Cameron v Hussain
Court of Appeal
23 May 2017
On 26 May 2013, there was an RTA between the claimant and an unidentified motorist driving a Nissan Micra. Whilst the driver of the Micra did not stop, the vehicle registration was taken down by a witness, and checks revealed that the vehicle was registered to Naveed Hussain and was insured.
Mr Hussain failed to co-operate with the police and refused to confirm who was driving the vehicle at the time of the accident. He was subsequently convicted of the offence of failing to give information about the identity of a driver. Matters were further complicated by the fact that the policy of insurance on the vehicle was obtained by fraud, in that it was in the name of a fictitious person.
The claimant suffered modest injuries, and the total value of the claimant's claim was estimated as up to £15,000 (including her own vehicle damage and hire charges).
In January 2014, the claimant issued proceedings against Mr Hussain and subsequently amended the proceedings to add the insurer of the vehicle as the second defendant. The insurer filed a defence denying liability on the basis that Mr Hussain was not covered to drive the vehicle and further, the claimant was unable to prove the identity of the driver so that judgment could not be obtained under the Road Traffic Act 1988 (the RTA 1988). The insurer applied for summary judgment.
The claimant sought permission to amend her claim so as to substitute the following in place of Mr Hussain as first defendant:
"The person unknown driving vehicle registration number Y598 SPS who collided with vehicle registration number KG03 ZIZ on 26th May 2013."
The claimant's application was dismissed both at first instance and on appeal to the High Court. The claimant further appealed to the Court of Appeal on the following grounds:
- The CPR permits proceedings to be issued and judgments to be made against unnamed parties where it is 'necessary and efficacious' to obtain justice.
- It was both 'necessary and efficacious' to allow the claimant to proceed against an unnamed defendant in the particular circumstances of this case.
- Permitting the claimant to proceed was consistent with s.151 RTA 1988.
In essence, the case centred on whether, as a matter of procedural law, the claimant could sue an unknown person. If it transpired that the claimant could not, then her only recourse was to claim against the MIB under the Untraced Drivers' Agreement (UTDA). If she could, then she would have a civil claim which the insurer would have to satisfy pursuant to s.151 RTA 1988. The civil route is often considered the superior option given the restrictions on costs and the inability to pursue subrogated claims under the UTDA. In this instance, presumably the claimant's vehicle damage claim was subrogated hence the clear preference to pursue a civil claim.
Court of Appeal findings
In a split decision, the Court of Appeal allowed the claimant's appeal granting her permission to amend her claim to substitute a 'person unknown' as the first defendant.
In summary, the court held:
- There is no reason in principle why, in appropriate cases, it should not be permissible under the CPR for a claimant to bring proceedings against an unnamed defendant, suitably identified by an appropriate description.
- There is no reason in principle or as a matter of construction of the rules why the ability to do so should be limited to a claim for an injunction or in relation to future relief (as had been the case to date).
- Whether in any particular case a claimant should be permitted to bring proceedings against a person identified only by description should depend on whether the overriding objective would be furthered by such a course.
In doing so, the Court of Appeal rejected the insurer's argument that it is only in 'exceptional' circumstances that a claimant would be permitted to join an unnamed defendant, identified only by description. The Court of Appeal also dismissed the suggestion that, if the claimant has an alternative remedy (as was the case here under the UTDA) that necessarily precludes any exercise of the court's discretion in the claimant's favour.
The majority of the Court of Appeal gave little time to the insurers' concern over their inability to ascertain the facts from the driver of the vehicle or from their own insured (where the insured transpires to be a fictitious entity). Indeed, the Court of Appeal noted that the situation was analogous to the commonly accepted situation where an identified driver can subsequently not be traced by the time judgment is entered. The Court held that "the [insurer] must bear the responsibility of not having carried out appropriate checks as to the identity, or existence, of the insured prior to inception of the policy".
It is expected that insurers will seek to pursue a further appeal to the Supreme Court. In the meantime, we would note the following:
- It is important to bear in mind that the Court of Appeal expressly noted that this 'procedural innovation' would be limited to cases where the vehicle driven by the tortfeasor was insured and where the insured and the registered owner (sic) are identifiable (Lloyd Jones LJ para 86). However, it appears inevitable that claimants will seek to argue that the principle applies even in circumstances where the registered keeper and / or insured cannot be identified, though the judgment of Lloyd Jones LJ allows insurers to at least try to stand firm on rejecting such an argument.
- In essence, the decision renders the UTDA defunct in the circumstances where someone has noted down the vehicle registration, and no doubt the MIB will be looking at whether it can re-direct to insurers the claims of that type currently being dealt with under the UTDA in light of the decision.
- Whilst this point was dismissed by the majority in the Court of Appeal, the decision could leave insurers open to an increase in fraudulent claims with the 'unknown driver' with a fictitious insured being the prime choice now for the organisers of staged RTAs. Where successful, a fraudster would not need to worry about an insured or driver performing in interview. Insurers may need to work harder to find connections, for example between the claimant and the registered keeper.
- The fraud risk is not assisted by the decision of Vnuk and the possibility of the compulsory motor insurance regime being held to extend to cover accidents on private property, away from prying eyes.
- The decision is stated to only apply in circumstances where the insurer might have an RTA liability. Whilst no doubt claimants will seek to argue that the principle should also apply to claims brought under the Uninsured Drivers' Agreement, at present, an insurer faced with similar circumstances should consider whether it is able to reduce its status to Article 75. The Court of Appeal noted that insurers would be free to bring a claim for a declaration under s.152(2) that it was entitled to avoid the policy (though this right was not pursued in the present case).
- It is now more than ever important for insurers to ensure that they have systems in place to detect inception fraud and act quickly. Insurers have to issue declaratory proceedings within three months of the date of issue of the underlying injury or damages claim.
- It is surprising that it was not argued that the policy was non-existent given the fictitious policyholder (pursuant to Shogun Finance v Hudson  UKHL 62). Insurers may wish to consider this point further if faced with similar circumstances.
- It should not be forgotten that it is a criminal offence not to provide the identity of the driver following an accident. As such, in most cases the driver will be identified. However, there are clearly exceptions and hire companies and insurers will no doubt be concerned by this decision.
The practical consequences of this decision are potentially significant for motor insurers, who will now be required to satisfy unknown defendant claims of this type under the RTA 1988. Whilst to an extent, there is arguably a logic to the decision by analogy with the fact that insurers are already required by statute to pay damages where the vehicle is insured and driven by a known but contractually uninsured individual, unfortunately, given the fact that the driver is unidentified, the insurer will be unable to rely upon the rights of recovery in s.151(8) to recoup its outlay. Although, it is worth noting that, first party insurers may also now be able to rely on this decision to recoup their outlay in similar circumstances, whereas previously a claim would not have succeeded under the UTDA. In the end, this decision will inevitably lead to insurers being asked to meet yet further claims.
For further information, please contact Nicola Dunk.