Bills Digest No. 176 2004–05
Asbestos-related Claims (Management of Commonwealth
Liabilities) (Consequential and Transitional Provisions) Bill
2005
WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Passage History
Purpose
Background
Endnotes
Contact Officer & Copyright Details
Passage History
Asbestos-related Claims (Management
of Commonwealth Liabilities) Bill 2005
Asbestos-related Claims
(Management of Commonwealth Liabilities) (Consequential and
Transitional Provisions) Bill 2005
Date
Introduced: 25 May
2005
House: House of Representatives
Portfolio: Employment and Workplace
Relations
Commencement:
Part 1 of the main
Bill commences on Royal Assent. Parts 2 and 3 commence either at
the end of 7 days after Royal Assent, or on 1 July 2005, whichever
comes later.
To transfer the Commonwealth s
common law liability for claims for asbestos-related conditions
(ARCs) from federal agencies and government business enterprises to
Comcare a Commonwealth statutory authority reporting to the
Minister for Employment and Workplace Relations. Comcare is
responsible for workplace safety, rehabilitation and compensation
in the Commonwealth jurisdiction.
Due to the short time between introduction of this legislation
and scheduled debate in the House of Representatives, this digest
focuses on key issues only.
Asbestos mining was carried out in Australia principally at
Wittenoom (WA) 1940 66, at Baryulgil (NSW) 1940 79, and at Barraba
1918 23 and 1970 83. In addition to claims from the mining of
asbestos, however, many claims arise from use of asbestos products
in their various forms.
The scale of the asbestos compensation problem in Australia was
highlighted in 2004 by the inquiry commissioned by the NSW
Government into the management of asbestos-related liabilities by
the James Hardie group of companies. The Report of the special
commission of inquiry into the medical research and compensation
foundation (the Jackson report ) explained that:
Asbestos was used in Australia during a large part
of the last century in the manufacture of building products
(particularly sheeting and roofing), pipes, insulation materials,
brake linings and other friction products, and other materials.
Asbestos, however, carries with it problems. Its fibres can give
rise to asbestosis, lung cancer, asbestos-related pleural diseases
and mesothelioma. Asbestos-related diseases may take many years
after exposure to manifest themselves. Mesothelioma is especially
insidious: very slight exposure to asbestos fibre may cause it, the
disease may not manifest itself until 40 or more years after the
exposure but when it does the course of the disease is most often
short, very painful and fatal.(1)
The dangers of asbestos were first raised in the Australian
media in 1974.(2) A number of acts and regulations were
consequently passed in each state and territory, especially during
the period 1978 85.(3) The use of all forms of asbestos
was finally banned in Australia from 31 December 2003, except in
prescribed circumstances.(4) At the same time, the
Commonwealth Government introduced a ban on the import or export of
asbestos.(5)
The first successful negligence claim in relation to an asbestos
disease was heard in 1985, and damages of $222 500 were
awarded.(6)
Estimates of Australia's total liability for future asbestos
claims start around $6 billion.(7) Apart from the James
Hardie group, fellow corporate heavy weights CSR and BHP Billiton
are targets, and federal and state governments also have
substantial asbestos liabilities. Claims are not limited to those
who worked in asbestos mines and factories. Former power station,
shipyard and dock workers, railway labourers and members of the
defence force, especially the Navy, are at significant risk from
asbestos-related diseases. As the Jackson report noted, these
diseases can take decades to develop a major difficulty for
compensation planning. Since 1945 about 7000 Australians have died
from this disease, estimated to rise to 18 000 by 2020. Other
asbestos-related cancers may be around 30 40 000 by the same
time.(8)
Current Australian Government liabilities for asbestos claims
are estimated at $0.9 billion over the next 50
years.(9) The explanatory memorandum states that
apart from claims in relation to Commonwealth employees or former
employees, it is predicted that Comcare would manage ARC common law
claims from:
-
former waterside workers
-
contractors and sub-contractors
-
tenants of Australian Government owned and/or constructed
premises
-
family members of employees who were themselves exposed through
contaminated clothing or other means
-
visitors
-
bystanders, and
-
dependants of persons in any of the above
categories.(10)
The explanatory memorandum notes that the Bill implements a
recommendation made by an Asbestos-related Disease
Inter-Departmental Committee (IDC) established in 2002 to review
the management of asbestos related compensation claims against the
Australian Government. The IDC recommended the establishment
of a central asbestos claims unit within Comcare to manage all ARC
common law claims against the Australian Government.
