12 January, 2009
On 21 November 2008 Mr Justice Burton handed down his long awaited Judgement in the so called "Trigger Litigation" in relation to cases where employees have suffered and died from mesothelioma resulting from the inhalation of asbestos fibres during employment.
Following the Public Liability decision of Bolton MBC v MMI handed down in January 2006 by the Court of Appeal, in which Forbes Solicitors represented Bolton MBC, certain insurers have been attempting to avoid indemnifying their former insureds, including a large number of local authorities in Employers Liability claims.
The issue that came before the High Court was whether the insurers who were liable to meet the claims of these former employees were those who insured the employers at the time that the employee inhaled the asbestos fibre, or whether it was the insurer who insured the employer up to 40 or more years later when the mesothelioma tumour actually developed.
The case was of particular significance because, in a number of cases, the employers had become insolvent by the time the tumour developed and therefore there was no relevant insurer capable of meeting the Claimant's claim if, as MMI and others suggested, it was the recent insurer who ought to meet the claim. The claim would fall into a "black hole".
The claims turned on policy wording interpretation. Many employers' liability policy wordings refer to cover being provided when "a disease is sustained or contracted". The insurers sought to argue that this could not mean at the time of inhalation when they were on cover but must mean at a later date when the tumour developed or occurred, so following the Bolton decision.
Whilst Mr Justice Burton reached the conclusion that an injury did not occur at the time of inhalation of the asbestos fibres, his conclusion was that the policy wording should be interpreted on the basis that an injury is "sustained" or "contracted" when it is caused, and that for the purposes of employers liability policies the injury was caused on inhalation during the employees employment.
This is a public policy decision based on the construction of insurance policies taking into account the intention of the parties when entering into the policy of insurance. Mr Justice Burton considered that the intention of the parties was that the policy would cover the employer in respect of injury to an employee resulting from exposure during the policy period, ie during the period of employment. Effectively what this Judgement does is take us back to the position that the industry had generally adopted prior to the policy wording litigation starting with the Bolton decision.
Undoubtedly the decision will be appealed so we may not have the certainty that everyone wishes for yet. Permission has been given for an appeal and it is hoped that the appeal will be expedited.
Until the resolution of any appeal a number of local authorities will have to continue to find significant sums to meet such claims in the hope that the decision is upheld on appeal and former insurers will respond and indemnify.
It is important to draw a distinction between PL and EL cover. This decision relates solely to employers' liability claims. Public liability policies are quite distinct and the decision in Bolton stands in relation to public liability 'occurrence' wording policies, namely that the policy on cover when the injury occurred, i.e. when the tumour developed, not the policy on cover at the time of inhalation, should respond.
Whilst it was not directly relevant to Mr Justice Burton's decision in the Trigger litigation he did make some findings in relation to when the tumour can be said to have occurred, indicating a 5 year rule as opposed to the former 10 year rule. This does not necessarily affect the "cut off" date for culpable exposure.