The High Court has struck out an injured worker’s claim against his former employer’s insurer, ruling that a claim under section 62 of the Civil Liability Act 1961 could not be enforced before the employer’s liability was established.
The judgment, delivered by Kearns P. on 3 December 2012, concerned a worker who injured his left hand while operating a panel saw at Modern Timber Homes Ltd on 26 June 2007. The company went into liquidation in September 2008. The worker began proceedings in April 2010 against the company, two of its directors and Quinn Insurance Ltd, which had insured the employer.
Quinn refused to indemnify the company, saying it had not been notified of the claim in time and had not provided information or assistance. The judgment records that the incident was first notified to Quinn in January 2009 and that the insurer communicated its refusal in March that year. At the time of the application, the worker had obtained no judgment or order against the company or its directors.
Quinn asked the court to strike out the claim against it, arguing that the worker had no direct contractual relationship with the insurer and that section 62 did not create an enforceable claim until the employer’s liability and the amount due were established. The worker argued that section 62 gave an injured employee of a company in liquidation a right to sue the insurer and that the insurer could be joined in the same proceedings.
The court accepted that section 62 creates a right of action capable of overcoming the usual rule that a person outside an insurance contract has no claim against the insurer. But Kearns P. said the section applies to “valid claims against the insured”; a claim could not be treated as valid for that purpose until liability had been established and its amount assessed. If the insurer is joined in the same proceedings, the claim against it must therefore be stayed until the employer’s liability is established.
The judgment also noted a potential limitation-period difficulty if a claim against an insurer were treated as arising at the same time as the claim against the employer. The court preferred an interpretation it considered less likely to produce injustice, observing that the insurer might never need to be involved if the employer successfully defended the primary claim.
The court granted Quinn’s application and struck out the claim against the insurer. The judgment did not determine the worker’s underlying claim against the employer or its directors, or whether the insurer ultimately owed indemnity.