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	England and Wales High Court (Queen's Bench Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Horsley v Cascade Insulation Services Ltd & Ors [2009] EWHC 2945 (QB) (18 November 2009) URL: http://www.bailii.org/ew/cases/EWHC/QB/2009/2945.html Cite as: [2009] EWHC 2945 (QB)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		18 November 2009

Mr Justice Eady :

1. The Claimant in these proceedings, Mr Trevor Horsley, is seeking an award of damages in respect of his having contracted asbestosis through exposure in the course of his employment with the First and Second Defendants. The First Defendant is said to be without funds and has been restored to the register purely for the purpose of this litigation. The Claimant's exposure during the course of his employment with that Defendant took place during the period 1976-1977. The exposure, so far as the Second Defendant is concerned, took place over a period of approximately eight months between 1976 and 1982. The Claimant worked as a lagger in the stripping out of asbestos-based insulation in chemical works and power stations.
2. Judgment was entered against the First and Second Defendants on 12 December 2008. Shortly afterwards, proceedings against the Third Defendant were discontinued.
3. The issues before me related to causation, contributory negligence and quantification of final damages. At one time the Claimant was seeking provisional damages, but he has now confirmed that he wishes to claim final damages: see Cowan v Kitson Insulations Ltd [1992] PIQR Q19. Because there are a number of imponderables, however, the exercise is not an easy one. It is especially unfortunate that the court has had to proceed without the benefit of expert accountancy evidence. I propose to set out my conclusions on the areas of dispute, but a final resolution cannot be reached until further calculations are carried out and the parties have had the opportunity of making any further submissions (orally or in writing) which they consider necessary in consequence.
4. As to apportionment, the parties have proceeded on an agreed basis, to the effect that the First Defendant should take responsibility for 23.26% and the Second Defendant 31.01% of liability. It is recognised, because asbestosis is a cumulative and divisible injury, that each tortfeasor should be responsible only for the proportion which its exposure contributed to the damage: see e.g. Holtby v Brigham & Cowan (Hull) Ltd [2003] 3 All ER 42. The agreed apportionment was arrived at in the light of expert evidence from engineers. The joint statement assessed the total contribution to the Claimant's exposure from these Defendants as being approximately 54.27%.
5. The Claimant was born on 21 October 1955 and is currently resident, for tax purposes, in Dubai (although he retains homes in Stroud and in London). He is the managing director of an English company called Western Thermal Ltd and also of a company in Dubai called HKBH Electro-Mechanical LLC. The English company specialises in thermal insulation and sheet metal fabricating. It is well established and was set up by Mr Horsley in 1985. It now employs approximately 120 people and, I understand, is the largest independent company in the business. The Dubai company, however, is of more recent origin. It was set up in January 2006 by Mr Horsley and a co-director called Mr Joseph Kemm. It provides electrical, mechanical and plumbing services to the construction industry.
6. The medical evidence is contained in reports from Dr Rudd which have not proved to be controversial. It is accepted that Mr Horsley suffers from asbestosis and also has pleural thickening and pleural plaques. Matters are complicated by the fact that he also suffers from diabetes and obesity. Moreover, he has been a heavy smoker for 35 years (with a brief respite when he gave up for a period of approximately two years between 2002 and 2004).
7. It has been assessed that he has a respiratory disability of 20%. He has been suffering from shortness of breath for a period of some five to six years. It has recently improved to an extent, probably as a result of Mr Horsley losing four stone in weight. 15% of the disability is attributable to asbestosis and 5% to obesity.
8. It is necessary to take account of a number of uncertainties and risks. First, the asbestosis has a 50% chance of progressing. Any such progress would be likely to increase the respiratory disability to the extent of 5-10% per annum. The slow progression of the disease would suggest that the Claimant's condition is rather less serious than average. There is a very small chance (assessed at approximately 2%) that Mr Horsley will not be able to continue working due to asbestosis, but this plays no part in the claim for future loss of earnings.
9. Secondly, there is the possibility that pleural thickening will develop so as adversely to affect Mr Horsley's breathing. This risk is also assessed at approximately 2%. If this takes place, the deterioration in the respiratory disability would again be of the order of 5-10% per annum. This small risk has again been discounted for the purposes of the claim for loss of earnings.
