Guiney -v- Accountant of the Courts of Justice [2014] IEHC 426 (22 September 2014)

Judgment Title: Guiney -v- Accountant of the Courts of Justice

Neutral Citation: [2014] IEHC 426

High Court Record Number: 2013 555 JR

Date of Delivery: 22/09/2014

Court: High Court

Composition of Court:

Judgment by: Hogan J.

Status of Judgment: Approved

Neutral Citation Number: [2014] IEHC 426

THE HIGH COURT

[2013 No. 555 J.R.]

BETWEEN/

HELEN GUINEY

APPLICANT

AND

ACCOUNTANT OF THE COURTS OF JUSTICE

RESPONDENT

JUDGMENT of Mr. Justice Gerard Hogan delivered on the 22nd September, 2014

1. This application for judicial review arises from a fatal accident in the workplace in November 2000, the tragic nature of which remains undimmed some fourteen years later. The applicant’s husband, John Guiney, was killed on a construction site, leaving her to fend for herself and two very young children. It is to her enormous credit that she has managed to do this in difficult financial circumstances following this terrible personal tragedy. Following protracted fatal injuries litigation judgment was ultimately entered by Irvine J. on 17th July, 2012, in favour of Ms. Guiney against the construction company, MJ Manning Construction Co. Ltd., for the sum of €794,795, together with costs.

2. Ms. Guiney might at that point have considered that her legal struggles for compensation were over following the making of this award by this Court. The construction company is, however, no longer trading and it is not, unfortunately, in a position to satisfy the judgment. To compound all the difficulties which have beset the applicant, Manning Construction’s insurer, the Independent Insurance Company Ltd. (“IICL”), was a UK company which is itself in liquidation. On 17th June 2001 the directors of IICL petitioned the High Court of England and Wales for the winding-up of the company and a Dan Schwarzmann and Mark Batten of PriceWaterhouseCoopers were appointed as joint provisional liquidators of IICL.

3. From information supplied by Messrs. Schwarzmann and Batten it seems unlikely that Ms. Guiney will receive anything more than perhaps 10-15% of the ultimate award on a distribution in the liquidation. Although it seems that the insurer was authorised in the UK, Ms. Guiney is not entitled to make a claim in respect of the UK Financial Services Compensation Scheme as the death occurred in Ireland. As it happens IICL was authorised to trade in Ireland since July, 1995 by virtue of an authorisation given (it would seem) by the relevant UK authorities, notification of which was given to the Central Bank pursuant to Article 33 of the European Communities (Non-Life Insurance) Regulations 1994 (S.I. No. 359 of 1994)(“the 1994 Regulations”).

4. The issue which now arises is whether Ms. Guiney is entitled to make a claim on the Insurance Compensation Fund (“the Fund”). The Fund was originally established by the Insurance Act 1964 (“the 1964 Act”) to provide for a system of compensation for cases of this broadly similar kind. While the question of whether Ms. Guiney comes within the terms of the 1964 Act might seem straightforward, nevertheless given the multiplicity of subsequent statutory amendments, the case raises acutely difficult questions of statutory interpretation. For this purpose it is necessary to set out the relevant statutory background.

5. Before proceeding further, however, it is also appropriate to record that, judged from the perspective of abstract justice, fairness and morality, Ms. Guiney’s claim to be paid compensation some fourteen years after this terrible tragedy is an absolutely compelling and overwhelming one. This Court is, however, obliged to deal with the imperfect world of human justice, so that her entitlement is regulated by law, i.e., in this instance, a complex web of inter-locking statutory provisions, amendments, substitutions and statutory instruments.

6. It should also be recorded as a further preliminary that it has been agreed that I should first deliver judgment on the issue of statutory interpretation only. It is only the event that I were to find against the applicant that questions of European Union law, including the potential impact of the non-discrimination provisions contained in Article 18 TFEU and the Third Non-Life Insurance Directive. It follows, therefore, that any potential consideration of these EU issues must be postponed pending the determination of the statutory interpretation issue.

