Court allows insurer Zurich to be joined as co-defendant to resolve liability and indemnity issues together.

[2017] IEHC 513

THE HIGH COURT

[2017 No. 12 C.A.T.]

BETWEEN

WINIFRED MCDONAGH

PLAINTIFF

AND

HELEN WARD AND ANTHONY WARD

DEFENDANTS

[2017 No. 10 C.A.T.]

BETWEEN

MARTIN WARD

PLAINTIFF

AND

HELEN WARD AND ANTHONY WARD

DEFENDANTS

[2017 No. 11 C.A.T.]

BETWEEN

PATRICK WARD [A MINOR]

PLAINTIFF

AND

HELEN WARD AND ANTHONY WARD

DEFENDANTS

JUDGMENT of Mr. Justice Meenan delivered on the 31st day of July, 2017.

Background

1. The above entitled proceedings arise out of a car accident that took place on or about 21st October, 2013, on the public highway

at or near Caltralea, Ahascragh, Ballinsloe, Co. Galway. Each of the plaintiffs were passengers in a car which was then driven by the

first named defendant and owned by the second named defendant. It is alleged that, by reason of the negligence and breach of duty

of the defendants, the car veered out of control and collided with a sign post as a consequence of which the plaintiffs sustained

personal injuries loss and damage.

2. At the time of the collision, the second named defendant held a policy of insurance with Zurich Insurance plc. (“Zurich”) in respect

of the car; therefore, Zurich were the relevant motor liability insurer for the second named defendant and the driver of the car, the

first named defendant.

3. Zurich were duly notified of the claim and then carried out investigations. Following the investigations Zurich decided to decline

indemnity to the defendants. The reason for this was set out in a letter dated 29th April, 2015. 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.” The letter stated that, following an inspection of the car, it

was noted that the tyre thread depth of two of the tyres was below the legal limit and that the condition of the tyres contributed to

the accident.

4. It was stated that the second named defendant had confirmed that he was aware of the condition of the tyres in advance of the

accident but had not made any arrangements to replace the tyres. The letter also noted that the second named defendant was

subsequently convicted and fined arising out of the condition of the two tyres.

5. In particular, for the purposes of this application, the letter further 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.

Please sign the enclose (sic) mandate authorising us to deal with the claim on your behalf and return it to this office”.

Under the 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.

6. By letter dated 30th April, 2015, solicitors, instructed by Zurich, wrote to the solicitors on record for the plaintiffs advising them

that the indemnity had been declined and proposing that Zurich be joined in the proceedings as a co-defendant. There was no

response to this letter. In further correspondence, solicitors for the plaintiffs declined to agree to Zurich being joined as a co-

defendant in each of the above proceedings.

7. Subsequently a successful application was made to the County Registrar of Co. Galway to join Zurich as a notice party in the

above proceedings. This order was confirmed by the Circuit Court. The plaintiffs have appealed the Circuit Court order to this Court.

8. Thus the issue before this Court are the circumstances under which a court may add a defendant to proceedings despite

objections from the plaintiff.

Submissions of the Parties

9. Zurich ground their application on the affidavit of Mr. David Snow, claims officer, who deposes to the facts set out in the

paragraphs above. It is clear from the affidavit, and was confirmed in the course of submissions, that Zurich is not alleging fraud

against either of the defendants.

10. While Zurich accept the general principle that a plaintiff is entitled to sue only whom it wishes, they say this principle, on the

authorities, is subject to exceptions, in particular, where there are “extraordinary circumstances”.

11. Reliance is placed on the decision in Fincoriz S.A.S. v. Ansbacher and Co. Ltd.(unreported, High Court, Lynch J., 20th March,

1987) where Lynch J. held:-

“Prima facie a plaintiff is entitled to sue whomsoever he wishes and is entitled not to have to sue a person that he does

not wish to sue…In order that a person may be joined as a defendant without the consent and, a fortiori, against the

wishes of the plaintiff there must be some exceptional circumstances. The exceptional circumstances must be such that

the added defendants are persons who ought to have been joined as defendants by the plaintiff in the first instance or

alternatively even if it was not unreasonable that they were not joined as defendants by the plaintiff in the first instance

it is shown at the time of the application to the court to join them that their presence before the court will as a matter of

probability be necessary to enable the court effectually and completely to adjudicate upon and settle all questions

involved in the cause or matter.”

12. Further, Zurich relies upon Barlow v. Fanning [2002] 2 I.R. 593 wherein Keane C.J. cites a passage from Halsbury’s Laws of

England (4th Ed.) vol. 37:-

“A person having no legal but only a commercial interest in the outcome of the litigation between the plaintiff and the

original defendant cannot be added as a party either for the convenience of the court or otherwise. On the other hand, a

person may be added as a defendant, either on his own application or the application of the defendant, where his

proprietary or pecuniary rights are or may be directly affected by the proceedings either legally or financially, by any order

which may be made in the action, or where the intervener may be rendered liable to satisfy any judgment either directly

or indirectly.”

