Businessman sues bank on alleged failure to pay insurance premium

A Dublin businessman has begun a High Court action for £265,000 damages over the alleged failure of the Bank of Ireland to pay…

A Dublin businessman has begun a High Court action for £265,000 damages over the alleged failure of the Bank of Ireland to pay a life insurance premium on time. It is claimed this resulted in the lapsing of the life policy. The damages are being sought against both the Bank of Ireland and Norwich Union Life Assurance Society for alleged negligence and breach of contract.

Mr Harold Wildgust, of The Ward, Coolquay, Co Dublin and his company, Carrickowen Ltd, alleges the bank on or about April 23rd, 1992 failed to honour a direct debit in discharge of a life insurance policy covering himself and his late wife, Margaret, who died on January 1st, 1993.

Mr Andrew Bradley SC, for Mr Wildgust, told the President of the High Court, Mr Justice Morris, the refusal by the bank to pay the insurance premium on time caused the lapsing of the policy.

The bank's failure to honour a direct debit in discharge of the monthly premium due on April 23rd was wrong, particularly as the bank was aware of the critical status of Mrs Wildgust's health at the time, he submitted.

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Counsel said the life policies were taken out by the Wildgusts on foot of a mortgage of £270,000 from bankers Hill Samuel, which was used to purchase two large industrial units in Coolock Industrial Estate.

The Wildgusts' company, Carrickowen, of which they were both directors with a half share each, from time to time exceeded the £25,000 borrowing limit imposed by the Bank of Ireland. In January 1992 Mr Wildgust had spoken to the bank and informed it of his wife's failing health.

If the direct debit had been met on April 23rd, 1992, it would have brought borrowings to £25,039 or £39 in excess of the limit. But the bank had previously and subsequently allowed his client exceed this limit on a number of occasions. On April 23rd, 1992, Norwich Union lapsed the life policy 30 days after the March premium was not paid.

Mr Bradley said his client was not notified the policy had been lapsed although Norwich Union claimed that on May 2nd, 1992 it informed the Wildgusts, Hill Samuel, the Bank of Ireland and an insurance broker who was not the broker involved.

His client would say he never received such a notification and he as counsel would be asking questions about when such a notification was written.

There would be evidence from a Mr O'Hanlon, of Hill Samuel bankers, that when he telephoned Norwich Union on April 22nd, 1992 he was assured the premium had been paid and the policy was safe. There was a written memo to this effect dated the same day.

Norwich Union represented the life insurance policy as being in order as of April 22nd, 1992. Under the terms of the policy, it was the duty of Norwich Union to notify the policy holder of any failure to discharge payment of premiums and any failure to do so was, Mr Bradley submitted, a breach of contract.

In its defence, the bank says that while it paid items drawn on Carrickowen's current account, even though this resulted in the overdraft exceeding £25,000, it denied such payments amounted to a commitment to Mr Wildgust to make payments of debits presented for payment.

It also says the Wildgusts and their company were guilty of contributory negligence in that they failed to make specific arrangements with the bank, Norwich Union or Hill Samuel to ensure the insurance premiums were at all times maintained.

Norwich Union also denies the plaintiff's claims. It denies conveying to a Hill Samuel Bank representative that the direct debit had been paid and that there was no need or obligation to discharge any sums. It says the direct debit payment in respect of March 1992 was twice returned unpaid and marked "refer to debtor" by the Bank of Ireland and that the policy lapsed in accordance with the conditions of the contract. It denies any liability.

The hearing resumes today and is expected to last several days.