Legal Watch: Disease August 2014 Issue: 002
Barber v Somerset principles well established a decade on On 28 July 2014, the High Court handed down judgment in
In This Issue:
the occupational stress case of Daniel v Secretary of State for the Department of Health. The court confirmed that the principles relating to liability for work-related stress set out in Barber v Somerset (2004), are well established. The court
• Barber v Somerset principles well established a decade on
dismissed Patricia Daniel’s (P) claim for damages arising from
• Supreme Court decision pending in International
occupational stress because the psychiatric injury was not
Energy Group Limited v Zurich Insurance Plc UK
foreseeable and no duty of care arose.
Branch
Background From 2002 P was employed by the defendant, formerly the Hammersmith & Fulham Primary Care Trust (H), as the cancer
• Substantial award for widower of 46 year-old woman exposed in the 1990s • Other recent asbestos developments
research network manager. She was initially responsible for setting up the network, NCRN, with her line manager Dr Kaczmarski (K), Consultant Haematologist. P alleged occupational stress which developed into a psychiatric condition. As a result, she became an inpatient at a mental health hospital with seriously continuing mental ill health. She maintained that her stress and subsequent mental illness were caused by H in (i) permitting her to be bullied by a professor of oncology, Professor Gabra (G) and (ii) overwork, or a combination of both.
• Another defendant succeeds in a NIHL appeal on limitation
A running dispute which developed between P and G was
From October 2005, after the departure of a lead nurse,
fundamental to the bullying claim. G was a world renowned
P’s workload increased and she was working longer than
professor whose research was acclaimed. He was ambitious
normal hours. Clearly such increased workload could
and wanted to pursue his own research agenda requiring
increase pressure. P however, took on the additional role
more resources than were available. G wanted to pool both
willingly and was well paid for it. P made no complaint at any
the resources from commercial organisations and the NHS
time about being overworked. When she did contact HR in
for cancer research. P was strongly opposed to this and felt
February 2007, she complained only about G and not about
that NHS resources should be kept distinct and separate
overwork. The court found that she was not overworked in
and not pooled. Both G and P had strong views on this
the sense that she was required to carry out an excessive
issue and it underlined their relationship throughout.
workload.
P also alleged that from October 2005 she effectively had
There was no evidence that any other employee suffered
two jobs and was therefore seriously overworked.
from occupational stress, or mental injury as a consequence
According to P, the bullying, victimisation and overwork were not properly dealt with by H. It was also alleged that on the occasions when she returned to work in 2007 and suffered further breakdowns, the negligence continued; the
of working in the pressurised cancer research units. It is therefore not a case where the defendant was on notice, that such a risk existed, from other difficulties experienced. In such a case, the focus is then turned to the individual.
returns to work were not properly handled, there was no
As to individual indications or signs from P herself of
appropriate risk assessment in writing and the further risks
impending mental injury, the judge was satisfied that there
to P were improperly dealt with.
were none. It is important to note that at no time did P tell H that she had a pre-existing psychiatric condition. The
The court’s decision The psychiatric experts agreed that P had a pre-existing
reason for P’s reticence to H is clear: she did not want to be seen as weak and wished to remain professional.
history of bipolar disorder, which had a very high rate of
The court decided that there was no sign or indication
recurrence. It was also accepted that P’s pre-existing
available to H of impending mental injury to P. Her line
condition was unknown to K and H.
manager, K, was aware of P’s complaint of harassment
P alleged that a number of emails from G amounted to bullying. The court did not consider that the email correspondence between P and G amounted to bullying. Nor was any of G’s conduct ‘bullying’ within the meaning of that term applied by either the courts or ACAS. The court found that it could not properly be regarded as genuinely offensive or unacceptable behaviour. It was simply tough exchanges between senior colleagues on a point of principle on which they both felt strongly. P was not as senior as G
by October 2006, but this did not suggest either stress or injury. There were no indications or complaints that were plain enough for any reasonable employer to realise that he must do something about it. In the court’s judgment therefore, no duty of care arose. Nor on the facts, was there a breach of duty of care. If there had in fact been a breach, the court would have found that occupational stress materially contributed to her ultimate psychiatric breakdown together with other factors.
or as influential but she was undoubtedly a senior employee
The judge was satisfied that on the occasions P returned
who had power, for example to stop clinical trials, and she
to work, although no formal written risk assessment was
exercised it.
made, all the necessary work adjustments which were identified in accordance with P’s condition were considered and put into place.
