Case No: (1) B3/2009/1435 and 
(2) B3/2009/2174
Neutral Citation Number: [2010] EWCA Civ 556
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM 
(1) Manchester District Registry, Queen’s Bench Division,
Mr Justice Blair
7MA91096
(2) Wallsall County Court
His Honour Judge Gregory
7B126175
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 19/05/2010
Before :

THE MASTER OF THE ROLLS

LORD JUSTICE WALLER
Vice-President of the Court of Appeal, Civil Division
and
LORD JUSTICE WALL
- - - - - - - - - - - - - - - - - - - - -
Between :

	(1) Churchill Insurance Company Limited	Appellant	
	- and -		
	Benjamin Wilkinson
(by his father and litigation friend Steven Wilkinson

(2) Tracey Evans
- and - 
Equity Claims Limited
	Respondent

Appellants

Respondent	
- - - - - - - - - - - - - - - - - - - - -
Stephen Worthington QC and Fergus Randolph QC (instructed by Keoghs LLP) for Appellant (1)
Graham Wood QC (instructed by Edmunds & Co) for Appellant (2)

Stephen Grime QC and Conor Quigley QC (instructed by Potter Rees) for Respondent (1)
Winston Hunter QC and Kieran Fitzgerald (instructed by Herzog & Associates for Respondent (2)

Hearing dates : 29th and 30th March 2010
- - - - - - - - - - - - - - - - - - - - -
Judgment
Lord Justice Waller : 
1.	Where a person insured to drive a car is a passenger in the car which he has permitted to be driven by a non-insured driver, and is injured through the negligence of the driver, by virtue of section 151(4) of the Road Traffic Act 1988 (the RTA) the insurer is bound to compensate the passenger; the question is whether in the light of certain provisions of Community law the insurers are entitled to reclaim that compensation from the passenger as the insured under section 151(8) of the RTA and/or by virtue of the terms of the policy. On 3rd June 2009 His Honour Judge Godfrey answered that question in favour of the insurers, and denied Tracy Evans compensation from Equity Claims Limited (Equity). On 11th June 2009 Blair J answered that question against the insurers Churchill Insurance Company Limited (Churchill) and gave judgment in favour of Benjamin Wilkinson. In these conjoined appeals the question is which of the judges was right. Consideration of that question will involve analysing the impact of Community law on the relevant provisions of the RTA, and it will be for consideration whether this court should make a reference to the Court of Justice before reaching its decision. 
2.	The common factors in both cases are that the persons injured were travelling in or on vehicles which they were insured to drive, but the negligent driver of the vehicles was uninsured, and was driving with their permission. In one case that permission was given with knowledge that the driver was uninsured; in the other the permission was given without giving any thought to that question. I attach the facts or assumed facts in a schedule to this judgment.
3.	Compulsory insurance has been a feature of legislation in the United Kingdom for many years. The aim is to provide a guarantee that an injured person will obtain the compensation that he or she is awarded against the negligent driver. Under the RTA and indeed under Community law it is not quite every victim that will be compensated by the insurers, and the issue on the appeals is whether the injured passengers in this case, who it is accepted must be compensated, are liable to repay their compensation because they were also the insured under the policy who permitted the vehicles to be driven uninsured. 
4.	The potential insurers providing the guarantee can be divided into three: (1) contractual insurers, which cover the vast majority of cases; (2) statutory (sometimes called the RTA) insurers whose liability arises under the RTA, though there would be no contractual liability; and (3) the Motor Insurers Bureau (MIB) which, since its establishment in 1946, has provided a safety net which now operates principally where there was no insurance at all or where the driver is not identified. We are concerned in the instant cases with RTA insurers although, for reasons which will become apparent, the extent to which the injured parties might or might not have recovered if there had been no insurance and the MIB scheme was in play is relevant.
Relevant RTA provisions  
5.	Section 151(1) provides that:
“This section applies where, after a certificate of insurance or certificate of security has been delivered under section 147 of this Act to the person by whom a policy has been affected or to whom a security has been given, a judgment to which this subsection applies is obtained.”
