International Energy Group Ltd v Zurich Insurance Plc UK

The Claimant is responsible for all the liabilities of a company known as Guernsey Gas Light Company Ltd. It seeks recovery under Employers’ Liability insurance policies issued by Midland Assurance Ltd covering the period 31 December 1982 – 31 December 1988, from the Defendant which has succeeded to the insurance liabilities of Midland. For ease of convenience, I shall refer both to the original parties to the insurances and to the Claimant/Guernsey Gas and to the Defendant/Midland collectively as “the Insured” and “the Insurer” respectively.

Guernsey Gas employed Mr Carré for some 27 years, from 13 November 1961 until 31 December 1988. According to the agreed statement of facts, during the whole period of his employment with the Guernsey Gas, including the 6 year policy period, Mr Carré was exposed to asbestos dust and fibres without adequate protection being provided by his employer, under circumstances that both materially increased the risk of his contracting mesothelioma and constituted breaches of the duty of care owed to him by Guernsey Gas. Mr Carré subsequently contracted and died from mesothelioma.

Mr Carré made a claim for damages in respect of his pain, suffering and loss of amenity, and for the financial losses he incurred in consequence of his illness and impending demise, with a schedule of loss served on his behalf valuing the claim at a figure in excess of £400,000. His claim was settled by the Insured for £250,000 plus costs. When the Insured’s own costs are brought into account, the aggregate outlay was £278,451.60. This is the sum which the Insured now claims from the Insurer.

One other insurer has been found which provided Employers’ Liability cover for a period during Mr Carré’s employment by the Insured, namely Excess Insurance Company Ltd which was on risk for 2 years – for the period 31 December 1978 – 30 December 1980.

In the case of the Insurer, the insuring clause provided:-

The Insurer does not dispute the Insured’s liability to Mr Carré in damages consequent on his contracting mesothelioma, nor the appropriateness or the quantum of the Insured’s settlement of Mr Carré’s claim, nor the reasonableness of the costs incurred.

It is also agreed for the purpose of these proceedings only, that it should be assumed that:-

Mr Carré was exposed to asbestos during the whole period of 13 November 1961 to 31 December 1988 when employed by the Insured and

Mr Carré was exposed to asbestos with the same degree of frequency and intensity throughout the period of his employment during the whole of that period.

The sole issue in dispute is whether the Insured is entitled to indemnity from the Insurer amounting to the entirety of its outlay in respect of Mr Carré’s claim or whether the Insured is entitled only to the proportion of its outlay, corresponding to the proportion which the period for which the Insurer was on risk (the Policy Period) bears to the whole period of Mr Carré’s exposure to asbestos by the Insured.

The Insured’s case is that, as a result of a series of decisions by the House of Lords and the Supreme Court, the Insured was liable to Mr Carré as a result of any period of culpable exposure for which it was responsible which materially increased the risk of his contracting mesothelioma. For the purpose of these proceedings it is agreed that it should be assumed that Mr Carré was exposed to asbestos with the same degree of frequency and intensity throughout the whole period of his employment and it therefore follows that the Insured negligently exposed Mr Carré to asbestos throughout the policy period, namely the six years when the Insurer was on risk. The Insured maintains that it was liable to Mr Carré for the whole of his loss and damage as a result of these three decisions of the highest court in the land, regardless of the fact that there were other periods of culpable exposure outside the Policy Period and whether or not those other periods of exposure were covered by other insurers. It follows, the Insured submits, that any one of the annual policies issued by the Insurer to the Insured must respond to the whole of the liability that has been incurred.

