The Court of Appeal has ruled that the Motor Insurers’ Bureau of Ireland (MIBI) is potentially liable to pay claims against people insured by Setanta Insurance Company when the insurer entered liquidation in April 2014. The court varied the High Court’s answer to make clear that the ruling establishes potential liability, not an entitlement to payment in any individual case.
The appeal arose from questions directed by the President of the High Court in proceedings brought by the Accountant of the Courts of Justice. The Law Society of Ireland was the claimant and appellant, and MIBI was the respondent. The dispute concerned the 2009 Agreement between MIBI and the Minister for Transport, including whether it covered judgments left unpaid because an insurer had become insolvent.
In her judgment, delivered on 2 March 2016, Ms Justice Finlay Geoghegan agreed with the conclusion reached by the President and Mr Justice Hogan: clause 4.1.1 of the agreement covers cases where an approved insurer’s insolvency causes a judgment or Injuries Board order to go unpaid. She said the clause’s wording included judgments against people who were not in fact covered by an approved policy and applied “whatever may be the cause” of non-payment.
The judgment also addressed clause 3.11, which makes assignment of judgments to MIBI or its nominee a condition precedent to liability. The judge said that condition sat uneasily with MIBI paying a judgment where the insurer, through no fault of the insured, could not pay. But she concluded it did not change the ordinary meaning of clause 4.1.1. She also noted that the agreement covers Injuries Board orders and other routes to compensation that may not involve a judgment capable of assignment.
The Court of Appeal did not decide whether an insured whose judgment is assigned to MIBI could then receive a payment from the Insurance Compensation Fund under section 3 of the Insurance Act 1964, as amended. The judge said that question might arise if MIBI sought recovery from an insured and that its answer was not obvious. The court gave no specific answer to the second question referred to it; the High Court must consider individual Fund applications.
The appeal was dismissed subject to varying the High Court order. The answer now states that MIBI is “potentially liable” in respect of claims against Setanta-insured people. The judgment noted that about 1,700 to 2,000 claims potentially eligible for Fund payments existed, and that actual liability under the agreement remained to be determined for each claimant.