EX TURPI CAUSA NON ORITUR ACTIO
THE ILLEGALITY DEFENCE
MIB EXCLUSIONS
1. In 2001, the Law Commission published Consultation Paper 160 on the Illegality Defence in
Tort. The Commissioners looked carefully at the then existing jurisprudence. In summary;
a. they expressed concern that;
i. The law was too unclear to enable the parties to anticipate the outcome of
certain cases;
ii. The strict application of the doctrine might lead to arbitrary results or
disproportionality, which was even then recognised as a fundamental
principle in ECHR jurisprudence [1.4 and 1.5];
iii. the phrase ‘ex turpi causa non oritur actio’ was inappropriate [1.12];
b. they accepted that the illegal behaviour in question and that might give rise to the
Defence might occasionally encompass not only criminal behaviour but also civil
wrongs or immoral behaviour [1.16];
c. they saw four classes of case [2.4 - 2.8];
i. Compensation for detention as a result of the Claimant’s crime;
ii. Indemnity for liability arising from the Claimant’s crime;
iii. Injury in the course of illegal joint venture;
iv. Injury in the course of the Claimant’s illegal activity.
1
2. Having identified those four classes, they saw different groups of cases that fell into those
classes.
3. The first group comprised the cases where the Claimant sought or was forced to found his
claim on his own illegal act. Prior to the decision in Gray v Thames Trains Ltd and another
[2009] 1 AC 1339, the relevant authorities were Clunis v Camden and Islington HA [1998]
QB 978 and Worrall v BRB [29th April 1999], where Claimants were refused damages for
imprisonment and loss of earnings while imprisoned, even though the relevant criminality
had undoubtedly been caused by the Defendant’s negligence. They had suffered head injury
or psychiatric injury that caused a personality change.
4. The second group was made up of cases where the Court determined that the effect of
affording relief to the Claimant would enable him to benefit from or to be spared from or to
be compensated for the consequences of his criminal behaviour. So, in Meah v McCreamer
[1986] 1 All ER 943, the Court refused to grant the Claimant an indemnity in relation to
amounts he had been ordered to pay to his victims notwithstanding that, again, the relevant
criminality had undoubtedly been caused by the Defendant’s negligence. The Commission
found it difficult to see how, in principle, such cases could be denied on a ‘no benefit’ basis
where the Claimant was not seeking to benefit from his own wrong but was simply seeking
to be kept indemnified or compensated for losses flowing from it.
5. These authorities were confirmed by the House of Lords in 2009. In Gray v Thames Trains
Ltd and another [2009] 1 AC 1339 their Lordships were concerned with the narrow question
of the impact of subsequent illegality on the recovery of damages.
2
6. G had been a passenger on a train involved in the Ladbroke Grove rail crash. The train was
operated by TTL and the accident had been caused by its negligence. Although G sustained
only minor physical injury, the experience caused him to suffer post-traumatic stress
disorder (PTSD). While he was receiving treatment and taking medication for that condition
he stabbed to death a pedestrian who had stepped into the path of his car. He pleaded
guilty to manslaughter on the grounds of diminished responsibility caused by PTSD and was
sentenced to be detained in hospital. In an action for negligence against T he claimed
general damages for his conviction, detention and feelings of guilt and remorse, and for
damage to his reputation. He claimed special damages in respect of his loss of earnings until
the date of trial and continuing, and he sought an indemnity against any claims, which might
be brought by dependants of his victim. The trial judge decided that a rule of law based on
public policy precluded a person from recovering, in consequence of his own criminal act,
both general and special damages. The Court of Appeal held that it was bound by the
decision in Clunis to find that recovery of general damages was precluded, while recovery of
loss of earnings was not. The issue for the House of Lords was whether the intervention of
G's criminal act in the causal relationship between T's breaches of duty and the damage of
which he complained prevented him from recovering that loss caused by the criminal act.
But for the accident and the stress disorder it caused, G would not have killed and would not
have suffered the consequences for which he sought compensation; on the other hand, the
killing was a voluntary and deliberate act.
7. T argued that a rule of law based on public policy, an aspect of the wider principle of ex turpi
causa, prevented a person from recovering compensation for losses suffered in consequence
of his own criminal act or, more narrowly, prevented a person recovering for damage that
was the consequence of a sentence imposed on him for a criminal act.
3
8. The House of Lords held that the narrow expression of the rule, that a person could not
recover for damage that was the consequence of a sentence imposed on him for a criminal
act was well-established. The Court of Appeal had been right to hold that it was bound by
Clunis to reject G's claim for damages suffered in consequence of the sentence of detention.
However, it had not been right to go on to hold, despite its finding that the rule applied, that
G was entitled to compensation for loss of earnings after his arrest. He had been unable to
earn because he was detained after having committed manslaughter. While it was true that
even if he had not committed manslaughter, his earning capacity would still have been
impaired by the PTSD, liability was precluded by the decision in Jobling v Associated Dairies
[1982] A.C. 794. G's claim for loss of earnings after his arrest and his claim for general
damages were claims for damage caused by the lawful sentence imposed upon him for
manslaughter. They fell within the narrower version of the rule and were not recoverable. It
was further held that neither the claim for general damages for feelings of guilt and remorse
consequent upon the killing nor the claim for an indemnity against any claims which might
be brought by dependants of the dead pedestrian was a consequence of the sentence of the
criminal court. However, the wider version of the rule, applied by the judge at first instance,
covered those heads of damage.
9. G's liability to compensate the dependants of the dead pedestrian was an immediate,
inextricable consequence of his having intentionally killed him. The same was true of his
feelings of guilt and remorse. The judge at first instance was therefore right and his
judgment was restored.