The Insurer submits that this is not the effect of these three decisions and that, although there is only one employer (the Insured), which could be liable to Mr Carré, the basis of liability to him depends upon a series of tortious material exposures to the risk of inhalation of asbestos fibres, some of which occurred within the Policy Period and some of which fell outside it. Each tortious material exposure, and each period of tortious material exposures, does not give rise to successive liabilities for full compensation but gives rise to liability for an aliquot share of compensation, the aliquot share attributable to a given year being the liability that falls to be indemnified under the policy granted by the Insurers for that year. Thus it is said that, because Mr Carré was culpably exposed to asbestos by the Insured over a period of 326 months (just over 27 years) and only seventy two of these months (6 years) were covered by the Insurer, the Insured’s entitlement to an indemnity should be limited to 72/326 or 6/27 which amounts to approximately 22.08 per cent of the full indemnity claimed.

Before making reference to the three major authorities, it should be pointed out that the Insured’s liability to Mr Carré was governed by the law of Guernsey. It is common ground between the parties that the Compensation Act 2006 is inapplicable to Guernsey. The Insurer says that this is a matter of some importance because the effect of the Compensation Act was to reverse the decision of the House of Lords in Barker v Corus UK Ltd [2006] 2 AC 572 and that the position in Guernsey is therefore governed by the decision in Barker without reference to the statute.

I turn then to the trilogy of authorities, namely Fairchild v Glenhaven Funeral Services Ltd [2003] 1 AC 32(HL), Barker (ibid) and Sienkiewicz v Greif (UK) Ltd [2011] 2 AC 229 (SC). Additionally, however, reference has to be made to the decision of Eady J in Phillips v Syndicate 992 Gunner [2004] LRIR 426, a case which was decided after Fairchild but before Barker and Sienkiewicz.

The decision of the House of Lords is founded upon what has become known as “the rock of uncertainty”, namely the impossibility, on current medical science, of ascertaining the particular cause of an individual’s mesothelioma. Exposure to asbestos dust and fibres can give rise not only to asbestosis and other pulmonary diseases but also to the risk of developing a mesothelioma which is a malignant tumour. The statistical risk of developing a mesothelioma increases in proportion to the quantity of asbestos dust and fibres inhaled, and the greater the quantity the dust and fibre inhaled, the greater the risk. The condition however may be caused by a single fibre, or a few fibres, or many fibres. Medical opinion holds none of these possibilities to be more probable than any other and the condition once caused is not aggravated by further exposure. As Lord Bingham put it at paragraph 6 in Fairchild:-

Thus no claimant would be able to prove on the balance of probabilities that any particular employer’s breach of the duty of care caused the disease and loss which he had suffered. The disease was indivisible damage and the victim could not show, in accordance with conventional principles of the law of tort, that any wrongdoing of any particular employer had made a material contribution to the disease and damage sustained.

In Fairchild, any cause of mesothelioma other than the inhalation of asbestos dust at work was discounted (a surprising feature of the case, as later authorities show) and the case concerned a series of employers, all of whom said that liability could not be laid at their door, because it was not possible to tell when the claimant had inhaled the relevant fibres which had led to the mesothelioma. Later authorities had to consider the position of a single employer and the basis of liability of that employer, the position where asbestos fibres had been inhaled when an individual was self-employed in an occupation involving asbestos, as well as the possibility of general environmental exposure, because it was recognised that asbestos dust or fibres could be inhaled in the ordinary environment, without the need for any engagement by the victim in an occupation which involved working in close proximity to asbestos.

At paragraphs 33-35, Lord Bingham decided that, for strong policy reasons, an individual who had been negligently exposed to asbestos fibres by an employer should be able to recover full compensation from an employer, regardless of his inability to show that his disease was caused during his period of employment by that particular employer. He said at paragraph 33 that:-

Liability was imposed by the House of Lords on the basis that an employer had negligently exposed its employee to asbestos dust and to the risk of contracting mesothelioma and this was to be regarded as a sufficient degree of causal connection between the breach of duty and the damage to give rise to tortious liability. It was recognised that this was a relaxation of the ordinary test of causal connection of damage which was required for tort. Lords Nicholls at paragraphs 42-43 and Hoffman at paragraphs 65-67 endorsed Lord Bingham’s approach and held that culpable exposure to asbestos fibres which materially increased the risk that the disease would occur was sufficient to satisfy the causal requirement for liability in tort. Each employer’s wrongful exposure of its employee to asbestos dust and to the risk of contracting mesothelioma would give rise to liability to all consequences of contracting it, their Lordships noting (inter alia) at paragraphs 34 and 117 that the case had been argued on an “all or nothing” basis and that no-one had suggested that the Claimants’ entitlement against any employer should be for any sum less than the full compensation, though there could be rights of contribution pursued by one employer against another.

