Court Revisits Notification Claims Conditions and Third Parties (Rights Against Insurers) Act 2010

Briefing

13 June 2025

12 MIN READ

1 AUTHOR

Makin v Protec Security and another¹ considers a number of interesting issues regarding a notification provision in the context of public liability cover.

It also considers the question of when liability is established under the Third Parties (Rights Against Insurers) Act 2010, with the Court following the recent Scottish law case of Scotland Gas Networks.

Background

The Claimant was thrown out of a bar on 6 August 2017, and had an altercation with two door supervisors employed by one of the Defendants, Protec Security Group Ltd. The Claimant walked away from the incident and returned home, but had a stroke two days later leading to serious disability. The Claimant alleged that this was the fault of the door staff and as a result of the incident.

The Claimant brought a damages claim against Protec. At a preliminary issues trial on 11 July 2023, His Honour Judge Sephton KC held that the Claimant’s injuries were as a result of the door staff’s actions and Protec was vicariously liable for the assault and injury.

At this point Protec had gone into liquidation, and the Claimant then sought to pursue Protec’s insurer under the Third Parties (Rights Against Insurers) Act 2010 alleging that there was cover for his claim against Protec.

Insurers denied an indemnity on the basis that Protec had failed to notify it of the Claimant’s claim in accordance with the terms of the policy.

Policy notification clause

The “Claims Conditions” stated:

“The following Conditions 1-10 must be complied with after an incident that may give rise to a claim under your policy. Breach of these conditions will entitle us to refuse to deal with the relevant claim. …

2 Writ, summons, etc

You must not respond to any letter, writ or summons or other document sent to you in connection with any accident, incident or occurrence that may relate to any claim under your policy or which may give rise to a claim under any Section of your policy. You must immediately send them to Sutton Specialist Risks Ltd unanswered by return of post, or to us or legal representatives as may otherwise be advised by us.

3 Notification of claims

You or any other party insured by your policy must inform Sutton Specialist Risks Ltd

3.1 immediately you have knowledge of any impending prosecution, inquest or inquiry in connection with any accident or disease, which may be the subject of claim, give notice in writing and give us any further information and assistance we may require, …

3.5 within as soon as practical but in any event within thirty (30) days in the case of any other damage, bodily injury, incident, accident or occurrence, that may give rise to a claim under any your policy but not separate specified above.”

Judgment

The coverage issues claim was heard in the Manchester District Registry, and His Honor Judge Pearce gave judgment. The key issues were as follows:

Whether the Claimant’s claim against Protec was notified on time in accordance with the claims condition clause in the policy;
Whether the claims condition clause was a condition precedent to liability;
Whether the judgment in the liability proceedings relating to breach of duty on the part of Protec and causation of injury was binding on the insurer.

Was the claim notified on time?

A brief summary of the relevant facts in relation to notification are as follows:

On 6 August 2017 the incident occurred.
From 17 to 21 August the police interviewed the doormen about the incident.
A letter of claim on behalf of the Claimant was sent to the owner of the restaurant on 29 October 2019, and this was passed on to Protec on 29 December 2019, with a covering email indicating that Protec may wish to notify its insurers.
On 5 June 2020 a letter of claim was sent to Protec itself indicating a claim against it.
However, the first notice of the claim given to insurers was on 8 July 2020, when the Claimant’s solicitors sent a copy of that 5 June letter of claim addressed to Protec direct to insurers.

The Claimant argued that there had been no breach of the notification requirement in Clause 3.5 because the incident that had taken place was not notifiable under that provision. A reasonable person would not have thought that the August 2017 incident alone at the time would give rise to a claim, and Protec was not obliged to notify the incident at a later point following the approach in Zurich v Maccaferri².

In Maccaferri, the Court held that where a policy required notification “as soon as possible after the occurrence of any event likely to give rise to a claim”, the obligation to notify an occurrence likely to give rise to a claim was to be judged by reference to the position immediately after the occurrence. The wording of the clause in Maccaferri was not to be construed as a rolling obligation to notify that arose at whatever point the insured came to know (or should have come to know) that an event that occurred in the past was now likely to give rise to a claim.