The Nature of the Fund
7. The Fund was originally established for the purposes of providing a compensation scheme for the creditors of insolvent insurers. The Fund is administered under general superintendence and “control of the President of the High Court acting through the Accountant”: see s. 2(2) of the 1964 Act. The day to day management of the Fund rests with the Accountant of the Court of Justice. The Accountant is a statutory officer attached to the High Court: see s. 16 of the Court Officers Act 1926 and the 8th Schedule, paragraph 2 of the Courts (Supplemental Provisions) Act 1961.

8. The applicant’s solicitors made an application to the Accountant for compensation under the Fund. By decision dated the 20th May, 2013, the Accountant, having taken the appropriate legal advice, refused to do so. The Accountant actually went further and very fairly supplied the applicant’s solicitors with the legal advice which he had received to the effect that the claim fell outside the scope of the 1964 Act. I have no doubt but that the Accountant acted with perfect propriety in taking the decisions which he did. He is effectively a custodian of the Fund and he has no entitlement to make a payment save in accordance with law.

9. The applicant has now sought a declaration to the effect that she is entitled to have the Accountant apply to the President of the High Court on her behalf under s. 3B of the 1964 Act for the approval of a payment under s. 3 of the 1964 Act. While this is formally the issue before the Court, the real question is whether the 1964 Act (as amended) applies to the present case so as to enable the applicant to recover from the Fund. If this Court were to determine the matter in her favour, there could be little doubt but that the appropriate machinery to enable this to be done would be quickly put in train.

The 1964 Act
10. While s. 3 of the 1964 Act has existed in one shape or another since it was first enacted, it has been amended on no less than seven occasions during the past 50 years. The general scheme of the 1964 Act was that it provided for the establishment of a fund to which non-insolvent insurers were required to contribute (s.6) and in respect of which policy holders could claim (s.3). If, in the present case, the employer’s insurer had been based in Ireland, then, in principle, at least, payments could have been made out of the Fund. It is nonetheless fair to say that the 1964 Act has been heretofore designed with domestic insurers only in mind. Much, however, has changed since the enactment of the Insurance (Amendment) Act 2011 (“the 2011 Act”), the relevant provisions of which took effect only on 30th September 2011. The 2011 Act changed this perspective in that for the first time the Oireachtas legislated expressly for contributions to the fund from EU/EEA insurers in respect of underwriting business for this State.

11. The latest version of s. 3 is that substituted by s. 4 of the 2011 Act. As so substituted, s. 3(1) of the 1964 Act now provides with effect from 30th September 2011:

“Subject to the provisions of this section and sections 3A and 3B, there may, with the approval of the High Court, be paid to a person out of the Fund in relation to an insurer in liquidation, such amount or amounts as that Court may from time to time authorise in respect of any sum (other than a sum payable in respect of the refund of a premium) due to a person under a policy issued by the insurer in liquidation in respect of a risk in the State, together with the costs and expenses (if any) necessarily and reasonably incurred by the person in endeavouring to secure payment of the sum.”

12. At first sight it might appear that the present claim was straightforward. Viewed purely in isolation the section simply requires that:

i. the claim must relate to an insurer in liquidation;

ii. there must be a sum due to a person under a policy issued by the insurer in liquidation;

and

iii. it must relate to a risk in the State.

13. IICL is all too plainly in liquidation and there is a sum of €794,795 plus costs due to Ms. Guiney under the employer’s liability policy. The sum which is due relates to a risk in the State. In addition, s. 3(8) of the 1964 Act (as inserted by s. 4 of the 2011 Act) now provides:

“In this section ‘insurer in liquidation’ means an insolvent insurer or an insolvent insurer authorised in another Member State in respect of which a liquidator, or a person who performs the equivalent function to a liquidator in the Member State concerned, has been appointed.”

14. Yet the issue is, unfortunately, rather more complex than this, since this argument rather assumes that the 1964 Act always contained provisions of this nature. It is plain that it did not and this is why the scope of temporal application of the 2011 Act (and, indeed, a series of other statutory amendments and regulations) is of critical importance to the resolution of this question of statutory interpretation. This also explains the inherent difficulties and complexities attendant in deciphering what exactly the state of the law prior to the enactment of the 2011 Act actually was.

