International Energy Group Ltd v Zurich Insurance Plc Uk Branch
| Jurisdiction | England & Wales |
| Judge | Lord Justice Toulson,Lord Justice Aikens,Lord Justice Maurice Kay Vice President of the Court of Appeal, Civil Division |
| Judgment Date | 06 February 2013 |
| Neutral Citation | [2013] EWCA Civ 39 |
| Docket Number | Case No: A3/2012/0343 |
| Court | Court of Appeal (Civil Division) |
| Date | 06 February 2013 |
[2013] EWCA Civ 39
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE COMMERCIAL COURT
Cooke J
2010 Folio 570
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Maurice Kay Vice President Of The Court Of Appeal, Civil Division
Lord Justice Toulson
and
Lord Justice Aikens
Case No: A3/2012/0343
Antonio Bueno QC and Patrick Limb QC (instructed by Simpson & Marwick Solicitors LLP) for the Appellants
Leigh-Ann Mulcahy QC, Jamie Smith and Nikki Singla (instructed by DWF LLP) for the Respondents
Hearing dates: 13–14 November 2012
Introduction
Mr Alan Carré worked for 27 years until 31 December 1988 for Guernsey Gas Light Co Ltd, a predecessor of the claimant ("IEG"). For the last 6 years of that period IEG was insured under a standard form of employer's liability policy by a company whose liabilities have been absorbed by the defendant ("Zurich"). I will refer to IEG and Zurich as including their predecessors.
Mr Carré worked for another employer from 1 January 1989 to 15 April 2008, when he retired. He did not enjoy a long retirement, because in July 2008 he was diagnosed as suffering from mesothelioma and he died a year or so later. Before his death he issued proceedings against IEG in the Royal Court of Guernsey, claiming that his illness was caused by its negligence and breach of statutory duty in exposing him to asbestos dust and fibres. The claim was settled for £250,000 plus costs. IEG's total outlay including its own costs amounted to £274,431.60, for which it claimed indemnity from Zurich.
The policy wording remained the same for each year that the policy was renewed. The insuring clause provided:
"If any person under a contract of service or apprenticeship with the Insured shall sustain any bodily injury or disease caused during any period of insurance and arising out of and in the course of his employment by the Insured in the business above mentioned, the Company will indemnify the Insured against all sums for which the Insured shall be liable in respect of any claim for damages for such injury or disease settled or defended with the consent of the Company. The Company will in addition pay the claimants' costs and expenses and be responsible for all costs and expenses incurred with the consent of the Company in defending any such claim for damages."
The claim was tried by Cooke J on an agreed statement of facts and issues. These included:
"6. During the whole period of his employment with the Guernsey Gas Light Company Limited, including during the Policy Period, Mr Carré was exposed to asbestos dust and fibres without adequate protection being provided by his employer, and thus under circumstances that both materially increased the risk of his contracting mesothelioma and constituted breaches of the duty of care owed to him by Guernsey Gas Light Company Limited.
7. In consequence of Guernsey Gas Light Company Limited's breaches of duty Mr Carré did in fact contract, and subsequently die from, mesothelioma.
…
11. In addition to the Defendant…one other insurer has been traced which provided employer's liability insurance to Guernsey Gas Light Company Limited during the period for which it employed Mr Carré. This insurer is Excess Insurance Company Limited and it provided such insurance for the period 31 December 1978 to 30 December 1980.
…
13. The defendant does not dispute the Claimant's liability to Mr Carré in damages consequent on his contracting mesothelioma, or the appropriateness or the quantum of the Claimant's settlement of Mr Carré's claim or the reasonableness of the Claimant's legal costs incurred.
14. The parties agree that for the purposes of these proceedings only it should be assumed that:
14.1 Mr Carré was exposed to asbestos during the whole period 13 November 1961 to 31 December 1988; and,
14.2 Mr Carré was exposed to asbestos with the same degree of frequency and intensity throughout the period of his employment during the whole of that period.
