International Energy Group Ltd v Zurich Insurance Plc UK
| Jurisdiction | England & Wales |
| Judge | Mr Justice Cooke |
| Judgment Date | 24 January 2012 |
| Neutral Citation | [2012] EWHC 69 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 24 January 2012 |
| Docket Number | Case No: 2010 FOLIO 570 |
[2012] EWHC 69 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
The Hon Mr Justice Cooke
Case No: 2010 FOLIO 570
Mr A Bueno QC (instructed by Simpson & Marwick) for the Claimant
Mr Jeremy Stuart-Smith QC and Mr Jamie Smith (instructed by Buller Jeffries) for the Defendant
Hearing dates: 17 and 18 January 2012
Introduction
The Claimant is responsible for all the liabilities of a company known as Guernsey Gas Light Company Ltd. It seeks recovery under Employers' Liability insurance policies issued by Midland Assurance Ltd covering the period 31 December 1982 – 31 December 1988, from the Defendant which has succeeded to the insurance liabilities of Midland. For ease of convenience, I shall refer both to the original parties to the insurances and to the Claimant/Guernsey Gas and to the Defendant/Midland collectively as "the Insured" and "the Insurer" respectively.
Guernsey Gas employed Mr Carré for some 27 years, from 13 November 1961 until 31 December 1988. According to the agreed statement of facts, during the whole period of his employment with the Guernsey Gas, including the 6 year policy period, Mr Carré was exposed to asbestos dust and fibres without adequate protection being provided by his employer, 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. Mr Carré subsequently contracted and died from mesothelioma.
Mr Carré made a claim for damages in respect of his pain, suffering and loss of amenity, and for the financial losses he incurred in consequence of his illness and impending demise, with a schedule of loss served on his behalf valuing the claim at a figure in excess of £400,000. His claim was settled by the Insured for £250,000 plus costs. When the Insured's own costs are brought into account, the aggregate outlay was £278,451.60. This is the sum which the Insured now claims from the Insurer.
One other insurer has been found which provided Employers' Liability cover for a period during Mr Carré's employment by the Insured, namely Excess Insurance Company Ltd which was on risk for 2 years – for the period 31 December 1978 – 30 December 1980.
In the case of the Insurer, the insuring clause provided:-
"If any person under a contract of service or of 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 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 Insurer does not dispute the Insured's liability to Mr Carré in damages consequent on his contracting mesothelioma, nor the appropriateness or the quantum of the Insured's settlement of Mr Carré's claim, nor the reasonableness of the costs incurred.
It is also agreed for the purpose of these proceedings only, that it should be assumed that:—
i) Mr Carré was exposed to asbestos during the whole period of 13 November 1961 to 31 December 1988 when employed by the Insured and
ii) 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.
The sole issue in dispute is whether the Insured is entitled to indemnity from the Insurer amounting to the entirety of its outlay in respect of Mr Carré's claim or whether the Insured is entitled only to the proportion of its outlay, corresponding to the proportion which the period for which the Insurer was on risk (the Policy Period) bears to the whole period of Mr Carré's exposure to asbestos by the Insured.
The Basis of Liability
The Insured's case is that, as a result of a series of decisions by the House of Lords and the Supreme Court, the Insured was liable to Mr Carré as a result of any period of culpable exposure for which it was responsible which materially increased the risk of his contracting mesothelioma. For the purpose of these proceedings it is agreed that it should be assumed that Mr Carré was exposed to asbestos with the same degree of frequency and intensity throughout the whole period of his employment and it therefore follows that the Insured negligently exposed Mr Carré to asbestos throughout the policy period, namely the six years when the Insurer was on risk. The Insured maintains that it was liable to Mr Carré for the whole of his loss and damage as a result of these three decisions of the highest court in the land, regardless of the fact that there were other periods of culpable exposure outside the Policy Period and whether or not those other periods of exposure were covered by other insurers. It follows, the Insured submits, that any one of the annual policies issued by the Insurer to the Insured must respond to the whole of the liability that has been incurred.
The Insurer submits that this is not the effect of these three decisions and that, although there is only one employer (the Insured), which could be liable to Mr Carré, the basis of liability to him depends upon a series of tortious material exposures to the risk of inhalation of asbestos fibres, some of which occurred within the Policy Period and some of which fell outside it. Each tortious material exposure, and each period of tortious material exposures, does not give rise to successive liabilities for full compensation but gives rise to liability for an aliquot share of compensation, the aliquot share attributable to a given year being the liability that falls to be indemnified under the policy granted by the Insurers for that year. Thus it is said that, because Mr Carré was culpably exposed to asbestos by the Insured over a period of 326 months (just over 27 years) and only seventy two of these months (6 years) were covered by the Insurer, the Insured's entitlement to an indemnity should be limited to 72/ 326 or 6/27 which amounts to approximately 22.08 per cent of the full indemnity claimed.
Before making reference to the three major authorities, it should be pointed out that the Insured's liability to Mr Carré was governed by the law of Guernsey. It is common ground between the parties that the Compensation Act 2006 is inapplicable to Guernsey. The Insurer says that this is a matter of some importance because the effect of the Compensation Act was to reverse the decision of the House of Lords in Barker v Corus UK Ltd [2006] 2 AC 572 and that the position in Guernsey is therefore governed by the decision in Barker without reference to the statute.
I turn then to the trilogy of authorities, namely Fairchild v Glenhaven Funeral Services Ltd [2003] 1 AC 32 (HL), Barker (ibid) and Sienkiewicz v Greif (UK) Ltd [2011] 2 AC 229 (SC). Additionally, however, reference has to be made to the decision of Eady J in Phillips v Syndicate 992 Gunner [2004] LRIR 426, a case which was decided after Fairchild but before Barker and Sienkiewicz.
The decision of the House of Lords is founded upon what has become known as "the rock of uncertainty", namely the impossibility, on current medical science, of ascertaining the particular cause of an individual's mesothelioma. Exposure to asbestos dust and fibres can give rise not only to asbestosis and other pulmonary diseases but also to the risk of developing a mesothelioma which is a malignant tumour. The statistical risk of developing a mesothelioma increases in proportion to the quantity of asbestos dust and fibres inhaled, and the greater the quantity the dust and fibre inhaled, the greater the risk. The condition however may be caused by a single fibre, or a few fibres, or many fibres. Medical opinion holds none of these possibilities to be more probable than any other and the condition once caused is not aggravated by further exposure. As Lord Bingham put it at paragraph 6 in Fairchild:-
"So if C is employed successively by A and B and is exposed to asbestos dust and fibres during each employment and develops a mesothelioma, the very strong probability is that this will have been caused by inhalation of asbestos dust containing fibres. But C could have inhaled a single fibre giving rise to his condition during employment by A, in which case his exposure by B will have had no effect on his condition; or he could have inhaled a single fibre giving rise to his condition during his employment by B, in which case his exposure by A will have had no effect on his condition: or he could have inhaled fibres during his employment by A and B which together gave rise to his condition; but medical science cannot support the suggestion that any of these possibilities is to be regarded as more probable than any other. There is no way of identifying, even on a balance of probabilities, the source of the fibre or fibres which initiated the genetic process which culminated in the malignant tumour."
Thus no claimant would be able to prove on the balance of probabilities that any particular employer's breach of the duty of care caused the disease and loss which he had suffered. The disease was indivisible damage and the victim could not show, in...
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