Talifero v Asbestos Injuries Compensation Fund Limited as Trustee for the Asbestos Injuries Compensation Fund

[2018] NSWCA 227

Court of Appeal

Supreme Court

New South Wales

• Summary available
• Amendment notes

Medium Neutral Citation:	Talifero v Asbestos Injuries Compensation Fund Limited as Trustee for the Asbestos Injuries Compensation Fund [2018] NSWCA 227
Hearing dates:	6 August 2018
Decision date:	11 October 2018
Before:	Beazley P at [1]; Sackville AJA at [2]; Emmett AJA at [133]
Decision:	1.   Direct the Estate to file within seven days a summons seeking leave to appeal from the decision of Sackar J made on 4 May 2018. 2.   Grant leave to appeal. 3.   Appeal allowed. 4. Set aside Order 1 made by the primary Judge on 4 May 2018, being judicial advice given pursuant to s 55 of the James Hardie Former Subsidiaries (Winding Up and Administration) Act 2005 (NSW) (Winding Up Act). 5.   Direct the parties to file within 14 days agreed short minutes of additional orders giving effect to this judgment, together with brief joint submissions addressing the Court’s power to make the orders. 6.   In the event that the parties cannot agree, direct the Estate to file and serve within 14 days short minutes of additional orders it proposes, together with brief written submissions in support (including submissions on the Court’s power to make the orders proposed). 7.   Direct the Trustee to file and serve within a further 14 days alternative short minutes of additional orders it proposes (if any), together with brief written submissions in support. 8.   If the parties are in agreement as to the costs orders that should be made in this Court and in the Equity Division proceedings, direct that consent short minutes of order as to costs be filed within 14 days. 9.   In the absence of agreement as to costs, direct the parties to file and serve written submissions in compliance with the timetable set out in Orders 6 and 7.
Catchwords:	TRUSTS – scheme established by three interrelated instruments to compensate victims of asbestos-related diseases – instruments comprise the James Hardie Former Subsidiaries (Winding Up and Administration) Act 2005 (NSW) (Winding Up Act), a Trust Deed and a Final Funding Agreement – application by Trustee for judicial advice under s 55 of the Winding Up Act – victim of mesothelioma exposed to asbestos both in Australia and overseas – victim claims damages against a “liable entity” based solely on exposure to asbestos in Australia – whether Trustee is justified under the scheme in paying only the proportion of the damages award attributable to exposure to asbestos in Australia – whether Trustee is obliged to pay the victim’s estate the whole of the damages award – whether the definition of “payable liability” in the instruments is satisfied if the victim’s claim relates solely to exposure to asbestos in Australia. PRACTICE AND PROCEDURE – appeal purportedly lodged as of right from judicial advice sought by the Trustee – appeal lodged by a non-party – leave required – whether appropriate to substitute different advice on an appeal from judicial advice given under s 55 of the Winding Up Act.
Legislation Cited:	Corporations Act 2001 (Cth) James Hardie (Civil Liability) Act 2005 (NSW) James Hardie (Civil Penalty Compensation Release) Act 2005 (NSW) James Hardie Former Subsidiaries (Winding Up and Administration) Act 2005 (NSW), ss 2, 3, 4, 5, 8, 20, 21, 23, 31, 32, 34, 35, 43, 44, 47, 55, 58, 62 Special Commissions of Inquiry Act 1983 (NSW) Trustee Act 1925 (NSW), s 63(1) Dust Diseases Tribunal Regulation 2013 (NSW), cl 24(1)
Cases Cited:	Alcan Gove Pty Ltd v Zabic (2015) 257 CLR 1; [2015] HCA 33 Asbestos Injuries Compensation Fund Ltd [2011] NSWSC 97 Asbestos Injuries Compensation Fund Limited as Trustee for the Asbestos Injuries Compensation Fund [2018] NSWSC 589 Bolton Metropolitan Borough Council v Municipal Mutual Insurance Ltd [2006] 1 WLR 1492 Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502; [1988] HCA 21 Fairchild v Glenhaven Funeral Services Ltd [2002] 3 All ER 305 Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher & Barnet (as liquidators of Octaviar Administration Pty Ltd (In Liq) & Ors (2015) 89 NSWLR 110; [2015] NSWCA 85 Harradine v Cockatoo Dockyard [2008] NSWDDT 8 Kelly v The Queen (2004) 218 CLR 216; [2004] HCA 12 Orica Ltd v CGU Insurance Ltd (2003) 59 NSWLR 14; [2003] NSWCA 331 Pilbara Infrastructure Pty Ltd v Australian Competition Tribunal (2012) 246 CLR 379; [2012] HCA 36 Ross v Meggitt Overseas Ltd (1999) 18 NSWCCR 324 Sienkiewicz v Greif (UK) Ltd [2011] 2 AC 229; [2011] UKSC 10 Stevenson v James Hardie & Co Pty Ltd (1997) 15 NSWCCR 568 Talifero v Amaca Pty Ltd [2017] NSWDDT 14 Tomlinson v Ramsay Food Processing Pty Ltd (2015) 256 CLR 507; [2015] HCA 28 Witness v Marsden (2000) 49 NSWLR 429; [2000] NSWCA 52
Texts Cited:	Health and Safety Executive, Occupational, Domestic and Environmental Mesothelioma Risks in Britain (2009) M Aronson, M Groves and G Weeks, Judicial Review of Administrative Action and Government Liability (6th ed 2017, Lawbook Co) Report of the Special Commission of Inquiry into the Medical Research and Compensation Foundation (September 2004)
Category:	Principal judgment
Parties:	Anthony David Talifero (Appellant) Asbestos Injuries Compensation Fund Limited as Trustee for the Asbestos Injuries Compensation Fund (Respondent) Attorney-General for the State of New South Wales (Intervening)
Representation:	Counsel: Mr B Walker SC / Mr S Robertson (Appellant) Mr IM Jackman SC / Ms BA Ng (Respondent) Mr MG Sexton SC SG / Ms ES Jones (Attorney-General, NSW)   Solicitors: Segelov Taylor Lawyers (Appellant) Baker McKenzie (Respondent) NSW Crown Solicitor’s Office (Attorney-General, NSW)
File Number(s):	2018/172078
Decision under appeal	Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Citation: [2018] NSWSC 589 Date of Decision: 04 May 2018 Before: Sackar J File Number(s): 2018/30145

Headnote

[This headnote is not to be read as part of the judgment]

Mr Francis John Talifero brought proceedings against Amaca Pty Ltd (Amaca) in the Dust Diseases Tribunal of New South Wales (Tribunal) for damages in negligence as a result of contracting mesothelioma through exposure to James Hardie asbestos cement products (Talifero Proceeding). Mr Talifero died of mesothelioma on 16 October 2017. On 11 December 2017, his Estate was awarded damages to the sum of $560,482. Although Mr Talifero was also exposed to asbestos during his employment in the United Kingdom, including through his employment as a stoker in the British Navy, the Tribunal held that this exposure was irrelevant as mesothelioma is an “indivisible” disease.

On 29 January 2018, the respondent, Asbestos Injuries Compensation Fund Limited, made an application for judicial advice pursuant to s 55(1) of the James Hardie Former Subsidiaries (Winding up and Administration) Act 2005 (NSW) (Winding Up Act). The respondent sought an order that it would be “justified in not paying so much of the damages award made in the Talifero Proceedings as reflects the extent to which Mr Talifero’s exposure to asbestos or asbestos products occurred outside Australia”. On 4 May 2018, the primary judge made the order in the terms sought.

The respondent’s application for judicial advice did not join any other party, however, on 8 March 2018, the primary judge granted leave to Amaca and Allianz Australia Insurance Ltd to make submissions. The Attorney-General for New South Wales intervened in the proceedings pursuant to s 58 of the Winding Up Act. The appellant, the Executor of Mr Talifero’s Estate, was not joined as a party to the application for judicial advice.

The primary judge’s decision depended on the construction of three inter-related instruments that comprised a scheme to compensate victims of asbestos-related diseases: the Winding Up Act, the Asbestos Injuries Compensation Fund Amended and Restated Deed dated 14 December 2006 (Trust Deed) and the Amended and Restated Final Funding Agreement dated 21 November 2006 (Final Funding Agreement).

The issue on appeal was whether the primary judge erred in failing to find that the whole of the claim made in the Talifero Proceeding was a “Proven Claim” that the respondent was obliged to pay under the Final Funding Agreement and thus erred in giving the judicial advice proposed by the respondent.

Leave to appeal was granted and the appeal was allowed.

Sackville AJA (Beazley P agreeing) held:

(i) A non-party requires leave to appeal from a judgment or order under s 101(1)(a) of the Supreme Court Act 1970 (NSW) and will have standing to seek leave if he or she is “aggrieved” or is “sufficiently interested” in the judgment or order: [19].

Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher & Barnet (as liquidators of Octaviar Administration Pty Ltd (In Liq) & Ors [2015] NSWCA 85, Witness v Marsden [2000] NSWCA 52, referred to.

Sackville AJA (Beazley P and Emmett AJA agreeing) held:

(ii) The appellant was “aggrieved” by the orders made by the primary judge and, in any event, clearly had a sufficient interest in challenging them. It was therefore appropriate to permit the appellant to apply for leave to appeal: [20], [159].

Sackville AJA (Beazley P agreeing) held:

(iii) A claim falls within the definition of “payable liability” in the Winding Up Act in so far as it is a claim founded on exposure to asbestos in Australia. Mr Talifero’s “claim” was that propounded in the Talifero Proceeding, which was wholly founded on his exposure to asbestos in Australia. The provisions of the Winding Up Act therefore authorised the respondent to pay the whole of the judgment debt to the appellant: [105] - [113].

Ross v Meggitt Overseas Ltd (1999) 18 NSWCCR 324, referred to.

(iv) Proviso (B) to the definition of “Personal Asbestos Claim” in the Final Funding Agreement (to which the definition of “Proven Claim” refers) is not to be construed as a direction to the court or Tribunal which determines the claim for damages. Such a claim must be determined in accordance with the common law and any legislation modifying the common law: [123].

Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502; [1988] HCA 21; Tomlinson v Ramsay Food Processing Pty Ltd (2015) 256 CLR 507; [2015] HCA 28, referred to.

(v) The better construction of the proviso to the definition of “Personal Asbestos Claim”, as applied to cl 4.2(d) of the Final Funding Agreement, is that each element refers to the claimant’s exposure to asbestos alleged in his or her claim for personal injury damages and not to the claimant’s actual exposure to asbestos: [124].

(vi) Accordingly, as Mr Talifero’s claim in the Tribunal was a claim for damages arising solely from exposure to asbestos in Australia, it satisfied the definition of “Proven Claim” as set out in the Final Funding Agreement, notwithstanding his actual exposure to asbestos in the United Kingdom. The respondent was therefore obligated to pay the entire judgment debt pursuant to cl 4.2(d): [121] – [127].

Emmett AJA held:

(vii) The provisions of the Trust Deed and Final Funding Agreement call for an inquiry by the respondent as to whether Mr Talifero inhaled the fibre that caused his mesothelioma in Australia or outside Australia. If Mr Talifero inhaled the fibre that caused his mesothelioma in Australia, he is entitled to the full amount of the award made by the Tribunal. On the other hand, if Mr Talifero inhaled the fibre that caused his mesothelioma before he came to Australia, he would not be entitled to any part of the award made by the Tribunal: [164] - [165].

