(1) T&N LIMITED (in Administration) (2) ASSOCIATED COMPANIES OF T&N LIMITED (in Administration) Claimants and (1) ROYAL & SUN ALLIANCE PLC (2) BRIAN SMITH (3) ASSOCIATED COMPANIES OF T&N LIMITED (not in Administration) (4) RONALD LAIDLER (5) MARINE INSURANCE CO LIMITED Defendants and (3) CURZON INSURANCE LIMITED Part 20 [2003] EWHC 1016 (Ch)

"The insurance by this Policy does not apply to or include liability in respect of pneumoconiosis or pneumoconiosis accompanied by tubercolosis [sic] . In this Endorsement the expression 'pneumoconiosis' means fibrosis of the lungs due to asbestos dust and includes the condition of the lungs known as dust reticulation."

"It is a condition of this insurance that:- (1) The Assured undertakes:- a) to pay the full cost and expense of handling and disposing of all claims based upon the allegation that employees or former employees of the Company or its Associated Companies contracted asbestosis or mesothelioma as a result of exposure to asbestos dust in the course of their employment with the Company or its Associated Companies. …. "

"Fibrosis of the lungs caused by asbestos dust which may or may not be associated with fibrosis of the parietal or pulmonary layer of the pleura."

"Primary malignant neoplasm of the mesothelioma (diffuse mesothelioma) of the pleura or of the peritoneum."

"The insurance by this policy does not apply to or include liability in respect of pneumoconiosis or pneumoconiosis accompanied by tuberculosis arising from foundry work or sand blasting. In this endorsement the expression 'pneumoconiosis' means fibrosis of the lungs due to silica dust and includes the condition of the lungs known as dust reticulation."

"2(2) Nothing in this Regulation shall be taken as prejudicing any provision in a policy requiring the policy holder to pay to the insurer any sums which the latter may have become liable to pay under the policy and which have been applied to the satisfaction of claims in respect of employees or any costs and expenses incurred in relation to such claims. … 5(1) Every employer entering into a contract of insurance in accordance with this requirement of the Act shall be issued by the insurer with whom he contracts, in respect of the policy of insurance expressing the contract, with a certificate of insurance in the form and containing the particulars specified in the Schedules to these Regulations. (2) Every such certificate of insurance shall be issued not later than thirty days after the date on which the insurance commences or is renewed."

"We hereby certify that the policy to which this certificate relates satisfies the requirements of the relevant law applicable in the United Kingdom."

"Was the term 'pneumoconiosis' used as a catch-all word to cover all asbestos related disease caused by inhalation of asbestos dust …, including therefore mesothelioma, or was it rather used in a strict medical sense as meaning fibrosis of the lungs caused by inhalation of dust, which it is common ground is a different disease from that of mesothelioma?"

"… there may have been some uncertainty in wider medical circles as late as 1966, or even later, as to whether mesothelioma was itself caused by asbestosis, and also some imprecise use of language regarding the term asbestosis, particularly among the wider public. It is also likely that the parties to the policy never gave their direct or close attention to the question of exactly what the pneumoconiosis exclusion would embrace, and in particular whether it would or would not embrace mesothelioma. The fact is, as it seems to me, the pneumoconiosis exclusion was the well known tariff wording which had been in use for many years as an exclusion concerned, loosely speaking, with the risk of inhalation of dust such as asbestos … What it embraced ... was simply not a matter of precise understanding, other than in terms of medical and statutory definition. In those senses, medical and statutory, the meaning of pneumoconiosis was and is clear: it relates to fibrosis of the lungs, not to cancer of the pleura. As it happens, just at the time the policy was being put into effect, the distinction between asbestosis and mesothelioma was being recognised and acted upon in the medical and statutory context by the listing in 1966 of mesothelioma as a separate prescribed disease. This distinction was also a matter of public comment by October 1965 in a lay publication such as The Sunday Times with its wide circulation. In these circumstances I think that the pneumoconiosis exclusion should be construed according to the medical and statutory definitions and not according to a wider or looser understanding of the term."

"Memo: The Insurers shall not be liable for the amount of the first £1,000 of each and every claim or for any lesser amount for which any claim is settled. In this endorsement the expression 'amount' means the total amount of damages and claimants costs and expenses together with all costs expenses and fees incurred with the Insurers written consent all as within defined, together with legal and specialist's fees incurred by the Insurers. Memo: The insurance by this Policy does not apply to or include liability in respect of pneumoconiosis or pneumoconiosis accompanied by tubercolosis [sic] . In this Endorsement the expression 'pneumoconiosis' means fibrosis of the lungs due to asbestos dust and includes the condition of the lungs known as dust reticulation."

"(1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract. (2) The background was famously referred to by Lord Wilberforce as the 'matrix of fact,' but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man. (3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them. (4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax: see Mannai Investments Co. Ltd. v Eagle Star Life Assurance Co. Ltd. [1997] AC 749 . (5) The "rule" that words should be given their "natural and ordinary meaning" reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in Antaios Compania Naviera S.A. v. Salen Rederierna A.B. [1985] AC 191, 201: 'if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense.' "

"Where ordinary words have been used they must be taken to have been used according to the ordinary meaning of those words. If their meaning is clear and unambiguous, effect must be given to them because that it was the parties are taken to have agreed by their conduct. Various rules may be invoked to assist interpretation in the event that there is an ambiguity. It is not the function of the court, when construing a contract, to search for an ambiguity."

"It is settled that an estoppel by convention may arise where parties to a transaction act on an assumed state of facts or law, the assumption being either shared by them both or made by one and acquiesced in by the other. The effect of an estoppel by convention is to preclude a party from denying the assumed facts or law if it would be unjust to allow him to go back on the assumption: …It is not enough that each of the two parties acts on an assumption not communicated to the other. But … a concluded agreement is not a requirement for an estoppel by convention."

" any condition of the lungs that results from inhalation of dust"

"I was sure we did not want the Royal involved in dealing with asbestos[is] and other disease claims."

"T&N has traditionally handled direct … common law claims arising from asbestosis and mesothelioma and the potential liability of the Royal in the event of the failure of T&N to meet such liabilities is confined to claims arising after the need to insure such claims became compulsory …"

"Mr Atkinson, who I am glad to say is now back among us, will be looking at the legal aspects of the situation [the coming into force of the 1969 Act], particularly in relation to pneumoconiosis and mesothelioma cases, and I will let you know the outcome in due course."

"For the purposes of insurance I did not distinguish between them, no, they were all asbestos-related diseases."

