House of Lords portcullis
House of Lords
Session 2000-01
Publications on the Internet
Judgments - White (A.P.) v. White and The Motor Insurers Bureau


Lord Nicholls of Birkenhead Lord Mackay of Clashfern Lord Cooke of Thorndon Lord Hope of Craighead Lord Scott of Foscote








ON 1 MARCH 2001

[2001] UKHL 9


My Lords,

    1. Shortly after midnight, in the early moments of 5 June 1993, Brian White was going to a late-night party. He was a front seat passenger in a Ford Capri. The car was being driven by his brother Shane along a country road a few miles outside Hereford. The car crashed and rolled over violently. Brian was very seriously injured. The accident happened at a quiet time of night, and no other vehicle was involved. Shane's driving was at fault. He lost control of the car coming out of a bend through not driving safely and properly.

    2. Shane was at fault in another respect: neither he nor the car was insured. Indeed, he had not passed a driving test and, moreover, he was disqualified from driving. At the time of the accident Brian did not know his brother was unlicensed and, hence, uninsured, but he had known in the past that his brother was driving without a licence. The trial judge, Judge Potter sitting as a judge of the High Court, said that while it would be going too far to say that Brian knew Shane was uninsured, it 'stands out a mile' that he ought to have known. He ought to have made sure one way or the other, and he made no effort to do so.

    3. These simple facts have given rise to this appeal to the House.

Compulsory insurance

    4. Compulsory insurance in respect of the driving of motor vehicles was first introduced in 1930. Before then, most motorists chose to insure themselves against third party risks. But there were cases of serious hardship where the person inflicting the injury was devoid of financial means and, being uninsured, was not able to pay the damages for which he was liable. It was primarily to meet these cases of hardship that the Road Traffic Act 1930 was enacted.

    5. The 1930 Act gave no protection to an innocent road user where the motorist failed to comply with his statutory obligation to insure. In 1937 a committee under the chairmanship of Sir Felix Cassel KC recommended that, in cases of failure to insure as required, an injured third party who had obtained a judgment against the person responsible should be able to recover from a central fund: Report of the Committee on Compulsory Insurance (Cmd 5528). The fund should be set up and financed by insurers licensed to transact compulsory motor vehicle insurance business.

    6. At the end of the war the insurers set up the Motor Insurers' Bureau, which for brevity I will refer to as 'MIB'. MIB is a company incorporated under the Companies Acts. Its primary object is to satisfy judgments in respect of any liability required to be covered by contracts of insurance under the Road Traffic Acts. Its members comprise all insurers which are for the time being transacting compulsory motor vehicle insurance in this country. MIB is funded by levies payable by its members. The amount of the levy is based on the premium income of the members. Ultimately, therefore, the funds of MIB come from the pockets of law abiding motorists who have complied with their statutory insurance obligations.

    7. The obligations of MIB are not to be found in an Act of Parliament. Instead, they are the subject of agreement with the appropriate minister. The first agreement was made on 17 June 1946, between the Minister of Transport and MIB. From time to time this has been brought up to date with supplemental agreements. The latest supplemental agreement is dated 13 August 1999, made between the Secretary of State for the Environment, Transport and the Regions and MIB. The version of the agreement in force at the time of Brian White's accident was dated 21 December 1988. I shall refer to this as 'the 1988 MIB agreement' or simply 'the MIB agreement'.

    8. In these proceedings Brian White is looking to MIB to satisfy his claim for damages against his brother Shane. The amounts involved may be very substantial, and there is no question of Shane being able to meet the claim. Before your Lordships' House Brian White's claim was presented primarily as a claim based on the terms of the MIB agreement. I shall consider this claim first. Under the MIB agreement the basic obligation undertaken by MIB relates to any judgment in respect of a liability which is the subject of a compulsory insurance obligation under the Road Traffic Acts. If such a judgment is obtained against any person in any court in this country, and the judgment is not satisfied within seven days, MIB will satisfy the judgment. MIB will do so, regardless of whether the person against whom judgment was obtained was in fact covered by any contract of insurance.

