Law Lords' judgment may mean insurers pay 100% damages for little exposure

Legal experts are divided on how insurers and plaintiffs should tackle apportionment on mesothelioma claims after the written Fairchild judgment released last week.

In the 115-page judgment, the Law Lords made it clear that they expected plaintiffs and lawyers to work behind the scenes to decide apportionment among themselves.

The Lords said they regretted that the issue of apportionment had not been addressed directly in the Fairchild case, denying them an opportunity to comment more fully.

The written judgment defined six conditions that claimants must fulfil to be eligible for compensation.

The conditions included a stipulation that the employer, or plaintiff, must have materially increased the degree of risk of disease.

The judgment also stipulated that the claimant must be unable to prove that the disease was caused by one employer.

The Lords said that they had no choice but to find for the claimants in the Fairchild case in order to serve the interests of justice.

Beachcroft Wansbroughs partner Andrew Parker said that the written judgment provided welcome clarity on the thoughts behind the May verbal judgment.

However, Reynolds Porter Chamberlain partner Stuart White pointed out that the removal of a claimant's need to prove causation against specific defendants meant that insurers could have to pay 100% damages for relatively little exposure if other defendants could not be found or were unable to pay.

Now lawyers are split on how the vital apportionment agreements should be decided.

Berrymans Lace Mawer partner Brian Goodwin said: "There is no doubt the claimant can recover all his damages against any responsible employer. He can now simply sue the most promising candidate and have little incentive to identify or locate the rest."

"The defendant will then have the onus of trying to recover contributions from other employers and this may well lead to mesothelioma litigation becoming increasingly complex.

"This presents the insurance company with a big problem."

The Association of British Insurers' (ABI) general insurance head John Parker said that the association would move as quickly as possible to set up a system between insurers to decide on apportionment.

However, Davies Arnold Cooper (DAC) senior legal manager

Geoff Mayer said that uninsured plaintiffs also needed to be included in any discussions on apportionment, effectively taking the talks beyond the realm of the insurance industry.

Mayer pointed out that many plaintiff companies did not have insurance against mesothelioma claims, either because their insurer no longer existed or mesothelioma was excluded from their cover.

"No scheme will work unless there is support amongst commerce generally," he said.

Weightmans Vizards asbestos specialist Dr Tony Prichard said that a test case may be needed to decide rules on apportionment.

Prichard is head of the Forum of Insurance Lawyer's (Foil) employers' and public liability and industrial disease group.

He has called a meeting of the Foil to discuss the way forward on such claims.

"This decision has made it open season for claimants to issue against those with the deepest pockets.

"There is nowhere to hide, as the shield of apportionment was never raised," Prichard said.

"Until apportionment is resolved, reserve planning stands as much hope of success as an Argentinean playing in the World Cup Final."