12KBW Release 2nd Edition of ‘Asbestos: Law and Litigation’

The wait is over. After much hard work by 12KBW barristers, and in particular the general editors, Harry Steinberg QCMichael Rawlinson QC, and James Beeton, Sweet & Maxwell have published the second edition of ‘Asbestos: Law & Litigation’.

The new edition is essential reading for all those practicing in this area. It features key updates on damages in fatal asbestos disease claims, litigation concerning exposure in schools, costs and procedure, and much more.

The book can be ordered online here.

Brooks v  Zurich v Aviva [2022] EWHC 1170 (QB) A stitch in time: claiming direct against the insurer

John-Paul Swoboda acted for the Claimant and is instructed by Melloney Harbutt of Boyes Turner.

On 1 August 2016 the Third Parties (Rights against Insurers) Act 2010 came into force. That, on the face of it, was a big moment in civil litigation as with the passing of that Act there was, or should have been, a significant reduction in the time taken to resolve complex litigation involving an insolvent or dissolved company. On the face of it, therefore, the passing of the 2010 Act was a big moment for mesothelioma[1] victims because where it had often proved difficult to resolve the thorniest claims in life previously there was now an Act which could save a lot of the time: the roughly six months needed to get a company restored to the register; however long it took to get judgment against the restored company (which admittedly can be a very quick process because of the asbestos list), and perhaps years to resolve any insurance coverage disputes[2]. The 2010 Act allowed three sets of proceedings to be brought in one, and what’s more the proceedings could be brought in the highly efficient asbestos list which oozes with experience and undoubtedly gives claimants the best shot of resolving claims in life if that is what they want.

On 20 May 2022 Master Davison handed down judgment in a strike-out application in Brooks v Zurich v Aviva where the defendants sought to argue that the claim under the 2010 Act was misconceived on the basis that the claimant’s cause of action was complete prior to 1 August 2016 and therefore the 2010 Act did not apply. It did not matter that the claimant did not have any symptoms until March 2020 said the defendants as it became inevitable that the claimant would suffer mesothelioma from the date of angiogenesis (the date where the tumour in the body develops its own blood supply) and this they asserted was prior to 1 August 2016. This argument was made on the basis not so much of the law of the Trigger litigation but on the discussion of the science and medicine. The defendants argument in an nutshell is that once the mesothelioma is inevitable the Claimant is worse off and his cause of action complete even though he may not know about the disease for perhaps 5 or 10 years.

Master Davison summarised the Claimant’s position as follows:

  1. A physical change, or even something that might properly be called an “injury” did not necessarily amount to actionable damage.  In each case, the question was whether that change was “material” or left the claimant “appreciably worse off”.
  2. The words used by the House of Lords in Rothwell and other high authorities to define the concept of actionable damage such as “appreciably”, “perceptibly” or “materially worse off” all necessarily implied that damage was detectable or capable of measurement.  For example, “appreciable” meant “capable of being estimated or assessed”.
  3. Relying on the medical evidence in this case and on paragraph 52 of the judgment of Rix LJ in the Durham v BAII trigger litigation, Mr Swoboda said that the pathogenesis of mesothelioma was, until its late stages, undetectable and undiagnosable and so, by definition, incapable of measurement or assessment.
  4. At the (still relatively early) stage of angiogenesis, the tumour would cause no symptoms and would be undetectable.  Although that state of affairs might constitute a physical change in the body (albeit an unknowable one), the claimant was not appreciably / perceptibly / materially worse off because there were as yet no deleterious effects and no damage that was susceptible to detection or measurement.
  5. It did not matter that at that stage the “die was cast”, (if it was).  The inevitability of progression of the disease was, by itself, irrelevant.  A latent injury or a latent loss of amenity did not sound in damages; see Guidera v NEI Projects (India) Ltd (1988) (an asbestosis case).
  6. In any event, whether there was actionable damage was, in each case, a question of fact.  Here, there was no medical evidence relating specifically to the claimant as to the precise date of angiogenesis.  Dr Rudd’s evidence about the date of angiogenesis was only an approximation based upon epidemiological evidence.  The date of angiogenesis in the claimant’s case might have been less than 5 years prior to clinical manifestations.  Although the claimant would bear the legal burden of proving his claim, he would discharge that burden by reference to the fact that liability was admitted and that he first manifested symptoms in March 2020, (see the speech of Lord Pearce in Cartledge at 784).  On the basis of the maxim “he who asserts must prove” it would then be for the defendants to show that he suffered damage at a date earlier than 1 August 2016 – a burden which, on the present state of the medical evidence, they would not be able to discharge.
  7. There was, similarly, no evidence specific to the claimant of the point in time when the progression of his disease became inevitable, whether that point in time was (as the defendants contended) angiogenesis or some other time.  Thus, even if the defendants were correct in their contention that actionable damage occurred when the “die was cast”, they had not shown when it was cast.

Against this backdrop, Master Davison, dismissed the defendant’s strike out application. Deciding the point at which the Claimant suffered compensable damage to complete his cause of action was ‘medically and legally controversial’ and therefore not susceptible to a strike out application. Further the law was still developing.

This is then, just the first round and not a determination of whether the Defendant or Claimant’s argument is correct. That will have to be determined at the trial in late July or in another case. But it can no longer be asserted that a claim under the 2010 Act is misconceived as leading counsel for the defendant contended in this case. The consequence of that is that claimants ought not to face delay from interlocutory applications where the 2010 Act is relied upon. And in many cases involving a defunct past employer where a claimant’s top priority is resolution in life the 2010 Act still provides the best shot of achieving that aim. This judgment then takes mesothelioma victims a step closer to using the 2010 Act as it was intended to be used.


[1] Or indeed any complex asbestos litigation

[2] Relying on the Third Parties (Rights against Insurers) Act 1930

Watt v Lend Lease Construction (Europe) Ltd [2022] CSOH 23: Adopting Abraham

Elle Duckenfield and Michael Rawlinson QC considers the Scottish judgment of Lord Uist in the case of Watt v Lend Lease Construction (Europe) Ltd [2022] CSOH 23.

On 3 March 2022 the Outer House of the Court of Session gave judgment in this fatal Scottish mesothelioma case. The judgment can be read here

Background

The late Mr Watt was employed by the defenders, formerly known as Bovis Construction Limited (“Bovis”), as a joiner between January and June 1963. 

