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South Australia v Ellis

Facts:

Mr Cotton began smoking at the age of 17. He smoked continuously for over 26 years until he was diagnosed with lung cancer in May 2000. He smoked between 15 and 20 cigarettes per day.

The plaintiff worked for two employers, Millennium and EWSD. During that time, he suffered relatively low levels of asbestos exposure. The plaintiff was 43 when he was diagnosed. He died on 6 January 2002.

The plaintiff commenced proceedings prior to his death. Following his death, Ms Ellis was substituted as the plaintiff.

The plaintiff sued the employers as well as Amaca being the manufacturer and supplier of the asbestos based products to which he was exposed.

The Chief Justice in Western Australia, Martin C J, in a strong dissenting judgment, believed, on the overwhelming balance of probabilities, that the plaintiff's extensive smoking history and the risk of contracting lung cancer which was caused by that smoking history, it is much more likely than not that the plaintiff would have contracted lung cancer in any event, irrespective of his exposure to asbestos. In other words, it is much more likely that the plaintiff's lung cancer was caused by tobacco smoking.

The majority judgment was given by Steytler P and McLure J A. The court noted that the trial judge accepted that tobacco smoke and asbestos operated cumulatively. Therefore the only remaining issue is whether each asbestos exposure made a material contribution.

The court accepted the finding of the trial judge that there was no safe threshold of exposure to asbestos. The Court therefore did not accept that the level of the plaintiff's asbestos exposure was insignificant. The Court concluded that the exposure at each place of employment made a material contribution to the contraction of lung cancer suffered by the plaintiff.

The appellants argued that the plaintiff smoking constituted an intervening cause of his lung cancer that broke the chain of causation. The court agreed with the trial judge who rejected this argument on the basis that the plaintiff's lung cancer was caused by the cumulative and synergistic effect of the combination of tobacco smoke and asbestos exposure.

The trial judge made a finding of contributory negligence on the plaintiff's part for smoking cigarettes. He reduced the plaintiff's damages by 10%. The appellants argued that 10% is far too low having regard to the trial judge's finding that the risk of lung cancer created by smoking was very much greater than the risk from asbestos.

The trial judge accepted that the plaintiff must have been aware for a long time of the risks of smoking as he had been counselled by his doctor and implored by his children to give up his smoking. The judge considered it was likely that the plaintiff was addicted to cigarette smoking as he kept on smoking after his diagnosis of inoperable cancer. Nevertheless the judge did not accept the plaintiff's argument that his addiction or dependence deprived him of voluntary control.

The court noted expert evidence that once a person stops smoking, this significantly decreases the risk of contracting lung cancer so that after 20-25 years from cessation, the risk is approximately that of a person who had never smoked. Furthermore, the court noted publicity since the 1960's in the media through newspapers, radio and television about the risks of cigarette smoking. The court concluded that there had been a serious degree of negligence on both sides and altered the finding of contributory negligence to one of 50%.

Comments:

Court of Appeal found that a plaintiff could successfully sue in respect of an asbestos induced lung cancer even though a co-ordinate carcinogen, in this case tobacco, was overwhelmingly responsible for the development of the cancer. The fact that asbestos and cancer together could cause lung cancer was considered to be decisive.

There is an application for leave to the High Court in respect of this decision outstanding and a strong dissenting judgment in favour of the defendants on behalf of the Chief Justice in Western Australia.

Christopher Smith v Baker Perkins Australia Pty Limited

Facts:

The plaintiff brought proceedings in the Supreme Court of Victoria against his employer, Baker Perkins Australia. The trial was heard before a jury. The plaintiff was diagnosed with lung cancer in 2004 and underwent surgery to remove a tumour from the right lung. The plaintiff claimed that he was exposed to asbestos during his employment as a fitter and turner with Baker Perkins.

Liability:

On the issue of causation, the plaintiff argued that his exposure to asbestos was a significant contributor to his lung cancer. The defendant argued that in fact the plaintiff's lung cancer was caused solely by his history of cigarette smoking.

