This post was written by Max Archer. This case is not to be confused with the earlier decision in The English Electric Company Limited v Alstom UK [2016] EWCA Civ 1314, featured on the blog earlier in the year (accessible here).

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The Background

Mr Edmund Critchley was diagnosed with malignant mesothelioma in early 2013. He brought proceedings against his employer, Associated Electrical Industries Ltd (“AEI”) that had exposed him to asbestos whilst he worked in the turbine industry between 1965 and 1967.

AEI subsequently admitted that it was his employer and effectively admitted liability by failing to show cause as to why judgment in default should not be entered against it. AEI paid compensation to Mr Critchley, the total amount expended including costs was £850,672.45.

The dispute before the court arose out of the corporate histories of the English Electric Company (“EE”) and Alstom:

• EE and AEI had been members of the same corporate group.
• Pursuant to an agreement of sale of AEI’s turbine business to EE in 1970, EE agreed to indemnify AEI against any claims arising on completed and uncompleted contracts as at 1st April 1970.
• EE then sold the business on to Alstom UK Limited in 1989.
• The 1989 sale also contained an indemnity clause to the effect that Alstom were liable to indemnify EE under the agreement.

The basis of EE’s claim against Alstom was as follows:

• AEI was liable to Mr Critchley as alleged
• EE and that it was bound to indemnity AEI pursuant to the 1970 agreement.
• Pursuant to the 1989 agreement Alstom was now liable to indemnify EE.

The Parties’ Arguments

Alstom argued that in spite of AEI’s admission of liability and pay-out to Mr Critchley, AEI was not liable to Mr Critchley as it was not his employer. It was argued that Mr Critchley was instead employed by AEIM, a subsidiary.

Against this, EE argued that AEI was Mr Critchley’s employer and that even if he had been employed to some extent by AEIM, the latter had been acting at all times as an agent for AEI which was the party ultimately liable anyway.

It was agreed that if EE was liable to indemnify AEI under the 1970 agreement then it must be liable to indemnify it on the 1989 agreement.

The Decision

HHJ Waksman QC gave judgment for EE.

It was held that AEI was Mr Critchley’s employer. There was no contract of employment before the court, further, there were many documents that were inconsistent, some pointing to AEI as the employer, some pointing to AEIM. However, the fact that Mr Critchley considered himself to be employed by AEI was of considerable importance in coming to the conclusion that it was the employer. Further, AEI’s admission that it was the employer was a further matter of importance, this was a decision that would not have been made lightly. The judge considered that on the balance of probabilities EE had established that the employer was AEI. The various uncertainties in the documents were not enough to displace this finding.

He went on to find that AEIM might have held itself out (to HMRC for example) as the employer and be acting for AEI as an agent in that regard. That being the case, AEI would be the principal, there could therefore be no reason why AEI could not be liable to Mr Critchley as had been admitted in the previous proceedings. If there was any extent to which AEIM could have been his employer it could only have been as an agent for AEI.

EE was therefore successful in its claim.

You may recall that we recently blogged about Bussey v Anglia Heating. This was a case in which HHJ Yelton (sitting as a High Court Judge) found that between 1965 and 1968 the Claimant’s husband had been exposed to asbestos, at levels which fell below the TDN13 threshold. The Judge held that he was bound by Williams v Birmingham and that accordingly the claim could not succeed.

The Claimant applied for permission to appeal on the facts (the level of exposure) and the law (the legal arguments about the status of Williams and its relevance to her case).

Permission to appeal has been granted on the law only and an expedited hearing has been ordered. The appeal will be listed before October 2018.

You can read our full post on Bussey here, in which a detailed summary of the legal arguments advanced at first instance are set out.

In this post, Harry Steinberg QC examines the case of Oldman v DEFRA, another instalment in the line of first instance decisions in which Williams v Birmingham is considered.

A copy of the unreported judgment can be found here.