"As I recall, T&N did not think they were in breach of the Act. They believed they had adequate cover, having been reassured by the Royal at the outset that this was the case [by the issue of certificates]" (the words in brackets having been added at the trial). It also relies on his evidence that: (1) he recalls Mr Kemp telling him that the Royal were concerned about whether it was complying with the 1969 Act, and he thinks that Mr Kemp meant that the Royal was worried about issuing the certificate; (2) it was his understanding, when he got involved, that Mr Kemp thought that if he had a certificate T&N would be all right, and it was his recollection that Mr Kemp's interest and what he thought amounted to compliance with the 1969 Act was to get a certificate in the offices; (3) in 1975 T&N believed that the insurer was on risk if T&N could not meet asbestosis claims, and the Royal also thought that this was the case based on its issue of certificates, which on their face did not state that pneumoconiosis was excluded; (4) he recalls that T&N did not think it was in breach of the 1969 Act, and it believed it had adequate cover, having been reassured by the Royal at the outset, that this was the case by the issue of the certificates; (5) what he had said in his statement (in connection with the Syndicate) that "

"On the question of excesses it has been accepted that simple excesses are not permissible under the Act, but that policy terms requiring an employer to reimburse the insurer to a stated extent in respect of any claim would be permitted."

"I believed that as a result of the 1969 Act T&N would be required to insure all employee injury and disease risks (including those arising from exposure to asbestos) and to display certificates identifying the EL Insurer on notice boards. I can recall John Kemp telling me that the Royal were not happy with the 1969 Act and whether or not they were complying with it. I think that John Kemp meant they were worried about issuing the certificates. I think this was in the early 1970's. I cannot recall John Kemp ever discussing the 1969 Act with me when it came into force."

"As I recall, T&N did not think that they were in breach of the Act. They believed they had adequate cover, having been reassured by the Royal at the outset that this was the case."

"I have been informed that in these proceedings T&N's administrators assert that an agreement was entered into between Royal and T&N in late 1971 … by which Royal agreed to front the whole of the employers' liability cover whilst T&N continued on a practical basis to deal with asbestos related claims themselves. I am positive that if any discussions of that nature had taken place they would have involved Leslie Owen and undoubtedly also head office. I certainly do not recall any such discussions, and in light of the discussions which took place between Royal and T&N from the end of 1974, [it] does not seem likely to me that any such agreement was reached at that stage. Had there been a formal agreement I would have expected T&N to raise this with Leslie Owen or me when discussions began in 1974 and I am certain they never did raise it. Also if such a change in cover had been effected I would undoubtedly have been told as one of two people responsible for dealing with the risk. Any suggestion that we should alter terms of cover in this way I am certain would have been referred to head office. We would also undoubtedly have needed full details of the claims history and to have carried out a full investigation into the risk to have considered this. I am certain that we did not do that in 1971. … To that date [November 1974] we had been issuing certificates in the prescribed form required by the 1969 Act but the exclusion had continued on the policy, which created a problem because there was a feeling the certificates were potentially inconsistent with the policy. … I can say that no suggestion was made to me at this stage (or at any time afterwards) that any agreement had been reached in 1971."

"I assume that this minute recorded information which had been provided by John Kemp. In the circumstances I believe that this note is probably a record of a discussion in the sense it simply records that Royal had agreed to issue a ('full') certificate (in fact there was only ever one form used). It is entirely possible, I think, that he raised this with the Royal given he would be concerned to have a certificate as from 1 January 1972 and equally that we would have confirmed we would be issuing one. But there is no doubt in my mind that the status quo continued, namely that T&N would continue to be responsible for asbestos related disease and bear the cost of claims to the extent of the excess as provided by the policy. Had Royal agreed, as I understand is alleged, to front the cover on the basis of an indemnity back, I have no doubt that is what John Kemp would have reported but to my mind the minute does not suggest that. … In any case, we simply would not have agreed to front the cover without seeing details of the claims experience. That is so even if, which I understand may be suggested, it will be said that we were only taking on a theoretical risk on the basis that our liability would only come in if T&N became insolvent. We could not begin to assess what that solvency risk might be without information about the claims history and potential future liability. There would have to have been a full blown investigation into the risk including surveys of premises to assess risk management and risk improvement where necessary. There is just no prospect that we would effect this fundamental change in the relationship by a casual agreement. I, or indeed anyone else at branch level, would not have had authority to do so without head office approval and the way the issue was addressed in 1974/5 when both I and Dennis Lloyd were both still in the same positions demonstrates the significance we attached to such a proposal. I am sure also that if any such agreement had been reached, both sides would have insisted on it being properly recorded in writing. I have no recollection of any such written agreement. Nor have I any recollection of any verbal agreement to this effect. I am sure that no such agreement was reached. The whole suggestion is so fundamentally at odds with my recollection of our arrangements with T&N and what happened later that I feel confident in saying it is without foundation. I can accept that we agreed to provide a certificate and again to the extent that the T&N minute records that the legislation left insurers free to underwrite risks as they saw fit, it accords with my understanding and meant there was no obstacle to us issuing a certificate. I do not think that at that time we would have seen it as of great significance in itself and indeed I can see that the prospect of not issuing such a certificate for a substantial insured in the middle of a policy period would be unthinkable unless there was some real obstacle to doing so. I do not remember any discussion about how T&N would comply with their obligations under the Act at this time and do not believe that there was any."

"What we are hoping to do, of course, is to come to an arrangement whereby while fulfilling our statutory obligations under the new Act, we shall continue to enjoy much of the freedom of action which we have hitherto enjoyed under the existing arrangements."

"Earlier this month Mr. J. M. Atkinson and I had preliminary discussions with the Royal concerning the renewal of the Group Employers Liability Policy …"

"I have discussed the situation in great detail with the Royal and should be pleased to answer any questions that you may wish to put to me. In the meantime, we are continuing to be held covered. Mr. Atkinson is well satisfied by the services rendered by the Royal, which have fulfilled the hopes entertained at the time of the change, and the Royal have confirmed that no problems will arise in connection with the Employers Liability (Compulsory Insurance) Act, under which they will issue a full certificate notwithstanding the special arrangements which we have negotiated with them. You may remember that Mr. Atkinson and I made representations to the Confederation of British Industry on this subject and the Regulations as now published meet the points that we made."

"The Committee noted with approval that following strong representations to the Confederation of British Industry, the Regulations published in the Act, whilst requiring all such claims to be fully insured, permitted individual arrangements to be negotiated between the insurance company and the company. In consequence the Royal Insurance Group had agreed to issue a full certificate under the Act although asbestosis and similar claims would continue to be dealt with by T&N Ltd as hitherto and the company would continue to bear the cost of such claims and the first £1,000 (or other agreed excess) on all other claims. The satisfactory outcome of these difficult and delicate negotiations was noted by the Committee with approval."

"You will recall that there was at one time some doubt as to whether or not T&N would be able to continue as hitherto to maintain direct control over common law claims arising from asbestosis and kindred industrial diseases peculiar to the asbestos industry and also as to whether or not the Group could continue to exclude the first £1,000 of all claims from employer's liability insurance. These doubts have now been resolved by the publication of the regulations under the Employer's Liability (Compulsory Insurance) Act 1969 which, whilst requiring all such claims to be fully insured, permit individual arrangements to be negotiated between the Insurance Company and the Company. In consequence the Royal Insurance Group have agreed to issue a full certificate under the Act and copies of these will be issued …. Asbestosis and similar cases will continue to be dealt with by T&N as hitherto and the Company will continue to bear the cost of such claims …."

