Compensation Act 2006

Section 3 of the Compensation Act 2006 was passed following a major public outcry against the decision of the House of Lords in Barker v Corus (UK) plc [2006] UKHL 20. The effect of the legislation is to restore what was believed to be the position following Fairchild v Glenhaven Funeral Services Ltd [2003] 1 AC 32.

Fairchild

In Fairchild the House of Lords varied the rules of causation to deal with the situation in which an employee had been exposed to asbestos over a period of years by different employers. Given that a single exposure was capable of leading to mesothelioma, and given also that it was impossible by medical science to say which exposure and by whom was that which had caused the disease, the House of Lords held that the employee could sue any one of the employers without having to show that the relevant exposure had been his responsibility. Because each employer was therefore liable, the decision was taken to mean that the liability was the usual form of tort liability, joint and several, so that each employer could be sued for the full extent of the employee’s injuries leaving it to the paying employer to claim contribution from other employers on a basis to be worked out (assuming of course that the other employers could be traced and were solvent – as liability insurance became compulsory only in 1972, some of the older employers might not have been protected and could not contribute). In short, it was assumed that the risk of the insolvency of one or more employers was borne by the employer against whom the claim was made. The decision in Phillips v Syndicate 992 Gunner [2004] Lloyd’s Rep IR 418, an insurance sequel, proceeded on that assumption. In that case liability insurers for the sued employer argued that they were liable only for that part of the claim representing their time on risk: it was held that they had to pay 100% of the employer’s claim, and also that they had no right to seek contribution from earlier or later insurers because the right of contribution applied only to concurrent policies and not to consecutive policies.