THE SUPREME COURT[Appeal No: 45/2016]
Denham C.J.
O’Donnell J.
McKechnie J.
Clarke J.
MacMenamin J.
Charleton J.
O’Malley J.In the Matter of an application by the Accountant of the Courts of Justice pursuant to the Insurance Act, 1964 (as amended by the Insurance (Amendment) Act, 2011
The Law Society of Ireland
Claimant (by Order of the Court)/Respondent
and
The Motor Insurers’ Bureau of Ireland
Respondent (by Order of the Court)/Appellant
Judgment of Mr. Justice Clarke delivered the 25th May, 2017.
1. Introduction
1.1 One the perennial issues which leads to complex and innovative litigation is the age old question of identifying a potential defendant who not only may have a legal liability to pay damages but will also be in a position to actually discharge any damages awarded. In the terminology of those involved in litigation this involves identifying a defendant who will be a “mark”. It hardly needs to be said that it would, in the vast majority of cases, amount to little more than a pyrrhic victory if one were to succeed in establishing liability and achieve an award of significant damages but, at the end of the day, the person against whom that award is made was not in a position to pay up. Many developments in the law of liability, particularly but not exclusively in tort, have been driven by plaintiffs seeking to expand the category of those who may be found liable because the person or body which might be considered to be the natural or primary target of litigation would be unable to pay any damages awarded.
1.2 Such considerations have doubtless informed attempts going back over many years to put in place measures designed to minimise the risk that persons injured in motor accidents, who can establish liability, might be left without a practical remedy in the form of an order for damages which is likely to be met. The system for the compensation of those injured in motor accidents through the fault of others remains based on the tort of negligence. The law of tort itself of course requires the establishment of fault. However, in the absence of any specific mechanism to ensure payment of any damages awarded, the chances of a plaintiff actually recovering damages would be wholly dependent on whether those persons against whom fault could be established (whether directly or vicariously) were marks. If the system were left entirely to its own devices plaintiffs would succeed in actually achieving compensation (or fail so to do) wholly dependent on the financial standing of those against whom awards could be made. Indeed, it does have to be said that there are certain areas of liability where that somewhat random element continues to apply. While many, indeed most, employers either have a sufficient level of assets to cover damages claims or are insured, an employee who suffers a workplace injury due to negligence attributable to their employer is dependent on either the employer concerned being in a position to meet any award or there being an effective policy of insurance in place.
1.3 However, there clearly has been a policy view going back very many years that, at least in the most general of terms, persons who are injured through the fault of others in motor accidents should not be left on the hazard of having to depend on identifying a defendant who is a mark in order to be able to recover damages in practise. The system of compulsory insurance for those driving motor vehicles is, of course, directed to that end. Where that system works, plaintiffs do not have to concern themselves with whether the defendant whose negligence caused their injuries is a mark but rather can look to the defendant’s insurer. But without further intervention such a system would have left some, being those who were unlucky enough to be injured by drivers who either were not insured or whose insurance company had some legitimate basis for declining liability, without practical recourse. It is in that context that the position of the respondent/appellant (“MIBI”) comes into play. While it will be necessary briefly to outline the history of the MIBI in due course and while the precise scope of its obligations lie at the heart of the issues which arise on this appeal, it can, at least in very general terms, be said that the purpose of the MIBI from its inception has been designed to at least partly fill the gap in cases where persons are injured due to the negligence of drivers who are not insured.
1.4 But a second possible difficulty also potentially arises. Insurance is only as good as the solvency of the insurance company which provides cover. Plaintiffs, dependent on insurance for the recovery of damages, are, therefore, dependent on the ability of the relevant insurance company to pay. It will be necessary in that context to refer in due course to certain statutory measures which have been put in place to provide a compensation fund (the Insurance Compensation Fund – “the Fund”) designed to cover, at least in part, the liabilities of insolvent insurance companies.
1.5 This appeal is concerned with the potential liability of one or other of the Fund or the MIBI in respect of the compensation of parties injured in motor accidents due to the negligence of drivers who had policies of insurance with Setanta Insurance company (“Setanta”) in circumstances where that company is insolvent.
1.6 In substance the issue is a very net one. Are claims arising in such circumstances covered by the MIBI agreement, in which case the compensation of such injured parties will be a matter for the insurance industry in accordance with the terms of that agreement? Alternatively do such claims fall outside the scope of the MIBI agreement, in which case injured parties must rely on the Fund to the extent that it is obliged to make up some of the damages to which they might be entitled. The Fund can be called upon only where there is no other source of payment so that it would have no liability if the MIBI is obliged to compensate.
1.7 It should be emphasised that the question really turns on the proper interpretation of the agreements governing the obligations of the MIBI considered in the context of the legislation establishing and governing the Fund. This case is not about whether it would be better or more appropriate that the burden of meeting damages properly owed to persons injured by the negligence of drivers whose insurance company became insolvent should fall on the Fund or the MIBI. That is a question of policy and one for the agreement of the parties. Rather the issue concerns the extent, if any, to which the insurance companies who subscribed to the MIBI and through it to the MIBI agreement have, in substance, contracted to meet such claims. If the relevant agreements were clear in either including or excluding liability in such cases then that would be that. The problem is that the agreements are, on any view, unclear and it follows that it is necessary for the courts to do the best they can in construing the agreements and any other relevant materials in order to answer the question raised.
1.8 In any event the High Court (Kearns P.), by order dated the 27th April, 2015, directed that this claim be maintained by the claimant/respondent (“the Law Society”) as representative of the interests of potential plaintiffs. The circumstances leading to that order will be addressed shortly. On the substantive issue being heard, the High Court (Hedigan J.) found in favour of the Law Society and held that the MIBI was obliged to compensate. (See Law Society v. MIBI [2015] IEHC 564). The Court of Appeal dismissed an appeal by the MIBI against that order (see Law Society v Motor Insurers Bureau of Ireland [2016] IECA 60).
1.9 This Court, (see Law Society v. MIBI [[2016] IESCDET 57), gave leave to appeal on the following basis:-
“… subject to the refinement or alteration of what follows at the case management conference, the Court will allow an appeal on the following points:
Whether the MIBI Agreement may properly be construed so as to impose liability or potential liability on insurance underwriters which are party to the MIBI Agreement to pay out in respect of claims against persons who were insured with Setanta, a Maltese registered insurance company, at the time of its entering into liquidation in April 2014.
The correct principles to be applied in construing the MIBI agreement, whether it be a private agreement or an administrative arrangement between Government and the motor insurance industry, with particular reference to the influence of statutory provisions on the proper interpretation of the language thereof
If the MIBI is so liable, how any such liability or potential liability on the part of the MIBI impacts upon the power of the High Court to approve payments under section 3 of the Insurance Act 1964 (as inserted by section 4 of the Insurance (Amendment) Act 2011) authorising payments out of the Insurance Compensation Fund “only if it appears to the High Court that it is unlikely that the claims can be met otherwise than from the Fund.”
Against that general background it is necessary to turn to a brief account of the procedural history.
2. Procedural History
2.1 These proceedings ultimately arose from a decision by Setanta to enter into a creditor’s voluntary winding up in April 2014, which event was preceded by concerns being voiced by the Central Bank from September 2013. The Accountant of the Courts of Justice, exercising statutory duties under s. 26 of the Courts Officers Act 1926 in relation to whether relevant claims could be met otherwise than from the Fund, issued proceedings (Accountant of the Courts of Justice and the Insurance Act, 1964 – Record No. 2015/85) on the 13th April, 2015, in which para. 1 of the relief claimed sought the determination of the following questions:-
“(a) Whether MIBI has a liability or potential liability to pay out in respect of claims against persons who were insured with Setanta, a Maltese registered insurance company, at the time of its entering into liquidation in April 2014.
(b) If so, how any such liability or potential liability on the part of the MIBI impacts upon the power of the High Court to approve payments under section 3 of the Insurance Act 1964 (the “Principal Act”) ( as inserted by section 4 of the Insurance (Amendment) Act 2011 (the “2011 Act”) ) authorising payment out of the Fund “only if it appears to the High Court that it is unlikely that the claim can be met otherwise than from the Fund.”
2.2 On the 27th of April, 2015 Kearns P. ordered that the Law Society and the MIBI be added as claimant and respondent respectively to the proceedings. Kearns P. further directed that the question of who is liable for claims against Setanta policy holders be considered with two questions being directed to be tried being whether MIBI had any liability and, if so, how such liability impacted on the power to make payments out of the Insurance Compensation Fund under s.3 of the Insurance Act 1964.
2.3 Thereafter, the hearing of those issues came before Hedigan J. in the High Court. As noted earlier the High Court found in favour of the Law Society, an appeal was brought by MIBI to the Court of Appeal but was dismissed and leave to appeal to this Court was successfully sought.
3. The MIBI Agreements
3.1 The genesis of the MIBI agreements came in the form of terms concluded between those insurers carrying on motor insurance business in Ireland and the relevant minister (I will use the term “the Minister” to refer to the various titles which the minister responsible for insurance has held over the period since 1955). That initial agreement (“the original agreement”) contemplated the establishment of what became the MIBI and set out the commitment of the relevant insurers to procure that the MIBI would enter into an agreement with the Minister providing a mechanism to ensure the discharge of certain judgments against uninsured drivers. In furtherance of the original agreement the MIBI was established in 1955 as a company limited by guarantee. Its objective was stated to be to compensate victims of uninsured motorists but its liability extended only to circumstances where compulsory insurance was required. As contemplated by the arrangement between the Minister and the motor insurance industry, the terms of the scheme were set out in the form of a contractual agreement between the MIBI and the Minister (“the 1955 Agreement”). This agreement was amended several times with each subsequent agreement determining or terminating the previous one.
3.2 Under the 1955 Agreement, the MIBI essentially agreed to pay the amount of a judgment against an uninsured driver if the judgment was not otherwise satisfied within 28 days. This obligation extended only to judgments in respect of personal injury or death caused by the driving of the vehicle in circumstances within the scope of s. 56 of the Road Traffic Act 1933. (See Clause 1 and Note 2 to the 1955 Agreement). The Agreement also provided for the possibility of ex gratia payments which could be made in respect of serious injuries or death caused by untraced motorists, (see Note 8 to the 1955 Agreement). The 1955 Agreement did not apply to damage to property
3.3 A subsequent agreement was made in 1964 which reflected the extension of compulsory insurance requirements arising from the Road Traffic Act, 1961 (“the 1961 Act”). Section 56 of the 1961 Act extended the compulsory insurance requirement to “use”, as opposed to simply “driving” of a vehicle.. The Notes to the 1964 Agreement state that the Agreement would “with certain exceptions extend to persons travelling in the vehicle” or passengers. (See the MIBI Agreements and The Law, by Lyons and Noctor, 2nd edition, par 1.12) The MIBI was not liable to satisfy judgments in respect of persons travelling in a vehicle where the vehicle was being used without the owner’s consent.(Clause 3, par 1 and Note 2). However, the MIBI could make ex gratia payments if it could be shown that the relevant passenger was not aware that the vehicle was being used without the owner’s consent. (See Clause 4 and Note 2). Similarly, the MIB was not liable to compensate persons who were in or on a vehicle in circumstances where they knew or ought to have known that there was no policy in place in respect of the “use” of the relevant vehicle. (See Clause 3, par 2). In addition Clause 4 of the 1964 Agreement, Note 8 allowed for ex gratia payments in relation to untraced drivers on the same terms as set out in the 1955 Agreement.
3.4 In 1988 a further agreement was made which implemented the Second Council Directive on Motor Insurance of 20th December 1983, on the approximation of the laws of Member States relating to insurance against civil liability in respect of the use of motor vehicles (Directive 1984/5/EEC) and extended liability to damage to property caused by uninsured motorists (reflected in Clause 4 of the 1988 Agreement). In addition clause 6 extended liability for injury or death – but not damage to property - in respect of untraced drivers. Under clause 5, certain passenger claims were excluded in respect of a stolen vehicle (CL. 5.1), where a person knew or ought to have known that a vehicle was uninsured (Cl. 5.2) or where an accident took place between two uninsured vehicles.
3.5 A 2004 Agreement introduced procedural changes for making claims and significantly, in clause 13, the Fund is referred to as the “… Fund of Last Resort.” However, this clause was not repeated in the subsequent Agreement; nor was it to be found in previous agreements.
3.6 A 2009 Agreement implemented the judgment of the CJEU in Commission v Ireland (Case C-211/07) such that only passengers who “knew” – as opposed to “ought to have known” – that they were in an uninsured vehicle, were excluded from being compensated by MIBI. In addition the agreement did not provide for an exclusion in respect of a collision involving two uninsured vehicles, (as had been the case in cl. 5.3 of the 1988 Agreement) as this was also held contrary to the 2nd EU Motor Directive ( 84/5/EEC). Clause 7.1. also introduced compensation for damage to property caused by untraced drivers but only where damages were also obtained for personal injuries.
