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|ISSN 1470-8108||Issue 43||Summer 2001|
Earlier this year, the insolvency of Chester Street Insurance Holdings Ltd., formerly Iron Trades Holdings Ltd., threw into doubt compensation payments for thousands of UK asbestos victims (newsletter issue 42). As more was revealed about questionable corporate reorganizations and payments to Chester Street executives, public and political pressure intensified for a public enquiry. On March 31, one thousand demonstrators gathered to protest the injustice caused by the collapse of Chester Street at a march and rally organized by the Clydebank Asbestos Group in Scotland. Speakers included: Bill Speirs, General Secretary of the Scottish Trade Union Congress (STUC), Joan Baird of Clydebank Asbestos Group, Andy White, Leader of West-Dumbartonshire Council, Tony Worthington, Member of Parliament (MP) for the Scottish constituency of Clydebank and Milngavie, Des McNulty and Lloyd Quinan, Members of the Scottish Parliament, and Frank Maguire, solicitor/campaigner. Asbestos victims, their relatives, trade unionists, activists, politicians and academics demanded answers. Leaflets distributed at the Clydebank Town Hall described a harsh reality: "5,000 Scottish shipyard workers will die of asbestos-related illnesses in the next 10 years because of their exposure to asbestos at work. If the Chester Street scandal is allowed to continue unchallenged, thousands of asbestos victims will be denied justice." The STUC calculates that since 1997, eighteen hundred people in Scotland have died as a result of occupationally contracted asbestos diseases. Calls made from the platform for a public inquiry were supported by the demonstrators. Tony Worthington was "proud that Clydebank is leading the way in the UK to protest against this scandal," but outraged by the insurers' betrayal of ordinary working men and women. He raised concerns over the actions taken and remuneration received by Chester Street/Iron Trades' executives, last year's sale of Iron Trades Insurance Company Ltd. to the Australian insurance multinational QBE and the failure of the Financial Services Authority (FSA) and other government agencies to protect the public. Helen Liddle, the Secretary of State for Scotland, sent a message of support: "The Government is making it clear to the insurance industry that they cannot just walk away from this matter. The industry cannot stand by and let individuals suffer as a result of the collapse of Chester Street."
For nearly two years, the Asbestos Sub-Committee of the All Party Group on Occupational Safety and Health has provided an essential conduit between the government and asbestos victims' groups, trade unionists, personal injury solicitors, journalists, campaigners and non-government organisations. The effectiveness of this Westminster body has been proved during the current campaign. Chester Street was the main topic of discussion at committee meetings on February 14, March 27 and May 1. Michael Clapham, MP for Barnsley, West and Penistone and Committee Chair, briefed the group on developments including meetings with PriceWaterhouseCoopers, the provisional liquidators, the FSA, the Association of British Insurers (ABI) and Melanie Johnson, Economic Secretary to the Treasury. Clapham was optimistic that pressure being exerted by Andrew Smith, Chief Secretary to the Treasury, and the personal involvement of Gordon Brown, the Chancellor of the Exchequer, would be pivotal.
Since January, MPs have kept the issue on ministerial agendas through personal contacts, Early Day Motions, Parliamentary questions and public discussions. On April 3, Tony Worthington called for an independent enquiry into Chester Street during a Commons' debate. Speaking for the government, Helen Liddle reassured the House that efforts were being made to ensure that asbestos victims would be compensated and that the reasons for Chester Street's insolvency would be revealed. On April 30, Stephen Hepburn, MP for Jarrow, secured an adjournment debate during which he pointed out that "the scandal of Chester Street… is fundamentally not about money but about people's lives. The TUC (Trades Union Congress) has estimated that a victim dies of an asbestos-related disease every 10 days in my area of South Tyneside." As well as one hundred per cent compensation for all Chester Street's asbestos victims, Hepburn demanded "that there should be a full public enquiry into the Iron Trades and Chester Street Holdings scandal." During this debate, Michael Clapham requested that the government comment on its plans to prevent other insurers from following the Chester Street precedent. The response by Melanie Johnson was unsatisfying: "we are looking closely into the issues raised by Chester Street." With the prospects of a general election looming, observers felt the situation would remain unresolved for some months. However, on May 10, Andrew Smith announced that a settlement had been agreed. Replying to a Parliamentary question by Tony Worthington, Smith declared that a deal "between Government and the private sector, in which the Government is meeting its liabilities to former public sector employees and the insurance industry is covering claims from former private sector employees" had been reached. The insurance industry will cover Chester Street's financial liabilities where an employer no longer exists or is insolvent in the following circumstances:
if a compensation award was settled before Chester Street's insolvency on January 9, 2001, the Policyholder's Protection Board (PPB; funded by a levy on insurers) will pay 90% of awards in respect of pre-1972 (1975 in NI) liabilities and 100% of awards where exposure occurred after 1972 (1975 in NI);
if the compensation award was settled on or after January 9, the insurance industry will fund equivalent payments pending the implementation of the new industry-funded Financial Services Compensation Scheme (FSCS) planned to come into effect in November, 2001 (the as-yet unknown starting date for the FSCS is being referred to currently as N2).
