Supreme Court of Ireland Decisions

1. These proceedings (and the related action of Hart and the Motor Insurers Bureau of Ireland) concern the interpretation of an agreement in writing dated the 21st day of December 1988 made between the Minister for the Environment and the Motor Insurers’ Bureau of Ireland (the 1988 Agreement), the facts concerning a tragic accident which occurred on the 25th November 1993 and the manner in which a claim by Phillip Bowes (the Plaintiff) arising out of that accident was processed.

2. The history of the accident as provided by the Plaintiff may be stated shortly. On the 25th November 1993 he was driving a Rover estate car, the property of Wrigley Company Limited on a public highway near Lismullen, Navan, County Meath. There was one passenger in the car, namely, Mr Andrew Hart (the Plaintiff in the related action and hereinafter referred to as ‘the Passenger’). A motor cycle the property of and driven by Mr Darby J Kennedy (the Deceased) came around a bend and collided with the car driven by the Plaintiff. The Plaintiff and the Passenger were injured in the collision and the motor car was damaged. Tragically Mr Kennedy was fatally injured.

3. By letter dated the 22nd day of July 1994 Messrs Stuart Stein & Co., Solicitors on behalf of the Plaintiff and the Passenger, wrote to the Motor Insurer’ Bureau of Ireland (MIBI). In that letter the Solicitors identified their clients, the date of the accident; its location and then went on to say as follows:-

4. On the 3rd August 1994 the MIBI replied enclosing the questionnaire sought and seeking from the Solicitors any medical or garda reports together with details of the insurance held by the claimants.

5. On the 12th day of August 1994 the questionnaire was returned duly completed together with a garda report and witness statements. It appears from the completed questionnaire that the Deceased had an address at Neilstown, Bohermeen, Navan, County Meath but that the motor cycle that he was driving at the time of the accident had a UK registration, namely, VFJ 432X.

6. In their letter to the MIBI, returning the questionnaire the Solicitors sought the co-operation of the MIBI in the following terms:-

7. In their letter of the 14th September 1994 to the MIBI the solicitors referred to the earlier correspondence and commented as follows:-

8. It appears that a meeting took place between representatives of the MIBI and the Solicitors on the 30th September 1994 at which the representative of the MIBI explained that there would be some delay in “appointing a handling office” because the motor cycle in question had

9. On the 15th November the Solicitors referred once more to their earlier letter and sought a response from the MIBI. On the 30th November 1994 MIBI wrote to the Solicitors in the following terms:-

10. On the 20th December Cornhill Insurance wrote to the Solicitors stating that the file had been passed to them and went on to say;-

11. The letter included other details in relation to the proposed examination and the final communication exhibited clarified further details in relation to the examination.

12. Proceedings were then instituted by the Plaintiff and the Passenger naming the MIBI as the sole Defendant. Those proceedings were commenced by plenary summons dated the 15th

13. February 1996. In the Statements of Claim, each dated the 21st of February 1996, the history of the accident as recorded above was set out in some detail together with the particulars of the injuries sustained by the Plaintiff and the negligence alleged against the Deceased. In relation to the involvement of the MIBI it was asserted as follows:-

14. In their defence the MIBI contended that:-

15. Without prejudice to that contention the MIBI raised further defences which included the following:-

16. After the proceedings had been set down for hearing an application was made on behalf of the Defendant for the determination of the issue as to whether the claim against the MIBI was maintainable given that any claim against the said Darby Kennedy was statute barred.

