Amaca Pty Ltd v Werfel

[2020] SASCFC 125

SUPREME COURT OF SOUTH AUSTRALIA

(Full Court)

AMACA PTY LTD v WERFEL

[2020] SASCFC 125

Judgment of The Full Court

(The Honourable Chief Justice Kourakis, The Honourable Justice Nicholson and The Honourable Justice Livesey)

21 December 2020

TORTS - NEGLIGENCE - ESSENTIALS OF ACTION FOR NEGLIGENCE - DUTY OF CARE - REASONABLE FORESEEABILITY OF DAMAGE - PARTICULAR CASES - DANGEROUS THINGS OR SUBSTANCES

APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - INTERFERENCE WITH JUDGE'S FINDINGS OF FACT - FUNCTIONS OF APPELLATE COURT - FINDINGS ON ISSUE OF NEGLIGENCE - GENERALLY

APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - RIGHT OF APPEAL - WHEN APPEAL LIES - ERROR OF LAW - PARTICULAR CASES INVOLVING ERROR OF LAW - FAILURE TO GIVE REASONS FOR DECISION - ADEQUACY OF REASONS

The respondent plaintiff was exposed to asbestos from products manufactured by the appellant, James Hardie, whilst employed by fencing contractors retained by the South Australian Housing Trust between 1994 and 1997. The plaintiff was again exposed to asbestos when undertaking domestic renovations in 2000 and 2001 on his home at Pooraka, and again in 2004 when working on his home at Parafield Gardens. These products had been manufactured by James Hardie, and sold to and installed by others, many years before the plaintiff worked on them.

The plaintiff was diagnosed with a rare form of mesothelioma in August 2017, when he was just 40 years old. The plaintiff's mesothelioma was, for the purposes of the law of negligence, caused by his exposure to products manufactured by James Hardie. The plaintiff is now 44 years old and, based on evidence accepted by the trial Judge, has a life expectancy of a little more than two years, rather than the statistical average of in excess of 40 years.

At first instance, the trial Judge found James Hardie negligent and awarded damages of just over $3 million in the plaintiff's favour. James Hardie appealed to this Court, complaining that the trial Judge’s reasons were inadequate and that, in any event, the trial Judge should not have found that it owed the plaintiff a relevant duty of care, that it breached that duty of care, and nor that any breach caused the plaintiff's injury. James Hardie also complained that the assessment of damages was affected by error or manifestly excessive, particularly the assessment of $400,000 for non-economic loss, the assessment of Griffiths v Kerkemeyer damages, the assessment of Sullivan v Gordon damages, and the assessment of exemplary damages.

Held by the Court: allowing the appeal, but only to the extent of reducing the total damages award to $2,228,478.

Adequacy of Reasons

1.      The provision of adequate reasons is an essential aspect of the judicial function and the failure to provide them is inimical to the open and transparent resolution of litigation.

2.      It is most unwise to engage in wholesale copying of submissions without attribution.  Whether the judicial function of furnishing adequate reasons has been satisfied is not determined by a mechanical assessment of what has, or has not, been copied, but by whether the reasons nevertheless perform their essential function.

3.      The inadequacy of reasons will not vitiate the decision unless the inadequacy relates to material aspects of the case, being issues on which the parties were divided, the resolution of which affected the outcome.

4.      The trial Judge made no attempt to engage with the case made by James Hardie on a number of issues in contest on appeal and, in numerous respects, the reasons were inadequate.

Duty of Care

5.      The combined circumstances required the imposition of a duty on James Hardie to take care to avoid injury to persons who might occasionally remodel, repair or remove its asbestos-cement products.

6.      At least by 1980 James Hardie ought to have known that there was a material risk of contracting mesothelioma from the occasional exposure to asbestos dust which would arise from tradespeople and householders remodelling, repairing or removing asbestos-cement products in residential buildings.

7.      By 1990 there was strong evidence that there was a material risk of contracting mesothelioma from even occasional exposure to asbestos dust when working with asbestos-cement products of which James Hardie, acting reasonably, would have known, which, together with other salient circumstances placed James Hardie under a duty of care.

8.      Defined, as the duty must be, prospectively, the class to whom the duty to take reasonable care is owed is those existing or future occupiers of homes containing asbestos-cement building products who may come to remove, remodel or repair those products, and the tradespersons they might engage to do so. 

Causation

9.       The plaintiff would have become aware of the risk that exposure to dust from asbestos-cement products might cause mesothelioma from at least the time he worked for a fencing contractor if James Hardie had more actively and strongly warned of the danger from 1990. 

10.    The plaintiff would have acted on those warnings and he would not have contracted mesothelioma.  The plaintiff's employment as a workplace safety representative strongly supports the inference that he would have taken recommended precautions.

Damages

Pain and suffering and loss of amenities

11.    When determining an award of damages for pain and suffering and loss of amenities interstate authorities are not irrelevant, but primary emphasis must be given to awards made in this State.  The trial Judge erred in giving primary emphasis to an award made in the New South Wales Dust Diseases Tribunal.

12.    Differences between damages awards for pain and suffering in South Australia and interstate must be addressed incrementally, with the benefit of whatever submissions and materials the parties and their representatives choose to put before this Court.

13.    Where a plaintiff knows that life expectancy has been curtailed, the consequential anguish and pain must be reflected in the award made for general damages for pain and suffering and the loss of the amenities of life.

14.    The award of $400,000 made by the primary judge for general damages and loss of amenities was affected by error and was manifestly excessive. It must be set aside. The appropriate award is $280,000, with interest on past loss at a rate of 4 per cent.

Loss of expectation of life

15.    The award compensates for something which is incalculable, being the “objective” aspects of life having been shortened.  There is no authority in this Court or the High Court which supports the approach taken by the trial Judge of awarding damages for loss of expectation of life at a rate of $1,000 for each of the “lost years”.

16.    The sum of $40,000 awarded by the trial Judge was made on an incorrect basis and represents a great deal more than is usually awarded for this head of damage in this State. The award should be set aside. On reassessment, the award should be a conventional sum of $20,000.

Griffiths v Kerkemeyer damages

17.    By simply repeating the plaintiff’s submissions, based on contested expert evidence, the Judge did not engage with the issues presented to her for decision.  In addition, no attempt was made to reconcile the differences between the evidence led from the plaintiff and his wife and the assumptions made in the expert evidence of the occupational therapist. 

18.    In addition, the Judge did not make adequate findings addressing agency and award rates.  On the evidence, the average award rate of $20 per hour was appropriate given the plaintiff’s capacity to retain carers, and the unskilled nature of the services, at least until after remission and the recurrence of illness until the end of life, when professional care at agency rates was appropriate.

19. Damages awarded under the Griffiths v Kerkemeyer principle are intended to compensate a plaintiff for the care and services gratuitously provided to the plaintiff personally, whereas damages awarded under the Sullivan v Gordon extension to the Griffiths v Kerkemeyer principle, at least as reflected in s 9(3) of the Dust Diseases Act 2005 (SA), are intended to compensate for a plaintiff’s impaired capacity to provide gratuitous domestic services to members of the plaintiff’s household. This distinction was not reflected in the evidence or the findings. There was a failure to provide adequate reasons.

20.    The Judge erred in awarding Griffith v Kerkemeyer damages for unspecified services provided to the plaintiff by his wife in connection with all of the plaintiff’s hospitalisation and treatment. However, in accordance with Wilson v McLeay, some moderate allowance would be made in addition to the cost of travel.

21.    Accordingly, the award must be set aside and the damages reassessed.  On reassessment, the award for gratuitous services provided to the plaintiff in the first two years after diagnosis will be $25,000 in lieu of the trial Judge’s allowance of $92,413.05, plus interest on past loss at a commercial rate of 6.5 per cent.

22.    The award for the future gratuitous services to be provided to the plaintiff in the three years until likely death is $125,000 in lieu of the trial Judge’s allowance of $187,862.

Sullivan v Gordon damages

23.    The occupational therapist’s calculations were based on her assessment of what services could or should have been provided to the household rather than on the evidence of the plaintiff and his wife about the domestic services the plaintiff in fact provided to his family before illness and during remission.  

24.    In addition, some modest reduction needed to be made for the services which the plaintiff required personally, as well as the likely reduction in services provided by the plaintiff to his children as they matured.

25.    The Sullivan v Gordon assessment was erroneous and must be set aside.  On reassessment, for the five year period from diagnosis until the plaintiff’s assumed date of death the award will be $70,000, plus interest on past loss at a rate of 6.5 per cent. The award for the services that the plaintiff would have provided during “the lost years” will be $175,000.  The award will be $245,000 in lieu of the trial Judge's allowance which exceeded $606,000.

Exemplary damages

26. The finding by the trial Judge that James Hardie had “the requisite knowledge” is consistent with a finding of imputed knowledge, not actual knowledge, sufficient to justify an award of exemplary damages pursuant to s 9(2) of the Dust Diseases Act 2005 (SA), but not at common law. That finding is indicative of inadequate reasoning.

