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Companies at risk of dust diseases litigation arising
out of exposures in South Australia need to be aware of the
increase both in the likelihood of litigation and the potential
damages.
Defendants in dust diseases cases may have perceived some
advantages to being sued in South Australia, given that awards of
damages have tended to be lower in that state. However, that is
likely to change now that the Full Court has confirmed exemplary
damages will be awarded where there was constructive knowledge of
risk (BHP Billiton Limited v Parker [2012] SASCFC 73).
This is the first ever award of exemplary damages under the Dust
Diseases Act 2005 (SA) and clarifies the application of a law which
has been the subject of debate in South Australia since the DDA was
enacted. Given that most defendants would have constructive
knowledge, this means exemplary damages will be the norm in South
Australia.
This development has the potential to empower the
plaintiffs' bar and may raise the tariff for resolution of dust
diseases claims in that state. It is also likely to trigger the
resolution of a backlog of cases in South Australia which have been
awaiting judicial determination of this issue.
Facts of this case: BHP Billiton v Parker
William Parker alleged that he developed asbestosis as a result
of exposure to asbestos dust and fibres as a shipyard worker at
Whyalla between 1971-72.
At first instance, Justice Lovell found that BHP Billiton was
liable for Mr Parker's asbestosis and awarded approximately
$52,000 in compensatory damages and $20,000 in exemplary damages.
BHP Billiton appealed to the Full Court.
Dust Diseases Act in effect imposes strict liability when it
comes to exemplary damages
Exemplary damages in common law are rare and only awarded where
a defendant has acted with "conscious wrongdoing in
contumelious disregard of another's rights" – a
high threshold.
But section 9(2) of the Dust Diseases Act, as interpreted by the
Full Court, goes well beyond the common law position, and of dust
diseases legislation in any other Australian jurisdiction. Under
it, the Court "should" award exemplary damages if the
dust diseases defendant:
knew that the plaintiff was at a risk of exposure to asbestos
dust; and
knew that exposure to asbestos dust could result in a dust
disease
even if the defendant did not know at the time that the
plaintiff was, in fact, exposed.
This means that exemplary damages should be awarded if
there was knowledge that a particular person's role carried
with it a risk of exposure to asbestos. This includes
imputed as well as actual knowledge. There is a residual discretion
not to award exemplary damages, but the Court said such cases would
be "outside the norm".
Full circle
South Australia-based dust disease plaintiffs formerly tried to
have their matters transferred to the swifter (and comparatively
more generous) NSW Dust Diseases Tribunal. The Dust Diseases Act
was passed with the stated purpose of expediting asbestos claims
within South Australia and discouraging reverse forum shopping out
of the jurisdiction.
This decision reinforces those policy objectives, as plaintiffs
will find South Australia an even more attractive forum for their
claims. The pre- Dust Diseases Act defendant-driven movement back
to South Australia may have reduced dust diseases defendants'
exposure with respect to quantum, but they will be exposed to
"strict liability" exemplary damages, representing a new
risk both in terms of reputation and quantum. Granted, the amount
of exemplary damages awarded in this case was not large, but did
represent nearly 40% of the amount of compensatory damages
awarded.
The difficulty for defendants arising from section 9(2) is that
it is triggered by the state of the their knowledge at the time of
the asbestos exposure, most often many many years ago. There is
little which can be done now to affect the risk that they will be
subject to an award of exemplary damages.
Companies at risk of dust diseases litigation arising out of
exposures in South Australia need to be aware of the increase both
in the likelihood of litigation and the potential damages.
Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
transactions or on matters of interest arising from this bulletin.
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