Proportionate Liability
In the House of Lords hearing, Leading Counsel for both sides
accepted that, if a defendant had materially contributed to a
mesothelioma, it would be liable to pay
the full damages flowing from it even if another company had also
exposed the sufferer to asbestos but for
some reason had not been sued (e.g. because it was uninsured and
had no assets). Consequently their Lordships found it unnecessary
to make a ruling on the point. This tempted insurers to argue that
they were only liable for their insured company’s proportion of the
total asbestos exposure, and not for the full damages.
Phillips v Thermac Insulations Ltd
This issue arose in a claim brought by Mrs Sylvia Phillips,
widow of the late Arthur Phillips who had worked as a lagger for
Thermac from 1955 to 1957 and from October 1959 to 1970, a period
of about 12 ½ years. Lloyds Syndicate 992 had insured Thermac from
November 1957 to November 1968, covering about 9 years of Mr
Phillips’ asbestos exposure. Thermac had long since ceased to
trade, and any other insurers it may have had were unknown.
Following Mr Phillips’ death from mesothelioma, Rodney Nelson-Jones
obtained a High Court judgment against Thermac for £205,000
damages. However Syndicate 992 only paid £148,625 (72.5%) of this,
matching the proportion of Mr. Phillips’ asbestos exposure by
Thermac for which the Syndicate had held the insurance risk.
Phillips v Syndicate 992 Gunner and
Others
Consequently Rodney started a fresh
Court action against the Lloyds Syndicate itself for the balance of
£56,375 plus interest. He relied upon the Third Parties (Rights
Against Insurers) Act 1930, which entitled Mrs Phillips to claim
against the Syndicate whatever indemnity Thermac would have been
able to secure if it had still existed. Rodney instructed Frank
Burton Q.C and the case was heard before Mr Justice Eady in the
High Court on 30 April and 1 May 2003.
Witness evidence
During the hearing, Rodney testified that he had specialised in
asbestos disease cases for nearly 25 years. He estimated that his
colleagues and he had conducted a minimum of 250 mesothelioma
claims during this period. None of our previous mesothelioma
clients had suffered a shortfall in their compensation due to a
defendant being insured for only part of the period of asbestos
exposure. Syndicate 992 called as witnesses two retired insurers
who described how insurers dealt with cases between themselves, and
on one occasion with a solvent defendant, on a proportionate time
exposed basis.
Policy wording
The Syndicate relied on condition 6 of the policy, which
provided that “If at the time any claim arises under this policy
there be any other insurance covering the same liability, the
Underwriters shall not be liable to pay or contribute more than
their due proportion of any such claim and costs and expenses in
connection therewith”. This represented a standard “rateable
proportion” clause as used in employer’s liability policies at the
relevant time.
High Court Judgment
Giving judgment on 14 May, Eady J. stated that what gave rise to
liability under the policy was Thermac’s continuing breach of duty
towards Mr Phillips which included the insured period between
October 1959 and November 1968. Throughout that period, Syndicate
992 were on risk for any negligence by Thermac that resulted in
legal liability to an employee. It was accepted by them that this
negligence materially contributed to his mesothelioma.
Rateable Proportion clause
Eady J. held that the Syndicate’s reliance on condition 6 was
untenable. He stated that – “The plain purpose of the provision is
to give the insurer the right to pay a “rateable proportion” in
cases of double insurance (i.e. two or more policies covering the
same risk at the same time). I can see no basis in authority, or on
the construction of the language, for treating it as embracing
successive policies of insurance”.
Business Efficacy
Syndicate 992 had also argued that it was necessary to imply
such a “rateable proportion” provision covering successive policies
to give the insurance contract business efficacy. Eady J tersely
dismissed this, commenting that the contract did not need such a
provision to make it workable.
Custom and Practice
Finally, Syndicate 992 argued that at some later stage after
1957-68 the custom developed of insurers only indemnifying
proportionately according to their period of insurance cover. Eady
J. found that – “Such a practice, if it existed between insurers,
is quite different from an established custom or practice governing
transactions between insurers and insured. There was no evidence to
that effect. Had there been anything remotely to be characterised
as a “custom or practice” in that context, it could hardly have
escaped the attention of Mr Nelson-Jones during his long specialist
career”.
Result
Consequently judgment was entered on behalf of Mrs Phillips for
£56,375 damages which the Syndicate had withheld, together with
interest and costs. The case is invaluable for establishing that
insurers are liable to pay full rather than proportionate damages
for a mesothelioma to which their insured have materially
contributed, even if they only insured a defendant company for part
of its total period of exposure.
For further information or if you believe you have a mesothelioma compensation claim, please
contact
Peter Williams, partner on
020 7861 4825 or email peter.williams@ffw.com
You can discuss your mesothelioma compensation claim with any
member of our mesothelioma claims
team by calling freephone 0800 358 3848, email
personalinjury@ffw.com
or complete our short enquiry form.