The English courts continue to wrestle with the issues surrounding which policies of insurance, if any, must answer in both the public or commercial liability and employment contexts for alleged exposure to asbestos causing illness years later.

In the consolidated appeal of Mesothelioma “Trigger” Litigation, [2010] EWCA Civ 1096, the English Court of Appeal was called on to consider when insurance coverage for mesothelioma claims under employers’ liability policies is triggered and whether the policy to respond to such claims is the one in place when the asbestos particles were inhaled on the job or the one in place at the onset of a disease that can emerge up to 35 years after inhalation.

The two policy wordings in question in the “Trigger” appeal differ slightly, but, essentially, one provided coverage for “injury sustained” and the other for “disease contracted” during the policy period. As will be seen below, this difference in wording was central to the outcome of the appeal.

The Appellate Decision

The Court of Appeal found that mesothelioma is not an “injury” that is “sustained” until onset of the disease. The Court clearly felt bound by the earlier Court of Appeal decision in Bolton MBC v. MMI [2006] concerning mesothelioma under a public liability policy. It was determined that liability for injury or illness “occurring within the policy period” is not triggered when the claimant was exposed to asbestos fibers, as no injury or illness had occurred at that point. Instead, liability attaches only when malignancy develops or when the symptoms first become apparent.

Lord Justice (LJ) Rix did not say in so many words that Bolton was wrongly decided, but he suggested that had he not been bound by this precedent, he would have preferred the view that the risk of mesothelioma that is created by the exposure is an injury. Burnton LJ, however, found Bolton convincing. Both Rix LJ and Burnton LJ (Smith LJ dissenting) rejected the first instance judge’s decision that this construction would be in conflict with the commercial purpose of employers’ liability insurance. Accordingly, they found that injury had not been sustained at the date of inhalation, and appellants with that policy form prevailed.

All three Lord Justices agreed that “disease contracted” in the other policy form referred to the time of the disease’s causal origins or the date of exposure. Rix LJ commented that the commercial purpose of the policy should prevail on this issue, and Burnton LJ differed that little assistance could be gained by referring to the commercial purpose of the policy. Accordingly, the appellants with this policy wording lost.

One further argument raised was that the policies only applied to employees in the course of their employment and did not apply to ex-employees. At first instance the judge held that this point favoured a construction that cover was intended to be the date of causation in all cases. Smith LJ agreed with the judge; Rix LJ agreed that the wordings did not apply to ex-employees but felt that this did not point to a causation trigger; and Burnton LJ held that certain wordings did apply to ex-employees.

Permission to appeal to the Supreme Court on all the above issues has been granted, and it is understood that argument has been scheduled for December 2011.

Commentary

Rather than adopt the “triple trigger” (exposure, onset, manifestation) followed in many U.S. jurisdictions, linking coverage only to the date of “onset” under the “injury sustained” policy wording is both impractical and of questionable merit as a policy. The date of causation (that is, exposure) can often be determined, but victims will in most cases only learn that they are suffering from mesothelioma some time later when they seek medical care for symptoms that become apparent. Onset was found to be usually “around 5 years” before manifestation, but determining the exact date of onset as a coverage trigger will be extremely imprecise in most cases.

The first instance judge suggested the adoption of a prima facie rule of five years before manifestation to address this; however, that was not argued on appeal. Nevertheless, no matter how or when “onset” is determined, if at that point the employer has become insolvent or is no longer in business, there will be no policy in place that can be called on for coverage, and claimants will be left without recourse unless the Financial Services Compensation Scheme might apply. If the employer is in existence and solvent, it will be deprived of the benefit of insurance coverage for which it had paid. One might query whether, as a matter of sound policy, the Supreme Court on the further appeal and/or government by legislation will in the end favor the Court of Appeal’s approach to an “onset” trigger or even an alternative “manifestation” trigger, which could leave both employers and victims without any redress to insurance coverage.

Causation Questions

Predicting where the “Trigger” appeal will come out is further complicated by the recent Supreme Court decision in Sienkiewicz v. Greif (UK) Ltd [2011] UKSC 10. There it was noted that the unusual features of mesothelioma had led to the development of a special test of causation for the disease, as it is frequently impossible for a claimant to prove causation according to the conventional “but for” test. The case of Fairchild v. Glenhaven [2002] had provided a cause of action “against a defendant who has materially increased the risk that the claimant will suffer damage and may have caused that damage, but cannot be proved to have done so because it is impossible to show, on a balance of probability, that some other exposure to the same risk may not have caused it instead” [Lord Hoffmann, with emphasis added].

Sienkiewicz considered which causation test applies in a “single exposure” case (where the claimant alleges only one possible tortious source for the asbestos exposure). Is it the Fairchild test (“materially increased the risk”) or is it an alternative “doubles the risk” test (i.e., must it be shown that the exposure for which the employer was responsible has more than doubled the environmental exposure). In this case, it was proven that this particular employer had only increased the claimant employee’s exposure over general environmental asbestos exposure by a mere 18%. The Supreme Court unanimously held that the special rule established in Fairchild applied. There was no room for a “doubles the risk” approach. This was the case even though, as Lord Brown recognized, the result is liability in full for one responsible for only a small proportion of the claimant’s overall exposure to asbestos dust.

Does Sienkiewicz suggest that exposure, since it can result in full employer liability, should be the trigger for insurance coverage? We will have to wait and see