Supreme Court judge John MacMenamin would dismiss the Motor Insurers’ Bureau of Ireland’s appeal in a dispute over whether an agreement made it liable when a member insurer became insolvent.
In a judgment delivered on 25 May 2017, MacMenamin J said clause 4.1.1 of the 2009 agreement supported the Law Society of Ireland’s case. He concluded that the agreement created liability against MIBI and that other provisions relied on by the bureau were not clear enough to displace that reading.
His judgment was an individual contribution to the appeal. He said he agreed with the judgment of Clarke J, while adding comments on how courts should interpret contracts. He described the agreement as ambiguous, but argued that its words should not be overridden by a retrospective appeal to business common sense.
The dispute concerned the meaning of the agreement following the collapse of Setanta. MacMenamin J said the central question was what the 2009 agreement conveyed to an objective observer, rather than what the parties might later wish they had agreed.
He also considered earlier arrangements and the parties’ understanding of insurer insolvency. A 1993 domestic agreement between MIBI and its member insurers provided for other insurers to contribute to certain payments arising from an insolvent member, and allowed MIBI to seek a refund from the insolvent company’s representative. MacMenamin J said this material supported the view that insolvency had been within MIBI’s contemplation.
He noted that MIBI’s financial statements made allowance for insurer insolvencies up to 2013, and questioned whether this could simply be dismissed as an error. He also said the parties had amended other parts of their agreements over time but left clause 4.1.1 unchanged.
MacMenamin J would have upheld the High Court and Court of Appeal judgments and orders and dismissed the appeal. He acknowledged that the outcome could affect the insurance market and MIBI’s levy on insurers, while saying the parties could revise their agreement.
The supplied judgment extract sets out MacMenamin J’s reasoning and proposed disposition. It does not establish the Supreme Court’s final order or the result of the appeal as a whole.