02
Legal principles
Commentary
The claimant suffered substantial psychiatric injury but the
As the court noted in this case; occupational stress claims
impending breakdown was not known to the defendant. It
are fact sensitive and require particular care in determination.
was not aware of her pre-existing condition or the risk of a
The case is fact sensitive but it is a reminder of the
recurrence of psychiatric disorder. Nor were there any signs
principles established in Barber 10 years ago: to succeed in
or complaints that this was impending.
an occupational stress claim, there must be evidence that
The essential questions which must be answered remain those which are set out in Hatton v Sutherland (2002) and Barber. As Lady Justice Hale said in Hatton, there is a single test for determining liability in occupational stress cases, namely:
“whether a harmful reaction to the pressures of the workplace is reasonably foreseeable in the individual employee concerned. Such a reaction will have two components: (i) an injury to health; which (ii) is attributable to stress at work.�
a claimant alerted the employer to any background mental health problems or any impending health concerns. If the employee struggles on stoically, not wanting to appear weak or unable to cope, the probability is that the employer will not be fixed with knowledge, actual or constructive, and the claim will fall at the foreseeability hurdle. Patricia Daniel v Secretary of State for the Department of Health (as successor to the liabilities of Hammersmith and Fulham PCT) [2014] EWHC 2578 (QB). Karen Scott E: Karen.Scott@plexuslaw.co.uk T: 0844 245 5235
The court reiterated that it is the indications of impending breakdown, not stress itself, which establish a claim. Unless foreseeable mental injury is established the claim will not succeed (Hatton and Hartman v South Essex NHS Trust (2005)).
03
Supreme Court decision pending in International Energy Group Limited v Zurich Insurance Plc UK Branch The appeal by Zurich in this case was heard in the Supreme Court on 15 and 16 July before Lords Neuberger, Mance, Kerr, Sumption and Carnwath. The judgment is eagerly awaited by all asbestos insurers and policyholders.
The arguments in the Supreme Court Zurich appealed on the following grounds: 1. The case should be decided on the application of the common law in Guernsey. The Court of Appeal was
Background
wrong to consider that the decision in Barker had been
IEG is the successor to the Guernsey Gas Light Co Ltd, a
EL Trigger. The decision in Barker remained good law
Guernsey corporation and the employer of Mr Alan Carre for a period of just over 27 years, from 1961 to 1988. Mr Carre developed mesothelioma and brought a claim in Guernsey alleging that he was exposed to asbestos throughout the 27 years of his employment. Mr Carre’s claim was settled and IEG claimed an indemnity from Zurich under EL policies issued between 1982 and 1988. Subsequently a further two years EL cover with Excess Insurance Co Ltd was also traced, but no other EL cover was traced. Therefore in total, IEG had only eight years EL cover out of 27 years employment. IEG claimed it was entitled to a full indemnity from Zurich, which argued that IEG was only entitled to an indemnity proportionate to its time on risk i.e. 6/27 years. Proceedings were issued and heard in the Commercial Court by Mr Justice Cooke who dismissed the claim. He found that IEG was only entitled to a proportionate indemnity because the Compensation Act did not apply in Guernsey and liability was proportionate in accordance with the common law principles applied in Barker v Corus (2006). IEG appealed to the Court of Appeal, which upheld the appeal on the grounds that the decision in Barker was no longer good law following the Supreme Court’s decision in EL Trigger (BAI v Durham (2012), and therefore liability was not proportionate and Zurich were obliged to provide a full indemnity. 04