Mr Watt died from mesothelioma in January 2017. Mr Watt’s widow, Nicola Watt, brought an action against his former employer for negligence and breach of Regulation 20 of the Construction (General Provisions) Regulations 1961 (“the 1961 Regulations”). Regulation 20 (since repealed) held that:

“where in connection with any grinding, cleaning, spraying or manipulation of any material, there is given off any dust or fume of such a character and to such extent as to be likely to be injurious to the health of persons employed all reasonably practicable measures shall be taken either by securing adequate ventilation or by the provision and use of suitable respirators or otherwise to prevent inhalation of such dust or fume.”

Prior to his death, Mr Watt provided a statement describing significant exposure to asbestos dust during his period of employment with Bovis. Bovis disputed this and argued that Mr Watt had experienced secondary, intermittent and low-level exposure for 3 or 4 days only. Damages were agreed last minute, subject to the finding on liability. 

The main issue in this case was foreseeability; whether Bovis were or ought to have been aware that Mr Watt was exposed to asbestos levels giving rise to a risk of asbestos-related injury whilst in their employment. 

To establish the date of knowledge of the dangers of asbestos as 1960-63, the pursuer relied upon Wagner’s 1961 paper, the mid-1950’s Annual Report of the Chief Inspectors of Factories and the HM Factory Inspectorate guidance on working with asbestos. The Defenders greatly relied on Swift J’s judgment in Abraham v G Ireson and Sons (Properties) Ltd [2009] EWHC 1958 (QB), in which Her Ladyship held that the earliest date for which employers can be fixed with foreseeable knowledge is the 1965 Newhouse and Thomson paper.

The Judgment 

Lord Uist commented that it was not necessary for him to reach a decision on the degree of Mr Watt’s exposure to asbestos in terms of fibres/ml. The judge did however accept the broad brush description of Mr Watt’s asbestos exposure provided by Professor Willey, the defenders’ occupational safety and health consultant, as “secondary, intermittent and low level over a period of 3 or 4 days” [16]. 

Lord Uist held that Wagner’s 1961 paper was not sufficient to prove that Bovis ought to have reasonably foreseen a risk of injury to Mr Watt. Adopting the approach of Swift J in Abraham, Lord Uist upheld the 1965 Newhouse and Tomson paper as marking the point at which employers could, or ought to, have knowledge that lower-level exposure to asbestos gave rise to the risk of injury. 

Therefore, Lord Uist found that it was not reasonably foreseeable for Bovis to have known that Mr Watt was exposed to the risk of asbestos-related injury. Their failure to take steps to protect Mr Watt against exposure was not negligent. For the purposes of the 1961 Regulations, it followed that Bovis could not have been aware that the asbestos exposure was “likely to be injurious” to Mr Watt. As such, it was not reasonably practicable for Bovis to take steps to protect Mr Watt from it. 

Comment

This is a reminder of the significance of the level of exposure when determining the date of knowledge for breach. The key document that continues to be heavily relied upon by judges is the Newhouse and Tomson’s 1965 paper. It appears that claimants will continue to encounter an uphill challenge in establishing knowledge in low-level exposure cases prior to 1965. There is no doubting the importance of this document: it was described by HHJ Hickinbottom (as he then was) in Jones v Metal Box as a ‘watershed’. It has become a trope of mesothelioma litigation that almost every employer from that date onwards is stuck with the constructive knowledge that there was no safe level of exposure to asbestos and that even trivial exposures could cause that disease. What perhaps is less well known is that the paper published in 1965 was given a prior airing at the 1964 WHO Symposium on the “Biological Effects of Asbestos’ held in New York. Morris Greenberg has written of the Symposium

“Contributors to the  report,  with  its 705  pages  of  text ,constituted  a  contemporary  International  Who’s  Who  of academics, industry experts, and civil servants involved in the fields of research and control of asbestos and its effects. Its contributions varied qualitatively and quantitatively, but overall it constituted an excellent compendium of the state of knowledge of the physical and health aspects of exposure to dusts containing asbestos”[1]

It must raise the question (since the UK was present via members of its civil service)  whether UK bodies under public ownership at the time of 1964 can be taken to have acquired their ‘watershed’ constructive knowledge qua employers in 1964 rather 1965. Such an argument against a public body has not yet been run at trial to the best of our knowledge.

Additionally the case raises issues on causation of how to establish that exposure represents a material increase in risk and whether a detailed quantitative finding is necessary. Lord Uist’s comment that a detailed quantitative finding on exposure was not required is an interesting point. On its face this is inconsistent with Geoffrey Tattersall QC’s approach in Bannister v Freemans [2020] EWHC 1256 (QB) where the latter  concluded that he should “make findings as to the deceased’s actual level of exposure to asbestos” [157]. Despite this specific comment, Tattersall QC went on to accept that this quantitative finding may be imprecise. This leads to the question of whether an imprecise quantitative finding is adequate for a detailed quantitative finding or whether it is simply a qualitative finding masquerading as one. On balance, it would seem relatively clear that Lord Uist’s approach more closely reflects the orthodox and authoritative guidance provided by Maurice Kay LJ in Cox v Rolls Royce of India @ [21]; by Sedley LJ in Willmore (CA) @ [7-12]; by Lord Phillips in Sienkiewicz(@ [108] and (by implication) by Underhill LJ in Bussey @ [62] namely that only qualitative findings as to dose should be made. With respect, Mr Tattersall QC’s approach now appears to be the outlier.


[1] Biological Effects of Asbestos: New York Academy of Sciences 1964 (AMERICAN JOURNAL OF INDUSTRIAL MEDICINE 43:543–552 (2003)

TDX v Raven Mount Services Company Ltd: Parent company liability in the construction context

Mary Mulhall of Hugh James and John-Paul Swoboda discuss the recent  case of TDX v Raven Mount Services Company Ltd, where they acted for the Claimant, and provide some practice points in cases where you are suing a parent company.

At the heart of this case was one question, did the parent company (the Defendant) owe the deceased a duty of care in respect of his safety whilst at work? If they did then liability followed, it having been admitted that asbestos exposure was negligent and causative of the deceased’s mesothelioma. The case settled on favourable terms to the Claimant at about 5pm on the day before trial.

