I hope you enjoy reading this edition and welcome any feedback.

23 January 2012 Disease Brief Welcome to the latest edition of Disease Brief, the quarterly publication from Kennedys Occupational Disease Unit, which features articles on a number of topical issues prepared by our disease specialists. Amongst the feature articles in this edition, we provide an update on the EL policy trigger litigation following the Supreme Court hearing in December, at which Kennedys represented two of the local authorities. We will keep you updated in relation to the judgment. I hope you enjoy reading this edition and welcome any feedback. Kieron West Head of Kennedys' Occupational Disease Unit Special feature Focus on fraud With Summers v Fairclough Homes Ltd being heard by the Supreme Court in April 2012, Martin Stockdale considers whether the nature of the fraud game is changing and asks the question: what will become of the lying claimant? (Link to: http://www.kennedys-law.com/article/fraudulentclaims). Case reviews Mesothelioma breach of duty and causation Court of Appeal provides guidance on breach of duty and causation issues in de minimis exposure claim; Claimant fails to show breach of duty Williams v University of Birmingham and another 28.10.11 Michael Williams died of mesothelioma in 2006 aged 54. As a physics undergraduate at Birmingham University in 1974 he conducted experiments in a University tunnel which contained lagged heating pipes from the 1930s and 1940s. These were subsequently shown to have contained a range of asbestos fibre types. The University did not dispute some exposure to a range of asbestos fibre types, but contended that exposure had been de minimis. Page 1 of 13

At the liability hearing at Leeds County Court, Her Honour Judge Belcher found for Mr Williams widow. The University appealed. The Court of Appeal addressed three core issues: What is the correct legal test for deciding breach of duty? Was the Judge entitled to conclude the lagging was in poor condition in 1974? Did the Judge apply the correct test when establishing causation? Held The Court of Appeal allowed the appeal on the first two issues but not on the causation argument. The correct measure of knowledge applicable to the University, following the Supreme Court s decision in Baker v Quantum Clothing Group Ltd and others [2011] (link to: http://www.kennedys-law.com/casereview/noiseinducedhearingloss/), was by reference to the state of knowledge and practice applicable in 1974, as expected of a reasonable and prudent employer of its type at the time, taking advantage of developing knowledge, but excluding hindsight. The Judge had mistakenly applied the test on causation in establishing breach of duty. The duty was to take reasonable care to ensure that Mr Williams was not exposed to a foreseeable risk of asbestos related injury. Reference to a material increase in the risk of contracting mesothelioma was incorrect and applicable to the causation test only. If exposure was found to have been de minimis there could be no breach of duty. The court allowed that, despite the lack of direct evidence, there was just sufficient evidence for the Judge to have concluded that the lagging was in fact in poor condition. In part the admission by insurers that the deceased had been exposed to fibres was relevant to this conclusion. However, even if the condition was poor, by reference to state of knowledge, the University would not have been in breach unless the Judge had been able to conclude that it would have been reasonably foreseeable to a body in its position in 1974 that, if exposed at low level, Mr Williams would have been exposed to an unacceptable risk of an asbestos related injury. Contemporaneous guidance did not provide such an alert. Thus although the lagging was deemed poor, there was no breach. On causation issues, the court decided that, following the Supreme Court s decision in Sienkiewicz v Grief (UK) Ltd [2011] (Link to: http://www.kennedys- Page 2 of 13