3.7 It is anticipated that the MIBI Agreement(s) may have to be further amended in light of the recent decision of the CJEU in Damijan Vnuk v Zavarovalnica Triglav C-162/13. (See pars 34, 52 and 59). Vnuk turned, amongst other things, on the interpretation of Article 3(1) of the first EU motor insurance Directive72/166/EC EU of 24th April, 1972 (it should be noted that that directive and all subsequent directives are now consolidated in Directive 2009/103/EC “relating to insurance against civil liability in respect of the use of motor vehicles, and the enforcement of the obligation to insure against such liability”). This case exemplifies the factors which may contribute to changes in the MIBI Agreements. The CJEU extended the parameters of required compensation by holding that accidents occurring in the course of the normal use of a vehicle must be covered. The effect of that case is that accidents occurring on private property must now be covered. Therefore, failure to insure in respect of accidents on private property may allow a victim to seek compensation from MIBI in the future.
4. The UK MIB Agreements:
4.1 There are two relevant MIB Agreements in the UK, the “Uninsured Drivers” Agreement and the “Untraced Drivers” Agreement. The first MIB Agreement was concluded on 31st December, 1946. This agreement was amended in November 1972, and renamed the “Compensation of Victims of Uninsured Drivers” or the “Uninsured Drivers” Agreement. The second, the “Untraced Drivers” agreement, was concluded in 1969 and also replaced in 1972. Prior to this later agreement payments in respect of untraced drivers were only made on an ex gratia basis. Both Agreements are determinable by either the MIB or the relevant Secretary of State on 12 months notice and have been amended on various occasions, most recently in 2017.
4.2 Under the UK Road Traffic Act 1988 it is compulsory for insurers to be a member of the UK MIB. Similarly, in Ireland, s. 78 of the 1961 Act made it compulsory for all insurers to be members of MIBI.
5. The Insurance Compensation Fund
5.1 The Fund was first established following the enactment of the Insurance Act 1964 (“the 1964 Act”). Provision was made for the Fund in s. 2 of that Act. Its administration is conferred on the Accountant of the Courts of Justice. Generally speaking, the Fund only applies to non-life insurers and the 1964 Act provides for funding by means of a levy on the insurance industry and loans from government. Section 6 provided that the Fund is to be financed by way of contributions from applicable insurers.
5.2 Section 4 of the 1964 Act states that a grant of IR£30,000 would be made available by the relevant minister to specifically address the payments made by the liquidator of Equitable Insurance (“Equitable”) under the provisions of s. 3 of the Act. Section 3 allowed for the payment out of the Fund of monies due by the liquidator of Equitable to meet certain claims. It is common case that the collapse of Equitable Insurance was unprecedented in Ireland at that time and closely preceded the enactment of the 1964 Act.
5.3 Section 3(7) of the 1964 Act, as inserted by the Insurance (Amendment) Act 2011 (“the 2011 Act”) states:-
“Where, in respect of a sum due under a policy, a payment equal to the whole of the sum is made by the Motor Insurers Bureau of Ireland, a payment shall not be made out of the Fund under this section in respect of the sum, and where, in respect of such a sum, a payment equal to the part of the sum is made by that Bureau, a payment out of the Fund in respect of the sum shall not exceed the amount of the sum less the amount of the payment by that Bureau.”
5.4 This provision is virtually identical in form to its predecessor, s.3(4) of the 1964 Act, as originally enacted. That provision contained five subsections and has been amended several times, by the Insurance (No. 2) Act 1983; the Insurance ( Miscellaneous Provisions) Act 1985 (the “Act of 1983”); the Insurance Act 1989 (the “Act of 1989”) and the 2011 Act. It is instructive to refer here to some of those amendments which affected the evolution and operation of the Fund.
5.5 Section 3(2) of the Insurance Act, 1989, inserted new sections (1B), (1C), (1D), and (1E).
5.6 Subsection (1B)(a) authorises payments out of the Fund to the liquidator of an insolvent insurer in respect of sums arising under a policy, including costs in securing the sum. Subsection (1B)(b) limits payments made out of the Fund in respect of subsection (1B)(a) to 65% of the total sum. Subsection (1C) stipulates that the 65% limit in subs. (1B)(c) applies to payments out of the Fund in respect of a liability of an insured to a third party.
5.7 Subsection (1D) expressly prohibits any payments out of the Fund under subs. (1B) in respect of a body corporate or unincorporated body of persons, unless and only in so far as a liability is owed to or by an individual. Furthermore, Section 31(1) effectively halted payments out of the Fund to a liquidator of an insolvent insurer in respect of sums arising under subs. 1A (as inserted by the Insurance Act, 1989) insofar as they related to a refund of premium to an insured,
5.8 Most recently, s.4 of the 2011 Act effectively repealed all intermediate amendments and wholly substituted section 3 of the 1964 Act and inserted sections 3A, 3B and 3C.
5.9 Section 4 of the 2011 Act also introduced a new subsection 3(2) into the 1964 Act, which was not contained in s.3 as originally enacted. Section 3(2) states:-
“The High Court shall order a payment under subsection (1) only if it appears to the High Court that it is unlikely that the claim can be met otherwise than from the Fund.”
5.10 Section 3A of the 1964 Act, as inserted by s. 4 of the 2011 Act, also provides that payments out of the Fund may be made to the liquidator of an insolvent insurer to discharge sums due or owing in respect of policies issued by that insurer. Section 3A(3) provides that a person must repay to the Fund any amounts subsequently received in excess of the sum due to them.
6. The Relevant MIBI Agreement
6.1 As noted earlier the central question on this appeal is as to whether, properly construed in the light of all relevant circumstances, the MIBI agreement applicable (being the 2009 agreement) (“the Agreement”) covers liability in respect of drivers who were insured but whose insurer becomes insolvent and thus unable to meet the claims of third parties against the drivers concerned.
6.2 In that context it is necessary to set out those provisions of the Agreement which might be said to at least have some bearing on that question. The principal clause of the agreement which places an obligation on the MIBI to meet claims is clause 4 which is under the heading “Satisfaction of Judgements by MIBI”. Clauses 4.1.1 and 4.1.2 are particularly relevant and are in the following terms:-
“4.1.1 Subject to the provisions of clause 4.4, if Judgement/Injuries Board Order to Pay in respect of any liability for injury to person or death or damage to property which is required to be covered by an approved policy of insurance under Section 56 of the Act is obtained against any person or persons in any court established under the Courts (Establishment and Constitution) Act, 1961 (No.38 of 1961) or the Injuries Board established 6 by the PIAB Act, 2003 whether or not such person or persons be in fact covered by an approved policy of insurance and any such judgement is not satisfied in full within 28 days from the date upon which the person or persons in whose favour such judgement is given become entitled to enforce it then MIBI will so far as such judgement relates to injury to person or damage to property and subject to the provisions of this Agreement pay or cause to be paid to the person or persons in whose favour such judgement was given any sum payable or remaining payable thereunder in respect of the aforesaid liability including taxed costs (or such proportion thereof as is attributable to the relevant liability) or satisfy or cause to be satisfied such judgement whatever may be the cause of the failure of the judgement debtor.
4.1.2 Subject to the provisions of clause 4.4, the MIBI shall satisfy, as soon as reasonably possible, any judgement in favour of a person who has issued proceedings pursuant to clause 2.3”
6.3 It is also of some relevance to recall, as noted earlier, that there were two agreements entered into in 1955. The first, the original agreement, was between insurance companies and the Minister and provided for the establishment of MIBI. The second, which post dated the MIBI coming into existence, was between the Minister and MIBI itself. The genesis of the commitment to provide for the satisfaction of relevant judgments was to be found in clause 2A of the original agreement under which insurers agreed to procure that MIBI would enter into an agreement with the relevant minister which agreement would contain provisions including the following term:-
“That if judgment in respect of any liability for injury to person which is required to be covered by an approved policy of insurance under Section 56 of the Act is obtained against any person or persons in any court established under the Courts of Justice Act , 1924 ( No. 10 of 1924) whether or not such person or persons be in fact covered by an approved policy of Insurance and any such judgment is not satisfied in full within 28 days from the date upon which the person or persons in whose favour such judgment was given any sum payable or remaining payable there-under in respect of the aforesaid liability including taxed costs ( or such proportion thereof as is attributable only to injury to person) or satisfy or cause to be satisfied such judgment whatever may be the cause of the failure of the judgment debtor to satisfy the same.”
6.4 It will be seen that the broad thrust of the core obligation to satisfy judgments has remained much the same since the initiation of the arrangements in 1955.
6.5 Clause 2 of the Agreement states as follows:
6.6 The relevant aspects of Clause 3 of the Agreement state as follows:
“Conditions precedent to MIBI’s liability
The following shall be conditions precedent to MIBI’s liability:
…
3.4 The claimant shall co-operate fully with An Garda Síochána or any other authorised person in their investigations of the circumstances giving rise to the claim
…
3.6 The claimant shall endeavour to establish if an approved policy of insurance covering the use of any vehicle in the accident exists by demanding or arranging for the claimant’s legal representative to demand insurance particulars (including policy number if available) of the user or owner of the vehicle in accordance with the provisions of section 73 of the Road Traffic Act, 1961. Provided the claimant or his legal advisers have made this demand in writing and he has been unsuccessful in so establishing after two months from the date of the accident, notification to MIBI may then take place. If within that two month period the claimant can present to MIBI written confirmation from a member of An Garda Síochána or the owner and/or user of the vehicle giving rise to the claim, then notification may take place immediately.
…
3.9 The claimant shall give not less than twenty eight days notice to MIBI before issuing a motion for judgment against any person which may give rise to an obligation by MIBI.
…
3.11 All judgements shall be assigned to MIBI or its nominee.
…
3.13 Any accident giving rise to a claim made to the MIBI shall be reported by the claimant to An Garda Síochána within two days of the event or as soon as the claimant reasonably could.”
6.7 Clause 9 states as follows:
“Recoveries
Nothing in this Agreement shall prevent any vehicle insurer from providing by conditions in its contracts of insurance or by collateral agreements that all sums paid by it on behalf of MIBI or by MIBI by virtue of the Principal Agreement or of this Agreement in or towards the discharge of the liability of its policyholders shall be recoverable by it or by MIBI from the policyholder or from any other person.”
6.8 The relevant text to the Preamble to the Agreement states as follows:
“AGREEMENT
Text of an Agreement dated the 29th day of January 2009 between the Minister for Transport and the Motor Insurers’ Bureau of Ireland, extending, with effect from dates specified in the Agreement, the scope of the Bureau’s liability, with certain exceptions, for compensation for victims of road accidents involving uninsured or stolen vehicles and unidentified or untraced drivers to the full range of compulsory insurance in respect of injury to person and damage to property under the Road Traffic Act, 1961.”
6.9 On one view the contents of the memorandum of association of the MIBI may be relevant to the proper construction of the Agreement for the sole purpose of the incorporation of the MIBI was to enable it to enter into the original agreement and, by implication, its successors. In that context it should be noted that the memorandum of association has been amended and what follows is the relevant text of that memorandum including any amendments up to and including those passed at an EGM of the company on the 18th December, 2009. It is first, perhaps, appropriate to note certain of the objects of the company which are set out in clause 3 of the memorandum of association. The following sub-clauses are argued to be of relevance to the issues which arise in this case.
“3.1 to enter into agreements and makes arrangements in compliance with current agreements or future agreements with the Minister for Transport (hereinafter called “the relevant Minister”) of the Republic of Ireland responsible for compulsory motor vehicle insurance and connected matters for the compensation of victims of road accidents, (other than the exceptions as provided in the Agreement dated 29th January 2009 between the Minister for Transport and the Motor Insurer’s Bureau of Ireland) involving either uninsured vehicles, stolen vehicles, unidentified drivers or untraced drivers which are required to be covered by contracts of insurance under the Road Traffic Acts 1961 – 2006 as amended or by common law, or a provision of the treaties of the European Community, or an act, regulation or directive adopted by an institution of the European Community, or otherwise.
…
3.12 to pay, satisfy or compromise any claims made against the Bureau which it may seem expedient to satisfy or compromise, notwithstanding that there may be no obligation to do so in law, and to effect counter guarantees.
…
3.19 to enter into agreements with the relevant Minister or any minister or department of state in the Republic of Ireland or elsewhere in relation to the payment of claims by third parties in respect of death or injury to persons or properties suffered in an accident arising out of or in consequence of the driving, ownership, management or control of a motor vehicle or to enter into such agreements either as principal or agent and generally act as agents in this country or of any organisations or associations concerned with the business of motor vehicle insurance whether established in this country or outside it.
…
3.27 to do all such other things that are incidental or conducive to the attainment of the above objects or any of them.”
6.10 Certain provisions of the articles of association are also said to be of relevance. These include Art. 10 concerning cessation of membership the relevant parts of which are in the following terms:-
No such Member, while continuing to transact motor vehicle insurance business in the State, shall be entitled to resign its membership.
Any such member ceasing to be a Member shall nevertheless remain liable for its or his share( pro rate or otherwise) of all obligations ( including but not limited to the obligations of a Member under Article 63.3) arising prior to such resignations and during that current year in which the resignation takes effect.
Upon the occurrence of any event listed in Article 10.1.1 or 10.1.2 any payments which the Bureau may as a result be called upon to make on a Member’s behalf to any creditor shall be contributed solely by the other members respectively. IN each case contributions actually payable by each of the other members shall be made in proportion to their respective levies within their respective group’s actual percentage of the total Bureau levy( relative to the year in which the Bureau meets the said contribution.).
…
10.5 Where any Member ceases to be a Member he shall remain fully liable in respect of all obligations incurred by him in virtue of his membership of the Bureau before its cessation and, for the avoidance of doubt, where an incident arises prior to cessation of membership and that incident would give rise to an obligation on that Member by virtue of his membership then that Member shall remain fully liable in respect of that obligation notwithstanding his being unaware of such incident or obligation prior to the cessation of his membership.”