TDX, the Claimant, was the deceased’s daughter. The deceased also had an adult son, TSX, who suffered from profound disability. Prior to mesothelioma TSX relied entirely on his father, the deceased, for his many care needs. Because TSX lacked capacity the proceedings were anonymised.

The case arose from 18 months of exposure to asbestos in the construction industry during 1962/63 to 1963/64. The deceased was a labourer working next to carpenters sawing AIB and laggers. His employer, according to HMRC records, was a company known as Holliday and Greenwood (H&G) but no insurance could be traced. However, the deceased recalled working for Higgs and Hill (H&H), the predecessor in title to the Defendant, who were the parent company to H&G and who remain an active company. 

We argued that parent company liability arose because H&H’s parent/ subsidiary relationship with H&G was at the extreme end where the de jure difference of legal personality was, in practice,irrelevant. We argued H&G was controlled legally, administratively, and in practice by H&H; that key aspects of the business (e.g. costings, plant, stores, wages, consideration of accidents) where carried on by H&H as though H&G and H&H were a single commercial undertaking. Whilst H&G in theory had their own staff we argued the evidence suggested employees did not distinguish between H&H and H&G (with the deceased indicating he thought he worked for H&H). We said in light of the above H&H owed a duty to the deceased in respect of his work and his safety whilst at work.

Practice points

Our experience litigating this case has highlighted some practice points which we hope may be useful for practitioners considering bringing an action against a parent company.

Firstly, if the facts are right, one should be prepared to allege parent company responsibility/liability in any context. To put it another way although Chandler v Cape [2012] EWCA Civ 525 was concerned with parent company liability in an asbestos factory, and subsequent cases, such as Okpabi v Shell [2021] UKSC 3 (oil spills from pipes in the Niger delta)Lungowe v Vedanta [2019] UKSC 20 (Zambian copper mine discharge causing PI and property damage), are mass torts occurring overseas, there is no reason in principle why parent company liability may not arise in the construction industry (as alleged in this case) or in any other industry. Parent company liability provides an alternative route to establishing liability which may prove invaluable where the employer is dissolved and no insurer can be traced.

Secondly, parent company liability in the terms cast by Okpabi, Vedanta and Chandler is not the only route to establish parent company liability. The courts have, in recent years also described a concept known as “dual vicarious liability”. The Supreme Court in Various Claimants v Catholic Child Welfare Society [2021] UKSC 56) said this doctrine may apply where the employee “is so much part of the work, business or organisation of both employers that it is just to make both employers answer for his negligence.” A further doctrine of some assistance may be transferred employment/ borrowed employees. As described in Bowstead and Reynolds on Agency “An employee, X, may be in the general employment of A, but, as the result of arrangements made between A and B, X may be acting as the employee of B, so as to make B, and not A, responsible for X’s tort at the relevant time. The test is whether X is transferred, or only the use and benefit of X’s work, and this depends upon the extent to which A places X under the control and at the disposition of B.” Finally, of course one must not lose sight of the fact that many of the regulations relevant to asbestos litigation do not require a pre-existing relationship of employment but rather the relevant test is control or whether the sued person was an occupier (cf. McDonald v National Grid Electricity [2014] UKSC 53). Which legal doctrine is best suited ought to be determined by the evidence.

Thirdly, the mantra of evidence, evidence, evidence is key if a parent liability case is to be won. Whether there is sufficient intervention or control of relevant activities for a duty to be imposed depends heavily upon the contents of documents internal, or passing between, the subsidiary and parent (cf. para 44 of Lord Briggs’ judgment in Vedanta and para 129 of Lord Hamblen’s judgment in Okpabi). Where exposure to asbestos occurred decades previously documentary evidence is likely to be incomplete. That is not to say there will be no documentation but rather it will take determination to obtain such documents as still exists. Trips to archives (local and national), libraries, and the locality are de rigueur. Full company documentation from Companies House (subsidiary and parent) may be required. 

Fourthly, if you’re brining a case like this it may take a certain leap of faith at the outset. That is because the defendant (the parent company) may have much by way of disclosure but you probably will not get full disclosure until after issue and service and possibly (as happened in our case) disclosure will continue until the date of settlement. From a practical point of view this might mean needing to update the pleadings with the disclosure.

Finally, the level of intervention in the management of the subsidiary requisite to give rise to a duty of care is a “pure question of fact” (cf. para 44 of Lord Briggs’ judgment in Vedanta). The determination of that question of fact is dependent upon interpretation and evaluation of evidence by the judge. That means two things. Different judges can legitimately come to different conclusions. Second, and interconnect to the first, any appeal on a question of fact will be difficult. Accordingly, to win a case like this we think there needs to be a powerful and persuasive narrative as to why the parent ought to be held liable. 

Haggerty-Garton & five ors v Imperial Chemical Industries Ltd

Judgment was handed down on 3 November 2021 following a two-day assessment of damages hearing before Ritchie J in this unusual fatal mesothelioma claim where the applicable law was Scots law. Judgment for the First Claimant, Charmaine Haggerty-Garton (the widow), was given in the sum of £614,040. Dushal Mehta of Fieldfisher and John Paul Swoboda or 12 KBW represented the First Claimant and her three children.

The judgment can be found here.

An article provide more information on the facts of the case can be found here.

This claim was unusual as Scots law was the applicable law despite being tried in England. This gives PI practitioners north and south of the border a chance to consider what is the same and what is different in personal injury actions. There are two huge differences: awards of general damages for ‘loss of society’ for relatives and interest.

Loss of society is a head of loss completely unknown to English law which allows for a general damages award for close relatives who can establish a sufficient relationship with the deceased. In this case there were nine relatives who made such a claim. Five relatives (two daughter from a first marriage, two sisters, and a granddaughter) were joined into the action two days prior to trial and settled their claims one day prior to trial. The other four relatives were the widow Charmaine Haggerty-Garton and her three sons. Their loss of society awards for (a) distress and anxiety endured in contemplation of the deceased’s suffering, (b) grief and sorrow caused by the deceased’s death and (c) the loss of such non-pecuniary benefit as they may have derived from the deceased’s “society and guidance” fell to be determined by Ritchie J. He made an award of £115,000 for the widow Charmaine and awarded between £40,000 to £35,000 for each son. By contrast no general damages award would have been made under English law and there would have been a statutory entitlement to £12,980 for bereavement for the widow only. 

