We Contemplate A Rise In Personal Actions Against Directors For Workplace Diseases in South Africa
In April South Africa's South Gauteng High Court dismissed a technical challenge by Anglo- Gold Ashanti against a claim by a former mine worker in silicosis-related litigation. The judgment is particularly significant to the directors' and officers' (D&O) liability market because although only AngloGold is cited as defendant, there remains scope for AngloGold's directors, in their personal capacities, to also be named as co-defendants.
Briefly, the claimant alleges, during the course of his employment at the Vaal Reefs Mine, AngloGold failed to carry out its obligations under safety legislation governing the operation of mines in South Africa, as a consequence of which he contracted silicosis, for which he now claims damages. AngloGold's failed technical challenge, which centred on pleading issues, means the claim is now free to proceed. In turn, as this was merely a test case, it is now a distinct possibility tens of thousands of other claimants, who until now have been lurking in the shadows, will step out into the light, claims against Anglo- Gold and other mining companies in hand.
There is little doubt in doing so they will be bolstered by the contemplation of class actions as envisaged by the South African Companies Act 71 (2008). While the jurisprudence in this area is relatively rudimentary at present there is, in principle, no statutory bar preventing these claimants from launching proceedings as a group of affected parties (Mankayi v AngloGold Ashanti Ltd (2011)). Should they do so, it is possible not only the mining companies but also their directors will be in the firing line.
The Mine Health and Safety Act 29 (1996) requires the chief executive of a mining company to ensure the discharge of a company's duties under safety legislation; penalties, fines and imprisonment can follow for those directors, officers or managers guilty of a failure to maintain a safe working environment. In addition, the chief inspector of mines, who is authorised to conduct official inquiries into, broadly, any "cause for concern on health or safety grounds", may require preventative or remedial action and can apply punitive enforcement measures (up to removal of a mining licence) in appropriate circumstances. Relying on this statutory framework there are, therefore, grounds upon which personal claims against relevant directors and officers could be founded.
D&O cover is, of course, available in respect of claims brought against directors in their personal capacity. Indeed, given the significant growth of the plaintiffs bar in South Africa and the additional complexities brought about by attempts to shift disease litigation to jurisdictions with more generous damages regimes, it would not be unreasonable to suggest such cover is now critical for directors and officers in this area.
While such policies typically exclude cover for occupational disease litigation, they may respond to claims of the kind set out above (failure to discharge statutory obligations) and policy extensions may also provide indemnity against the cost of litigation. D&O insurers should therefore be aware of the potential for claimants afflicted with occupational diseases to pursue directors and officers directly for breaches of, among others, the Mine Health and Safety Act, and consider whether their policies would cover such claims, notwithstanding the applicable exclusions.
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