High Court Confirms That Third Party Rights Against Insurers In Ireland Are Restricted

The recent decision of the High Court in Michael Murphy v Allianz Plc [2014] IEHC 692 has provided further clarification to the scope of section 62 of the Civil Liability Act 1961 and, in particular, the necessary conditions which must be satisfied for its application. This decision follows a number of similar determinations of the High Court in recent years and confirms the following important principles in relation to section 62:

the insured, who has a policy of liability insurance, must be one who becomes bankrupt or dies (if an individual) or wound up (if a company) or dissolved (if a partnership or other incorporated association); liability should be established in the underlying claim against the insured and quantum assessed before the insurer is joined to proceedings or sued; and the courts will recognise a valid repudiation by an insurer. Previous Authorities

In Dunne v PJ White Construction Company [1989] ILRM 803 the Supreme Court considered it to be "an inevitable consequence" of section 62 that it creates a right of action in favour of an injured third party. Finlay CJ held that in such proceedings the onus of proof is not on a plaintiff to prove that the insurer had rescinded or repudiated the contract but rather it is for the insurer to establish that there has been a rescission or repudiation. The decision of Gilligan J in Michael Murphy v Allianz Plc follows the recent High Court decisions in McCarron v Modern Timber Homes Limited & Ors and Hu v Duleek Formwork Limited (in liquidation) & Aviva. Each of these cases also concerned an employers' liability claim and an application by the insurer to strike out proceedings on the basis that they disclosed no reasonable cause of action and were bound to fail.

Michael Murphy v Allianz Plc

The plaintiff in this case suffered an injury on a building site during his employment as a brick layer and issued proceedings against the main contractor and the sub-contractor. The insurer sought outstanding wage declarations from the main contractor's broker under the relevant Policy Condition and reserved its rights under the policy pending resolution of the outstanding wage declarations and any other issues. Neither the main contractor nor its brokers furnished the insurer with the documents sought and, as a result, indemnity was withdrawn under the policy. The main contractor was subsequently struck off the Register of Companies. Gilligan J stated that it is clear from the wording of section...