The Supreme Court recently released its judgment in the case of AXA General Insurance Limited and others v The Lord Advocate and others. This is the Appeal by which various insurance companies sought to challenge the validity of the 2009 Act of the Scottish Parliament which provided that pleural plaques would be "actionable harm" for the purposes of an action for damages for personal injury. The Appeal was dismissed, meaning that the legislation remains in force and affected individuals will be entitled to raise proceedings for damages if they can prove they have developed pleural plaques as a consequence of negligent exposure to asbestos. 

Background

The case involved a Judicial Review brought by various insurance companies seeking to challenge the lawfulness of the Damages (Asbestos-related Conditions) (Scotland) Act 2009 (the 2009 Act). The 2009 Act came into force on 17 June 2009 and provided that asbestos-related pleural plaques constitute personal injury which is actionable under Scots law. Although pleural plaques are not in themselves a disease, and have no symptoms, they indicate previous exposure to asbestos. The purpose of the 2009 Act was to reverse the House of Lords decision in Rothwell v Chemical & Insulating Co Ltd, where it was held that the mere presence of pleural plaques did not constitute an " injury" which was capable of giving rise to a claim for damages.

The insurers lost in the Outer House before Lord Emslie and reclaimed to the First Division of the Inner House, where the Lord President, Lord Eassie and Lord Hardie upheld the decision of the Outer House. The First Division, however, did uphold the insurers' claim that the third to tenth respondents (individuals who have been diagnosed with pleural plaques) did not have title and interest to defend the attack on the validity of the 2009 Act. The insurers then appealed to the UK Supreme Court and the third to tenth respondents cross-appealed against the decision of the First Division which said they could not participate in the Judicial Review through lack of title and interest to defend the proceedings.

In the Supreme Court the insurance companies challenged the validity of the 2009 Act on two grounds:

  1. Firstly that it was incompatible under Article 1 of Protocol 1 of the European Convention on Human Rights (the Convention) and therefore outside the legislative competence of the Scottish Parliament under the Scotland Act 1998. Article 1 Protocol 1 states:

"Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law."

  1. Secondly, under the common law, that the 2009 Act was open to judicial review as an unreasonable, irrational and arbitrary exercise of the legislative authority of the Scottish Parliament.

Decision

The Supreme Court rejected the insurers' appeal and held that the individuals diagnosed with pleural plaques did have standing to defend the challenge to the Act as they were "directly affected" by the legislation.

Legislative competence

In relation to the first ground the Court held that the insurance companies were entitled to bring proceedings under the Convention as the effect of the 2009 Act is that they would be victims for the purposes of Article 34 and that the amount of money the insurance companies would be required to pay out is a possession for the purposes of Article 1 Protocol 1. Therefore for the 2009 Act to comply with Article 1 Protocol 1 it must be shown that the Act is pursuing a legitimate aim and is reasonably proportionate to the aim pursued.

The Court considered that they should respect the judgement of the Scottish Parliament as the elected body as to what is in the public interest, unless that judgement is "manifestly without reasonable foundation", and it could not be said that the judgement of the Scottish Parliament was without reasonable foundation. Therefore the Court accepted that the 2009 Act pursued a legitimate aim and that the means chosen were reasonably proportionate to the aim sought to be realised. The balance is correctly struck because the claims will only succeed if the asbestos exposure was caused by the employer's negligence and the insurance companies' obligation to indemnify "is a commercial venture which is inextricably associated with risk…there was inevitably a risk that circumstances, unseen at the date when they were written, might occur which would increase the burden of liability…The nature, number and value of claims were…always liable to develop in ways that were unpredictable". Also considered was that the Act was preserving the status quo prior to Rothwell when pleural plaques were considered compensatable.

Common law grounds

In relation to the second ground of challenge, the Court held that Acts of the Scottish Parliament are in principle subject to judicial review at common law, but not on the grounds of irrationality, unreasonableness or arbitrariness. This is not needed as there is already a statutory limit on the Scottish Parliament's legislative competence if a provision is incompatible with any of the Convention rights. It would also be "quite wrong for the judges to substitute their views on these issues for the considered judgement of the democratically elected legislature unless authorised to do so, as in the case of Convention rights, by the constitutional framework laid down by the UK Parliament".

Title and interest

Perhaps the most significant part of the decision, or rather that with the most constitutional importance which will have implications on the development of public law in Scotland, was the abolition of the "title and interest" test. Lord Dunedin held in D&J Nicol v Dundee Harbour Trustees in 1915 that a litigant must have both title and interest to sue, and gave guidance that for a person to have title "he must be a party to some legal relation which gives him some right which the person against whom he raises the action either infringes or denies".

The procedure for judicial review in the Court of Session was introduced in 1985 through the Rules of the Court of Session, which are now to be found in Chapter 58. As the Rules were only a procedural amendment, they could not alter the substantive law. Despite the wide-ranging nature of the supervisory jurisdiction in public law, the requirement to show title and interest remained to be shown in applications for judicial review. In 1992 the Court of Session in West v Secretary of State for Scotland held that the competency of an application for judicial review does not depend upon any distinction between public and private law. The presence of the title and interest hurdle has had the effect of excluding public interest challenges to decisions of a public authority on the grounds that the required legal nexus to give title could not be shown.

In AXA, Lord Reed considered that Lord Dunedin's dictum in Nicol pre-dated the modern development of public law and was rooted in private law concepts which are not relevant in the context of applications to the supervisory jurisdiction. He pointed out that the approach to standing taken by Lord Dunedin was appropriate to proceedings where the function of the courts was to protect legal rights. An application to the supervisory jurisdiction was a request to the court " to supervise the actings of a public authority so as to ensure that it exercises its functions in accordance with the law" rather than being brought to vindicate a right vested in the applicant: "There is thus a public interest involved in judicial review proceedings, whether or not private rights may also be affected. A public authority can violate the rule of law without infringing the rights of any individual."

Lord Hope held the private law test of title and interest does not have a place in public law:

"I think that the time has come to recognise that the private law rule that title and interest has to be shown has no place in applications to the court's supervisory jurisdiction that lie in the field of public law. The word "standing" provides a more appropriate indication of the approach that should be adopted."

While Lord Hope did not wish to "risk" a definition of what constitutes standing in the public law context, he did hold that the words "directly affected" as used in Rule 58.8(2) of the Rules of the Court of Session 1994 (as amended by SSI 2000/317) "capture the essence of what is looked for". In this case, therefore, as the individuals suffering from pleural plaques were 'directly affected' by the challenge to the 2009 Act, they therefore had 'standing'.

Consequences

The abolition of the "title and interest" test will have significant implications on the development of public law in Scotland as the definitions of 'standing' and 'directly affected' will be no doubt be expanded and developed over time.

In relation to whether pleural plaques is compensatable, there is now a different position in Scotland than in England & Wales. The latter are still bound by the Rothwell decision so pleural plaques is not an actionable personal injury south of the Border. 

There are hundreds of pleural plaques cases sisted at the Court of Session awaiting this decision which will now be able to proceed. We hope that Thompsons, who are acting in the majority of them, will develop a systematic procedure for dealing with the cases and we wonder whether the Court of Session will itself consider the situation and issue a Practice Direction in order to ensure the smooth and orderly running of the recalling of the sists.