Farrell v Federated Employers Insurance Association Ltd

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
Judgment Date28 Jul 1970
Judgment citation (vLex)[1970] EWCA Civ J0728-2

[1970] EWCA Civ J0728-2

In The Supreme Court of Judicature

Court of Appeal

Appeal by plaintiff from judgment of Mr. Justice MacKenna on 6th November, 1969.


The Master of the Rolls (Lord Denning),

Lord Justice Megaw and

Sir Frederic Sellers

Edward Farrell
Plaintiff, Appellant
Federated Employers Insurance Association Limited
Defendants, Respondents

Mr. C.F. DEHN, Q.C., and Mr. JOHN TRENCH (instructed by Messrs. Stuart Hunt & Co.) appeared on behalf of the Appellant Plaintiff.

Mr. W.A. MACPHERSON (instructed by Messrs. Herbert Smith & Co.) appeared on behalf of the Respondent Defendants.


We need not trouble you further, Mr. Macpherson.


Nearly eight years ago, on the 10th November, 1962, Mr. Edward Farrell was injured in an accident. He was employed by a firm called J. O'Connor & Co. Ltd. They were laying pipes In a tunnel for the West Ham Corporation. He had only been working for them for five days. Then he fell from the jib of a crane. He was severely injured. His employers did not, as they should have done, notify their insurers of the accident. They should have done it as soon as possible. But they did not do it until the 1st April 1963. They did then notify it. In giving details they said there was no defect in the machinery or plant: and that the accident was not caused by the carelessness of anyone other than Mr. Farrell himself.


Eight months after the accident, on the l6th August, 1963, Mr. Farrell consulted solicitors who wrote to his employers claiming damages and asking them to forward the letter to their insurance company. The employers did so. They were insured with the Federated Employers Insurance Association Ltd. The insurance company wrote to Mr. Farrell's solicitors saying that no liability was admitted but arranging for a medical examination. Sewerel letters passed, but the insurance company evidently thought, as the accident had not been notified to them for some months, that the employers might not claim under the policy, and so on the 8th April 1964 the insurance company wrote to Mr. Farrell's solicitors:


"Our Chief Officer has instructed us to deal with this matter at present without prejudice to our liability under our policy."


On the 28th July 1964 Mr. Farrell's solicitors wrote to the insurance company asking "who is to accept service of proceedings on your insured's behalf." On the 4th May 1964 the insurance company replied: -"should you wish to issue proceedings, we have no objection to them being issued on our Insured."


This was not the usual practice. In the ordinary way, ofcourse, an insurance company get their own solicitors to accept service. In this case, they did not take that course. They left Mr. Farrell's solicitors to serve the employers direct. But those solicitors did not do so for a long time. Mr. Farrell's solicitors waited for over a year. They did not issue the writ until the 28th September 1965. That was getting on for three years after the accident. They issued it, of course, against the employers, J. O'Connor & Co. Ltd. They did not serve it until the 6th January 1966. They sent it by post to the registered office of J. O'Connor & Co. Ltd. This was good service, but there was no one there connected with the company. They looked up the company's file and found that the bank had appointed a receiver for the debenture holders. He had been appointed as long ago as September 1964. So on the 17th January 1966 Mr. Farrell's solicitors sent the writ and statement of claim to the receiver. On the 18th January 1966 the receiver sent those documents back and said:

"You may be aware that I am Receiver and Manager of this Company, appointed by Barclays Bank Ltd., and in this connection, I should inform you that the assets which have come into my hands fall far short of the sum required to discharge the indebtedness to the Bank, and accordingly there is no possibility of any funds becoming available to the unsecured creditors of which your client might be one."


On getting that letter, I think Mr. Farrell's solicitors ought at once to have taken the matter up with the insurance company. After all, they had been in correspondence with them in 1963 and 1964. But instead, they entered JUDGMENT against J. O'Connor & Co. Ltd. in default of appearance. On the 28th February 1966 they entered JUDGMENT for damages to be assessed. Shortly afterwards, on the 2nd March 1966, they wrote to the insurance company (it was their first letter for 18 months):

"We are writing to advise you that, having now served proceedings upon your client, we have obtained a JUDGMENT in default of appearance for damages to be assessed."


The insurance company instructed their solicitors who wrote back on the 11th March 1966:

"This is the first occasion upon which our clients have received any notice whatsoever of proceedings having been brought against their Insured…. It was a conditionprecedent that their insured would notify or forward to our clients, immediately on receipt, every claim, notice, letter, writ, process of other document concerning any claim. As you will have gathered, none were notified or forwarded."


Over two years later, on the 29th May 1968, the damages were assessed at £34,500. On the 16th August 1968 the costs were taxed at £292. 18s.10d. On the 1st November 1968 Mr. Farrell's solicitors issued a writ against the insurance company claiming the sums of £14,500 and £292. 18s.10d. by virtue of a provision of the Third Parties (Rights against Insurers) Act 1930. That Act gives an injured person a direct cause of action against the insurance company whenever the insured person becomes insolvent. When the insured is a company, the Act applies, among other things, on a receiver being appointed, see section 1(1) (b). Thereupon the injured person can sue the insurance company direct. But he has first to establish that the insured person was liable to him for that amount, see ( Post Office v. Norwich Union Fire Insurance Society Ltd. 1967 2 Q.B. 363); and, having done that, he stands in the shoes of the insured person. But the insurance company can avail themselves, as against him, of all the defences which would have been available to them as against the insured person. So in this case the insurance company said that the policy was issued subject to conditions on which they relied as a defence.


The Insurance company had kept no copy of the policy, but they had kept a record card which enables them to reconstruct one. The correctness of it was not challenged. It showed that the employers had made a proposal and declaration on the 26th June 1962. That the policy was signed on the 13th September 1962. It was originally for the period from the 9th August 1962 to the 31st October 1962, but was afterwards extended to the 11th December 1962. It insured the employers against liability to their workmen in case of bodily injury or disease arising out of and in the course of their employment. Subject, however, to sewerel conditions, of which Condition 1 said:

"In the event of any occurrence which may give rise to a claim for indemnity under this Policy the Employer shall as soon as possible give notice thereof to the Association in writing with full particulars. Every claim, notice, letter, writ or other document served on the Employer shall be notified or forwarded to the Association immediately on receipt."


At one stage the Insurance company sought to rely on the first part of the condition: because the employers had not notified them till 4½ months after the accident. But the Insurance company realised that they had, by their conduct, waived that part of the condition. So they confined their reliance to the second part of the condition. They said that the writ had not been served on them "immediately on receipt". It was received at the employers' office on the 7th January 1966, but was not notified to them until the 3rd March 1966: and meanwhile JUDGMENT had been entered against the employers.


Mr. Justice MacKenna held that the Insurance company were protected by the condition. Mr. Farrell now appeals to C this Court.


Mr. Dehn, who appeared for Mr. Farrell, recognised that he stood in the shoes of the employers, J. O'Connor &Co. Ltd. His point was that this condition was not binding on the employers unless it was brought to their notice, and proved by evidence so to have been brought. He cited for this proposition In re ( Coleman's Depositories Ltd. and Life and Health Assurance Association 1907 2 K.S. 798). He submitted to us that the insurance company ought to prove the posting of the policy to the employers: and he cited some old cases on how postage was to be proved. I do not think this point should prevail. It was not taken on the pleadings. It was taken for the first time at the trial. The insurance company met it by calling the brokers who proved that the ordinary course of business was this: the insurance company send the policy to the brokers, and then the brokers send it to the employers as- against the receipt of the first premium. The brokers had no reason to suppose that this course of business was not followed in this case. That seems to me...

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