6.11 In addition Art. 63 sets out the mechanism whereby members are required to start and end making their contribution towards the Funding of the MIBI. It must, of course, be recalled that each insurer providing motor insurance in the State is required to be a member. Thus any new insurer entering that market is required to join the MIBI and any insurer leaving that market may then leave the MIBI. Article 63 is designed to deal with the commencement and cessation of the obligations of members in that context and is in the following terms:-
“63.1 In the first calendar year of membership a Member will be required to pay a joining fee and an annual membership fee in accordance with Article 7. The annual membership fee in the first calendar year of membership shall be calculated on a pro rata basis from the actual date the new Member was admitted to the 31st December in the same calendar year.
63.2 Levies on new Members will be payable by each new Member in accordance with the provisions of Article 62.
63.3. A levy will continue to be assessable on and payable by a Member for the calendar year following the year in which that Member ceases to transact motor vehicle insurance business in accordance with the terms of Article 10.3 and the basis for the calculation of that levy will be the GWP recorded by the Member in its final calendar year of carrying on motor vehicle insurance business in the State.”
6.12 Two further matters are also said to be potentially relevant. The first is a note to the financial statements of the MIBI for the year ended 31st December, 2012 which is in the following terms:-
“As stated in the Report of the Board, in the event of the insolvency of any of its members, the Bureau is required, under its agreement with the Minister for Transport, to pay claims, to the extent that its insolvent members are unable to do so. No provision has been made for this contingent liability in these financial statements.”
A similar note appeared in many previous financial statements.
6.13 Finally, it may be of some relevance to make reference to certain extracts from a letter written by the Chief Executive Officer of MIBI to the then President of the Law Society on the 29th September, 2014 which deals with what is said to be the position of the relevant department. The Minister is, of course, the other party to the MIBI agreement and it is said that the Minister does not dispute MIBI’s construction of the agreement to the effect that it does not provide for a liability in the case of insolvent insurers. The relevant extract is in the following terms:-
“As you are aware from our more recent exchange in July of this year the MIBI had sought legal advice to ascertain whether the MIBI was liable to make payments to discharge an unsatisfied judgment in respect of a Setanta related claim under the 2009 Agreement. The legal opinion was unequivocal in its conclusion that the 2009 Agreement did not require the MIBI to satisfy awards against drivers covered by an approved policy of insurance where the insurer was unable to pay all or part of the award because of insolvency.
…
6.14 Against that background it is next necessary to turn to the respective arguments put forward by the parties.
7. The Argument
7.1 As noted in the introduction to this judgment, the MIBI agreement which governs the legal obligations which arise in this case makes no express provision, one way or the other, as to whether the compensation mechanism provided for in the agreement is to be applicable in the case of insolvent insurers. It follows that the position of each of the parties was to point to aspects of the Agreement, its predecessors, the legislation governing the Fund and other surrounding circumstances for the purposes of suggesting that an interpretation favourable to their case was more appropriate. Thus a range of provisions of the MIBI agreements, the relevant legislation and the facts were called in aid on both sides with, hardly surprisingly, emphasis being placed on those elements of the agreements and other materials which might be said to tend to favour one view or the other. Against that backdrop it is appropriate to set out the principal arguments of the parties by reference to those aspects of the agreements, legislation and facts which were argued potentially to have an influence on the overall determination of the scope of the obligations arising under the relevant MIBI agreement. Many of the points raised by either side were pursued in detail with rebuttal following reply aided, I suspect, by the fact that the case had already been argued twice before it reached this Court. What follows is a description of the main thrust or principal themes of the argument. For the sake of brevity some detail has been omitted.
7.2 However, before going on to consider the specific provisions of the documentation which are said to be relevant to the issue in this case, it is of some importance to identify one general question concerning the proper approach to the construction of the agreement to which it will be necessary to return. The general principles applicable to the construction of contracts were not in dispute. However, at least on one view, it was possible that the question of whether it was appropriate to characterise the agreement as being “administrative” or alternatively “contractual” in nature might have some relevance to its proper construction. MIBI argued that the Agreement is purely contractual in nature save, perhaps, for the fact that it is intended to, and in fact does, confer rights on persons who are not parties to the agreement being persons who are injured as a result of the negligence of drivers in circumstances covered by the terms of the Agreement. On the other hand the Law Society contended that the Agreement has at least significant public law features which, it was said, potentially affect both the proper interpretation of the agreement itself and the extent to which it might, in certain circumstances, be permissible for the MIBI to rely on the strict terms of the agreement.
7.3 Perhaps it might be said that the key argument which emerged between the parties was as to whether, as the Law Society argued, the Agreement, and in particular clause 4, provides for compensation to a broad class of injured parties or whether, as the MIBI argued, the Agreement is designed to cover a narrower class. In substance, leaving aside untraced or unidentified cases which are not fully relevant to the issue in this case, the debate was whether the Agreement extended only to persons who did not have a valid policy of insurance or whether its scope was wider and extended to any case where qualifying compensation was not paid.
7.4 The starting point for any description of the argument must, therefore, be article 4 itself for it is that article which specifies the primary obligation. I, therefore, turn to the arguments put forward by the parties in respect of the proper construction of that article and then go on to consider the other aspects both of the various MIBI agreements, the legislation and the surrounding facts and circumstances which are called in aid by either side.
7.5 It will, of course, be necessary to consider the judgments of both the High Court and the Court of Appeal. However, it is appropriate to set out the positions of the parties first so as to place those judgments in context.
(i) Clause 4.1
7.6 A key provision of the Agreement, of course, is clause 4.1.1. The Law Society argues that the terms of that clause are sufficiently wide to include liability for insolvent insurers. MIBI argue to the contrary and suggest that if it had been intended that the agreement apply to a potentially wide class of persons, such as drivers who held a valid policy of insurance from an insurer who become insolvent, then it would have been expected that an express clause to that effect would have been included. In one sense that fundamental argument was about what the default position was. The Law Society argued that the terms of clause 4.1 were sufficiently wide so that it would have required a clear exclusion to remove any potential obligation to compensate in the case of insolvent insurers. On the other hand the MIBI argued, as just noted, that the obligation which would be placed on the remainder of the insurance industry to pick up the tab in the case of a collapsed fellow insurer was such that it would have required a clear express inclusion.
7.7 As will have been seen the basic structure of clause 4 requires the MIBI to satisfy any judgment of the type specified in the clause which remains unsatisfied for 28 days from when the relevant judgment becomes enforceable. The category of judgment covered refers to one arising from a “liability for injury … which is required to be covered by an approved policy of insurance under (the relevant legislation) …”. The Law Society suggests that the wording of that clause does not require that the driver whose liability gives rise to the relevant judgment actually be uninsured but rather it is said that the clause simply provides that the MIBI will satisfy any judgment arising from circumstances which were the subject of compulsory insurance which remains unsatisfied for 28 days. However, other aspects of clause 4 itself were also the subject of significant debate.
7.8 The first such provision is the phrase appearing both in clause 4.1.1 and also in its ultimate predecessor, clause 2A of the original arrangement. In both of those clauses the phrase “whether or not such person or persons be in fact covered by an approved policy of Insurance…” is used. The Law Society suggests that this phrase makes clear that the question of whether or not there is a policy of insurance in existence is not material to the issue of the obligation of the MIBI to compensate. On that basis it is argued that the fact that there may have been a policy in existence at the time of an accident but that the relevant insurer became insolvent thereafter does not affect the scope of the agreement. On the other hand the MIBI suggests that the relevant phrase is designed to deal with situations where a policy is validly repudiated after an accident. In such a case the insurer is not contractually bound to their insured. On the other hand, it is pointed out that an insolvent insurer remains subject to a liability to their insured and, thus, onward to a party injured by that insured, even though the insurer may not be able to meet that liability due to its insolvency.
7.9 Next there was some debate concerning the relevance of the use of the phrase “the Bureau’s liability… for compensation for victims of road accidents involving uninsured or stolen vehicles and unidentified or untraced drivers” in the preamble to the Agreement. The MIBI suggests that the use of that phrase is consistent with its argument that clause 4.1.1 is intended to cover a limited class only being the class defined by that phrase. However, the Law Society argues that the substantive terms of the agreement itself do not, in its primary operative clause, include such a limitation and also repeat the argument made, in a different context, about the meaning of the word uninsured by reference to the time at which a person might be said to be uninsured. In rebuttal the MIBI argue that a person who holds a policy with an insolvent insurer nonetheless remains insured even though there may be little practical benefit in the insurance in question.
7.10 Finally, the Law Society places reliance on the phrase contained in both clause 4.1.1 of the Agreement and clause 2A of the original agreement where it is specified that the relevant liability is to arise “whatever may be the cause of the failure of the judgment debtor to satisfy same”. It is argued that this is in very wide terms and would clearly cover a case where the problem arose from the insolvency of the judgment debtor’s insurer. The MIBI argue that the phrase is intended to clarify that the MIBI will discharge a liability regardless of the reason for the failure of the insurer to pay but only within what it argues is the limited class of case covered by the agreement.
7.11 However, each of the parties suggested that assistance in the proper construction of clause 4.1 could be gained from a range of other materials such as the legislation concerning the Fund, the Memorandum and Articles of Association of the MIBI, certain case law and the surrounding facts. In that context it is necessary to set out the principal issues raised starting with the 1964 Act and in particular section 3(7) thereof.
(ii) Section 3(7) of the 1964 Act
7.12 The Law Society refers to various statutory provisions in support of their argument. In particular it is said that the argument in favour of the broad ambit of liability in clause 4.1.1 of the Agreement is reinforced by s.3(7) of the 1964 Act. That section provides that payment should not be made out of the Fund where a payment has been made by the MIBI. The Law Society argues that this section implies that the primary liability should rest on the MIBI and that the Fund should only become liable on a secondary basis. On the other hand, the MIBI suggests that the purpose of s.3(7) is simply to avoid a double payment.
7.13 Section 3(7) does not, of course, expressly state that the MIBI is to be liable in any particular circumstances. However, the Law Society argues that the section contemplates the possibility that the MIBI might be liable in a case where the insurer was insolvent for otherwise, it is said, the Fund would have no role. On the other hand the MIBI suggests that a liability on the MIBI could not arise, under statute, by implication in circumstances where the MIBI agreement itself makes no express relevant provision.
7.14 The argument also touched on the fact that the Fund is applicable in the case of all non life insurers. Obviously those insurers providing motor insurance are a subset of that general class. The MIBI agreement, of course, only applies to motor insurers. Thus only motor insurers fund the MIBI but all non life insurers have obligations to the Fund. Section 3(7) of the 1964 Act refers to a sum due under a policy although the Law Society argues that the only policies which could, in practise, have relevance in the context of excluding a payment from the Fund where a payment had been made by the MIBI must be a payment arising under a motor insurance policy on the basis that it is only under such a policy that the question of a payment by the MIBI could arise.
7.15 On the question of the MIBI’s “double payment” argument it should be noted that s.4 of the 1964 Act, as originally enacted, stated that the Minister was to make a grant to the Fund “for the purpose of making payments under section 3 of this Act to the liquidator of the Equitable Insurance Company, Limited.” Section 4 of the Act of 1964 was repealed by section 5 of the 2011 Act. However, that same Act also re-enacted section 3(4) of the Insurance Act 1964, now section 3(7). The MIBI say that speculation as to why the provisions of s.3(7) were retained by the 2011 Act is not permissible. The Law Society, however, suggests that it is a principle of construction that the Oireachtas does not legislate in vein. On that basis it is said that the re-enactment of the subsection (now s.3(7)) is contrary to the view that the provision was designed only to prevent double recovery in the context of Equitable.
7.16 In that context a debate arose as to whether there were any circumstances in which s.3(7) could have practical application even if the MIBI interpretation of their obligations was correct. In other words were there, in practise, circumstances where the MIBI might make a payment in relation to a case where an insurer ultimately became insolvent and where the prevention double recovery, which the MIBI argues is the sole purpose of s.3(7), might operate in practise. It is said that there are certain circumstances where the MIBI might make a payment on the basis of the situation then appearing but where subsequent events might change the situation. If, in such a context, a relevant insurer were to become insolvent then, it is said, s.3(7) could apply and would have the effect of preventing the Fund from having to pay out in such circumstances. This might happen where MIBI makes a payment and it later transpires that an insurance policy was in existence or where there is a dispute as to cover or where the driver is unknown but later identified or where an untraced vehicle is subsequently traced.
7.17 The Law Society places reliance on the fact that untraced or unidentified drivers were only covered by the possibility of an ex gratia payment under the 1955 or 1964 Agreements so that, it is argued, those cases could not have been in contemplation in the context of section 3(7). MIBI suggests, however, that, given the focus on the re-enactment of s.3(7) in 2011, it is relevant to take into account the fact that, by that time, untraced or unidentified drivers were within the full ambit of agreement and not just confined to the potentiality for an ex gratia payment.
7.18 It is next necessary to return to certain other articles of the Agreement which are said to influence the proper construction of the Agreement as a whole.
