Shi v Ernst and Young Ltd
| Jurisdiction | Ireland |
| Judge | Ms. Justice Faherty |
| Judgment Date | 31 October 2017 |
| Neutral Citation | [2017] IEHC 804 |
| Court | High Court |
| Docket Number | [2015 No. 10555 P] |
| Date | 31 October 2017 |
[2017] IEHC 804
THE HIGH COURT
Faherty J.
[2015 No. 10555 P]
AND
Insurance - Trip and fall - Refusal to indemnify - Solicitor's application to come off record - Discretionary remedy - Insureds excess
Facts: The solicitor of the second named defendant filed a motion before the Court seeking leave to come off record. The solicitor contended that pursuant to the contract of insurance with the insurance company, the second named defendant was liable to make payment in excess of €2,500 before claiming indemnity in relation to each claim. The solicitor further contended that despite giving notice to the second named defendant, it failed to make the relevant payment. In those circumstances, the second named defendant's insurer instructed the solicitor to file the present motion. The plaintiff opposed the motion to come off record. The plaintiff argued that the requirement to pay the excess provided for in the policy was not a 'condition precedent.'
Ms. Justice Faherty granted the order sought by the solicitor in the notice of motion. The Court held that the second named defendant's insurer was willing to meet the plaintiff's costs in the proceedings till the date of the present judgment together with the costs of the present motion and thus, the Court would make the order in those terms. The Court noted that the interests of the plaintiff would not be prejudiced by making of the present order as there was no privity of contract between the plaintiff and the second named defendant's insurer.
This matter comes on for hearing before this Court by way of motion brought by O'Brien, Lynam, solicitors on record for the second named defendant, to come off record in the within proceedings.
The application is grounded on the affidavit of Mary Byrne, solicitor, and she avers that the proceedings relate to an incident which is alleged to have occurred on 11th April, 2014, when the plaintiff was working in the course of his employment with the first named defendant. The plaintiff alleges that he was required to attend a sporting event at Belvedere Rugby Club, Ballsbridge, Dublin 4. The sporting event was being organised by the second named defendant. The plaintiff claims that he was required to run backwards on an uneven surface as a result of which he was caused to trip and fall and sustain personal injuries, loss and damage.
Ms Byrne avers that acting on the instructions of the second named defendant's insurer, an appearance was entered on behalf of the second named defendant by O'Brien Lynam Solicitors on 18th February, 2016.
The basis for the application to come off record is that the second named defendant has failed to discharge an excess of €2,500 in respect of the claim made against the policy of insurance, as required by the policy of insurance.
The defendants' insurer is 'Syndicate 1991 at Lloyd's'. With regard to the policy of insurance entered into by the second named defendant with its insurer, Ms. Byrne avers as follows:
'7. It will be seen that it is an express term and condition of the policy of insurance and, indeed, a condition precedent to the insurer providing an indemnity to the Second named Defendant under the policy of insurance that the Second named Defendant as the insured is liable for and discharges an excess of €2,500 in respect of each and every claim ...
8. It is also clear the terms and conditions of the policy of insurance that the payment of the excess by the Second named Defendant when demanded is a condition precedent to the insurer providing an indemnity to the Second named Defendant under the policy of insurance.'
Ms Byrne exhibits a letter dated 1st February, 2017 calling on the second named defendant to discharge the €2,500 excess, as provided for in the policy. The letter advised, inter alia, as follows:
'We note that pursuant to your contract of insurance with our client that the payment of the self-insured retention of €2,500 is in fact a condition precedent to indemnity.'
The letter advised that in the event that the sum was not received within fourteen days of the letter, the solicitor's instructions were to immediately proceed for an order seeking liberty to come off record.
By reason of the failure of the second named defendant to pay the excess, the insurers instructed the solicitors for the second named defendant to issue the within motion.
The Court was advised that the first named defendant was adopting a neutral position vis-à-vis the motion to come off record.
