Legal Watch:DiseaseAugust 2014Issue: 002

In This Issue:

• BarbervSomerset principles well established a

decade on

• Supreme Court decision pending in International

EnergyGroupLimitedvZurichInsurancePlcUK

Branch

• Substantial award for widower of 46 year-old

woman exposed in the 1990s

• Other recent asbestos developments

• Another defendant succeeds in a NIHL appeal

on limitation

BarbervSomerset principles well established a decade onOn 28 July 2014, the High Court handed down judgment in

the occupational stress case of Daniel v Secretary of State

for the Department of Health. The court confirmed that the

principles relating to liability for work-related stress set out

in Barber v Somerset (2004), are well established. The court

dismissed Patricia Daniel’s (P) claim for damages arising from

occupational stress because the psychiatric injury was not

foreseeable and no duty of care arose.

BackgroundFrom 2002 P was employed by the defendant, formerly the

Hammersmith & Fulham Primary Care Trust (H), as the cancer

research network manager. She was initially responsible

for setting up the network, NCRN, with her line manager Dr

Kaczmarski (K), Consultant Haematologist.

P alleged occupational stress which developed into a

psychiatric condition. As a result, she became an inpatient at

a mental health hospital with seriously continuing mental ill

health.

She maintained that her stress and subsequent mental illness

were caused by H in (i) permitting her to be bullied by a

professor of oncology, Professor Gabra (G) and (ii) overwork,

or a combination of both.

02

A running dispute which developed between P and G was

fundamental to the bullying claim. G was a world renowned

professor whose research was acclaimed. He was ambitious

and wanted to pursue his own research agenda requiring

more resources than were available. G wanted to pool both

the resources from commercial organisations and the NHS

for cancer research. P was strongly opposed to this and felt

that NHS resources should be kept distinct and separate

and not pooled. Both G and P had strong views on this

issue and it underlined their relationship throughout.

P also alleged that from October 2005 she effectively had

two jobs and was therefore seriously overworked.

According to P, the bullying, victimisation and overwork

were not properly dealt with by H. It was also alleged that

on the occasions when she returned to work in 2007 and

suffered further breakdowns, the negligence continued; the

returns to work were not properly handled, there was no

appropriate risk assessment in writing and the further risks

to P were improperly dealt with.

The court’s decisionThe psychiatric experts agreed that P had a pre-existing

history of bipolar disorder, which had a very high rate of

recurrence. It was also accepted that P’s pre-existing

condition was unknown to K and H.

P alleged that a number of emails from G amounted

to bullying. The court did not consider that the email

correspondence between P and G amounted to bullying.

Nor was any of G’s conduct ‘bullying’ within the meaning

of that term applied by either the courts or ACAS. The court

found that it could not properly be regarded as genuinely

offensive or unacceptable behaviour. It was simply tough

exchanges between senior colleagues on a point of principle

on which they both felt strongly. P was not as senior as G

or as influential but she was undoubtedly a senior employee

who had power, for example to stop clinical trials, and she

exercised it.

From October 2005, after the departure of a lead nurse,

P’s workload increased and she was working longer than

normal hours. Clearly such increased workload could

increase pressure. P however, took on the additional role

willingly and was well paid for it. P made no complaint at any

time about being overworked. When she did contact HR in

February 2007, she complained only about G and not about

overwork. The court found that she was not overworked in

the sense that she was required to carry out an excessive

workload.

There was no evidence that any other employee suffered

from occupational stress, or mental injury as a consequence

of working in the pressurised cancer research units. It is

therefore not a case where the defendant was on notice,

that such a risk existed, from other difficulties experienced.

In such a case, the focus is then turned to the individual.

As to individual indications or signs from P herself of

impending mental injury, the judge was satisfied that there

were none. It is important to note that at no time did P tell

H that she had a pre-existing psychiatric condition. The

reason for P’s reticence to H is clear: she did not want to be

seen as weak and wished to remain professional.

The court decided that there was no sign or indication

available to H of impending mental injury to P. Her line

manager, K, was aware of P’s complaint of harassment

by October 2006, but this did not suggest either stress or

injury. There were no indications or complaints that were

plain enough for any reasonable employer to realise that

he must do something about it. In the court’s judgment

therefore, no duty of care arose. Nor on the facts, was

there a breach of duty of care. If there had in fact been a

breach, the court would have found that occupational stress

materially contributed to her ultimate psychiatric breakdown

together with other factors.

