Four cases over collapsed firm Setanta deferred until April

Court to clarify conflict of interest issue for lawyers representing insurer and clients

High Court: Collapsed insurance company Setanta’s liquidator has estimated the cost of around 1,750 claims could be €90 million. Photograph: Bryan O’Brien

High Court: Collapsed insurance company Setanta’s liquidator has estimated the cost of around 1,750 claims could be €90 million. Photograph: Bryan O’Brien

 

Four cases in which motorists insured by the collapsed firm Setanta may be personally liable for 13 per cent of any awards made against them over traffic accidents will go ahead in April instead of February, the High Court heard.

The cases were deferred so the court may first determine issues over whether lawyers who have been representing both the drivers and Setanta, as their insurer, can cease representing them because of what the lawyers say is now a conflict of interest.

The president of the High Court Mr Justice Peter Kelly said he was prepared to grant an adjournment in four cases in which liability for the accidents had already been conceded and which will only be before the court for assessment of damages. They were due to be heard in February but will now take place in April.

In the meantime, the court will consider the applications by lawyers for the Setanta clients to “come off record” because of the conflict of interest in representing the named individual clients as well as the insurer itself in the context of the expected shortfall between the company’s assets and the amount of claims.

As those solicitors are effectively defending the cases on behalf of the insurer, that raises issues for the defendant motorists, some of whom have consulted their own solicitors.

Estimated costs

The liquidator of Setanta, who has estimated the cost of around 1,750 claims could be €90 million, had earlier this month said it was likely the insured motorists could have to meet some 22 per cent of any award made against them. This was based on an actuarial analysis of Setanta reserves last June.

This was because the State’s Insurance Compensation Fund (ICF) will only pay 65 per cent of awards. The ICF liability arises from a Supreme Court ruling last year in which it was found that the Motor Insurers Bureau of Ireland, which compensates victims of uninsured driving, would not be liable for 100 per cent of the Setanta awards.

The outstanding 35 per cent would fall to the insured motorist but, taking Setanta’s reserves into account and the costs of dealing with the claims, it estimates it may be only able to meet 22 per cent.

The judge was told on Wednesday that the liquidator now believes the liability of Setanta-insured motorists could be 13 per cent, although this was still not clear due to a number of factors, including whether claimants were prepared to accept lower settlement figures in cases which did not go to trial.

Shortfall

After asking whether there was any likelihood if the State, through the ICF, would fund the shortfall, Emily Egan McGrath, for the liquidator, said her client did not have any information about that or whether it might happen.

Ms Egan McGrath urged the judge to adjourn the hearing of the cases so the representation issue could be dealt with first.

Lawyers for the plaintiffs in the four cases opposed the adjournment pointing out the accidents, in which their clients were injured, dated back to 2010 and 2011. They were anxious to get their on with their cases.

The judge said he had sympathy for the plight of the plaintiffs but the question of representation should first be dealt with. He also said in other cases – there are some 350 Setanta-related claims before the High Court and others before the Circuit Court – defendants should be notified of the application by solicitors to cease representing Setanta.

Those defendants, who had lawfully taken out insurance policies with Setanta, were blameless in all this but they should be given the opportunity of being heard by the court in circumstances where they could be made personally liable for part of any awards in the cases against them, he said.