On the issue of liability, the plaintiff argued that the plaintiff worked with asbestos insulation for a portion of his time while employed by the defendant. He argued that the defendant knew or ought to have known that asbestos exposure was dangerous to ones health and should have taken steps to eliminate any such exposure.

The defendant argued that it was not a primary asbestos manufacturer but rather an oven manufacturing company that did not depart from the standards of dust exposure implemented by the NH&MRC during the time of the plaintiff's employment with the defendant.

In relation to contributory negligence, the plaintiff argued that it was not negligent for him to have smoked because it was a common past time and socially acceptable. The defendant argued however that there should be a finding of 90% contributory negligence due to the plaintiff's cigarette smoking.

The jury handed down a verdict in favour of the plaintiff for an amount in excess of $1M. 65% was deducted for contributory negligence leaving a net judgment of $383,372.50.

Comments:

A jury is not required to give reasons for its decision. We therefore do not have the benefit of a written judgment. The assessment of 65% contributory negligence however was very favourable.

The old "rule of thumb" has been to allow a discount of 20% for lung cancer cases involving plaintiff's who smoke cigarettes. Although the decision of a jury in the Supreme Court of Victoria is not binding on the Dust Diseases Tribunal and nor is the decision of the Court of Appeal in Western Australia in Cotton, the outcomes of these two cases have provided a helpful bargaining tool in other lung cancer cases involving plaintiff's who smoked cigarettes.

A B & P Constructions Pty Limited v Amaca Pty Limited (re Lorizio)

The plaintiff was employed by A B & P Constructions between January 1980 and mid 1998 as an apprentice carpenter and carpenter. During the course of his employment he came into contact with asbestos cement building materials manufactured and supplied by Amaca.

The plaintiff contracted mesothelioma. He was only 42 years of age as at the date of the trial in the DDT in June 2006. The plaintiff sued only his employer. The claim was settled for the sum of $1,000,000 inclusive of costs.

A Cross-Claim was filed against Amaca seeking contribution or indemnity. Amaca vigorously contested the claim as they regarded it as a test case. Amaca had not previously defended a claim where the exposure was so recent. Also Amaca denied there was any breach of its duty of care as warnings were given about the dangers of its asbestos products. We argued that the warnings given by Amaca were given too late and were inadequate, considering the toxic nature of its asbestos products which were capable of and did kill people.

The matter was heard before his Honour Judge Duck. His Honour acknowledged that in about 1978-1979 Hardies started to affix warning labels to asbestos cement sheeting. The Judge had to decide whether James Hardie, if sued by the plaintiff, would have been found liable to pay damages.

His Honour was satisfied that the carpentry work undertaken by the plaintiff exposed him to asbestos and this materially contributed to the development of his disease. James Hardie acknowledged that it had a duty to warn but claimed that it had satisfactorily discharged that duty.

Duck J provides a very useful judgment in that he summarises the wording contained in the various warning labels affixed to Hardies' products over a number of years. The Judge thought that the warnings on labels and in brochures were not adequate to bring to the attention of end users the serious consequences of using the product. Indeed the Judge thought that the warnings camouflaged the real risk to which people using the product may be exposed. His Honour stated that the warnings in brochures did not bring home the real risk of exposure to asbestos dust and that the warnings were insufficient. Accordingly the Judge found that Hardies did not discharge its duty to warn and that if sued by the plaintiff, it would have been liable to pay damages.

The Judge observed that Hardies knew of the risk but continued to market the product. He was critical of the wording contained in the warnings and believed that they were expressed in such a way as to lull people into a false sense of security.

