Dust Disease Asbestos Litigation 2017

ASBESTOS LITIGATION – A NEW HEAD OF DAMAGE?

On 26 May 2017 Judge Gilchrist of the District Court of South Australia delivered his decision in the matter of Latz v Amaca Pty Ltd (formerly James Hardie & Co Pty Ltd).  It included an award of compensation for lost pension payments in the “lost years”, a first.

Background

The claimant Mr Latz was a retired surveyor that had terminal malignant mesothelioma.  He alleged that this resulted from exposure to asbestos that was produced by James Hardie & Coy Pty Ltd during the course of building, construction and renovation work carried out at a house residence that he had constructed in Glenalta, South Australia between 1976 and 1977.

The Court accepted that Mr Latz erected a fence on the Glenalta property in that time period that was comprised of asbestos sheets that were manufactured and sold by James Hardie & Coy Pty Ltd, which caused the exposure to asbestos dust.  The Court concluded that he was entitled to judgment for damages.

Damages

Mr Latz was awarded damages for past and future medical expenses, general damages for his pain and suffering and loss of expectation of life, domestic assistance and economic loss.

Mr Latz was also awarded exemplary damages.  They are damages of a penalising nature that may be awarded pursuant to the Legislation if the Court is satisfied that the Defendant knew that the injured person was at risk of exposure to asbestos dust or carried on a prescribed industrial or commercial process that resulted in the exposure to dust, and knew at the time of the exposure, that it would result in a dust disease.  This award was made because of James Hardie & Coy Pty Ltd’s “reckless indifference” to the dangers to Mr Latz’s health.

Economic loss

The claim for economic loss was of particular interest.

Upon his retirement Mr Latz received the right to a state based pension.  This was a pension to be paid periodically or that could be redeemed as a lump sum that Mr Latz had “earned” the right to receive upon his retirement from his work as a surveyor with various South Australian government departments pursuant to the Superannuation Act 1974 (pursuant to which Mr Latz made contributions during the course of his employment with the state).  It also conferred on his partner Ms Tamplin the right to receive two thirds the value of his pension following his death.  Mr Latz also received a partial Aged pension from Centrelink.  His combined pension was $989 net per week.

Mr Latz’s claim for economic loss included a claim for the loss of the pension occasioned by his expected premature death (“the lost years”, being the years that he could have expected to live had he not contracted mesothelioma, pursuant to a normal life expectancy, and the premature death as a result of that disease).  This was resisted by AMACA Pty Ltd (“Amaca”).

In relation to the state pension, Amaca argued that any award should be reduced by living expenses and the fact that Ms Tamplin stood to receive a portion of those benefits following his death to avoid double or excessive compensation.  The Court did not make such a reduction, noting that those benefits were statutory entitlements that had accrued through work pre-retirement and it would be unjust and unfair to do so.

Amaca disputed the claim for the lost Aged pension.  This had not previously been compensated.  The Court noted that the law requires injured persons to be placed, as far as payment of compensation can do so, in the position they would have been had the injury not occurred.  “But for the asbestos related premature death, Mr Latz would have continued to receive his Aged Pension for the rest of his “expected life”.  That life has been considerably shortened by this “tort”.  The Court therefore ordered that Mr Latz be compensated for this loss.

Mr Latz received damages in the sum of $500,000 for the loss of the pension in “the lost years”.

Subsequent cases

More recently, in July and August 2017, Judge Russell of the New South Wales Dust Diseases Tribunal, heard cases[1] that included claims for economic loss, being the loss of the Aged pension in the “lost years” like Latz.  Judgements were delivered on 22 August 2017.

Unlike Latz, Judge Russell rejected those claims for economic loss.  Judge Russell reasoned that the Aged Pension is received without reference to the ability of the person to earn income, or without reference to whether there has been any interference with the ability to earn income.  He noted that to assess economic loss one must determine if there has been a diminution or loss of the claimant’s earning capacity, which involves the consideration of what monies would have been produced by the exercise of the former earning capacity.  He noted that to date there is no authority in either the High Court or NSW Court of Appeal for damages for the loss of the ability to receive the Aged pension.

Judge Russell considered the Latz case and said the state pension raised different issues as that entitlement was “earned” through years of employment.  By comparison, the Aged pension is paid under Social Security legislation “simply because a person reaches a certain age and satisfies a means test”.  Judge Russell disagreed with Judge Gilchrist and found that the loss of the Aged pension is not an available head of damage.

With an eye to a possible appeal, in the event he was wrong, Judge Russell went on to perform a theoretical assessment of the value of the lost pension.  After deducting cost of living expenses and a portion of the statutory payments received from the Dust Diseases Authority, he arrived at a nil net loss in any event.

Concluding remarks

There is a distinction between the state based pension in Mr Latz’ case and the Aged pension.  It appears to be uncontroversial that the former was and is compensable because it was a benefit arising from Superannuation legislation that Mr Latz “earned” during the course of his employment.  By comparison, the Aged pension is a periodic payment that is made on reaching retirement age and satisfying a means test (and not income earnings in exchange for one’s labour).

Judge Gilchrist accepted that the Aged pension was compensable because the pension payments that would be lost as a result of the “the lost years” was nonetheless a financial loss attributable to the disease occasioned by James Hardies Pty Ltd’s products and tort law is based on the principal that injured people are to be put into the position they would have been had injury not occurred as best as payment of money can do so.  On the other hand, Judge Russell rejected the claim for compensation for that loss on the basis that tort law also requires, in the exercise of calculating economic loss, assessment of the value of one’s lost earning capacity.

The Latz case was appealed by Amaca and the appeal was heard by the Full Court of the Supreme Court of South Australia on 11 September 2017.  The decision has not yet been handed down (as at today, 21 September 2017).  We await the outcome with interest.

There have not been appeals lodged against the Judge Russell judgments at this stage.

This issue may ultimately have to be finally determined by the High Court.

[1] Dib v Amaca Pty Ltd [2017] NSWDDT6; Londos v Amaca Pty Ltd [2017] NSWDDT7