BAILII is celebrating 24 years of free online access to the law! Would you consider making a contribution?
No donation is too small. If every visitor before 31 December gives just £1, it will have a significant impact on BAILII's ability to continue providing free access to the law.
Thank you very much for your support!
 |
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] | |
High Court of Ireland Decisions |
||
|
You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Cara Environmental Technology Ltd. v. McGovern [2005] IEHC 92 (18 March 2005) URL: http://www.bailii.org/ie/cases/IEHC/2005/H92.html Cite as: [2006] 1 ILRM 255, [2005] IEHC 92 |
||
[New search] [Help]
Neutral Citation No: [2005] IEHC 92
THE HIGH COURT
DUBLIN
2004 No. 19743p
CARA ENVIRONMENTAL TECHNOLOGY LIMITED
Applicant
and
RAYMOND P. McGOVERN
Respondent
EX-TEMPORE OF MS. JUSTICE FINLAY GEOGHEGAN ON FRIDAY, 18 MARCH 2005
Before me in these proceedings is a preliminary issue which was directed to be heard. The issue in terms agreed between the parties is set out in an issue paper and reads:
"Having regard to the fact that neither the proceedings bearing Record number 2002/12082P and entitled SCHURMANS & VAN GINNEKEN by Plaintiff and AHP MANUFACTURING BV trading as WYETH MEDICA IRELAND AND CARA ENVIRONMENTAL TECHNOLOGY LIMITED and OTHERS, Defendants nor the proceedings brought in the Netherlands against the Plaintiff and referred to in the Plaintiff's statement of claim have been determined and having regard to the fact that the plaintiff herein has not been found liable in either set of proceedings referred to, can the Plaintiff sue the Defendant for the breaches of contract pleaded in the statement of claim herein".
The origin of the preliminary issue is to be found in paragraph 1 of the defence delivered in these proceedings. That paragraph reads:
"The Plaintiff's claim discloses no cause of action. Further, the Defendant notes that neither the proceedings bearing record number 2002/12082P and entitled SCHURMANS & VAN GINNEKEN by Plaintiff and AHP MANUFACTURING BV trading as WYETH MEDICA IRELAND AND CARA ENVIRONMENTAL TECHNOLOGY LIMITED and OTHERS nor the proceedings brought in the Netherlands against the Defendant have been determined. The Defendant says that pending the determination of the said actions the Plaintiff's action is divorced from any or any adequate factual matrix, is hypothetical, is premature and serves no practical purpose. The granting to the Plaintiff of the relief sought in this action at this time will not resolve the dispute or potential dispute between the Plaintiff and the Defendant".
There was, as directed, an agreed statement of facts upon which the preliminary issue was to be determined. It appears from those agreed statement of facts that the Plaintiff in these proceedings took out a policy of insurance which is described as a 'general liability insurance policy' and which includes both a public liability and product liability insurance. That policy was initially taken out on 22 November 2000 and appears to have been renewed in October 2001, and also a period from August 2001 to August 2002 and again from August 2002 to August 2003. Nothing turns on the relevant dates. In July 2002, the Plaintiff notified the Defendant of a possible claim. In September 2002, the first set of proceedings referred to with a claim against the plaintiff herein bearing record number 2002/12082P were instituted in this jurisdiction. I will refer to those as the Irish proceedings. There were also proceedings instituted in the Netherlands inter alia against the plaintiff in these proceedings. Certain correspondence which passed between the Plaintiff and the Defendant in these proceedings also formed part of the agreed statement of facts. It appears from that correspondence that the plaintiff herein having notified the defendant, who is a representative of Lloyds in this jurisdiction of both the Irish proceedings and the Dutch proceedings, that the defendant appointed liability adjusters and the plaintiff was represented by its broker Marsh Ireland limited. In the initial correspondence it is clear that a question was raised on behalf of the Defendant as to whether or not against the claims made in the Irish and Dutch proceedings against the Plaintiff herein fell within the insurance policy held by the plaintiff from the defendant. There is a letter of 30 July 2003 from the liability adjuster Mr. Goldsbury to Mr. McCann of Marsh Ireland. Thereafter there appears to have been a number of meetings and there was a formal submission, or what was described as a formal submission, made by Mr. McCann of Marsh Ireland on behalf of the Plaintiff to Mr. Goldsbury to the effect that the claims made against the Plaintiff in the Irish and Dutch proceedings fell within the public liability or product liability portions of the policy issued by the Defendant to the Plaintiff.