The judge was satisfied that on the occasions P returned

to work, although no formal written risk assessment was

made, all the necessary work adjustments which were

identified in accordance with P’s condition were considered

and put into place.

03

Legal principlesThe claimant suffered substantial psychiatric injury but the

impending breakdown was not known to the defendant. It

was not aware of her pre-existing condition or the risk of a

recurrence of psychiatric disorder. Nor were there any signs

or complaints that this was impending.

The essential questions which must be answered remain

those which are set out in Hatton v Sutherland (2002) and

Barber. As Lady Justice Hale said in Hatton, there is a single

test for determining liability in occupational stress cases,

namely:

“whether a harmful reaction to the pressures of the workplace is reasonably foreseeable in the individual employee concerned. Such a reaction will have two components: (i) an injury to health; which (ii) is attributable to stress at work.” The court reiterated that it is the indications of impending

breakdown, not stress itself, which establish a claim. Unless

foreseeable mental injury is established the claim will not

succeed (Hatton and Hartman v South Essex NHS Trust

(2005)).

CommentaryAs the court noted in this case; occupational stress claims

are fact sensitive and require particular care in determination.

The case is fact sensitive but it is a reminder of the

principles established in Barber 10 years ago: to succeed in

an occupational stress claim, there must be evidence that

a claimant alerted the employer to any background mental

health problems or any impending health concerns. If the

employee struggles on stoically, not wanting to appear

weak or unable to cope, the probability is that the employer

will not be fixed with knowledge, actual or constructive, and

the claim will fall at the foreseeability hurdle.

Patricia Daniel v Secretary of State for the Department of

Health (as successor to the liabilities of Hammersmith and

Fulham PCT) [2014] EWHC 2578 (QB).

Karen Scott

E: Karen.Scott@plexuslaw.co.uk

T: 0844 245 5235

04

Supreme Court decision pending in InternationalEnergyGroupLimitedvZurichInsurancePlcUKBranchThe appeal by Zurich in this case was heard in the Supreme

Court on 15 and 16 July before Lords Neuberger, Mance,

Kerr, Sumption and Carnwath. The judgment is eagerly

awaited by all asbestos insurers and policyholders.

BackgroundIEG is the successor to the Guernsey Gas Light Co Ltd, a

Guernsey corporation and the employer of Mr Alan Carre for

a period of just over 27 years, from 1961 to 1988. Mr Carre

developed mesothelioma and brought a claim in Guernsey

alleging that he was exposed to asbestos throughout the

27 years of his employment. Mr Carre’s claim was settled

and IEG claimed an indemnity from Zurich under EL policies

issued between 1982 and 1988. Subsequently a further

two years EL cover with Excess Insurance Co Ltd was

also traced, but no other EL cover was traced. Therefore

in total, IEG had only eight years EL cover out of 27 years

employment.

IEG claimed it was entitled to a full indemnity from Zurich,

which argued that IEG was only entitled to an indemnity

proportionate to its time on risk i.e. 6/27 years. Proceedings

were issued and heard in the Commercial Court by Mr

Justice Cooke who dismissed the claim. He found that IEG

was only entitled to a proportionate indemnity because the

Compensation Act did not apply in Guernsey and liability

was proportionate in accordance with the common law

principles applied in Barker v Corus (2006).

IEG appealed to the Court of Appeal, which upheld the

appeal on the grounds that the decision in Barker was no

longer good law following the Supreme Court’s decision in

EL Trigger (BAI v Durham (2012), and therefore liability was

not proportionate and Zurich were obliged to provide a full

indemnity.

The arguments in the Supreme Court Zurich appealed on the following grounds:

1. The case should be decided on the application of the

common law in Guernsey. The Court of Appeal was

wrong to consider that the decision in Barker had been

overturned by the decision of the Supreme Court in

EL Trigger. The decision in Barker remained good law

and the effect of that decision was that at common

law, liability for mesothelioma was proportionate or

aliquot (“the quantum rule”). The Court of Appeal erred

because it had conflated the issues of causation and

quantum. Once causation was established, the quantum

rule imposed proportionate liability. The Compensation

Act did not apply in Guernsey and the Court of Appeal

should therefore have applied the quantum rule in

Barker. Zurich’s contractual obligation to provide an

indemnity should therefore be proportionate.

