In a long running issue of compensation for non disabling
pleural plaques, the Inner House, Scotland's Appeal Court has come
down in favour of Scottish Claimants and confirmed that the
condition will remain compensable in terms of the Damages (Asbestos
Related Conditions) (Scotland) Act 2009.
Pleural plaques are areas of fibrous tissue in the lungs, only
identifiable on x-ray or CT scan. They are almost invariably
asymptomatic and do not cause or contribute to the development of
more serious asbestos disease. Their existence does, however,
indicate previous exposure to asbestos, which itself creates a
significant risk of contracting diseases such as asbestosis, lung
cancer and mesothelioma.
The House of Lords decided in Rothwell in October 2007 that
pleural plaques did not cause damage and could not, therefore,
constitute an injury given rise to an action in tort.
Following that decision the Scottish Government, concerned
regarding the anxiety caused to people with pleural plaques, took
steps to legislate to reverse the House of Lords decision so that
pleural plaques would continue to be compensable in Scotland.
The Damages (Asbestos Related Conditions) (Scotland) Act 2009
came into force on 17 June 2009. Four major insurers, namely,
Axa, Zurich, Aviva and Royal & Sun Alliance immediately raised
Judicial Review proceedings seeking to reduce the 2009 Act as
unlawful. The Judicial Review was unsuccessful and was
appealed to the Inner House of the Court of Session.
The Inner House were asked to consider the insurers' title and
interest to sue as well as the third to tenth respondents title and
interest to oppose the insurers' Petition. Those respondents
who were pleural plaques claimants represented by Thompsons
Solicitors, had entered as parties at a relatively late stage.
The main issue in the Appeal was, however, whether the 2009 Act
infringed the insurers' rights under Article 1 Protocol 1 (A1P1) of
the European Convention on Human Rights (ECHR). The insurers
also contended that the court had the power to review and reduce
Scottish Parliament Legislation on grounds such as a irrationality
under the Common Law.
The Inner House, in a single speech delivered by the Lord
President, were satisfied that the insurers had "victim status"
under Article 34 of the ECHR. They were within a class said
to be affected by the 2009 Act:
"…the Lord Ordinary was correct to conclude that the reclaimers
had the requisite elements of title and interest to enable them to
have "victim" status in terms of Article 34 of the Convention and
thus to pursue their challenge to the 2009 Act under A1P1."
As regards the insurers' title and interest to challenge an Act
of the Scottish Parliament on the basis of the Common Law, the
court considered "that in passing legislation the Scottish
Parliament has a duty to members of the public to act in conformity
with the law… we see no reason why an individual member of
the public who is adversely affected by the legislation cannot
challenge such legislation, provided always that he or she can
qualify an interest to do so." They concluded that the Lord
Ordinary had correctly reached the view that the insurers had
advance sufficient title and interest to bring the Judicial Review
proceedings.
The Lord President went on to consider the third to tenth
respondents' title and interest. These respondents, all
clients of Thompsons Solicitors who had been diagnosed with pleural
plaques and who had raised, or intended to raise an action in
respect of their condition, had been allowed to enter the Judicial
Review process by Lord Uist after the original action had been
raised against the Lord Advocate. The Rules of Court allow
persons who are "directly affected" by an issue raised in the
proceedings, to apply to enter the process as a party. The
Dean of Faculty for the insurers successfully argued that for a
person claiming to be "directly affected" by the 2009 Act he would
have "to show that he was or would be a victim of the measure in
question."
The third to tenth respondents were in no different position to
any other person having pleural plaques. If it was
appropriate to allow the third to tenth respondents to enter
process, the same should apply to all of the remaining 567
claimants who had been identified and were known to the
parties. Alternatively "the third to tenth respondents could
not derive title in this case from the duty of the Scottish
Parliament to act in conformity with the legal limits on its
competence. As these respondents maintain that the Scottish
Parliament has acted within its powers, no legal relation to which
they are a party had been infringed or denied."
The court rejected the arguments put forward by Counsel for the
Lord Advocate and the third to tenth respondents that the third to
tenth respondents were directly affected by virtue of their
diagnoses of pleural plaques. They were not entitled to be
party to the Judicial Review process, and should have sought to
enter the process by the alternative route as interveners.
In the preliminary matter of title and interest to sue the
insurers' arguments were, therefore, successful and the court
turned to the issue of the Common Law challenge to the validity of
the 2009 Act:
"The issues on this aspect of the reclaiming motion are whether
the nature and powers of the Scottish Parliament are such that its
legislation is immune from challenge before the Court of Session
other than on grounds of incompetence specifically provided for by
the Scotland Act 1998; and, if its legislation is not so immune, on
what grounds may that legislation be open to challenge."
The court first of all considered the position had the 2009 Act
been acted by the Westminster Parliament. They concluded that
"had the present case involved a challenge to a United Kingdom
Statute on such grounds, it would, in our view, have been bound to
fail."
