Disease Newsletter February 2010

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1 Disease Newsletter February 2010 This edition includes a commentary on Our regular asbestos update, hand arm vibration syndrome, the Transfer of Undertakings (Protection of Employment) Regulations 2006, (TUPE), an update on the deafness test litigation, provisional damages, pension loss calculations, proposed changes to the Third Parties (Rights against Insurers) Bill, limitation and our regular review of trends and what is on the horizon. Asbestos update A regular feature in the disease newsletter ter providing an up to date roundup of asbestos related issues. Gloria Ginvert provides an overview and Judith Peters comments on the Damages (Asbestos Related Conditions) Bill and two recent low level asbestos exposure decisions. Hand arm vibration syndrome Is it now possible to distinguish between a Claimant who has constitutional raynauds and a Claimant who has a vibration induced condition? Jim Byard comments on the recent study using a modified cold provocation test in an attempt to distinguish between the conditions. Deafness test litigation update Has the Supreme Court granted permission to appeal? Jim Byard explains the funding issue. TUPE Regulations Identifying the correct Defendant is not always straightforward in disease claims. Lisa Watson and Russell Daw discuss the application of the TUPE Regulations and what evidence will help determine whether a TUPE transfer has taken place. Provisional damages Has complacency set in? Victoria Douglas advises caution when agreeing terms for provisional damages in respect of return conditions and time limits.

2 Pension loss calculations What was the impact of the amendments to the sixth edition of the Ogden tables upon a pension loss calculation? Paul Debney, explains its subtleties and sheds light upon pension loss calculations. Third Party (Rights against Insurers) Bill Proposed changes to the 1930 Act introduce a new streamlined process. Jim Byard explains the existing legislation and the changes proposed by b the bill presently before Parliament. Limitation When does time start to run? Did the Defendants admission of liability prevent a limitation Defence? What delay is relevant for the purpose of Section 33 discretion? Peter Ward provides a commentary on three recent decisions where these questions were raised. Trends What does the future hold for new conditions and what is happening in the wider disease arena? Gloria Ginvert comments on a noise induced hearing loss claim from a cellist, the Jackson reforms, IPOD music player class action, link between bowel cancer and eating processed meat, reports of nanoparticles causing lung disease. We hope you find our bulletin informative and we would welcome feedback on ways which in which we can ensure that the bulletin best meets with your needs. The bulletins editor is Gloria Ginvert. This update does not attempt to provide a full analysis of those matters with which it deals and is provided for general information purposes only and a is not intended to constitute legal advice and should not be treated as a substitute for legal advice. Weightmans LLP accept no responsibility for any loss that may arise from reliance on the information in this update. The copyright in this update is i owned by Weightmans LLP. If you require any further information on the articles within this bulletin or disease issues generally, please contact Gloria Ginvert, Editor or Jim Byard, our Head of Practice Area.

3 January 2010 Asbestos update Discount for smoking. Show cause hearing. The Newcastle minimal asbestosis litigation. Policy trigger. Employers Liability Insurance Bureau Bill. Damages (Scotland) Bill. Post Office liabilities to asbestos exposed employees. Low level exposure to asbestos. s. Damages (Asbestos Related Conditions) Bill. Discount for smoking In Horsley v Cascade Insulation Services Ltd & Others [2009] the Claimant had asbestosis and a 12 % risk of developing lung cancer because of smoking which increased to 36 % when combined with the factors of asbestos exposure and asbestosis. The risk of contracting mesothelioma was put at 5 %. Counsel for the Claimant argued that in respect of general damages, the JSB guidelines figure for asbestosis of 45,000 was not clear over the extent to which it reflected the increased risk of mesothelioma and lung cancer. He proposed taking 29 % (the added risks of lung cancer and mesothelioma) of the award for these two conditions (in the order of 70,000), producing an additional figure of 20,300. Thus, he argued that the Claimant s proposed figure of 55,000 for general damages was reasonable. His Honour Judge Eady was of the opinion that this was too generous as he considered the JSB figure had already factored in such risks. He said that when at the stage of assessing risk, including an increased risk attributable to smoking, the Defendants must take the victim as he finds him. Therefore at this stage any question of disallowance because the Claimant had voluntarily undertaken risks related to smoking should be excluded. This factor was however relevant when addressing the risk in this case of the Claimant being unable to work in the future because of his smoking and following the decisions in Badger and Shortell, the final award would also be discounted for contributory negligence for smoking which he assessed at 20 %. Show cause hearing The recent decision in Revenue & Customs v Rita Silcock (Widow and Executrix of the Estate of Robert Henry Silcock, Deceased) [2009] was an appeal by the defendant Revenue & Customs against a decision made at a show cause hearing that it was liable for the fatal mesothelioma suffered by the respondent s late husband.

