New MIB agreements announced
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The MIB (Motor Insurance Bureau) have now published a new Untraced Drivers Agreement for England, Scotland and Wales which is due to come into force on the 1st March 2017. This replaces the old 2003 Agreement and the five supplementary Untraced Drivers' Agreements that amended it. The new Agreement applies to accidents that occur on or after the 1st March 2017.
So what are the main changes?
- Applicants - applicants under the 2017 Agreement are now "claimants."
- Property excess - the excess on property damage is now £400
- Damage caused by trailers - Clause 3(2) extends liability on the MIB for accident to accidents that arise out of the use of a trailer as a vehicle. This reflects the judgment of the European Court of Justice in Vnuk v Zavarolvalnica Triglas D.D CJEU (Third Chamber) September 4, 2014 C-162/13.
- The terrorism exclusion - Clause 5(1)(d) from the 2003 Agreement, which excluded any damage caused by or in the course of terrorism, has been removed. It was thought that this exclusion offended against European law.
- Accounting for loss of earnings - Clause 6(2) states that the Applicant does not have to reduce his compensation from the MIB by any sum paid to him for loss of earnings by his employer, unless that sum is paid by the employer's and the Applicant's insurance.
- Property damage and "significant injury" - Clause 7 confirms that property damage is still recoverable provided it goes hand in hand with significant injury, which is defined in Clause 7(2) as death or injury resulting in 2 nights or more of inpatient treatment or 3 sessions or more of hospital out-patient treatment.
- A passenger's "knowledge" of no insurance - it has long been argued that the definition of "knowledge" contained in what is now Clause 8 offends against the one adopted by the House of Lords in the case of White v White  1 WLR 481 and other cases from the European Court of Justice. However, the MIB seemed to want to hang on to their own definition of "knowledge" like grim death. Interestingly the effect of Clause 8(1) has been slightly cut down. It used to be enough under the 2003 Agreement for the MIB to argue that knowledge was established by the passenger knowing that the car was being used for the purposes of a crime or to flee the police. Those provisions have now gone. Clause 8(3) states that the burden of proving knowledge of no insurance is still on the MIB, and in the 2003 Agreement they set out four matters that would stand as proof as knowledge. One of these (the old Clause 5(2)(d)) was that the passenger knew that the user of the vehicle was not its owner or an employee of its owner. This sub clause has now also gone. The MIB explain its removal by saying that the sub clause was "too difficult to operate in practice".
- Property damage for uninsured victim - The old Clause 5(1)(f) of the 2003 Agreement has been removed as contrary to European Directive 2009/103/EC. This is the clause that excluded a claim for property damage by the owner of a car that was insured.
- Calculation of compensation - the new Clause 11 deals with the calculation of compensation. Clause 11(2)(c) now specifically provides for the MIB to make a wider range of compensation awards, including periodical payments and provisional damages, although the previous 2003 Agreement gave them the power to do that within the general law.
- Interest on general damages - Clause 11(4) says that interest runs from the date of the accident or the date of the award, whichever is the sooner. Previously the award of interest was linked to the receipt of the police report.
- Reporting to the police - Clause 10(4)(c) retains the requirement for the Claimant to report the matter to the police, but this is now "as soon as reasonably" practicable. The former time limits of five and fourteen days are gone. Reporting these kinds of accidents were always a headache for some Claimants, the 2003 Agreement required them to produce evidence from a local police station that they had reported the accident and often the police were simply not interested. That requirement has gone. Also the 2003 Agreement required the Claimant to report as soon as reasonably "possible". That word is now substituted by the word "practicable", which may reflect the impossibility of complying with this clause for some Claimants.
- New approval procedure for minor and protected parties - Clause 14 now introduces a procedure for the approval of claims from minors and protected parties by an arbitrator, and so essentially what we have now is a parallel system to that seen within the Civil Procedure Rules. Prior to the 2017 Agreement, there was no approval system at all but it is now required in all cases. The difference is that the MIB's system is designed to take place primarily on paper with the right of the arbitrator (Clause 14(11)(c)) to request an oral hearing. Clause 14(14)(b) provides for counsel's fees in support of an approval process to be paid, although they can be disputed by the MIB and they are limited to £250 plus VAT if the case would have been "fast track" under the Civil Procedure Rules.
- Costs - Clause 21 of the 2017 Agreement relates to costs and replaces the previous Schedule at the end of the 2003 Agreement. Costs mean a fee calculated in accordance with Clause 21(8), VAT and reasonable disbursements, which are defined under Clause 21(11) as expenditure that the MIB has specifically authorised, and in relation to evidence resulting from that expenditure, then evidence that has been disclosed to them. The table in Clause 21 states that claims up to £10,000 get £450, and then there is a sliding scale upwards with awards over £250,000 receiving £18,700 plus 7% of the damages over £250,000 subject to a maximum of £250,000. Under the 2003 Agreement, the costs contribution from the MIB was 15% of the amount of the award up to a maximum of £3,000 for damages of £150,000 or less. Above that amount, the costs contribution was 2%. Consequently the new costs contribution allowed by the MIB is very much more generous for larger claims. Clause 21(12) states that the Claimant can actually ask the MIB for more costs, if the claim is "exceptionally complex" although value cannot be the sole guide. Clause 21(14) allows an arbitrator to decide on the level of that additional amount of costs.
- Costs of arbitration - Clause 22 expands the provisions on the costs of arbitration. The costs allowed on arbitration range from £250 to £500 depending on whether the appeal was written or oral. Clause 14(14) also allows for the recovery of counsel's fees in the approval process for a child or protected party before an arbitrator.
- Changes to the 2015 Uninsured Drivers Agreement
- These are made by a Supplementary Agreement applying to accidents on or after the 1st March 2015. Clause 7 of the 2015 Agreement is removed in its entirety. This is the clause that provides that an uninsured driver who is the victim of another uninsured driver, cannot recover his property damage. Clause 9 of the 2015 Agreement (the terrorism exclusion) is also removed.
The new 2017 Untraced Drivers Agreement is a welcome addition to MIB law in general. The five Supplementary Agreements that followed the 2003 Agreement have now been consolidated into one Agreement, certain clauses which offended against European Union motor insurance law have been removed, infant settlement approval has been introduced and the costs allowable have been increased. However, there are still arguments that certain parts of this Agreement are in contravention of that same European law. It remains to be seen what will happen on BREXIT, but the writer has a theory that the UK will remain quietly within the European Directives, quite simply because coming outside would cause too many problems for motorists driving to and from Europe, and the insurers who cover them. The MIB has never been the kind of political issue that Brexiteers would ever really notice.
Finally practitioners in this area need to be aware that Leigh Day solicitors are bringing a judicial review of the MIB Agreements together with the primary legislation imposing third party motor insurance. The hearing of that application is listed in the High Court for three days in mid-February 2017. This is part of an ongoing campaign run by the charity, RoadPeace which has already obtained major concessions from the government and some of which can be seen in the new 2017 Untraced Drivers Agreement. However there are still a number of concerns about the present system of compensation for victims of uninsured and untraced drivers. Consequently the action is continuing and the decision made by the court could have far reaching consequences for the handling of MIB claims.
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