The Supreme Court has allowed an appeal by the Motor Insurers’ Bureau of Ireland (MIBI), ruling that its 2009 agreement with the Minister for Transport does not require the bureau to meet judgments against drivers whose insurer has become insolvent.
The judgment, delivered by O’Donnell J. on 25 May 2017, concerned claims involving Setanta Insurance, which had entered liquidation. The Law Society of Ireland argued that the agreement’s broad wording required MIBI to pay judgments that remained unsatisfied, including where an insurer could not meet a claim because of insolvency. The MIBI argued that the agreement covered only claims involving uninsured or untraced drivers and drivers whose insurance had been repudiated.
The accountant of the High Court had been asked to make payments from the Insurance Compensation Fund under the Insurance Act 1964, as amended. The Law Society contended that the MIBI agreement provided another source of compensation, so payments should not be made from the fund. The proceedings were a trial of that issue directed by the President of the High Court; they did not involve oral evidence, cross-examination or discovery.
O’Donnell J. said clause 4.1.1’s general language could support the Law Society’s interpretation when read on its own. But he concluded that the agreement had to be read as a whole and in its commercial and legal context. The agreement’s preamble described its purpose by reference to uninsured or stolen vehicles and unidentified or untraced drivers. The court also considered clause 3.11, which provides for a judgment to be assigned to the MIBI after payment, and the absence of specific provisions addressing insurer insolvency.
The judgment noted that the Insurance Compensation Fund scheme could limit recovery to 65% of a claim, subject to a cap of €830,000, while recovery under the MIBI agreement could be close to full. But the court was deciding how to interpret the agreement, not determining what compensation any individual claimant would receive.
The court held that the agreement applies to the limited class of uninsured, untraced and repudiated-policy cases, and does not generally cover claims where an insurer is insolvent or every claim left unpaid for 21 days. It allowed the appeal and set aside the declaration made by the Court of Appeal. The judgment also stressed that this order did not compel the MIBI to pay any individual claim; the proceedings could only prevent payment from the fund, potentially leaving claimants to seek recovery through another route.