17. The affidavit sworn by Mr Stuart Stein in relation to that motion contains evidence material to these proceedings. In paragraph four of his affidavit Mr Stein explained why no proceedings had been instituted against the estate of the Deceased in the following terms:-

18. Again in paragraph eleven of his affidavit Mr Stein said:-

19. Mr Stein may have been correct in his belief that it would have been “a waste of time and expense” to establish whether or not any representation had been raised to the estate of the

20. The potential of a mechanically propelled vehicle to cause serious personal injury became apparent in the early part of this century. As the years went by it was recognised that many motorists would have insufficient assets with which to compensate the victims of their negligent driving. No doubt it was for that reason that the Road Traffic Act 1933 section 56 imposed a statutory obligation on motorists to insure themselves against their liability for personal injuries caused by the driving or control of mechanically propelled vehicles. Although machinery was set up to secure compliance with this statutory requirement it was not always effective. The Executive had to address the question of what was to happen where a motorist had failed to obtain or maintain valid and effective insurance cover. The solution adopted here (and in the United Kingdom) was to persuade the insurance industry to provide a fund to meet such cases. In this jurisdiction a company limited by

21. On the 12th day of March 1962 the MIBI entered into a further agreement with the Minister for Local Government. This agreement was necessitated by the enactment of the Road Traffic Act 1961. The purpose of the amending agreement was to confine the obligations of the MIBI to liability that would have been required to be covered by an approved policy under

22. The changes introduced by the 1988 Agreement were indeed revolutionary. First it extended the liability of the MIBI to meet judgments for “damage to property” in addition to injury to persons (see clause 4 (1). Secondly it extended the liability of MIBI to liability for the payment of compensation for personal injury or death (but not property) of any person caused by the negligent driving of a vehicle in a public place (after the 31st December 1988) where the owner or user of the vehicle remained unidentified or untraced (see clause 6). Thirdly, the Agreement expressly permitted proceedings to be brought by an injured party citing the MIBI either as co-defendant or sole defendant in the particular circumstances mentioned in clause 2 of the 1988 Agreement.

23. The surprising feature of the arrangements made between the Executive in this jurisdiction (and in the United Kingdom) and with the insurance industry was that it took the form of an agreement between the Minister concerned and the corporate body representing the industry. The uncompensated victims of motor accidents could not in law enforce the obligations undertaken by the insurance industry in those agreements as there was no privity between them and MIBI. This serious difficulty was overcome before 1988 by a simple and effective

24. Whatever their procedural shortcomings, the substance of the pre 1988 Agreements was clear: the MIBI had committed itself, subject to various exceptions and conditions precedent, to meeting the claims of certain judgment creditors. The explanation for this arrangement can be readily understood. The motor industry was not treating the uninsured motorist as if he were insured. There was no question of monies provided by the MIBI forming part of the assets of the judgment debtor. So, far from it, the judgment debtor would be liable to the MIBI either by way of subrogation or assignment for all monies paid by it to the judgment creditor. Moreover, the procedure ensured that the MIBI would be the payer of last resort. Any persons whose negligence contributed to the injuries could be made a defendant by the victim, either at his election or at the direction of the MIBI, and no matter how small a part the negligence of that defendant played in causing the accident, the fact that the judgment could be recovered against him for the entire amount relieved the MIBI of any liability whatever. The fact that the MIBI had express contractual power to settle claims of which they were given notice did not affect the concept that in respect of accidents occurring before the 31st December 1988 they were liable only in respect of judgments obtained in courts established under the Courts (Establishment and Constitutional) Act 1961.

25. The reason that victims of hit and run drivers could not avail of the earlier agreement was that judgment could not be obtained against them. To overcome that problem the 1988 Agreement simply provided that the liability of MIBI should extend to the payment of compensation for personal injury or death of persons where the owner or user of the vehicle remained

26. Whilst the arrangement continues in the form of an agreement between the Minister and the MIBI the 1988 version expressly confers upon “persons claiming compensation” certain rights to seek enforcement of the provisions of that agreement. The three procedures made available to persons claiming compensation are set out in clause 2 of the Agreement as follows:-

