James Hardie 220404

Special Commission of Inquiry into the Medical
Research and Compensation Foundation

April 2004
CONTACT:
John Gordon
National President
Phone: 03 9225 7064 Fax: 03 9225 8968
Email: j.Gordon@seabrookchambers.com.au
Executive Summary
The history of asbestos disease in Australia is inseparable from the James Hardie group of
companies.
With scientific evidence available from as early as 1901, and government inspections and
asbestos litigation common in the 1930s, James Hardie knew of asbestos’ harmful effects very
early. Yet James Hardie ceased asbestos production only circa 1987.
Given the record, there can be no doubt that the James Hardie companies are morally and
legally responsible for their asbestos disease legacy in Australia, a legacy that will endure for
at least a generation. But whether James Hardie will provide recourse to asbestos victims is
another question.
The James Hardie companies fought hard to resist litigation. Despite the difficulties, early
lawsuits were successful and established liability. In more recent years, James Hardie has
more successfully frustrated claims by insulating holding companies from operating companies
divested of assets.
APLA’s submission provides an analysis of case law tracing this history of litigation to the
present. Recent experience in the UK illustrates that the movement of James Hardie off-shore
and assumption of liability by the Medical Research and Compensation Fund may present
insuperable barriers to claimants.
In light of these analyses, APLA answers the Special Commission’s key questions with a firm,
“No.” The current state of the law does not provide adequate recourse to asbestos victims
where the holding entity is inadequately resourced, nor does it provide clear access to parent
companies, especially foreign parent companies.
In light of this conclusion, the APLA submission offers a legislative solution.

Contents
1 Introduction............................................................................................................ 1
1.1 Structure........................................................................................................... 1
1.2 Background and issues .................................................................................... 2
1.3 History .............................................................................................................. 2
2 The Law – Case Briefs .......................................................................................... 4
2.1 The duty owed by a product manufacturer, and those in 'identical' positions .. 4
2.2 The duty owed by party aware of foreseeable risk and in a position of
'proximity' apt to reduce or obviate the foreseeable risk to plaintiff's class ...... 5
2.3 Duty owed by ‘proximate’ parent company and lifting the corporate veil ......... 9
2.4 Liability of foreign parent companies.............................................................. 10
3 Case Law Analysis .............................................................................................. 14
3.1 The Legacy..................................................................................................... 14
3.2 Does the present law permit recourse to all James Hardie Assets to
compensate victims of negligence? ............................................................... 14
4 Issues Raised by the Special Commission....................................................... 16
4.1 Recourse under current law ........................................................................... 16
4.2 Analogy with unconscionability cases ............................................................ 16
4.3 Recourse under the Trade Practices Act ....................................................... 17
5 Law Reform Proposal.......................................................................................... 18
5.1 Recovery under insurance policy from corporation in liquidation and recent
Government reforms of Corporations Law – a model for corporate liability
reform? ........................................................................................................... 18
5.2 Proposed legislation ....................................................................................... 18
6 Legal Costs .......................................................................................................... 20
7 Conclusion ........................................................................................................... 22
Appendix 1 .................................................................................................................. 24
1 Introduction
APLA Ltd - Lawyers for the People (formerly the Australian Plaintiff Lawyers
Association) is an organisation comprising lawyers and others who advocate civil
justice and human and consumer rights protections and reforms. The organisation,
given its origins, has a particular interest in protecting and enhancing the rights of the
injured to just compensation under our civil justice system.
Most, if not all of the lawyers in Australia who act for the victims of asbestos disease,
and who are therefore involved in the disease legacy of the widespread use of James
Hardie products in Australia over six decades, are members of APLA.
Given this longstanding intimacy with clients and their suffering, APLA members have
been uniquely placed to observe the consequences of James Hardie's negligence, the
legal processes that have ensued, and the manner in which James Hardie has
conducted itself within those legal processes, throughout Australia. If it were not for the
commitment of APLA members, it is unlikely that common law damages for persons
negligently exposed to asbestos would ever have been awarded in this country.
APLA members also have an acute knowledge of the expertise and evidence of a wide
range of people who have been involved in James Hardie litigation over the years.
1.1 Structure
APLA’s submission commences with a preliminary consideration of the issues that we