The temporal application of the 2011 Act
15. At the heart of the respondent’s case is the contention that, as originally enacted, the 1964 Act (and, specifically, the Fund thereby created) applied only to Irish insurers and Irish-based risks and that payment out could only be made in respect of insurers proceedings for the winding-up of which had been commenced by this Court. While the scope of the 1964 Act was extended by the 2011 Act to insolvent insurers authorised in other European Union and European Economic Area States to the extent that they covered policies which covered risks situate in Ireland, the respondent argues that this represented not only a novel change, but one which was prospective in its effect only. It followed, therefore, on the respondent’s argument that the entitlement of the creditor of an insolvent insurance company based elsewhere in the European Union (i.e., as here, the United Kingdom) to recover from the Fund was unaffected by the enactment of the 2011 Act so far as pre-2011 policies are concerned. The 2011 Act came into force on 30th September 2011.

The inference to be drawn from s. 9 of the 2011 Act
16. In considering the temporal application of the 2011 Act it may be convenient to start with a consideration of s. 9. Section 9 of the 2011 Act is a transitional provision which excludes the application of the amendments effected by the 2011 Act in certain circumstances. This section provides:

“Notwithstanding s. 4 of this Act, payments under the [1964] Act in respect of an insolvent insurer proceedings for the winding up of which were commenced before the commencement of this Act, or in respect of an insurer to which an administrator was appointed before the commencement of this Act, should be made as though s. 3 of the [1964] Act read as it did before the enactment of s. 4 of this Act.”

17. It is accordingly clear from this provision that, where the winding-up of an insolvent insurer had been commenced before the commencement of the 2011 Act, the pre-existing law nonetheless continued to apply to that insurer. The term “insolvent insurer” is not specifically defined in the 2011 Act, but a new definition of the term “insurer” has been inserted in s. 1(d) of the 1964 Act by s. 2 of the 2011 Act:

“’insurer’ means an insurance undertaking that is authorised to carry on the business of a non-life insurer and includes an undertaking whose authorisation has been revoked by the [Central] Bank, but does not include -

(a) an insurer authorised in another Member State, or

(b) a captive insurance undertaking within the meaning of Article 13 of Directive 2009/138/EC…”

18. As IICL was a UK authorised insurer, it is not an “insurer” for the purposes of s. 9 since it is expressly excluded by the terms of s. 1(d) of the 1964 Act. The real questions, accordingly, are (i) what inference should be drawn from this statutory exclusion and (ii) assuming that the inference drawn is adverse to the applicant, what, then, was the pre-existing law?

19. The overall object and purpose of the 2011 Act obviously requires to be considered in this context. Counsel for the respondent, Mr. Barniville S.C., contended that as the 2011 Act sought to extend the ambit of the 1964 Act in order to include EU/EEA insurers for the first time, it made no sense that such insurers would be included in transitional measures which referred to pre-existing liquidations involving Irish insurers when, by definition, the earlier 1964 Act (and Fund) did not apply to such EU/EEA authorised insurers.

20. While one could not be but impressed by the powerful and eloquent advocacy of counsel for Ms. Guiney, Ms. Hyland S.C. - who argued that I should draw precisely the opposite inference - in the end I find myself obliged to conclude that the only logical conclusion which can be drawn from the terms of s. 9 of the 2011 Act is that it re-inforces the contention that the 2011 Act is substantially (if not, indeed, entirely) prospective in operation.

21. While it might well have been open to the Oireachtas to legislate in this matter with retrospective effect, one would nonetheless expect that if this were indeed to have been done that the 2011 Act would have been this made quite explicit. There is a general presumption at common law that legislation affecting substantive rights will have prospective effect only. That presumption operates with particular force where any such retrospective legislation would either affect vested rights or retrospectively impose new obligations. These presumptions have been consistently applied in a long series of judicial decisions, of which Hamilton v. Hamilton [1982] I.R. 466, Dublin County Council v. Greally [1990] 1 I.R. 77, Minister for Social, Community and Family Affairs v. Scanlon [2001] 1 IR 64 and Dublin City Council v. Fennell [2005] IESC 33, [2005] 1 IR 604 are perhaps only the most prominent.