    9. MIB's basic obligation is subject to some exceptions. The success or failure of Brian White's claim, so far as it is based on the terms of the MIB agreement, depends on the proper interpretation of one of these exceptions, set out in clause 6(1)(e). MIB's obligations do not apply in a case where the injured passenger 'knew or ought to have known' that the vehicle had been stolen or was uninsured. Clause 6(1) reads:

    '(1) MIB shall not incur any liability under Clause 2 of this Agreement in a case where -

      (e) at the time of the use which gave rise to the liability the person suffering death or bodily injury .. was allowing himself to be carried in or upon the vehicle and .. before the commencement of his journey in the vehicle .. he -

        (i) knew or ought to have known that the vehicle had been stolen or unlawfully taken,


        (ii) knew or ought to have known that the vehicle was being used without there being in force in relation to its use such a contract of insurance as would comply with Part VI of the Road Traffic Act 1972.'

The crucial phrase for the purposes of this case is 'knew or ought to have known'.

The Motor Insurance Directive

    10. When interpreting any document it is always important to identify, if possible, the purpose the provision was intended to achieve. This makes it necessary, in the present case, to go to the Second EEC Motor Insurance Directive 84/5/EEC, of 30 December 1983, on the approximation of the laws of the member states relating to insurance against civil liability in respect of the use of motor vehicles. It is necessary to do so because the purpose of the 1988 MIB agreement was to give effect to the terms of this Directive.

    11. The main purpose of the Directive was to improve guarantees of compensation for victims of motor accidents by ensuring a minimum level of protection for them throughout the Community. One aspect of this was the need, as stated in the preamble, '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'. Member states, however, were to have the opportunity of applying certain 'limited exclusions'.


    12. Article 1 of the Directive requires each member state to have compulsory motor insurance covering third party liability for both personal injury and damage to property. It sets minimum standards of protection up to which compensation must be available for the victims of accidents throughout the Community. Article 1(4) makes provision regarding unidentified and uninsured vehicles:

    'Each Member State shall set up or authorize a body with the task of providing compensation, at least up 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 paragraph 1 has not been satisfied.'

The permitted exception is then stated in these terms:

    'However, Member States may exclude the payment of compensation by that body in respect of persons who voluntarily entered the vehicle which caused the damage or injury when the body can prove that they knew it was uninsured.'

Thus, member states may exclude compensation for damage or injury caused by the driver of an uninsured vehicle if the person who suffered damage or injury 'voluntarily' entered the vehicle and 'knew' it was uninsured. It should be noted that, unlike the corresponding exception in the MIB agreement ('knew or ought to have known'), the exception permitted by the Directive uses the word 'knew' without any adornment. It is this difference in language which gives rise to the issues arising on this appeal.

    13. What is meant by 'knew' in the context of the Directive? The interpretation of the Directive is a matter governed by Community law. If the meaning of 'knew' in article 1 is doubtful, and it is necessary to resolve the doubt in order to decide this appeal, then a reference to the European Court of Justice must be made. Rightly so, because it is important that the provisions of this Directive are applied uniformly throughout the Community. So I turn to consider what 'knew' means in the Directive and whether there is any relevant ambiguity.

    14. The context is an exception to a general rule. The Court of Justice has stressed repeatedly that exceptions are to be construed strictly. Here, a strict and narrow interpretation of what constitutes knowledge for the purpose of article 1 is reinforced by the subject matter. The subject matter is compensation for damage to property or personal injuries caused by vehicles. The general rule is that victims of accidents should have the benefit of protection up to specified minimum amounts, whether or not the vehicle which caused the damage was insured. The exception, therefore, permits a member state, contrary to the general rule, to make no provision for compensation for a person who has suffered personal injury or damage to property. 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. A narrow approach is further supported by the other prescribed limitation on the permissible ambit of any exclusion: the person claiming compensation must have entered the vehicle voluntarily. The need for the passenger to have entered the vehicle voluntarily serves to confirm that the exception is aimed at persons who were consciously colluding in the use of an uninsured vehicle. And it can be noted that the Directive emphasises the exceptional nature of the exclusion of compensation by placing the burden of proving knowledge on the party who seeks to invoke the exception, namely, the institution responsible for paying compensation.

    15. This, then, is the context in which 'knew' is used in this Directive. In this context, knowledge by a passenger that a driver is uninsured means primarily possession of information by the passenger from which the passenger drew the conclusion that the driver was uninsured. Most obviously and simply, this occurs where the driver told the passenger that he had no insurance cover. Clearly, information from which a passenger drew the conclusion that the driver was uninsured may be obtained in many other ways. Another instance would be when the passenger was aware, from his family or other connections with the driver, that the driver had not passed his driving test ('if he'd taken the test, I would have known'). Knowledge of this character is often labelled actual knowledge, thereby distinguishing other types of case where a person, although lacking actual knowledge, is nevertheless treated by the law as having knowledge of the relevant information.

