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Sim v. Independent Insurance Co Ltd [2004] ScotCS 58 (13 February 2004)

OUTER HOUSE, COURT OF SESSION

A1296/01

OPINION OF R. G. CRAIK Q.C.

Sitting as a Temporary Judge

in the cause

MOIRA SIM

Pursuer;

against

INDEPENDENT INSURANCE COMPANY LIMITED

IN PROVISIONAL LIQUIDATION

Defender:

________________

Pursuer: C. J. MacAulay Q.C; Thompsons, Solicitors

Defenders: L. Murphy Q.C; Miss Springham, Advocate for Dundas & Wilson C.S.

13 February 2004

Background
[1] The late Brian Sim ("the deceased") died on 31 July 1992 from pleural mesothelioma (see post-mortem report number 6/8 of process). The pursuer is his widow.

[2] In an action raised in this court on 27 July 1995, the pursuer, as an individual and as executrix of the deceased sought and obtained a decree against Don (Contractors Limited) (hereinafter referred to as "Don") for the sum of £200,000 with interest at 8% a year from 31 July 1992, together with £459.79 as expenses. The action was undefended and the decree in absence was extracted on 13 August 1996 (6/3 of process refers). In the meantime, Don had gone into liquidation in November 1987 (correspondence 6/9 of process refers).

[3] The pursuer contends that the deceased had been in the employment of Don as an apprentice joiner "between about January 1963 and June 1967". She claims that: "During his period with Don he was negligently exposed by them to inhalation of asbestos dust. In consequence, he contracted mesothelioma, from which he died age 44". Since the death of the deceased, the pursuer has been attempting to claim compensation and, latterly, to enforce the decree obtained against the employers' liability insurers of Don during the relevant period of the deceased's employment. In this regard, she avers that: "Throughout the 1960's (and in any event throughout the period of the employment with them of the deceased), Don were insured for employers' liability risks. The cover provided thereunder, as was standard for employers liability policies then and now, included cover for justified claims against the employers by or on behalf of employees who had sustained injury or had contracted disease in consequence of their said employment by reason of fault on the part of the employers. The insurance company with whom they were so insured was The Federated Employers Insurance Company Limited" ("Federated"). She goes on to aver: "Federated was taken over in about the early 1980's by Allstate Insurance Company Limited, which assumed the obligations of Federated, and Allstate was in turn taken over by the defenders, which assumed the obligations of Allstate". To complete this narration, it appears that the defenders have also since gone into provisional liquidation in June 2001 and the provisional liquidators of the company have been added as defenders.

[4] The defenders' position is that, in the main, the pursuer's averments as summarised above are said to be "Not known and not admitted". Their position is more fully stated in answer 7 where they explain and aver "that the defender has not been provided with and is not in possession of any documents or information which would lead them to reasonably conclude that they are liable to indemnify Don". They go on, on an esto basis, to deny that they have any liability to indemnify Don, particularly for the principal sum sued for. They refer in this regard to the terms of Section 1 of the Third Parties (Rights Against Insurers) Act 1930.

[5] Against this background, the pursuer sought to lead evidence which would establish that Federated were indeed the employers liability insurers of Don during the relevant period of the deceased's employment. She also sought to establish that any liability constituted against Don by virtue of the undefended decree obtained, would now be enforceable against the defenders.

The evidence
[6] The evidence was in relatively short compass. The pursuer gave evidence to confirm the deceased's period of employment with Don and his unfortunate death in 1992. She also confirmed she had taken steps to try and establish who Don's employers liability insurers had been at the relevant time. She had contacted the witnesses Mr Inch and Perry in the early 1990's. These were gentlemen who had connections with insurance companies in the locality and, on the basis of the information they had supplied her with, she had been advised to raise the action in which she had obtained her undefended decree. Her original solicitor, the witness Paul Reid of Messrs Flemming and Reid also spoke to efforts made at about this time to ascertain the insurance position, culminating in the correspondence produced as 6/10-22 of process, and in the present defenders repudiating liability.