13. Clearly, it is argued, that Zurich has a “proprietary or pecuniary interest” in the outcome of the proceedings. This is 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.

14. 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.

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

against their wishes.

16. The plaintiffs’ principal submission was to distinguish the facts of this case from the decision of McDonagh v. McDonagh [2015]

IEHC 543 where Kearns P. joined an indemnifier as a notice party against the wishes of the plaintiff. It was argued that what

differentiated McDonagh from this case was that, in McDonagh, the indemnifier was alleging fraud.

17. The plaintiffs further relied upon an earlier decision of O’Neill J. in McDonagh v. Stokes [2014] IEHC 229 where a decision of the

Circuit Court, refusing to allow an indemnifier to adduce oral evidence on a s. 76 hearing, was reversed. In this particular case the

indemnifiers were also alleging fraud. In reaching this decision O’Neill J. made a number of observations on the joinder of an indemnifier

as a party in proceedings and indicated that, were such an application before him, he would decline to join an indemnifier. However,

O’Neill J. allowed the indemnifier to give oral evidence in the s. 76 hearing.

Discussion and Decision

18. The first issue which I have to address are the circumstances under which a court will join a defendant to proceedings against

the wishes of the plaintiff. This was addressed by Kearns P. in McDonagh v. McDonagh and I find his analysis of the relevant

authorities most helpful. In particular, Kearns P. referred to the passages in the judgments of Lynch J. in Fincoriz SAS v. Ansbacher

Ltd. and Keane C.J. in Barlow v. Fanning which I have set out earlier.

19. As Zurich is the indemnifier involved and, as a matter of near certainty, will be called upon to satisfy any award made in favour of

the plaintiffs, it cannot but be the case that it has a “proprietary or pecuniary rights…directly affected by the proceedings either

legally or financially…”

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

proceedings.

21. I do not accept the submissions made by the plaintiffs that fraud is necessary to establish “exceptional circumstances”. Were

fraud to be alleged in these particular actions then clearly this would be an additional factor which would give rise to the “exceptional

circumstances”. However, as is clear from the authorities referred to, establishing a proprietary or pecuniary interest in the outcome

of the proceedings will suffice.

22. The fact that Zurich may have an opportunity to be heard under s. 76 of the Road Traffic Acts after the plaintiffs have obtained

judgment does not amount to a good reason for not joining Zurich at this stage. Though Zurich would be able to defend its position s.

76(1)(c) of the Road Traffic Act 1961 provides:-

“where the claimant has so recovered judgment for the sum, or after service of the notice so recovers judgment for the

sum or any part thereof, and has not recovered from the owner or user or such insurer or guarantor the whole amount of

the judgment, the claimant may apply to the court in which he recovered the judgment for leave to execute the judgment

against the insurer or guarantor, and thereupon the court may, if it thinks proper, grant the application either in respect

of the whole amount of the judgment or in respect of any specified part of that amount.”

It seems to me that there is no good reason why Zurich should not be afforded an opportunity to make whatever arguments it may

wish to make in resisting any liability or seeking an indemnity itself from the defendants in the context of the hearing between the

plaintiffs and the defendants.

23. In joining Zurich as a co-defendant this does not, in my opinion, prejudice the plaintiffs’ actions. If Zurich had not declined and

indemnified the defendants then it would have taken over the defence in the usual way. This would have involved investigating the

circumstances of the accident and carrying out the appropriate medical examinations. Further, by joining Zurich as a co-defendant it

would be opened to the defendants, who have had cover declined, to claim that they are entitled to be indemnified. Thereby all

issues between the plaintiffs and the defendants, between the plaintiffs and Zurich and between the defendants and Zurich can all be

heard at the same time.

24. In support of this, I refer to the decision of Ryan J., as he then was, in Persona Digital Telephony Ltd. v. Minister for Public

Enterprise [2014] IEHC 78 wherein Ryan J. stated:-

“[The plaintiffs] cannot be forced to make a case that they do not want to make they cannot be obliged to change their

pleadings so as to include a claim against the new added party. The point of joining a new defendant is in the interest of

justice, in the court's interest in seeing that litigation is properly and effectively conducted and that its processes are

operated in a way that is just and fair and also in the interest of the added party because of the impact of the litigation

on his rights.”

25. The earlier decision of O’Neill J. in McDonagh v. McDonagh is clearly distinguishable. In that case the court had already made an

award and what was in issue was the scope of proceedings allowable under s. 76 the Road Traffic Act 1961. Further, the

observations of O’Neill J. concerning the appropriateness of adding an indemnifier as a co-defendant does not form part of the ratio of

the decision.

26. In the circumstances, I will accede to the application of Zurich to be joined as a co-defendant in the above entitled proceedings.