Murphy v Allianz Plc

• Jurisdiction: Ireland
• Judge: Mr. Justice Gilligan
• Judgment Date: 05 December 2014
• Neutral Citation: [2014] IEHC 692
• Court: High Court
• Docket Number: [2012 No. 4802 P]
• Date: 05 December 2014

[2014] IEHC 692

THE HIGH COURT

Gilligan J.

[2012 No. 4802 P]

BETWEEN:

MICHAEL MURPHY

PLAINTIFF

AND

ALLIANZ PLC

DEFENDANTS

Insurance & Reinsurance – S. 62 of the Civil Liabilities Act, 1961 – Breach of contract – Repudiation of indemnity.

Facts: In the earlier proceedings related to the present proceeding, the plaintiff claimed damages for injury sustained in due course of employment. The incident of injury was reported to the insurance company over a year after its occurrence. After inquiries, the insurance company refused indemnity and repudiated liability in respect of the plaintiff's claim. Subsequent to the striking off of the name of the employer company from the Register of Companies, a judgment in default of defence against the employer company was granted to the plaintiff. The plaintiff now challenged the repudiation of the insurance claim by the insurance company. The plaintiff claimed that the repudiation was not valid. The plaintiff contended that there was no evidence to support valid grounds for repudiation. The defendant claimed lack of privity of contract between the parties.

Mr. Justice Gilligan held that the plaintiff's claim would be unsustainable. The Court observed that the plaintiff's case would not fall within the provisions of s. 62 of the Civil Liability Act 1961. The Court concluded that the plaintiff failed to constitute a valid claim against the insured in respect of which monies were payable under the policy of insurance. The Court affirmed that there was no privity of contract between the parties.

JUDGMENT of Mr. Justice Gilligan delivered on the 5th day of December, 2014

1 This is an application brought by the defendant, pursuant to Order 19, Rule 28 of the Rules of the Superior Courts 1986, to strike out proceedings commenced by the plaintiff on the basis that they disclose no reasonable cause of action and are bound to fail.

Background

2 The reliefs sought by the plaintiff in these proceedings refer to earlier proceedings of 2004 entitled Michael Murphy v Bri-Mo Limited and Patrick McShane. In the 2004 proceedings, the second named defendant, Patrick McShane, was a labour-only sub-contractor on a site on which Bri-Mo Limited, the first named defendant, acted as the main contractor. The plaintiff was a bricklayer employed by, and working under, the direction and supervision of Mr. McShane. On or around the 9th of January, 2004, some blocks fell from a wall on the foot of the plaintiff, causing him damage.

3 The incident of 9th January, 2004, was reported to Allianz over a year after its occurrence, on foot of which Allianz engaged with Bri-Mo's brokers, Jardine Lloyd Thompson. By letter dated 27th May, 2005, to Bri-Mo's brokers, Allianz noted that, as this was the first notification, it could not confirm indemnity, and it made certain inquiries in relation to the accident. By further letter dated 10th June, 2005, to Bri-Mo's brokers, Allianz sought outstanding wage declarations under Policy Condition No. 8 and reserved its rights under the policy pending resolution of this and any other issues. During this time, Allianz also received certain correspondence from the solicitor for the plaintiff, providing information in respect of the claim and noting that the solicitors firm Fitzsimons Redmond had entered an appearance on behalf of Bri-Mo. Allianz's request for outstanding wage declarations was repeated in a letter dated 21st March 2006 to Bri-Mo's brokers, wherein Allianz advised that it might repudiate the claim if the broker was not resolved within 14 days. However, neither Bri-Mo nor its brokers supplied the outstanding wage declarations. By letter dated 17th May 2006, Allianz wrote to Bri-Mo's brokers, noting that the declarations had not been furnished and confirming that it was withdrawing indemnity under the policy and that the policyholder must make its own arrangements to defend the claim of Michael Murphy. Allianz confirmed that it was closing its file in relation to the matter. Bri-Mo Limited never sought to challenge, at that time or since, Allianz's refusal of an indemnity and repudiation of liability in respect of the plaintiff's claim.

4 On or around 19th September, 2010, Bri-Mo was struck off the Register of Companies. By order dated the 14th of November, 2011, this Court (Ryan J.) granted the plaintiff judgment in default of defence against Bri-Mo with the amount of damages to be assessed before a judge without a jury.

Submissions

5 I think it is appropriate at this juncture to deal with submissions in a thematic way in order to properly reflect on the issues raised.