27.    It is inappropriate to use the exemplary damages award of $250,000 made in Amaca v Latz as a template for the making of an award in this case as the circumstances are different and the plaintiff is in a different class of claimants.

28.    The award of exemplary damages should be set aside and the damages reassessed. 

29. Where the criteria under s 9(2) are satisfied, an award should usually be made. An award made under s 9(2) will be characterised by moderation. It is a separate and additional question whether the common law criteria for making an award of exemplary damages are satisfied. No findings were made which supported an award of exemplary damages at common law having regard to the negligence proved in this case.

30.    Where the outer limits of the appellant’s potential liability are not known to the Court, it is not possible to know whether this and other awards yet to be made against the appellant will be mitigated by the award made in Amaca v Latz. 

31. In the circumstances of this case, it is appropriate to award $35,000 for exemplary damages pursuant to s 9(2) of the Dust Diseases Act 2005 (SA).

Dust Diseases Act 2005 (SA) s 9(2), s 9(3), s 8(2); Civil Liability Act 1936 (SA) s 22, s 23, s 58, s 58A; Competition and Consumer Act 2010 (Cth) Sch 2; Lord Campbell’s Act (UK); Trade Practices Act 1974 (Cth); Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 (Cth); Trade Practices Revision Act 1986 (Cth) Pt 5 Div 1A, s 65B, s 65F, s 65J, referred to.
Anderson v Corporation of the City of Enfield (1984) ASC 55-302; Amaca Pty Ltd v AB & P Constructions Pty Ltd [2007] NSWCA 220; Amaca Pty Ltd v Hannell (2007) 34 WAR 109; Amaca Pty Ltd v Latz (2017) 129 SASR 61; Arthur Robinson (Grafton) Pty Ltd v Carter (1968) 122 CLR 649; Benham v Gambling [1941] AC 157; BHP Billiton Ltd v Hamilton (2013) 117 SASR 329; Clark v Chandler (1973) 5 SASR 416; Cojocaru v British Columbia Women’s Hospital and Health Care [2013] 2 SCR 357; Electro Optic Systems Pty Ltd v State of New South Wales (2014) 10 ACTLR 1; Ewins v BHP Billiton Ltd (2005) 91 SASR 303; Griffiths v Kerkemeyer (1977) 139 CLR 161; Kars v Kars (1996) 187 CLR 354; Latz v Amaca Pty Ltd [2017] SADC 56; Leichhardt Municipal Council v Montgomery (2007) 230 CLR 22; Miller v Jennings (1954) 92 CLR 190; Nguyen v Nguyen (1990) 169 CLR 245; Planet Fisheries Pty Ltd v La Rosa (1968) 119 CLR 118; Sharman v Evans (1977) 138 CLR 563; Skelton v Collins (1966) 115 CLR 94; Sullivan v Gordon (1999) 47 NSWLR 319; Sydney Water Corporation v Caruso (2009) 170 LGERA 298; Teubner v Humble (1963) 108 CLR 491; Thompson v Johnson & Johnson Pty Ltd (1989) ATR 80-278; Van Gervan v Fenton (1992) 175 CLR 327; Waller v Suncorp Metway Insurance Ltd [2010] 2 Qd R 560; Wilson v McLeay (1961) 106 CLR 523; Wright v Dunlop Rubber Co Ltd (1972) 13 KIR 255, discussed.
Beck v Farrelly (1975) 13 SASR 17; BHP Billiton Ltd v Parker [2012] SASCFC 73; Burton v Grocke [2014] SADC 195; Diamond v Simpson (No 1) (2003) Aust Torts Reports 81-695; Dunning v BHP Billiton Ltd [2014] NSWDDT 3; Fletcher Construction Australia Ltd v Lines MacFarlane & Marshall Pty Ltd (No 2) (2002) 6 VR 1; Flint v Lovell [1935] 1 KB 354 (CA); Fox v Percy (2003) 214 CLR 118; Geyer v Resi Corporation [2013] SADC 122; Gray v Motor Accident Commission (1998) 196 CLR 1; H West & Son Ltd v Shepherd [1964] AC 326; Hannell v Amaca Pty Ltd (2006) WASC 310; Hirsch v Bennett [1969] SASR 493; Hospital Contribution Fund of Australia Ltd v Switzerland Australia Health Fund Pty Ltd (1987) 78 ALR 483; Janssen Pharmaceutical Pty Ltd v Pfizer Pty Ltd [1986] ATPR [40-654]; James v Surf Road Nominees Pty Ltd [2004] NSWCA 475; John Pfeiffer Pty Ltd v Canny (1981) 55 ALJR 683; Lamb v Cotogno (1987) 164 CLR 1; Lee v Lee (2019) 266 CLR 129; Lowes v Amaca Pty Ltd [2011] WASC 287; Medical Benefits Fund of Australia Ltd v Cassidy [2003] ATPR [41-971]; Nicholson v Nicholson (1994) 35 NSWLR 308; Packer v Cameron (1989) 54 SASR 246; Parkin v Amaca Pty Ltd [2020] WASC 306; Rose v Ford [1937] AC 826; South Australian Housing Trust v Development Assessment Commission (1994) 63 SASR 35; Suosaari v Steinhardt [1989] 2 Qd R 477; Vacwell Engineering Co Ltd v BDH Chemicals Ltd [1971] 1 QB 88; Whisprun Pty Ltd v Dixon (2003) 200 ALR 447; Wise v Kaye [1962] 1 QB 638; XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd (1985) 155 CLR 448, considered.

AMACA PTY LTD v WERFEL
[2020] SASCFC 125

Full Court: Kourakis CJ, Nicholson and Livesey JJ

THE COURT.

Introduction

1. The plaintiff, Mr Mathew Werfel (Mr Werfel), was born on 6 October 1976 and is presently 44 years old.  He was diagnosed with a rare form of mesothelioma, being mesothelioma of the tunica vaginalis testis, in August 2017.[1]

   [1]    Sometimes referred to as “MTVT”.

2. Mr Werfel underwent radiotherapy, chemotherapy and three surgeries, including the removal of his right testicle.  After diagnosis in August 2017, and a difficult first 12 months, he was in remission by the time of trial and had returned to full time work (albeit on more limited, sedentary duties) as the office manager of a Federal politician.  Mr Werfel was also attending the gym a few times each week and had resumed some home duties.  Nonetheless, he remained tired, lethargic and anxious about his future.  Based on medical evidence accepted by the Judge, Mr Werfel has a life expectancy of less than two years until August 2022, rather than the statistical average of in excess of 40 years. 

3. It is not disputed that Mr Werfel was exposed to asbestos fibres liberated from asbestos cement in products manufactured by the appellant, Amaca Pty Ltd, which was formerly known as James Hardie Proprietary Limited and as James Hardie & Coy Pty Ltd, (James Hardie).  It is not disputed that Mr Werfel’s mesothelioma was, for the purposes of the law of negligence, caused by that exposure.

4. The exposure to asbestos from James Hardie products occurred when Mr Werfel worked on asbestos fencing in 1994 and 1997 whilst employed by fencing contractors retained by the South Australian Housing Trust (SAHT),[2] and again when Mr Werfel undertook domestic renovations in 2000 and 2001 on his home at Pooraka (the Pooraka house).  Mr Werfel was again exposed in 2004 when working on his home at Parafield Gardens (the Parafield Gardens house).[3]  These products had been manufactured by James Hardie, and sold to, and installed by, others many years before Mr Werfel worked on them.

   [2]    Amaca joined the Housing Trust as a third party, seeking contribution, but failed at trial and did not press the claim on appeal.

   [3]    See the reasons of the Judge, Werfel v Amaca Pty Ltd v The State of South Australia Pty Ltd [2019] SAET 159, [18]-[52].

5. Because Mr Werfel’s life expectancy is short, his trial against James Hardie was brought on urgently, and heard between 3 April and 1 July 2019.  On 6 August 2019, the Judge found James Hardie negligent and awarded damages of just over $3 million.

6. James Hardie complains that the Judge’s reasons are inadequate and that, in any event, she should not have found that it owed Mr Werfel “a relevant duty of care”,[4] that it breached “a relevant duty of care”,[5] or that any breach caused Mr Werfel’s injury.[6]  In addition, James Hardie complains that the assessment of damages was affected by error and/or manifestly excessive, particularly the assessment of $400,000 for non‑economic loss, the assessment of Griffiths v Kerkemeyer damages,[7] the assessment of Sullivan v Gordon damages under s 9(3) of the Dust Diseases Act 2005 (SA) (Dust Diseases Act)[8] and the assessment of exemplary damages under s 9(2) of the Dust Diseases Act.

   [4]    Appeal ground 3.1.