[7] The main witness for the pursuer was a Mrs Doreen Prosser. She had commenced employment with Don in about 1964 or 65 as a clerkess and secretary. She had been about 18 at the time. She had remained with the company until it had gone into liquidation in 1987 and latterly, was the Company Secretary. She had had an increasing responsibility for the company's affairs as the years had gone by. She recalled the name of the deceased as being an apprentice joiner in her early days. She was also of the opinion that Federated would have been the company's insurers - she could remember no other name in that connection. She could not be specific about dates and appeared to be only vaguely aware that there had been a change of the company's insurers in November 1979. Various documents were put to her. In particular, number 6/4 of process was put to her. This bears to be a proposal for employers' liability insurance made to Midland Assurance Limited on 6 November 1999, on behalf of Don. Mrs Prosser confirmed that the copy signature shown on the document was that of the company's principal, Jack Webster and that it showed the company's previous insurers at that time as being Federated. She had no real recollection of Midland Assurance being the company's insurers thereafter and she could not really say whether the Eagle Star Insurance Company had also been involved. She was also shown no 7/2 of process, a copy of insurance records, apparently extracted from archives maintained on behalf of the defenders. She agreed that this appeared to show that the cover there provided by Federated to Don appeared to commence on 17 March 1972, for an initial period to 1 November 1972 and to be renewed yearly thereafter. She was unable to say, definitively, whether this was in fact the commencement of Federated's involvement or whether, as she recollected, that company had been involved prior to that date, during the period of the deceased's employment.

[8] The evidence of Mrs Prosser was supplemented to some extent, from the pursuer's point of view, by the evidence of the witness Robert Inch. He is 73 years of age and was formerly manager of the Aberdeen branch of the Legal and General Insurance Company until the early 1980. He then set-up as an Independent Insurance Broker under the name of Rosemount Insurance Brokers Limited. He had been contacted by the pursuer at about the beginning of 1995 to see whether he could assist in tracing who the insurers of Don had been at the relevant period. He produced the hand-written statement, number 6/6 of process, dated 9 February 1995. Reference is made to this for its full term. In evidence, he supplemented his written statement by claiming that in the early 1970's, he had become very friendly with Jack Webster, the principal of Don, and that he had tried to interest him in placing some of Don's insurance cover elsewhere. He claimed that Mr Webster had said to him at that time that Federated had been Don's insurers for the last 20 years. The witness explained that Federated specialised in affording cover for contractors like Don. In particular, they were able to provide indemnity performance bonds for contractors who had to provide such for local authority contracts. The witness had been responsible for having the proposal form to Midland filled up and signed by Mr Webster in November 1979 and he pointed to the item naming the previous insurers as being Federated. The witness had no personal knowledge when the cover afforded by Federated had commenced or what Don's insurance position had been in the 1960's. Mr Inch was hesitant in confirming some details and contradicted himself in various passages of his evidence. I did not find him particularly reliable.

[9] Edward Perry, aged 69, was another retired insurance broker. He had been contacted by Mr Inch to see if he could assist the pursuer in her investigations. He made various enquiries on her behalf, which were inconclusive. In particular, he had ascertained that there had been a fatal accident involving an employee of Don during the relevant period in the 1960's. He had been unable to ascertain from any of those involved who the relevant insurers had been at the time.

[10] The final witness in the case was led by the defenders. She was Mrs Jacqi Little, who was in charge of insurance archives kept for, amongst other companies, those for which the defenders were responsible. At their request, she had searched the archives for any documentation relating to Don's insurance cover. Her evidence was that the archives were in some disarray, consisting largely of sheets which had been taken from binder files and stored in boxes. She had, however, managed to find the document now produced as 7/2 of process. She confirmed that this seemed to be a record of the cover afforded by Federated to Don between 17 March 1972 and the date of the policy's cancellation on 1 November 1979. She confirmed that the various entries recorded premiums paid over that period and brief details of claims made. The initial premium for the period from March to November 1972 appeared to be a half year's premium. Thereafter the premiums had been renewed on a year to year basis until cancellation. She had been able to find no earlier records relating to Federated and Don. It appeared to her that the document she spoke to recorded the scope of Don's policy with Federated over the period in question. She did not preclude there being an earlier policy since those she had searched through appeared to be stored and filed by reference to their cancellation dates. It seemed unlikely that a policy cancelled before March 1972 would have been kept in the archives.

Submissions on the Evidence
[11] Against this evidential background, senior counsel for the pursuer submitted that I should find, on a balance of probabilities, that the pursuer had established that Federated had been Don's employers' liability insurers over the period in question and, that being the case, that the pursuer was entitled to the decree of declarator sought and the monetary conclusion against the defenders in respect of the undefended decree already granted against Don. In asking me to hold the pursuer's case established, counsel relied on the recollection of Mrs Prosser and the assertion by Mr Inch that he had been told by the principal of Don in 1973 that Federated had been the company's insurers for the past 20 years.