"I confirm that nothing more need be done at this stage, as we are not insured for claims on account of this disease so that the question of a report to the Royal does not arise."

"I may have misled you in my earlier note of 18 th April when I said that we were not insured in respect of pneumoconiosis claims. Since the Employers Liability (Compulsory Insurance) Act was brought into force, it has been necessary to include these in our Royal cover although as a matter of practice we continue to deal with them internally without troubling the insurers either by completing an initial report form or otherwise."

"The Royal have agreed to issue a full certificate under the Employers' Liability (Compulsory Insurance) Act 1969 but common law claims in respect of asbestosis and kindred industrial diseases, not hitherto insured, will continue to be dealt with direct by Legal Department in conjunction with the Company's legal advisers in this field. Similarly, the first £1,000, or other agreed excess, of all other claims will continue to be paid by the Company as before."

"We refer to our telephone conversation with Mr Hornsby regarding the programme 'World in Action' shown on Granada Television on Monday evening. We look forward to receiving a transcript of the programme as soon as possible. In the course of our conversation you mentioned that you were under the impression that the firm's Employers Liability policy was subject to the exclusion of Pneumoconiosis and in this connection we would draw your attention to Circular HU.73/019 dated 18 th April 1973 when we raised the question of the exclusion of Pneumoconiosis and the application of the Employers Liability (Compulsory Insurance) Act 1969. Branches were asked to refer any cases subject to Endorsement A 448 to Head Office and we shall be interested to learn what action was taken as we cannot trace any correspondence regarding this matter on our file."

"Spoke to Bob Rollo & explained Circular had never reached us. Agreed to submit this renewal having first spoken to Insured to get their reaction"

"The Committee will recall that the risks associated with the use of asbestos are, by special arrangement with the Royal, dealt with direct by T&N and at its own expense, though the insurers provide the statutory certificate under the Employers' Liability (Compulsory Insurance) Act. Mr. J. M. Atkinson recommends that the VCM risks arising from the Group's plastics operations should be dealt with on a similar basis."

"We recently commenced renewal discussions with the Insured, and took the opportunity to mention the question of the exclusion of Pneumoconiosis from the cover bearing in mind the Employers' Liability (Compulsory Insurance) Act 1969. There is no doubt that the Turner and Newall Group, and this was borne out during our recent discussion, are very paternalistic and they have traditionally dealt with and settled all Pneumoconiosis claims themselves on the basis that they preferred to apply a more humanitarian approach than strict legal liability might allow. Consequently they wish to retain this authority, and have requested that we, in effect, front the cover by deleting the exclusion, to satisfy the Act, on receipt of a letter of indemnity from them. Frankly, we feel that this approach has much to commend it, particularly bearing in mind their commercial standing, and as we presumably have no real wish to directly underwrite the risk we trust you will agree to such course of action: we will in effect delegate to them the authority to handle all such claims."

"3) The suggested arrangement whereby the Insured continue to deal with all Pneumoconiosis claims themselves, with us fronting that cover by deleting the exclusion and subject to a 'letter of indemnity' from them, means in practice that the Insured retain the primary liability for such claims themselves. However, the issue of a policy without the exclusion does place on us the ultimate liability for these claims and in practical terms this liability would only devolve on us if:- (i) the Insured cancelled their 'letter of indemnity' or (ii) the Insured went into liquidation. The 'letter of indemnity' should therefore contain an undertaking obliging the Insured to give notice of cancellation and the period of such notice should exceed our policy cancellation condition period by at least 7 days. This gives us some protection against (i) but (ii) is tantamount to our providing a limited solvency guarantee. To enable us to consider this point, please arrange to obtain for us a copy of the Group's accounts for each of the last three financial years. If we agree to the arrangement this is an aspect for which we will need to make a charge which might be appreciable. We shall have to have some idea of the likely liability for unsettled and I.B.N.R Pneumoconiosis claims as at a given point of time, bearing in mind that, in the event of the insolvency of the Insured, all these claims, (subject to the comment above concerning commencing date) would become our responsibility. We therefore need to know something of the number and amount of the cases handled by the Insured over each of the past, say, 5 years, the basis of settlement and the amounts held in reserve against unsettled and I.B.N.R claims. What would be the Insured's view of the maximum amount of our potential liability at any given point in time? Another point which arises is that we believe that there is a risk that lung cancer could be contracted by members of families of employees through contact with the employees. Is there any danger that settlements made by the Insured with their employees on the present basis could prejudice our position with regard to these claims? The V.C.M question is similar and would need to be dealt with in a similar way if the Insured propose to deal with claims on a non-liability basis. The difference, however, is that the risk has not been excluded from the policy and therefore, we have always been providing an indemnity in respect of legal liability for such claims. While we have not, in fact, obtained any premium for this in the past, there is a continuing risk and we assume that, if the present position remains unaltered, you will be obtaining some extra premium to cater for this additional risk."

"I confirm that we shall need to extend the arrangement covering asbestosis claims to include VCM claims as well, and Mr Atkinson and I will discuss this point with you when we meet at 11.30 a.m. on Thursday 9th January 1975 …"

"Employers' Liability (Compulsory Insurance) Act 1969 Policy Number R10/6B3720 At your request we are writing to place on record certain assurances with regard to the above Policy pursuant to which you have issued certificates in accordance with the Employers' Liability (Compulsory Insurance) Act 1969 in respect of this Company and its Associated Companies as defined in the policy. 1. Notwithstanding the wording of the said Policy, as from 1 st January 1975 we undertake:- (a) to pay the full cost and expense of handling and disposing of all claims based upon the allegation that employees or some employees of the Company or its Associated Companies contracted asbestosis or mesothelioma as a result of exposure to asbestos dust in the course of their employment with the Company or its Associated Companies (b) to pay the full cost and expense of handling and disposing of all claims based upon the allegation that employees or former employees of the Company or its Associated Companies contracted angiosarcoma or acroosteolysis as a result of exposure to vinyl chloride in the course of their employment with the Company or its Associated Companies (c) to pay the first £1,000 (one thousand pounds) of the cost and expense of handling and disposing of all other claims in respect of bodily injury or disease sustained or contracted by employees in the course of their employment by the Company or its Associated Companies and which would otherwise fall within the cover extended by the Policy. 2. We further undertake not, without your written consent, to cancel, amend or otherwise vary the above undertakings other than by not less than 60 days notice expiring on the renewal date of the Policy. For the sake of good order, we shall be grateful if you will confirm the acceptability of the above by endorsing the enclosed carbon copy of this letter and returning it to us."

"On a general matter we have, since the earlier correspondence, been reconsidering our attitude to risks with a large excess or similar self-funding arrangement. We have in fact written to you recently on one or two cases setting out our general thoughts and in particular the solvency aspect. In dealing with a risk with the potential of claims in excess of £1m. for the asbestosis alone this is naturally of paramount importance. We therefore consider that in addition to the letter of indemnity we must look for a guarantee from a reputable bank or other insurance company indemnifying us without time limit against all sums which the Insured failed to pay for any reason and we consider that the minimum amount fixed for such guarantee should be £1½m. Perhaps you will discuss the matter again with your clients along these lines and we should be interested to learn of any further developments. Should your client have any difficulties in this regard please refer back to us immediately."

