Australia: Asbestos Litigation Update

Last Updated: 9 July 2009
Article by Barbara De Brouwer, Sara Mirabella and Michael Proud

Some recent decisions involving asbestos litigation considered whether an issue determined in earlier proceedings could be relitigated, the meaning of 'dependent' in section 15B of the Civil Liability Act 2002 (NSW), whether an insurer's liability was greater than the specified statutory amount, and whether indemnity costs were payable by a party which had refused to settle at an earlier time.

Apostolopoulos v Hatzisarantinos and Ors trading as Omonia Constructions (No. 3) [2009] NSWDDT 6

An application was made by the first defendant, Omonia, under section 25B(1) of the Dust Diseases Tribunal Act 1989 (NSW) (the Act) to relitigate an issue of a general nature that had been determined in an earlier proceeding. The issue concerned whether Progressive Massive Fibrosis (PMF) was an indivisible injury.

Section 25B(2) of the Act outlines the factors that the Tribunal is to consider when deciding whether to grant leave under section 25B(1). They are:

  • The availability of new evidence (whether or not previously available).
  • The manner in which the other proceedings referred to in that subsection were conducted.
  • Such other matters as the Tribunal considers to be relevant.

On section 25B(2)(a), Judge O'Meally was of the opinion that 'new evidence' meant evidence not given previously. Evidence contained in various reports obtained by Omonia's solicitors, which discussed the nature of PMF, were held to constitute 'new evidence'.

When considering the conduct of the earlier proceedings, Judge O'Meally was not persuaded that the manner in which that trial was conducted before Judge Johns warranted leave to be granted. He felt that the issue of PMF was fairly raised in evidence, examined by counsel and considered at first instance and on appeal.

The grounds on which Judge O'Meally refused to grant leave under section 25B(2)(c) of the Act included:

  • The delay of more than three years after the filing of the plaintiff's section 25B notice.
  • The rejection of offers of settlement.
  • The lack of any indication prior to the departure of the Tribunal and lawyers for overseas for the purposes of examining the plaintiff.
  • The fact that the case would have been conducted in a different manner had the application been made earlier.

Amaca Pty Ltd v Novek [2009] NSWCA 50

This case considered the meaning of 'dependent' in section 15B of the Civil Liability Act 2002 (NSW) (CLA). In particular, whether a relationship of dependency existed between grandparent and grandchildren in a situation where the children's parents were alive and not estranged from the children.

Before becoming ill with mesothelioma, Mrs Margaret Dawson lived with her daughter, her daughter's husband and their two young children.

The daughter and husband were able to work full time while Mrs Dawson cared for the children. The first instance finding that the grandchildren were dependents of Mrs Dawson was appealed by the defendants on the basis that the trial judge erred in construing section 15B of the CLA. They argued that:

  • The grandchildren were not dependents of Mrs Dawson.
  • Mrs Dawson's services were not provided to the grandchildren, but to their parents.
  • The provision of services was not reasonable.

On appeal Justice Campbell (with whom the other judges agreed) held that no errors of law had been made. Justice Campbell held that:

  • The period of time over which Mrs Dawson provided care to the children, the frequency with which it was provided, and the extensive nature of the care she provided, made it open to the judge to conclude that the children were dependent on Mrs Dawson.
  • Mrs Dawson provided services to the grandchildren by looking after them.
  • It was open to the judge to conclude that the provision of services was reasonable.

The appeal was dismissed with costs.

This case is significant because it broadens the definition of 'dependent' in section 15B of the CLA to include a grandmother providing care for her grandchildren where the children's parents are alive and not estranged from the children.

QBE Insurance (Australia) Ltd v Stewart [2009] NSWCA 66

Angus Stewart worked for Pilkington Bros (Australia) Ltd (Pilkington) from 1964 to 1967. For most of his employment he operated a multi-stage dye bending machine during which time he wore asbestos gloves for heat protection. When using the gloves, the gloves gave off dust in various circumstances. Many years later Mr Stewart was diagnosed with mesothelioma and died from this condition on 22 October 2007. Prior to his death he commenced proceedings in the Dust Diseases Tribunal against QBE (Pilkington's workers' compensation insurer) and Wallaby Grip Ltd (Wallaby Grip) (the supplier to Pilkington of the asbestos gloves). Following his death, the proceedings were continued by his widow and legal personal representative, Irene Stewart.

On 18 March 2008, Judge Kearns delivered a verdict against QBE and Wallaby Grip for AU$356,510 in favour of Ms Stewart. QBE appealed this decision on two grounds:

  • The finding that Pilkington was negligent (the employer's liability issue).
  • The finding that QBE was liable for more than $40,000 which, at the relevant time, was the statutory minimum for which every employer was required to obtain a policy for its liability for any injury to its workers (the insurance issue).

The appeal was heard before Justices Ipp, Gyles, and Brereton.