4 The claimant widow was unable to provide any detail as to the precise period, sources and places of exposure to asbestos dust. Her claim was on the basis that the Deceased s exposure to asbestos was likely to have occurred in the various buildings visited by her husband when employed by Revenue & Customs. Revenue & Customs did not serve any evidence claiming it was for the respondent to establish evidence of lack of proper precautions in relation to the dangers of asbestos. The Deputy Master at first instance acknowledged that the burden of proof was still on the respondent but it was for Revenue & Customs to show that it had an arguable Defence. He held that on the material available to him he was able to draw an inference that there was exposure as alleged and there was no evidence of Revenue & Customs taking any precautions to avoid the risk of exposure. On appeal it was held that there was some evidence which put Revenue & Customs in difficulty and on balance sufficient to conclude the Claimant would win on the exposure issue at trial. Whilst the Deputy Master had correctly noted that the burden of proof was still on the Claimant and dealt correctly with the burden of proof on the exposure issue, he was wrong to find that Revenue & Customs had been negligent. At a show cause hearing, the defendant was only subject to an evidential burden to show cause after the claimant had produced credible evidence in support of her case. Here the Defendant was able to submit the Claimant s evidence was insufficient to succeed in all likelihood. As Revenue & Customs had shown they had some realistic prospect of defending the case the Deputy Master was wrong and the appeal was allowed. Newcastle minimal asbestos litigation Following Judgment on the above cases it was thought that both parties would be appealing. However it is now understood that neither side is appealing and His Honour Judge Walton s decision stands. Policy trigger The appeal hearing has been heard in the policy trigger litigation and Judgment is expected soon, probably in February. Employers Liability Insurance Bureau Bill This bill which proposes the creation of an Employers Liability Insurance Bureau providing a fund of last resort received its first reading in the Commons on the 6 January 2010 and there is a provisional date for the second reading of the 5 February The compensation scheme proposes compensating persons in cases where personal injury or disease has been caused in the course of employment by an employer which has become insolvent and has no employers liability insurance, or their insurer cannot be traced. Alternatively, any employer who was not insured in accordance with the Employers Liability (Compulsory Insurance) Act It is proposed the compensation scheme would allow payment of full common law compensation. It would allow for contributions for funding to be imposed on Insurers underwriting employers liability insurance and others.

5 Further the bill would allow for the creation and maintenance of an employers liability insurance database recording particulars of insurer, insured, period of cover, policy number and policy wording of any employers liability insurance policy identified by investigation or enquiry. Damages (Scotland) Bill The challenge to Scottish legislation granting sufferers of pleural plaques the right to claim damages by way of Judicial review by Insurers was rejected by the Court of Session earlier this month. Post Office liability to asbestos exposed employees The dispute between British Telecommunications Plc and the Royal Mail Group Limited was determined in British Telecommunications Plc v Royal Mail Group Ltd [2010] earlier this month when it was held the liabilities of the Post Office to employees who were exposed to asbestos whilst working in the Telecommunications side of the Post Offices undertakings were transferred to British Telecommunications. Gloria Ginvert, Partner, Weightmans LLP Low level exposure to asbestos dust Dianne Willmore v Knowsley Metropolitan Borough Council & Karen Sienkiewicz v Greif (UK) Ltd The Court of Appeal has handed down its Judgment in two mesothelioma cases where the level of exposure alleged was very low. Mrs Willmore was a pupil at a school owned and operated by the Defendant Council in The school was newly built and in common with many schools built around that time, used asbestos containing materials in the construction and fitting out. The source of the exposure was said to be from ceiling tiles which had been taken down by workmen and left stacked in a corridor along which the Claimant passed. In addition it was found that some ceiling tiles had been left in the girls toilets and disturbed by the activities of girls. The Judge at first instance concluded that the tiles more probably than not had contained asbestos, based on the fact that in 2002 a ceiling panel in the corridor was found to contain amosite (brown asbestos). The Court of Appeal did not uphold any further finding of exposure allegedly caused when pupils removed ceiling tiles themselves to hide bags or coats in the cavity above. No engineering evidence was considered by the Judge at first instance with regard to the extent of breathable asbestos fibres that had been liberated. It was accepted that there was an inescapable level of ambient air pollution including asbestos fibres, which represents a background risk to everyone and to establish liability on the Council it would be necessary for Mrs Willmore s exposure at the school to be more than minimal and hence sufficient to materially increase the background risk. The Court of Appeal did not accept the Appellant Council s contentions that the Judge at first instance had confused or conflated risk of exposure and risk of harm. The main issue on the appeal was whether the evidence did support that there had been exposure to asbestos fibres sufficient to materially increase the Claimant s risk of contracting mesothelioma.