27. Clause 2 aforesaid is unhappily expressed. On the face of it, it would appear to imply that any person seeking compensation from the MIBI, having made a claim against it, could then institute proceedings naming the MIBI as the sole defendant. That interpretation would make sub clause (2) of clause 2 irrelevant and unnecessary. Furthermore, such construction would ignore the fact that the liability of the MIBI (or the provisions of the Agreement enforceable against it by a claimant) arises in two distinct ways. First, the MIBI may be liable on foot of a judgment obtained against an uninsured or inadequately insured driver, or alternatively to pay compensation for the negligence of the driver or user of a vehicle (whether insured or not) who is unidentified or untraced. Whatever procedures are adopted those are the only circumstances in which provisions can be enforced by a claimant against the MIBI. Either the claimant seeks to be repaid a judgment debt - in which case he must issue proceedings against a driver - or else he seeks to be compensated for the negligent driving of an untraced and unidentified driver. In that case he may, subject to compliance with the various conditions precedent, institute proceedings against the MIBI as the sole defendant; but his essential proof to obtain compensation would be the negligence of an unidentified and untraced driver. Clearly in the present case any such proceedings would fail as the driver of the vehicle involved has been identified. Accordingly, any claim against the MIBI to succeed must involve the identified driver (or his estate) and proceedings against him to judgment unless the MIBI negotiate an acceptable compromise of the Plaintiffs claim.

28. In my view in the present circumstances no claim by the Plaintiff can be sustained because judgment has not been obtained against the estate of the deceased, Darby Kennedy, and any proceedings now leading to such judgment are unfortunately barred by the lapse of time.

29. Whilst the Appellant has relied heavily on the Directive of the European Union, known as the “Second Council Directive” (84/5/EEC of 30th December, 1983) I do not believe that this argument is well founded. In my view the 1988 Agreement for all its faults and interpreted in the manner which I have indicated gives full effect to the European Directive in the results to be achieved by that Directive.

30. I would dismiss the appeal in the above entitled proceedings and the same result would follow in the related proceedings by the Passenger against the Motor Insurers Bureau of Ireland.

31. The basic facts of these actions are relatively simple. The plaintiffs were injured in a road traffic accident involving a car in which they were travelling with a motor cycle the driver of which was killed.

32. The accident occurred on the 25th November 1993. On the 22nd of July, 1994, the solicitors for the plaintiffs wrote by registered letter to the Motor Insurers’ Bureau of Ireland (the Bureau) as follows:

33. A reply dated 3rd August, 1994 was received from the Bureau which was as follows:-

34. The questionnaire was returned completed together with the garda report and attached statements. Efforts were made by the plaintiffs’ solicitors to trace to the motor cyclist insurance but were unsuccessful.

35. Ultimately the Bureau nominated Cornhill Insurance plc to represent its interests. A medical examination of the plaintiffs was then arranged. All this had been done by mid-November 1994.

36. It was not until the 15th February 1996 that plenary summonses were issued on behalf of the plaintiffs against the Bureau. The reason for the gap between November, 1994 and February, 1996 is not explained. The plenary summons is endorsed in the form of an action for damages for negligence. In the statement of claim the defendant was sued in “respect of public duty under agreement with the State.”

37. By its defence the Bureau pleaded at paragraph 1:-

38. The rest of the defence was without prejudice to this plea and related to a denial of a successful cause of action against the deceased motor cyclist.

39. In addition at paragraph 3 the defendant pleaded:

40. By reason of this plea an application was made to have a preliminary issue heard and by an order of Mr. Justice Johnson made the 3rd November, 1997, a preliminary issue was directed, being whether the claim against the Motor Insurers’ Bureau of Ireland arising from the negligence

41. This issue came before Budd J . who held that the plaintiffs were not entitled to sue the Bureau as sole defendants. Accordingly, the actions were dismissed. It is against this order that the matter comes before this Court.

42. Two issues arise: (1) whether the Motor Insurers’ Bureau of Ireland (the Bureau) can be sued as sole defendant by a claimant who has suffered injury at the hands of an uninsured but identified driver rather than at those of an unidentified or untraced motorist, and (2) if it can, can it rely upon a special defence - here the Statute of Limitations - open to the identified driver or, in this case, his personal representatives, had they been sued.

