Issue 48 February 2010 - Current Awareness: Reparation & Constitutional Law
REPARATION AND CONSTITUTIONAL LAW - A xa General Insurance Limited [2010] CSOH 2
The petitioners sought judicial review of the Damages (Asbestos-related Conditions) (Scotland) Act 2009 ("the Act"). Both prospectively and retrospectively, the Act makes pleural plaques and certain other asbestos-related conditions actionable for the purposes of claims of damages for personal injuries. According to the petitioners, this unfairly burdens them with additional liabilities under indemnity insurance policies to the extent of hundreds of millions of pounds. In that connection, they sought declarator and reductive orders from the court. The respondents, who were the Scottish Ministers, as represented by the Lord Advocate, and a number of individuals with diagnosed pleural plaques who seek, or might seek compensation under the Act, resisted this. Those with pleural plaques may or may not go on to develop life threatening conditions.
Under art. 6, the petitioners referred to a series of Strasbourg decisions that seemed to state that a violation of art.6 might arise where a State interfered, by means of legislation, with the judicial determination of a current dispute. The petitioners argued that the Act could have the effect of conferring additional rights on claimants in disputes that existed at the time the Act was passed, thus violating art.6. They placed particular weight on Zielinski v France (2001) 31 EHRR19 and argued the Scottish Parliament has, in effect, nullified the decision in Rothwell v Chemical and Insulating Co Limited [2008] 1 A.C. 281 in which the House of Lords held that pleural plaques could not be compensated because there was no damage or loss from this condition, by passing the Act
In relation to art.l of the First Protocol, the petitioners argued that their "possessions" had been unlawfully interfered with in two respects. The first was that the Rothwell case was an asset of enormous commercial value and importance to the insurance industry. They had fought for, and finally won, a complete immunity from claims based on asymptomatic and non-disabling pleural plaques. Even on the Scottish Government's estimates, the overall value of such claims - if allowed to proceed - would run into a nine-figure sum, whereas the insurance industry feared liabilities measured in the billions. Thus, if a reasonably based claim carrying a legitimate expectation of success could qualify as an asset, and thus as a "possession", there was no reason why an established immunity from claims should not also qualify.
Secondly, even if the immunity conferred by Rothwell did not qualify as a "possession" then the petitioners' capital resources must surely do so. Not only would the Act deprive the petitioners of such resources in the longer term, as pleural plaques awards became payable, but its immediate effect would be to sterilise massive reserves which, under regulatory rules, the petitioners and other insurers were required to maintain against future liabilities. As the sums involved are so substantial and the causal relationship so obvious, it would be extraordinary if the article had no application in this case.
Held: petition dismissed.
(1) In relation to the claim under art.6 the court noted that in A v Scottish Ministers [2002] 3 WL.R, 360, the applicants had been the subject of criminal proceedings during which each was found to be suffering from some form of mental disorder warranting detention in hospital. Relying on ill-considered legislation, two of them petitioned the sheriff for release on the grounds that they were no longer treatable. While the first of these petitions was already pending - but had not yet been determined - the Scottish Parliament legislated to introduce public safety as a further ground on which continued detention might be justified. The applicants sought review of this new legislation, contending that it unwarrantably interfered with the judicial determination of their applications to the sheriff. When the case came before the Privy Council, reliance was placed on art5 of the Convention (right to liberty) and on Zielinski. In that latter context, holding that the new legislation was justified by, "compelling grounds of the general interest", Lord Clyde (at para.73) said: "The legislation was aimed not just at the two appellants, but at all those who, like them, had committed crimes of the most serious kind ... and had a history of mental disorder which might be held to be untreatable...The risk [to public safety on their discharge] was an imminent one and if a remedy was to be provided it was necessary to provide it speedily...Given the importance of the objective it does not seem to me unreasonable or disproportionate for the Parliament to have so designed the solution as to make it applicable to those who had not yet obtained a ruling from the sheriff even if they had already applied for one". Drawing on the court's view, it was not unreasonable or disproportionate for the Parliament to have so designed the Act as to make it applicable to those whose claims had not yet been determined, even if an action had already been raised. The court was persuaded that there were compelling reasons of general interest which meant that the Parliament was entitled to make legislative choices to favour persons thought to require compensation for pleural plaques.