6 The Court of Appeal upheld the decision of the Judge at first instance who had found that the Claimant was likely to have been close to the ceiling tiles which had been disturbed and that that was sufficient to place the Claimant at increased risk despite the lack of any measurements or evidence as to the exposure that could be expected from the circumstances described as compared to background levels commonly found in urban areas. In the case of Sienkiewicz the Claimant was an office worker employed by the Defendant company at their factory from 1966 to The Claimant s duties took her all over the factory and it was said that she spent some time in areas which from time to time were contaminated with asbestos. Again in that case it was accepted that the Claimant would have been exposed to background asbestos levels in urban areas. The Judge at first instance found that the Claimant had been exposed in the manner alleged but that the Claimant had failed to establish that the occupational exposure had at least doubled the risk that arose by virtue of environmental exposure. He found that background exposure would have created a risk of mesothelioma of 24 cases per million while the cumulative overall occupational exposure gave rise to a risk of 4.39 cases per million. Hence the occupational exposure was undeniably very much the minority of the Claimant s total exposure. The Court of Appeal considered whether the Claimant was required to show that the risk arising from the tortious exposure was more than double the risk arising from the non-tortious exposure or whether the Claimant only needed to show a material increase in the risk of harm. The Claimant contended that she only had to show a material increase in the risk, relying on Fairchild and section 3 of the Compensation Act. The Defendant argued that Fairchild did not consider the situation where there was only one occupational exposure and the other source of exposure was environmental and further, that this case was not affected by Section 3 of the Compensation Act as that section could only apply if liability was established applying the principles established by Fairchild. The Court of Appeal, with Lady Justice Smith giving the leading judgment; found that Section 3 of the Compensation Act applied to all mesothelioma cases including the circumstances of this case. The requirement under Section 3 for the responsible person to be liable in tort was satisfied by proof of causation by reference to a material increase in risk, i.e. on a Fairchild basis, even if the factual circumstances of the exposure were such that, with the necessary evidence, it would be possible to prove causation on ordinary principles as was arguably the case in this particular matter. The judge at first instance had made an assessment of the respective occupational and environmental exposure. Lady Justice Smith decided that it was not necessary for her to consider whether these assessments were flawed but said that she remained uncertain as to the validity of the whole process of quantitative assessment in a case of this kind. This begs the question as to how a Court can consider whether exposure is more than minimal and hence has made a material contribution to the risk of developing mesothelioma. In his judgment Clarke LJ also concluded that this case would come within the Fairchild exemption as well as within the ambit of Section 3 of the Compensation Act. Whilst in this case there was one exposure that involved a breach of duty and a second (the environmental exposure) which did not, Clarke LJ also pointed out this was also the case in Barker v Corus and in his judgment it was not necessary for all exposures to involve a breach to come within the Fairchild exemption.

7 Comment Asbestos exposure, encountered years previously, cannot be measured with absolute certainty whatever means of assessment or measurement is employed, but there remains the question of by how much an individual s lifetime exposure to environmental background asbestos pollution is actually increased by very small incidents of exposure, particularly in the type of circumstance described in Willmore. It appears from Willmore that almost any exposure however slight, and without any recognised assessment, will satisfy the Fairchild test of making a material increase to the risk of mesothelioma and therefore if that exposure is in breach of duty, liability will follow. If that is correct the only means of defending similar cases will be in circumstances where it is possible to defend the allegations of breach of duty or in cases where there has been substantial negligent exposure elsewhere and, in comparison, the slight exposure is insufficient to materially increase the risk. The difficulty of successfully defending allegations of breach of duty is exemplified by the Willmore decision in which it was found that the Claimant had been exposed as a result of ceiling tiles disturbed and left in the vicinity notwithstanding evidence to the contrary given by staff who had worked at the school at the time. The circumstances of exposure in Willmore are likely to be common to what occurred in numerous other schools or other public buildings of a similar construction in the 1960s and 1970s. There has been recent research into the extent of background exposure in the environment, but instances of slight or trivial exposure need to be evaluated and considered in the context of the extent of environmental exposure and the risks from such exposure. In addition guidance is needed on the nature and extent of exposure required to be more than minimal. It is understood that an application for leave to appeal to the Supreme Court has been made in Willmore. It is to be hoped that the Supreme Court will provide such guidance. Damages (Asbestos Related Conditions) Bill On 16 October the Damages (Asbestos Related Conditions) Bill had it s third reading without amendment and passes now to the House of Lords. This Private Members Bill brought before the House of Commons by Andrew Dismore MP seeks to reverse the effect of the House of Lords decision in Johnston v NEI International Combustion Limited, which held that pleural plaques were not compensatable. If this Bill is enacted and becomes law it will define pleural plaques as a condition constituting actionable damages for the purposes of negligence in tort, even though the condition is not causing any impairment of a physical condition or personal injury and will most probably never do so. As Mr Dismore pointed out at the end of the debate, the Bill had no priority whatsoever and was a presentation Bill, which resulted from Mr Dismore having spent the night on the floor of the Public Bill Office to make sure he had first place in the queue. Last year the government consulted on how to address the issue of pleural plaques. The consultation included three different options: a no fault compensation scheme for the historic cases which had arisen prior to the House of Lords ruling; a no fault compensation scheme to relate to both historic and future cases; or a statute to overturn the effect of the House of Lords ruling.

