Carswell v Secretary of State for Transport & Anor

An arrangement implementing Directive 84/5/EEC may lawfully use an inquisitorial compensation scheme administered by a private body which both investigates claims and pays awards. Equivalence requires comparison of the relevant procedures as a whole; it does not require identical procedures. Effectiveness is breached only where the procedure makes exercise of European-law rights impossible or excessively difficult.

Under the 2003 Untraced Drivers’ Agreement, the MIB bears the investigation burden. An applicant must provide only information and assistance reasonably required to enable that investigation. Fixed-scale legal costs covering the application, responses to proper requests, challenges and award advice were sufficient. The scheme also provided adequate arbitration and contractual enforcement routes. No breach capable of supporting Francovich damages was established.

The claimant sought damages from the Secretary of State, alleging that the 2003 Agreement between the Government and the Motor Insurers’ Bureau failed properly to implement Article 1(4) of the Second Motor Insurance Directive. Her husband had been killed by an unidentified vehicle. The MIB paid compensation and a contribution towards legal costs, but that contribution did not meet the solicitors’ total bill.

The claimant challenged the scheme on three grounds: lack of independence because the MIB investigated and paid claims; inadequate provision for legal costs, especially investigative work; and lack of an effective means of enforcing the MIB’s investigation obligation. She also complained about the handling of her individual claim.

1. Claim dismissed. The 2003 Agreement adequately implemented Article 1(4) of the Second Directive and did not infringe the principles of equivalence or effectiveness.
2. The inquisitorial character of the scheme was not inherently unlawful. Equivalence permits comparison between materially different systems and does not demand identical procedures. The fact that the MIB was a private commercial body, investigator and payer did not, without more, make it legally unsuitable. Legal advice, arbitration and enforcement provisions supplied safeguards against unfairness or self-interest.
3. Clause 7 placed the entire obligation to investigate on the MIB, at its own cost. Clause 11 required only information and assistance reasonably necessary to enable that investigation. The MIB could not transfer investigative work or its cost to an applicant.
4. The fixed-scale costs provisions covered legal advice concerning the application, proper responses to requests under clause 11, the correctness of MIB decisions and the adequacy of awards. They did not reimburse voluntary additional investigations, such as preparing a full schedule of loss to take the initiative on quantum. Considering the scheme as a whole, its costs arrangements were no less favourable than court proceedings and did not make enforcement of European-law rights excessively difficult.
5. An applicant could challenge MIB decisions or requirements through arbitration under clauses 18 or 28. If the MIB failed to investigate, the applicant could enforce the clause 7 obligation in contract under the Contract (Rights of Third Parties) Act 1999, where no arbitral remedy applied.
6. Even if there had been a breach, the Secretary of State’s procedural discretion was wide and any error would not have been a manifest and grave disregard of that discretion. The individual complaints were largely unsubstantiated and caused no actionable prejudice.

First-instance decision. No prior appellate stage is stated in the judgment.