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The common law has a momentum of its own. It can be immensely difficult to stop when it takes a wrong turn. The law governing asbestos liabilities took such a turning in October 2011 in Williams v University of Birmingham [2011] EWCA Civ 1242. Since then, successive Courts have been convinced by the specious precision of TDN13 and lured into using it as a proxy for what was considered a safe level of exposure at the time. In doing so, they have placed reliance on the assumed results of hypothetical fibre counts that hardly anyone carried out, including, of course, the defendants who have repeatedly benefited from this fashion for reconstructive dust-counting

The inherent flaws of Williams – and its use of TDN13 as a safety standard – are manifold and well known. First, the TDN13 guidance was based on a British Occupational Hygiene Society paper about the comparatively high levels of exposure necessary to give rise to a risk of asbestosis. But it had nothing to say about mesothelioma, which, as had been known since Newhouse & Thompson in 1965, could be caused by tiny quantities of asbestos. Second, TDN13 was produced in collaboration with the asbestos industry. The HMFI was in close contact with the official-sounding Asbestosis Research Council, which was set up, funded and run by the three largest UK asbestos manufacturers. It remains a disturbing example of the dangers of allowing an industry to regulate itself. Finally, TDN13 was never intended to be a safety standard. It was a threshold for prosecution and enforcement (not that the HMFI did much prosecuting or enforcing in this area) not an expression of what was generally deemed safe.

Instead, the mechanistic application of TDN13 has produced decisions that defy logic, language and, on occasions, legal principle. In Williams itself, for example, the Court of Appeal made a finding – untenable in the light of the available literature – that exposure below the TDN13 threshold could not give rise to a foreseeable risk of injury. This approach led to the conclusion, in McCarthy v Marks & Spencer [2014] EWHC 3183, that the obligation to reduce asbestos exposure was so qualified by these control limits that the ‘lowest level reasonably practicable’ actually meant something else. This thinking has become so ossified that the Court refused, in Bussey v Anglia Heating (unreported, 12 May 2017), to apply well-established principle as to the extent of the employer’s duty.

This approach also subverts good health and safety practice, which gives priority to risk prevention. A responsible employer or other ‘duty-holder’ will first try to eliminate risks before falling back on after-the-fact fibre-counting or other sampling methods.

The decision of HHJ Moloney QC in Oldman v DEFRA sees a welcome return of the pre-eminence of the employers’ old-fashioned duty to take proper steps to protect employees from harm. Mr Oldman worked as a marine engineer from 1954 until 1980. Until the early 1960s, he was exposed to asbestos as a result of working on lagged pipes on an elderly steam vessel, the Sir Lancelot. It was possible that he had been exposed afterwards, but to a lesser extent. He contracted pleural thickening and sued for damages. The Court held that the pleaded statutory regulations did not apply to his work at sea. Accordingly, the claimant needed to make out the common-law claim. The defendant, predictably enough, relied on Williams and its progeny. The Judge held that those cases applied only to the duty in respect of a “very low level of exposure”. The Court looked, instead, to the earlier decision of the Court of Appeal in Jeromson v Shell Tankers [2001] EWCA Civ 101.

In Jeromson, the Court of Appeal had reviewed the literature, including the famous letter from the Chief Inspector of Factories to the shipbuilding industry in 1945. The Court concluded that the threats posed by asbestos were sufficiently well understood by 1951 for employers to be under a duty to reduce their employees’ exposure to asbestos to the greatest possible extent. This would have included the use of respirators. It was necessary only to show that there was a risk of some form of pulmonary disease, it was not necessary to foresee or understand the precise nature of the injury. In later years, as knowledge of the risks developed, the duty can only have become stronger.

Accordingly, in Oldman, the Court held that the defendant owed its engineers, ‘a duty to reduce their risk of exposure to asbestos to the greatest extent possible.’ The defendant had failed to take appropriate precautions and was so held liable.

This was a revival of one of the basic principles of employers’ liability and echoes the classic statement of principle of Swanwick J in Stokes v Guest Keen & Nettlefold [1968] 1 WLR 1776. On the other hand, and almost inexplicably, the Court of Appeal in Williams was not shown its earlier decision in Jeromson. If it had been, one suspects that the result might have been different. The reasoning in Oldman is robust, orthodox and unimpeachable. And, after the wrong turning in 2011, it offers a clear way out of this legal blind alley.

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Thank you to Abigail Holt of Cobden House Chambers for supplying the transcript of the judgment in Oldman.

The following post by Kate Boakes is about Grant v the Secretary of State for Transport, a quantum-only fatal mesothelioma case in which judgment was handed down last Friday by Martin Chamberlain QC, sitting as a Deputy High Court Judge. Harry Steinberg QC and Patrick Kerr acted for the Claimant.