Following this decision, because, in particular, of the terms in which Lord Hutton and Lord Rodger expressed themselves, there was some debate as to whether the House of Lords had created a new basis for tortious liability in cases of mesothelioma or whether they had merely deemed the ordinary tortious causation test to be met in these cases - a fictional causation.

The decision of the House of Lords in Barker both clarified and refined the position stated in Fairchild. It is plain from the speeches of the majority that the House of Lords is to be taken as creating a new form of special tortious liability in relation to mesothelioma. In various places in their opinions, their Lordships made it plain that Fairchild had not proceeded upon the fiction that a defendant who had created a material risk of mesothelioma was deemed to have caused or materially contributed to the contraction of the disease. Whereas the speeches of Lord Hutton and Lord Roger in Fairchild could be read that way, the other members of the House had made it clear that the creation of the material risk of mesothelioma was sufficient for liability, as the passages to which I have referred earlier in this judgment make clear. The point is made expressly by Lord Hoffman himself in Barker at paragraphs 31-36, by Lord Scott at paragraph 53, by Lord Walker at paragraph 113 and by Baroness Hale at paragraph 126.

The House went on to consider the extent of the liability of an employer who was one of a number of employers, all of whom had negligently exposed the claimant to asbestos in the course of his employment, any one exposure of which might have been causative. Mr Barker had three material exposures to asbestos: the first was for six weeks whilst working for one company; the second was for six months working for Corus; the third was for three short periods in a period of seven years, whilst working as a self-employed plasterer. Unlike Fairchild therefore, not all the exposures which could have caused the disease involved breaches of duty to the claimant or were within the control of a defendant. It was held by the majority that this made no difference to the Fairchild principle of liability in tort but that Corus was not liable for all the damage suffered by Mr Barker’s estate and dependents, but only for its aliquot contribution to the materialised risk that he would contract mesothelioma.

At paragraphs 35-37, Lord Hoffman stated that, if the basis of liability created in Fairchild was, as he held it was, the wrongful creation of risk of causing the disease, the damage which the defendant should be regarded as having caused was the creation of such a risk or chance. If that was correct, then it would not matter that the disease itself was indivisible damage, since chances were infinitely divisible and different people could be separately responsible to a greater or lesser degree for the chance of an event happening. Treating the creation of the risk as the damage caused by the defendants involved having to quantify the likelihood that the damage, which was known to have materialised in fact, was caused by that particular defendant. It would therefore be possible to determine the share of the damage which should be attributable to him. The courts could quantify the chances of X having been the cause of Y as well of the chance of Y being the outcome of X, as was commonly done in loss of a chance cases.

Having so characterised the basis of liability, the attribution of liability according to the relative degree of contribution to the chance of the disease being contracted was considered a logical and fair outcome. At paragraphs 43 and 48, Lord Hoffman stated that a wrongdoer should not be liable for more than the damage which he had caused. When the basis of liability was merely the creation of the risk of harm, if more than one person was responsible, the liability should be divided according to the probability that one or other caused that harm. The damages which would have been awarded against the defendant who had actually caused the disease must be apportioned to the defendants according to their contributions to the risk. It seemed to him that the most practicable method of apportionment would be according to the time of exposure for which each defendant was responsible, but allowance might have to be made for the intensity of exposure and the type of asbestos.

Lord Scott agreed with Lord Hoffman and, at paragraphs 59 and 61-63, set out in his own words, not only the basis of liability as negligently exposing an employee to asbestos dust and materially increasing the risk of contracting mesothelioma but breaking down the liability in terms of periods of exposure.