    16. There is one category of case which is so close to actual knowledge that the law generally treats a person as having knowledge. It is the type of case where, as applied to the present context, a passenger had information from which he drew the conclusion that the driver might well not be insured but deliberately refrained from asking questions lest his suspicions should be confirmed. He wanted not to know ('I will not ask, because I would rather not know'). The law generally treats this state of mind as having the like consequences as would follow if the person, in my example the passenger, had acted honestly rather than disingenuously. He is treated as though he had received the information which he deliberately sought to avoid. In the context of the Directive that makes good sense. Such a passenger as much colludes in the use of an uninsured vehicle as a passenger who actually knows that the vehicle is uninsured. The principle of equal treatment requires that these two persons shall be treated alike. The Directive is to be construed accordingly.

    17. Thus far I see no difficulty. I consider that it is acte clair that these two categories of case fall within the scope of the exception permitted by the Directive. Conversely, I am in no doubt that 'knew' in the Directive does not include what can be described broadly as carelessness or 'negligence'. Typically this would cover the case where a passenger gave no thought to the question of insurance, even though an ordinary prudent passenger, in his position and with his knowledge, would have made enquiries. He 'ought' to have made enquiries, judged by the standard of the ordinary prudent passenger. A passenger who was careless in this way cannot be treated as though he knew of the absence of insurance. As Lord Denning MR said in Compania Maritima San Basilio SA v Oceanus Mutual Underwriting Association (Bermuda) Ltd [1977] QB 49, 68, negligence in not knowing the truth is not equivalent to knowledge of it. A passenger who was careless in not knowing did not collude in the use of an uninsured vehicle, and he is not to be treated as though he did. To decide otherwise would be to give a wide, rather than a narrow, interpretation to the exception permitted by the Directive. This also seems to me to be acte clair.

    18. I pause to note that, on this basis, there is no occasion to refer a question of interpretation to the Court of Justice in the present case. The circumstances of Brian White's accident come within this last category of case. The judge, having heard oral evidence from Brian White, rejected the idea that on the night in question any one of those involved 'so much as bothered his head about such a matter as insurance'. In the past both brothers had been accustomed to drive while uninsured. In 1990, three years before the accident, they agreed that it would be better to put themselves in a position where they could drive cars legally. The judge observed that much can happen in three years. So it was going too far to say that, because of what had happened in the past, Brian knew Shane was still driving without insurance in 1993. But Brian ought not to have got into a car driven by his brother without making sure his brother 'had carried out the good resolution and really had made himself a legal driver'.

    19. This finding by the judge is no more than a finding of carelessness, assessed by the standard of the ordinary prudent passenger having the knowledge possessed by this particular passenger. Thus, this accident falls outside the circumstances in which the Directive permits a member state to exclude payment of compensation.

The interpretation of the MIB agreement

    20. Against this background I turn to the interpretation of the phrase 'knew or ought to have known' in clause 6(1)(e) of the 1988 MIB agreement. This question of interpretation is governed by English law. 'Ought' imports a standard by reference to which conduct is measured. Such is the prevalence of negligence in English law that the phrase immediately prompts the thought that the standard imported by 'ought' is the standard of the reasonable person. In cases of professional negligence the standard is that of the reasonably competent and careful professional in the relevant discipline. But this is not necessarily the standard. The meaning of the phrase depends upon its context. Here the context is the Directive. The MIB agreement was entered into with the specific intention of giving effect to the Directive.

    21. Had the MIB agreement been embodied in legislation, whether primary or secondary, the English court would have been under an obligation to interpret its provisions, as far as possible, in a way which gives effect to the Directive: see Marleasing SA v La Comercial Internacional de Alimentación SA (Case C-106/89) [1990] ECR I-I4135. As Lord Oliver of Aylmerton observed in Litster v Forth Dry Dock & Engineering Co Ltd [1990] 1 AC 546, 559, a purposive construction will be applied to legislation even though, perhaps, it may involve some departure from the strict and literal application of the words which the legislature has elected to use.