The following key points will be of particular interest to asbestos lawyers:

• £92,500 was awarded in respect of general damages for PSLA (this is believed to be the highest ever award for mesothelioma in England & Wales).
• The case marks the return of intangible benefits, as the Judge awarded £2,500 in respect of this head of claim in a departure from the recent case of Mosson v Spousal (London) Limited.
• In respect of funeral expenses, the Judge held that the cost of the headstone was recoverable but declined to make an award for the cost of the reception.
•  An award was made in relation to a difficult claim for future income dependency.

Thank you for reading, and feel free to post any comments or questions you have about the decision, a full copy of which can be found here: http://www.bailii.org/ew/cases/EWHC/QB/2017/1663.html

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Mr Grant was exposed to asbestos in the course of his work at the British Railways Board between 1959 and 1960. He contracted mesothelioma in around July 2011 and died in November 2014, aged 70. The Claimant was his wife, with whom he had lived for 38 years at the time of his death.

The Judge awarded £92,500 in respect of general damages for pain, suffering and loss of amenity. Although many of the symptoms suffered by Mr Grant were typical for mesothelioma, the Judge held that the following five factors justified an award towards the top of the bracket:

1. The duration of the symptoms (40 months) was unusually long.
2. There were three courses of chemotherapy, with extremely unpleasant side-effects including hallucinations.
3. Mr Grant suffered breathlessness, intermittent pain and night sweats before 2014, from January 2014 he was prescribed morphine, and from July 2014, he reported severe pain.
4. Between July and November 2014, Mr Grant was doubly incontinent and suffering from pain which was not adequately controlled by medication and was incapacitating.
5. His significant concern surrounding the Claimant’s financial security after his death.

Following a detailed review of the authorities, the Judge held that it was appropriate to make an award for the loss of intangible benefits. A key part of his reasoning can be found at paragraph 108 of the judgment:

Third, there is a separate reason why an award for services dependency, calculated by reference to the cost of replacement services, may be inadequate to value the loss of the deceased’s services. A wife whose husband used to do all the minor repair work around the house now has to find and choose the painter, plumber, decorator et al. and make the arrangements for them to come and do what needs to be done. These are things she did not have to do before. The time spent by the claimant in doing them has a pecuniary value. That was the basis for the awards made by Hamblen J in Beesley and by HHJ McKenna in Wolstenholme. The difficulty of assessing that value precisely accounts for the modesty of the awards generally made under this head. It does not, however, transform the award from (permissible) compensation for pecuniary loss to a form of (impermissible) solatium. With respect to Garnham J, I do not see why the ordinary activities of family members other than the deceased would be less affected if DIY is done by outside contractors than if done by the deceased himself. Garnham J was no doubt correct to point out that work done by a commercial contractor might be of better quality than that done by the deceased, but that would not necessarily be so. In any event, a services dependency award is, or should be, valued by reference to the cost of replacing the lost services on a like-for-like basis. There is no reason to assume that such awards generally confer a pecuniary advantage on claimants such as to justify a refusal to compensate for losses – real, albeit difficult to assess – of the kind identified by Hamblen J in Beesley and HHJ McKenna in Wolstenholme.

It was accepted that Mr Grant had carried out the decorating, gardening and a small amount of DIY. Since his death, the Claimant had lost the convenience of not having to arrange for such work to be done commercially. This convenience had a modest pecuniary value, which the Judge assessed at £2,500.

In relation to the claim for funeral expenses, the Judge held that the House of Lords’ decision in Gammell v Wilson was authority for the proposition that the cost of a headstone was in principle allowed a part of the claim for funeral expenses, and accordingly an award was made in respect of this loss. As to the claim for the cost of the funeral reception, the Judge reviewed the relevant cases (Gammell v Wilson, Knauer v MOJ and Mosson v Spousal (London) Limited), which, although first instance decisions, he had to follow unless convinced they were wrongly decided. He held that because receptions are not always held after a funeral, and when they are held, there is no invariable practice of providing refreshments, it was difficult to suppose that Parliament intended to include them within “funeral expenses” under the Law Reform (Miscellaneous Provisions) Act 1934. Accordingly, he was not convinced that the decisions were wrong, and he declined to make an award.