He said at paragraphs 61-62:-

Lord Walker and Baroness Hale agreed with this approach both as a matter of logic, because a material contribution to the risk of harm could be divided, and as a matter of fairness, in circumstances where an employer was being made liable for harm which he might not in fact have caused - see specifically Lord Hoffman at paragraphs 35, 36, 40, 43 and 48, Lord Scott at paragraph 62, Lord Walker at paragraph 109 and 113, and Baroness Hale at paragraph 128. The majority of the House held that if the tortious exposers were only liable in proportion to their own contribution to the claimant’s overall exposure to the risk of harm, no problems arose, whether other exposure to asbestos dust was tortious, non tortious, by natural causes or by the employee himself. That point is made expressly by Lord Hoffman at paragraph 17 and Lord Scott at paragraph 59.

It can be seen therefore that the essence of the liability of any particular employer is not the negligent causing of harm, but the negligent exposure of an employee to the risk of harm from asbestos fibres or dust which amount to a material increase in the risk. The liability is in respect of the degree of risk for which the defendant is responsible. This has to be assessed on the basis of the relative duration of the exposure and the relative intensity of it compared with all other periods of exposure and intensity. It will be recalled that in the present case there is agreement as to the uniformity and consistency of exposure throughout the whole period of Mr Carré’s employment by his one relevant employer, the Insured.

The terms of the Act, so far as relevant, are as follows:-

This section applies where –

the victim has contracted mesothelioma as a result of exposure to asbestos,

the responsible person is liable in tort, by virtue of the exposure mentioned in paragraph (a), in connection with damage caused to the victim by the disease (whether by reason of having materially increased a risk or for any other reason).

The responsible person shall be liable –

Other than by the responsible person, whether or not in circumstances in which another person has liability in tort, or

By the responsible person in circumstances in which he has no liability in tort), and

Jointly and severally with any other responsible person.

The effect of this Act was to reverse the effect of the decision of the House of Lords in Barker in those jurisdictions to which it applied. Whereas Barker established that, at Common Law, each tortious exposure which gave rise to a material increase in the risk of contracting mesothelioma generated a several liability for a proportion of full compensation, section 3 of the Act of 2006 provides that a tortfeasor who commits the Fairchild/Barker tort (defined as a “responsible person”) is to be liable to make full compensation to the Claimant and is to be jointly and severally liable with any other responsible person. There is then room for the responsible person claiming a contribution from any other responsible persons in the same way as other joint tortfeasors can.

The Act does not alter the Common Law in any respect other than the measure / quantum of damage. This is plain from the terms of the Act itself which does not purport to change the basis of tortious liability as established by the House of Lords. Section 3 is to apply in the circumstances set out in subsection (1) which include at (d) the necessity for the responsible person to be liable in tort by virtue of negligently exposing a victim to asbestos, whether that tortious liability arises “by reason of having materially increased a risk, or for any other reason.” The section therefore refers to imposition of liability as per Fairchild/Barker but also to the possibility of liability on some other basis- presumably a reference to the conventional route to liability, should medical science ever overcome “the rock of uncertainty”. The Fairchild/ Barker basis of liability for mesothelioma remains, as long as the “rock of uncertainty” exists, the negligent subjection of the victim to a period of exposure to asbestos, thereby, in that period subjecting the victim to a material increase in the risk that he or she will contract a mesothelioma. Liability still depends upon negligent exposure with material increase of risk and the extent of that liability depends on the relative degree of such exposure and the extent of the increase in risk. When assessing the statistical likelihood of harm and the extent of the increase in risk, this can only be measured in terms of time and intensity of exposure.

Unlike the two House of Lords cases to which I have already referred, the Supreme Court, in Sienkiewicz, was faced with two cases of a single defendant who was guilty of culpable exposure. In each case there was limited exposure to asbestos dust by the defendant (in one case an employer and in the other a local authority responsible for a school), and exposure to a low level of asbestos in the general atmosphere. It could not be shown on the balance of probabilities whether the source of exposure to asbestos which had initiated the process leading to mesothelioma was the responsibility of the defendant in question or the result of inhalation in the general atmosphere. In such “single exposure” cases, the question was whether the Fairchild/Barker basis of liability applied.