(iii) Conditions Precedent and Enforcement (Articles 2 and 3 of the Agreement)
7.19 The starting point under this heading is a suggestion that the case law in this area confirms that the conditions precedent set out in Art. 3 of the Agreement require to be strictly construed and complied with even where no prejudice is established (see for example O’Flynn v. Buckley, Walsh MIBI and Horan [2009] 3 I.R. 311). MIBI suggests that certain of those conditions precedent, in particular Arts. 3.4, 3.6, 3.9 and 3.13, are consistent with the liability of the MIBI extending only to a limited class of person (including uninsured drivers but not those whose insurance becomes practically ineffective by the insolvency of the relevant insurer) rather than the wide class contended for by the Law Society (being any person in whose favour an order is made which remains unsatisfied for 28 days). Conditions concerning cooperation with an Garda Síochána in investigations, reports to the garda and attempts to establish the existence of a policy of insurance are said to fall into this category. In addition it is said that the requirement to be found in clause 3.9, being to give notice to the MIBI before issuing a motion for judgment, could not have been complied with in the case of a party injured by the negligence of a Setanta insured where the injured party had brought a motion for judgment prior to Setanta going into liquidation.
7.20 To the extent that it might be argued that these conditions precedent can be complied with in some, although not all, Setanta insured type cases, MIBI argues that the agreement could not have been intended to cover some but not all persons in a particular class.
7.21 The Law Society suggests that clause 3 cannot be said to override what is submitted to be the clear wording of clause 4.4.1.
7.22 In addition the Law Society suggest that the interpretation sought to be placed on much of clause 3 by MIBI would mean that many of the same clauses equally might not necessarily be complied with in the case of an accident caused by the negligence of a driver who appeared to have a policy of insurance but where, for one reason or another, that policy was not valid or was properly repudiated. In such a case the injured party might have no reason to believe that there was any need to instigate investigations by an Garda Síochána and might believe that there was an approved policy of insurance in place. The Law Society suggests that it could never have been the intention to exclude such cases for the ambit of the MIBI scheme.
7.23 In the context of the enforcement of the agreement, the MIBI notes that clause 2 requires that the MIBI be joined as a co-defendant in proceedings except in cases where the owner and user of the vehicle remain unidentified or untraced. Likewise, the MIBI is required to be the sole defendant in the cases covered by clause 2.4. It is argued that this provision is inconsistent with the contention that the agreement covers insolvent insurers for it is said that the proceedings might well predate the insolvency concerned. In those circumstances it would not, of course, have been within the contemplation of the plaintiff concerned to join the MIBI for the need to rely on the MIBI agreement would not be apparent.
7.24 However, the Law Society state that the provisions concerning enforcement cannot be used to limit the coverage of the agreement specified in clause 4 and in particular note that the MIBI may be joined as a sole defendant where a party has applied for compensation and has been refused. It is said that there is no reason in principle why those events could not occur after an insolvency has arisen so as to trigger the enforcement mechanism set out in clause 2.4.
(iv) Conflict between Clauses 3 and 4
7.25 As already noted a key part of the Law Society argument is that the wording of clause 4 appears to relate to any case where a judgment remains unpaid after 28 days. On the other hand, as just noted, an important part of the argument of the MIBI draws attention to the conditions precedent set out in clause 3 and the suggestion that at least some of those conditions cannot be met in the case of drivers insured by a collapsed insurance company. The Law Society, while not accepting the interpretation of the MIBI of the effect of clause 3, nonetheless argues that clause 3 is insufficient to displace the clear wording of clause 4. However, the MIBI place reliance on the fact that clause 4.1.1 includes the phrase “subject to the other provisions of this agreement” so that, it is said, the wording of that clause cannot be read in isolation. On the other hand the Law Society suggests that MIBI’s case involves a rewriting of clause 4.1.1 rather than its interpretation in accordance with the other terms of the agreement.
7.26 Having considered the relevant clauses of the Agreement and the legislation it is now necessary to turn to certain other materials which are said to be relevant.
(v) The Articles and Memorandum of Association
7.27 Part of the argument put forward by MIBI relied on the suggestion that an intention not to provide compensation in the case of insolvent insurers can be gleaned from the Memorandum and Article of Association of the company. Reliance is placed on clause 3.1 which refers to providing compensation in respect of uninsured, unidentified or untraced cases. Thus it is argued that the scope of agreements which are in the power of MIBI must be confined in a like manner. It is said that any agreement which went beyond the scope of that contemplated in the objects clause would potentially be ultra vires. While it was not suggested that that would, in itself, render a wider agreement invalid, nonetheless it is said that it cannot have been the intention of the Minister to enter into an agreement which was ultra vires. In that context attention is drawn to the fact that the Minister may well have been aware of the Memorandum and Articles of Association of the MIBI at the time of the 1955 Agreement
7.28 On that basis it is necessary to look at the relevant provisions of the Memorandum and Articles of Association. The precise terms of clause 3.1, as cited earlier, provide for the payment of compensation to the victims of road accidents “involving… uninsured vehicles…”. That raises, in turn, the question of the time at which it is required that the vehicle be uninsured. MIBI argues that the natural meaning of the phrase contained in the clause in question is that the vehicle must be uninsured at the time of the accident. On that basis it is said that a driver who has a valid policy of insurance at the time of an accident, but whose insurer subsequently becomes insolvent, cannot be said to be uninsured for the purposes of the clause. On the other hand the Law Society suggests that the interpretation sought to be placed on the clause by MIBI would be inconsistent with cover being provided in cases where a policy of insurance is repudiated.
7.29 Leaving aside the proper construction of the Articles and Memorandum, the Law Society also argues that the original agreement between the Minister and the motor industry, which contemplated the establishment of the MIBI, predates the Articles and Memorandum. While it is, of course, accepted that each of the MIBI agreements were entered into after the MIBI had been established and after, therefore, its Memorandum and Articles of Association had come into existence, it is nonetheless said that there is a consistency between the scope of the obligations undertaken by the MIBI which dates back to the original agreement entered into between the industry and the Minister such that, the Law Society argues, little assistance can be given in construing the scope of the MIBI’s obligations from the Articles and Memorandum. It is also argued that, given that the purpose of the agreement is to benefit persons injured as a result of the negligence, those persons cannot properly be said to have their entitlements reduced by reason of the Articles and Memorandum in the light of the then applicable section 8 of the Companies Act, 1963. On the other hand the MIBI argues that the claims of injured parties are ultimately derivative of the entitlement of the Minister because it is the Minister who is the contracting party.
7.30 On that basis it is suggested that the scope of the agreement must be interpreted by reference to the position only of the contracting parties being the Minister and the MIBI. On that basis it is said that the scope of the agreement, insofar as it relates to injured parties, cannot be greater than the scope of the agreement which the Minister, as a party, could enforce. In that context both parties comment on Tevlin v. McArdle and MIBI [2014] IEHC 436.
7.31 The Law Society also places reliance on Art. 10.1 of the Articles of Association, already cited, which concerns the termination of membership of the MIBI by an insurer. Attention is drawn to the fact that clause 10.1.1 provides for automatic termination of membership in the event that a member goes into liquidation. MIBI argues that the proper interpretation of the agreement as a whole simply requires the MIBI to honour liabilities already incurred by the insolvent insurer prior to it ceasing to be a member meaning judgments already entered against insured covered by the insurer in question.
7.32 The wording of the relevant passage from clause 10.1 refers, amongst other things, to the circumstances when a member goes into liquidation or becomes insolvent. What follows is an obligation on the remaining members to contribute to any payments which the MIBI may be required to make on the insolvent former member’s behalf “to any creditor”. The MIBI argues that the use of the term “creditor” confines the case to one where there has already been a judgment against an insured of the now insolvent insurer. The Law Society, on the other hand, refers to the use of the term “all obligations” in the previous paragraph of Art. 10.1 and suggests that that paragraph extends the obligations being considered under para. 10.1 to all cases of liability or potential liability.
(vi) “The Equitable Collapse”
7.33 The historical role of the Fund, particularly in the context of the collapse of Equitable, is itself also a matter of contention between the parties. It is agreed that the MIBI previously paid out in respect of liabilities attributable to Equitable in 1963. However, the MIBI say that, because of the limited nature of the evidence, no inference should be drawn as to the legal basis of those payments and the fact of those payments should not influence the view of the relevant agreement which the parties held at that time. The MIBI assert there is no evidence that it did in fact accepted liability in respect of Equitable and it was suggested that any payments were likely to have been ex gratia. It was said that there is evidence, in the form of a 1964 departmental publication (“The 1964 Memoranda”), that the 1964 Act was enacted in the wake of, and to address, the liquidation of Equitable. This is said to form part of the “factual matrix” which should inform the Court’s interpretation of the intention behind the 1964 Agreement. Further reliance is placed on the fact that the 1964 Memoranda makes clear that the Fund was designed to address insolvent insurers’ liabilities. In any event, MIBI say that Re: Butler [1970] I.R. 45 is inconsistent with the MIBI being liable in this context and, it is submitted, that case “indicates” that all payments to Equitable after the enactment of the 1964 Act were out of the Fund alone. Therefore, the MIBI argues that section 3(7) is simply designed to prevent double recovery where payments were made to Equitable prior to the enactment of the 1964 Act and that this was at the forefront of the contracting parties’ thoughts in entering the 1964 MIBI Agreement.
7.34 On the other hand the Law Society points out that there is no reference in the MIBI’s 1966 Statement of Accounts which suggests that payments to Equitable were on an ex gratia basis and that some payments in respect of Equitable claims which were made by the MIBI appear to post-date the 1964 Act. The Law Society note there is no reference in the affidavit of Mr. Casey, the Chief Executive Officer of the MIBI, to the payments being ex gratia in nature. The Law Society say the 1964 Memoranda “indicates” that the MIBI was in fact requested to meet all of Equitable’s liabilities, even those not covered by the then applicable 1955 Agreement, but that the MIBI refused. (See High Court Judgment in this case, at para. 7.26). Therefore, it is said that there is no evidence to support MIBI’s proposition that the legal basis of the payments was either “unclear” or “ex gratia”. The Law Society do say that it is not clear as to whether payments were made out of the Fund in those cases in respect of motor policies or whether a judgment creditor existed for 28 days such as to invoke MIBI liability.
(vii) MIBI Internal Documents
7.35 The Law Society seek to place reliance on statements contained in each of the MIBI’s report and note to financial statements from 2005 to 2013 to the effect that, in the event of the insolvency of one of its members, the MIBI must cover claims “to the extent that its insolvent member is unable to do so”.
7.36 On the other hand the MIBI says that this note cannot be said to reflect the common intention of the parties to the MIBI agreement (because it is argued that the Minister was not informed of the note) and cannot, on that basis, be relevant to the proper interpretation of the agreement.
7.37 In addition it is said that no estoppel could arise because the note is addressed to the members of the MIBI and not either the Minister or the public so that no reliance can be said to have been placed on the note.
7.38 Ultimately the MIBI state that the note is in error. It is said that it cannot, as extrinsic evidence of the intention of one of the parties, be taken to be evidence which can influence the proper interpretation of the agreement. In that regard reliance was placed on Phipson On Evidence (17th Ed. para. 42-12).
(viii) Business Sense
7.39 The MIBI suggest that the interpretation placed on the agreement by the Law Society, and approved by the Court of Appeal, would flout ordinary business sense and should, therefore, only be accepted if the agreement clearly provided for the acceptance by the MIBI of liability in respect of insolvent insurers. First it is said that such a construction would require other insurers to guarantee a competitor company which operated a high risk strategy in relation to writing insurance. This, it is said, would undermine the business model of companies with a low risk strategy.
7.40 Second, the MIBI argues that imposing a liability on continuing insurers in the case of an insolvent competitor could lead to a knock-on effect where the liabilities thus imposed led to significantly increased liabilities to the MIBI being placed on the balance sheets of the surviving insurers. Next it is said that any potential liability to cover claims against drivers insured by an insolvent insurer would amount to a contingent liability in respect of which provision would need to be made. However, no realistic appraisal of the appropriate level of provision could be achieved without access to the financial data of those competitors.
7.41 However, the Law Society, placing reliance on ICDL v. ECDL [2012] 3 I.R. 327, and Arnold v. Britton [2015] UKSC 36, suggests that it is clear, as a matter of principle, that a business sense argument cannot be used to displace the clear wording of an agreement. The Law Society further argue that any issues under this heading can and should be addressed by the industry attempting to renegotiate the agreement with the Minister. Furthermore, the Law Society argues that the agreement needs to be seen in the context of the fact that its overall intention is to provide a mechanism to ensure that persons injured by the negligence of others receive compensation. The fact that insurers are required, therefore, to cover liabilities in respect of uninsured drivers means that such liability arises no matter how large the incidence of claims against such uninsured drivers may be.
(ix) The United Kingdom Case Law
7.42 The Law Society argues that certain passages in judgments delivered in the United Kingdom suggest that the interpretation given to the MIB Agreements in that jurisdiction was such that they were taken to cover cases involving insolvent insurers. Reliance in that regard is placed on Jacobs v MIB [2010] EWCA Civ 1208 at par 7, and Gurtner v Circuit [1968] 2 QB 587 at 598, and Bennett v Stephens [2010] EWHC 2194 at paragraph 16. On the other hand MIBI argues that the issue of the potential extension of liability of the United Kingdom MIB to cases involving insolvent insurers was not directly before the courts on the occasions in question. On that basis it is suggested that the comment which the Law Society seek to rely on are obiter dicta.
