White (A.P.) v. White and the Motor Insurers Bureau

Under article 1(4) of the Second EEC Motor Insurance Directive 84/5/EEC, knowledge that a vehicle is uninsured includes actual knowledge and deliberate avoidance of confirmation. It excludes mere carelessness or a negligent failure to inquire.

An agreement made specifically to implement that Directive should be construed objectively in its light. Accordingly, an exclusion for a passenger who “knew or ought to have known” of the absence of insurance is confined to actual knowledge and wilful blindness. The interpretative obligation applicable to domestic law under European Community law does not, as such, extend to contracts, although the Directive’s purpose may provide compelling context under ordinary contractual principles.

Brian White suffered serious injuries while travelling as a passenger in an uninsured car negligently driven by his brother. The trial judge found that he did not know the driver was uninsured, but that he ought to have known because he had failed to make inquiries.

The High Court subsequently held that article 1(4) of the Second EEC Motor Insurance Directive 84/5/EEC was directly enforceable against the Motor Insurers Bureau. The Court of Appeal, in Mighell v Reading [1999] 1 CMLR 1251, reversed that conclusion. It held that the Bureau’s agreement created a wider exclusion than the Directive and that the Directive was not directly enforceable.

On the appeal in White (A.P.) v. White and the Motor Insurers Bureau, the principal issue was whether “knew or ought to have known” in the agreement included a merely negligent failure to discover that the vehicle was uninsured.

1. Appeal allowed by a majority of four to one. Lord Nicholls of Birkenhead delivered the leading speech. Lord Mackay of Clashfern and Lord Hope of Craighead agreed with his reasons. Lord Cooke of Thorndon also agreed and gave additional reasons. Lord Scott of Foscote dissented.

2. Per Lord Nicholls, article 1(4) of the Second EEC Motor Insurance Directive 84/5/EEC created a strictly construed exception to the general protection of accident victims. Proportionality required a high degree of personal fault before a passenger could be deprived of compensation. “Knew” included actual knowledge and a state of wilful blindness in which the passenger suspected that insurance might be absent but deliberately avoided inquiries so that the suspicion would not be confirmed. It did not include carelessness or negligence judged by the standard of an ordinarily prudent passenger. That construction was acte clair, so no reference to the Court of Justice was required.

3. Per Lord Nicholls, the purpose of the 1988 MIB agreement supplied compelling context under ordinary principles of contractual interpretation. The agreement was specifically intended to implement the Directive. Its phrase “knew or ought to have known” was therefore intended to be co-extensive with “knew” in article 1(4). “Ought to have known” included information which an honest person would have obtained but which a passenger deliberately avoided. It did not include a merely negligent failure to inquire.

4. The interpretative obligation explained in Marleasing SA v La Comercial Internacional de Alimentación SA Case C-106/89 applied to national law made by state authorities. Per Lord Nicholls, it could not be extended, as such, to contracts so as to impose obligations which ordinary contractual construction did not impose, even where one party was a government emanation. Conventional contractual interpretation nevertheless produced a Directive-compatible result in this case.

5. The Bureau bore the burden of establishing the facts necessary to invoke the exclusion. The trial judge’s finding amounted only to carelessness. It did not establish actual knowledge or deliberate avoidance. The claim was therefore not excluded by clause 6(1)(e). This conclusion disposed of the appeal, and the majority expressed no opinion on whether the Directive was directly enforceable against the Bureau.

6. Lord Cooke considered that compatibility with European Community law could also operate as an interpretative aid for a government contract manifestly intended to implement a Directive. Lord Scott dissented. He considered that “ought to have known” unambiguously included negligence and that the agreement therefore excluded the claim. He also considered that the Directive lacked direct effect against the Bureau because it did not identify the body liable to provide compensation.

1. House of Lords: By a majority of four to one, allowed the passenger’s appeal and held that his claim was not excluded by the 1988 MIB agreement.
2. Court of Appeal: In Mighell v Reading [1999] 1 CMLR 1251, allowed the Bureau’s appeal. It upheld the finding that the passenger lacked actual knowledge, but held that the agreement’s exclusion was wider than article 1(4) of the Directive and that the Directive was not directly enforceable.
3. High Court: Judge Potter initially found that the passenger did not know the vehicle was uninsured but ought to have known. In a later judgment, he held that article 1(4) of the Directive was directly enforceable against the Bureau and found for the passenger.