Ought the Scots law approach to be adopted in English law? There is certainly a case to be made but it is ultimately a question of policy as to whether English law should follow Scots law in allowing general damages claims for relatives when a loved one has died as a result of a tort. It is however undeniably the case that Scots law is more generous in the assessment of general damages for relatives in fatal cases and it is not wholly satisfactory that there should be such divergence between the Scots and English law on this issue.

The other huge difference between the approach under Scots law and English law is in respect of interest rates. Whilst English law interest rates languish at 0.025% in respect of special damages and 2% for general damages Scots law is much more generous with interest being claimable at 8% and 4% depending on the head of loss. Interest in this case amounted to over £40,000. It is inconceivable that anything like this amount would have been recovered under English law.

Two other points from the judgment may be of broader interest to PI practitioners. Firstly, in respect of the claim for loss personal services (equivalent to a services dependency claim) Ritchie J found the ONS paper “2016 Household Satellite account on household service work done through the UK” which provided a figure of £18,932 on the value of unpaid household service work undertaken per person was “helpful” but said he had difficulty in understanding what the survey meant. The extent to which this ONS paper (which suggests many services dependency claims have been undervalued where impressionistic awards were made) influences future claims is still a matter for debate (and future cases).

Secondly, the Court also had to consider what the appropriate award for Solatium (the Scots law equivalent to PSLA) was. This was a case where the deceased suffered terribly particularly towards the end of his life. He endured the symptoms of mesothelioma for some 13 months. An award of £97,250 was made confirming the trend that most awards in mesothelioma cases are likely to fall in the higher part of the JC bracket.

Paramount v Rix [2021] EWCA Civ 1172

This post was written by Harry Steinberg QC.

Yesterday morning, little more than a month after the hearing, the Court of Appeal handed down judgment in Paramount Shopfitting Company Ltd v Rix [2021] EWCA Civ 1172. It is the latest in a series of decisions about how the courts should assess loss of income where mesothelioma hits a family business.

Facts

Mr Rix contracted mesothelioma as a result of the defendant’s negligence and died aged 60. He had been the founder and driving force of a successful joinery business. The judge, Cavanagh J, described him as a “… remarkably talented and dedicated businessman.” He and his wife held 80% of the shares between them and their two sons held the remaining 20%. The business consistently generated a gross annual profit of more than £300,000, but they retained most of the profit within the business to enhance its value. 

The family business continued to thrive after Mr Rix’s death and generated greater profits in the subsequent years

Mrs Rix claimed as his widow and dependant. She contended that her loss of financial dependency under s.3 of the Fatal Accidents Act 1976 was her share of the annual income to which they would jointly have been entitled had Mr Rix lived (basis 1). Alternatively, she claimed by reference to replacing the cost of his services to the business (basis 2). The defendant contended that there was no loss since the family business had been more profitable after Mr Rix’s death and she had inherited his shares and retained her own. 

The Judge’s decision 

The trial judge, presented with these alternatives, decided that there was a loss of dependency and held that basis 1 was the appropriate method of calculation. The business was not a ‘money generating beast’ and the income was derived from Mr Rix’s efforts – his skill and acumen – and not from a capital asset. 

Grounds of appeal

The Defendant was permitted to appeal on three grounds. First, the Judge was wrong to assess the loss of dependency by reference to all the profits which accrued to Mr and Mrs Rix without regard to whether those profits survived his death and continued to accrue. Secondly, the Judge was wrong to treat Mrs Rix’s shareholding as if it had belonged to Mr Rix. Finally, the Judge was wrong not to deduct Mrs Rix’s surviving income from her shares in the calculation of the loss. 

On appeal

The Court of Appeal unanimously dismissed all three grounds of appeal.

Nicola Davies LJ, giving the lead judgment, held that the earlier authorities, Wood v Bentall [1992] PIQR 332, Cape vO’Loughlin [2001] EWCA Civ 178 and Welsh Ambulance Services NHS Trust & Anor v Williams [2008] EWCA Civ 81, did not establish a principle that a business should be treated as a capital asset which will continue to produce a flow of income regardless of the death of the prime mover and driving force. 

On the facts, there was ‘no identifiable element of the profits which was not touched by the management of Mr Rix’. The loss was the income that would have been generated by Mr Rix’s services to the business, irrespective of the fact that the business retained the capital assets. It was therefore logical to treat the whole profit available to Mr and Mrs Rix as earned income and part of the financial dependency. Accordingly, there was no sound objection to basis 1 and the first ground of appeal was dismissed. 

The second ground of the appeal – that the Judge should not have treated Mrs Rix’s share as if it belonged to Mr Rix – was dismissed on the basis that it is established by authority that the Court must look at what the underlying reality of the situation. It appears, curiously, that the defendant relied on Ward v Newall [1998] 1 WLR 1722, which on the face of it seems to be directly contrary to defendant’s argument. 

The final ground of appeal was dismissed on the basis that the finding that the income of Mr and Mrs Rix – whether in the form of salary, dividends or profits – was wholly attributable to Mr Rix’s endeavours and earning capacity. This left no room for any deduction for income that would survive his death. Any such deduction would also contravene the principle that dependency is fixed as at death. 

Discussion

The outcome was a resounding success for the claimant and a decisive statement about how the Courts should treat claims of this type in the future. 

The decision is of considerable general importance. Where the injured party in a mesothelioma case has a fixed or regular income, the assessment of ‘financial dependency’ is essentially basic arithmetic. But, increasingly often, in cases such as Rix and Head v Culver (on remarkably similar facts), the loss is both more substantial and controversial. The central difficulty is how to disentangle that part of the profit which is derived from the residual value of the shares, which may be bound up in the company assets or intangible factors such as the goodwill and the existing customer base. 

The Court of Appeal recognised that, in principle, it is necessary to distinguish between loss of income derived from services and income derived from a capital asset. As Staughton LJ pithily put it in Wood, you cannot claim for the loss of the eggs if you have inherited the goose. 

But that principle, until now at least, has been difficult to apply. 

The Court of Appeal did not opt for the quasi-compromise position represented by basis 2 and the cost of replacing Mr Rix’s services (although, it should be remembered, the defendant rejected this approach too). Instead, the Court of Appeal tackled the question of how to assess this type of loss head on. 

