October 2018

Asbestos Diseases: Divisible or Indivisible?

Many people know that James Hardie was one of the leading suppliers of asbestos for many years. While James Hardie is still a publicly listed company, its asbestos liabilities were the subject of an agreement with the NSW Government in 2006 whereby James Hardie funded a new trust which would pay compensation for asbestos claims. For that purpose, the old James Hardie entity is now known as Amaca Pty Ltd.

The structure by which the agreement was achieved was quite complicated, with some of the complexities illustrated by the recent Court of Appeal decision of Talifero v Asbestos Injuries Compensation Fund [2018] NSWCA 227.

Mr Talifero brought proceedings against Amaca as a result of contracting mesothelioma from James Hardie asbestos cement products. He had also suffered asbestos exposure while serving in the Royal Navy in England, but chose not to sue the British Government or its Navy.

It was argued by the James Hardie trustees that the trust deed should be interpreted in such a manner that Amaca should only be liable for the percentage of Mr Talifero’s asbestos exposure which occurred in Australia, and that the exposure he suffered in Britain should be deducted from the amount which Amaca was obliged to pay Mr Talifero.

The trial judge found that the trustee was indeed entitled to use its discretion to make this deduction, but the Court of Appeal has recently disagreed. Amaca therefore had to pay Mr Talifero’s complete judgment, notwithstanding that he had also suffered that asbestos exposure with an unrelated party in England.

It is a very intricate judgment, considering at length the various documents and legislation which comprise the James Hardie trust agreement.

However, from the wider perspective of asbestos claims generally, the Court of Appeal repeated the findings from earlier cases that mesothelioma should be regarded as an indivisible disease. This means that it is a cancer to which all asbestos exposure contributes, and is not a cumulative process.

By way of contrast, non malignant diseases like asbestosis or silicosis are regarded as divisible diseases, in that the severity of the disease is related to the quantity of the agent that is ingested.

Looking at it another way, in an indivisible injury, every defendant whose conduct has made a material contribution to the injury is liable to compensate for the entire damage suffered by the plaintiff. In a divisible injury, defendants are liable to compensate a plaintiff only for the damage caused by their contribution to the injury.

One of the reasons which Amaca lost this appeal is that the mesothelioma suffered by Mr Talifero was indivisible. Therefore, Amaca had made a material contribution to his disease, irrespective of what had happened to him in England, so Amaca was liable for the full judgment.

These concepts are fairly well understood by those parties who feature regularly in asbestos litigation. However, we have noticed that more of the firm’s clients are unexpectedly finding themselves involved in asbestos litigation, so the comments above may assist an infrequent asbestos litigant to understand the distinction between these two types of asbestos exposure.

Author: David Greenhalgh