This blog was written by Ivan Bowley who appeared for the successful Claimant. He is instructed by Tom Bradley of Simpsons Solicitors.

A recent decision of the High Court considers whether the right to seek further damages under a provisional damages order passes to the injured victim’s estate on his death.

Mr Hammacott developed asbestos related pleural plaques and minor asbestosis as a result of asbestos exposure sustained during various periods of employment with the defendants. In 1991 he issued a claim for provisional damages pursuant to section 32A of the Senior Courts Act 1981. The immediate award was determined at trial in 1993 and the parties subsequently agreed a consent order (PDO) which gave Mr Hammacott the right to seek further damages if he developed any of a number of risk conditions, including deterioration of his asbestosis or pleural thickening.

The PDO provided that: “The Plaintiff do have leave to apply (without time limit) for further damages pursuant to Order 37 Rule 10 if he does develop the aforesaid conditions or any of them.” Attached to the order was an agreed statement of facts which recorded that: “It is agreed between the parties that the Plaintiff can apply for further damages at any time during his life”. Many years later Mr Hammacott developed more serious asbestos disease but died in 2017 without having issued an application for further damages. It was alleged that his asbestos disease caused his death.

The executor of Mr Hammacott’s estate issued an application under CPR 19.2 to be substituted as Claimant in Mr Hammacott’s claim so that he could then pursue an application for further damages on behalf of the estate pursuant to section 1(1) of the Law Reform (Miscellaneous Provisions) Act 1934, and a claim on behalf of Mr Hammacott’s widow pursuant to section 1 of the Fatal Accidents Act 1976. The question for the court was whether the benefit of the PDO survived and passed to Mr Hammacott’s estate pursuant to section 1(1) of the 1934 Act or, as the Defendants contended, it died with him.

The Defendants opposed the application on a number of grounds. Mr Hammacott’s original cause of action had “merged” with the judgment and so no longer existed. The right to seek further damages was therefore to be determined in accordance with the PDO together with the agreed statement of facts which limited the right to seek further damages only to Mr Hammacott and only during his lifetime. The statutory scheme did not envisage anyone other than the injured victim having the right to seek further damages.

The Claimant argued that the PDO comprised part of Mr Hammacott’s original cause of action, relying on the decision of HHJ Roberts in the County Court case of Guilfoyle v North Middlesex University Hospitals NHS Trust (2018). That cause of action therefore survived for the benefit of Mr Hammacott’s estate. The Judge agreed and considered that Guilfoyle had been correctly decided.

The Judge found that the term “without time limit” in the PDO did not restrict the right to apply for further damages only to Mr Hammacott. The reference in the agreed statement of facts to the application being made in the deceased’s lifetime did not appear in the PDO itself, and, even if it had, it was only a stipulation as to time and did not prescribe who was permitted to make the application. The Judge also rejected the argument that the right to claim further damages ended with Mr Hammacott’s death. The term “without time limit” meant exactly what it said and was not restricted to Mr Hammacott’s lifespan.

It was not in dispute that the relevant procedure was contained in CPR 41 which had replaced RSC Order 37 under which the original consent order had been made. The Judge found that the statutory scheme under section 32A of the Senior Courts Act 1981 and the procedural rules for provisional damages in CPR 41 did not limit the award of further damages only to the injured victim. Nothing in the legislation and the rules prevented the injured victim’s rights passing to a third party, including the victim’s estate.

Because of the Judge’s findings on the effect of the statutory scheme, CPR 41 and the language of the PDO, it was not necessary for the Judge to go on to consider whether an application to extend time to apply for further damages was necessary. Under Order 37 Rule 8(3) any application to extend the time within which a party could seek further damages had to be made before the expiry of the existing period. However, CPR 41 contained no similar stipulation. In Blythe v Ministry of Defence [2013] All ER 326, the Master had ruled that an application by a living victim to extend time made 2 years after the initial period had expired was permissible. That decision was upheld on appeal to the single judge and subsequently by the Court of Appeal.

Having made the findings summarised above the Judge found that the requirements of CPR 19.2 had been satisfied and the Claimant could be substituted so that the claim under section 1(1) of the 1934 Act claim could proceed.

Although not central to the issue before the Court the Judge also heard submissions about the impact of limitation. He found that no new limitation period applied in respect of the estate claim. This decision is consistent with Lloyd v Humphries [2015] EWHC 525 (paras 89 – 90). The time period within which an application for further damages could be made was determined by the terms of the PDO. If he was wrong about that the Judge stated that CPR 19.5 applied. CPR 19.5 permits substitution after the expiry of a relevant limitation period, and for personal injury actions provides that the court may defer resolution of that issue to trial.