overturned by the decision of the Supreme Court in and the effect of that decision was that at common law, liability for mesothelioma was proportionate or aliquot (“the quantum rule”). The Court of Appeal erred because it had conflated the issues of causation and quantum. Once causation was established, the quantum rule imposed proportionate liability. The Compensation Act did not apply in Guernsey and the Court of Appeal should therefore have applied the quantum rule in Barker. Zurich’s contractual obligation to provide an indemnity should therefore be proportionate. 2. The Court of Appeal erred in law in construing the “all sums” wording of the insuring clause. Zurich’s obligation to indemnify in respect of “all sums for which the insured shall be liable” was closely linked to the “disease caused during any period of insurance” wording of the insuring clause. The liability to which the policy responded was the liability generated during the period of insurance and not the liability generated during the period of employment as a whole. 3. If the court rejects grounds 1 and 2 and decides that Zurich is liable to indemnify IEG in full or for any mesothelioma claims where section 3 of the Compensation Act applies, then Zurich asks the court to consider employing an equitable remedy to distribute the liability borne by insurers. This was necessary as a
result of the imposition of liability by Fairchild and the
If the Supreme Court upholds the decision of the Court of
Compensation Act. This equitable remedy termed by
Appeal and accepts that Barker has been overturned, this
Zurich as “Fairchild Recoupment Rights” would entitle
will also impact on the apportionment of liability for other
Zurich (and any other interested insurer) to recover
indivisible diseases such as lung cancer.
contributions from solvent policyholders in such cases and would also provide a legal basis for the sharing of claims by successive EL insurers post Fairchild, as voluntarily adopted in the ABI Handling Guidelines,
Steve Phillips E: Steve.Phillips@plexuslaw.co.uk T: 0844 245 5237
which were issued in 2003.
IEG’s response: 1. The decision in Barker was implicitly overruled by the decision of the Supreme Court in EL Trigger because that decision made it clear that in mesothelioma cases, the claim was for the development of the indivisible disease and not the divisible creation of the risks of the disease. Therefore, the Barker approach to apportioning liability by reference to increased risk was consigned to “past history”. 2. The “all sums” wording of the Midland insurance policy was clear and Zurich was liable to indemnify in full. The disease was “caused” during the period of cover and wording of the insuring clause did not provide a proportionate indemnity. 3. The more radical proposal for equitable rights of contribution against the insured should be rejected. There is no legal basis for such rights of contribution and the court has no equitable jurisdiction to create the contribution rights which Zurich is seeking. Further submissions were made on behalf of the ABI and the Asbestos Victims Support Groups Forum as interveners in the appeal.
The outcome The decision of the Supreme Court is eagerly awaited and will have significant implications for the future handling of mesothelioma claims, in particular the sharing of liability between successive EL insurers and/or EL insurers and their solvent policyholders. 05
Substantial award for widower of 46 year-old woman exposed in the 1990s A quantum decision in the recent mesothelioma case
employed for many years as a receptionist or a personal
of Knauer v Ministry of Justice (2014) is worth a mention
assistant before her work at the prison.
because the court confirmed the law on various disputed heads of damage. The facts of the case are also of interest because exposure only commenced in the late 1990s. On the face of it, even if the defendant had no case on liability, there should therefore have been strong causation arguments.
When K was diagnosed, the couple sold their business and bought a new home to live in. H gave up his work to look after his wife.
The court’s decision on quantum Many heads of damage were agreed but on a small number
Background Sally Knauer (K) was employed between 1997 and 2007 as an administrator at Guy’s Marsh Prison, Shaftesbury,
of issues there was a wide divergence between the parties. The total award by the court amounted to just over £640,000 excluding interest.
Dorset. The prison included many old buildings which K had
Pain, suffering and loss of amenity
to access in the course of her job. Many of these buildings
Taking into account the 12th edition of the Judicial
contained asbestos.
