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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> McDonagh -v- McDonagh [2015] IEHC 543 (24 July 2015)
URL: http://www.bailii.org/ie/cases/IEHC/2015/H543.html
Cite as: [2015] IEHC 543
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Neutral Citation [2015] IEHC 543 THE HIGH COURT [2015 No. 8 CA] BETWEEN: CELINE McDONAGH PLAINTIFF AND
JOHN McDONAGH DEFENDANT JUDGMENT of Kearns P. delivered on 24th day of July, 2015 The applicant, RSA Insurance Ireland Limited, wishes to be joined as either a defendant or notice party to these proceedings. In this appeal, the applicant seeks to reverse the decision of the Circuit Court dated 16th January, 2015 whereby it dismissed the applicant’s appeal from an order made by the County Registrar for the Counties of Laois and Offaly dated 17th November, 2014 refusing the applicant’s application, brought pursuant to Order 6, Rule 4 of the Circuit Court Rules 2001, to be joined as a co-defendant to the proceedings. BACKGROUND The defendant’s insurer, RSA Insurance Ireland Ltd., has declined to indemnify the defendant arising from what are alleged to be ‘material inconsistencies’ in accounts furnished in relation to the road traffic accident. The defendant was notified of the refusal of indemnity by letter dated 16th May, 2014. In effect, the insurers in this case believe this to be a fraudulent claim. By notice of motion dated 1st August, 2014 the applicant sought an order pursuant to Order 6, Rule 4 of the Circuit Court Rules 2001 to be joined as a co-defendant to the proceedings. This application was refused by the County Registrar on 17th November, 2014. The Circuit Court then dismissed the applicant’s appeal of this order on 16th January, 2015. The matter came before this Court on 29th April, 2015. Following submissions by counsel for all parties the matter was adjourned to allow the applicant to deliver a supplemental affidavit setting out the basis upon which the applicant could reasonably allege, or undertake to allege fraud in these proceedings. STATUTORY PROVISIONS
The opposition to any joinder of the insurance company is based on the simple proposition that a plaintiff cannot be forced to sue a party he does not wish to sue and that a specific statutory procedure exists which adequately addresses the situation which the insurers wish to address in bringing this application. That is contained in section 76(1) of the Road Traffic Act 1961 which provides as follows -
(a)….. (b)….. (c) where the claimant has so recovered judgment for the sum, or after service of the notice so recovers judgment for the sum or any part thereof, and has not recovered from the owner or user or such insurer or guarantor the whole amount of the judgment, the claimant may apply to the court in which he recovered the judgment for leave to execute the judgment against the insurer or guarantor, and thereupon the court may, if it thinks proper, grant the application either in respect of the whole amount of the judgment or in respect of any specified part of that amount; (d) where the claimant has not so recovered judgment for the sum, the claimant may apply to any court of competent jurisdiction in which he might institute proceedings for the recovery of the sum from the owner or user for leave to institute and prosecute those proceedings against the insurer or guarantor (as the case may be) in lieu of the owner or user, and the court, if satisfied that the owner or user is not in the State, or cannot be found or cannot be served with the process of the court, or that it is for any other reason just and equitable that the application should be granted, may grant the application, and thereupon the claimant shall be entitled to institute and prosecute those proceedings against the insurer or guarantor, and to recover therein from the insurer or guarantor any sum which he would be entitled to recover from the owner or user and the payment of which the insurer or guarantor has insured or guaranteed; (e) the insurer or guarantor shall not, as a ground for refusing payment of moneys to the claimant or as a defence to proceedings by the claimant, rely on or plead any invalidity of the policy or guarantee arising from any fraud or any misrepresentation or false statement (whether fraudulent or innocent) to which the claimant was not a party or privy and which, if constituting a misdemeanour under this Part of this Act, was not the subject of a prosecution and conviction under the relevant section of this Act. When the matter came before this Court on 29th April, 2015 the Court directed that an affidavit setting out the basis for joining the applicant for the purposes of enabling the applicant to plead that a fraud had been perpetrated in relation to the claim. An affidavit was filed on 7th May, 2015 by Joyce Foley, an employee of the applicant insurance company who is assigned to their investigation unit. It is averred that during the course of an investigation into the road traffic accident of 18th November, 2012, the defendant stated that he did not know Mr. Hugh Geoghegan, the driver of the vehicle which was struck by the defendant’s vehicle. However, in an affidavit filed by a P. Dempsey, a private investigator employed by Confidential Investigations Athlone, it is stated that the defendant’ sister, the plaintiff herein, has been in a relationship with Mr. Geoghegan for twelve years and has a child with him. The private investigator further states that he observed Mr. Geoghegan delivering a person to the defendant’s address on 31st March, 2014. It is submitted that the applicant insurer believes that the accident was contrived and therefore refused to indemnify the defendant. The applicant seeks to be joined as a co-defendant so that a defence of fraud can be pleaded. It is submitted that an order joining the applicant as a co-defendant or notice party should be made so that the insurer can protect its interests in the most cost, resource, and time efficient manner. Counsel on behalf of the applicant refers the Court to the decision in Fincoriz SAS v. Ansbacher Limited [1987] IEHC 19 wherein Lynch J. held -
