The Importance Of Strict Compliance With Notification Provisions

Two cases involving the Third Parties (Rights Against Insurers) Act 2010 (the 2010 Act) have emphasised the draconian effect that breach of a condition precedent to liability can have and the importance of policyholders complying strictly with notification provisions: Makin v Protec Security Group Limited [2025] EWHC 895 (KB) (Makin) and Archer v R 'N' F Catering Ltd (t/a Biplob Restaurant) [2025] EWHC 1342 (KB) (Archer).

Both cases involved claimants who had suffered personal injury and sought recovery under the 2010 Act from the public liability insurers of insolvent defendants. In both cases, the Court found that the insurer was not liable to provide an indemnity under the relevant policies because of breach by the insured of notification obligations, which were held to be conditions precedent. Procedural compliance was critical. This was despite the fact that the third party claimants were not aware of the notification obligations and played no part in the insureds' breaches.

The Archer case also considers the proper application of Section 9(2) of the 2010 Act, which allows third parties to 'step into the shoes' of an original insured, in order to fulfil a policy condition.

THEMAKIN DECISION

Background

The claimant, Mr Makin, was left with a serious neurological disability following a stroke he suffered after being assaulted and forcibly evicted from an establishment in Oldham, Greater Manchester in 2017. The claim value was in excess of GBP £1 million. A preliminary issue trial concluded that the insured, Protec Security Group Limited (Protec), was vicariously liable for the claimant's injury.

The question for the Court was whether the insurer was liable under Protec's public liability policy. The insurer argued that it was not – due to a failure by the insured to notify the claim in accordance with the policy terms. There were two relevant claim conditions in the policy requiring the insured to:

• provide notice "within [sic] 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"; and
• not respond to documents received that were "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". Instead, there was a requirement to "immediately" forward these to an agent of the insurer.

The policy went on to state that a "[b]reach of these conditions will entitle [the insurer] to refuse to deal with the relevant claim".

Failure to notify

On the night of the assault in 2017, the claimant stood up after the attack and walked away. A brief police investigation was conducted but it was not until around two years later, in October 2019, that the claimant first intimated a claim. The claimant's solicitors wrote threatening a claim in October and December 2019; a formal letter of claim was delivered to the insured in June 2020. However, it was not until July 2020 that the insurer received notice of a potential claim. That notice originated from the claimant's solicitors, rather than the insured. This was despite the insured being solvent at that time (joint liquidators were appointed the day preceding the preliminary issue trial in July 2023).

The Court first considered compliance with the first claim condition above which required notification within 30 days of "any other damage, bodily injury, incident, accident or occurrence, that may give rise to a claim". The claimant argued that the obligation to notify could not have arisen at the time of the incident because a reasonable person would not have thought that, taken alone, the incident might give rise to a claim in circumstances where the claimant had stood up and walked away (relying on Zurich Insurance PLC v Maccaferri Limited [2016] EWCA Civ 1302). While the Court agreed that, judged at the time of the incident or in the immediate aftermath, no reasonable insured could be expected to form the view that it involved circumstances that "may give rise to a claim" under the policy, the Court was satisfied that within 30 days of the incident, the insured was sufficiently aware that there had been an incident. An objective assessment of the circumstances, including the fact that there had been a police investigation, led to a conclusion that there were sufficient facts to suggest this. By failing to provide notice of the incident, the insured had failed to comply with the policy condition.

Further, and for completeness, the Court considered whether the insured also breached the condition by failing to "immediately" forward documents to the insurer, being the claim correspondence and formal letter of claim.

The Court was willing to accept the word "immediately" might be properly construed as meaning 'as soon as reasonably practicable'. Nevertheless, the long latency period between the letters received by the insured, and the insurer being notified (and even then, notified by the claimant's solicitors rather than the insured) led the Court to the conclusion that the insured had indeed also breached this provision.

Discretion to decline cover or conditions precedent

The policy stated that breach of the claim conditions "entitle [the insurer] to refuse to deal with the relevant claim". The question then for the Court was whether that gave the insurer an absolute or discretionary right to reject the claim.

The claimant argued that the claim conditions were not conditions precedent. The phrase 'condition precedent' was used in other parts of the policy, but not for the claim conditions. In contrast, the insurer argued that the word 'entitle' was akin to the word 'right', and the use of the word 'will' was consistent with an absolute right as opposed to a mere contractual discretion. The insurer noted that early notification is an important part of insurers' management of risks and outcomes, and these conditions were to be properly construed as conditions precedent.

The Court highlighted that there is no absolute rule of construction which says that words used must at all points carry the same meaning. The task for the Court was to look beyond the label on the tin (or lack thereof) and at the contents of the conditions.

The Court agreed with the insurer and found that the claim conditions were conditions precedent to liability. Non-compliance by the insured indeed entitled the insurer to deny liability for the claim.

Whilst not necessary on this determination, the Court went on to consider what the position would have been if it had ruled that the claim conditions were bare conditions rather than conditions precedent. There was no evidence before the Court on the insurer's decision making process to determine whether the decision would have been exercised in accordance with the principles set out by the Supreme Court judgment in Braganza v BP Shipping Ltd [2015] UKSC 17: namely, that the decision must be exercised lawfully and rationally (in the public law sense) as well as in good faith and in accordance with the underlying contractual purpose. However, the Court did note that it would not have found that the delay in forwarding the letter of claim to insurers in June 2020 justified the insurers' refusal of an indemnity. The Court called this a "trivial breach" which had no meaningful consequence on the insurers' ability to deal with the claim.

