25 February 2002
Earlier this month, Prime Minister Tony Blair summed up the feelings of hundreds of asbestos claimants by saying that December's Appeal Court ruling in the Fairchild case was "seen as an injustice".
For those of us involved with compensation claims in respect of the UK's biggest industrial killer, it was good to see a leading politician siding with the sufferers, because in the last 12 months they have been dealt a series of heavy blows by both the law and corporate business.
Someone dies every three hours of an asbestos-related disease in the UK. By the end of this decade, an estimated 10,000 people will die each year from asbestos-related diseases, more than twice the number of road accident deaths. This affects every region, and importantly, almost every constituency.
Those suffering from asbestos exposure are currently not receiving compensation. This is due, if not to legal loopholes, then certainly to legal inadequacies, although moves are underway to secure legislation to ensure the polluter pays for the lethal legacy of the UK's industrial past.
In the last 12 months, sufferers have had to face a wicked onslaught: the Fairchild judgment had seen mesothelioma sufferers unable to claim from multiple employers; a major insurance company collapsed; and the UK's largest asbestos manufacturer T&N said it does not know when, if ever, it will pay the hundreds of people who were harmed as a result of exposure to its own asbestos products.
But back in 1995, when a brave and tenacious June Hancock won her landmark case against T&N, it seemed that the battle was won and that claims - if proven - would be settled.
Having contracted the deadly mesothelioma while playing as a child in Leeds in the streets surrounding a factory owned by T&N, Hancock dedicated the remaining months of her life to fighting for justice for fellow sufferers, so that they could benefit from her experience.
On 10 January 2001, Chester Street Holdings (formerly Iron Trades Holdings), which insured many companies which had used significant quantities of asbestos, collapsed under the weight of claims against it, leaving the Government to open the door to compensation following a deal with the Association of British Insurers (ABI).
Having received that blow, claimants were still confident that T&N would meet its many outstanding claims. After all, in November 1996, the company had announced a financial package to cap its asbestos-related liabilities, including £373m from its own funds and £500m top-up insurance cover.
T&N's then chairman Sir Colin Hope reassured sufferers by saying: "The proposals are intended to bring to an end the uncertainty surrounding the asbestos issue that has overshadowed the group for so many years. We now have over £1bn of cover, about three times the central estimate of the present value of liability."
|"[T&N had] a wish to contest these claims by any means possible, legitimate or otherwise, so as to wear the claimants down by attrition"|
Mr Justice Holland
However, in October last year, T&N took refuge from its many creditors. It applied for, and received, permission from the High Court to enter into voluntary administration.
Asbestos sufferers began to feel that the law was not on their side.
This legal manoeuvre allowed T&N to continue trading while freezing all the asbestos claims against it so that it could review how to pay the millions in compensation. From the sufferers' point of view, it was business as usual at T&N, while they sat and waited, many knowing they would die before they had the comfort of knowing that their families would be provided for.
T&N's move into administration was no accident. It followed the sale of the company in 1998 to US-based Federal-Mogul (FM), which also had a history of asbestos-related claims.
Although not unexpected, FM's filing for voluntary Chapter 11 bankruptcy in the US and administration under the UK Insolvency Act 1986 alarmed many people on both sides of the Atlantic, even though newly-elected chairman and executive officer Frank Macher said that, in spite of all this, "Federal-Mogul will continue to serve its existing customers, fulfil current contracts and secure new business".
It now appears that FM, with a turnover of $6bn (£4.2bn), acquired not just a highly profitable enterprise, but it also had valuable insurance cover which, although taken out in the UK to meet UK asbestos claims, is now available to US claimants too.
This, of course, means that, with more than 90 per cent of the 350,000 outstanding claims against FM being brought by people exposed to asbestos who are not physically disabled, and with many of them also seeking punitive damages, the once adequate insurance cover for the UK claimants is now nowhere near enough to cover the UK and US claims combined.
Even for a company of FM's size (operating profits last year were around $100m (£69.4m)) the worldwide claims of around $350m (£244.8m) are too large to meet.
On 9 January this year, MP John Battle spoke for many of his colleagues when he questioned the legalities of T&N's insurance arrangements. "Does the arrangement where a company is self-insured and has a captive insurer (as T&N is believed to have had), comply with the Employers' Liability (Compulsory Insurance) Act?" he asked.
For the High Court to allow T&N to enter into administration in the full knowledge that the acquisition of the company by FM already meant that UK claimants could lose out was, in the eyes of many sufferers, tantamount to complicity.
Little did they know that in December, a potentially more devastating blow would come, this time from the Court of Appeal, which ruled in Fairchild and others that, because mesothelioma can be caused by a single asbestos fibre, people who may have been exposed in more than one place of work could not pursue any employer because the source of the single (guilty) fibre could not be identified.
Lord Justices Brooke, Latham and Kay summarised their judgment as follows: "Where a claimant has suffered asbestos-induced mesothelioma after being exposed working for more than one employer, [they] cannot recover damages [because] mesothelioma is a single indivisible disease and a claimant cannot establish on the balance of probabilities when it was that he inhaled the asbestos fibre, or fibres, which caused a mesothelial cell in his pleura to become malignant.
"The court observed that, in these circumstances, claimants may have a claim under the Pneumoconiosis (Workers' Compensation) Act 1979, in which event the cost to the exchequer may run into tens of millions of pounds each year. If they do not, it said that these cases have revealed a major injustice crying out to be righted, either by statute or by an agreed insurance industry scheme."
This acknowledgement of the 'injustice', recently reiterated by the Prime Minister, ought to give hope to mesothelioma/cancer sufferers. There may be a move to right this wrong with new legislation, but sadly, it will come too late for many of those suffering today.
However, sufferers and their lawyers are determined that the Government, despite Blair's new interest, does not bail out T&N and that the polluter is made to pay.
After all, according to Mr Justice Holland in his ruling in the Hancock case, this is the company whose defence to the claims reflected "a wish to contest these claims by any means possible, legitimate or otherwise, so as to wear them (the claimants) down by attrition".
It seems that the war of attrition is still being waged against the asbestos victims, whose only crime was to breathe in the dust.
As John Battle concluded in last month's parliamentary debate: "This is a struggle for a just society that must be won."
Adrian Budgen is a partner at Irwin Mitchell