(viii) The primary judge erred in concluding that the respondent would be justified in not paying so much of the damages award made by the Tribunal as reflects the extent to which Mr Talifero’s exposure to asbestos or asbestos products occurred outside Australia, in so far as it would involve paying a proportion between nil and 100% of the Tribunal’s award: [167].

Judgment

1. BEAZLEY P: I have had the advantage of reading in draft the reasons of Sackville AJA. I agree with his Honour’s reasons and proposed orders.

2. SACKVILLE AJA: This appeal arises out of an application for judicial advice made by the respondent, Asbestos Injuries Compensation Fund Ltd (Trustee), pursuant to s 55(1) of the James Hardie Former Subsidiaries (Winding Up and Administration) Act 2005 (NSW) (Winding Up Act). [1] In its summons filed on 29 January 2018, the Trustee sought an order in the following terms:

“[I]n the Talifero Proceeding, the [Trustee] would be justified in not paying so much of the damages award made in the Talifero Proceedings as reflects the extent to which Mr Talifero’s exposure to asbestos or asbestos products occurred outside Australia.”

1. Section 55 of the Winding Up Act is reproduced, so far as relevant, at [51] below.

3. The summons defined “Talifero Proceeding” to mean proceeding number 116 of 2017 in the Dust Diseases Tribunal of New South Wales (Tribunal) which was commenced by Mr FJ Talifero against Amaca Pty Ltd (Amaca), formerly known as James Hardie and Co Pty Ltd. Mr Talifero died of mesothelioma on 16 October 2017 and his legal personal representative was substituted as the plaintiff. The Tribunal gave judgment on 11 December 2017 for the plaintiff (Estate) in the sum of $560,482 as damages for the mesothelioma contracted by Mr Talifero as a consequence of Amaca’s negligence. [2]

   2. Talifero v Amaca Pty Ltd [2017] NSWDDT 14 (Tribunal Judgment).

4. The Trustee’s application for judicial advice did not join any other party. On 8 March 2018, the primary Judge granted leave to Amaca to make submissions and be heard on the application and also granted leave to Allianz Australia Insurance Ltd to make submissions. The Attorney-General for New South Wales intervened in the proceedings pursuant to s 58 of the Winding Up Act but it does not appear that a formal order was made joining the Estate as a party to the application for judicial advice.

5. It was common ground both before the Tribunal and the primary Judge that Mr Talifero had been exposed to asbestos in Australia and, before he migrated to this country, in the United Kingdom (including through his employment as a stoker in the British Navy). The Tribunal recognised that Mr Talifero had been exposed to asbestos during his employment in the United Kingdom, but that that exposure was irrelevant since the disease of mesothelioma is “indivisible”. [3]

   3. Tribunal Judgment at [9]. See [76]-[79] below for an explanation of the terms “indivisible” and “divisible”.

6. Before the primary Judge neither the Attorney-General nor the parties given leave to make submissions disputed that s 55 of the Winding Up Act authorised the Court to give the advice sought by the Trustee if it was otherwise appropriate to do so. After hearing argument, the primary Judge gave advice in the terms sought by the Trustee in a judgment delivered on 4 May 2018. [4] The effect of the advice is that the Trustee is justified in not paying the portion of the judgment sum that reflects the contribution made to Mr Talifero’s mesothelioma by his exposure to asbestos in the United Kingdom. The Trustee has made a determination as to the extent of the contribution to asbestos in the United Kingdom, but the correctness of that determination was not an issue before the primary Judge and does not arise on the appeal.

   4. Asbestos Injuries Compensation Fund Ltd as Trustee for the Asbestos Injuries Compensation Fund [2018] NSWSC 589 (Primary Judgment).

7. By a notice of appeal filed on 1 June 2018, the Estate purports to appeal as of right from the order made by the primary Judge. The notice of appeal names the Trustee as the respondent and contains the following ground:

“The primary judge:

(a)   erred in failing to find that the whole of the claim made and upheld in the Talifero Proceeding was a ‘Proven Claim’ that the [Trustee] is obliged to pay under the James Hardie Final Funding Agreement.

(b)   in the premises, erred in giving the judicial advice proposed by the [Trustee] rather than giving judicial advice to the effect that the [Trustee] was obliged to pay the whole of the liability of Amaca … under the judgment given in favour of the [Estate] on 11 December 2017.

In this ground of appeal,

‘James Hardie Final Funding Agreement’ means the Amended & Restated Final Funding Agreement dated 21 December 2006.” [5]

5.    The date appears to be a mistake as the Amended and Restated Final Funding Agreement is dated 21 November 2006.

8. The Estate seeks orders allowing its appeal and setting aside the judicial advice given by the primary Judge. In lieu of that advice the Estate seeks an order to the following effect:

“Order that the Trustee is advised that it is obliged to pay the whole of the liability of Amaca Pty Ltd (formerly known as James Hardie & Coy Pty Ltd) under the judgment given in favour of the Estate (including the liability under that judgment to pay pre- and post-judgment interest and costs).”

9. The issue for determination on the appeal depends on the construction of three inter-related instruments:

• the Winding Up Act;

• the Asbestos Injuries Compensation Fund Amended and Restated Deed dated 14 December 2006 (Trust Deed); and

• the Amended and Restated Final Funding Agreement dated 21 November 2006 (Final Funding Agreement).

10. The expression “Proven Claim”, which is referred to in the notice of appeal, is defined in identical terms in both the Trust Deed and the Final Funding Agreement. But much of the debate in this Court centred on the definitions of the expressions “payable liability” and “personal asbestos claim” in the three relevant instruments. The definitions of these terms are in substance the same in the Trust Deed and the Final Funding Agreement, but the definitions are different in the Winding Up Act.

11. The Estate, represented in this Court by Mr Walker SC and Mr Robertson, relies on the Tribunal’s finding that Mr Talifero’s exposure to James Hardie’s asbestos products in Australia alone was sufficient to cause his mesothelioma, whatever contribution may or may not have been made by his exposure to asbestos in the United Kingdom. The Estate submits that the Final Funding Agreement obliges the Trustee to pay in full a “proven asbestos claim” where that claim rests exclusively on exposure to asbestos in Australia. The Estate contends that there is nothing in the Winding Up Act that detracts from the Trustee’s obligation imposed by the Final Funding Agreement. Since Mr Talifero succeeded before the Tribunal on a claim wholly founded on exposure to asbestos in Australia it follows, so the Estate argues, that the Trustee must pay the entirety of the judgment sum.

12. The Trustee supports the reasoning of the primary Judge. It contends that the three instruments, when read together, oblige the Trustee only to pay a personal asbestos claim to the extent to which the claim (as distinct from the judgment on the claim) is in fact attributable to exposure to asbestos in Australia. According to the Trustee, if as a matter of fact Mr Talifero’s mesothelioma can be attributed both to exposure to asbestos in Australia and in the United Kingdom, the Trustee has to apportion responsibility for his mesothelioma between the two periods of exposure. On this analysis, if 40 per cent of responsibility for Mr Talifero’s mesothelioma is attributable to exposure in the United Kingdom and 60 per cent to exposure in Australia, the Trustee is obliged only to pay 60 per cent of the judgment sum awarded by the Tribunal to the Estate.

13. On the Trustee’s case, it is not to the point that the Estate succeeded before the Tribunal in establishing that Mr Talifero’s exposure to Amaca’s asbestos products in Australia was sufficient under common law principles to be regarded as the cause of his mesothelioma. The question is rather whether, on a harmonious reading of the three instruments constituting the scheme, the Trustee is entitled to pay only the proportion of the damages awarded to Mr Talifero that can be attributed as a matter of fact to his exposure to asbestos products in Australia.

10. The Attorney-General has intervened in the appeal as he did on the application for judicial advice. For the most part Mr Sexton SC SG, who appeared with Ms Jones for the Attorney-General, supports the reasoning of the primary Judge, but makes no submission as to the particular facts of the case.

Procedural matters

The direction

15. As has been noted, no issue was raised before the primary Judge as to whether s 55(1) of the Winding Up Act authorised the primary Judge to give the direction sought by the Trustee. Similarly, none of the parties who participated in the appeal disputed the primary Judge’s powers to give that direction.

16. Section 55(1) permits a liable entity or the Trustee to apply for advice or direction on any matter relating to the scope of the Trustee’s functions under Part 4 of the Winding Up Act, the exercise of any function by the Trustee under Part 4 or any other matter relating to the operation of Part 4. [6] Section 4(1) defines “functions” to include “power, authority or duty”.

    6. Section 55(2) permits an application for advice or direction to be made by the Minister but no such application has been made. Section 55 of the Winding Up Act is reproduced at [51] below.

17. I accept the parties’ implicit assumption that s 55(1) of the Winding Up Act authorised the Court to make the direction sought by the Trustee. Section 23(1) of the Winding Up Act provides that the powers of each liable entity must be exercised during the “winding up period” so as to carry on the business of the entity to ensure that only payable liabilities of the entity are paid in accordance with Part 4 of the Act and to pay payable liabilities in accordance with Part 4. [7] Section 32 stipulates that during the winding up period for a liable entity only “payable liabilities” of the entity may be paid, whether by the entity itself or the Trustee. Section 34 authorises a liable entity or the Trustee on its behalf to pay the payable liabilities of the entity as and when they fall due. Sections 23, 32 and 34 are within Part 4 of the Winding Up Act. The language of s 55(1) is sufficiently broad to encompass a direction by the Court to the Trustee that it would be justified in not paying out of the funds available to it a particular proportion of damages awarded to a claimant.

    7. Sections 23, 32 and 34 of the Winding Up Act are reproduced at [43], [46] and [47] below.

18. The Estate’s notice of appeal raises other issues. The Estate seeks in substitution for the order made by the primary Judge a direction to the Trustee advising that it is obliged to pay the whole of the judgment in favour of the Estate. Section 55(1) of the Winding Up Act makes no mention of an application by a person other than a liable entity or the Trustee. Nor does s 55 provide for an application or cross-application by a third party, such as a claimant who has obtained a judgment against a liable entity or the claimant’s estate. It will be necessary to return to the question of whether the Estate is entitled in proceedings under s 55(1) (including an appeal) to seek a direction in the terms stated in the Estate’s notice of appeal.

Leave to appeal

19. The Trustee has not objected to the competency of the appeal despite the fact that the Estate was not joined as a party to the Trustee’s application in the Equity Division for advice or direction. Section 101(1)(a) of the Supreme Court Act 1970 (NSW) provides that subject to the Act and the rules, an appeal lies to the Court of Appeal from any judgment or order of the Court in a Division. It is, however, established that a non-party requires leave to appeal from a judgment or order. [8] A non-party has standing to seek leave to appeal if he or she is “aggrieved” or is “sufficiently interested” in the judgment or order. [9]

    8. Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher & Barnet (as liquidators of Octaviar Administration Pty Ltd (In Liq) & Ors (2015) 89 NSWLR 110; [2015] NSWCA 85 (Fortress Credit) at [75] (Bathurst CJ, Beazley P, Macfarlan, Meagher and Barrett JJA agreeing).

    9. Witness v Marsden (2000) 49 NSWLR 429; [2000] NSWCA 52 at [81]-[82] (Heydon JA, Mason P and Priestley JA agreeing); Fortress Credit at [77]-[82].