8 The time for replies to the consultation ended on 1 October 2008 and significant time and effort was spent in preparing responses to the consultation by those both in favour of and opposed to changes in the law as established in the traditional way with decision having been made by the highest court in the land. It was expected that the government would have set out their position by now, but have not done so, despite having confirmed they would respond only for the suggested dates to pass. The debates in parliament, both at second reading in April this year and on the third reading on 16 October illustrated the emotive issues which surround the question of pleural plaques and whether or not they should be compensatable. The Bill, according to Andrew Dismore, simply seeks to turn back the law to what it was thought to be prior to the House of Lords decision in Johnston. He said liability for such claims would be met by Insurers,, albeit providing the employer and/or their insurers were traceable, as opposed to a scheme which would cost the tax payer. Mr Dismore said that his Act would maintain the basic principles of negligence or breach of statutory duty as the test for liability. This, perhaps conveniently, ignores the requirement not only for there be a breach of duty, but also for loss/damage to be caused thereby to create a cause of action. The main opposing view is that the law of tort/negligence should remain the same for all classes of action and that there should be a standard definition of what was meant by damage. The dangers of changing the law in a piecemeal way were highlighted. It appears that a full range of opposing views was not represented in the debate. Indeed Mr Dismore thanked those who had supported the bill and kept a Trappist rule of silence, presumably relating to limiting knowledge of the possibility of debate and the prospect of numerous questions causing the Bill to run out of time. Amendments were moved to defeat the retrospective element of the Bill in Clause 4, which suspends limitation for the period between the House of Lords decision and the Act coming into force to allow claims to be made by those with pleural plaques who had not previously had their cases decided or otherwise concluded who would otherwise would have fallen foul of limitation. In addition, amendments were proposed to allow claims from those who had pleural plaques which were not causing symptoms but were likely to cause symptoms. However neither amendment was accepted. At committee stage there was argument that those who had been exposed to asbestos but did not have pleural plaques were still in exactly the same position as those with pleural plaques with regard to the risk of further symptomatic asbestos related disease and hence should be included within the government s proposals. Whilst this is not a part of the Bill it is clearly a relevant consideration when considering the potential repercussions of such legislation. Indeed, the case of Diane Wilmore v Knowsley Council was raised in the debate on 16 October. Mrs Wilmore contracted mesothelioma but her only exposure to asbestos fibre was as a school pupil in circumstances where work was ongoing at the school whilst the school was open and asbestos ceiling tiles were removed and left stacked in an area occupied by the pupils. The Court of Appeal gave their decision dismissing the appeal made by Knowsley Council on 14 October 2009, the day before the Claimant s death, but has yet to pass down their full Judgment.

9 How many people will have encountered similar circumstances as schoolchildren? It is, of course, the exposure and not the presence of pleural plaques that gives rise to the risk of future serious disease. Whilst Mr Dismore stressed that the Bill was tightly drawn and hence in his view will not open the floodgates to any form of parallel litigation, this will not prevent the legislation been cited as an example when considering other asymptomatic conditions and situations where an individual is at risk of developing a medical condition in the future. The government s position in respect of the Bill remains unclear. Bridget Prentice MP, Under Secretary of State for Justice apologised for the delay of the government in responding to the consultation and stressed that the government wanted to give support to those who had been exposed to asbestos. She mentioned that she had met with medical experts the previous day with regard to this very issue and as a result further issues were identified which the government wished to consider before publishing their response. The Bill now goes to the House of Lords, where amendments may be made, which in turn would have to return to the House of Commons during the life of the government. Having got this far, there remains every prospect that the Bill be enacted. The support for the Bill reflected that there are many who clearly consider that to leave the pleural plaques situation as it currently stands is simply not an option. Judith Peters, Partner, Weightmans LLP

10 Disease January 2010 Hand Arm Vibration ion Syndrome A Diagnostic breakthrough? Insurers continue to face thousands of claims for HAVS and CTS induced by vibration. In addition to the reduced safe exposure levels set by the Control of Vibration Work Regulations (2005) those defending claims for HAVS have been unable to rely upon an accurate diagnostic tool to determine whether the condition exists or whether the condition has been caused by constitutional factors. The symptoms displayed in hand/arm vibration syndrome or secondary Raynaud s Phenomenon are recognised to mimic almost entirely those of primary Raynaud s Phenomenon which is a relatively common constitutional condition affecting around 10% of the population of working age (DHS paper 1981). The difficulty facing vascular consultants, employers and insurers alike is how to distinguish between a claimant who has constitutional Raynaud s and a claimant who has a vibration induced condition. In the 1990s a test favoured by many Vascular Consultants was to immerse a patients hand in cold water seeking to provoke the vascular and sensorineural changes associated with the condition. This form of testing was largely discredited and has now fallen into disuse particularly following George Proud s epidemiological study published in Since then Vascular Surgeons and Insurers have to a large degree been asked to take on trust a claimant s history of symptoms. That history has been regarded as the most important factor in determining whether medical causation can be proven (Whalley v Montracon Trailers CA 2005). The absence of a method of objectively diagnosing the condition has led to suspicions of claimants unjustly receiving compensation for a condition which is either constitutional or does not exist at all. The attached paper which appeared in October s journal of Hand Surgery suggests that there may now be an objective method of confirming or denying the diagnosis. The main findings Salem et al used a modified cold provocation test in an attempt to distinguish between:- i. Aetiologically normal patients. ii. Those with primary Raynaud s Phenomenon. iii. Those with hand/arm vibration syndrome. They used a standardised cold stress test to reduce finger temperature to 15 degrees C. The patients were then measured to establish the time taken for their fingers to re-warm by 5 0 C. The study established: 1. That those patients with primary Raynaud s Phenomenon took longer to re-warm than aetiologically normal patients or those with hand/arm vibration syndrome.

