Employers' Liability Insurance - Court of Appeal Judgment in "Trigger" Litigation

A feature of all asbestos conditions is that they have a long “latency” period. This is the time it takes following exposure to asbestos dust for an individual to develop an asbestos disease. Generally speaking, this is at least 12 years, and there is no upper time limit: periods of 50 years or more have been known.

Most cases of asbestos disease arise from an individual’s exposure to asbestos in employment. A common problem is that, by the time the asbestos condition has been diagnosed, the employer in question has been dissolved or is insolvent. Traditionally, an insurer accepted that, if it provided the employer’s liability insurance for the defendant at the time when the claimant was exposed to asbestos dust, it was responsible for the claim. Consequently, as long as this insurer could be identified, it did not matter whether the defendant no longer existed or no longer had any assets, because damages could be paid by the insurance company.

In 2008, four insurers challenged this traditional approach in mesothelioma cases, in what has become known as the “Trigger” litigation. Their argument was based on a narrow interpretation of the wording of their employer’s liability insurance policies. These stated that the insurer had to meet claims where a disease was “contracted” or “sustained” during the period of the insurance policy. The companies alleged that mesothelioma was neither contracted nor sustained at the time that the policy was in force, but only when the disease developed many years later. Doctors believe that this point is reached about ten years before mesothelioma is diagnosed. The insurers’ argument was potentially serious. If upheld, it would prevent some claimants from making a claim for damages as, if by the time mesothelioma had developed the defendant company no longer existed, there would be no employer’s liability insurance policy in place.

The insurers failed in the High Court, and the judge upheld the traditional approach.

They took their case to the Court of Appeal, however, and in October 2010, almost a year after the hearing before it ended; the court gave a split ruling. The three judges each gave different reasons for their decisions and different rulings were made on the policies of different insurers. The result was that one insurer was successful, two unsuccessful and one successful with regard to some of its policies but unsuccessful with others.

Given the uncertainty left by the Court of Appeal judgment an appeal to the Supreme Court seemed inevitable and it has now been confirmed that this will take place, although a date for the hearing has not yet been set. Whilst to claimants this further delay is unwelcome, the hope must be that the judgment of the Supreme Court will clarify what is now very confused area of law.

The “Trigger” litigation is a serious and worrying issue which is estimated to affect 8 to 12 per cent of mesothelioma claims. Most employers’ liability insurance companies have not, however, joined the action and continue to accept responsibility for claims if the exposure to asbestos took place during the period when they provided employer’s liability insurance.

For more information, please contact Michael Osborne michael.osborne@mooreblatch.com