Redman v Zurich Insurance Plc & Anor (Rev 1)

For transitional claims against insurers, liability is incurred when the underlying cause of action is complete. It is not postponed until the claimant establishes liability by judgment, declaration or agreement. The transitional provisions of the Third Party (Rights Against Insurers) Act 2010 preserve the earlier statutory regime for claims meeting the specified pre-commencement conditions. They do not make the 2010 regime operate retrospectively in parallel with the Third Party (Rights Against Insurers) Act 1930. In particular circumstances, one regime applies to the exclusion of the other.

The claimant, suing as widow and administratrix of the deceased’s estate, brought proceedings against the defendants’ insurer under the Third Party (Rights Against Insurers) Act 2010. The deceased had allegedly suffered asbestos exposure during employment, and the employer had entered voluntary winding up and later been dissolved. The insurer applied to strike out the claim or obtain summary judgment.

The central issue was whether the transitional provisions permitted the 2010 regime to apply retrospectively, in parallel with the 1930 regime, to a claim arising before the 2010 Act came into force.

1. Academic issue. Although the dispute had become largely academic, the court exercised its discretion to determine it. The requirements identified in Hutcheson v Popdog Ltd (Practice Note) [2012] 1 W.L.R. 782 were satisfied: the issue was of general importance, the respondent consented or was protected as to costs, and both sides had fully argued the point.
2. When liability is incurred. Under section 1 of the Third Party (Rights Against Insurers) Act 2010, read with Schedule 3, liability is incurred when the cause of action is complete. It is not incurred only when the claimant’s right to compensation is crystallised by judgment or otherwise. The reasoning in Post Office v Norwich Union Fire Insurance Society Ltd [1967] 2 Q.B. 363 was applied. The description of that reasoning in Bradley v Eagle Star Insurance Co [1989] 2 W.L.R. 568 as unassailably correct reinforced the conclusion.
3. Transitional effect. Schedule 3 preserves the 1930 regime where, before 1 August 2016, the insured had incurred the relevant liability and had become a relevant person. It does not permit the 2010 regime to operate retrospectively and in parallel. The claimant’s interpretation would deprive the transitional provisions of practical effect and would amount to judicial legislation contrary to the clear statutory wording.
4. Because the employer had incurred liability and become a relevant person before commencement, the 1930 regime applied and the 2010 regime did not. The claim under the 2010 Act disclosed no reasonable grounds and was struck out under CPR 3.4.