Case Comment: Recovery of Medical Costs for Asbestos Diseases (Wales) Bill – Reference by the Counsel General for Wales  UKSC 3
17 Friday Apr 2015
Judgment was handed down in the case of Recovery of Medical Costs for Asbestos Diseases (Wales) Bill: Reference by the Counsel General for Wales  UKSC 3 on 9 February 2015, the Association of British Insurers intervening. Handing down a unanimous judgment, Lord Thomas and Lady Hale concurring for narrower reasons, Lord Mance (with whom Lord Neuberger and Lord Hodge agreed) held that the Bill was outside the legislative competence of the Welsh Assembly under both section 198(4) and 108(5) of the Government of Wales Act 2006 and was incompatible with the ECHR, A1P1.
The reference was brought by the Counsel General for Wales under section 112 of the GOWA. The two pertinent provisions of the Bill are section 2, imposing a quasi-tortious liability on insurers/compensators for the cost of NHS services to be provided to victims of asbestos related diseases, and section 14 which extended the liability under the employers’ liability insurance policy to an extent greater than the liability would have been if charges payable to the Welsh NHS had been paid as damages by the employer to the employee; see Durham v BAI (Run-OFF) Ltd  UKSC 14.
- Whether the Bill comes within the legislative competence of the Welsh Assembly concerning “the organisation and funding of [the] national health service”, under section 108(4)-(5) and para 9 of Part 1 of Schedule 7 GOWA
- Whether the Bill is outside the legislative competence by virtue of section 108(6) GOWA owing to incompatibility with the A1P1 rights of compensators and insurers
On the first issue, it was decided that the last sentence of para 9 (stated above) was the critical phrase for determining legislative competency. It was common ground that Welsh Ministers do not possess general fiscal powers, and even acting on assumption that the Assembly did have competence to levy charges for Welsh NHS services, the Bill was not sufficiently related to the purpose and effect of raising money which can or will be used to cover part of the costs of the Welsh NHS under section 108(4). The Bill was imposing liability on compensators and insurers rather than patients, lacking any direct or close connection with the provision of NHS services.
As to the second question the Bill was found to have interfered with A1P1 rights. New financial liabilities would arise from asbestos exposure and liability insurance policies long pre-dating the Bill, potentially increasing financial burdens arising from “events long-past and policies made long ago”; see para 25 of Lord Hope’s judgment in AXA General Insurance Ltd v HM Advocate  UKSC 46. The Bill did not have the special justification required for its retrospective effect.
In their concurring opinions, Lord Thomas and Lady Hale considered that section 2 was within the Welsh Assembly’s competence because the “organisation of funding for the NHS” encompasses a general power to raise funds for the Welsh NHS through imposing charges on patients recoverable from the liable employer, which it could indemnify from its insurer. The legitimate aim of making the tortfeasor pay, rather than the public as a whole, had an economic and social purpose. The Welsh Assembly could impose charges directly on the employer/compensator. As drafted section 14 was outside the competence of the Welsh Assembly, under section 108(4) and (5) GOWA, because of its retrospective effect and it infringed A1P1.
Counsel-General’s reference answered to that effect.
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Melanie Davidson works in the Marketing Team at Justis. She completed her Masters degree in Public International Law, writing her dissertation on the persecution of minorities. Her predominant legal interest lies in the areas of state crime and international human rights.