Application of Butler

• Jurisdiction: Ireland
• Judgment Date: 15 November 1970
• Date: 15 November 1970
• Docket Number: [1963. No. 879 P.]
• Court: Supreme Court

Application of Butler

In the Matter of the Equitable Insurance Company Limited and in the Matter of the Companies Acts, 1908 to 1959—JOHN BUTLER

Applicant.

[1963. No. 879 P.]

Supreme Court

Contract - Insurance - Condition precedent - Insured required to give notice of event to insurance company "as soon as practicable" - Company in liquidation and insolvent when event occurred - Whether failure to serve notice was excused - Insurance Act, 1964 (No. 18 of 1964), s. 3.

The applicant was a motorist who held a valid policy of insurance that had been issued by an insurance company engaged in vehicle insurance business. A condition of the policy required the applicant to give written notice to the company "as soon as practicable" after the occurrence of any accident in which a motor car driven by the applicant was involved. The insurance company became insolvent and was ordered to be wound up, and a liquidator was appointed. On the 5th June, 1963, the applicant was advised by the liquidator to procure insurance cover elsewhere. On the 24th June a motor car driven by the applicant was involved in an accident which resulted in personal injuries being sustained by a passenger in the car. Notice of the accident was not given to the insurance company until a year later. The passenger sued the applicant and recovered judgment for damages. On the 7th August, 1964, a special fund was established pursuant to the Insurance Act, 1964, for the purpose of providing moneys to meet the claims of policyholders of the insurance company. Section 3, sub-s. 3, of the Act of 1964 provides that, where "a sum is due to a person under a policy" by reason of a judgment obtained against the person, the amount payable out of the special fund should be such amount as the judge having seisin of the winding-up might consider reasonable. The applicant applied in the High Court for a decision under sub-section 3 and contended that notice had been given in accordance with the condition since, on the facts existing and known to him at the date of the accident, no practical purpose would have been served by giving notice to the insurance company shortly after the accident.

Held by Kenny J., in dismissing the application, and affirmed by the Supreme Court (Budd, FitzGerald and McLoughlin JJ.) on appeal, 1, that no sum was due to the applicant on foot of his policy as he had failed to give written notice of the accident to the insurance company shortly after the accident had occurred.

2. That the applicant's belief in the futility of giving due notice shortly after the accident was irrelevant to the determination of the proper issue which was whether any other circumstance had prevented him from giving due notice shortly after the accident.

O'Donovan v. Attorney General [1961] I.R. 114 considered.

Motion on Notice.

The facts have been summarised in the head-note and are stated in the judgments, post.

Section 2 of the Insurance Act, 1964, established the Insurance Compensation Fund. Section 3, sub-ss. 1-3, of the Act of 1964 provides as follows:—

"3.—(1) Subject to the provisions of this section, there may be paid out of the Fund to the liquidator of an insolvent insurer proceedings for the winding up of which by the High Court were commenced or are commenced on or after the 1st day of January, 1963, such amounts as may be necessary to pay any sum (other than a sum payable in respect of the refund of a premium) which is due to a person under a policy issued by the insurer in the State and is in respect of a contingency the insurance of which is required by the Act of 1936 to be effected by an insurer, together with the costs or expenses (if any) necessarily and reasonably incurred by the person in endeavouring to secure payment of the sum, and, upon receipt of the amounts by the liquidator, he shall pay to every such person the sum due to him as aforesaid together with the costs and expenses aforesaid (if any) incurred by him.

(2) Where an amount is paid out of the Fund to the liquidator of an insurer under subsection (1) of this section in respect of a sum due under a policy issued by the insurer and the costs and expenses aforesaid (if any) incurred in relation to the sum, the amount paid shall be admitted in the proceedings for the winding up of the insurer by the High Court as a proved debt of the insurer having the same priority as the sum due under the policy and the Accountant shall, as respects the amount paid out of the Fund, be a creditor of the insurer.

(3) Where a sum is due to a person under a policy by reason of a judgment obtained against the person or in respect of compensation payable by way of a weekly payment by the person under the Workmen's Compensation Acts, 1934 to 1955, the amount payable out of the Fund under subsection (1) of this section in respect of such sum shall, subject to the provisions of this section, be such amount as the Judge of the High Court having seisin of the proceedings for the winding up of the insurer by which the policy was issued may consider reasonable."

On the 27th May, 1963, the High Court ordered that the Equitable Insurance Company Limited be wound up by the court, and appointed William Sandys to be official liquidator of the company. On the 15th May, 1968, the applicant issued his notice of motion in the winding-up proceedings seeking a decision under s. 3, sub-s. 3, of the Insurance Act, 1964. The notice of motion was served on the official liquidator.

The applicant appealed to the Supreme Court from the judgment and order of the High Court.

Kenny J. :—

On the 21st March, 1959, the Equitable Insurance Company Limited issued a private motor-car policy to Mr. Butler in relation to motor car I.R. 8900. This provided under the heading "Insured driving other vehicles" that, subject to the limitations on liability for driving the car mentioned in the Schedule (I.R. 8900), the Equitable would indemnify Mr. Butler in respect of any event while he was personally driving a car not belonging to him. The Equitable's liability to indemnify Mr. Butler in respect of his car was expressed to be "subject to the terms, exceptions and conditions contained herein or endorsed or otherwise expressed hereon." Under the heading "Conditions" on one of the pages of the policy, there appeared a clause which read: "The Insured shall give notice in writing to the Head Office or any Branch Office of the Company as soon as practicable after the occurrence of any event in consequence of which the Company may become liable under this Policy with full particulars thereof . . ."

On the 27th May, 1963, this Court ordered that the Equitable was to be wound up. On the 24th June, 1963, when the policy issued by the Equitable was in force, Mr. Butler was driving a car owned by Mr. Kieran Kenny for which a policy issued by the Ocean Accident Insurance Company was in force. Mr. Kenny was a passenger in the car on that day and was injured because of Mr. Butler's carelessness. The accident policy of the Ocean company, I have been informed, contained a clause under which that insurance company was not liable to indemnify the driver against a claim by Mr. Kenny.

The Equitable did not get any notification of Mr. Butler's claim for indemnity against them until the 31st July, 1964.

Mr. Kenny subsequently got judgment against Mr. Butler for £3,100 damages and for costs which were subsequently taxed at £504 14s. 1d. The official liquidator repudiated all liability of the Equitable to indemnify Mr. Butler who has now applied under s. 3, sub-s. 3, of the Insurance Act, 1964, for an order that I should find the amount awarded by the judgment to be reasonable and for an order for payment under s. 3, sub-s. 1, of that Act.

In my opinion, Mr. Butler did not give the Equitable notice of the occurrence of the event, creating a liability to indemnify, as soon as practicable. Mr. Butler's belief (that there was no purpose in giving notice as the Equitable was known to be insolvent) did not free him from his obligation to notify them of the accident. He committed a breach of one of the conditions of the policy and the Equitable are not liable to indemnify him against Mr. Kenny's claim.

Before I can make an order for payment out of the insurance fund it must be shown that there is a sum "which is due to a person under a policy" issued by the Equitable—see s. 3, sub-s. 1, of the Act of 1964. There was a delay of 13 months in giving notice and it has not been...