"...we ..wish to do all we can to reach a reasonable solution to the problem which now emerges. In a nutshell, this is that the Insured wish to comply with the Employers' Liability (Compulsory Insurance) Act 1969 by having a policy without exclusions of certain industrial diseases, but yet at the same time they do not wish the risk in respect of these diseases to be conventionally insured but prefer to handle them themselves. However, by virtue of the certificate we issue under the Act we would be ultimately liable for the settlement of all outstanding claims if by reason of financial difficulties the insured were to go into liquidation. Despite your reluctance to take any steps which might have the effect of upsetting in any way the harmonious relations which you have established with the Insured, we are firmly of the view that the issues must be explored with them. As a matter of Group underwriting policy, we do not transact solvency guarantee business and would not be willing to contemplate carrying this risk on the back of the EL account."

"T&N's statutory obligation to insure all employers' liability risks, including asbestosis claims from employees, is at present met by the Royal Insurance Group who issue the required certificate on the understanding that all asbestosis claims will be dealt with direct, as in the past, by the Company. The Royal make no charge for this service as premiums are calculated by reference only to common law claims other than those deriving from asbestosis, but they have recently expressed concern at the extent of their potential liability bearing in mind that outstanding claims are currently estimated at over £1m whilst actual payments in the first half of the current financial year have approached £170,000. The alternatives to insuring against asbestosis claims in the ordinary way (which would be very costly indeed in terms of premium and highly undesirable in other respects), is to seek a banker's guarantee or to set up a Trust Fund to ensure, even if T&N were to become insolvent, that sufficient monies would be available to meet the Company's statutory obligations to the claimants. Inquiries are being undertaken with regard to the respective merits and demerits of these courses and a further report and recommendation will be submitted to the next meeting."

"The Committee considered a paper presented by Mr. J. Kemp setting out the current insurance position in relation to asbestosis claims made against the Company by employees and third parties. As regards the former, for which there was a statutory obligation to insure, it was recalled that, by special arrangement with Royal Insurance, T&N continued to handle and settle all asbestosis claims by present and past employees, though the insurance company remained ultimately liable having issued the statutory certificate under their name. In view of the very considerable escalation in the cost of asbestosis claims settlements in recent years, Royal Insurance had suggested that their potential liability in this respect (and also in respect of outstanding common law claims generally) should be safeguarded by a bankers guarantee or by the setting up of a trust fund. The Committee agreed that, of these alternatives, a bank guarantee seemed likely to be the better solution, but it was noted that the whole matter was under close examination in conjunction with the Group Solicitor and the Group Treasurer and would be the subject of a detailed report and recommendation as soon as enquiries had been completed. In the meantime, Mr. J. M. Atkinson undertook to ascertain how Cape, who must be faced with the same problem, had dealt with the situation."

"T&N has traditionally handled direct … common law claims arising from asbestosis and mesothelioma and the potential liability of the Royal in the event of the failure of T&N to meet such liabilities is confined to claims arising after the need to insure such claims became compulsory …"

"There is therefore a need for further detailed and extensive investigations by our clients, and recognising that this may take some time, which we as Insurers cannot afford, they have offered the alternative solution of our accepting the solvency guarantee risk for of course a consideration."

"Since the last meeting, Mr. J. M. Atkinson and I have examined in greater depth the implications of the insurance situation in relation to asbestosis claims arising both before and after the coming into effect of the Employers' Liability (Compulsory Insurance) Act 1972 and have also had further exploratory talks with Royal Insurance. Further discussions will follow when the data has been examined by the Royal, and the potential liability both of T&N and the Royal has been more fully assessed. Meanwhile, an encouraging start has been made to the talks and a full report on the courses of action open to the Company will be presented in due course. Cape are in a similar situation as they also handle claims direct under cover of the Statutory Certificate issued by their insurers, but it has been established that their insurers have not yet drawn attention to the situation that might arise if Cape found themselves in financial difficulties. …. The policy [with the Royal] as at present written specifically excludes asbestosis claims though the Royal provides full statutory cover under the Compulsory Insurance Act. It has already been agreed that T&N should deal direct with any claims that may emerge from the use of VCM and the Royal have been given a letter of indemnity in regard to their liability in these two areas, and also in respect of general claims up to £1,000. The legal/financial implications of this situation are currently under discussion with the insurers."

"This was true to the extent that the form of certificate was set down by law and made no provision for such matters. However, the 'pneumoconiosis' exclusion remained on the policy throughout. The fact that the exclusion remained on the policy reflected the ongoing agreement with T&N that they would be liable and not Royal for asbestos related claims. I am not qualified to say what effect the certificate has but again what comes across is a worry that some way or another we may be picking up liabilities because of the certificate."

"The committee will recall that the Royal continue to afford the necessary statutory cover in respect of the asbestosis claims for which the Company itself accepts responsibility and their proposals for the regularisation of this situation are still awaited."

"By issuing a Certificate we are liable to pick up any of these claims, irrespective of when they may manifest themselves. This is understood by the Solvency Insurers but they underwrite on the basis of their assessment of the financial standing of the Company i.e. T.&N.. and whilst this may be alright at a particular point in time, circumstances could change. In the event of the accounts revealing a serious down-turn they may well decline to renew and this, of course, would be just when we wanted the cover. If T.&N. went into Liquidation during the period of the cover the Solvency Insurers would, of course, pay."

"The Group Solicitor and I have had further discussions with the Royal with the object of finding a solution to the problem presented by the fact that they issue an unqualified statutory certificate of insurance against a policy which excludes asbestosis claims and general claims under £1,000. No way out of the difficulty was found on this occasion but a further meeting is to be held in April when the asbestosis claims experience in the March quarter is known. In the meantime the Royal are pursuing enquiries into the practice of the insurance market in relation to this situation which is not peculiar to T&N."

"However T&N were anxious to rectify the present situation which they accepted did not comply with the law and they recognised the difficult position which the Royal were in by virtue of the EL Certificate issued. In addition, whilst T&N were quite content with their financial position they recognised and appreciated the nature of the Royal's concern on the solvency angle in the context of a future timescale of ten or twenty or more years ahead when employees currently exposed may be putting forward claims."

"To explore ways of solving the problem attaching to the present arrangement whereby Turner and Newall carry their own asbestosis E.L. Risk, but the 'Royal' stand to be responsible for such claims in the event of the inability or failure of Turner and Newall to meet their commitments; such responsibility is brought about by E.L. (Compulsory Insurance) Act which, in essence, doesn't allow exclusions to an E.L. Policy."

