Suing an Insolvent Company - Part 2

Friday, 22nd July 2016

In a recent article (click here to view the article) we highlighted that if you want to sue a company that has gone bust, from 1 August 2016 it will become easier to seek compensation and be awarded damages as you will be able to pursue the insurance company direct. 

What happens, however, if the defendant company doesn't have insurance?

This is the problem that faced Mr Campbell who suffered an injury whilst working with an electric circular saw during the course of his employment.

The company went into liquidation in 2009, but had failed to have proper insurance in place to cover Mr Campbell's claim.  It is compulsory to have such insurance in place and so Mr Campbell, sued the sole director, Mr Gordon, on the basis that he had failed to comply with the statutory requirement to take out proper employers liability insurance to protect his employees. 

The matter came before the Supreme Court recently and the Court held that the legal requirement to take out employers liability insurance is a criminal offence, but that this did not mean that a more general liability existed which would allow a personal injury claim to be brought.  They were not prepared to 'pierce the corporate veil' and allow a claim to be brought against the director personally.

This decision means that victims of accidents may be left with no one to pay their claim, and remain vulnerable, where their employer does not comply with the law and take out proper insurance against which their employees can make a claim.

 

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Elizabeth Johnson

Associate (CILEx)

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+44 (0)1392 334019


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