AMACA NOT LIABLE TO PAY FOR INTERNATIONAL ASBESTOS EXPOSURE

Legal Directions

Asbestos Injuries Compensation Fund Limited as Trustee for the Asbestos Industries Compensation Fund [2018] NSWSC 589

Introduction

In this case, Justice Sackar of the Supreme Court of NSW provided judicial advice at the request of the Asbestos Injuries Compensation Fund Limited as Trustee for the Asbestos Injuries Compensation Fund (the Trustee) as to whether the interrelationship between the James Hardie Former Subsidiaries (Winding up and Administration) Act 2005 (NSW), the Asbestos Injuries Compensation Fund Amended and Restated Trust Deed of 14 December 2006, and the Amended Restated Finding Funding Agreement dated 21 November 2006 was such as to justify the Trustee not paying the proportion of damages arising from exposure to asbestos dust and fibre out of Australia, where the injury suffered by a claimant was of indivisible character and developed as a consequence of exposure to asbestos dust and fibre both inside and outside of Australia.

The Court held that the Trustee was justified in not paying that part of the damages award that reflects the extent to which exposure to asbestos occurred outside Australia. This decision will impact upon the complexity of this subclass of toxic tort litigation and also has the potential to increase the liability of co-defendants to some of the former James Hardie Group of companies.

Background

The Trustee’s application for judicial advice was triggered by litigation pursued by Mr Talifero in the Dust Diseases Tribunal of NSW. Mr Talifero developed mesothelioma as a consequence of inhalation of asbestos dust and fibre. His exposure occurred in part from work he undertook around asbestos-containing products in England before he migrated to Australia. After arriving in Australia, he was exposed to Amaca’s asbestos-containing products. He commenced litigation in the Dust Diseases Tribunal, alleging Amaca was in breach of the duty of care it owed as a manufacturer and supplier and, as a result of exposure to Amaca’s products, he developed mesothelioma.

Russell DDTJ found that the quantity of asbestos dust inhaled by Mr Talifero as a consequence of Amaca’s breach of duty was, of itself, sufficient to be causative of mesothelioma and, noting that the disease of mesothelioma was of indivisible character (being that each and all medically relevant exposure to asbestos dust and fibre was causative of the entirety of the damage), delivered judgment in favour of Mr Talifero against Amaca for the ‘full loss’.

Amaca’s capacity to meet the judgment against it is confined to the monies made available to it by the Trustee.

The Trustee, based upon an opinion by an oncologist, Professor Fox, concluded that 52% of the causal culpability for Mr Talifero’s mesothelioma was attributable to the exposure to asbestos dust and fibre that occurred in England. Accordingly, the Trustee funded Amaca to meet 48% of the verdict. The report of Professor Fox was tendered in the proceedings before the Tribunal.

A report by Professor Breslin, a respiratory specialist, was also tendered; this report recorded a history indicating about 12% of Mr Talifero’s lifelong exposure to asbestos dust and fibre had occurred in England, and by far the most significant causal culpability for the mesothelioma could be attributed to the exposure arising from Amaca’s products in Australia. Similarly, Professor Henderson (a pathologist), expressed significant concerns with the methodology utilised by Professor Fox in attributing 52% of the causal culpability to the exposure in England.

Having said that, as the question of English causal culpability was not relevant to Mr Talifero’s case against Amaca in the Tribunal (under Australian law, sufficient exposure to asbestos dust and fibre to be medically relevant to the development of the disease has the effect that all injury, loss and damage arising from the loss can be attributable to the breach of duty from which that exposure emanates in a case of an indivisible disease), Russell DDTJ correctly did not consider that issue and it was not fully argued.

The Trustee’s application for judicial advice arose as part of Mr Talifero’s threat to pursue enforcement against Amaca for 100% of the judgment obtained in the Tribunal.

Construction of the Funding Agreement

The scope of this article does not allow for a detailed assessment of the interrelationship between the 2005 Act, the Funding Agreement, and the Trust Deed.

The critical consideration in this case was whether the reference in the source documents to a liability in the Trustee to fund Amaca (and other former ‘James Hardie companies’) being limited to claims insofar as they arise from exposure to asbestos occurring in Australia justified a limitation in funding in circumstances where all of the damages awarded for an indivisible disease were attributable to exposure in Australia, although under Australian law, those damages were also attributable to exposure to asbestos which occurred outside Australia. In short, was it the intention of the Funding Agreement to require full payment of damages and provide the former James Hardie Group Company a right of contribution from an international tortfeasors as distinct from limiting the entitlement to payment of the damages?

Impact

The effect of this decision is to permit the Trustee to fund a portion of the liability falling upon it under a judgment, if the disease giving rise to the claim in part developed from exposure to asbestos dust and fibre outside Australia. In effect, Justice Sackar has construed the source documents to produce a proportionate liability scheme in this subclass of cases.

In Mr Talifero’s case, further litigation to determine the proportion of causal culpability attributable to Australian exposure – as distinct from English exposure – now seems likely. It is evident on the expert evidence that there is significant controversy as to whether Professor Fox’s opinion as to relative causal culpability is correct. There is potential for that argument to develop in the course of enforcement proceedings against Amaca or litigation directly against the Trustee, although we expect that if enforcement proceedings were pursued against Amaca, the Trustee may be joined as a party. Any future development will incur significantly more costs and disbursements together with the further stress and inconvenience of litigation to Mr Talifero’s family, although past experience indicates it is more likely that the impact of this decision will affect co-defendants rather than the plaintiffs in future cases. Mr Talifero’s case is unusual because the facts of his exposure permitted him to sue only Amaca.

In most ‘toxic tort’ cases, exposure to asbestos dust and fibre has arisen as a consequence of a breach of duty by more than one tortfeasor. However, given the situation of an ‘indivisible disease’, under Australian law breach of duty by any tortfeasor will give rise to an entitlement against that tortfeasor for recovery of the entire damages. That tortfeasor is thereafter limited to obtain contribution from other joint and severally liable tortfeasors.

As a result, in future cases, a plaintiff who has been exposed to asbestos dust and fibre both outside and inside Australia in circumstances where proceedings are available against tortfeasors other than Amaca is likely to sue those other tortfeasors so as to ensure recovery of complete damages. The rights of those tortfeasors to contribution from Amaca will therefore be impacted by the Trustee’s reduction of the Amaca contribution to allow for the impact of the exposure to asbestos dust and fibre outside Australia, while to the extent that the funding of Amaca is appropriately reduced, the joint and severally liable tortfeasors will be required to ‘make up’ that shortfall. In addition, to the extent to which there is a dispute as to the causal culpability attributable to the exposure outside Australia, the joint and severally liable tortfeasors will be required to pursue contribution proceedings against Amaca.

It will also be interesting to see whether either Mr Talifero or Allianz, both of whom intervened in the proceedings, institute an appeal.

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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