(x) Anomalies
7.43 While not necessarily said to be decisive, both sides did draw attention to potential anomalies in the overall operation of the compensation system for injured parties if the construction sought to be placed on the MIBI agreements by their opponent were to prevail.
7.44 The MIBI draws attention to the fact that the agreements are clear in requiring, as a condition to the payment of compensation to an injured party, that the entitlement of that injured party to recover from the negligent driver concerned must be assigned to the MIBI. In practise, therefore, the scheme ordinarily contemplates that, while the MIBI must pay the injured party, it retains the entitlement to recover any amount paid to the insured party from the driver whose negligence gave rise the liability in the first place. Obviously, in the case of persons who did not go to the trouble of getting insurance in the first place, this provision makes complete sense. If it should prove practical for the MIBI to seek to recover any money which it had to pay out then it can do so. The scheme, in effect, provides for a timely and straightforward payment mechanism in favour of the injured party rather than requiring that party to obtain judgment against a defendant and try and enforce it. But the uninsured driver whose negligence caused the problem in the first place does not escape liability and can be pursued if there is any point to it.
7.45 The application of that regime in the case of an insolvent insurer would, however, potentially mean that a driver, who had in place a policy of insurance where, through no fault of the driver concerned, the relevant insurer became insolvent, would be exposed to personal liability. On the basis of the Law Society’s interpretation of the agreements, it is said that the MIBI would have to pay the injured party but the MIBI, on its argument, could seek to recover any monies paid out from the driver. There was some debate about whether that consequence could truly arise in all the circumstances having regards to the terms of the agreement and the legislation concerning the Fund but it can be said that it remains a possibility. The argument in this regard was described by Ryan P. in the Court of Appeal as troubling. He recognised the injustice of imposing liability on a driver whose insurer happens to become insolvent. However, Ryan P. was of the view that it did not necessarily follow that such an unfortunate consequence could affect the proper interpretation of the agreements. Likewise, Ryan P. did make some mention of the possibility that there might be certain terms in an agreement which a party would not be entitled to seek to enforce because it would be unjust so to do.
7.46 There was also a connected issue concerning the extent to which it might be possible for such a driver to recover from the Fund. In the ordinary way the Fund is authorised to pay to the liquidator of an insolvent insurer sums arising under a policy but limited to 65% (and with a cap in certain circumstances) in respect of payments relating to the liability of an insured to a third party. On one view it might be said that a driver who becomes liable to the MIBI, as a result of the assignment to the MIBI of a judgment obtained by a party injured by the negligence of the driver concerned, could benefit from such a payment. Such a driver has, of course, a valid policy with the insolvent insurer. As a matter of contract between that driver and the relevant insurer, the now insolvent insurance company is obliged to cover the driver’s liabilities. The reason why the driver would in practice be liable to the MIBI would be because of the failure of the relevant insurer to meet its contractual obligations (by reason of its insolvency).
7.47 If that argument were correct it would follow that, in practical terms, the MIBI could pursue the driver concerned for the entire award to the injured party together with costs but the driver would be able, subject to some limitations, to obtain 65% of such sums from the Fund. Thus, in practice, at least in most cases, the driver would be exposed as to 35% of the total award (including costs) made in favour of the injured party. While that would be a significant exposure on the part of the relevant driver it does also follows that, if the interpretation advanced by the MIBI is correct, any driver who is insured by an insolvent insurer would face a similar exposure for the injured party could obtain judgment for the full sum properly due and only 65% (or less) would be met by the Fund thus leaving the injured party to pursue the individual driver for the balance.
7.48 On the other side of the coin the Law Society relies on that undoubted consequence of the MIBI being correct. As already noted the provisions of the 1964 Act, in their current form, make clear that the Fund only covers 65% of the total sums due by an insolvent insurer to injured third parties. It follows that, if the construction sought to be placed on the Agreement by the MIBI itself is correct, then those who are injured as a result of the negligence of drivers who are insured as of the date of the accident concerned but whose insurer becomes insolvent, are likely, as a matter of practice, to be confined to 65% (or less) of the total claim. This will be so unless the driver is a mark for the balance. On that basis the Law Society argues that it would be anomalous that someone who is injured due to the negligence of a driver who has no policy of insurance at all will get full compensation under the Agreement but a driver who, through happenstance, is injured by the negligence of a driver who has a policy of insurance but whose insurer becomes insolvent, will likely only receive 65% of full compensation. In such a case it is to be recalled that a significant element of the damages required to be paid to those who suffer catastrophic and life changing injuries are designed to provide financial support to make up for either lost income or the provision of necessary medical and other supports. The compensation which would be required to be paid to such a catastrophically injured person for that type of support would be likely to be cut by over a third if their only recourse is to the Fund.
7.49 It must, of course, be accepted that, outside the field of compulsory motor insurance, the potential to actually recover damages can depend on whether there is a defendant who is a mark. Sometimes that problem may well lead to one party receiving full compensation but an equally deserving party receiving no or much less compensation. However, the Law Society argues that, in the light of the fact that it has been the consistent policy for the last 60 years to attempt to ensure that those injured by the negligence of others in motor accidents do receive compensation, it would be a strange result if only one category of such persons (being those injured by the negligence of insurers who turn out to be insolvent) were to receive compensation which falls a significant way below the full amount to which they would ordinarily be entitled.
7.50 In addition, it is worth noting that those, such as employers, who are insured by insurers who become insolvent run the same risk of being directly exposed to the tune of at least 35% of any damages awarded. As O’Donnell J. suggests in his judgment in this case, it may well be that it was considered that those who enter into insurance with imprudent insurers (and who may, at least in some cases, have thereby benefited by unrealistically low premia) should be exposed to some of the potential liabilities which would flow from the insolvency of the insurer concerned. Be that as it may non-motor insured also have a potential exposure to being forced to meet part of claims brought against them which are covered by an insurance policy written by an insolvent insurer because the Fund will only meet a portion of the relevant claim thus leaving the person or company concerned exposed for the balance.
7.51 It follows that it is possible that there may be anomalies whatever the result of this case. There can be little doubt but that those anomalies could be cleared up either by amendments to the MIBI agreements or to changes in the relevant legislation or, indeed, both of those measures. However, a court is confined to dealing with the legal measures in place at any relevant time. If, on a proper construction of the relevant legal materials, anomalies arise then there is little that a court can do about it. The extent, if any, to which this Court should, in this case, have regard to the potential anomalous consequences of one interpretation or another is a question to which it will be necessary to turn in due course.
(xi) The Insurer Concerned
7.52 It is also necessary to mention the practical way in which the MIBI organises its internal business for, again on one view, it may be that this has some relevance to the proper construction of the agreements. It is unnecessary to go into any great detail relating to the concept of “insurer concerned”. Suffice it to say that there are internal mechanisms applied within the MIBI for identifying, in appropriate cases, the insurance company which is to deal with particular claims both administratively and financially. On the one hand it might be said that those practical measures for the implementation of the obligations of the relevant insurers form part of the factual matrix or context against which the agreements, and in particular those agreements subsequent to the original, which would have been negotiated against the backdrop of that mechanism being in place, should be construed. On the other hand it might be argued that whatever mechanism the insurers who are members of the MIBI might decide as and between themselves for distributing the burden of meeting claims covered by the Agreement (both as to the administrative burden of defending claims and the financial burden of making payments) is purely internal to the MIBI and cannot be said to play any legitimate role in the interpretation in the MIBI’s external obligations to compensate injured parties.
7.53 Having addressed the principal aspects of the documentation, the legislation and the facts which are called in aid by both sides it is necessary briefly to identify the reasons why the High Court and, in particular, the Court of Appeal found in favour of the construction urged by the Law Society.
8. The High Court Judgment
8.1 In his judgment Hedigan J. set out much of the facts and arguments which are already addressed in this judgment. He noted that the key phrases which are found in clause 4 of the Agreement are repeated from the original agreement and in particular clause 2 thereof. Hedigan J. suggested that the background to the MIBI Agreements generally was an intention to protect the innocent victims of uninsured drivers. In broad terms Hedigan J. came to the view that clause 4.1.1 (and its antecedents) covers liability in the case of an insolvent insurer. He went on to analyse the various arguments put forward on behalf of MIBI for suggesting that the narrower meaning of the scope of the Agreement should, nonetheless, be adopted. However, at para. 9(12), he concluded as follows:-
“The background against which this agreement was made, including the conduct of the parties thereto together with their conduct post 2009, does not provide any basis for changing the meaning of what the Agreement states. In my view the liability of the MIBI in this regard has been apparent and accepted since at the very least 1964, if not indeed 1955.”
8.2 On the business efficacy argument the trial judge noted that it might well be that developments in the insurance market on a European level had altered the parameters of risk contemplated by the MIBI Agreements. However, he expressed the view that that could not affect the meaning of those agreements which had, in his view, been understood to cover cases of insurer insolvency until quite recently.
8.3 On that basis Hedigan J. came to the view that the interpretation advanced by the Law Society was correct and so held.
9. The Court of Appeal Judgment
9.1 Each of the judges of the Court of Appeal delivered judgments. Ryan P. concluded first, not without some reservations on his part, that it was appropriate to treat the Agreement as purely commercial albeit with what he described as very special, almost unique, features. Ryan P. suggested that clause 4.1.1 clearly covered the case of insurer insolvency but identified what he considered to be a more difficult question being whether that interpretation could be said to have been negatived by other aspects of the Agreement. While accepting that some of the other features (in particular clause 3(11)) might tend to negative the broad interpretation of clause 4, Ryan P. was of the view that the very breadth of the terminology found in clause 4 was sufficient to rebut any ambiguities arising from other clauses.
9.2 Ryan P. went on to suggest that the historical context of the collapse of Equitable and the enactment of the 1964 Act provided further support for the conclusion that insurer insolvency was covered by clause 4.1.1 and indicated his view that such a construction would not be at odds with commercial sense or general business efficacy.
9.3 Finlay Geoghegan J. took a similar view in placing significant reliance on what she saw to be the clear wording of clause 4.1.1. Finlay Geoghegan J. also noted the issue, touched on earlier in this judgment, as to whether an insured who became liable to the MIBI as a result of a claim against him by an injured party being assigned to the MIBI would be entitle to recover out of the Fund at least to the limits which the legislation provides.
9.4 Hogan J. also placed significant reliance on what he found to be the clear wording of clause 4.1.1 and found the arguments put forward on behalf of the MIBI for suggesting that the clause in question did not clearly cover insolvent insurers’ cases to be “ultimately unconvincing”. Hogan J. also came to a similar view to that of Ryan P. in regarding the all embracing nature of the wording of clause 4.1.1 as being sufficient to rebut any arguments deriving from other clauses in the Agreement. Hogan J. did not consider the commercial reality argument as being persuasive not least because of the statutory obligation imposed on insurance companies to fund payments required to be made out of the Fund. In that regard Hogan J. also placed reliance on the policy argument to the effect that the purpose of the Agreement was to ensure that persons injured by the negligence of others would receive full compensation.
9.5 While each of the three judgments of the Court of Appeal addressed certain additional issues it seems clear that the overall rationale of that court was that the wording of clause 4.1.1 was clear and strong in its terms such that it was sufficient to overbear any of the additional arguments put forward on behalf of the MIBI in favour of its alternative construction.
10. The Law
10.1 As noted earlier there was little disagreement between the parties as to the appropriate principles to be applied in construing the Agreement. The one possible exception was the suggestion put forward on behalf of the Law Society to the effect that the fact that the Agreement has, on their case, a public law element may have some implications for its proper interpretation.
10.2 This Court has, in Analog Devices BV v. Zurich Insurance Company [2005] 1 I.R. 274, confirmed that the modern approach to the construction of contracts in this jurisdiction is similar to that applied by the courts of the United Kingdom as developed in cases such as Investors Compensation Scheme v. West Bromwich Building Society [1998] 1 W.L.R. 896.
10.3 However, in the light of the issue raised concerning the possibility that the Agreement might be said to have a public law element which might influence its proper interpretation, it may be appropriate to attempt to identify the underlying principle behind the proper approach to the interpretation of documents which are designed to affect legal rights and obligations.
10.4 The modern approach has sometimes been described as the “text in context” method of interpretation. It might be said that the older approach in the common law world placed a very high emphasis indeed on textual analysis without sometimes paying sufficient regard to the context or circumstances in which the document in question came into existence. On the other hand it is important not to lose sight of the fact that the document whose interpretation is at issue forms the basis on which legal rights and obligations have been established. That is so whether the document in question is a statute, a contract, the rules of an organisation, a patent or, indeed, any other form of document which is designed, whether by agreement or unilaterally, to impose legal rights and obligations on either specific parties or more generally. To fail to have sufficient regard to the text of such a document is to give insufficient weight to the fact that it is in the form of the document in question that legal rights and obligations have been determined. However, an over dependence on purely textual analysis runs the risk of ignoring the fact that almost all text requires some degree of context for its proper interpretation. Phrases or terminology rarely exist in the abstract. Rather the understanding which reasonable and informed persons would give to any text will be informed by the context in which the document concerned has come into existence.
10.5 Perhaps it is fair to say that the main underlying principle is that a document governing legal rights and obligations should be interpreted by the courts in the same way that it would be interpreted by a reasonable and informed member of the public who understands the context of the document in question. Such a person would, necessarily, pay a lot of attention to the text but would also interpret that text in its proper context.