22. If the obligations contained in the 1964 Act did not otherwise apply to foreign insurers authorised in other EU/EEA states, then it would be surprising indeed if the changes effected by the 2011 Act operated with retrospective effect. After all, the obligation to contribute to the Fund was first imposed on foreign insurers by the 2011 Act itself: see s. 6 of the 1964 Act as substituted by s. 7 of the 2011 Act. It is, moreover, clear from cases such as Fennell that having regard to the provisions of Article 15.5.1 of the Constitution the Oireachtas could not retrospectively impose new contribution obligations of this kind. Article 15.5.1 provides:

“The Oireachtas shall not declare acts to be infringements of the law which were not so at the date of their commission.”

23. In these circumstances s. 7 of the 2011 Act could not have had retrospective effect since it would have entailed imposing a retrospective obligation on such foreign insurers to make contributions to the Fund at a time when, prior to September 2011, there was no such legal obligation. Yet, if s. 7 could not operate retrospectively, it would have been equally unfair on “domestic” insurers to shoulder the burdens of meeting the obligations of other insurers when such insurers had no obligation to make contributions to the Fund. The Fund could only be expected to pay out in respect of risks to which all relevant insurers had contributed by means of payments under s.6. All of this strongly indicates that the 2011 Act was to have prospective effect only, with the result that, prior to September 2011, the Fund applied to domestic insurers only.

24. It is true that, as Ms. Hyland S.C. so persuasively argued, the effect of this conclusion is as if the words “the winding-up of which has been commenced by the High Court after the commencement of the Insurance (Amendment) Act 2011” were now to be interpolated into the words of s. 3 of the 1964 Act (as substituted by the 2011 Act). Yet this conclusion should not be regarded as in its own way surprising, since more or less the same could be said of every statutory provision which altered the substantive law in this or in similar fashion. This is just simply the result of the fact that legislation of this kind is invariably simply prospective in its operation. The Oireachtas must be taken to be fully conscious of these long-established rules of statutory construction (supplemented, where appropriate, by the operation of Article 15.5.1 of the Constitution) so far as the drafting and enactment of legislation of this kind is concerned.

The state of the pre-existing law
25. This brings us directly to the next question, namely, what was the state of the pre-existing law prior to the enactment of the 2011 Act so far as an insolvent insurer based in another EU/EEA state was concerned? The respondent contended that the Fund applied only to insurers, proceedings for the winding-up of which by this Court were commenced after 1st January 1963. In essence, therefore, the key question is whether IICL was an “insurer” for the purposes of the Insurance Acts prior to the commencement of the 2011 Act and, in any event, even if it is, whether proceedings for the winding-up of which were commenced in this Court after 1st January 1963. As we shall now see, both of these questions have to be answered in the negative.

26. As originally enacted, s. 3 of the 1964 Act provided in material part:

“Subject to the provisions of this section, there may be paid out of the Fund to the liquidator of an insolvent insurer proceedings for the winding up of which by the High Court were commenced or are commenced on or after 1st day of January 1963, such amounts as may be necessary to pay any sum…which is due to a person under a policy issued by the insurer in the State and in respect of a contingency the insurance of which is required by the Act of 1963 to be effected by an insurer….”

27. The term “insurer” was originally defined by s. 1 of the 1964 Act as meaning:

“an assurance company or syndicate holding an assurance licence to carry on assurance business other than life assurance business or industrial assurance business.”

28. The term “assurance licence” was defined by s. 1 of the 1964 Act as a licence granted by the Minister under the Insurance Act 1936.

29. By the 1980s, however, the terminology had changed, reflecting (in part) the influence of EU law. A new definition of “insurer” was then inserted by s.7 of the Insurance (No.2) Act 1983 (“the 1983 Act”). Section 1 of the 1964 Act was accordingly amended with the new definition of “insurer” as “meaning the holder of an authorisation.” The term “authorisation” was defined as meaning “an authorisation under the European Communities (Non-Life Insurance) Regulations 1976.”