    22. The present case does not involve legislation. Despite the contrary argument submitted to your Lordships, I do not see how the Marleasing principle, as such, can apply to the interpretation of the MIB agreement. Article 5 of the EC Treaty (OJ 1992 C224, p 6) obliges member states to take all appropriate measures to ensure fulfilment of their obligations arising out of the Treaty. The rationale of Marleasing is that the duty of member states under article 5 is binding on all the authorities of member states, including the courts. The courts must apply national law accordingly, whenever the law was enacted or made. But it is one matter to apply this principle to national law. Whatever form it may take, law is made by authorities of the state. It is quite another matter to apply this principle to contracts made between citizens. The Marleasing principle cannot be stretched to the length of requiring contracts to be interpreted in a manner that would impose on one or other of the parties obligations which, Marleasing apart, the contract did not impose. This is so even in the case of a contract where one of the parties is an emanation of government, here, the Secretary of State. The citizen's obligations are those to which he agreed, as construed in accordance with normal principles of interpretation.

    23. So the Marleasing principle must be put on one side. Even so, I consider that the application of conventional principles of interpretation of documents arrives at the same result. The purpose for which the MIB agreement was made furnishes a compelling context. The exception spelled out in clause 6(1)(e)(ii) of the agreement was intended by the parties to carry through the provisions of the Directive. The phrase 'knew or ought to have known' in the agreement was intended to be co-extensive with the exception permitted by article 1 of the Directive. It was intended to bear the same meaning as 'knew' in the Directive. It should be construed accordingly. It is to be interpreted restrictively. 'Ought to have known' is apt to include knowledge which an honest person who enters the vehicle voluntarily would have. It includes the case of a passenger who deliberately refrains from asking questions. It is not apt to include mere carelessness or negligence. A mere failure to act with reasonable prudence is not enough. Hence it does not embrace the present case. Brian White's claim is not excepted from the MIB agreement. On this I respecfully differ from the view of the Court of Appeal.

    24. Precisely where the boundary is drawn between the states of mind within the scope of clause 6(1)(e) and those outside it is not a matter which arises on this appeal. This question, should it ever arise, is better pursued on an occasion when the facts make it necessary to obtain guidance from the Court of Justice on the precise scope of the exemption permitted by article 1(4) of the Directive. As already noted, a reference for this purpose is not a course open to the House on this appeal.

    25. Mr O'Brien QC, appearing for MIB, objected to the appellant being permitted to advance a case based on this interpretation of the MIB agreement. This interpretation was not advanced at the trial. At the trial the case put forward on behalf of Brian White was that the exemption in the agreement was wider than that permitted by the Directive. He should not now be permitted to put forward an interpretation of the agreement which, had it been advanced at the trial, might have led to different findings of fact.

    26. I am unable to accept this objection. It was for MIB to establish the facts upon which MIB sought to rely to bring the case within clause 6(1)(e). In the course of his submissions to your Lordships, Mr O'Brien expressly disclaimed any wish to have the matter remitted so that the judge's findings of fact could be clarified or amplified on this point.

    27. This conclusion suffices to decide this appeal. Mr Tattersall QC presented an alternative argument, should he fail on the question of interpretation of the MIB agreement. He submitted that the Directive gives rights which are directly enforceable against MIB as an emanation of the state. Since Brian White's claim against MIB based on the MIB agreement itself has succeeded, it is not necessary to pursue, or express any opinion on, this alternative formulation of Brian White's case.


My Lords,

    28. I have had the advantage of reading in draft the speech prepared by my noble and learned friend Lord Nicholls of Birkenhead. For the reasons he gives, I agree this appeal should be allowed.


My Lords,

    29. I have had the advantage of reading in draft the speeches prepared by the other members of the Appellate Committee who sat in this case. For the reasons given by my noble and learned friend Lord Nicholls of Birkenhead, I would allow this appeal.

    30. The reasons to the contrary given by my noble and learned friend Lord Scott of Foscote command respect and I acknowledge their force. But I do not see them as so forceful as to override the desirability that, where it is possible without distortion, legal instruments entered into by the Government of the United Kingdom should be construed compatibly with relevant European Community law.