   [5]    Appeal ground 3.2.

   [6]    Appeal ground 3.3.

   [7]    Griffiths v Kerkemeyer (1977) 139 CLR 161.

   [8]    Sullivan v Gordon (1999) 47 NSWLR 319.

7. These reasons address the following matters:

   Introduction
   Adequacy of reasons
   An appeal by way of rehearing
   Duty of care and breach – generally
   Mr Werfel’s three cases
   When did James Hardie manufacture the asbestos products with which Mr Werfel came into contact?

   Asbestos fencing exposure 1994-1997
   The Pooraka house exposure – 2001
   The Parafield Gardens house exposure – 2004
   Conclusions to this point
   The fencing exposure
   The Pooraka and Parafield Gardens houses

   The manufacture of asbestos free product
   The duty of care

   Introduction
   Foreseeability of risk
   Other salient features

   Breach – a failure to warn

   Causation
   The assessment of damages

   Ground 3.4 – the assessment of damages
   Ground 3.5 – general damages and loss of expectation of life

   The Judge’s reasons
   The parties’ submissions
   Applicable legal principles

   Consideration
   Three general observations – assessing general damages
   Assessing damages for personal injury – pain and suffering, the lost years and loss of expectation of life
   The “assessment” of damages for loss of expectation of life
   Reassessment of damages for pain and suffering and loss of expectation of life

   Ground 3.6 – damages for past and future gratuitous services to Mr Werfel

   The trial Judge’s reasons
   Applicable legal principles
   The “market cost” of the gratuitous services provided
   Damages allowed whilst Mr Werfel was in hospital
   The premises upon which Ms Morgan’s report was based
   Damages awarded for work to be done on the properties that the appellant owned but in which he did not reside
   Damages were allowed for costs known to not have been incurred

   Reassessment of past and future gratuitous services

   Ground 3.7 – Sullivan v Gordon damages

   The Judge’s reasons
   The parties’ submissions
   Applicable legal principles

   Consideration
   Reassessment of Sullivan v Gordon damages

   Ground 3.8 – exemplary damages

   The trial Judge’s reasons
   The parties’ submissions
   Applicable legal principles

   Consideration
   Reassessment of exemplary damages

   Conclusions on damages
   Final conclusion
   Appendix: James Hardie – corporate structures and financial capacity

   Adequacy of reasons

1. James Hardie submitted that well over two‑thirds of the reasons of the Judge were, in fact, written by Mr Werfel’s legal team.  That is, 71 of 91 pages, 242 of 359 paragraphs and 19,854 of 29,929 words in the reasons came verbatim, without attribution or analysis, from Mr Werfel’s written submissions.  It was submitted that, as a result, the Judge did not make findings on contested issues and it could not otherwise be inferred that she had done so.  As a consequence of this “copying”, James Hardie submitted that the decision was “vitiated”.[9]

   [9]    Fletcher Construction Australia Ltd v Lines Macfarlane & Marshall Pty Ltd (2002) 6 VR 1, [104]‑[105], [163]-[165], [172] where the recording of “only one side of the judicial equation” was said to “vitiate” adverse credit findings.

2. James Hardie also emphasised that the Judge had refused the parties the opportunity to put their final addresses other than in writing.  When asked about the consequence of that complaint on this appeal, James Hardie then accepted that it had acquiesced to this course at trial.  No separate complaint was thereafter made about the inability to put oral submissions to the trial court.

3. Mr Werfel responded to the criticisms of the reasons by contending that, whilst the reasons were “not ideal”, the matters about which James Hardie complained were, either, not in issue, or otherwise not material to the decision made.  Without gainsaying the submission of James Hardie about the extent of the copying, Mr Werfel highlighted that the Judge had on occasion made minor corrections to the written submissions made by Mr Werfel, and submitted that it could be inferred that she had done so by reference to her own reading of the documents.

4. Mr Werfel relied on the decision in Whisprun Pty Ltd v Dixon, in which Gleeson CJ, McHugh and Gummow JJ explained that a Judge need not address every argument:[10]

   A judge’s reasons are not required to mention every fact or argument relied on by the losing party as relevant to an issue. Judgments of Judges would soon become longer than they already are if a judge’s failure to mention such facts and arguments would be evidence that he or she had not properly considered the losing party’s case.

   [10] Whisprun Pty Ltd v Dixon (2003) 200 ALR 447, [62]-[63].

5. Mr Werfel also referred to a number of cases where complaints about copying had been rejected.  In some, the issue on judicial review was whether the decision‑maker had constructively failed to exercise jurisdiction,[11] whilst in others, the fact of copying was not in itself regarded as decisive.[12]  For example, in James v Surf Road Nominees Pty Ltd, the New South Wales Court of Appeal held that copying may be acceptable:[13]

   Adoption of one party’s submissions by a judge, and so acknowledged, is one method of providing adequate reasons.  It may not be the choice of every judge but it is impossible to say that it necessarily or in this case falls short of the judicial duty to provide reasons.

   [11] LVR (WA) Pty Ltd v Administrative Appeals Tribunal (2012) 203 FCR 166, [91]. In Juneja v Tax Practitioners Board (2017) 72 AAR 407, [91] Besanko J said, “many of the factual matters stated by the Tribunal were either expressly not in dispute or were not reasonably capable of being disputed”.

   [12] James v Surf Road Nominees Pty Ltd [2004] NSWCA 475, [168] (Beazley, Tobias and McColl JJA).

   [13] James v Surf Road Nominees Pty Ltd [2004] NSWCA 475, [168].

6. Generally, cases in this last-mentioned group emphasise that the copying of one party’s submissions should be “acknowledged”.  That was not done in this case.  In the Canadian case of Cojocaru v British Columbia Women’s Hospital and Health Care (Cojocaru), McLachlin CJ, speaking for the Supreme Court of Canada when upholding reasons that entailed very substantial copying, explained:[14]

   In a case such as this, the essence of the complaint is not that the reasons are functionally insufficient — the parties agree that on their face, the reasons explain what was decided and provide a basis for appellate review — but rather that the judge’s wholesale incorporation of the material of others shows that he did not put his mind to the issues and decide them impartially. It is a complaint not about sufficiency, but about process, … whether the presumption of judicial impartiality has been rebutted.

   …

   Approached from this perspective, a number of the criticisms advanced against copying fall by the wayside. One such criticism, made by the majority of the Court of Appeal in this case, is the judge’s failure to attribute the incorporated material to the original author. This criticism is connected to the idea that the reasons should be the “original” product of the judge’s mind, and that to the extent they are not, the judge should ac knowledge her sources. Failure to attribute sources and lack of originality, without more, do not assist in answering the ultimate question — whether a reasonable person would conclude from the copying that the judge did not put her mind to the issues to be decided, resulting in an unfair trial. The fact that a judge attributes copied material to the author tells us nothing about whether she put her mind to the issues addressed in that copying. Nor is lack of originality alone a flaw in judgment writing; on the contrary, it is part and parcel of the judicial process. It may not be best practice for judges to bulk up their judgments with great swaths of borrowed material. But the fact remains that borrowed prose, attributed or otherwise, does not, without more, establish that the judge has failed to come to grips with the issues required to be decided.

   …

   Judges are busy. A heavy flow of work passes through the courts. The public interest demands that the disputes and legal issues brought before the courts be resolved in a timely and effective manner, all the while maintaining the integrity of the judicial process. In an ideal world, one might dream of judges recasting each proposition, principle and fact scenario before them in their own finely crafted prose. In reality, courts have recognized that copying is acceptable, and does not, without more, require the judge’s decision to be set aside. While the theoretical basis on which the result is explained varies, this is the position in England, various Commonwealth countries, the U.S. and in Canada.

   [14] Cojocaru v British Columbia Women’s Hospital and Health Care [2013] 2 SCR 357, [26], [31], [37] (McLachlin CJ). At [10] it was explained that: “The trial judgment, rendered some time after a lengthy trial, consisted of 368 paragraphs. Only 47 were predominantly in the judge’s own words; the balance of 321 paragraphs was copied from the plaintiffs’ submissions. This raises the concern that the Judge did not put his mind to the issues, the evidence and the law as he was sworn to do, but simply incorporated the plaintiffs’ submissions.”

7. Chief Justice McLachlin then reviewed cases from various jurisdictions, including the Australian cases of James v Surf Road Nominees Pty Ltd and Fletcher Construction Australia Ltd v Lines Macfarlane & Marshall Pty Ltd.[15]  The Supreme Court concluded that “copying alone is not grounds for appellate intervention”.[16]  The ultimate question is whether the judge has independently considered the issues and impartially addressed them:[17]

   … However, if the incorporation of the material of others would lead a reasonable person apprised of all the relevant facts to conclude that the Judge has not put his or her mind to the issues and made an independent decision based on the evidence and the law, the presumption of judicial integrity is rebutted and the decision may be set aside.