Underhill LJ identified the problem with precision: 

“The real question is how that distinction works in the case of a small or medium-sized business with substantial assets, where the deceased (typically, but not necessarily, the founder) is not only the owner but the main person whose work and decisions generate the profits and thus the income which he takes out of the business and which the wife enjoys.” (para 76)

In a key passage, at para 60, Nicola Davies LJ answered the question as follows: 

“Income is only derived from capital if it is identifiable as having been received without the labour and services of the deceased. In short, it is passive.”

Underhill LJ found the answer lay in the old decision of Staughton LJ in Wood in which Staughton LJ held that, in assessing the loss in this situation, the court had to decide how much of the deceased’s was ‘derived solely from capital’. Applying this reasoning, Underhill LJ held

“I take that to mean that it is irrelevant that the capital has in one sense made the earning of the income possible.  The income is only “derived from capital” if it is identifiable as having been received without the husband’s services – in short, if it is passive.”   

Nicola Davies LJ, at para 54(iv), used the same language in articulating the core principles. 

The Court of Appeal has seemingly come up with a practical solution which is to give the injured party, rather than the tortfeasor, the benefit of the doubt. Valuable cases are rarely decided by the burden of proof, but if the only income that is it be deducted is that which is ‘derived solely from the capital’ then it rests with the defendant to prove that which falls into this category. 

This is consistent with (a) the Court of Appeal’s recognition that damages under the fatal accidents act may be greater than would be justified on a strict view of the dependants’ loss (para 54vi) and (b) the fairwind principle which gives the benefit of the doubt to the injured party where the tort makes the future uncertain. 

The Convention Against Cost Budgeting in the Asbestos List: Smith v W Ford & Sons (Contractors) Ltd [2021] EWHC 1749 (QB)

Samuel Cuthbert discusses the judgment of Master Davison in  Smith v W Ford & Sons (Contractors) Ltd [2021] EWHC 1749 (QB) which reasserts the convention that costs budgeting does not apply to cases in the Asbestos List. 

Background

There is a convention that cost budgeting is disapplied for cases in the Asbestos List. This is captured in the White Book commentary at 3DPD 5.3 as follows:

“The convention of dispensing with costs budgeting in asbestos disease cases has been reinforced by the introduction of PD 3E paragraph 2(b) which indicates that in all cases where there is limited or severely impaired life expectation (five years or less remaining) the Court will ordinarily disapply costs management.”

In this case, the Defendant had made an application to displace this convention and impose costs budgeting. Master Davison’s judgment, given ex tempore on that point in the course of the CMC, has wider application for cases in the Asbestos List.

The Judgment

Master Davison dismissed the Defendant’s application and dispensed with costs budgeting. The Master held that the convention that budgeting be dispensed with reflects the fact that matters typically need to progress very quickly in the Asbestos List. Both case management and final hearings are often listed comparatively soon after the issue of the Claim Form. Further, the Asbestos Masters do not distinguish between mesothelioma, asbestosis cases, and fatal cases for the purposes of listing. All such cases are listed for CMC very quickly, despite the differences in life expectancy in those categories of cases. Such listing arrangements cannot accommodate costs budgeting. 

Master Davison’s judgment takes the Defendant’s three arguments in turn. 

First, the fact that the case in hand was a deceased case was not significant. No distinction was made on that ground because of the administrative burden it would impose and its potential effect on living cases. 

Second, the fact that this case was a heavily contested trial was also not sufficient to take the case out of the ordinary. Heavy contest is characteristic of lots of asbestos cases, and the expert evidence in such case is also often complex. 

Third, in relation to the Defendant drawing attention to the benefits of costs budgeting across the board, Master Davison held at [9]:

“[…] these factors were considered corporately by the Asbestos Masters and by the senior judiciary who devised the present system and approved the convention that costs budgeting should not usually apply. The factors that are generally in favour of costs budgeting were judged to be subordinate to the factors that I have mentioned.” 

Two further observations were then made in relation to this. The Defendant had not produced any evidence to demonstrate that costs in asbestos cases are disproportionate or inadequately controlled. The Defendant could not therefore displace the convention of dispensing with costs budgeting. Moreover, Master Davison observed that QB Masers, Chancery Masters, and Costs Judges do not agree with the Defendant’s position that costs budgeting controls costs better. He did not recognise the Defendant’s dichotomy that imposing costs budgeting represents tight controls of costs in contrast to the ‘free-for-all’ that ensues without it. 

Comment

This is a notable judgment for asbestos practitioners. As is evident from the opening line of Master Davison’s judgment, it is handed down with the approval of the other Asbestos Masters. Its restatement of the reasons for the convention in favour of displacing costs budgeting in the Asbestos List may head off similar challenges in the future.

Master Davison held at [5] that the listing arrangements cannot accommodate costs budgeting and stated: “And I would add that they cannot accommodate too many debates, or contested hearings, about whether costs budgeting should or should not apply”. The Master’s comment at [9] that this hearing was not the appropriate forum for debates about “complex and somewhat sensitive” issues, speaks to the special considerations that underly the need for an Asbestos List. Practitioners need no reminding of the particular difficulties faced by litigators on this list, the existence of the ‘Show Cause’ procedure, expedited timetabling and case management by specialist Masters serve to meet these difficulties. It is hard to see how cost budgeting can be accommodated within this schema, it is suggested that the Master’s decision is therefore the right one.  

Re-assessment of damages in Head v Culver Heating Co Ltd: from nothing to £2.4M

This blog post was written by Samuel Cuthbert.

Harry Steinberg QC and Kate Boakes – instructed by Peter Williams of Fieldfisher LLP – acted for the Claimant in Deborah Head (Executrix of the Estate of Michael Head, Deceased) v The Culver Heating Company Limited [2021] EWHC 1235 (QB). Johnson J re-assessed the lost years claim, following the Claimant’s successful appeal in the Court of Appeal earlier this year.

The judgment can be read here. Our blog post on the Court of Appeal’s judgment can be read here.

Background

In January 2021, the Court of Appeal overturned the decision of HHJ Melissa Clarke by which she held that Mr Head, a successful businessman who founded and ran a company called EMSL, could not recover any loss of earnings in the lost years because the profitability of his business would likely continue after his death and so too any divided income from his shares. The Court of Appeal set aside that element of her decision and ordered that the case should be remitted for a re-assessment of the lost years claim.

