In the July 2006 edition, we reported on the landmark decision of the House of Lords in the case of Barker v Corus (UK) plc [2006] UKHL 20 and conjoined cases which overturned the earlier decision of the Court of Appeal. For once, the House of Lords had issued a decision favouring insurers in the asbestos litigation minefield. Each defender should only be held liable to the extent that they contributed to the claimant’s condition and where other culpable employers could not be traced, a deduction should be applied to the damages to take account of this. Prior to the House of Lords’ judgement, the Courts had held that claimants only had to establish liability against one employer to recover 100% of the damages from them.
The backlash from the Barker case was heard throughout the country with claimants and their agents protesting at this “unjust decision”. The matter was referred to the Government by a number of MPs and the Prime Minister himself stated at the GMB Conference on 13 June 2006 that “I regret that judgement....If we can change it, we will. I hope to announce something on this in a couple of weeks.”
It did not take long for Parliament to step in and deal with this issue by drafting Section 3 of the Compensation Act 2006, which received Royal Assent on 25 July 2006, and reversed the decision in the Barker case. This statutory provision appeared without any formal consultation on the issue which has once again resulted in adverse commentary by insurers and defenders’ solicitors.
Section 3 of the Compensation Act 2006 provides that in respect of claims arising from individuals who have contracted mesothelioma as a result of negligent exposure to asbestos dust, claimants will be able to recover full compensation from any of their employers and no deductions have to be applied for employers who have not been sued. This section effectively reinstates the previous legal position.
Part of the concern for insurers regarding the joint and several liability approach is that claimants’ solicitors may “cherry pick” the defenders to sue, so as not to ultimately affect the damages received by the claimant. Therefore, some claimants’ solicitors will only intimate claims against defenders they know to have insurance in place, and will neglect to raise against now defunct companies for the fear that they will not receive their full damages. Only 90% of the damages are paid under the Financial Services Compensation Scheme (FSCS) for insurers who were on risk prior to 1972 and are now in liquidation.
The provisions in the Compensation Act 2006 appear to have been created in a rush and there are some matters which those who drafted it did not take into consideration when creating the legislation. One such issue is that there is no provision as to what has to happen to the 10% shortfall when damages are paid under the FSCS. Has this 10% to be split amongst the remaining defenders (which does not seem a fair result)? Previous practice was that the claimant would accept a 10% deduction from his damages for such periods and it is assumed that this practice will continue.
Another issue not addressed by Section 3 of the Compensation Act is: What about the claimant who was self-employed and exposed to asbestos during that employment? Does the Act exclude seeking a deduction from damages to take account of any such periods of self-employment? The Act refers to a “responsible person” being a person who has negligently or in breach of statutory duty caused or permitted another person to be exposed to asbestos, but, it is not clear whether the claimant himself would be considered as such a responsible person for the purposes of applying a deduction for a period of self-employment.
Another matter that is not covered in the Act is whether the provisions of the Act extend to the Court litigation costs and expenses of the claimant. We will need to wait and see how the Act is applied in practice.
Contribution for Mesothelioma Claims
Following on from the provisions of Section 3 of The Compensation Act 2006, draft Regulations have been created and are currently before Parliament in relation to cases in which a contribution is required from the FSCS to mesothelioma claims. These draft Regulations are called ‘The Compensation Act 2006 (Contribution for Mesothelioma Claims) Regulations 2006’. Their general effect is to make minor changes to the FSCS to allow the Financial Services Authority to make rules facilitating the faster payment of compensation to victims of mesothelioma. Broadly speaking, under the proposed changes, negligent employers and their insurers who have paid victims of the disease will now be able to claim a contribution from the FSCS in certain cases. It is thought that these Regulations will make it fairer to insurers and responsible persons who, without these changes, would not be able to pay the mesothelioma victim the damages due to them up-front and thereafter recover a contribution for the proportion funded by the FSCS. It is a process change that does not change the overall liability of the FSCS.
Rights of Relatives to Damages
There is another interesting legal development of note in relation to mesothelioma claims which deserves a short commentary. Proposals currently before the Scottish Parliament seek to change Section 1(4) of the Damages (Scotland) Act 1976 to allow immediate family members of a mesothelioma victim to claim for loss of society, distress and grief, whether or not the victim has already made a claim for damages arising from mesothelioma prior to his death. The current position is that relatives only become entitled to damages upon the death of a family member if a claim has not been made during his lifetime for damages arising from the disease or injury.
Under the present law, mesothelioma victims have to make the decision as to whether they want to pursue an award for damages during their lifetime, which will prohibit their immediate family from making a claim upon their death. Evidence indicates that at the moment, the majority of mesothelioma sufferers decide not to pursue their award for damages during their lifetime so as not to prejudice their families’ entitlement to damages upon death.
The amendment is proposed in The Rights of Relatives to Damages (Mesothelioma) ( Scotland ) Bill which was introduced on 27 September 2006. An announcement was made by Deputy Justice Minister Johann Lamont to MSPs on Holyrood’s Justice 1 Committee that, from 20 December 2006, even though the Bill allowing the move is not yet law, sufferers of asbestos-related cancer are able to lodge compensation claims. Consequently, mesothelioma sufferers will be able to proceed with their own claim in the knowledge that their families will not be disadvantaged. Obviously, this will have an adverse effect for insurers, as the total damages payable as a result of individuals contracting mesothelioma from negligence exposure to asbestos dust will increase substantially.
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Pamela Stevenson
(Information posted in February 2007 and may not have been updated at time of reading).