On the employer's liability issue, the decision was unanimous that 'there was (just) sufficient evidence to entitle the primary judge to conclude that Pilkington failed to warn Mr Stewart of the risks attendant on use of asbestos gloves... and that if given a warning Mr Stewart would have acted on it'. Accordingly, on this issue, the appeal failed.

On the insurance issue, QBE's appeal was allowed. Justices Ipp and Gyles held that Judge Kearns erred in holding that QBE's liability to indemnify Pilkington was unlimited and, in particular, not limited to $40,000. 'The only evidence that bore upon the amount of cover under the policy was that which gave rise to the inference that the cover was at least $40,000': per Justice Ipp.

Justices Ipp and Gyles also found that Judge Kearns erred in holding that an onus lay on QBE to produce evidence that demonstrated the limit, if there was one. 'The fact that QBE could not produce the policy does not transform the onus of proof that otherwise arises': per Justice Ipp.

However, Justice Brereton disagreed. He was of the view that the party relying on an express exclusion of limitation of liability bore the onus of showing that it was a term of the contract.

This decision reinforces the long standing legal principle that the onus of proof lies with the party who makes the allegation. The terms of the relevant insurance policy and in particular, the maximum sum insured, were elements of Ms Stewart's case. The onus of proving these elements rested with her.

QBE Insurance (Australia) Ltd v CSR Ltd [2009] NSWDDT 7

Francis Gibson contracted asbestosis as a result of his employment with Austin Richards Pty Ltd between 1962 and 1970. On 30 November 2006, Mr Gibson issued proceedings for damages against QBE Insurance (Australia) Ltd (QBE), the insurer of Austin Richards, and Amaca Pty Ltd (Amaca), the supplier of asbestos products. Amaca cross-claimed against CSR Ltd (CSR), another supplier of asbestos products.

Mr Gibson's claim was subject to the Claims Resolution Process established by Part 4 of the Dust Diseases Tribunal Regulations 2007. On 13 February 2008, an appointed Contributions Assessor determined contribution as follows: QBE – 15%; Amaca – 63.75%; and CSR – 21.25%. Amaca was appointed as Single Claims Manager (SCM) to manage, negotiate and seek to resolve the (Mr Gibson's) claim on behalf of all defendants.

On 27 March 2008, a mediation was held. Mr Gibson offered to settle his claim for $240,000 inclusive of costs. QBE, Amaca and CSR offered $80,000 inclusive of costs because CSR would not agree to any settlement that exceeded this amount.

On 7 April 2008, Mr Gibson offered to settle his claim for $150,000 inclusive of costs on a provisional basis. Although QBE and Amaca considered this offer reasonable and were keen to accept it, CSR refused to authorize the SCM to settle with Mr Gibson for that amount.

By July 2008, there were a number of reports available to the parties. Dr David McEvoy, respiratory physician, was of the opinion that the future cost of Mr Gibson's care would be $80,000 to $120,000. Dr Roger Allen, physician, estimated these costs to be $80,000 to $100,000 whereas Mr Hoey, occupational therapist, estimated them to be $90,000. When the latter report was to hand, QBE's solicitors wrote to CSR's solicitors enquiring whether their client would alter its position. CSR's response was that it would not but that QBE and Amaca were free to settle with Mr Gibson in the sum of $150,000.

The claim eventually settled on 4 September 2008 for $165,000 inclusive of costs on a provisional basis. QBE agreed to pay $22,500, ie 15% of $150,000 in accordance with the Contributions Assessment, and Amaca agreed to pay the balance of $142,500.

On 16 February 2009, CSR agreed to pay $31,875 inclusive of costs and interest in settlement of the cross-claim by Amaca. This settlement was on a full and final basis. This amount was the same sum that CSR had refused to contribute to Mr Gibson's initial offer of $150,000 in April 2008.

QBE sought orders that CSR pay its costs, either on a party/party basis or indemnity basis, from 27 March 2008 (the date of the mediation) or, in the alternative, from 7 April 2008 when Mr Gibson offered to accept $150,000 inclusive of costs in settlement of his claim on a provisional basis. QBE contended that it would not have incurred these costs if CSR had acted reasonably during the Claims Resolution Process.

During the hearing, CSR conceded that, as at April 2008, $150,000 inclusive of costs was a reasonable settlement of Mr Gibson's claim for provisional damages.

Judge Curtis concluded that CSR had acted unreasonably when it imposed a monetary limit of $80,000 on Amaca when it was appointed SCM. Its conduct was incompatible with the objectives of the Claims Resolution Process. As CSR was on notice of its peril if it persisted with its unreasonable attitude, Judge Curtis held that '[t]his [was] an appropriate matter in which costs should be paid on an indemnity basis'.

© DLA Phillips Fox

DLA Phillips Fox is one of the largest legal firms in Australasia and a member of DLA Piper Group, an alliance of independent legal practices. It is a separate and distinct legal entity. For more information visit www.dlaphillipsfox.com

This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances.

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