10. Thirdly, there is a 5% risk that the Claimant may contract mesothelioma. This would normally lead to death within a period of 12-18 months following diagnosis.
11. Fourthly, there is a risk of lung cancer. The risk of Mr Horsley developing lung cancer because of smoking has been assessed as being of the order of 12%. When combined with the factors of asbestos exposure and asbestosis, the risk increases to 36%. The combination has a synergistic or multiplicative effect. That is why the increase over the risk attributable to smoking is as high as 24%. In the event of developing lung cancer, Mr Horsley would also be likely to die within a period of 12-18 months.
12. The claim for loss of future earnings, which is the major element for debate before me, is based upon the risks of mesothelioma and lung cancer.
13. As to general damages, there was a range between £40,000 and £55,000. Mr Burton QC for the Claimant suggests that £55,000 would be a reasonable sum, whereas Mr Macpherson for the Second Defendant suggests that £40,000 would be appropriate and Ms Outhwaite QC for the First Defendant £45,000.
14. My attention was drawn in this context to a number of decided cases for assistance, but significant adjustments are required to take account either of inflation or factual differences. It is not helpful to focus on them in great detail. It is better to concentrate on the particular, and possibly unique, combination of circumstances I have described.
15. The JSB guidelines suggest that for asbestosis giving rise to respiratory disability at between 10% and 20% an award of £45,000 would be appropriate. (I take that to refer to a final award rather than provisional damages.) Yet, argues Mr Burton, it is by no means apparent to what extent such a figure would reflect increased risk of mesothelioma and lung cancer when the court is awarding final damages. Counsel for the Defendants suggest that such risks must to some extent be factored in, since they are a common feature in asbestosis cases (although the level of risk is likely to vary considerably). That must be right. Again, however, it is probably right to focus on the specific evidence relating to this claimant and the established level of risk for him.
16. Here, the additional element attributable to lung cancer risk is about 24% and to mesothelioma risk 5%. Mr Burton seeks simply to add the risks together and thus arrives at 29%. Mr Macpherson submits that a simple aggregation of this kind is wrong in principle. Mr Burton then draws attention to the current level of awards where lung cancer or mesothelioma is actually incurred (i.e. of the order of £70,000). He takes 29% of this as representing appropriate compensation for the risk (£20,300). He suggests in the light of these calculations that the figure appearing in the Claimant's schedule is reasonable at £55,000. There are aspects of his methodology that are questionable, for example as to (i) merely adding the lung cancer and mesothelioma risks together and (ii) assessing compensation for the risk by reference to a percentage of the award that would be given for incurring the relevant disease. These have led Mr Burton in my view to a final calculation which is over-generous in the circumstances of the case.
17. When one is at the stage of assessing risk and including an increase attributable to smoking, it is right to apply the principle that a defendant must take his "victim" as he finds him and, therefore, to exclude any question of disallowance because the particular claimant happens to have voluntarily undertaken the risks associated with smoking. As illustrated in the case of Badger v Ministry of Defence [2005] EWHC 2941 (QB), this factor becomes relevant later when addressing contributory negligence.
18. I have come to the conclusion that I can do no better on the facts before me than to take a round figure in the middle of the JSB guideline range (at £45,000). Appropriate interest will naturally also be recoverable.
19. I must turn now to the vexed question of future losses. The Defendants argue that the objective is to find what is the appropriate sum (if any) to compensate the Claimant in respect of income which probably would have been received but for the impact of asbestos exposure upon life expectancy. Mr Burton suggests that this is too narrow an approach and that it is necessary also to cater for the possibility that the Claimant will incur a malignancy during his working life (a "chance of a loss"). Unfortunately, the evidence of the Claimant's income is somewhat limited. It is necessary to approach the income from the English company and that from the Dubai company separately because the quality of the evidence differs considerably.
