Limitation of claims against insurers under the Third Parties (Rights Against Insurers) Act 2010 (2023)

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In one of the first statute of limitations decisions under the Third Party (Rights Against Insurers) Act 2010, the Leeds County Court ruled that the statute of limitations on claims against insurers continued after the policyholder's insolvency. This is in contrast to the position under the Third Party (Rights Against Insurers) Act 1930, where the courts held that statutes of limitations were suspended in the event of the insolvency of the insured.

emRashid contra Direct Savings Ltd,His honorary judge Gosnell considered the different provisions of the 1930 Act and the 2010 Act and the application of the statute of limitations in the 1980 Limitation Act where the policyholder is insolvent. The judge concluded that, in the case oflarnell(which was a decision in relation to the 1930 Act) do not apply to claims made under the 2010 Act, so the limitation period does not end at the time of the insolvency event.


14 claimants brought claims against Direct Savings Limited (DSE) for negligent installation of hollow wall insulation in 2014/15. DSE argued that another related company, Direct Savings (Scotland) Limited (DSS), actually carried out the installations and DSS was wound up on 1 September 2020. Both DSE and DSS were insured with the same insurer. The plaintiffs filed motions to join the insurer and DSS as defendants in the lawsuit, and the insurer opposed the motions on the grounds that the statute of limitations had expired for claims against it under the 2010 Act (the premise , which occurred in 2014/15 , and orders placed more than 6 years later). The plaintiffs alleged that, pursuant to art.larnell, the statute of limitations expired on the DSS settlement date, despite the fact that the claim under the 2010 Act was against the insurer. The judge considered a number of issues, the main one being whether the claim against the insurer under the 2010 Act was made within or outside of the DSS settlement and, consequently, whether the statute of limitations on that claim was in the time of settlement. the DSS DSS contest is interrupted.


The judge found that there are no specific provisions in the 2010 Act or the 1930 Act that answer the question of whether the statute of limitations continues after the policyholder becomes insolvent. In the case of claims against a bankrupt company, the limitation period for these actions is generally suspended from the beginning of the bankruptcy. in case ofGegen Financial Services Compensation Scheme Larnell (Insurances) Limited (in liquidation)[2006] QB 808 considered whether this statute of limitations would also apply to claimants' claims against insurers under the 1930 Act. Lord Justice Lloyd concluded that under the 1930 Act the first step to a third is to establish the liability of the insolvent insured and such a claim falls 'within' the sphere of liquidation. Until this liability is determined, neither the insured nor the third-party beneficiary have the right to reclaim under the policy and, if the credit has not already expired at the onset of insolvency, it does not expire at the expiration of the additional period (as with normaloverall undercarriageBeginning).larnellprior to the 2010 Law and therefore did not consider the application of these principles in relation to the 2010 Law.

In the present case, the insurer wanted to make a distinctionlarnelland argued that a claim under the insurance policy did not "fall under" the DSS settlement. In fact, unlike the 1930 Act, the 2010 Act does not require a third party to first establish liability against the insolvent policyholder, and the third party accumulates a direct right against the insurer at the time of insolvency. The insurer relied on five previously unreported (non-binding) judgments that reached the same conclusion, namely:larnellcan be distinguished and this limitation will continue to apply in a claim against an insurer under the 2010 Act.

The authors have tried to argue that if the Judicial Commission intended the statute of limitations to continue despite the dissolution of a corporation, they would have recommended it when considering amendments to the 1930 Act, but they have not. Therefore, the authors argued, the 2010 Act was not intended to change the previous position on the statute of limitations under the 1930 Act, as confirmed bylarnell. The plaintiffs also argued that the 2010 Act should be interpreted specifically and that the plaintiffs should not be placed in a worse position than they would be under the 1930 Act, which they would be if the statute of limitations continued despite the bankruptcy event.

The judge favored the arguments of the insurer and agreed with the five previous (undeclared) decisions. The judge noted that the main issue was whether the claim against an insurer under the 2010 Act was made in or out of liquidation. He found the answer clear since the 2010 Law allowed a direct claim against an insurer without the need to add the insolvent policyholder as a party and therefore concluded that the benefit of an insurance policy was not an asset of the bankruptcy or bankruptcy process. was insured. Echoing a comment from one of the previously unreported rulings, the judge said: "A lawsuit against [an insurance company], a separate legal entity that is not [of the insured] Liquidation for the purpose of asserting rights to an asset that is not available to general creditors must necessarily take place outside of insolvency“. was an important factorlarnellthat in the event of a claim under the 1930 Act, the third party would first have to claim liability against the insolvent insured. This does not apply to claims under the 2010 Act. The judge said: "The usual justification for suspending the statute of limitations to allow the liquidator to seize and fairly distribute the company's assets without having to face litigation from the company's creditors does not apply where a claimant has a direct claim against [the insurer] under the 2010 Act“.

The judge was not convinced by the plaintiff's allegations and commented that one possible reason the Judicial Commission did not specifically recommend changing the statute of limitations to the 2010 law was that it was not aware of the problem.larnellit was not decided until 2005, following the recommendations of the Law Commission on amendments to the 1930 Act drafted in 2001. Therefore, the argument that the drafters of the 2010 Act did not intend to place the claimant in a 2010's worse than under 1930 Act position was also thrown out: the judge found it unlikely that the drafters of the 2010 Act would have even seriously considered the point.

larnelltherefore, it was distinguishable and the statute of limitations on the claim against the insurer under the 2010 Act continued even after the dissolution of the DSS.


This case is important for any claimant considering bringing claims against insolvent policyholders' insurers under the 2010 Act. Claimants may have previously thought they had unlimited time to bring such claims and relied in thelarnellDecision to stop time at the time of insolvency of the insured. However, this ruling confirmed that the deadline for claims under the 2010 Act is maintained and this may now result in third-party claimants filing their claims earlier to avoid potential statute of limitations issues. Some applicants may already realize that they are late. On the other hand, the ruling will help insurers to claim the statute of limitations on claims under the 2010 Law. More importantly, it provides clarity on the application of the Limitation Law to claims under the Law of 2010 and to all parties as to applicable law. rights and defenses.

Keep reading:

Rashid gegen Direct Savings Limited[2022] 8 WUK 108

Gegen Financial Services Compensation Scheme Larnell (Insurances) Limited (in liquidation)[2005] EWCA Civilization 1408

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