In the context of indivisible diseases such as mesothelioma, the NSW Court of Appeal has recently given important clarification that entities such as Amaca Pty Ltd (Amaca) (a former subsidiary of James Hardie) cannot limit their liability for injury resulting from asbestos exposure within Australia, by reference to separate exposure outside Australia.

In May this year the NSW Supreme Court confirmed that the Trustee for the Asbestos Injuries Compensation Fund is justified in limiting the damages to be paid to Francis Talifero’s estate (Estate) despite the fact that Mr Talifero had an indivisible disease (mesothelioma). The Court of Appeal, however, disagrees and has advised that the Trustee is obliged to pay the Estate the whole of Amaca’s liability under the award of damages.

Why is the Court of Appeal’s decision important?

The effect of the first instance decision would have been to allow Amaca to occupy a unique position not shared by any other asbestos tortfeasors in Australia, and, in certain circumstances, to circumvent the orthodox position in Australia where liability for indivisible diseases is not subject to proportionality.

In practical terms, this would have:

  • required other tortfeasors to assess the damages attributable to a claimant’s Australian vs. non-Australian asbestos exposure when seeking contribution from Amaca.
  • prevented the other tortfeasors from recovering contribution from Amaca for non-Australian exposure.
  • potentially resulted in claimants with mesothelioma pursuing other tortfeasors to recover the shortfall resulting from Amaca’s underpayment.

Background

Mr Talifero was exposed to asbestos in Australia and the United Kingdom. His claim against Amaca, however, was framed by reference to his Australian-based exposure only. The NSW Dust Diseases Tribunal found that Mr Talifero’s Australian-based exposure was sufficient to cause his mesothelioma and his Estate was awarded $560,482.00 in damages, plus costs.

An exercise in interpretation

At its core, this matter involved an exercise in interpretation of the key terms of three instruments: the James Hardie Former Subsidiaries (Winding up and Administration) Act 2005 (Act), the Asbestos Injuries Compensation Fund Trust Deed and the Final Funding Agreement (Funding Agreement). By way of background, these three instruments comprise the tripartite scheme under which payable liabilities of James Hardie’s former subsidiaries are met.

Supreme Court decision

Despite differences between their key terms, first instance judge, Justice Sackar, held that the three instruments should be read together in harmony. His Honour’s interpretation of these terms, combined with the history of the tripartite scheme and the finite resources available to fund potential liabilities, led him to find that the Trustee is obliged to limit the damages payable to the Estate to the proportion of damages relating to Mr Talifero’s Australian-based asbestos exposure.

Court of Appeal decision

Justice Sackar was overruled by all three judges of the Court of Appeal.

Having established that the Estate’s award of damages flowed from a claim founded exclusively on exposure to asbestos in Australia, Sackville AJA (Beazley P agreeing) was satisfied that the Act allows for the entirety of the award to be paid by the Trustee, despite Mr Talifero’s exposure in the United Kingdom. Furthermore, given the role of the Act in providing a framework for the operation of the Funding Agreement, to construe the Funding Agreement as prohibiting a payment authorised by the Act is not, according to Sackville AJA, a harmonious reading.

Acting Justice of Appeal Emmett took a different approach in his interpretation: if Mr Talifero inhaled the fibre that caused his mesothelioma in Australia, he (or rather his Estate) is entitled to the full amount of the award. On the other hand, if the fibre causing Mr Talifero’s mesothelioma was inhaled outside Australia, there would be no entitlement to any part of the award. Such an inquiry, however, was not before the Court of Appeal.

We have no doubt that the clarification provided by the Court of Appeal comes as something of a relief to other asbestos product suppliers in Australia.