11 2. That a difference of more than C between the temperature of the finger and that of the room will not occur in patients with primary Raynaud s or hand/arm vibration syndrome. 3. A temperature gain of equal to or greater than C in the first 30 seconds on re-warming combined with a low base line temperature is strongly suggestive that a patient has hand/arm vibration syndrome. In summary, the study suggests that there are statistically significant differences in temperature responses between aetiologically normal patients, those with primary Raynaud s and those with hand/arm vibration syndrome. Limitations It has to be recognised that this is a small study (176 patients) in comparison to Professor Burke s study of over 100,000 miners seeking compensation through the DTI scheme (2003). Additionally, the hand/arm vibration syndrome patients forming part of the study were all seen for the purposes of medico-legal reports. Undoubtedly further studies are needed before this diagnostic test will be widely accepted in medico-legal circles. It is however, an important step towards establishing a reliable and objective way of distinguishing between those claimants who genuinely present with hand/arm vibration syndrome, those with a constitutional condition and those with no compensable symptoms at all. Jim Byard, Partner, Weightmans LLP

12 Disease - January 2010 Nottinghamshire and Derbyshire Textile Case Litigation. An update The Supreme Court indicated by way of Order issued in November that it was prepared to grant Quantum Clothing Group Limited and two other petitioners conditional permission to appeal the Judgment of the Court of Appeal handed down in May The Court perhaps anticipating the outcome of Lord Jackson s report on the funding of civil costs indicated that they wanted to ensure that the Respondent (Claimant) was properly represented upon any appeal. We as petitioners have made funding proposals to the Respondent and at the time of going to press a response is awaited from her instructing solicitors. Jim Byard, Partner, Weightmans LLP

13 Disease - January 2010 TUPE: The difficulties in disease litigation The Transfer of Undertakings (Protection of Employment) Regulations 2006 apply when a business or part of one is transferred to a new employer or where a contractor takes on a contract to provide a service for a client from another contractor. This should be distinguished from an asset only sale where no employees would transfer. The Regulations first came into force in 1981 and implemented the European Communities Acquired Rights Directive (ARD) (prior to the TUPE Regulations 1981, the ARD only had direct applicability to public bodies). The effect of the Regulations is to preserve a then current employee s terms and conditions. Further the buyer inherits all rights and liabilities and obligations arising from those contracts of employment. Therefore any acts or omissions of the seller before the transfer are treated as having been done by the buyer. For this reason it is critical, that the buyer obtains appropriate indemnities from the seller in respect of all pre-transfer liabilities. Martin v Lancashire County Council and Bernadone v Pall Mall Services Group [2000] WL confirm that in addition to the transfer of liability in tort for personal injury, the seller s right of indemnity under its employer s liability insurance also transfers to the buyer. The question therefore arises as to who is the correct Defendant to be sued, the buyer or the seller? Both cases confirm that the buyer is the correct Defendant to be sued. The difficulty in disease litigation (particularly long tail diseases) is that employment often ceased many years ago. If the alleged employer still exists it is rare for them to have retained documentary proof of the Claimant s employment dating back many years. The Claimant s National Insurance Employment History (which the Claimant s Solicitor should have obtained from HMRC) should be considered in light of Companies House records and searches in order to confirm employment (unless the Claimant has any old wage slips or other proof). It is wise to consider the Claimant s letter of claim, medical report and witness statement if available in detail. The Claimant should explain all of his relevant employers where excessive exposure is alleged and whether or not his employment was continuous between any such employers and appropriate questions raised, if this information is not provided. If a Claimant left Employer A and started working for Employer B carrying out the same job as before and providing the transfer took place post 1 January 1981 then the TUPE Regulations 1981 (or 2006 if post 6 April 2006) will apply. Claimant s Solicitors will often ask for sight of the copy contract confirming the TUPE transfer, but this will often be unavailable due to the passage of time and frankly should be not be necessary given the above. Claimants will recall whether or not they gave their notice or were dismissed prior to obtaining a new job on their own merit; as opposed to simply being moved from employer A to Employer B and continuing as before. As a result Claimants are the best people to answer whether or not there has been a TUPE transfer; providing their Solicitor is familiar with TUPE Regulations and case law. Claimant s Solicitors regularly seem to forget that it is solely the Claimant s duty (or arguably the Claimant s Solicitors duty) to identify the correct Defendant in any Court Proceedings they choose to issue. If a mistake is made and the incorrect Defendant is pursued, then upon discontinuance or Summary Judgment that Defendant should seek its costs from the Claimant. If the Claimant has BTE or ATE insurance funding those