According to the explanatory memorandum:
The IDC made this recommendation based on the view
that the decentralised approach was resulting in some
inefficiencies and inconsistencies in case management across
portfolios, including inconsistent admissions of liability. The IDC
considered that having a centralised body like Comcare to manage
claims against Australian Government agencies with ARD
[asbestos-related disease] exposure would overcome the difficulty
of attributing liability to individual portfolios given the
effluxion of time and changes to various Administrative
Arrangements Orders. It would also enable prompt settlement
of claims, which is particularly important where death-bed
litigants are involved.(11)
The explanatory memorandum notes further that the Bill would
allow Comcare to assume the whole of the Australian Government s
common law liability for ARCs. It explains that:
This will not only relate to the liability for
claims from Australian Government employees but any person (or
dependant) who claims to have suffered damage from exposure to
asbestos for which the Australian Government may be liable.
Currently, non-employee ARC common law claims are managed by
portfolios, requiring each portfolio to take responsibility for
case management.(12)
When the Bill was
introduced Australian Greens Senator Kerry Nettle expressed concern
about possible low-level caps on compensation payouts from the
Commonwealth to victims of asbestos-related disease. Senator Nettle
said:
The Greens do not object to centralising the
management of the claims with Comcare. However, we are concerned
about how several aspects of the bill will affect people suffering
asbestos-related diseases and their families
People making claims would have the option of
accepting a compensation figure determined by Comcare or taking a
private legal action, which is expensive and time-consuming,
especially for people who might have only a short time to live.
Comcare's liabilities are governed by the Safety, Rehabilitation
and Compensation Act, which prohibits a court from awarding a
payout higher than $110,000 for non-economic loss (including loss
of expectation of life). This means an effective cap on all
Commonwealth claims of $110,000, which is a long way short of the
average payouts by the NSW Dust and Diseases Tribunal of around
$250,000. The average claim for mesothelioma is around
$300,000.
The Greens are also concerned about provisions in
the bill that would allow the minister to effectively remove any
Commonwealth body from the reach of the compensation provisions,
without having to notify parliament or enable parliament to
overturn the decision.(13)
Key issues
In a general sense the idea behind the Bill appears sensible,
namely to centralise the Commonwealth s asbestos-related
liabilities in Comcare, which has an established system for
compensation payments. However, as the Greens have identified,
there are a number of potential issues with specific provisions of
the Bill.
The explanatory memorandum states that the Bill:
would not affect the ability of an employee to
elect to institute action for the recovery of damages for
non-economic loss - instead of receiving compensation under the SRC
Act. It would also not affect any statutory caps on the
awarding of common law damages such as limitations imposed by s. 45
of the SRC Act and s. 389 of the Military Rehabilitation and
Compensation Act 2004.(14)
Liabilities of employees or former employees of the Commonwealth
or Commonwealth authorities transferred to Comcare would be
governed by the compensation scheme set out in the Safety,
Rehabilitation and Compensation Act 1988 (SRC Act). Under s 45
of the SRC Act, a claimant can either:
(a) accept an amount of compensation
determined by Comcare paid under sections 24, 25, or 27 of the SRC
Act in respect of an injury resulting in permanent impairment;
or
(b) elect to bring a common law action (i.e. a
private legal action) against the Commonwealth. In this case,
however, s 45 (4) prohibits a court from awarding a payout greater
than $110 000 for non-economic loss (i.e. the main claim for pain
and suffering, loss of expectation of life, loss of enjoyment of
life etc).
Parliament might ask why Comcare would offer a person any more
than $110 000 for non-economic loss under (a) if it knows that the
person cannot get anything more than this under (b). Section 389 of
the Military Rehabilitation and Compensation Act contains a similar
provision, also limiting common law payouts for non-economic loss
to $110 000.
While the Bill transfers the liability for all asbestos-related
claims against the Commonwealth or (declared) Commonwealth
authorities to Comcare, it is not clear whether the limit on
pay-outs under the SRC Act would apply to people other than
employees or former employees (eg family members, visitors,
bystanders etc). Parliament might request further advice on this
issue.