43. The determination of these issues depends upon the proper construction of the agreement dated 21st December, 1988 and made between the Minister for the Environment and the Bureau (the 1988 Agreement). This in turn depends upon the scheme which had previously existed and the reason for the making of the 1988 Agreement. The scheme which existed previously was pursuant to an agreement dated the 30th November, 1955 between the Minister for Local Government and the Bureau (the 1955 Agreement). Under that Agreement the Bureau was liable to satisfy all judgments against motorists whether insured or not remaining unsatisfied for a period of twenty-eight days. As a condition precedent to liability notice of intention to bring the proceedings had to be given to the Bureau and served by registered post.

44. The relevant provisions of the 1955 Agreement were as follows:

45. The Act referred to in the body of the Agreement was the Road Traffic Act, 1933. Subsequently when the Road Traffic Act, 1961 was passed there were two further agreements, one in 1962 and one in 1964, which provided for the altered insurance obligations contained in the 1964 Act. However, the scheme of the Agreement was not altered in any way. The liability of the Bureau remained as a liability to satisfy all judgments remaining unsatisfied for twenty-eight days.

46. In using the word “liability” I intend to refer solely to the obligations undertaken by the Bureau in accordance with the terms of the several agreements. For example, where the Agreement refers to “conditions precedent to MIB of I’s liability” this does not impose any liability on the Bureau; it merely indicates the circumstances in which the obligations

47. One aspect of the scheme of the agreements between the Bureau and the Minister which lessened their effect was that unless there was someone to be made defendant, there was no remedy. In this way, claims against unidentified or untraced motorists were excluded from the provisions of the scheme. Damage to property was also excluded.

48. The amendment of the scheme by the 1988 Agreement was brought about to comply with the terms of a European Directive (“the 1983 Directive’) entitled “Second Council Directive 84/5/EEC of 3O December, 1983 on the approximation of the laws of the Member States relating to insurance against civil liability in respect of the use of motor vehicles.” This Directive provided that any scheme involving the Bureau should

49. Article 5 of the Directive provided that Member States should amend their national provisions to comply with the Directive not later than 31st December, 1987 and that the provisions thus amended should be applied not later than 31st December, 1988. The State complied with this requirement both as to the amendments to our national provisions and as to the time at which they were to be applied by the 1988 Agreement.

50. These requirements could have been effected either by a supplemental agreement or by an entirely fresh agreement. In the event, it was not done by either method. The 1988 Agreement is an apparent combination of the two methods. The 1988 Agreement was made on the 21st December, 1988. It determines the earlier agreements but at the same time re-enacts their material provisions while at the same time

51. The difficulty in this approach is that the 1983 Directive upon which the Agreement is based does not make any distinction between the circumstances in which claims may arise. More importantly there are internal indications in the new provisions themselves which cannot relate to persons who are unidentified or untraced.

52. Before seeking to construe the 1988 Agreement, it is appropriate to set out the relevant provisions of this Agreement and of the 1983 Directive respectively.

53. The new provisions of the 1988 Agreement are as follows:

54. Alongside these provisions the 1988 Agreement also includes mutatis mutandis the provisions of clause 4 of the 1955 Agreement - clause 7 of the 1964 Agreement - as sub-clauses 6, 7, 8 and 9 of clause 3. Likewise, it includes clause 1 of the 1955 Agreement - clause 2 of the 1964 Agreement -

55. Since the 1988 Agreement has been brought into being as a result of the 1983 Directive, before seeking to construe the 1988 Agreement it is appropriate to look to the terms of this Directive as an aid to construction of that Agreement.

56. The relevant recital to this Directive provides so far as is material:

57. The relevant provisions of the Directive appear in Article 1(4) and are as follows:

58. For sake of clarity I propose to refer to the obligation of the Bureau to meet claims against identified drivers as being the old cause of action, and claims in respect of the actions of unidentified or untraced motorists as the new cause of action.

59. The internal indications in the new clauses that they apply to both owners and users who are identified as well as to those who cannot be identified or traced are to be found in clauses (3)(3), 3(4) and 4(3).

60. The reference in clause 3(3) to “subsequent legal proceedings” and the reference in clause 3(4) to “insurance particulars ... of the user or owner of the vehicle”, both new provisions, can only refer to identified drivers.