A further question concerned a proposed amendment of the original claim to join the Fatal Accidents Act claim on behalf of Mr Hammacott’s widow. Section 3 of the Damages Act 1996 expressly permits a claim by the dependants where a provisional damages order has previously been made. CPR 17.4(2) permits the addition of a new claim after limitation has expired where it arises out of the same or substantially the same facts as the existing claim. The Judge stated that it was not necessary for him to rule on the question of whether it would be appropriate to permit an amendment of the existing proceedings to add a claim under the 1976 Act but nevertheless went on to consider the point. He stated that in order to succeed it would have to be shown that Mr Hammacott’s death arose out of the original tort; those facts were no part of the proceedings that were brought by Mr Hammacott and therefore the 1976 Act claim did not arise out of substantially the same facts as the existing claim.

Commentary

The Judge rejected the Defendants’ argument that the meaning of the PDO was to be found in the agreed statement of facts. By contrast, in Green v Vickers  [2003] EWCA Civ 904, the Court of Appeal determined the meaning of a term dealing with causation in a provisional damages claim by reference to the agreed statement of facts in that case. Inevitably each case will turn on its own facts, but where the language of the order appears inconsistent with the agreed statement of facts it should be the order that prevails.

The author also respectfully suggests that the Judge was wrong about the application of CPR 17.4(2). That rule states: “The court may allow an amendment whose effect will be to add or substitute a new claim, but only if the new claim arises out of the same facts or substantially the same facts as the claim in respect of which the party applying for permission has already claimed a remedy in the proceedings.” In the present action the claimant is seeking further damages because of the Mr Hammacott’s more serious asbestos disease and consequent death. The 1976 Act claim on behalf of his widow arises precisely because, it is alleged, Mr Hammacott died as a result of his asbestos related injury. Both claims arise out of the same tortious exposure to asbestos dust and concern the same asbestos disease. It is difficult to see how the two claims do not arise out of the same or substantially the same facts.

The issues that arose in this case are not uncommon in asbestos litigation, but they can also arise in other provisional damages claims. They concern the interpretation of provisional damages orders made many years earlier and under a rules regime that has since been replaced by the CPR. Language that was thought to be watertight when the original order was made may now be found not to achieve the result originally intended.

Problems can easily be avoided if the language of the provisional damages order specifically provides for claims by the injured victim’s estate (and/or dependants). When required to do so the Courts have provided for this outcome. The judge in Guilfoyle ordered that any further application for damages had to be made within 12 months of the victim’s death. In Prater v British Motor Holdings Ltd [2016] Lawtel, the judge specified a period of 3 years after the date of death.

This blog is written by John-Paul Swoboda and Cressida Mawdesley-Thomas. John-Paul Swoboda successfully acted for the Claimant, instructed by Shaheen Mosquera of Fieldfisher, in Keegan v (1) Independent Insurance Company Ltd (2) Zurich Insurance PLC [2022] EWHC 1992 (QB).

Keegan is the first case to go to trial, so far as we are aware, to consider the application of The Third Parties (Rights against Insurers) Act 2010 (‘the 2010 Act’) in the context of claims for mesothelioma. Regular readers of this blog will no doubt remember the case of Brooks (link to blog here) which considered the issue through the prism of a strike out application.

It is, we think, a significant decision:

• It makes any argument that the cause of action is complete in mesothelioma cases years before the onset of symptoms hard, if not untenable.
• Arguments against suing an insurer(s) directly in mesothelioma claims (where the employer is no longer a live entity) on the basis that the cause of action was complete before 1 August 2016 are therefore hard, if not untenable.

Background

Claimant

Mr Keegan was exposed to asbestos whilst working for his employer Jas. C. Flaxman & Sons Ltd at various Marks & Spencer stores between 1972 and at least 1984. He began to suffer from symptoms of mesothelioma in about January 2021. His claim was supported by witness statements and also medical evidence. To avoid the delay of restoring Jas. C. Flaxman & Sons Ltd to the register Mr Keegan brought his claim directly against their insurers (IICL and Zurich), relying on the 2010 Act. This was particularly important as he was paying for expensive dual agent immunotherapy from his own funds.

First Defendant

The First Defendant, an insolvent insurer, did not respond to the claim and took no part in the proceedings. That is not to say there is no potential paymaster however, as the FSCS agreed in principle to indemnify but took issue with the fact that an action had been brought directly against the insolvent insurer. That issue of whether the FSCS is liable for the judgement against the insolvent insurer was not resolved during the current action.

