Dear all,

A recent decision of the Irish Court of Appeal, in which it was held
that the Motor Insurers Bureau of Ireland ("MIBI"), a company of which
all motor insurers underwriting business in Ireland are obliged to be
members, is liable to meet claims against a motor insurer which has
since become insolvent pursuant to its agreement with the Minister for
Transport (the "MIBI Agreements") may be of interest.

The judgments contain interesting discussions of the appropriate
principles of contractual interpretation (largely following the
principles set out in ICS v West Bromwich BS and Irish cases which
have followed that decision); the admissibility and significance of
evidence as to the historical practice of the MIBI and the historical
development of successive MIBI Agreements; and in the judgment of
Hogan J an inconclusive but interesting discussion of the propriety of
the MIBI Agreements, as a matter of Irish constitutional law.

There is also some reference to the UK position (which I understand
has since changed significantly), on which the original Irish MIBI
Agreement appears to have been modelled.

As a matter of contract law, the judgments are welcome. They stand for
the proposition that clear words in an agreement mean what they say
and are not to be rendered meaningless by extraneous considerations or
appeals to supposed commercial realities.

The result has been broadly welcomed. To me at least, it is a little
concerning that where a claimant secures judgment against a policy
holder of the insolvent insurer and that judgment is unsatisfied by
the MIBI, the MIBI will as a condition of that payment secure an
assignment of the claimant's judgment against the policy holder, which
the MIBI will be free to enforce against the policy holder.

That provision makes perfect sense, where a driver is uninsured. It
would be gravely unjust where the driver has taken out and maintained
a valid insurance policy, has complied with its terms but finds him or
herself without cover due to the insolvency of his insurance company.

In fairness, it is right to acknowledge that the Court of Appeal were
fully alive to this issue but remained satisfied that the words of the
contract in question were clear. It may be that in practice the MIBI
will not enforce such a right and it may also be, as suggested in the
judgment of Finlay Geogeghan J that if such a claim were made against
a driver, the driver might have a claim over against the insurance
compensation fund (such a claim would meet only part of the payment
they would be required to make).

Kind regards

Ger

http://www.bailii.org/ie/cases/IECA/2016/CA60.html