The Judge needed to consider what was just and equitable in terms of a reasonable apportionment between the employer and Amaca. The Judge noted that the employer employed the plaintiff when he was young and vulnerable and required more careful supervision than he received. Even though Mr Restuccia, the plaintiff's boss, saw the warnings, he paid no attention to them. Furthermore the employer was ignorant to the relevant legislation and did not appear to regard it of any significance. Also there was no evidence of any change in work practise after Mr Restuccia became aware of the problems. The Judge did not accept the claim by Mr Restuccia that employees were advised to wear masks. The plaintiff said that no warnings were given to him by his employer.

The Judge found that the burden of the award should be borne equally between the supplier and employer on a 50/50 basis.

Appeal:

Amaca appealed against the decision of Duck J. The appeal was heard on 18 June 2007 and judgment handed down on 29 August 2007 dismissing Amaca's Appeal with costs.

The Court believed that the trial judge was entitled to find that the response of Amaca to the risk of injury to an end user was not reasonable as its warnings did not properly bring home the seriousness of the risk.

Amaca also argued that if stronger warnings had been given to satisfy the Judge's requirement of adequacy to bring home the real risks, that would not have made any difference. In other words they claim that Mr Restuccia would not have paid any attention to stronger warnings and that the plaintiff himself would have kept working in any event.

The Court rejected these arguments. Mr Restuccia testified that he could not read or speak English very well and had not noticed the warnings printed on the labels provided by James Hardie. He advised the trial judge that had he realised what warnings were given he would have stopped using the products. It was only when James Hardie began to discontinue the use of asbestos-based products that Mr Restuccia realised there was any real danger. Furthermore the plaintiff said that if he had been aware of the dangers he would have refused to work with asbestos-based products.

Even though Amaca challenged the apportionment between itself and the employer, it acknowledged that the question of contribution is a discretionary decision and not readily overturned on Appeal. The Court believed that the apportionment made by the trial judge was well within the assessment of what was just and reasonable and therefore there was no error of law involved.

Comments:

Amaca regarded this as a test case. The claim has significant ramifications because the decision by the Court of Appeal elevates the status of the determination made in the Dust Diseases Tribunal against Amaca. As time goes on there will be more and more claims of this type by plaintiffs that involve more recent exposure to asbestos. Amaca has always relied on the argument that it provided warnings from the late 1970s onwards and therefore could not be found to have breached its duty of care to end users. The decision of the Court of Appeal totally rejects the defence raised by Amaca. Even so, Amaca continues to plead in Replies filed in the DDT that it provided warnings.

A W Baulderstone Holdings Pty Limited v B I (Contracting) Pty Limited (re: Stutley)

Facts:

In late 1963 Baulderstone contracted with the South Australian Government for the construction of certain buildings at Royal Adelaide Hospital. Neil Stutley worked on site and was exposed to asbestos which was released into the air during the spraying of asbestos insulation on steel girders. As a consequence he developed mesothelioma.

Stutley brought proceedings against Baulderstone in the DDT. These proceedings were settled in the amount of $500,000 inclusive of costs.

Cross-Claim:

Baulderstone brought contribution proceedings against BIC and other related companies. The trial judge found the cross-defendants liable as to 80% of Baulderstone's liability to Mr Stutley. Baulderstone also claimed a complete contractual indemnity against BIC. This was based on a written sub-contract entered into with BIC for the carrying out of the insulation work at the Hospital. Baulderstone could not locate the contract but called Mr Murray Baulderstone, the Project Manager at the relevant time, who gave evidence about the standard form of contract for all sub-contractors.

The trial judge upheld Baulderstone's claim for a complete contractual indemnity. Therefore BIC was required to indemnify Baulderstone in the sum of $500,000 together with interest.

Appeal:

BIC appealed against the decision and the Appeal was heard on 17 April 2007, with judgment being handed down on 17 July 2007. The main concern we had on appeal was that the indemnity clause in the contract was more than 40 years old and was somewhat "dusty" with some antiquated wording. Nevertheless, the Court upheld our argument and found that the construction of an indemnity clause requires the clause to be construed strictly in the context of the contract as a whole and to the extent that there remains any ambiguity, to construe the indemnity in favour of the proferens. The Court believed that the language of the indemnity clause was in the widest terms and that it encompassed the injury, loss and damage for which Baulderstone was liable to its employee Mr Stutley. The Court believed there was no ambiguity in the clause so as to require the clause to be construed in favour of BIC so as to make the indemnity clause inapplicable.

