Does the limitation period for a personal injury claim against an employer still run when the employing company is in liquidation?
The short answer to the above question is that, where the employing company has a solvent insurer to deal with the claim, then the limitation period does continue to run.
In the Holmes case the Claimant was employed by the Defendant as a joiner between 1986 and 1993. The Claimant should have commenced proceedings in 2010, having acquired, by mid-2007, the requisite knowledge that he had suffered a significant hearing loss which was (probably) attributable to allegedly noisy working conditions.
The Defendant company was dissolved on 19 August 1995, following a voluntary winding up. On 13 August 2018 the Claimant applied to restore the Defendant to the register of companies, a prerequisite for pursuing a claim against the Defendant’s insurers pursuant to the Third Parties (Rights against Insurers) Act 1930.
The insurers did not receive notice of the application and had no opportunity to object to it on the basis of a limitation defence.
The Claimant argued in subsequent personal injury proceedings that, pursuant to the provisions of the Companies Act 2006, any claims against the company which were not already statute barred would not become statute barred during the period of liquidation. Mr Justice Spencer rejected this fairly novel argument, which he thought relied on ” the application of a rule set down in a nineteenth century case which, it seems to me, was never intended to apply to a case such as the present.”
One distinguishing feature of the present case was that the true target of the claim was the employer’s liability insurer, whose policy indemnity limit would not be exceeded by the value of the claim.
The Court went on to refuse to exercise its discretion under s33 of the Limitation Act. The delay in commencing proceedings between 2010 and 2018 was viewed as being inexcusable. The Court concluded that the Claimant should not “gain an unexpected and undeserved windfall” by virtue of the Defendant company’s insolvency.
It is quite commonplace for long-tail noise induced hearing loss and asbestos claims to be pursued many years after the employment has ceased and the employing company has been dissolved.
It is often an uphill struggle to defend a claim against a dissolved company, with at best a limited opportunity to speak to witnesses or obtain relevant documents. The limitation defence is therefore of vital importance and remains intact following this decision, at least where the Defendant’s insurer will indemnify the claim.
If you would like to discuss this article in more detail, please contact Adrian Neale.