Mesothelioma contribution claims – amendments to the Companies Act 2006
The government has agreed to enact an amendment to the Companies Act 2006 that will assist in the recovery of monies from potential co-defendants in mesothelioma claims.
If a claimant is pursuing compensation against a devolved company in a mesothelioma claim, then they can recover from any insurer for that company, using the Third Party Rights against Insurers Act 2010.
As mesothelioma claims are indivisible, a claimant can recover 100% of their claim against any single defendant. This is an issue when that defendant is a dissolved company. In such cases, as a claimant only needs to restore one company it is in their best interest to identify a defendant who has just one insurer. Thus potentially focusing unfairly on a company whose interest might otherwise be minimal. This injustice continues as that insurer cannot bring a subrogated claim in the name of a dissolved defendant unless a legal assignment has been taken. Without this, an insurer has no other choice than to restore the dissolved company to the Companies House register.
This is further complicated by limitations within the Companies Act 2006 which only allows a company to be restored to the register within six years of that company being dissolved. As mesothelioma claims often have a latency period of twenty to fifty years before symptoms manifest, any single defendant is likely to face difficulties in recovering a contribution if potential co-defendants are dissolved, even when relevant insurers are known. The impact of this cannot be understated – it can leave those with a small interest potentially culpable for 100% of a costly asbestos claim with no ability to recover heavy losses from other potential parties.
Fortunately, the government now seeks to address this inequality by amending the Companies Act 2006 to allow insurers to restore their policyholder in personal injury claims without any set time limit. This amendment, if approved by parliament, will be the Third Parties (Rights against Insurers) Act 2010 (Consequential Amendment of Companies Act 2006) Regulations 2018.
The amendment is a draft Statutory Instrument (SI), and as such parliament can either approve or reject it, but they cannot amend it. It will be debated and approved by both Houses, having first been considered by the Secondary Legislation Scrutiny Committee (SLSC) and the Joint Committee on Statutory Instruments (JCSI). The SI will be stopped if either House votes against it. Unlike bills, both Houses can consider an SI at the same time and there is no rule that one House must go first.
To date, the draft SI was laid before parliament on 28 June and was considered by the SLSC on 10 July. The changes are expected to be implemented before the summer recess.
|Instrument created and laid before the Houses of Parliament||28 June|
|Motion to approve the instrument tabled by the government was approved by the House of Commons||29 June|
|Considered by Secondary Legislation Scrutiny Committee (SLSC) –policy considerations||10 July|
|Consideration by Joint Committee on Statutory Instruments (JCSI) – legal content||TBC|
|Delegated Legislation Committee (DLC) vote||TBC|
|Final approval by both House of Parliament||TBC|
The impact to this amendment is that compensators need no longer fear potentially having to pay 100% of claims with no right of recourse, especially where a defendant’s interest might otherwise be minimal. This is welcome news to those faced with high value mesothelioma claims. The advantage to these changes being implemented sooner rather than later is that there is only a two year time limit in which to pursue a claim for contribution following settlement of a claim. The sooner the law is amended, the sooner contributions claims can be intimated (if necessary), thus helping to prevent insurers who have had to pay large claims having to swallow heavy losses due to time running out. This equally reduces the risk of any two year time limit expiring in which to make such contribution claims.