The highest value element of the claim was for future income dependency in respect of the development of a 20-acre site Mr Grant had purchased over 20 years prior to his death with the long-term intention of turning it into a business and retail park. The Defendant disputed the claim in its entirety. At the time of Mr Grant’s death at the age of 70, planning permission had not yet been obtained. Notwithstanding these potential difficulties, the Judge determined that Mr Grant, who had “energy, drive and propensity for hard work”, would have made a success of the development, albeit with the assistance of professional advice.  What value his contribution would have been was open to debate, but he would have added value. Accordingly, this was a compensable head of loss in principle. The calculation of this head of loss has been adjourned to allow for further submissions.

This blog post was written by Max Archer.

The Claimant in this case was the widow of a man who had died from mesothelioma as a result of his exposure to asbestos during the course of his employment.

The Department of Communities & Local Government was the defendant/Part 20 claimant (“D1”)

Deluxe Laboratories Ltd was the fourth defendant/Part 20 defendant. (“D2”)

The issue for the court to determine was contribution proceedings brought by D1.
D1 had been required to pay the Claimant £180,000 in damages and costs. D1 sought a contribution in respect of that amount from D2. The Claimant’s husband had been employed by both D1 and D2. The Part 20 claim was brought under s.3 of the Compensation Act 2006 on the grounds that D2 was also liable to the deceased as a ‘responsible person’.

The court had witness statements made by the deceased before his death which set out his employment history and recollections as to his employment generally. The court also had two asbestos surveys of D2’s premises carried out in 2006, medical evidence from both parties and expert reports.

The court had to determine:

1. Whether D1 had proved that the deceased had been exposed to asbestos whilst
   employed by D2;
2. Whether a breach of duty had been established;
3. Whether D1 had proved that the exposure increased the risk of contracting
   mesothelioma;
4. Whether there should be an apportionment and if so to what extent.

Judgment was entered for D2.

It was found that D1 had not proved that the deceased had been exposed to asbestos whilst in the employment of D2.

Though it was found that there had been the potential for exposure, on the balance of probabilities the deceased had not been exposed whilst in the employment of D2. Any exposure that had taken place was de minimis. The issue of breach therefore fell away. The court therefore found that D2 was not a responsible person as per s.3 and the issue of apportionment did not arise.

This post was written by Michael Rawlinson QC and Gemma Scott, who acted for the Claimant in Bussey v Anglia Heating Ltd., the latest case to consider the application of Williams v University of Birmingham in low-exposure claims.

A full copy of the judgment, which was handed down last Friday, is available on Lawtel and Westlaw.

[UPDATE: The Court of Appeal has granted the Claimant permission to appeal. See our post about the appeal here]

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Michael Rawlinson QC and Gemma Scott have received the judgment in the case of Bussey v Anglia Heating Ltd., a case fought in order to seek consideration of the application of Williams v University of Birmingham in low-exposure mesothelioma claims arising out of employment.

The relevant facts were that, from 1965 to 1968, the Deceased, Mr Bussey, was exposed to asbestos dust whilst (i) sawing and manoeuvring asbestos cement pipes and (ii) transporting and breaking open asbestos rope used for caulking bends in the asbestos pipes. He did so whilst installing domestic heaters and boilers. Sadly, he developed mesothelioma and died.

Mr Bussey’s widow successfully claimed against one other Defendant. But there was a shortfall in the damages and so she sought the remainder from Anglia Heating Ltd pursuant to Section 3 of the Compensation Act 2006.

At trial, His Honour Judge Yelton (sitting as a Judge of the High Court) found that the level of exposure fell below the ‘limits’ prescribed within TDN 13. The arguments on law addressed to the Court by Mrs Bussey (during trial and the iterative process following receipt of the draft judgment) were that:

