AMACA FOUND LIABLE FOR IN SITU ASBESTOS PRODUCTS AND LARGE EXEMPLARY DAMAGES

Legal Directions

Werfel v Amaca Pty Limited v The State of South Australia (South Australian Employment Tribunal 6 August 2019)

Background

The plaintiff, a 42 year old man, alleged that he developed mesothelioma of the tunica vaginalis testis as a consequence of inhalation of asbestos dust and fibres from Amaca’s asbestos containing building products when working with fencing contractors to the South Australian Housing Trust between 1994 and 1997 and when undertaking maintenance / improvement of his then home at Pooraka (from 2000 to 2001) and his subsequent home at Parafield Gardens (from 2004 to 2005). The fencing work involved the occasional cutting of in situ asbestos cement sheeting used to clad fences with power tools. The home maintenance work largely comprised sanding of in situ asbestos containing fibrous sheeting installed as eave linings. No new asbestos containing products were used and all of the exposure occurred well after Amaca ceased to manufacture asbestos cement building products.

The plaintiff sued Amaca. Amaca cross-claimed for contribution against the South Australian Housing Trust (Housing).

Competing expert evidence was tendered on causation of the plaintiff’s disease. The testis is an unusual site for mesothelioma to develop. The trial judge ultimately preferred the plaintiff’s evidence on that point.

Further, it was uncontroversial that both Amaca and Housing were aware during all periods of the plaintiff’s exposure that inhalation of asbestos dust and fibres in the quantity experienced by the plaintiff was sufficient to be causative of a risk of developing a disease. As a result, the questions for determination on liability were:

  • What was the reasonable response in light of that risk?
  • Had either Amaca or Housing discharged the duty of care owed to the plaintiff by making a reasonable response?
  • If not, would a reasonable response have impacted such that the plaintiff would have become aware of the risk and avoided it?

In addition, issues arose as to compensatory damages which will not be discussed in this article. However, as mentioned in the Editor’s Note, a significant argument arose as to the awarding of and the appropriate quantum of exemplary damages.

Response to the risk

The trial judge held that the appropriate response in light of the risk was for warnings to be provided.

Insofar as Housing was concerned, the trial judge ultimately accepted evidence that Housing had taken a number of steps prior to 1994 to educate people residing in its houses, its employees and contractors working on its houses as to identification of products which potentially contained asbestos and the risk presented by inhalation of asbestos and fibre. Indeed, terms had been included in contracts which required contractors to comply with Housing’s protocol / standard for handling asbestos containing products.

The trial judge held that those steps were adequate to discharge the duty owed by Housing to the plaintiff, who was an employee of the fencing contractors.

The position regards Amaca was different. Amaca had installed warnings on some of its asbestos cement building products from about 1978, but not on its corrugated fencing products. Further, Amaca’s brochures and instruction booklets which were supplied via hardware stores from the late 1970s ceased to be supplied and/or available after Amaca stopped manufacturing asbestos containing building products in the mid-1980s.

Amaca took no steps to provide warnings in print, television or film media as to methods of identification of asbestos containing products (as distinct from non-asbestos containing products) or the risks presented by inhalation of modest quantities of asbestos dust and fibre, even in home handyman type situations. This was despite Amaca having actual knowledge of that risk, the fact that products it had supplied in South Australia were being handled by home handymen in a manner which gave rise to risks to their health and the allocation of a substantial advertising budget to market both the company and its non-asbestos containing product lines.

Ultimately, the plaintiff successfully argued that taking steps to educate the general population as to identification of potentially asbestos containing products and the associated risk of inhaling even small quantities of dust from asbestos containing products was an option available to Amaca, and its failure to do so constituted a breach of the duty of care owed to the class of persons including the plaintiff.

In reaching that conclusion, the trial rejected evidence tendered by Amaca that such a campaign was unlikely to have any significant impact on the behaviour of the general population and also, would not have specifically impacted upon the plaintiff – bearing in mind the plaintiff’s concessions he was unaware of articles generally appearing in South Australian newspapers during the period of his exposures as to the risk presented by inhalation of asbestos dust. The trial judge distinguished the relevance of the articles noting that, although there were many, only a very small number identified the risk arising from household maintenance work, as distinct from more significant exposure in mining or manufacturing-related activity giving rise to much heavier levels of exposure. In addition, none specifically identified the types of products involved.

Amaca also unsuccessfully argued that he plaintiff would have ignored any such warnings, in light of his knowledge he was cutting into asbestos containing products during the fencing work and nonetheless, readily accepted the assertion by his employer, ‘Alan’, that cutting of the asbestos cement sheeting did not give rise to a risk because the type of asbestos contained in the sheeting was not potentially harmful.

