MIBI potentially liable for claims following liquidation of Maltese-registered insurer

Ryan P (nem diss): Insurance law – liquidation of motor insurance company Setanta (a company registered in Malta) – how the outstanding claims against Setanta policyholders are to be met – whether the claims should be met by the Insurance Fund which is administered pursuant to the Insurance Act, 1964 as amended, or by the Motor Insurers Bureau of Ireland, pursuant to its agreement with the Minister for Transport dated 2009 – Insurance Compensation Fund – interpretation of the agreement between the Bureau and the Minister – s. 56 of the Road Traffic Act 1961 – whether the MIBI is liable to pay out in respect of claims against persons were insured with Setanta at the time of its entry into liquidation – principles of interpretation – ‘Insurers Agreements Not to Enforce Strict Legal Rights: Bargaining with the Government and in the Shadow of the Law’ (1985) 48(3) Modern Law Review 275-292 by Lewis – section 3(7) of the Insurance Act, 1964 – whether clause 4.1.1 of the agreement covers drivers whose insurance company is insolvent – Memorandum and Articles of Association of MIBI – principles of contractual interpretation – Lewison, ‘The Interpretation of Contracts’ (4th Ed., 2007) – Agreement represents the compliance by the State with his obligations under the Sixth Directive – business commonsense – MIBI Internal Documents – High Court order affirmed with variations – appeal dismissed.

"It is possible, in my view, to find interpretations of the critical phrases that I have mentioned in which restrictions of liability can be accommodated. This is what the MIBI have done in the submissions. However, it seems to me that there is the plain meaning of the words and their location in the scheme generally, and in the context of the March 1955 agreement, and all of that leads me to a broad rather than a narrow interpretation."

Finlay Geoghegan J: Insurance law – question as to the potential liability of the Motor Insurers’ Bureau of Ireland (MIBI) to a plaintiff or other person who obtains a judgment or PIAB order against an insured of Setanta Insurance Company Limited (in liquidation) pursuant to the 2009 Agreement between the Minister for Transport and the MIBI – whether or not the 2009 Agreement imposes a liability on MIBI to satisfy a judgment which otherwise meets the conditions set out in clause 4.1.1 – s.3 of the Insurance Act 1964 ( as inserted by s.4 of the Insurance (Amendment Act 2011)) – actual liability of MIBI to individual claimants for compensation pursuant to the MIBI 2009 Agreement remains to be determined on an individual basis – MIBI is potentially liable to pay out in respect of claims against persons who are insured with Setanta Insurance Company Limited (in liquidation) at the time of its entry into liquidation – appeal dismissed.

"For the reasons given by the trial judge and the other members of this Court clause 4.1.1 by inclusion of words “whether or not such person or persons be in fact covered by an approved policy of insurance” and later “whatever may be the cause of the failure of the judgement debtor” explicitly by the ordinary meaning of the words used includes the situation where the failure to pay is caused by the insolvency of the insurer which issued the approved policy to the judgment debtor (or respondent to payment order). Further its construction in the context of the background facts and in particular the Principal Agreement of 1955 to which the 2009 is supplemental and the 1955 and all intervening MIBI Agreements supports such a construction."

Hogan J: Insurance law – whether the MIBI is liable, whether under the terms of clause 4.1.1 of a January 2009 agreement made between it and the Minister for Transport or otherwise, to pay unsatisfied claims in motor accident cases arising from the insolvency of an insurance company – origins of the MIBI Agreement – the true nature and status of the MIBI Agreements – agreement is a piece of quasi-legislation which is the product of a private agreement between the Minister and the insurance industry – construction of clause 4.1.1 of the 2009 Agreement – noscitur a sociiis (“a word is known by its companions”) – Insurance Act 1964 – collapse of the Equitable Insurance Co. Ltd. – the commercial reality argument – the intention of the parties – the vires of the MIBI – at the wording of Clause 4.1.1 of the 2009 Agreement extends in principle to that of insurer insolvency – High Court order affirmed – appeal dismissed.

"One is left, therefore, in the position that the only real explanation for the words “whether or not such…. persons be in fact covered by an approved policy of insurance” as they were used in the original Principal Agreement of 1955 and every agreement since that date is that, viewed objectively, they covered the case of insurer insolvency. I agree that the wording is also apt to cover the case of the untraced driver, but since this wording has been in use since 1955 – several decades before the MIBI assumed any obligations in the case of the untraced driver - one is left with the clear impression that insolvency was covered from the start, as these words would otherwise have had no meaning in 1955."