see arising from James Hardie’s conduct and the Special Commission’s terms of
reference, and an historical outline of asbestos litigation in Australia.
Our submission then considers relevant case law:
• in dangerous goods generally;
• by which liability has been established against various James Hardie operative
and holding entities;
• in which that liability has been challenged in recent years, and finally;
• international cases in which claimants have attempted to recover damages for

tort breaches from foreign parent companies.
Against the background of this case law, APLA considers whether current law allows
recourse to James Hardie and its associated companies for the asbestos legacy they
have left, and addresses the specific issues foreshadowed in the Special Commission’s
invitation to make a submission.
Having concluded that current law is inadequate, APLA submits a corporations law
reform proposal based on a recent Commonwealth government model.
In concluding the submission, APLA also challenges the spurious claim made by
James Hardie International’s Chief Executive Officer that asbestos legal costs are
unnecessarily increased by plaintiff lawyers: exactly the converse is true.
Special Commission of Inquiry into the Medical Research and Compensation Foundation 1
APLA Submission
1.2 Background and Issues
When the Medical Research and Compensation Fund (MRCF) announced its concerns
about shortfalls in funding last year, APLA entered the debate immediately, calling for,
among other things, a review of potential abuse of the protection afforded by the
"proprietary limited" or limited liability company. A copy of APLA's media release is
attached as Appendix 1.
The following issues raised by the inquiry are of concern to APLA:
• Compensation of the victims of James Hardie’s negligence;
• Legal costs in delivering compensation to the victims of James Hardie

negligence;
• Historical conduct of James Hardie and its companies as background to the

corporate restructure which created the MRCF and moved the James Hardie
controlling entity offshore;
• Adequacy of the Corporations Law to protect the rights to compensation at

common law of persons negligently exposed to harmful products and toxic
substances, especially those with latent effect;
• Steps taken by James Hardie to ignore the best evidence available in 2000-01
relating to the likely future incidence of asbestos disease in Australia;
• Desirability of reform to the Corporations Law (or statutory enhancement of

existing common law principles) to protect the rights to compensation at
common law of persons negligently exposed to harmful products and toxic
substances, insofar as strategic divestment such as that apparently engaged in
by James Hardie threatens such rights and is incapable of being redressed by
the existing law;
• Adequacy of the present system for delivery of compensation to persons

suffering asbestos-related disease.1
1.3 History
James Hardie was the biggest manufacturer of products containing asbestos in

Australia, from the 1920s until it ceased using asbestos in about 1987.
In 1935 the Factories Inspectorate, operating under the auspices of the Factories and
Shops Act 1920 (WA) conducted inspections of the James Hardie plant at Rivervale. It
was concerned by the seminal report of the UK Factories Inspectorate, which detailed
major concerns about exposure to asbestos in industry, and set out means of
preventing such exposures.
Having found cases of asbestosis among employees of James Hardie at Rivervale,

and having raised the issue of compensation with the management,2 the Factories
Inspectorate notified the Western Australian Commissioner of Public Health. It is
1
APLA is concerned to respond to these issues raised by James Hardie and its insurers, should the
Commission permit such issues to be raised: there seems to have been some discussion of these matters
in evidence to date.
2
Witzig, in Carroll, Brian, A very good business: one hundred years of James Hardie Industries Limited
1888-1988, Sydney : James Hardie Industries, 1987, p70.
APLA Submission
inconceivable that from that time, James Hardie was unaware of the propensity of
asbestos to cause serious disease and that such disease was both preventable, and
compensable.
The first reported claim for compensation for respiratory illness by an employee (or,
more accurately, the dependant of a deceased employee) of James Hardie and Co.
was in the matter of Jones v James Hardie and Co Pty Ltd (1939) WCR (NSW) 129.
It is inconceivable that the various entities in James Hardie did not know of the risks of
inhaling asbestos from that time - at least sufficient to satisfy the legal requirements
relating to foreseeability, and hence, liability to employees, and users of James Hardie
products.
In any event, having regard to the information available in the medical, scientific and
industrial literature (from 1901 onwards), James Hardie companies would have been
legally presumed to have had such knowledge from that time.
It was 40 years before the first (inadequate) warnings appeared on any James Hardie
products, or before any employee was warned of the dangers they faced daily in the
manufacture of the asbestos products that made James Hardie Industries "The name
behind the name".
Even after that, James Hardie failed to warn contractual visitors to its plant of the
dangers of asbestos: Misiani v Welshpool Engineering Ltd & Anor [2003] WASC 263 at
[138-139].
APLA Submission
2 The Law – Case Briefs
2.1 The duty owed by a product manufacturer, and those in 'identical'

