If an individual suffers an injury on the road through the negligence of a driver, they will recover compensation.
This is because of the provisions within Section 143 of the Road Traffic Act 1988.
Even if there was no insurance attaching to the vehicle, the Motor Insurers’ Bureau would satisfy any unsatisfied Judgment.
But there are numerous cases in which insurers in road traffic accident cases have tried a variety of methods to avoid liability including seeking a statutory declaration, asserting that the insurance policy is only relevant if the policyholder was driving or in the vehicle, and stating that the use of the vehicle was different to that which was insured.
However, in the end, subject to liability, an insurer or the Motor Insurers’ Bureau usually pays.
The position is profoundly and tragically different for victims of accidents at work. Section 1 of the Employers’ Liability (Compulsory Insurance) Act 1969 requires every employer to insure against personal injury sustained by his employees arising out of that employment.
So far, so good. The intention of the Act is clearly to protect employees who go to work and suffer personal injury through no fault of their own. However, unfortunately, there is no equivalent to Section 151 of the Road Traffic Act 1988 for employers’ liability cases.
The insurance policy is not disclosed as a matter of course. The Claimant, naturally, wants to put his or her best case forward both in the letter before action and in the Particulars of Claim.
However, usually, in employers’ liability cases, the breaches relied upon to prove negligence by a Claimant also act as a Defence to an insurer seeking to avoid liability.
Irwin Mitchell was involved in a case which highlights the significant injustice which can arise. The Claimant’s name has been anonymised to protect his identify. He is referred to as “James”.
James was working for a scaffolding company. He fell from height. The reason for his fall from height was because of significant and numerous health and safety breaches by his employer.
Tragically, he suffered from a spinal cord injury. He is paralysed. He has no function in his legs. He retained the use of his arms after many months of rehabilitation.
James’ employer was convicted after an investigation and prosecuted by the Health and Safety Executive. They were fined. They subsequently decided to liquidate the company. A new company was started. In effect, the owners swept what had happened to James “under the carpet”.
James initiated a claim against the liquidated company (before it had been dissolved). After the prosecution, the company’s insurers withdrew indemnity on the grounds that the company had breached the terms and conditions by failing to have a “health and safety policy” which was followed. In effect, the insurer relied upon the company’s breach of duty as a reason to avoid meeting the claim from James. This is the paradox.
The insurer only investigated the company’s health and safety policy when it had a significant financial interest in the outcome.
The whole purpose of the insurance is for the benefit of an employer’s employees. Section 1 of the Employers’ Liability (Compulsory Insurance) Act 1969 specifically states “Insurance against liability for employees”.
However, through no fault of his own, James sustained a spinal cord injury and again, through no fault of his own, the company’s insurer was able to avoid paying him.
James’ case was a particularly devastating one, where the lack of a statutory obligation for an insurer to discharge a third party’s claim, in this case James’ claim, led to profound and terrible consequences.
He recovered some damages because of the tenacity shown, willingness to challenge the status quo, and innovative arguments raised by Irwin Mitchell.
In reality, however, this was heavily discounted to reflect the risks that a Court would find that the company’s insurers were entitled to void the policy. The insurer avoids a significant financial liability.
The owners and the directors of the company move on with a different company.
James, the innocent person at the centre of all of this, is unable to work and is trying to raise a young family with a spinal cord injury.
As I stated in the aftermath of the case, I urge Parliament to protect employees to ensure that if they go to work and suffer injury, particularly serious life-changing injury, they are able to secure compensation from an insurer if the employer does not have the means to pay.
In addition, if an employer does not take out insurance, there should be a body set up to meet claims such as the Motor Insurers’ Bureau for road traffic collision cases. It is inexcusable that James has to live with a spinal cord injury through no fault of his own and with no redress.
This nonsensical inconsistency in employers’ liability cases needs addressing urgently. To add insult to injury (pun intended), on 1 November 2019, the Motor Vehicles (Compulsory Insurance) (Miscellaneous Amendments) Regulations 2019 come into force.
Insurers will no longer be able to seek a statutory declaration after the accident in road traffic cases. In other words, if they are going to void the policy, they cannot do so post-accident in an effort to save them from having to satisfy judgments obtained against their insured or another person using the vehicle to which their policy of insurance attaches.
Once again, there is no such redress for those injured at work, and the paradox continues.
David Withers is a serious injury partner, Joanne Witherington is an associate solicitor and Sarah Parkin is a solicitor, all at Irwin Mitchell.