6.	Section 151(2) provides that:
“Subsection (1) applies to judgments relating to a liability with respect to any matter where liability with respect to that matter is required to be covered by a policy of insurance under section 145 of this Act and either-
(a) it is a liability covered by the terms of the policy or security to which the certificate relates, and the judgment is obtained against any person who is insured by the policy or whose liability is covered by the security, as the case may be, or
(b) it is a liability, other than an excluded liability, which would be so covered if the policy insured all persons or, as the case may be, the security covered the liability of all persons, and the judgment is obtained against any person other than one who is insured by the policy or, as the case may be, whose liability is covered by the security.”
It is this provision from which it follows that even if the insurance policy does not in fact cover driving by the negligent driver, the policy must be read as if “all persons” were insured.
7.	Section 151(4) deals with the reference to “excluded liability” in s.151(2)(b) as follows:
“In subsection 2(b) above ‘excluded liability’ means a liability in respect of the death of, or bodily injury to, or damage to the property of any person who, at the time of the use which gave rise to the liability, was allowing himself to be carried in or upon the vehicle and knew or had reason to believe that the vehicle had been stolen or unlawfully taken, not being a person who-
(a) did not know or had no reason to believe that the vehicle had been stolen or unlawfully taken until after the commencement of his journey; and
(b) could not reasonably have been expected to have alighted from the vehicle.”
As will appear hereafter this reflects the “stolen vehicle” exclusion expressly contemplated by the Directives and defines one category of victim who does not have the benefit of insurance backing any judgment that a victim may obtain against the driver.
8.	The duty to satisfy judgments is contained in s. 151(5) which provides as follows:
“Notwithstanding that the insurer may be entitled to avoid or cancel, or may have avoided or cancelled, the policy or security, he must, subject to the provisions of this section, pay to the persons entitled to the benefit of the judgment—
(a) as regards liability in respect of death or bodily injury, any sum payable under the judgment in respect of the liability, together with any sum which, by virtue of any enactment relating to interest on judgments, is payable in respect of interest on that sum,
(b) …
(c) any amount payable in respect of costs.”
9.	There then follows the insurer’s entitlement to recover where an insured has given permission to drive to a driver who is uninsured, the key provision on these appeals. For clarity, like Blair J, I have omitted the references to certificates of security.  Section 151(8) provides as follows:
“Where an insurer becomes liable under this section to pay an amount in respect of a liability of a person who is not insured by a policy …, he is entitled to recover the amount from that person or from any person who—
(a) is insured by the policy, . . . , by the terms of which the liability would be covered if the policy insured all persons … and
(b) caused or permitted the use of the vehicle which gave rise to the liability.”
10.	The Court of Appeal has considered the proper construction of “permitted”, and has held that “permission does not cease to be permission for the purposes of the statute because, in good faith, the person giving it believes that the person to whom it is given is covered by the policy when in fact the person is “not”; see Pill LJ in Lloyd-Wolper v Moore [2004] 1 WLR 2350 para 25. Thus on that construction Tracy Evans, as the insured, was held liable to reimburse the insurers  even though it was not established that she knew the driver was uninsured. If that conclusion is right, then a further category of victim would appear to have been excluded i.e. a passenger who is the insured and travels in a car driven by a person uninsured who drives because the insured granted permission, and that appears on the way the section has so far been construed to be so whether the insured knew the driver was uninsured or simply granted permission believing in ignorance the driver was insured. Lloyd-Wolper does show that an insured can make it a condition of granting permission that the driver is insured and if the driver then drives without insurance such conditional permission will not constitute permission within section 151(8). 
11.	Before turning to the Community law and considering its impact, the submission of Mr Stephen Worthington QC on behalf of the insurers in the Wilkinson case appears powerful. He submits that although by section 151(2) liability includes the negligent driver’s liability to Ben Wilkinson, and under section 151(5) the insurers are bound to meet that liability to Ben Wilkinson in respect of his injury, section 151(8) is clear in obliging Ben Wilkinson as the insured who caused or permitted the tortfeasor to drive to reimburse the insurers.
12.	I would however add this which will be relevant when considering the impact of Community law. I was not persuaded that section 151(8) must be considered as if it were separate from section 151(4). Mr Worthington’s argument was that section 151(8) should not be construed as “excluding” the insured passenger from the benefit of insurance in that section 151(4) conferred the benefit to the injured passenger, and section 151(8) simply entitled the insurer to an indemnity from an insured. It seems to me that the effect of section 151(8) as a matter of English law must be to exclude from the benefit of insurance a passenger who is the insured but has given permission to an uninsured driver to drive. 