"The Royal however issue certificates which state that the Act is complied with and the continuance of this state of affairs is causing the Royal some anxiety. Apart from the legal implications, their main cause of worry is based on the certainty that if T&N ever cease, for any reason, to settle asbestosis claims they will be called upon to do so on the strength of the certificates issued, and in spite of the exclusion clause in the policy. The Royal's liability starts only from the time when they issue the certificates, that is to say 1972 … [T]hey cannot regard the possibility of T&N going out of business during the next twenty years as being so remote that it can be ignored."

"If this fund can be established to the satisfaction of the Royal, it will enable them to issue a policy in compliance with the Act, even though no premium will be payable in respect of the asbestosis risk."

"The Insured had always carried their own E.L. asbestosis risk preferring moral rather than strict liability settlements. With the advent of the Employers' Liability (Compulsory Insurance) Act we were required to issue a Certificate of Insurance bearing no exclusion of asbestosis in order to comply with the Act. As you will appreciate we therefore had a legal duty to meet asbestosis claims with rights of recovery against the client, but such rights may have availed us nothing had the client run into financial difficulties. Several methods of overcoming the problem were explored, from 1) an approach by the client to his bankers for the latter to guarantee the client's letter of indemnity to us , to 2) the creation of a Trust Fund by the client by a substantial transfer of capital (claims hitherto having been met out of income) but all to no avail. Consequently we came off cover, the client fully appreciating our reasons."

"My recollection is that I thought the problem was the Royal's rather than T&N's."

"Q. You would have realised, would you not, that even a excess under a policy, a small excess of £50, would not be permitted under the Act? A. Yes, that is true. Q. So that meant that there were two issues, were there not, that you were bound to have discussed with Turner & Newall in 1971 when this legislation was about to come into effect: The first one was what it was going to do about the £1,000 excess on the policy? A. Yes. Q. The second one is in the context of the Act what are we going to do about the pneumoconiosis exclusion? A. Yes. Q. I think you accept that Mr Kemp must have raised the issue with you, or you must have raised it with him? A. We discussed the case when it came up, yes. … Q. It was put to you, was it not, that Turner & Newall would continue to be responsible for handling and paying for asbestos claims and that they would reimburse you, pay for the first £1,000 of every claim, but that you would give them the necessary cover they needed to comply with the Act; it must have been? A. No, what we did, this discussion with John Kemp would have been on the question of this issuing the certificates and at that time they said they were going on with paying these claims, and at that time we were in the situation that we issued a policy, it was within a long-term agreement; it was still in cover at the time the renewal came up and we would issue a certificate; and we said we would issue a certificate. At no time did we actually consider Turner & Newall insuring the claims or, in fact, not paying them. Q. A few point arise from that answer; the premium was up for grabs on this renewal, it was to be renegotiated, was it not? A. That was always the case, yes. Q. So whatever you say about the three year agreement, there was a renewal -- A. Of course, yes. Q. -- and there was a renegotiation -- A. Yes. Q. -- and you charged a higher premium? A. Yes. Q. The second point is, let us assume for the moment that he did ask you for a full certificate what did you understand that he was requiring you to do? A. He wanted a certificate because he would obviously be interested and wish to have a certificate because that was what the Act said he should have to put on the premises. Q. What was that Insurance Act certificate evidencing? A. Only that we had issued a policy. … Q. If you were prepared to issue that certificate to Mr Kemp that your policy complied with the Act, you must have been contemplating, must you not, a policy which provided for full insurance with no excess and no excluded diseases? A. Well, yes. … Q. The arrangement was that you would effectively agree to do that, but that Turner & Newall would have, as it were, a behind-the-scenes agreement with you, behind the policy agreement, that they would pay for the asbestos related claims and for the first £1,000 of all other claims; that was the arrangement you had with Mr Kemp, was it not? A. I do not recall. Q. It must have been? A. I do not recall that that was the way I saw it at that time, no. … MR EDELMAN: You knew that T&N had no other employers' liability insurance arrangements, did you not? A. That is not strictly correct. T&N had unit policies when they took over various firms. The one that comes to mind, if you refer to the minutes of the committee, which was December 1971, in that you will see that there is a company called EC Limited and EC Limited, I think it is something like "for contractual reasons" could not be transferred to Royal. So that policy, for instance, ran for a further year, and I cannot name them, but I have a strong belief that there were others, so there were other insurers. Q. Other individual policies -- A. Policies, yes. Q. -- which affected individual unit companies that you were aware of because -- A. We were not aware of them, I only picked that up from that minute. Q. So far as you were aware the T&N group had no other employers' liability insurance because -- A. I can accept that, yes. Q. So it was your policy or nothing to comply with the Act so far as they were concerned, and you? A. Yes. Q. And you knew that to comply with the Act the policy, as you have accepted, had to provide them with full insurance without an excess? A. If that is the wording of it -- I do not actually recollect having any discussion on that because, but put to me like that I suppose I have to agree with you. Q. That is certainly what you would have believed at the time whatever argument may now be made about what the Act said, that is what you would have believed at the time, is it not? A. Yes. Q. You would have had guidance on that from Head Office? A. I have no recollection of that. MR JUSTICE LAWRENCE COLLINS: I thought you said before that you would have had guidance. A. Sorry, what I think was put to me before was we had a series of circulars from Head Office relating to that Act. Whether it was particular guidance on the point made I [would] not like to say. … Q. And [in relation to Mr Kemp's note of October 22, 1971, to Mr Hardie], the second page of this document, in the third line: "

"On a general matter we have, since the earlier Correspondence, been re-considering our attitude to risks with a large excess or similar self-funding arrangement. We have, in fact, written to you recently on one or two cases setting out our general thoughts and in particular the solvency aspect."

"The regulations published in the Act whilst requiring all such claims to be fully insured permit individual arrangements."

"90 plus per cent of Newall's insulation claims are by persons seeking to be ...(reading to the words)... prior to the Act 11/72 when we legally assumed ultimate responsibility."

"With the advent of Employers' [this is Mr Lloyd again, 1st November 1979] Compulsory Insurance Act we were required to issue a certificate of insurance bearing no exclusion of asbestosis in order to comply with the Act. As you will appreciate, we therefore had a legal duty to meet asbestosis claims. ...(reading to the words)... Such rights may have availed us nothing, had the client run into financial difficulties."

"The suggestion has been made by [Mr Edelman] numerous times that some agreement or arrangement was reached in 1971. We have seen a memorandum of November 1974 when the Royal first brought up the problem. I am asking you, as far as your recollection goes, when did the problem about the exclusions and the Act first arise with T&N?"

"The problems arose when the Act came in, 1972."

"To explore ways of solving the problem attaching to the present arrangement whereby Turner and Newall carry their own asbestosis E.L. Risk, but the 'Royal' stand to be responsible for such claims in the event of the inability or failure of Turner and Newall to meet their commitments; such responsibility is brought about by E.L. (Compulsory Insurance) Act which, in essence, doesn't allow exclusions to an E.L. Policy."

