Saimina Kadu-Virmani discusses the problem of locating paying parties in noise-induced deafness claims


A retired foundry worker has been diagnosed with noise-induced hearing loss, having worked in a noisy environment for almost half of his life - but the defendant company no longer exists and the trace for employers' liability insurance cover has worn thin. So what can be done to locate a paying party and how do you go about it?



For many disease practitioners, the above scenario will be all-too-familiar and frustrating, often involving long-winded and time-consuming investigations to locate compensators, only to eventually result in the bleak end to many claims and the pensioner claimant being left with no other form of tangible redress.



The Employers' Liability Compulsory Insurance Act 1969, which came into force in 1972, made it a criminal offence for an employer not to carry liability cover. While many prudent companies did invest in policies before 1972, documentation relating to the same, held by both the company and potential insurers' archive units, are often nowhere to be found, putting the claimant in the same situation as he would be in, should cover not exist at all.



It becomes all the more complicated when you find your client's employer was a company within the heavy manufacturing industry which was previously insured with Chester Street Insurance Holdings Ltd (now in liquidation).



Despite other agents dealing with policies under schemes such as Iron Trades, should you find the defendant to now also be in liquidation/dissolved as a result of liquidation, redress may be available from the Financial Services Compensation Scheme. But even if the scheme agrees to compensate, the time taken to validate the defendant and the amount of compensation awarded is often reduced from the real value of the claim, leaving the claimant in a somewhat prejudiced position - particularly if the claimant's employment commenced pre-1972.



Given that the date of guilty knowledge for employers in deafness cases is generally established as being 1963, in practical terms what this means is that unless you are in the fortunate position to have identified insurers post-1972, it is very likely that there will still be a period of nine years where cover is not available.



Put more bluntly, if the majority of your client's employment is pre-1972 and your client's noise-induced hearing loss is under 15db with no tinnitus-related symptoms present, it is probable that the value of the claim when assessed on a pro rata basis may dip to below £1,000, resulting in the claimant being under-compensated and leaving the issue of you being able to recover your costs in the air.



For the amateur about to embark on the mammoth task of searching for appropriate defendants and their insurance representatives, it is always wise to pursue the following avenues robustly:



The client

The first, yet often overlooked, point of contact should be the client, who is usually able to provide a myriad of information relating to his former employer and is likely to be in possession of a hoarded collection of documents, such as clocking-in cards and contracts of employment, which should be able to reveal information such as Companies House registration details and details relating to mergers, management buy-outs and takeovers.



If the defendant was part of a larger group of companies, it is always wise to write to the parent company, as their own insurance policy may have extended to cover subsidiaries.



HM Revenue & Customs (HMRC)

The client's HMRC employment schedule should be obtained at the earliest opportunity, as it will confirm the name of the defendant and any other potential defendants the client 'forgot' to advise of.



As it can take up to 13 weeks for the schedule to arrive, it is always wise to complete the HMRC's own form and provide further information, detailing names and approximate tax years the client recalls working for previous employers, as this will inevitably facilitate matters and, in theory, result in the schedule arriving promptly.



If the schedule arrives and fails to name the defendant, and should the client be unable to produce any documentation to confirm his employment, defeat should not be accepted, as HMRC should be able to state if the client paid National Insurance contributions during those years.



Companies House

The Companies House website can provide information relating to the company and, all importantly, confirm the current status of the defendant and registered office details.



If the defendant company is still in existence and has been since as early as 1800, details should be contained on the website. However, if the company has now dissolved, Companies House only retains information for 20 years and is entitled to destroy documentation ten years after dissolution.



While it may then be possible to order the company's microfiche, this archaic method is now also being phased out, leaving the claimant solicitor in the unattractive position of being left with limited leads to follow.



Directors and secretaries

Directors' and secretaries' contact details can be obtained from Companies House for a small fee. Once the appropriate individuals have been identified, it is always worthwhile writing a letter of enquiry asking for details of employers' liability insurers, insurance brokers, administrators, liquidators, accountants or just anyone under the sun who would hold any such information.



In the closing paragraph of the letter, gentle reminders that it is a criminal offence for employers not to have carried employers' liability insurance, and that those with knowledge of insurers are obliged to disclose details as per section 2 of the Third Party (Rights Against Insurers) Act 1930, are likely to yield a more prompt response.



Liquidators and administrators

When writing to liquidators and administrators, whose details can also be obtained via Companies House, the standard response to correspondence is 'we ceased to act for the company on X date for reason of which we do not hold any information', when in actual fact since 1986, liquidators have been obliged to retain a company's financial and training records for six years after they cease acting (regulation 20 of the Insolvency Practitioners Regulations, SI 1990/439) and their own papers for six years (regulation 13(5) of the Insolvency Practitioner Regulations 2005 (SI 2005/524)).



Do be aware, however, that regulation 16(2) of the Insolvency Regulations 1994 does permit the practitioner to destroy company records one year from the date of dissolution.



The Association of British Insurers (ABI)

The ABI's automated voluntary code of practice for tracing employers' liability insurance policies was introduced in November 1999 with the aim of making it easier to search and locate employers' liability insurance policy record holders. Disease practitioners in this field are probably versed all too well with the familiar reply to a search carried out 13 weeks previously, stating that 'no employers' liability insurance has been found... Unfortunately, nothing further can be done... The ABI's involvement is now concluded'.



Based on experience, positive replies to enquiries are uncommon, despite the ABI appointing an individual (albeit seven years after the code came into operation) to handle queries. The form can only be completed once a search has been carried out with Companies House establishing incorporation details.



The form cannot be completed for companies that are still in existence, even though the insurance history may be unknown.



Other tools

Spending a good few bill-worthy hours scouring the Internet can often unearth a mass of information relating to the defendant's previous doings and can help clarify often-tangled ownership histories and present whereabouts.



It is always worthwhile consulting other solicitors, the Health & Safety Executive, the Trades Union Congress and specialist solicitors groups such as the Association of Personal Injury Lawyers for assistance. If the client is in receipt of a pension from the company, it is always worthwhile pursuing this avenue, as documentation from the pension provider should be able to shed further light on matters. Once all avenues have been explored and exhausted and no compensator identified, redress for the claimant is simply non-existent.



While there are government-backed schemes to help victims of criminal injuries and road traffic accidents, surprisingly there is no such scheme for these pensioners who have worked in heavy industry and suffered irreversible injury through no fault of their own.



Further, there is no indication of such a scheme even being in the pipeline, which perhaps begs the question whether intervention is required, and if it is now time for the ABI and government to focus towards establishing such a body, although whether there is the political will to force insurers to contribute is doubtful.



Saimina Kadu-Virmani is a trainee solicitor at Bolton firm MRH Solicitors