International Energy Group Ltd v Zurich Insurance PLC UK 24.01.12
Where exposure was in Guernsey and the Compensation Act 2006 did not apply, liability was decided on the basis of Barker v Corus UK Ltd; insurer was not liable for full period of exposure when policies covered only part of this.
In certain circumstances where the Compensation Act does not apply, claimants may be faced with partial payments of damages, or even no damages. The High Court accepted that this was an unfortunate consequence of its decision. For insurers however, the ruling means that in these circumstances they will not be faced with paying 100 percent of damages where their period of insurance was restricted to a small proportion of the overall time exposed.
The Claimant (the insured) was responsible for the liabilities of Guernsey Gas Light Company Ltd. Guernsey Gas employed Mr Carré for 27 years from 1961 until 1988. During the whole period of his employment, Mr Carré was negligently exposed to asbestos. He subsequently died from mesothelioma. Prior to his death, he made a claim for damages, which was settled by the insured for £250,000 plus costs.
The insured sought recovery from Zurich (the insurer) of the total amount paid. This was under employers’ liability insurance policies issued by Midland Assurance Ltd, covering the period 31 December 1982 to 31 December 1988, the insurer having succeeded to the insurance liabilities of Midland. Only one other insurer had been found which provided employers’ liability cover for a period during Mr Carré’s employment, Excess Insurance Company Ltd, which was on risk for two years from 1978 to 1980. The issue in dispute was whether the insured was entitled to recover the full amount of its outlay from the insurer, or only the proportion corresponding to the period for which the insurer was on risk.
The insured’s liability to Mr Carré was governed by the law of Guernsey. The Compensation Act 2006 is inapplicable in Guernsey.
Mr Justice Cooke considered the following:
- Fairchild v Glenhaven Funeral Services Ltd  - the House of Lords held that a claimant who had been negligently exposed to asbestos fibres in the course of his employment should be able to recover full compensation from any employer, regardless of his inability to show that his disease was caused during his period of employment by that particular employer.
- Barker v Corus Ltd  - the House of Lords held that the damages which would have been awarded against the defendant who had actually caused the disease must be apportioned to all the defendants according to their contributions to the risk. The contributions would be based on the length of time of exposure for which each defendant was responsible.
- Compensation Act 2006: this reversed the decision in Barker. Section 2 of the Act provides that a tortfeasor is liable to make full compensation to a claimant. They can then claim a contribution from any other responsible persons.
Cooke J held that, whilst under Fairchild principles and those which prevail following the Compensation Act, the insured’s claim would be unanswerable, the position in this case was different by virtue of Barker and the fact that the Compensation Act did not apply. In this case, the liability of the insurer should be assessed by reference to the responsibility it bore for exposure on a time exposure basis.
The insurer also ran a secondary argument, that if its primary submission failed, it would be entitled to a contribution from the insured for those periods of Mr Carré’s employment when it was not the insurer. These arguments were rejected, with the Judge stating that, if there was no Barker decision, the case would have been decided on the basis of Fairchild, and so it would have been responsible for the full amount.