The Court considered that the trial judge erred in his understanding of the interrogatory in that BIC stated that it obtained a contract to undertake asbestos spraying at the Hospital, rather than it had obtained a contract. However, BIC had proved that it had contracts to undertake work at the Hospital. Therefore the Court believed that nothing of significance flowed from the trial judge's error.

Comments:

This is the first time that a claim in the DDT has succeeded where it involves a complete contractual indemnity. It was only possible to run the contractual indemnity argument in the first place because of Mr Murray Baulderstone being able to give evidence about the contract entered into more than 40 years ago.

The University of Adelaide v BI (Contracting) Pty Limited (re: Rowley)

Facts:

Professor Derrick Rowley was a Professor in the Faculty of Medicine of the University of Adelaide when, in 1961, building work was being done in the Medical School. The building work involved the spraying of steel beams with a mixture containing asbestos. The Professor visited the floor when the spraying was being done for no more than 5-10 minutes. As a consequence of this exposure to asbestos, the Professor developed mesothelioma which resulted in his death.

Prior to his death the Professor brought proceedings against the University of Adelaide and BIC. After the trial had run for a number of days the plaintiff discontinued against BIC and pressed on against the University. The claim then settled for the sum of $250,000 plus costs which were ultimately agreed at $120,000.

The University filed a Cross-Claim seeking contribution or indemnity from BIC. The Cross-Claim was heard in the Tribunal on 11 and 12 December 2006.

The following submissions were put on behalf of the University:

• The plaintiff's exposure in 1961, despite being only 5-10 minutes, was "intense".
• In McNeill the Court of Appeal held that there was no duty owed to the plaintiff as he was an end user in a backyard. Our claim was different as the plaintiff was an employee of the University and the University was a client of BIC.
• The decision in McNeill could be distinguished as it involved exposure that did not occur in an industrial context.
• BIC acknowledged that it knew of the dangers of exposure to asbestos in 1961. Nevertheless BIC did nothing at all to provide a warning, erect a barricade or use water to minimise the amount of dust in the atmosphere.
• There was no doubt about medical causation.
• BIC had the onus of proof in establishing that the costs paid to the plaintiff of $120,000 were unreasonable.

The submissions put on behalf of BIC were as follows:

• A question in the case was the state of knowledge of the risks of exposure to asbestos dust in 1961. This was not a field of knowledge within the competence of expert opinion. The University was required to call someone who was practicing in the relevant field in that year, but not someone who is now in that field whose knowledge of the state of affairs in 1961 is brought about by his or her reading. Professor Henderson, who gave evidence, was a first year medical student in 1961.
• The fact that a dust cloud is visible does not tell you anything. It does not prove that the level of dust exceeds 5 million particles per cubic metre.
• The University required the use of asbestos in its specification. Therefore BIC was not at fault for complying with this specification.
• In McNeill the plaintiff lost his case because the Court of Appeal found that transient exposures in 1961 did not create a foreseeable risk of injury. The University's case was no better.
• The plaintiff's costs were never assessed. There was no proof that the amount of costs paid to the plaintiff's solicitors was reasonable.

Judgment:

Kearns J found in favour of the University. His Honour decided that the University was entitled to a contribution from BIC of 35% of the damages it had paid to the plaintiff, plus interest and costs. Furthermore the Judge was satisfied that the amount paid to the plaintiff's solicitors in costs was reasonable.