   This does not negate the fact that, as a general rule, it is good judicial practice for a judge to set out the contending positions of the parties on the facts and the law, and explain in her own words her conclusions on the facts and the law. The process of casting reasons for judgment in the judge’s own words helps to ensure that the judge has independently considered the issues and come to grips with them. As the cases illustrate, the importance of this may vary with the nature of the case. In some cases, the issues are so clear that adoption of one party’s submissions or draft order may be un controversial. By contrast, in complex cases involving disputed facts and legal principles, the best practice is to discuss the issues, the evidence and the judge’s conclusions in the judge’s own words. The point remains, however, that a judge’s failure to adhere to best practices does not, without more, permit the judge’s decision to be overturned on appeal.

   [15] Fletcher Construction Australia Ltd v Lines Macfarlane & Marshall Pty Ltd (2002) 6 VR 1.

   [16] Cojocaru v British Columbia Women’s Hospital and Health Care [2013] 2 SCR 357, [45] (McLachlin CJ).

   [17] Cojocaru v British Columbia Women’s Hospital and Health Care [2013] 2 SCR 357, [49]-[50].

8. Whilst in Cojocaru the Supreme Court of Canada carefully addressed “the extent of the copying, the quality of the copying, the lack of attribution for the copying, the nature of the case and the failure to fulfil the basic functions of reasons for judgment”,[18] that was not the approach of James Hardie.  Rather, as mentioned, it relied on the bare fact of the copying and its extent.

   [18] Cojocaru v British Columbia Women’s Hospital and Health Care [2013] 2 SCR 357, [52].

9. As a general rule, it is most unwise to engage in wholesale copying of submissions without attribution.  Where a decision-maker has appeared only to have adopted the submissions of one side, it is not difficult to understand why the opposing side will view the resulting decision with a justified sense of disquiet, particularly where the decision follows, or largely follows, the submissions of one side.  That disquiet is understandably pronounced where the submissions of the opposing side appear to have been left out of account and do not appear to feature in the decision-making process. 

10. Nonetheless, we are not prepared to find that where there is extensive copying without attribution then, without more, the reasons are thereby inadequate and the resulting decision necessarily vitiated.  Much depends on what has been copied and whether, nevertheless, the decision-maker has performed the task of engaging with the case of each party and making decisions on what divides the parties, whether they be matters going to evidence, or matters referable to legal principles and the proper application of those to the evidence before the court.

11. Having said that, we reject the approach of defending impugned reasons by reference to whether, regardless of the content of those reasons, there exists some material that supports, or which is capable of supporting, the ultimate decision made by the judge.  As the Victorian Court of Appeal said in Fletcher:[19]

    In our opinion it does not follow from the fact that evidence exists to support a conclusion drawn by the judge that errors of significance, or substantial inadequacy, in the reasons for arriving at the conclusion are to be disregarded. The limitations in the conduct of the trial to which the parties agreed no doubt placed a severe burden on the judge (and, for that matter, the parties and their legal advisers) and may have played some part in the making of the errors we have identified in the judge’s reasons. But these limitations do not in our view require the losing party to accept a verdict in which such errors played a significant, and possibly crucial, role, nor to accept a verdict arrived at, say, by coincidence, in circumstances where it cannot be said that only one proper conclusion, or set of conclusions, was open on all the evidence. Nor did those limitations justify the want of, or inadequacy of, reasoning.

    [19] Fletcher Construction Australia Ltd v Lines MacFarlane & Marshall Pty Ltd (No 2) (2002) 6 VR 1, [169].

12. The provision of adequate reasons remains an essential aspect of the judicial function and the failure to provide them is inimical to the open and transparent resolution of litigation, whatever the nature of the case.[20]  Whether the judicial function of furnishing adequate reasons has been satisfied is not determined by a mechanical assessment of what has, or has not, been copied, but by whether the reasons nevertheless perform their essential function.

    [20] See DL v The Queen (2018) 266 CLR 1, [32]-[33] (Kiefel CJ, Keane and Edelman JJ); R v Sexton [2018] SASCFC 28, [170]-[181] (Kourakis CJ), which concerned criminal trials by judge alone.

13. So, it is necessary for the Judge to “engage with the case presented”[21] and to “expose his or her reasoning on points critical to the contest between the parties”, whether as to evidence or as to argument.[22]  The reasons must deal with the substantial points that have been raised, including findings on “material questions of fact”.[23]  Where a “party has relied on evidence or material which the judge has rejected, the judge should refer to that evidence or material and, in giving reasons which deal with the substantial points that have been raised, explain why that evidence or material has been rejected”.[24]

    [21] Whalan v Kogarah Municipal Council [2007] NSWCA 5, [40] (Mason P, Ipp and Tobias JJA).

    [22] DL v The Queen (2018) 266 CLR 1, [131] (Nettle J).

    [23] DL v The Queen (2018) 266 CLR 1, [130].

    [24] Hunter v Transport Accident Commission [2005] VSCA 1, [21] (Nettle JA).

14. As has been said many times, this is necessary so as to avoid the losing party entertaining a justifiable sense of grievance, as well as to facilitate the conduct of any appeal.[25]  The appeal court should not have to speculate about the basis for any particular finding made at trial.[26]

    [25] See SZKLO v Minister for Immigration and Citizenship (2008) 102 ALD 115; Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430, 431, 441-442 (Meagher JA); Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247, 257-258 (Kirby P).

    [26] Resi Corporation v Munzer [2016] SASCFC 15, [71] (Lovell J).

15. Nonetheless, the extent of the obligation to provide adequate reasons varies, depending upon the nature and conduct of the particular case.  There are no “set standards” nor any “optimal, even desirable, level of detail required”.[27] 

    [27] Resi Corporation v Munzer [2016] SASCFC 15, [71].

16. As well, even if the reasons (or aspects of the reasons) are apparently “inadequate”, this alone does not necessarily vitiate the entire decision under appeal.  Rather, the inadequacy must relate to “material” aspects of the case.  That is, issues on which the parties were divided, the resolution of which affected the outcome. 

17. In Sydney Water Corporation v Caruso, the New South Wales Court of Appeal considered the test to be applied in determining whether legal error vitiates a decision.  The case concerned the assessment of compensation payable on the compulsory acquisition of land by the appellant.  An issue arose as to the way in which the primary judge had made findings about expert valuation evidence.  The Court articulated in different ways what is required to establish a material error, and there was disagreement as to which party bears the burden of persuasion with respect to whether error vitiated the decision.  Allsop P was of the opinion that:[28]

    A decision will be impaired, or spoilt or corrupted or “vitiated” if the error went to a central issue for consideration and the appellate court cannot be persuaded to a relevant degree of satisfaction that the resolution of the central issue has not been affected.

    [28] Sydney Water Corporation v Caruso (2009) 170 LGERA 298, [25] (Allsop P).

18. Tobias JA did not agree.  In his view, it is not for the party responding to the allegation of error to persuade the appellate court that the resolution of a central issue has not been affected.  Rather, “it is for the party asserting error to satisfy the appellate tribunal that the error has affected the relevant decision in the sense that it was one upon which the decision depended”.[29]

    [29] Sydney Water Corporation v Caruso (2009) 170 LGERA 298, [132] (Tobias JA).

19. The third member of the Court, Sackville AJA, though in general agreement with Tobias JA, reserved his opinion on these questions.  His Honour warned that, to ask whether a legal error is material if it might have affected the decision, or only if it did in fact affect the decision, and who bears the burden of persuading the court, will not necessarily be answered the same way in all cases.  His Honour cautioned that the nature of the inquiry may differ, depending on the circumstances.[30]

    [30] Sydney Water Corporation v Caruso (2009) 170 LGERA 298, [198] (Sackville AJA).

20. Whilst we are generally obliged to follow decisions of other intermediate appellate courts on the common law of Australia, unless convinced that they are plainly wrong,[31] in Sydney Water Corporation v Caruso there is no majority decision on the degree of materiality required, nor the question of onus.  In any event, there are at least three difficulties associated with the resolution of these questions in this case.  The first is that neither party addressed these questions.  The second difficulty is that neither party wanted a retrial.  That is, even if the decision was vitiated (however that might be determined), neither party wanted the decision set aside and the matter retried.  This common approach suggests that, whether or not the reasons were inadequate, this Court is not being asked to make a finding that the decision as a whole is vitiated.  Analysis of the adequacy of the reasons of the Judge is therefore necessarily confined to the conclusions reached on discrete issues the subject of appeal.

    [31] CAL No 14 Pty Ltd v Motor Accidents Insurance Board (2009) 239 CLR 390, [49]-[51] (Gummow, Heydon and Crennan JJ); Hasler v Singtel (2014) 87 NSWLR 609; Director of Public Prosecutions v Patrick Stevedores Holdings Pty Ltd (2012) 41 VR 81.

