Employers' Liability Insurance "Trigger" Litigation, Re

In employers’ liability insurance, “sustain injury” ordinarily refers to the injury being suffered or occurring during the policy period, not to the earlier event causing it. Commercial purpose cannot justify rewriting clear standard wording. However, “disease contracted” may refer to the disease’s causal origins. Accordingly, mesothelioma was contracted when causative asbestos exposure occurred under policies using that expression, although it was not actionable injury until its later onset. The Court was bound by Bolton on the latter point, despite reservations expressed by Lord Justice Rix. ELCIA-era policy endorsements secured employee claimants, even where the underlying contractual cover was narrower. The appeals therefore succeeded in part, with the precise result depending on each policy wording.

Six consolidated specimen actions concerned employers’ liability policies issued by BAI, Excess, MMI, Independent and Zurich. Former employees had developed mesothelioma many years after asbestos exposure, and some employers were insolvent or no longer insured when the disease manifested.

The High Court, Burton J, construed sustained wording as having the same effect as causation wording and held that the insurer on risk during exposure was liable. The insurers appealed. The central questions were whether injury or disease was sustained or contracted on exposure or on the later onset of mesothelioma, whether the policies covered former employees, and what effect the Employers’ Liability (Compulsory Insurance) Act 1969 had.

1. Disposition. By a majority, the insurers’ appeals succeeded in part. Lady Justice Smith dissented and would have dismissed all aspects of the appeals.
2. Injury. The majority treated Bolton Metropolitan Borough Council v Municipal Mutual Insurance Ltd as binding authority that mesothelioma is not actionable injury until its onset, at the earliest the onset of malignancy. Exposure alone did not constitute actionable injury. Lord Justice Rix expressed serious doubts about that conclusion but considered himself bound by precedent; Lord Justice Burnton accepted the reasoning in Bolton.
3. “Sustain injury”. The ordinary meaning of sustained injury is injury suffered, incurred or occurring during the policy period. The Court rejected the substitution of “caused” for “sustained”. Commercial purpose and the historical claims practice could not justify rewriting standard wording which was capable of operating in ordinary accident cases.
4. “Disease contracted”. The phrase is capable of referring to causal origin, onset or progress. In the relevant context, it referred to causal asbestos exposure. Thus BAI’s first and second wordings and MMI’s third wording responded to mesothelioma claims arising from exposure during the policy period.
5. Other wordings. Excess’s sustained wordings, MMI’s first and second wordings, and Zurich’s first sustained wording did not ordinarily cover mesothelioma developing after the policy period. The tariff wording was clear causation wording. The judges differed on Independent’s wording: Rix LJ treated the employment-related exposure during the policy period as the trigger, whereas Burnton LJ required injury or disease to be sustained during the insurance period.
6. ELCIA 1969. The ELCIA-era deeming endorsements secured employee claimants, including former employees in Burnton LJ’s analysis, but did not necessarily enlarge the employer’s contractual cover. Rix LJ considered that the Act required causation wording; Burnton LJ disagreed. Both agreed that the endorsement could require the insured to repay sums paid beyond the contractual cover.
7. Dissent. Smith LJ held that the policies had to be construed against the factual matrix existing when they were made. The common industry understanding that sustained and causation wordings operated alike supported cover for tortious asbestos exposure during the policy period. She distinguished Bolton as a public-liability decision.

• Court of Appeal (Civil Division): appeals from Burton J’s decisions in the Queen’s Bench Division were allowed in part by the majority; Smith LJ would have dismissed them.
• High Court, Queen’s Bench Division: Burton J held that the sustained policy wordings should be construed as causation wordings and gave judgment for the claimants on that basis.