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England and Wales High Court (Administrative Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> Aviva Insurance Ltd & Anor, R (On the Application Of) v The Secretary of State for Work And Pensions  EWHC 30 (Admin) (12 January 2021)
Cite as:  EWHC 30 (Admin),  WLR 2187,  1 WLR 2187,  WLR(D) 39
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QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| THE QUEEN
on the Application of
(1) AVIVA INSURANCE LIMITED
(2) SWISS REINSURANCE COMPANY LIMITED
- and –
|THE SECRETARY OF STATE FOR WORK AND PENSIONS
Edward Brown and Brendan McGurk (instructed by Government Legal Department) for the Defendant
Hearing date: 15 December 2020
Draft circulated to the parties on 21 December 2020
Crown Copyright ©
Mr Justice Henshaw:
(B) SCOPE OF JUDGMENT
(C) STARTING DATES
(D) HRA SECTION
(E) UNLAWFUL ACTION
(F) BAINBRIDGE CERTIFICATE
(G) SCA SECTION 31(2A) AND OTHER REMEDY ISSUES
(H) PERMISSION TO APPEAL
i) the scope of the Judgment, and hence the appropriate order, in particular the policy date range and types of claim to which it applies;
ii) from what starting dates the court should declare the legislation became non-compliant with Article 1 to the First Protocol to the European Convention on Human Rights ("A1P1");
iii) whether the legislation can be 'read down' pursuant to section 3 of the Human Rights Act 1998 ("HRA");
iv) whether the order should state that the Defendant acted unlawfully;
v) whether the Bainbridge certificate should be quashed;
vi) whether the order should be stayed pending further argument on a potential contention by the Defendant under section 31(2A) of the Senior Courts Act 1981 ("SCA"); and
vii) permission to appeal.
(B) SCOPE OF JUDGMENT
"Section 22 does not give rise to a 'one-off insertion' of deemed wording into policies of insurance on 6 October 1997 (or, if later, when relevant insurance contracts were made). It creates a deemed contractual liability as and when the circumstances set out in section 22(1) arise, namely when a compensation payment is made following the incurring of a liability by a compensator that is covered (to any extent) by the insurance policy. The interference thus arises, on an ongoing basis, each time a compensator incurs a liability under section 6 and the insurer incurs a corresponding liability under section 22"
and expresses concern that the Judgment may extend to policies underwritten at any time.
"… The challenge in these proceedings relates to an unintended but increasingly onerous by-product at the margins of the scheme, which involves obligations imposed on a dwindling number of liability insurers holding long-tail disease legacy policies (including the First Claimant). The objectionable features of the scheme of benefit recovery as currently operated by the Defendant, though significant to EL insurers with legacy policies, therefore form a very small part of the whole."
"The present Claimants' complaint is that the combination of the 1997 Act (as interpreted by the Defendant) and the developments outlined above has given rise to five situations where liability insurers are obliged to reimburse the State for benefits that do not correspond to any damage caused by their insured, or (or including) where the insured is only one of two or more employers liable for such damage and the insurer's contribution to the victim's exposure was limited (and in some cases very limited):
i. the requirement to repay 100% of the recoverable benefit even where the employee's own negligence also contributed to the damage sustained;
ii. the requirement to repay 100% of the recoverable benefit even where the employee's "divisible" disease is, as in Carder, in part unconnected with the insured's tort;
iii. where others would also be liable in full for an "indivisible" disease (which by section 3 of the Compensation Act 2006 but not at common law applies to mesothelioma), but they or their insurers cannot be traced. A particular instance of this, relating to a Mr Bainbridge, is cited as an example for the purposes of the present claim. This situation has become a particular problem in asbestos cases where (a) the events causing the injury were usually decades earlier; (b) employees often did contract work for many different employers; and (c) the rules on causation have been relaxed in various ways so that a relatively minimal contribution to asbestos exposure can nevertheless result in an award in damages. The legal and public policy underpinning these developments was designed to ensure full recovery for the victims of torts but, the Claimants say, can provide no justification for the State being allowed, parasitically, to recover 100% of its outlay on benefits connected with that injury;
iv. the requirement to repay certain benefits that do not correspond to a recognised head of loss. The choice as to which benefits to pay to a disabled person is a matter of government policy. Only some of these are prescribed benefits which the Claimants are required to repay. Nevertheless, the nature and amounts of those prescribed benefits do not always correspond to heads of compensation that would be payable by way of damages following a successful negligence claim. For example, Universal Credit is now a listed benefit referred to in Schedule 2 to the 1997 Act, but is deductible only against "Compensation for earnings lost during the relevant period". Universal Credit now includes a number of benefits that were previously not recoverable, including housing benefit. However, the Claimants' evidence indicates that, as one would expect (and as exemplified by the case of Bainbridge), claims for loss of earnings are often not made by those suffering from mesothelioma given their average age; and
v. the requirement to repay 100% of the recoverable benefit despite the element of compromise that is present in most settled claims. This requirement even extends to claims that are settled without admission of liability."
(C) STARTING DATES
"I have also given some consideration to the question of whether I should seek to determine from what date or dates the aspects of the scheme that I have found not to comply with A1P1 became non-compliant. However, I am conscious that this topic was not the subject of focussed argument before me. My inclination would be to consider that feature (i) referred to in § 11 above was non-compliant from the date the HRA came into force, but that features (ii) and (iii) became non-compliant only when the Act began to operate in the circumstances that existed following (respectively) the decision in Carder and the passage of the Compensation Act 2006. However, considerations of limitation may make certain distinctions academic, and in any event I consider that the parties should have the opportunity to address these issues by way of further argument, either before me in the context of remedies, or in any ensuing proceedings directed at the Claimants' financial loss claims."
(D) HRA SECTION 3
"Given the complexity of the matter, I consider it appropriate to accede to the proposal of both sides that they be the subject of further submissions in the light of my conclusions on the substance of the matter".
"The use of the two expressions, "read" and "given effect", is not to be glossed over as an example of the kind of cautious tautologous drafting that used to be typical of much of the statute book. That would be to ignore the lean elegance which characterises the style of the draftsman of the 1998 Act. Rather, section 3(1) contains not one, but two, obligations: legislation is to be read in a way which is compatible with Convention rights, but it is also to be given effect in a way which is compatible with those rights. Although the obligations are complementary, they are distinct. So there may be a breach of one but not of the other. For instance, suppose that legislation within the ambit of a particular Convention right requires a local authority to provide a service to residents in its area. The proper interpretation of the duty in the legislation may be straightforward. But, even if the local authority interprets the provision correctly and provides the appropriate service, if it provides the service only to those residents who support the governing political party, the local authority will be in breach of article 14 in relation to the other article concerned and, in terms of section 3(1), will have failed to give effect to the legislation in a way which is compatible with Convention rights. So, even though the heading of section 3 is "Interpretation of legislation", the content of the section actually goes beyond interpretation to cover the way that legislation is given effect." (§ 107)
"Second, more controversially, Mr Mathieson asks this court to discharge its interpretative obligation under section 3 of the 1998 Act by somehow reading the provisions for suspension of payment of DLA in regulations 8(1) and 12A(1) of the 1991 Regulations so as not to apply to children. In my view however it is impossible to read them in that way. Anyway, as the Secretary of State points out, it may not always follow that the suspension of payment of a child's DLA following his 84th day in hospital will violate his human rights. Decisions founded on human rights are essentially individual; and my judgment is an attempted analysis of Cameron's rights, undertaken in the light, among other things, of the extent of the care given to him by Mr and Mrs Mathieson at Alder Hey. Although the court's decision will no doubt enable many other disabled children to establish an equal entitlement, the Secretary of State must at any rate be afforded the opportunity to consider whether there are adjustments, otherwise than in the form of abrogation of the provisions for suspension, by which he can avoid violation of the rights of disabled children following their 84th day in hospital" (§ 49)
Similarly, Lord Mance said:
"With regard to the appropriate remedy to give effect to these conclusions, I agree that this should be tailor-made and limited to Cameron's particular position, by simply deciding that the decision in his case cannot stand and that he was entitled to continued payment of DLA after 84 days. The Secretary of State may be able to refine the criteria for the receipt or cessation of DLA in other cases in a manner which avoids the inequity involved in its withdrawal in respect of those in Cameron's position. We cannot address in general declaratory terms the position of children receiving DLA and hospitalised for longer than 84 days, as Mr Mathieson invites us to do." (§ 61)
Both judgments had the agreement of the majority of the court.
"Parliament, however, cannot have intended that in the discharge of this extended interpretative function the courts should adopt a meaning inconsistent with a fundamental feature of legislation. That would be to cross the constitutional boundary section 3 seeks to demarcate and preserve. Parliament has retained the right to enact legislation in terms which are not Convention-compliant. The meaning imported by application of section 3 must be compatible with the underlying thrust of the legislation being construed. Words implied must, in the phrase of my noble and learned friend, Lord Rodger of Earlsferry, "go with the grain of the legislation". Nor can Parliament have intended that section 3 should require courts to make decisions for which they are not equipped. There may be several ways of making a provision Convention-compliant, and the choice may involve issues calling for legislative deliberation." (§ 33, my emphasis)
i) is (or was) for a proportion only of the damages otherwise due to the person suffering from the disease, by reason of the contributory negligence of that person; and/or
ii) is (or was) for damages in respect of part only of a disease constituting a 'divisible' injury in respect of which the relevant State benefits were paid; and/or
iii) would, but for section 3 of the Compensation Act 2006, have been for only a proportion of the damages attributable to a disease constituting an 'indivisible' injury.
