Dear Colleagues;

Thanks to James Lee for the heads-up on the Zurich case, [2015] UKSC 33, https://www.supremecourt.uk/cases/docs/uksc-2013-0057-judgment.pdf, another in the saga of mesothelioma claims following Fairchild. Not being an insurance lawyer I found most of it made my brain hurt, but I thought it was worth comment on one aspect.

Almost every member of the Court, in fact I think all of them, do their best to make a decision on the common law as it relates to asbestos victims, exposed over a long period time, and the complexities created by different employers, different insurance companies, some of both being either solvent or insolvent, employers being insured or uninsured- while regretting that most of the difficulties are created because of the initial decision in Fairchild to create special rules of causation for what were seen to be hard cases. Fairchild has not been accepted as good law in Australia by our High Court yet, and if ever there were a series of good reasons for the HCA to say, “no thanks”, they are seen here. The judges here refer to the fact that there is now a “Fairchild enclave”, within which, once the usual rules of causation have been abandoned, new rules have to be crafted, which connect with other rules relating to apportionment between joint tortfeasors, insurance law, and principles of contribution at common law and equity.

Some quotes: Lord Mance (for the majority here)- [39] “it has proven difficult to work through the implications of the special rule in Fairchild”;  later when developing the law of contribution and responding to an argument that the solution he prefers is not consistent with previous cases, at [66]: “if the common law always depended on precedent, Fairchild [and arguably McGhee] should never have been decided as it was”.

Lord Hodge at [98] “the courts continue to grapple with the consequences of departing from the “but for” test of causation”; [102] “But we are where we are. The law has tampered with the “but for” test of causation at its peril”; [111] it could be argued that “having dug a hole, the courts should not keep on digging”.

Lord Sumption (in the minority) [187]: “The whole recoupment analysis is in my opinion a classic example of the problems associated with the adoption of special rules within the Fairchild enclave which differ from those that would follow from the application of the ordinary principles of law”.

Finally, from the joint judgment of Lord Neuberger and Lord Reed:

[191] as subsequent decisions have shown, the effect of what was a well-intentioned, and may seem a relatively small, departure from a basic common law principle by a court, however understandable, can lead to increasingly difficult legal problems – a sort of juridical version of chaos theory. ..

[210]. When the issue is potentially wide-ranging with significant and unforeseeable (especially known unknown) implications, judges may be well advised to conclude that the legislature should be better able than the courts to deal with the matter in a comprehensive and coherent way. It can fairly be said that the problem for the courts in taking such a course is that the judges cannot be sure whether Parliament will act to remedy what the courts may regard as an injustice. The answer to that may be for the courts to make it clear that they are giving Parliament the opportunity to legislate, and, if it does not do so, the courts may then reconsider their reluctance to develop the common law. For the courts to develop the law on a case-by-case basis, pragmatically but without any clear basis in principle, as each decision leads to a new set of problems requiring resolution at the highest level, as has happened in relation to mesothelioma claims, is not satisfactory either in terms of legal certainty or in terms of public time and money. 

211. In the case of mesothelioma claims, there can be no real doubt but if Fairchild had been decided the other way, in accordance with normal common law principles, Parliament would have intervened very promptly. That may very well have been a better solution, but it can fairly be said that that observation is made with the wisdom of hindsight. 

neil foster