Colin Peck reviews some of the important recent developments concerning insurers' liability for UK asbestos-related exposure
On 3 May 2006 the House of Lords handed down its judgment in three conjoined appeals: Barker v Corus (formerly Saint Gobain Pipelines); Murray v British Shipbuilders (Hydrodynamics) Ltd; and Patterson v Smiths Dock Ltd.
They were the latest in a line of test cases to come before the English courts in the past 12 to 18 months regarding insurers' liability for UK asbestos-related diseases.
As a result of the decision in Barker v Corus, in which the House of Lords considered again the earlier decisions in Fairchild v Glenhaven and Barker v Saint Gobain, the indications are that employers (and their insurers) liability for mesothelioma claims will be drastically reduced.
In the Barker judgment and other recent decisions the English courts have increasingly restricted the circumstances in which claimants can bring a successful claim for UK asbestos-related exposure.
The House of Lords decision in Barker v Corus, Murray v British Shipbuilders and Patterson v Smiths Dock was concerned, broadly, with two issues. One was the question of an employer's liability to pay damages in cases where a worker was employed by several firms, none of which can be specifically blamed for the onset of mesothelioma; the second, was its liability where a worker had also been exposed to asbestos during a period of self-employment.
In Fairchild v Glenhaven (2002), the House of Lords had held that a worker who had contracted mesothelioma after being exposed to asbestos dust at different times by more than one employer could successfully sue any of them in respect of his entire damage, even though he could not prove which employer had actually caused his disease.
The decision appeared to go against the standard rule in English law that it is not enough for a claimant to show that a defendant's conduct increased the likelihood of damage being suffered and may have caused it, but that a claimant had to prove, on the balance of probabilities, that the defendant's conduct did cause the damage.
At the time the House of Lords considered that there were exceptional circumstances which meant that it would be unfair to make the claimant satisfy the 'but for' test of causation where he could not prove which employer's breach of duty had actually caused the mesothelioma.
Then in the Court of Appeal case of Barker v Saint Gobain in 2004, the court considered whether, where the claimant was himself responsible for exposure to asbestos during periods of self-employment - an employer who had also exposed the claimant to asbestos could avoid liability on the ground that the claimant may have been responsible for his own injury.
In rejecting the argument, the court acknowledged the result would be that a diminishing number of solvent employers would become liable for the totality of the injury to former employees, but added that they would not modify the rule as it was established to protect the person who has been wronged.
Contributory negligence
They considered that any blameworthiness on the part of the claimant in exposing himself to the disease could be dealt with through the principles of contributory negligence.
In a recent decision, the House of Lords considered whether, to come within the 'Fairchild exception', a claimant had to demonstrate that all of the factors in Fairchild must be present. In that case, the causal agent (asbestos dust) was the same during every period of employment, all of the exposures had resulted from a breach of duty by the different employers involved, and science was unable to show which exposure had actually been responsible for the contraction of the disease.
The House of Lords also went on to consider what the extent of the employers' liability under the Fairchild exception was, whether it was jointly and severally liable or only severally liable.
Both of these issues were raised in the Barker v Corus appeal, where Barker had been exposed to asbestos dust during two periods of employment and then again during self-employment.
In the Patterson v Smiths Dock and Murray v British Shipbuilders appeals, all of the exposures to asbestos were the result of breaches of duties owed by employers and so fell within the Fairchild exception. The only question, therefore, was whether the liability was joint and several or only several.
Indivisible injury
Lords Hoffman and Scott delivered the leading judgments of the five Law Lords (Lord Rodger of Earlsferry dissenting). They held that it was important to remember that the Fairchild exception had been created by the House of Lords in relation to an indivisible injury such as mesothelioma (as opposed to a divisible one like asbestosis).
Fairchild was where a single injurious agent had been involved, and where, in circumstances where it could not be shown which of the defendants' breach had actually caused the injury, it would be unfair for them to escape liability and for the claimant to go without any compensation.
Hence, they recognised that in creating the Fairchild exception in 2002, the House of Lords had not created an overarching principle but rather a narrow exception to the English law causation requirements. It is an exception which applies where several defendants can be said to have "materially contributed to the risk that the employee would contract mesothelioma".
However, just as in originally creating the Fairchild exception the Lords had recognised the fairness principle, they also recognised that it would be unfair for those employers who were still solvent to be jointly and severally liable for the whole damage, in circumstances where their liability was based on the concept of a material contribution to the risk of contracting mesothelioma, not proven actual causation.
They allowed the employers' appeals on the basis that the cases should be remitted to the courts below to re-determine the damages payable by the solvent defendants by reference to the proportion of the risk attributable to the breach of duty by those defendants.
Lord Scott suggested that this could be determined by taking into account such factors as the duration of the exposure for which the defendant was responsible, the intensity of the exposure, and the exact type of causative agent for which the defendant was responsible, all when compared with the claimant's overall exposure.
The judgment is a success for employers (and their insurers) in seeking a fairer apportionment of their liability. It would seem to leave claimants needing to effect legislative changes if they are to recover full compensation in such circumstances.
Just as in originally creating the Fairchild exception in 2002, when the House of Lords appeared to have radically altered the standard rule in English law on causation, so in their latest decision, in maintaining that exception (albeit now emphasised to be narrow), the Lords has had to devise the previously unknown concept of a party's "creation of a material risk of injury".
Future cases
It remains to be seen how, in future cases, the parties and the courts will apportion this creation of risk and whether it will be along the lines suggested by Lord Scott.
In the past 12 months the English courts have demonstrated more of a trend of restricting the circumstances in which claimants can bring a successful claim for UK asbestos-related exposure.
They reduced damages payable where a claimant had contributed to his asbestos induced lung cancer by smoking (Badger v Ministry of Defence), the exclusion of pleural plaques (Rothwell v Chemical & Insulating Co Ltd) and the limiting of second hand exposure (James Maguire v Harland and Wolff).
That trend was reinforced by the judgment in Barker v Corus, Murray v British Shipbuilders and Patterson v Smiths Dock. IT
' Colin Peck is a partner in the insurance and reinsurance group at Lawrence Graham