21. A third difficulty with resolving these questions in this case is that many of the issues agitated on appeal were argued by both sides at such a high level of generality that it is difficult to determine what was actually in contest, or remained in contest, and what was considered by the parties to be “material” or “operative” to any particular decision or conclusion which remains the subject of contest or challenge on appeal. 

22. For example, whilst the finding by the Judge on the issue of foreseeability at paragraph [164] was criticised by James Hardie, Mr Werfel maintained that there was, in fact, no real dispute about that aspect of the case at trial.  At paragraphs [157]-[163], the Judge referred to the documentary and other evidence on the issue of foreseeability, largely copying Mr Werfel’s submissions, before concluding:[32]

    I have rejected Amaca’s submissions relating to foreseeability.

    [32] Werfel v Amaca Pty Ltd v The State of South Australia Pty Ltd [2019] SAET 159, [164].

23. This conclusion is announced without any reference to what the submissions from James Hardie were, nor why they were rejected.  It is hard to imagine a clearer instance of inadequate reasons.  There has been, with respect, no attempt at all to engage with this aspect of the case made by James Hardie against Mr Werfel.  This Court is left to speculate about why the case against Mr Werfel was rejected on the issue of foreseeability. 

24. In all of these circumstances, we propose to address the issue of the adequacy of reasons as an adjunct to the determination of the issues arising on the appeal.  Those issues concern whether, and from when, James Hardie owed Mr Werfel a duty of care and, if so, whether that duty was breached in a way which caused Mr Werfel’s mesothelioma.  And, as will be seen, those issues are also concerned with various aspects of the assessment of damages.

    An appeal by way of rehearing

25. We agree with the parties that a retrial would be most undesirable unless unavoidable.  This appeal is in the nature of an appeal by way of rehearing. As was explained in Fox v Percy[33]

    Within the constraints marked out by the nature of the appellate process, the appellate court is obliged to conduct a real review of the trial and, in cases where the trial was conducted before a judge sitting alone, of that judge’s reasons. Appellate courts are not excused from the task of ‘‘weighing conflicting evidence and drawing [their] own inferences and conclusions, though [they] should always bear in mind that [they have] neither seen nor heard the witnesses, and should make due allowance in this respect’’. In Warren v Coombes, the majority of this Court reiterated the rule that:

    ‘‘[I]n general an appellate court is in as good a position as the Judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the Judge. In deciding what is the proper inference to be drawn, the appellate court will give respect and weight to the conclusion of the Judge but, once having reached its own conclusion, will not shrink from giving effect to it.’’

    As this Court there said, that approach was ‘‘not only sound in law, but beneficial in . . . operation’’.

    After Warren v Coombes, a series of cases was decided in which this Court reiterated its earlier statements concerning the need for appellate respect for the advantages of Judges, and especially where their decisions might be affected by their impression about the credibility of witnesses whom the Judge sees but the appellate court does not. Three important decisions in this regard were Jones v Hyde, Abalos v Australian Postal Commission and Devries v Australian National Railways Commission. This trilogy of cases did not constitute a departure from established doctrine. The decisions were simply a reminder of the limits under which appellate judges typically operate when compared with Judges.

    (Footnotes omitted)

    [33] Fox v Percy (2003) 214 CLR 118, [25]-[26] (Gleeson CJ, Gummow and Kirby JJ).

1. The approach required of this Court was recently restated in Lee v Lee:[34]

   A court of appeal is bound to conduct a "real review" of the evidence given at first instance and of the judge's reasons for judgment to determine whether the Judge has erred in fact or law. Appellate restraint with respect to interference with a Judge's findings unless they are "glaringly improbable" or "contrary to compelling inferences" is as to factual findings which are likely to have been affected by impressions about the credibility and reliability of witnesses formed by the Judge as a result of seeing and hearing them give their evidence.  It includes findings of secondary facts which are based on a combination of these impressions and other inferences from primary facts.
   
   
   

   Thereafter, “in general an appellate court is in as good a position as the Judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the Judge”.  Here, the Judge's findings of primary fact were not disturbed.

   (Footnotes omitted)

   [34] Lee v Lee (2019) 266 CLR 129, [55] (Bell, Gageler, Nettle and Edelman JJ).

2. On this appeal, James Hardie challenges the Judge’s analysis and application of the relevant legal principles, together with some of her Honour’s findings (or absence of findings) of fact.  James Hardie accepted that this Court ought proceed on the Judge’s generally favourable assessment of the credibility and reliability of the evidence of Mr and Mrs Werfel.  We are satisfied that we are in as good a position as was the Judge to review the evidence and to make findings of fact and draw inferences with respect to the issues which still divide the parties and which are material to the determination of appeal.[35]

   [35] Warren v Coombes (1979) 142 CLR 531.

   Duty of care and breach – generally

3. The Judge found that James Hardie owed a duty of care to a category of persons which included persons in the circumstances of Mr Werfel.  Notwithstanding, the various different times and circumstances of Mr Werfel’s exposure, the Judge described the duty of care owed as a single duty and in general terms.[36] 

   [James Hardie] owed a duty of care to Mr Werfel as a member of a class of persons who cut, sawed, sanded and drilled [James Hardie’s] asbestos cement products occasionally, intermittently or from time to time. [James Hardie] had a duty to take reasonable care to avoid injury being suffered by members of that class using the products as intended or in a manner in which they were known to be used.

   This formulation was taken directly from Mr Werfel’s trial submissions.[37]  In adopting this formulation, the Judge provided only limited reasoning in support.[38] 

   [36] Werfel v Amaca Pty Ltd v The State of South Australia [2019] SAET 159, [154].

   [37] Paragraphs 5.16 and 2.19.

   [38] Werfel v Amaca Pty Ltd v The State of South Australia [2019] SAET 159, [142]-[153].

4. A duty of care in virtually identical terms to that adopted by the Judge was found to have been owed by James Hardie to a home handyman at first instance in Hannell v Amaca Pty Ltd[39] and, on appeal in Amaca Pty Ltd v Hannell.[40]However, the Judge made no reference to Hannell nor the reasoning in the Court of Appeal in this or any other context. 

   [39] Hannell v Amaca Pty Ltd [2006] WASC 310.

   [40] Amaca Pty Ltd v Hannell (2007) 34 WAR 109, [354] (Steytler P and McLure JA; Martin CJ dissenting on this point). The plaintiff failed at the level of breach. Special leave to appeal to the High Court was refused but the question of duty of care was not considered, [2007] HCA Trans 626.

5. Mr Hannell acquired a house property in or about May 1982.  The house and a number of its fences had been constructed in the late 70s and incorporated asbestos cement products manufactured by James Hardie.  Mr Hannell was exposed to respirable asbestos fibres when carrying out non-occupational handyman work on the fences and house eaves during three short periods in 1983, 1985 and 1990.  He subsequently contracted mesothelioma.

6. The majority in the Court of Appeal reasoned as follows.[41]

   Where the existence and scope of a duty of care is settled by authority, it is unnecessary to identify and apply the legal principles that govern the determination of those questions. The existence and scope of the duty of care owed by the appellant to the respondent were in issue in this case.

   There has been a return to the words of Lord Atkin in Donoghue v Stevenson as the foundation for all modern considerations of duty of care. Reasonableness is the test for the imposition of a duty of care.  Gleeson CJ said in Tame, that it is the reasonableness of a requirement that a person should have certain persons or interests in contemplation that determines the existence of a duty of care. Further, reasonable foreseeability is to be understood and applied with due regard to whether it is reasonable to require a person to have in contemplation a risk of the injury that eventuated.

   It is an error to formulate the duty of care with such particularity as to in effect circumvent the requirement of reasonableness at the breach stage of the analysis. On the other hand, to formulate a duty at too high a level of abstraction may provide an inadequate legal means by which to determine the issues in a particular case; it will be too abstract if it is divorced from the facts said to enliven the duty.

   The appellant contended that it was necessary at the duty stage of the analysis to determine the existence and scope of the duty by reference to the particular breach relied on; that is, the trial Judge was required to determine whether the appellant owed to the respondent a duty to warn.

   That approach is certainly used in novel situations where it is otherwise only possible to formulate a duty of care at such a high level of abstraction as to be of no practical assistance. A good illustration of this is in Cole v South Tweed Heads. When faced with that situation, the duty analysis brings to account the same considerations as are relevant in determining whether the specific breaches relied on would constitute a breach of any duty however formulated.

   Save in medical negligence cases where it has been authoritatively determined that a medical practitioner owes to his or her patient a duty to warn, ordinarily the question whether the provision of a warning is within the scope of the duty in a particular case is determined at the breach stage of the analysis by assessing whether a failure to warn constitutes a breach of duty. However, the result should be the same regardless of the approach.