College guidelines and the recent comparable decisions in
The defendant conceded liability following exchange of
Zambarda v Shipbreaking (Queenborough) Ltd (2013) and
witness evidence. Unfortunately, it is not clear from the
Streets v Esso Petroleum Co Ltd (2009), the court assessed
judgment, exactly how K was exposed to asbestos in her
general damages at £80,000. This is a large sum in view of
role as administrator.
the seven-month duration of pain and suffering. However,
K was diagnosed with malignant mesothelioma in March 2009 and died in August 2009 at the age of 46. The claimant (H) is K’s widower and the administrator of her estate. They had three sons who at the date of their mother’s death were
the court seems to have given weight to factors including K’s young age, her domestic circumstances and the extent and effects of invasive investigations including a partial pleurectomy.
aged 22, 20 and 16.
Funeral and wake expenses
They were an old fashioned couple in the sense that the
The claimant sought to claim £725 for the cost of the
division of labour in the household was as it might have
reception or wake which followed the funeral. The court
been in the 1950s. K managed the household. She cleaned,
disallowed the claim on the basis that Gammell v Wilson
cooked, laundered, ironed clothes, did the shopping and
(1982) is still good law. Defendants and their insurers should
walked the dogs. She also did the gardening and decorating.
take heed of this when presented with such claims.
H did occasional household repairs but little more than that.
Income dependency: the multiplier
In 2007 K and H bought two public houses in Dorset. They
The claimant urged a departure from the traditional method
ran one and their eldest son ran the other. K continued her
of calculating the multiplier. He submitted that losses up to
job at the prison for a while, but then resigned and worked in
the date of trial should be treated as special damages (with
the public house where they lived. She had previously been
a small discount for the uncertainties of life but none for
06
accelerated receipt) and that the multiplier for future loss
The court therefore allowed an average of nearly 23 hours
should be calculated from the date of trial or judgment.
per week in respect of the lost services of a working mother.
Mr Justice Bean said that he would follow that course if it
A defendant should be able to reduce annual service claims
were open to him, but that he was bound by the decisions
by obtaining documentary and witness evidence on the
in the House of Lords in Cookson v Knowles (1979) and
local hourly rate for direct hiring as opposed to through an
Graham v Dodd (1983) in which the conventional approach
agency. Evidence on the claimant’s average working hours
was adopted.
may also be useful in disproving the time allegedly engaged
Income dependency: the multiplicand K was only paid £5,783 from the public house in the tax
in household chores. Loss of intangible benefits
year preceding her illness. Despite that, the court accepted
Although the claimant contended for an award of £10,000,
the claimant’s submissions that the couple would have sold
the court considered this was over-ambitious in view of
the public house within two years and that she would then
the case law. The court accepted the defendant’s figure of
have returned to ordinary employment. The 2012 edition of
£3,000 (Fleet v Fleet (2009)).
the Annual Survey of Hourly Earnings (ASHE) supported an average net income for secretarial work of just over £16,000 per annum. Therefore, that salary was used for purposes of calculating K’s likely income. This decision clearly had a substantial effect on the income dependency claims.
Commentary The high services dependency award in this case should act as a salutary lesson to defendants and their insurers. Defendants need to ensure that they obtain as much
Service dependency
evidence as possible to reduce the costs of the services
The services dependency claims accounted for more than
claimed in a dependency claim. It is also a good reminder
half of the total damages award in the sum of £329,241.
that some of the old cases, like Gammell are still good law.
The MOJ argued vigorously that there should be no award
As it is a quantum only judgment, we have little information
for services dependency. H had not engaged a paid cook,
on the liability and causation arguments raised by the
cleaner, gardener or decorator in the five years since K’s
defence. The claimant’s latency period (time between
death. However, the court considered that this argument was
the initial asbestos exposure and diagnosis) was only 12
misconceived. The fact that a widower decided to manage
years. Studies have shown that high levels of exposure can
himself after the death of his wife, would not disentitle him
shorten the latency period but causation should have been
to sue for and recover damages, for the pecuniary loss he
arguable, unless there was very good evidence of heavy
had sustained.
exposure to asbestos in the early years of her employment.
The court rejected the claimant’s £25,000 annual claim for a resident housekeeper. It would not be reasonable for the defendant to pay for a resident housekeeper to replace what had been lost. Such continuity of services could be provided by an agency for £16,640 per annum. Accepting H’s evidence that K was extremely house-proud, the court allowed 20 hours per week on household tasks. A further 125 hours were allowed each year for decorating and gardening.
