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Trigger Litigation; BAI (Run off) Ltd v Durham and Other cases

17 April 2012
The issues

Mesothelioma – employer liability insurance policies

The facts

Employer liability insurance policies came before the Supreme Court for interpretation as to the meaning of particular clauses dealing with cover in respect of mesothelioma compensation claims. There were six actions dealing with nine specimen policy wording over a period from the late 1940s to 1998. The Supreme Court by a majority of four to one found for the claimants in those actions. The issue was whether the policies responded to mesothelioma which developed as a disease during the relevant insurance periods, or whether the insurance policies responded to mesothelioma which developed and manifested itself later – but where the exposure occurred during the insurance period. In particular, the meaning of particular words used in the policies was considered, namely ‘sustained’ and ‘contracted’. Lord Manse gave the main judgment and emphasised the importance of avoiding over-concentration on single words and phrases viewed in isolation. The polices should be construed by looking at them as a whole and broadly.

Lord Mance considered:

  1. The wordings on their face required course of employment to be contemporaneous with the sustaining of injury.
  2. The insurance wordings demonstrated a close link between the actual employment undertaking during each insurance policy and the premium agreed to be payable for the risks undertaking in respect of that period.
  3. If insurances addressed risks arising from employment during the insurance period only, then there was a potential gap in cover. This was with regard to employer’s breaches of duty towards employees in one period which only led to injury or disease in another later period.
  4. There was a risk that employers would be vulnerable to any decisions by insurers not to renew. He also took the view considering the interpretation of the Employers Liability (Compulsory Insurers) Act 1968 that the only conclusion which gave proper effect to the protective purpose of that legislation that it required insurance on a causation basis.

Although, ‘sustained’ might initially appear to refer to the development or manifestations of mesothelioma, the only approach which was consistent with the nature and under line purposes of the insurances both before and after the Employer Liability (Compulsory Insurers) Act 1968 was one which looked to the causation to the accident or disease which injured the employee. The disease might properly be said to have been ‘sustained’ by an employee in the period when it was caused or initiated even though it only developed or manifested itself subsequently.

In respect of the word ‘contracted’, Lord Mance concluded as did the Court of Appeal that the word used in conjunction with disease looked to initiating or causative factor of the disease.


Some discussion was had as to the proper interpretation of the House of Lord decision in Fairchild. The majority agreed that the special causation rule in Fairchild operated by relaxing the rule of causation such that in mesothelioma cases the law accepted a weak or broad causal link. Specifically, an exposure which might or could not be shown on the ordinary balance of probabilities to have played a role in the actual occurrence of the disease. Lord Phillips, on the other hand, took the view that the correct analysis was that the house had taken as the basis of liability the wrongful creation of or contribution to the risk of mesothelioma by exposure to asbestos. The other three Justices agreed with Lord Mance’s interpretation.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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