positions
"It is beyond doubt that a manufacturer of any product owes a duty to a consumer to
take reasonable care to prevent the product causing injury or loss to the consumer. As
the facts in the other judgments demonstrate, Dovuro's position was identical in
principle with that of such a manufacturer... A manufacturer breaches its duty of care if,
by exercising reasonable care it should have foreseen and avoided the loss."
(per McHugh J in Dovuro v Wilkins [2003] HCA 51at [29])
"In Wyong Shire Council v Shirt Mason J emphasised:
"In deciding whether there has been a breach of the duty of care the tribunal of
fact must first ask itself whether a reasonable man in the defendant's position
would have foreseen that his conduct involved a risk of injury to the plaintiff or
to a class of persons including the plaintiff."
“That passage was relied upon by the majority in Graham Barclay Oysters Pty Ltd v
Ryan as a basis for allowing the appeal by the oyster growers.
"A risk is real and foreseeable if it is not far-fetched or fanciful, even if it is extremely
unlikely to occur. The precise and particular character of the injury or the precise
sequence of events leading to the injury need not be foreseeable: it is sufficient if the
kind or type of injury was foreseeable even if the extent of the injury was greater than
expected."
(per Gummow J in Dovuro at [59]-[60])
"In the past, in other areas of the law of negligence, this Court has insisted upon duties
of notification to those affected of known risks to which they are exposed by the actions
of others with superior knowledge: Rogers v Whitaker (1992) 175 CLR 479; Chappel v
Hart (1998) 195 CLR 232; Rosenberg v Percival (2001) 205 CLR 434. The greater the
risk, the higher the duty to notify. Involved in this principle is a respect for the autonomy
of individuals to make informed decisions concerning their own interests when placed
in a position of risk by the acts or omissions of others. Where there is potentially a high
risk...the importer with technical and scientific expertise available to it, will be held to a
high standard of care for, and of notification to, the growers who were necessarily
reliant on being alerted to any unusual risks to which they are exposed."
(per Kirby J in Dovuro at [120])
"Although it did not grow the seed, Dovuro occupied a position in the chain of
distribution from grower to farmer which was not significantly different from that of a
manufacturer. Dovuro had the analyses of the seed and it knew, therefore, what was in
the seed. It was Dovuro that decided to import the seed into Australia and it was
Dovuro that decided the regions of Australia in which it would sell the seed by sale to
distributors. It was Dovuro that supplied the bags in which the seed was sold. Obvious
parallels can be drawn between Dovuro's role and that of the product manufacturer
considered in Donoghue v Stevenson..."
APLA Submission
(per Hayne and Callinan JJ in Dovuro at [155])
See also the analysis of the duty of a manufacturer of a toxic product in Wright v
Dunlop Rubber Company Limited (1972) 13 KIR 255, at 271-3.
Wright v Dunlop Rubber Co was applied by the New South Wales Court of Appeal in
CSR Limited v Wren (1997) 44 NSW LR 463; (1988) Aust Torts Reports 81-461, 64,
811 and has been approved by the Supreme Court of Victoria in Thompson v Johnson
& Johnson Pty Ltd [1991] 2 VR 475 at 490 to 491 and the Supreme Court of
Queensland in ME Wood v Glaxo Australia Pty Ltd (unreported) Supreme Court of
Queensland, Cooper J, 28 February 1992, at 33.
2.2 The duty owed by a party aware of a foreseeable risk and in a position
of 'proximity' apt to reduce or obviate the foreseeable risk to a
plaintiff's class
2.2.1 Barrow & Heys v CSR Ltd & Midalco Pty Ltd (unreported) Supreme Court
of Western Australia, Rowland J, 4 August 1988 (BC8801016)
In this case, the plaintiffs worked at the Wittenoom blue asbestos mine in Western
Australia. Both were employed by Australian Blue Asbestos Limited (ABA - later
Midalco Pty Ltd) a wholly owned subsidiary of CSR Ltd. Extensive evidence was
adduced as to the control and management of the asbestos mine, and the role
assumed by CSR in its operation. On the basis of that evidence, the plaintiffs
submitted that this was a case in which the corporate veil should be lifted so as to
attribute to CSR Ltd the acts and omissions of its subsidiary.
The plaintiffs also pointed to the implementation of a reduction of Midalco's capital in