20. The Estate is aggrieved by the orders made by the primary Judge and in any event clearly has a sufficient interest in challenging them. It is therefore appropriate to permit the Estate to apply for leave to appeal. Since the issues raised by the Estate are clearly of general importance, it is also appropriate that the Court grant leave to appeal

Mr Talifero’s claim

Talifero Proceeding

21. Section 55(4) of the Winding Up Act provides that a written statement signed by the Trustee seeking judicial advice is sufficient evidence of the matters set out. The Trustee prepared an “Amended Statement of Facts” pursuant to s 55(4) which was admitted into evidence.

22. Based on the Amended Statement of Facts, the primary Judge made the following findings concerning the Talifero Proceeding: [10]

    10.    Primary Judgment at [3]-[10].

“3   By a Statement of Claim filed 18 April 2017 in the Dust Diseases Tribunal of New South Wales, Mr Talifero sued Amaca Pty Ltd for damages in negligence, alleging that he had contracted mesothelioma as a consequence of exposure to James Hardie asbestos cement products.

4   Mr Talifero’s Statement of Claim was first filed on 18 April 2017. His claim was made against Amaca Pty Ltd (not the Trustee) in negligence. [In the Statement of Claim] Mr Talifero asserted that at all material times Amaca Pty Ltd manufactured and supplied asbestos cement building materials in Australia and supplied asbestos cement building materials to hardware stores and retail outlets including Kingsford Timber Co Pty Ltd. Mr Talifero alleged therefore that the cause of his injury, loss and damage was the negligence of Amaca Pty Ltd. The claim was framed by reference to exposure that had been experienced in Australia.

5   In Mr Talifero’s Statement of Particulars filed 19 May 2017,[11] he did provide a summary of work and exposure to asbestos, which relevantly included exposure whilst employed overseas in the United Kingdom.

11. The Dust Diseases Tribunal Regulation 2013 (NSW), cl 24(1) provides that the plaintiff in proceedings in the Tribunal must file and serve a Statement of Particulars in the prescribed form. The form specifies that the plaintiff must include a detailed history of his or her exposure to asbestos, including all interstate and overseas exposure.

6   However, I note this Statement of Particulars suggested exposure to asbestos whilst overseas accounted for only 10% (with respect to exposure whilst employed as a Stoker in the British Navy) or less than 1% (with respect to Turnerised Roofing Co Ltd, Birmingham UK and Burberry Brick Co in the United Kingdom). This was no doubt to suggest the exposure overseas was de minimis or at least that the relevant material exposure to asbestos products occurred in Australia.

7   Amaca Pty Ltd filed a defence to Mr Talifero’s claim on 25 August 2017 where it relied upon a reduction of liability on account of Mr Talifero’s allegations of exposure to asbestos overseas. In an Amended Defence filed 4 September 2017, Amaca Pty Ltd withdrew this reduction of liability.

8   Mr Talifero passed away on 16 October 2017. On 7 November 2017, orders were made substituting Mr Talifero’s son, Anthony David Talifero, as legal representative of the estate of Mr Talifero for the purposes of continuing the Talifero Proceeding.

9   The Talifero Proceeding was set down for hearing and concluded on 23 November 2017. On 11 December 2017, Judge Russell SC delivered his reasons … and also ordered judgment for the plaintiff against the defendant (Amaca Pty Ltd) for $560,482.00 and ordered the defendant to pay the plaintiff’s costs.

10   Judge Russell SC made the following findings of fact about Mr Talifero’s exposure to asbestos in his written reasons:

(1)   Mr Talifero was born in the United Kingdom on 15 May 1931. Mr Talifero was exposed to asbestos during his employment in the United Kingdom, but that exposure was irrelevant since the disease was the indivisible condition of mesothelioma.

(2)   Mr Talifero came to Australia in 1971 and worked for 25 years as a house painter. During that time, from time to time he had to replace broken asbestos cement sheets, in order to complete house painting jobs. Mr Talifero always bought new fibro sheets from Kingsford Timber where he had an account. About 20% of Mr Talifero’s painting jobs required him to install new fibro. To do this he needed to cut, rasp and sand new fibro sheets.

(3)   Mr Talifero purchased fibro sheets from Kingsford Timber and the sheets he purchased were James Hardie fibro sheets.

(4)   Mr Talifero was exposed to asbestos by way of the James Hardie flat fibro sheets.

(5)   Mr Talifero’s exposure to James Hardie products alone in Australia was sufficient to cause Mr Talifero’s mesothelioma.” (References omitted.) (Emphasis in original.)

Trustee’s determination

23. Two expert reports were tendered in the Tribunal on behalf of the Estate. Professor Breslin, a consultant thoracic physician, opined on the basis of Mr Talifero’s history of definite occupational asbestos exposure that 10 to 12 per cent of his exposure occurred in Britain and the balance in Australia. Professor Breslin considered that the “overwhelming cause” of Mr Talifero’s asbestos exposure was his work in Australia, but that his exposure in Britain materially contributed to the development of his mesothelioma.

24. Professor Henderson, Emeritus Professor of Anatomical Pathology at Flinders University, did not express an opinion as to the percentage contributions made by Mr Talifero’s exposure to asbestos in Britain and Australia. However he expressed the view that Mr Talifero’s exposure to asbestos in Australia represented a “significant and substantial causal contribution to the singular (i.e. all or none; so-called ‘indivisible’) injury” in the form of pleural malignant mesothelioma. The Tribunal referred to the expert reports [12] but had no need to make a finding as to the proportional contribution to Mr Talifero’s mesothelioma of his exposure to asbestos in Britain.

    12.    Tribunal Judgment at [21]; [64]; Primary Judgment at [13]-[17].

25. The primary Judge noted[13] that the Trustee had made its own determination that 48 per cent of Mr Talifero’s total exposure was attributable to his exposure in the United Kingdom and that, accordingly, it intended to deduct 48 per cent from the damages award made by the Tribunal in favour of the Estate. [14] In making this determination the Trustee relied on a report by Professor Richard Fox, a medical oncologist. Professor Fox, whose report was not tendered before the Tribunal, adopted the so-called “Peto hypothesis” (which is also referred to as the Peto model or Peto formula) to make the apportionment. [15] Although Professor Fox’s report was not in evidence at the Tribunal, Professor Henderson in his report stated that he had “major and serious reservations, and substantial doubt” about Professor Fox’s use of the Peto hypothesis to estimate relative percentage causal contributions from Mr Talifero’s exposure to asbestos in Britain and Australia.

    13. Primary Judgment at [18].

    14. Primary Judgment at [18].

    15.    Professor Fox said that the “Peto hypothesis” was derived from the work of a prominent English epidemiologist. According to Professor Fox, Peto:

26. No challenge has been made either before the primary Judge or in this Court to the Trustee’s determination founded on Professor Fox’s analysis. It follows that if the primary Judge’s order is upheld and the Trustee acts in accordance with the judicial advice and its own determination (assuming no further challenges), the Estate will receive only 52 per cent of the judgment sum awarded by the Tribunal.

Background to the tripartite scheme

Jackson Report

27. In February 2001 the Board of James Hardie Industries established the Medical Research and Compensation Foundation (MRCF) as a means of funding the James Hardie Group’s liability for current and future asbestos-related claims. It became obvious within a short time that the funding allocated to the MRCF would fall well short of the amount required to meet all claims.

28. By Letters Patent issued on 27 February 2004 under s 4(1) of the Special Commissions of Inquiry Act 1983 (NSW), DF Jackson QC was appointed to inquire into and report on a number of matters (Jackson Inquiry). The matters were as follows:

“1.   the current financial position of the Medical Research and Compensation Foundation (‘MRCF’), and whether it is likely to meet its future asbestos-related liabilities in the medium to long term;

2.   the circumstances in which MRCF was separated from the James Hardie Group and whether this may have resulted in or contributed to a possible insufficiency of assets to meet its future asbestos-related liabilities;

3.   the circumstances in which any corporate reconstructions or asset transfers occurred within or in relation to the James Hardie Group prior to the separation of MRCF from the James Hardie Group to the extent that this may have affected the ability of MRCF to meet its current and future asbestos-related liabilities; and

4. the adequacy of current arrangements available to MRCF under the Corporations Act to assist MRCF to manage its liabilities, and whether reform is desirable to those arrangements to assist MRCF to manage its obligations to current and future claimants.”

The outcome of the Jackson Inquiry was the Report of the Special Commission of Inquiry into the Medical and Research Foundation, published in September 2004 (Jackson Report).

29. The recitals to the Final Funding Agreement provide a convenient if not complete record of the principal findings of the Jackson Report and the events leading to the arrangements embodied in the Winding Up Act, the Trust Deed and the Final Funding Agreement. The Recitals include the following:

“(a)   in February 2004, the NSW Government established the Jackson Inquiry;

(b)   in September 2004, the Jackson Inquiry found that the MRCF was, and is, underfunded in the sense that Amaca and Amaba, being two former subsidiaries of JHIL [James Hardie Industries Ltd] which are now owned by MRCF, will not over time have sufficient funds and other assets to meet their anticipated future liabilities:

(i)   to sufferers of Asbestos disease as a result of exposure to Asbestos dust and fibre in Australia whilst in their employ or from products manufactured by Amaca or Amaba or otherwise from their Asbestos activities; and

(ii)   to the relatives or estates of such sufferers,

and associated costs and expense;

…

(e)   the Jackson Inquiry found, inter alia, that:

(i)    ABN 60 (then, as JHIL, the parent company of the James Hardie [G]roup) did not have a legal obligation to provide funds to Amaca and Amaba to add to the assets of those companies on or prior to implementing the arrangements which resulted in those former subsidiaries becoming owned by the MRCF;

(ii)   some of the suggested causes of action of Amaca, Amaba or the MRCF arising out of the conduct of members of the James Hardie Group, their officers, their actuaries and various firms of solicitors were ‘speculative’, and that other causes of action were ‘perhaps not [speculative]’, but that all such causes of action were ‘unlikely to result in any significant increase in the funds of Amaca, Amaba or the Foundation’;

(iii)   there was ‘no doubt management and the Board [of what was then JHIL] were entitled to seek to achieve, if they could, separation of [JHIL] from Amaca and Amaba and thus from the shadow thought to be cast from those companies' emerging asbestos liabilities’;

(f)   the Jackson Inquiry also found, however, that:

(i)   ABN 60 was ‘very aware that if it were perceived as not having made adequate provision for the future asbestos liabilities of Amaca and Amaba, there would be a wave of adverse public opinion which might well result in action being taken by the Australian or State governments to legislate to make other companies in the James Hardie [G]roup liable, in addition to Amaca or Amaba’ for such future asbestos liabilities;

(ii)   ABN 60’s representations at the time of establishment of the MRCF that the MRCF was ‘fully-funded’ were misleading;

(iii)   ‘it was not possible, in money terms, to say that separation of Amaca and Amaba from ABN 60 or other members of the James Hardie [g]roup directly resulted in or contributed to a possible insufficiency of assets to meet the future asbestos related liabilities of Amaca and Amaba’, but that, in practical terms, the separation was ‘likely to have an effect of that kind’;

…

(h)   following the release of the Jackson Inquiry Report, the NSW Government requested the ACTU, Unions NSW and Banton [a representative of Asbestos Support Groups] to conduct negotiations with JHISE in order to resolve the underfunding of the MRCF, and subsequently the NSW Government also took part in those negotiations;

(i)   in those negotiations, the principal objective of the Initial Negotiating Parties, for different reasons, was to achieve a binding agreement intended to ensure that, after taking into account the existing assets of the Liable Entities, sufficient funding is made available by the JHISE Group to fully compensate, on an agreed basis, all proven current and future Australian Asbestos personal injury and death Claimants against the Liable Entities;

(j)   on 21 December 2004, the Initial Negotiating Parties entered into a nonbinding Heads of Agreement …

(k)    in the Heads of Agreement, the Initial Negotiating Parties acknowledged that the funding arrangement must be affordable and bankable for the JHISE Group; that it is in the mutual interests of the Parties and Claimants that the JHISE Group remains profitable and financially viable … In this regard, it was recognised by the Initial Negotiating Parties, and is recognised by the Parties, that the JHISE Group’s commercial viability and success will provide the basis for the long term funding of the claims which are to be subject to those funding arrangements;

…

(m)   JHISE asserts that a principal purpose of the JHISE Group in entering into this deed is to avert threats from the NSW Government, the federal government and other state and territorial governments (and perhaps governments of other countries in which the JHISE Group is, or the ABN 60 group was, active), that it or they would act, or support the NSW Government acting, to legislatively impose liability upon one or more members of the JHISE Group in relation to Asbestos-related personal injury liabilities of the Liable Entities in excess of the available assets of the Liable Entities unless James Hardie reached a voluntary settlement in relation to such liabilities. (Emphasis added.)