The trial judge also held that Amaca was in breach by failing to install appropriate warnings onto its corrugated fencing products. She noted that such fencing was rarely painted and as such, a warning printed on these sheets would most probably have been present at the time the plaintiff encountered the product, which would have overcome the misinformation provided to him by his employer.

Comment

The finding of liability in Amaca is based on accepting a submission regarding the requirement to advertise so as to provide information to enable identification of potential asbestos containing products and the risk of handling those products in a handyman situation. Quite what level of advertising was appropriate was not specifically identified by the trial judge. Analogous submissions by the plaintiffs Moss and Hannell were rejected by the Supreme Court of Western Australia. In those cases, the Supreme Court found that advertising to provide warnings was not a reasonable response to the risk of home handyman exposure. Similarly, the ‘requirement to advertise’ submission was rejected by the Dust Diseases Tribunal in the Dockyards Test Litigation.

It will be interesting to see whether the Full Court of the Supreme Court of South Australia upholds the trial judge’s view as to the appropriate response by Amaca.

Exemplary damages

South Australian legislation provides a statutory presumption of an entitlement to exemplary damages if the trial judge is satisfied that the defendant knew the injured claimant was at risk of exposure to asbestos dust at a time it knew that exposure to asbestos dust could result in a dust disease.

On the facts of this case, it seems uncontroversial that Amaca had the requisite knowledge and accordingly, the presumption of an award of exemplary damages was satisfied. The question is as to degree, noting that assessment of exemplary damages requires both retrospective and prospective considerations, including punishment and deterrence.

In another South Australian case against Amaca, Latz, the trial judge held Amaca liable for $50,000 in exemplary damages; however, that award was increased on appeal to $250,000 by the Full Court of the Supreme Court of South Australia.

In Werfel, the trial judge took into account the fact that Amaca had acted with no concern for the safety of persons encountering its in situ products, but solely with concern for its own profitability during the course of the period it manufactured asbestos cement building products. There was no reason why Amaca could not have withdrawn asbestos as an ingredient in its mix much earlier but instead chose to maximise its commercial gain.

In considering the appropriate quantum, the trial judge:

  • rejected Amaca’s submissions that there was little value in deterrence, noting that home handymen continue to be exposed to dust emanating from Amaca’s products to date
  • determined that Amaca’s conduct warranted significant penalisation
  • acknowledged that the absence of appropriate warnings or taking steps to withdraw asbestos from its products at a much earlier time was an outrage, warranting a significant award in damages.

The trial judge distinguished the premier position of Amaca as the most sophisticated ‘asbestos defendant’ such that it should have an expectation of a much higher award of exemplary damages against it than other tortfeasors of less relevant sophistication, for instance, the state of South Australia or BHP.

The trial judge awarded $250,000, which was consistent with the quantum of the award made in Latz.

Comment

The position which has been taken by Amaca in South Australian litigation subsequent to Latz is that only modest, if any, exemplary damages will be awarded in future cases. As such, Amaca has asserted that it is inappropriate for it to make disparate contributions to settlement to take into account an allowance for exemplary damages.

It also appears that claimants have been more ‘bullish’ in cases involving Amaca since Latz. The obvious reason for that position is that plaintiffs expect a significant award of exemplary damages will be made against Amaca in the event the proceedings progress to trial. This has had a ‘flow on’ effect for co-defendants who are not liable for exemplary damages or – at least – not liable for exemplary damages of the same magnitude as Amaca.

Co-defendants are expected (by Amaca) to contribute on appropriate apportionment shares to a higher settlement figure than would have been available before Latz, although arguably still within the range of compensatory damages.

It will be interesting to see whether Amaca can be persuaded to alter its position on the question of exemplary damages following the decision in this case, since it seems that the company is at significant risk of being held liable for very substantial exemplary damages in each case into the future. Also, it may be that South Australian claimants will become even more ‘bullish’ in light of this decision and press for settlement at a figure clearly above the range of compensatory damages. It will be necessary for co-defendants to adopt a strong strategy to ensure they are paying contribution to compensatory damages rather than a share of the component of the plaintiff’s loss attributable to exemplary damages payable by Amaca.

Again, the decision of the Full Court on appeal on this aspect will be interesting and may well inform both plaintiffs and co-defendants as to the component of future claims attributable to exemplary damages to be awarded against Amaca.

Further information / assistance regarding the issues raised in this article is available from the author, Stephen Taylor-Jones, Partner or your usual contact at Moray & Agnew.

 


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