30. Article 4 of the European Communities (Non-Life Insurance) Regulations 1976 (S.I. 115 of 1976)(“the 1976 Regulations”) provided that a person shall not carry on the business of non-life insurance in the State save where he is the holder of an authorisation under these Regulations granted by the Minister, unless he carries on such business in accordance with the terms of the authorisation and unless he has established an insurance undertaking in the State. By virtue of the Central Bank and Financial Services Authority of Ireland Act 2003, the power to grant authorisations was subsequently transferred from the Minister to the Central Bank.

31. Further changes were effected by s. 2(1) of the Insurance Act 1989 (“the 1989 Act”) provided that

“In this Act, except where the context otherwise requires -

‘authorisation’ means an authorisation issued by the Minister under the Regulation of 1976 or the Regulations of 1984 to carry on a specified class or description of insurance business…

‘insurer’ means the holder of an authorisation under the Regulations of 1976 or the Regulations of 1984……”

32. Section 2(2) of the 1989 Act further provided that references in the Insurance Acts 1909-1989 to an “assurance company” or “insurance company” were to be “construed as references to the holder of an authorisation” and references to “licence” were to be construed “as references to ‘authorisation.” Following the enactment of the 1989 Act, therefore, the reference to “insurer” in the 1964 Act was to be understood as referring to the holder of an authorisation issued by the Minister for Enterprise and Employment to carry on insurance business under, in particular, the 1976 Regulations..

33. The term “authorisation” was again subsequently amended by Article 3 by the European Communities (Non-Life Insurance)(Amendment)(No.2) Regulations 1991 (S.I. No. 142 of 1991)(“the 1991 Regulations”) by the substitution of the following definition:

“’authorisation’ except where the context otherwise requires means -

(i) authorisation granted by the Minister under these Regulations,

(ii) authorisation granted by the authority changed by the law with the duty of supervising the activities of insurance undertakings in a State which is a member of the European Communities in accordance with Article 6 of the First [Non-Life Insurance] Directive;

and references to authorisation, in relation to non-life insurance in the Insurance Act 1989, shall be construed accordingly.”

34. Article 1(2) of the 1991 Regulations provided that those Regulations were to be construed as one with the 1976 Regulations.

35. The changes further underscored the definition of “insurer” now contained in the 1964 Act (as amended and substituted by the 1983 Act and the 1989 Act), because there was now a sharp distinction between the holder of an authorisation granted by the Minister “under” the 1976 Regulations (as amended) on the one hand and an authorisation granted by the authorities in another Member State on the other. Only insurers who had been granted an authorisation by the Minister (or, since 2003, the Central Bank) “under” the 1976 Regulations could be regarded as “insurers” for the purposes of the application of s. 3 of the 1964 Act and the Fund. In this context, the word “under” must be understood as meaning “pursuant to”: see the comments of Hardiman J. to this effect in Zambra v. McNulty [2002] 2 IR 351, 356 approving the earlier comments of O’Bryan J. in R. v. Clyne, ex p. Harrap [1941] V.L.R. 200.

36. The available evidence suggests that IICL was never authorised by the Minister (or, more latterly, the Central Bank) “under” the 1976 Regulations in this sense. Everything instead points to the fact that IICL was authorised “by the authority charged by law” with supervisory functions in another Member State, namely, the UK within the meaning of Article 2(1) of the 1976 Regulations (as substituted by Article 3 of the 1991 Regulations). While neither party has been in a position to produce an actual copy of that UK authorisation, the applicant has clearly established that the Central Bank received notification from the UK Department of Trade and Industry of the information required in relation to IICL for the purposes of the Article 33 of the 1994 Regulations.

Has the winding-up of IICL been commenced by the High Court in Ireland?
37. There is no doubt but that following the enactment of the 2011 Act there is henceforth no requirement that the winding-up proceedings must have been commenced in this State. This is because s. 4 of the 2011 Act introduced an entirely new definition of the term “insurer in liquidation” into the 2011 Act:

38. For our purposes, however, it is necessary to ascertain again what the position was prior to the enactment of the 2011 Act given the nature of the saving provisions contained in s. 9 of the 2011 Act. It is plain from s. 3 of the 1964 Act that the Fund applied only to insolvent insurers proceedings for the winding up of which “by the High Court were commenced or are commenced on or after 2st day of January 1963.” Yet it is equally clear that proceedings for winding-up of IICL by this Court were never commenced.

