LM-2024-000252 - [2025] EWHC 2704 (Comm)

Mr Miller failed to verify the position regarding pollution exclusions in BOC US’s primary policies post-October 1988.

Mr Miller failed to verify the position regarding pollution exclusions in BOC US’s excess policies post-October 1985.

These two allegations may be considered together, because they both concern the quantification of the policy limits included in the allocation calculation for the settlement in the TTSA. The cut-off dates used for that purpose were 1 October 1985 in the case of excess policies and 1 October 1988 in the case of primary policies. This was because BOC did not include any excess or primary coverage after these respective dates in its allocation calculations on the basis that later policies contained absolute pollution exclusions. Equitas makes two complaints: first, that Mr Miller did not verify the existence of the alleged pollution exclusions; second, that he did not verify that such exclusions, if they existed, excluded the asbestos claims and the welding product claims.

Mr Miller’s relevant evidence in his witness statement gives the context for this issue and sets out his own position.

“21.

BOC commenced litigation against a number of its insurers, including Newark, in 1988. The litigation was originally focused on insurance coverage for environmental claims. After several years of intense litigation, a settlement was reached of those environmental claims. Subsequently, the focus in the litigation shifted to bodily injury claims against BOC caused (or alleged to have been caused) by exposure to asbestos containing products and/or welding related products (the ‘Bodily Injury Claims’). The vast majority of the Bodily Injury Claims were related to alleged exposures to welding fumes. The asbestos related Bodily Injury Claims were much smaller in number.

22.

Whilst I understand that the environmental claims are not the subject of these proceedings, these claims were significant and ‘set the scene’ for the Bodily Injury Claims. The litigation of the environmental claims was extremely expensive for the defendant insurers. There were several months of depositions in various states throughout the United States and the discovery was incredibly voluminous. The defendant insurers were therefore well aware of the lengths that BOC would go to in litigating their claims and seeking to maximise their coverage. It was thought that a similarly intense approach to litigation would be taken by BOC for the Bodily Injury Claims.

23.

The policies at issue were also the same for the environmental claims and the Bodily Injury Claims (save for certain global excess policies, which I deal with below). During the ‘environmental’ stage of the litigation, the parties had spent a significant amount of time collating, reviewing and determining the limits and coverage position of BOC’s policies that were at issue in the litigation. By the time the focus shifted to the Bodily Injury Claims, the parties were aware of and were agreed on the coverage position under the policies that were the subject of the litigation, and whether any of BOC’s policies contained applicable exclusions.

…

72.

In my experience as an environmental coverage lawyer, from 1986 ‘absolute’ pollution exclusions began to feature in commercial general liability (‘CGL’) policies (i.e. policies that would otherwise respond to the Bodily Injury Claims). By 1988, virtually all CGL policies contained such exclusions.

73.

It was my experience that, prior to 1986, most CGL policies contained ‘sudden and accidental’ pollution exclusions, which I recall had been introduced in the 1970s and which excluded cover for pollution claims unless the pollution was ‘sudden and accidental’. However, there was an enormous increase in environmental and asbestos related litigation in the 1970s and 1980s, not just in New Jersey, but across the US. As I have explained above, New Jersey was a very favourable jurisdiction for insureds in respect of mass torts claims. The New Jersey court had previously held sudden and accidental exclusions did not exclude coverage for pollution/environmental clean up claims, even if there had been dumping of hazardous waste over a number of years. The New Jersey court had also determined that sudden and accidental pollution exclusions did not exclude coverage for bodily injury claims arising out of pollutants such as asbestos.

74.

In my experience as an environmental coverage lawyer, I saw that insurers began to replace sudden and accidental exclusions with absolute pollution exclusions, beginning in 1986. I understood this to be in response to the adverse legal rulings against insurers in New Jersey.

75.

The introduction of absolute pollution exclusion was significant in determining an appropriate end date for the trigger period. There had been extensive litigation in relation to the interpretation of these exclusions and the New Jersey courts had held that absolute pollution exclusions did exclude coverage for asbestos claims. It was also generally accepted in the insurance legal profession (and the parties were in agreement) that the release of welding fumes would be considered a ‘pollutant’ similar to asbestos and the New Jersey courts would very likely rule on welding claims in the same way they had on asbestos claims, i.e. that coverage for claims arising from exposure to welding fumes would be excluded by absolute pollution exclusions.

…

77.