The re-assessment of damages was heard by Johnson J. By a judgment handed down on 11 May 2021, the Judge assessed damages for the lost years claim in the sum of £2.44 million. Accounting for the other heads of loss that were assessed by HHJ Clarke, the total judgment sum was £2.62M.

The decision

Johnson J was required to assess the lost years claim in accordance with the guidance of Bean LJ in the Court of Appeal.

The gulf between the parties remained enormous: the Claimant contended for a figure of £3.7M and the Defendant contended for a figure of £238,000. This difference was attributable to four key issues which the Judge had to determine.

(1) What fell to be included in the lost years claim? Was it limited to salary and dividend income? Or did it extend to retained profits insofar as these were generated by Mr Head’s work?

At paragraph 33 of the Court of Appeal’s judgment, Lord Justice Bean held that “at the time of Mr Head’s death all the income which he and his wife received from the company (save for the small deduction in respect of Mrs Head’s work) was the product of his hard work and flair, not a return on a passive investment.

There was a dispute as to the meaning of this sentence. The Claimant argued that it was intended to mean that all of the income the Claimant was able to derive from EMSL, including those profits he chose to retain within the business, was recoverable as part of the lost years claim and there was no “investment income” element. The Defendant argued that the use of the word “received” meant that the recoverable element was limited to that which was actually extracted from the business and that the profits Mr Head retained within the business should be categorised “investment income” and offset against the loss.

Johnson J found for the Claimant on this point. He held that the effect of the Court of Appeal’s judgment was clear:

First, artificial distinctions should not be drawn between salary, dividends and undistributed profit. Bean LJ’s use of the term “loss of earnings” was not an exclusion of earning capacity that was reflected in the accumulation of funds otherwise than by payment of salary. Mr Head’s dividend income was not to be treated differently to his salary. Similarly, the term “dividend” was used in Bean LJ’s judgment to cover both dividend income and undistributed company profits. Mr Head’s earning capacity was not defined solely in terms of his salary or by reference to dividend payments, because he was the individual responsible for 90% of the profitability of the business. Had he been self-employed, his earning capacity would be assessed be reference to his net profit and the fact he chose to incorporate EMSL did not, as a matter of principle, make any difference to his level of earning capacity.

Second, Mr Head’s earning capacity, at the time he contracted mesothelioma, was best reflected by a combination of his salary and 90% of EMSL’s profits, less a deduction in respect of the work done by Mrs Head. This was an assessment made by HHJ Clarke at first instance and the Court of Appeal had not suggested that this element of her decision was in any way flawed.  

Third, once Mr Head no longer worked full-time, his earning capacity could properly be reduced pro rata.

(2) If Mr Head had not contracted mesothelioma, to what extent would he have worked less and/or handed over ownership of the company as he approached old age?

HHJ Clarke held that Mr Head would have worked at 80% rate from the age of 65 to 70 and at 50% rate thereafter. These findings were not disturbed on appeal. Johnson J held, following the guidance from Bean LJ, that Mr Head would have further reduced his input to 25% at the age of 75. Despite Mr Head’s evidence that he did not envisage ever fully giving up work, Johnson J found as a fact that he probably would have retired completely at the age of 80.

Johnson J accepted the evidence of Mr Head’s widow and son that he would not have drawn more money from EMSL than that which reflected the work he put in. He found that it was likely, as the years progressed, that Mr Head would have reallocated his shareholding to reflect his proportionately reduced involvement. This meant that there was no element of “investment income” to be taken into account – all of Mr Head’s income from EMSL would have been a reflection of his contribution to the business and was therefore earned income.

(3) Should the calculation of the lost years claim take into account rental income that Mr Head would have received from a property he had jointly owned with his widow?

This issue was not explored at the original trial and so there was no evidence on the point. It was possible that if the Defendant had relied on the rental income, then the Claimant may have sought to argue that a part of the rental income should be included in Mr Head’s earning capacity, thereby increasing the extent of the claim (e.g. if Mr Head had spent time and effort in the maintenance of the property). Johnson J held that it was not open to the Defendant to introduce an additional factor to the calculation of the lost years claim which had not been explored in the evidence.

(4) What deduction should be made for living expenses?

It was common ground that that Mr Head’s notional living expenses during the lost years should be deducted from his earning capacity, but not the extent of that deduction. There was a typing error in HHJ Clarke’s judgment which meant that the percentage deduction was too high. The Defendant contended that it was too late to change it. But Johnson J held that, rather than deducting a proportion of the income, it was appropriate to deduct the actual sum that reflected Mr Head’s living expenses. This was £3,584 per month. This deduction was to be made once overall – rather than year on year with any surplus crystalising as a loss – because the award was a single sum representing the whole of Mr Head’s earning capacity in the lost years less his total living expenses for the same period.

Consequential issues

Johnson J decided various consequential issues at a second hearing.

After determining some minor calculation issues, he assessed the lost years claim at £2.44 million. The overall judgment sum – including other heads of loss and interest – was £2.62 million.

There were two consequential issues which may be of wider interest.

  • What rate of interest should be applied, and in respect of which components of the award?

The effect of the judgment was that Mrs Head ought to have been awarded £2.44 million in May 2019, when HHJ Clarke handed down her judgment. The Claimant contended that interest should be awarded on that whole sum at a rate of 8% (by analogy with the judgment debt rate) or alternatively 4%. The Defendant argued that interest should only be awarded on the past loss element of the award, at half the special account rate.

Johnson J held that he should apply the conventional approach, as set out in Jefford v Gee [1970] 2 QB 130, of awarding interest at half the special account rate. That rate was held to apply to past losses only, i.e. that part of the lost years claim that related to the period before judgment in the re-assessment of damages.

(2) What, if any, orders should be made under CPR 36.17(4)?

The Claimant made a Part 36 offer on 13 November 2020, before the Court of Appeal hearing, of just under £2.25 million in respect of all heads of loss, which she subsequently bettered. The Claimant sought an order under CPR 36.17(4) which should be refused only where the court considers it “unjust” to make such orders. CPR 36.17(5) sets out a non-exhaustive list of matters to be considered.

