Aviva Insurance Ltd v The Secretary of State for Work and Pensions
| Jurisdiction | England & Wales |
| Judge | Mr Justice Henshaw |
| Judgment Date | 12 January 2021 |
| Neutral Citation | [2021] EWHC 30 (Admin) |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 12 January 2021 |
| Docket Number | Case No: CO/2608/2019 |
[2021] EWHC 30 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
BEFORE THE HONOURABLE Mr Justice Henshaw
Case No: CO/2608/2019
The Queen on the Application of
Michael Kent QC, Benjamin Tankel and Kate Boakes (instructed by Keoghs LLP) for the Claimants
Edward Brown and Brendan McGurk (instructed by Government Legal Department) for the Defendant
Hearing date: 15 December 2020
Draft circulated to the parties on 21 December 2020
Approved Judgment
| (A) INTRODUCTION | 2 |
| (B) SCOPE OF JUDGMENT | 2 |
| (C) STARTING DATES | 5 |
| (D) HRA SECTION 3 | 7 |
| (E) UNLAWFUL ACTION | 15 |
| (F) BAINBRIDGE CERTIFICATE | 15 |
| (G) SCA SECTION 31(2A) AND OTHER REMEDY ISSUES | 16 |
| (H) PERMISSION TO APPEAL | 18 |
(A) INTRODUCTION
This judgment deals with certain consequential matters arising from my judgment dated 20 November 2020 on the substance of the Claimants' claim ( [2020] EWHC 3118 (Admin)) (“ Judgment”). They are:
i) the scope of the Judgment, and hence the appropriate order, in particular the policy date range and types of claim to which it applies;
ii) from what starting dates the court should declare the legislation became non-compliant with Article 1 to the First Protocol to the European Convention on Human Rights (“ A1P1”);
iii) whether the legislation can be ‘read down’ pursuant to section 3 of the Human Rights Act 1998 (“ HRA”);
iv) whether the order should state that the Defendant acted unlawfully;
v) whether the Bainbridge certificate should be quashed;
vi) whether the order should be stayed pending further argument on a potential contention by the Defendant under section 31(2A) of the Senior Courts Act 1981 (“ SCA”); and
vii) permission to appeal.
The background and context are set out in the Judgment, in conjunction with which this present judgment should be read.
(B) SCOPE OF JUDGMENT
The first question is whether the Judgment is limited to insurance policies underwritten before the enactment of the Social Security (Recovery of Benefits) Act 1997 (“ the 1997 Act” or “ the Act”) on 19 March 1997. The Defendant notes that Judgment § 85 states:
“Section 22 does not give rise to a ‘one-off insertion’ of deemed wording into policies of insurance on 6 October 1997 (or, if later, when relevant insurance contracts were made). It creates a deemed contractual liability as and when the circumstances set out in section 22(1) arise, namely when a compensation payment is made following the incurring of a liability by a compensator that is covered (to any extent) by the insurance policy. The interference thus arises, on an ongoing basis, each time a compensator incurs a liability under section 6 and the insurer incurs a corresponding liability under section 22”
and expresses concern that the Judgment may extend to policies underwritten at any time.
Judgment § 3 notes that the Claimants' challenge relates to “obligations imposed on a dwindling number of liability insurers holding long-tail disease legacy policies (including Aviva), arising from liabilities for long-tail asbestos-related diseases”. Paragraph 6 of the Claimants' Detailed Statement of Facts and Grounds explains that in the normal case, a long-tail disease claim will fall to be dealt with by the employer's liability insurer whose policy was in force at the time of the act or omission giving rise to the disease, “ which is likely to have been many years before a claim is made and before the 1997 Act came into force” (noting that in mesothelioma cases the tortious exposure to asbestos may be fifty years or more before the disease becomes manifest). Paragraph 3 of the Claimants' skeleton argument for the substantive hearing stated:
“… The challenge in these proceedings relates to an unintended but increasingly onerous by-product at the margins of the scheme, which involves obligations imposed on a dwindling number of liability insurers holding long-tail disease legacy policies (including the First Claimant). The objectionable features of the scheme of benefit recovery as currently operated by the Defendant, though significant to EL insurers with legacy policies, therefore form a very small part of the whole.”
