by Matthew Austin September-02-2015 in Litigation & Dispute Resolution, Commercial & Business, Insurance
The thorny issue of the rights of non-insured third parties to claim under a policy of insurance was addressed by Mr Justice Gilligan in the High Court recently. The case of Michael Murphy v Allianz Plc [2014] IEHC 692 (“the Murphy case”) involved a consideration of section 62 of the Civil Liability Act 1961 (“Section 62”) in this regard.
In general, Irish law does not afford a person who is not a party to the contract of insurance any right of redress against the insurer. There are a few limited exceptions. The position in England is different. For decades English statute law has conferred third party rights of redress against Insurers. The most recent iteration of this UK legislation is the Third Party (Rights Against Insurers) Act 2010 which concerns the transfer of an insured’s rights arising under a contract of insurance to a third party.
In Ireland section 62 operates in favour of third parties in a very limited way. It gives a third party rights in respect of an insurance policy where the insured person/company dies, becomes bankrupt or is wound up. In that scenario, a third party may have a right of recovery against the policy of insurance provided that third party can show it has a valid claim against the insured. It does not operate to transfer the insured’s rights under the contract of insurance to the third party. By way of example – a company employee who successfully sues his corporate employee in respect of personal injury suffered in the course of his employment may be able to rely on section 62 if his employer goes into liquidation and the employer had effected a policy of employer’s liability insurance which would answer the claim were the employer not in liquidation. In that scenario section 62 should operate to allow the employee pursue the insurer directly provided the employee’s entitlement to recover against his employer has been established and provided also that the insurer is liable to pay out to the employer.
Mr Justice Gilligan’s judgment in the Murphy case is a reminder of the limited scope of section 62. The factual background of the Murphy case is as follows: the Plaintiff claimed against his employer[1] Bri-Mo Limited in respect of personal injuries suffered by him on 9 January 2004. Allianz had been notified of the incident over a year after its occurrence. On 17 May 2006 Allianz confirmed withdrawal of indemnity for Bri-Mo Limited in respect of the claim. Bri-Mo Limited did not challenge Allianz’s decision. On 19 September 2010 Bri-Mo Limited was struck off the register of companies. On 14 November 2011 the Plaintiff obtained judgment against Bri-Mo Limited with the amount of damages to be assessed by a Judge.
The Plaintiff could not recover against his employer and therefore sought to rely on section 62 in seeking to recover against his employer’s insurer. Judge Gilligan found that Bri-Mo Limited had never been in liquidation and in those circumstances the Plaintiff could not rely on section 62. Furthermore, the Judge found that even if Bri-Mo Limited had been in liquidation the Plaintiff would still have to establish that he was entitled to monies payable to the insured (the employer) under the policy. The Judge noted that the insurer had validly repudiated the claim seven years previously. Therefore the Plaintiff was unable to establish that monies were payable to the insured pursuant to the policy.
Section 62 remains a distant cousin of the English statutory third party rights regime. It operates in only certain stipulated circumstances set out, in not the most straight-forward of terms, within the wording of section 62. The rights of a non-party to claim against a policy of insurance in this jurisdiction remain limited.
[1] The Plaintiff was in fact employed by Mr Patrick McShane, also named as a Defendant in the personal injury claim. Bri-Mo Limited was the main contractor on the construction project.
Back to Full NewsShare this article:
About the Author
Matthew Austin
Matthew is a partner in the Commercial & Business team and has considerable expertise in a range of practice areas, having acted for Irish and International clients in domestic and multi-jurisdictional issues. Matthew has advised in civil and administrative law disputes and in regulatory and advisory matters including insolvency/restructuring, IP, defamation and media law, competition and consumer protection and data protection.