20. One seriously troubling feature of the evidence was that purported accounts for HKBH Electro-Mechanical LLC were produced in respect of the years ended 31 December 2006, 2007 and 2008. Each of these was accompanied by a single sheet purporting to be an "independent auditors' report (continued)" attributed to Baldwins (Ashby) Ltd of Elsmore House, 14a The Green, Ashby de la Zouch, Leicestershire. These are in largely identical terms – even down to the same typographical error ("Limtied" instead of "Limited"). On behalf of the Second Defendant, Mr Macpherson put his case to the Claimant that these are not genuine documents and that they have been manufactured especially for the litigation. The "Baldwins" signature appearing on each of these "reports" seems to be identical and the suggestion was made that, in each case, it had been scanned from another document relating to a different company (probably Western Thermal).
21. This very serious allegation was rather brushed off by the Claimant. He merely said it was not his document. After the hearing, I was informed that his solicitor had not realised that there might be anything amiss with the cover sheets in question until this was drawn to his attention on the first afternoon of the trial. He was unable to check the matter overnight, however, as the relevant partner in Baldwins was away on holiday. This was how it came about that in his closing submissions Mr Burton told me that no checks had been carried out. He later assured me that this was not simply through lack of interest on the part of those instructing him. In the absence of the relevant partner, it was felt that no useful information was likely to be forthcoming before the hearing concluded. Mr Burton accepted that the documents were "odd", but that was as far as he felt able to take it at that stage.
22. The documents obviously require close investigation. In each case, the single sheet of the auditor's report purports to be "continued", whereas there is no other part of the report produced from which it could be a continuation. Moreover, the perpetuation of the original typing error plainly suggests that these documents came into existence at the same time.
23. Other "oddities" were, for example, that the date of the Companies Act was omitted and that, instead of two columns of figures in the accounts to show a comparison with the previous year, there appeared two identical columns of figures. I cannot imagine what the explanation could be for that.
24. In any event, it is something of a mystery how an English firm of chartered certified accountants could possibly be auditing the accounts of a Dubai company "in accordance with United Kingdom Generally Accepted Accounting Practice". This is especially so since the Claimant laid great emphasis in cross-examination upon the proposition that the accounts were prepared in accordance with local standards. It is fair to say, however, that every time he sought to raise this he was stopped by Ms Outhwaite on the basis that he was not an expert in accounting practices within the United Arab Emirates. That still leaves the question unanswered as to what Baldwins were doing auditing this company's accounts.
25. Furthermore, the Claimant said in his evidence that the figures were supplied electronically to Baldwins from Dubai and they incorporated them in the accounts on that basis – without any reference to underlying documents being sent to them for the purposes of a proper audit.
26. The Claimant has been accused of attempting to mislead the court by the production of forged documents, but neither he nor his advisers seemed to take the allegation at all seriously. In these circumstances, I cannot conceivably place any weight on the evidence relating to HKBH Electro-Mechanical or as to the income said to derive from it. What is more, it casts considerable doubt, until the obvious questions are answered, upon the credibility of the Claimant. If bogus documents have been produced in relation to the Dubai company, plainly it would tend to undermine his credibility overall.
27. Other factors ring warning bells too. Counsel cited a number of examples, such as the Claimant's failure on occasions to fill up forms accurately as to his state of health; his implausible statement that Dr Rajesh had advised him that smoking offered some benefit so far as his lungs were concerned; and his claim that he would not be liable to tax, contained in a witness statement that post-dated a letter of 23 February which made clear that he was.
28. It is thus appropriate for me to be cautious about the Claimant's evidence and to rely upon it only in cases where some degree of corroboration is available, for example from documents that can be shown to be themselves reliable.
29. I have no solid reason to suppose that the documents relating to the English company, Western Thermal Ltd, are not to be relied upon. There has been no suggestion that these accounts are other than genuine. Yet other questions are raised in relation to this part of the claim.
30. Mr Macpherson makes the point that the Claimant has failed to identify in his evidence why the profit of the company, or his share of it, would be affected by his absence in the event of his being unable to work. He has been predominantly in Dubai since March of this year (three weeks out of four) and was at pains to explain that this absence would not affect his earnings from Western Thermal because it would be competently and profitably managed by others in his absence – not least by reason of their being incentivised through a bonus scheme which he explained. Furthermore, last year, he came very close to selling the company for several million pounds. The only reason why the transaction was not completed was inability on the part of the would-be purchasers to raise the necessary funds. Against this background, submits Mr Macpherson, there is no convincing reason to suppose that the company would be incapable of operating profitably in the Claimant's absence.