2. The Court of Appeal erred in law in construing the

“all sums” wording of the insuring clause. Zurich’s

obligation to indemnify in respect of “all sums for

which the insured shall be liable” was closely linked to

the “disease caused during any period of insurance”

wording of the insuring clause. The liability to which

the policy responded was the liability generated during

the period of insurance and not the liability generated

during the period of employment as a whole.

3. If the court rejects grounds 1 and 2 and decides

that Zurich is liable to indemnify IEG in full or for

any mesothelioma claims where section 3 of the

Compensation Act applies, then Zurich asks the court

to consider employing an equitable remedy to distribute

the liability borne by insurers. This was necessary as a

05

result of the imposition of liability by Fairchild and the

Compensation Act. This equitable remedy termed by

Zurich as “Fairchild Recoupment Rights” would entitle

Zurich (and any other interested insurer) to recover

contributions from solvent policyholders in such cases

and would also provide a legal basis for the sharing

of claims by successive EL insurers post Fairchild, as

voluntarily adopted in the ABI Handling Guidelines,

which were issued in 2003.

IEG’s response:1. The decision in Barker was implicitly overruled by the

decision of the Supreme Court in EL Trigger because

that decision made it clear that in mesothelioma cases,

the claim was for the development of the indivisible

disease and not the divisible creation of the risks of the

disease. Therefore, the Barker approach to apportioning

liability by reference to increased risk was consigned to

“past history”.

2. The “all sums” wording of the Midland insurance policy

was clear and Zurich was liable to indemnify in full.

The disease was “caused” during the period of cover

and wording of the insuring clause did not provide a

proportionate indemnity.

3. The more radical proposal for equitable rights of

contribution against the insured should be rejected.

There is no legal basis for such rights of contribution

and the court has no equitable jurisdiction to create the

contribution rights which Zurich is seeking.

Further submissions were made on behalf of the ABI and

the Asbestos Victims Support Groups Forum as interveners

in the appeal.

The outcome The decision of the Supreme Court is eagerly awaited and

will have significant implications for the future handling of

mesothelioma claims, in particular the sharing of liability

between successive EL insurers and/or EL insurers and

their solvent policyholders.

If the Supreme Court upholds the decision of the Court of

Appeal and accepts that Barker has been overturned, this

will also impact on the apportionment of liability for other

indivisible diseases such as lung cancer.

Steve Phillips

E: Steve.Phillips@plexuslaw.co.uk

T: 0844 245 5237

06

Substantial award for widower of 46 year-old woman exposed in the 1990sA quantum decision in the recent mesothelioma case

of Knauer v Ministry of Justice (2014) is worth a mention

because the court confirmed the law on various disputed

heads of damage. The facts of the case are also of interest

because exposure only commenced in the late 1990s.

On the face of it, even if the defendant had no case on

liability, there should therefore have been strong causation

arguments.

BackgroundSally Knauer (K) was employed between 1997 and 2007

as an administrator at Guy’s Marsh Prison, Shaftesbury,

Dorset. The prison included many old buildings which K had

to access in the course of her job. Many of these buildings

contained asbestos.

The defendant conceded liability following exchange of

witness evidence. Unfortunately, it is not clear from the

judgment, exactly how K was exposed to asbestos in her

role as administrator.

K was diagnosed with malignant mesothelioma in March

2009 and died in August 2009 at the age of 46. The claimant

(H) is K’s widower and the administrator of her estate. They

had three sons who at the date of their mother’s death were

aged 22, 20 and 16.

They were an old fashioned couple in the sense that the

division of labour in the household was as it might have

been in the 1950s. K managed the household. She cleaned,

cooked, laundered, ironed clothes, did the shopping and

walked the dogs. She also did the gardening and decorating.

H did occasional household repairs but little more than that.

In 2007 K and H bought two public houses in Dorset. They

ran one and their eldest son ran the other. K continued her

job at the prison for a while, but then resigned and worked in

the public house where they lived. She had previously been

employed for many years as a receptionist or a personal

assistant before her work at the prison.

When K was diagnosed, the couple sold their business and

bought a new home to live in. H gave up his work to look

after his wife.