4
10. That much is clear but Lord Phillips wet on to hold that It was not necessarily right to make
no distinction between a sentence of imprisonment and a hospital order. While a conviction
for an offence punishable with imprisonment was necessary to confer jurisdiction for the
imposition of a hospital order, the offence leading to that conviction might have no
relevance to the decision to make the order. If a sentencing judge made it clear that the
defendant's offending behaviour played no part in the decision to impose the hospital order,
it was strongly arguable that the order should be treated as being a consequence of the
defendant's mental condition and not of his criminal act. In that event ex turpi causa would
not apply. More difficult questions will arise, therefore, especially post-Rabone, in the
difficult grey area where the detention or deprivation of liberty takes place partly for the
protection of C’s best interests and partly for the protection of a wider public interest. It will,
therefore, be legitimate to pursue such claims where the level of culpability is non-existent
or, probably also, where, for example, a Claimant was unfit to plead in the criminal
proceedings and where no determination was made as to his criminality.
11. Lord Hoffmann (in a judgment with which Lords Phillips and Lord Scott agreed) said that
there was both a narrow and a wide form of the illegality defence. The narrow form is that a
Claimant cannot recover for damage which flows directly from loss of liberty, a fine or other
punishment lawfully imposed in consequence of an unlawful act.
12. This narrow version - which forms the basis for the application of the rule in Canada - is
justified on the basis of consistency. Where the law, as a matter of penal policy, has caused
the damage, it would be inconsistent for the law to require a Claimant to be compensated
for just that same damage.
5
13. The third and fourth group of cases identified by the Law Commission are covered by a
general principle that the court should not assist a Claimant who has been guilty of illegal
conduct of which the courts should take notice.
14. The question as to how the Court should respond was partially answered in Gray and the
answer is in any event obiter. Lord Hoffman provided some analysis of the defence in its
wider form. He had no problem with the maxim or its Latin expression. The following
extracts from Lord Hoffman’s speech are of relevance:
‘The maxim ex turpi causa expresses not so much a principle as a policy. Furthermore
that policy is not based upon a single justification but on a group of reasons, which vary
in different situations’ (at p1370G)
15. This wide version is justified on the basis that it is offensive to public notions of the fair
distribution of resources that a claimant should be compensated (‘usually out of public
funds’) for the consequences of his own criminal conduct. The wide version of the rule might
lead to difficult issues of causation. Lord Hoffmann said he did not find it helpful to apply a
Latin tag such as whether the claim arose “ex turpi causa” (that is, “from a dishonourable
cause”) Nor was it useful to apply a test based on whether there was “an inextricable link”
between the claim and the illegality. Rather, a distinction had to be drawn between cases
where, although the damage would not have happened but for the tortious conduct of the
defendant, it was caused by the criminal act of the claimant; and cases where, although the
damage would not have happened without the criminal act of the claimant, it was caused by
the tortious act of the defendant. On the facts of this case, the wide version of the defence
6
ruled out the claim for general damages for feelings of guilt and the claim for an indemnity
against claims by dependants of the victim.
16. It seems that the courts are to look at a range of factors in deciding whether these policy
issues apply. Certainly the moral culpability of the claimant is one of them. Lord Phillips
reserved his position in a case where the claimant, although detained under the Mental
Health Act 1983, had not shown any significant responsibility for his offence. Another
relevant factor is the seriousness of the illegality involved. For example, Lord Rodger
suggested that the decision might have been different if the offence for which the claimant
was convicted was trivial.
17. But there may be problems in attributing causation. In Lord Hoffmann’s words:
‘Secondly, the wider rule may raise problems of causation, which cannot arise in
connection with the narrower rule. The sentence of the court is plainly a consequence
of the criminality for which the Claimant was responsible. But other forms of
damage may give rise to questions about whether they can properly be said to
have been caused by his criminal conduct.’ This distinction, between causing
something and merely providing the occasion for someone else to cause something,
is one with which we are very familiar with in the law of torts.....It might be better to
avoid metaphors like ‘inextricably linked’ or ‘integral part’ and to treat the question
as simply one of causation. Can one say that, although the damage would not have
happened but for the tortious conduct of the defendant, it was caused by the
criminal act of the Claimant? (Vellino v Chief Constable of the Greater Manchester
Police [2002] 1 WLR 218). Or is the position that although the damage would not
7
have happened without the criminal act of the Claimant, it was caused by the
tortious act of the Defendant? (Revill v Newbery [1996] QB 567)’. (at p1377C-F)
18. Mr Vellino was a criminal who was having a party in Stockport when the police came to
arrest him. He escaped their grasp and jumped from a balcony, as the result of which he
suffered catastrophic injury. He sued them for letting him escape when they knew he had
form for escaping via balconies. He lost and one of the reasons was because the claim was
founded on his own illegal act. Mr Revill, however, recovered from the allotment holder who
negligently injured him when he fired his shotgun from inside his shed; he recovered
because it was said that even though he was committing a criminal act, his criminal status
did not mean that he should have no protection or rights under the civil law.
19. Lord Hoffmann did not, however, consider the co-conspirator cases of Ashton v Turner
[1981] 1 QB 137 or Pitts v Hunt [1991] 1 QB 24.
20. In Ashton, two drunken men committed a burglary. While trying to escape, the first
defendant, driving the second defendant’s car with his permission, caused an accident
severely injuring the plaintiff, who was a passenger in the car. His claims were dismissed.