The U-turn by the insurance industry came as a surprise. The publication of a letter from the ABI in the Financial Times (FT) on June 20, 2001 and an FT article the following day explain some of the political reasons for the industry's change of heart. The two-page ABI letter was sent to 254 member companies after the June 7th General Election. Ian Chippendale, Chairman of the ABI's General Insurance Council Management Committee, wrote: "ABI worked closely with the Treasury and the PPB to establish what options there were, and took legal advice from counsel on whether PPB was liable for the pre-1972 claims. In the event the legal advice was inconclusive, but the ABI Board agreed that the legal position should not be tested in the courts. There would have been massive damage to the industry's reputation from being seen to deny compensation to people dying from asbestosis on the basis of fine legal distinction… the outcome is the best that could be achieved. Above all it has avoided a PR disaster for the whole industry and allowed the industry to build constructive relations with key Treasury ministers." Chippendale estimates that the cost to the ABI of meeting the claims settled between January 9 and N2 will be £4-5 million; the PPB believes the ultimate cost of the post-1972 claims, paid by a levy on all general insurers proportional to their general insurance premium income, over the next twenty years will be £1 billion. Although Gordon Brown is not named by Chippendale, it is clear that the reference to "members of the Cabinet" from affected constituencies includes the serving MP from Dunfermline East. Keen to build bridges with Ministers in the second-term Labour government, the industry accepted that it would not be well-served by slugging it out with Brown who, having served the same area for sixteen years, is well aware of the tragic asbestos legacy suffered by local people many of whom worked at the Royal Naval dockyards at Rosyth.
The news of the settlement has been greeted with relief. Jimmy Cloughley, a voluntary worker at Clydebank and one of the organizers of the Scottish demonstration, said: "The victory/settlement means so much to so many people throughout the length and breadth of the UK. It is an example of the strength of ordinary people when faced with a gross injustice to take on large corporations and win. The justice of this case was obvious to the Clydebank Asbestos Group who felt they had to organize themselves against the Chester Street insurance liquidation." Cloughley paid tribute to local and overseas supporters including two trade unions in Australia which organized a simultaneous protest in Melbourne against the Australian firm QBE, the new owner of Iron Trades. Bill Speirs of the STUC congratulated the government "on the result they have got from the insurance industry in relation to Chester Street. But even more credit goes to the campaigners, including the trade union movement, who moved so quickly following the Chester Street debacle. It goes to show that sharp, focused campaigning can really make a difference." Since January 9, Frank Maguire and Ian McFall, at the Glasgow and Newcastle offices of Thompsons Solicitors, have worked tirelessly to establish the facts behind the insurer's collapse and compile legal arguments for government intervention. In a telephone interview, McFall said: "I always believed that there would be a resolution to this problem; it was unthinkable that society could turn its back on thousands of innocent asbestos victims. Although we can now see the light at the end of the tunnel, I am still concerned at the details which remain to be clarified regarding the operations of FSCS."
The matter of a public enquiry remains on hold while the government waits for the report of the provisional liquidator. According to Helen Liddle: "The Provisional Liquidator of Chester Street is investigating the company's affairs. The Government will remain in close touch with the Provisional Liquidator. We are not ruling our further enquiries." Although, a PriceWaterhouseCoopers spokesperson confirmed on June 21 that a wide-ranging investigation into the financial affairs of Chester Street was proceeding, he was unable to provide a date by which the report would be available. In view of the clamour for a public enquiry into Chester Street, is it wise for the government to rely on external findings before taking action?