Turning to the Scottish Parliament, the Lord Advocate's
contention had been that there is no basis for any Common Law
challenge to Scottish legislation. The Lord President's view
was that:
"The traditional grounds of Common Law Judicial Review are not,
without modification, apt for them. It is acknowledged that,
while they are open to review on the grounds of "illegality"… they
are not apt for review on the ground of "procedural irregularity"…
the notion of "irrationality", even in the extreme sense of being
"so absurd that [the legislature] must have taken leave of [its]
senses" is not, in our view, apt - at least in the context of the
legislation here under discussion."
In exceptional cases it might be possible to challenge Scottish
Acts of Parliament under the Common Law. Irrationality,
however, was not a sufficient basis for challenge, and in the
present situation no exceptional case had been made out.
Whilst the issue of recoverability for pleural plaques had never
been tested in the Scottish Courts, defenders and their insurers
had proceeded for over a decade on the basis that pleural plaques
were compensable in Scotland.
"In deciding that, notwithstanding Rothwell, in Scotland pleural
plaques should be, and have always been, a condition for which
compensation should be paid and that, in effect, the insurers of
negligent employers would be liable to meet claims for that
compensation, the Scottish Parliament was, as a matter of political
judgment, entitled to take into account that such insurers had for
a significant period accepted such liability. In contracting
with employers to indemnify them against claims by their employees,
and in accepting premiums as consideration, the insurers took the
risk that the law would develop, or even change, with a consequence
that their exposure was greater (or less) than might have been
envisaged when the risks were placed. Although the House of
Lords was unanimous in Rothwell, there had been a defence in the
Court of Appeal and the judge at first instance had been in the
claimant's favour. That was all against the background of the
first instance cases in the mid 1980s. Although the reasoning
of the House of Lords may, in retrospect at least, seem compelling,
it is not inconceivable that the decision might have gone the other
way. Even if the rationality were a sufficient basis on which
to challenge the validity of an enactment of the Scottish
Parliament (which, in our view, for the reasons already given, it
is not) we consider that … it has not been demonstrated that the
2009 Act was irrational."
The Lord President dealt finally with the main ground of
challenge under A1P1 of the ECHR, which provides:
Protection of Property
Every natural or legal person is entitled to the peace or
enjoyment of his possessions. No-one shall be deprived of his
possessions except in the public interest and subject to the
conditions provided for by law and by the general principles of
international law.
The preceding provision shall not, however, in any way impair
the right of a state to enforce such laws as it deems necessary to
control the use of property in accordance with the general interest
or to secure the payment of taxes or other contributions or
penalties."
The court confirmed that A1P1 could be infringed in a situation
where "the state deploys measures depriving one citizen of his
property by transfer to another." The protection under A1P1
extends to both natural and juristic persons and it was accepted
that the insurers "substantial capital resources" qualify as
"possessions".
Further, in position by the state of a liability to make payment
of money could, foreseeably, constitute an interference with the
right to property protected by A1P1. The 2009 Act was found
to amount to an interference with the insurers' property.
However, the final question was whether that interference could
be justified in the public interest. In a judgment which, in
many respects, favoured the insurers' legal arguments, the Lord
President's final blow was dealt against the insurers:
"It is clear to us that the Scottish Government and the
Parliament saw the Rothwell decision as amounting to a social
injustice in the case of those diagnosed as having pleural plaques
and other benign asbestosis related conditions. Criticisms
may no doubt be made of that decision. But the existence of grounds
of criticism of their approach does not, of course, render the
legislators decision invalid. Assessing the validity and
weight of such criticisms it is essentially a matter of
governmental and political judgment. Recognising that area of
discretion or judgment and the test which a court has to apply in
review we, for our part, have come to the conclusion that it cannot
be held that the view formed by the Scottish Government and the
Parliament that the judgment of the House of Lords in Rothwell
produced some injustice was a view which those bodies were not
entitled to reach. Generally, a person who knows that he has
pleural plaques also knows that as a result of exposure to asbestos
his body has undergone physiological change, even if
asymptomatic. He also knows that asbestos has entered his
body. And it is entirely understandable that, on that account, he
may suffer heightened levels of considerable anxiety about his risk
of developing mesothelioma or asbestosis in later life, even if
compared to the person who has been exposed to asbestos but has not
developed pleural plaques. In other contexts, such as the
legislation on harassment to which the Lord Ordinary refers, the
legislature has resolved that anxiety may constitute a matter
worthy of monetary compensation. Further it may also be noted
that in their opinions in Rothwell, certain of the members of the
Judicial Committee of the House of Lords expressed regret or
concern that a person with pleural plaques might be without a
remedy… The rectification of what the legislature conceived as
being a social injustice for a category of people in society can be
seen as a measure in general or public interest."
It was concluded that the 2009 Act pursues a legitimate aim in
the public interest. The manner in which the Scottish
Parliament had enacted in the 2009 Act struck a fair balance
between the competing parties interests and was
proportionate. Therefore, although the insurers' property had
been interfered with in terms of A1P1, that was justified.
Whilst the insurers can, therefore, be buoyed by the fact that
many of their legal arguments were well reasoned and accepted by
the Inner House, at present victory remains with the Scottish
Parliament and the pleural plaques claimants.
There will be a further appeal onto the Supreme Court, and the
insurance industry remains confident that in the final balance
their arguments will be upheld.