Cameron v Liverpool Victoria Insurance Co Ltd: Suing Unnamed Defendants & the Approach to Alternative Service

Benjamin Williams QC and Ben Smiley |

The Supreme Court has now handed down judgment in Cameron v Liverpool Victoria Insurance Co Ltd.  The case concerns the issue as to whether/when it is permissible to issue proceedings against an unnamed defendant.  The Supreme Court’s decision marks a reversal in the recent trend of courts permitting that course of action.  It will now only be possible in these circumstances where the service of the claim form on the defendant can be effected or properly dispensed with.  The decision also appears to mark a stricter approach to alternative (previously known as substituted) service on the insurers of missing defendants, which may increase the practical difficulties in issuing proceedings in such cases.

Background

The case arose from a hit and run car accident in May 2013.  The Claimant was injured when a Nissan Micra negligently crashed into her.  The driver of the Micra drove off, illegally failing to stop or report the accident to the police.

The claim was originally issued against the registered keeper of the Micra.  However, it subsequently transpired that the keeper of the vehicle had not been the driver.  Further, neither the (unknown) driver of the Micra, nor the keeper of it, was insured.  The vehicle had been insured with Liverpool Victoria, but the insurer’s belief was that the person to whom the insurance had been issued was fictitious.

This situation potentially left the Claimant with two sources of remedy.  If she was able to obtain a judgment in proceedings against the driver of the vehicle, then pursuant to s.151(5) of the Road Traffic Act 1988 (the “Act”), the insurer of the vehicle would be required to satisfy that judgment.  Alternatively, she could make a claim under the Untraced Drivers Agreement (the “UTDA”) to the Motor Insurers’ Bureau (the “MIB”).

The UTDA has a number of features which render it unattractive for claimants including: (a) it allows only very limited sums to be recovered in respect of legal costs; (b) it has a jurisdictional requirement that a collision is reported to the police within tight timeframes; (c) it will not provide a remedy where the claimant has received benefits from insurance or other third parties; (d) there is a cap (of £1m) and an excess (of £300) in respect of property damage claims; and (e) the MIB’s inquisitorial process is widely felt to lack the transparency and independence of court proceedings.

Accordingly, the Claimant sought to continue her claim against the driver, despite being unable to name him.  She applied to amend her claim to bring it against “the person unknown driving vehicle registration number Y598 SPS who collided with vehicle registration number KG03 ZJZ on 26 May 2013.”  Reliance was placed on Bloomsbury Publishing Group plc v News Group Newspapers Ltd [2003] 1 WLR 1633, and the cases which followed it, as establishing the principle that proceedings can be issued against unnamed parties where it is necessary and efficacious to obtain justice.

That application failed at first instance, and on first appeal.  However, the Court of Appeal decided by a majority (Gloster LJ and Lloyd Jones LJ, with Sir Ross Cranston dissenting) that the Claimant should be permitted to bring a claim against the unnamed driver.  The Court found that: (a) the policy of the Part VI of the Act was that an insurer of a vehicle should meet liabilities to victims of accidents irrespective of whether the policy covers the driver; (b) consistent with that policy, an insurer’s liability should not depend on whether the claimant could identify the driver by name; and (c) a claimant might well consider a claim under the UTDA as an inferior remedy to a court action for damages.

The Supreme Court’s decision

The Supreme Court unanimously reversed the decision of the Court of Appeal.  The sole judgment was given by Lord Sumption, in one of his final decisions before retirement.

Suing unnamed defendants and persons unknown

He noted that the possibility of actions against unnamed defendants was opened up by the decision in Bloomsbury (a case where the publishers of Harry Potter obtained an injunction against unknown people who had stolen copies of the book and were offering it to newspapers).  Since that decision, the jurisdiction had been regularly invoked, with a significant increase in its use in recent times.  However, this was the first occasion on which the basis and extent of the jurisdiction to bring a claim against an unnamed defendant had been considered by the Supreme Court or the House of Lords.