Johnson J considered each of the factors at CPR 36.17(5)(a)-(e) and held that none of those factors suggested that it would be unjust to order Part 36 consequences. However, he declined to make the orders on the basis that the Claimant introduced new evidence between the Court of Appeal’s judgment and the re-assessment of damages hearing. That evidence comprised a witness statement from Mr Head’s widow, son, and personal assistant, which resulted in a finding that Mr Head would have reduced his shareholding in the business to reflect the gradual reduction in his involvement. This benefitted the Claimant as it meant that the value of the claim was assessed on the basis that Mr Head would not have received income from the business beyond that which derived from his contribution. The Judge found that the earlier evidence before the court would not, in itself, have resulted in that finding, and therefore it would have been natural for the Defendant to question whether the offer was supported by the evidence as it stood at the time.

Comment

The decision on the lost years claim is bound up in the findings of fact. Johnson J, having considered the evidence in the light of the decision in Adsett v West, held that Mr Head’s income would have reflected his work and was not investment income. But the judgment serves as a useful worked example of how to quantify a lost years claim for a successful businessperson who is still working at the time of contracting a fatal illness.

In his judgment in the Court of Appeal, Bean LJ stated at [6]: “I consider that it was indeed necessary to reopen the determination of this appeal in order to avoid real injustice”. Before HHJ Melissa Clarke, the Claimant was awarded damages of c.£175,000 and nothing in respect of the lost years. The re-assessed damages now stand at £2.62 million. This serves to quantify the extent to which a real injustice has been avoided.

The Part 36 decision is also of interest. It could be argued that the Defendant was fortunate to escape the consequences set out in CPR 36.17(4). The determinative factor identified by the Judge appears to be one of the vagaries of litigation, where the Claimant produced supplementary evidence in response to the guidance from the Court of Appeal.

Scarborough College Ltd v Winter [2021] 4 WLUK 352- The Show Cause Test under Scrutiny

This post was written by Helen Waller.

An independent boarding school recently appealed a judgment on liability made against it under the ‘show cause’ procedure set out in CPR PD 3D. The claim was one made by a former pupil who had contracted mesothelioma as a consequence of his exposure to asbestos at the school. The mesothelioma led to the former pupil’s death in December 2020, a month after the show cause hearing. His widow continued the claim.

CPR PD 3D, paragraph 6.1 sets out the defendant’s obligations in the show cause procedure. A defendant is to “identify the evidence and legal arguments that give the defendant a real prospect of success on any or all issues of liability.” Following Silcock v H M Revenue and Customs [2009] EWHC 3025 (QB), that obligation only kicks in once the claimant has adduced credible evidence in support of his case.

The Background

The Claimant/Respondent had been a boarder at the school from 1969 to 1973, housed in a Victorian building. He said that 6 days a week he and other pupils dried their sports kit on asbestos-lagged pipes in the basement boiler room. His case was that the lagging was damaged and frayed. In respect of establishing the Defendant/Appellant’s knowledge of the dangers of asbestos and breach of duty, the Claimant/Respondent relied on the following:

  1. A Department of Education memo, circulated to all schools in 1967, which stated that the inhalation of asbestos dust was known to cause asbestosis, lung cancer and mesothelioma.
  2. The now well-known 1965 article in The Sunday Times which discussed the danger of exposure to asbestos.
  3. A letter from a health and safety practitioner as a preliminary expert report, which stated that the pipes were likely to have contained asbestos.

The Defendant/Appellant submitted a preliminary report from an occupational hygienist.

The Master held that the school knew or ought to have known of the condition of the lagging, the risk of exposure to asbestos, and that the pupils were using the room. He held that the memo and the article meant that it would be fanciful for the school to maintain that it did not have concerns about exposure to asbestos, and that the school should have curtailed access to the boiler room in light of such concerns. Therefore, the Master concluded that the school had no realistic prospect of defending liability and that a breach of statutory duty was incontrovertible. Medical causation and assessment of damages remained to be dealt with at trial.

The Appeal

The appeal came before Cavanagh J. The school contended that the Master had applied too high a standard in deciding whether or not it had a “real prospect of success” in defending the case on liability. The school accepted that the lagging had likely contained asbestos, but argued that it had neither actual nor constructive knowledge as to the risks of asbestos at the time such as would place it in breach. It argued that asbestos had been used up to 1975, that contemporary publications had suggested that it had posed no health risk and that competing interpretations of what was known at the time should be a matter for trial.

The Judge dismissed the appeal. Drawing on Silcock, the Judge held that the test of whether the Defendant/Appellant’s case had some prospect of success that was not fanciful was a low bar. The procedure was inevitably rough and ready and often conducted without the benefit of full expert reports. It was held that the Department of Education memo should have put the school on notice of the risk. The Master had been entitled to conclude that it was not reasonably arguable that contemporaneous reports about the safety of asbestos present in buildings in an undisturbed state could have assuaged concerns. That conclusion was supported by The Sunday Times article from 1965. As a result, the Master had been right to find that the school ought to have taken reasonable steps to prevent exposure to the asbestos lagging and dust. Foreseeability was to be judged in the context of the state of knowledge at the time and the Master had been correct in his conclusion that the school would not be able to establish that harm had not been reasonably foreseeable. The school might not have known whether the dust swirling in the boiler room was chrysotile, but there had been a clearly foreseeable risk of injury. The school’s own expert did not exclude the possibility that the dust was chrysotile.

Comment

This is an important appellate judgment re-enforcing two key aspects of the show cause procedure.

Firstly, it is only a low bar that a defendant has to meet. However, the test is a clear one and the Masters are specialist asbestos judges. This case is a reminder that the Masters should approach these cases pragmatically and realistically. 

Secondly, the Masters regularly apply this test to incomplete expert evidence, but that is no bar to a finding of a defendant having no prospects of success. Defendants can often generate the semblance of a coherent argument, but once one takes a step back, it is clear that that argument is not one that stands reasonable prospects at trial. The procedure is necessarily rough and ready. It is designed to ensure, so far as possible, that dying victims are not deprived of the ability to live the short remainder of their lives with a modicum of financial security.

Charmaine Haggerty-Garton (as Widow and Executrix of the Estate of Mr David Haggerty (Deceased)) -v- Imperial Chemical Industries Limited: Case Summary

Introduction

John-Paul Swoboda and Spencer Turner instructed by Dushal Mehta of Fieldfisher recently represented a Claimant in a claim which involved the common law double actionability rule and the circumstances in which the “flexible exception” to the rule can apply.   

