Insurance companies may have failed in an attempt to stop payouts to workers with a lung condition caused by asbestos, but they did manage to limit compensation
Both sides have claimed victory in a recent landmark court battle over asbestos liability claims. On 15 February, Mr Justice Holland handed down his judgment in the Manchester High Court in Grieves & Others vs ST Everard & Others.
It was a test case pursued by 10 men against 10 companies who had employed them. The employers’ case was run by two insurance companies, Norwich Union Insurance and Zurich Insurance, and the DTI representing the interests of British Ship Builders, which no longer exists. Each of the 10 men has developed pleural plaques and the defendants admitted that each man had been negligently exposed to asbestos and had developed the pleural plaques as a result.
Pleural plaques are localised areas of thickening of the membranes which surround the lungs, caused by the inhalation of asbestos, although how exactly the plaques are formed is not yet certain. As a rule, pleural plaques do not lead to any symptoms, although occasionally an uncomfortable grating sensation may occur while breathing. The only ways to discover the presence of pleural plaques are by X-ray or CT scan. Pleural plaques are evidence of asbestos exposure and of an increased risk of developing fatal conditions such as mesothelioma.
For nearly 20 years, insurers have been paying compensation to individuals with pleural plaques on the basis of previous case law. In this case insurers sought to overturn that case law and to argue that the presence of pleural plaques is insufficient to found a claim because of the lack of any symptoms. The men argued that not only were they entitled to claim damages, but that they were also entitled to greater damages than those previously awarded.
The claimants were victorious in that they established that they could claim damages as a consequence of having pleural plaques. The judge held that, despite the fact that pleural plaques were asymptomatic, they did amount to physiological damage resulting from exposure to asbestos fibres and penetration of the body by asbestos fibres, and that their presence indicates an assessable risk of the future onset of symptomatic disease, such as lung cancer. Together with anxiety as to present or prospective suffering, this represented sufficient damage to the claimants to complete the foundation of a cause of action. On their own, the mere presence of the pleural plaques would have been insufficient and the additional element of anxiety was essential.
The insurers were victorious in that the judge set a lower benchmark for the amount of damages payable to claimants who have pleural plaques.
Some of the claimants were seeking provisional damages, in other words an award based on the assumption that no further physical deterioration will occur, but that if it does, a further award can be made by the court. The other claimants were seeking final damages, in other words a “once and for all” award with no possibility of further awards. The judge held that the average provisional award should be £3500-4000, a reduction from the figure of £6000-7000 argued for by the claimants. He also argued that the average final award should be £6000-7000, a reduction from the £12,500-20,000 award argued for by the claimants.
Leave to appeal was granted and it seems unlikely that this case will be the final word on the issue. The stakes are huge. Asbestos-related claims are expected to cost UK insurers up to £10bn over the next 40 years, with pleural plaque claims accounting for more than £1bn of that sum. It has been estimated that there are 14,000 claims a year in respect of pleural plaques, that they make up 75% of all asbestos claims, and that about £25m a year is paid out by insurers. The judgement could lead to savings of up to £750m in total for insurers, a significant reduction. Had the insurers been totally successful in court, that reduction would have been even greater.
Neither side can claim outright victory and the compensation war is far from over. The next battle seems set to take place in the Court of Appeal when employees exposed to asbestos will again take to the field.
Jane Hughes is a construction solicitor at Kendall Freeman. Email her at firstname.lastname@example.org