30. The Jackson Report did not make detailed recommendations as to how future asbestos claims against James Hardie entities could or should be met. Instead, the Report noted that consideration of the adequacy of current arrangements had been overtaken to a significant degree by the expressed willingness of the James Hardie Group to fund future asbestos liabilities of Amaca, Amaba and JHIL notwithstanding that the Group was not under a legal obligation to do so. [16]

    16.    Jackson Report at [1.23], [1.38].

31. The Jackson Report concluded that the best long-term solution for satisfying the asbestos liabilities would be a scheme “for which that proposed by JHI NV [James Hardie Industries NV] might be a starting point”. But that proposal was “in an embry[onic], and sometimes contradictory form” and needed more clarification and detailed work. [17] The ten “key principles” proposed by JHI NV as the basis for its suggested scheme made no explicit reference to the consequences for a scheme of exposure to asbestos outside Australia.

    17.    Jackson Report at [1.38].

Second reading speech

32. The bill for the Winding Up Act was one of a package of three bills introduced into and passed by both Houses of the New South Wales Parliament on a single day, 1 December 2005. The related legislation comprised the James Hardie (Civil Liability) Act 2005 (NSW) and the James Hardie (Civil Penalty Compensation Release Act) 2005 (NSW). The effect of these two enactments was to extinguish the potential civil liability of James Hardie entities (including civil penalties) arising from the events investigated by the Jackson Inquiry.

33. The second reading speech addressed all three bills. The Minister explained that:

“The extinguishment of liability is part of the price the Government, the ACTU and the victims groups are willing to pay to secure James Hardie's agreement to fund compensation for victims of the asbestos products of its former subsidiaries. Importantly, the extinguishment of liability is intended to assist James Hardie to put the events investigated by the Special Commission of Inquiry behind it and to concentrate on being a successful business. Under the Final Funding Agreement, this will be not only for the benefit of James Hardie shareholders, but also for the benefit of persons who have been injured by James Hardie’s asbestos.” [18]

18.    NSW Legislative Assembly, Parliamentary Debates (Hansard), 1 December 2005 at 20549 (The Hon Bob Debus).

34. The Minister said that the bill for the Winding Up Act:

“implements and supports some of the important structural elements of the Final Funding Agreement. Part 2 of the bill supports the establishment by James Hardie of the trust fund contemplated by the Final Funding Agreement and called the SPF, that is, the Special Purpose Fund, in the bill. The SPF will receive the funding payments from the James Hardie [G]roup and will use the funding to pay payable liabilities of the liable entities. The SPF will also manage and resolve claims against the liable entities. Part 2 overcomes any doubt as to whether the SPF will be a valid charitable trust.

…

Part 4 will replace the New South Wales external administration of the liable entities established under the James Hardie Former Subsidiaries (Special Provisions) Act. Instead, the bill places the liable entities into New South Wales winding up and external administration. This is proposed to be a very long-term winding up to ensure that the liable entities remain in place so that asbestos-related personal injury claims can continue to be made against them. The SPF will manage the winding up and external administration of the liable entities, under the general supervision of the Minister and the Supreme Court.” [19]

19.    Ibid at 20551.

35. The Minister paid tribute to the people who had campaigned “over many years for justice”. He also acknowledged that contributions of those who had participated in the negotiations leading to the Final Funding Agreement, including James Hardie’s negotiating team. The Minister concluded as follows:

“Today has seen an historic agreement concluded between the Government and James Hardie to provide funding for long-term compensation for asbestos victims. The passage of these bills will fulfil one of the conditions to the full commencement of the final funding agreement. They are a vital step towards James Hardie making the first payment of funding.” [20]

Tripartite scheme

20.    Ibid at 20552.

Winding Up Act

36. The Winding Up Act received assent on 2 December 2005. Part 1 (ss 1-7) came into force on 3 March 2006. [21] Part 2 (ss 8-10) came into force on 1 December 2005, the date the Bill for the Winding Up Act was first introduced into Parliament. [22] Part 4 (ss 20-60) came into force on 7 February 2007. [23]

    21. Winding Up Act, s 2(1); New South Wales, Government Gazette, No 30, 3 March 2006 (Proclamation under the James Hardie Former Subsidiaries (Winding up and Administration) Act 2005 (NSW)).

    22. Winding Up Act, s 2(2).

    23. Winding Up Act, s 2(1); New South Wales, Government Gazette, No 30, 8 February 2007 (Proclamation under the James Hardie Former Subsidiaries (Winding up and Administration) Act 2005 (NSW)).

37. Section 3(1) of the Winding Up Act states the principal objects of the Act as follows:

“(a)   to set up a State scheme for the winding up and other external administration over an extended period of certain companies that were formerly within the James Hardie corporate group,

(b)   to ensure that not only present, but also future, liabilities of those companies in respect of personal injury or death of persons arising from exposure to any asbestos or asbestos products that were mined, manufactured, sold, distributed or used by those companies are dealt with:

(i)   in accordance with the Final Funding Agreement, and

(ii)   so that preference is given to those claims over other claims which are deferred to the future, and

(iii)   in a manner that recognises that exposure to such asbestos or asbestos products, or personal injury or death arising from such exposure, may occur for an extended period into the future.” (Emphasis added.)

38. The “Final Funding Agreement” is defined in s 4(1) to mean the agreement entered into by the State of New South Wales, James Hardie Industries NV and LGTDD Pty Ltd on 1 December 2005 as amended from time to time. Section 64 provides for the Final Funding Agreement to be tabled in Parliament.

39. Section 8(1) of the Winding Up Act declares that the trust fund established by James Hardie Industries NV (the SPF) as contemplated by the Final Funding Agreement is a valid charitable trust for the purposes of the law of New South Wales, provided it complies with certain conditions.

40. Section 3(2) of the Winding Up Act provides as follows:

“To achieve the objects set out in subsection (1), this Act displaces certain provisions of the Corporations Act and includes provisions for the establishment of a trust fund and the administration of the companies concerned during the winding up periods for the companies that are apposite to the unique circumstances of the winding up and administration of the companies.”

41. Part 4 of the Winding Up Act is headed “Winding up of liable entities”. The term “liable entity” is defined in s 4 to include Amaca. Section 20(1) defines the “winding up period” for a liable entity to mean the period commencing on the day s 20 commenced and ending upon the deregistration of the entity or on a date appointed by the Governor for termination of the winding up.

42. Section 21 states that during the winding up period for a liable entity any winding up of the entity must be conducted in accordance with the provisions of Part 4.

43. Section 23 provides as follows:

“(1)   Subject to this Part, the powers of each liable entity must be exercised during the winding up period for the entity so as to:

(a)   carry on the business of the entity so far as is necessary or convenient for the management of claims made against the entity to ensure that only payable liabilities of the entity are paid in accordance with the provisions of this Part, and

(b)   pay payable liabilities in accordance with the provisions of this Part, and

(c)   apply any funds provided from the SPF only in accordance with the conditions on which the funding is provided.” (Emphasis added.)

44. Section 23(2) empowers a liable entity to make any compromise or arrangement with personal asbestos claimants or persons alleging that they have a personal asbestos claim or a claim for a payable liability against the entity. Section 23(2) also gives the liable entity other powers in relation to claims against it.

45. The following definitions in s 4(1) of the Winding Up Act are relevant inter alia, to s 23:

“claim means any claim, demand, action, cause of action or proceedings (whether based in tort, contract, under legislation or otherwise).

payable liability of a liable entity means a liability of the entity to pay any of following:

(a)   a proven personal asbestos claim made against the entity in an Australian court or other Australian tribunal, but only to the extent that the exposure to asbestos or asbestos products to which the claim relates occurred wholly within the territorial limits of Australia,

…

personal asbestos claim against a liable entity or concurrent wrongdoer means a claim by any of the following persons for damages (whether arising before, during or after the assent day) in respect of personal injury or death arising from exposure to any asbestos or asbestos products that were mined, manufactured, sold, distributed or used by or on behalf of the liable entity or concurrent wrongdoer (as the case may be):

(a)   the person who sustains the personal injury,

(b)   the legal personal representative of a deceased person who sustained the injury or died as a result of the injury,

…

proven personal asbestos claim against a liable entity means a personal asbestos claim against the entity in respect of which:

(a)   a final judgment has been entered by a court or other tribunal against the entity, or

(b)   binding settlement has been entered into by the entity,

but only to the extent that the judgment or settlement gives rise to a liability of the entity …” (Emphasis added.)

46. Division 5 of Part 4 of the Winding Up Act is headed “Making and payment of claims”. It includes the following provisions:

“31   Claims that may be made during the winding up period

(1)   During the winding up period for a liable entity, claims against the entity may be paid only in the manner permitted by this Part.

(2)   During the winding up period for a liable entity, a person cannot begin or continue with civil proceedings against the entity in a court or other tribunal unless the proceedings seek to enforce:

(a)   any of the following kinds of claims of the person:

(i)   a personal asbestos claim (whether or not a proven personal asbestos claim),

(ii)   … or

(b)   a payable liability of the entity that was incurred to the person, or

(c)   a right of the person against the liable entity (other than right to be paid damages or receive other payment).

32   Kinds of claims that are payable

(1)   During the winding up period for a liable entity, only payable liabilities of the entity (other than a liability to pay a claim that is excluded by subsections (2) and (3)) may be paid (whether by the entity itself or by the SPF trustee on the entity’s behalf or for its benefit).

…”

The exceptions referred to in s 32(1) are not presently relevant.

47. Section 34 of the Winding Up Act states as follows:

“If there are sufficient funds to do so, a liable entity (or the SPF trustee on its behalf or for its benefit) is authorised to pay the payable liabilities of the entity as and when they fall due for payment, except as otherwise provided by this Part.” (Emphasis added.)

48. Section 35(1) enables the Trustee, with the approval of the Minister, to apply to the Supreme Court for an approved payment scheme if it appears reasonably likely that for a period of time there will be insufficient funds “for all payable liabilities of a liable entity to be paid in full as and when they fall due”. On such an application, the Supreme Court may make an order for the payment by instalments of the full amount of liabilities due or for the deferral of payment of payable liabilities of the entity during a specified period (s 35(5)).

