In brief - Current legal system not ideal for dealing
with asbestos claims
Various initiatives have highlighted the need to guard against
unwitting exposure to asbestos but more thought needs to be given
to how best to compensate those already affected. The current legal
system, which requires asbestos victims to prove their claims
through adversarial court processes, is not the best way to deliver
Proving negligence can be difficult and defendant may
not be solvent
Compensation to sufferers of asbestos disease usually results
from an allocation of liability based on the negligence of
employers, product suppliers or occupiers of sites where asbestos
has been used. When the asbestos exposure takes place decades ago,
being able to attribute fault based on negligence is often
One plaintiffs' lawyer recently described the process as
piecing together a jigsaw. If negligence can be proved, then
provided the defendant or its insurer is still solvent,
compensation follows. Where fault cannot be shown, the sufferer of
the disease can remain uncompensated.
Sufferers from asbestos-related diseases not treated
There is an element of luck in the system. One sufferer will be
able to point precisely to his or her exposure and recover
compensation. Someone unwittingly exposed may not be able to do so.
The pain and suffering of each will be comparable, but one will
recover damages and the other will not.
In a December 2011 High Court decision Justice Heydon noted that
the problems associated with asbestos exposure were likely to
persist for decades. He said: "Perhaps a social-medical
problem of this size requires a legislative solution."
No-fault compensation scheme preferable to current
After working in this area for defendants in the litigation for
over 15 years, I believe that the appropriate way to ensure the
just, quick and cheap resolution of asbestos-related claims is a
no-fault compensation scheme to be administered in conjunction with
existing mechanisms such as the federal Comcare scheme or the Dust Diseases
Board of New South Wales.
Funding of payments under the system could be pooled and drawn
(perhaps in annual payments like the current James Hardie
arrangement) from the reserves of insurers, companies and
government authorities - all of whom are required to estimate and
provide for the long term financial impact of asbestos claims.
A central compensating authority would take responsibility for
making appropriate payment once qualifying criteria had been met:
exposure to asbestos and a resulting illness. Payment would be on a
Compensating sufferers preferable to paying
Adopting a no-fault approach to compensation would streamline
the payment process to those suffering illness. This is vital
– the life expectancy of a sufferer of mesothelioma is often
only months. Common law adjudication is time, resource and cost
heavy. Those resources and costs are better used to pay claimants
rather than lawyers.
Possibility that legal and transaction costs are being
In December 2008 the New South Wales government released an
Issues Paper, Review of the Dust Diseases Claims Resolution Process,
dealing with the operation of the system for dealing with asbestos
claims in that state. The paper showed that up to 16.3 per cent of
all costs associated with the resolution of claims were legal and
Costs vary between states, but the NSW government paper appears
to be the only public data on the issue of compensation and legal
costs in Australian asbestos claims.
And it may be that the transaction costs are being
underestimated. A March 2011 case in the
Dust Diseases Tribunal of NSW (the special court which handles
asbestos cases in that state) disclosed that 35 per cent of one
plaintiff's settlement ended up being diverted to his own legal
costs and disbursements and refunds. No account was made in that
case to the costs incurred by the defendant.
Finite pool of funds for compensating asbestos
Asbestos compensation comes from a finite pool. To avoid the
possibility that future claimants might be left without payment (as
is occurring in the United States because of a substantial number
of asbestos-related bankruptcies), consideration should be given to
whether a system of adversarial justice in the courts is the best
method for delivering compensation.
All stakeholders have much to gain by ensuring that as great a
proportion of asbestos related costs as possible goes directly to
claimants. Let's hope the worthy aim of preventing disease in
the future does not divert attention from improving delivery of
compensation to those who do, tragically, fall ill.
An earlier version of this article was first published in
January 2013 in the Australian Financial Review.
With Anshun estoppel, a party can be prevented from making claims which should have been pursued in former proceedings.
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