"The Insured had always carried their own E.L. asbestosis risk preferring moral rather than strict liability settlements. With the advent of the Employers' Liability (Compulsory Insurance) Act we were required to issue a Certificate of Insurance bearing no exclusion of asbestosis in order to comply with the Act. As you will appreciate we therefore had a legal duty to meet asbestosis claims with rights of recovery against the client, but such rights may have availed us nothing had the client run into financial difficulties…"

"The indemnity granted by this Policy is deemed to be in accordance with the provisions of any law relating to compulsory insurance of liability to employees in Great Britain, Northern Ireland, the Isle of Man ......BUT the Assured shall repay to the Underwriters all sums paid by the Underwriters which the Underwriters would not have been liable to pay but for the provisions of such law"

"It is a condition of this insurance that:- (1) The Assured undertakes:- a) to pay the full cost and expense of handling and disposing of all claims based upon the allegation that employees or former employees of the Company or its Associated Companies contracted asbestosis or mesothelioma as a result of exposure to asbestos dust in the course of their employment with the Company or its Associated Companies. b) to pay the full cost and expense of handling and disposing of all claims based upon the allegation that employees or former employees of the Company or its Associated Companies contracted angiosarcoma or acroosteolysis as a result of exposure to vinyl chloride in the course of their employment with the Company or its Associated Companies. c) to reimburse Underwriters for all other claims and claims expenses up to £375,000 in the aggregate in the policy period."

"All T&N really wanted from EL Insurance was a certificate to put up in our offices and factories stating that we had insurance which complied with the 1969 Act, and a claims investigation service. The EL Insurance with the Syndicate provided both of these."

"Thus whilst T&N was and remained solvent, - the Syndicate were not going to be paying asbestos or vinyl Chloride claims; - the Syndicate were not going to end up ultimately bearing the cost of any claims unless the Aggregate Excess...was exceeded.......... However, the position became quite different if T&N became insolvent. In that eventuality - third party claimants would be likely to look to the Syndicate directly for payment of their claims and to argue that the Syndicate was liable to pay asbestos and vinyl chloride claims, notwithstanding the terms of the policy which required T&N to pay such claims; and - the Syndicate would end up ultimately bearing the cost of claims both within and outside the Aggregate Excess, because their right of reimbursement and T&N's burning coat adjustment would be worthless."

"…Exemption clauses will …. be construed strictly, and the degree of strictness appropriate to their construction will depend upon the extent to which they involve departure from the implied obligations ordinarily accepted by the parties in entering into a contract of a particular kind:"

"DMM is inadequately informed by BRS without any claims experience etc. or other detail and most importantly it is uncertain whether we are to deal with asbestosis, mesothelioma and VCM disease claims which are presently excluded from the Royal cover. Apparently these disease claims are dealt with internally by the Assured's Legal Department."

"..the insurance with the Syndicate was referred to as 'unconventional' because although the policy would be deemed to be compliant with the 1969 Act and the Syndicate would bear the ultimate liability for all EL claims, there would be an arrangement between T&N and the Syndicate under which T&N: (a) agreed to deal with all asbestosis and mesothelioma claims; (b) agreed to reimburse the Syndicate for all other claims up to a high aggregate limit..."

"7. In both cases, asbestosis claims would continue to be dealt with as now, but both insurers would issue policies in accordance with the Act."

"Mr Atkinson and Pemberton were authorised to place the cover with Lloyd's on the best terms provided that on completion of their enquiries they were satisfied that ....the terms and conditions of the policy would comply with the requirements of the Employers' Liability (Compulsory Insurance) Act."

"The Brokers now know enough about us to allay apprehension by themselves and Turner & Newall on capacity to cope efficiently with the claims and, I hope, on continuity but they remain apprehensive about effecting the solvency bond although I told them you had fixed so many now without hitch including some on companies about which one would expect much greater concern on solvency than Turner & Newall – who have just turned in a £50 million profit. Before Derek [Marchant] dealt with the solvency bond question at the meeting on 7 March it is clear Hogg Robinson Manchester were not aware that the quotation was subject to effecting a bond."

"1. List required by Brian Smith each year on form to be agreed showing asbestosis cases – name, period of employment, amount, etc." … 3. All handling charges and claims on asbestosis to be outside aggregate – James Chapman accepted to continue handling. … 5. Policy wording incorporating letter of indemnity (same as Royal) accepted. B.S. confirmed DTI had approved type of scheme – letter available for perusal if required. … 9. No separate letter of indemnity required."

"Disease insured by agreement that the Assured reimburse the entire cost of asbestosis, mesothelioma and angio-sarcoma. All other diseases fall within the annual 1/2 million excess on conventional injuries"

"… unless you then specifically ask I am not required to check at any stage their claims handling or reserves against diseases attributable to asbestos or angio-sarcoma."

"Terms: Excess £500,000 in the aggregate in any one year to be reimbursed by Assured on all claims except disease claims arising from Asbestos and V.C.M. where the claims are to be handled by the Assured who will also meet the entire cost. The policy insures technically as a 'long stop' and will be protected by a solvency bond."

"With effect from 1 April 1977 the Group E-L insurance is provided by Lloyds. The main difference between the cover provided by the Royal up to 31 March 1977 and the new terms arranged with Lloyds is that the Group is responsible for the payment of asbestosis claims, plus the first £500,000 of any other claims in aggregate in any one year, whereas under the Royal policy only the first £1,000 of each and every claim other than asbestosis was borne by the Group. The requirements of the Employees' Liability (Compulsory Insurance) Act are satisfied by T&N undertaking to reimburse insurers with the first £500,000, and for the full amount of claims arising from asbestosis, asbestos related diseases, and diseases arising from exposure to vinyl chloride. There is no actual excess in the policy. The premium (£40,000 in the first year) will be allocated to unit companies in proportion to manual wages."

"Lloyds offered full insurance cover complying with the Compulsory Insurance Act, but required an indemnity whereby T&N would agree to meet the cost of all claims arising from asbestosis and asbestos related diseases and from exposure to vinyl chloride and also the cost of other claims up to an aggregate of £300,000 in any one year. In effect Lloyds were offering catastrophe cover and leaving the Group to meet its own day to day liabilities. Discussions were held with the underwriter leading to an agreement to increase the aggregate for non-asbestosis claims to £500,000. With the authority of the Insurance Committee cover has been placed with Lloyds with effect from 1 April 1977 at an initial premium of £40,000 per annum and arrangements have been made for a claims investigation service which will be an additional charge on Group companies. There are no exclusions or excesses in the policy, and the policy complies fully with the requirements of the Employers' Liability (Compulsory Insurance) Act, and T&N merely agrees to pay the above costs notwithstanding the wording of the policy."

"Mr. Scott is correct in believing that in effect we carry no insurance cover in respect of asbestos disease claims from our employees and former employees in the UK. I say "in effect" since although all employers are under a legal obligation to insure against employers' liability claims in this country, in practice T&N has a policy, the terms of which meet the statutory obligation, but at the same time result in our handling asbestos disease claims direct and making any compensation payments out of revenue. Naturally this is reflected in the premium."

"Agreed not amend asbestos situation to an exclusion."