1975, affected by CSR, which had the effect of leaving the wholly owned subsidiary
with only $100,000 in assets (and, it turned out, limited insurance: £2,000 per claim)
with which to meet any claim made against it.∗
Further, the plaintiffs submitted that although there was in existence an agency
agreement by which the parent was appointed managing agent of the subsidiary, in
effect the defendant was an agent of the parent, and the parent should be liable for the
∗
The true context in which the capital of Midalco Ltd was reduced by the parent, CSR, emerged only after
judgment, when internal CSR documents were leaked to Channel 9 journalist, Michael Gill.
The "Business Sunday" documents revealed that CSR was becoming concerned about the potential size
of Wittenoom asbestos damages claims against it in 1974, and a debate raged within the company as to
whether CSR should "stand behind" its subsidiary. CSR executives later became concerned that the
reduction in Midalco's capital at that time could be "dynamite" if people found out.
One infamous view urging that CSR strictly observe the separate corporate personalities of the companies
was that of personnel manager NE Irving, who said that even if the workers "die like flies", they would
"never be able to pin anything on CSR."
CSR's lawyers, Freehill, Hollingdale and Page urged that CSR do nothing to infer that it was standing
behind Midalco (such as putting more money into the capital-diminished company); "Midalco was the
operating company and it had insurance protection. The insurers (and society generally) should carry all
the liability. It is really not CSR's responsibility. " Any "moral and humanitarian [instincts] towards
employees must be curbed", they urged.
By 1983, the WA Attorney General told Parliament, in the context of dampening enthusiasm for pursuing
CSR that, "only the assets of the operating company would be available to satisfy an award of damages in
respect of the mining at Wittenoom...(a) recent search of the corporate Affairs Offices indicates that net
assets of Midalco Pty Ltd in the last set of accounts filed, amounted to $337."
For a complete analysis of the "Business Sunday” documents see Vojakovic and Gordon, "The Victim's
Perspective" in Peters and Peters, Sourcebook on Asbestos Disease Volume 13, Michie, 1996.
APLA Submission
acts or omissions of the agents with respect to the asbestos exposure of the
employees.
Finally, it was contended that the position assumed by CSR with respect to the mining
and milling operations put it into a position where it had clear knowledge of a
foreseeable risk of injury to the plaintiffs, and a relationship which came within the
established criteria for “proximity” so as to create a direct duty owed by CSR to the
workers at the Wittenoom mine.
Justice Rowland analysed each of those contentions and concluded (at 217 to 218):
“In the words of counsel for the plaintiff, CSR had a “hands on” relationship in
ABA affairs. It had the legal right by virtue of the managing agent’s agreement
to direct development at the mine and at times it exercised that right. It had the
legal right to exercise directive powers concerning expenditure, all of which
could impinge on the day-to-day activities at Wittenoom, and at times it
exercised that right. [CSR’s] Brown conceded that ABA could not be funded by
traditional commercial means. The fact that it was funded by either equity
capital or loans for long periods on an ad hoc month-to-month basis to meet
expenses, all of which funding required approval from CSR, showed that,
whether or not ABA operated or not from month to month, the extent of its
operation was entirely in the control of CSR.
Now whether one defines all of the above in terms of agency, and in my view it
is, or control, or whether one says that there was a proximity between CSR and
the employees of ABA, or whether one talks in terms of lifting the corporate veil,
the effect is, in my respectful submission, the same. There was “the necessary
degree of proximity of relationship” between each plaintiff and CSR to give rise
to a duty of care on the part of CSR to take reasonable care for the safety of
each plaintiff commensurate with and identical to the duty owed by ABA. And it
failed to exercise such care. For the reasons I have previously outlined, the
knowledge, actions and responsibilities of the directors of ABA are also those of
CSR. The CSR Board obviously relied upon its senior officers in BMD to have
the knowledge in their capacity as CSR officers to organise the whole