A person having no legal but only a commercial interest in the outcome of the litigation between the plaintiff and the original defendant cannot be added as a party either for the convenience of the court or otherwise. On the other hand, a person may be added as a defendant, either on his own application or the application of the defendant, where his proprietary or pecuniary rights are or may be directly affected by the proceedings either legally or financially, by any order which may be made in the action, or where the intervener may be rendered liable to satisfy any judgment either directly or indirectly.” It is submitted on behalf of the applicant that another relevant consideration in the context of an application pursuant to Order 15, rule 13 is, as referred to in the passage cited by Keane C.J. in Barlow “where the intervener may be rendered liable to satisfy any judgment either directly or indirectly”. If judgment is marked against the defendant in these proceedings the plaintiff is entitled to pursue judgment against the applicant as the defendant’s insurer pursuant to s.76 of the Road Traffic Act, 1961. The applicant submits that it is an artificial exercise to permit the plaintiff to secure a judgment against the defendant in what may in effect be an uncontested case where the crucial question regarding the alleged fraud cannot be determined until the plaintiff seeks to invoke s.76. In this regard, counsel refers the Court to the following extract from the decision of Kelly J. in Duignan v. Dudgeon [2005] IEHC 348 -
In my opinion it is entirely artificial to suggest, as the plaintiff does, that his departure from Arnotts is not the main issue in the proceedings. It is, in many respects, at the forefront of the proceedings and the Plaintiff himself has made it so by his positive assertion that he did not retire from his position. The crucial question of whether that is correct or not can only be decided with Arnotts being joined as a defendant. In my view it makes no sense for the action to proceed without this issue being properly addressed. The action as constituted at present cannot effectually and completely adjudicate upon and settle that crucial question.”
[The plaintiffs] cannot be forced to make a case that they do not want to make they cannot be obliged to change their pleadings so as to include a claim against the new added party. The point of joining a new defendant is in the interest of justice, in the court's interest in seeing that litigation is properly and effectively conducted and that its processes are operated in a way that is just and fair and also in the interest of the added party because of the impact of the litigation on his rights.” Counsel further relies upon an ex tempore decision of this Court in Daly v. Ryan and Liberty Insurance (3rd November, 2014) where the Court held that joining the insurer to proceedings rather than awaiting a subsequent application under s.76 in circumstances where they wished to allege fraud was appropriate. The Court indicated that this course allowed for the most efficient use of court time and avoided unnecessary additional costs being incurred by the parties. The applicant submits that the decision of O’Neill J. in McDonagh v Stokes [2014] IEHC 229 as relied upon by the defendant and in which O’Neill J took a different view is distinguishable as the primary question which the court in that case considered was the correct procedure to be adopted under s.76. It is submitted therefore that those parts of the judgment upon which the defendant seeks to rely do not form part of the ratio decidendi of O’Neill J’s decision and are obiter. It is further submitted that the European Communities (Fourth Motor Insurance) Directive Regulations, 2003 allows claimants to proceed directly against insurers without first obtaining judgment against the driver of the vehicle that caused injury. Pursuant to the Regulations, the injured party has a direct right of action against the insurers and does not need to sue the driver. It is accepted however that s.76 is unaffected by the Regulations and that an injured party therefore has the right to proceed either against the driver and to seek to have any judgment satisfied by the insurers under s.76, or, to proceed directly against the insurers. It is therefore submitted on behalf of the applicant that the circumstances of this case are exceptional and it is necessary to join the applicant as a co-defendant or notice party to effectually and completely adjudicate on the issue of whether a fraud has been perpetrated. SUBMISSIONS OF THE DEFENDANT
Counsel contends that the applicant has no direct or indirect interest in these proceedings. Neither plaintiff has proceeded directly against the applicant pursuant to the 2003 Regulations and therefore there is no such direct effect on the pecuniary or proprietary interests of the applicant unless and until the plaintiff obtains judgment against the defendant and then, pursuant to s.76, seeks leave to apply to the court in which judgment was recovered for leave to execute the judgment against the insurer. If such an application was made, it is submitted that it is at that stage that the applicant could vigourously resist the application and put before the relevant court any relevant evidence of fraud which it has obtained in the course of the investigations it has conducted. Counsel for the defendant submits that there is absolutely no bar to the applicant presenting evidence of fraud in a s.76 application and, if necessary, an oral hearing may be directed. It is submitted that insurance companies regularly successfully defend such applications on various grounds, including that a fraud has been perpetrated. Therefore, it is submitted that any interest the applicant has in these proceedings is a remote one. It is denied that the plaintiff would be able to rely on the provisions of s.76(e) to preclude the insurer from making raising the defence of fraud in circumstances where it is alleged that the plaintiff and the defendant colluded. Section 76(e) relates only to fraud, misrepresentation, or a false statement to which a claimant was not a party. Counsel for the