07
“...Defendants need to ensure that they obtain as much evidence as possible to reduce the costs of the services claimed in a dependency claim...� In general, there is a lengthy period between the development of the first malignant cell and the point at which the disease can be diagnosed. The latency period for mesothelioma is usually between 20 and 50 years with the shortest typical period being 10 to 15 years. It is generally accepted that all exposure up to 10 years before the appearance of symptoms is causative. During the final 10 years, further exposure to asbestos fibres will have no causative effect. A very short latency period as in this case is still exceptional. Knauer v Ministry of Justice [2014] EWHC 2553 (QB). Karen Scott E: Karen.Scott@plexuslaw.co.uk T: 0844 245 5235
08
Other recent asbestos developments Justice Select Committee report on mesothelioma claims The government’s decision to apply sections 44 and 46
3. The committee also called upon the Ministry of Justice to work with the Department of Health to reduce delays in the production of the medical records of mesothelioma victims.
of the Legal Aid Sentencing and Punishment of Offenders Act 2012 (LASPO) has been called into question by the
Lord Faulkes has now confirmed that the government will not
Justice Select Committee. Section 48 of LASPO had
proceed with the introduction of LASPO to mesothelioma
exempted mesothelioma claims from sections 44 and 46,
claims before autumn this year.
so that claimants could still recover success fees and ATE
The government has also confirmed that the Third Party
premiums from defendants. This was subject to a review by the government and following a consultation in 2013, it was announced that the LASPO provisions would apply to mesothelioma claims from July 2014. This resulted in the Justice Select Committee reviewing this decision; written submissions were invited and the committee conducted two oral evidence sessions. The committee arrived at the following conclusions: 1. The government’s consultation was “hasty” and it
(Rights against Insurers) Act 2010 will be brought into force under clause 17 of the new insurance Bill, which has already received its first reading in the House of Lords.
Judicial review of the LASPO consultation process In tandem with the Justice Committee’s review, the Asbestos Victims Support Group Forum (AVSGF) has launched a judicial review of the consultation process, which was heard
should not have been conducted until “sufficient time
by the High Court in July. The AVSGF is seeking a new
has elapsed for the effects of LASPO changes in non-
consultation process before the provisions of LASPO are
mesothelioma cases to be assessed”. The cost-benefit
introduced to mesothelioma claims.
analysis undertaken by the government as part of the consultation and its conclusion that there is a significant financial net benefit to claimants was regarded by claimants’ lawyers with considerable suspicion and its conclusions were “hotly disputed”. The Justice Select Committee had been confronted with “an emotive and polarised” debate about the process of making mesothelioma claims and to overcome this divergence
Disclosure of employment records As anyone handling mesothelioma claims will know, the employment history provided by the HMRC is a vital piece of evidence. The decision by the HMRC to no longer provide employment histories in deceased cases due to data protection concerns was therefore problematic.
of views, the committee considered that there should be
In his evidence to the Justice Committee, Lord Faulkes has
a more thorough independent review.
now confirmed that this problem will be resolved by way of
2. The committee also urged the government to expedite the primary legislation required to bring into effect the Third Party (Rights against Insurers) Act 2010.
legislation. The Deregulation Bill currently before the House of Lords will be amended to enable the HMRC to release information for the purpose of certain litigation including Fatal Accidents Act claims, claims for damages for the benefit of an estate of a deceased person and claims under the Diffuse Mesothelioma Payment Scheme. 09
Pending enactment of the Bill, an interim procedure has been agreed between the HMRC and APIL and approved by Masters McCloud and Eastman for use in the RCJ as confirmed in Master McCloud’s decision in Yates v Revenue & Customs Commissioners (2014). The court will make an order for disclosure following the issue of a claim against “persons unknown” in relation to the relevant deceased asbestos claim. The claimant can then make an application for disclosure of the relevant employment history, supported by evidence and the application will not be opposed by the HMRC. This process should ensure that employment histories are disclosed without undue delay pending enactment of the Deregulation Bill. Steve Phillips E: Steve.Phillips@plexuslaw.co.uk T: 0844 245 5237
010
Another defendant succeeds in a NIHL appeal on limitation The case of Malone v Reylon Heating Engineering Ltd (2014) sees an argument under s33 of the Limitation Act 1980 resolved in the defendant’s favour and considers the extension of the primary limitation period under s33 of the Act.
