Kevin Johnson John Pickering and Partners November 2005

John Pickering and Partners specialise in claims for asbestos disease sufferers. We have been acting for asbestos sufferers for over 25 years. We have been involved in most of the landmark asbestos judgments including Fairchild (1) , Margereson (2) and the claims against Cape Plc by South African citizens (3). We only act for asbestos sufferers, not for the employers who caused the disease or the insurers who insured them. We represent asbestos sufferers referred to us from a variety of different sources including asbestos victim support groups.

My own personal experience is that based in Liverpool, many of my clients have been exposed to asbestos through work in the maritime industry. Many individuals who worked at various Merseyside based shipbuilding and ship repair companies have contracted asbestos disease. Many such companies frequently feature in compensation claims. A variety of different tradesmen and occupations can be affected. Laggers, fitters and others working generally in or around engine and boiler rooms of vessels have contracted asbestos diseases. Other workers may have had bystander exposure to asbestos when working on ships, such as painters, carpet fitters, etc. Even office workers of ship repair companies have been affected.

We also act for individuals exposed when asbestos fibre was unloaded from ships. I have been involved in claims concerning the ports of Liverpool, London, Southampton and Avonmouth. I have acted for a variety of individuals such as dockyard cleaners, dockers and senior management, such as cargo superintendents.

We also act for Merchant Navy seamen. Often such individuals were engineers, boiler operators, etc involved in working in engine or boiler rooms. However, I have represented other individuals including catering staff such as stewards who have been exposed to asbestos when repairs were carried out onboard ships that they worked on at sea and in port.

Claims against ship owners by Merchant Navy seamen can be difficult. The first problem is that employment often took place many years ago and individuals may have worked on lots of different ships, often for different shipping lines. Understandably, through the passage of time, it can be difficult for people to remember the dates of their voyages, the names of ships and the shipping lines they worked for. This is why seamen's discharge papers can be extremely important. Many former seamen take a great pride in these documents and keep them safe. These records can be important in identifying voyages and ship owners and helping with a civil claim. Without discharge papers, such claims are certainly not impossible, but the claim is made easier if the documents have been kept.

There are general issues in asbestos disease claims that still apply to claims by Merchant Navy seamen. Liability has to be established by the Claimant. It is also necessary to prove that damage has been caused by asbestos exposure. It is necessary to get the medical records and eventually a medical report to establish the diagnosis. In all cases, liability has to be proven by the Claimant.

However, claims against ship owners can give rise to arguments from Defendants about liability. Generally, many claims for asbestos disease are indefensible because the conditions were often so bad that the risk of some sort of asbestos disease was or ought to have been obvious to the employers. However, ship owners and those acting for them i.e. their insurers and solicitors, often argue that the date of knowledge of the hazards of asbestos are different for ship owners compared to land based employers. Ship owners argue that because they only transported asbestos as cargo, different considerations apply.

They even argue that their date of knowledge that asbestos was dangerous was not until 1977 when the government issued a hazardous cargo warning (known as an M Notice) to ship owners. I believe this to be a very contentious argument because 1977 is well after the generally accepted date of knowledge for mesothelioma. Medical articles were written in the late 1950's about a tumour of the lining of the lungs called mesothelioma and newspaper articles appeared in 1965 confirming that mesothelioma could be caused by brief exposure to asbestos. A reasonably well-informed member of the public in the mid 1960's would have appreciated that asbestos exposure, even in small quantities, may cause this fatal condition. However, asbestos exposure in claims against ship owners is often very substantial, particularly when dockers unloaded asbestos and sacks became ripped and torn and the fibre leaked. Claims for Merchant Navy seamen might involve working onboard ships either at sea or in port when various repairs were carried out. This could involve stripping asbestos lagging from pipework or boilers and laggers mixing up and applying asbestos lagging. These are all operations that gave rise to substantial levels of dust. Despite a Court of Appeal decision against ship owners called Jeromson (4), many ship owners continue to try to avoid liability rather than meeting their obligations.