31. Evidence could have been produced to demonstrate that the Claimant's departure from Western Thermal would, on a balance of probabilities, lead to a measurable decrease in its profitability. That would require evidence not only from the Claimant himself but also from others as to his role within the company's activities and why it should be regarded as so pivotal. In particular, evidence could have been produced to demonstrate why it was said that none of the replacements could achieve the same contribution towards the company's profitability. If such evidence had been produced, no doubt the Defendants would wish to have the opportunity of testing it, if necessary, with an expert witness.
32. Furthermore, some enquiry would be appropriate into the question of how much the new incentivised managers are costing over and above the cost of staff in earlier years. It is reasonable to suppose, in the absence of any explanation to the contrary, that it will cost an amount which would go to reduce the company's profit and/or the money available for the Claimant's salary. There being no specific evidence, I will assume in the Defendants' favour that there should be a reduction in calculating the Claimant's future salary of 7% compared to the position prior to March 2009.
33. Another point made by Mr Macpherson is that the Claimant would be free, in relation to either of his companies, to sell his shareholding at any stage for its market value. He need not, therefore, suffer financially if he took that step either when he succumbed to illness or at an earlier stage in anticipation. What troubled me about this submission was that, in principle, if the tortious conduct had not occurred, the Claimant would be in a position to take income from the company by way of salary (and dividends) as well as having the benefit of his ownership of it as a capital asset. What he is now claiming for is the potential loss of personal income attributable to any illness which he may incur as a result. That would have to be calculated according to the average figure for "salary" over the last three years, which I calculate at £178,983 (see below), but allowing for a 7% reduction for the reasons explained in paragraph 32 above.
34. What is said is that it would be within the Claimant's power to reorganise the accounting within the company in such a way that he could receive exactly the same income by way of dividend as opposed to salary. I suspect this may well be right, but the matter was not explored in sufficient detail for me to be able to come to a meaningful conclusion. I would accordingly proceed on the basis that the Claimant would be entitled to recover any losses shown to have been incurred in relation to future salary, but I would exclude dividends from consideration. That is for the reasons I have discussed; namely, that I am not persuaded on the evidence that the profitability and/or dividends would, on a balance of probabilities, be caused to diminish by the Claimant's non-availability. These payments are a factor of share ownership rather than earning capacity.
35. More generally, Ms Outhwaite and Mr Macpherson submit that the court has not been provided with sufficient evidence to make a sensible assessment of any risk of future financial loss.
36. The way the case was put on the Claimant's behalf even in his most recent schedule of loss was that any future loss of income should not be regarded as subject to tax because, as a resident of the United Arab Emirates, he would not be liable to tax. This turns out upon investigation not to be correct. There would be some tax payable in respect of earnings in the United Kingdom. Moreover, questions were raised by the Defendants as to how likely it really is that he will remain resident in Dubai for the next 10 or 15 years, given his ties to this jurisdiction and the recent downturn in the construction boom there (which the Claimant does not accept has affected his business so far). At all events, even if I assume that the Claimant will remain there, a proper assessment needs to be made (preferably by agreement) as to the likely incidence of UK tax on future earnings. I must, however, make an assessment on the available evidence of the Claimant's future residence. I believe it is reasonable to assume that he will not continue to be resident abroad beyond the age of 60.
37. The court is also invited to proceed on the basis that the Claimant's plan would be to work until the age of 70, although for reasons which were not entirely clear this represented a recent change of heart. The original suggestion was that he planned to retire at 65. When asked about the change, he gave two explanations. First, it was said that none of his children was interested in participating in the business. Secondly, he said that he loved working. Neither of these explanations, however, would explain why until as late as September this year the retirement age was set at 65.