• Whilst Williams was the last CA judgment on this issue, it would only bind a lower Court in the face of earlier and apparently contrary CA authority (namely Maguire v Harland & Wolff and Jeromson v Shell Tankers) where those earlier decisions had been fully considered by the later CA.
• It was now known that Jeromson had not been more than tangentially cited (and Maguire had not been cited at all) to the Court in Williams.
• Thus either (i) the CA in Williams had acted in ignorance of the formulation of the test for breach in Maguire and Jeromson, namely that once the threshold of foreseeable risk had been reached the duty upon an employer was to reduce the risk from asbestos exposure to the lowest level reasonably practicable; or (ii) it must be that the CA in Williams had impliedly sought to restrict that earlier formulation of the duty to employment cases because the victim in Williams was not an employee but rather a visitor to premises.
• In the first of those circumstances, it was argued that the Court in Bussey should follow the Maguire and Jeromson formulation because the CA in Williams had acted in ignorance of those earlier and applicable authorities. In the second of those circumstances, the Court should still follow Maguire and Jeromson because Mr Bussey’s exposure arose as a result of his employment and hence was closer to the facts of Jeromson than Williams.
• It was admitted on the facts of this case that the employer could have taken steps to materially reduce the exposure faced by the Deceased by taking simple steps.
• Judgment should follow.
• In the alternative, the Claimant wished to argue that Williams was simply wrong insofar as it has been taken to have held that, in the face of the risk of fatal injury to an employee, a gap existed between the level of exposure at which foreseeable injury was created and some higher level of exposure at which the exposure would then be deemed unacceptable and would thereby require remediation.

The Court held that it was bound by Williams as it was the last decision of the CA in time. Accordingly, the claim must fail because Mrs Bussey could not prove that her husband’s exposure to asbestos exceeded the prescribed ‘limits’ in TDN13. The necessary paperwork for appeal is being prepared.

Apologies for the lack of posts recently. After a flurry of reported cases at the start of the year, nothing post-worthy has happened in the last few weeks.

The post below is about a case in which Aliyah Akram obtained a PSLA award of £90,000 in respect of a man who died of mesothelioma at the age of 88, having been diagnosed at 86.

As Master Davison’s judgment was ex tempore, we don’t have a written judgment to share with you. But we are told that the case will be reported on Lawtel soon and accordingly will be available to use as a comparator.

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An award of £90,000 for pain, suffering and loss of amenity was made where the deceased had suffered from of mesothelioma for around 3½ years.

The deceased contracted mesothelioma as a result of his exposure to asbestos while working as a scaler engaged in ship repair at the Royal Docks in East London between 1948 and 1971.

Although aged 86 years old at the time of his diagnosis, the deceased had been an otherwise healthy, active man. As a result of the mesothelioma, he suffered from breathlessness and developed a massive pleural effusion on his left lung.  He underwent a talc pleurodesis and an intercostal drain was inserted.  His other symptoms included a persistent cough, swelling of his ankles and severe chest pain.  He lost weight in a dramatic fashion.  For the last 18 months of his life he was unable to go out independently and towards the end of his life his disability and pain became very severe.  He suffered significant anxiety as a result of his prognosis.

The deceased’s life expectancy was reduced by 4.4 years.

Master Davison noted that the deceased had been predominantly nursed by his family and had been able to die at home and so the claim fell below the very top of the bracket (£95,700) but merited an award of £90,000.

This blog post was written by Max Archer.

In February of this year, David Pittaway QC handed down his decision in the case of Kearns v Delta Steeplejacks, a case that explores important issues in relation to apportionment.

The claimant, who was 63 years old at the date of trial, was a steeplejack who had worked for the defendant for a period of around seven or eight years between 1981/82 and 1990/1991. Over that period he worked on chimneys, power station cooling towers, power station buildings, flare stacks and on an asbestos roof. The action had originally also been brought against another of the claimant’s employers, this was discontinued before the commencement of the trial.

In 2007 the claimant was diagnosed with smoking-induced chronic obstructive pulmonary disease (COPD). However, he had also developed bilateral asbestos-related pleural plaques and diffuse pleural thickening in his right lung.

The claim was brought under the Asbestos Regulations 1969 and the Control of Asbestos at Work Regulations 1987.  Breach of duty was explored at trial but ultimately conceded by the defendant: the defendant was in breach of its duty to reduce the claimant’s exposure to asbestos dust as far as was reasonably practicable.

Though the claimant had discontinued against his other employer, the issue of apportionment was before the court. There was no evidence as to the extent of the claimant’s exposure whilst working with his other employer. In spite of this, the joint expert report had made a dose-based and a time-based assessment of the respective exposures as best as it could. The judge accepted the time-based assessment and apportioned liability on the basis that the defendant was responsible for 39% of the claimant’s exposure.