Section 62 of the Civil Liabilities Act, 1961

6 The plenary summons of the plaintiff, dated 15th May, 2012, seeks five substantive reliefs: the first two substantive reliefs seek respectively a declaration and an order pursuant to s. 62 of the Civil Liability Act 1961 that such damages and costs as may be awarded to the plaintiff in the 2004 set of proceedings against Bri-Mo Ltd. and Patrick McShane constitute monies payable to the plaintiff in a discharge of a valid claim which the defendant is obliged, under the terms of an insurance policy between it and Bri-Mo Ltd., to pay the plaintiff; the third, fourth and fifth substantive reliefs seek damages for breach of statutory duty, breach of contract and negligence and negligent misstatement and/or misrepresentation and breach of duty, respectively.

7 Counsel for the defendant submits that, insofar as s. 62 of the Civil Liability Act 1961 is concerned, the plaintiff's claim discloses no reasonable cause of action and/or is bound to fail for two reasons:

(A) Firstly, s. 62, on its terms, applies only where a person who has effected a policy of insurance in respect of liability for a wrong ‘if an individual becomes bankrupt or dies or, if a corporate body is wound up, or if a partnership or other unincorporated association is dissolved.’ In this case counsel submits, Bri-Mo, a corporate body, had affected a policy of insurance with Allianz. However, while Bri-Mo was struck off the Register of Companies in 2010 for failure to file annual returns, it was not wound up, either voluntarily or by order of this Court. Thus, the defendant submits that s. 62 of the civil liability act 1961 has no application to these proceedings because Bri-Mo Ltd. is not now and never was in liquidation. It is clear from oral submissions as made to the Court that the plaintiff has no fixed intention to wind up Bri-Mo Ltd. The defendant argues that the plaintiff has taken no steps to place the company in liquidation either since the institution of these proceedings on 15th May 2012 or since the restoration of the company to the register on 25th November, 2013. The defendant argues that the liquidation of Bri-Mo Ltd is not a mere technical requirement that might be overlooked at the discretion of the parties or the Court. It is a fundamental precondition to the insurer's liability under s. 62 of the Civil Liability Act 1962. On this basis alone, the defendant submits that the proceedings ought to be struck out. For this reason, counsel for the defendant contends that s. 62 of the Act of 1961 does not apply in this case.

(B) Further, s. 62 goes on to provide that ‘monies payable to the insured under the policy shall be applicable only to discharging in full all valid claims against the insured in respect of which those monies are payable…’ Mr. McShane did not hold employer's liability insurance. However, Bri-Mo maintained employer's liability insurance with Allianz under a Combined Construction Policy. Policy Condition No. 8, entitled “Premium Adjustment,” requires the insured party to supply certification of wages, salaries, and other earnings or of turnover for the period of insurance within 90 days of the expiry of the said period and provides inter alia that, if this is not supplied, Allianz will not provide any indemnity for bodily injury which might otherwise be the subject of an indemnity. As set out by Policy Condition No. 1, the observance and fulfilment of the terms and conditions of the policy are conditions precedent to any liability on the part of Allianz to make any payment under the policy. As such, counsel for the defendant submits that due to the failure of Bri-Mo to observe the condition precedent under Policy Condition No. 8 relating to the supply of wage certification, Allianz was entitled to, and did in fact, refuse an indemnity and repudiated liability in respect of the plaintiff's claim against Bri-Mo under the relevant policy of insurance. Bri-Mo never, at the time of repudiation or since, has challenged the said refusal of indemnity and repudiation of liability. Counsel argues that the plaintiff cannot now go behind that decision. The only party entitled to challenge that decision would have been Bri-Mo itself and even that party could not do so at this juncture, over seven years after it was made.

8 The defendant also submits that there is no contract or contractual nexus between the parties which could found a claim for damages for breach of contract. Further, it is submitted that the defendant owes no duty of care to the plaintiff. Counsel relies on the case of Hu v Duleek Formwork Ltd. (In Liquidation) and Aviva [2013] IEHC 50 in this regard. Having considered certain classes of relationship where a duty of care had been found to exist on the basis of sufficient proximity, such as the duty of a solicitor to a beneficiary under a will, Peart J. stated at paragraph 20:

‘But I know of no case where the Courts have found a duty of care to exist between an insurance company and a potential claimaint against the insured party, and have been referred to none. It would not be right in the present case in such circumstances to extend the law that far, so as to find that the plaintiff might reasonably...