McCarron v Modern Timber Homes Ltd ((in Liquidation)) and Others

• Jurisdiction: Ireland
• Judge: Kearns P.
• Judgment Date: 03 December 2012
• Neutral Citation: [2012] IEHC 530
• Date: 03 December 2012
• Court: High Court
• Docket Number: [2010 No. 3594 P]

[2012] IEHC 530

THE HIGH COURT

[No. 3594P/2010]

McCarron v Modern Timber Homes Ltd (in liquidation) & Ors

BETWEEN

RICHARD McCARRON

PLAINTIFF

AND

MODERN TIMBER HOMES LTD (IN LIQUIDATION), SHAUN McCOLGAN, DANIEL McCOLGAN AND QUINN INSURANCE LTD

DEFENDANTS

CIVIL LIABILITY ACT 1961 S62

DUNNE v PJ WHITE CONSTRUCTION LTD (IN LIQUIDATION) 1989 ILRM 803

POST OFFICE v NORWICH UNION FIRE INSURANCE 1967 1 AER 577

BRADLEY v EAGLE STAR INSURANCE CO LTD 1989 1 AER 961

THIRD PARTIES (RIGHTS AGAINST INSURERS) ACT 1930

MCKENNA v BEST TRAVEL LTD 1995 1 IR 577

INSURANCE LAW

Contract

Privity of contract - Liquidation of insured - Third parties' rights under policy - Statutory interpretation - Claim against first to third defendants not yet determined - Whether plaintiff entitled to bring claim against fourth defendant - Appropriate time to bring such claim - Bradley v Eagle Star Insurance Co Ltd [1989] AC 957; Dunne v PJ White Construction Co Ltd [1989] ILRM 803; McKenna v Best Travel Ltd [1995] 1 IR 577 and Post Office v Norwich Union Fire Insurance Society Ltd [1967] 2 QB 363 considered - Statute of Limitations 1957 (No 6) - Civil Liability Act 1961 (No 41), s 62 - Relief granted (2010/3594P - Kearns P - 3/12/2012) [2012] IEHC 530

McCarron v Modern Timber Homes Ltd (in liquidation)

1 JUDGMENT of Kearns P.delivered on the 3rd day of December, 2012

2 The plaintiff in these proceedings sustained an injury to his left hand whilst operating a panel saw in the course of his employment with the first named defendant on 26 ^th June, 2007. The company went into liquidation on 2 ^nd September, 2008. These proceedings seeking damages for the injury were commenced on behalf of the plaintiff by plenary summons dated 14 ^th April, 2010. In the proceedings the plaintiff has joined both his former employer and the second and third named defendants who were directors of the company. He also sued Quinn Insurance Ltd., the fourth named defendant herein, on the basis that it was the insurer of the first named defendant at the time of the accident andhad agreed under the terms of that insurance to indemnify the first named defendant in respect of any claim brought by an employee who sustained injury during the course of his employment with the first named defendant.

3 It appears that the fourth named defendant refused indemnity to the first named defendant on the basis that Modern Timber Homes failed to comply with the general conditions of the policy and in particular failed to notify the insurer in a timely manner of the claim the subject matter of these proceedings. It is stated that the incident was first notified to Quinn Insurance on 28 ^th January, 2009. On 20 ^th March, 2009, Quinn Insurance informed the liquidator and the plaintiff's solicitors that it was refusing to indemnify the first named defendant company both on grounds that the company failed to notify the claim in a timely manner to the insurer or to provide information and/or assistance in relation thereto.

4 At the present time, the plaintiff has simply instituted proceedings against his former employer and the directors of his former employer and no judgment or order has been obtained against either of them.

5 Against this background the fourth named defendant has brought this application seeking an order striking out the plaintiff's claim against the fourth named defendant on the basis it discloses no reasonable cause of action against the fourth named defendant; alternatively, it is claimed that the plaintiff's claim should be struck out in circumstances wherethere is no privity of contract between the plaintiff and the fourth named defendant.

6 Counsel on behalf of the plaintiff argued that a right of action permitting the plaintiff to sue the fourth named defendant was created by s. 62 of the Civil Liability Act 1961 whereby the normal rules of privity were not to apply in cases where a company went into liquidation and there were monies payable to that company under a policy of insurance which were applicable only to discharge a valid claim against the insured. Counsel on behalf of the plaintiff argued that the decision of the Supreme Court in Dunne v. P.J. White Construction Ltd (In Liquidation) [1989] I.L.R.M. 803 recognised that an injured employee of a company in liquidation had a right of action under s. 62 of the Civil Liability Act 1961 to sue an insurer and nothing in that decision precluded the joinder of the insurance company as co-defendants in the same set of proceedings.

7 Counsel argued that the joinder of the insurer in the one set of proceedings, apparently permitted by statutory provision in the United Kingdom, had a number of benefits. Firstly, it dispensed with the need for a second set of proceedings to be brought separately against the insurer following judgment against the company in liquidation. It also provided a useful opportunity for the insurance company to challenge the assessment of damages which it could not otherwise do if not a party to the originalset of proceedings. It was contended that there was thus no logical or reasonable basis for the fourth named defendant's contention that one set of proceedings must first be brought against the company in liquidation before a second set of proceedings could follow against the insurer.

8 In reply counsel for the fourth named defendant submitted that a person who is not a party to the contract of insurance between the insurer and the insured has no rights in common law against the insurer. He is estopped from pursuing the insurer, save for statutory exceptions which provide otherwise, under the privity of contract rule. As s. 62 of the Civil Liability Act 1961 provides no such right for a plaintiff unless or until the validity and quantum of a claim against the company is first...