The High Court has set aside a Circuit Court order requiring ARB Underwritings Limited to meet a personal injury judgment and remitted the insurer enforcement application for a plenary hearing.
In a judgment delivered on 2 May 2014, O’Neill J. held that the insurer should have been allowed to give oral evidence about its allegation that the claimant and driver Winifred Stokes were involved in fraud connected to the accident and insurance claim. The High Court did not decide whether that allegation was true.
The case arose from a collision on 25 April 2010 at Kilross junction, Stranorlar, County Donegal. John McDonagh, who was travelling as a rear seat passenger in a car driven by Stokes, alleged that it collided with the rear of another vehicle and caused him serious injuries. The insurer initially told McDonagh’s solicitor that it had accepted liability on behalf of its insured driver.
After proceedings were issued, the insurer said it would not indemnify Stokes. Its counsel told the court that the decision was based on information from An Garda Síochána concerning an investigation into suspected staged accidents in the area. The insurer later sought to present evidence of an alleged conspiracy and fraud, which it believed involved McDonagh and Stokes.
Judgment in default of appearance was entered against Stokes in October 2011. In November 2012, the Circuit Court assessed McDonagh’s damages at €17,500, including special damages, plus costs. The following June, the Circuit Court granted McDonagh’s application under section 76 of the Road Traffic Act 1961 to enforce the judgment against the insurer. It did so without hearing oral evidence.
The insurer appealed, arguing that the section 76 application should not have been granted without a hearing. McDonagh’s side argued that the judgment against Stokes remained valid and that the insurer had not taken steps to challenge it or join the original proceedings. The High Court accepted that the insurer could not properly have appeared for Stokes after withdrawing indemnity, or joined the earlier case to pursue its own adverse position.
The judge also rejected the argument that McDonagh had to establish in his initial application that a valid insurance policy remained in place, noting that a claimant may not know why indemnity was refused. But because the insurer had requested an opportunity to give oral evidence, and the fraud allegations could, if established, take the matter outside section 76, the Circuit Court should have allowed that evidence to be heard and cross-examined.
The High Court therefore set aside the section 76 enforcement order and sent that application back to the Circuit Court for a plenary hearing. It did not set aside the underlying judgment against Stokes or determine the fraud allegation. The judgment records that the decision would also determine the appeal involving the other injured passenger, Martin Stokes.