   The trial Judge found that the appellant owed a duty of care to the respondent as a member of the class of persons who cut, saw, sand or drill the appellant's asbestos cement products occasionally, intermittently or from time to time, the duty being to take reasonable care to avoid injury being suffered by members of that class using the product as intended or in a way in which the product was normally used. The duty is formulated at an appropriate level of generality and does not circumvent the requirement of reasonableness at the breach stage of the analysis. We would dismiss the appellant's challenge to the trial Judge's formulation of the duty of care.

   (Citations omitted)

   [41] Amaca Pty Ltd v Hannell (2007) 34 WAR 109, [348]-[354].

7. Hannell concerned exposures experienced by a home handyman in 1983, 1985 and 1990 to products first installed and, by inference, manufactured in or about the early 1970s.  However, as will be demonstrated below, Mr Werfel as an employed fencing repairer and home handyman was exposed in 1994 to 1997 to fencing product manufactured at an unknown time, and in 2001 and 2004 to flat sheet product manufactured in or about 1964, 1966 and 1977.  The respective periods of manufacture and of exposure are markedly different.  As a consequence, the questions of the existence of any duty of care owed to Ms Werfel, of its scope and of any breach will be informed by different considerations.

8. The four respective times at which relevant product was manufactured and the three respective times at which Mr Werfel was exposed to relevant product are all potentially relevant to each of the questions.  As it happens, in Mr Werfel’s case, once the evidence concerning these times is properly analysed, a number of the issues that divide the parties can readily be resolved without having to consider and resolve all of James Hardie’s complaints concerning the Judge’s findings of a duty of care and of breach.

   Mr Werfel’s three cases

9. By the end of the trial, Mr Werfel’s claim had crystallised to three “cases” or bases for liability described by the Judge in the following terms.[42]

   Mr Werfel submitted[43] that [James Hardie] should have done the following:

   ∙by the late 1960s, have removed asbestos fibres from the building materials it sold to Australians, and

   ∙by the 1960s, have affixed a warning on all Deep Six and Super Six corrugated asbestos cement sheets it manufactured and distributed; and

   ∙from the early to mid-1980s, warned members of the very large class of people who might be at risk from exposure to asbestos dust from in situ asbestos cement products, of which Mr Werfel was one, of the dangers to which they were exposed. 

   [42] Werfel v Amaca Pty Ltd v The State of South Australia [2019] SAET 159, [171].

   [43] Paragraph 7.48 of Mr Werfel’s final written submissions at trial.  The same propositions although differently worded were put in paragraph 2.44 of Mr Werfel’s trial submissions.

10. Her Honour ultimately accepted Mr Werfel’s three propositions and found[44] that James Hardie breached a duty of care owed to a class of persons including Mr Werfel in that:

    From the mid-1960s [the appellant] should have placed a warning on its corrugated asbestos cement building materials, from the late 1960s ceased incorporating asbestos into its building products and from the mid-1980s conducted a warning campaign of the same kind as it was when then conducting to sell its products and distance itself from asbestos.

    [44] Werfel v Amaca Pty Ltd v The State of South Australia [2019] SAET 159, [209].

11. Mr Werfel’s three cases or bases for liability need to be considered or analysed with reference to each of the occasions when building products containing asbestos were manufactured by James Hardie and each of the occasions when Mr Werfel was exposed to any of those products.

    When did James Hardie manufacture the asbestos products with which Mr Werfel came into contact?

12. It is common ground on the appeal that Mr Werfel was exposed to James Hardie’s manufactured products containing asbestos at a number of different times and locations.  Exposures occurred:

    (i)when Mr Werfel worked on asbestos fencing for contractors retained to work on SAHT sites between 1994 and 1997;

    (ii)when Mr Werfel did home handyman maintenance and renovations on his Pooraka house during the period December 2000 to early 2001;[45] and

    (iii)when Mr Werfel did home handyman maintenance and renovations on his Parafield Gardens house in 2004.[46]

    [45] Mr Werfel’s evidence was that he bought Pooraka on 8 December 2000 and undertook maintenance and renovations as soon as he moved in.

    [46] Mr Werfel’s evidence was that he bought Parafield Gardens on 22 July 2004 and performed maintenance and renovations soon thereafter.

13. The resolution of the contested issues concerning whether or not the appellant owed a duty of care to the respondent at a relevant time, whether or not the appellant breached any duty of care and whether or not any breach was causal of Mr Werfel’s loss will depend, in part, on findings as to when the products that were worked on by the respondent at each of the three locations were manufactured by James Hardie.  The Judge made findings only of a general nature and James Hardie has challenged some of these findings as not being supported by the evidence.

    Asbestos fencing exposure 1994-1997

14. James Hardie accepts that, between 1994 and 1997, Mr Werfel worked on in-place fencing made of corrugated cement panels containing asbestos (asbestos fence panels) manufactured by James Hardie.  There were no protective measures (such as warnings, masks, damping down) in place and Mr Werfel was exposed, including by inhalation, to large clouds of asbestos dust.  The dust comprised crocidolite, amosite and chrysotile asbestos fibres.  It is common ground that the asbestos fence panels had not been painted.

15. As to when the asbestos fence panels had been manufactured, the Judge found:[47]

    It is likely that the fences were manufactured from the mid 1950s to the 1970s or later.

    James Hardie contends that there is nothing in the evidence to support the qualification “mid” 50s or that part of the finding “or later”.  This contention must be accepted.  However, the question arises whether there is evidence sufficient to support even a modified finding – “1950s to 1970s”.

    [47] Werfel v Amaca Pty Ltd v The State of South Australia [2019] SAET 159, [71].

16. In fairness to the Judge, the evidence on this topic was unsatisfactory.   Mr Werfel explained that he had performed fencing work in the northern suburbs of Adelaide, in suburbs surrounding Port Adelaide, in Tea Tree Gully and the Adelaide CBD, and that 60 to 70 per cent of the work was SAHT related.  He worked for two employers during the 1994 to 1997 period and did predominantly the same type of work in the same localities.  Mr Werfel grew up in the northern suburbs and expressed the opinion that the SAHT houses “were all the same vintage, 1960s-70s”. 

17. However, the actual asbestos fence panels with which the respondent came into contact more likely than not were not SAHT fences.  The Judge made a finding that it is more likely than not that Mr Werfel’s exposure to asbestos arose as a result of fencing work undertaken on properties unrelated or adjacent to but not on SAHT properties.[48]  That finding is supported by the evidence as will be shown.  It is an important finding for reasons to be explained.  Mr Werfel gave this evidence.

    [48] Werfel v Amaca Pty Ltd v The State of South Australia [2019] SAET 159, [39].

    WITNESS:So, the main jobs supplied through the contractor were Housing Trust related work and also they did work, we did work for what we called the Aboriginal part of the Housing Trust as well in which a lot of these jobs were what we called reuse jobs where we would knock the old fence down, smack all of the iron sheets off with a crowbar or even by hand because they were nailed into Jarrah fencing rails which had quite often deteriorated and the fences effectively just fell apart.

    MR SEMMLER:[49] All right, and these reuse jobs, what materials were you reusing?

    [49] Senior counsel for the respondent at trial and on appeal.

    WITNESS: So, we were reusing the galvanised iron from the existing fences, discarding all of the Jarrah posts and Jarrah rails.

    MR SEMMLER:   Now, in addition to those types of fences did you come across other kinds of fences in the course of your work assisting Alan?

    WITNESS: So, we also did brand new fences, good neighbour fences, ARC mesh, high spear, low spear tubular fences.

    MR SEMMLER:   All right, and did you come across any other fences that were in place that weren't made of the materials you've mentioned?

    WITNESS: So, when we were doing jobs for the Housing Trust, as well as private jobs, we would build the fences in between properties. Quite often they would interact with the backs and side fences and, indeed, front fences of other houses.

    MR SEMMLER:   And what were those fences made of?

    WITNESS: Those fences I now know to be made out of asbestos. They were a corrugated - - -

    MR WATSON:[50] I object.

    [50] Senior counsel for the appellant at trial and on appeal.

    WITNESS: They were - - -

    MR WATSON:     I'm sorry. I object. The witness can describe the - - -

    HER HONOUR:   What he believes them to be and nothing more.

    MR SEMMLER:   That's all that we're putting forward.  Could you perhaps now describe what these fences looked like?

    WITNESS: They were a corrugated cement-type fencing material - - -

    MR SEMMLER:   Yes, and how big were the - - -

    WITNESS: - - - and in panels.

    MR SEMMLER:   What was the gap in the corrugations approximately?

    WITNESS: They were a bigger corrugation than corrugated fencing iron. I believe the corrugations were about 12 centimetres, 12 to 15 centimetres across.

    MR SEMMLER:   What's that in inches? I can only deal in inches.

    WITNESS: Five - - -

    MR SEMMLER:   You're indicating with your two forefingers there.

    WITNESS: Yes, 5 or 6 inches across.

    MR SEMMLER: All right. Thank you. What was the material that these corrugated fences that you came across like? How would you describe it?