Background
Appeal Court decision Allowing R’s appeal, the Court of Appeal held that the judge identified only one limitation period, to be applied to the entirety of M’s employment. Consequently, her approach to s33 was vitiated because she erroneously decided that the only relevant period of delay was between 2007 and 2009. She should instead have identified the two periods of delay:
Malone (M) had worked for Reylon (R) between 1977
2004 to 2009 for the pre-2001 damage, and 2007 to 2009
and 2004. He claimed that he was exposed to excessive
for the post-2001 damage.
noise for up to eight hours a day and that R had frequently
There had been no proper basis for the judge to suspend
failed to provide adequate hearing protection. R went into administration in 2006 and into liquidation in 2008. Notification of the claim was in 2009.
or put back the limitation period for the earlier period, or to treat the injury for the entirety of the employment as being indivisible, given that apportionment was possible in
In 2011, M issued his claim for damages for alleged noise-
hearing loss cases and was appropriate in the instant case.
induced hearing loss and moderate tinnitus arising from
As, in the judge’s view, the determining factor as to whether
his employment. He accepted that he had constructive
to allow the entire case to proceed was whether the primary
knowledge within the meaning of s11 and 14 of the Act by
limitation period had expired in 2004 or 2007, together with
the end of January 2001. He asked the court to dis-apply
her acceptance that R had a strong case regarding prejudice
the primary limitation period under s33 for the entire period
if the relevant period of delay was between 2004 and 2009,
of his employment on the basis that it would be equitable to
her conclusion that it was equitable to exclude the time limit
permit his action to proceed in the circumstances.
was unsustainable.
Lower court decision
The Court of Appeal held that she should have considered,
The judge found that M had been exposed to “injurious levels of noise” whilst employed by R and had not been provided with adequate hearing protection. She found that the cause of action regarding the entire period of employment had accrued when the injury was “completed”, namely when M ceased working for R in 2004. The judge decided that the
separately: 1. Whether to allow the case to proceed for the pre-2001 injury, bearing in mind the prejudice caused by the delay since 2004, and 2. Whether to allow it to proceed for the post-2001 injury.
determination of whether the primary limitation period had
The decision regarding the first period was potentially
expired in 2004 or 2007 was critical to the exercise of her
relevant to the decision on the second, given that the court
discretion under s33. She concluded that the delay between
needed to have regard to all the circumstances of the case,
2007 and 2009 had not materially compromised R’s ability
which inevitably included considering why it had become,
to defend the claim, and exercised her discretion under s33
overall, a distinctly stale claim for damages. The lapse of
in favour of M.
time during the pre-limitation period had to be treated with
011
a significant degree of care to ensure that it was accorded the correct degree of weight. It was also useful to stress that once the limitation clock started ticking, it was appropriate to consider the delay since the claimant had knowledge rather than focusing solely on the delay from the end of the
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As the judge had applied the wrong approach, the instant court’s role was to re-exercise the discretion provided by s33. The prejudice to the defendant outweighed the prejudice to the claimant for the purposes of s33, pre and post-2001, and it would not be equitable to allow the claim to proceed
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particularly taking into account the issue of proportionality.
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The Court of Appeal accepted that M was capable of
Karen Scott
proceeding with a claim for the period post-2001 but as that period represented just 3 out of 27 years of employment, the Court of Appeal held that it was not proportionate to allow the claim to proceed and therefore s33 discretion was not
Knowledge Management Lawyer T: 0844 245 5235 E: Karen.Scott@plexuslaw.co.uk
exercised. Malone v Reylon Heating Engineering Ltd (2014) EWCA Civ 904.
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