49. Section 36 of the Winding Up Act relevantly provides as follows:

“36   Payments made by SPF trustee directly to claimants

(1)   This section applies to any payment of funds from any of the compensation funds made by the SPF trustee directly to a payable claimant in order to discharge (whether wholly or in part) a payable liability of a liable entity to the claimant that is made on the entity’s behalf or for its benefit.

(2)   A payment to which this section applies operates:

(a)   to discharge the liability concerned to the same extent to which the liability would have been discharged if the payment had been made directly to the payable claimant by the liable entity, and

(b)   except where the SPF trustee makes the payment from the discretionary fund—to confer on the SPF trustee a right against the liable entity to be indemnified for the amount of the payment (including any relevant interest), and

(c)   except where the SPF trustee makes the payment from the discretionary fund - to confer on the SPF trustee the same rights to obtain contribution from third parties in respect of the subject-matter of the liability concerned as the liable entity would have had if it had made the payment directly.”

50. Division 8 of Part 4 of the Winding Up Act provides for the completion of the winding up of an entity. The Minister, if satisfied that the provisions of Part 4 are no longer of utility in achieving the objects of the Act, may make an order that the Trustee proceed to the final stage of winding up of the liable entity (s 43(2)). The Trustee is under a duty as soon as practicable after the “finalisation day” to collect the property of the liable entity and discharge its outstanding liabilities (s 44). Division 8 provides for claims against the liable entity to be proved, including a claim other than a claim for a payable liability (s 47(1)). Section 50 sets out the debts that are to be paid in priority to all other claims. After costs and expenses, priority is to be given to payable liabilities and then to “claims for the payment of liabilities (other than payable liabilities)”.

51. Division 9 of Part 4 of the Winding Up Act is headed “Enforcement”. Division 9 includes s 55 which relevantly provides as follows:

“(1)   A liable entity or the SPF trustee may apply for advice or direction by the Supreme Court … on any matter relating to:

(a)   the scope of the entity’s or trustee’s functions under this Part, or

(b)   the exercise of any function by the entity or trustee under this Part, or

(c)   any other matter relating to the operation of this Part.

…

(4)   A written statement signed by the applicant is sufficient evidence of the matters set out in it.

…

(6)   In determining any such application, the Supreme Court … may decide to:

(a)   approve or disapprove of any act proposed to be done by the applicant, or

(b)   give such advice or direction as the Supreme Court … considers appropriate.

(7)   An advice or direction given by the Supreme Court under this section is to be given by order.

…

(10)   No proceedings lie, or civil or other liability arises, against an applicant for or on account of any act, matter or thing done or omitted to be done by the applicant in good faith and in accordance with any approval, advice or direction given under this section.

(ii)   In this section:

applicant means a person who applies for advice or direction under this section.”

52. Section 62 (in Part 5) declares for the avoidance of doubt that nothing in the Winding Up Act operates to create any liability for a personal asbestos claim if the liability does not arise under another law.

Trust Deed

53. The Trust Deed executed on 14 December 2006 amends and restates the original trust deed entered into between James Hardie Industries NV (JHINV), a limited liability company incorporated in the Netherlands, and the Trustee. It appears that amendments were intended to overcome difficulties created by a ruling from the Australian Taxation Office concerning the charitable status of the trust.

54. The recitals to the Trust Deed include the following:

“B.   On 1 December 2005, JHINV, the NSW Government and the Performing Subsidiary entered into a long term funding agreement (Original FFA) to provide for funding to be made available by JHINV and/or its subsidiaries to compensate, on the basis set out in the Final Funding Agreement, proven current and future Australian Claimants against the Liable Entities.

C.   In accordance with the Original FFA, on 7 April 2006 [JHINV] executed the Original Deed.

D.   Also on 7 April 2006, [JHINV] paid the Settled Sum to the Trustee and the Trustee agreed to be trustee and to hold the Settled Sum and other property on trust for the Charitable Purpose in accordance with the Original Deed.

E.   The Trustee executed a Deed of Accession on 8 June 2006 so as to become a party to the Original FFA and to give effect to the intention and agreement of the relevant parties referred to in the preceding paragraphs.

…

G.   On 21 November 2006, the parties to the Original FFA amended and restated the Original FFA, subject to certain conditions being satisfied (as amended, the Final Funding Agreement).” (Emphasis in original.)

55. The “Performing Subsidiary” is defined to mean James Hardie 117 Pty Ltd, formerly known as LGTDD Pty Ltd. A “Claimant” relevantly means an individual or the legal personal representative of an individual who makes a “Personal Asbestos Claim”. The expression “Liable Entities” means Amaca, Amaba and ABN 60.

56. Clause 2.2 of the Deed confirms that the “Charitable Fund” was established upon execution of the Original Deed. “Charitable Fund” means the charitable trust established under the Original Deed as amended and confirmed by Part 2 of the “Transaction Legislation” to carry out the “Charitable Purpose”. The “Transaction Legislation” is the Winding Up Act. The “Charitable Purpose” includes (cl 3):

“3.1    the principal purpose of receiving and providing funding for the payment and paying of Payable Liabilities and providing services with respect to the management and resolution of Payable Liabilities.”

57. The following definitions are relevant to cl 3.1 and to other provisions in the Deed:

“Payable Liability means:

(a)    any Proven Claim (whether arising before or after the date of this deed);

…

Personal Asbestos Claim means … :

(a)   any present or future personal injury or death claim by an individual or the legal personal representative of an individual, for damages under common law or under other law … which:

(i)   arises from exposure to Asbestos occurring in Australia, provided that:

(A)   the individual’s exposure to Asbestos occurred wholly within Australia; or

(B)   where the individual has been exposed to Asbestos both within and outside Australia, damages included in the Personal Asbestos Claim shall be limited to the amount attributable to the proportion of the exposure which caused or contributed to the loss or damage giving rise to the Personal Asbestos Claim which occurred in Australia;

(ii)   is made in proceedings in an Australian court or tribunal; and

is made against all or any of the Liable Entities or any member of the JHINV Group from time to time;

…

Proven Claim means any Personal Asbestos Claim … in respect of which final judgment has been given against, or a binding settlement has been entered into by a Liable Entity or any member of the JHINV Group from time to time, and in each case, to the extent to which that entity incurs liability under that judgment or settlement.”

58. The moneys held on trust by the Trustee for the Charitable Purpose include the following:

• the sum of $184.3 million paid by the Performing Subsidiary;

• annual contributions to be made to the Trustee by the Performing Subsidiary as specified in the Final Funding Agreement;

• any asset or property of a Liable Entity transferred to the Trustee pursuant to the Winding Up Act; and

• all income derived from the funds held by the Trustee (cl 3.2).

59. The Trustee is required to exercise its discretion to apply income to ensure to the extent possible that all net income is included in the assessable income of the Liable Entities (cl 4.2(a)). However, under cl 4.2(b):

“In determining how the Annual Income is to be applied, the Trustee may in its absolute discretion, but subject to clause 4.2(a) and the remainder of this clause 4, apply some or all of the Annual Income for a Financial Year for the benefit of any one or more of the Income Beneficiaries:

(i)   by paying a Payable Liability of that Income Beneficiary…”

60. Subject to the Deed, the Trustee has all the powers and privileges of ownership over all the Charitable Fund Property and Income (cl 5.2). In addition to the powers conferred on the Trustee by the Trust Deed, it may exercise each and any power conferred on it by the Winding Up Act or by any other New South Wales legislation (cl 5.7).

60. Clause 5 imposes limitations to the powers of the Trustee as follows:

“5.8    Limitations on Powers of the Trustee

(a)   Notwithstanding any other provision of this Deed, the Trustee has no power to and must not pay or discharge or purport to pay or discharge any liability of a Liable Entity which a Liable Entity is not authorised to pay or discharge by the Final Funding Agreement … or the Transaction Legislation.

…

5.10    Compliance with the Final Funding Agreement

(a)   The Trustee must at all times comply fully with the obligations imposed on the Trustee by the Final Funding Agreement.

(b)   In the event of any inconsistency between the Final Funding Agreement and this Deed, the terms of the Final Funding Agreement prevail to the extent of the inconsistency but otherwise this Deed shall have effect.” (Emphasis added.)

Final Funding Agreement

62. The Final Funding Agreement comprises an “Amended and Restated Deed” dated 21 November 2006. The parties are James Hardie Industries SE (JHISE), a company incorporated in Ireland, the Performing Subsidiary (James Hardie 117 Pty Ltd), the State of New South Wales and the Trustee. The text of the Final Funding Agreement is 153 pages in length, excluding ten schedules, and involves navigating an extraordinary number of definitions and cross-references.

63. Some of the recitals to the Final Funding Agreement have been set out earlier. [24] The recitals also include the following:

“B.   On 1 December 2005, JHISE, the NSW Government and the Performing Subsidiary entered into the Original FFA with the common intention of making funding available by JHISE and/or its subsidiaries to pay, on the basis set out in the Original FFA, Proven Claims against the Liable Entities.

…

E.   The Parties enter into this amended and restated deed:

(a)    to reflect their formal and legally binding agreement to implement the principles set out in the Heads of Agreement …;

(b)   in particular, to record the financial obligations of JHISE and the Performing Subsidiary set out in clauses 6 and 9 below; and

(c)    … to ensure that the Trustee may at its discretion apply income of the Compensation Funds for the benefit of one or more of the Liable Entities by paying Proven Claims or such other Payable Liabilities of those entities, in accordance with the Trust Deed and the Transaction Legislation, but without creating any entitlement of the Liable Entities to receive such amounts or to give any directions to the Trustee with respect to such payments.” (Emphasis added.)

24. See at [29] above.

64. Clause 4.2 provides that the Trustee’s role is to include the following:

“(c)    manage itself or through one or more of the Liable Entities or otherwise cause to be managed, the response to all Payable Liabilities for itself or for or on behalf of the Liable Entities …;

(d)    subject to it having the necessary funds to do so … pay (in accordance with and subject to … the provisions of the Transaction Legislation) SPF Funded Liabilities itself or through one or more of, or on behalf of, or for the benefit of, one or more of, the Liable Entities … and in each case for itself, or through, or for the benefit of or on behalf of, one or more of the Liable Entities as the Trustee may in its discretion determine. In any case where an amount is paid through, or on behalf of, or for the benefit of, a Liable Entity, then unless expressly notified by the Trustee to the Liable Entity, the Liable Entity shall have no rights to direct the Trustee as to the payment or manner or timing of any payment of such amounts, nor to have any rights to itself receive such amounts;

…

(i)   generally do all things necessary and convenient for the purposes of handling and finalising Payable Liabilities for itself, or through, for the benefit of, or for or on behalf of, one or more of the Liable Entities (provided that nothing in this deed shall require the Trustee to incur any liability or pay any amount with respect to a liability which is not a SPF Funded Liability…)

…

(k)   be authorised and permitted to negotiate with Claimants and at its discretion procure that the relevant Liable Entity enter into binding settlements in relation to (including without limitation compromises of) Payable Liabilities.”

