UK: Mesothelioma: Employers’ Liability Trigger Litigation

Last Updated: 12 October 2010
Article by Mark Hemsted, John Goodman and David Knapp

The judgment of the Court of Appeal in the combined appeals more commonly known as the Employers' Liability Trigger Litigation was handed down today (8 October) by the Court of Appeal. The Court, in a fragmented judgment, allows some of the appeals from the order of Burton J (21 November 2008). A number of the appellants were, however, unsuccessful. The reasoning of the three Lord Justices all differ. In his leading judgment, Lord Justice Rix indicates that he considers himself bound by the Court of Appeal's decision in Bolton v MMI (2006) and that, were he not bound by Bolton he would have found to the contrary. The position is therefore wholly unsatisfactory and it appears inevitable that this matter will proceed to the Supreme Court.

Lord Justice Rix

Lord Justice Rix gave the lead judgment providing all of the background information, the overview of the medical evidence and the legal history of "causation" and "injury" in tort.

He indicates that he considers that the commercial purpose of EL Insurance has been to provide employers with insurance to meet liabilities which their activities as employers in each period of insurance engendered. He further rules that as "industrial disease became a more important element in such liability, the general understanding of such disease was that, even where there was a latency period or the disease was not diagnosed until much later, the disease was contracted and the relevant injury was, at any rate in its origins, suffered in the period of activity from which the disease arose". Rix goes on to say "the prevalence of causation wording is, in my judgment, symptomatic of the commercial purpose of EL Insurance".

With that said, the balance of Rix's judgment does not appear to be entirely consistent with his thinking in relation to that commercial purpose.

Rix considers the trigger "disease contracted". Rix indicates that on the one hand the meaning of "injury" in the Bolton v MMI sense would suggest the onset of disease not its origins being the trigger. On the other hand, Rix considers that the commercial purpose of EL Insurance pulls in the other direction.

Weighing the two up, Rix concedes that the The judgment of the Court of Appeal in the combined appeals more commonly known as the Employers' Liability Trigger Litigation was handed down today (8 October) by the Court of Appeal. The Court, in a fragmented judgment, allows some of the appeals from the order of Burton J (21 November 2008). A number of the appellants were, however, unsuccessful. The reasoning of the three Lord Justices all differ. In his leading judgment, Lord Justice Rix indicates that he considers himself bound by the Court of Appeal's decision in Bolton v MMI (2006) and that, were he not bound by Bolton he would have found to the contrary. The position is therefore wholly unsatisfactory and it appears inevitable that this matter will proceed to the Supreme Court commercial purpose should prevail and thus where the language permits vindication of the contracts commercial purpose that is the better choice. Rix therefore concludes that in contracts involving "disease contracted" wording the trigger for the policy refers to the time of the disease's cause or origins, namely the time of inhalation of asbestos fibres.

On the other hand, Rix considers that where the relevant clause requires a trigger of "sustaining injury" this in its normal sense refers to the suffering of injury thus in Rix's view one only "sustains" an injury in the terms of insurance cover at the date when the cancer manifests itself in the lining of the injured party's lungs in the context of a mesothelioma claim.

Rix concedes that this finding is in conflict with the commercial purpose of EL Insurance but finds the policy wording should take precedence in this instance.

Rix goes on to consider the position of exemployees, that is to say those who would have inhaled asbestos fibres some significant period previously when employed by a company, but at the date when the disease was "sustained," were no longer employees of the company. His conclusion in this regard is somewhat unclear and it is understood there may be applications pursued by the participating parties as to the effect of what he is saying. It appears however at first blush he suggests that at the date of injury the employees must have been actual employees of the company for them to be entitled to claim. Thus, if under a "sustained" policy wording, the employee would have to be still employed by the company at the date of the manifestation of the cancer for him to be entitled to claim under the policy of insurance. It is understood some of the appellants will argue this principle should be extended further thereby requiring those who "contracted" mesothelioma at the date of the inhalation of asbestos fibres to be still employed at the date of the manifestation of the cancer.

Finally Rix considers the definition of "injury" within an insurance contract. He seems very much drawn to a tort taking place at the time the increased risk of injury was occurred. He states however that in Bolton v MMI the court held there was no actionable injury at the time of exposure. He considers he is bound by that decision. Rix however says if he was permitted to depart from precedent he would find that an "injury" in insurance contract terms takes place in a mesothelioma claim at the date there is an increased risk of injury, namely the date of inhalation of asbestos fibres. He effectively invites appeal of the Bolton v MMI decision on this point to the Supreme Court.

Lady Justice Smith

Smith effectively agrees with Burton J. She looks at the commercial purpose of the contracts. She looks to construe each policy in light of the factual matrix as existed at the time the contract was entered into. Smith LJ considers Burton was correct to find there was no difference in meaning between a policy which used "sustained" wording and one which used "causation" wording. She further agrees with Burton J with regards to his consideration of the ex-employee problem. She considers that applicable policies provide cover for the employers liability to a person who was an employee and exposed during the policy period who is no longer an employee.

Lord Justice Stanley Burnton

Stanley Burnton LJ in his judgment considers the only question to be addressed is the interpretation of contracts of insurance. He further considers that commercial purpose is largely irrelevant in considering the policy wording. Stanley Burnton therefore is unable to agree with the decision of Burton J. Stanley Burnton indicates that Burton J departed from the express provisions in the contract of insurance without any justification.

Stanley Burnton agrees with Rix's interpretation that mesothelioma is "caused" during the year in which an employee is exposed to asbestos. In his judgment however employees did not "sustain" an injury within the policy when they were exposed to asbestos. Injury is not "sustained" in his view until the malignancy of the cancer. With some difficulty Stanley Burnton considers that one "contracts" mesothelioma at the date of exposure.

Unanswered Questions

There is reference in the judgment of Rix LJ to the implications of this judgment being wider than simply mesothelioma. It is likely further litigation may ensue on the applicability of this judgment to other diseases.

Further, the judgment leaves open the position regarding employees that may have been insured under a "contracted" wording for some of the period of exposure. Is there an argument pursuant to Phillips v Syndicate 992 (2003) that the insurer should cover the entirety of the claim against them even where there is a solvent insured?

Finally the apparent position in relation to exemployees is totally contrary to that which was argued by all parties, including the appellants.


The finding of the court, by a majority was that "sustained" policy wordings respond only at the date of manifestation of a cancer in mesothelioma claims. "Contracted" policy wordings are triggered at the date of inhalation of the asbestos fibres.

The court however by virtue of Rix's reference to an alteration of the insurance definition of "injury" is inviting appeal to the Supreme Court and it appears inevitable this opportunity will be taken by losing parties.

The decision of the court may provide a windfall to some insurers depending on their policy wording. This decision makes it a matter of chance for policyholders as to whether cover will be available for mesothelioma claims depending on their policy wording at a date when the court held the commercial purpose of Employers' Liability Insurance was to cover for all eventualities. It will create huge problems for those policyholders who have continuous EL insurance but with different policy wording.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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