Re T & N Ltd and Others (No 3)

JurisdictionEngland & Wales
CourtChancery Division
JudgeMR JUSTICE DAVID RICHARDS,Mr Justice David Richards
Judgment Date16 June 2006
Neutral Citation[2006] EWHC 1447 (Ch)
Date16 June 2006
Docket NumberCase No: 5798 and others of 2001

[2006] EWHC 1447 (Ch)





Mr Justice David Richards

Case No: 5798 and others of 2001

In the Matter of T&n Limited and Others
In The Matter of the Companies Act 1985

Richard Snowden QC, Paul Stanley and Ceri Bryant (instructed by Denton Wilde Sapte) for the Administrators of T&N Limited and other scheme companies

William Trower QC and Jeffrey Terry (instructed by DWF) for Royal & Sun Alliance Plc

William Trower QC and Stephen Robins (instructed by DLA Piper Rudnick Gray Cary) for Lloyd's Syndicate 45/117

David Chivers QC (instructed by Travers Smith) for Cape Insulation Limited

Patrick Field QC (instructed by Thompsons) for employees, former employees and dependants of former employees of T&N Limited and other scheme companies

Hearing dates: 21, 22, 23 November, 2 December 2005, 23, 24 January, 20 March, 6 April, 9 June 2006

Approved Judgment


The Honourable



This is an application by the administrators of T&N Limited (T&N) and fifty-seven associated companies for leave to convene meetings of certain creditors of those companies under section 425 of the Companies Act 1985 to consider schemes of arrangements between the companies and those creditors. The application raised several issues of principle, which were the subject of a number of different hearings. In this judgment I give the reasons for decisions announced on earlier occasions.


The schemes of arrangement are proposed to be made with those employees and former employees of the companies who have or may in the future have claims for damages for personal injuries arising out of exposure to asbestos, with dependants or relatives of such employees who have or may in the future have claims under the Fatal Accidents Act 1976 or equivalent legislation in other jurisdictions and with persons, principally other employers, who have or may in the future have contribution claims in respect of claims by employees or their dependants. In each case the claims are restricted to those covered by employers' liability insurance in place between 1 October 1969 and 30 April 1995.


T&N and some of the other companies proposing schemes were for many years engaged in the manufacture, distribution, sale and installation of asbestos-containing products. In the course of their employment, many employees were exposed to asbestos dust. Some employees have developed diseases and other conditions partly or wholly as a result of this exposure, and it is certain that others will do so in the future. In previous judgments, I have referred in more detail to the business and financial circumstances of T&N and its associated companies and the personal injuries claims against them, and to particular features of asbestos-related conditions: see Re T&N Ltd [2004] EWHC 2361 (Ch), [2005] 2 BCLC 488 paras 6 to 44 and Re T&N Ltd [2005] EWHC 2870 (Ch) paras 3 to 11 and 24. A particular feature of asbestos-related conditions is the long period between exposure to asbestos dust and either the start of the condition or the appearance of symptoms of the condition. It may be many years before any condition starts at all, for example in the case of mesothelioma by the development of the first malignant cell, and many years after that before any symptoms become apparent.


T&N and its associated companies are the subject of a very large number of personal injuries claims in the United States, and of a smaller but nonetheless significant number of claims in the United Kingdom. While most of the US claims are in respect of product liability, the claims in the UK are made mainly by former employees or their dependants.


Insurance cover for employers' liability in the United Kingdom was provided to T&N and some of the other companies proposing schemes under employers' liability policies issued by Royal & Sun Alliance Plc (RSA) or its predecessor for the period from 1 October 1969 to 31 March 1977 and by Syndicate 45/117 at Lloyd's (the Syndicate) for the whole or part of the period from 1 April 1977 to 30 April 199I refer to RSA and the Syndicate as the EL Insurers and to the policies issued by them as the EL Policies. Employers' liability insurance for earlier periods was commuted before the appointment of the administrators.