13.	It is of interest that under the MIB scheme i.e. if there had been no insurance in place at all, a passenger who has been injured when travelling in a car which he or she knows to be being driven by an uninsured driver is excluded from the scheme. There is thus some similarity between those victims excluded under the RTA i.e. passengers travelling in vehicles they know to be stolen or insured passengers travelling in vehicles they have permitted to be driven by uninsured drivers, and under the MIB scheme, i.e. passengers travelling in vehicles they know to be uninsured. 
Impact of Community Law.
14.	 There is no dispute that the RTA seeks to give effect to the United Kingdom’s obligations under Community Law. That being so, there is an obligation on the courts to construe United Kingdom legislation “as far as possible” so as to fulfil those obligations: see paragraph 8 of the judgment of the European Court of Justice in Marleasing [1990] ECR 1-4135 Mr Conor Quigley QC for Ben Wilkinson suggested in argument that if one took account of paragraph 9 in Marleasing and the result in that case, the obligation actually goes beyond construing “as far as possible”, and was more absolute. He would argue the court simply cannot give effect to United Kingdom legislation which does not accord with Community law. Mr Fergus Randolph QC submitted that the authorities of the ECJ since Marleasing are more consistent with the “so far as possible approach”, and he drew our attention to the latest authority: Joined Cases C-378/07 to C-380/07 Angelidaki judgment 23 April 2009 particularly paragraphs 197 to 202. That authority uses the language “so far as possible” and recognises that a national court’s obligation is to “do whatever lies within their jurisdiction” . . . “applying the interpretive methods recognised by domestic law”, and equally recognises that if the result prescribed by a directive cannot be achieved by way of interpretation, the remedy lies in an action against the Member State in accordance with Francovich and others [1991] ECR 1-5357. I would reject Mr Quigley’s more absolute suggestion. 
15.	In relation to the impact of Community law the questions come down to this. If section 151(8) is construed (as I suggest) so as to exclude an injured  insured person from a remedy when travelling as a passenger which he or she has permitted to be driven by an uninsured driver, would Community law hold such an exclusion was void and unenforceable? If so, can section 151(8) be interpreted so as not to breach Community Law? 
16.	The first question raises issues of construction of certain Council Directives; 72/166/EEC, 85/5/EEC, 90/232/EEC and 2009/103/EC. It also involves consideration of certain judgments of the ECJ in Ruiz Bernaldez [1996] ECR 1-1847, Mendez Ferreira [2000] ECR 1-6711, and Candolin [2005] ECR 1-5745.  
17.	The 2009 Directive is a consolidating Directive which has come into being since the judgment of Blair J and delivery of those judgments in the ECJ. That Directive cannot be retrospective in the sense of being the Directive directly applicable to the circumstances of these cases, but no one suggested different results would flow from language used in the 2009 Directive as compared with language in the Directives being codified. That was clearly right since the 2009 Directive expressly provides that it was intended simply to codify “in the interests of clarity and rationality” the previous Directives. In those circumstances, and since for the future it will be that Directive which will apply, I am going to consider the questions by reference to that Directive. To do so, I will place in square brackets the reference to the previous Directive, and in considering the authorities, I will as far as possible refer to the consolidating Directive keeping in square brackets the Directive to which reference is actually being made. 
18.	The following provisions in the preamble are relevant:-
“14. It is necessary 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.  It is important to provide that the victim of such an accident should be able to apply directly to that body as a first point of contact.  However, Member States should be given the possibility of applying certain limited exclusions as regards the payment of compensation by that body and of providing that compensation for damage to property caused by an unidentified vehicle may be limited or excluded in view of the danger of fraud.
15. It is in the interest of victims that the effects of certain exclusion clauses be limited to the relationship between the insurer and the person responsible for the accident.  However, in the case of vehicles stolen or obtained by violence, Member States may specify that compensation will be payable by the abovementioned body.”
19.	Article 3 provides (subject to a limited right of derogation under Article 5) for each Member State being obliged to take all appropriate measures “to ensure that civil liability in respect of the use of a vehicle normally based in its territory is covered by insurance”. 