65. As in the Trust Deed, “Payable Liability” is defined in the Final Funding Agreement to include “any Proven Claim”. The term “SPF Funded Liability” is also defined to include “any Proven Claim”. “Proven Claim” and “Personal Asbestos Claim” in substance have the same meaning in the Final Funding Agreement as in the Trust Deed. [25]

    25. See at [57] above.

66. Clause 3 of the Final Funding Agreement deals with “Structure” as follows:

“3.1    Agreed Structure

The Parties agree to the structure set out in the Transaction Legislation and the Trust Deed for establishing the Compensation Funds for the purpose of funding the payment of liabilities to Claimants in respect of Proven Claims, and for meeting reasonable Operating Expenses and Claims Legal Costs, and other Payable Liabilities, and for dealing with such Liable Entities.

…

3.3    No recourse

(a)   The Parties agree that [subject to certain qualifications], neither JHISE nor any other member of the JHISE Group shall have any obligations, and there shall be no (and the Parties shall not seek) recourse to any of them, with respect to any liabilities of the Liable Entities, other than and then only to the extent set out in:

(i)    this deed and the Related Agreements; and

(ii)   the Transaction Legislation and the Release Legislation …

(b)    The Parties agree that Claimants have no rights arising under this deed or any Related Agreement against any of the Parties to this deed or any Related Agreement.”

67. “Claimant” means an “individual (or legal personal representative of an individual) who makes a Personal Asbestos Claim …”. The term “Related Agreements” is defined to mean documents ancillary to the Final Funding Agreement listed in Schedule 1, including the Trust Deed. The “Release Legislation” is defined to mean, in effect, the James Hardie (Civil Liability) Act 2005 (NSW) and the James Hardie (Civil Penalty Compensation Release) Act 2005 (NSW).

68. Clauses 6 and 9 of the Final Funding Agreement specify the funding obligations of JHISE and the Performing Subsidiary.

69. Clause 8 provides as follows:

“8.1    Application of funds

The Parties acknowledge that it is the intent of this deed and the Transaction Legislation and the Trust Deed to ensure that:

(a)    the monies and other assets provided to the Trustee… may only be applied in the payment of SPF Funded Liabilities; and

(b)    such monies and other assets are not to be applied to satisfy any other creditors of the Trustee or of the Liable Entities or of the JHISE Group.

8.2    Excluded Claims

Each of the Parties agree and acknowledge that:

(a)   this deed and the Transaction Legislation seek to address, within the limits set out in this deed … the funding for payment of SPF Funded Liabilities and the handling of Payable Liabilities: and

(b)   nothing in this deed requires or shall require JHISE, the Performing Subsidiary or any other member of the JHISE Group to provide any funding for payment of any of the following liabilities of the Liable Entities (together, the Excluded Claims):

(i)   personal injury or death claims arising from exposure to Asbestos outside Australia;

(ii)   personal injury or death claims arising from exposure to Asbestos made outside Australia;

…

(v)   any liabilities of the Liable Entities other than SPF Funded Liabilities.” (Emphasis added.)

Primary Judgment

70. Consistently with observations made by Gzell J in Asbestos Injuries Compensation Fund Ltd,[26] the primary Judge accepted that the three instruments (the Winding Up Act, the Trust Deed and the Final Funding Agreement) must be read “together harmoniously”. [27] His Honour said that:[28]

“Given the palpable synchronicity between the Final Funding Agreement, the Trust Deed and the 2005 Act, it is clear the overarching legislative intention in facilitating the scheme was that the three instruments were to be read harmoniously. That is, the tripartite scheme should be construed on the basis that the provisions are intended to give effect to harmonious goals.”

26. [2011] NSWSC 97 at [76].

27. Primary Judgment at [72].

28. Primary Judgment at [134].

71. The primary Judge considered that there was no conflict between the key definitions in the instruments, but a “measure of disconformity or ambiguity”. [29] By way of example, he pointed to the word “claim”, which is a defined term in the Winding Up Act but is not defined in the Trust Deed or the Final Funding Agreement. [30]

    29. Primary Judgment at [129].

    30. Primary Judgment at [130].

72. His Honour also pointed out that there is a disconformity between “the singularly important definition” of “Personal Asbestos Claim” in the Trust Deed and Final Funding Agreement and the definition of “personal asbestos claim” in the Winding Up Act. [31] His Honour described the latter as a “blander definition” because it “does not refer to any limit attributable to exposure caused [by] or contributed [to] outside Australia”. [32]

    31. Primary Judgment at [131].

    32. Primary Judgment at [132].

73. The primary Judge concluded that when the various provisions are read together the Trustee is not liable for any loss by reason of exposure outside Australia:

“135   It seems to me when one reads these various provisions together harmoniously, the Trustee is not able to pay for any loss by reason of exposure outside of Australia. The Trustee is obliged to limit the payment attributable to the proportion of [Australian] exposure as stipulated by proviso (a)(i)(B) in the definition of ‘Personal Asbestos Claim’ in the Final Funding Agreement and Trust Deed. The blander definition of ‘personal asbestos claim’ in the [Winding Up] Act should be read harmoniously as to give best effect to the purpose and language of the scheme as a whole, which attempts to address the funding and payment of asbestos claims against James Hardie entities or subsidiaries. There is no apparent intention in the scheme for the various definitions between the instruments somehow to be treated differently or separately.

136   The tripartite scheme is not one intended to provide for largesse and is not intended to cover the potential liabilities of foreign asbestos manufacturers or the similar foreign exposure (see for example clause 8.2 of the Final Funding Agreement). There is no reason to read down the definition of ‘Personal Asbestos Claim’ in the Final Funding Agreement or Trust Deed to conform with the blander definition in the [Winding Up] Act.

137   This conclusion is reinforced by noting that the [Winding Up] Act unsurprisingly does not provide an exhaustive list of the trustee’s obligations, duties or discretions or the entire mechanics of the legislative scheme. The [Winding Up] Act’s role in the scheme is as a legislative framework and facilitation of the Funding Agreement and Trust Deed, as well as control over the corporate operation of the James Hardie entities. That the definition of ‘personal asbestos claim’ in the [Winding Up] Act is a blander definition is attributable to the different functions the instruments each play in the scheme.

138   I am further not satisfied that the word ‘claim’ in the [Winding Up] Act, the Final Funding Agreement or the Trust Deed is intended to be confined merely to a party’s pleading. It is intended to indicate no more than the method or means by which a party may make a request for compensation. The Estate’s construction of the word ‘claim’ in my view relies on an overly literal reading.

139 Again, the history of the scheme as set out in the relevant Recitals and the principal provisions is directed towards the concern that there needs to be a method of funding any potential claims made against the liable entities (those entities that constitute the James Hardie Group) and not companies worldwide. The negotiation process and history of the scheme reflects the concern that the compensation fund might run out of money or would not have sufficient funds (see for example the potential for rationing provided for in section 35(2) of the [Winding Up] Act). The Trustee has access to finite resources for claimants now and into the future.”

74. The primary Judge observed that it was uncontroversial that mesothelioma is an “indivisible injury”. [33] But that proposition did nothing to illuminate the role of the Trustee under the scheme. The Trustee was obliged by the Trust Deed and the Final Funding Agreement, particularly proviso (a)(i)(B) to the definition of “Personal Asbestos Claim”

“to make a proportionate determination as a matter of fact apportioning or distinguishing exposure to asbestos within Australia and outside of Australia.”[34] (Emphasis in original.)

33. Primary Judgment at [141].

34. Primary Judgment at [145].

75. His Honour continued as follows: [35]

    35.    Primary Judgment at [148]-[152].

“148   To say, as the Estate does … that mesothelioma is indivisible and is therefore incapable of being apportioned, is in my view to confuse the role of a court and the role of the Trustee.

149   There is therefore a fundamental difference between what a court needs to do in determining causation curially and what the Trustee is obliged to do under the exercise of its discretion in the tripartite scheme. A court decides causation, whereas the Trustee’s discretion is governed by the Trust Deed, the Final Funding Agreement and the [Winding Up] Act, and particularly the proviso (a)(i)(B) in the definition of ‘Personal Asbestos Claim’ in the Trust Deed and Final Funding Agreement.

150   Merely because the pleading of Mr Talifero before the Dust Diseases Tribunal gave rise to a global figure of $560,482.00 to be paid by Amaca, and the current evidence that mesothelioma is indivisible, does not detract from the requirement stipulated in the definition of ‘Personal Asbestos Claim’ in the Final Funding Agreement and Trust Deed for the Trustee to make this apportionment exercise as a matter of fact. It is rather concerned with providing for a fair method of apportioning and paying claimants harmed by James Hardie asbestos now and into the future, and in the interests of the scheme as a whole.

151   Of course medicine can express expert views as to whether particular exposure is material or non-material as a matter of fact. It can also be determined as a matter of fact whether overseas exposure materially contributed to the injury or death of the claimant.

Conclusion

152   I am of the view that the [Winding Up] Act, the Final Funding Agreement and the Trust Deed, when read together harmoniously, oblige the Trustee to only pay those personal asbestos claims as limited to the amount attributable to the proportion of the exposure which caused or contributed to the loss or damage which occurred in Australia.”

Submissions

Common ground

76. First, the parties to the appeal accept the “uncontroversial” proposition that mesothelioma is an “indivisible injury”. [36] Santow JA explained this concept in Orica Ltd v CGU Insurance Ltd:[37]

“It [mesothelioma] is not the result of successive deteriorations. In a case of mesothelioma [the] injury was one and indivisible. This is because mesothelioma is a form of cancer to which all asbestos exposure contributes. It is a disorder quite distinct from asbestosis and other fibrosis-inducing diseases caused by exposure to fibrosis-inducing substances, which produce increasing fibrosis with continued exposure. Mesothelioma is not a cumulative process such as occurs in cases of asbestosis or silicosis. It is not the result of successive deteriorations. In a case of mesothelioma, a plaintiff is suffering from an injury that is one and indivisible”

36. Primary Judgment at [141].

37. (2003) 59 NSWLR 14; [2003] NSWCA 331 at [196] quoting Stevenson v James Hardie & Co Pty Ltd (1997) 15 NSWCCR 568 at 575 (Judge O’Meally). In Alcan Gove Pty Ltd v Zabic (2015) 257 CLR 1; [2015] HCA 33, the High Court departed from the factual findings in Orica in view of different evidence, but cast no doubt on the explanation of “indivisible injury”.

77. The concept of a “divisible” disease, where the condition is dose-related, was addressed by Lord Phillips PSC in Sienkiewicz v Greif (UK) Ltd:[38]

“The agent ingested operates cumulatively first to cause the disease and then to progress the disease. Thus the severity of the disease is related to the quantity of the agent that is ingested. Asbestosis and silicosis are examples of such diseases, as are the conditions of vibration white finger and industrial deafness, although the insults to the body that cause these conditions are not noxious agents. For this reason it is important to distinguish between asbestosis and mesothelioma when considering principles of causation.”

38. [2011] 2 AC 229; [2011] UKSC 10 at [14].

78. In Harradine v Cockatoo Dockyard,[39] O’Meally P succinctly explained the difference between indivisible and divisible injuries as follows:

“In cases of indivisible injury, every defendant whose conduct has made a material contribution to the injury is liable to compensate for the whole. In cases of divisible injury the situation is different; defendants are liable to compensate a plaintiff only for the damage caused by their contribution to the injury.”

39. [2008] NSWDDT 8 at [17].