Ewbank J considered that as a matter of public policy the defendants owed him no duty of
care. In certain circumstances the law might not recognise that a duty of care was owed by
one participant in a crime to another in relation to an act done in the course of the
commission of the crime. Ewbank J was strongly influenced by the approach taken by the
Australian courts to this issue. He held in the alternative that even if a duty of care was
owed, the plaintiff had willingly accepted as his the risk of negligence and injury resulting
8
from it. This aspect of the judgment would now be decided differently since section 148(3)
of the Road Traffic Act precludes the application of the volenti doctrine in RTA cases.
21. In Pitts v Hunt [1991] 1 QB 24, the plaintiff was a passenger on a motor cycle driven by the
defendant. He was seriously injured when the motor cycle collided with another vehicle as a
result of the defendant’s negligent driving. The defendant was killed and the plaintiff
brought an action for damages against the defendant’s estate. Both had been drinking
heavily prior to the accident and the plaintiff had encouraged the defendant to drive in a
recklessly dangerous manner. The plaintiff was aware that the defendant was uninsured and
did not hold a licenceIt was also found that they were deliberately riding in a way calculated
to frighten others. The Trial Judge concluded that the driver was riding recklessly and
dangerously and at the very least the pillion passenger was aiding and abetting that driving.
Whilst he was not manipulating the controls of the machine, he was fully in agreement and
encouraging the way in which the driver was manipulating the controls. . The claim was
dismissed on the basis that the plaintiff’s own criminal conduct precluded him from
recovering damages and the decision was upheld by the Court of Appeal.
22. But there was no consensus why.
23. Balcombe LJ considered that where parties are engaged in a joint criminal enterprise it is
impossible for the courts to determine the standard of care appropriate in the
circumstances. In such a situation, therefore, it was impossible to tell whether the duty had
been breached. This may be viewed as a ‘one stage’ approach to the treatment of the
illegality so that the duty of care is itself negated.
9
24. Dillon LJ held that the action failed because the plaintiff’s injuries arose directly ex turpi
causa, as they were a direct result of the plaintiff’s deliberate participation in criminal
activity. But what if that activity was not dangerous driving but driving while intoxicated or
careless driving?
25. Beldam LJ considered the correct approach to be to consider the question of public policy in
the light of the Road Traffic Acts. He concluded that an award to the plaintiff of
compensation would be precluded on grounds of public policy. This involves a ‘two-stage’
approach, deciding first whether a duty of care would be owed in the absence of the
illegality and then deciding whether the illegality operated to bar the claim. He said that he
would be reluctant to hold that the driver owed no duty of care even towards his passenger.
Although the ‘no-duty’ approach has found considerable support in Australia, it found little
further judicial support in England and Wales, and was subject to academic criticism.
26. The Law Commission reported after the decision in Gray but it is worthwhile reflecting on
what they had originally thought of the basis for the decisions in Ashton and Pitts.
4.87 This does not mean that we think the outcomes of the decided English cases
were incorrect. In our view the cases were quite correctly decided on other grounds.
Thus we think that both Ashton v Turner and Pitts v Hunt were cases in which the
claims should fail but on the ground of lack of duty rather than of illegality.
4.88 Pitts v Hunt can be seen as a case of the driver being encouraged by the
passenger to drive in the manner that ultimately led to the passenger being injured.
It does not lie easily in the mouth of the passenger to claim that a duty was owed to
him by the driver not to drive in the very way that the passenger was encouraging.
Thus on the particular facts of this case there is a strong argument for saying that
there was no duty. Ashton v Turner may also be explicable on a similar basis: the
driver was driving in the manner encouraged by the passenger, so as to escape
pursuit following a burglary. It can be argued that where the passenger expressly or
implicitly asked the driver to drive in a particular way, a duty not to drive in that way
does not arise.
10
4.89 It can even be said that in cases such as those mentioned above, the fact that
the plaintiff was acting illegally has little to do with the denial of duty. There is no
duty because of the particular individual facts of the case; that those circumstances
were ones of illegality is incidental. We think it would be arguable that there would
be no duty on facts like those in Pitts v Hunt even if the parties had been driving
on a private road and not trying to frighten anyone, so that their conduct was not
illegal. It could be said that the fact that the plaintiff was encouraging the driver to
swerve and to weave about would make it impossible to say that the defendant
was under a duty to the plaintiff not to drive in this dangerous manner.
4.90 The English cases involving driving where it has been held that there was no
duty are therefore explicable without illegality being an essential part of the
decision. Because of the factual circumstances, a duty cannot be found. We contrast
this approach with that taken by some of the Australian cases, where a duty has
been denied as a matter of policy - in other words, where a duty will not be found.
4.91 In some cases an alternative analysis would be that the claimant had accepted
the risk of injury. In Pitts v Hunt it was held that the defence of volenti non fit injuria
is not available in those cases arising out of negligent driving, because of what is
now sections 149(2) and (3) of the Road Traffic Act 1988. This does not apply to the
oft-cited example of two people trying to break into a safe using explosives and one
injuring the other.
4.92 Both Ashton v Turner and Pitts v Hunt are different to the case where the
passenger has not suggested or encouraged the course of action actually taken by
the driver. If the passenger in Ashton v Turner had been injured later in the journey
home, rather than in the course of the get-away, we think that he should have been
owed a duty of care by the driver; and it follows from what we said earlier that we
are not convinced that there is any valid rationale for barring his claim on the
ground of illegality.
27. When it finally reported in 2010 the (then differently constituted) Law Commission said
3.37 In our 2009 consultative report, we argued that it was open to the courts to
develop the law in ways that would render it considerably clearer, more certain and
less arbitrary. Instead of purporting to apply rigid rules, the courts should consider
each case to see whether the application of the illegality defence can be justified on
the basis of the policies that underlie that defence. We did not think this would
require a major alteration. The policy rationales were already found within the case
law and the courts already apply them to do justice. All that was required was an
incremental change, as courts became more prepared to articulate the policy
reasons behind their decisions.
