Third party rights

Scope of the Third Parties (Rights Against Insurers) Act 1930

The decision of the Court of Appeal in Re OT Computers [2004] EWCA Civ 653 is a landmark ruling. After a series of decisions over some two decades which have served to undermine the Third Parties (Rights against Insurers) Act 1930, the Court of Appeal has redressed the balance in dramatic fashion. As is well known, the 1930 Act applies to liability insurance, and allows the victim of an insolvent assured to bring an action against the assured’s liability insurers once the liability of the assured has been established and quantified. In re OT Computers decides two crucial points. First, the 1930 Act applies to both contractual and tortious liability. Second, insurance information can be obtained from the assured and from insurers in advance of any judgment being obtained by the third party against the assured. On each of these points the Court of Appeal has anticipated the changes to be made to the 1930 Act on the implementation of the Law Commission’s 2001 Report. The decision of Morritt V-C at first instance in this case (discussed in the April 2004 issue of Insurance Law Monthly) has been overturned. The doubts there expressed about the correctness of the ruling have now been confirmed. The leading judgment in the Court of Appeal was delivered by Longmore LJ.