14 insurers may have to meet the Defendant s costs. However, more often than not this will be a legal error by the Claimant s Solicitors- and consequently should be personally liable to pay the Defendant costs on the Claimant s behalf. If a Claimant alleging industrial deafness / noise induced hearing loss worked for Company A as a road worker whilst they had the contract for repairing a Local Authority s roads and he subsequently transferred to Company B in 1982 (when they secured the road work services contract), then Company B would be the correct legal Defendant. Company B would remain the correct legal Defendant even if the Claimant did not allege excessive noise exposure with them, for instance if Company B immediately introduced adequate hearing protection to reduce the noise level. In the co-joined Court of Appeal cases of Martin and Bernadone (see above) LJ Peter Gibson confirmed that there can be no doubt that upon a TUPE transfer; a liability which is transferred, ceases to be enforceable against the seller (upholding the decision in Allan v Stirling DC [1995] ICR 1082). As such to sue Company A in our scenario above would be incorrect and would entitle Company A to a discontinuance or Summary Judgment. Claimants frequently mistake similar named Companies for each other. A Solicitor on the Claimant s behalf may attempt to argue that these Companies are one and the same, particularly if they are within the same Group of Companies, and that the action should be allowed to proceed. The House of Lords case of Salomon v Salomon & Co [1897] AC 22 established that a Company has its own legal personality distinct from its shareholders/owners and thus a Court cannot make such a leap between two distinct legal entities. This was applied in JH Rayner Ltd v DTI [1990] AC 418 and the fairly recent case of Carlton & Granada v The Football League [2002] EWHC In reality all of the insurers for a period of employment may decide not to take issue with such an inaccuracy by the Claimant. This may be the case where all of the insurers want a swift economic settlement or want to avoid the expense of a Claimant restoring a dissolved Company to the Register of Companies. Conceding such a point should only be considered where there is a full insurance history and where all of the insurers are in agreement. The danger otherwise is that other contributing insurers may subsequently disagree with that decision and refuse to contribute. In their simplest form, the TUPE Regulations are relatively straightforward. However, care should be taken by the buyer of a new business, involving the transfer of employees, to ensure that wherever possible due diligence is undertaken to ensure that details of all insurance policies (from time to time in force) are provided. In the absence of those policies, an indemnity should be obtained from the seller, as it is the current employer against whom proceedings will be issued and liability sought. Lisa Watson, Associate Solicitor and Russell Daw,, Associate Solicitor, Weightmans LLP

15 Disease - January 2010 Provisional Damages Familiarity Breeding Contempt? Asbestos specialists face claims for provisional damages on a daily basis. Claimants generally seek standard return conditions which pivot around four deteriorations or future risks which have become accepted as arising from asbestos exposure. Drafting Particulars of Claim has become almost a pro-forma exercise. It may have become commonplace to some Defendant practitioners to draft standard Defences and to agree terms of Consent Orders without a second glance, but by mirroring the Claimants complacency, it seems the purpose of provisional damages has been lost along the way. Let us remind ourselves of the law relating to provisional damages, the circumstances in which they can be claimed and the importance of ensuring appropriate return conditions. Section 51 County Courts Act 1981 and Sections 32A and 34A Supreme Courts Act 1981 enshrine the Court s discretionary power to award provisional damages in circumstances where there is a chance that at some time in the future the injured person will, as a result of the act or omission giving rise to the cause of action, develop some serious disease or suffer some serious deterioration in his physical or mental condition. This allows the Court to award the injured person: a) Damages assessed on the assumption that the injured person will not develop the disease or suffer the deterioration in his condition; and b) Further damages if at a future date he develops the disease or suffers the deterioration. The Court cannot impose a provisional award upon a Claimant. It is entirely a matter for the Claimant as to whether he wishes to opt for a provisional award. Cowan v Kitsons Insulation [1992] PIQR 019. Claimant and Defence practitioners alike are sometimes ignorant of the fact that a default judgment cannot be obtained in a provisional damages claim unless the Claimant abandons his claim for provisional damages. In such circumstances, the Claimant should apply for directions in accordance with Part 23 CPR. Rules 41.2 and 41.3 CPR 1998 set out the practical framework for provisional damages claims. The Practice Direction to Part 41 fleshes out exactly what the provisional damages Order should contain and the documents which must be preserved as the case file in the event of a return claim. The Order must: Specify the disease or type of deterioration which will entitle the Claimant to apply for further damages if they occur at a future date; Give an award of immediate damages; Specify the period in which an application for further damages may be made; and Direct what documents are to be filed and preserved as the case file in support of any application for further damages. As complacency sets in, the boundaries as to what constitutes a serious deterioration become blurred. In Willson v MOD [1991] 1 All ER 638, Scott Baker LJ stated it was necessary to consider: a) Whether it was proved there is a chance of some serious deterioration in the Claimant s condition, and