arrangement of ABA and to ensure that it was carried through. Knowledge
possessed by Brown and King in particular must be knowledge acquired by
both companies. Each company had an interest and a duty to know the
knowledge of its officers who had dual responsibilities to both. In the case of
ABA, the duty was not only because Brown was a director, but also because
ABA relied upon his knowledge. In the case of CSR, as a senior employee in
CSR, Brown had a duty of communication to CSR and CSR had a duty to
receive that communication. In my view, CSR is liable to each plaintiff.”
2.2.2 Ross v CSR (unreported) Supreme Court Victoria 24 August 1988 (Gobbo
J)
In this case a former employee of Midalco sought an extension of time under the
Limitation of Actions Act 1958 (Vic) to bring a claim against CSR Limited with respect
to asbestos disease suffered as a result of his exposure at Wittenoom.
On the evidence disclosed, which was largely derived from materials relied upon by
Rowland J in Barrow v CSR Limited, Gobbo J found that there was sufficient evidence
to establish a cause of action against CSR Limited.
2.2.3 CSR Limited v Wren (1998) 44 NSWLR 463; (1998) Aust Tort Reports 81-
461
APLA Submission
Mr Wren was employed by Asbestos Products Pty Ltd. This company was a wholly
owned subsidiary of CSR Limited.
The asbestos used at the plant was asbestos from the Wittenoom asbestos mine, or in
other words, from Australian Blue Asbestos Limited (ABA), another wholly owned
subsidiary of CSR Limited.
Mr Wren developed mesothelioma and sued CSR for breach of its duty of care to him,
and also sued ABA for failing to warn of the dangers when supplying the product -
asbestos - to Asbestos Products Pty Ltd.
At first instance, CSR Limited were found to have owed a duty to Wren by reason of
the direction, control and involvement by CSR and its staff in the operations of
Asbestos Products Pty Ltd. But the product supplier subsidiary was not found liable for
failing to warn.
In the Court of Appeal (1997) 44 NSW LR 463: (1998) Aust Torts Reports 81-461 at 64,
811,3 in a joint judgment, Beazley and Stein JJA found that CSR had breached a duty
owed and upheld the plaintiff’s cross appeal.
Powell JA agreed that CSR owed Mr Wren a duty of care, but disagreed with the
dispensation of the cross appeal. Powell JA seemed to find that CSR’s duty of care
existed on the basis that it had assumed “the mantle of employer of those employees
of Asbestos Products Pty Ltd who were engaged in the manufacturing processes being
carried out in the factory” (at 465). Powell JA considered the approach similar to
situations “in which Courts had to determine what, if any, are the duties owed by a third
party to a person whose services have been “lent” by that person’s employer to the
third party: see eg. Garrard v A E Southey & Co Limited and Standard Telephones &
Cables Limited [1952] 2 QB 174.
Beazley JA and Stein JA considered that the essential question in the case was
“whether the relationship between CSR and Mr Wren were such as to give rise to a
duty of care in CSR to protect Mr Wren from the risk of foreseeable injury,” at 64, 822.
Again, there was extensive examination of documents made available under discovery
by the defendant corporations. The majority in Wren made it clear that the decision
was clearly based within the law of tort, and did not do “violence” to the principles of
corporations law enshrined in Salomon v Salomon & Co. [1897] AC 22; that is to say,
by avoiding the piercing of a corporate veil. Rather, “the reason CSR was liable in the
circumstances here is because it brought itself into a relationship with the employees of
Asbestos Products Pty Ltd by placing its staff in the role of management at Asbestos
Products Pty Ltd.” (at 485; 64, 823).
With respect to the plaintiff’s cross appeal in the product liability claim, the majority held
(at 64, 828 to 64, 830):
“There can be no dispute that a manufacturer may owe a duty of care beyond
that owing to the direct purchaser of its goods. Donoghue v Stevenson was
itself an example of that as was Grant v Australian Knitting Mills (1935) 54 CLR
49... it may be, however, that in a particular case the fulfilment of a duty of care
which is owed to a person beyond the immediate purchaser can only be fulfilled
by taking steps specifically directed to the end user. Wright v Dunlop Rubber
Co. (1972) 13 KIR 255 was such a case...Both AP and CSR were aware that
there were dangers associated with the inhalation of asbestos. In fact, because
3
Only the Aust Torts Report contains the judgments relating to disposition of the cross appeal brought by
