Cape Asbestos Scheme |
12th April 2010 |
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Cape Asbestos History |
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| Cape Asbestos was incorporated in 1893 to mine and process asbestos and to sell
asbestos-related products. From 1913, Cape Asbestos operated a number of factories processing and manufacturing
asbestos products in the UK. Principally through its subsidiaries, Cape Asbestos operated mines and, latterly, a factory manufacturing
asbestos products in South Africa. Cape Asbestos sold its mining operations in South Africa in 1979 and, since 1989,
has had no presence in South Africa. |
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| As the health risks associated with asbestos became more widely known, Cape
Asbestos closed a number of its UK factories in the 1960s and 1970s, at the same time developing asbestos-free
insulation products. Cape Asbestos ceased manufacturing asbestos products in the 1980s and, in September 2002, sold all
of its manufacturing operations with the exception of two small operations in Dalton-in-Furness and Abu Dhabi
which support Cape's contracting business. |
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| By 1945, Cape Asbestos had begun to diversify into the provision of industrial
services. Today, Cape is a leading international provider of industrial support services to the energy sector and is
recognised for its health and safety procedures and record. Services include the provision of scaffolding, insulation,
specialist coatings, fire protection, refractory linings and other associated services including asbestos removal
both on and offshore. |
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| The Group's historical use of asbestos in its industrial activities has meant
that a number of people have been exposed to asbestos and its associated health risks. Whilst the large majority of the
Scheme Companies' UK employees have not been affected, unfortunately a number of employees, contractors and others who
have come into contact with the Scheme Companies' asbestos-related activities have been and will be diagnosed with
asbestos-related conditions. |
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Cape Asbestos related claims in the UK |
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| The following is an analysis of the UK asbestos-related claims the Scheme
Companies receive. |
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| Types of claim - The diseases or conditions commonly accepted as being
attributable to asbestos exposure: |
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| (i) Mesothelioma - a fatal cancer which usually develops in the
lining of the lungs (the pleura). There is no cure for the disease and it leads to death, usually within 18 months to
two years of the symptoms becoming apparent. |
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| (ii) Lung cancer - although the connection between exposure
to asbestos and the development of lung cancer is well established, there are many other causes of lung cancer, not
least smoking. As a consequence of the number of different causes and some uncertainty about the nature of the
connection between exposure to asbestos and lung cancer, there are relatively few claims against the Scheme Companies by
claimants suffering from lung cancer. |
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| (iii) Asbestosis - the development of fibrosis in the lungs caused by
asbestos dust. Fibrosis reducesthe respiratory ability of the sufferer. |
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| (iv) Pleural thickening - scarring of the lining of the
lung as a result of asbestos exposure leading to respiratory disability. |
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| (v) Pleural plaques - lesions on the lining of the lungs which harden
over time. (please refer to latest news on Pleural Plaques). |
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| Whilst the Scheme Companies have during certain periods maintained EL
insurance cover, there remains significant financial exposure (in particular in respect of periods prior to it becoming
compulsory to maintain such insurance) where there is either no or only partial insurance cover or the insurer is
insolvent. Similarly, in relation to PL insurance (which is not compulsory) there are substantial periods where there
is either no or only partial insurance, the insurance is subject to exclusions or the insurer is insolvent with the
consequence that the Group has, for many years, been paying compensation for these claims. |
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| The net charge to the Group's consolidated profit and loss account
(excluding the settlements made in respect of the South African claims and the Shipyard Claims referred to below),
was in the Financial Years ended 31 December 2000 £4.4 million, 2001 £3.7 million, 2002 £2.4 million, 2003 £3.8 million
and 2004 £3.7 million respectively. With the exception of the claims covered by the South African settlement, the
overwhelming majority of claims against the Scheme Companies have been made by persons who were exposed to asbestos
in the UK. |
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Implications of Cape Asbestos related claims |
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Asbestos-related claims will continue for the foreseeable future. With the number of claims and the costs of settlement
(in most cases) rising and the possibility of further types or classes of claims being made, it is extremely difficult
to predict with accuracy the long-term financial impact of these claims on the Scheme Companies. It is therefore
important that the Cape Asbestos Group is able to develop a stronger and more secure financial base from which it is able to generate
the funds needed to meet the claims. A number of other companies faced with the same issues have been forced into
insolvency, often leaving claimants, where there is no insurance cover, with little prospect,
if any, of receiving compensation. |
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Indeed, if there was a material deterioration in the Group's trading performance or a significant increase in either
the number of asbestos-related claims or the quantum of damages the Group had to settle, it is unlikely that, in the
absence of further external funding, the Group would be able to continue to meet claims. In those circumstances it is
possible that the Cape Asbestos Directors would be faced with no alternative other than to realise the Group's principal assets
and to commence the breaking up of the Group. |
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| Claims against Cape Plc and any of its subsidiary Group Companies are
subject to a statutory Scheme of Arrangement which was approved by the High Court in June 2006. Cape Asbestos have
invested £40 million in the Sheme Fund which is estimated to be sufficient to pay all claims in full for the next
eight years. Cape Asbestos will review the Fund every three years. If there is insufficient capital in the Fund to
meet the expected cost of claims for the following eight years, Cape Asbestos will top up the Fund from its available
operating cash flow. The scheme limits the requirement on Cape Asbestos to top up the Fund to 70% of its available
annual cash flow. If Cape Asbestos has insufficient cash in any given year to keep the fund topped up, there may
come a time when claims against Cape Asbestos are not paid in full. |
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| The scheme only applies to personal injury claims for asbestos related
disease caused by exposure to asbestos from Cape's activities in the UK. The purpose of the Scheme is to provide a
secure pot of money to meet Cape's future asbestos liabilities while allowing Cape Asbestos to trade profitably and
thereby continue to top up the fund to pay claims in full for as long as possible. The scheme protects the Cape group
from the threat that it may become insolvent as a direct result of asbestos liabilities. The Scheme therefore
directly affects the ability of any asbestos Claimant to take action to enforce payment of any settlement or judgment
against any Cape Scheme company or against any of their insurers pursuant to the Third Party
(Rights Against Insurers) Act 1930. |
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Claiming compensation under the Cape Asbestos Scheme |
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| If you would like some advice on whether you are able to claim compensation
under the Cape Asbestos Scheme, please call us on FreePhone 0800 783 9535. We have had numerous successful claims
against Cape Asbestos and have many more claims pending. |
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