61. The kernel of the question, however, is the interpretation to be placed on clause 4(3). There is in my view no justification as a matter of construction for regarding this clause as applying only to the new cause of action, however much one might believe that the old cause of action had to be pursued to judgment before any liability was imposed upon the Bureau.

62. There are a number of reasons why it should be construed as applying to both causes of action. Article 1(4) of the 1983 Directive clearly gives the right to apply directly to the Bureau whether the vehicle is

63. Secondly, clause 4(3) follows on from clause 4(1). If you have a judgment, you have one right; if you do not, you have a different right. So far that would give the right under clause 4(3) to those having the right under clause 4(1). This would be the position if the words “or is

64. Clause 4(3) uses the word “applies” rather than “claims”, a further indication that it purports to meet the provisions of Article 1(4) of the 1983 Directive. That it is also a claim is made clear by the use of the word “claimant” in clause 4(4).

65. It follows in my view that the new provisions of the 1988 Agreement do not apply exclusively to the new cause of action. As appears from paragraph 1 of the defence filed on behalf of the defendant the defendant accepts this proposition in part. The paragraph follows the wording of clause 2(3) of the 1988 Agreement and for this reason appears to accept that the claim procedure applies in every case. In its written submissions the Bureau also contended inter alia that clause 2(3) does not apply to

66. The implications arising from this construction of clause 4(3) are important in the interpretation of clause 2 and in particular clause 2(3) of the 1988 Agreement. First, a claimant, even where he can bring proceedings and obtain judgment is not obliged to do so. He can apply to the Bureau under clause 4(3). Secondly, it seems that if the claimant cannot reach agreement with the Bureau for the purposes of clause 4(4), such claimant must be deemed to have made a formal claim for the purposes of clause 2(1). Thirdly, there would seem to be no justification

67. Consequently, clause 2(1) is applicable to any claimant whether the user or owner of the vehicle is identified, unidentified or untraced, provided that an application has first been made under clause 4(3).

68. Passing to clauses 2(2) and 2(3), these clearly relate to different circumstances. There are two obvious differences:

69. Nor do the different words – “giving rise to the claim” in clause 2(2) and “seeking a court order for the performance of the Agreement” in clause 2(3) – help. They are really saying the same thing and are in any event governed by “may seek to enforce the provisions of this Agreement” at the beginning of the clause.

70. The whole manner of drafting the 1988 Agreement is so unusual that there can be no certainty as to what is intended by clause 2(2). Clearly, it only applies to claims where the owner or user of the vehicle is identified. Equally clearly, it is not intended to apply where a claim has not been made under clause 2(1). In these circumstances, it probably is intended to apply when notice of intention only has been given to the Bureau. Under the 1955 Agreement and the 1964 Agreement it was not unusual for the Bureau to be joined as co-defendant in proceedings. Clause 2(2) probably intends to eliminate the need for such an application. As such

71. In my view, clause 2(3) is easier to construe. It is the final means of enforcing the Agreement against the Bureau. The first step is to apply for compensation under clause 4(3). The parties may then agree the amount: clause 4(4). If they do not, a claim can be made which may or may not be settled: clause 2(1). I am conscious that there seems to be no real difference between clause 4(4) and clause 2(1). If all this fails, then clause 2(3) applies. Since the entire of this procedure may be used by a claimant under the old cause of action, there can be no basis for construing clause 2(3) against such a claimant.

72. These provisions effectively made the Bureau the insurer of first resort in all cases to which the 1998 Agreement applied. This position of the Bureau as insurer of first resort has been made even more clear by

73. Council Directive 90/232/EEC of 14th May, 1990. In particular, this Directive provided that the compensation payable by the Bureau should not be conditional upon showing that the negligent driver was unable or refused to pay, nor delayed by the resolution of a dispute as to which Bureau or insurer should ultimately be liable.

74. The relevant recitals of this Directive were:

75. Article 4 so far as is material is as follows:

76. In pursuance of these provisions the Bureau has given the following undertakings:

77. While it is immaterial, it is to be noted that the undertaking in relation to Article 3 omits reference to refusal to pay.