As every UK verdict and settlement is meticulously examined in light of the restrictive Fairchild judgment (newsletter issue 42), asbestos litigation in the US continues to expand. The number of asbestos claims being brought against some American defendants has more than doubled over the last ten years according to a report released on June 12, 2001 by management consultants Tillinghast-Towers Perrin. Annual averages of 20,000 claims per defendant have grown to 50,000-60,000, leading accountants to predict that the total cost of asbestos-related settlements will reach $200 billion. According to Mike Angelina, one of the co-authors of the study: "Over 450,000 claims have been filed to date and we project that close to 1 million claims will be filed before the litigation ends, absent some type of federal legislation." Although defendant corporations will be liable for $55-$65 billion (39% of the liabilities), the rest will be picked up by US insurance companies (30%) and foreign insurers (31%). To date, the US insurance industry has paid out $41 billion for asbestos claims; this study calculates that the insurers' final bill could reach $85-$105 billion.
W.R.Grace & Co. and USG, the largest wallboard maker in the US, have joined the lengthening list of US corporations seeking protection from asbestos liabilities by filing for Chapter 11 bankruptcy. In the last twenty years, twenty-seven companies have reorganized under the Federal Bankruptcy Code. According to information supplied by Grace, there were 81% more asbestos-related claims filed against the company in 2000 than in 1999. Since then, "the pace of asbestos claims… has skyrocketed." In the last seven years, USG has been named in more than 250,000 asbestos injury cases; the company has paid out $450 million to resolve asbestos-related litigation. It is believed that the twenty-two thousand new claims received by USG in 2001 will contribute to a yearly asbestos bill exceeding $275 million. Experts at the Manville Trust have recently announced that a 1999 prediction of 500,000 total claims has been revised to 1.5-2.5 million claims.
Since February, 2001 the judicial climate in which UK asbestos personal injury litigation is processed has been dominated by Mr. Justice Curtis' reversal of legal precedents in the Fairchild case. The judge let both defendants off the hook declaring himself unable to apportion liability between them for the occupational asbestos exposure experienced by the late Arthur Fairchild. The day after the Fairchild judgment was issued in the High Court, the Court of Appeal (February 2, 2001) upheld the original ruling in a case brought by the widows of two other mesothelioma victims. In February 2000, Deputy High Court Judge R.D. Machell Q.C. had found for the plaintiffs, Betty Irene Jeromson and Ruth Mary Dawson, in their action against Shell Tankers UK and Cherry Tree Machine Co. Ltd. Both defendants appealed alleging that the Asbestos Industry Regulations 1931 were specific to the asbestos industry and were not relevant to "the incidental use of asbestos in other industries." Appeal Court Justices Lord Mantell, Hale and Cresswell were unequivocal: "The regulation in this case is quite clear: the obligation to provide an exhaust is absolute unless it is not practicable to do so. There is no question of reasonable practicability. In any event, the known danger was dust and the required precaution was both known and practicable. The judge was clearly right to hold that if the regulation applied it had been broken in this case." Another favourable result in a mesothelioma case was reached on February 8 with an out-of-court settlement of £275,000 in Leonard Leslie Humber v W.S. Shuttleworth (Slough) Ltd. Between 1967-1975, the plaintiff was occupationally exposed to asbestos while preparing asbestos sheets for delivery to customers and working in the vicinity of colleagues sawing these sheets. In 1999, he became unwell and was subsequently diagnosed with malignant mesothelioma. Mr. Humber was represented by a solicitor from the London law firm of Field Fisher Waterhouse; the firm's Asbestos Newsletter can be viewed on the website located at: www.ffwlaw.com The Spring 2001 issue lists successful actions against defendants such as: Elders & Fyffes Ltd., Hessle Foam Products Co. Ltd., Smith & Partners Ltd. (formerly Smith Insulations Ltd.), Cape Darlington Ltd., Expandite Contract Services Ltd., Turmag (Great Britain) Ltd. (formerly Mitchell Brothers, Sons & Co. Ltd.), Watkin Heating Co. Ltd., Barrett & Wright (London) Ltd., Cape Building Products Ltd. and the British Waterways Board (formerly the British Transport Commission). Of particular interest is the settlement achieved in the John Johnson case. Although a post mortem examination established the presence of pleural plaques, no evidence of asbestosis was found in Mr. Johnson's lungs. In addition, the deceased had smoked 20 cigarettes daily over a period of thirty-five years. Citing the Helsinki report (1997) which held that "asbestosis was not a necessary condition for the causation of lung cancer by asbestos" and presenting expert evidence from Dr Robin Rudd and Professor Douglas Henderson encouraged the defendant's insurers to make an offer equivalent to two thirds of the agreed value of the claim.