    31 It is an established rule that, even where a Community Directive does not have direct effect, it is for a United Kingdom court to construe domestic legislation in any field covered by the Directive so as to accord with the interpretation of the Directive as laid down by the European Court of Justice, if that can be done without distorting the meaning of the domestic legislation: Webb v Emo Air Cargo (UK) Ltd [1993] 1 WLR 49, 59, per Lord Keith of Kinkel, citing Duke v GEC Reliance Systems Ltd [1988] AC 618, 639-640, per Lord Templeman. Similarly the Court of Justice has held that when applying provisions of national law the national court must interpret them as far as possible in the light of the wording and purpose of any relevant Directive, even if it does not have direct effect: Faccini Dori v Recreb Srl (Case C-91/92) [1994] ECR I-3325, 3357, para 26. A helpful discussion and further authorities may be found in Bennion on Statutory Interpretation, 3rd ed (1997), pp 1004-1010.

    32. In relation to enactments the established rule is linked with section 2(4) of the European Communities Act 1972. It may be, however, that the rule is properly to be given wider scope extending to contracts entered into by the United Kingdom Government which are manifestly intended to give effect to a European Directive. Whether or not that is so, I think that a relevant Directive must be at least an aid to the interpretation of such a contract. This can conveniently be called the principle of European compatibility.

    33. In a general sense the MIB agreement of 21 December 1988 was clearly intended by the Minister, to the knowledge of the Bureau, to give effect to the Second Council Directive 84/5/EEC of 30 December 1983. It is possible, though, as Lord Scott suggests, that one or both of the parties intended "ought to have known" to include merely negligent ignorance and did so either misapprehending the meaning of "knew" in article 1(4) or without properly considering the point.

    34. But what was in fact in the minds of the parties is speculative, nor is an inquiry into it the usual approach. As normally with questions of contractual interpretation at common law, the approach here should be, in my view, objective. Reading clause 6(1)(e)(ii) of the agreement in the light of the background and the principle of European compatibility, can "knew or ought to have known" fairly be interpreted so as not to extend beyond actual knowledge or a state of mind, such as wilful blindness, so close thereto as not to be justly and realistically distinguished? I think that the answer is "yes". In this particular context a negative answer is not compelled by the undoubted fact that, in ordinary cases where Community law has no bearing, an interpretation including mere negligence is commonly applied.

    35. The principle of European compatibility may have little or no weight in interpreting a contract between private parties only, especially if there is no ground for attributing to them a common intention to contract with reference to European law. The MIB agreement is not in that category. Indeed, if it were, Brian White might not have been able to sue on it successfully: see Halsbury's Laws of England, 4th ed reissue, vol 9(1) (1998), para 764, n 16 and the authorities there collected. Rather it falls into the category described in Wade & Forsyth, Administrative Law, 8th ed (2000) p 777 "Contracts are widely used by public authorities as instruments both of policy and of administration". That work lists the MIB agreement among the specific examples given. Lord Denning MR said that the MIB agreement was "as important as any statute": Hardy v Motor Insurers' Bureau [1964] 2 QB 745, 757. The increasing employment by government at all levels of contractual techniques to achieve regulatory aims is a development well recognised in the courts and by legal writers: see too, for instance, de Smith, Woolf & Jowell, Judicial Review of Administrative Action, 5th ed (1995), para 6-036. Inevitably, it seems to me, this development will have some influence on the interpretation of relevant contracts. The present case may be placed in that setting also.

    36. In short, contractual interpretation is governed generally by the precepts of Lord Wilberforce and Lord Blackburn: see Prenn v Simmonds [1971] 1 WLR 1381, 1383-1384 citing River Wear Commissioners v Adamson (1877) 2 App Cas 743, 763. Consideration is given to the matrix of facts; the circumstances with reference to which the words were used; and the object, appearing from those circumstances, which the persons using them had in view. When to those considerations there is added as an aid to interpretation the principle of compatibility with European Community law, I think that there is full justification for holding "ought to have known" in the MIB agreement to be limited to a state of mind tantamount to actual knowledge.


My Lords,

    37 I have had the advantage of reading in draft the speech of my noble and learned friend Lord Nicholls of Birkenhead. I agree with it, and for the reasons which he has given I too would allow the appeal.


My Lords,

    38. In 1993 the appellant, Brian White, was a passenger in a car being driven by his brother, Shane White. It is not entirely clear to whom the car belonged but it probably belonged to Shane. The car was uninsured. Shane White was uninsured. An accident was caused by the negligence of Shane White. Brian White suffered very serious injuries. He seeks compensation for his injuries from the Motor Insurers Bureau (the "MIB").