law.com/casereview/defendingmesotheliomaclaims/), all it was obliged to do to establish causation was make a finding of fact that tortious exposure to asbestos fibres materially increased the risk of contracting mesothelioma. It was not necessary to carry out a comparative exercise as to levels of exposure. The question of whether tortious exposure to fibres was material will be a question of fact for the judge in each case. Comment The decision is of support to defendants and their insurers and refreshingly demonstrates the ongoing debates inherent in asbestos cases. It includes cogent guidance on the current state of asbestos related law, the relevance of state of knowledge arguments (at a time when many had assumed such arguments to be all but forlorn), guidance in establishing asbestos breach of duty, and a helpful appendix giving a summary of knowledge of dangers of exposure to asbestos. Setting apart the facts in this case, admissions of the presence of asbestos should not be translated, without deliberation, into admissions of exposure to inhalable fibres. This may not always have been the case, whereas judges will naturally rely on admissions in preference to adjudicating on disputes or uncertainty on the facts. The ambit of breach of duty criteria, as opposed to criteria applicable to causation issues, may be ripe for review, as hinted by Lord Justice Patten in his concurring judgment. For more information please contact Richard Harris on +44 845 838 4823 or Richard.harris@kennedys-law.com. Feature articles Occupational disease claims: market developments A round up of recent news relating to the Atomic Veterans Litigation, HSE statistics, Legal Aid, Sentencing and Punishment of Offenders (LASPO) Bill, Löfstedt report, and tracing employers' liability insurance policies. Atomic Veterans Litigation in November 2011, a seven member panel of Judges in the Supreme Court heard the Claimants appeal. Judgment is expected shortly. This follows the Court of Appeal s decision (Link to: http://www.kennedys-law.com/casereview/atomicveteranslitigation/) in January 2011 that the majority of claims had not been brought within the limitation period. Between 1952 and 1958, the UK carried out a series of atmospheric tests of thermonuclear devices in the region of the Pacific Ocean. A group of 1,011 Claimants are claiming damages for the adverse Page 3 of 13

consequences to health which they allege have resulted from exposure to ionising radiation deriving from the tests. HSE statistics on 2 November 2011, the Health & Safety Executive published its annual ill health and non-fatal injury statistics, following on from the workplace fatal injury statistics published in March 2011. The statistics show that 2,321 people died from mesothelioma in 2009 and thousands more from other occupational cancers and diseases such as chronic obstructive pulmonary disease. The total number of mesothelioma deaths has increased from only 153 in 1968 and the annual number is predicted to increase to a peak around the year 2016. LASPO Bill the Legal Aid, Sentencing and Punishment of Offenders Bill is currently going through committee stage in the House of Lords. Given the significant number of tabled amendments to be discussed, the Bill is unlikely to have a smooth ride. One amendment to be marshalled is that success fees and ATE premiums should remain recoverable in certain categories of cases, including disease. Kennedys Civil Justice Group continues to provide our clients with the opportunity to have a voice on these issues and has recently met with Lords Thomas and Gold. Löfstedt report on 28 November 2011 the DWP published Professor Löfstedt s report, Reclaiming health and safety for all: An independent review of health and safety regulation. Professor Löfstedt highlights the figure given within HSE statistics for an estimated 8,000 cancer deaths in Britain each year that are attributable to past exposure to occupational carcinogens. In its response, the Government concludes: Professor Löfstedt s report is a significant step in our continuing effort to keep our workplaces safe, free businesses from red tape, and reclaim the reputation of health and safety that has been so damaged by the excesses of the compensation culture. Tracing employers liability insurance policies - on 31 October 2011, the DWP published a review statement for 2010 in relation to the Code of Practice for Tracing Employers Liability Compulsory Insurance Policies. The Code was launched in 1999. The review body was disappointed with the results, which showed that the overall success rate had not improved over the past three reporting years. The voluntary Code was replaced by the Employers Liability Tracing Office (ELTO) in April 2011. View our article on proposal for an Employers Liability Insurance Bureau and our preliminary views on the ELTO (Link to: http://www.kennedyslaw.com/article/employersliabilityinsurancebureauwhen/) For more information please contact Kieron West k.west@kennedys-law.com, David Bywater d.bywater@kennedys-law.com or Richard Harris richard.harris@kennedyslaw.com. Page 4 of 13