Those are the “ legacy policies” to which I refer in Judgment § 3, and which I take to mean insurance policies underwritten before the 1997 Act came into force, in September/October 1997. The Judgment accordingly proceeds on the basis that the claim relates to pre 1997 Act policies (and reinsurances of such policies): see, e.g., Judgment §§ 15(ii), 15(iii)(d), 146, 151 and 155. It does not consider one way or the other the position is relation to policies underwritten thereafter. Ultimately, of course, it is for others to interpret the meaning and effect of the Judgment, but in my view the order reflecting the Judgment should be confined within the scope of the claim as I understand it, and hence to insurance policies underwritten before the Act came into force (together with reinsurances of such policies). In their draft order, the Claimants seek further to narrow the relief granted slightly, by confining it to policies of insurance issued before 19 March 1997, when the Act was enacted as opposed to when it came into force.
The second question on scope concerns the relevant recipients of compensation payments. Judgment § 11 summarises the Claimants' complaint in this way:
“The present Claimants' complaint is that the combination of the 1997 Act (as interpreted by the Defendant) and the developments outlined above has given rise to five situations where liability insurers are obliged to reimburse the State for benefits that do not correspond to any damage caused by their insured, or (or including) where the insured is only one of two or more employers liable for such damage and the insurer's contribution to the victim's exposure was limited (and in some cases very limited):
i. the requirement to repay 100% of the recoverable benefit even where the employee's own negligence also contributed to the damage sustained;
ii. the requirement to repay 100% of the recoverable benefit even where the employee's “divisible” disease is, as in Carder, in part unconnected with the insured's tort;
iii. where others would also be liable in full for an “indivisible” disease (which by section 3 of the Compensation Act 2006 but not at common law applies to mesothelioma), but they or their insurers cannot be traced. A particular instance of this, relating to a Mr Bainbridge, is cited as an example for the purposes of the present claim. This situation has become a particular problem in asbestos cases where (a) the events causing the injury were usually decades earlier; (b) employees often did contract work for many different employers; and (c) the rules on causation have been relaxed in various ways so that a relatively minimal contribution to asbestos exposure can nevertheless result in an award in damages. The legal and public policy underpinning these developments was designed to ensure full recovery for the victims of torts but, the Claimants say, can provide no justification for the State being allowed, parasitically, to recover 100% of its outlay on benefits connected with that injury;
iv. the requirement to repay certain benefits that do not correspond to a recognised head of loss. The choice as to which benefits to pay to a disabled person is a matter of government policy. Only some of these are prescribed benefits which the Claimants are required to repay. Nevertheless, the nature and amounts of those prescribed benefits do not always correspond to heads of compensation that would be payable by way of damages following a successful negligence claim. For example, Universal Credit is now a listed benefit referred to in Schedule 2 to the 1997 Act, but is deductible only against “Compensation for earnings lost during the relevant period”. Universal Credit now includes a number of benefits that were previously not recoverable, including housing benefit. However, the Claimants' evidence indicates that, as one would expect (and as exemplified by the case of Bainbridge), claims for loss of earnings are often not made by those suffering from mesothelioma given their average age; and
v. the requirement to repay 100% of the recoverable benefit despite the element of compromise that is present in most settled claims. This requirement even extends to claims that are settled without admission of liability.”
Judgment § 182 concludes that the three aspects of the scheme set in place by the 1997 Act summarised in subparagraphs (i) to (iii) above are incompatible with the Claimants' rights under A1P1.
The Claimants noted in their skeleton argument for the substantive hearing that “For simplicity, the claimant seeking damages from an insured entity is referred to as “the employee” even though in fatal cases such claims will be pursued by his or her personal representative and there may be a limited number of cases not involving employers' liability”. As an example of the latter category, the Claimants point out that one of the claims in Fairchild v Glenhaven Funeral Services Ltd [2002] UKHL 22; [2003] 1 AC 32 arose from occupier's liability satisfied by public liability insurance. The Claimants submit that the reasoning in the Judgment applies equally in such circumstances, and that the order should accordingly refer to “the person suffering from the disease” rather than being confined to employees (in the way that the wording of Judgment § 11 might appear to be confined). The Defendant does not dissent from this, and I agree.
Thirdly, the Claimants submit that the order resulting from the Judgment should be confined...
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