At the time of the institution of these proceedings on 14 December 2004, no final decision appears to have been taken on behalf of the defendant following that submission. However, by an e-mail of 5 January 2005, a decision was given and in that e-mail from Mr. Goldsbury having referred to the earlier exchanges and the formal submission he stated and I quote: "The underwriters have instructed to me
to notify you that they have carefully studied all aspects of the matter in the context of the policy wording and they have taken legal advice in view of the significant potential of the claim that has been made against Cara Environmental (and others). In the final analysis, underwriters have reached the conclusion that Cara's claim for indemnity under the terms of the policy does not arise for consideration and thus that no liability cover is available to the policyholder in relation to this particular claim.
Whilst it may transpire that Cara can avail of cover under some other policy of insurance, underwriters are satisfied that in relation to their combined liability policy there is no cover available to the policyholder".
The Plaintiff in these proceedings appears at the same time as the issue of the plenary summons to have delivered a statement of claim. In these statements of claim, which pre-dates the e-mail with the refusal of cover, to which I have referred, the Plaintiff having pleaded the relevant policy and the indemnity, which it is contended it includes in respect of public liability and product liability, refers to both the Irish and the Dutch proceedings, and then pleads that the Plaintiff has furnished the Defendant with full particulars of the claims and the Plaintiff accepts that it is obliged to discharge the excess applicable under the policies.
The most important part of the pleading is paragraph 12 of the statement of claim which sets out the essential cause of action of the Plaintiff against the Defendant and I quote:
"The Defendant having been called upon by the Plaintiff to comply with its obligations pursuant to the policy and indemnify the Plaintiff has wrongfully failed, neglected and refused to do so".
It is then pleaded that as a result of the alleged breach of contract that the Plaintiff has suffered, and continues to suffer, loss and damage, the form of relief claimed is a declaration of which I will return to and also damages for breach of contract.
Having regard to that background and paragraph 1 of the defence, I indicated that it appeared appropriate that the preliminary issue as agreed between the parties in which the essential question that is put before this Court is:
"Can the Plaintiff sue the Defendant for the breach of the contract pleaded in the statement of claim herein..."
Must be understood to mean in the first instance; should the Plaintiff be entitled to sue the Defendant or to continue at this stage suing the Defendant for the breaches of contract? That must be construed as meaning; 'does the Plaintiff's claim, as pleaded, disclose in the context of the agreed facts a cause of action against the Defendant? That is the issue which I propose considering. I wish to observe at that stage that it was not suggested on behalf of the Defendant that if the Plaintiff's presently has a cause of action against the Defendants' for breach of contract that there was any other reason for which it should not now be permitted to proceed with this action.
The Defendant's contention that the Plaintiff's statement of claim does not, in the context of the agreed facts, disclose a cause of action, is based essentially on three decisions to which I was referred: namely, the Post Office –v- Norwich Fire Insurance Society Ltd 1967, 108,577. Bradley –v- Eagle Star Insurance Company Limited, 1989 1 All ER 961 and in this jurisdiction a decision of the former President of the High Court, Morris J. In McManus –v- Cable Management (Ireland ) Limited unreported in the High Court, 8 July 1994. It is submitted on behalf of the Defendant that those decisions establish that until such time as the Plaintiff herein has become legally liable to pay to the third party claimants a sum of money in respect of a claim which is covered by the insurance policy that the Defendant is not under any obligation to indemnify the Plaintiff pursuant to the terms of the policy.
Each of the cases to which I have referred are concerned with a direct claim by a third party against an insurance company. The English cases concern a right of action under an English statute and underlying English decisions is the provision pursuant to that statute that the third parties can have no better entitlement against the insurance company than the insured.
