Employer’s Liability Trigger Litigation

News
07 Jun 2009

In November 2008 a decision was handed down by Mr Justice Burton in the case of Durham v BAI (Run Off) Limited (In Scheme of Arrangement) (2008). This case explored the practice of handling claims arising from harmful exposure to asbestos at work.

The traditional approach has been for EL Insurers, on risk when the exposure took place, to pay the claim. Where the exposure spanned a number of Insurers interests, the damages were paid on a pro-rata basis, depending on evidence of exposure during each Insurer’s period of risk. The practice even applied in mesothelioma cases which are indivisible.

While this approach may be correct for dose-related heavy exposure conditions such as asbestosis, it does not necessarily apply to mesothelioma which can arise from transient light exposure. Prior to Durham, the medical profession generally accepted that malignant changes occurred in mesothelioma cases ten years before symptoms appeared.

This supported an argument that the injury to the Claimant with mesothelioma occurred not when he was exposed to asbestos, but at a time ten years prior to the appearance of symptoms. If that approach was correct then the EL Insurer on risk ten years before the symptoms appeared would pay damages and not the Insurer on risk when the exposure occurred.

Up to now it is has been assumed, for claims handling purposes, that mesothelioma was developing from the moment of exposure which is effectively saying that mesothelioma is sustained at the same time as it is caused. However, in the case of Bolton v MMI (2006) the Court of Appeal accepted that malignant changes did not start until much later and that until those changes occurred no injury had occurred. However in Durham, Mr Justice Burton, in his detailed Judgment, has maintained the status quo and has held that in EL Policies the words “injuries sustained or contracted” are synonymous with “injury caused”. The effect is that EL Policies covering the period of inhalation/exposure will continue to respond to the claim.

It is of no surprise, given the importance of this litigation, that Leave to Appeal to Court of Appeal has been granted and Mr Justice Burton has recommended the Appeal be expedited. In the meantime some Insurers are refusing to pay mesothelioma cases pending the outcome of the Appeal and this is clearly and area of importance to be monitored as the Appeal progresses to trial.

VMCL