The court considered the commercial purpose of employers’ liability insurance.
Held: Although the Court was held by precedent to conclude that the date in the certificate was the date of the accident and thus of the disablement, nevertheless it achieved compensation for the employees, by concluding that they were employed, and the employer insured, at that date of disablement. At the date of disablement, i.e. the date in the certificate, although neither employee was receiving wages he was, or at any rate was deemed to be, employed and covered by insurance.
Souton LJ stated: ‘I approach the construction of the policy from the point of view that it is intended to protect the employers against their liability to their workmen under the Workmens Compensation Act.’ and ‘The section then means that the last employer within twelve months before the date of the disablement certified is primarily liable to the workmen, but can discharge or distribute his liability in whole or part by proving that other employers within the twelve months have caused or contributed to the disability. The Certifying Surgeon’s date of disablement is final, and is to be taken as the date of ‘the accident’, and fixes the twelve months within which the employers can be made to contribute, besides fixing the date before which you are to look for the last employer whom the workman can safely sue, whether employment by him did or did not cause or contribute to the disablement. The employer then claims on the insurance company, on the ground that he is liable to make compensation for an injury by the disease.’ and ‘The second point raised by the insurance company is that as the workman was not being paid wages by the employer at the date of the accident, he was not then in the employer’s service . . Another and a better answer is that Parliament, to enable the workman to recover compensation, has treated him as employed at the time of the certified disablement by the last relevant employer previous to that date; and that it is this conventional and fictitious state of things that is the basis of the employers’ and insurers’ liability.’
GreeJ r concluded that the last employer during the twelve months from liability ‘would be entitled to indemnity on a policy in force during the time they were the workmen’s last employers’. He went on: ‘It was further contended for the appellants that the liability to compensate the two men ought to be held to be outside the contract of insurance because they were not in receipt of wages, and therefore the amount of their wages would not form an element in the calculation of the premium payable by the respondents. This is admittedly the fact, but it is to be remembered that the contract of insurance is a contract to indemnify the assured against all claims during the term of the insurance by the respondent’s workpeople. There is not a separate consideration for the insurance in respect of each workman. The wage calculation is a rough and ready way of ascertaining the amount of the premium. It is not unreasonable to neglect in the calculation the wages of workmen in the service but not actually working during part of the insured term . . the risk of the certification of industrial disease might well be accepted by an insurance company without any modification of the usual method of calculating the premium payable for insurance against all claims under the Act’.
Judges:
Greer, Scrun LJJ
Citations:
[1932] 1 KB 401
Jurisdiction:
England and Wales
Insurance
Updated: 21 August 2022; Ref: scu.453696