39. It is perfectly true that IICL might well have been wound up in Ireland pursuant to s. 345 of the Companies Act 1963. Nevertheless, as Mr. Barniville S.C. so persuasively argued, given the clear language of s. 3 of the 1964 Act (“were commenced or are commenced”), this hypothetical possibility is not in itself enough. Section 3 of the 1964 Act is not therefore concerned with what might have happened, but rather what did happen. Since proceedings for the winding-up of IICL did not in fact commence in this Court, it follows, therefore, that this statutory pre-requisite is not satisfied.

Conclusions
40. In summary, therefore, my principal conclusions are as follows:

41. First, as originally enacted, the 1964 Act operated so as to provide for a compensation fund in respect of the policy-holders (and other creditors) of insurers who became insolvent. The Act was, however, confined in its operation to Irish-based insurers who were wound-up by this Court.

42. Second, this statutory scheme was rendered more complex by a series of statutory amendments and statutory instruments. Article 3 of the 1991 Regulations nevertheless drew a clear distinction between insurers who were granted authorisations by the Minister (and, subsequently, by the Central Bank) and those who were authorised under the law of another Member State. Prior to the enactment of the 2011 Act, only the former category of insurance undertakings qualified as “insurers” for the purposes of s. 3 of the 1964 Act.

43. Third, the 2011 Act liberalised the law by extending the scope of the Fund to those foreign insurers who wrote business in Ireland. But this benefit also carried certain obligations, including the obligation to pay rateably into the Fund in the same fashion as Irish-based insurers had being doing since it was first established.

44. Fourth, the whole tenor of the 2011 Act was that these changes were to apply with prospective effect only. There is a strong presumption against retrospective legislation which affects vested rights and, having regard to the provisions of Article 15.5.1 of the Constitution, the Oireachtas could not have imposed on obligation on those foreign based insurers to make such a contribution to the Fund with retrospective effect.

45. Fifth, this conclusion is underscored by the provisions of the saving provisions of s. 9 of the 2011 Act which provides that the pre-existing law continues to apply to those insolvent insurers the proceedings for the winding-up of which had been commenced prior to the enactment of the 2011 Act. While it is true that s. 9 expressly provides that this saving clause does not apply to foreign-based insurers, this is because that earlier law dealing with the Fund never applied to those particular insurers.

46. Sixth, so far as pre-existing law is concerned, the provisions of s. 3 of the 1964 Act applied only to those insurers who held authorisations from the Minister (or, as the case may be, the Central Bank) and did not apply to those foreign based insurers who operated in this State by virtue of an authorisation granted by the authorities of another Member State. There was similarly a requirement that proceedings in this Court for the winding up of that insurer must have been commenced after 1st January 1963.

47. Seventh, neither of these two conditions were satisfied in the case of IICL. It had never been authorised by the Minister or the Central Bank and the winding-up proceedings in respect of that undertaking had been commenced in the High Court of England and Wales and not in this Court.

48. Eight, it follows, accordingly, that IICL is not an “insolvent insurer” in the special sense in which that term has been defined for the purposes of the 1964 Act.

49. It follows, therefore, that I find myself compelled to find against Ms. Guiney so far as the issue of statutory interpretation is concerned. Quite obviously, in view of my earlier observations, I reach this conclusion with the deepest possible personal regrets since, as I have already indicated, Ms. Guiney’s moral claim to compensation is, as a matter of abstract justice, quite unanswerable. I am nonetheless bound by what I consider to be the correct interpretation of the relevant statutory provisions and regulations I have described to reach this conclusion, unpalatable and unsatisfactory as it may be.

50. In the light of this conclusion I would accordingly invite the parties to consider how the balance of the case dealing with the arguments based on EU law can be dealt with as quickly as possible.

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