Asbestos disease – apportionment of mesothelioma claims – an update

The House of Lords decision in Fairchild v Glenhaven (June 2002) made each culpable employer jointly liable for damages awarded to former employees developing the cancer mesothelioma. The normal rules of causation were suspended because of the impossibility of proving which exposure or exposures to asbestos dust – in a worker’s career often spanning several decades – initiated the disease. The acknowledged unfairness to employers and their EL insurers – perhaps as employer or insurer on risk for a tiny proportion of the period of exposure, yet liable for the entire loss – was overridden in favour of claimants on the basis that it was the lesser of two evils.

In Phillips v Syndicate 992 & others (14 May 2003) insurers failed in an attempt to reduce the impact of the Fairchild decision by withholding 27.5% of a judgment entered by consent for £205,000, on the basis that they were not on risk for that proportion of the period of culpable exposure. In particular insurers sought to rely upon a standard ‘rateable proportion’ clause in the policy which reduced cover to the extent that other insurance covered the same liability. The Court rejected this argument holding that the clause applied to cases of ‘double insurance’ (i.e. more than one policy in a single policy period) rather than to successive policies which covered the same risk in different policy periods. The Court also rejected similar arguments seeking to imply an effective rateable proportion clause on the basis of custom and practice, or for business efficacy.

As the anniversary of the Fairchild decision (20 June) approaches there will now be increasing pressure on interested insurers, employers and others to conclude negotiations on the draft agreement on apportionment issues which has been under discussion for some time. The decision in Phillips underlines the need for such an agreement as the alternative to widespread litigation of the numerous apportionment issues generated by Fairchild.

A transcript of the judgment in Phillips is at:- http://www.bailii.org/ew/cases/EWHC/QB/2003/1084.html.

For further information or advice on the issues raised please contact Simon Chandler at [email protected] or +44 (0)117 9307816 or Mark Elborne at [email protected] or +44(0) 207 367 3057.