10.6 With one exception it seems to me that the detailed rules specified in Investors Compensation Scheme can be seen as being derivative from that general “text in context” approach. The exception is the fact that prior negotiations or drafts are not regarded as forming an appropriate part of the context by reference to which the text is to be interpreted. As pointed out in many of the authorities, to take that approach is to deviate from the approach which a reasonable and informed member of the public might take. However, there are sound reasons of policy, which it is unnecessary to repeat here, for adopting that approach. Indeed even the contra proferentem rule, as discussed in the context of Investors Compensation Scheme by O’Donnell J. in ICDL GCC Foundation FZ-LLC & Another v. European Computer Driving Licence Foundation Limited [2012] IESC 55, can be seen as an application of the underlying principle. The reasonable and informed person would be likely to assume that an individual who wished to insert a clause into a contract specifically for their own protection or benefit would ensure that the clause was expressed in clear terms. It would follow that, provided that the terms were clear and that there was no ambiguity, the clause should stand and provide whatever protection its terms permitted. However, if the clause were unclear and an ambiguity existed, then the clause should be construed against the profferer for the reasonable and informed observer would be likely to take the view that, if greater protection or benefit had truly been agreed, the profferer would have ensured that it was clearly specified.
10.7 It is also appropriate to take into account the fact that part of the overall context requires a consideration of the nature of the type of document which requires to be interpreted. It has again often been said that part of the reason for conferring a significant weight to the text actually used is that we do not expect persons to make mistakes or use loose language in important documents. Similar considerations would apply with the same, or perhaps even greater, force in the case of legislation or the like. On the other hand documents such as planning permissions have been held to be properly interpreted by reference to the way in which they might be interpreted by an ordinary person concerned with either proposing or opposing a development. As per the judgment of McCarthy J. in In Re XJS Investments [1986] I.R. 750, such documents are not to be construed in the same was as, for example, documents of title. Furthermore, many types of formal legal documents are written in a traditional language typically used for documents of the type in question and this itself forms part of the context.
10.8 I would emphasise, however, that, in my view, it is possible, particularly in the case of formal agreements negotiated carefully by experienced players often with significant legal and other advice, to overdo context. I fully agree with the insight of Lord Hoffman, as noted by O’Donnell J. in his judgment in this case, that, in a family context, words may often have a clear meaning which would be understood by all within the family but where that meaning differs radically from the meaning which any external party might place on them. An umbrella is an umbrella and an apron is an apron but it may be that, in the context of certain families one may mean the other. I must confess to a standing joke in my own family which requires persons to be asked to post a letter in a phone box.
10.9 But as already noted a most important part of context is the nature of the document concerned. In Investors Corporation itself the point is made that we do not readily accept that people make mistakes in carefully drafted and important documents. If the failing which the modern jurisprudence sought to address was over-reliance on textual analysis then there is a danger, at the other extreme, in an over-reliance on context or subordinate parts of agreements. Important legal documents are drafted in particular ways. They have clauses which specify the primary liabilities and obligations of the parties. While one should always look at the agreement as a whole and should always look at the context in which the agreement is reached one should not unduly downplay the importance of the words in which the primary rights and obligations of the parties have been defined. To do so would be to elevate context and subordinate clauses above primary text which would, in my view, be just as great a mistake as the previous practice of elevating text above context. Lord Hoffman’s observations might make perfect sense in a family setting but it would require very special circumstances to interpret the word “umbrella” as meaning “apron” in a carefully drafted legal contract.
10.10 It is on that basis appropriate to at least have some regard to the nature of the Agreement. While it is, in substance, an agreement between the Minister and the MIBI it is, of course, designed not to benefit the Minister directly but rather to give effect to the Minister’s policy desire to ensure that there should be appropriate compensation for those who can establish that they were injured in motor accidents as a result of the negligence of others.
10.11 It follows that the appropriate approach to be adopted in construing the Agreement is to consider the text but in its context giving appropriate weight to both. Part of that context is the nature of the document whose construction is at issue. In the circumstances of this case the relevant context is that it is a long term agreement between the Minister and the MIBI which is designed to provide benefits for third parties being those who are injured in cases covered by the Agreement.
10.12 Before going on to apply that general approach to the issue of construction which arises in this case it is, perhaps, worth making one additional point by way of background to the task with which the Court is faced in a case such as this where what is in dispute is the construction of a long term agreement.
10.13 It might well be said that agreements which are designed to last over a long period of time can often give rise to greater questions of construction or difficulty than one-off contracts. The reason for this is that courts are often called on to apply such contracts to developing situations which may not have been contemplated, or at least not contemplated in the same way, at the time when the contract was originally entered into. However, it is an occupational hazard of long term agreements that they may have unintended consequences when the circumstances to which the contract applies change over time.
10.14 A simply example might be to touch on long term commercial leases. Those who remember the situation which emerged in the late 1960s and 1970s will be aware that significant litigation occurred at that time which stemmed from the fact that the standard form of commercial lease then used was typically for a term of 21 years without rent review. In times when inflation reached a level which had not previously been anticipated, landlords were faced with a situation where the rent which they were receiving in real terms fell considerably while tenants had the benefit of what might have been felt to have been a windfall gain.
10.15 On the other hand, in the immediate aftermath of the onset of the great recession, the boot was on the other foot. By that time rent review clauses had become the norm and it was almost always the case that such rent reviews were on a so-called “upward only” basis. It followed that, with a very significant collapse in the going rate for rents, tenants found themselves paying a lot more than the market would have suggested and landlords had the benefit of what many might have regarded as windfall gain.
10.16 This demonstrates that long term contracts, which might have appeared to have been relatively evenly balanced between the benefits and obligations of both sides at the time when they were entered into, can turn out to favour or disadvantage one side or the other because of a change in circumstances. It is all the more important, therefore, that care be exercised by all parties entering into long term arrangements to ensure that they include means of amendment or, indeed, the potential to escape from the arrangements, so as to cover unexpected eventualities. Those who enter into long term arrangements without such provision inevitably must be taken to have accepted a risk. Those who, as the parties to the various MIBI agreements did, revise their contractual arrangements from time to time also need to have regard to any change in circumstances then present or anticipated and to make sure that the text of any amended agreement entered into covers such situations.
10.17 Any failure so to do runs the risk of the sort of unintended consequences which I have sought to identify. Against that backdrop I now turn to a discussion of the core issue of construction which arises in this case.
11. Analysis
11.1 It seems to me that, in the circumstances of this case, it is appropriate to start with the text of the Agreement while of course keeping in mind that context needs to be considered in construing that text. In my view the Law Society was correct to argue that clause 4.1.1 of the Agreement can properly be described as the central provision governing the liability of MIBI. It is in that form that the primary obligation of the MIBI has been defined. It is important to acknowledge that the terms of clause 4.1.1 are conditional for there is a reference to the clause applying “subject to the provisions of this Agreement”. However, and subject to that important caveat, the primary obligation of the MIBI under the Agreement as a whole, which is to be found in that clause, is to “pay … to the person … in whose favour such judgment was given any sum payable … in respect of the aforesaid liability …” The reference to “such judgment” is a reference to an unsatisfied judgment in a case covered by compulsory insurance. Thus the structure of the Agreement is that it relates to unsatisfied judgments (or, in more recent versions, Injuries Board orders). It is in that form that the parties have chosen to define the legal obligations arising under the Agreement. In its terms that clause does not specifically relate to uninsured drivers as such but rather relates to cases covered by compulsory insurance where there is a judgment or Injuries Board order which has not been satisfied.
11.2 It is also of some importance to note that the clause is said to be applicable “whether or not such person or persons be in fact covered by an approved policy of insurance”. Taken at face value the text of clause 4.1.1 would seem to apply even to a case where the defendant against whom an order had been made was insured by a solvent insurance company but, for whatever reason, that insurance company had not discharged the judgment in question within 28 days from the time when the judgment became effective.
11.3 It is, of course, necessary to point out that such a narrow textual analysis is not necessarily decisive. Even if the clause itself was not qualified by the express provision that it is subject to the other terms of the Agreement, a pure reliance on textual analysis would not accord with the modern approach to interpretation of legally binding documents. However, it remains the case that clause 4.1.1 is an important starting point. The parties could have chosen, if they wished, to define the obligation of MIBI in express terms by reference to uninsured drivers. There are, indeed, references to uninsured drivers to be found elsewhere in the Agreement. However, the parties chose, from the very beginning, to define the obligation of the MIBI by reference to unsatisfied judgments in cases covered by compulsory insurance rather than by reference to the relevant defendant being uninsured and, indeed, arguably did so in a manner which expressly suggests that the obligation arises whether or not the relevant defendant was insured.
11.4 On that basis I am satisfied that the Law Society were correct to argue that clause 4.1.1 potentially covers a situation such as that which lies at the heart of these proceedings being a case where a relevant defendant was insured by an insurer who has become insolvent. Given that that clause represents the primary definition adopted by the parties to specify the circumstances in which the MIBI is to be liable, it seems to me to follow that the real question is as to whether there is anything to be found either elsewhere in the Agreement or in the general context surrounding the Agreement and its predecessors which might lead to a different interpretation being placed on clause 4.1.1 other than that which might derive from a purely textual analysis of that clause. It is in that context that it is necessary to turn to the various arguments put forward by the parties both in favour and against the proposition that the Agreement as a whole needs to be construed in a way different from that which a textual analysis of clause 4.1.1 might suggest.
11.5 The first such point that needs consideration is the argument put forward on behalf of MIBI which suggests that the phrase providing for liability on the part of MIBI, in clause 4.1.1, which refers to that liability arising whether or not the relevant person was actually insured, was intended to cover the case of an insured who held a policy of insurance at the time when the relevant accident occurred but where the insurer in question validly repudiated the policy of insurance thereafter. It is certainly the case that the phrase in question makes clear that that the MIBI would have to cover a person who had a potentially valid policy of insurance at the time of an accident but where the relevant insurer became legally entitled to repudiate. Such a situation could, of course, apply either in circumstances where events predating the accident, such as the proposal for insurance and the information supplied with it, were deficient in a manner which would entitle the insurer to repudiate or where the insured, post accident, committed a breach, such as failure to cooperate with the insurer in an appropriate way, which would also justify repudiation.
11.6 I would attach some weight to that argument for it does provide a possible explanation for the inclusion of the phrase in question which is not inconsistent with the MIBI’s case. On the other hand it does have to be said that there is nothing in the text of clause 4.1.1, or indeed any surrounding documentation or materials, which suggests that the proviso contained in that phrase is confined to cases where there was a policy of insurance which is validly repudiated. On the contrary, read in its natural way, the clause seems to cover any failure to discharge a judgment whether or not there is a policy of insurance in place. In those circumstances the weight to be attached to the MIBI’s argument on this point seems to me to be quite limited.
11.7 Before leaving this aspect of the debate it is also important to recall, as the Law Society argued, that both the Agreement and the original agreement specified that the relevant liability is to arise “whatever may be the cause of the failure of the judgment debtor to satisfy same”. Here again MIBI argue that that phrase was not intended to expand the obligations arising under the Agreement to all cases where there was a failure to pay but rather was intended only to deal with all cases which come within the ambit of the Agreement. Again I think it is fair to say that the phrase in question lends weight to the Law Society’s argument for it is, in its terms, unqualified and does not appear to confine itself in any particular way.
11.8 Next it is necessary to turn to the various conditions precedent set out in the Agreement which the MIBI argues are strongly suggestive that the Agreement as a whole should properly be construed as only applying to uninsured drivers. The relevant conditions have already been cited and relate to matters such as cooperation with An Garda Síochána in investigations, reports to the Garda and attempts to establish the existence of a policy of insurance.
11.9 It is clear, from the case law already cited, that compliance with those conditions precedent is, as a matter of law, a mandatory requirement for liability to be imposed on MIBI. It also seems that compliance with at least some of those clauses would be of little relevance in the case of a claim against an insured whose insurer had become insolvent. In such a case there would undoubtedly have been an apparently valid policy of insurance in place and thus Garda investigations and the like into the insurance status of the defendant would not be very relevant.
11.10 However, it seems to me that the point made by the Law Society in response to that argument is of considerable significance. It will be recalled that the explanation given by MIBI for the inclusion of the phrase concerning whether or not there was an insurance policy in place was that that phrase was intended to cover cases where the insurance policy in question was validly repudiated. Indeed, it seems to me that the MIBI would have been in some very considerable difficulty in having any cogent answer to the Law Society’s interpretation of clause 4.1.1 without that argument. But the conditions precedent on which reliance is placed under this heading would equally be of little practical application in the case of a repudiated policy. The insured would have had a policy of insurance, apparently valid, at the time of the accident. There would, for example, be no requirement to investigate the existence of the policy for it would be clear that it did exist with the only issue being whether it had subsequently been validly repudiated.
11.11 Given that it is accepted, as it would have to have been, that the MIBI agreement undoubtedly covers repudiated policies of insurance then it is hard to see how any great weight can be attached to the argument based on those condition precedents. Some of the conditions precedent may have limited, or indeed no, application in particular circumstances. While compliance is mandatory, compliance can only be required where the issue sought to be covered by the condition precedent is of some arguable relevance. It does not seem to me that compliance with those conditions precedent concerning matters such as investigation of insurance policies will, ordinarily, have any relevance in the case of at least some repudiated policies. It follows that there are at least some cases where compliance with the conditions precedent will not, in practise, arise. It follows in turn that the fact that the same or similar conditions precedent may be of limited or no relevance in the case of an insolvent insurer is of relatively little weight in construing the Agreement as a whole.
