Bolton Metropolitan Borough Council v Municipal Mutual Insurance Ltd and another
| Jurisdiction | England & Wales |
| Judge | Lady Justice Hallett,Lord Justice Auld |
| Judgment Date | 06 February 2006 |
| Neutral Citation | [2006] EWCA Civ 50 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case Nos: 2005 1277 & 1310 A3 |
| Date | 06 February 2006 |
[2006] EWCA Civ 50
Lord Justice Auld
Lord Justice Longmoreand
Lady Justice Hallett
Case Nos: 2005 1277 & 1310 A3
EDWARD BARTLEY JONES Esq QC and DIGBY JESS Esq
(instructed by Forbes, BB1 8DA) for the Claimant
HOWARD PALMER Esq QC and Ms SONIA NOLTEN
(instructed by Watmores, WC2A 1RP) for the First Defendant and Main AppellantMICHAEL HARVEY Esq QC and TIM SMITH
(instructed by Halliwells Llp, EC2R 8AW) for the Second Defendants and Respondents
Lord Justice Longmore :
Introduction
Mr Gordon Green, while he was alive, worked on building sites as an employee of W Lee & Sons, an electrical contractor. One of the sites on which he worked was a Teacher Training college being built by Bolton Metropolitan Borough Council ("Bolton") . He inhaled asbestos dust while working at the site between 1960–1963. He was later employed by Carnaud Metalbox Engineering Plc ("CME") between 1965 and 1970 and after 1973 when he also inhaled asbestos dust. In August or September 1990 Mr Green consulted his doctor as a result of breathing difficulties and chest pain. In January 1991 he was diagnosed as suffering from mesothelioma. Once a patient starts to suffer from symptoms resulting in this diagnosis, he usually has from 12 to 18 months to live. Mr Green sadly died in November 1991, 15 months after becoming symptomatic and 10 months after diagnosis.
Mrs Green began proceedings in February 1994 on behalf of his estate and on her own behalf against Bolton and against CME. These defendants settled those proceedings by each paying half of £160,000 which was the sum which Mrs Green was willing to accept. Bolton now seeks to recover the amount it has paid and consequential costs from its public liability insurers on risk at the time when, according to Bolton, it incurred its liability to Mr Green which, they say, was in 1980 when Mr Green's mesothelioma occurred. Those insurers are Municipal Mutual Insurance Ltd ("MMI") . They deny liability and say that, if any insurer is liable, it is Bolton's insurer at the time when Mr Green was exposed to the inhalation of dust. As a result of MMI's contentions Bolton have joined, as Second Defendants to the proceedings, the successors in title to the public liability insurers who provided public liability cover when Mr Green was working on their premises between 1960 and 1963 viz Commercial Union Assurance Co Ltd ("CU") . MMI has thus raised an issue of considerable importance to public liability insurers, given the prevalence of claims for asbestos related diseases. CU and Bolton have had little choice but to respond appropriately.
At the outset of his address, Mr Michael Harvey QC for CU drew attention to the fact that the contest in the present case was not a contest between employers' liability insurers (since Bolton never employed Mr Green) but between public liability insurers and, to this extent, was an unusual dispute. The significance of this observation was said to be that, while employers' liability insurers usually offered cover in respect of
"injuries caused during the period of insurance"
and would thus, at any rate arguably, offer cover at the time when an employee was exposed to the inhalation of asbestos fibres, public liability insurers usually offered cover in respect of
"injuries occurring during the period of insurance".
This, Mr Harvey submitted, was significantly different wording, which meant that, in the case of asbestos-related diseases which only eventuated a long time after initial exposure, it was the insurer at risk at the time the disease began who had to indemnify Bolton in respect of their liability, not the insurer at risk at the time of exposure. Needless to say the wordings of the two policies at issue in this appeal differ somewhat and it is now necessary to set them out.
