Four statutes this decade have significantly changed insurance contract law: the Third Party (Rights Against Insurers) Act 2010 (TPRAI), the Consumer Insurance (Disclosure and Representations) Act 2012, the Insurance Act 2015 and the Enterprise Act 2016. With this level of statutory reform it is perhaps hardly surprising that Mr Justice Turner decided, in Redman v Zurich on 26 July, against “an interpretation … tantamount to judicial legislation” when consider trigger dates for applying the TRPAI Act 2010 above.
The underlying tort in Redman was an industrial disease claim involving negligent exposure, for around 30 years ending in the mid-1980s, by the employer policyholder known as ESJS1. The employee died from asbestos-related lung cancer in November 2013. ESJS1 was wound up in January 2014 and dissolved in June 2016.
The employee’s widow brought a claim directly against Zurich, ESJS1’s insurer, and the key question for the judge was whether the 2010 Act applied to the claim or whether the previous regime – a 1930 Act of exactly the same name – should apply?
The importance of the question arises because the 1930 Act is procedurally more complex and less favourable for claimants (indeed those reasons are precisely why the Law Commission recommended in the early 2000s that legislation should be introduced to replace it). The judgment notes that a number of other cases depend on the same point.
Despite relatively clear transitional provisions explaining when the 1930 and 2010 Acts should apply and what the cut-offs are, the claimant attempted to argue that the 2010 Act should run retrospectively and in parallel with its 1930 predecessor. Turner J dismissed this quickly in a short but emphatic judgment. His decision in Redman is, as far as we can tell, the first on the point. It is explained in more detail in the box below.
The judge’s approach to interpreting the 2010 Act is both orthodox and persuasive in its reasoning. I think it is very probably the correct approach to establishing which of the two TPRAI Acts should apply. Whether it is the last word on the matter could depend on an appeal in this case or on a different claim arguing against his decision. But for the time being it should be regarded as settling the law on this point.
|Arguments, reasoning and conclusion in Redman
The transitional arrangements in the 2010 Act are not immediately accessible, but they indicate that the dates of two events are critical: (i) when the insured “has incurred a liability” covered by the policy and (ii) when the insured becomes a “relevant person” – basically, when it is subject to formal insolvency arrangements.
If both events happen before the 2010 Act’s commencement date of 1 August 2016 then it does not apply and the 1930 Act must be used. Otherwise – ie if either or if both events happen after commencement – the 2010 Act shall apply.
On the facts above, the insolvency and the liability (in tort) both happened before August 2016, which would indicate the 1930 would apply. Nevertheless, “until relatively recently, it was argued on behalf of the claimant that ESJS1 had not ‘incurred a liability’ … before the Act came into force [and] those instructed by the claimant originally maintained their stance that a claim under the 2010 Act was justified.” This line of argument was dropped in the run-up to the hearing and conceded orally by counsel.
Turner J recognised the concession. He explained what “incurred a liability” means, which is probably the core point in this case. He pointed out that the liability (of the insured employer) was obviously incurred before 2016. In his view, to which emphasis has been added: “[the concession above] 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.”
Given that a straightforward approach to interpreting the words of the 2010 Act meant it would not apply, the claimant tried a second line of argument; being that the 2010 Act should operate retrospectively and in parallel with the 1930 Act which it replaced.
If you think that argument has something of a ‘cake and eat it’ feel about it – how can the 2010 be said to replace the old Act but at the same time run alongside it? – you may be correct and you are not alone. The judge seems to have thought the same and rejected it outright. In dismantling this argument he began judgment by describing it as a “brave submission”, a phrase which, more often than not, is judicial euphemism for a hopeless point. He found that the argument was “wholly inconsistent” with the wording of the 2010 Act and added (perhaps for good measure) that Parliament could readily have chosen, but did not, to make the 2010 Act fully retrospective. He therefore concluded that:
“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.”
The full text of the judgment in Redman is available here