79. It is also useful to refer to the summary given by Lord Phillips in Sienkiewicz v Greif (UK) Ltd of the aetiology of mesothelioma as understood in 2011:[40]

“(i) Mesothelioma is always, or almost always, caused by the inhalation of asbestos fibres. (ii) A significant proportion of those who contract mesothelioma have no record of occupational exposure to asbestos … (iii) The more fibres that are inhaled, the greater the risk of contracting mesothelioma. (iv) There is usually a very long period between the exposure to asbestos and the development of the first malignant cell. Typically this can be at least 30 years. (v) There will be a lengthy period between the development of the first malignant cell and the point at which the disease can be diagnosed … (vi) The mechanism by which asbestos fibres cause mesothelioma is still not fully understood. It is believed that a cell has to go through six or seven genetic mutations before it becomes malignant, and asbestos fibres may have causative effect on each of these. (vii) It is also possible that asbestos fibres have a causative effect by inhibiting the activity of natural killer cells that would otherwise destroy a mutating cell before it reaches the stage of becoming malignant.”

40. [2011] 2 AC 229; [2011] UKSC 10 at [19]. The “Annex” to Lord Phillips’ judgment sets out extracts from the judgment of Longmore LJ in Bolton Metropolitan Borough Council v Municipal Mutual Insurance Ltd [2006] 1 WLR 1492 at [7]-[12] explaining in more detail the state of medical knowledge concerning the causes of mesothelioma.

80. Secondly, the parties agree that it is necessary to attempt to construe the Winding Up Act, the Trust Deed and the Final Funding Agreement “harmoniously”. However, as Mr Walker observed in argument, that proposition is perhaps of limited assistance because each party maintains that its construction of the three instruments is “harmonious” notwithstanding that the outcomes are very different in each case. For example, the Trustee submits that the definition of “Personal Asbestos Claim” in the Winding Up Act should be construed as referring to an individual’s actual exposure to asbestos as distinct from the exposure alleged in the individual’s claim. This construction, so it is said, would ensure that the less explicit language in the Winding Up Act definition conforms to what the Trustee says is the clear meaning of the more explicit definition in the Final Funding Agreement. The Estate says that the definition in the Final Funding Agreement is not clear and should be read as referring to the individual’s exposure to asbestos as alleged in the claim. In this way, so the Estate argues, the definition in the Final Funding Agreement conforms to the definition in the Winding Up Act.

134. The Trustee’s application under s 55 of the Act related to a judgment obtained in the Dust Diseases Tribunal (the Tribunal) in proceedings brought by Mr Francis Talifero (Mr Talifero) against Amaca Pty Ltd (Amaca) seeking damages for injury suffered by Mr Talifero as a consequence of his exposure to asbestos products supplied by Amaca. Amaca is one of the companies formerly within the James Hardie corporate group to which the Act is intended to apply. The question is whether the Trustee would be justified in not paying so much of the damages awarded in favour of Mr Talifero in the proceedings in the Tribunal as reflects the extent to which Mr Talifero’s exposure to asbestos or asbestos products occurred outside Australia. Before addressing the question raised in the appeal, it is necessary to say something about the Act, the Trust Deed and the Agreement.

The Act

137. Part 4 of the Act, which consists of ss 20 to 60 inclusive, relates to the winding up of liable entities. It is common ground that Amaca is a liable entity for the purposes of the Act, the Trust Deed and the Agreement. Section 21(1) of the Act relevantly provides that, during the winding up period for a liable entity, no proceedings may be brought or continued in a court or other tribunal for the winding up of the entity otherwise than in accordance with Pt 4. Under s 20, the winding up period is the period commencing on the day on which s 20 of the Act commenced and ending at the end of the day appointed by the Governor, or on which the liable entity is deregistered under the Corporations Act2001 (Cth), whichever first occurs.

138. Under s 23(1) of the Act, the powers of a liable entity must be exercised during the winding up period so as to:

• carry on the business of the liable entity so far as is necessary or convenient for the management of claims made against the liable entity to ensure that only payable liabilities of the liable entity are paid in accordance with the provisions of Pt 4;

• pay such payable liabilities in accordance with the provisions of Pt 4; and

• apply any funds provided from the Fund only in accordance with the conditions on which that funding is provided.

139. Section 32(1) relevantly provides that, during the winding up period for a liable entity, only payable liabilities of the liable entity may be paid. It is relevant that s 32 does not impose any obligation or liability on a liable entity. Rather, s 32 restricts the liabilities of a liable entity that may be paid.

140. The term payable liability is defined in the Act, relevantly, as a liability of the liable entity to pay a proven personal asbestos claim made against the liable entity in an Australian court or other Australian tribunal, but only to the extent that the exposure to asbestos or asbestos products to which the claim relates occurred wholly within the territorial limits of Australia. A personal asbestos claim is defined as including a claim for damages, in respect of personal injury or death arising from exposure to any asbestos or asbestos products that were sold by or on behalf of a liable entity, by the person who sustains the personal injury. A proven personal asbestos claim is defined as a personal asbestos claim against a liable entity in respect of which a final judgment has been entered by a court or other tribunal against the liable entity, or a binding settlement has been entered into by the liable entity, but only to the extent that the judgment or settlement gives rise to a liability of the liable entity.

The Trust Deed

141. Clause 5.10 of the Trust Deed relevantly provides that the Trustee must at all times comply fully with the obligations imposed on it by the Agreement. Further, cl 5.8(a) relevantly provides that the Trustee was to have no power to, and must not pay or discharge or purport to pay or discharge, any liability of a liable entity that the liable entity was not authorised to pay or discharge by the Agreement or the Act.

142. Clause 3 of Trust Deed relevantly provides that the charitable fund established under it is to exist and be maintained by the Trustee, and that the charitable fund property is to be maintained and applied by the Trustee for the principal purpose of receiving and providing funding for the payment and paying of Payable Liabilities and providing services with respect to the management and resolution of Payable Liabilities. The term Payable Liability is defined in the Trust Deed, relevantly, as a Proven Claim as defined in the Agreement.

The Agreement

143. Clause 4.2 of the Agreement relevantly provides that the Trustee’s role is, subject to the provisions of the Act, to pay Proven Claims in respect of liable entities. However, a liable entity has no right to direct the Trustee as to the payment or manner of timing of any payment of such amounts, nor to have any rights to itself receive such amounts.

144. Under the Agreement, Proven Claim means any Personal Asbestos Claim in respect of which final judgment has been given against, or a binding settlement has been entered into by, a liable entity, to the extent to which that entity incurs liability under that judgment or settlement. Personal Asbestos Claim is defined, relevantly, as any present or future personal injury or death claim by an individual or the legal personal representative of an individual, for damages under common law or under other law that:

(i)   arises from exposure to asbestos occurring in Australia, provided that:

(A)   the individual’s exposure to asbestos occurred wholly within Australia; or

(B)   where the individual has been exposed to asbestos both within and outside Australia, damages included in the Personal Asbestos Claim shall be limited to the amount attributable to the proportion of the exposure which caused or contributed to the loss or damage giving rise to the Personal Asbestos Claim which occurred in Australia;

(ii)   is made in proceedings in an Australian Court or Tribunal; and

is made against any of the liable entities.

Mr Talifero’s Claim

145. Mr Talifero was born in the United Kingdom in 1931 and had some exposure to asbestos during his employment in the United Kingdom first with the British Navy and then with a roofing company and a brick company. He came to Australia in 1971 where he worked for 25 years as a house painter. During that time, he had to replace broken asbestos cement sheets from time to time in order to complete house painting jobs. Mr Talifero was exposed to asbestos by way of new fibro sheets manufactured by Amaca and supplied to Kingsford Timber, where Mr Talifero bought the sheets. He subsequently contracted mesothelioma, a disease from which he subsequently died.

146. On 18 April 2017, Mr Talifero commenced proceedings against Amaca in the Tribunal. Mr Talifero’s statement of claim alleged that, from 1971 to 1996, while working as a self-employed house painter, he handled asbestos cement building materials manufactured and supplied by Amaca, as a consequence of which, he was exposed to and inhaled asbestos dust and fibre and contracted mesothelioma. He claimed damages for the injury, loss and damage suffered by reason of his contracting mesothelioma. Following Mr Talifero’s death, the proceedings in the Tribunal were continued by Mr Anthony Talifero (the Executor), who is the son and legal personal representative of Mr Talifero.

147. On 16 June 2017, Amaca’s solicitors wrote to Mr Talifero’s solicitors saying that the Trustee could not make a payment to Mr Talifero from the Fund for any exposure to asbestos outside Australia. The letter stated that, if Mr Talifero obtained judgment in the Tribunal, the Trustee would deduct a portion of the judgment attributable to the overseas exposure. On 19 June 2017, Mr Talifero’s solicitors wrote to Amaca’s solicitors asking whether Amaca and the Trustee had made an application under s 55 of the Act and, if not, whether it intended to make such an application. Amaca’s solicitors told Mr Talifero’s solicitors that the Trustee had not made an application because it did not consider such an application to be required.

148. The Trustee subsequently obtained a report by Professor Richard Fox dated 29 July 2017 (the Fox Report). The Fox Report described a model for the incidence of mesothelioma related to the fibre type, size, mix of asbestos, the intensity of exposure, the time since first exposure, and the year of exposure (the Peto Model). The Fox Report explained that the Peto Model predicts that risk of mesothelioma is increased after each increment of exposure to asbestos by an amount proportional to the level of exposure and the cube of time after that, and that incidence is much more dependent on early or low levels of exposure and increases less rapidly as exposure continues to increase, depending mainly on the time since first exposed.

149. The Fox Report was based on certain assumptions that do not appear to be in dispute. The assumptions were that Mr Talifero:

• served in the British Navy in 1949 and 1950;

• worked in the United Kingdom between 1951 and 1959 with a roofing company and from 1960 to 1961 with a brick company; and

• after migrating to Australia, worked between 1971 and 1996 with a painting firm.

The Fox Report noted that Mr Talifero estimated that his period with the British Navy represented 10% of his total exposure to asbestos dust and fibres, his period with the roofing company and the brick company were less than 1% of his exposure, and his Australian exposure represented 90% of his total exposure. The Fox Report assumed that Mr Talifero’s estimates were based on total dust exposure on a concentration basis rather than being based on time.

150. For the purposes of the Fox Report, Mr Talifero’s 1% exposure with the roofing and brick companies in the United Kingdom was ignored and exposure with the British Navy was taken to be the midpoint of the period, being 64.5 years prior to the development of his mesothelioma. That, when cubed, produced the numerical value of 268,336. By contrast, the Australian employment was over a period of 25 years during which, the Fox Report said, the asbestos exposure was “relatively light”. The exposure in Australia was taken to be the midpoint of the period being 32 years prior to the development of mesothelioma. When cubed, that gave a numeric value of 32,768. The concentration of 10% with the British Navy gave a figure of 26,834 and the concentration of 90% in Australia gave a figure of 29,949. That, the Fox Report concluded, gave a non-Australian contribution of 48% and an Australian contribution of 52%.

151. On 22 November 2017, the Trustee’s solicitors wrote to the Executor’s solicitors saying that the Trustee was under a statutory duty to pay a claim only to the extent of asbestos exposure within Australia, even if an award of damages is made by a court or tribunal on the basis of a single indivisible injury. They said that, where a claimant has experienced overseas exposure to asbestos, the Trustee is prohibited from making a payment for the proportion resulting from overseas exposure. The letter confirmed that no payment would be made by the Trustee for any damages award with respect “to the relevant determined proportion of overseas asbestos exposure” and that if any damages award included both domestic and overseas exposure, the Trustee would make an appropriate adjustment to deduct the proportion relating to overseas exposure. The letter said that the Trustee would make an application under s 55 of the Act for judicial advice in that regard.