    WITNESS: It was like a cement-type material.

    MR SEMMLER:   Yes, and how would it react?

    WITNESS: We'd come across them in which sometimes they had broken and crumbled. They looked very brittle. Some of them contained like a capping, a rectangular-type capping on the tops of the sheets.

    MR SEMMLER:   And how did the appearance of that material, the capping, compare to the appearance of the rest of the fence?

    WITNESS: So, it looked like it was the same type of material, a cement type of material.

    MR SEMMLER:   When you came across these fences, when they were adjoining a new fence that you were putting up or a fence that you were erecting from the old materials, the reused fences, what did that, if anything, involve you doing in relation to each fence?

    WITNESS: So, when we were rebuilding the fences, whether it was a side fence or a back fence or, indeed, a front fence, whenever there was interaction with a neighbour's fence or an adjoining fence you would try, for example, to get the post that you were putting in to erect your new fence as close as you could to the adjoining fence in order to then make sure that it fit flush. You would then put the rails of the new fence on and sometimes that interacted with the old adjoining fence and sometimes that meant modifying the adjoining fence to allow for the post and the rail to fit flush accordingly.

    MR SEMMLER:   And did the need for modifications, did that apply to the corrugated fences you've been describing?

    WITNESS: Yes, that's correct. So, the modifications would be, on some circumstances, to shave some of the fencing sheet, the cement-type fencing, corrugated fencing sheet off to allow for the posts and the rail to become flush and sometimes it also meant the capping to be cut to indeed allow for that to occur, or sometimes it was in order to allow the rail to sit flush up against the existing fence.

    (Emphasis added)

18. A little later, whilst still giving evidence in chief and in the context of his working on asbestos fence panels for the second employer, Mr Werfel added this:

    MR SEMMLER:   Did you deal with such fences in the same circumstances and in the same way you’ve described in your work with Alan?

    …

    WITNESS: Yes, it was with interaction with other fences from other properties.

    Mr Werfel here affirmed that his exposure to asbestos occurred when he interacted with other fences on other properties.  As such, the Judge misrecorded or misconstrued this evidence in a significant way when her Honour observed[51] that:

    [Mr Werfel] clarified that [the asbestos fence panels he worked on] were fences that interacted with other fences from other properties.

    (Emphasis added)

    [51] Werfel v Amaca Pty Ltd v The State of South Australia [2019] SAET 159, [22].

19. According to Mr Werfel’s evidence in chief, he performed work on SAHT homes fences and private homes fences.  The fencing materials he worked on in these respects were iron sheets, Jarrah fencing posts and rails, “good neighbour” fences, ARC mesh and high spear and low spear tubular fences.  Even so, Mr Werfel’s opinion (or, indeed, any other witness’s opinion) as to the age of the SAHT houses could not assist directly with the age of the SAHT houses fencing.  That fencing may not have been erected at the same time as the houses were built, although an inference of reasonable proximity as to timing is probably available. 

1. The concept of “mitigation” used in the passage cited from Amaca v Latz implies that the defendant’s fault or wrongdoing has generally been ascertained, and that the end point or outer limit of proper punishment has been identified, against which each, successive award can be measured.  So, in a case where a plaintiff’s damages are assessed, but it is found that there was an unreasonable failure by the plaintiff to mitigate by unreasonably failing to undergo treatment,[423] or that some conduct by the defendant relevantly mitigates a plaintiff’s loss,[424] the entire award is not made and some lesser award may be made having regard to the effect of the mitigation on the entire loss.

   [423] See, for example, Fazlic v Milingimbi Community Inc (1982) 150 CLR 345, 350 (the Court), where treatment was refused.See also Fox v Wood (1981) 148 CLR 438, 445-447 (Brennan J), where the receipt of workers compensation was regarded as mitigating loss, and the costs reasonably incurred in doing so (payment of income taxation on workers compensation) were recoverable.

   [424] Such as an apology in a defamation case, which mitigates the damages award, Carson v John Fairfax & Sons Ltd (1993) 178 CLR 44, 66 (Mason CJ, Deane, Dawson and Gaudron JJ).

2. However, that approach does not easily fit Amaca v Latz, or the circumstances before this Court under the Dust Diseases Act.  There was no suggestion in Amaca v Latz that the award of $250,000 could be equated to criminal punishment which wholly met the purpose of an award of exemplary damages and its associated purposes of punishment, retribution and the like in respect of all potential claimants.  The Full Court in Amaca v Latz was not intending to punish James Hardie for all of the conduct which might be thought to be deserving of punishment in respect of all potential claimants.  It was concerned only with Mr Latz who, on the evidence, was exposed to asbestos dust and fibre during the building, construction and renovation of his house between 1976 and 1977.  He initially inhaled asbestos dust when cleaning up the site after construction, and he did so again when cutting to size and fitting asbestos sheets when he erected a fence shortly after his house was built.[425] 

   [425] Latz v Amaca [2017] SADC 56, [3] (Judge Gilchrist).

3. Neither party before us attempted the task, no doubt difficult, of explaining, still less proving, the outer limit of James Hardie’s potential liability in respect of all potential claimants.  Presumably there is up to date actuarial and statistical evidence similar to that which was placed before Mr Jackson QC for the purposes of his inquiry.  It seems unlikely in the extreme that this case and the case of Amaca v Latz will be the only cases in which awards for exemplary damages will be made against James Hardie under the Dust Diseases Act. 

4. However absent a confident appreciation of the number and size of each of the classes of potential claimants, as might be undertaken in a class action, it is simply not possible for this Court to have any real understanding of the outer limits of this defendant’s potential liability.  This Court has no material with which it is able to estimate or assess the time at which a full appreciation of the liability of James Hardie will be known, and no means of evaluating when, if ever, later exemplary damages awards might be mitigated by awards already made, even in respect of identical conduct. 

5. The Court is not making an award other than in favour of the particular plaintiff before it, and it is not necessarily addressing all of the recognised common law purposes behind an award of exemplary damages where the wrongdoing ceased some time ago, and it is, at least, unlikely that others remain to be deterred from manufacturing and supplying products containing asbestos.  Having said that, though Mr Werfel has not succeeded with respect to the case mounted on manufacture and supply, he has succeeded with respect to a failure to warn, and so there remains some scope to bring to account deterrence.  These considerations, and the fact that the award is made pursuant to statutory criteria which require that awards will usually be made even where the common law criteria are absent, suggest that the focus must remain on each particular plaintiff and be characterised by moderation.

6. If the statutory criteria necessary for the making of an award of exemplary damages under s 9(2) of the Dust Diseases Act are made out, and the Court is considering whether to make an award, and in what amount, we are, with respect, unable to see any “bright line” between cases where the conduct can be described as “reprehensible”, and those where it might otherwise be described, for example, as deserving of punishment or condemnation.[426] Many, perhaps most cases where the defendant is liable to an award under s 9(2) of the Dust Diseases Act could, in a general sense, be described as “reprehensible”.  That does not, standing alone, say very much about whether or in what amount exemplary damages should be awarded.

   [426] Cf Amaca Pty Ltd v Latz (2017) 129 SASR 61, [225].

7. The first question is whether the statutory requirements are made out.  If they are, then an award will usually be made, as was explained in BHP Billiton Ltd v Parker.[427]  It will be a separate and additional question whether the case is one where the common law criteria for an award of exemplary damages are also made out.  The answer to that question will primarily be relevant to the size of the exemplary damages award.  That question will be addressed by the usual common law criteria, particularly whether there has been conscious wrongdoing in contumelious disregard of the plaintiff’s rights and interests.  As we have explained, that was not the finding made by the Judge in this case.  No actual knowledge or deliberate wrongdoing featured in any findings made which are referable to the ground upon which James Hardie has been found negligent in this case.

   [427] BHP Billiton Ltd v Parker (20122) 113 SASR 206.

8. In these circumstances, the award of damages to be made under s 9(2) of the Dust Diseases Act must in this case focus upon and be directed to the circumstances of Mr Werfel and the class of which he forms a part. Whilst the conduct of James Hardie is deserving of condemnation, the common law criteria for the making of an award of exemplary damages have not been made out. James Hardie may be punished again by further awards yet to be made under s 9(2) of the Dust Diseases Act.  The award must, we think, therefore be characterised by moderation.

9. In our view, an appropriate award of exemplary damages in the circumstances of this case would be $35,000.

   Conclusions on damages

10. We have indicated the assessments of damages that we propose to make on reassessment, for the reasons we have given.  Nonetheless we have also reflected on the overall damages award in contemplation.  In our view, it represents a reasonable allowance for the loss and damage sustained by Mr Werfel.

11. Allowance must be made for interest on past losses.

12. It is usual to apply interest over half the period to judgment so as to reflect the accruing nature of the loss.[428]  On pain and suffering and loss of amenities, we apportion $175,000 of the $280,000 awarded to the past, and allow interest at 4 per cent.  Accordingly, we allow the sum of $7,000.[429] 

    [428] Wheeler v Page (1982) 31 SASR 1.