3.38 The decision in Gray v Thames Trains shows that this incremental change is
already taking place. As Lord Hoffmann explained, the illegality defence is based
upon a group of reasons, which vary in different situations. In each case, the policy
reasons must be considered against the facts of the case. Stone & Rolls is a more
difficult decision, but we do not think it is inconsistent with this approach.
11
28. Since then, there have been two decisions in which the Courts have been required to
consider the wider application of the rule.
29. In Delaney v (1) Pickett (2) Tradewise Insurance Services Limited [2011] EWCA Civ 15321, C
won on ex turpi causa but lost because it was an MIB case. C was a front seat passenger and
sought to claim for the serious injuries he sustained in a road traffic accident. The vehicle
was being driven by D1 in a negligent manner, such that he lost control of the vehicle and
collided with an oncoming vehicle. Whilst C was being removed from the vehicle by the
emergency services a large bag of cannabis was found to be concealed under his coat. A
smaller quantity of cannabis was found in a bag which was tucked into D1’s sock. During a
subsequent police interview D1 explained that he was a habitual user of cannabis and the
drugs were for his own personal use. D1 was later convicted of dangerous driving and
possession of cannabis.
30. At first instance HHJ Gregory found on the evidence before him that C and D1 were
travelling together to acquire a sufficient quantity of cannabis for re-sale, such that the
purpose of the journey was the transportation of illegal drugs and they ‘were acting in
concert in a joint enterprise for illegal purposes’. It was held that the defence of ex turpi
causa non oritur / public policy was made out.
1
The Claimant has petitioned the Supreme Court for permission to appeal.
12
31. HHJ Gregory’s findings of fact were upheld by the majority of the Court of Appeal2, but the
finding of ex turpi causa non oritur / public policy was unanimously over-turned: Ward LJ
analysed Pitts v Hunt where the defence succeeded and pointed to the different approaches
that were taken in the separate judgments3. However reliance was placed upon Lord
Hoffman’s speech in the more recent decision of Gray v Thames Trains Limited [2009] 1 AC
1339. Ward LJ considered that the crucial question was:
‘whether, on the one hand the criminal activity merely gave occasion for the tortious act of the
defendant to be committed or whether, even though the accident would never have happened had they
not made the journey which at some point involved their obtaining and/or transporting drugs with the
intention to supply or on the other hand whether the immediate cause of the Claimant’s damage was
the negligent driving. The answer to that question is in my judgment quite clear. Viewed as a matter of
causation, the damage suffered by the claimant was not caused by his or their criminal activity. It was
caused by the tortious act of the Defendant in the negligent way in which he drove his motor car. In
those circumstances the illegal acts are incidental and the Claimant is entitled to recover his loss.’
32. Richards LJ agreed with Ward LJ’s analysis and expressed the view that the same result
would follow from the application of the various strands of reasoning in Pitts v Hunt [64].
Tomlinson LJ agreed with Richards LJ and reached his own conclusion using each of the tests
identified by Ward LJ (above);
‘This is not the occasion for an examination of the conceptual foundation of the ex turpi causa defence.
However the matter is looked at, there was no relevant nexus between the illegality upon which [C] was
engaged and the tortious conduct of [D1] which gave rise to his injuries. There is no reason why the duty
2
Ward LJ dissented but conducted his analysis on the basis that the findings could be upheld.
3
See above
13
of care owed by [D1] to other road users should not be regarded as applying equally to his passenger.
There is no difficulty in ascertaining the standard of care required – it is wholly unaffected by the nature
of the enterprise upon which they were embarked. Nor do I see any affront to the public conscience in
an award of damages against D1 in favour of C’
33. In Joyce v O’Brien [2012], the claimant (J) claimed damages for personal injury arising out of
a road traffic accident against his first defendant uncle (O) and the second defendant insurer
(T). O had been driving a van and J was standing on the rear footplate. J fell as the van
negotiated a sharp turn and sustained a severe head injury. O pleaded guilty to a charge of
dangerous driving on the basis that he was driving too fast for the relevant road as J was on
the back of the van. J asserted that his accident was caused by O's negligence. T's case was
that O and J had stolen ladders from local residents and were making their escape when the
accident occurred and, therefore, O was not liable to J as they had been engaged in a
common criminal enterprise. It was also T's case that the stolen ladders had been placed
inside the van but because of their length the rear van door had to remain open and,
therefore, J stood on the rear footplate holding on to the ladders and the van itself. Neither
O nor J gave evidence, but O had provided inconsistent stories at the scene of the accident.
Witness evidence described: O removing ladders from the van following the accident, O
entering an alleyway and returning empty-handed; ladders dumped in an alleyway; J hanging
on to the back of the van and holding onto the ladders; O driving recklessly; ladders having
been stolen from X in the area; O giving a false account of the accident; O driving off after
the accident and returning minutes later; the ladders found in the alleyway near the scene of
the accident as fitting the description of X's stolen ladders.
34. Mr Justice Cooke held as follows;
a. it was important when serious allegations of criminal conduct were made in civil
proceedings to proceed with care in applying the civil standard of proof and to be
assiduous in requiring cogent evidence, Hornal v Neuberger Products [1957] 1 Q.B.