15. The sole issue in dispute, and for the Court's determination, is whether:
15.1 the claimant is entitled to indemnity from the defendant amounting to the entirety of its outlay in respect of Mr Carré's claim (which the defendant would characterise as a "contribution amounting to an indemnity"); or whether,
15.2 the claimant is entitled to a contribution from the defendant of a proportion of its outlay corresponding to the proportion which the Policy Period bears to the whole period of Mr Carré's exposure by Guernsey Gas Light Company Limited"
Cooke J gave a reserved judgment on 24 January 2012, [2012] EWHC 69 (Comm). He found that IEG was entitled to a full indemnity in respect of its costs of defending Mr Carré's claim, but that otherwise its right of indemnity was limited to an aliquot share of its outlay based on the proportion of the period of Mr Carré's employment by IEG for which it was insured by Zurich.
The judge rejected an alternative argument by Zurich that, if it was wrong in its primary submission, it should be entitled as a matter of equity to a contribution from IEG in respect of the period for which IEG exposed Mr Carré to asbestos and was not insured by Zurich.
IEG appeals against the rejection of its claim for a full indemnity. By a respondent's notice and cross appeal, Zurich challenges the judge's award of a full indemnity in respect of IEG's defence costs (which it says ought to have been reduced in the same way as the rest of IEG's claim) and the judge's rejection of its alternative argument.
In my view the key to the question whether the judge was right on the primary issue is to be found in the decision of the Supreme Court in Durham v BAI (Run off) Ltd ("the Trigger litigation") [2012] UKSC 14, [2012] 1 WLR 867. That decision was given on 28 March 2012, which was 2 months after the judgment of Cooke J. Tempting as it is to go directly to the Trigger decision, I should first refer to the basis of Cooke J's judgment and to the background to the Trigger litigation.
Cooke J's judgment
Cooke J's judgment was founded on his understanding of the nature of IEG's liability to Mr Carré under the law as stated by the House of Lords in Fairchild v Glenhaven Funeral Services Limited [2002] UKHL 22, [2003] 1 AC 32, and Barker v Corus UK Limited [2006] UKHL 20, [2006] 2 AC 572. He considered that the effect of those decisions, more particularly Barker, was that the House of Lords had created a new basis of liability in tort in mesothelioma cases, the essence of which was not the causing of mesothelioma but the wrongful creation of a risk of suffering mesothelioma. The liability of IEG in each policy year was for the amount of the risk which it created in that year. The total risk which it created during the 6 year policy period, and therefore the amount of its liability to Mr Carré in respect of its conduct during those years, was to be calculated by comparison with the total period for which it employed Mr Carré, since mathematically the risks associated with his exposure in any one year were no greater or less than in any other year. The subsequent intervention of Parliament in passing the Compensation Act 2006 was in the judge's view immaterial, because it did not apply to Guernsey and there was no equivalent Guernsey legislation.
The insidious nature of mesothelioma and the difficulty of attributing it to any particular period of exposure to asbestos have made it a vexed subject for tort lawyers. It was first addressed by the House of Lords in Fairchild. In that case the Court of Appeal held that where employees had been exposed to asbestos dust during periods of employment with more than one employer, their claims failed because they were unable to show on a balance of probabilities which period of exposure was responsible for the onset of the disease. The decision was a logical application of conventional principles of causation, but the injustice to the sufferers was obvious. The House of Lords reversed the Court of Appeal's decision. The judgments ran to 79 pages. The law reporter's headnote summarised the decision as follows:
"that, where an employee had been exposed by different defendants, during different periods of employment, to inhalation of asbestos dust in breach of each defendant's duty to protect him from the risk of contracting mesothelioma and where that risk had eventuated but, in current medical knowledge, the onset of the disease could not be attributed to any particular or cumulative wrongful exposure, a modified approach to proof of causation was justified; that in such a case proof that each defendant's wrongdoing had materially increased the risk of contracting the disease was sufficient to satisfy the causal requirements for his liability; and that, accordingly, applying that approach and in the circumstances of each case, the claimants could prove, on a balance of probabilities, the necessary causal connection to establish the defendants' liability."
Subject to the qualification that the words "on a balance of probabilities" in the final phrase would perhaps be better omitted, that is a fair summary of the decision. The nature of the rule has been the subject of much detailed analysis by scholars and others and it has been re-examined by the House of Lords or Supreme Court on three occasions — Barker, Sienkiewicz v Greif (UK) Limited [2011] UKSC 10, [2011] 2 AC 229 and the Trigger litigation.
Barker was a problematic decision and it has not fared well. It was held by a...
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