Lord Sumption identified the critical question as being “what, as a matter of law, is the basis of the court’s jurisdiction over parties, and in what (if any) circumstances can jurisdiction can be exercised on that basis against persons who cannot be named.”  He then drew a distinction between two types of cases where defendants cannot be named: (a) where the defendants are identifiable but their names are unknown – such as squatters who are identifiable by their location; and (b) where defendants are anonymous and cannot be identified – such as hit and run drivers whose locations are unknown.

The importance of service

It had been conceded in the Court of Appeal that alternative service could be effected on the insurers.  However, the Supreme Court allowed that concession to be withdrawn, and ultimately the decision turned on that point.  While stating that the appeal was “not directly concerned with service”, Lord Sumption held that “the legitimacy of issuing or amending a claim form so as to sue an unnamed defendant can properly be tested by asking whether it is conceptually (not just practically) possible to serve it”.  He then explained the importance of service for the in personam jurisdiction of the Court, and noted that service would be possible on the first category of anonymous defendants which he had identified, or that at least the proceedings would come to their attention by the enforcement of the relevant injunction.

By contrast, in the current category of case, service was impossible as it was not known who the defendant was and there was no relief such as an injunction which would bring the proceedings to his or her attention.  This was, in Lord Sumption’s view, “a more serious problem than the courts, in their more recent decisions, have recognised.  Justice in legal proceedings must be available to both sides. It is a fundamental principle of justice that a person cannot be made subject to the jurisdiction of the court without having such notice of the proceedings as will enable him to be heard.”  He drew on authorities regarding enforcement of foreign judgments for this principle.

Alternative service (or substituted service) must come to the attention of the defendant

Lord Sumption then provided a useful historical analysis of certain pre-CPR authorities in respect of alternative service.  He re-affirmed the decision of Porter v Freudenberg [1915] 1 KB 857, in which it was stated to be a requirement for what was then called substituted service to be permitted that “the plaintiff is in fact unable to effect personal service and that the writ is likely to reach the defendant or to come to his knowledge if the method of substituted service which is asked for by the plaintiff is adopted.”  He further resolved the apparent conflict between subsequent Court of Appeal authorities in the context of alternative service on insurers, including Abbey National Plc v Frost (Solicitors’ Indemnity Fund Ltd intervening) [1999] 1 WLR 1080, where a claim was brought against a solicitor who was insured by the Solicitors Indemnity Fund.  The solicitor could not be found and the Court of Appeal had permitted substituted service on the Fund in circumstances where there was no likelihood of the proceedings coming to the notice of the insured.

Lord Sumption held that “subject to any statutory provision to the contrary, it is an essential requirement for any form of alternative service that the mode of service should be such as can reasonably be expected to bring the proceedings to the attention of the defendant”.  As such, the Court of Appeal in Abbey National had been wrong if it had intended to state as a general proposition that service need not be such as to bring the proceedings to the defendant’s attention.

But Lord Sumption noted an alternative reading of the decision in that case, which was that such service could be permitted (even absent the defendant’s likely notification) in the context of schemes such as the solicitors’ compulsory insurance scheme, where it was possible to discern a statutory policy that the public should be protected against defaulting solicitors.  He recognised that the reasoning would apply equally to the compulsory insurance of motorists under the Act, as was held by the Court of Appeal in the current case.  He further stated that he did not rule out the possibility that such an exception might be required by other statutory schemes.

However, there were three reasons why Lord Sumption held that the exception should not extend to the current statutory scheme: (a) firstly, the Act limits the liability of the insurer to satisfying a judgment, and the availability of compensation via the UTDA meant that there was no need to stretch that liability; (b) secondly, the driver himself has a right to be heard where he was not the policyholder and there was no arguable contractual authority conferred on the insurer to accept service on a non-policyholder’s behalf; and (c) thirdly, alternative service on the insurer would not reach the driver of the Micra and so should not have been ordered unless it was appropriate to dispense with service altogether.

These points may not find favour with the claimant community.  The first point ignores the obvious drawbacks of the UTDA scheme (which had been accepted by the Court of Appeal).  The second point ignores the reality of insurer-run defences in a range of contexts, when insureds play no real part whatsoever.  The third point was also true of Abbey National, and would also be true of a case under s 151 of the Act where a defendant could be identified but not located (e.g. because he had moved location post-accident) so as to enable conventional forms of service.

