The Court of Appeal has upheld a High Court ruling that the Motor Insurers’ Bureau of Ireland (MIBI) may be liable in principle for unsatisfied motor accident judgments where an insurer becomes insolvent.
In a judgment delivered on 2 March 2016, the court dismissed the MIBI’s appeal and affirmed the decision of Hedigan J. The dispute arose after Setanta Insurance, a Maltese-registered insurer, went into liquidation in April 2014. The court considered whether claimants with judgments against motorists insured by Setanta could seek payment from the MIBI, or instead apply to the High Court for payments from the Insurance Compensation Fund.
The Law Society of Ireland opposed the MIBI’s appeal. The Accountant of the Courts of Justice, who administers the Fund, took a largely neutral position on whether the MIBI had liability in principle.
Writing for himself, Hogan J. said clause 4.1.1 of the January 2009 agreement between the MIBI and the Minister for Transport covered an unsatisfied judgment “whatever may be the cause of the failure of the judgment debtor”. He concluded that the wording extended in principle to insurer insolvency. The court also considered the history of the agreements, including payments made by the MIBI after the collapse of Equitable Insurance in 1963, and the Insurance Act 1964.
The judgment records the MIBI’s argument that this reading conflicted with other provisions of the agreement, including a clause providing for assignment of a judgment to the MIBI. Hogan J. accepted that those provisions created some textual incongruity, but concluded that they did not displace the broad wording of clause 4.1.1. He also rejected the argument that covering insolvency was contrary to commercial sense.
The ruling establishes liability only in principle. It does not determine whether any particular claimant is entitled to payment. Hogan J. said claimants must still comply with the agreement’s procedural requirements, and individual circumstances may need separate consideration. The Court of Appeal said it was unnecessary to answer the second question comprehensively: how any MIBI liability affects approval of payments from the Fund depends on the circumstances of each claimant.
Hogan J. stated that the formal answers were those in the judgments of Ryan P. and Finlay Geoghegan J.; those judgments are not included in the supplied source. The judgment records that the appeal was dismissed and the High Court decision affirmed.