THIRD PARTY (RIGHTS AGAINST INSURERS) ACT 2010 IS NOT RETROSPECTIVE: PARLIAMENT COULD EASILY HAVE SAID OTHERWISE
In Redman -v- Zurich Insurance PLC  EWHC 1919 (QB) Mr Justice Turner held that the provisions of the Third Party (Rights Against Insurers) Act 2010 is not retrospective.
“If Parliament had intended the 2010 regime retrospectively to apply to all third party claims against insurers then it would have taken a relatively straightforward drafting exercise to achieve this.”
The claimant brought a fatal accident claim. Her husband had been exposed to asbestos between 1952 and 1982. The defendant was his former employer. However the employer had been wound up in 2014 and dissolved in 2016. The issue was whether she was able to bypass the onerous requirements of the Third Party (Rights Against Insurers) Act 1930 on the grounds that the 2010 Act was not in place.
A “FRIENDLY” ACTION
To some extent this was friendly action, designed to clarify the law.
As it happens, the parties have recently co-operated to ensure that, as far as possible, the determination of the point at issue does not impact substantively upon the position of Mrs Redman and in this they are to be commended. The defendant had consented to the joinder of ESJS1, now restored to the register, out of time and, mindful of the fact that the resolution of the issue of statutory interpretation is one in which it has by far the greater interest, has agreed to indemnify her as to the costs of preparing for and the hearing of this application.
Notwithstanding, the extent to which this litigation has taken on the form of a “friendly action” and mindful of the fact that this is a first instance decision I am satisfied that the three conditions in Hutcheson v Popdog Ltd (Practice Note)  1 WLR 782 have been satisfied. As Lord Neuberger held:
“Both the cases and general principle seem to suggest that, save in exceptional circumstances, three requirements have to be satisfied before an appeal, which is academic as between the parties, may (and I mean ‘may’) be allowed to proceed: (i) the court is satisfied that the appeal would raise a point of some general importance; (ii) the respondent to the appeal agrees to it proceeding, or is at least completely indemnified on costs and is not otherwise inappropriately prejudiced; (iii) the court is satisfied that both sides of the argument will be fully and properly ventilated.”
I am informed that a number of those acting on behalf of claimants generally are bringing or threatening to bring claims against insurers under the 2010 Act the success or otherwise of which will be determined by the proper interpretation of the transitional provisions of that statue and unless and until there is some authoritative decision on the issue there is likely to be an accumulation of such claims thereby giving rise to a strong risk of wasted time and costs. In the circumstances, I am entirely satisfied that it would be appropriate to exercise my discretion and adjudicate on the matter. Furthermore, the issue of the defendant’s historic costs remains in issue which provides some further, albeit somewhat slender, justification for the resolution of the substantive dispute. For the record, I will state that I am entirely satisfied that both sides of the argument have been fully and properly ventilated before me.
The judge decided that the 1930 Act applied in these circumstances and the 2010 Act could not be used by the claimant.
“THE 2016 ACT
“Rights against insurer of insolvent person etc
This section applies if –
a relevant person incurs a liability against which that person is insured under a contract of insurance, or
a person who is subject to such a liability becomes a relevant person.
The rights of the relevant person under the contract against the insurer in respect of the liability are transferred to and vest in the person to whom the liability is or was incurred (the “third party”).
The third party may bring proceedings to enforce the rights against the insurer without having established the relevant person’s liability; but the third party may not enforce those rights without having established that liability.
For the purposes of this Act, a liability is established only if its existence and amount are established; and, for that purpose, “establish” means establish –
by virtue of a declaration under section 2….,
by a judgment or decree,
by an award in arbitral proceedings….,or
by an enforceable agreement.”
“TRANSITORY, TRANSITIONAL AND SAVING PROVISIONS
Despite its repeal by this Act, the Third Parties (Rights against Insurers) Act 1930 continues to apply in relation to –
cases where the event referred to in subsection (1) of section 1 of that Act and the incurring of the liability referred to in that subsection both happened before commencement day;
cases where the death of the deceased person referred to in subsection (2) of that section happened before that day.
In this Schedule “commencement day” means the day on which this Act comes into force.”
APPLYING THE LAW
i) The relevant person has incurred a liability against which that person is insured under a contract; and
ii) The person subject to such a liability has become a “relevant person”.
Until relatively recently, it was argued on behalf of the claimant that ESJS1 had “not incurred a liability against which that person is insured under a contract” before the Act came into force. Indeed, that was the basis upon which those instructed by the claimant originally maintained their stance that a claim under the 2010 Act was justified.
“Under that section the injured person steps into the shoes of the wrongdoer. There are transferred to him the wrongdoer’s “rights against the insurers under the contract.” What are those rights? When do they arise? So far as the “liability” of the insured is concerned, there is no doubt that his liability to the injured person arises at the time of the accident, when negligence and damage coincide. But the “rights” of the insured person against the insurers do not arise at that time.”
In the event, counsel for the claimant conceded both in his skeleton argument and in oral submissions before me that he was abandoning this line of argument altogether. In my view, this decision was not only right but inevitable. Liability is incurred when the cause of action is complete and not when the claimant’s rights against the wrongdoer are thereafter crystallised whether by judgment or otherwise.
Having accepted that the wording of Schedule 3 to the 2010 Act inevitably leads to the conclusion that the provisions of the 1930 Act apply to Mrs Redman’s claim, her counsel was then constrained to rely upon an interpretation of the schedule which not only bore no relation to the basis upon which this claim was purportedly brought under the 2010 Act but was entirely inconsistent with it.
i) The purpose of transitional provisions is to identify the respective scope of application of earlier and later legislation. If the claimant’s approach were correct, there would be no such transition because the 2016 regime would apply retrospectively and indiscriminately without reference to any point or circumstances of transition. I invited counsel for the claimant to identify any circumstances within the scope of his interpretation in which the 1930 regime would operate and not the 2010 regime. He was unable to do so.
ii) If Parliament had intended the 2010 regime retrospectively to apply to all third party claims against insurers then it would have taken a relatively straightforward drafting exercise to achieve this.
iii) If the provisions of the 2010 Act were to apply retrospectively but in parallel with the 1930 regime then one would expect that there would be some merit in affording the claimant a choice between the two. However, counsel for the claimant was unable when pressed on the topic to identify any circumstances in which it would benefit a claimant to elect to deploy the more procedurally unfavourable provisions of the 1930 Act.
The claimant points out that by interpreting the 2010 Act so as to be retrospective in application the court would be able to avoid the need to identify the date upon which damage was caused which may often be a challenging exercise in the context of some industrial disease claims. It is well recognised that identifying the point at which the process of the development of malignancy, for example, gives rise to damage can be medically and legally controversial. Nevertheless, such difficulties do not entitle the court to ride roughshod over the clear wording of the 2010 Act. To apply the interpretation favoured by the claimant would be tantamount to judicial legislation. In any event, the problems commonly found in industrial disease cases do not arise in the vast majority of more straightforward claims and, in most cases, there is likely to be no difficulty in establishing when liability accrued.
i) A relevant person “incurs a liability” under section 1 of the Third Party (Rights Against Insurers) Act 2010 when the cause of action is complete and not when the claimant has established the right to compensation whether by a judgment or otherwise;
ii) The transitional provisions do not provide for the 2010 regime to be applied retrospectively so as to run in parallel with the 1930 regime. In any given circumstances, either the 1930 regime applies or it does not. Where it does continue to apply then the 2010 regime has no application.