The possibility of dispensing with service

Lord Sumption left open the possibility of the Court ordering that service be dispensed with under CPR r.6.16 in a case such as this.  He accepted that such an order could be made if the defendant had “deliberately evaded service and cannot be reached by way of alternative service”, including “cases where the defendant is unidentifiable but has concealed his identity in order to evade service”.  But it would be necessary to show that the defendant “knows that proceedings have been or are likely to be brought against him”.

The judgment is unclear as to how this would work in practice.  Lord Sumption indicated that it might be inferable in the case of hit and run drivers due to the statutory requirements to stop, provide details and/or report the incident later.  “But,” held Lord Sumption, “the mere fact of breach of this duty will not necessarily be enough, for the driver may be unaware of his duty or of the personal injury or damage or of his potential liability.”  It is unclear what further evidence a potential hit and run victim might realistically have in order to support the inference, beyond the fact that the driver had absconded illegally – which would seemingly not always be sufficient.  The Court finally dealt in short order with a key ground raised in support of the Claimant’s case on appeal: namely that if proceedings were not permitted against an unnamed driver, then the result was inconsistent with the Sixth Motor Insurance Directive, which requires (at Article 18) a direct right of action against the relevant insurer.  Lord Sumption dismissed this, on the basis that the Claimant was not seeing a direct right against the insurer for the underlying wrong; rather she was seeking a declaration following a judgment against the driver; and the Directive did not require the claim against the unnamed driver to be permitted “without identifying him or observing rules of court designed to ensure that he is aware of the proceedings”.

The impact of the Sixth Motor Insurance Directive

The Court finally dealt in short order with a key ground raised in support of the Claimant’s case on appeal: namely that if proceedings were not permitted against an unnamed driver, then the result was inconsistent with the Sixth Motor Insurance Directive, which requires (at Article 18) a direct right of action against the relevant insurer.  Lord Sumption dismissed this, on the basis that the Claimant was not seeing a direct right against the insurer for the underlying wrong; rather she was seeking a declaration following a judgment against the driver; and the Directive did not require the claim against the unnamed driver to be permitted “without identifying him or observing rules of court designed to ensure that he is aware of the proceedings”.

Commentary

Although the judgment dealt with the relatively narrow ambit of claims by hit and run victims who do not wish to use the UTDA procedure, it is of significantly wider impact.

The Court has made a determined effort to push back the tide of claims against unnamed defendants, relying on what is described as a fundamental principle of English law.  Unless the defendant can be served or the proceedings will necessarily come to his attention (by e.g. the enforcement of an injunction) then such claims will no longer be permitted.

More importantly perhaps, the decision signals the death knell to the practice of serving proceedings on an absent defendant’s insurer – which was so commonplace in motor claims that the service point was conceded below.  In the hit and run context, this will drive more claims into the UTDA.  But it may also have wider repercussions in respect of other claims against defendants (whether named or not) who cannot be located.  For the reasons given above, it is not easy to see why the principle in Abbey National (even on the narrower alternative reading identified by Lord Sumption) should not have applied to the Claimant’s case; and so it may be difficult extending that principle to other cases.

Finally, although Lord Sumption did raise the prospect of dispensing with service in an appropriate case, there is little guidance as to how the very high threshold for this might be met by a claimant.  If it is not enough in itself that a hit and run driver has flouted the legal requirements to stop and/or report details of an accident, such that there is no prospect of identifying him, then when else would it be said that a defendant had “deliberately evaded service and cannot be reached by way of alternative service”?  In this respect, the decision appears to create much uncertainty.  Would dispensing with service be permissible after a heavy collision, or a collision with a pedestrian, in which it could be said to be obvious that the driver should have stopped, but not be permissible in the event of a glancing collision between vehicles?  It therefore seems certain that there is more litigation on these issues to come.

 

© Benjamin Williams QC and Ben Smiley 

4 New Square

20 February 2019

No legal responsibility is accepted for the contents of this article and parties should take their own legal advice specific to the circumstances of their own case.