20.	Article 10 imposes an obligation to set up a body to compensate for injuries caused by unidentified vehicles or an uninsured vehicle i.e. in the United Kingdom the MIB. It provides however that “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.”
21.	Chapter 5 is headed “Special categories of victim, exclusion clauses, single premium, vehicles despatched from one Member State to another”. Article 12  and 13 then provide as follows:-
“Article 12
Special categories of victim
1. Without prejudice to the second subparagraph of Article 13(1), the insurance referred to in Article 3 shall cover liability for personal injuries to all passengers, other than the driver, arising out of the use of a vehicle.
2. The members of the family of the policyholder, driver or any other person who is liable under civil law in the event of an accident, and whose liability is covered by the insurance referred to in Article 3, shall not be excluded from insurance in respect of their personal injuries by virtue of that relationship.
3. The insurance referred to in Article 3 shall cover personal injuries and damage to property suffered by pedestrians, cyclists and other non-motorised users of the roads who, as a consequence of an accident in which a motor vehicle is involved, are entitled to compensation in accordance with national civil law.
This Article shall be without prejudice either to civil liability or to the quantum of damages.
Article 13
Exclusion clauses
1. Each Member State shall take all appropriate measures to ensure that any statutory provision or any contractual clause contained in an insurance policy issued in accordance with Article 3 shall be deemed to be void in respect of claims by third parties who have been victims of an accident where that statutory provision or contractual clause excludes from insurance the use or driving of vehicles by:
(a) persons who do not have express or implied authorisation to do so;
(b) persons who do not hold a licence permitting them to drive the vehicle concerned;
(c) persons who are in breach of the statutory technical requirements concerning the condition and safety of the vehicle concerned.
However, the provision or clause referred to in point (a) of the first subparagraph may be invoked against persons who voluntarily entered the vehicle which caused the damage or injury, when the insurer can prove that they knew the vehicle was stolen.
Member States shall have the option — in the case of accidents occurring on their territory — of not applying the provision in the first subparagraph if and in so far as the victim may obtain compensation for the damage suffered from a social security body.
2. In the case of vehicles stolen or obtained by violence, Member States may provide that the body specified in Article 10(1) is to pay compensation instead of the insurer under the conditions set out in paragraph 1 of this Article.
Where the vehicle is normally based in another Member State, that body can make no claim against any body in that Member State.
Member States which, in the case of vehicles stolen or obtained by violence, provide that the body referred to in Article 10(1) is to pay compensation may fix in respect of damage to property an excess of not more than EUR 250 to be borne by the victim.
3. Member States shall take the necessary measures to ensure that any statutory provision or any contractual clause contained in an insurance policy which excludes a passenger from such cover on the basis that he knew or should have known that the driver of the vehicle was under the influence of alcohol or of any other intoxicating agent at the time of an accident, shall be deemed to be void in respect of the claims of such passenger.
22.	Article 12 (1) [this was Article 1 of the third Directive which came into force on 14th May 1990] would suggest that insurance is required to cover all passengers injured except those contemplated by the second paragraph of Article 13 (1) [this was a tidied up version of Article 2(1) of the second Directive which came into force on 30th December 1983] i.e. those where the insurer can prove that the passenger knew the vehicle was stolen.  If its effect is as wide and straightforward as that then much of Article 13 would seem to be for the avoidance of doubt. For example Article 13 (3) prohibiting the exclusion of a passenger injured where he knew the driver was intoxicated and Article 13 (1) (b) and (c) prohibiting certain exclusions would not seem to be strictly necessary.
23.	If Article 12(1) has that wide meaning, then it would seem at least at first sight to preclude excluding from compensation a passenger who is an insured under the policy but is injured in an accident due to the negligence of the driver which the insured has permitted to drive uninsured.    That would seem to be so even if the insurer could prove that the insured passenger knew the driver was uninsured. That result might not seem altogether satisfactory since if the driver were unidentified or there was no insurance at all, the MIB could exclude from compensation a passenger injured whom they could prove knew the driver was uninsured.
