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Pleural plaques and asymptomatic asbestos conditions: Scotland update

Helen Callaghan looks at two recent Scottish judgments concerning asymptomatic pleural plaques and asbestosis

In the last few months there have been two important Court of Session decisions involving claims for pleural plaques and asymptomatic asbestosis, in particular the assessment of the appropriate level of award for provisional damages and whether settlement of a claim for asymptomatic asbestosis on a provisional basis carried an implied admission of liability. The decisions will have a bearing on the advice practitioners now provide to insurers when considering provisional settlements in terms of quantum, liability, reserving and economics.

Background

Historically, pleural plaques were always considered as an “injury” for the purposes of recovering damages. However, in the case of Rothwell v Chemical & Insulating Co Ltd and Anr (2008) 1 AC 281 the House of Lords ruled that since pleural plaques were symptomless, they did not constitute an “injury” capable of giving rise to a claim for damages in tort. Although not binding in Scotland, the decision was effectively overturned by the Scottish Parliament with the introduction of the Damages (Asbestos Related Conditions)(Scotland) Act 2009, declaring that pleural plaques did amount to personal injury and constituted actual harm, thereby allowing pursuers the opportunity to seek compensation for pleural plaques. Similar legislation was passed in Northern Ireland: the Damages (Asbestos Related Conditions) Act (Northern Ireland) 2011.

Following the introduction of the Scottish legislation a framework agreement was negotiated between Pursuer agents and the insurance industry whereby full and final damages were paid on a sliding scale, according to the age of the claimant, with a fixed sum paid for provisional damages with agreed return conditions. The case of WW v The Advocate General for Scotland sought to depart from the agreed fixed sum for provisional damages with the court being asked to assess an appropriate award for provisional damages. The case of Boyd v Gates (UK) Ltd highlighted the difficulties insurers will now face when seeking to agree provisional damages on economic grounds only.

WW v The Advocate General for Scotland

WW v The Advocate General for Scotland
Outer House, Court of Session
13 August 2015

The opinion of Lord Pentland in the case of WW v The Advocate General for Scotland (also known as Wales v MOD) has been awaited with anticipation, being the first reported decision in Scotland to assess and award provisional damages for pleural plaques.

The case called before Lord Pentland for a proof on quantum only to assess the appropriate level of provisional damages for pleural plaques. The written judgment of Lord Pentland, of 13 August 2015 can be summarised as follows:

The pursuer is 69 years old and was employed as an electrician in the Royal Navy whereby he was exposed to quantities of asbestos dust. Negligent exposure and liability had been admitted by the defenders. In November 2013, the pursuer had been referred to hospital for an unrelated medical condition when pleural plaques were identified following an MRI scan. A subsequent HRCT showed widespread partially calcified bilateral pleural thickening consistent with parietal pleural plaques from previous asbestos exposure. There was no evidence of diffuse pleural thickening from benign asbestos related pleurisy and no pleural effusion to suggest malignancy, or asbestosis.

Medical evidence from Dr Dorward on behalf of the pursuer confirmed the diagnosis of bilateral parietal pleural plaques with the risk of developing mesothelioma at 5%. Dr Dorward was of the opinion that given the pursuer had no symptoms, radiologically or clinically of asbestosis, it was unlikely that the pursuer would develop that condition. The pursuer accepted and understood that pleural plaques were harmless. He was however anxious regarding the 5% chance that he would develop something further. The pursuer’s level of anxiety of developing mesothelioma was described as “above average”, the pursuer being described as “an anxious individual with a degree of scepticism about the reliability of medical diagnoses.”

The Northern Irish case of McCauley v Harland & Wolff [2015] NICA 28 referred to and considered to be of significance. In McCauley an award of £10,000 was made to a widow whose husband had asymptomatic pleural plaques, stress and anxiety until his death due to unrelated heart problems. That award was subject to an appeal by the defenders. The proof in the Wales case was adjourned until the decision of the Court of Appeal was known and to hear further submissions on quantum. The Court of Appeal refused the defenders’ appeal in McCauley.

Counsel for the pursuer in the Wales case submitted that an award of £15,000 for provisional damages should be made having regard to the award in McCauley.

Lord Pentland considered this would be substantially too high.

In assessing quantum Lord Pentland considered the level of provisional awards made in England and Wales for pleural plaques pre Rothwell:

Ford v Clarbeston Ltd (1997) CLY 1947- £4,750 awarded to a 58 year old with a 2% risk of developing malignant mesothelioma – updated £7,800

Greenhow v Rilmac Ltd (1999) 99(4) QR 4 - £6,000 awarded to a 54 year old with a 10% risk of developing pleural thickening, 5% risk for asbestosis, 3% risk for lung cancer and 5% risk for mesothelioma, along with an increased risk of developing laryngeal and gastro-intestinal cancer. – updated £9,300

Heath v Cape Distribution Ltd [2003] 1 QR 13 - £6,000 awarded to a 58 year old with a 1 % risk of developing diffuse pleural thickening, 1% risk of asbestosis, 3% of malignant mesothelioma and 1% risk of lung cancer – updated £8,500.

Rantoul v Swan [2004] CLY2960 - £6,500 awarded to 62 year old man with a 1% risk of asbestosis, 3% risk of mesothelioma and a 1% risk of lung cancer. Life expectancy was also slightly reduced by 9 months – updated £9,000.