Following the path trodden one month previously by Mr. Justice Curtis, His Honour Judge Mackay cited the Fairchild reasoning in his March 27th judgment in the case of Doreen Fox v Spousal (Midlands) Ltd. Mrs. Fox's husband died in 1996 from mesothelioma. The deceased had worked as a pipe lagger for the defendants from 1953-1955; from 1955-1989 he worked in Liverpool Docks as a stevedore/holdsman. Judge Mackay concluded: "the claimant cannot prove that these (Spousal) particular defendants… were the relevant employers at the time when this disease was started. I reject the claimant's assertion in this particular case that that proof is apparent or can be established in the manner which the claimant puts forward, or indeed, can be established in the manner which was put before Mr. Justice Curtis in the case which he heard, Fairchild-v-Leeds City Council." Permission to appeal has been granted and the Fox case will be included amongst several to be heard in the Fairchild appeal on November 12, 2001.
What is believed to be the first English award for psychological stress caused by the fear of contracting an asbestos-related disease was agreed in April, 2001. Although the plaintiff, Ronald Lyons, does not have any physical symptoms of an asbestos-related lung condition yet, his exposure to asbestos during fifteen years at the Southampton dockyards has made him all too aware of the possible repercussions. The claim was for severe depression caused by "paranoia" and fear that he would suffer the same fate as many others who unloaded bags of asbestos from ships' holds during the 1950s and 1960s. Mr Lyons has witnessed relatives and friends succumb to asbestos-related diseases over the years: "It is like someone holding a loaded gun to your head and saying they are going to pull the trigger but they won't tell you when. It's like a time bomb inside me." The case Mr. Lyons brought against his former employers, Union Castle (now the Stuntbrand Mail Steam Ship Co.) and Associated British Ports, was settled out of court for a sum which the plaintiff has classed as "pitiful." While disappointed by the amount, it was the principle that mattered: "it is not about the compensation. If they had given me £600,000 it would not solve my problems. I have to go on suffering every day. Nothing can change that."
In June, 2001 the sum of £240,000 was awarded for the mesothelioma death of Robert Kirk, a heating engineer with fifteen years employment in the central heating and engineering industry. According to solicitor Louise Morgan, thirty-nine year old Mr. Kirk, who died in 1997, was: "the youngest victim of this terrible disease that we know of." The case against Hallamshire Heating Company Ltd., the Sheffield-based company which employed Mr. Kirk as a trainee heating engineer from 1974-1980, was complicated by the defendant's liquidation. The company's insurers were traced after legal action had been taken against former company directors. The defence solicitors initially denied the "alleged" exposure, contested the income dependency claim, mounted a limitation defence and pleaded the Fairchild point because of subsequent occupational exposure.
While civilian workers are permitted to sue the Ministry of Defence (MOD) for asbestos-related damages, former service personnel are not. The resulting inequality of treatment constitutes a blatant injustice which has been overlooked by successive governments. A 1996 campaign for changes in Section 10 of the Crown Proceedings Act 1947 petered out long ago. Although the act was repealed in 1987, Section 10 still applies. Solicitor Adrian Budgen explains: "Section 10 still bars former members of the Armed Forces from claiming Common Law damages in respect of asbestos injuries as the date of exposure will inevitably have been before May 1987." There has been talk of bringing cases before the European Court but nothing tangible has happened to improve the plight of military personnel with asbestos-related diseases. These claimants remain at the mercy of a system incorporating piecemeal payments from the DSS War Pensions Agency, the Armed Forces Pension Scheme, the Criminal Injuries Compensation Scheme, the Criminal Injuries Compensation (Overseas) Scheme and the MOD (only if employer's negligence can be proved). An MOD consultation document currently being circulated looks likely to prolong this injustice. The Joint Compensation Review aims to update an under-resourced and confused scheme "with modern, fair and simpler arrangements; to ensure that appropriate benefits are targeted at those most disabled; and to reduce the number of claims for compensation that have to be settled in court." The objectives are laudable: "we suggest that the structure of the new compensation package should be not too far out of line with awards available in civil negligence claims… (we seek) consistency with practice in civil litigation cases and insurance benefits, so that fairness and transparency of awards can be validated." The problem is located in section 6.12: "the date of the exposure or incident in service, rather than the date of the claim arising from the exposure or incident… would determine whether a case was considered under the old scheme or the new." As the overwhelming majority of asbestos-related MOD claims stem from before the cut-off date, these victims will continue to be disadvantaged.