The policies
The insuring clause of what is called the Third Party policy, issued by MMI, provides, so far as relevant:-
"The Company agrees to indemnify the Insured in respect of all sums which the Insured shall become legally liable to pay as compensation arising out of
(a) accidental bodily injury or illness (fatal or otherwise) to any person other than any person employed under a contract of service . . . . with the Insured if such injury or illness arises out of and in the course of the employment
(b) accidental loss of or accidental damage caused to property
when such injury illness loss or damage occurs during the currency of the Policy and arises out of the exercise of the functions of a Local authority.
The Company will also pay any costs awarded against the Insured . . . .
In addition the Company will pay all costs and expenses incurred with its written consent
(a) in defending any claim for compensation . . . ."
This policy states that it is to be placed in a special insurance policy binder and read in conjunction with General Policy Conditions therein. Condition 3 requires Bolton to report immediately "all injury . . . . all accidents and all claims or legal proceedings arising out of such injury . . . . or accidents". Condition 6 provides:-
"6. If at the time of any occurrence giving rise to a claim under this Policy there is or would but for the existence of this Policy be any other insurance applicable to such claim then unless the Policy expressly provides otherwise the Company shall not be liable in respect of that claim except insofar as concerns any excess beyond the amount which would be payable under such other insurance had this Policy not been in force."
The insuring clause of the public liability policy, for which CU is now responsible, provides, so far as relevant:-
". . . . the Company will indemnify the Insured against
(A) All sums which the Insured shall become legally liable to pay for compensation in respect of
(1) bodily injury to or illness of any person
(2) loss of or damage to property
occurring within Great Britain Ireland Northern Ireland the Channel Islands or the Isle of Man during the Period of Indemnity as a result of an accident and happening or caused as described in the Schedule under the heading of Description of Risk".
Forty-three years later no trace of this Schedule can now be found.
"(B) All costs and expenses of litigation
(1) recovered by any claimant against the Insured
(2) incurred with the written consent of the Company
in respect of a claim against the Insured for compensation to which the indemnity expressed in this Policy applies".
The indemnity is subject to an Exception whose purpose, and effect, are to do what the MMI policy does by words within the insuring clause – viz, to exclude liability for employers' liability risks. The policy contains two other important Conditions:-
"1. The Insured shall give written notice to the Head Office or Branch Office of the Company of any accident or claim or proceedings immediately the same shall have come to the knowledge of the Insured or his representative
. . . . . . . . . . . . . .
10. The due observance and fulfilment of the terms provisions conditions and endorsements of this Policy by the Insured in so far as they relate to anything to be done or complied with by him . . . . shall be conditions precedent to any liability of the Company to make any payment under this Policy."
The judgment
In a detailed and helpful judgment His Honour Judge Kershaw QC, sitting in the Mercantile Court at Liverpool, held:-
(1) MMI were liable to indemnify Bolton since the mesothelioma, in respect of which Bolton was liable to Mr and Mrs Green, was an accidental bodily injury which occurred during the currency of MMI's cover;
(2) CU were not liable to indemnify Bolton since the mesothelioma had not occurred during the period of indemnity for which they were on cover;
(3) CU were not liable to Bolton for the further and additional reason that there had been no immediate notification to CU of the "accident" or "claim" as soon as it came to Bolton's knowledge, such notification was a condition precedent to CU's liability unless CU waived their right to rely on it and CU had not waived their right so to rely;
(4) MMI could not, therefore, rely on condition 6 of their policy as a defence to Bolton's claim since there was no "other insurance applicable" to the claim;
(5) no question of contribution between insurers could arise;
(6) although Bolton could recover its costs of proceedings against MMI, Bolton would have to pay CU's costs save to the extent that 25% of such costs could be recovered from MMI by Bolton in addition to their costs as against MMI.
I shall consider the issues in the same order but, for the purposes of understanding the arguments in relation to the first two issues it is necessary to say something of the aetiology of mesothelioma, which, since no party challenged the judge's findings, can be done by incorporating them almost verbatim from the judgment. They are based on the evidence of Dr Rudd and Dr Moore-Gillon, well known experts in the field of respiratory medicine.
Aetiology of mesothelioma
There are three forms of asbestos: brown (amosite) , blue (crocidolite) and white (chrysotile) . Their fibres have different bio-persistence: 20 years after exposure to fibres about half the inhaled amosite fibres remain in...
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