Second Defendant

The Second Defendant expressly denied that the 2010 Act applied or operated to confer any cause of action against the insurers. The Second Defendant contended that any liability of the insured to the Claimant was incurred prior to the commencement of the 2010 Act and accordingly it did not apply.

Settlement was reached with the Second Defendant shortly before trial for £650,000 plus an indemnity for future treatment costs. This left a shortfall of about £200,000 on the total claimed (which was £854,076.23 per the schedule of loss) which is the sum which the Claimant went to trial on in the action against the First Defendant.

The 2010 Act

The 2010 act operates to transfer to third parties’ the rights against the insurer that the ‘relevant person’ has when that relevant person incurs an insured “liability”. This is set out in section 1 of the 2010 Act which provides (emphasis added):

(1) This section applies if—

(a) a relevant person incurs a liability against which that person is insured under a contract of insurance, or

(b) a person who is subject to such a liability becomes a relevant person.

(2) The rights of the relevant person under the contract against the insurer in respect of the liability are transferred to and vest in the person to whom the liability is or was incurred (the “third party”).

(3) The third party may bring proceedings to enforce the rights against the insurer without having established the relevant person’s liability; but the third party may not enforce those rights without having established that liability.

What this means in the context of a Claimant suing an insurer directly in a PI action is that the Claimant is vested with the right to bring a claim directly against an insurer who provided relevant EL / PL cover so long as the employer/occupier is a relevant person (i.e., either in some kind of insolvency situation or dissolved). The rights are enforceable once liability is established and liability is established under the 2010 Act by a declaration of the insured’s liability. It should be noted that this marks an important departure from the 1930 Act, which the 2010 Act repealed, which required liability to be established against the insolvent company/person before the claim could be brought against the insurer and before details of applicable insurance could be obtained.

The Issue

The central issue was whether the former employer had “incurred a liability” (that phrase being used in s1(1) of the 2010 Act) before 1 August 2016, the date that the 2010 Act came into force, such that the Claimant was entitled to bring the claim against the insurers directly.  

That task was made  easier  as Redman v Zurich Insurance Plc [2017] EWHC 1919 (QB) had already decided what the phrase “incurs a liability” means in section 1(1) the 2010 Act:

“Liability is incurred when the cause of action is complete and not when the claimant’s rights against the wrongdoer are thereafter crystallised whether by judgment or otherwise.”  [23]

In Keegan, there was no issue that the negligence occurred long before 1 August 2016 (the tortious exposure was between 1972 and 1984). The issue was when was damage, sufficient to complete the cause of action, sustained.

Discussion of the case

The Court considered the relevant case law on actionable damage fully and thoroughly the cases of Cartledge v E Jopling & Sons Ltd [1963] AC 758; Pirelli General Cable Works Ltd v Oscar Faber & Partners (A firm) [1983] 2 AC 1; Hicks v Chief Constable of South Yorkshire Police [1992] P.I.Q.R. p433; Rothwell v Chemical & Insulating Co Ltd [2008] AC 2981; Dryden v Johnson Matthey PLC [2018] UKSC 18 all being considered. The Court also considered the insurance cases, and in particular The Trigger litigation and whether that shed light on when actionable damage arose in the context  of mesothelioma.

This is accordingly a fully considered decision albeit one-sided as the First Defendant was unrepresented and the Second Defendant did not, and could not, make any submissions to prejudice the position of Zurich in light of the agreement with the Claimant. Accordingly, Yip J’s finding that it is only when the mesothelioma “manifests itself by radiological changes and/or symptoms that actionable damage occurs. Until then, the claimant is not appreciably worse off either physically or economically.” is a decision to be treated with the utmost respect. Following this decision, it is our view that the mere fact that an insurer has been sued directly is no reason for judgment not to be entered at the show cause stage.

Further Yip J’s indication that where symptoms onset after 1 August 2016 it is for the Defendant to prove that actionable damage in fact occurred is important. It is no longer tenable, it is suggested, for a Defendant to baldly assert at a show cause that the cause of action was complete before 1 August 2016 where symptoms onset much later: such an assertion would fail to meet the burden (whether evidential or legal) which Yip J indicated applies.

Finally it would be churlish to quibble with Yip J over whether actionable damage occurs at the point of asymptomatic pleural effusion or the onset of symptoms as it will be irrelevant to the question of whether the cause of action was complete before or after 1 August  2016: as Yip J noted, “… On either basis, I am satisfied that there was no actionable damage until long after the commencement date of the 2010 Act.” That, it is suggested, will be the same in any mesothelioma diagnosed in the past few years.