247 and H (Minors) (Sexual Abuse: Standard of Proof), Re [1996] A.C. 563 applied;
b. the evidence of theft was circumstantial but the inference was overwhelming. On
the evidence, it was clear that the ladders recovered from the alleyway were stolen
14
from X, that both O and J had been involved in their theft and that it was a joint
enterprise (see paras 26-29 of judgment);
c. the issue of causation was the key to recoverability, Vellino v Chief Constable of
Greater Manchester [2001] EWCA Civ 1249, [2002] 1 W.L.R. 218, Delaney v Pickett
[2011] EWCA Civ 1532, [2012] R.T.R. 16 and Gray v Thames Trains Ltd [2009] UKHL
33, [2009] 1 A.C. 1339 applied;
d. There was no room for the operation of any consideration of the disproportionate
injury suffered as against the heinousness of the crime committed, Delaney and
Gray considered.
35. Cooke J decided that the claim had to fail on causation beacuse:
a. O and J were participating in a criminal enterprise involving the theft of ladders and
their unlawful removal in a van, where the only means of transporting them in a
speedy escape meant that J had to keep them in the van with the door open by
standing on the rear footplate and hanging on to them and the rear of the van.
b. J's actions were an essential part of the joint enterprise. His injuries were caused by
a combination of O's speedy driving and his positioning, making that driving
dangerous.
c. J's actions were so unusual as to be as causative of his injuries as O's driving, both of
which were part of the criminal activity. J could not recover for injuries suffered in
the course of that enterprise.
d. Further, it was of no consequence which formulation of ex turpi causa was applied
as the result was the same in that the claim had to fail.
e. O could not owe a duty to J and it was not possible to calculate to a set standard of
care how fast the van should have been driven in circumstances where speed was
essential to get away and there was a need for J to hang on to the stolen items and
the back of the open van to effect their joint objective of a speedy escape.
36. The Claimant has sought permission to appeal.
The Uninsured Drivers Agreement 1999
37. Clause 5 of the UDA 1999 provides that:
15
‘(1) Subject to clauses 6 to 17, if a Claimant has obtained against any person in a Court in Great Britain a
judgment which is an unsatisfied judgment then MIB will pay the relevant sum to, or to the satisfaction of
the Claimant or will cause the same to be paid.
(2) Paragraph (1) applies whether or not the person liable to satisfy the judgment is in fact covered by a
contract of insurance and whatever may be the cause of his failure to satisfy the Judgment’
38. Clause 6 of the UDA 1999 provides‘(1) Clause 5 does not apply in the case of an application made in
respect of a claim of any of the following descriptions (and where part only of a claim satisfies such a description,
clause 5 does not apply to that part) – (e) a claim which is made in respect of a relevant liability described in
paragraph (2) by a Claimant who, at the time of the use giving rise to the relevant liability was voluntarily
allowing himself to be carried in the vehicle and, either before the commencement of his journey in the vehicle or
after such commencement if he could reasonably be expected to have alighted from it, knew or ought to have
known that- (iii) the vehicle was being used in the course or furtherance of a crime
39. In Delaney (above) the Claimant lost because of clause 6(1)(e)(iii). D2 used D1’s nondisclosure of his cannabis use as a means of avoiding the policy and obtained a declaration
under section 152 of the RTA 1988, in effect rendering the policy void ab initio. HHJ Gregory
accepted D2’s argument that C knew that the vehicle was being used in the course or
furtherance of a crime, namely, possession of a controlled drug with intent to supply. That
conclusion was upheld by the majority of the Court of Appeal, despite their sympathy for C’s
predicament.
40. On this issue, Ward LJ delivered a dissenting judgment in Delaney. He accepted that on a
literal construction of the clause and assuming that it was a case of possession of drugs with
16
intent to supply, then the exception would apply4. However Ward LJ considered that in line
with the usual rules of construction it was necessary to consider the context in which the
agreement had been made. Part of the context was EC Directive 84/5/ EEC5, where the only
exception is for those who knew the vehicle was uninsured.
41. Ward LJ also cited Evans v (1) SOS for the Environment (2) MIB (ECJ) and White v White
[2001] WLR 4816 and recognised that there was high authority for the proposition that the
principle of ‘indirect effect’ (ie the Marleasing principle) could not be applied to the
interpretation of the MIB agreement. In White conventional principles of interpretation
were able to yield the same result in any event7. In Delaney (above) Ward LJ purported to
apply conventional rules of construction of the agreement and found that having regard to
the background something must have gone wrong with the language of the clause. Ward LJ
refused to accept that ‘a crime’ in clause 6(1)(e)(iii) could mean ‘any crime’8 and considered
that it must mean ‘serious crime’ [48]. Ward LJ went on to conclude that:
‘Crime in the clause must be construed as a crime of such a kind as would give the driver a
good defence of illegality.’9
4
‘A motor vehicle is being used in the course of crime if it is being used in the process of committing the crime and as a
subordinate part of the carrying out or carrying on of the criminal activity. In furtherance of the crime means that the
vehicle is being used to advance or to help the commission of the crime’ [41]
5
Now EC Directive 2009/103/EC
6
In White it had been observed that ‘proportionality requires that a high degree of personal fault must exist before it
would be right for an injured passenger to be deprived of compensation’.
7
In that case the meaning of ‘known or ought to have known’ was given a restricted interpretation so as to require actual
knowledge.
8
It is of note that he gave the example of a speeding driver (which is a road traffic offence).
9
Ward LJ acknowledged that this would render the words of clause 6(1)(e)(iii) otiose, but considered that this would be
consistent with the fundamental purpose which the agreement was expected to serve [49].
17
42. Ward LJ conceded that this approach would empty clause 6(1)(e)(iii) of all of its content.
Further, he decided, that if it is to be equated to the ex turpi causa defence, it must also
involve importing an additional requirement, namely that the crime must be connected to
the tortious use of the vehicle (as per Lord Hoffman’s dictum in Gray. Since Ward LJ decided
that the evidence had supported only simple possession of cannabis, which he did not
regard as a serious crime, he would have allowed the appeal on this point.