The claim was brought by the widow of Mr Haggerty in England. Mr Haggerty died from mesothelioma following exposure to asbestos in Scotland in the 1970’s. The Claimant’s position was that Scots law applied to the claim. If Scots law was found to apply to the claim, the Claimant could bring a claim for ‘loss of society’ under section 4 of the Damages (Scotland) Act 2011, which had the potential to substantially increase the value of her claim. Relatives unable to claim in English law would also be able to join the action if Scots law applied.

This blog post considers the principles relevant to the determination of the applicable law in this claim.  

Applicable Law and the ‘Double Actionability’ Rule

The applicable law in this claim fell to be determined by the common law double actionability rule because the alleged tort occurred before the Private International Law (Miscellaneous Provisions) Act 1995 and the Rome II Regulation came into force.

The origins of the English common law position are set out in Phillips v Eyre (1870) L.R. 6 Q.B. 1 in which Willes J stated that:

“As a general rule, in order to found a suit in England for a wrong alleged to have been committed abroad, two conditions must be fulfilled. First, the wrong must be of such a character that it would have been actionable if committed in England. Secondly, the act must not have been justifiable by the law of the place of where it was done.”

Willes J’s decision came to be regarded as requiring the existence of a civil liability for the harm done which was imposed by the law of place of the tort. However, any civil liability would only be actionable in England if the circumstances of the case, had they occurred in England, would have also given rise to an actionable claim in tort.

The House of Lords considered the applicable law rules in relation to torts committed abroad in the case of Boys v Chaplin [1971] A.C. 356. The majority of the court affirmed the general rule of double actionability as was stated in Phillips.

The rationale for the double actionability rule is twofold. Firstly, it seeks to ensure that a person should not be liable for something which is lawful in the place that it is done and secondly, to provide that a person who is given protection by the laws of one country is protected against legal proceedings in other countries.

The Exception to the ‘Double Actionability’ Rule

In Boys, Lord Wilberforce emphasised that double actionability was to be the general rule but it was not invariable and was subject to a “flexible exception” where the court considers it just to apply it. The exception provides that a particular issue between the parties may be governed by the law of the country which, with respect to that issue, has the most significant relationship with the occurrence of that issue and the parties. The exception was not precisely defined in Boys when Lord Wilberforce said that there was:

“great virtue in a general well-understood [double actionability] rule covering the majority of cases provided that it can be made flexible enough to take account of the varying interests and considerations of policy which may arise when one or more foreign elements are present.”

Boys arose out of a road traffic accident in Malta. The Claimant and the Defendant were both normally resident in England but at the time of the accident were stationed in Malta as members of the armed forces. Maltese law provided that general damages could not be recovered for PSLA. The question for the House of Lords was whether or not the Claimant could recover the general damages in his claim brought in England.

The House of Lords determined that, although the Claimant’s claim would fail under the general rule of double actionability, there were clear and satisfactory grounds on which to apply the flexible exception. Lord Wilberforce particularly emphasised the fact that the parties were both normally resident in England and that no policy or interest of Malta would be adversely affected by the application of an English rule in a claim brought by one English party against another.

The difficulty with the exception is that the court in Boys did not provide a set of firm guidelines for determining when the exception could be invoked.

The flexible exception to the double actionability rule was considered again by the Privy Council in Red Sea Insurance Co Ltd v Bouygues SA [1995] 1 A.C. 190 (PC). In Red Sea Lord Slynn said that the exception could be invoked in cases in which the law of the place where the tort was committed was more significantly related to the case as a whole or to a particular issue than was the law of the country in which the action was brought.

The Court of Appeal further considered the exception in Pearce v Ove Arup Partnership Ltd [2000] Ch. 403 (CA). In that case there was a claim in respect of a breach in the Netherlands of a Dutch copyright which would not have been actionable if committed in England. The Court of Appeal said that “the plaintiff’s claim would be defeated if the court were to refuse to apply the exception. But the claim … is one where the English court would have given a remedy, under United Kingdom copyright law, if the facts alleged had occurred in England. This is not a case in which the claim is in respect of some wrong which is conceptually unknown in English law. In our view this is a case where … the exception to the double actionability rule enables the English court to apply Dutch law; and the English court ought to do so.”

In Sophocleous v Secretary of State for the Foreign And Commonwealth Office [2018] EWCA Civ 2167, the Court of Appeal restated the comment made by Lord Wilberforce in Boys, that there needed to be “clear and satisfying grounds” for the flexible exception to be applied. The Court of Appeal stressed the importance of the general rule and emphasised that the courts should not apply the exception readily.

Lord Hope in Kuwait Airways Corporation v Iraqi Airways Co (Nos 4 and 5) [2002] 2 AC 883 said of the exception that “unless a rigorous approach to this question is adopted, the application of the exception is at risk of giving rise to much uncertainty and to the criticism…that it has become instinctive and arbitrary”

The instant matter was listed for a preliminary hearing to determine whether Scots law or English law applied in whole or to any part of the claim.

The Claimant’s position was that there were clear and satisfying grounds for the Court to find that the applicable law to the claim was Scots law, arguing that:

  1. The exposure took place in Scotland.
  • The Damages (Scotland) Act 2011 provided for a significantly larger damages claim than under the Fatal Accidents Act 1976 and there was the potential for different family members to be compensated under different regimes which would be incongruous.
  • A group of potential claimants in Scotland may have had their claims extinguished if Scots law did not apply to the claim. It would therefore be unjust to minimise damages by reducing what was recoverable to the lowest common denominator as between Scots law and English law.
  • The stated goal of English law was ‘to fulfil foreign rights, not destroy them’, as per KXL v Murphy [2016] EWHC 3102 (QB).

The Defendant’s position was that:

  1. The parties were domiciled in England.
  • The consequences of the tort were and will continue to be experienced in England.
  • The Claimant chose to sue in England rather than in Scotland.

The matter was set down for a preliminary hearing in the High Court to determine the applicable law. Shortly before the matter came before the court the Defendant accepted the Claimant’s position that Scots law should apply to the claim.

The case provided an interesting insight into the authorities surrounding the principle of double actionability and the flexible exception the rule. This case demonstrates that the common law rules are by no means obsolete. Given the majority of asbestos cases involve exposure before the Private International Law (Miscellaneous Provisions) Act 1995 came into force, it is not expected that this will be the last time that practitioners and the courts have to grapple with the issues which arose in this case.