UK: Barker v Corus: reducing asbestos-related insurance reserves

Following the recent House of Lords decision in Barker v Corus Plc, some insurers may be able to reduce reserves held in respect of mesothelioma claims. As this article shows, however, any such steps must be taken with great care and with detailed reference to the principles laid down by the House of Lords.

To view the article in full, please see below:


Full Article

Following the recent House of Lords decision in Barker v Corus Plc, some insurers may be able to reduce reserves held in respect of mesothelioma claims. As this article shows, however, any such steps must be taken with great care and with detailed reference to the principles laid down by the House of Lords.

The House of Lords' judgment in Fairchild v Glenhaven Financial Services Ltd [2002] UKHL 2002 marked a significant development in the law of negligence, recognising a less demanding test for causation in exceptional cases involving the inhalation of asbestos resulting in mesothelioma. Then on 3rd May 2006, the House of Lords delivered its much-awaited judgment in Barker v Corus plc [2006] UKHL 20 (formerly Barker v Saint Gobain Pipelines plc), revisiting Fairchild and addressing its limits.

In Fairchild, the victims had each contracted mesothelioma following multiple exposures to asbestos caused by different negligent employers. The peculiarities of mesothelioma meant that, modern medicine could not prove which employer's breach caused the disease. The judgment allowed the claimants to establish liability despite this difficulty.

The Barker facts were similar, except that the first victim had also negligently exposed himself to asbestos during a period of self-employment, and in the other two claims one or more negligent employers and their insurers were insolvent.

The Barker court comprised five Law Lords: Hoffman, Scott, Rodger, Walker and Hale. Lords Hoffman and Rodger had also delivered judgments in Fairchld.

Lord Scott identified four key questions:

  1. Does the Fairchild exception apply even if part of the claimant's exposure to asbestos occurred in a period of self-employment?
  2. Does the exception apply even if part of the exposure occurred during employment by a non-negligent employer?
  3. If the answers to (1) and (2) are "yes", what is the effect on liability and quantum?
  4. Does the Fairchild exception apply if the claimant was exposed to two or more materially different causative agents

The court unanimously decided that the answers to (1) and (2) are "yes". Periods of exposure by victims themselves, for example during self-employment, or non-negligent exposure by an employer do not affect the application of the Fairchild exception.

Question (4) was not raised on the facts and only Lords Hoffman and Scott addressed it directly. Both decided the answer was "no" - the Fairchild exception only applies if any potential causative agents operated in the same way. For example, Lord Hoffman did not think the exception applies if a claimant has suffered lung cancer which may have been caused by an exposure to asbestos but may also have been caused by smoking.

The most controversial part of the judgment concerned question (3) and, more particularly, whether negligent employers are liable jointly, so that any one can be sued for the whole of a loss with a right to seek contribution from each other, or whether their liability is divisible, so that employers can only be sued for their proportionate share.

This is an important issue because an increasing number of potential defendants and their insurers in the field of mesothelioma claims are insolvent or untraceable, as in two of the Barker claims.

None of the Lords confined themselves to precedent on this question, they all placed considerable emphasis on public policy considerations. A majority of 4 to 1 decided that the fair and proper result is that liability under the Fairchild exception is divisible. This overturned the Court of Appeal’s decision, and so changed the law on this point. As Baroness Hale put it:

"On the one hand, the defendants are, by definition, in breach of their duties towards the claimants or the deceased. But then so are many employers, occupiers or other defendants who nevertheless escape liability altogether because it cannot be shown that their breach of duty caused the harm suffered by the claimant. For as long as we have rules of causation, some negligent (or otherwise duty-breaking) defendants will escape liability. The law of tort is not (generally) there to punish people for their behaviour. It is there to make them pay for the damage they have done. These Fairchild defendants may not have caused any harm at all. They are being made liable because it is thought fair that they should make at least some contribution to redressing the harm that may have flowed from their wrongdoing. It seems to me most fair that the contribution they should make is in proportion to the contribution they have made to the risk of that harm occurring."

Lord Rodger delivered the dissenting judgment. In contrast to the majority, he felt that joint liability between employers was a fair result.

The court did not decide how each employer's liability should be apportioned but it did offer some guidance in this area. The majority thought liability should be commensurate with contribution to the risk and indicated that relevant considerations should include the time, intensity and type of each exposure, and that non-negligent and self-employed exposures should proportionately reduce liability.

The move to limit employers' maximum liability to their proportionate shares has caused a public outcry and some groups have already proposed amending legislation. The judgment does leave claimants facing an increased prospect of unrecoverable losses. However, it does not necessarily follow that the burden of those losses should fall on employers and their insurers. In terms of possible future legislation the House of Lords' key finding was perhaps that it would be unfair to adopt that approach.

Overall, the insurance industry should welcome this judgment. Given the increasing difficulties with insolvency, the decision to adopt several liability in preference to the previous position will enable some insurers to reduce their reserves substantially, although the precise impact remains to be seen.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 16/05/2006.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions