23 April 2007
On 21 February 2007 Mr Justice Wyn Williams awarded the claimant in Ellis Hindson v Pipe House Wharf (Swansea) (2007) £26,000 in damages arising out of his negligent exposure to asbestos at work and subsequent contraction of pleural plaques. By legal quirk he was able to recover substantial damages even though the Court of Appeal had ruled in February 2006 that pleural plaques are no longer an injury significant enough to warrant compensation in Rothwell v Chemical & Insulating Company and Another (2006).
As a result he will either be the last claimant to recover damages for this condition in English law or, if the House of Lords reverses the ruling on appeal in June this year, his case will show how all others should be valued.
Pleural plaques are localised areas of thickening or scarring on the outside lining of the lung (the pleura). It is believed that the presence of asbestos fibres leads to a prolonged low-grade inflammatory response resulting in the laying down of this fibrous tissue. The condition is rarely detected during the first 20 years after exposure. Crucially, it does not cause, nor is it likely to cause, respiratory disability, but does show up on x-rays.
Thousands of working men and women were exposed to asbestos dust up to and including the 1970s. Consequently hundreds of cases have been brought against former employees and their insurers every year since the early 1980s.
Kemp & Kemp: Quantum of Damages contains pages and pages of pleural plaques judgments. In 2004 the insurance industry, along with the Government, representing UK shipbuilders as defendants, decided to challenge the right of claimants to recover such damages in Rothwell v Chemical & Insulating Co, now commonly referred to as the pleural plaques test litigation. The defendants understandably challenged the older claimants, those who had relatively low risks of future asbestos disease (between 3 per cent and 5 per cent) and those who had low incomes.
Ellis Hindson had already obtained judgment in his case. He was relatively young at the age of 54 and had a high risk of future asbestos disease. He had a 5 per cent risk of contracting mesothelioma and a 15 per cent increased risk of contracting lung cancer due to asbestos alone. He had a relatively high income at around £35,000 a year. His case was included in the test litigation to show that there were sufferers from pleural plaques who had high risks of future disease, and consequently relatively high general damages and future financial loss claims.
The test cases first came before Mr Justice Holland at the High Court in December 2004. In his judgment, handed down on 15 February 2005, he agreed that pleural plaques were an 'injury' to be compensated in English law (the actionability point). He then took a broad-brush approach with regards to the quantum of damages. He assessed the final award of general damages in Hindson's case at £7,000 - the same bracket as all other pleural plaques cases, despite his younger age, higher future risks and high potential loss of income if he did contract asbestos cancer. He rejected any claim for prospective financial loss that might arise with the onset of malignant disease. He held that the chance of that loss, or any part of it arising in the future, was "no more than speculative".
Hindson appealed, arguing that a risk of mortality from asbestos injuries cancer at around 20 per cent was not too speculative with respect to causing future loss of income and that the judge had not taken account of his high future risks in assessing general damages at £7,000.
The defendants in nine of the other cases appealed the quantum awards and the actionability point. The matter came before the Court of Appeal in January 2006. By a majority judgment of two to one it was decided that pleural plaques should not constitute an 'injury' that could be compensated in English law. This was largely upon policy grounds.
The actionability point is subject to an appeal to the House of Lords, to be heard on 25 June. This, of course, was not an issue in Hindson's case - he already had his judgment. Lady Justice Smith dealt with the quantum issues in that case. She could not accept that the judge was right to treat him in the same way as other claimants.
The risks of future harm must be dealt with on an individual basis. It was plainly wrong that he should have been awarded the same sum as another claimant when his risk of fatal cancer was five times greater. On the claimant's medical evidence he should have been awarded 20 per cent of £50,000 (the standard sum for asbestos cancer claims), which is £10,000, in addition to £5,500 each for the plaques and anxiety.
The claim for financial loss was not too speculative. She felt unable to come to a view on the value of the case as the defendants wanted to challenge the medical evidence. They disputed that Hindson had a 20 per cent risk and argued that a heart condition rendered the future loss claims too speculative. Williams J finally dealt with quantum in the High Court in January 2007. He could do no more than follow Smith LJ's approach to quantum.
The claimant's medical evidence was accepted with regards to the 20 per cent risk of asbestos malignancy, and the heart condition in the end made little difference. He agreed that a strictly mathematical approach to the general damages award was helpful. On the basis of a £50,000 award for mesothelioma and/or lung cancer and a 20 per cent risk, the award would be £10,000; when adding damages for the plaques themselves, the appropriate figure for the general damages was £15,500.
The defendants had submitted that no sum should be awarded for future financial loss because it was "too remote and too speculative". The judge did not agree. It is well established that damages can be awarded in cases where there is a risk of future financial loss.
Examples where such damages are awarded are: where there is a risk that at some future date medical treatment may be necessary for which the claimant tends to pay; and where a claimant's future working capacity has been compromised by an injury so that there is uncertainty about whether or when they might seek alternative employment.
This case was no different. The schedule of damages provided an arithmetical calculation of future financial loss, which was predicated upon the basis that the claimant would work to the age of 70 in his current level and that he had a 20 per cent risk of losing this income. In Williams J's judgment a strictly arithmetical approach was not possible given the imponderables in relation to age, level of earnings and risk that he would be prevented from working by coronary disease.
The arithmetical calculation of the claimant's future income loss had one advantage. It provided an upper limit for the claim. He reached the conclusion that an appropriate award to represent the risk of future financial loss was £8,500. In truth the award represented no more than a comparatively small percentage of the claimant's current annual net wage. He also awarded £2,000 in relation to the 20 per cent risk that nursing care of £10,000 would be required in the future. The total award was £26,000.
Hindson finally recovered his damages after almost three years and three trials. He had beaten his own Part 36 offer made in 2004 and, with punitive interest, recovered more than four times the amount awarded by Holland J.
•Peter Williams is a partner at Field Fisher Waterhouse