In aid of the application to come off record, counsel for the second defendant's solicitors relies, in the first instance, on 'Section 12-Public Liability' in the policy document which provides for an excess of €2,500 in respect of each and every claim. Reliance is placed on the 'Conditions (Applicable to Sections 11, 12 &13)' which, inter alia, apply to 'Section 12-Public Liability'. The conditions read as follows:
'1. Insureds Excess
The Insureds Excess shall be subject to the following Conditions and provisions:
(a) The Insurer or its representatives may at any time and at their sole discretion require immediate payment of the Insured's Excess in whole or in part directly to the Insurer or at the Insurer's direction to its appointed representative and in any event the Insured's Excess shall become payable
(i) at the settlement and or closure of a claim or
(ii) at the point in time where costs Defence Costs legal fees claims handling costs and loss adjusting expenses incurred exceed or equal the Insured's Excess.
(b) The terms of this Policy including the Insurer's rights in the defence of a claim and the Insureds duties in the event of a claim apply irrespective of the application of the Insured's Excess.
(c) The Insurer may at its option including where it is statutorily obliged to do so pay part or all of the Insured's Excess to effect a settlement of any potential claim or suit and upon notification of the action taken the Insured shall promptly reimburse the Insurer for such payment.'
Counsel places particular reliance on clause on 1(a) above, arguing that clause 1(a) is disjunctive and that, accordingly, it is open to the insurer at its sole discretion to require immediate payment of the insured's excess.
Counsel also points to clause 5 of the 'General Conditions (Applicable to all Sections)' in the policy which provides:
'Compliance with Conditions
It is a requirement of this Policy that liability of the Insurers is conditional upon observance the terms of this Policy relating to anything to be done or complied with by the Insured. This shall include any requirements described in this Policy or any clause attaching to and forming part of this Policy as condition precedents to any liability of the Insurers.'
It is submitted that clause 5 provides for the entitlement of the insurer to repudiate liability if the requirements provided for in the policy are not met. It is further submitted that the onus of proof, which is on the insurer, has been met in this case, given that the second named defendant has been called upon to pay the excess and has not done so.
It is submitted that given that the second named defendant was called upon in February, 2017, to pay the excess and failed to do so, that failure constituted a breach of conditions and that, accordingly, given that the liability of the insurers is 'conditional upon observance of the terms' of the policy, the failure of the second named defendant to pay the excess entitle the insurers to instruct the second named defendant's solicitors to come off record. Furthermore, it is for the second named defendant (and not the plaintiff) to come to court and dispute the insurer's entitlement to repudiate liability. However, the second named defendant is not disputing the interpretation the insurer has put on the policy of insurance. Nor has the second named defendant disputed the insurer's entitlement to bring the within application.
In written submissions, subsequently furnished to the Court, counsel contends that in applications such as the present, the discretion vested in the Court should be exercised in accordance with the principles set by the Supreme Court out in O'Fearail v. McManus [1994] 2 I.L.R.M. 81, which are referred to below.
The plaintiff opposes the motion to come off record.
In the replying affidavit sworn by the plaintiff's solicitor, Padraic Ferry of Inns Chambers, issue to taken with the reliance placed by the insurers on the 'Conditions (Applicable to Sections 11, 12 and 13)'.
Counsel for the plaintiff submits that serious prejudice may accrue to the plaintiff if the order sought by the insurers is made. This is in circumstances where the first named defendant had filed a full defence denying liability and has served a Notice of Indemnity against the second named defendant.
In his replying affidavit, the plaintiff's solicitor avers that given that the second named defendant is an events manager which arranged an event for employees of the first named defendant, it may be that there is some documentation pursuant to which the first named defendant is afforded an indemnity by the second named defendant and if that were to be the case, the first named defendant may have a benefit to be claimed under the insurance policy. It is contended that if that were the case, then there is a potential for the first named defendant, if it so opted, to discharge the sum of €2,500 excess as a party with an identifiable interest pursuant to the policy of insurance. In the course of his submissions to the Court, counsel for the plaintiff acknowledged that there is...
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