This case considered the question of whether more than one policy can respond to provide cover to an insured when the injury is caused by exposure to a pathogen during a succession of policy periods. Whilst the case does not stand for any novel legal principle it is a reminder of the importance of closely considering the making of admissions potentially relevant to policy coverage.
Mr Kozaczynski was employed by Commonwealth Steel to work at its mill between 2 December 1962 and 5 July 2000. During the course of each year of his employment Mr Kozaczynski was exposed to and inhaled asbestos fibres and ultimately developed mesothelioma on 5 July 2000.
Mr Kozaczynski brought proceedings in the NSW Dust Diseases Tribunal against Commonwealth Steel and that case was settled in the sum of $525,000 paid by Commonwealth Steel on or about 7 December 2000 ('the Loss').
Commonwealth Steel had a number of excess common law policies cover the 1963-1964 until 1967-1968 years which were written by a succession of Lloyds syndicates.
Each insurer admitted that the inhalation of asbestos fibres in its policy period constituted an 'injury' as contemplated by the insuring clause of each policy. Nonetheless the Lloyd Syndicates (the 'Syndicates') asserted that only one policy responded to provide cover for the Loss, being the 1963-1964 policy. The Syndicates argued that an earlier decision of the NSW Court of Appeal, Vero Insurance Limited v Power Technologies Pty Limited , established a 'legal rule' to that effect.
Commonwealth Steel argued that each of the polices responded to provide cover.
Vero v Power Technologies
The Power Technologies case also involved arguments relevant to policy coverage arising from mesothelioma. In that case Vero, a public risk insurer, denied liability to indemnify Power Technologies on the basis that the loss (and as such the occurrence as contemplated by the Vero policy) did not occur in a certain policy period. Vero relied upon expert evidence to the effect that the 'bodily injury' (being the relevant 'trigger' in the insuring clause of the Vero policy) occurred at the time that the asbestos fibre caused a genetic mutation in a cell which ultimately resulted in the mesothelioma. That was, on Vero's evidence, about 10 years prior to the onset of symptoms of mesothelioma and not during any period of cover by a Vero policy. Power Technologies relied upon the evidence of Professor Tattersal to the effect that the mesothelioma arose as a consequence of the initial substantial exposure to asbestos fibres which, on the facts, occurred in the first Vero policy period.
The court accepted Professor Tattersal's evidence and held that a single 'bodily injury' occurred at the time of the initial inhalation of sufficient asbestos fibres to be causative of mesothelioma and, further, on the evidence presented in that case, subsequent exposure to asbestos fibres in latter policy periods whilst potentially relevant did not cause the injury.
That result is relevantly identical to the rational of a South Australian District Court case, in Coulton, Palmer & Preston Pty Limited v Allianz Insurance Limited. In that case Professor Henderson gave relevantly consistent evidence to that of Professor Tattersal in Power Technologies. In Coulton the question was whether each of a succession of insurance policies responded. The District Court, applying similar reasoning to the NSW Court of Appeal, held that only the first policy responded.
The NSW Court of Appeal rejected the Syndicates' argument that Power Technologies established a rule of law. Rather the court held that the decision in Power Technologies rested upon the facts of that case being the evidence as to the causation of mesothelioma and how that applied in the construction of Vero's insuring clause. That is when 'bodily injury' occurred as contemplated by the Vero policy.
Although the Court of Appeal was not referred to in Coulton, in the writer's view, an identical position arises. Coulton was decided on a construction of the Allianz policy in the light of the expert evidence of Professor Henderson.
The Court of Appeal held the construction of the Syndicates' policies should be undertaken in accordance with the facts of the case to hand. The court noted that the Syndicates had admitted the inhalation of asbestos fibres in each policy period constituted an 'injury' as contemplated by the insuring clause of each of the Syndicates' policy. It followed that the loss was the result of an 'injury' in each policy period and, consequently, each policy responded to provide cover.
It may be that the evidence as to causation of mesothelioma available to the Syndicates in Commonwealth Steel was different to the evidence relied upon by Vero and Allianz in Power Technologies and Coulton. The admission of inhalation of asbestos fibres as constituting an 'injury' as contemplated by the insuring clauses was critical in the finding of coverage by each policy. If evidence consistent with that presented in Power Technologies and Coulton was tendered in Commonwealth Steel the result is likely to have been different. The case is a reminder that it is essential to be careful in considering admissions made.
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