We solicitors represent Mr David Mahoney in a claim against his former employers for mesothelioma, a fatal form of lung cancer caused by exposure to asbestos.
Mr Mahoney was exposed to asbestos just after leaving school when he worked on the BHS site in Colchester for a firm called Myton Limited, part of the Taylor Woodrow Group.
On 22nd July 2010 judgment was entered in the Royal Courts of Justice against Myton Limited and they were ordered to pay Mr Mahoney a £50,000 interim payment (copy of the order enclosed). Mr Mahoney intended to use this payment to fund potentially life prolonging treatment in Frankfurt which is not available on the NHS.
Myton Limited themselves are not able to pay this interim payment as they are dissolved (although they have been restored to the Companies Register for the purpose of this litigation). Thus under the Third Party Rights Against Insurers Act it is the insurers of Myton Limited during his period of employment which should respond and pay this interim payment.
The relevant insurers of Myton Limited were Builders Accident Insurance (BAI), which is now insolvent. A company called BAI Claims Limited now deals with any claims against this insurer and once a claim is established it is submitted to the Financial Services Compensation Scheme (FSCS) and a level of funding will be made available to meet the claim. The FSCS is the UK’s statutory fund of last resort for customers of failed FSCS authorised firms, such as failed insurance companies.
In 2008 BAI Limited started to refuse to submit claims to the FSCS claiming that the wording of the insurance policies only covers cases where the disease manifests itself during the period of insurance and not when the exposure to asbestos occurs. As mesothelioma ‘manifests’ itself some 5 years prior to any symptoms / diagnosis then they argue it should be the insurance policy in force at that time that should respond to claims. However as mesothelioma can develop up to 40 years after the exposure occurred then quite often there will not actually be any insurance policy in place at that time as the company has more than likely been dissolved, as is the case with Mr Mahoney.
A test case was brought in the High Court against BAI (The Trigger Case). BAI lost the claim as the High Court agreed that it is the policy in force at the time of exposure which should respond to the claim. BAI subsequently appealed to the Court of Appeal and the judgment from the Court of Appeal will be handed down on Friday 8th October 2010. Early indications are that the defendant’s intend to appeal this decision to the Supreme Court and Mr Mahoney will probably have to wait another 1 ½ to 2 years before he can obtain any compensation.
Should this decision go in favour of the insurance companies then the Government also stands to lose millions as they will face demands for compensation from employees of former nationalised industries and organisations such as the Ministry of Defence. They will also lose out on the thousands of pounds of benefits paid to victims, which are clawed back when insurance companies pay the compensation.
Some insurers are distancing themselves by the decision to contest the case. A spokesman for the Association of British Insurers is reported as saying: “This is being brought by a small group of run-off insurers against the views of the majority of UK insurers. Most active insurers are happy to pay to people with employers’ liability policies.”
The correct law as we stand today is that of the High Court decision in favour of the Claimants, in other words it is the insurance policy in force at the time of exposure that should respond to claims. However BAI Limited are refusing to submit claims to the FSCS pending the outcome of the trigger litigation, they are able to do this because claimant’s have no legal rights of enforcement against the FSCS.
The results is that BAI Limited are refusing to submit these claims and in particularly they are denying Mr Mahoney at least his £50,000 interim payment despite there being a level of funding available from the FSCS and despite the current law being that it is the insurance policy at the time of exposure which should respond.