All change under the Control of Asbestos Regulations 2006 We consider the changes likely to be introduced as a result of intervention by the European Commission and the implications for businesses and their insurers. Asbestos related disease is the single greatest cause of occupational death in Great Britain, estimated to cause over 4,000 deaths each year. As a result, there are stringent regulations in force which govern how work with asbestos materials is carried out. However, following a complaint made in 2006, the European Commission issued a reasoned opinion stating that the omission of two terms within the Control of Asbestos Regulations 2006 (CAR06), non-friable and without deterioration of non-degraded material, meant that the UK had not fully implemented the relevant Directive. As a result, more types of work were considered exempt from regulation than should have been. UK response The UK intends to implement new legislation in the next few months which will put into place a new category of requirements when working with asbestos to ensure compliance with the Directive. The Health and Safety Executive has been carrying out a consultation in this regard. Submissions were required by 4 November 2011. The HSE is expected to publish its report by early February 2012. It is proposed that the two omitted terms will be included in a revised Regulation 3(2), using the exact words of the EC Directive. This approach is necessary to comply with the reasoned opinion and avoids any confusion over the intentions of the EC Directive. Whilst it is not expected that definitions will be given for the terms non-friable or without deterioration of non-degraded material in the revised Regulations, the HSE may issue guidance as to what they consider would fall into each category. Additional amendments will also be made to avoid the imposition of an additional requirement to hold a licence for some types of lower risk work. These changes mean that a new category of reporting will be created, which fits between the two current categories of licenced and non-licenced work. Current requirements The current regulations exempt those carrying out lower risk work from the requirements to: Page 5 of 13

New category 1. Notify work with asbestos to the relevant enforcing authority before work is commenced. 2. Carry out medical examinations to assess each worker s state of health before exposure to asbestos begins and then at least every three years. Medical examinations must be carried out by a doctor appointed by HSE. 3. Maintain a register for each worker of the type and duration of work done with asbestos. This register must be held for at least 40 years. 4. Hold a licence. 5. Have arrangements to deal with accidents, incidents and emergencies. 6. Designate asbestos areas. Under the revised regulations there will be a third category of work. This will be a new category of non-licensed work, which remains exempt from requirements 4 to 6 above. However employers will be required to comply with requirements 1 to 3. This new category of work will be referred to as Notifiable Non-Licensed Work (NNLW). To enable workers to continue to carry out NNLW when the revised regulations come into force, a three year transition period is proposed before the requirement for an employee to have a medical examination prior to starting work with asbestos comes into force. However there is no transition period expected for the other two requirements. Implications The potential demand for medical examinations is likely to be the most significant challenge. This will also add a cost burden to every employer, and it remains to be seen whether employers will adhere to these new rules, particularly small businesses. The benefit in increasing awareness and reporting requirements may reduce the number of asbestos related claims in the future. However, this is expected to be a long term effect. Small businesses may not feel encouraged to comply with the new Regulations when the immediate benefits are low, given the additional costs involved. Whilst employers are required to take out employers liability insurance, insurers are now regularly providing exclusions in their policies for asbestos related claims. However, whilst this may be some way off, the courts may Page 6 of 13

one day take the view that insurance companies cannot exclude liability for particular injuries, when at the date of inception there was a statutory requirement to ensure employers have appropriate liability insurance. Ensuring that their insureds are aware of, and prepared for, these changes may prevent a number of potentially expensive future claims. It would also convey an immediate impression that insurers care about their clients risks, even in areas that are not covered by insurance, to encourage a general ethos of safety. For more information please contact David Bywater on +44 124 529 4806 or d.bywater@kennedys-law.com. Employers Liability Insurance Bureau will it happen? Is it any real surprise that an Employers Liability Insurance Bureau (ELIB) has yet to come to fruition? Although there have been some recent indications that the Government is continuing discussions with the insurance industry, we would say not. Nick Starling, the ABI s Director of General Insurance and Health, said in February 2010 that an ELIB could present a serious moral hazard, which doesn't leave you in any doubt as to his opinion on the matter. The continuation of the recession has done little to alter Mr Starling's view that the ELIB would simply be unfair on businesses by raising a levy on them to fund the scheme. Finally, it is not unexpected that the Conservative government would side with employers, such is their manifesto. The ELIB Bill failed to make it beyond the first reading in the House of Commons, and that position is unlikely to change until this country s financial position improves. By all accounts that isn't going to be any time soon. Employers Liability Tracing Office It is, however, not all doom and gloom for claimants, as the Employers Liability Tracing Office (ELTO) appears to be a success since its introduction in April 2011. Kennedys experience is that the results of searches on the database have been quicker than under the previous voluntary Employers' Liability Code of Practice tracing service and the staff most helpful when tracking down insurance histories for clients. Adrian Brown, chair of the ELTO, appears keen to improve on successes to date and has warned both insurers and brokers to "keep their foot on the pedal." If the ELTO continues to flourish, then perhaps this will remove the necessity of an ELIB in any event. Comment Page 7 of 13