"30. From this it follows that the interpretative obligation decreed by section 3 is of an unusual and far-reaching character. Section 3 may require a court to depart from the unambiguous meaning the legislation would otherwise bear. In the ordinary course the interpretation of legislation involves seeking the intention reasonably to be attributed to Parliament in using the language in question. Section 3 may require the court to depart from this legislative intention, that is, depart from the intention of the Parliament which enacted the legislation. The question of difficulty is how far, and in what circumstances, section 3 requires a court to depart from the intention of the enacting Parliament. The answer to this question depends upon the intention reasonably to be attributed to Parliament in enacting section 3.
31. On this the first point to be considered is how far, when enacting section 3, Parliament intended that the actual language of a statute, as distinct from the concept expressed in that language, should be determinative. Since section 3 relates to the "interpretation" of legislation, it is natural to focus attention initially on the language used in the legislative provision being considered. But once it is accepted that section 3 may require legislation to bear a meaning which departs from the unambiguous meaning the legislation would otherwise bear, it becomes impossible to suppose Parliament intended that the operation of section 3 should depend critically upon the particular form of words adopted by the parliamentary draftsman in the statutory provision under consideration. That would make the application of section 3 something of a semantic lottery. If the draftsman chose to express the concept being enacted in one form of words, section 3 would be available to achieve Convention-compliance. If he chose a different form of words, section 3 would be impotent.
32. From this the conclusion which seems inescapable is that the mere fact the language under consideration is inconsistent with a Convention-compliant meaning does not of itself make a Convention-compliant interpretation under section 3 impossible. Section 3 enables language to be interpreted restrictively or expansively. But section 3 goes further than this. It is also apt to require a court to read in words which change the meaning of the enacted legislation, so as to make it Convention-compliant. In other words, the intention of Parliament in enacting section 3 was that, to an extent bounded only by what is "possible", a court can modify the meaning, and hence the effect, of primary and secondary legislation.
33. Parliament, however, cannot have intended that in the discharge of this extended interpretative function the courts should adopt a meaning inconsistent with a fundamental feature of legislation. That would be to cross the constitutional boundary section 3 seeks to demarcate and preserve. Parliament has retained the right to enact legislation in terms which are not Convention-compliant. The meaning imported by application of section 3 must be compatible with the underlying thrust of the legislation being construed. Words implied must, in the phrase of my noble and learned friend, Lord Rodger of Earlsferry, "go with the grain of the legislation". Nor can Parliament have intended that section 3 should require courts to make decisions for which they are not equipped. There may be several ways of making a provision Convention-compliant, and the choice may involve issues calling for legislative deliberation."
"…there is a limit beyond which a Convention-compliant interpretation is not possible, such limit being illustrated by R(Anderson) v Secretary of State for the Home Department  1 AC 837 and Bellinger v Bellinger (Lord Chancellor intervening)  2 AC 467. In explaining why a Convention-compliant interpretation may not be possible, members of the committee used differing expressions: such an interpretation would be incompatible with the underlying thrust of the legislation, or would not go with the grain of it, or would call for legislative deliberation, or would change the substance of a provision completely, or would remove its pith and substance, or would violate a cardinal principle of the legislation (paras 33, 49, 110-113, 116). All of these expressions, as I respectfully think, yield valuable insights, but none of them should be allowed to supplant the simple test enacted in the Act: "So far as it is possible to do so ..." While the House declined to try to formulate precise rules (para 50), it was thought that cases in which section 3 could not be used would in practice be fairly easy to identify." (§ 28)
i) MB, where Baroness Hale (with whom Lord Brown agreed) concluded that certain provisions of the Prevention of Terrorism Act 2005 should be read and given effect "except where to do so would be incompatible with the right of the controlled person to a fair trial" (§ 72);
ii) Connolly, where the Divisional Court concluded that section 1 of the Malicious Communications Act 1988 should be interpreted either by giving a heightened meaning to the words "grossly offensive" and "indecent", or " by reading into section 1 a provision to the effect that the section will not apply where to create an offence would be a breach of a person's Convention rights, i.e. a breach of article 10(1), not justified under article 10(2))"; and
iii) R v Waya, where the Supreme Court held that section 6(5)(b) of the Proceeds of Crime Act 2002 should be read as subject to the qualification "except in so far as such an order would be disproportionate and thus a breach of article 1, Protocol 1".
