FROM BOLTON TO DURHAM: THE ASBESTOS TRIGGER LITIGATION

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FROM BOLTON TO DURHAMTHE ASBESTOS TRIGGER
LITIGATION

• ALARM NE CONFERENCE
• 27.03.09
• GREGOR WOODS

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Mesothelioma

• Malignant tumour
• Multi stage process involving genetic changes in
  cells
• Forms in the mesothelial cells of the pleura,
  typically
• Non-spherical shape
• Invariably fatal
• Almost always caused by inhalation of asbestos
  fibres
• Very long tail 30-40 years from exposure to
  diagnosability
• Average of 14 months from diagnosis to death

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Mesothelioma

• Approx 9000 deaths in UK to 2003
• Now approx 2000 deaths per year and rising
• Peak 2011-2015
• Can be caused by minimal exposure
• Dose related
• 10 year rule

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Some recent issues in asbestos litigation

• if C cant prove which negligent exposure caused
  the mesothelioma, can he succeed against any
  defendant? (Fairchild/HOL)
• Is a defendant who only contributed in part to
  the total exposure liable to pay the mesothelioma
  claim in full? (Barker/HOL Compensation Act
  2006)
• Are pleural plaques an actionable injury?
  (Rothwell/HOL)
• Does a PL/EL policy respond on inhalation or when
  the condition actually manifests? When is that?

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THE BOLTON CASE PL POLICY INTERPRETATION

• Bolton MBC v MMI and Commercial Union (COA
  6.2.06)
• Dispute between MMI and CU
• C exposed in 1960s, when working at Boltons
  premises. PL insurer at time predecessor of CU
• Diagnosed with mesothelioma 1991.
• Injury deemed to have arisen 1980
• MMI were PL insurer 1.2.79-1.12.91

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BOLTON

• MMI indemnify (in respect of) accidental bodily
  injury or illnesswhen such injury, illness,
  loss or damage occurs during the currency of the
  policy.
• CU .bodily injury to or illness of any person
  occurring during the period of indemnity.

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BOLTON

• Question when did the injury occur? Inhalation
  of fibres or development of tumour?
• MMI argued injury occurred on inhalation
  (injury means insult)
• CU argued no injury until tumour appeared, 10yrs
  before symptoms
• COA Development of tumour, not inhalation
• MMIs PL policy pays

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BOLTON

• actionable injury does not occur on exposure or
  on initial bodily changes happening at that time
  but only at a much later date whether that is
  when the malignant tumour is first created or
  when identifiable symptoms first occur does not
  matter for the purposes of this caseinjury
  cannot be equated to the insult received by the
  body when exposure first occurs
• (Longmore LJ, COA)

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BOLTON

• SOMMI were the loser, or were they?

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What about EL policies?

• EL policies traditionally worded on a injury
  caused basis, such that they were triggered by
  bodily injury caused during the period of
  insurance
• Insurers have traditionally treated inhalation of
  asbestos fibres as the triggering event
• A number of policies over the years have used
  different wording injury sustained or injury
  contracted

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DURHAM V BAI (Run Off) LTD etc

• Historically, EL insurers have paid out on a
  causation basis, whatever the precise wording
• ie inhalation of fibres triggers the EL policy
• Following Bolton, some insurers refused to pay
  out on inhalation, arguing injury not sustained
  until development of tumour
• Those insurers included MMI.

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DURHAM

• Key issue in Durham when is mesothelioma
  sustained/contracted ?
• Policy interpretation

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DURHAM who is litigating?

• 6 Lead Cases
• Several insurers arguing sustained/contracted
  policies do not respond on inhalation but on date
  of tumour
• BAI
• Independent Insurance Co Ltd
• Excess Insurance Company
• Municipal Mutual Insurance Ltd

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DURHAM the Local Authority involvement

• MMI v Zurich Insurance and others (10 Local
  Authorities)
• MMI provided EL and PL insurance to majority of
  Local Authorities
• Ceased to write new business from 30.9.92 and
  transferred assets and ongoing business to Zurich
  for a fee
• Zurich managed the run-off for MMI and provided
  insurance on same basis/wording to LAs who
  renewed their insurance or transferred to Zurich
• Zurich kept to old MMI wording as its First
  Select policy until 1998, when it changed its
  wording to injury caused basis

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DURHAM

• Until Bolton, Zurich, on behalf of MMI, paid all
  meso claims on traditional exposure basis
  post-Bolton, all such claims declined
• MMI wordings
• 1. (1949-1958) shall sustain any personal
  injury
• 2. (1958-1974) shall sustain any bodily injury
  or disease
• 3. (1974-1992) bodily injury or
  disease..sufferedwhen such injury or disease is
  sustained or contracted during the currency of
  the policy

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DURHAM

• MMI argument injury not sustained when fibres
  inhaled/on exposure, so policies do not respond
• Zurichs position date of inhalation as
  potentially liable to Claimants under pre-1998
  wording if MMI succeed
• Local Authorities position date of inhalation
  as risk of Black Hole.

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THE BLACK HOLE..
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DURHAM the judgement of Mr Justice Burton
21.11.08

• No injury was suffered on inhalation of fibres
• sustained or contracted policies equate to
  caused policies
• Such an interpretation was the best one to give
  effect to the commercial purpose of EL insurance
• Such an interpretation reflected the practice of
  the insurance industry for decades until Bolton

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DURHAM date of injury?

• Butwhen does the injury occur?
• Relevant to PL policies, and to EL if MMI succeed
  on Appeal
• Around the point of angiogeneis (tumour develops
  own blood supply)- approx 5 years prior to
  diagnosability (new 5 year rule)

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The future

• Appeals to be heard later this year
• Local Authorities will challenge the 5 year
  rule developed by Burton (vulnerable to
  post-1998 tumours if MMI succeed)
• COA may take different view on different policies
• Prospects of success on appeal?