24.	If Article 12(1) does not have the wide meaning suggested, then the question which arises is whether a provision which requires repayment from the insured passenger is an exclusion within the classes prohibited by Article 13(1). The only candidate is Article 13(1) (a) [formerly the first indent in Article 2(1) of the second Directive]. The argument for the insurers is that in these cases the driver had the authority of the owner of the vehicle and thus Article 13(1)(a) [the first indent of Article 2(1)] does not apply to such a situation. Section 151(8) is only dealing with the case where permission has been given and thus the argument is that there was no obligation on the United Kingdom to take measures to amend it so as to exclude its application to injured insured passengers.
25.	The argument for the injured passengers is that Article 13(1)(a) [the first indent of Article 2(1)] is concerned to prevent insurers excluding from insurance vehicles being driven by persons unauthorised by the insurers. If that were right then since the drivers were not authorised by the insurers, and the effect of 151(8) would be to exclude the insured passenger injured by the driving of such a driver in so far as it can force repayment of the compensation, then the United Kingdom should have amended the provision so as to allow such an injured passenger to be free from that obligation.
26.	Does Article 12(1) [Article 1 of the Third Directive] have the wide meaning suggested in paragraph 22 above? In my view the judgments in the ECJ support the view that it does. In Ruiz Bernaldez the judgment was handed down on 28th March 1996. It was concerned with an insurance policy which excluded liability where the driver was intoxicated. As appears from the first paragraph of the Advocate General’s Opinion it was the first two Directives which were the subject of interpretation but since the Third Directive had been adopted and it was merely the period of transposition that had not yet expired he was of the view it could be used as an aid to interpretation. Thereafter he did not apparently rely on Article 1 of the Third Directive as the basis for his view or indeed mention it save where that was expressly part of the question asked by the national court [question 4]. He relied on the obligation to have in place compulsory insurance under what became Article 3 of the 2009 Directive [at that time Article 3(1) of the first directive] in taking the view that the exclusions contained in Article 13(1) [at that time Article2(1) of the second Directive] were not an exhaustive list. That that was his view is apparent from his answers to Questions 1, 3, and 4 (particularly question 3). In the judgment of the court, it is clear the court took the same view. That is clear from the language in paragraphs 18 to 19 and in any event flows from the result since the court held that an insurance policy could not exclude the paying of compensation to a third party where the driver was intoxicated. It did however allow that in such cases the insurer could recover from the insured (who in that case was not of course an injured passenger). [The position so far as intoxication is concerned is now covered by the 2009 Directive Article 13(3)]
27.	 Mendes Ferreira provides little assistance to the issues that arise in these appeals. In essence it emphasised that civil liability, i.e. the liability to be covered by compulsory insurance was a matter for Member States. Thus if there was no fault liability in a particular Member State that would have to be covered by compulsory insurance, but it was a matter for each Member State whether fault had to be established or not. There is a paragraph relied on by Mr Fergus Randolph QC in the judgment of the court from which he sought to gain support for his argument that it was for the Member State to decide whether it should have a provision such as 151(8) or indeed “compulsory insurance” in certain situations. That is paragraph 32 which reads as follows:- 
“Consequently, if a Member State’s domestic law imposes compulsory insurance cover in respect of personal injuries to passengers who are not family members and who are carried free of charge, whether or not there is any fault on the part of the driver of the vehicle which caused the accident, it must impose the same cover in respect of personal injuries to passengers who are members of the family of the insured person or of the driver.  On the other hand, if that Member State’s domestic law does not impose compulsory cover in respect of personal injuries to passengers who are not family members, Article 3 of the Second Directive does not require it to impose compulsory cover of personal injuries to passengers who are members of the family of the insured person or of the driver.”
28.	By that paragraph the court cannot have been meaning that Member States were free to consider whether to make insurance compulsory in respect of passengers who were not family members. That would fly in the face of the express provisions of the Directives. I am not sure that I can explain precisely what the court meant, but it does not seem to me that it affects the main thrust of the decision in Ruiz Bernaldez or the even more important decision in Candolin decided in June 2005 to which I will now turn.