78. This later Directive and the undertakings given on foot of it do not affect the construction of the 1988 Agreement. They do nevertheless give an indication of the understanding by the Bureau of its obligations thereunder. The undertaking with reference to Article 3 is independent of the existence of any judgment. In those cases where there is a judgment, the claimant will be required to assign it to the Bureau.

79. Once the Bureau can be sued as a sole defendant, even in the case of an identified wrongdoer, then the question of the joiner of such

80. The answer to the central issue in these proceedings, whether the Bureau can be sued as sole defendant when the owner or user responsible is identified should be in the affirmative. The 1988 Agreement provides for two sets of procedures relating to the old cause of action. Why it should do so is obscure. The first is similar to that under the 1955 Agreement save that when the claimant brings such proceedings there is an obligation imposed by clause 2(2) to join the Bureau as a co-defendant. It commences with notice of intention to commence proceedings pursuant to the provisions of clause 3(6). The second is the same as for the new cause of action.

81. That procedure requires, first, notification of intention to claim compensation within the time limited: clause 3(1); a claim pursuant to clause 4(3) followed by a reasoned response by the Bureau. If this cannot be settled pursuant to the provisions of either clause 4(4) or clause 2(1), proceedings may issue citing the Bureau as sole defendant.

82. This view of the agreement is in accord with the explanatory booklet on the agreement issued by the Department of the Environment. It follows that provided that a proper notice of intention to claim is made within the time provided by clause 3(1), followed by a claim as has been made by the plaintiffs, then the proceedings by the latter against the Bureau as sole defendant cannot be defeated by the time running under the Statute of Limitations as against the personal representatives of the wrongdoer.

83. In my view, the originating letter in which the Bureau was asked to forward its usual questionnaire for completion by the plaintiffs was compliance by the plaintiffs with clause 3(1) of the Agreement in that it gave notice of intention to claim compensation. When the questionnaire was completed and returned, this was the act of a claimant within the meaning of clause 4(3). The efforts on behalf of the plaintiff to obtain insurance particulars of the wrongdoer came within clause 3(4).

84. These steps on behalf of the plaintiffs clearly indicated an intention to exercise such rights as they had under the terms of the 1988 Agreement. They never said specifically, “we claim compensation from you”, nor do they indicate which clauses they were relying on. The existence of the questionnaire showed what information the Bureau required. The plaintiffs complied with this and sought also to discover insurance particulars. In my view, both sides knew the purpose of what was

85. Ultimately, it is my view that it is the clear intention of the Directive, and consistent with a purposive construction of the Agreement, that in fact the Bureau should act as insurer of the wrongdoer. Further, it is clear from the 1983 Directive that there was no intention that claims against unidentified or untraced wrongdoers should be in any different category or be dealt with in any different way from claims against uninsured drivers.

86. The reality of the Agreement is that the Bureau in those cases where the Agreement applies may be substituted for the wrongdoer; and where that procedure is adopted notification of intention to seek compensation

87. In the circumstances, the plaintiffs were entitled to avail of the provisions of the 1988 Agreement. One final consideration; the Bureau was under an obligation to give a reasoned reply to the plaintiffs as soon as was reasonably practicable. This it did not do. By failing to do so, it was in breach of its obligations under clause 4(3) of the Agreement. In such circumstances, it cannot at the same time complain that the plaintiffs are in breach of clause 2, which in any event in my view they are not.

88. Unfortunately, there is no explanation available as to what happened between November 1994 and February 1996. In September 1994, the’ Bureau was more concerned with discovering whether the motor cycle was properly registered in the United Kingdom so it could recover anything paid iii this jurisdiction by it from its corresponding body in that jurisdiction. That in itself is a breach of its undertaking in relation to Article 4 of the later Directive.

89. In the circumstances, I would hold that the claims against the Bureau are maintainable given that any claim against the said Darby Kennedy is statute barred by virtue of the provisions s.9(2) of the Civil Liability Act 1961, and would allow the appeal.