Employers' liability, mesothelioma trigger litigation: when a butterfly flaps its wings...

In late March 2012 the Supreme Court put to bed a long running issue on employers’ liability insurance in BAI (Run off) and Others -v- Durham & Others [2012] UK SC14 (for convenience referred to in this article as “Insurers -v- Claimants”).

The case centred, as ever, on long-suffering asbestos victims who seem to be the subject of a never-ending list of test cases over the last 10-15 years, which started with Fairchild [[2003] 1 AC 32] (indivisibility/joint and several liability), followed by Barker [2006] UKHL 20 (indivisibility and apportionment), interjected by Grieves [2006] EWCA Civ 27 – followed by Johnston v NEI [2007] UKHL 39  (pleural plaques and asymptomatic conditions), followed up last year with Sienkiewicz [2011] UKSC 10 (de minimis exposure).  In Durham, the Supreme Court determined that the responsible employers liability (EL) insurance policy to answer a claim made by a mesothelioma victim against a Defendant employer, no matter what the wording (“sustained” or “contracted”), was the policy in place at the time of asbestos exposure.  The insurers had argued the relevant policy was that in place at the time the disease developed; for many, a time when no defendant, and hence no policy, existed at all.

For the asbestos practitioner these cases have provided a lively playing field tarnished with the massive concern of uncertainty imposed on the victims.  But what are the wider implications of the Supreme Court ruling?  And will it play as heavily beyond the mesothelioma battlefield as it did for those affected directly by the trigger case?  This article looks at the various ramifications of the judgment, and the lucky escape had by some.

Other insurers

Whilst the ABI and the majority of insurers distanced themselves from the trigger litigation (pursued only by 4 insurers – MMI, Builders Accident, Excess and the Independent Insurance Company) anecdotally many conversations had with defendant representatives of the non-participating insurers before 29 March 2012 ended with “…of course, we’ll have to wait and see what happens in the trigger litigation…”.

As a sceptical claimant lawyer, the writer finds it difficult to digest the idea some insurers would have paid out on their EL cases had the Supreme Court found against the claimants and much more likely we would have faced responses along the lines of “our hands are tied by the trigger judgment!”.  After all, what is good for the goose is good for the gander.

Other asbestos diseases

Whilst the parties involved were keen to stress the trigger litigation was centred on mesothelioma, is it fair to say other asbestos claimants should have been worried by the trigger judgment?  Inevitably the answer is yes. 

The medical uncertainty surrounding the mechanics of mesothelioma lent itself very well to the arguments in the trigger litigation.  However, take asbestosis as an alternative, whereby the first inflammatory response in the lungs possibly begins on inhalation but does not develop into fibrosis until many years later, finally becoming visible on chest x-ray, and subsequently giving rise to symptoms of breathlessness.  That brief layman’s description already presents four possible triggers (and probably as many years’ arguments in the courts).  The same triggers: inhalation, effect on cells in the lungs, distortion of lung tissue, symptoms; could equally be used for mesothelioma as they could for asbestosis.  It is not only mesothelioma victims welcoming the judgment.

Non-asbestos diseases

And why stop there?  To suggest the Supreme Court decision in the trigger litigation did not have ramifications across the disease landscape, simply must be a fiction.

The Lords’ finding that employers’ liability policies, whether worded “contracted” or “sustained” should be read as giving proper effect to the Employers’ Liability (Compulsory Insurance) Act 1969 and paying out on a causation basis, must indicate the wider effect of the judgment and be a welcome relief to all disease injured employees, whether cancer, deafness or other.  The reassurance can be met in equal measure by the employers who purchased insurance many years ago in good faith to provide resource for compensating their injured workers.

Claimants can probably be assured that no future insurers will seek to raise these issues on other disease claims as to do so would be a folly of magnitude.

Public liability diseases

It was the 2006 Court of Appeal judgment in Bolton MBC v MMI

[2006] 1 WLR 1492 which set the wheels in motion for the trigger litigation (or at least put the kernel of the idea in the maverick four insurers’ minds).

If the Court of Appeal in Durham felt bound by its previous judgment in Bolton the Supreme Court fortunately felt free of those constraints deeming public liability policies to be “operating on different basis” (para 48).  So is Bolton still good law for the wives who washed asbestos overalls, or those who lived in the shadow of asbestos factories?

Aside from the legislative purpose of the ELCIA, which is lacking for PL policies, it is arguably not stretching the bounds of reasonableness to make the trigger judgment look favourably on future PL policies.  Indeed, was not the “underlying purpose” of PL policies purchased in the 1960s to give companies cover for the activities occurring in the 1960’s – e.g. the wife who is injured when she visited her husband in the factory, or the injured non-employee sub-contractor – rather than potential claims decades into the future?  Is there not equally as close a link between the tasks undertaken by the employer/company during the currency of the insurance policy (the year the premium was paid) for employees as visitors?

Many recent public liability policies (post Bolton and indeed since 2002) have sought to exclude asbestos liabilities.  That presents (in the writer’s opinion) exactly the same sort of insurance lacuna as the trigger litigation could have presented had it gone the insurers way – a period during which a person can be negligently exposed to asbestos, develop mesothelioma and yet have no recourse to a defendant’s insurance if they wish to make a claim.  Take for example the wife who washed her husband’s clothes in the 1970’s, reaches angiogenesis of her mesothelioma in 2010 and symptoms manifesting in 2015, yet her husband’s employer went out of business in the recession in the late 2000s.  She has no recourse to claim.  In the writer’s opinion, a case arising on these facts would be ripe for re-visiting Bolton.

Lung cancer

And lastly, what would a commentary on an asbestos case be without a final word on lung cancer cases – does the trigger litigation cast any further light on the dim candle lit by Lord Philips at paragraphs 76 and 90 of the Sienkiewicz judgment?  The Supreme Court grappled with the question that seems to have vexed the courts in mesothelioma claims, encapsulated by the “special rule” of material contribution to risk.  The previous concepts of causation considered by the courts seemed to offer some glimmer of hope in lung cancer claims, in that asbestos “contributes to the risk” or “contributes to the cause” of lung cancer.  But the Lords appear to cast serious doubt on the distinctions simplifying matters to a “weak” or “broad” causal link (Lord Mance, para 73). 

That does not extinguish hope altogether but, the repeated affirmation of the Barker decision by the Lords (and therefore implicitly the apportionment of lung cancer) seems to this writer to cast serious doubt on the possibility of advancing a joint and several liability argument for lung cancer claims.  Whilst mesothelioma claimants are saved by Section 3 of the Compensation Act, sadly it seems lung cancer victims do not have the legislative support.  The millions of pounds that were inevitably spent on legal fees in the trigger litigation is warning enough in itself to tread carefully where asbestos test cases are concerned.

This article was first published by Solicitors Journal on 24 April 2012, and is reproduced by kind permission.