The court’s decision on quantumMany heads of damage were agreed but on a small number

of issues there was a wide divergence between the parties.

The total award by the court amounted to just over £640,000

excluding interest.

Pain, suffering and loss of amenity

Taking into account the 12th edition of the Judicial

College guidelines and the recent comparable decisions in

Zambarda v Shipbreaking (Queenborough) Ltd (2013) and

Streets v Esso Petroleum Co Ltd (2009), the court assessed

general damages at £80,000. This is a large sum in view of

the seven-month duration of pain and suffering. However,

the court seems to have given weight to factors including

K’s young age, her domestic circumstances and the extent

and effects of invasive investigations including a partial

pleurectomy.

Funeral and wake expenses

The claimant sought to claim £725 for the cost of the

reception or wake which followed the funeral. The court

disallowed the claim on the basis that Gammell v Wilson

(1982) is still good law. Defendants and their insurers should

take heed of this when presented with such claims.

Income dependency: the multiplier

The claimant urged a departure from the traditional method

of calculating the multiplier. He submitted that losses up to

the date of trial should be treated as special damages (with

a small discount for the uncertainties of life but none for

07

accelerated receipt) and that the multiplier for future loss

should be calculated from the date of trial or judgment.

Mr Justice Bean said that he would follow that course if it

were open to him, but that he was bound by the decisions

in the House of Lords in Cookson v Knowles (1979) and

Graham v Dodd (1983) in which the conventional approach

was adopted.

Income dependency: the multiplicand

K was only paid £5,783 from the public house in the tax

year preceding her illness. Despite that, the court accepted

the claimant’s submissions that the couple would have sold

the public house within two years and that she would then

have returned to ordinary employment. The 2012 edition of

the Annual Survey of Hourly Earnings (ASHE) supported an

average net income for secretarial work of just over £16,000

per annum. Therefore, that salary was used for purposes

of calculating K’s likely income. This decision clearly had a

substantial effect on the income dependency claims.

Service dependency

The services dependency claims accounted for more than

half of the total damages award in the sum of £329,241.

The MOJ argued vigorously that there should be no award

for services dependency. H had not engaged a paid cook,

cleaner, gardener or decorator in the five years since K’s

death. However, the court considered that this argument was

misconceived. The fact that a widower decided to manage

himself after the death of his wife, would not disentitle him

to sue for and recover damages, for the pecuniary loss he

had sustained.

The court rejected the claimant’s £25,000 annual claim for

a resident housekeeper. It would not be reasonable for the

defendant to pay for a resident housekeeper to replace

what had been lost. Such continuity of services could be

provided by an agency for £16,640 per annum. Accepting

H’s evidence that K was extremely house-proud, the court

allowed 20 hours per week on household tasks. A further

125 hours were allowed each year for decorating and

gardening.

The court therefore allowed an average of nearly 23 hours

per week in respect of the lost services of a working mother.

A defendant should be able to reduce annual service claims

by obtaining documentary and witness evidence on the

local hourly rate for direct hiring as opposed to through an

agency. Evidence on the claimant’s average working hours

may also be useful in disproving the time allegedly engaged

in household chores.

Loss of intangible benefits

Although the claimant contended for an award of £10,000,

the court considered this was over-ambitious in view of

the case law. The court accepted the defendant’s figure of

£3,000 (Fleet v Fleet (2009)).

Commentary The high services dependency award in this case should

act as a salutary lesson to defendants and their insurers.

Defendants need to ensure that they obtain as much

evidence as possible to reduce the costs of the services

claimed in a dependency claim. It is also a good reminder

that some of the old cases, like Gammell are still good law.

As it is a quantum only judgment, we have little information

on the liability and causation arguments raised by the

defence. The claimant’s latency period (time between

the initial asbestos exposure and diagnosis) was only 12

years. Studies have shown that high levels of exposure can

shorten the latency period but causation should have been

arguable, unless there was very good evidence of heavy

exposure to asbestos in the early years of her employment.

08

“...Defendants need to ensure that they obtain as much evidence as possible to reduce the costs of the services claimed in a dependency claim...”In general, there is a lengthy period between the development

of the first malignant cell and the point at which the disease

can be diagnosed. The latency period for mesothelioma is

usually between 20 and 50 years with the shortest typical

period being 10 to 15 years. It is generally accepted that

all exposure up to 10 years before the appearance of

symptoms is causative. During the final 10 years, further

exposure to asbestos fibres will have no causative effect.