Figures in the Jackson report indicate that the average
mesothelioma claim in June 2003 against members of the James Hardie
Group was around $280 000 to $300 000.(15) An article
in The Age on 12 January 2004 said that pay-outs from the
NSW Dust Diseases Tribunal now average about $250 000
.(16) Informal advice from the tribunal in May 2005 was
that the average was around $150 000.(17) These figures
would include amounts for economic or pecuniary loss (eg loss of
earning capacity, medical and rehabilitation expenses, care
needs).
On this basis Parliament might seek further advice as to whether
a cap of $110 000 for non-economic loss is appropriate for
asbestos-related injuries resulting in permanent impairment.
According to the explanatory memorandum:
The Bill would not alter the fundamental ARC
liability of the Australian Government. The Bill should have
no impact on the ability of a current or prospective claimant to
recover damages for an ARC from the Australian Government. To
ensure against any unforeseen consequences of this Bill a safeguard
is included to protect the rights of
claimants.(18)
Clause 15 provides where the operation of the
Bill means that a person has been deprived of property otherwise
than on just terms , the Commonwealth is liable to pay a reasonable
amount of compensation to the person. If there is no agreement on a
reasonable amount, the person can bring a further legal action
against the Commonwealth. The explanatory memorandum describes this
as a safety net provision.(19) It says this could apply,
for example:
where Comcare has retransferred a liability to an
entity that did not have the means to discharge that
liability. If that situation did occur, this clause would
provide for sufficient funding to meet those
liabilities.(20)
There is an inalienable right under s 51 (31) of the Australian
Constitution to recover fair compensation if the Commonwealth
deprives a person of legal property, so from the point of view of
claimants it adds nothing for this to be covered by a specific
provision in the Bill. The meaning of acquisition of property and
just terms in clause 15 is specifically linked to the meaning of
these terms in s 51 (31) of the Constitution. While purportedly
included as a safety net for claimants, the real purpose of clause
15 may be to protect the Bill from invalidity if a claimant is
deprived of some or all of a legal claim without fair
compensation.(21)
More importantly from a practical perspective, however, most
claimants with asbestos-related injuries will not have sufficient
life-span and/or resources to initiate a further potentially
complex and expensive legal action to recover additional
compensation. This is especially so because actions under clause 15
may involve complicated constitutional issues.
In particular, despite the assertion in the explanatory
memorandum that clause 15 will be available to prospective
claimants , it appears that people who are yet to discover an
asbestos-related condition may be unable to use clause 15 to seek
additional compensation.
A valid common law legal claim has traditionally been recognised
as 'property'. In Georgardis (1994)(22) the
High Court held that a statutory provision which purported to
extinguish the right to sue for common law damages violated s
51(31) of the Constitution. The majority said that acquisition of
property :
extends to the extinguishment of a
vested cause of action, at least where
the extinguishment results in a direct benefit or financial gain
(which, of course, includes liability being brought to an end
without payment or other satisfaction) and the cause of action is
one that arises under the general law.(23)
The judgment in Georgardis was applied by the High
Court in Mewett (1997).(24)
So people with existing legal claims i.e. those that have
already vested that are transferred to
Comcare under the Bill would be able to use clause 15 if Comcare
caps their payout at a level lower than they may otherwise have
been entitled to. But those people who will develop
asbestos-related diseases in the future do not yet have
vested claims. They will not be able to
claim that introduction of the Bill deprived them of an existing
legal right or property. Therefore they could not use clause 15 to
seek additional compensation if, for example, Comcare limits their
payout to $110 000 even though the normal common law figure for
their particular condition was much higher.
Under clause 4 of the Bill, the Minister can
declare that a body in which the Commonwealth or a Commonwealth
entity has a substantial interest is a Commonwealth authority
. The explanatory memorandum notes that:
This would mean that if an asbestos-related claim
is made by a person against a body that the Minister has declared
to be a Commonwealth authority, there would be a reassignment of
the liability for the claim to Comcare at the time the claim is
made.(25)
Clause 4 also allows the Minister to declare a body not to be a
Commonwealth authority. The explanatory memorandum
states:
This would mean that if an asbestos-related claim
is made by a person against that body after the date the instrument
is made the liability for that claim would not flow to
Comcare. However, Comcare would remain responsible for any
asbestos-related claim made during the time it was a Commonwealth
authority.(26)
Clause 6 contains similar provisions regarding
the transfer of liabilities from Comcare to another body.
There are a number of issues with these clauses:
-
There appears to be potential for confusion as to which
Commonwealth bodies have been declared and which have not. Will it
be clear to people whether they should go to Comcare or not? Why
not transfer all liabilities to Comcare rather than making these
subject to individual declarations?