"5. Policy wording incorporating letter of indemnity (same as Royal) accepted. B.S. confirmed DTI had approved type of scheme – letter available for perusal if required. … No separate letter of indemnity required."

"...Disease insured by agreement that the Assured reimburse the entire cost of asbestosis, mesothelioma and angio-sarcoma. All other diseases fall within the annual 1/2 million excess on conventional injuries ....."; (d) Mr Holden's undated "guidance note" made around April 1, 1977: "

"in effect .. a catastrophe policy" which "would enable the Company to have cover complying with the Compulsory Insurance Act."

"Lloyd's offered full insurance cover complying with the Compulsory Insurance Act, but required an indemnity whereby T&N would agree to meet the cost of all claims arising from asbestosis and asbestos related diseases and from exposure to vinyl chloride and also the cost of other claims up to an aggregate of £300,000 in any one year. In effect Lloyds were offering catastrophe cover and leaving the Group to meet its own day to day liabilities. Discussions were held with the underwriter leading to an agreement to increase the aggregate for non-asbestosis claims to £500,000. With the authority of the Insurance Committee cover has been placed with Lloyds with effect from 1 April 1977 at an initial premium of £40,000 per annum and arrangements have been made for a claims investigation service which will be an additional charge on Group companies. There are no exclusions or excesses in the policy, and the policy complies fully with the requirements of the Employers' Liability (Compulsory Insurance) Act, and T&N merely agrees to pay the above costs notwithstanding the wording of the policy."

"We have recently received confirmation that Turner & Newall have now formed a captive Company known as Curzon and the captive will now insure the aggregate excess under the Employers' liability cover along with the Asbestosis claims on this cover."

"...to exclude liability for all employees' claims for asbestos related diseases from the Syndicate's agreement to indemnify the insured Companies in respect of employees' claims for bodily injury disease or death resulting from their employment"

"Independent set-off, as its name suggests, does not require any relationship between the transactions out of which the cross-claims arise... The only requirements are that the cross-claims must both be due and payable and either liquidated or capable of being quantified by reference to ascertainable facts which do not in their nature require estimation or valuation. Transaction set-off, on the other hand, is a cross-claim arising out of the same transaction or one so closely related that it operates in law or equity as a complete or partial defeasance of the plaintiff's claim."

"WHEREAS, London Market Insurers severally subscribed to certain liability insurance policies issued to T&N (the Subject Insurance Policies as defined below); and, WHEREAS, T&N has incurred and may incur in the future certain liabilities, expenses and losses arising out of various Claims as defined below; and, WHEREAS, in an effort to obtain an adjudication of its rights for coverage under the Subject Insurance Policies, T&N filed two actions captioned T&N Plc vs. Syndicate 990, NRG Victory Reinsurance Co and Mendes and Mount and T&N, Plc vs. Syndicate 190 (hereinafter referred to as the 'Declaratory Actions'); and, WHEREAS, certain London Market Insurers are named defendants in both the Declaratory Actions; and, WHEREAS, London Market Insurers have denied and continue to deny all substantive allegations and claims asserted against them in the Declaratory Actions; and, WHEREAS, by this Agreement, the Parties intend to adopt, by way of compromise, and without prejudice to or waivers of their respective positions in other matters, without further trial or adjudication of any issues of fact or law, and without the London Market Insurers' admission of liability or responsibility under the Subject Insurance Policies, a settlement regarding the application of the Subject Insurance Policies to all Claims strictly as a business accommodation without regard to the merits of the claims and without prejudice to their respective positions on policy wording or any other issues in the Declaratory Actions, or any other action."

"… all the Names, Underwriters, and syndicates at Lloyd's, London, and all the companies doing business in the London Insurance Market which severally subscribed, each in his or its own proportionate share, to one or more of the Subject Insurance Policies (such insurers are identified in Attachment B to this Agreement). London Market Insurers shall also include:- all Names, Underwriters, and syndicates at Lloyd's, London, whether or not identified in Attachment B hereto, that subscribed to any liability insurance policies (a) the existence of which have not presently been established but which were issued to T&N or (b) the existence of which has been established but the identities of the Names, Underwriters and syndicates at Lloyd's, London are not presently known; …"

"(i) all liability insurance policies listed in Attachment A hereto and (ii) all known and unknown general liability, umbrella or excess insurance policies subscribed by the London Market Insurers and issued to T&N whether or not listed in Attachment A hereto."

" … any and all known or unknown, past, existing, potential or future claims, demands, suits, actions or requests for relief or action or forbearance of any kind or description against T&N, by any person whatsoever, including without limitation: (a) any claim or actual, alleged, threatened or feared personal injury, bodily injury, sickness or disease; (b) any claim of actual, alleged, threatened or feared property damage including, without limitation, damage, destruction, loss of use, diminished value or any economic loss and any claim relating to actual, alleged, threatened or feared damage to, destruction of, or limitation or loss of use of natural resources; (c) any claim seeking to compel (through injunctive or equitable relief or otherwise) the enforcement of federal, state or local statutes, rules, regulations, ordinance or government directive or the testing, study, investigation, prevention or remediation of actual, alleged, threatened or feared environmental pollution or any claim for such costs; (d) any claim for nuisance, trespass, interference with quiet enjoyment of property, bad faith, sanctions, punitive or exemplary damages, statutory fines or penalties; or; (e) any claim for costs or expenses incurred in order to comply with any environmental statute, rule, regulation, ordinance or government directive. (f) The Parties agree that (a) through (e) above are worldwide in scope."

" Release of London Market Insurers by T&N. T&N, and any subsequently appointed trustee or representative acting for T&N, hereby remises, releases, and forever discharges: (a) each of the London Market Insurers; (b) each of the London Market Insurers' present and former officers, directors, employees, partners, limited partners, shareholders, members, subsidiaries, affiliates, representatives, attorneys and agents (i) in such capacity and (ii) in their individual capacity for acts, conduct or omissions relating to T&N; … from and against all manner of action, causes of action, suits, debts, accounts, promises, warranties, damages (consequential or punitive), agreements, costs, expenses, claims or demands whatsoever, in law or in equity, whether presently known or unknown, asserted or unasserted, in connection with any and all Claims. It is the intention of T&N to reserve nothing whatsoever hereunder with respect to Claims and to assure the London Market Insurers their peace and freedom from all Claims. This Release extends to all those Underwriters at Lloyd's that subscribed to any of the Subject Insurance Policies which include both known and unknown policies. This Release also extends to all those London Market Companies identified in Attachment B and paying their share of the settlement as regards their subscription to any of the Subject Insurance Policies which include both known and unknown policies. This Release also extends to Equitas Reinsurance Limited and Equitas Limited. Each of these entities is a third-party beneficiary of the terms of this Release. The parties releasing claims expressly assume the risk that acts, omissions, matters, causes or things may have occurred which are not known or are not suspected to exist by one or more of them. The parties hereby waive the terms and provisions of any statute, rule or doctrine of common law which either: narrowly construes releases purporting by their terms to release claims in whole or in part based upon, arising from, or related to such acts, omissions, matters, causes or things; or, which restricts or prohibits the releasing of such claims."

