Law lords ruling leaves insurers facing huge claims over asbestos-related cancer

Insurers were facing the prospect of compensation claims totalling billions of pounds from asbestos-related cancer victims [yesterday] after the House of Lords overturned a Court of Appeal ruling. Five law lords unanimously rejected the earlier judgment in three test cases, which had said that compensation could not be paid in cases where workers had been exposed to asbestos by more than one employer because it was impossible to tell where the "fatal" fibres were inhaled. The ruling means thousands of victims of mesothelioma, a form of asbestos-related cancer, will be able to claim compensation.

The three test cases had involved Judith Fox and Doreen Fairchild, widows of mesothelioma victims, and Edwin Matthews, a sufferer. Victims' lawyers and unions put the potential cost to the insurance industry between £6bn and £8bn over the next two decades, as the number of mesothelioma cases rise. The Association of British Insurers said that some estimates were "wildly out of line with reality", but acknowledged that the figure could work out at something less than £200m a year. There are thought to be more than 1,500 mesothelioma cases a year. But that number is expected to rise, or even double according to some estimates, over the next 15-20 years. Meanwhile, lawyers say that "average" payments in mesothelioma cases were running at about £100,000 before the recent legal uncertainty brought a halt to any payouts.

Unusually, the law lords delivered only an outline judgment [yesterday], barely a week after hearing arguments in the case. Lord Bingham, the senior law lord, said this largely reflected concern for Mr Matthews' personal circumstances. He is very ill. The law lords' detailed reasons will be delivered later this summer. That led insurers to offer a guarded response to the decision. "Insurers will pay compensation within the law as set down and interpreted today," said John Parker, head of general insurance at the ABI. But he added: "We will need to study the details of this ruling very carefully as soon as the reasons for the decision become available in order to establish the precise parameters of the law." Similarly Norwich Union, which with Zurich was involved in the Matthews case, said it was waiting for the Lords' reasoning in order to assess the impact of the decision.

There was relief from victims and their relatives, and from personal injury lawyers. Anthony Coombs, Mr Matthews' solicitor, described the decision as "momentous", while Patrick Allen, president of the Association of Personal Injury Lawyers, said it would be "a huge relief" for the hundreds of cases in the pipeline. Brian Fox, brother of Tom Fox, one of the two posthumous claimants in the trio of cases, said: "We've been waiting a long time. It's great to see justice being done." Much of the legal argument before the Lords had centred on whether the concept of "material contribution" to risk should apply. Mr Coombs speculated that the law lords had decided that "any employer who materially increased the risk" would be deemed to have caused the disease. If that is so, lawyers say there could be significant implications for other negligence and product liability claims. Rod Freeman at Lovells cited blood product cases, where hepatitis or HIV infection followed a series of blood transfusions.

"Financial Times" 17 May 2002