The primary issue for the court was causation: whether the damage to the claimant’s lungs a result of his exposure to asbestos or whether it stemmed from other causes. The judge found that the diffuse pleural thickening in the claimant’s right lung had been caused by asbestos exposure. However, the position with regards to his left lung was different: the damage here was not asbestos related and did not constitute pleural thickening.

The judge accepted the finding in the experts’ joint report that the claimant was suffering from a respiratory disability of 60%, 40% of which was from cigarette induced COPD and 20% being asbestos related. This conclusion was reached by reference to a detailed analysis of the radiography both in the expert’s reports and at trial.

As to the court’s valuation of the case, the JC Guidelines recommended a bracket of £29,900 to £80,4500 in respect of “Asbestosis and pleural thickening”. Given the finding that 20% of the claimant’s respiratory disability was due to asbestos, general damages were assessed at £40,000. Given the apportionment as between the defendant and the claimant’s other employer the claimant recovered £15,717. The Claimant was

This post was written by Patrick Kerr. It explains the outcome of a recent assessment of damages hearing in a living mesothelioma claim in which he was instructed to represent the Claimant. The hearing involved consideration of a novel point regarding the adjournment of a lost services claim until after the Claimant’s death.

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Patrick Kerr of 12 Kings Bench Walk, instructed by Harminder Bains, a partner at Leigh Day, appeared on behalf of the Claimant at the two-day trial heard last month in the High Court in front of HHJ Walden-Smith (sitting as a High Court Judge).

Mr Andreou is a living mesothelioma victim who had worked for S. Booth Horrocks & Sons Limited between 1960 and 1965 as an apprentice plumbing and heating engineer, where he was required to work with asbestos. In 2016 he was diagnosed with mesothelioma.

Judgment on liability was obtained at an earlier stage in proceedings and the matter proceeded by way of assessment of damages. Mr Andreou underwent a right thoracotomy, pleurectomy and decortication, a drastic surgical procedure where his pleura was stripped out from around his lungs, and his diaphragm and pericardium were replaced with synthetic materials. Following the surgery, Mr Andreou had acute renal failure, with an unpleasant array of side effects including abdominal pain, vomiting and nausea. He also had chest drains inserted. One week before the hearing, Mr Andreou found out that the cancer had spread to his peritoneum. He also had the common mesothelioma side effects of weight loss, appetite loss, breathlessness, chest infections and lethargy.  Overall, his life expectancy was reduced by about 5 years. PSLA was agreed at £90,000.

The main areas of dispute at the hearing were the claim for past expenditure on aids and equipment, and the claim for lost years.

Prior to the hearing, Mr Andreou had installed a lift in his home at a cost of £84,000, so that he could move between the floors of his house. The defendant argued that this was an unreasonable purchase, and only the cost of a stair lift should be awarded. It was held that there was a balance to be struck, and that the claimant must act reasonably. Whilst the claimant was not obliged to take the cheapest option, he was not entitled to the world (Pankhurst v White [2009] EWHC 1117 (QB)). The Court found that in this particular instance, the lift was not a reasonable purchase, as it was disproportionately expensive given the short period of time for which it would be used; and there was no obvious additional benefit to Mr Andreou, over and above what could be provided by a stair lift (Whiten v St George’s Healthcare NHS Trust [2011] EWHC 2066 (QB) and A v University Hospitals of Morecambe Bay NHS Foundation Trust [2015] EWHC 366 (QB) considered).

Regarding lost years, however, Mr Andreou was awarded £177,189.52 for lost income in the years following his death. The multiplicand was calculated by averaging Mr Andreou’s income over the past five years. Whilst Mr Andreou was too ill to give live evidence, there was still more than sufficient documentary evidence to come to this conclusion.

Mr Andreou also claimed £14,019.20 for lost services he would have provided but for contracting mesothelioma. This head of loss would not usually be recoverable in a living mesothelioma claim but it was contended that in the event the Defendant contested it, this aspect of the case could be adjourned until after his death; and there could be no dispute that it was recoverable by his estate. The Defendant contended that as Mr Andreou had chosen to bring his claim now, he had opted to forgo this head of loss to which his estate was undoubtedly entitled.  The Court, however, decided that it would not be fair or right to prevent Mr Andreou from claiming this head of loss purely by virtue of bringing the claim before his death.  As such, it was content to adjourn this loss until after his death.