38. As to Western Thermal, the Claimant's case is that he owns 89.5% of the shares (although even this figure has fluctuated somewhat) and is paid income by way of salary and dividend. The pattern over the last four years is as follows:

Year	Salary (£)	Dividends	Total (£)
2008-09	276,113	320,000	596,113
2007-08	112,487	153,907	266,394
2006-07	201,401	250,059	451,460
2005-06	125,932	146,452	272,384
Total	1,586,351	1,586,351	1,586,351
Annualised	÷ 4	÷ 4	÷ 4
Annual income	396,588 p.a.	396,588 p.a.	396,588 p.a.

39. The company's profit on ordinary activities prior to taxation for each of those years was as follows:

2008-09	£597,688
2007-08	£139,142
2006-07	£937,520
2005-06	£243,094
Total	£1,917,444
Average	÷ 4
Annualised	£479,361 p.a.

40. It is clear from these figures that not only the Claimant's dividend but also his salary fluctuated significantly from year to year and would appear to be linked to profit. One could envisage circumstances in which a steady salary was payable so as to be proof against downturn in profit, but this does not appear to be the position so far as the Claimant's income is concerned.
41. The way Mr Burton puts his case for future loss of income is based upon the following calculations:

Multiplier to age 70 (age 54, Ogden table 11)	12.48
Life multiplier (21 years, Ogden table 28)	16.39
Proportionate multiplier (to reflect malignancy during working life): 12.48 x (12.48 ÷ 16.39)	x 9.50
Event may occur at any point	x 50%
Net multiplier	x 4.75

42. Obviously the figures upon which Mr Burton based his schedule have to be reduced to take account of the fact that I am not allowing anything in respect of lost income for Dubai.
43. I take it that Mr Burton's adjusted calculations would be as follows:

Loss during life: £396,588 x 0.50	£198,294.00
Loss after death (less 50% living expenses): £198,294 x 3.75	£743, 602.50
Loss if malignancy occurs	£941,896.50
Chances of occurrence 24% + 5%	x 29%
Earnings loss	£273,149.98

44. It is accepted, at least by the First Defendant, that Mr Burton's basic methodology is reasonable, but there are a number of arguments raised by the Defendants which I need to take into account – irrespective of the actual figures.
45. First, it is necessary to consider, in a more analytical way, what the likely annual loss would be in the event of the Claimant being unable to work. I have already held that there is no evidence to justify my taking into account dividends, since it would be necessary to show that his absence would affect those figures. On the other hand, I am unable on the limited evidence to justify going behind the figures identified as attributable to salary. I will therefore take the average figure for salary over the relevant period, which I calculate to be £178,983.
46. There is a challenge, as I have said, to the Claimant's likely retirement age. As no sufficient reason was given by the Claimant in the course of his evidence for the sudden increase to 70, I will proceed on the basis that his likely retirement age is 65. Another factor which supports this conclusion to some extent is the reduction in life expectancy. Dr Rudd is of opinion that there has been a reduction attributable to exposure to asbestos from 75 years 4 months to 69 years 4 months. It is no more than one factor, but it does tend to make it less likely that there would be an intention to work right up to 70. That conclusion would plainly require adjustment to the multipliers.
47. Mr Macpherson's primary contention, on the other hand, is that the Claimant would be only entitled to recover (if at all) in respect of the relevant reduction in life expectancy. Since the reduced expectancy is to 69 years four months, there would be no loss recoverable if his retirement age is likely to be 65. My attention was drawn in support of this argument to Pickett v British Rail Engineering Ltd [1980] AC 136. But it was reaffirmed in that case that the object of the law is "full compensation": see e.g. at p.168, per Lord Scarman. That is to say, the court should strive to "put the party … who has suffered in the same position as he would have been in if he had not sustained the wrong": Livingstone v Rawyards Coal Co. (1880) 5 App Cas 25, 39, per Lord Blackburn. Here, it is common ground that the exposure to asbestos has given rise to an increased risk of malignancy during the Claimant's working life. It is thus appropriate to attempt to compensate for that increased risk.