the plaintiff against the finding that the product supplier was not liable.
APLA Submission
of the nature and extent of the inter-relationship between the three companies -
AP, CSR & ABA - it is reasonable to infer that their knowledge was co-
extensive. These additional factors are relevant to ABA’s liability. The question
is therefore, whether in all the circumstances, ABA owed a duty of care directly
to Mr Wren and, if so, what the content of that duty was. The relevant
circumstances are these which need to be assessed to determine that question:
“ABA supplied asbestos to AP. ABA knew that the product, if not handled in a
particular way, that is, so as to minimise liberation of fibres into the atmosphere
in circumstances where they were liable to be inhaled, was potentially
dangerous. Both AP and CSR were also aware of that danger...in the
circumstances, ABA as a supplier of goods known to be dangerous if
precautions as to its use were not observed owed a duty to AP to warn it of the
dangers associated with the product. In our opinion, ABA also owed a duty to
AP’s employees, it being obvious from the nature of the product and its
intended use, both being matters known to ABA, that AP’s employees would be
handling the product either in its unprocessed or processed form. Given the
nature of that risk, ABA was under a duty to warn that care should be taken so
as to minimise the liberation of asbestos dust into the atmosphere in the
proximity of persons who would be liable to inhale the dust.”
2.2.4 CSR & Anor v Young ( 1998) Aust Torts Reports 81-468
In contrast to Barrow, Ross, and Wren, the plaintiff in this case was neither an
employee, nor a user of manufactured product supplied by the defendant. In this case,
the plaintiff was born in September 1959, shortly after her family moved to Wittenoom
where her father worked. The father returned from work with asbestos on his clothing
and their yard and much of the town of Wittenoom were covered in blue asbestos
tailings. At the age of 34, the plaintiff was diagnosed as suffering from mesothelioma.
She sued CSR and ABA, contending that a duty of care was owed by each to the
plaintiff. CSR argued that if a duty of care was owed to the plaintiff, it was owed only
by ABA, not by CSR, although CSR conceded that it owed a duty to the workers in the
mine and the mills. The trial judge found that CSR independently owed a duty to the
plaintiff. Again, there appears to have been an extensive examination of documentary
material provided by way of discovery. In the New South Wales Court of Appeal, all
three judges found that CSR was itself conducting operations at Wittenoom. Again, the
Court of Appeal eschewed any suggestion that they were piercing the corporate veil in
coming to this conclusion. The findings were based solely on tortious considerations
regarding the operations of CSR at Wittenoom, its responsibility for the environment
thus created, and the establishment of a duty of care. Giles AJA said (at 64 953):
“Some mention was made of “piercing the corporate veil” and of CSR being
vicariously liable for the wrong of ABA, but there was no development of these
matters as a basis for CSR’s co-extensive duty. The question in a case such as
the present is whether the dominant parent in all the circumstances, including that
the dominance may have been such that the subsidiary was in truth “merely a
conduit for the parent” see Craig v Lake Asbestos of Quebec 843 F 2p 145 (1988)
was in a relationship of proximity to the injured party. If it was, there was no
question of piercing the corporate veil, a notion discussed in some detail by Rogers
AJA in Briggs v James Hardie & Co Pty Ltd (1989) 16 NSW LR 549 at 567 – 581.
As his Honour pointed out (at 578 –9), the tests of the kind extracted in Smith,
Stone & Knight Limited v Birmingham Corporation (1939) 4 ALL ER 116 are
inappropriate to actions in negligence. There is also no question of vicarious
liability and the considerations such as those on which CSR rely for the submission
presently under consideration do not exclude the duty of care.”
APLA Submission
2.3 Duty owed by ‘proximate’ parent company and lifting the corporate veil
2.3.1 James Hardie & Co Pty Ltd v Hall as administrator of estate of Putt (1998)
43 NSWLR 554
This case considered the liability of the James Hardie holding company for acts of the
subsidiary corporation that resulted in the contraction of asbestos-related disease by
employees of the subsidiary.
O’Meally J at first instance, “after examining in detail documentary evidence” (560),

