Defendant’s conduct in a mesothelioma claim results in a record award for exemplary damages – Amaca Pty Ltd v Latz [2017] SASCFC 145

Author: Andrew Spearritt

Judgement Date: 30th October, 2017

Citation: Amaca Pty Ltd v Latz [2017] SASCFC 145

Jurisdiction: Full Court of the Supreme Court of South Australia[1]

Principles

  • The Full Court of the Supreme Court of South Australia (the Full Court) has decided that a claim for loss of pension is a recognised head of damage.
  • An award for exemplary damages is designed to punish, provide retribution and to demonstrate the court’s disapproval of the defendant’s conduct.

Background

The plaintiff was diagnosed with terminal malignant mesothelioma in October 2016. He alleged that he contracted this disease as a result of exposure to asbestos that was manufactured and supplied by James Hardie and Coy Pty Ltd (James Hardie), which occurred between 1976 and 1977. The plaintiff sued Amaca Pty Ltd (the defendant) as the successor to James Hardie.

At first instance the plaintiff was awarded damages by Gilchrist J in the District Court of South Australia (the District Court) in the sum of $1,062,000, including $500,000 for future economic loss, for loss of superannuation and of the age pension, and $30,000 for exemplary damages. Click here to view our Case Note on the District Court’s decision in Latz v Amaca P/L (formerly James Hardie & Co P/L).[2]

The defendant appealed, amongst other issues, against the award of $500,000 on the ground that the loss of pension is not a recoverable head of damage. The plaintiff cross‑appealed, amongst other issues, against the award of $30,000 on the grounds that the trial judge erred in his approach to the assessment and that the award was manifestly inadequate.


Full Court decision

Pension loss

Blue J in the leading judgment and Hinton J (Stanley J dissenting) held that the trial judge at first instance did not err in principle in awarding damages for loss of the State and aged pensions. The defendant contended that the common law recognised only three types of compensable loss for tortiously inflicted personal injury and that loss of a pension did not fall within any of those heads of damage and was therefore not recoverable. The defendant relied upon the High Court of Australia’s (High Court) decision in CSR Limited v Eddy[3].

The plaintiff contended that the compensatory principle applies, namely that damages are to be awarded so as to place the plaintiff as far as possible in the same position as if the defendant has not committed the actionable wrong.

Blue J, applying the compensatory principle and his interpretation of the High Court’s decision of CSR Limited v Eddy, held that loss of a pension is recoverable. His Honour referred to the decision of the plurality of the High Court in which they addressed a claim for damages for the loss of the ability to provide gratuitous domestic services for another as a result of personal injury. As this head of damage did not involve any actual financial loss, the High Court considered this head of damage as a non‑financial loss. According to his Honour, because the High Court was not called upon to attempt to identify exhaustively different forms of actual financial losses that were recoverable, his Honour believed the use of the expression ‘such as’ by the High Court has left it open for the loss of a pension to be recoverable as a distinct head of damage.

Blue J, stated that “This Court is not bound by High Court authority to determine that damages for loss of a pension due to premature death of the plaintiff caused by the defendant’s tort cannot be recovered.”

In a dissenting opinion on this issue, Stanley J referred to the High Court decision of Farah Constructions v Say-Dee[4] and said, “in the absence of High Court authority supporting the existence of a new head of damage, I consider that it is not open to this Court to uphold the judge’s award of $500,000”.

In contrast to the majority decision by the Full Court, it can be seen from the decisions in Londos v Amaca Pty Ltd[5] and Dibbs v Amaca Pty Ltd[6] in the Dust Diseases Tribunal of New South Wales (the DDT), in which Russell J held as a matter of law that there is no authority in Australia (binding upon the DDT) that loss of the ability to receive an age pension is a compensable head of damage.

Exemplary damages

At first instance Gilchrist J held it was appropriate to award exemplary damages in the amount of $30,000 relying upon the decision of the Full Court in BHP Billiton v Parker[7]. In BHP Billiton v Parker, Doyle CJ and White J noted that awards for exemplary damages under s 9(2) of the Dust Diseases Act 2005 (SA) will not be large, at least in those cases in which the court does not regard the defendant’s conduct as reprehensible. In BHP Billiton v Parker, the Full Court dismissed BHP’s appeal from an award of exemplary damages in the amount of $20,000, stating that while BHP had breached its duty of care, its conduct was not of a reprehensible kind.

Stanley J was of the view that the findings of Gilchrist J were sufficient to conclude that the conduct of James Hardie was conduct of a reprehensible kind. Stanley J agreed that the original award for exemplary damages was manifestly inadequate. In the most detailed examination of this issue he noted “The award exists to punish the cross-respondent (Amaca), to provide retribution and to demonstrate the court’s disapproval of the cross‑respondent’s conduct. Those factors loom large in this case”. At first instance Gilchrist J had before him documentary evidence that showed James Hardie knew as long ago as 1938 about the risks to the health of its workers from asbestos dust. There was overwhelming evidence to demonstrate that James Hardie’s conduct occurred in circumstances where it was fully informed about the lethal dangers of asbestos, yet failed to warn its customers, being motivated by its thirst for profit which it valued over the safety of its customers including the plaintiff.

For the purpose of assessing exemplary damages, Stanley J stated that while the defendants’ conduct must be assessed by reference to the standards of the conduct that applied at the time, the damages to be awarded are to be assessed as at the time of judgment and proceeded to assess exemplary damages in the amount of $250,000.

Interestingly, while considering whether to make an award for exemplary damages the court must take into account whether the award will act as a deterrent, which may have limited effect as James Hardie no longer manufacture and supply asbestos products. Acknowledging this fact, Stanley J stated it will be a deterrent to others still engaged in businesses which involve handing asbestos and that the purpose of the award for exemplary damages is not confined to deterrence. Blue and Hinton JJ agreed with the reasons for and the amount of the increased award for exemplary damages.


Why this case is important

A new head of damage has been allowed by the Full Court. By a majority of 2-1, the Full Court has held that loss of a pension is a recognised recoverable head of damage and is compensable at common law.

There is conflicting authority in New South Wales such that a claim for loss of a pension is not available. The split decision by the Full Court on the interpretation of CSR v Eddy and the decision to allow a ‘new’ head of damage suggests that a special leave application to the High Court may be considered.

The implications of the Full Court decision of assessing exemplary damages at $250,000 remain unclear at this stage. From the judgment, it can be seen that there was overwhelming evidence produced against Amaca showing that Amaca had known about the risks to health from asbestos dust since 1938, and that Amaca’s conduct was of a reprehensible kind.

In our view, the ramifications of the award for exemplary damages being assessed at $250,000 and the apparent lack of a transparent reasoning process as to how the particular amount was decided may result in Amaca appealing the decision. In the meantime, it is likely that future awards for exemplary damages in South Australia may well be in excess of $30,000.


 

[1] Blue, Stanley and Hinton JJ.

[2] [2017] SADC 56.

[3] [2005] HCA 64.

[4] [2007] HCA 22.

[5] [2017] NSWDDT 7.

[6] [2017] NSWDDT 6.

[7] [2012] SASCFC 73