FROM BOLTON TO DURHAM: THE ASBESTOS TRIGGER LITIGATION

1. FROM BOLTON TO DURHAM:THE ASBESTOS TRIGGER LITIGATION ALARM NE CONFERENCE 27.03.09 GREGOR WOODS

2. Mesothelioma Malignant tumour Multi stage process involving genetic changes in cells Forms in the mesothelial cells of the pleura, typically Non-spherical shape Invariably fatal Almost always caused by inhalation of asbestos fibres Very long tail: 30-40 years from exposure to diagnosability Average of 14 months from diagnosis to death

3. Mesothelioma Approx 9000 deaths in UK to 2003 Now approx 2000 deaths per year and rising Peak 2011-2015 Can be caused by minimal exposure Dose related �10 year rule�

4. Some recent issues in asbestos litigation if C can�t prove which negligent exposure caused the mesothelioma, can he succeed against any defendant? (Fairchild/HOL) Is a defendant who only contributed in part to the total exposure liable to pay the mesothelioma claim in full? (Barker/HOL; Compensation Act 2006) Are pleural plaques an actionable injury? (Rothwell/HOL) Does a PL/EL policy respond on inhalation or when the condition actually manifests? When is that?

5. THE BOLTON CASE: PL POLICY INTERPRETATION Bolton MBC v MMI and Commercial Union (COA 6.2.06) Dispute between MMI and CU C exposed in 1960�s, when working at Bolton�s premises. PL insurer at time: predecessor of CU Diagnosed with mesothelioma 1991. Injury deemed to have arisen 1980 MMI were PL insurer 1.2.79-1.12.91

6. BOLTON MMI: �indemnify (in respect of) accidental bodily injury or illness��when such injury, illness, loss or damage occurs during the currency of the policy�.� CU: ��.bodily injury to or illness of any person occurring during the period of indemnity�.�

7. BOLTON Question: when did the injury occur? Inhalation of fibres or development of tumour? MMI argued �injury occurred� on inhalation (�injury means insult�) CU argued no injury until tumour appeared, 10yrs before symptoms COA: Development of tumour, not inhalation MMI�s PL policy pays

8. BOLTON ��actionable injury does not occur on exposure or on initial bodily changes happening at that time but only at a much later date; whether that is when the malignant tumour is first created or when identifiable symptoms first occur does not matter for the purposes of this case�injury cannot be equated to the �insult� received by the body when exposure first occurs� (Longmore LJ, COA)

9. BOLTON SO�MMI were the loser, or were they��?

10. What about EL policies? EL policies traditionally worded on a �injury caused� basis, such that they were triggered by bodily injury �caused� during the period of insurance Insurers have traditionally treated inhalation of asbestos fibres as the triggering event A number of policies over the years have used different wording: �injury sustained� or �injury contracted�

11. DURHAM V BAI (Run Off) LTD etc Historically, EL insurers have paid out on a �causation� basis, whatever the precise wording ie inhalation of fibres triggers the EL policy Following Bolton, some insurers refused to pay out on inhalation, arguing injury not �sustained� until development of tumour Those insurers included MMI�.

12. DURHAM Key issue in Durham: when is mesothelioma �sustained/contracted� ? Policy interpretation

13. DURHAM: who is litigating? 6 Lead Cases Several insurers arguing sustained/contracted policies do not respond on inhalation but on date of tumour: BAI Independent Insurance Co Ltd Excess Insurance Company Municipal Mutual Insurance Ltd

14. DURHAM: the Local Authority involvement MMI v Zurich Insurance and others (10 Local Authorities) MMI provided EL and PL insurance to majority of Local Authorities Ceased to write new business from 30.9.92 and transferred assets and ongoing business to Zurich for a fee Zurich managed the run-off for MMI and provided insurance on same basis/wording to LA�s who renewed their insurance or transferred to Zurich Zurich kept to old MMI wording as its �First Select� policy until 1998, when it changed its wording to �injury caused� basis

15. DURHAM Until Bolton, Zurich, on behalf of MMI, paid all meso claims on traditional �exposure� basis; post-Bolton, all such claims declined MMI wordings: 1. (1949-1958) �shall sustain any personal injury�� 2. (1958-1974) �shall sustain any bodily injury or disease� 3. (1974-1992) �bodily injury or disease..suffered�when such injury or disease �is sustained or contracted during the currency of the policy�

16. DURHAM MMI argument: injury not �sustained� when fibres inhaled/on exposure, so policies do not respond Zurich�s position: date of inhalation as potentially liable to Claimants under pre-1998 wording if MMI succeed Local Authorities� position: date of inhalation as risk of �Black Hole��.

17. THE BLACK HOLE�..

18. DURHAM: the judgement of Mr Justice Burton 21.11.08 No injury was suffered on inhalation of fibres �sustained� or �contracted� policies equate to �caused� policies Such an interpretation was the best one to give effect to the commercial purpose of EL insurance Such an interpretation reflected the practice of the insurance industry for decades until Bolton

19. DURHAM: date of injury? But�when does the injury occur? Relevant to PL policies, and to EL if MMI succeed on Appeal Around the point of angiogeneis (tumour develops own blood supply)- approx 5 years prior to diagnosability (new �5 year rule�)

20. The future Appeals to be heard later this year Local Authorities will challenge the �5 year rule� developed by Burton (vulnerable to post-1998 tumours if MMI succeed) COA may take different view on different policies Prospects of success on appeal?