152. On 11 December 2017, for reasons published on that day, a judge of the Tribunal directed the entry of judgment for the Executor against Amaca in the sum of $560,482. The Tribunal found that Mr Talifero’s exposure to the products manufactured and supplied by Amaca was sufficient to cause his mesothelioma and that he was therefore entitled to judgment against Amaca.

153. On 8 January 2018, Amaca’s solicitors wrote to the Executor’s solicitors saying that the Trustee had directed that a 48% deduction be applied to the award made by the Tribunal. By letter of 15 January 2018 to the Trustee’s solicitors, the Executor’s solicitors asserted that the Executor was entitled to the whole of the judgment sum awarded by the Tribunal. The Trustee’s solicitors replied on 19 January 2018 saying, relevantly, that the Trustee had determined that, in giving effect to s 32 of the Act and the relevant provisions of the Agreement, only 52% of the award in the Tribunal was a “payable liability” of Amaca capable of being properly paid by the Trustee in accordance with the Act. That assertion was apparently based on the Fox Report. The Trustee’s solicitors referred to their letter of 22 November 2017 as setting out the approach adopted by the Trustee.

154. On 23 January 2018, the Trustee’s solicitors gave notice to the Attorney General under s 57 of the Act that the Trustee proposed to make an application under s 55 of the Act. Accordingly, by summons filed in the Equity Division on 23 January 2018, the Trustee sought an order pursuant to s 55 of the Act that it would be justified in not paying so much of the damages award made in proceedings brought in the Tribunal by Mr Talifero as reflects the extent to which Mr Talifero’s exposure to asbestos or asbestos products occurred outside Australia.

155. On 4 May 2018, for reasons published on that day, a judge of the Equity Division (the primary judge) concluded that the Act, the Agreement and the Trust Deed obliged the Trustee only to pay those personal asbestos claims as limited to the amount attributable to the proportion of the exposure that caused or contributed to the loss or damage which occurred in Australia. The primary judge made an order in accordance with prayer 1 of the Trustee’s summons of 29 January 2018. Although the proceedings before the primary judge were for advice and direction under s 55 of the Act, the Executor was given leave to intervene, as was the Attorney General. The primary judge ordered that the Trustee’s costs of the proceedings on an indemnity basis and the Executor’s costs on an indemnity basis be paid out of the Fund.

156. By Notice of Appeal filed on 1 June 2018, the Executor appeals from the orders made by the primary judge. Before addressing the question raised in the appeal, it is desirable to say something about the procedure involved in the Trustee’s application.

The Procedure

157. Under s 55(1) of the Act, the Trustee may apply for advice or direction by the Supreme Court on any matter relating to:

• the scope of the Trustee’s functions under Pt 4 of the Act;

• the exercise of any function by the Trustee under Pt 4 of the Act; or

• any other matter relating to the operation of Pt 4 of the Act.

Under s 55(10), no proceedings lie, or civil or other liability arises, against an applicant for or on account of any act, matter or thing done or omitted to be done by the applicant in good faith and in accordance with any approval, advice or direction given under this section.

158. On one view, the application under s 55 of the Act could be misconceived. Section 55 is concerned with advice or direction in relation to Pt 4 of the Act. The real question raised by the proceedings, however, concerns the true construction of the Agreement and the Trust Deed. It may be that the application could have been framed as an application under s 63 of the Trustee Act 1925 (NSW). Under s 63, a trustee may apply to the Supreme Court for an opinion advice or direction on any question respecting the management or administration of the trust property, or respecting the interpretation of the trust instrument. If the trustee acts in accordance with the opinion advice or direction, the trustee will be deemed, so far as regards the trustee's own responsibility, to have discharged the trustee's duty as trustee in the subject matter of the application, provided that the trustee has not been guilty of any fraud or wilful concealment or misrepresentation in obtaining the opinion advice or direction.

159. Since the Executor was not a party to the Trustee’s summons, he may need leave to appeal. Clearly, he should have leave to the extent that it is necessary.

The Appeal

160. The ground specified in the Notice of Appeal is that the primary judge erred in failing to find that the whole of the claim made and upheld in Mr Talifero’s proceedings in the Tribunal was a Proven Claim that the Trustee is obliged to pay under the Agreement. That question turns upon the language of the proviso contained in par (a)(i)(B) of the definition of Personal Asbestos Claim in the Agreement and the Trust Deed. The proviso calls for a factual inquiry on the part of the Trustee as to whether:

• Mr Talifero’s exposure to asbestos occurred wholly within Australia; or

• Mr Talifero had been exposed to asbestos both within and outside Australia.

If the latter is found to be the case, the damages that are to be included in Mr Talifero’s claim must be limited to the amount attributable to the proportion of the exposure that occurred in Australia and that caused or contributed to Mr Talifero’s mesothelioma.

161. The material before the Trustee demonstrates that Mr Talifero was exposed to asbestos or asbestos dust both within and outside Australia. It appears that the state of the science in relation to the contracting of mesothelioma is that mesothelioma can be caused by the inhalation of a single fibre of asbestos and that the onset of the disease might not occur until as many as 40 years after the inhalation. It is not presently possible to identify the precise time when the fibre that causes mesothelioma might have been inhaled. Thus, it is not possible to say whether the fibre inhaled by Mr Talifero that caused his mesothelioma was inhaled while working in Australia with products manufactured and supplied by Amaca, or was inhaled while, for example, on service with the British Navy outside Australia. Nevertheless, it is clear that Mr Talifero was exposed to asbestos both within and outside Australia.

162. It is possible that, while working with the British Navy, Mr Talifero inhaled a fibre of asbestos and that, while working on products manufactured or supplied by Amaca in Australia, he also inhaled a fibre of asbestos. That raises a significant question of causation. Each fibre may, on its own, have been causative of Mr Talifero’s mesothelioma, quite independently of the other. That will now never be known.

163. The possibility that there may have been two independent causes of the disease does not appear to be reflected in the language of par (a)(i)(B) in so far as that provision calls for an inquiry as to the amount of damages included in the claim made by Mr Talifero that is “attributable to the proportion of the exposure” that caused or contributed to his loss and damage that occurred in Australia. That language is quite inapt to refer to the circumstances of a victim of mesothelioma.

164. It appears likely that the exposure to asbestos that actually caused Mr Talifero’s mesothelioma occurred either wholly within Australia or wholly outside Australia, although it is not possible to say which. The provisions of the Trust Deed and the Agreement call for an inquiry by the Trustee as to whether Mr Talifero inhaled the fibre that actually caused his mesothelioma in Australia or outside Australia. It may be that Mr Talifero inhaled fibres both outside Australia and inside Australia. Nevertheless, the Trustee must make a decision as to whether it is more likely than not that Mr Talifero inhaled the fibre that caused his mesothelioma while in Australia. It may be that, before coming to Australia, Mr Talifero had inhaled a fibre that, ultimately would have caused mesothelioma and that, after he arrived in Australia, he inhaled another fibre that may, of itself alone, have caused his mesothelioma.

165. If Mr Talifero inhaled the fibre that caused his mesothelioma in Australia, he is entitled to the full amount of the award made by the Tribunal. On the other hand, if Mr Talifero inhaled the fibre that caused his mesothelioma before he came to Australia, he would not be entitled to any part of the award made by the Tribunal. That question, however, is not presently before this Court. However, the Fox Report appears to be a singularly inappropriate basis for determining whether it is more likely than not that the fibre that caused Mr Talifero’s mesothelioma was inhaled inside or outside Australia.

161. It is interesting that considerations of policy similar to those raised in proceedings such as these led, as long ago as the 2nd Century, to a departure from what the law would usually require by way of proof of causation. In a situation such as the present, the Romans would have held both wrongdoers liable under the Lex Aquilia, which imposed liability on a person who caused the death of a slave iniuria, that is to say, without justification or wrongfully. Under Roman law, a slave was property and the owner was entitled to recover damages from a wrongdoer who wrongfully caused the death of a slave. Where a slave was mortally injured wrongfully by one wrongdoer and, subsequently, before death occurred, was killed wrongfully by another wrongdoer, the Roman solution, as explained by Julian, the greatest jurist of the reign of Hadrian in the first half of the 2nd Century, was to permit full recovery from both wrongdoers, [53] although the quantum of damages recoverable could differ because the value of the slave was significantly reduced by the first act. [54] That view was confirmed by Ulpian at the beginning of the 3rd Century on the basis that the Lex Aquilia was penal in its nature. [55] Of course, as Lord Rodger observed in 2002, Justinian’s compilations in the Digest published AD 533 may not furnish much guidance on the formulation of an equivalent rule today. [56] On the other hand, the apportionment contemplated by the Act is not all that different from the solution of the Roman jurists.

     53. See Digest 9.2.51.pr.

     54. See Digest 9.2.2.pr

     55. See Digest 9.2.11.2.

     56. See Fairchild v Glenhaven Funeral Services Ltd [2002] 3 All ER 305 at [160].

162. As indicated above, the primary judge concluded that the Trustee would be justified in not paying so much of the damages award made by the Tribunal as reflects the extent to which Mr Talifero’s exposure to asbestos or asbestos products occurred outside Australia. In so far as it appears to authorise paying a proportion between nil and 100% of the award of the Tribunal, that conclusion, is erroneous.

163. I would allow the appeal and set aside the orders made by the primary judge. Clearly, it would be desirable that the matters that have been fully argued should be resolved and should not be thwarted by procedural difficulties. However, I am not persuaded that this Court is in a position to decide the question. The Trustee should be advised that it would not be justified in paying the amount of damages specified in the summons.

164. After the proceedings in the Equity Division have been properly constituted, along the lines suggested by Sackville AJA, the Trustee should be given the opportunity of making a decision as to the amount that is to be paid to the Executor in respect of the award made by the Tribunal, in the light of the conclusions reached above. If the Executor were to be dissatisfied with any decision made by the Trustee, it would be open to him to take proceedings against the Trustee in respect of that decision.

165. Since that result was not contended for by any party, it would be appropriate to afford the parties the opportunity to make any further submissions they wish as to the costs at first instance and of the appeal.

**********

Endnotes

“postulated a model for the incidence of mesothelioma where the incidence was related to the fibre, type, size, mix of asbestos, the intensity of exposure in fibre mix, the time in years since first exposure and the year of exposure”.

The Supreme Court of the United Kingdom referred to the work of Peto and Rake, published in 2009 by the Health and Safety Executive, on Occupational, Domestic and Environmental Risks in Britain as the “first representative study to quantify the relationship between mesothelioma and lifetime occupational and residential history”: Sienkiewicz v Greif (UK) Ltd [2011] 2 AC 229; [2011] UKSC 10 at [18] (Lord Phillips PSC).

 “(1)   A trustee may apply to the Court for an opinion advice or direction on any question respecting the management or administration of the trust property, or respecting the interpretation of the trust instrument.

…

(10)   Any person who claims that the person’s rights as beneficiary will be prejudiced by the conveyance or distribution may within such time as may be prescribed by rules of court, or as may be fixed by the Court, apply to the Court for such order or directions as the circumstances may require, and during such time and while the application is pending, the trustee shall abstain from making the conveyance or distribution.”

Amendments

11 October 2018 - [151] "invisible" amended to read "indivisible"

25 October 2018 - Typographical amendments to:

Headnote, holding (i), [73], [79], [90], [107], [124]