After the Dust has Settled - Reform of compensation for dust diseases claims in NSW
The Carr Government's review of the costs of administering compensation for dust diseases in NSW has recommended dramatic changes to the way dust claims are resolved. The proposed sea change amounts to a cultural revolution for lawyers who are used to the traditional case management techniques of the Dust Diseases Tribunal (the Tribunal) and should dramatically reduce the legal cost of claims.
The centrepiece of the reforms is the proposal that most claims be dealt with by a new claims resolution process. Parties will have to lay their cards on the table early in the claim with the exchange of information and key documents. Matters that can't be informally settled will go to compulsory mediation.
Multiple defendant cases or complex cross-claims, where there is no agreement on how to split the claim, will be referred to independent third parties, who are to work out who is responsible for what using standard presumptions that are to be developed by the Government in conjunction with the defendants and insurers who work in the Tribunal.
The recommendations will cut down the work of the Tribunal dramatically - largely restricting it to urgent cases and "test" cases where there is a new issue that needs judicial decision - by requiring parties to exchange information in the new claims resolution process, which is designed to encourage settlement without reference to the Tribunal.
Lawyers will have to do more work up front to ensure they get the best settlement for their clients because there is a threat of severe cost penalties down the track if the claims are not settled in a timely way, when appropriate settlement offers have been made. The stricter costs regime should encourage parties to take a more commercial approach to settlement rather than running the risk of wearing not only their own costs but those of other parties.
The process has been remarkable for the degree of agreement there has been between the plaintiffs' and the defendants' camps on proposed reforms. Early exchange of information and compulsory alternative dispute resolution backed up by cost penalties was largely uncontroversial.
The real action will be when the defendants and insurers sit at the negotiating table with the Government to work out what the "standard presumptions" will be for working out what share each defendant in a multiple defendant case or each cross-defendant to a cross-claim should bear. Dividing the settlement between defendants and cross-defendants is a hot topic at the Tribunal and one that generates a huge amount of cost at present. The requirement that plaintiffs give a detailed account of their exposure so that a rational apportionment can be worked out should assist but there will still be arguments as to which is the more culpable party among defendants and cross-defendants. The application of standard presumptions should reduce the time spent in argument but it will be interesting to watch the fur fly while the presumptions are worked out.
There is some streamlining recommended to the Tribunal's procedures. These should not be too controversial because the Tribunal has been prepared to adapt its procedures to facilitate the resolution of claims and to realise the goal when it was established that it be a "fast track mechanism" for the resolution of claims.
The review recommends that the Government put out a draft regulation for further comment and that it conduct negotiations with key stakeholders so that the new arrangements can take effect from 1 July 2005.
The review has left to one side a number of contentious issues such as caps on damages, out of State claims where the Tribunal goes on a circuit to other States, making the Tribunal part of the District Court and other issues that were outside its terms of reference for another day. The review recommends that a further review take place in a year's time.
To assist any further review, it is proposed that the parties give the Tribunal data on their legal costs at the end of matters so that the Government has meaningful information to use.
The success of the proposals depends on the willingness of parties to proceed on good faith - providing full and candid information in the pre-trial procedure and to take a commercial approach that forsakes posturing for a fast resolution of claims. Defendants will wait to see just how independent are the independent third parties who are to determine apportionment in the absence of agreement in multiple defendant cases.
If the proposals are adopted, the hoped for dividends are James Hardie's agreement to fund the liability of its former operating companies; significantly lower costs overall (although there may be some increase to the costs at the beginning of a claim) and dramatically fewer claims going to the Tribunal for judicial determination.