IEG is a solvent Guernsey company, a supplier of gas to the Channel Islands and a subsidiary of a global utilities, transport, energy and timber company quoted on the New York Stock Exchange. IEG is the successor in title of Guernsey Gas Light Co Ltd (“GGLCL”), which for a period of over 27 years from 13 November 1961 to 31 December 1988 employed Mr Carré and during such employment exposed him to asbestos dust.
In 2008 Mr Carré brought proceedings against IEG claiming that he had sustained mesothelioma consequent on his exposure to asbestos dust throughout his 27-year period of employment with GGLCL. IEG settled his claim on 19 December 2008 by a compensation payment consisting of £250,000 in damages and interest plus £15,300 towards Mr Carré’s costs. IEG also incurred defence costs of £13,151.60.
Thereafter IEG looked to GGLCL’s liability insurers under policies in force during the period of exposure. Two have been identified, first the Excess Insurance Co Ltd, which provided employers’ liability insurance for two years from 31 December 1978 to 30 December 1980, and, second the Midland Assurance Ltd, to whose insurance liabilities Zurich has succeeded, which provided such insurance for six years from 31 December 1982 to 31 December 1988. The present appeal thus proceeds on the basis that GGLCL had insurance for eight of the 27 years throughout which it exposed Mr Carré to asbestos dust. Guernsey did not have legislation making employers’ liability insurance compulsory until 1993, when the Employers’ Liability (Compulsory Insurance) (Guernsey) Law 1993 came into effect.
IEG notified a claim for its total loss to Zurich, which offered to meet 72/326ths of the damages and interest paid to Mr Carré and of the defence costs incurred. The proportion reflected the relationship between the six years of the Midland insurance and the 27-year period of Mr Carré’s exposure by GGLCL. It was arrived at on the basis that IEG’s liability to Mr Carré was incurred and increased from day to day throughout the 27 years, while only six years of such liability fell within the period of the Midland insurance.
At first instance Cooke J accepted Zurich’s case regarding the compensation, but not the defence costs, paid in respect of Mr Carré. He held it liable to pay £71,729.84 in full discharge of its policy liabilities, being its relevant proportion of such compensation plus 100% of the defence costs. The Court of Appeal allowed IEG’s appeal, rejected Zurich’s cross-appeal relating to defence costs, and ordered Zurich to pay £278,451.60, representing 100% of both the compensation paid and defence costs incurred by IEG.
On appeal to the Supreme Court two questions required answering: first, is Barker still good law in Guernsey; second, is an insurer who provided only part of the cover liable for the entire liability and, if so, are they entitled to recover a proportionate amount from other insurers. In addressing the first question the Supreme Court held that Barker is still good law in Guernsey. On the second the court held that Zurich was liable for the full amount but that it could claim contribution for the period not covered by their policy.
The result of the case is easy enough to understand even if the reasoning of the court is not: Barker remains good common law (Guernsey not having an equivalent to the Compensation Act 2006) meaning liability is proportionate; had the matter been governed by English law then IEG would have been liable for the full amount but with the right to claim contribution from other insurers.
This result leads to two interesting questions and/or points: first, would the modification of the double insurance principle, as first suggested in the case of Phillips v Syndicate 992 Gunner