defendant submits that even if the plaintiff were to obtain an uncontested judgment against the defendant and subsequently sought leave to recover against the applicant on foot of that judgment, the plaintiff would do so in full knowledge that were the applicant to successfully establish fraud they would be liable to be found guilty of offences pursuant to sections 14, 24 and 26 of the Civil Liability and Courts Act 2004. It is submitted that these provisions provide a very real disincentive to persons who might bring fraudulent claims. It is submitted that the plaintiff was perfectly entitled to pursue the claim in the manner it has done so to date and there is nothing improper in the decision not to pursue the claim pursuant to the 2003 Regulations. In all of the circumstances, it is submitted that it is not necessary to join the applicant to these proceedings. Without prejudice to this submission, counsel contends that even if the applicant is to be joined to the proceedings, it should be joined as a notice party rather than a co-defendant. In this regard, reliance is placed on the following extract from Delany & McGrath’s Civil Procedure in the Superior Courts -
DISCUSSION It is accepted between the parties that a plaintiff is ordinarily entitled to chose the person they wish to commence proceedings against and cannot be compelled to proceed against a person he has no desire to pursue. However, as set out by Lynch J. in Fincoriz SAS v Ansbacher Ltd. [1987] IEHC 19, a court may join a party to proceedings against the wishes of the plaintiff, but it must only do so in exceptional circumstances. Similarly, in Persona Digital Telephony Limited and Sigma Wireless Networks Limited v the Minister for Public Enterprise, Ireland and the Attorney General [2014] IEHC 78 Ryan J. held that there must be ‘very exceptional’ circumstances before the plaintiff’s choice as to who to sue will be interfered with. In BUPA Ireland Limited v Health Insurance Authority [2006] 1 IR 201 the Supreme Court held that the “proprietary or pecuniary rights” of an applicant were held to be a relevant consideration in the oontext of an application pursuant to Order 15, rule 13. Having regard to this finding, and the comments of Ryan J. in the Persona Digital Telephony case that “the point of joining a new defendant is in the interest of justice, in the Court’s interest in seeing that litigation is properly and effectively conducted and that its processes are operated in a way that is just and fair and also in the interests of the added party because of the impact of the litigation on its rights”, this Court is satisfied that the applicant in the present case has met the high threshold required to be joined as a notice party. This is not a case, as referred to in Barlow and Others v Fanning & UCC [2002] 2 IR 593, where the applicant seeks to be joined merely because its reputation is at risk and they wish to defend it. Nor is the applicant seeking to be joined simply because it is interested in the proceedings, as opposed to having a genuine legal interest in the outcome of the proceedings. The applicant insurer’s proprietary or pecuniary rights are very much at stake in these proceedings. If judgment is entered against the defendant, the plaintiff may then seek to execute the judgment against the applicant under s.76. While the Court accepts that the plaintiff was not required to proceed directly against the applicant insurer, the Court is satisfied that, having regard to the Court’s interest in ensuring that litigation is effectively conducted and that valuable court time is used efficiently, the facts of this particular case justify the joining of the applicant as a notice party. It is obvious that there is a real risk that no defence of the kind sought to be made by the insurer will be advanced by the existing defendant and, without prejudice to the substantive hearing, the Court is satisfied on the basis of the supplemental affidavits that there is at least an arguable case in relation to the alleged fraud which would be properly made at this stage. There is no statutory preclusion of such a joinder and the ever-increasing exhortations of appellate courts - as exemlified in the Supreme Court decision in Talbot v Hermitage Golf Club & Ors. [2014] IESC 57 - to ensure that cases and legal business generally be disposed of efficiently and expeditiously, coupled with the fact that EC Motor Regulations now expressly provide that insurers may be sued directly, all constitute factors strongly in favour of the course sought by the applicant in this case. The Court accepts the submissions of the applicant that the decision of O’Neill J. in McDonagh v Stokes related primarily to a separate and distinct issue, namely the correct procedure to be applied pursuant to s.76, and that those portions of the judgment relied upon by the defendant did not constitute part of the ratio decidendi of the decision. In the subsequent case of Daly v Ryan and Liberty Insurance (ex tempore, 3rd November, 2014) this Court permitted an insurer to be joined to the proceedings rather than await judgment being marked against their insured, damages assessed, and ultimately an application pursuant to s.76 of the Road Traffic Act, 1961. The Court accepts that in the present case, as it seems clear that fraud is being alleged against the plaintiff and the defendant, the applicant would not be restrained by 76(e) from arguing fraud in any s.76 application. As already stated however, the Court is satisfied that, in all the circumstances of this case, requiring the applicant to do so rather than joining them as a party to these proceedings would be an inefficient use of court time and would cause unnecssary costs to be incurred by the parties. However, to conform to the greatest degree possible with the historic legal jurisprudence, the Court will direct that the insurer be joined as a notice party rather than as a defendant. As a countervailing factor of possible benefit to the plaintiff in the proceedings is the fact that, if successful with the claim, an award of aggravated or exemplary damages may be sought and awarded by the trial judge DECISION |