Smith v Meade

• Jurisdiction: Ireland
• Judge: Mr. Justice Gerard Hogan
• Judgment Date: 16 December 2016
• Neutral Citation: [2016] IECA 389
• Date: 16 December 2016
• Court: Court of Appeal (Ireland)
• Docket Number: Neutral Citation Number: [2016] IECA 389 Record No. 2014/176 [Article 64 transfer]

[2016] IECA 389

THE COURT OF APPEAL

Hogan J.

Irvine J.

Hogan J.

Hedigan J.

Neutral Citation Number: [2016] IECA 389

Record No. 2014/176

[Article 64 transfer]

BETWEEN/

DAVID SMITH

PLAINTIFF

- AND -

PATRICK MEADE

AND

PHILIP MEADE

DEFENDANTS

- AND BY ORDER-

FBD INSURANCE plc

DEFENDANT/APPELLANT

- AND -

IRELAND

AND

THE ATTORNEY GENERAL

DEFENDANTS/RESPONDENTS

Negligence – Exclusion clause – Interpretation of legislation – Appellant seeking to appeal against the decision of the High Court – Whether the High Court judge interpreted domestic legislation in a manner which was contra legem

Facts: The plaintiff, Mr Smith, on 19th June 1999, was very seriously injured when the van in which he was travelling as a passenger in the rear of that vehicle was involved in an accident on a public roadway near Tullyallen in Co. Louth. The van, which collided with another vehicle, was being driven at the time by the first defendant. Mr Patrick Meade, and the van was owned by the second defendant, Mr Philip Meade. The plaintiff sued these two defendants for negligence and breach of duty. The motor insurance policy which the second defendant had in force at the time of the accident contained an exclusion clause in respect of rear passengers who, like the plaintiff, travelled in the rear of the van which had no fixed seating for such passengers. The policy which was in force at the time for the van was written by the third defendant/appellant, FBD Insurance plc. Following the notification of the claim by the plaintiff, FBD declined to provide an indemnity to the second defendant in respect of the plaintiff's injuries. In explaining this decision FBD invoked the provisions of the exclusion clause. In the High Court Peart J concluded that it was possible, employing the Marleasing interpretative principles (Case C-106/89 Marleasing SA v La Comercial Internacionale de Aliementacion SA [1990] ECR I-4135), to interpret s. 65(1)(a) of the Road Traffic Act 1961 and Article 6 of the Road Traffic (Compulsory Insurance) Regulations 1962 in a manner consistent with the requirements of Article 3(1) of the Third EU Motor Insurance Directive 90/232/EEC. FBD appealed to the Court of Appeal against the decision of Peart J, contending that the High Court went beyond the Marleasing principle and that the judge, in effect, interpreted the domestic legislation in a manner which was contra legem and, essentially, that he gave the Third Directive a form of retrospective horizontal direct effect as against it, a private insurance company.

Held by Hogan J that the Court should refer the following draft question to the Court of Justice of the European Union pursuant to Article 267(1) TFEU: "Where:- (i) the relevant provisions of national law provide for an exclusion for compulsory motor insurance in respect of persons for whom no fixed seats in a mechanically propelled vehicle have been provided, (ii) the relevant insurance policy provides that cover will be confined to passengers travelling in fixed seating and this policy was, factually, an approved policy of insurance for the purposes of that national law at the time of the accident, (iii) the relevant national provisions providing for such an exclusion from cover have already been adjudged to be contrary to EU law in an earlier decision of this Court (Case C-365/05 Farrell v Whitty [2007] ECR I-3067) and, accordingly, required to be disapplied, and (iv) the language of the national provisions is such that it does not permit of an interpretation conforming to the requirements of EU law, then, in litigation between private parties and a private insurance company concerning a motor accident involving a serious injury to a passenger in 1999 who was not travelling in a fixed seat, is the national court when disapplying the relevant provisions of national law also obliged to disapply the exclusion clause contained in the motor insurance policy which was in force at the time such that injured victim could then have recovered directly as against the insurance company on foot of that policy? Alternatively, would such a result amount in substance to a form of horizontal direct effect of a Directive against a private party in a manner prohibited by EU law?"

Hogan J held that the appeal should stand adjourned pending the determination of the reference by the CJEU. He further invited counsel to make submissions concerning the form of the draft reference to the CJEU pending the finalisation of that draft wording.

Reference to Court of Justice of the EU.

