Dangers in asbestos litigation

To many people, asbestos diseases and court cases are mysterious things that are vaguely talked about and poorly understood. However, Councils and their risk managers should be aware of potential problems caused by asbestos and take steps to lessen them.

Asbestos is a naturally occurring product with many wonderful features, such as fire resistance and great insulation properties. However, there is one small problem: it is deadly.

Asbestos fibres can enter the lungs and lie dormant for decades before a process not fully understood by the medical profession manifests itself in either a malignant or a benign asbestos disease.

Mesothelioma is a malignant disease which results in death within two years (often a lot earlier) after diagnosis. While the benign asbestos diseases are less unpleasant, they can still be very disabling for the person affected, and therefore expensive for Council and its insurers.

Asbestos remains widespread; it is still in many homes, especially in areas like the eaves. It is safe while undisturbed, but for instance can trigger serious concerns when major storms or winds rip buildings open.

From a risk management perspective, we expect that most councils would, at the very least:

• have a detailed inventory of asbestos in their infrastructure

• have embarked on proper remediation programs long before now

• include terms in their development applications that draw the problem of asbestos in buildings to the attention of developers.

From a claims handling point of view, the problem with asbestos diseases is their long latency period; usually 20 to 40 years. If a Council receives an asbestos claim today, the plaintiff’s exposure to asbestos will usually have occurred decades ago.

Therefore, the plaintiff’s supervisor and colleagues are likely to be either retired (and unwilling to become involved in litigation), dead, or simply unable to be located. Obtaining detailed facts of an alleged asbestos exposure is a perennial problem; in many cases there is little practical alternative but to accept the plaintiff’s version of events.

Once a claim arrives, Council also needs to locate whoever its insurer was at the time of the exposure, which may not be the current insurer. If the plaintiff was  a Council employee, the relevant workers compensation insurer can usually be located through Council or icare records. If the plaintiff was not an employee (such as a contractor, member of the public, or wife of an employee exposed to asbestos through washing her husband’s clothes), Council needs to locate its public liability insurer at the time of the exposure. In many cases, this is easier said than done, and even if such a policy can be located, it may not be enough to cover the value of the claim; a typical mesothelioma claim now settles for around $500,000 inclusive of the plaintiff’s costs.

The first lesson for a Council is therefore to keep as detailed a record as possible of all insurance policies, as far back as can be located. It should be kept in digital form, in a file which will never be deleted, and its location known to all present and future employees.

Record keeping is also crucial for establishing the liability of any other party, such as a professional asbestos supplier, who may have contributed to an exposure. It is not sufficient for a Council to say in court that it “probably” acquired asbestos from James Hardie (now known as Amaca) or CSR. Unless Council has definite evidence to identify the supplier, those companies are likely to successfully defend any claim against them.

A council we act for recently retrieved purchase invoices from their digital archives showing they had acquired asbestos from James Hardie. Accordingly, a substantial contribution was obtained from Amaca towards settling an asbestos exposure claim against the council.

That said, identifying the asbestos supplier by no means absolves Council of its liability, especially if Council was also the plaintiff’s employer. The courts have shown a surprisingly varied approach to apportioning liability between an employer and supplier, but the employer can generally expect to carry between 25 and 50 per cent of the total.

The problems posed by asbestos litigation indicate a  wider risk management lesson for all Councils; accurate records should be kept of all council activity. Councils with a policy of throwing out hard copies of documents after seven years should reconsider and ensure that all relevant records are stored electronically for the long term.

The question is simple: if a claim emerges in 30 years’ time from an asbestos exposure from Council property today, is your record-keeping sufficient to properly assist your successors, and their insurers and lawyers, in the 2040s?

If you have any questions regarding this article, please contact Lian Chami.

Author: David Greenhalgh