AXA General Insurance Company Ltd v Lord Advocate

Heard on 13, 14 and 15 June 2011

The appellants are insurance companies, whose business includes the writing of employers' liability insurance policies. They undertake to indemnify the employer in respect of any liability incurred by it for harm or injury arising out of the employer's negligence. They have brought these proceedings to challenge the lawfulness of an Act of the Scottish Parliament which was passed on 11 March 2009, received the Royal Assent on 17 April 2009 and came into force on 17 June 2009. It is the Damages (Asbestos-related Conditions) (Scotland) Act 2009 ("the 2009 Act") which provides that asymptomatic pleural plaques, pleural thickening and asbestosis shall constitute, and shall be treated as always having constituted, actionable harm for the purposes of an action of damages for personal injury.

It is no secret that the purpose of the 2009 Act was to reverse the decision of the House of Lords in Rothwell v Chemical & Insulating Co Ltd [2007] UKHL 39, [2008] AC 281 (" Rothwell"). In that case it was held that, as pleural plaques caused no symptoms, did not increase susceptibility to other asbestos-related diseases or shorten life expectancy, their mere presence in the claimants' lungs did not constitute an injury which was capable of giving rise to a claim for damages. It was anticipated that, while that decision was not binding on the Scottish courts, it would almost certainly be followed in Scotland as there is no material difference between the law of England and Wales and Scots law on this branch of the law. In Wright v Stoddard International plc (No 2) [2007] CSOH 173, 2008 Rep LR 37 Lord Uist applied the decision in Rothwell, although on the facts he would not have awarded damages anyway: see para 161. The appellants claim that reversing that decision will expose them to claims under their indemnity insurance policies amounting to millions of pounds annually and perhaps several billions of pounds in total. They seek declarator that the 2009 Act is unlawful and its reduction.

The first and second respondents are, respectively, the Lord Advocate representing the Scottish Ministers and the Advocate General for Scotland representing the United Kingdom government. The third to tenth respondents are individuals who have been diagnosed with pleural plaques caused by negligent exposure to asbestos. They have each raised, or intend to raise, actions of damages seeking reparation for the loss, injury and damage which they claim to have sustained as a result of their employers' negligence. The defenders to their actions include, or will include, private undertakings, nationalised industries and public bodies at the level of both local and central government. These respondents claim that they will be financially disadvantaged if the appellants' attack on the 2009 Act were to be successful, as they would be deprived of the benefit of the declaration in the Act that pleural plaques constitute harm which, for the purposes of an actionof damages, is actionable. On 8 May 2009 they were allowed by the Lord Ordinary (Lord Uist) to enter the process as individuals who were directly affected by the issues raised under and in terms of rule 58.8(2) of the Rules of the Court of Session 1994.

On 8 January 2010, after a debate that took place over periods totalling 22 days, the Lord Ordinary (Lord Emslie) held that the appellants had locus standi to bring these proceedings, that the wording of Rule of Court 58.8(2) was wide enough to cover the position of the third to tenth respondents but that the appellants had failed in their various challenges to the 2009 Act and their petition must be dismissed: [2010] CSOH 2, 2010 SLT 179. The appellants reclaimed. On 12 April 2011, after a hearing which lasted 8 days, the First Division (the Lord President (Hamilton), Lord Eassie and Lord Hardie) allowed the reclaiming motion to the extent of repelling the answers for the third to tenth respondents on the ground that they did not have a title and interest to be convened as respondents under rule 58.8(2), but quoad ultra refused the reclaiming motion: [2011] CSIH 31, 2011 SLT 439. The appellants have now appealed to this court and the Lord Advocate and the third to tenth respondents have cross-appealed. The Attorney General for Northern Ireland, the Northern Ireland Department of Finance and Personnel and Friends of the Earth Scotland were given permission to intervene in writing. The First Minister of Wales was given permission to intervene both in writing and orally and the Counsel General for Wales (Mr Theodore Huckle QC) made submissions on his behalf.

As the Lord Ordinary explained ( 2010 SLT 179, paras 2–4), pleural plaques are physical changes in the pleura. They can be detected radiologically as areas of fibrous tissue by x-rays and CT scans. They are caused by occupational exposure to asbestos and, in common with other asbestos-related conditions, they tend to develop after a long latency period of 20 years or more. In most cases they have no discernible effect on an individual's day to day physical health or well-being. They are asymptomatic, causing no pain or discomfort. They produce no disability or impairment of function, nor are they externally disfiguring. But it was common ground in Rothwell that they do indicate that the quantity of asbestos fibres in the lung is significant: see Lord Rodger of Earlsferry, para 78. While they do not in themselves threaten or lead to other asbestos induced conditions, their presence may indicate a cumulative level of asbestos exposure at which there is an increased risk of mesothelioma or other asbestos-related disorders. In that respect they are said to function as a marker for that increased risk. Individuals who have been diagnosed with pleural plaques are liable to become alarmed and anxious for the future. In some cases this may bring to mind the suffering and perhaps death of friends and colleagues from asbestos-related diseases. Their enjoyment and quality of life may be severely reduced by the associated anxiety.

It would, as Lord Rodger of Earlsferry said in Rothwell, para 90, make no sense, if the plaques themselves are not a condition for which the law will intervene to give damages because it is not serious enough to require its intervention, for the law to give damages for anxiety associated with plaques. Furthermore, the anxiety is not about any risk to health caused by the plaques themselves. Rather, it is because these individuals are worried that they may develop asbestosis or mesothelioma as a result of the accumulation of fibres in their lungs. To give them a claim for damages for this would be to give them a claim for something that the plaques themselves did not cause. So the mere risk that they may develop asbestosis or mesothelioma in the future will not give them a claim for damages. For them to recover damages for the associated anxiety, the asbestos-related pleural plaques themselves must be actionable.

Claims for damages in negligence for pleural plaques began to emerge in the 1980s. In three cases, all of which were decided at first instance in England, the judges found in the claimants' favour: Church v Ministry of Defence (1984) 134 NLJ 623, Peter Pain J; Sykes v Ministry of Defence The Times, 23 March 1984, Otton J; and Patterson v Ministry of Defence [1987] CLY 1194, Simon Brown J. The claimants in these cases had all been exposed to asbestos while working in naval dockyards. In some cases it was indicated that pleural plaques did not give rise to a cause of action: Morrison v Central Electricity Generating Board, 15 March 1984; Shuttleton v Duncan Stewart & Co Ltd 1996 SLT 517. But damages were awarded in Gibson v McAndrew Wormald & Co Ltd 1998 SLT 562 and Nicol v Scottish Power plc 1998 SLT 822. And the general practice of employers or their liability insurers during this period was to concede that pleural plaques were an actionable injury and to settle claims without admission of liability. The appellants say that this was because both the number and value of such claims were low.

Insurance by employers against their liability for personal injury to their employees has been compulsory since 1 January 1972, when the Employers' Liability (Compulsory Insurance) Act 1969 came into force. In terms of section 1(1) every employer must insure, and maintain insurance, against liability for "bodily injury or disease" sustained by its employees and arising out of and in the course of their employment in the employer's business. But section 3 of that Act...