BAI (Run Off) v Durham

In BAI (Run Off) Ltd v Durham,1 the Supreme Court has now laid to rest a protracted dispute on the construction of employers’ liability (“EL”) insurance policies written by a small group of insurers between the late 1940s and early 1980s. As is well known, the market operates, as it has done for many years, by adoption of “causation” wording. The wording commonly in use sets the “trigger” for indemnity as the causation of injury/ disease: it is the cause which needs to occur during the policy period whenever the occurrence or manifestation of the injury/disease subsequently arises. The subject dispute arose because the wording of a minority of EL insurers differed in that their policies expressly referred to injury/disease being “sustained” during a period of insurance. Prior to 2006 there had been no live argument on the point: as a matter of practice all insurers had settled claims on a causation basis. This stance changed following the Court of Appeal’s decision in Bolton MBC v Municipal Mutual Insurance Ltd,2 which, albeit in the context of public liability insurance, had determined that cover in relation to “disease sustained” during an insurance period related to the occurrence (or manifestation) of disease during that insurance period, whenever earlier caused. A group of insurers contended that similar reasoning and result ought logically to follow for their EL policies’ adopting “sustained” wording. Their policies had all long since expired by the time that the claimants had experienced any actionable injury by the occurrence (or manifestation) of the fatal disease of mesothelioma. Thus, the insurers disputed any responsibility for the claims.