    [429] Section 30C, Supreme Court Act 1935, MBP (SA) Pty Ltd v Gogic (1991) 171 CLR 657; Wheeler v Page (1982) 31 SASR 1, 6 (King CJ (with whom Jacobs and Prior JJ agreed).

13. For past gratuitous services provided to Mr Werfel, the calculation must be at commercial rates.[430]  The Judge used a rate of 6.5 per cent.  Accordingly, the interest awarded on the $25,000 award for past gratuitous services is $1,625.  For past Sullivan v Gordon damages in respect of the services that Mr Werfel would have provided to Mrs Werfel and their daughters, the allowance to trial is, for the first year, $20,800 and, for the second year until recurrence, $27,000. At a rate of 6.5 per cent the allowance becomes $3,107.

    [430] Grincelis v House (2000) 201 CLR 321.

14. Accordingly, we set aside the Judge’s assessment and substitute the following award of damages:

Pain and suffering and loss of enjoyment of life	$280,000
Interest on past pain and suffering	$7,000
Loss of expectation of life	$20,000
Past economic loss and interest	$23,817
Future economic loss – the lost years	$1,300,000
Past medical expenses	$12,034
Future medical expenses	$150,895
Past gratuitous services to Mr Werfel	$25,000
Interest on past gratuitous services	$1,625
Future gratuitous services to Mr Werfel	$125,000
Sullivan v Gordon damages – including the lost years	$245,000
Interest on past Sullivan v Gordon damages	$3,107
Exemplary damages	$35,000
Total	$2,228,478

Final conclusion

1. The appeal against liability is dismissed.  The appeal against damages is allowed in part.  The Judge’s award of $3,077,187 is set aside and replaced with an award of $2,228,478.

2. We will hear from the parties regarding the appropriate form of the orders to be made and as to costs.

   Appendix: James Hardie – corporate structures and financial capacity

   James Hardie was one of a group of companies, the shares in which were wholly or largely owned by James Hardie Industries Ltd (JHIL).  James Hardie was a manufacturer and wholesaler of asbestos products generally and, relevantly to this matter, of asbestos-cement home building products in particular. It was one of the main operating companies of the companies controlled by JHIL (the James Hardie Group).  James Hardie wound down its asbestos production in the 1980s, and finally ceased production and distribution in 1987.

   In 2001 the James Hardie Group established the Medical Research and Compensation Foundation (the MRCF), to make provision for personal injury claims arising out of its asbestos operations. On 27 February 2004, an inquiry into the establishment and operation of the MRCF was initiated under s 4(1) of the Special Commissions of Inquiry Act 1983 (NSW) (The Inquiry).  Mr DF Jackson QC was the appointed commissioner.  The report was received into evidence at Mr Werfel’s trial.  The facts set out in this section are drawn from that report.

   The MRCF became the shareholder of Amaca Pty Ltd, which was then the name of James Hardie and of another company in the James Hardie Group then known as Amaba Pty Ltd (Amaba).  In this judgment, the corporation which was first named James Hardie and later changed its name to Amaca Pty Ltd has been referred to as James Hardie.  The net assets of both corporations as of 30 June 2004 were $179.2 million but were acquired by the foundation for no monetary consideration.  Over time, JHIL made further contributions to the MRCF so that the value, as at the time of the Commissioner’s report, of the total assets acquired by it, were $293 million.  Even though an amount of $63.01 million was set aside against those assets to meet currently notified asbestos‑related claims, Commissioner Jackson estimated the net present value of all future claims to be $1.5 billion.  Commissioner Jackson found that the estimate of future liabilities, on the basis of which the MRCF was first funded, was calculated from overly favourable assumptions.  Certain claims which James Hardie and Amaba might have against insurance companies was found to have a net present value of about $160 million.  Commissioner Jackson found that MRCF’s funds would be exhausted by 2007 if its funds were not augmented. 

   In October 2001, a scheme of arrangement was approved whereby the holding company of the James Hardie Group became James Hardie Industries NV (JHI NV), a Dutch company.  The shareholders of JHIL became shareholders in JHI NV.  The shares held by JHI NV in JHIL were only partially paid-up; JHIL was entitled to make a call for up to $1.9 billion if it were necessary for it to do so in order to maintain its solvency.

   In March 2003, JHI NV and JHIL agreed to cancel the partly paid up shares.  A new Foundation (the ABN 60 Foundation) then became the sole shareholder of JHIL.  At the time of that reconstruction, the net assets of JHIL were about $20 million.  For some time after the establishment of the MRCF, the James Hardie Group refused to substantially increase its funding of the MRCF.  In his report, Commissioner Jackson observed that there was no legal obligation on JHIL to fund the liabilities of James Hardie and Amaba simply because they were subsidiaries, but recognised the commercial interest of JHIL in making adequate provision for those liabilities.  In a discussion which bears both on the commerciality of a large business accepting its product liability responsibilities and moving on, and on the public policy tensions between profit and responsibility for product liability which must be resolved within the law of negligence, Commissioner Jackson observed:

   The James Hardie Group has also indicated, subject to various matters dealt with in discussing Term of Reference 4 (including that it is under no legal obligation to do so), that it is prepared to fund the future asbestos liabilities of Amaca, Amaba and JHIL.  In my opinion it is right that it should do so.  There may have been no legal obligation on JHIL to fund the liabilities of Amaca and Amaba simply because they were its subsidiaries, but if it were thought, in the interests of JHIL, for it to be separated from those subsidiaries because of the shadow of asbestos liabilities they brought with them, it is hard to see why it would not have been in the interests of JHIL to provide the funding which was necessary to enable that to be done effectively.  To do it effectively meant to do it in a way which would not result in the issue rearing its head again, as has happened here, with very adverse results to the public standing of James Hardie.  If the interests of JHIL’s shareholders were thought to lie in cutting loose the asbestos liabilities, what seems to have been overlooked, is what Mr Peter Shafron (the Group’ Chief General Counsel) had said to the Board some twelve months before in his paper “Asbestos”:

   ‘The overall US experience on reorganisations, as described by JH’s US attorneys, has some admittedly fairly obvious lessons for us:

   In sum, the US experience has shown thus far that a carefully planned reorganisation that makes fair provision for the asbestos claims has some chance of succeeding.  But any attempt at reorganisation that does not leave significant assets for the asbestos claims will, at a minimum, spawn lengthy and costly litigation with the plaintiffs’ bar, and may ultimately be unsuccessful.’

   I add two observations.

   The first is that I can understand how, the manufacture of asbestos products having ceased in the 1980s (finally in 1987), asbestos liabilities came to be described within the James Hardie Group as ‘legacy issues’ or part of the ‘rump’.  That mode of thought, however, tends to obscure the true legal situation.  The negligence of the James Hardie companies occurred in the past, but the liabilities flowing from that negligence only arise day by day, now and in the future, as the diseases are acquired or manifest themselves.  The exposure to asbestos may not even yet have occurred.  The position in February 2001 was, as it remains, that members of the public will contract asbestos‑related diseases over many years because of the negligence of Amaca and Amaba.  The notion that the holding company would make the cheapest provision thought ‘marketable’ in respect of those liabilities so that it could go off to pursue its other more lucrative interests insulated from those liabilities is singularly unattractive.  Why should the victims and the public bear the cost not provided for?

   (Citations omitted)

   The third term of reference of the Inquiry was to consider the circumstances in which any corporate reconstruction or asset transfers occurred, within, or in relation, to the James Hardie Group, prior to the separation of MRCF from James Hardie Group to the extent that this may have affected the ability of MRCF to meet its current and future asbestos‑related liabilities.  The effect on the ability of the MRCF to meet its future liabilities is, of course, not relevant to these proceedings.  However, the evidence received by the Inquiry disclosed the financial resources available to James Hardie, out of which provision could have been made to fund its liabilities, or warn of the danger of asbestos products, in order to reduce those liabilities.

   In 1995 James Hardie sold its core technology to a dedicated research and development company in the James Hardie Group for $75 million.  In the same year, it sold other business entities for a net profit of $38.255 million. 

   James Hardie’s operating profit before income tax for the year ending 31 March 1996 was $109,369,000.  There were retained profits of $57,775,000.  After adjustments for income tax, and taking into account certain abnormal items, its total operating profit was $110,195,000.  After an adjustment for a change in accounting policy, the total available for appropriation was $166,734,000.  Two dividends were paid totalling $100,900,000 during that year to JHIL or other companies in the James Hardie Group.  

   In the following financial year, James Hardie paid JHIL $43.5 million. 

   James Hardie ceased to be an operating company in 1998, when its business was sold to JHI NV and its real estate was leased to another company or companies in the James Hardie Group.