16 b) Whether the Court should exercise its discretion in favour of the Claimant in the circumstances of the case. He clarified that the chance must be measurable rather than fanciful. To satisfy this, we see the measurement of future risks by medical experts in percentage terms in medical reports in asbestos claims. Scott Baker LJ offered the guidance that a serious deterioration means something beyond ordinary deterioration. Taken to its limit, there is scope for the proposition that low level asbestosis or pleural thickening sufferers with minimal future risks of progression should not be permitted to return to Court for further damages in case of deterioration of those conditions. How can such deterioration be viewed as beyond ordinary deterioration? Weightmans have recently, successfully limited return conditions solely to asbestos related lung cancer and mesothelioma in just these circumstances. In doing so, it was necessary to remind the Claimant and the Court of the rationale behind provisional damages and of the meaning of serious deterioration. Caution should be exercised when setting time limits for return claims. It is becoming increasingly common for Claimant s solicitors to seek to reserve rights for the Claimant s Estate in the event of death. The Court has no power to grant a declaration reserving rights to an Estate. The Law Reform (Miscellaneous Provisions) Act 1934 and the Fatal Accidents Act 1976 enshrine the rights of the Deceased s Estate to bring such a claim. Such rights do not need to be rehearsed in any order for provisional damages. The practical effect of going back to basics with these principles can only benefit Defendants and Insurers alike. By limiting return claims only to malignant diseases provides greater certainty in terms of future reserves. The possibility of two bites of the cherry, for example worsening asbestosis and then developing lung cancer, is removed. The costs benefits of avoiding such multiple return claims are evident. Whilst provisional damages claims are seen as fast track money spinners to Claimants, the reality for Defendants is that they cannot be looked on with scorn. Casting your eye to the future now when assessing appropriate return conditions can avoid any unintended consequences that over-familiarity with provisional damages may bring. Victoria Douglas, Associate Solicitor, Weightmans LLP

17 Disease - January 2010 Pension Loss Calculations in Disease Claims In May 2007 the 6 th edition of The Ogden Tables was published which fundamentally altered the methodology for the calculation of future loss of earnings. The impact upon pension loss claims was far more subtle and consisted only of alterations to the multipliers to be adopted when calculating the same. This was due to a revision of life expectancy in the population as a whole following predictions based upon the findings of the 2004 National Census. Ogden 6 confirms increased multipliers with most effect on multipliers at younger ages for loss of pension. In fact the increase in the multipliers for, say a male with a pension loss commencing at age 65 years ranges from 11.82% (for a male aged 40 years at the date of trial) falling to 2.4% (for a male aged 50 at date of trial) and thereafter to nil by age 65. We are all probably quite familiar with calculating loss of pension in the context of lost year claims and claims for dependency in Fatal Accident Act matters and as such these present few practical difficulties. What are encountered less frequently are those situations where an individual loses pension rights during their working life and it is upon these situations which this article intends to shed some light. At its simplest is the situation where a person suffers a reduction in future likely pension payments, either due to loss of the pensionable employment or because their contributions to the scheme are reduced due to a reduction in earnings caused by the Defendant s breach of duty, but where the Claimant concerned does not receive any ill health early retirement pension. Most pensions have 2 components; firstly the possibility of drawing down part of the fund upon retirement as tax free cash (typically up to 25% of the fund) with a corresponding abatement of the annual payments; secondly an annual payment (paid monthly or weekly) for the life of the scheme member. There might also be a widow s pension and death in service benefits. It is important to remember that tax is payable on annual pension receipts although whether this will impact on actual receipts will depend upon the Claimant s total annual income and age ( as personal allowances increase with age). In this scenario the loss calculation is reasonably straightforward. Once the pension scheme administrators have confirmed the lump sum and annual pension which the claimant would have enjoyed but for the accident and that which he is now likely to receive the calculations can commence. The Claimant will receive the difference between the lump sum which he would have received but for the Defendant s breach of duty and that which he will now receive at retirement. This must be reduced to reflect accelerated receipt using Table 27. This takes account of the fact that a claimant could invest the monies awarded to him with an assumed rate of return of 2.5% per annum. For example, the discounting factor for 10 years at 2.5% pa return is The annual loss is then multiplied by the appropriate multiplier to calculate the lifetime loss of annual pension payments and that, added to the lump sum is the pension loss.

