High Court: Zurich joined as co-defendants in personal injury proceedings despite plaintiffs’ objections

About this case:

• Judgment:
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Mr Justice Meenan rejected arguments put forward by the plaintiffs’ that there had to be exceptional circumstances for Zurich to be joined against their wishes, and was satisfied that Zurich had a “proprietary or pecuniary interest” in the outcome of the proceedings

Background

Plaintiffs’ Winifred McDonagh, Martin Ward, and Patrick Ward were passengers in a car which was then driven by Helen Ward and owned by Anthony Ward.

It is alleged that, due to the negligence and breach of duty of the defendants, the car veered out of control and collided with a sign post – consequently the plaintiffs sustained personal injuries loss and damage.

At the time of the collision, Anthony Ward held a policy of insurance with Zurich Insurance plc in respect of the car; therefore, Zurich were the relevant motor liability insurer for Anthony Ward and the driver of the car, Helen Ward.

Zurich were duly notified of the claim and then carried out investigations. Following the investigations Zurich decided to decline indemnity to the defendants – Zurich relied upon a condition of the insurance policy to the effect that Zurich would not be liable in respect of any claim arising when the car was being used or driven “to the knowledge of the insured in an unsafe and unroadworthy condition.”

Zurich stated: “If we are forced under s. 76 of the Road Traffic Act 1961 to deal with the third-party claims, we will seek to recover all sums paid from you”. Under an enclosed mandate the defendants would agree to pay to Zurich all sums paid by it in respect of any settlement or judgment arising from the accident.

The present issue before the High Court was that the plaintiffs declined to agree to Zurich being joined as a co-defendant in the proceedings. Thus, the Court had to decide upon the circumstances under which a court may add a defendant to proceedings despite objections from the plaintiff.

Submissions from Zurich

It was important to note from the outset that Zurich was not alleging fraud against either of the defendants.

While Zurich accepted the general principle that a plaintiff is entitled to sue only whom it wishes, it said this principle is subject to exceptions e.g. where there are “extraordinary circumstances” as per Fincoriz S.A.S. v. Ansbacher and Co. Ltd.(unreported, High Court, Lynch J., 20th March, 1987).

Citing Barlow v. Fanning 2 I.R. 593, it was argued that Zurich had a “proprietary or pecuniary interest” in the outcome of the proceedings. This was underlined by the provisions of s. 76 of the Road Traffic Act which provides that, were the plaintiff to obtain an award against the defendants, Zurich would have to satisfy that award as it was the insurer involved.

Zurich further submitted that it was inevitable that, following the conclusion of the plaintiff’s action against the defendants, there would be further proceedings under s. 76. Therefore, it would be a more efficient use of court time and to avoid incurring further unnecessary costs to join Zurich at this stage of the proceedings so that all matters could be resolved at the one hearing.

Submissions from the Plaintiffs

In resisting the application, the plaintiffs argued that there were no “exceptional circumstances” that would allow Zurich be joined against their wishes.

The plaintiffs’ principal submission was to distinguish the facts of this case from the decision of McDonagh v. McDonagh IEHC 543 where an indemnifier was joined as a notice party against the wishes of the plaintiff. It was argued that what differentiated McDonagh from this case was that the indemnifier was alleging fraud. The plaintiffs further relied upon an earlier decision in McDonagh v. Stokes IEHC 229.

High Court Discussion

Justice Meenan stated “as Zurich is the indemnifier involved and… will be called upon to satisfy any award made in favour of the plaintiffs”, it has “proprietary or pecuniary rights…directly affected by the proceedings either legally or financially…”

Thus, Zurich satisfied the exceptional circumstances test and ought to be joined as a co-defendant in the proceedings.

Justice Meenan did not accept the submissions made by the plaintiffs that fraud was necessary to establish “exceptional circumstances”. Were fraud to be alleged, then this would be an additional factor which would give rise to the “exceptional circumstances”. However, establishing a proprietary or pecuniary interest in the outcome of the proceedings was sufficient.

The fact that Zurich might have an opportunity to be heard under s. 76 of the Road Traffic Acts after the plaintiffs obtained judgment did not amount to a good reason for not joining Zurich at this stage.

Citing Persona Digital Telephony Ltd. v. Minister for Public Enterprise IEHC 78, Justice Meenan was satisfied that in joining Zurich as a co-defendant this did not prejudice the plaintiffs’ actions.

In the circumstances, Justice Meenan acceded to the application of Zurich to be joined as a co-defendant in the proceedings.