The Supreme Court held that it did because “the rock of uncertainty” applied just as much in this case as in the multiple employer/multiple exposures cases. Because the victim was unable to prove on the balance of probabilities the source of exposure to asbestos which had initiated the process which led to mesothelioma, if a claimant could show that one defendant had tortiously exposed him to asbestos and thereby materially increased the risk of contracting mesothelioma, that defendant would be liable. Moreover, the basis of liability for mesothelioma remained a question of Common Law, unaffected by section 3 of the Compensation Act 2006. That section did not provide that “the responsible person” would be liable in tort if he had materially increased the risk of a victim contracting mesothelioma. It provided that where “the responsible person” was liable in tort for a victim contracting mesothelioma, as a result of negligently exposing that person to asbestos, “whether by reason of having materially increased a risk or for any other reason”, that person was to be liable in respect of the whole of the damage caused to the victim by the disease and to be liable jointly and severally with any other responsible person. In other words, the Act did not create a statutory liability but set out the consequences which flowed if a liability had been established, whether in accordance with the Fairchild/Barker basis of tort, or a conventional basis.

Lord Phillips, at paragraph 47 onwards, referred to the leading speech of Lord Hoffmann in Barker as interpreting the Fairchild principle as one that rendered a defendant liable for contributing to risk, not contributing to injury. The risk created was itself the damage for the purpose of establishing liability, albeit that the principle only applied where injury had been caused. As risk or chance was infinitely divisible, each defendant could be held liable only for his contribution to the risk, as he put it. The result of the decision in Barker was that, where not all those responsible for a victim’s mesothelioma were before the court, only a proportion of the full damages would be recoverable. The principle also dealt with the problem of contributory negligence. Although the impact of Barker on the consequences of imposition of liability had been reversed by the 2006 Act, the basis of liability remained untouched -see paragraphs 47, 48, 56 and 70.

Lord Rodger made it plain at paragraph 131 that section 3 of the Compensation Act was not concerned with prescribing the basis for defendants being held responsible for a claimant’s mesothelioma. Its purpose was to reverse the decision in Barker so that, where a defendant was held liable in a mesothelioma case, he was to be liable for the whole of the damage caused on a joint and several basis with any one else responsible. The reference in section 3 to the defendant being held liable “by reason of having materially increased the risk, was designed to show that the statutory rule as to consequences of liability applied to cases where liability was based on the Fairchild/Barker principle, whilst recognising, by the words “or for any other reason” that a defendant might be held liable on some other basis. In either case the defendant was to be liable for the whole of the damage on a joint and several basis with other responsible persons. With this Lord Brown expressly agreed at paragraphs 181, 183 and 185, whilst each of the other Justices agreed with Lord Phillips and Lord Rodger that the basis of liability set out in Fairchild/Barker remained unchanged. Baroness Hale at paragraphs 168 and 173, Lord Mance at paragraph 188, Lord Kerr at paragraphs 199- 203 and Lord Dyson at paragraphs 212, 220 and 223, agreed with Lord Phillips and Lord Rodger in their analysis of the perpetuation of the Fairchild/Barker basis of tortious liability for mesothelioma.

In Williams v University of Birmingham [2011] EWCA Civ 1242 (CA), Aikens LJ, with whom both the other Lords Justices agreed, set out the legal approach to be adopted following the three decisions to which I have just referred. At paragraph 30, he referred to Sienkiewicz and the holding by the Supreme Court that the basis of liability for mesothelioma remained a question to be decided according to the Common Law, since section 3 of the 2006 Act only dealt with the position once liability had been found. At paragraph 31 he set out the four elements that had to be established on the balance of probabilities as a result of the trilogy of decisions. The breach of the duty of care was to be shown by the claimant establishing that the defendant had negligently exposed the victim to asbestos fibres and consequent asbestos related injury that was the reasonably foreseeable result of the negligence. The causation element required that it be shown that the defendant’s negligent breach of duty caused a material increase in the risk that the victim would develop mesothelioma. The causation element applicable to ordinary tort claims was thus modified to deal with “the rock of uncertainty”.

