Legacy Claims - Heneghan v Manchester Dry Docks Ltd & Others (Court of Appeal)

In an important victory for insurers, the Court of Appeal has handed down a significant judgment for asbestos related lung cancer claims.

Lord Dyson MR, who gave the lead judgment, approved a new approach to causation in finding that damages should be apportioned in accordance with an individual defendant's proportionate share of exposure to asbestos. 

Background The deceased Claimant died from asbestos-related lung cancer in January 2013. He was exposed to asbestos by ten employers between 1961 and 1974. Six of these employers were sued by the Claimant.

The level of asbestos exposure of the six Defendants was quantified at 35.2% of the Claimant’s total asbestos exposure; with individual Defendant’s exposure ranging from 2.5% to 10.1%.

Liability was admitted. If the Defendants were liable in full, damages totalled £175,000. 35.2% of these damages equalled £61,600.

At first instance, the Defendants successfully argued before Jay J that liability was based on materially increasing the risk of lung cancer under the Fairchild exception, since it could not be proved that any Defendant had caused the cancer or materially contributed to it. Accordingly, following Barker V Corus, the Defendants were liable in proportion to their contribution to the risk of injury.

The Appeal

The Claimant appealed; but the Court of Appeal unanimously found for the Defendants. Lord Dyson MR approved the High Court's approach: there is a two stage test to causation. Firstly, 'what' caused the lung cancer has to be considered and secondly, 'who' caused the lung cancer.

It was found that exposure to asbestos was the cause of the Claimant's lung cancer, as on the balance of probabilities, epidemiological evidence established that the risk of the cancer being caused by asbestos was greater than 2:1 (i.e. doubling the risk test).

In respect of 'who', it was noted that scientific evidence was unable to show specific evidence of individual causation directed to individual Defendants. It was noted (and agreed by the Claimant) that it was not possible to establish causation on the 'but for' test. If the Claimant had not been exposed to asbestos by any one of the Defendants, he would still have developed lung cancer. 

The 'material contribution' test was also considered as per Bonnington Castings and Lord Dyson approved Swift J's rejection  of this test in lung cancer cases as per Phurnacite, as it could not be proved that exposure by the Defendants had a cumulative effect, only that exposure may have contributed to the cancer. Bonnington was therefore reserved for cases where it could be proved scientifically that the Defendant had contributed to the injury. From a practical point of view, this effectively restricts the Bonnington material contribution test (to causation) to divisible injuries such as NIHL, diffuse pleural thickening and asbestosis.

It was found that the Defendants had materially contributed to the risk that the Claimant would develop lung cancer and thus the Court had no difficulty, as the first instance Judge had done, in applying the Fairchild exception to occupational lung cancer claims. As Section 3 of the Compensation Act 2006 only applies to mesothelioma, Barker also applies to apportion the damages.

Consequently, although the disease is indivisible, damages are divisible and are paid in accordance with each defendant's contribution to the exposure (risk of injury).

The Court of Appeal reserved their position on whether the first instance Judge's obiter comments concerning whether causation could be established on conventional principles for a defendant who contributed more than 50% of a claimant's total exposure. However, the Court was good enough to point out that both parties considered the Judge to be wrong for a variety of reasons, making it doubtful that the Judge was in fact correct. 

COMMENT:

1. This judgment has significant effect on multi-defendant asbestos-related lung cancer practice and in respect of every other type of multi-defendant occupational cancer claims.
2. The case affirms that every exposure to asbestos does not contribute to ‘causation of the lung cancer’ but that each exposure contributes to the ‘risk of contracting the disease’.
3. The finding represents the approval of a common sense approach which is fair to both parties. Had the Fairchild exception not been extended, the Claimant would not have recovered any damages at all. Alternatively, if it had been found that a material increase in the risk of exposure was the same as a material increase in exposure (and therefore of injury) a defendant who was responsible for only 2.5% of the exposure would be required to pay 100% of the damages. Both these outcomes would be demonstrably unfair.
4. There has obviously been considerable uncertainty in lung cancer and other (medically) indivisible disease cases. These cases are predominantly cancer cases but readers should be aware of the risk of Occupational Stress Claims being classed as medically indivisible. Claimants now have two hurdles to overcome. The first is to establish that the alleged causative agent caused the condition; and, a more (legally) problematic issue is how the law of causation is to apply to individual defendants. Dyson MR from the outset defined the terms of reference of the decision by reference to five key factors and these should be borne in mind when considering the application of the Fairchild exception to novel cases.
5. The Appellate Courts have shown themselves increasingly troubled by rogue jurisprudence enabled by both Fairchild and Sienkiewicz. As we have highlighted in previous briefings, the Appellate Court is now consciously moulding causation law jurisprudence in the hope of providing a coherent and consistent causation code. This may prove a fruitless endeavour because Appellate Courts cannot control the cases that come before them but this decision (which is unlikely to be appealed) and decisions such as Williams v The Bermuda Hospitals Board [2016] UKPC 4 indicate a wish to impose some structure in the law of causation. 
6. The Appellate Courts seem to be increasingly recognising that the interpretation or understanding of precedent, even when misguided or incorrect, generates still further test case activity. The historical conflation of the McGhee and Bonnington decisions is a good example of this. At the very least, it can now be said that:

   • Causation, on the basis of a material increase in risk, will be limited to Fairchild type scenarios where the 'but for' test prevents a claimant who has established medical causation (the ‘what’ test) inevitably establishing legal causation because of scientific uncertainty.

   • In divisible (or cumulative) injury cases the 'but for' test will be relaxed where a claimant can establish a material contribution to injury (per Bonnington Castings).

   • Otherwise, the appropriate test remains the 'but for' test (see below)

7. There has been considerable concern over the obiter dicta comments of Jay J that causation needs to be established on a conventional 'but for' test against a defendant who contributed more than 50% of the claimant’s dose. The Court of Appeal recognised the risk in the observations of a very able High Court Judge setting an agenda for the future, and were keen to point out that the Judge's observations remain matters of opinion as to issues that were fundamentally untested on the facts of this case. Although the decision as a whole represents an important element of the Appellate Courts' efforts to provide clarity in this very difficult area, the circumstances postulated by Jay J are likely to attract additional test case activity in the future.

8. Despite judicial concerns about the validity of the "doubling the risk" test, this appears to remain the favoured option where the risk has increased sufficiently and indeed appears to be synonymous with the 'but for' test in medically straightforward circumstances. Heneghan does not provide an answer to the scenario postulated by the Privy Council in the recent case of Williams, where the risk is so small that the "doubling the risk" test is no longer a valid test and indeed is no longer synonymous with the ‘but for’ formulation. There may be scope for a de minimis type threshold below which significant increases in minimal pre-existing / constitutional risks will not be recognised as causative. It seems likely that we will see further test cases in this area. 

9. The pursuit of this case on appeal involved considerable risk to insurers but early impressions indicate that the risks of unforeseen consequences arising from the pursuit of this appeal have been successfully averted. It is understood that an appeal to the Supreme Court is unlikely and so further test case activity by other insurers cannot be ruled out.