In this matter, Pearce J accepted that in the immediate aftermath of the altercation, as the Claimant walked away from it, no reasonable insured could have been expected to have formed the view it involved circumstances that may give rise to a claim. However, given that well within 30 days (as specified in the clause) the police asked to interview the doormen, Protec was aware (or a reasonable person would have been aware) that the door staff were at least potentially being criticised for injuring a customer. The Court did not need to undertake a roving review of what Protec knew, but there was a clear point in time at which the matters that were known to it clearly led to the conclusion that the incident may give rise to a claim.

Pearce J held that the case was far more similar to Aspen v Pectel³ than Maccaferri.

The Court did not need to consider notification any further in light of the conclusion above. However, it also found a breach of the notification provision in Condition 2 by failing to forward the letter of claim addressed to the restaurant owner: it was clear from that letter that a claim might be made against someone in relation to the incident, and there was a clear suggestion that might be Protec.

Finally, there was a failure to notify the letter of claim addressed to Protec. Insurers received it more than four weeks after receipt and this was not “immediate” as required by the policy.

Condition precedent?

The relevant provision in this case was not labelled as a condition precedent although other terms in the policy were so described. The relevant wording in the clause was that failure to comply “will entitle us to refuse to deal with the relevant claim”. The Claimant argued that this gave the insurer a contractual discretion to refuse indemnity which must be exercised by the insurer on Braganza principles (discussed below).

The Court disagreed and held that there was no ambiguity in the use of the word “will“. Using the word that a particular set of circumstances “will” entitle a party to act in a certain way does not imply there is some contractual limit, and that was not undermined by the failure to use the label of condition precedent in respect of the term. Compliance with the claim conditions was a condition precedent to liability.

Discretion

Given the finding that the term was a condition precedent it was not necessary for the Court to reach a finding on this issue.

However, had there been a contractual discretion on the part of insurers as to whether to decline the claim, then that would have had to be exercised in accordance with Braganza principles: it must be lawful and rational in the public law sense; made in good faith; and consistent with the contractual purpose.

The contractual purpose of the term was to avoid prejudice from a delay in notification because it affected insurer’s ability to deal with a third party claim against the insured. The insurer’s obligation would not have been to consider what was more likely than not to have happened but for the failure to notify, but to evaluate all of the material and come to a rational conclusion.

Two hypothetical considerations that would have meant insurers may have been in a better position from an earlier notification included that witnesses’ memories of the incident would have been better earlier on, and earlier notification may have assisted the insurer in contacting door staff. It was noted that the insurer “did not need to go into overdrive” to investigate a claim that was three years old at the time of notification. These factors were capable of founding a rational and lawful exercise of the contractual discretion to refuse an indemnity.

However, the Court was not persuaded that the insurer had actually made a decision on the basis of factors identified, but rather just because of the fact that the insured breached the claims conditions. The delay in forwarding the letter of claim alone would not have been capable of justifying the refusal of indemnity, had contractual discretion applied.

Effect of the liability judgment

Following Scotland Gas Networks v QBE⁴ the Claimant contended that the judgment on the underlying liability claim was binding on insurers in these proceedings.

The insurer argued that, following AstraZeneca v Omega⁵, under a third party liability policy the insured must establish its liability to the Claimant to the satisfaction of the insurer. It is not enough that the Claimant has a judgment against the insured in the liability proceedings.

However, Scotland Gas Networks decided by the Scottish Inner House made clear that the position was different under the 2010 Act. The Act is clear in setting out the routes to establishing the liability of the insured, and this includes a judgment which determines the issue of liability. AstraZeneca did not apply in relation to the 2010 Act.

It was not necessary to decide this point and so this was obiter dicta, but the Court accepted that it was correct that it should follow the Scotland Gas Networks decision. This was not technically binding authority as it was a Scottish judgment but was of considerable persuasive value.

Conclusion

The case largely turns on its own facts, but it is an interesting illustration of the application of existing case law on notification. It also demonstrates that the possibility of disputes arising when notification provisions are not as clear as they might be. Further, it provides indication that, as expected, the position on the application of the 2010 Act, as set out in Scotland Gas Networks, is the same in English law. Accordingly, a judgment that the insured is liable to the Claimant will be enough to establish liability under the 2010 Act. Therefore, following this approach, if insurers do not participate in the liability proceedings and judgment is entered against the insured, it will be difficult to argue that the insured was not liable subsequently if a claim is brought against them under the 2010 Act (although it would still of course be possible to raise any policy coverage defences).

An appeal has been filed in relation to this matter, and so further developments are awaited.

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