The effect of these decisions is, to my mind, clear. The basis upon which any defendant is to be found liable in mesothelioma cases is negligent exposure to risk and the extent of the liability depends upon the extent of relative exposure to that risk, as compared with competing exposures to it. If there is no variation in intensity of exposure, the only measure of that exposure is by reference to duration – to the periods of time over which there was negligent exposure, as compared with the periods of time when there was exposure from other sources, whether attributable to tortious exposure by other persons, non-tortious exposure, exposure whilst self-employed or exposure from the ambient atmosphere.

The Insured however relied upon the decision of Eady J in the first instance case of Phillips v Syndicate 992 Gunner [2004] LRIR 426. As I have already pointed out, this decision post-dated Fairchild but pre-dated Barker, Sienkiewicz and Williams. In that case Mr Phillips had been employed by a single employer between 1955 and 1957 and then between 1959 and 1970, during which periods he was exposed to asbestos dust. Out of the 13 years of this exposure, the insurers were on risk for 9 years between 1959 and 1968. A judgment against the employers was entered by consent and the insurers maintained, as has the Insurer in the present case, that they were only liable for the fraction of the total damages that the period of cover bore to the total period of employment and negligent exposure. The insurers in that case relied upon a rateable proportion clause and/or an implied term in the contract by reason of custom and practice or business efficacy. These arguments were rejected by the Judge, as was inevitable in the light of Fairchild, which imposed liability on the employer, in any one period of exposure, for the total loss suffered. It was implicit in the Judge’s decision that, following Fairchild, each material exposure within the total period of exposure was sufficient to give rise to liability on the part of the employer to the victim for 100% of the damages sustained. There can be no doubt as to the correctness of the Judge’s conclusion on the basis of Fairchild, although at paragraphs 18, 20 and 31, he appears to have considered that the effect of the House of Lords decision in Fairchild was to equate the negligent exposure to the risk of mesothelioma with the making of a material contribution to the contracting of it many years later.

Where the insurers, in that case, sought to equate the successive years’ policies issued by them with “double insurance”, the Judge held at paragraph 30 that the annual policies did not relate to “the same liability”. Of course, as there was only one insurer involved and the Fairchild basis of liability applied, this insurer was liable, on each policy year, for the total damage suffered, because that was exactly what Fairchild had established. To my mind it was the same liability, but as there was only one insurer, double insurance did not come into play.

The Insured’s submission however fails to recognise that the Fairchild principle was modified and refined in Barker, in the manner that I have outlined above. The Insured’s liability in any policy year is for the aliquot share of responsibility that culpable exposure in that year bears to the total exposure of the victim to asbestos, subject only to any variation in intensity, which it is agreed, does not arise in the present case.

Whereas, under Fairchild principles and those which prevail following the Compensation Act in the jurisdictions affected by that statute, the Insured’s claim would be unanswerable, the position for this Insured and Insurer is different by virtue of Barker and the fact that the Compensation Act does not apply. It is, in my judgment, clear that the basis of Common Law liability prevails, in accordance with the principles enunciated in Barker, with the result that the liability of any defendant for mesothelioma is assessed by reference to the responsibility he bears for exposure, as compared with the responsibility for other exposures to asbestos and the risk of contracting mesothelioma. The Insured here accepts, ex hypothesi, that exposure over any period of one year is quite sufficient to give rise to a material increase in the risk of contracting mesothelioma and, given the agreed facts as to the uniformity and consistency of the intensity of exposure over the whole of the period of the Insured’s employment, the only measure of assessing responsibility for exposure is by reference to periods of time during which such exposure occurred. It cannot matter for this purpose, when assessing the Insured’s liability for any one year of exposure, conforming to the annual period of the insurance cover granted by the Insurer, that there is only one employer here involved. The special Common Law basis of liability for mesothelioma, as found in Fairchild/Barker, was applied to a one employer situation in Sienkiewicz as endorsed in Williams, although by that time the quantum of damage was governed by the Compensation Act. If the principles of the Common Law, as set out in these authorities, are applied to Guernsey, as they must be since the 2006 statute does not apply there, the liability of the insured to Mr Carré incurred in any one policy year is an aliquot share of the total damages suffered by reference to the relevant time of exposure during the policy year, as compared with the total exposure during the period of employment.