-
Subclauses 4(3) and 6(3) require the Minister to publish the
declaration in the Australian Government Gazette.
However, subclauses 4(4) and 6(4) provide that failure to publish
declarations would not make them invalid.
-
Subclauses 4(5) and 6(5) state that such declarations are not
legislative instruments within the meaning of section 5 of the
Legislative Instruments Act 2003.
-
This means there is no requirement to table them in Parliament
and they are not disallowable instruments. So Parliament will not
get the opportunity to discuss whether transfer of a liability to
Comcare, or transfer of a liability from Comcare, is appropriate in
the particular circumstances
-
One option would be to require such instruments to be tabled and
to be subject to disallowance by the Parliament. Another option
under the Legislative Instruments Act would be to require them to
be tabled only, but not make them disallowable.
-
D. F. Jackson QC, Report of the special commission of
inquiry into the medical research and compensation foundation,
September 2004, Part A, p. 17, available at http://www.cabinet.nsw.gov.au/hardie/PartA.pdf.
-
Is this killer in your home? (cover story), Bulletin, 6
July 1974, pp. 30 33.
-
A list of current legislation is included as Appendix A in:
Asbestos: code of practice for the safe removal of
asbestos (NOHSC: 2002 (1988)), Canberra: National Occupational
Health and Safety Commission, 2002, http://www.nohsc.gov.au/PDF/Standards/Codes/AsbestosCode.pdf
-
The ban was effected through amendments to the National Model
Regulations for the Control of Workplace Hazardous Substances, by
the National Occupational Health and Safety Commission (NOHSC),
acting under section 38 of the NOHSC Act,
http://www.comlaw.gov.au/comlaw/management.nsf/lookupindexpagesbyid/IP200401491?OpenDocument.
-
Customs (Prohibited Imports) Amendment Regulations 2003 (No.
10), Statutory Rule 2003 No. 321,
http://www.comlaw.gov.au/ComLaw/Legislation/LegislativeInstrument1.nsf/asmade/bynumber/96E32ED54181807ACA256F700080EE5C?OpenDocument,
and Customs (Prohibited Exports) Amendment Regulations 2003 (No 6),
Statutory Rule 2003 No. 320,
http://www.comlaw.gov.au/ComLaw/Legislation/LegislativeInstrument1.nsf/asmade/bynumber/357C8840277BDED1CA256F700080EE59?OpenDocument.
-
Pilmer v McPherson s Limited, Supreme Court of Victoria
(unreported), 1985; an appeal was dismissed: McPherson s Ltd v
Pilmer, Harold Simpson, Supreme Court of
Victoria (unreported), 26 November 1985, http://vsc.sirsi.net.au/Judgments/Civil/239906.pdf.
-
Beth Quinlivan, 'Asbestos: Powder traces', Business Review
Weekly, 2 June 2004. See Peter Prince, Jerome Davidson and
Susan Dudley, In the shadow of the corporate veil:
James Hardie and asbestos compensation,
Parliamentary Library Research Note No. 12 2004-05, at: http://www.aph.gov.au/library/pubs/rn/2004-05/05rn12.pdf.
Quinlivan, op. cit.
-
Quinlivan, op. cit.
-
Explanatory memorandum, p. 2.
-
ibid., p. 1.
-
ibid., pp. 1 2.
-
ibid., p. 1.
-
K. Nettle,
Government asbestos claims bill raises concerns ,
Australian Greens media release, 25 May 2005, at:
http://www.greens.org.au/mediacentre/mediareleases/senatornettle/250505a.
-
Explanatory memorandum, p. 2.
-
Jackson report, p.55 (para 3.33).
-
http://www.theage.com.au/articles/2004/01/11/1073769452839.html.
-
Conversation with author 31.5.05.
-
Explanatory memorandum, p. 2.
-
ibid., p. 9.
-
ibid.
-
See Parliamentary Counsel, Drafting Direction 1993, No. 9,
Severability provisions Constitutional limitations and
prohibitions, para 3 (Acquisition of property).
-
179 CLR 297.
-
ibid., at 305 (Mason CJ, Deane and Gaudron JJ). Emphasis
added.
-
191 CLR 471.
-
Explanatory memorandum, p. 4.
-
ibid.
Patrick O Neill and Peter Prince
2 June 2005
Bills Digest Service
Information and Research Services
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