The EL Insurers have asserted that the EL Policies excluded all asbestos-related claims and that in any event they were entitled to avoid the policies on grounds of alleged misrepresentation and non-disclosure. In May 2002 the administrators commenced proceedings in the name of T&N and associated companies against, among others, the EL Insurers to determine the extent of the cover provided by the EL Policies. The EL Insurers denied liability for asbestos-related claims and claimed to avoid the policies. The Court of Appeal directed that the coverage issues should be tried first. After a two-week trial, involving extensive factual and expert evidence, Lawrence Collins J gave judgment on 9 May 2003, and held in favour of T&N and its associated companies. With the judge's permission, the EL Insurers appealed. A hearing of the appeal was fixed first for November 2003, then deferred to May 2004, but settlement discussions between the parties reached the point where, by consent, the Court of Appeal ordered that the hearing be vacated and all further proceedings both in the appeal and in the High Court proceedings be stayed until June 2006.


Non-binding terms were set out in an exchange of correspondence and a sum of £36.74 million was placed in escrow by the EL Insurers. It is a term of the heads of agreement that the proposed schemes of arrangement should sanctioned by the court, in order to give effect to the proposals for the compromise and to make them binding on those who can now or may in the future be able to claim under the EL Policies.


The essential features of the scheme are that, by way of compromise of the claims in the litigation, the scheme companies and actual or potential claimants in respect of asbestos-related diseases and conditions will not assert claims against the EL Insurers, and the sum of £36.74 million paid into escrow will be held by trustees to pay a dividend on such claims as and when they are made and established. The fund will be available to meet both present and future claims.

Outline of the schemes


The claims which will be covered by the schemes fall into three broad categories. First, personal injury claims by employees and former employees for damages for asbestos-related diseases. The claims covered will be those made by a person who was employed by a scheme company during at least part of the period from 1 October 1969 to 30 April 1995 and who has developed or may in the future develop a disease caused by exposure to asbestos during their employment with the scheme company. Secondly, claims under the Fatal Accidents Act 1976 or equivalent legislation by dependants or relatives of former employees whose deaths are caused by asbestos-related diseases. Thirdly, contribution and other claims made in respect of claims in the first two categories. Contribution claims will principally be made by other employers outside the T&N group. The claims covered by the schemes include not only those which have already been asserted or could now be asserted but also those which are contingent at present but which may be capable of being made in the future. Finality in respect of such claims is considered essential by the EL Insurers. I will return to this feature of the proposed schemes.


The claims covered by the scheme (EL Claims) are defined as follows:

"A claim against the EL Insurers under the EL Policies arising out of a claim against a Scheme Company in relation to Asbestos Exposure to an Injured Person which occurred in the Cover Period and during and in the course of his employment as an Employee including but not limited to:

(i) a claim by an Injured Person, or on behalf of his estate pursuant to the Administration of Estates Act 1925, the Damages (Scotland) Act 1976 or the Administration of Justice Act 1982, for damages and/or compensation for an Asbestos Disease, or a claim by the CRU in respect of such a claim; or

(ii) a claim by a Contribution Claimant in respect of a claim as described in sub-paragraph (i) above or (iii) below; or

(iii) a claim by or on behalf of a Current Dependant or by or on behalf of a Current Relative or by or on behalf of any person akin to a Current Dependant or Current Relative pursuant to any equivalent legislation wherever and whenever enacted,

except in each case a claim where a TUPE Transfer of the Scheme Company's undertaking has occurred before 1 October 2001 (which will be a TUPE Claim)."

EL Claimant is defined as:

"A person who immediately prior to the EL Schemes taking effect has or may have at any time in the future an EL Claim, and who is a creditor within the meaning of section 425 of the Companies Act 1985, or a Non Scheme EL Claimant who is treated as being an EL Claimant pursuant to Clause 14 of the EL Schemes".

"Injured Person" is defined as:

"Any person who suffers, at any time after commencement of the Cover Period, an Asbestos Disease caused partly or wholly by Asbestos Exposure."

"Asbestos Disease" means any injury, disease or condition caused partly or wholly by Asbestos Exposure and "Asbestos Exposure" means the use of and/or exposure to asbestos. "Current Dependants" means persons who at the effective date under the scheme are dependants, as defined in section 1(3) of the Fatal Accidents Act 1976, of an Injured Person, and...

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