Appeal:

BIC filed an Appeal against the decision in the Tribunal and judgment was handed down by the Court on 19 September 2008. The appeal filed by BIC was dismissed as well as a Cross-Appeal filed by the University challenging the apportionment. The topics dealt with by Bell JA were as follows:

The evidentiary challenges:

BIC argued that it was an error for the trial judge to allow evidence to be given by experts concerning the state of knowledge in 1961 when the experts were not properly qualified at the time and had simply reviewed literature. The Court rejected this submission and held that the evidence was receivable because the expert was able to assess the worth of the journals and other material which had been produced as to the state of knowledge in the field in 1961. Therefore the expertise of the witnesses was of assistance to the Court.

Foreseeability-Risk of Injury-Duty of Care:

BIC challenged the finding of the trial judge that BIC owed a duty of care to Professor Rowley. BIC submitted that it was not open to the trial judge to conclude that in 1961 it was foreseeable to BIC that a bystander exposed to asbestos dust and fibre for only 5-10 minutes was at risk of contracting a lung disease. Bell JA noted that the trial judge distinguished this claim from the High Court matter of Seltsam Pty Limited v McNeill on the basis that Professor Rowley was exposed to high concentrations of asbestos in an industrial setting whereas Father McNeill was merely an end-user of asbestos cement sheeting. Bell JA believed it was open to the trial judge to find that it was foreseeable to BIC in 1961 that a person such as Professor Rowley exposed to its asbestos spraying operation for a short period of time was at risk of lung disease.

The University's liability for Professor Rowley's costs:

BIC claimed the trial judge was in error in holding that the University had established an entitlement to contribution from BIC towards the $120,000 it paid to the plaintiff's solicitors for costs. BIC argued that there was no proof that Professor Rowley was liable to his solicitors for legal costs. Bell JA believed it was open to the trial judge to find that Professor Rowley was in fact under a legal obligation to pay his solicitors' costs as it was inherently unlikely that the plaintiff's solicitors would have undertaken legal work for no reward. The Court was not persuaded that any legal error had been established.

Professor Rowley's exposure to asbestos dust and fibre in excess of 5mppcf:

BIC challenged the finding by the trial judge that Professor Rowley was exposed to concentrations of asbestos dust and fibre well in excess of 5mppcf. Bell JA believed that this amounted to a finding of fact and observed that the Court of Appeal is not authorised to overturn such a finding as the Appeal is limited in point of law. The Court did not accept the argument by BIC that there was no evidence capable of supporting the factual finding.

Notice of Contention:M

The University argued that the "Dreessen Standard" had been breached. Bell JA believed that the failure of BIC to comply with the Dreessen Standard was a circumstance to be taken into account in deciding whether BIC had breached the duty of care it owed to Professor Rowley. Therefore the Court rejected the University's contention.

The Cross-Appeal:

The University challenged the apportionment made by Kearns J in which his Honour held that the University was entitled to a 35% contribution from BIC. Bell JA was not satisfied that the determination of the trial judge involved legal error. Therefore, the Cross-Appeal was dismissed with costs.

Comments:

BIC was convinced that the Rowley claim was simply a "re-run" of McNeill. BIC was adamant that there was no foreseeability of a risk of injury and therefore no breach of duty of care for short bystander exposure in 1961. The University was able to persuade the trial judge and the Court of Appeal that the McNeill decision could be distinguished on the basis that Professor Rowley was exposed to high concentrations of asbestos in an industrial context.

Importantly the University was able to hold onto the finding of liability on the part of BIC. The refusal of the Court to intervene in the apportionment made by the trial judge was no surprise.

Stewart v QBE Insurance (Australia) Limited & Anor

Kearns J in the DDT was asked to give a ruling on the extent of common law cover available under a policy issued by the workers compensation insurer at a time when the statutory minimum common law cover was $40,000. No documentary or oral evidence was called on behalf of the insurer even though it asserted that the limit under the policy was $40,000. The Judge expressed the view that it should have been within the power of the insurer to produce evidence about that. Although his Honour understood the difficulties because of the fact that the insurance was arranged a long time ago and primary documents and copies may have disappeared in part or in whole, nevertheless, the Judge noted that evidence to that effect was capable of being called by the insurer and would have assisted in discharging its onus of proof.

