Employers' Liability Policy 'Trigger' Litigation, Court of Appeal - Queen's Bench Division, November 21, 2008, [2008] EWHC 2692 (QB)

Resolution Date:November 21, 2008
Issuing Organization:Queen's Bench Division
Actores:Employers' Liability Policy 'Trigger' Litigation

Neutral Citation Number: [2008] EWHC 2692 (QB)

HQ06X02919, HQ07X01388, HQ07X03187, HQ07X00744, HQ07X01800, HQ07X02055



Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 21 November 2008

Before :


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Durham -v- BAI (Run Off) Limited (In Scheme of Arrangement) ("Lead Case 1")

Fleming & Eddleston -v- Independent Insurance Company Limited (In Provisional Liquidation) ("Lead Case 2")

Edwards -v- Excess Insurance Company Limited ("Lead Case 3")

Thomas Bates & Son Limited -v- BAI (Run Off) Limited (In Scheme of Arrangement)

("Lead Case 4")

Akzo Nobel UK Limited & Amec PLC -v- Excess Insurance Company Limited

("Lead Case 5")

Municipal Mutual Insurance Limited -v- Zurich Insurance Company and Others

("Lead Case 6")

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Lead Case 1

Colin Wynter QC & Alison McCormick (instructed by Irwin Mitchell) for the Claimant

Roger Stewart QC & Stephen Robins (instructed by DLA Piper UK LLP) for the Defendant

Lead Case 2

Colin Wynter QC & Tim Smith (instructed by John Pickering & Partners) for the Claimant

Roger Stewart QC & Stephen Robins (instructed by DLA Piper UK LLP) for the Defendant

Lead Case 3

Colin Wynter QC & Andrew Burns (instructed by Thompsons) for the Claimant

Colin Edelman QC, David Platt & Peter Houghton (instructed by Plexus Law) for the Defendant

Lead Case 4

Edward Bartley Jones QC & Dr Digby Jess (instructed by Burd Ward) for the Claimant

Roger Stewart QC & Stephen Robins (instructed by DLA Piper UK LLP) for the Defendant

Lead Case 5

Colin Wynter QC & Richard Harrison (instructed by Reed Smith and Berrymans Lace Mawer) for the Claimants

Colin Edelman QC, David Platt & Peter Houghton (instructed by Plexus Law) for the Defendant

Lead Case 6

Howard Palmer QC, Andrew Miller & Sonia Nolten (instructed by Watmores) for the Claimant

Jeremy Stuart-Smith QC, Leigh-Ann Mulcahy & Clare Dixon (instructed by Buller Jeffries)

for the First Defendant

Lawrence West QC & A. John Williams (instructed by Plexus Law) for the Second Defendant (instructed by Kennedys) for the Third Defendant (instructed by DLA Piper UK LLP) for the Fourth Defendant (instructed by Kennedys) for the Fifth Defendant (instructed by Milton Keynes District Council) for the Sixth Defendant (instructed by Sparling, Benham & Brough) for the Seventh Defendant (instructed by Berrymans Lace Mawer) for the Eighth and Eleventh Defendants (instructed by Morgan Cole) for the Ninth Defendant (instructed by Weightmans) for the Tenth Defendant.

Hearing dates: 3rd, 4th, 5th, 6th, 9th, 10th, 11th, 12th, 13th, 16th, 17th, 18th, 19th, 20th, 23rd, 24th, 25th, 26th & 30th June 2008, 1st, 2nd, 3rd, 4th, 7th, 8th, 9th, 10th, 11th, 14th, 15th, 16th, 17th, 21st, 22nd, 23rd, 24th, 25th, 28th, 29th, 30th & 31st July 2008

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Mr Justice Burton :

  1. The Proceedings

    1. This has been the collective hearing of six actions, together called the ``Trigger Litigation'', since the dispute relates to identifying the `trigger' under various insurance policies. The result has considerable consequences for several thousand people, and will have a continuing impact for many years. The six consolidated actions have emerged by way of specimen proceedings in which the issues can be resolved. They relate to cases where employees have suffered and died from mesothelioma resulting from inhalation of asbestos fibres during employment, and they, or the employers liable to them, seek to recover from the employers' insurers. The issue in the actions is (by reference to nine specimen insurance wordings) whether the insurers liable to meet the claims are those who insured the employers at the time the employees inhaled the asbestos fibres - the time of exposure, of inhalation or ingestion (``date of inhalation'') - or those (if any) who insured the employer (if the employer were still in business) up to forty or more years later, when the tumour develops (``date of tumour'').

