The Jackson inquiry into the Medical Research and Compensation Foundation for asbestos victims all comes down to money. Who should pay for the biggest occupational health disaster since the industrial revolution?
James Hardie's proposal for the establishment of a statutory scheme to take over compensation for people with asbestos-related diseases - which was given cautious approval by the inquiry - has many advantages.
It would minimise legal costs and cut the duplication between the courts (such as the Dust Diseases Tribunal in NSW), which award compensation to people with dust diseases on proof of breach of legal obligations, and administrative bodies (such as the NSW Dust Diseases Board) that provide compensation to employees who have dust diseases irrespective of fault.
It would get rid of the angst and stress for all concerned in court processes.
Claimants, and their lawyers, are deeply suspicious of replacing all judicial remedies with an administrative process. There is a fear that any fund will run dry.
Evidence before the Jackson inquiry of widely differing actuarial estimates of future liability illustrates the near impossibility of being right.
Claimants also look to what happened in New Zealand, where the no-fault accident compensation scheme delivers far less compensation to people with dust diseases than does the Australian court system. They will also be giving up a court system that works well for the great unknown of a compensation scheme.
The amount needed to establish the statutory scheme is anyone's guess. No one knows, for example, if the so-called third wave of claims from renovators and others with very minor exposure will be a tsunami or a ripple.
If defendants are going to be asked to provide more money to the scheme from time to time to meet shortfalls, this will make the scheme much less attractive to them as they will be looking for complete absolution in return for a hefty one-off payment.
The defendants, who will be expected to deliver substantial amounts to set up the scheme, can be expected to fight tooth and nail to put in the minimum amount they can get away with.
Arguments between government, suppliers, end-user businesses, insurers and other stakeholders, as to who should pay and how much, could take many months to resolve.
Defendants will want a national scheme so there is no opportunity for claimants to pick the best compensation available by claiming in the most plaintiff-friendly state, thereby undoing all the benefit of the scheme.
Defendants and claimants will be wary of who is put in charge of the scheme.
NSW Premier Bob Carr's passing of the baton for working out what should happen, to the ACTU in the first instance, is smart politics.
Meanwhile, James Hardie's willingness to sit down with the ACTU and victims and to consider proposals other than the statutory scheme is a welcome response.
However, there are other stakeholders who will need to be heard. Other defendants (state governments, different product suppliers), and the insurance sector will all want to be involved in the process.
If the establishment of a scheme takes time, perhaps we should consider making changes to the existing system instead?
In NSW, which has the most sophisticated system for compensating victims of dust exposure, the following reforms could be quickly instituted:
- The law of damages awarded by the courts for dust diseases could be made consistent with that applying under the tort reforms of recent years. This should establish more predictability and make negotiations simpler.
- Plaintiffs should provide a sworn statement of their exposure history when they begin claims, with their medical reports and evidence of economic loss.
This would enable defendants to assess claims quickly and settle them. In return for making plaintiffs show their hand, there could be stiffer cost penalties on any party shown to be dragging the chain on settlement.
- All claimants should be medically assessed by the Dust Diseases Board's medical authority and its findings should be binding on the parties to any litigation. The board's medical authority is knowledgeable, fast and fair in its assessments.
Clearly, compensation of dust diseases does need a radical rethink. The foundation set up by Hardie will run out of cash in the not too distant future unless it is topped up, so the question then will be who pays?
These reforms could be instituted swiftly. They would bring down the legal costs substantially and have the potential to speed up settlement. Such reforms would allow a reflective pause for the more complex arguments about reform of our Corporations Act, and the establishment and funding of a statutory scheme to be considered and debated. Robert Pelletier is a partner who specialises in product liability at industrial relations and employment law firm Toomey Pegg Drevikovsky. He has no connection with James Hardie. He acts for defendants at the Dust Diseases Tribunal.