Furthermore, the plaintiff's Counsel submitted that it was within the power of the insurer to have called evidence from a number of people in the insurance industry as to practices in the circumstances. The Judge accepted this submission and agreed that such evidence could have assisted as to whether at the time and in the type of industry within the particular insurer policies tended to be underwritten for the limit or more than the limit or unlimited.

Kearns J said that in the absence of any evidence of any of these matters he ruled that the policy for which QBE is liable to indemnify the plaintiff's employer was unlimited.

Appeal:

QBE appealed the decision and the Appeal was heard in November 2008. The Court of Appeal has reserved its decision.

Depending on what attitude is adopted by the Court of Appeal, it is important for insurers, where there is a limited level of common law cover available, to have either documentary or oral evidence available to be called to verify what the limit of cover was under the policy at the relevant time. Without such evidence, the DDT will rule that the insurer is liable to indemnify the plaintiff's employer for an unlimited amount.

Amaca Pty Limited v CSR Limited (Re: Stavar)

The plaintiff recovered damages from Amaca assessed at $339,000. A determination was made by a contributions assessor requiring CSR to contribute 6.35% to the plaintiff's damages.

 

Amaca sought to have a verdict and judgment entered on its cross-claim against CSR in accordance with the contributions determination. This was opposed by CSR on the basis that it is premature and that there will be disputes between the defendants on the percentages that each party should contribute to the plaintiff's damages and this will require determination by the Tribunal.

O'Meally P acknowledged that the Regulation have produced some peculiar consequences. He quoted the decision of Handley AJA in QBE Insurance (Australia) Limited v Wallaby Grip Limited & Ors (2007) NSWCA 43 in which the Court held that the Tribunal is entitled and bound to give effect to a determination made by a contributions assessor by entering appropriate verdicts and judgments. The President therefore entered a verdict for Amaca on its Cross-Claim and it was given a judgment in its favour of $21,526.50 plus interest and costs.

Comments:

The determination made by a contributions assessor is based on the papers and without the benefit of evidence being given by the plaintiff or other witnesses. If a party such as CSR wishes to challenge a verdict and judgment entered against it on a cross-claim, it is required to file fresh proceedings by way of a Statement of Claim. The problem faced by CSR if it seeks a more favourable determination at Trial is that it will be subject to significant costs sanctions if a substantially better result is not achieved. Meanwhile the summary determination is immediately enforceable. The obvious intention of the legislation is to prevent a final determination of the plaintiff's claim being delayed because of a dispute between defendants and cross-defendants about contribution. Given the relatively small amount of money involved in the judgment entered against CSR, it would seem most unlikely that CSR will seek to challenge the decision. The remedy may be in an action for restitution against the other defendants. CSR would have the onus of proving that Amaca and any other defendant should bear a greater share of responsibility than that determined by the contributions assessor.

Mediations:

A Mediator has certain expectations and seeks to achieve a resolution to a dispute between the parties. The following points are relevant:

1. The parties who attend a Mediation are expected to do so either with their client in attendance or else to be in a position to obtain instructions over the telephone without delay.
2. The parties are expected to be reasonable in their settlement negotiations. If the Mediator believes that a party is raising unmeritorious disputes and there is no reasonable basis for doing so, and the Tribunal subsequently determines that the issue was unreasonably left in dispute, the party is liable to pay the costs of any other party to the proceedings, assessed on an indemnity basis.
3. The best approach for a Mediator is to try to isolate the issues of difference between the parties.
4. The Mediator should write down a breakdown of the damages and then try to get the parties to focus on the small matters rather than the global amounts.
5. If liability is in issue, this needs to be broken down to identify whether it is one or more of the following:
   • Fact
   • Liability
   • Duty of care
   • Breach of duty
   • Contributory negligence

David Cooper
5 December 2008

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