A victory for justice for mesothelioma victims (and their employers)
Posted by Jeremy Horton on 28th March 2012
The Supreme Court has just given its long awaited judgement in the insurance trigger litigation and the result is a resounding success for victims of mesothelioma and their employers.
The appeals were about the obligations of insurance companies under a number of employers liability (EL) insurance policies. In particular the appeals concerned the insurers’ obligations to indemnify employers against liability towards employees who contracted mesothelioma following exposure to asbestos. Mesothelioma has a particularly long gestation period which can exceed 40 years between exposure to asbestos and the manifestation of the mesothelioma disease. The insurers argued that the EL policies only covered mesothelioma which manifested as a disease at some point during the relevant policy period. The employers argued that the insurance policies covered mesothelioma caused by exposure to asbestos during the relevant policy period, even if it only developed and manifested as the mesothelioma disease sometime later.
There was also a second part of the case which the Supreme Court had to consider if the employers won the first argument. The usual rule in negligence cases is that to obtain compensation the claimant must establish on the balance of probabilities that the defendant’s negligence had caused his disease. Following the Fairchild/Barker cases an exception to this general principle was developed for mesothelioma cases caused by exposure to asbestos. The effect of this was that an employer would be liable where exposure to asbestos contributed to the risk the employee would suffer mesothelioma. The insurers argued that if they had to pay out under their EL insurance policies this special rule in Fairchild/Barker should not be applied to decide whether employees’ mesothelioma was caused by exposure to asbestos during a particular policy year.
A majority of the Court of Appeal had previously found that in some EL insurance policies insurers’ liability to pay was triggered on the date the employee inhaled asbestos rather than the later date in the asbestos exposure resulted in a disease (where the policy wording used the word “contracted”). However they found that in other policies (using the word “sustained”) insurers’ liability was only triggered on the occurrence of the mesothelioma disease.
The questions for the Supreme Court were therefore: first, under the EL policies was mesothelioma “sustained” or “contracted” at the moment when an employee was wrongfully exposed to asbestos or only at the later time when the mesothelioma disease subsequently occurred? Second, did this special rule in Fairchild/Barker apply when determining whether for the purposes of EL policies the employee had sustained or contracted mesothelioma during a particular policy period?
By a majority of four to one the Supreme Court ruled against the insurers and in favour of the employers on all points. In the main judgement given by Lord Mance it was emphasised that to resolve the meaning of the policies one had to avoid over concentrating on the meaning of single words or phrases in isolation and look at the insurance contract more generally. They considered several features pointed the way to the correct interpretation. These included the fact that wordings of the policies on their face generally required the course of employment to be contemporaneous with the sustaining the injury, the wordings also demonstrated a close link between the actual employment undertaken during each period and the premium agreed by the parties for the risk undertaken in that period. They were also concerned that on the insurers’ case there would be a potential gap in cover for employers’ breaches of duty in one period which only lead to disease or injury in a later period. They were also guided by the wording of the Employers Liability Compulsory Insurance Act 1969 which required insurance against liability for injury or disease sustained by employees; the Act required insurance on a causation basis.
They considered there was no difficulty in treating the word “contracted” as looking to the causation of a disease, rather than its development or manifestation; this was looking to the initiating causative factor of the disease. They conceded that the word “sustained” at first sight appeared to refer to the manifestation of an injury or disease, but the nature and underlying purpose of the EL insurances looked to the initiation or causation of the accident or disease which injured the employee. Therefore they considered a disease may properly be said to have been “sustained” by an employee in the period when it was caused or initiated, even though it only developed/manifested itself later.
On the second issue of whether EL policies covered employers’ liability for mesothelioma arising under the special rule in Fairchild/Barker they stated that the purpose of these policies was to insure employers against liability to their employees. Where it was held that the employers are liable to the employees it would be remarkable if the insurers were not also liable under the policies. Therefore for the purposes of the EL policies negligent exposure of an employee to asbestos during the policy period was a sufficient causal link with subsequently arising mesothelioma to trigger the insurers’ obligation to indemnify the employer.
Although this litigation was not brought by mesothelioma sufferers but their employers, this decision is very welcome news to innocent mesothelioma sufferers. If the Court of Appeal decision had stood then by a trick of wording many mesothelioma sufferers employed by companies who had since gone out of business by the time they developed mesothelioma would have been deprived of compensation for their mesothelioma. This is because whilst there may have been insurance in place at the date of their exposure, there was no employer and hence no insurance at the date they developed mesothelioma and depending on the policy wording it would have been this later event only that would have triggered insurers’ liability to pay compensation for their mesothelioma. The decision will also be welcomed by many employers still in business, who will now get the insurance cover for mesothelioma that they thought they had paid for in the first place. It did take perhaps a slightly strained interpretation of the wording of some insurance policies to reach this result. However surely few can doubt that when employers paid insurers the premiums for these policies the expectation would have been that they would be paying for cover for any events occurring during the cover period which caused injury or disease, even if the disease did not develop until sometime later. Few can also doubt that, at a time when the government is seeking to restrict access to justice for many injury and disease victims, this is one decision that will increase access to justice for some of the most worthy of claimants, the innocent victims of mesothelioma, a dreadful and fatal condition. Let us hope Parliament continue in that same vein by leaving intact the House of Lords’ amendments to the current Legal Aid bill, which would allow to continue the current free and fair claims funding arrangements for all victims of industrial disease.
If you or family member has developed mesothelioma or any other asbestos related disease please contact us for free advice about the potential for making a claim for compensation on a no win no fee basis.