DURHAM V BAI (RUN OFF) LTD, THE EMPLOYERS' LIABILITY TRIGGER LITIGATION

Court of Appeal, Lord Justice Rix, Lady Justice Smith and Lord Justice Stanley Burnton, 8 October 2010

Liability insurance (employers liability) - Trigger of cover - Mesothelioma - Whether cover for "injury sustained" was on an exposure or injury basis - Whether cover for "disease contracted" was on an exposure or injury basis - Employers' Liability (Compulsory Insurance) Act 1969

The claimants were employees who had been exposed to asbestos in the course of their employment, and who had thereafter contracted mesothelioma. The medical evidence showed that, following exposure, disease did not actually occur for up to 40 years, and it was only when the body's defence mechanism failed that a mutated cell would become cancerous and develop into mesothelioma. Disease did not occur until approximately five years before it became diagnosable, and thereafter the disease would be fatal in around 14 months. There was, therefore a period of some 35 years between exposure and the onset of the disease. Only about 3 per cent of people exposed would develop the disease, and the disease was not dose-related although the risk of injury was necessarily greater the longer the period of exposure. Employers had, at the time of exposure, taken out policies against liability to employees for injury. Some of those policies were written on a "causation" basis, so that they responded to the event which caused the disease (ie, the exposure). Others were written on an "injury sustained" or "disease contracted" basis. The question for the Court of Appeal was whether the "sustained" wording applied to the exposure (in which case the policies responded) or to injury (in which case they did not, as the injury was sustained many years later, and policies in force at the date of the injury - if any - often excluded historic exposures). Burton J at first instance held that the sustained wording was to be construed in the same way as the causation wording, so that there was cover at the date of inhalation rather than the date of tumour. The Court of Appeal by a majority allowed the appeals in part and held that "sustained" meant "suffered".