I do not now recall whether I personally reviewed all of BOC’s post-1985 excess covers and all of BOC’s post-1988 primary covers during the Bodily Injury Claims’ settlement discussions. However, as I have explained above, by this point BOC’s coverage position had already been considered and reviewed at length by the parties when the environmental claims were being litigated/settled. In particular, the presence of absolute pollution exclusions in BOC’s policies would have also excluded BOC’s environmental claims, so this had been a key issue at that stage of the litigation too. I participated in the review of BOC’s policies undertaken by the defendant insurers during the environmental phase of the litigation. Where BOC’s policies contained absolute pollution exclusions, I recall that these were excluded from providing cover for the environmental claims. By the time we were considering these pollution exclusions in the context of the Bodily Injury Claims, applicable exclusions in BOC’s policies had already been established and were accepted to have excluded the Bodily Injury Claims, as they had done for the environmental claims.”

So far as concerns the existence of the pollution exclusions, I accept Mr Miller’s evidence that, whether or not he specifically looked at the policies in the context of the bodily injury claims (as to which, unsurprisingly, he has no firm recollection), the extent of coverage and of exclusions had been considered in detail in the environmental litigation and was known. In cross-examination Mr Miller said that he was “very familiar” with all of the relevant policies. There are two further points. First, the documents show that in December 1998 those acting for BOC sent to Mr Miller a cover note for 1985-1986, which contained an absolute pollution exclusion as well as an asbestos exclusion, and they confirmed to him that the coverage “continued, essentially unchanged, through 1988.” Second, in his report, paragraph 7.2.8.4, Mr Coughlin remarks on “the general adoption of asbestos exclusions and the ‘absolute’ pollution exclusion by the insurance industry in the mid to late 1980s”, which is consistent with the evidence of both Mr Miller. It is inherently probable that the policies in question did contain absolute pollution exclusions, and Equitas has not asserted or proved that they did not.

There remains the question whether it was reasonable for Mr Miller to proceed on the basis that absolute pollution exclusions would exclude cover for the bodily injury claims based on exposure to asbestos or, in particular, welding fumes in the course of employment. A later decision of the Supreme Court of New Jersey, overturning a judgment of the Appellate Division, held that the purpose of absolute exclusion clauses in comprehensive general liability policies was to have a broad exclusion for traditional environmentally-related damages, not (on the facts of that case) to bar coverage for personal injuries arising from exposure to toxic fumes emanating from a floor coating-sealant operation performed by the insured: Nav-Its, Inc. v Selective Ins. Co. (2005) 183 N.J. 110. This does not, however, indicate that Mr Miller was wrong to take the view he did at the time of the TTSA. I make the following observations. First, the issue concerns only exposure to fumes from welding operations (most of the claims), as coverage for bodily injury resulting from exposure to asbestos was excluded by specific provision. Second, Mr Miller’s own evidence is that the view he took accorded with what was “generally accepted” in the legal profession in New Jersey. Third, Mr Coughlin’s opinion was that “Mr Miller’s view was reasonable at the time” and that “the position taken by Newark was … entirely reasonable”: report, paragraphs 7.2.8.8 and 7.2.8.12. It is right to observe that he accepted that contrary arguments could have been made (report, paragraph 7.2.8.12) and that “when the TTSA was being negotiated and signed, the issue of whether the absolute pollution exclusion was limited to traditional environmental pollution was an open one in New Jersey” (report, paragraphs and 7.2.8.7). But he also opined that “the consensus as at March 2001 was that absolute pollution exclusions would likely be effective to exclude asbestos and welding claims” (report, paragraph 7.2.8.12). In cross-examination, Mr Coughlin acknowledged that by 2001 “cracks were beginning to show” in the consensus position; yet, despite rigorous questioning, he did not materially depart from the conclusion expressed in his report. See report, paragraphs 7.2.8.4 to 7.2.8.13; transcript, day 2, pages 104-108. Fourth, Mr Schiavone did not cover this issue in his evidence and so did not contradict Mr Coughlin’s opinion, either in his report or in the experts’ joint statement. Fifth, insofar as it was put or suggested to Mr Coughlin that the point ought to have been determined before settlement, that would obviously be a risky course, especially if the consensus opinion was against Newark on the issue. Sixth, all the other insurers who were party to the TTSA, with the exception of Liberty, would have gained advantage by the inclusion of the policies in question. The fact that they all took the same position on the absolute pollution exclusions is a reason for thinking that Mr Miller’s approach was not unreasonable. Seventh, Mr Miller observed that, regardless of absolute pollution exclusions, post-1988 policies would have been unlikely to respond to bodily injury claims because the insurers would have had the “known loss” defence, which precludes cover for losses that are already known by the insured when the policy is taken out: statement, paragraph 80. Eighth, Equitas has not demonstrated that the point would have made a material difference to the ultimate settlement.