11.12 Before leaving the issue of the conditions precedent it is important to comment on the argument between the parties as to the extent to which it might be said that article 3, concerning conditions precedent, or indeed any other articles, could override what is said to be the clear wording of clause 4.1.1. I do not doubt that there can be circumstances where, notwithstanding the clear wording of what might be said to be the principal operative clause in an agreement, a proper construction of the agreement as a whole and in its context might nonetheless lead to a conclusion which differed somewhat from that which might be reached by simply considering the text of that principal clause. However, in relation to such an argument I think it is important to emphasise that particular weight should be given to the structure of any agreement and in particular the principal way in which the parties have sought to set out their main obligations and entitlements. It would, in my view, require something quite significant in terms of other provisions in the Agreement or of the general context, to displace what might otherwise be taken to be the natural meaning of clause 4.1.1. To take any other view would be to significantly undervalue the text of a central clause of a carefully drafted and important agreement. It would be to overvalue context and subordinate clauses.
11.13 I am not satisfied that there is anything in clause 3, or indeed in any of the other clauses of the Agreement, which so clearly points in the opposite direction so as to displace the basic structure of what was agreed not only in the Agreement but in all its predecessors. In each of those agreements the insurers and the Minister defined the primary terms of the MIBI’s liability by principal reference to unsatisfied judgments rather than specifically by reference to the uninsured status of the defendant in question.
11.14 Finally, in the context of the terms of the Agreement, it is of importance to address the argument put forward on behalf of the MIBI which places reliance on the terms of the preamble which suggest that the purpose of the Agreement is to provide for compensation for victims of road accidents “involving uninsured or stolen vehicles and unidentified or untraced drivers”. The MIBI argues that this provision of the preamble makes clear that the overall intent of the Agreement was that it was to be confined to providing for compensation to a limited class being those injured by the negligence of the various categories of drivers specified. I think it has to be said that, at a minimum, a tension exists between the text of the preamble and the provisions of Clause 4.1.1. As noted earlier, Clause 4.1.1 does not, certainly in express terms, contain any restriction which confines liability to a limited class of the type specified in the preamble. That tension is a matter to which it will be necessary to return.
11.15 In the light of that analysis of the Agreement it is next necessary to consider the various other documents, materials or external circumstances which were urged by the parties as having some relevance to the proper construction of the Agreement.
11.16 I should first turn to the arguments put forward by both sides which suggest that the interpretation proffered by their opponent would lead to anomalies. For the reasons identified earlier in this judgment, it seems to me that there may be some merit in what both sides say in this regard. The concern expressed by the MIBI related to the position of a person who held a policy of insurance with Setanta and who was the subject of a successful claim. As already noted, it is part of the MIBI scheme that the MIBI becomes entitled to enforce any judgment obtained by a relevant plaintiff in the event that the MIBI discharges the liability under the judgment concerned. Prima facie there would, indeed, appear to be what might be described as at least a material risk that the burden of discharging the judgment in favour of the injured party might ultimately fall, to the extent that it might be enforceable in practice, on the driver whose negligence caused the accident in question. Certainly the ordinary operation of the MIBI Agreement would lead to the MIBI obtaining the benefit of any judgment against that driver. Precisely what the position of that driver might be thereafter was the subject of some debate but it is not, in my view, possible to resolve such questions in this case.
11.17 For the reasons noted earlier it is at least arguable that a driver in such a situation might be in a position to obtain from the Fund at least some of the monies which were owed to the MIBI (subject to a cap and a limitation of 65%). If that turns out to be the case then such a driver would only be exposed to the extent of either 35% or the balance over the cap. But, on the basis of the MIBI construction of the Agreement being correct, the same driver would be exposed in exactly the same way in any event. This is so because the Fund would only cover the injured party’s claim to the same extent and the injured party would be entitled to seek the balance directly from the driver. On that view there may, in fact, be no anomaly for the driver would have the same exposure in either event.
11.18 Suffice it to say that such a driver would be exposed to some extent should they prove to be a mark. Given that the driver concerned would not be at fault, for they would have held a valid policy of insurance at the time of the relevant accident, this might be seen as anomalous although, of course, the driver would have to have been negligent for any liability to arise in the first place. On the other hand any non-motor insured, who happens to have a liability to a third party but whose insurer becomes insolvent, will also be exposed to meeting at least part of the claim. While there are undoubtedly policy considerations which suggest that innocent injured parties should be fully compensated, it would appear to be the policy of the Fund legislation that relatively innocent insured may nonetheless have to meet part of a relevant claim, perhaps to discourage a race to the bottom in the insurance business.
11.19 The point made on behalf of the Law Society on anomalies is, however, undoubtedly valid and arguably much clearer. If persons injured due to the negligence of drivers insured by Setanta must look to the Fund for compensation then there is no doubt that there will be limitations on the amount of damages which they can recover in practice. It would again seem highly anomalous that, having put in place extremely detailed provisions to ensure that persons injured in road traffic accidents through the fault of others should actually be able to recover full compensation, it would transpire that those unlucky enough to be injured by the negligence of a driver, who had a policy of insurance but where the insurance company concerned proved to be insolvent and the driver not a mark, would be placed at a significant disadvantage over another injured party who happened to be injured due to the negligence of a completely uninsured driver.
11.20 Given the clear underlying policy behind the MIBI Agreements from the beginning and, indeed, the European law obligations of the Minister to ensure compensation in appropriate cases, such a consequence would undoubtedly be anomalous.
11.21 However, there may be anomalies either way. Why is this so? It can only be because, prior to the collapse of Setanta, none of the relevant parties really sat down and thought through how things were to work in the case of a significant insolvency of a motor insurer. If they had then surely the range of anomalies which were canvassed in argument before this Court would have been considered and express measures, whether statutory or in the context of amendments to the MIBI Agreements, would have been put in place to deal with those anomalies. The fact that this did not happen means that there may be anomalies whatever the decision of this Court. But this Court cannot rewrite either the law or the MIBI Agreements. Whichever way this Court decides this appeal there may be anomalies and persons will have to bear the burden of that situation. But it is not within this Court’s power to prevent that situation. Those who could have prevented it did not address the situation prior to the insolvency of Setanta and the Court is left with no choice but to take the situation as it stands with whatever consequences follow. It is, of course, the case that part of the context which can properly be taken into account in the construction of a legally binding document may be potential anomalies which would arise from its construction in any particular way. The notional reasonable and informed person would undoubtedly lean against interpreting the intention of the parties as creating significant anomalies at least if there was an alternative construction available which would prevent any such anomaly arising. However, I am not sure, given that there may be anomalies either way, that the fact of those anomalies can be taken to influence to any material extent the proper construction of the Agreement in this case.
11.22 I propose next to take a number of further questions together. The first is the argument on business efficacy relied on by MIBI. The second concerns the implications, if any, from the actions taken after the Equitable collapse. A third stems from the fact that no amendments were introduced into the MIBI agreement at the time when the Fund came into existence.
11.23 The business sense argument is relatively straightforward. It is argued on behalf of the MIBI that the effect on competitors of a requirement in substance to underwrite the liabilities of an insolvent motor insurer (which would result from the Court adopting the interpretation on the Agreement argued by the Law Society) would not make business sense. It was accepted, of course, that a business sense argument cannot override the clear wording of a contract. However, it was said that the Agreement is sufficiently unclear and imprecise to make it appropriate for the Court to have significant regard to the business sense argument.
11.24 There were, perhaps, two legs to the argument that it would not make business sense to underwrite the liabilities of an insolvent competitor. First it was said that the potential or contingent liabilities which might thereby arise were potentially very substantial indeed and that, being insurers, each motor insurer who is party to the MIBI arrangements would have to consider how properly to make provision against such a possible liability. It is, of course, the case that all insurance is about risk. Insurers seek to assess the risk involved in offering any particular type of insurance and attempt to fix the premium accordingly. There can be little doubt but that the clear obligation of motor insurers in Ireland to contribute to the MIBI must properly be taken into account by each insurer in their overall assessment of potential liabilities. Outside the ambit of the MIBI, insurers in the non-motor aspect of the market must assess the liabilities which may arise on their own policies. That may or may not prove to be a difficult task. Some types of eventualities can, doubtless, be predicted with reasonable accuracy. Others may be more sporadic such as the substantial liabilities which may arise for those offering household insurance policies in the event of extreme weather conditions affecting many policy holders.
11.25 While acknowledging that having to provide funding to compensate those injured by the negligence of uninsured drivers provides an added level of difficulty for those involved in the motor insurance business, it is argued that it is at least possible to make some reasonable estimation as to the likely burden arising from the commitments which motor insurers make to the MIBI. In substance the MIBI can, perhaps, suggest that, while it may not be possible to estimate the precise amount of money which insurers will have to contribute to the MIBI in each year, the overall exposure is no more likely to fluctuate wildly from year to year than the exposure which will arise under each insurers own policies. It is said, however, that taking on the burden of potentially having to meet the liabilities of a, possibly very substantial, insurer who becomes insolvent would give rise to a level of potential liability which would be both very difficult to assess or to make provision for. On that basis it is argued that a court should lean against an interpretation which places such a burden on the relevant insurers unless the terms of the agreement imposing that liability are clear.
11.26 In the same context some reliance is placed on the regulatory obligations of insurers concerning adequate provision. In addition it is said that an obligation to cover the liabilities of an insolvent insurer would give rise to significant market difficulties. On that argument it is suggested that it is more likely that an insurer will become insolvent if it adopts imprudent policy writing or premium fixing practices. Such practices may, at least in the short-term, secure additional business which may, at least in part, be at the expense of the very competitors who may have to cover the liabilities of the imprudent insurer should it become insolvent. It is said that this again is the type of consequence which the Court should lean against unless the relevant contractual arrangements clearly imposed it.
11.27 There is certainly some merit in those arguments. Accepting an obligation to meet the liabilities of competitors who become insolvent has potential significant adverse consequences for those in the motor insurance business along the lines identified. Those consequences are certainly a factor which the Court should take into account as a result of which the Court should scrutinise the relevant contractual arrangements to ensure, if it be the case, that they truly do impose an obligation of the type concerned. This is a matter to which I will return at the end of this analysis.
11.28 However, in the same context the Law Society raises the question of what actually occurred after the Equitable collapse. As noted earlier there is clear evidence that the MIBI actually discharged the liabilities of Equitable when it became insolvent. As the events are quite some time ago there is, understandably, something of a lack of very clear evidence about the legal basis on which MIBI discharged those liabilities. It is suggested, although the evidence is extremely limited in this regard, that the payments might have been made on an ex gratia basis. On the other hand the Law Society draws attention to the fact that the insurers at the relevant time were asked, but declined, to extend MIBI cover to other cases thus, by inference, being prepared to rest on their legal obligations.
11.29 That leads to perhaps a further important point which was the subject of some debate in the argument before this Court. Obviously at the time when the original MIBI Agreement was put in place and at the time of the Equitable collapse, the Fund did not exist. While there have been some changes in the text of the MIBI agreements over time, I think it is fair to say that the core provision which lies at the heart of the dispute in this case has not significantly altered at least insofar as it relates to the issues which this Court has to decide. In particular there was no alteration brought about as a result of the creation of the Fund. In the light of the fact that MIBI had, in fact, compensated those injured by the negligence of drivers covered by Equitable, and in the light of the fact that, thereafter, the Fund came into existence, it might have been thought that the relevant agreement would be amended to make clear, if it was indeed the case that such was what the parties wished, that the Fund was now to be the resort of those injured by the negligence of drivers who held policies with an insolvent insurer. No such amendment in fact occurred. It seems to me that, while there is undoubtedly some weight to be attached to the business sense argument put forward on behalf of MIBI, the absence of any amendment at the time when the Fund came into existence must also be taken into account in any overall assessment.
11.30 Before leaving the business efficacy argument it is also appropriate, in my view, to touch on the question of the notes to the financial statements of the MIBI to which reference has already been made. I will deal with the specific arguments raised under that heading later in this judgment. However, it seems to me that those notes are of particular relevance in the context of the business efficacy argument. It is true, of course, that the unilateral view of one party is not relevant to the construction of an agreement. Agreements are to be construed objectively. However, it seems to me that the established view of a party can be of some relevance in considering the weight, if any, to be attached to a business efficacy argument. The whole point of such an argument is that it is said that a particular construction should not be favoured because it should be assumed that a reasonable business person would not have entered into an agreement which was contrary to business sense. Such an argument is normally made by a party who asserts that, from its perspective, an agreement construed in a particular way would not have made sense and that it should be implied that the party would not have entered into such an agreement unless the text is clearly to the contrary. But if the very party whom it might be said would not have entered into an agreement of a particular type can be shown to have believed that it had entered into an agreement of that very type, then such an argument is, in my view, significantly undermined. I say that notwithstanding the fact that events occurring after a contract has been concluded cannot ordinarily be used to construe the meaning of the contract at the time it was entered into for that exercise again has to be conducted on an objective basis and in the light of the circumstances prevailing at the time in question. However, if it truly is to be said that it would not have made business sense for the MIBI (and the insurers who are members of it) to have agreed to cover the liabilities of an insolvent insurer then it is surely highly surprising that they appear to have believed, for a significant number of years leading up to the Setanta collapse, that they had done just that. If it would have been so contrary to business sense to have entered into such an agreement then it is surprising in the extreme that the MIBI actually thought that it had done so.