While counsel on behalf of the Plaintiff sought to rely upon a decision in Charter Reinsurance Company 1996, 2 WLR, 726 to suggest a different construction of the policy at issue in these proceedings. I propose considering the Defendant's submission at this stage upon the basis that insofar as the policy at issue in these proceedings entitles the Plaintiff to an indemnity in respect of a claimant's costs, damages, costs and expenses under the heading of either public liability or product liability, that under the terms of this policy, the indemnity from the insurance company to the Plaintiff insured only arises when the Plaintiff becomes legally liable to pay to the claimant a sum for damages and costs.
I am making that assumption without necessarily deciding that that is the way that these policies should be so construed. The question, therefore, as to whether the Plaintiff now has a cause of action is dependant upon a resolution of the question as to whether even making that assumption there is, on the agreed facts, a claim for an alleged breach of contract which can now be pursued. In order to identify what is the alleged breach of contract, it is necessary to refer again to paragraph 12 of the statement of claim in which it is effectively alleged, that the Plaintiff has failed to comply with its obligations pursuant to the policy and has failed to indemnify the Plaintiff.
The submission made by counsel on behalf of the Plaintiff is, that even if one assumes that the policy at issue here, in terms of the indemnity in respect of what I refer to as the public liability claim or the product liability claims is to be construed as I have indicated, and one accepts the English decisions as authorities for the proposition that the entitlement to an indemnity only arises when the insured, the Plaintiff in this instance, becomes legally liable to pay, that it does not mean, on the facts herein, that there is no present cause of action for breach of contract.
The submission is twofold. Firstly, it is submitted, in particular, in reliance upon the judgment of Lord Denning in the Post Office case at page 580 that he specifically has excluded from the principle, for which that case is authority, the type of situation which has occurred on the facts of this case. In that judgment starting at page 579, Lord Denning stated:
"Under Section 1 of the Act of 1930, the injured person cannot sue the insurance company, except in such circumstances as the insured himself could have sued the insurance company. Potters could have sued for an indemnity only when their liability to the third person was established and the amount of the loss ascertained. In some circumstances an insured might sue earlier for a declaration, e.g., if the insurance company were repudiating their policy for some reason; but where the policy is admittedly good the insured cannot sue for an indemnity until his own liability to the third person is ascertained".
It is to be noted in that quotation that in respect of the circumstances in which Lord Denning envisages that an insured might sue for an earlier declaration he simply gives as one example, "if the insurance company were repudiating their policy for some reason". On the facts of this case there has been no repudiation of the policy by the insurance company. In the defence it is expressly pleaded that the policy is admitted to have been in force for the relevant periods. However, in the e-mail of 5 January 2005, to which I have referred, it is expressly denied that the insurers are on cover in respect of the claims made against the Plaintiff in both the Irish and the Dutch proceedings.
It appears to me that this is an analogous type of situation to a repudiation referred to by Lord Denning and to be within the type of circumstances envisaged by Lord Denning in which an insured may be entitled before its liability to a third party has been determined to bring proceedings seeking a declaration. It is clear from the exchanges which have taken place that the Defendant herein has made it clear that no indemnity will be available to the Plaintiff in the event that the third party claimants succeed against it in the Irish or Dutch proceedings.
Counsel on behalf of the Plaintiff has drawn attention, in particular, to certain of the admitted facts which mean that the Plaintiff should be entitled to now claim a declaration by reason of alleged breach of contract in denying that the Defendant is on cover for the claims being made in the Dutch and Irish proceedings and refers in particular to the size of the claims. In the Irish proceedings the special damages as pleaded aggregate in excess of 92 million Euro and in the Dutch proceedings in excess of 8 million Euro. It is submitted on behalf of the Plaintiff, that if it had to firstly continue with the Irish and Dutch proceedings to the point of judgment and wait until after that period to determine whether it was entitled to an indemnity that, as matter of probability, it could not survive if awards of that order were made against it.
Secondly, my attention was drawn to general condition Number 3 in the policy of insurance which provides that having firstly required notice of any claim or proceedings to be given to the underwriters provides:
"...no admission, offer, promise or payment shall be made or given by or on behalf of the Assured without the written consent of the Underwriters who shall be entitled to take over and conduct etcetera..."