A very short latency period as in this case is still exceptional.

Knauer v Ministry of Justice [2014] EWHC 2553 (QB).

Karen Scott

E: Karen.Scott@plexuslaw.co.uk

T: 0844 245 5235

09

Other recent asbestos developments

Justice Select Committee report on mesothelioma claims The government’s decision to apply sections 44 and 46

of the Legal Aid Sentencing and Punishment of Offenders

Act 2012 (LASPO) has been called into question by the

Justice Select Committee. Section 48 of LASPO had

exempted mesothelioma claims from sections 44 and 46,

so that claimants could still recover success fees and ATE

premiums from defendants. This was subject to a review

by the government and following a consultation in 2013, it

was announced that the LASPO provisions would apply to

mesothelioma claims from July 2014.

This resulted in the Justice Select Committee reviewing

this decision; written submissions were invited and the

committee conducted two oral evidence sessions.

The committee arrived at the following conclusions:

1. The government’s consultation was “hasty” and it

should not have been conducted until “sufficient time

has elapsed for the effects of LASPO changes in non-

mesothelioma cases to be assessed”. The cost-benefit

analysis undertaken by the government as part of the

consultation and its conclusion that there is a significant

financial net benefit to claimants was regarded by

claimants’ lawyers with considerable suspicion and its

conclusions were “hotly disputed”. The Justice Select

Committee had been confronted with “an emotive

and polarised” debate about the process of making

mesothelioma claims and to overcome this divergence

of views, the committee considered that there should be

a more thorough independent review.

2. The committee also urged the government to expedite

the primary legislation required to bring into effect the

Third Party (Rights against Insurers) Act 2010.

3. The committee also called upon the Ministry of Justice

to work with the Department of Health to reduce

delays in the production of the medical records of

mesothelioma victims.

Lord Faulkes has now confirmed that the government will not

proceed with the introduction of LASPO to mesothelioma

claims before autumn this year.

The government has also confirmed that the Third Party

(Rights against Insurers) Act 2010 will be brought into force

under clause 17 of the new insurance Bill, which has already

received its first reading in the House of Lords.

Judicial review of the LASPO consultation processIn tandem with the Justice Committee’s review, the Asbestos

Victims Support Group Forum (AVSGF) has launched a

judicial review of the consultation process, which was heard

by the High Court in July. The AVSGF is seeking a new

consultation process before the provisions of LASPO are

introduced to mesothelioma claims.

Disclosure of employment records As anyone handling mesothelioma claims will know, the

employment history provided by the HMRC is a vital piece

of evidence. The decision by the HMRC to no longer provide

employment histories in deceased cases due to data

protection concerns was therefore problematic.

In his evidence to the Justice Committee, Lord Faulkes has

now confirmed that this problem will be resolved by way of

legislation. The Deregulation Bill currently before the House

of Lords will be amended to enable the HMRC to release

information for the purpose of certain litigation including

Fatal Accidents Act claims, claims for damages for the

benefit of an estate of a deceased person and claims under

the Diffuse Mesothelioma Payment Scheme.

010

Pending enactment of the Bill, an interim procedure has

been agreed between the HMRC and APIL and approved

by Masters McCloud and Eastman for use in the RCJ as

confirmed in Master McCloud’s decision in Yates v Revenue

& Customs Commissioners (2014). The court will make an

order for disclosure following the issue of a claim against

“persons unknown” in relation to the relevant deceased

asbestos claim. The claimant can then make an application

for disclosure of the relevant employment history, supported

by evidence and the application will not be opposed by the

HMRC.

This process should ensure that employment histories are

disclosed without undue delay pending enactment of the

Deregulation Bill.

Steve Phillips

E: Steve.Phillips@plexuslaw.co.uk

T: 0844 245 5237

011

Another defendant succeeds in a NIHL appeal on limitationThe case of Malone v Reylon Heating Engineering Ltd

(2014) sees an argument under s33 of the Limitation Act

1980 resolved in the defendant’s favour and considers the

extension of the primary limitation period under s33 of the

Act.

BackgroundMalone (M) had worked for Reylon (R) between 1977

and 2004. He claimed that he was exposed to excessive

noise for up to eight hours a day and that R had frequently

failed to provide adequate hearing protection. R went

into administration in 2006 and into liquidation in 2008.