UK historians researching issues of occupational health have found that for one hundred years those responsible for protecting working people and the public from exposure to dangerous substances and practices have repeatedly failed to do their job. Under The Health and Safety at Work Act 1974, the Health and Safety Commission (HSC) and the Health and Safety Executive (HSE) share the workload. Public expectations that after eighteen years of Tory rule the 1997 change in government would signal a new vigour and enthusiasm at these agencies have not been fulfilled. While a rash of new laws, guidance notes, prosecutions and higher penalties have signalled a more focused approach to asbestos-related matters, the civil servants remain constrained by an institutionalised naivety and overwhelming lack of imagination. Last year, we reported on one glaring example of HSE schizophrenia (newsletter issue 38); today we report on another.
Data published in 1995, revealed that: "asbestos exposure at work in construction and building maintenance will account for a large proportion of these (mesothelioma) deaths, and it is important that such workers should be aware of the risks and take appropriate precautions." Millions of tons of asbestos hidden within the British infrastructure continues to endanger thousands of lives; carpenters, electricians, plumbers, gas fitters, plasterers, construction workers, painters, decorators and handymen are frequently exposed to unidentified asbestos-containing products in office buildings, factories, schools, universities, leisure centers, domestic dwellings, department stores, railways and airports throughout the country. It has been estimated that there is asbestos in 850,000 commercial properties, 400,000 flats and most houses built in the UK prior to 1985. On Workers' Memorial Day (April 28), Bill Callaghan, the Chair of the HSC, told a Trades Union Congress (TUC) rally: "Tackling the problem of asbestos is a huge undertaking, but the HSC regards it as one of its highest priorities. Asbestos killed 50,000 people in the 30 years to 1998, and the toll will continue to rise, because illnesses resulting from work with the material can take up to 60 years to manifest themselves." He added: "The support of all health and safety stakeholders will be needed if Britain is to rid itself of the terrible waste of asbestos-related disease." The work of one stakeholder has been publicly discounted by an HSE official as "unviable". In an article headlined: "HSE Says No To Endorsing Asbestos Register," which appeared in the Contract Journal, (June 20, 2001), an HSE spokesperson says: "We will never endorse a commercial venture, whatever the intention… At present we are amending the way we tackle asbestos. In no way can AsbestosRegister.com see this as the first rung on the ladder as there is no ladder for the company to step onto." The HSE has been wrong before and it is wrong now. This time it's blinkered approach could prolong an epidemic which has already claimed thousands of lives. AsbestosRegister.com is a not-for-profit enterprise which has devised the first web-based national asbestos register. The implementation of this scheme could enable building owners, property developers, surveyors, planners, builders and others to instantly identify asbestos materials contained in a specific building by use of a PC or WAP mobile phone. TUC General Secretary John Monks acknowledged the problem: "With so little known about the asbestos history of individual buildings, every time a builder begins work on a renovation or conversion, or a firefighter enters a burning building, they are putting their lives at risk… Future (asbestos) deaths are avoidable, but only with good solid, reliable information regarding the whereabouts of the fatal fibres. This new database could be just what we need to save any more workers from dying needlessly." According to Ross Udall, the CEO of AsbestosRegister.com: "The obstructive behaviour of the HSE is not based on any rational analysis of our system nor on an understanding of the benefits that the national database would provide. For reasons known only to themselves, the HSE has adopted a not-invented here attitude to a project which has received support and encouragement from other government agencies, trade unions, NGOs and the property sector." Innovation, hard work and modern technology have resulted in an effective solution to an endemic problem. AsbestosRegister.com and the public have the right to know why the HSE, which has no competing system of its own nor plans to construct one, has so categorically dismissed a technology with so much promise.
Compiled by Laurie Kazan-Allen