29.	In Candolin (and I simplify the facts somewhat) a car was driven by R when he was heavily intoxicated carrying passengers also heavily intoxicated and aware that R was intoxicated. R lost control, there was a crash and a passenger P suffered very serious brain damage. P was in fact the owner of the car which was insured with Vahinkovakuutusosakeyhtio Pohjola. By Finnish national law the insurer is only liable to pay for the injury to the driver “in so far as there is a special reason for that.” A passenger is limited in the same way if he “knew or should have known of the driver’s condition”. The Finnish Court of Appeal in Turku ruled that P should not receive compensation from the insurers. On appeal to the Finnish Supreme Court (Korkein Oikeus), that court referred certain questions to the ECJ. The relevant questions so far as these appeals are concerned were questions 1 to 3 which were in the following terms:-
“(1) Does the requirement in Article 1 of the Third Directive, under which all passengers other than the driver are to be compensated from insurance for personal injuries arising out of the uses of a vehicle, or any other provision or principle of Community law lay down restrictions in assessing the significance of the passenger’s own contributory fault under national law, in connection with his right to compensation payable from compulsory motor vehicle insurance?
(2) Is it consistent with Community law, in any situation other than the cases mentioned in the second subparagraph of Article 2(1) of the Second Directive, to exclude or limit, on the basis of the conduct of a passenger in a vehicle, his right to obtain compensation from compulsory motor vehicle insurance for road accident damage?  May that come into question, for example, when a person has entered a vehicle as a passenger although he could have seen that the danger of an accident and of his suffering injury was greater than normal?
(3) Does Community law preclude the driver’s intoxication, which influence his capability of driving the vehicle safely, from being regarded as such a factor to be taken into account?”
30.	The Advocate General in his opinion reached the same conclusion as the court in Ruiz Bernaldez.    He refers to Article 13(1) [then Article 2(1) of the second Directive] and states it must be construed narrowly. He says this in paragraphs 42 and 43:-
“42. The Community legislature’s intention with this provision was to provide for an exception to the rule that statutory provisions or contractual clauses in an insurance policy may not be relied on as against passengers and third parties who are the victims of an accident.  This exception must be interpreted narrowly and as being exhaustive since it forms a departure from the general rule.  Any other interpretation would have the effect of allowing Member States to limit payment of compensation to third-party victims of a road accident to certain types of damage, thus bringing about disparities in the treatment of victims depending on where the accident occurred, which is precisely what the directives are intended to avoid.
43. This interpretation of Article 2 of the Second Directive is corroborated by Article 1 of the Third Directive, which widens the circle of victims to include passengers, with a view to protecting this particularly vulnerable category of potential victims.  By adopting this measure, the Community legislature has deliberately sought to enlarge the group of persons protected by the directives.  In view of the aim of the directive, namely to protect the victim, I am of the opinion that a national provision which automatically excludes any cover from the outset is inconsistent with the three directives.”
31.	He then says in relation to question 2 that the national court can limit compensation when assessing the civil liability of the driver; thus knowledge of intoxication may give rise to contribution to fault in assessing that liability.
32.	Question 3 raises a highly relevant point so far as these appeals are concerned. P was an insured under the policy. He had permitted his car to be driven by R knowing R was intoxicated. Should he be assessed more harshly? The Advocate General’s opinion was as follows:- 
“54. It follows that, where a driver who is not the owner or registered holder of the motor vehicle causes an accident and the motor vehicle is insured by a passenger, the legal relationship between the insured person causing the loss or injury.  In such a situation the original insured person has a legal relationship with the insurer solely as a victim.  As stated in point 39, the protection of the victim occupies an important place in the three directives.
55. The owner of the car who was travelling in the car as a passenger cannot therefore be treated more severely than the other passengers on the ground that he permitted his car to be driven by someone who was acting under the influence of alcohol.”
33.	The court in its judgment reached the same conclusion as the Advocate General. The judgment relies on Ruiz Bernaldez and its approach to Article 13(1) [then Article 2(1) of the second Directive] and concludes at paragraph 23 as follows:- 
“It follows that the second subparagraph of Article 2(1) of the Second Directive must be interpreted as meaning that a statutory provision or a contractual clause in an insurance policy which excludes the use or driving of vehicles from the insurance may be relied on against third parties who are victims of a road accident only where the insurer can prove that the persons who voluntarily entered the vehicle which caused the injury knew that it was stolen.”