"This Agreement is the product of informed negotiations and involves compromises of the Parties' previously stated legal positions. Accordingly, this Agreement does not reflect upon the Parties' views as to rights and obligations with respect to matters or persons outside the scope of this Agreement. This Agreement is without prejudice with regard to positions taken by the London Market Insurers with regard to other insureds, and without prejudice with regard to positions taken by T&N with regard to other insurers. The Parties specifically disavow any intention to create rights in third parties under or in relation to this Agreement, except as provided in Section 4 regarding Equitas. This Agreement is the jointly drafted product of arms-length negotiations between the Parties with the benefit of advice from counsel, and the Parties agree that it shall be so construed. As such, neither party will claim that any ambiguity in this agreement shall be construed against the other party."

"It is the intention of T&N to reserve nothing whatsoever hereunder with respect to Claims and to assure the London Market Insurers their peace and freedom from all Claims."

"However widely drawn the language, the circumstances in which the release was given may suggest, and frequently they do suggest, that the parties intended, or, more precisely, the parties are reasonably to be taken to have intended, that the release should apply only to claims, known or unknown, relating to a particular subject matter. The court has to consider, therefore, what was the type of claims at which the release was directed. For instance, depending on the circumstances, a mutual general release on a settlement of final partnership accounts might properly be interpreted as confined to claims arising in connection with the partnership business. It could not reasonably be taken to preclude a claim if it later came to light that encroaching tree roots from one partner's property had undermined the foundations of his neighbouring partner's house. Echoing judicial language used in the past, that would be regarded as outside the 'contemplation' of the parties at the time the release was entered into, not because it was an unknown claim, but because it related to a subject matter which was not 'under consideration'."

"Although evidence of the parties' negotiations is normally inadmissible for the purpose of construing their agreement, it may be admissible … along with other extrinsic evidence, to show the disputes which the parties, by their agreement, were endeavouring to resolve."

"It is axiomatic that the analysis of these materials is an objective one, the subjective intentions of each party being irrelevant. An objective analysis of the 'factual matrix' that formed the background to the compromise is required to enable the disputes settled to be identified."

"After some discussions specific to Syndicate 190, I then discussed with the Lloyd's representatives an outline proposal intended to end Lloyd's involvement with T&N."

"Assuming you wish to resolve all disputes including those with NRG, we can offer £1,496,000 immediately which would bring T&N to the point of 100% realization of its insurance asset in London. (of course, you may wish to continue to pursue NRG independently, in which case we will offer only £496,000)."

"I am also attaching a list of syndicates (other than 990) which subscribed to the 1966 to 1968 Turner & Newall London Market Excess Policies. I propose that the Specialist Claims Unit, acting on behalf of those syndicates, act as assignee of Turner & Newall's rights and defenses against Syndicate 990 and NRG Victory Reinsurance Company. … Based upon the foregoing please advise me if you are prepared to discontinue the New York actions without prejudice to renewal."

"Let me simplify the matter. T&N is claiming entitlement to £1,183,440 of coverage under its 1966-1969 1st and 2nd excess coverage. These amounts are allegedly due from Syndicate 190 (£94,560) Syndicate 990 (£89,280) and NRG (£999,600). If T&N will discontinue its New York actions and assigns its rights and defenses against NRG and 990 to those Syndicates subscribing to the 1966-1969 policies, then we will offset £1,183,440 against the Lloyd's overpayment on the 1962 to 1978 policy years. This offer is open today only. At 10am New York time 22 May, Mr. Quinn is due to be deposed. When his deposition begins, our offer is rescinded without any need for further notice or writings. If you wish to accept this offer, please advise your New York counsel to discontinue both New York actions today. Please contact me if you have any questions."

"The draft … is agreed in principle. I may have some minor comments in relation to the wording of the document, but the basis of the document and the agreements recited therein are acceptable to T&N"

"All the discussions leading up to the 1997 Settlement Agreement related only to the 1988 Settlement Agreement policies. At no time was there ever any discussion of settling other policies such as Employers' Liability claims nor was any mention made of the Syndicate. This is not surprising as our discussions dealt solely with the difficulties being experienced in making effective recovery of the receivable due on T&N's behalf to the CCR by the London Market. Had anyone suggested to me that the 1997 Settlement Agreement covered more than certain insurers' liability under the 1988 Settlement Agreement policies, then I would have had to consider in detail with others at T&N the ramifications of this. No mention was made of this and, in particular, no mention was made that the Syndicate would be covered."

"My purpose in meeting with T&N was, in line with the SCU's policy in these matters, to try to achieve a final resolution of all potential claims T&N had or might have against any Lloyd's Syndicate or against the other named London Market Insurers pursuant to any liability policy which had been written by a Lloyd's Syndicate or by the other named London Market Insurers. As far as I was aware, T&N had the same objective in mind … I believe T&N wanted to be able to report that it had resolved all disputes with its insurers, including the London Market Insurers … [The] settlement discussions were on the basis of the London Market Insurers buying back all policies for a one-off payment, so as to eliminate the possibility of any future claims by T&N and to draw a line under T&N as a policyholder, forever. I recall telling Mr Baines at this meeting [April 1, 1996] that the payment the SCU was offering for such a settlement was 'the last dollar you will get from Lloyd's for asbestos' … As far as the SCU and Equitas was concerned, the Settlement Agreement ended all Lloyd's Names' liability (actual or prospective) to T&N under any liability policy which had been issued as at the date of the agreement … This was a full policy buy-back designed to give London Market Insurers their peace and freedom from further claims."

"This Release extends to all those Underwriters at Lloyd's that subscribed to any of the Subject Insurance Policies which include both known and unknown policies."

"It is a specific liability policy because it relates specifically to accidents and injury arising out of or in the course of the business, but only to employees as against general members of the public."

"No, I would be amazed if it even occurred to anybody."

"… there are difficulties … both historic and substantive, in construing 'liabilities to third parties which he may incur' as including a simple contract debt voluntarily incurred. As a matter of legislative history, it is improbable that the draftsman of the Act intended such a broad meaning. …. I have to choose between construing the words 'where a person is insured against liabilities to third parties which he may incur' as limited to insurance against liabilities which may be imposed on that person by operation of law, whether for breach of contract or in tort, or as including the underwriting of liabilities voluntarily undertaken by that person, ie the payment of contract debts. I do not believe that the words were intended to include the latter. … I do not regard the result as satisfactory but, in my view, the solution lies in amendment of the Act. I hope that this matter will therefore receive the attention of the Law Commission in its final report [on the 1930 Act]."

"But the position in law seems to me clearly to be that a third party in a case like the present has no claim in law or in equity of any sort against the insurance company, or against the money paid by the insurance company, nor has he any claim against the person who injures him, the assured, to direct the assured to pay over the sum of money received under the insurance policy to him. The amount that the assured in fact received is part of his general assets."