Insurance Watch

Insurance Watch

Questions of Causation frequently arise in many areas of the law, but causation is not a single, unvarying concept to be mechanically applied without regard to the context in which the question arises.

Lord Bingham in R v Kennedy [2007] UKHL 38

A dissent in a court of last resort is an appeal to the brooding spirit of the law, to the intelligence of a future day, when a later decision may possibly correct the error into which the dissenting judge believes the court to have been betrayed.

Chief Justice Charles Evans Hughes The Supreme Court of the United States 3^rd ed 1936

The last ten years have seen the question of “but-for” causation brought into sharp focus in order to avoid the potential injustice to thousands of Mesothelioma victims who have contracted the disease and who now seek to establish a causal link between Mesothelioma and their exposure to asbestos during the course of their employment which may have taken place many years before. The central problem that has bedevilled such employer’s liability claims has been the difficulty in establishing when the disease was triggered.

However, recent Judicial scrutiny of the causation test in the context of Mesothelioma has been brought about by long tail employer’s liability insurers who seek to avoid or to reduce their contribution to payments made by the employer or a co-insurer.

In International Energy Group Limited the Zurich Insurance PLC UK branch [2013] EWCA Civ. 39 the English Court of Appeal has applied the decision of the Supreme Court in Durham v BAI (Run off) Ltd (“the trigger litigation”) [2012] UKSC 14.

The background to the IEG case was that Mr. Alan Carré had worked for twenty seven years until 31^st December 1988 for Guernsey Gas Light Company Limited, a predecessor of the claimant International Energy Group Limited (“IEG”). For the last six years of his employment IEG was insured under a standard form of employer’s liability policy by a company whose liabilities have been absorbed by Zurich. Following Mr. Carré’s retirement in July 2008 he was diagnosed as suffering from mesothelioma and he died a year later. Before his death he issued proceedings against IEG in the Royal Court of Guernsey claiming that his illness was caused by its negligence and breach of statutory duty in exposing him to asbestos dust and fibres. The claim was settled for £250,000 plus costs. IEG’s total outlay including its own costs amounted to £274,431.60 for which it claimed an indemnity from Zurich. The question at first instance before Cook, J. was whether Zurich were responsible for the payment of an indemnity proportionate to the period of time for which they insured the employer or whether IEG was entitled to a full indemnity.

The underlying problem in determining whether there should be a full or partial indemnity in mesothelioma cases is that due to its insidious nature there is great difficulty in attributing the contraction of mesothelioma to any particular period of exposure to asbestos. This has made it a vexed subject for tort lawyers as the strict nature of the “but for test” of causation has been ameliorated in the case of mesothelioma in order to avoid injustice to employees. The new test was originally formulated in Fairchild v Glenhaven Funeral Services Limited (2002) UK HL 22 [2003] 1 AC 32 where the House of Lords reversed the Court of Appeal’s decision in a judgment that ran to seventy nine pages and which held in effect that where an employee had been exposed by different defendants, during different periods of employment, to inhalation of asbestos dust in breach of each defendant’s duty to protect him from the risk of contracting mesothelioma and where that risk had eventuated but, in current medical knowledge, the onset of the disease could not be attributed to any particular or cumulative wrongful exposure, a modified approach to proof of causation was justified; that in such a case proof that each defendant’s wrong doing had materially increased the risk of contracting the disease was sufficient to satisfy the causal requirements for his liability; and that, accordingly, applying that approach and in the circumstances of each case, the claimants could prove on balance of probabilities the necessary causal connection to establish the defendants liability.

This test was re-examined by the Supreme Court in Barker, Sienkiewicz v Greif (UK) Limited [2011] UK SC 10 where the majority held that where an employee was exposed to asbestos dust by successive employers and developed mesothelioma the liability of each employer was proportionate to that employers contribution to the overall risk. The members of the Appellate Committee all delivered separate judgments. In a strong dissenting judgment Lord Roger maintained that to analyse Fairchild as recognising a tort in which the damage caused by the defendant was not mesothelioma but a risk of developing mesothelioma was not to reinterpret but to rewrite that decision. He held that the proper analysis of Fairchild was that the House of Lords had recognised that in this particular type of case, because of the limitations of medical science the usual but for test of causation should give way to a more generous test of causation by which it was sufficient for the claimant to prove that the defendant had materially increased the risk of the victim contracting mesothelioma and the victim had done so. On that basis Lord Roger held that it was right that the liability of the defendant should be joint rather than limited to separate liability for the individual damage which each had caused in the form of exposure to risk of mesothelioma during different periods of time.

This dissenting voice had the clear resonance of natural justice and has now been vindicated by the decision of the Supreme Court in the Trigger litigation where Lord Manse on behalf of the majority of the Supreme Court recognised that causation is a complex, contextually variable concept in law as in life and concluded that for the purposes of insurance liability for mesothelioma following upon exposure to asbestos created during an insurance period this involves recognising a sufficient “weak” or “broad” causal link for the disease to be regarded as “caused” within the insurance period. This judgment has had profound impact on Longtail Risk Insurers and Reinsurers and resulted in the Court of Appeal in the case of International Energy Group Limited v Zurich Insurance PLC UK branch holding that IEG were entitled to a total indemnity of payments that they had made in respect of the claim by Mr. Alan Carré. Undoubtedly, Chief Justice Charles Evans-Hughes and Lord Bingham would nod from above in sage agreement.