JUDGMENT of Mr. Justice Gerard Hogan delivered on the 16th day of December 2016

1 On 19th June 1999 the plaintiff, Mr. Smith, was very seriously injured when the van in which he was travelling as a passenger in the rear of that vehicle was involved in an accident on a public roadway near Tullyallen in Co. Louth. The van, which collided with another vehicle, was being driven at the time by the first defendant and the van was owned by the second defendant. The complex legal issues which arise in the case should not, however, be permitted to obscure these tragic personal circumstances and life changing injuries which the plaintiff suffered and of which all members of the Court are all too painfully aware.

2 The plaintiff sued these two defendants for negligence and breach of duty. The actual legal issue which arises on this appeal is, however, a more complicated one and goes well beyond the parameters of even a serious personal injuries action such as the present case. The motor insurance policy which the second defendant, Mr. Philip Meade, had in force at the time of the accident contained an exclusion clause in respect of rear passengers who, like the plaintiff, travelled in the rear of the van which had no fixed seating for such passengers. The policy which was in force at the time for the van was written by the third defendant, FBD Insurance ('FBD'), and it contained the following clause:-

'Passenger cover only operates for the one passenger seated on the fixed seat in the front of the vehicle.'

3 Following the notification of the claim by the plaintiff, FBD, by letter dated 13th August 2001, declined to provide an indemnity to the second named defendant in respect of the plaintiff's injuries. In explaining this decision FBD invoked the provisions of the exclusion clause contained in the policy in question, saying that it did not cover liability in respect of personal injuries to persons (such as the plaintiff) who were being carried as a passenger in a part of the vehicle which was not designed and constructed with seating accommodation for passengers.

4 It is not now disputed but that Article 3(1) of the Third EU Motor Insurance Directive 90/232/EEC ('the Third Directive') required Member States to approximate their laws in order to ensure that the general compulsory motor insurance obligation provided for in their laws did not provide for exclusions from cover of this nature. It is also accepted that the relevant provisions of the Third Directive (the details of which I propose to address later in this judgment) had not been fully transposed into our domestic law by the latest date for transposition, namely, 31st December 1995. Indeed, if there was any lingering doubt about this, the Court of Justice confirmed in Case C-365/05 Farrell v. Whitty [2007] E.C.R. I-3067 (a case which I propose to examine in greater detail at a later stage of this judgment) that Article 3(1) of the Third Directive had precisely this effect.

5 The particular difficulty which arises in this case is whether the relevant national legislative provisions, namely, s. 65 of the Road Traffic Act 1961 (as amended) ('the 1961 Act') and Article 6 of the of the Road Traffic (Compulsory Insurance) Regulations 1962 ( S.I. No. 14 of 1962) ('the 1962 Regulations') can be read in a manner consistent with the requirements of Article 3(1) of the Third Directive. In the High Court Peart J. concluded that it was possible, employing the Marleasing interpretative principles ( Case C-106/89 Marleasing SA v. La Comercial Internacionale de Aliementacion SA [1990] E.C.R. I-4135), to interpret s. 65(1)(a) of the 1965 Act and Article 6 of the 1962 Regulations to arrive at such a result: see Smith v. Meade [2009] IEHC 99, [2009] 3 I.R. 335.

6 In his judgment Peart J. stated ( [2009] 3 I.R. 335, 348):

'It is also clear from the case-law of the Court of Justice to which I have been referred that the Third Directive has direct effect, but in that regard direct effect does not provide a remedy as against an individual such as FBD, but rather against the State or any emanation of the State. That is accepted by the plaintiff. Some submissions have been made as to the possibility that the plaintiff could pursue a remedy against FBD on the basis of a horizontal direct effect or indirect effect, but it is in my view unnecessary to reach a conclusion in that regard.

In my view the conclusion to the issue for determination in this case is reached by the route of harmonious interpretation and the primacy of Community law.... When one reads the three directives, including the recitals thereto, which are in play in this case, the objectives sought to be achieved are very clear. Those objectives have been explained in the cases to which the Court has also been referred and I have set out certain of the passages to which I have been referred.

All passengers being carried in vehicles and who are injured as a result are intended to be guaranteed equal treatment throughout the European Community regardless of in which Member State the injury is caused. The Second Directive required each Member State to take necessary measures to ensure that any statutory provision or any contractual clause contained in an insurance policy which excludes from insurance persons, inter alia, such as this plaintiff shall for the purpose of Article 3 (1) of the First Directive...