43. The majority (Richards LJ and Tomlinson LJ) in Delaney took a more conservative approach
to the construction of clause 6(1)(e)(iii): Richards LJ considered that as the EC Directive did
not mention such an exception, it could not provide any specific context to the process of
interpretation, save that any exception should be interpreted restrictively because it was at
odds with the general principle of compensation. Richards LJ indicated that he would ‘readily
read the clause as being subject to an implicit de minimis exception’, but would not go as far
as the qualification suggested by Ward LJ because it would leave the clause with little or no
purpose. In any event he considered that possession of a commercial quantity of cannabis
was a ‘serious crime’10 and so the precise scope of the ‘implicit de minimis exception’ was not
considered any further. Tomlinson LJ reached the same overall conclusion on the facts of
this case, but could not read into the agreement any de minimis exception [79]. Tomlinson LJ
also stated that:
‘Naturally I see the force of [the] objection that adoption of this line of reasoning could lead to recovery
being denied in circumstances where the crime in the course of commission is minor. However I see no
escape from this possibility.’[78]
10
Counsel for D2 had accepted in argument that the clause did not apply to ‘any crime’, but instead applied where the
conduct is so reprehensible that it deserves public condemnation or where there has been conspicuous wrongdoing [68].
18
44. It is worth noting that in Delaney both Richards LJ and Tomlinson LJ felt constrained to say
that there had been no challenge to the compatibility of clause 6(1)(e)(iii) with the
directives11. Tomlinson LJ thought that this was ‘important’ and referred to an acceptance
on behalf of C that ‘neither Directive is exhaustive as to the scope of permissible exceptions’
[75].
45. In view of the impact of Delaney on what constitutes ‘a crime’ for the purposes of 6(1)(e)(iii),
the potential for such a challenge based on the relevant EC Directive now takes on more
significance. In an appropriate case, proceedings should be amended in order to join the MIB
and the Secretary of State. Also, one is left to wonder what will be the situation where the
crime in question is, for example, driving while under the influence of alcohol or drugs or
dangerous or even careless driving, which are criminal offences under the Road Traffic Acts
A Challenge to clause 6(1)(e)(iii) based upon the EC Directive/Incompatibility?
46. For recent accidents, the relevant directive is the codifying EC Directive 2009/103/EC12.
There are relevant passages in the preamble and recital 14 states;
‘It is necessary to make provision for a body to guarantee that the victim will not remain without
compensation where the vehicle which caused the accident is uninsured or unidentified. It is important
to provide that the victim of such an accident should be able to apply directly to that body as a first
point of contact. However, Member States should be given the possibility of applying certain limited
11
See paragraphs [67] and [75]
12
It repealed the previous Directives and came into force on 27th October 2009.
19
exclusions as regards the payment of compensation by that body and of providing that compensation
for damage to property caused by an unidentified vehicle may be limited or excluded in view of the
danger of fraud.’
47. In chapter 4 of the main body of the Directive, article 10 imposes a requirement on a
Member State:
‘to set up or authorise a body with the task of providing compensation, at least up to the limits of the
insurance obligation for damage to property or personal injuries caused by an unidentified vehicle or a
vehicle for which the insurance obligation provided for in article 3 has not been satisfied.’
48. The specific exception to the obligation of that body to pay compensation is contained in
article 10(2) and refers to a passenger who voluntarily enters the vehicle that caused the
damage knowing that it was uninsured. There is no provision which equates to clause
6(1)(e)(iii) of the UDA 1999 (ie knowledge that the vehicle was being used in the course of or
furtherance of a crime)13. The basis for the concession on behalf of C in Delaney that the
Directive was not ‘exhaustive as to the scope of possible exceptions’ is not spelt out in the
Judgment and it was not approved as appropriate by the Court.
49. The preamble does refer to the presence of ‘certain limited exclusions’. The only specific
exclusion for present purposes is found in article 10(2). The preamble does refer to other
13
In Delaney Ward LJ had concluded that the only exception in the Directive was knowledge that the driver was uninsured
(ie the article 10(2) exception) was therefore much narrower than the exceptions provided for in the agreement itself [44].
In addition Richards LJ observed that the Directives ‘contain no provision corresponding even broadly with clause 6(1)(e) or
allowing on the face of it for an exclusion of the kind it contains’. Other articles have also previously pointed out the
apparent incompatibility.
20
exclusions in the event that a Member State makes arrangements for the authorised body to
provide compensation where a vehicle is stolen or taken by force (recital 15). These
provisions find their way into the main body of the Directive at article 13(1). There are
therefore other potential exclusions on an authorised body’s liability to pay compensation
under the terms of the Directive.
50. Delaney was heard on 21st December 2011, that is after the decision of the ECJ in Churchill
Insurance Co Ltd v Williams / Evans v Equity Claims Limited [2012] RTR 10 had been
handed down a few weeks earlier. In Churchill (above) the circumstances were different. C
was a passenger in a vehicle which he was insured to drive, but the person who was actually
driving the car was not. The insurer sought to rely upon section 151(8) RTA 1988 and recover
or withhold the damages that would otherwise have been paid to the injured passenger. The
Court of Appeal had previously found that this provision amounted to an automatic
exclusion from insurance, rather than a provision for repayment. The reference to the ECJ
concerned the question of whether this provision was compatible with article 13 of the EC
Directive 2009, in that it ‘excludes from insurance’. The ECJ held that such a provision (as
interpreted by the Court of Appeal) would be precluded by the terms of article 13, as only
one limited derogation to that principle was permitted14.