A further problem in addition to the above difficulties is the issue of actually recovering the damages at the end of the case. A large number of ship owners/shipping lines are no longer trading and are insolvent. This includes a number of well-known names such as Shaw Savill & Albion, Elder Dempster, Clan Line, City Line, etc (5) .

The problem of employers becoming insolvent is not a new one in claims for asbestos diseases. It is something that has posed difficulties for asbestos sufferers for many years. In relation to land-based employers, employer liability insurance became compulsory in 1972 (6). One of the biggest problems in claims against insolvent land based employers is tracing who the insurers previously were. This can be a very difficult exercise and if not successful may mean that claims cannot be pursued, although certain government benefits may be awarded (7).

However, the issue of insurance in relation to ship owners can be more difficult than for other employers. Ship owners' insurance is different to usual employer liability insurance. Ship owners were members of P&I Clubs, basically insurance co-operatives set up by the ship owners to 'protect and indemnify' members. There are a number of differences in the way that P&I Club insurers operate compared to employer liability insurers. One of the rules of P&I Club insurance is the 'pay to be paid' principle or 'pay first' rule. This means that the ship owner has to first pay out any money that they are liable to satisfy before they can recover the sum from the P&I Club insurer. Therefore, in a claim for compensation for somebody with asbestos disease, if the claim is successful, the ship owner first meets the Claimant's damages and legal costs out of their own pocket before then recovering the amount that they have paid out from the P&I Club insurer. The ship owner is therefore indemnified against claims that they may face, but only when they have paid the claim out of their own pocket. The difficulty arises because as I have described above, a large number of ship owners are now insolvent. Given economic trends and due to the increasing number of asbestos claims, it is almost inevitable that the number of ship owners becoming insolvent in the future will continue to increase. In fairness, many of the P&I Club insurers do not try to take advantage of this legal technicality to avoid their responsibilities.

However, a case known as The Fanti & Padre Island (8) is often relied on by some P&I Club insurers or their solicitors when trying to avoid paying because of a breach of the pay to be paid rule. They say that they are entitled to refuse claims because the ship owner, by becoming insolvent, is in breach of the terms of insurance because it is no longer financially able to meet its liabilities. The ship owner cannot pay its liabilities out of its own pocket if it is insolvent. Therefore, P&I Clubs argue that the pay to be paid rule has been broken. In the Fanti/Padre Island case, the House of Lords upheld pay first clauses. However, there are some important issues in relation to that claim. Firstly, it involved cargo owners trying to get damages from an insured ship owner. It did not involve a claim for compensation for personal injury or death, which features in claims by asbestos disease sufferers. Furthermore, barristers acting for the two P&I Club insurers in the House of Lords decision assured the House of Lords that the P&I Club insurers that they were acting for would not try to enforce the pay to be paid rule in claims involving personal injury or death.

Unfortunately, a different P&I Club insurer that was not directly involved in the Fanti/Padre Island case has taken a different view.

I have been involved and continue to be involved in claims on behalf of asbestos sufferers against Clan Line and City Line where this particular P&I Club insurer is refusing to pay damages.

It seems once again that it is the asbestos victims and their families that end up losing out financially. Asbestos sufferers face a double blow. Firstly, they have developed an asbestos disease. Secondly, they may not recover their full compensation. Having acted for a number of Merchant Navy seamen, I know how often they take great pride in their past service for ship owners. They often worked for ship owners for many years, providing decades of service with a single employer. Such individuals simply offered their labour, in return for which they have now contracted asbestos disease through absolutely no fault of their own. They have to bring these claims out of necessity because they face financial hardship due to living with the effects of asbestos disease. The failure by certain P&I Club insurers to meet their liabilities literally adds insult to injury. I call upon the P&I Club insurer concerned to meet its obligations without delay.

Kevin Johnson - Partner