34.	So far as the owner insured is concerned it said this at paragraph 31:-
“In the determination of whether those circumstances exist and whether the limit on the compensation is proportionate, which is a matter for the national court, the fact that the passenger concerned is the owner of the vehicle the driver of which caused the accident is irrelevant.”
35.	If the reasoning in Ruiz Bernaldez and Candolin is followed, the insurers cannot argue that Article 13(1) [Article 2(1) of the second Directive] defines the only prohibited exclusions. Furthermore they cannot argue that where an insured is carried as a passenger, he should normally be treated as an “insured” and not a passenger; Candolin would indicate if anything he or she will normally be treated as a passenger. 
36.	But there are points of difference between the circumstances in the above two cases and the instant appeals. First where knowledge of intoxication is concerned that can be allowed for as a factor in assessing civil liability; it can putting it in English law terms give rise to a finding of contributory negligence if with knowledge the owner permits the intoxicated driver to drive. I do not see how knowing that a driver is driving uninsured could give rise to a finding of contributory negligence as a matter of English law. Second, in the MIB situation it is recognised that a passenger who becomes a passenger knowing that the driver is uninsured, can be excluded from the passengers entitled to compensation. Why would Community law suggest that so far as RTA insurers are concerned the position should be different? 
37.	I am not confident as to how this latter question would be answered by the Court of Justice particularly in the context of the first point of difference. There might also be a distinction between an insured passenger permitting an uninsured driver to drive, who has knowledge that the driver is uninsured, and an insured passenger who believes the driver has insurance or has not turned his or her mind to that question. 
38.	I would accordingly suggest that questions that seek the answer to whether section 151(8) in its present form complies with Community Law and/or whether with some amendment or reinterpretation as to the degree of the insured’s knowledge might lead it to comply should be referred.
39.	It would furthermore seem to me inappropriate to consider whether as a matter of national law section 151(8) can be interpreted so as to comply with Community Law until we are clear as to whether it does comply, and if not the extent to which it does not comply.
40.	That leaves an issue which arises only in the Evans appeal. Mr Winston Hunter QC argued that even if section 151(8) were incompatible with Community law, the insurers in that appeal could rely on a term of the policy which was in the following form:- 
“Section 3: Payments
Payments made under Compulsory Insurance Regulations and Right of Recovery
If the law of any country in which this policy operates requires us to settle a claim which, if this law had not existed, we would not be obliged to pay, we reserve the right to recover such payments from you or from the person who incurred the liability.”
41.	 The short answer to that submission is that the clause reserves a right, and that unless the right exists, nothing has been reserved. So far as English law is concerned that right if it exists is under section 151(8). Thus any right is dependant on the true interpretation of that subsection. The clause does not purport to give some independent right to recover.  
Lord Justice Wall :
42.	I agree.
The Master of the Rolls :
43.	I also agree.
Schedule
The facts in Churchill v Wilkinson
This was tried as a preliminary issue on the following assumed facts. In October 2004, Mr. and Mrs. Wilkinson, BW’s parents, bought him a car for £1,600.  The car was insured through Churchill.  The policy holder was Mrs. Wilkinson, but BW was a named driver.  On 23 November 2005, he met with a couple of friends, one of them being Mr Fitzgerald, who had been drinking.  BW, who had not been drinking, drove them to a local MacDonald’s, where they had something to eat.  When they left, BW allowed Mr Fitzgerald to drive the car. It is accepted for the purposes of the preliminary issue that BW knew Mr Fitzgerald was not insured under the policy.   Unfortunately, Mr Fitzgerald lost control, and the car collided with a vehicle driving in the opposite direction.  BW, who was aged 20 at the time, suffered severe injuries.  Mr Fitzgerald was subsequently convicted of dangerous driving, driving with excess alcohol and driving without insurance.
The facts in Evans v Equity
Tracy Evans (TE) owned a motorcycle. She insured the same with Equity under which she was insured to drive her motorcycle but no one else. On 4th August 2004 she permitted Adam Cockayne to drive her motorcycle with herself as pillion passenger. Through the negligence of Adam Cockayne he drove into the back of a lorry and TE was seriously injured. Adam Cockayne had been insured under a policy to drive his own motorcycle but no other and was thus uninsured. The judge found that in permitting Adam Cockayne to drive she had given no thought to the question whether Adam Cockayne was insured to drive her motorcycle.