Asbestos Exposure and Choice of Law – The View from Scotland

 

This blog post is by James Beeton of 12 King’s Bench Walk.

In Docherty v Secretary of State for Business, Innovation and Skills [2018] CSOH 25, the Outer House of Scotland’s Court of Session considered the following question:

Where a man, while working in Scotland, inhales asbestos fibres that cause him injury after he has become resident in England, which law is applicable to determine the admissibility of claims for damages made by his executors and relatives after his death?

Facts

The deceased had worked as a mechanical fitter for a predecessor of the defender. From about 1941 to 1947, and then from 1954 to 1979, he was exposed to asbestos dust in the course of his work.

In 2003 the deceased began to experience respiratory problems and in 2009 he was admitted to hospital. A CT scan showed basal bronchiectasis with fibrosis and mild pleural thickening consistent with asbestosis. He continued to suffer respiratory difficulties until his death in 2011.

At the time when the deceased began to experience respiratory symptoms, at the time of diagnosis and immediately prior to his death, the deceased lived in England.

The pursuers deliberately raised an action in Scotland rather than England with a view to benefitting from the Damages (Scotland) Act 2011, which allows rights of action to a much broader range of relatives than would have had a claim under English law. The Scottish courts are also more generous in valuing claims for grief and loss of association, meaning that there was a further advantage to pursuing the claim in Scotland.

Issues

There were three issues for the court to determine:

  1. Whether the applicable law was determined by the Rome II Regulation (No. 864/2007) (“Rome II”);
  2. If so, what was the applicable law under the Regulation; or
  3. If not, what was the applicable law under the common law of Scotland?

Decision

Did Rome II Apply?

Lord Tyre agreed that the case gave rise to an issue of conflict of laws, but he held that by virtue of its commencement provision at article 31, Rome II was inapplicable. Article 31 provides that Rome II applies to ‘events giving rise to damage which occur after its entry into force.’ The date of entry into force was 11 January 2009.

Lord Tyre was of the view that the reference in article 31 to ‘events giving rise to damage’ was linked to the distinction drawn in article 4(1) of Rome II between three separate concepts, namely:

  • The event giving rise to the damage (in this case, exposure to asbestos);
  • The damage (the deceased’s illness and death); and
  • The indirect consequences of the event (the losses suffered by the deceased’s relatives).

Since the ‘events giving rise to damage’ (i.e. the exposure to asbestos) had occurred before the entry into force of Rome II, the Regulation would not apply.

Neither, it was agreed, would the Private International Law (Miscellaneous Provisions) Act 1995 apply, which contained a similar commencement provision at section 14. The matter therefore had to be determined by the pre-1995 Act common law.

What was the Applicable Law?

Scots common law provided that a right of action would not be recognised unless it was admitted by the lex loci delicti. However, there was no clear answer to the question of how to identify the lex loci delicti where the harmful event occurred in one jurisdiction but the harm occurred in another.

Lord Tyre approached this question by referring to comments of the House of Lords in Rothwell v Chemical & Insulating Co Ltd [2008] 1 AC 281.

  • At [87] and [88], Lord Rodger had said:

‘In summary, three elements must combine before there is a cause of action for damages for personal injuries caused by a defendant’s negligence or breach of statutory duty. There must be (1) a negligent act or breach of statutory duty by the defendant, which (2) causes an injury to the claimant’s body and (3) the claimant must suffer material damage as a result.

In these cases the claimants do not suggest that the presence of the asbestos fibres in their lungs constitutes an injury…’

  • At [47], Lord Hope had said:

‘It is well settled in cases where a wrongful act has caused personal injury there is no cause of action if the damage suffered was negligible. In strict legal theory a wrong has been done whenever a breach of the duty of care results in a demonstrable physical injury, however slight. But the policy of the law is not to entertain a claim for damages where the physical effects of the injury are no more than negligible…’

He considered that it was clear from these comments that ‘a cause of action in delict does not arise unless and until there has been both a wrongful act and resultant injury. Specifically, the presence of asbestos dust in an employee’s lungs does not of itself constitute injury, and… no cause of action arising out of negligent exposure arises until it does.’

Since injury was an essential ingredient of an actionable wrong, and since injury could not take place until after the breach of duty had occurred, the place of the harmful event (or locus delicti) was the place where the injury took place and not where the negligent act or omission occurred.

In those circumstances, the claim fell to be determined according to English law and the case insofar as it was based on the Damages (Scotland) Act 2011 would be dismissed.

Comment

The decision represents a coup for defenders faced with pursuers seeking to maximise damages by proceeding in Scotland rather than England.

In addition to the broader range of dependants in fatal accident claims and the more generous levels of award available outlined above, it will also be noted that pleural plaques are in fact compensable in Scots law (where the Rothwell result was overturned by legislation). Following the approach in Docherty, a pursuer resident in England at the time his injury manifests itself will be unable to benefit from those features of Scots law by bringing his case in Scotland.

A suggestion by some commentators is that this decision appears on the face of it to be inconsistent with the Supreme Court’s approach in Durham v BAI (Run Off) Ltd [2012] UKSC 14 (the “Trigger” litigation).

It will be recalled that in that case the Supreme Court determined that mesothelioma was ‘contracted’ or ‘sustained’ for the purposes of employer’s liability insurance policies during the period of exposure rather than at the point of its manifestation in the victim.

The first point to note is that two drivers led to the policy decision in Durham: the first was the type of insurance policy in question (i.e. employer’s liability insurance) and the second was the nature of the disease under consideration.

It is therefore important to note that Durham involved mesothelioma, whereas this case involved asbestosis – a cumulative condition whose causative mechanism is very different to that of cancer.

The policy decision in Durham that the relevant employer’s liability insurance policies would be triggered at ingestion was based in part on (i) the expectation of the London market and (ii) the fact that most modern policies contained exemption clauses for asbestos diseases which would have led to a lack of compensation for mesothelioma victims if the date of clinical onset of symptoms was adopted as the trigger date of the policies. A key driver leading to the policy decision in Durham was therefore lacking.

A further point is that the two cases simply concern different things. Durham deals with the rules of contractual construction concerning whether a tortfeasor may call upon its indemnity: Docherty (and Rothwell) deal with the rules of what constitutes an actionable injury for the purposes of a tort. The concepts are not the same – although there may be a degree of overlap for the purposes of determining the applicability of the Third Party (Rights against Insurers) Act 2010 or 1930 (which could allow the claimant to sue the insurer direct).

That disconnect, it seems to me, is also reflected in Lord Mance’s comments (on behalf of the majority in Durham) at [52] that:

‘Damage is only incurred when mesothelioma develops. Only when it develops does the victim incur damage which is legally relevant … [The Fairchild rule] is not a rule which, even as between employers and employees, deems the latter to have suffered injury or disease at the time of any exposure.’

On that approach, it appears that Lord Tyre was correct to take the place where the disease developed as the locus delicti.

On the other hand, Durham was not addressed by Lord Tyre and, as has been pointed out, the decision in Docherty runs contrary to the prevailing insurance market practice of taking the relevant jurisdiction as the place of exposure rather than the place of manifestation of the disease.

It is understood that the pursuers have sought to appeal to the Inner House of the Court of Session. It will be interesting to see how the case progresses.

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