found that by reason of various factors, including the control exercised by the parent
company, its power to insist on proper workplace standards being maintained, and the
appearance that but one enterprise was being conducted by the separate legal entities,
the parent company, conscious of a foreseeable risk of injury, and being in a proximate
relationship to him by virtue of the above matters, owed a duty of care to the plaintiff,
an employee of the subsidiary.
In the Court of Appeal, Sheller JA, with whom Beazley and Stein JJA agreed, seemed
to examine the issue solely from the perspective of the jurisprudence as to when it was
acceptable to withdraw the corporate veil. At 581, Sheller JA opined that what the trial
judge had done was to “implicitly” lift the corporate veil in conducting the analysis of
effective control of the workplace.
With great respect, to reach that conclusion was to misunderstand the nature of the
exercise undertaken below, which was to explicitly recognise the integrity of the
corporate veil but to find that the conduct of the parent company created another legal
relationship, that of ‘neighbourhood’ or ‘proximity’ between the parent entity and the
plaintiff.
2.3.2 Briggs v James Hardie & Co Pty Ltd (1989) 16 NSWLR 549
This case involved an application for extension of time under the Limitation Act 1969
(NSW), and thus consideration of the question as to whether the plaintiff, who had
been exposed to asbestos at Baryulgil mine operated by a subsidiary of James Hardie
& Co Pty Ltd and James Hardie Industries Pty Ltd, had adduced evidence that might
establish a cause of action against the parent companies.
It is, presumably, Hall/Putt, and this case, that James Hardie Industries today points to
as absolving them from any legal liability to persons exposed to asbestos by acts or
omissions of its subsidiaries.
Hope JA (at 552) noted that the plaintiff did not try to establish at this preliminary stage
that there was a relationship of proximity between the parent and himself “of the kind
discussed in…Barrow & Hayes (sic) v CSR ...as well as by Gobbo J in Ross. “ His
Honour held that all that the plaintiff had done was to point to the possibility of there
being evidence to make out this point (553) and that was all he needed to do. Meagher
JA considered that more than the possibility of existence of such evidence was
necessary and that the plaintiff had not discharged the burden. Rogers A-JA
considered that proof of the availability of the evidence was the necessary burden
(565), and after detailed consideration of what the plaintiff must prove to succeed in his
claim, held that the judge at first instance had been wrong in rejecting the application
(581).
Rogers A-JA considered that the plaintiff had to pierce the corporate veil in order to
succeed against the parent company, whether by showing the enterprise to have been
conducted by the parents, or that the subsidiary was but the agent of the parents (567).
His Honour’s comprehensive analysis of the law relating to these principles, and the
APLA Submission
manifest difficulties confronting a party trying to establish them is unexceptionable.
Rogers A-JA concluded (at 577);
“In the result, as the law presently stands, in my view the proposition advanced
by the plaintiff that the corporate veil may be pierced where one company
exercises complete dominion and control over another is entirely too simplistic.
The law pays scant regard to the commercial reality that every holding company
has the potential and, more often than not, in fact does, exercise complete
control over a subsidiary...It remains to be seen whether the time has come for
the development of a more principled approach than the authorities provide at
present.”
If that indeed was the only proposition advanced by the plaintiff, then the claim was
being mounted on a very different basis to Wren, Young, Barrow or Ross, and not on
the basis that a claimant today would be advised to essay liability against ABN 60. But
Hope JA’s reference to Barrow and Ross suggests that in fact a tort-based liability
theory had in fact also been advanced. Indeed, in permitting the claim to go ahead
against the parent companies, Rogers A-JA seems to recognise that something a bit
different was being put (580);
“The question of who may be liable to the plaintiff should be deferred until the
conclusion of the evidence. It is in this context that it is of importance in the
present case that the principles of liability of defendants in the position of
Hardies and Wunderlich are still so uncertain. It seems to me that the very
uncertainty in the law demonstrates the possibility of Hardies and Wunderlich
being held liable after a trial.”
2.4 Liability of foreign parent companies
2.4.1 Lubbe v Cape PLC (2000) 1 WLR 1545 (HL)
In Lubbe v Cape PLC (2000) 1WLR1545 (HL), plaintiffs who suffered asbestos-related
injuries as a result of exposure to asbestos in the employ of subsidiary corporations of
the respondent in South Africa, or exposure to environmental asbestos created by
those corporations in their asbestos mining operations, sought to sue the English
parent in England. Lord Bingham noted that the main issue raised in the plaintiffs’
claim was put in this way (at 1551):
“Whether a parent company which is proved to exercise defacto control over