Establishing liability

To enforce rights against an insurer under the 2010 Act, a third party must establish that an insured person has incurred a liability. It is notable in this case that the hearing determining liability was a preliminary hearing and was not attended by the defendant insured.

In obiter comments, HHJ Pearce considered whether this underlying judgment establishing liability of the insured would have been binding on the insurer (assuming the claims conditions were complied with). The Court found the underlying judgment to be "of considerable persuasive value" and no sufficient reason was identified to justify a departure from this judgment, which was determinative of the issues it considered.

THE

ARCHER DECISION

Background

The claimant, Miss Archer, sought to establish the potential liability of the insurer, Riverstone, in respect of damages for personal injury caused by the insured, R'N'F Catering Limited under a public liability policy. The claimant suffered complications (requiring surgical interventions) after contracting a gastrointestinal illness, alleged to have originated from the consumption of a meal at the insured's restaurant on 26 July 2019.

General Claim Condition 1 in the policy required notice to be given to the insurer "as soon as reasonably possible" on the happening of any event or circumstance which could give rise to a claim, or on receiving notice of any claim. This was followed by a requirement for full details of the claim to be provided within "30 days of the event or circumstances [...]".

The policy stated that: "No claim under the Policy shall be payable unless the terms of this Condition have been complied with [...]".

There was an additional clause under the section headed "General Conditions":

The Court considered two issues:

• whether the insurer could prove the insured was not entitled to an indemnity under the policy because of a failure to comply with the notification provisions, and
• whether Section 9(2) of the 2010 Act could assist the claimant. Section 9(2) enables third parties to 'step into the shoes' of the insured for the purpose of fulfilling a condition in a policy of insurance. The statutory provision reads:

Failure to notify

The claimant first contacted the insured on 29 November 2019 to inform them of the injury. Two months later, on 10 January 2020, the claimant's solicitor issued a claim notification form and requested insurer details. However, it was not until 17 November 2020 that the insured contacted its insurance broker, at which point the insurer was notified.

Claims handlers tried several times to obtain further information from the insured. Eventually, on 26 August 2021, they wrote to the claimant's solicitor informing them that the insured defendant had failed to engage with them and it was assumed the insured did not wish to be indemnified. Proceedings were issued in July 2022 and only then in October 2022 did the insured begin to engage with the claims handlers, stating that previous emails had gone unseen. A formal declinature letter was issued to the insured on 22 February 2023.

The Court found little difficulty in establishing that the insured failed, on the balance of probabilities, to notify the insurer "as soon as reasonably possible". By failing to respond to the insurer's requests, the insured had further failed to adhere to the condition requiring evidence and information to be provided within 30 days.

Both of these conditions were expressly described as conditions precedent in the policy by virtue of the "sweeper clause" on the 'Observance of Terms' which made every obligation on the insured that required something to be done a condition precedent to liability. The Judge had no difficulty concluding on the facts that the insured was in breach of both conditions and was not entitled to an indemnity under the policy.

Section 9(2) of the 2010 Act

The claimant submitted, ambitiously, that even if the insured was deemed to have breached the policy conditions, relying on Section 9(2) of the 2010 Act, she was still entitled to an indemnity because she had co-operated with the insurer once the rights of the insured under the policy transferred to her. She argued it had been impossible to comply with the conditions precedent prior to the transfer of rights under the 2010 Act. If the Court were to accept this argument, it would have had the effect of restarting the clock for the compliance with the policy conditions.

Unsurprisingly the Court did not accept this. This approach would have created a fiction, resurrecting the right to an indemnity already lost through a failure by the (insolvent) insured to comply with a condition precedent. This was not what the 2010 Act envisaged on its construction and Section 9(2) could not come to the claimant's aid. Further, the 2010 Act's explanatory notes provide an example of the proper application of Section 9(2), stating that where the insured has not given notice of a claim but a third party gives notice within the period prescribed by the insurance contract, the requirement to give notice is fulfilled. This example expressly references the need for the third party to have acted within the period specified.

COMMENT

In both cases, it is obvious that the respective Judges had considerable sympathy for the claimants. Both claimants were relying on the 2010 Act to obtain a remedy for serious injuries suffered and each of whom were blameless of any default relative to the policies in issue. In both cases it was the insolvent insureds that had failed to comply with conditions precedent to liability in the policies. The purpose of the 2010 Act (and its predecessor, the 1930 Act) is to protect third party claimants in unfortunate circumstances where insolvent insured defendants cannot meet a liability but have a contract of insurance that can. However, as these decisions show, there are limits to the generosity of the 2010 Act. These limits mean the third party claimant can only access the relevant policy subject to the action (or inaction) of the relevant insured. It does not improve the position of the third party claimant and allow them to circumvent wrongdoing by the insolvent insured.

Both cases serve as a reminder to policyholders to pay close attention to the wording of notification requirements and comply strictly. Third parties seeking to bring a claim which may be the subject of insurance should seek confirmation, as soon as they assert their claim against a prospective defendant, of whether a relevant policy is in place and if notification provisions have been complied with promptly. If in doubt, third parties should insist on being provided with details of the insurer and take steps to notify insurers directly.

Both cases also illustrate the fundamental unfairness to insureds (and thus third party claimants) inherent in many conditions precedent to liability where breaches of condition, often trivial and inadvertent, cause no prejudice to the insurer in investigating or defending the claim. Insurers on the other hand would no doubt argue that such terms are key to the management of the risks they write, allowing early investigation of a claim when it may be easier to contact witnesses and memories have not faded. That debate is doubtless set to continue.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.