Notification of the claim was in 2009.

In 2011, M issued his claim for damages for alleged noise-

induced hearing loss and moderate tinnitus arising from

his employment. He accepted that he had constructive

knowledge within the meaning of s11 and 14 of the Act by

the end of January 2001. He asked the court to dis-apply

the primary limitation period under s33 for the entire period

of his employment on the basis that it would be equitable to

permit his action to proceed in the circumstances.

Lower court decisionThe judge found that M had been exposed to “injurious levels

of noise” whilst employed by R and had not been provided

with adequate hearing protection. She found that the cause

of action regarding the entire period of employment had

accrued when the injury was “completed”, namely when M

ceased working for R in 2004. The judge decided that the

determination of whether the primary limitation period had

expired in 2004 or 2007 was critical to the exercise of her

discretion under s33. She concluded that the delay between

2007 and 2009 had not materially compromised R’s ability

to defend the claim, and exercised her discretion under s33

in favour of M.

Appeal Court decisionAllowing R’s appeal, the Court of Appeal held that the judge

identified only one limitation period, to be applied to the

entirety of M’s employment. Consequently, her approach to

s33 was vitiated because she erroneously decided that the

only relevant period of delay was between 2007 and 2009.

She should instead have identified the two periods of delay:

2004 to 2009 for the pre-2001 damage, and 2007 to 2009

for the post-2001 damage.

There had been no proper basis for the judge to suspend

or put back the limitation period for the earlier period, or

to treat the injury for the entirety of the employment as

being indivisible, given that apportionment was possible in

hearing loss cases and was appropriate in the instant case.

As, in the judge’s view, the determining factor as to whether

to allow the entire case to proceed was whether the primary

limitation period had expired in 2004 or 2007, together with

her acceptance that R had a strong case regarding prejudice

if the relevant period of delay was between 2004 and 2009,

her conclusion that it was equitable to exclude the time limit

was unsustainable.

The Court of Appeal held that she should have considered,

separately:

1. Whether to allow the case to proceed for the pre-2001

injury, bearing in mind the prejudice caused by the delay

since 2004, and

2. Whether to allow it to proceed for the post-2001 injury.

The decision regarding the first period was potentially

relevant to the decision on the second, given that the court

needed to have regard to all the circumstances of the case,

which inevitably included considering why it had become,

overall, a distinctly stale claim for damages. The lapse of

time during the pre-limitation period had to be treated with

The information and opinions contained in this document are not intended to be a comprehensive study, nor to provide legal advice, and should not be relied on or treated as a substitute for specific advice concerning individual situations. This document speaks as of its date and does not reflect any changes in law or practice after that date. Plexus Law and Greenwoods Solicitors are trading names of Parabis Law LLP, a Limited Liability Partnership incorporated in England & Wales. Reg No: OC315763. Registered office: 8 Bedford Park, Croydon, Surrey CR0 2AP. Parabis Law LLP is authorised and regulated by the SRA.

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Contact UsFor more information please contact:

Karen Scott

Knowledge Management Lawyer

T: 0844 245 5235

E: Karen.Scott@plexuslaw.co.uk

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a significant degree of care to ensure that it was accorded

the correct degree of weight. It was also useful to stress that

once the limitation clock started ticking, it was appropriate

to consider the delay since the claimant had knowledge

rather than focusing solely on the delay from the end of the

limitation period.

“…once the limitation clock started ticking, it was appropriate to consider the delay since the claimant had knowledge...”As the judge had applied the wrong approach, the instant

court’s role was to re-exercise the discretion provided by s33.

The prejudice to the defendant outweighed the prejudice to

the claimant for the purposes of s33, pre and post-2001,

and it would not be equitable to allow the claim to proceed

particularly taking into account the issue of proportionality.

The Court of Appeal accepted that M was capable of

proceeding with a claim for the period post-2001 but as that

period represented just 3 out of 27 years of employment, the

Court of Appeal held that it was not proportionate to allow

the claim to proceed and therefore s33 discretion was not

exercised.

Malone v Reylon Heating Engineering Ltd (2014) EWCA Civ

904.

Megan Galliet

E: Megan.Galliet@plexuslaw.co.uk

T: 0844 245 5245