51. In Churchill the principles in relation to insured vehicles were set out. The Advocate General
made the point that insurers must always compensate victims other than the driver. Any
reduction, must be an exceptional event, but applied on a case by case basis. In extreme
14
Ie article 13(2): knowledge that vehicle was stolen; [36]. Reliance was also placed on the analysis set out in the previous
decision of Candolin v Vahinkovakuutusosakeyhtio Pohjola [2006] RTR 1. There it was held that the only distinction was
between a driver and passengers and the fact one of the passengers was the owner of the vehicle (which was insured) was
irrelevant.
21
cases there may be a reduction to zero, but this must be based upon an appraisal of all the
circumstances of the case. Authorising an unauthorised person to drive would certainly not
be enough to reduce the compensation to zero. A passenger’s contribution may not
authorise excessive reduction of compensation [AG36]. As a result it was held that the status
of the insured as victim must prevail and as a victim he or she must be compensated. This,
we understand, will open the door to partial recovery for such victims, outside the scope of
the Law Reform (Contributory Negligence) Act 1945. The ECJ adopted a similar approach to
that of the Advocate General at [35] – [36]15. One of the arguments put forward by the
insurers was the apparent discrepancy between the position of the insured who permits an
unauthorised person to drive (who would receive compensation) and the case of other
persons entering a vehicle in the knowledge that it was uninsured (where compensation
may be refused under article 10(2)). The Advocate General reasoned that:
a. The situation of an insured vehicle and an uninsured vehicle were not comparable
and different rules may apply which might be regarded as being exceptional;
b. As a matter of interpretation it would be unusual to reduce the protection of the
advantaged party (ie the insured passenger), so as to render it equivalent to the
disadvantaged party.
52. In the Judgment the first of these reasons was emphasised, it was held that the two
situations were ‘neither similar nor comparable’. It was also pointed out that the authorised
body is considered to be a measure of last resort. It was held that,
15
Further in rejecting the argument that ‘authorisation’ within article 13 was referring to the owner rather than the
insurer, a purposive interpretation was used again based upon the objective of protecting victims.
22
‘This explains why, despite the general aim of protecting victims of EU rules relating to civil
liability in respect of the use of motor vehicles, the EU legislature allows Member States to
exclude the payment of compensation by that national body in certain limited cases, and, in
particular, in respect of persons who
voluntarily entered the vehicle which caused the
damage or injury when the body can prove that they knew that neither the driver nor the
vehicle was insured.’ [42]
53. This passage seems to lend some limited support to the ability of the Member State to
exclude compensation in ‘certain limited cases’, which again may be read as being consistent
with a Member State being able to impose exclusions going beyond the article 10(2)
exclusion. However, even if further exceptions were to be permitted, it is difficult to see how
clause 6(1)(e)(iii), as interpreted by the majority in Delaney, could amount to a ‘limited’ or
proportionate exception. Tomlinson LJ explicitly accepted that the exception could apply to
a minor criminal offence and considered that it would be difficult for a Court to make a value
judgment about which crimes would or would not fall within the de minimis exception that
was contemplated by Richards LJ. Whilst the insurer indicated that the MIB would reserve its
use to serious or reprehensible crimes or conspicuous wrongdoing, the agreement itself
seems to lead to a situation where even crimes of driving without due care and attention or
travelling slightly in excess of the speed limit would be capable of bringing into play the
exclusion. It is unclear whether the MIB will in fact adopt the generous approach mentioned.
54. Some support for this approach seems to be provided by the ECJ’s analysis in Farrell v
Whitty at [27] – [29] where the argument was whether a Member State could adopt a more
restricted definition of ‘passenger’ for the purposes of an uninsured vehicle16? This was met
with the observations that:
16ie
excluding those who were travelling in a motor vehicle that was unconverted for use.
23
’27. In addition, Community legislation expressly lays down exceptions to the obligation to
protect victims of accidents. Those exceptions are referred to in the third sub-paragraph of art
1(4) and 2(1) of the Second Directive17.
28. However, the Community Legislature did not provide any derogation with respect to a
separate category of persons who may be the victims of road traffic accident, namely those
who were on board a part of a vehicle which is not designed for their carriage and equipped
for that purpose. That being so, those persons cannot be excluded from the concept of
‘passenger’ and, accordingly, from the insurance cover which the Community legislation
guarantees.
29. Given that, first, the right to derogate from the obligation to protect accident victims is
defined and circumscribed by Community law and, secondly, the realisation of the objectives
referred to above requires a uniform approach to the insurance cover in respect of passengers
at Community level, the Member States are not entitled to introduce additional restrictions to
the level of compulsory insurance cover to be accorded to passengers’.
55. It seems at the very least arguable that clause 6(1)(e)(iii) of the UDA 1999 is incompatible
with the provisions of EC Directive 2009/103/EC.
Indirect Effect / Direct Effect
56. As Delaney shows, the current position is that the Marleasing principle (ie indirect effect or
horizontal direct effect) cannot be relied upon when construing the UDA 1999 (see White
(above)). In order to challenge the compatibility of clause 6(1)(e)(iii), a Claimant would need
the Courts to revisit the applicability of the principle of indirect effect to the UDA 1999 or
17
ie now article 10(2) and 13(1) of the EC Directive 2009 /103/EC
24
seek to rely upon the provisions of the Directive directly against the MIB /article 75 insurer
using the principle of (vertical) direct effect.
