On 26 July 2017, Mr Justice Turner handed down judgment in Redman v (1) Zurich Insurance Plc (2) ESJS1 Limited (formerly known as The Humber Electrical Engineering Co Limited)  EWHC 1919 (QB). A copy of the judgment can be accessed here.
The decision is particularly important for the insurance market and litigants because it clarifies when the 2010 Act applies.
The facts: Mrs Redman (suing as widow and administratix of the estate of Mr Redman, deceased) had brought a claim directly against Zurich under the Third Parties (Rights against Insurers) Act 2010 (“the 2010 Act”). Zurich applied for summary judgment/strike-out, arguing that the 2010 Act was not applicable on the basis that, under Schedule 3, paragraph 3 of the 2010 Act, if both the relevant insolvency event and the incurring of liability occurred prior to 1 August 2016 (the commencement date of the 2010 Act) the claim should have been brought under the Third Parties (Rights against Insurers) Act 1930 (“the 1930 Act”) and it was necessary to restore and sue the insured employer to judgment in order to be able to stand in the employer’s shoes and claim against the insurer for indemnity. It was agreed that the relevant insolvency event pre-dated commencement of the 2010 Act, but the Claimant sought to argue that the 2010 Act has retrospective effect, permitting her to choose whether to proceed under the 2010 or the 1930 Act.
The decision: Turner J granted Zurich’s application and held, in summary, that
- A relevant person “incurs a liability” under section 1 of the 2010 Act when the cause of action is complete and not when the claimant has established the right to compensation whether by a judgment or otherwise.
- 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 impact: For asbestos-related cancers, where (applying existing case-law) the injury occurred a number of years prior to their diagnosability, such claims will continue under the 1930 Act, with the need to sue the insured before seeking payment from insurers, for some time to come. The decision also confirms when an insurer is liable under the 2010 Act so that it is entitled to seek contribution from potential tortfeasors who were not sued or from other insurers of the same insured (given that it can only do so if it is properly liable in respect of the loss for which it seeks contribution) and is able to recover from its reinsurers (if applicable).