The principal need for an ELIB arises from industrial disease claims, particularly those claimants exposed to asbestos dust. In such claims the tortious insult could have been over 50 years ago and also have continued over a prolonged period of time. Accordingly the lack of insurance cover for an employer can be a common occurrence. The joint and several liability imposed on a negligent employer by the Compensation Act 2006 provides greater protection for most mesothelioma suffers in assisting their recovery of full damages, but that is of little comfort to other disease sufferers. A recent Supreme Court decision allowed legislation to proceed in Scotland to make the asbestos condition of pleural plaques a compensatable condition, which has been followed in Northern Ireland. As far as claimants are concerned, this does give rise for an immediate need for an ELIB if they hope to recover their full award of damages. It is likely that pleural plaques claimants would make an immediate demand upon the ELIB to satisfy or contribute towards their claims. The damages awards for pleural plaques are relatively small, but the claimants costs can add considerably to the overall insurer spend. Perhaps this is another reason why we are unlikely to see an ELIB in the near future. From the perspective of employers and their insurers, given the significant costs that would be involved in establishing and funding an ELIB, any further moves towards its introduction should be firmly resisted. View our article on pleural plaques: Northern Ireland follows Scotland s lead. (Link to: http://www.kennedys-law.com/article/pleuralplaquesnorthernireland). For more information please contact Cameron Clark on +44 114 253 2033 or cameron.clark@kennedys-law.com. Pleural plaques Northern Ireland follows Scotland s lead Following the Supreme Court s decision in October 2011 declaring that the Scottish Parliament acted within its powers in introducing legislation which made claims for pleural plaques compensatable, the Northern Ireland Assembly has followed suit by introducing similar legislation. Damages (Asbestos-related Conditions) Act (Northern Ireland) 2011 The Act came into force on 14 December 2011. Section 1(1) provides: Asbestos-related pleural plaques are a personal injury which constitutes actionable damage for the purposes of an action for damages for personal injuries. Section 1(2) provides: Page 8 of 13

Any rule of law the effect of which is that asbestos-related pleural plaques do not constitute actionable damage ceases to apply to the extent it has that effect. Thus, both the Scottish and Northern Ireland Parliaments have introduced legislation which negates the House of Lords decision in Johnston v NEI International Combustion Ltd [2007], by which asymptomatic pleural plaques were ruled to comprise an uncompensatable injury. Comment: Following the House of Lords decision in Johnston, in July 2008 the Ministry of Justice invited submissions from interested parties as to whether legislation should be introduced in England and Wales to permit claims by victims of symptomless pleural plaques. In its response to the consultation, which was finally published in March 2010, the then Labour Government declined to overturn the House of Lords decision. Its only concession was to establish a limited scheme to pay 5,000 to individuals who had already begun a claim at the time of the House of Lord s ruling. Whether or not one approves of compensation being paid to a person who has no actual pain, discomfort or disability, there does now exist an unsatisfactory situation where certain subjects within the United Kingdom are (on geographical grounds alone) permitted to bring a claim for damages for asymptomatic asbestos related conditions and others are not. This is not only an apparent injustice, but the conflicting law applying to different parts of the United Kingdom is likely to lead to forum shopping and to jurisdictional disputes. It may well be that an asymptomatic pleural plaques victim was employed by a company domiciled in England but was deployed to work in Scotland and/or Northern Ireland where he was exposed to respirable asbestos dust and fibres. There may also be claims where claimants with asymptomatic pleural plaques were employed and culpably exposed to respirable asbestos dust and fibres by several employers domiciled in different jurisdictions within the United Kingdom. It does not take a genius to predict the problems which are likely to occur in determining matters of jurisdiction and in trying to apportion damage between employers domiciled in, or who have negligently exposed the claimant in, different jurisdictions. It is understood that insurers are contemplating an appeal of the Supreme Court s decision to the European Court of Human Rights, and so it may be sometime before the conundrum is resolved. For more information please contact Kieron West on +44 845 838 4831 or email k.west@kennedys-law.com. Page 9 of 13