i) The fundamental features of the scheme in this case, reflected in the legislative consideration summarised in Judgment section (D), are (so far as relevant) the imposition upon compensators and their insurers of positive liabilities to the State, even in respect of State benefits that cannot be deducted (vis-à-vis the victim) from a head of claim, limited to 5 years of benefits, and deemed insurance coverage for such liabilities. The proposed reading down would not be inconsistent with, or go against the grain of, any of those features. It would merely create a discrete carve-out relating to a particular set of historic insurance policies, in respect of diseases only, relating only to cases where the insured was only partly responsible for the disease, and in respect of only part of the liabilities that would otherwise arise. Moreover, the fact that the reading down would in substance create an exception where none currently exists, is comfortably within the permitted scope of interpretation pursuant to HRA section 3 as explained in Ghaidan and exemplified by the cases referred to in § 34 above.
ii) It is questionable whether it is a fundamental feature of the legislation that it should apply to liabilities from events long-predating its enactment: the materials referred to in Judgment § 46 and 52 suggest that Parliament's intention was, rather, merely to catch cases "in the pipeline". In any event, however, the proposed reading down would not prevent the retrospective application of section 22(5). It would merely remove, in the discrete category of cases identified in subparagraph (i) above, a portion of the liability that would otherwise arise.
iii) I accept that the court should not attempt to rewrite the legislative scheme, but consider that in the present case reading down would do no more than to give effect to the exceptions which, based on the conclusions reached in the Judgment, are essential in order to make it Convention-complaint (see further § 30 above). I am not convinced that it assists the argument to characterise the legislative scheme here as a revenue-raising scheme. It is dissimilar from a general taxation scheme for the reasons identified in Judgment § 145. I also do not consider the possibility that the legislature could, at least in theory, decide to replace the whole scheme with a different way of raising money from the insurance industry in general means that the court, in reading down these particular provisions, is engaged in making quasi-legislative choices.
(E) UNLAWFUL ACTION
"(a) as the result of one or more provisions of primary legislation, the authority could not have acted differently; or
(b) in the case of one or more provisions of, or made under, primary legislation which cannot be read or given effect in a way which is compatible with the Convention rights, the authority was acting so as to give effect to or enforce those provision."
(F) BAINBRIDGE CERTIFICATE
(G) SCA SECTION 31(2A) AND OTHER REMEDY ISSUES
"(2A) The High Court—
(a) must refuse to grant relief on an application for judicial review, and
(b) may not make an award under subsection (4) on such an application,
if it appears to the court to be highly likely that the outcome for the applicant would not have been substantially different if the conduct complained of had not occurred.
(2B) The court may disregard the requirements in subsection (2A)(a) and (b) if it considers that it is appropriate to do so for reasons of exceptional public interest.
(2C) If the court grants relief or makes an award in reliance on subsection (2B), the court must certify that the condition in subsection (2B) is satisfied."
i) whether damages are in fact necessary to afford just satisfaction under section 8(3) of the HRA;
ii) what sort of claim arises in principle: the Claimants have suggested that a Kleinwort Benson or Woolwich claim might arise in this context (see Kleinwort Benson Ltd v Lincoln City Council  2 AC 349 and Woolwich Equitable Building Society v IRC  AC 70), but the application of those cases to this situation is not accepted by the Defendant; and
iii) limitation under the HRA (or, if applicable, under the Limitation Act 1980).
The Defendant submits that the gravity of these specialist consequential issues remains centred on the Administrative Court and not the Chancery Division.
(H) PERMISSION TO APPEAL
i) I do not read the Court of Appeal's analysis in JCWI as standing for the simple proposition put forward by the Defendant. The analysis (see, in particular, §§ 125-141 in the judgment of Hickinbottom LJ, with which Henderson LJ agreed) is considerably more nuanced than that (and, indeed, indicates at § 135 that the applicability of the MWRF test was not decisive in the case before the court).
ii) The real question, as indicated in JCWI as I interpret it, is not a binary one but, rather, the degree of deference to be accorded to the democratically elected or accountable decision maker in the light of the degree of social and economic policy involved (see JCWI § 140).
iii) The present case has an economic and/or social policy component, but is at heart concerned with a measure imposing financial obligations on discrete groups of entities. It is significantly removed from cases about, for example, general allocation of State resources or social policy.
iv) It is open to debate how and to what extent deference should be afforded where the alleged A1P1 infringement has arisen by reason of particular events and circumstances that were not (on the findings set out in the Judgment) the subject of conscious assessment or focus by the decision-maker.