18 Thus for example a 40 year old claimant would have retired at age 65 with a lump sum of 20,000 and an annual pension of 7,500. He will now receive a lump sum of 10,000 and an annual pension of 4,000. His lump sum loss is 10,000, which must be reduced by a discounting factor of to reflect 25 years accelerated receipt. His loss is 10,000 x = 5,394. In addition, his annual loss is The multiplier is set out in Table 21 and is 7.78 years. Thus 3,500 x 7.78 = 27,230. His total pension loss is therefore 5, ,230, a total of 32, More complex are those cases where the Claimant is a member of a pension scheme which provides ill health early retirement/ disability pensions. Parry v Cleaver [1970] AC 1 decided that the ill health pension payments received by the claimant prior to his normal retirement date cannot be set off against any loss of wages claim. After his normal retirement date (ie the date upon which he would have retired if he had not been injured) then the receipts can be set off against the annual payments that the Claimant ought to have received, to create a net loss figure to be multiplied by the relevant multiplier as set out above. The complexity arises in the treatment of any lump sum paid to the Claimant early. Typically, these schemes allow a claimant to retire immediately, generally with an enhancement of actual years served. The claimant can elect to take part of his fund by way of lump sum immediately (with a corresponding reduction in annual pension payments). Although the pre retirement annual payments cannot be deducted from the pension loss claim, part of the lump sum can. The methodology for calculating the same was set out in the case of Longden v British Coal Corporation [1997] UKHL 52. In order to determine the amount of the lump sum, received early which can be set off against the pension claim one must calculate the multipliers for the claimant to his normal retirement age and for his full life (ignoring any reduction in life expectancy arising as a result of the Defendant s breach of duty). The difference between these 2 multipliers represents the post retirement multiplier. The post retirement multiplier is divided by the full life multiplier and multiplied by 100 to calculate the % deduction. Additionally, in order to compare like with like the retirement lump sum must be ascribed a current day value, by reducing it to reflect accelerated receipt using Table 27. Thus a claimant retires aged 40 years and receives a lump sum of 10,000. But for the accident he would have retired at aged 65 and received 20,000. He now receives an ill health pension of 4,000 and will receive a retirement pension of 7,500 at age 65. Thus: Discount factor for accelerated receipt of lump sum (25 years, 2.5%, Table 27) Present value of expected lump sum is 20,000 x = 10,788 Life multiplier at receipt of lump sum Multiplier to retirement at receipt of lump sum Longden factor ( ) / = Lump sum loss is ( 10,000 x ) = 7,771

19 Therefore present value of the lump sum loss is 7771 x = 4, Annual pension loss is 3500 Pension multiplier is life multiplier multiplier to retirement Ie = 7.78 (as previous calculation) Total annual loss is 3,500 x 7.78 = 27,230 Total pension loss is 27, , = 31, Thankfully, the incidence of claims involving these sorts of calculations in disease claims is low and likely to decrease as expensive final salary pension schemes are closed to new entrants and phased out by overhead conscious employers. The corollary of the lack of practise in dealing with these may well be a certain amount of head scratching particularly where a claim is badly pleaded by a Claimant. Paul Debney, Partner,, Weightmans LLP

20 Disease - January 2010 Third Parties (Rights against Insurers) Bill Some 11 years after the Law Commission Report was published which recommended material changes to the existing Third Parties (Rights Against Insurers) Act 1930, it appears that there are more realistic prospects of a new Bill receiving Royal Assent after a second Reading Committee took place on 7 and 9 December The 1930 Act This Act aimed to regulate the position where a Third Party could not proceed against another on the grounds that the individual or the Company had become insolvent. The 1930 Act transferred the Insured s right under the insurance policy to the Third Party and enabled them in certain circumstances to proceed directly against the insurer. In practice several problems emerged, particularly as the Courts tended to adopt a restrictive approach to its interpretation. Amongst other things the Act required: The Third Party to establish the existence and amount of the Insured s liability before proceedings could be issued; The Third Party was required to proceed against both the Insured and the Insurer and for example in historical disease claims required the restoration of the Insured Company to the Companies Register to enable it to be sued. Any rights transferred could be subject to any defences which the Insurer could have used against the insured, e.g. failing to notify the insurer of the claim even if the Third Party provided that notification. The considered view of the consultation was that the existing legislation was in many circumstances time consuming and costly. The Bill Although this has yet to receive Royal Assent and consequently is open to amendments, it appears that the main thrust will be radical A Third Party who is able to establish the existence of insurance will now have no obligation to join the Company in proceedings i.e. obviating the need for the Claimant to restore the former Company to the Companies Register. It seeks to restrict the technical defences available to insurers, e.g. treating the notification clause as being satisfied if the Third Party has provided the notification. Additionally, any policy condition requiring the insured to provide ongoing information to the insurer should have no effect if the insured is now dissolved

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