Supreme Court to rule on EL policy trigger litigation We provide an update following the Supreme Court hearing in December 2011, where Kennedys represented two of the local authorities. The final appeal in what has become known as the EL policy trigger litigation occupied the Supreme Court from 5 to 15 December 2011. Background The origins of the litigation can be traced back to the Court of Appeal s decision in Bolton Metropolitan Borough Council v Municipal Mutual Insurance Ltd and another [2006]. MMI were found liable to indemnify Bolton under a public liability policy in respect of a para-occupational mesothelioma claim because liability to indemnify under the policy (written with an injury occurring wording) was triggered by the date of the occurrence of the injury, and not the date of the negligent exposure. The medical evidence in Bolton was to the effect that the injury occurred when the mesothelial cell mutated, about 10 years before first physical symptoms occurred. Although MMI had (unsuccessfully) contested the Bolton case on the basis that it was the date of negligent exposure which triggered the insured s right to indemnity, they soon realised (as did other insurers in run-off ) that a similar finding in relation to the trigger of their EL policies could save them millions of pounds in relation to mesothelioma claims, because they had ceased to write any form of insurance in 1992 and the deemed date of injury in any new mesothelioma claim was bound to be after 2002. The EL policy trigger litigation consists of six separate actions by insurers in runoff who seek declarations to the effect that they are entitled to repudiate claims by mesothelioma victims and/or by their employers who had taken out EL insurance covering the period of the mesothelioma victims culpable occupational exposure. The insurer clauses in the EL policies under consideration are variously written with wordings which provided indemnity in respect of injury or disease contracted ; injury or disease sustained or contracted ; and for injury or disease contracted or caused within the currency of the policy. High Court At first instance, Mr Justice Burton found that, whatever the wording was in an EL policy, the policy was to be construed as having been triggered by the date of inhalation. Therefore, it was the insurer who was on risk at the date of inhalation which was liable to indemnify in respect of the injury. Burton J also made a further finding that, on the basis of the medical evidence he had heard, the deemed date of injury in a mesothelioma claim was the date of angiogenesis, namely the date when the tumour developed its own independent blood supply, which is about five years before the manifestation of first physical symptoms. Page 10 of 13

Court of Appeal The insurers appealed, asserting that the policies should be construed on the basis of their literal meaning. In addition, they disputed Burton J s finding that an injury was caused/contracted/sustained on inhalation of asbestos fibres, contending that there was no actionable injury during the period they were on cover. Whilst Burton J s judgment gave effect to the manner in which insurers had responded to mesothelioma claims for several decades, and it ensured that no mesothelioma victim went uncompensated, the Court of Appeal produced a complex judgment which pleased none of the parties involved and was a nightmare for insurers to apply. It also caused many insureds to have black holes in their EL insurance, on account of the different policy wordings adopted by different insurers. This therefore resulted in appeals and cross appeals on both sides of the argument to the Supreme Court. Supreme Court Before the Supreme Court the Defendants (as the insurers in run-off are known) stuck pretty closely to their printed cases. They sought to persuade the court that these were cases of pure construction/interpretation of various policy wordings and that it should not be distracted by the fanciful arguments of the Claimants (the individual mesothelioma victims and their employers). In their submissions, the Claimants, who included Kennedys clients: Submitted that the construction of the insurer clauses asserted by the Defendants was based on stripping the clauses apart and not reading them as a whole. Argued that the Bolton decision should be distinguished. Insofar as the court found the policy wordings ambiguous, the Claimants invited the court to construe those wordings contra proferentem (i.e. against the party relying on the ambiguity). Invited the court to look at and give effect to the intentions of the parties at the time the contracts of insurance were entered into. Cited decisions from other jurisdictions to tempt the court away from the Defendants contention that only an actionable injury could trigger an EL policy. Sought to demonstrate how the earlier decisions in Fairchild v Glenhaven Funeral Services Ltd [2002] and Barker v Corus (UK) Plc [2006] interfaced with EL insurance contracts written with sustained wording. Here it was asserted that limited medical knowledge had led to the Fairchild Page 11 of 13

