Liability insurance

Exposure to dangerous substances

The House of Lords’ notorious decision in Fairchild v Glenhaven Funeral Services Limited [2002] 3 WLR 89 sought to ensure that employees exposed to asbestos at various points in their working lives would be guaranteed a source of compensation in the event that they developed mesothelioma or other asbestos-related diseases. The problem faced in Fairchild was that any one employee might have worked for a number of different employers, each of which had exposed him to asbestos. It would be impossible for an employee in that position to identify which exposure had triggered his disease. Their Lordships’ solution was to hold that traditional causation rules were inapplicable in such circumstances, and that every exposure could be treated as causative of the illness. That ruling meant that an employee could sue any employer who had employed him during the relevant period. The House of Lords, while doubtless acutely aware that this ruling would create major problems for the insurance industry, in particular as regards the allocation of losses, chose – wisely – not to speculate upon the consequences of their ruling. Two problems became immediately apparent. First, if an employee chose to sue one employer who had employed him for part of the relevant period, did that employer have any right of contribution against other employers and, if so, how was contribution to be calculated? The second problem was that the chosen employer might have been insured by different employers’ liability insurers at different times in the relevant period. The point which arises here is how the insurances are to respond, given that it cannot be said – by virtue of Fairchild itself – at what point during the course of employment the exposure triggering <is this emphasis correct?> the losses occurred. The latter problem was partly addressed by the decision of Eady J in Phillips v Syndicate 992 Gunner [2003] EWHC 1084 (QB), forthcoming in [2004] Lloyd’s Rep IR.