    2. In the six actions which I shall describe, the parties are (i) employees (seeking to recover direct from insurers, under the Third Party (Rights Against Insurers) Act 1930 as amended (``TPRIA'')), (ii) still solvent employers, including Local Authorities (who have paid out claims to employees and are fearful of having to pay out more) and (iii) insurers, four of whom take the date of tumour position, and one, Zurich, which takes the date of inhalation position.

    3. In the six actions, some are claimants and some defendants, but I shall call those who take the date of inhalation position Claimants, and those who take the date of tumour position Defendants. As will appear, I have had seven leading and thirteen junior Counsel in front of me, instructed by fourteen firms of solicitors, of whom DLA Piper have acted ably as lead solicitors. Enormous amounts of time and money have been saved, both by the fact that the actions have been heard together, but even more by the extraordinary degree of co-operation between the parties, under the leadership of those lead solicitors, and the morass of documents has been slimmed down to manageable proportions. The hearing was concluded in two calendar months. As a result of the quantity and quality of the legal submissions, with each party inevitably adopting a slightly different standpoint, I have had the benefit of exhaustive argument: the submissions, including the discrete arguments relating to the issue of estoppel which, in the event, only arose in the sixth action, were contained in three bundles of written opening submissions and the equivalent of more than one bundle of closing submissions, supplemented orally by 9½ days of oral opening and 8½ days in closing. None of the submissions was duplicated, and much was adopted without repetition by others on the same side. In those circumstances, in this judgment I shall not always identify individually the source of those submissions, but I have taken them all into account.

    4. The issue between the parties is differently expressed by each side. The Claimants submit that the insurance policy wordings must be construed, as they had prior to 2006 always been construed, namely so that the insurance company (or companies) should respond which covered the employers when the asbestos fibres were inhaled by the employees which led to their subsequent death. The Defendants submit that the wording should not provide cover where no injury or disease was present during the period of insurance.

    5. The actions were necessary in the light of the approach of the four insurance company Defendants, all of whom are in run-off and/or subject to an insolvent scheme of arrangement (in the case of BAI) or provisional liquidation (in the case of Independent), to the Employers' Liability (``EL'') policy wordings pursuant to which the claims are made. For the first time, after forty years, these four insurance company Defendants have, since 2006, declined to pay out on EL policies in force at the date of inhalation to mesothelioma sufferers, and/or to employers liable to them, in the light of a decision of the Court of Appeal in Bolton MBC v Municipal Mutual Insurance Ltd (``Bolton'') [2006] 1 WLR 1492 relating to the wording of a Public Liability (``PL'') policy. Prior to 2006 and Bolton, on the evidence before me, neither they nor any other EL insurance company had ever done anything other than pay out to mesothelioma sufferers by reference to the date of inhalation.

    6. Even though insurers may be insolvent (as are BAI and Independent), if the liability of those insurers can be established by the relevant Claimants, then such Claimants can recover from the fund established under the Financial Services Compensation Scheme (``FSCS'') pursuant to the Financial Services and Markets Act 2000, 100% of their claims if and to the extent that the claims relate to the period subsequent to 1972 (when, as will be seen, EL insurance became compulsory pursuant to the Employers' Liability (Compulsory Insurance) Act 1969 (ELCIA) and 90% of claims antedating ELCIA. However the establishment of the liability of an insolvent insurer under the TPRIA is a condition precedent to recovery under the Scheme. The Employee Claimants, or those in their position, whose claims will be resolved by these specimen proceedings, must therefore succeed in these proceedings against the relevant Insurance Defendants in order to claim under the FSCS.

    7. There is also a compensation scheme for those suffering from mesothelioma caused in employment (`occupational sufferers') under the Pneumoconiosis etc (Workers Compensation) Act 1979. By this Scheme (as amended) a claimant must show that any relevant employer in the previous 20 years (but subject, in the case of mesothelioma, to exemption in respect of the last 15 of those years) has ceased to carry on business, and that a claimant has not brought any action or compromised any claim for damages. This Scheme has been gradually made easier to qualify for, by successive amendments, and a new Scheme has recently extended such benefits to non-occupational sufferers by the Child Maintenance and Other Payments Act 2008. However the relatively small payments (very small indeed for dependants) paid under such Scheme bear no relationship whatever to the value of the claims.

    8. As a result therefore of the interpretation of their EL policies by these four insurance companies to accord with the interpretation of a PL policy with different but similar wording by the Court of Appeal in Bolton, those employees (or solvent employers who have paid out those employees), whose claims would have been met (by these insurers and/or under the FSCS) under policies in existence at the time of inhalation, are likely to find themselves in what has been called a `black hole'; because they...

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