11.31 It is next necessary to turn to the arguments put forward by both sides which derive from the statutory provisions concerning the fund. The Law Society places reliance on the terms of s.3(7) of the 1964 Act which provides that payment should not be made out of the Fund where a payment has been made by the MIBI. It is suggested that this implies that the MIBI is to be the primary source of compensation in cases of insolvency in the motor insurers’ industry. However, the MIBI argue, correctly in my view, that s.3(7) could not impose a liability on the MIBI where one did not exist in the first place under the Agreement.
11.32 There was some debate concerning the legislative history of the relevant provisions of the 1964 Act as amended from time to time which arose in the context of the argument put forward by MIBI that the only purpose of s.3(7) was to prevent a double payment. In that context the Law Society drew attention to the fact that s.4 of the 1964 Act permitted the Minister to make payments to the liquidator of Equitable. That provision might, it was accepted, provide an initial explanation consistent with the predecessor of s.3(7) being intended to prevent double compensation. However, the Law Society went on to note that s.3(7) is, in its current form, a re-enactment of s.3(4) of the original legislation. That re-enactment occurred in 2011 and, it is said, clearly correctly so far as it goes, could not have in any way been related to the Equitable collapse over half a century earlier. In that context the MIBI suggested that there could be, admittedly rare, circumstances where there might be a risk of a double payment where there was a change in circumstances after a payment out by the MIBI which might, theoretically, lead to a potential claim on the Fund were it not for s.3(7).
11.33 While there was much interesting debate concerning the provisions of the 1964 Act, in its various forms, which concerned the Fund, I have come to the view that the legislation cannot have any proper bearing on the proper interpretation of the Agreement. I could well see that if the Agreement had been specifically amended in the context of the introduction of the Fund, the new legislative backdrop which would have arisen at that time would undoubtedly have formed part of the context by reference to which the text of the relevant agreement as amended would need to be interpreted. The legislative context in which any agreement is entered into can clearly form a part, and frequently an important part, of the context which must be taken into account in analysing the text. This will be particularly so where the agreement is entered into with the State.
11.34 However, I am not convinced that legislative provisions or changes can play quite such an important role in the proper interpretation of a pre-existing contract unless the terms of the contract itself are such that their proper interpretation is necessarily altered by legislative change. In that latter context it is easy to envisage a case where, for example, a contract stipulates that a service provider is to comply with all relevant regulatory requirements in providing the service in question. Clearly a change in the regulatory regime would affect such a contract without any amendment being required. There might, in such a context, be difficult questions of construction where the new regulatory regimes seemed to be in conflict with, or to create difficulties of interpretation in relation to, other provisions contained in the same contract. Doubtless other examples could easily be given. I would wish to emphasise, therefore, that I do not consider that an agreement cannot be held to change its proper meaning by reason of the knock-on effect of legislative change. However, the fact that there is no amendment as a result of legislation may be part of the factual matrix which provides context for the construction of the Agreement. For present purposes I would confine myself to holding that the legislative history of the Fund for the purposes of this case could not have any proper bearing on the true construction of the Agreement.
11.35 I next propose to deal with two arguments put forward by MIBI which, in reality, concern documentation internal to that company and the motor insurers who are members of it. It is argued that certain aspects of the Memorandum and Articles of Association of the MIBI and the internal arrangements entered into between the MIBI and the individual insurance companies for distributing the burden of the liabilities of the MIBI (including the so-called “insurer concerned” provisions) are consistent with MIBI’s interpretation of the Agreement. I am not convinced that any significant weight can be attached to these arguments. They may, or may not, reflect a certain view by the MIBI and its motor insurer members as to the proper interpretation of the Agreement. Clearly the internal constitutional documents of the MIBI are a matter for it and the arrangements which the various insurers enter into between themselves for distributing the burden of complying with the MIBI’s obligations are again a matter for those insurers. Doubtless, in formulating those measures, each had regard to its own understanding of the scope of the obligations which the MIBI might have to undertake. But as such they could do no more than establish the subjective view of one party as to what the Agreement means. While various relevant Ministers, or officials in the relevant departments, may or may not have been aware of some or all of the detail of those internal MIBI measures at various points in time, it does not seem to me that there is any legitimate basis for suggesting that any of those measures could properly form part of the context which might legitimately affect the proper interpretation of the Agreement.
11.36 For like reasons I am not convinced that the contents of various notes contained in MIBI accounts, which seem to imply a belief on the part of the MIBI at certain stages that it did have a liability in the case of an insolvent insurer, carry any significant weight in themselves. These again reflect the subjective view of one party to a contract. I have already dealt with the impact of those notes on the business efficacy argument.
11.37 Indeed, even insofar as any weight might be attached to the various internal documents of the MIBI referred to, same cut both ways for the MIBI is able to point to aspects of its Article and Memorandum of Association and the internal agreement between the insurers which might be said to support its construction while the Law Society can point to the notes to which I have just referred to the opposite effect.
11.38 But more fundamentally it seems to me that one of the consequences of the underlying principle to be applied in the construction of legally binding documents, which I have already sought to identify, is that the test is an objective test and little will normally be gained by attempting to identify the subjective views of the parties as to what the contract means.
11.39 There may, of course, be cases where something in the nature of an estoppel might arise in circumstances where parties have acted in a way which demonstrates an acceptance on both their parts that an agreement should be given a particular construction. This will be particularly so in the context of long-term agreements. The fact that an objective interpretation of the contract might lead to a different result may be displaced by a party being estopped from relying on that objective construction if they have acted in a way which would reasonably lead the other party to believe that a particular interpretation was accepted all round. However, given that the internal documentation of the MIBI points in both directions and the rather unusual nature of this contract being one where the persons who may benefit are not actually parties to the contract at all, I am not persuaded that any question of estoppel could arise.
11.40 In similar vein it does not seem to me that the attempt by the MIBI to suggest that the Minister necessarily agreed with the MIBI’s construction of the Agreement is either properly made out or, in any event, of any particular relevance. If it could have been demonstrated that, prior to the collapse of Setanta, both the MIBI and the Minister had acted in a way which made clear that they both accepted that the Agreement did not extend to the case of an insolvent motor insurer, then things might be different but there was no evidence in that regard.
11.41 Therefore, I have come to the view that, as in the case of the possible effect of the 1964 Act on the proper construction of the Agreement, the various matters internal to the MIBI which I have sought to analyse do not provide any assistance either.
11.42 Finally, it is necessary to make some brief reference to the United Kingdom case law. I am not convinced that any very great assistance can really be obtained from the case law relied on. It is true that there are certain observations in the judgments already cited which seem to imply a view that the United Kingdom MIB Agreement may be taken to cover cases involving insolvent insurers. However, it does appear that the MIBI are correct to argue that the issue was not squarely before any of the courts on the relevant occasions. In addition it is clear, as the argument and analysis set out in this judgment hopefully demonstrates, that much of the debate in this case is dependent on the precise terms of the Agreement. Unless there were United Kingdom authorities which made clear that the court in question was addressing the precise issue of interpretation with which this Court is concerned and where the terms sought to be interpreted were the same as, or at least not materially different from, those in the Agreement, it is doubtful if any great weight could be placed on those United Kingdom authorities.
11.43 Having analysed the various arguments put forward it is necessary to summarise the conclusions on the individual elements of the argument for the purposes of determining an overall conclusion on the issue before the Court.
12. Discussion
12.1 The starting point has to be to note that there is at least some ambiguity to be found in the Agreement. For the reasons analysed earlier I am satisfied that Clause 4.1.1, taken by itself, is very clear in its terms and includes an obligation on the MIBI to provide compensation in the case of an insolvent insurer. I am not convinced that the argument based on conditions precedent really creates any ambiguity or provides any basis for an alternative construction to be placed on Clause 4.1.1. However, the stated purpose of the Agreement in the preamble seems to me to be potentially inconsistent with Clause 4.1.1 and it follows that there is, at least to that extent, an ambiguity.
12.2 While accepting that an interpretation which may give rise to an anomaly can be a factor, at least in some cases, to be taken into account in the proper construction of a legally binding document, I am not, for the reasons set out earlier, convinced that the anomalies pointed to in this case can affect the proper construction of the Agreement. The reason why anomalies may be relevant is that the hypothetical reasonable and informed person would lean against an anomalous interpretation unless the wording was clear such that no alternative meaning could be implied. However, here the anomalies may cut both ways and, in my view, the reasonable and informed person would be faced with the task of accepting that, whatever interpretation is to be placed on the Agreement, it is possible that anomalies will occur. On that basis I am not satisfied that the anomalies can have any significant material effect on the proper construction of the Agreement.
12.3 Also for the reasons already set out I am not satisfied that the 1964 Act and its various amendments can play any significant role in the proper interpretation of the Agreement not least because no amendment took place to the Agreement at the time when the Fund was first created.
12.4 I have concluded that there is some merit in the business sense argument put forward on behalf of MIBI but would question the weight to be attached to that argument not least because of the fact that it would have been easy for the parties, after the Fund had come into existence, to have amended the Agreement to make express provision which made absolutely clear, if that was truly the intention of the parties, that it was now to be the Fund which would cover compensation in cases of insolvent insurers. In addition, the fact that, in formal and published documents, being its financial statements for a number of years, the MIBI indicated that it considered that it did have a liability in the case of insolvent insurers greatly diminishes any weight which can be attached to an argument which is based on the fact that it would not have entered into such an agreement.
12.5 Finally I have concluded that the internal documentation of the MIBI relied on by both sides cannot properly be taken, in all the circumstances of this case, to influence an objective interpretation of the Agreement.
12.6 In the light of that analysis it seems to me that the key components which determine the proper interpretation of the Agreement are Clause 4.1.1 itself coupled with the contrary indication in the preamble and, to the extent that weight can properly be attached to it, the business sense argument which is at least a matter to which consideration should be given, having regard to the ambiguity created because of the conflict between the preamble and Clause 4.1.1.
12.7 I do place significant weight on the fact that Clause 4.1.1 is the device which the MIBI and the Minister have at all times over the last 60 years chosen as the mechanism for determining the scope of the liability of the MIBI. The Agreement could have been cast in many different ways but that it is the way in which the parties chose to specify the obligations of the MIBI. That clause is, in my view, as the Law Society argued, sufficiently wide to encompass the case of an insolvent insurer. Given that that clause was chosen by the parties as the primary means of defining the obligations of the MIBI, it seems to me that it would have required something of quite significant weight to displace the interpretation of the Agreement as a whole which a consideration of that clause would indicate. While acknowledging that some weight does have to be attached both to the preamble and to the business sense argument, I am not convinced that either of those matters, whether taken in isolation or cumulatively, are sufficient to displace what seems to me to be the natural and ordinary meaning of Clause 4.1.1 itself. To take any other view would, in my judgment, be to elevate either context or subordinate parts of the Agreement to a status which they do not deserve and would be to significantly undervalue the clear meaning of the principal operative clause of the Agreement itself.
12.8 In those circumstances I am satisfied that the proper interpretation of the Agreement as a whole, both having regard to its text and the context in which it and, indeed, its predecessors, were formulated, is such that it must be held to include an obligation on the part of the MIBI to cover liability in any case where a judgment remains unsatisfied for 28 days against a driver whose driving was the subject of compulsory insurance. That general statement is, of course, subject to the caveat that the conditions precedent specified in the Agreement must be met. But I am also satisfied that those conditions precedent only apply to the extent that they have any practical application to the case in question.
13. Conclusions
13.1 There can be little doubt that the issue which arose for consideration on this appeal has very significant implications both for the MIBI, for the motor insurers who are members of the MIBI, for persons injured due to the negligence of drivers insured by Setanta and indeed for drivers who held Setanta insurance but who were unfortunate enough to be involved in accidents for which they are found liable. However, the result of this appeal depends only on the proper construction of the Agreement and not on any policy considerations as to where the liability for compensating those injured due to negligence should properly lie.
13.2 It is unfortunate that the task of construing the Agreement is both complex and not free from doubt. It is particularly unfortunate that, when the Fund was brought into existence as a result of the 1964 Act, the relevant MIBI agreement at the time, or at least its successors, were not amended in a fashion which made clear whether the liability to compensate those injured as a result of the negligence of drivers insured by an insolvent insurer was to fall on the MIBI or, alternatively, on the Fund. If the Agreement in its relevant form came to be drafted in a way which made the answer to that question clear then, I suspect, none of us would be here.
13.3 However, the courts were left with the task of attempting, as best they could, to place an appropriate construction, in accordance with law, on the Agreement as it stands having regard both to the text of the Agreement and the context in which it, and indeed its predecessors, were entered into. That task of interpretation is, in my view, far from easy and the result is not clear-cut.
13.4 However, for the reasons analysed in some detail in this judgment, I would hold that the proper construction of the Agreement as a whole, taken in context, is that it generally imposes an obligation, subject to compliance with such of the conditions precedent as may be relevant in practice, on the MIBI to cover claims made against drivers insured by Setanta. In those circumstances I would dismiss the appeal.