It was submitted that in the light of this provision that if the Plaintiff is not now entitled to litigate its dispute with the Defendant as to whether the Defendant is on cover for the claims made against it, and if such litigation is put off until after the Irish and Dutch proceedings, that if in the course of those proceedings any admission was made by the Plaintiff or, indeed, it sought to enter into any settlement, and did so and then subsequently proceeded with the present litigation against the Defendant, even if it were successful the Defendant might be entitled to avoid liability under the express terms of the policy and that that would produce such an unjust result that it could not be intended.
On that ground alone I would find that there is a cause of action at present which is entitled to proceed, but the Plaintiff also relies on the fact that under the policy at issue in these proceedings, there is an additional indemnity to which the Plaintiff is entitled, under this policy, which is not dependent upon it becoming legally liable to pay a third party in respect of a claim made against it under the product liability or public liability clauses in the policy.
It is the provision in relation to what are defined as "Legal Costs" and appears in the policy under a heading of 'Memoranda for Section 1, 2 and 3' at page 7 of the policy and states , and I quote:
"The Underwriters will in addition pay Legal Costs in connection with any occurrence which is or may be the subject of indemnity under these Sections unless otherwise stated".
It is common case that it is not "otherwise stated". The submission made on behalf of the Plaintiff is that there is a present obligation to indemnify the Plaintiff against Legal Costs in respect of the claims being made in the Irish and Dutch proceedings as they are claims which relate to an occurrence which "may be the subject of an indemnity". Further that there has been a failure and effective refusal to date to indemnify the Plaintiff against such Legal Costs.
On behalf of the Defendant it is submitted that there has been no application to discharge the Legal Costs and on the correspondence undoubtedly that is true. However, it does not appear to me that such fact affects the issue which I have to determine for this reason. In the light of the categoric decision contained in the e-mail of 5 January 2005 that there is no cover under this polity in respect of the claims being made against the Plaintiff herein, in the Irish and Dutch proceedings there does not appear to me to be any point in the Plaintiff having written seeking specifically the payment of the Legal Costs.
Further, the Plaintiff has made clear in the replies to particulars which were furnished on 20 January 2005, that it is maintaining that the Defendant is obliged, in addition, to pay Legal Costs in connection with any occurrence which is, or may be, the subject of an indemnity. Further, it has indicated in such replies that it has already paid in excess of 230,000 Euro (inclusive of VAT) in legal fees in the Irish and Dutch proceedings and that the failure to confirm in the first place whether or not was providing the indemnity and laterally refusing to provide cover, has had an effect on the future planning of the Plaintiff's business. There is no suggestion on behalf of the Defendant that it is now willing to discharge such Legal Costs. Hence, I consider this submission on behalf of the plaintiff also to be well-founded.
I have concluded that the Plaintiff does now have a present cause of action which it may pursue and that cause of action is fairly stated and claimed at paragraph 12 of the statement of claim as being a claim for breach of contract. I just wish to add that insofar as I have determined that there is a present entitlement to make the claim for beach of contract in relation to the Legal Costs, I do not intend in any way at the moment to hold that the costs as claimed are Legal Costs within the meaning of the policy. That is the claim which the plaintiff's are now entitled to pursue. It is obviously still a matter in issue and it may be separately a matter in issue between the parties.
The last matter that I wish to deal with is, the objection made on behalf of the Defendant to the form of declaration claimed. One of the reasons for which I have determined that there is a cause of action is in reliance upon the exception envisaged by Lord Denning in the Post Office case that there may be a claim in certain circumstances to a declaration. The declaration as drafted in the statement of claim is very wide. However, where the issue before the Court is whether or not the Plaintiff has a cause of action, such that it may be entitled to continue, or to put it another way, whether the Defendant is correct in asserting that there is no sustainable cause of action, it does not appear to me that the fact that the Plaintiff may have currently drafted the precise form of declaration sought more widely than it would be entitled to even on the cause of action pleaded, is a reason for which this Court should refuse to permit the Plaintiff to proceed.
It appears to be similar to the principle to which I was referred in the case of Sun Fat Chan –v- Osseous in [1992] 1IR 425 and, in particular, McCarthy J. in relation to taking into account any amendment which might save a statement of claim.
So, I will answer the precise issue as put in the issue paper to the effect that the Plaintiff can now sue the Defendant for breaches of contact pleaded in the statement of claim.