Lord Pentland also considered the Court of Appeal decision in Rothwell from 2006 which held that if the claimants had suffered actionably physical injury, provisional damages could reflect the degree of anxiety and the risk of sustaining a serious asbestos related injury. The Court of Appeal agreed that the appropriate level of compensation for significant anxiety would fall into the bracket of £4,000 to £6,000. At today’s figures this would now be between £5,500 and £8,000.

Taking all sources into consideration, Lord Pentland concluded that, but for the decision of the House of Lords, the current bracket in England and Wales for provisional damages for pleural plaques with associated moderate anxiety would be between £5,500 and £9,000.

Counsel for the defenders submitted an appropriate award for provisional damages would be £5,500. Lord Pentland considered this would be too low being at the lower end of the bracket.

Provisional damages were therefore awarded at £8,500 being broadly in line with the pre-Rothwell figures, updated for inflation. Lord Pentland emphasised that the pursuer in the present case had a greater than average level of anxiety with return conditions restricted to mesothelioma, being the only condition proven to be likely to develop as per the uncontested medical evidence of Dr Dorward.

NOTE: Although the proof was restricted to quantum (the defenders having made an admission of liability) during the period of adjournment, the defenders sought to amend their pleadings seeking to delete the admission of liability and to incorporate a new defence based on Crown immunity under the s10(2) Crown Proceedings Act 1947. Counsel for the defenders submitted that it was unknown that the pursuer had in fact served in the Armed Forces until he gave evidence to that effect and it was only after the pursuer’s evidence was it appreciated Crown immunity could be invoked. Lord Pentland refused the defender’s Minute of Amendment, coming too late in the day and with no reasonable explanation from the defenders as to why an admission of liability had been made without first fully investigating the claim.

Boyd v (First) Gates (UK) Limited & Ors

Boyd v Gates (UK) Ltd & Ors
Outer House, Court of Session
24 July 2015

In this action all three defenders agreed an extra judicial settlement with the pursuer for provisional damages for pleural plaques and asymptomatic asbestosis in the sum of £6,300, with the pursuer reserving the right to apply to the court for further damages if he develops diffuse plural thickening, lung cancer or mesothelioma.

In the terms of the joint minute the pursuer’s right to return for further damages required to be preserved by way of an order pronounced in terms of s.12 Administration of Justice Act 1982. Only where such an order is made, would the pursuer be able to return to court claim for further damages should any of those conditions develop. The terms of the joint minute sought an admission of liability from the defenders on the basis that where provisional damages have been paid, an order under s12 implies an admission of liability.

The second defenders took issue with the wording of the provisional settlement joint minute, wishing to reserve their position to put the pursuer to proof on negligent exposure and liability in the event he were to apply for further damages. The position of the second defenders was that economics dictated an extra judicial settlement on this occasion was desirable rather than the significant expense of proceeding to a proof on liability. The Second defender in this case made an agreement to settle for reasons of economy only and that there was no condition of settlement that liability required to be admitted.

The pursuer’s position was that given provisional damages had been agreed and paid, this was an implied admission of liability of the part of the defenders. The case called before Lord Uist for debate on 24 July 2015. The First and Third defenders accepted and agreed the terms of the proposed joint minute. Submissions were made on behalf of the pursuer and Second defenders only.

The second defender submitted that there no requirement to admit liability when provisional damages were settled extra-judicially. The second defenders relied upon the terms of a previous joint minute negotiated with the pursuer’s agents in a similar case involving provisional damages (Coleman v Scottish and Southern Energy, 27 January 2015, unreported) in which the following wording was agreed by both parties and the court:

For the avoidance of doubt, the parties hereby acknowledge and agree that the award of provisional damages referred to herein is made on the basis of an extra judicial settlement and without enquiry into the merits of the cause of the action and that, in any application for further damages, the pursuer will still require to aver and prove negligent, causative exposure to asbestos by the first and/or second defenders.”

Counsel for the second defenders submitted that an order under s.12 Administration of Justice Act 1982 does not imply an admission of liability.

Counsel for the pursuer submitted that there is an implied admission of liability where damages are paid under s.12 and further that the only way the pursuer would be able to apply for further damages at a later date was to obtain such an order under s.12. It was submitted on behalf of the pursuer that “where a defender offered to settle by way of a payment of provisional damages under s.12 it was implicit that no issue of liability remained”. It was also submitted that if the second defenders position were correct, the status of an order made under s.12 would be called in question if the issue of liability had been preserved. If it were held by the court in an application for further damages that a defender was not liable, would the pursuer then have to repay the provisional damages previously awarded to him?

His Lordship concluded that “the whole scheme of s.12 proceeds on the basis that in the particular case liability is no longer in issue.” and that “an offer by a defender to make a payment of provisional damages therefore inherently carries with it an admission of liability.

Comment

Given the level of award made in Wales being significantly greater than the sums agreed in the Framework Agreement, the impact on reserving is apparent. It is anticipated pursuer agents will now seek higher awards for full and final damages for pleural plaques and asymptomatic asbestos conditions which must be reflected in recommended reserve figures.

Further, the relatively low value of pleural plaques and asymptomatic asbestos disease awards have generally resulted in insurers weighing up the significant costs of putting the pursuers to strict proof in terms of causation and liability, opting for a low value economic settlement. The decision in Boyd will impact on the approach taken by insurers as an economic settlement on a provisional basis will now imply an admission of liability. The decision effectively forces insurers to either accept liability and the consequences of such an admission or incur the costs of maintaining a full defence and proceeding to a hearing on evidence.

Contact

For further information please contact Helen Callaghan on 0141 228 8128 or Caroline Coyle on 07712 355 907.

By Helen Callaghan

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

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