Accordingly, Judgment was given in the sum of £312,441.59 for all heads of loss, save for the lost of services which has been adjourned until after the death of the Claimant.

In December of last year, the Court of Appeal handed down its decision in English Electric Company v Alstom.

The background to this case was as follows:

Rodney Oliver had worked for Associated Electrical Industries (“AEI”) between 1956 and 1961. Over the course of his employment he had handled turbine generator equipment that was contaminated with asbestos. Unfortunately, this exposure led to him dying of mesothelioma in 2005. A claim was successfully presented against AEI by his widow in which she was awarded damages of £250,000.

In 1970, AEI had sold its turbine business to its sister company the English Electric Company Ltd. (“EE”). This sale was documented in a resolution of EE’s general purposes committee in 1971, within this it was recorded that EE agreed to indemnify AEI against any claims arising on completed and uncompleted contracts as at 1 April 1970. This agreement was expressly stated to be ‘subject to a number of reservations’ which were not listed in the resolution. EE then sold the business on to Alstom UK Limited in 1989. This sale also contained an indemnity clause to the effect that Alstom were liable to indemnify EE under the agreement.

The question at first instance was whether EE were liable to indemnify AEI in respect of the claim brought by Mr Oliver’s widow under the 1971 resolution. It was common ground that if EE were liable to indemnify AEI then Alstom were liable to indemnify EE under the 1989 sale and purchase agreement. HHJ Mackie QC found that EE was liable to indemnify AEI such that the claim against Alstom succeeded.

Alstom appealed, its primary submission was that on a true construction of the 1970 agreement to sell the indemnity provision could not have been intended to apply to claims arising from AEI’s contracts of employment with its workforce. The nature of the agreement was such that its purpose related to taking the benefit and burden of outstanding and uncompleted contracts in respect of the business and its customers. The indemnity must be read as relating to the business contracts as opposed to the contracts of service with employees. It was also argued that as the 1971 resolution referred to there being ‘certain reservations’ and that those reservations had not been before the court, EE could not prove that it was liable to AEI under the terms of the indemnity.

Judgment

The appeal was dismissed. Lord Justice Longmore gave the leading judgment. He found that as the 1971 resolution involved an inter-company transfer within a group of companies it could be inferred that there would be a transfer of the entire undertaking. The indemnity was expressed as being ‘against any claim arising on completed and uncompleted contracts as at 1st April 1970’. As such, it only contemplated two categories of contract. Giving the indemnity its natural meaning it must be taken to refer to ‘all contracts to which the transferor is or has been a party’. There was therefore no reason why it could not include contracts of employment. If the parties had not intended this outcome then other rights and responsibility would not have been fully transferred. Looking at the agreement in the round as well as the express wording, all liability incurred up to 1970 had been transferred. In any event, Mr Oliver’s employment contract was ‘completed’ by 1970 as he had left his employment in 1961.

As to the appellant’s submissions on the ‘reservations’ in the agreement, it was found that the ‘reservations’ mentioned in the 1971 resolution related to trading and rights of the business, they were not related to contracts of employment. The reservations referred back to a section of the resolution in which EE ratified the purchase ‘subject to certain reservations as to trading and rights of the turbine generator business and goodwill carried on by AEI’. In those circumstances there would no reason for the transferor to wish to make reservations in relation to any contracts of employment, such reservations would be against its own interest. Moreover, the reservations appeared to refer to outstanding and uncompleted contracts. Mr Oliver’s contract did not fall into these categories, thus rendering the reservations irrelevant.

Comment

This is an interesting case on whether responsibility for historic asbestos claims can be passed up chains of sale and purchase agreements. Given the latency inherent in mesothelioma claims, it is not uncommon for the original tortfeasor company to undergo numerous transfers, changes in identity and other such corporate gymnastics. The longer the latency period the more complex these transfers are likely to be. This case is a useful illustration of the extent to which the construction of transfer agreements can be a contentious issue long after the original claim has finished. Claimant’s and Defendants alike will need to be alive to these potential issues. This is particularly relevant in circumstances where a potential party to the claim has no insurer, the possibility of passing liability around in these circumstances may be crucial.