This case clarifies that the Third Parties (Rights Against Insurers) Act 2010 (the 2010 Act) does not apply retrospectively, such that the Third Parties (Rights Against Insurers) Act 1930 (the 1930 Act), and only the 1930 Act, will continue to apply in circumstances in which both (i) the insured's insolvency occurred; and (ii) the insured's liability was incurred, prior to 1 August 2016.
Under the 2010 Act, a third party with a claim against an insured insolvent party is entitled to pursue the claim against the insolvent party's insurers directly, without first having to establish the insolvent party's liability. The 2010 Act is more advantageous to such a claimant than the 1930 Act, which requires the insolvent party's liability to have been established separately, prior to proceedings being brought against insurers, a task rendered procedurally more convoluted, if not impossible, where the insolvent party has ceased to exist as a corporate entity.
In this case, the claim was brought by Mrs R, whose husband (Mr R) had in 2013 died of lung cancer allegedly caused by asbestos exposure during the course of his employment (from 1952 1982) with a firm, (E). After Mr R's death, E was the subject of a voluntary winding up, being dissolved in June 2016.
Mrs R brought a claim against E's Insurers under the 2010 Act. The Insurers objected, arguing that the 2010 Act had no application in this case, on a proper interpretation of its transitional provisions.
The 2010 Act came into force on 1 August 2016, but provides that the 1930 Act shall continue to apply in cases in which both the insolvency and the "incurring of the liability" happened before that date.
In its judgment, the Court of Appeal confirmed by reference to previous authorities that a liability is "incurred" for these purposes when the cause of action is complete (when negligence and damage collide2) and not when a judgment, settlement or award establishing such liability is made.
The Court of Appeal further held that the legislative intention was not for both regimes to operate in parallel, in the case of claims to which the 1930 continues to apply. Either the 1930 regime applies or it does not. Where it does continue to apply then the 2010 regime has no application.
Although the Court of Appeal's conclusions are perhaps unsurprising, this case provides important clarification on a point on which, as the judgment itself makes plain, is of significant wider interest. It also makes clear that, at least for the time being, the 1930 and 2010 regimes will continue to operate alongside one another, with the circumstances of each case determining which will apply.