Sinn Fein's Phil Flanagan pictured last month at the High Court in Belfast. Picture by Jonathan Porter/PressEye

The Fermanagh politician, who last month admitted to seriously libelling the Ulster Unionist MP and publicly apologised to him, today began his legal battle with the Assembly’s former insurance company in a bid to get them to pay the almost £50,000 in damages and unknown legal costs awarded against him.

The case, which will continue tomorrow morning in Belfast, shed some light on the unusual arrangements whereby Sinn Fein MLAs pay large sums of money from their salaries towards the party.

Under cross-examination as he gave evidence in his case against AIG Europe, Mr Flanagan was asked by Robert Millar, counsel for AIG Europe, whether there was a written agreement between Sinn Fein and the party that much of their salary goes to the party.

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UUP MP Tom Elliott's and solicitor James Cooper at an earlier hearing. Picture by Jonathan Porter/PressEye

The married father-of-two – who said that he lives in rented accommodation and has no assets – did not indicate that there is such an agreement, but said that “the manner in which Sinn Fein MLAs are paid is that we have to make a contribution to the party”.

Mr Flanagan said that his salary was paid into his bank account. But, under further questioning from Mr Millar, he said that Sinn Fein has access to that account and appeared to suggest that the party then pays him the £2,000 a month out of that account.

Explaining the arrangement, he said: “People within Sinn Fein have access to that bank account.”

Mr Flanagan’s financial arrangements came up because it was argued that he had not been in a financial position to make an early offer of compensation to Mr Elliott which would have been sufficient to dissuade the now MP from instigating the legal action.

UUP MP Tom Elliott's and solicitor James Cooper at an earlier hearing. Picture by Jonathan Porter/PressEye

Mr Flanagan had tweeted “Tom Elliott speaks to Stephen Nolan about the past. I wonder if he will reveal how many people he harassed or shot as a member of the UDR.”

In court today, where he spoke about the issue for the first time as he chose not to give evidence in the libel action, he reiterated his apology and stressed that he never had any evidence that Mr Elliott had done anything improper during his military service.

However, Mr Flanagan repeatedly insisted that although he now accepts the seriously defamatory nature of what he said, he thought at the time that because he had posed it as a question it was not an allegation.

But Mr Millar put it to the MLA that his “highly personalised” question only left open the possibility that the number of people “harassed or shot” by Mr Elliott remained in doubt. Mr Flanagan said that at the time he did not intend to injure Mr Elliott and did not believe it to be defamatory but he went on to say: “I accept that now [it is defamatory], following discussions with my legal team.”

Mr Flanagan said that he had thought Mr Elliott could have responded by saying “zero” and said that he wanted to redress what he felt was an imbalance in a Radio Ulster discussion that morning by articulating the view of many constituents that the UDR was not a “referee” during the Troubles but was a “participant”.

Under examination by his barrister, Martin McDonnell, Mr Flanagan said that his frame of mind at the time when he sent the tweet was that there wasn’t “one set of good guys and one set of bad guys” during the Troubles.

When asked by his barrister if he had intended to defame Mr Elliott by the message, he replied: “Certainly not.”

He had listened to the Nolan Show in the car on his journey from Fermanagh and then tweeted while sitting in his vehicle while in the Stormont car park, he told the court.

Mr Flanagan did secure a concession from the insurer during today’s proceedings. The company – which once sponsored Manchester United – dropped its contention that the terms of the policy excluded MLAs from suing each other and claiming against it under the terms of the policy.

However, Mr Millar outlined a series of other objections to Mr Flanagan’s case, among them the fact that he did not report Mr Elliott’s legal letter to the company for two and a half months, despite the policy stating that the insurer should be notified immediately.

He also cited an exemption in the policy which allows the insurer to refuse to indemnify the insured if they are responsible for defaming someone when they know that what they are saying is defamatory and argued that what he had done was not in the course of his duties as an MLA.

The court was told that Mr Elliott wrote to his Sinn Fein rival the day after the May 2014 tweet (which was deleted after an hour) to say that the issue of libel proceedings would be influenced by “the immediacy and nature” of Mr Flanagan’s response.

Explaining why he failed to respond at all to that solicitor’s letter, Mr Flanagan said: “I hoped the problem would just go away once some time had passed,” adding that with hindsight he should not have done so.

Mr Flanagan said that he had initially found the language in Mr Elliott’s letter “shocking” because he did not believe that he had broken the law and had hoped that by deleting the tweet that would be sufficient to resolve the issue.