[12] Senior counsel for the defenders had various submissions to make. Firstly, he contended that the pursuer had failed to establish her case on the evidence. The evidence of Mrs Prosser had been of recollection only. At the time in question, she had been an 18 year old clerkess and secretarial assistant with no responsibility for the company's insurance position. No doubt she could remember Federated as having been the company's insurers in the past but she could not be positive as to the period involved. When confronted with the documentary evidence which appeared to indicate that Federated's policy with Don had commenced in March 1972, she was not really able to contradict that. Further, even in a period when she had been company secretary, approximately 1980-1987, she was not able to identify who the employers liability insurers of Don had been. Counsel submitted that Mr Inch did not advance the pursuer's case. His evidence was vague and unreliable. On one point of evidence, prior communings with Mr Perry, he had been shown not to be telling the truth. All we had from Mr Inch was a bald assertion that Mr Webster told him on some undetermined occasion in 1973 that Federated had been Don's insurers for the last 20 years. That might or might not have been so. There was no independent reliable confirmation of this. The documentation (7/2 or process) appeared to contradict the hearsay assertion made by Mr Inch and to show that Federated's cover of Don only commenced in March 1972. The pursuer had thus failed at the first evidential fence and the defenders should be assoilzied.

Decision
[12] For the pursuer to succeed in obtaining the decree of declarator that she seeks, I would, in the first instance, have to be satisfied on a balance of probabilities that the evidence has demonstrated that Federated were Don's employers' liability insurers over the period in question in the 1960's. I am not so satisfied. The shortcomings in the evidence as highlighted in the submissions by counsel for the defenders meant that I was not able to hold on the required test that the pursuer had established the factual basis of her case. It has not been established, in my view, who the employers' liability insurers of Don were at the period in question. It has not been established what (if any) cover Don had during that period and what risks they were insured against. There, unfortunately for the pursuer, the case must fail and the various remedies that she seeks in the action must be refused.

Supplementary Submissions
[13] Counsel for the defenders having dealt with the evidence, went on to make various legal submissions which, although not necessary for my disposal of the case, ought to be summarised in case of further procedure. Basically, even if the evidence had entitled the pursuer to the declarator sought under heads 1a and b of the first conclusion of the summons, it did not follow that she was entitled to that sought under head (c). There were various reasons for that, firstly, in terms of the Act of 1930, the third party (here the pursuer) was only entitled to same remedy as the insured (Don) would have been entitled to against its insurers in respect of its liability to its employee. No doubt, if the policy contended for had been in place, Don would have been entitled to look to its insurers for indemnity against any properly constituted and quantified claim made against them in relation to their negligently exposing an employee to asbestos (whatever an employer's obligations at the relevant time might have been). But that did not mean to say that the insurer was necessarily bound to satisfy any decree taken against the employer, particularly a decree in absence for a sum that might well have borne no relation to the actual value of the claim. Various authorities were cited in favour of these propositions. These were Rhesa Shipping S.A. v Edmunds 1985 1WLR 948; Bradley v Eagle Star Insurance Company Limited 1989 1AC957 and Cheltenham and Gloucester Plc v Sun Alliance and London Insurance plc 2001 SC965. Reference was also made to McGillivray on Insurance Law, 10^th edition at paragraphs 28-6 and 28-27. All of these authorities, counsel contended, were to the effect that an insurer only has to satisfy a liability properly constituted and quantified against its insured.

[14] There seemed to me to be much force in counsel's supplementary submissions, but, given my decision on the facts, I did not find it necessary to make any further decision on the matters mentioned.

Disposal
[15] Counsel for the defenders contended for decree of absolvitor but I do not think that is appropriate in the particular circumstances of this case. The pursuer has failed to establish the necessary link between the deceased's employers and the insurers over the relevant period and she may never do so. However, since my findings amount to a failure in the proof rather than a demonstration that a situation contrary to that for which she contends existed, it seems more appropriate that the action should be dismissed.

[16] Accordingly, I proceed to uphold the defender's third plea in law and to dismiss the conclusions of the action. It follows that the pursuer's first and second pleas in law are also refused. The remaining pleas in law for the parties fall to be dismissed.

[17] The question of expenses remains and the case will be put out by order so they can be dealt with in due course.