exception, which treated each inhalation as being causative of the damage which eventuates, so as to constitute a deemed injury for the purposes of the policy. The court was therefore invited to conclude that the trigger for an EL policy should be treated in a similar manner. Needless to say, the Supreme Court s judgment has been reserved. Kennedys will keep you updated. For more information please contact Kieron West on +44 845 838 4831 or email k.west@kennedys-law.com. Claims spotlight: jurisdictional issues Kennedys successfully deters mesothelioma claim against UK parent company of Canadian subsidiary. Solicitors acting on behalf of a mesothelioma victim wrote a letter of claim to the UK parent of a Canadian subsidiary alleging culpable occupational exposure whilst working for the subsidiary in Canada from 1977 to 1978. On enquiry, the Claimant s solicitors advised that it was their client s intention to pursue a claim against the Canadian subsidiary here in the UK. They argued that there were other culpable former employers domiciled in the UK and it would not be sensible or economic to pursue a separate action in the Canadian Court. The Claimant s solicitors also asserted that the Canadian law of negligence was very similar to the English law of negligence. Issues raised We were able to persuade the Claimant s solicitors not to pursue the claim against our client, by putting forward the following arguments: At all times material to their client s claim, Canada operated a no-fault workers compensation scheme under which common law claims for damages for work related injuries were not permitted. Claims for work related injuries in Canada are now governed by the Workers Compensation Act, RSA 2000. Section 21(1) of this Act states that no action lies for the recovery of compensation under this Act and all claims for compensation (i.e. statutory workers compensation) shall be determined by the Workers Compensation Board. The Alberta Limitations Act, RSA 2000 provides an absolute limitation period. This operates to statute bar all claims brought more than 10 years after the date on which the cause of action accrued. The absolute period Page 12 of 13

begins to run from the date of the negligent or wrongful act complained of and not from the date when the damage was first discovered. In Durham v T&N Plc [1996] a mesothelioma victim had been occupationally exposed by a wholly owned Canadian subsidiary of the Defendant. He sought to recover damages by means of an action issued out of the High Court here in the UK. Expert evidence of Canadian law, adduced by the Defendant, established that there was no right to bring a common law claim for damages for negligence or breach of duty on the part of an employer or former employer in Canada. Any claim had to be brought under Canada s no-fault workers compensation scheme. At first instance and in the Court of Appeal it was held that Canadian law was to be applied, because it had the closest connection with the acts and omissions complained of. Also, since the Claimant was unable to maintain a common law action for a work related injury against the Defendant in Canada, he could not maintain such an action here in the UK. Comment Under the principle laid down in Fairchild v Glenhaven Funeral Services Ltd [2002], the Claimant was still entitled to pursue a claim for the entirety of his damages against the UK domiciled former employers. However, our client had no further involvement in the claim. For more information please contact Kieron West on +44 845 838 4831 or email k.west@kennedys-law.com. Kennedys is a trading name of Kennedys Law LLP. Kennedys Law LLP is a limited liability partnership registered in England and Wales (with registered number OC353214). Page 13 of 13