48. Alternatively, Mr Macpherson suggests that, if the Claimant is permitted to go beyond what he calls "the conventional Pickett approach", a multiplier to take account of work to the age of 65 would be appropriate at 5.28. He takes the mid-point and reduces the multiplier accordingly by 50% to 2.64. That is because malignancy could occur at any point. On his calculation the notional loss will not occur until 2.64 years have elapsed. He submits that a discount for accelerated receipt would therefore be appropriate so as to yield a multiplier of 2.39. This would be the way of compensating for contingencies or what is in effect the "chance of a loss". He suggests that it accords with Herring v Ministry of Defence [2004] 1 All ER 44 and is more likely to arrive at a fair and proportionate award than what he describes as the purely "arithmetical" or percentage-based "loss of a chance" approach advocated by Mr Burton: see also Brown v Ministry of Defence [2006] PIQR Q9, p.109. My attention was also drawn to other first instance cases where the court declined to follow the "arithmetic" approach, which is sometimes used simply for the purpose of identifying a frame of reference or an upper limit: see Thomas v Krupp Camford Pressings Ltd, unreported, 8 January 2003 (a decision of HHJ Hickinbottom, as he then was, sitting in Cardiff) and Hindson v Pipe House Wharf (Swansea) Ltd, unreported, 21 February 2007, Wyn Williams J.
49. This seems to me to be an appropriate way of addressing the Claimant's condition as described in the evidence and would properly take account of the potential impact on earning capacity before the anticipated retirement age. As I have already indicated, the calculations need to be applied (and to be applied only) to the potential loss of "salary" (i.e. not "dividend") emanating from Western Thermal.
50. There will have to be a discount to take account of future payment of tax (and national insurance) in the light of the recently disclosed information that the Claimant will be liable in respect of UK derived income. That will be a matter for discussion between the parties and, if necessary, a determination in the light of their rival submissions.
51. I also accept the Defendants' submission that there should be some discount to take account of the risk of the Claimant's being unable to work because of his smoking habit. On the evidence, I will assess that at 15%. Dr Rudd is of the view that, if he continues to smoke up to the age of 65, there would be a 15% chance that he would be prevented from working until that age by a smoking related disease. (He also expressed the view that, if the Claimant continued to smoke beyond 65, there would be a 25% chance that such a disease would prevent his working until 70.)
52. So far as care is concerned, the chance of the Claimant requiring care in the future is, according to the expert evidence, so low as to be de minimis. Dr Rudd has assessed the chance at 1%. In any event, no evidence has been produced as to the cost of such care in Dubai. In the circumstances, I do not think I would be justified in making an award under this head any greater than that which, if I understand the position correctly, has been conceded by the Defendants (before apportionment), which I would round up to £1,500.
53. No evidence before me would justify making an award in respect of the tentative claim to cover equipment.
54. There will need to be a discount in respect of any sum ultimately awarded in respect of contributory negligence, as was given, for example, in the case of Badger v Ministry of Defence, cited above, and in Shortell v Bical Construction Ltd, an unreported decision of Mackay J on 16 May 2008. The applicable law is fully discussed in those cases. I see no reason to make any different deduction from that adopted by Stanley Burnton J (as he then was) in Badger. I will therefore assess the contributory negligence at 20%. I should make it clear that I have rejected Mr Burton's suggestion that I should make no significant discount for contributory negligence for the reason that an allowance has already been made for the Claimant's smoking habit when calculating the risk of lung cancer. It is said that the overall risk of 36% has been reduced by deducting the 12% attributable to smoking. But that is for reasons of causation. The Defendants are not responsible for that 12%. Moreover, the Claimant would have contributed to the synergistic effect reflected in the 24% risk. It is true that the Defendants had to take the "victim" as they found him, but that does not exclude contributory negligence.
55. I take account of the fact that the Claimant must have known throughout his smoking career of the health risks, as a matter of general knowledge, quite apart from the regular warnings he has received from medical practitioners. Furthermore, it is reasonably apparent from the answers he gave in cross-examination that he fully intends to carry on smoking for the indefinite future.
56. When the figures have been calculated in accordance with my conclusions, the extent of each Defendant's liability can be determined in the light of the agreed apportionment to which I referred in paragraph 4 above.