57. In order to rely upon the provisions of the Directive directly against the MIB / article 75
insurer, it would need to be shown that they fall within the definition of an emanation of the
State18. Support for such an argument can be found in both the case law and journal articles:
The ECJ in Farrell v Whitty [2007] 2 CMLR 46 provided guidance on this issue and
determined that it was a matter for the national courts to decide as there was insufficient
information about the MIBI [37] – [42]. Birmingham J subsequently held in the same case
that the MIB is an emanation of the State, such that the EC Directive could be relied upon
directly against them.
58. In McCall v (1) Poulton (2) MIB [2008] EWCA Civ 1313 the Court of Appeal thought the
decisions in Farrell v Whitty were of sufficient importance for the Court of Appeal to uphold
an Order referring various questions to the ECJ. It was envisaged that the reference would
also include whether the Marleasing principles of indirect effect applied to the MIB
Agreements and whether the MIB was an emanation of the State19. This case seems to have
settled prior to the hearing of the reference.
59. Clearly these issues give rise to the possibility of a reference being made to the ECJ. In that
regard we note that when the same arguments were raised in McCall (above), Waller LJ
observed that he ‘would find the ECJ’s view as to the appropriate guidance of great
18
In addition the EU Directive must be sufficiently clearly worded; unconditional or non dependent and confer a specific
right for the citizen to base his or her claim on.
19
There is an analysis of the previous case law on what constitutes an emanation of the state at [41] – [51].
25
assistance’. It is hard to forecast whether, from a case management perspective, it will be
necessary or desirable to have the reference before any trial takes place (on assumed facts)
or whether we would have a trial on all issues concerning liability, with a later reference to
the ECJ for a decision on facts as found on the liability trial.
Cause of action against the Secretary of State for the Environment, Transport and the Regions
60. If MIB does show an entitlement to rely upon clause 6(1)(e)(iii) such that it is not bound to
satisfy a Judgment in circumstances where a vehicle is being used in the course of or
furtherance of a crime, there is also the potential for a Francovich claim against the
Secretary of State. Such a claim has its own separate criteria20.
Wider Impact of the EC Directive?
61. In Churchill v Wilkinson (above) the Advocate General made reference to the distinction
(sometimes not easily drawn) between 1) whether civil liability has been incurred and 2) the
actions of the insurer. The Advocate General stated that,
‘It with this second stage alone that EU law is concerned on principle and without prejudice to ensure
the effectiveness of the Directive....I may not, however, fail to observe that the distinction between the
two stages can, in practice, present certain difficulties, and it is conceivable that the court may, in the
future, be called upon to give further clarification on this point.’ [AG16]
20
Intention of the Directive was to confer rights on individuals; The content of those rights must be capable of being
identifiable from the provisions of the Directive; No discretion was allowed on implementation; breach by the Member
State was ‘manifest and grave’; and there is a direct causal link between the breach and the damage: Carswell v SoS and
MIB (above) at [66] – [67];
26
62. The dispute in Churchill clearly centred on the second stage. However, Advocate General
later returned to this topic and explained that:
‘In other words the Directive, while leaving....the national legislature some leeway in laying down the
rules governing civil liability, at the same time requires victims of accidents to be guaranteed, in any
event, if not the same treatment in every Member State (that would have required harmonisation of the
rules on liability too, which the legislature preferred instead to avoid), at least a ‘comparable’ standard
throughout the territory of the union. It is not at all clear whether that principle of the Directive can
have any effect on the latitude afforded [to] the Members States in the sphere of civil liability.’ [AG22]
63. These comments were based upon the analysis of the ECJ in Lavrador v Companhia de
Seguros [2012] RTR 4 at [28] – [30], that a Member State must exercise its powers so as not
to deprive the EU Directives of their effectiveness21. They would do so where compensation
is excluded or limited in a disproportionate manner on general and abstract criteria.
64. We need to consider whether this could affect the proper scope of the ex-turpi causa
Defence itself, even though it is a matter that strictly relates to civil liability? Whilst the
observations of the Advocate General appear to open the door to such arguments, the fact
that the ex-turpi causa defence inevitably involves a consideration of the individual
circumstances may preclude this.
65. We should also note that in Lavrador a national provision which excluded compensation in
an individual case on account of the Claimant’s blameworthiness for the accident was not
held to be contrary to the Directive. Nevertheless, these principles may still be of assistance
21
See also Candolin [24] – [29]; Carvalho v Companhia [2011] RTR 32
27
when it comes to the compatibility of clause 6(1)(e)(iii) of the UDA 1999 with EC Direction
209/103/EC. If, for example, it were to be found that Member States are permitted to make
limited exceptions going beyond the exception explicitly set out in article 10(2) of the
Directive (ie beyond article 10(2)), then even though this is a matter within the remit of the
Member State, the above analysis would suggest that they would still need to exercise those
powers so as not to deprive the EC Directive 2009/103/EC of its effectiveness. It should be
borne in mind that the manner in which the majority in Delaney have construed clause
6(1)(e)(iii) gives rise to an exclusion which is wide ranging, based upon general criteria and
does not take account of the individual circumstances of the case or indeed proportionality.
It must be arguable that such a wide-ranging exception undermines the effectiveness of the
Directive.
Road Traffic Act Offences and clause 6(1)(e)(iii)
66. In a recent case that is still being litigated, the Article 75 insurer relied on clause 6(1)(e)(iii)
where the offence being committed was dangerous driving. For obvious reasons, there was
concern that this would render many passengers without a remedy. We intimated an
intention to bring in SoS who informed us that there was an agreement with MIB that MIB
would not rely on the exclusion for RTA offences!
© CHRISTOPHER MELTON, QC
Byrom Street Chambers, Manchester
June 2012
28