The Gazette 1976

GAZETTE

UNE

1976

RECENT IRISH CASES

INSURANCE

Insurance Company who refuses

to arbitrate is in breach of a

condition and cannot repudiate

liability for an accident in which

their company client is fully

liable.

The first plaintiff, Buckley's

Stores Ltd., is a company incorpor-

ated in February, 1958. The second

plaintiff, Patrick Buckley was at all

material times a director of that

company. They owned a business

in Millstreet, Co. Cork, and in 1967,

bought premises in Academy Street

Cork, to convert into a departmental

store. These premises were opened

for business on 5th October, 1967,

and many employees of the Mill-

street premises were temporarily

employed in the Cork premises

pending the employment of the re-

quired additional staff. Two girls,

Noreen Bourke and Kathleen Cronin

were driven by Patrick Buckley

from Millstreet to Cork each morn-

ing, and driven home each evening.

On 9th October, 1967, there was a

collision in which the car, belonging

to the first plaintiff, but driven by

Patrick Buckley, was involved; as

a result Noreen Bourke and Kath-

leen Cronin sustained injuries and

loss. Liability for the accident was

fully admitted by the plaintiffs.

At the time of the accident, the

first plaintiffs had the following pol-

icies of insurance:

(1) A policy of insurance with the

National Employers Mutual Guard-

ian Insurance Association Ltd. (here-

inafter called "National Employ-

ers"), by which the said Association

agreed to indemnify the insured

against liability at law for damages

and claimant's costs and expenses

in respect of injury sustained by any

person under a contract of service

or apprenticeship with the insured,

if the bodily injury is sustained in

the course of employment at their

business in Cork city.

(2) A policy of insurance with the

Federated Employers Insurance

Association Ltd. (hereinafter called

the "Federated Employers") where-

by that defendant agreed to

insure the first plaintiff against lia-

bility for damages at law and claim-

ant's costs in respect of bodily in-

jury sustained by any person under

a contract of service or apprentice-

ship with the plaintiff, if such in-

jury is sustained in the course of

employment at their business in

Millstreet, Co. Cork.

(3) A policy of insurance with

the Norwich Union Fire Insurance

Society Ltd. (hereinafter called the

"Norwich Union") whereby that de-

fendant agreed, subject to the terms

and conditions of the policy, to in-

demnify the insured Company, and

any person driving with their con-

sent against claims shall become

liable to pay to any person by way

of damages or costs in respect of

injury to person or property in con-

nection with the vehicle described

in the Schedule.

Claims were instituted in the High

Court on 2nd May, 1968, by Noreen

Bourke and Kathleen Cronin against

Patrick Buckley, and each of the 3

separate defendant insurance com-

panies were notified of the claim.

After the statement of claim had

been delivered on 8th January, 1969,

the question arose as to which of

the three defendants was liable to

indemnify Patrick Buckley in re-

spect of the claim.

As a result of a lengthy corres-

pondence during 1969, the Norwich

Union were prepared to pay 50%

of the claim, provided that the Nat-

ional Employers and the Federated

Employers would each contribute

25% of the loss. As a result of cor-

respondence, on 26th February,

1970, the National Employers

agreed to pay 25% of the damages

subject to the aforementioned con-

ditions. However, on 14th April,

1970, the Federated Employers in-

formed Mr. Buckley's solicitor that

they were quite satisfied that their

policy did not provide any indem-

nity. Subsequently the National

Employers heard of this, and in-

formed the solicitor that they were

not prepared to make any contri-

bution. On 31st July, 1970, the Nor-

wich Union informed the solicitor

that, in their opinion, the accident

arose out of the course of employ-

ment of the injured women, and in

those circumstances they were not

prepared to contribute more than

50% of the total cost.

On 5 August. 1970, Patrick

Buckley's solicitor wrote to the

three Insurance Companies concern-

ed that he proposed to seek arbi-

tration in accordance with the terms

of their policies, and suggested the

late Mr. John A. Costello as arbi-

trator. Both the Federated Employ-

ers and the Norwich Union agreed

that the dispute would be referred

to arbitration. But the National Em-

ployers refused to submit it to arbi-

tration on the ground that their liab-

ility was not at stake. On 19th Octo-

ber. 1970, Mr. Buckley's solicitor

informed the National Employers

that both the Norwich Union and

the Federated Employers had agreed

to the appointment of Mr. Costello

as arbitrator. As a result of further

correspondence, the National Em-

ployers still refused to take part in

the arbitration.

The arbitration proceedings start-

ed on 31st July, 1971, and the

arbitrator subsequently adjourned

the proceedings. On 1st September,

1971, Mr. Buckley's solicitor wrote

to the National Employers inform-

ing them of the situation, and stat-

ing that, if they declined to submit

the matter to arbitration his in-

structions were to institute proceed-

ings claiming indemnity. The Nat-

ional Employers however continued

to reiterate their previous position

that, as the proceedings had been

instituted by Patrick Buckley and

not by Buckley's Stores Ltd., they

had never declined to indemnify

Buckley's Stores. By letter of 20th

October, 1971, Mr. Buckley's solic-

itor informed the National Em-

ployers that the arbitration would

be resumed in the Four Courts on

27th October, 1971, but they did

not attend. On 28th October,

Buckley's Stores, wrote to invoke

cover under the policy covering their

employees in the Cork City branch.

The Solicitor invited them to submit

to arbitration, but on 8th November

1971, they declined to do so.

On 12th November. 1971, the

solicitor for the injured women

wrote to Mr. Buckley's solicitor

stating that they wished to sue him

personally, and as agent for Messrs.

Buckley's Stores of Cork and of

Millstreet On 16th November, Mr.

Buckley's solicitor forwarded a copy

of this letter to National Employ-

ers, stating that it was now

obvious that Messrs Buckley's

Stores Ltd. were involved in the

proceedings. The case of the injured

women against Buckley's Stores

Ltd. and Patrick Buckley was listed

for the High Court sitting in Cork

in July, 1972. On 27th July, 1972,

Mr. Buckley's solicitor informed

National Employers that Miss

Cronin's action had been settled for

£1,870 and costs, and that Miss

Bourke's action had been settled for

£4,000 and costs. On 8th August,

1972, the solicitor forwarded copies

of the orders of the High Court to

National Employers, and again ask-

ed them to consider their former

decision. National Employers then

referred the matter to their own

solicitors, who wrote to Mr. Buck-

ley's solicitor on 11th September,

1972, that they would advise their