(2) In relation to art.l of the Protocol No.l, on the initial question of whether the petitioners can lay claim to "possessions", it was obvious that their substantial capital resources must necessarily qualify. However, the same could not be said of the Rothwell decision. No doubt the insurance industry perceive that decision as a hard-won victory with real economic value, but at the same time it was a decision reached - with some indication of regret - under English law and on agreed evidence that might not be replicated in future cases. It did not rule out the possibility of successful recovery on contractual grounds and, in any event, two out of three asbestos-related conditions covered by the Act were not directly considered in Rothwell.
(3) In these circumstances, the petitioners were not in a strong position to claim more than a potential freedom from further claims in a Scottish context, bearing in mind that claimants may now be expected to go to some lengths to have their own case distinguished from Rothwell. On different factual or expert evidence, or on different legal grounds, a Scottish court might reach a different conclusion on the actionability of pleural plaques and, of course, Rothwell leaves all courts free to reach their own view on conditions to which the test cases were not directed. No vested or permanent immunity from pleural plaques claims can be said to exist, nor can the petitioners even assert a legitimate expectation in that area, due to the Parliament's swift reaction to the Rothwell decision in late 2007.
(5) In any event, immunity from claims is not sufficient to bring art.l of Protocol No.l into consideration. It is not a property right. Even as an interest that has economic value, it is not proprietary in nature.
(6) Even if the capital resources could be regarded as possessions, the facilitation of pleural plaques claims should not be held to constitute a relevant interference with the petitioners' capital resources. These consequences are simply too remote from the Act to qualify. It is not the Act that would cause such claims to succeed but proof of all the legal and factual requisites for a monetary award. In any event, such claims would be directed against negligent former employers and not against insurers such as the petitioners. Plainly, the petitioners' resources would only be at risk if relevant contractual insurance arrangements were held to be engaged at some future stage.
(7) Even if the engagement of all past policies were to be assumed in the petitioners' favour, there was still no relevant interference. The Act does not purport to deal with any party's proprietary rights. By removing a medico-legal barrier, it allows affected individuals to assert a delictual cause of action against negligent former employers. It does not, otherwise, affect the outcome of any claim. Defending interests are not mentioned and there is no question of the statute appropriating assets in any form.
(8) Even if there was interference, the Act did pursue a legitimate aim in the general interest and cannot, therefore, be regarded as inflicting a, "disproportionate and excessive burden" on the insurance industry. There is, in other words, a reasonable relationship of proportionality between the means employed and the aims sought to be realised. The judges in the House of Lords in Rothwell had expressed some sympathy for those with pleural plaques but were bound by existing law. There was nothing intrinsically unreasonable about legislation that seeks to alter or reverse the effects of a judicial ruling at any level. When Parliament came to pass the Bill, MSPs clearly had the speeches in Rothwell very much in mind, and it could be said that they legislated on a fair understanding of the relevant facts and of the existing state of the law. The clear intention, repeatedly declared from November 2007 onwards, was to restore the pre-Rothwell position in Scotland. As the Minister for Community Safety explained in evidence on September 9, 2008 (production 6/27, at p.5): "We are not overturning (the medical) evidence ... We are placing a different interpretation on the evidence. We feel that pleural plaques are not, in themselves, trivial".
(9) Although the petitioners argued that there were massive potential unquantified and unquantifiable liabilities, it could not be said that the Parliament had sought, in any way, to target the insurance industry in any improper way.
(10) For essentially the same reasons, the challenge based on common law irrationality also failed.