The result of this is that, in cases where the Compensation Act does not apply and the employer is insolvent, the victim’s recovery from the insurance company under the Third Parties (Rights against Insurers) Act of 1930 will be limited to an aliquot share. In the present case, this does not arise, since both Insurer and Insured are solvent and the victim has already been paid by the Insured. From a victim’s perspective the result is unfortunate, if there is an insolvent tortfeasor and it was for policy reasons relating to this that the Compensation Act was passed. Without it, however, the Common Law position as expressed in Barker must prevail.

The Insurer submitted, in the alternative, that if it was wrong in its primary submission and that it was prima facie liable under the principles of Fairchild and/or at Common Law and/or by statute and/or by some other mechanism, it would be entitled, as a matter of equity to a contribution from the Insured in respect of the periods in which Mr Carré had been exposed to asbestos which were not the subject of insurance with the Insurer, whether or not insured with Excess or “self-insured”. It was accepted that, as a matter of equity, there could be no offset of this contribution if the Insured was insolvent, as against a victim suing under the 1930 Act but in circumstances of solvency, it was said that justice required there to be contributions akin to the contributions which arise in circumstances of double insurance.

The Insurer developed elaborate arguments in support of this submission which I am unable to accept. The analogy with double insurance breaks down for at least two reasons. First, double insurance operates where there is more than one insurer insuring the same risk and this gives rise only to a right of contribution between them, where one insurer has paid out the totality of the loss. The liability of the insurer to the insured is unaffected and the rights of contribution only arise once the insured has been paid. Secondly, there is no concept known to English law as “self-insurance”, as such. Whilst entities may decide not to take up insurance, their entitlement to recover from insurers depends simply upon the terms of the insurance contracts in question and not upon any decision they might take about not taking out cover for other periods of time. On ordinary principles of insurance law, it would not be possible to construct a basis for an insurer obtaining a contribution from an insured in respect of a liability that the insurer was bound to pay under the terms of the insurance contract between them.

The reality of the matter is that, if the pure Fairchild basis of liability applied, whether by virtue of the Compensation Act or otherwise, without reference to Barker, the Insurer would be liable for the totality of the damages suffered by Mr Carré because, in any policy year, the Insured’s liability would be for the totality of that damage. If liability devolved upon the Insured in any one year for the totality of Mr Carré’s damages, that is a liability for which the Insured is entitled to indemnity from the Insurer in respect of that policy period, though the Insurer would have a right of contribution from Excess.

I intend no discourtesy in summarily dismissing the Insurer’s alternative submissions but it appears to me that, if the Insurer cannot succeed on the basis of the Common Law principles enunciated in Barker, there is no room for the operation of any equitable principles that could counteract or mitigate the effects of the application of ordinary insurance contract law principles.

The Insurer offered to contribute to the Insured’s loss on the “time on risk” basis and the issue between the parties has been, throughout this litigation, whether or not that offer would amount to a proper indemnity under the Policy. As I have held that this does represent the full extent of the Insurer’s liability, the Insured’s claim must fail and, subject to any particular considerations of which I am currently unaware, costs will generally follow the event.

The parties can however address me on the order to be made and upon the issue of costs on the handing down of this judgment, if such matters are incapable of agreement between the parties.