the operations of a (foreign) subsidiary and which knows, through its directors,
that those operations involve risks to the health of workers employed by the
subsidiary and/or persons in the vicinity of its factory or other business
premises, owes a duty of care to those workers and/or other persons in relation
to the control which it exercises over and the advice which it gives to the
subsidiary company?”
The resolution of that issue did not fall for consideration in the series of cases that
resulted in the House of Lords considering the matter, questions of jurisdiction, forum
and whether a permanent stay should be granted to bring the matter exercising the
Court at that stage. Their Lordships considered that a stay on forum grounds should
not be permitted. The matter was set down for trial in April 2002.
We note, however, reports of settlements between the plaintiffs and the holding
company: one in December 2001 for 7,500 plaintiffs in the sum of £21 million ("South
African Claimants Briefed on Cape Asbestos Settlement" Legalbrief 1/2/02); and a
further settlement resulting in the payment of £7.5 million which was approved by the
APLA Submission
Court on 27 June 2003 (“Cape Asbestos Settlement Gets Court Approval” Legalbrief
30/6/03).
2.4.2 Sithole v Thor Chemicals Holdings Ltd (unreported) 3 February 1999 (CA
UK)
These cases involved similar issues to the Lubbe / Cape cases. In his judgment,
Tuckey LJ (with whom Judge LJ agreed) said:
"The first defendants, Thor Chemical Holdings Limited ("Thor"), are an English
company. They have a wholly owned South African subsidiary ("Thor SA"). That
subsidiary manufactured and reprocessed mercury compounds at factories in
Natal in South Africa. The second defendant, Mr Cowley, was the chairman and
controlling shareholder of Thor and took an active part in the management of
the companies in the group of which Thor was the holding company.
“The 21 plaintiffs, or those they represent, are or were employed by Thor SA at

the factories in Natal at various times from 1982. They claim damages for
personal injuries caused by exposure to mercury during the course of their
employment. The defendants are each alleged to be directly liable to the
plaintiffs in tort for setting up and maintaining factories in South Africa which
they knew or ought to have known would be unsafe for those who worked in
them.
“Before dealing with the history of these proceedings I must refer to two earlier
actions by other Thor SA employees against these defendants. The first of
these started in October 1994. There were three plaintiffs. Although their
periods of employment covered a shorter period than the plaintiffs in the
present action, the injuries they suffered and the allegations they made against
the defendants were to all intents and purposes the same. The defendants
applied to stay the proceedings on the grounds that they should be heard in
South Africa. Their application was dismissed by Mr James Stewart QC sitting
as a Deputy High Court judge on 11 April 1995. In a long judgment, in which
among other things the judge summarised the allegations made in the
statement of claim against the defendants (which I do not propose to repeat but
can be found at pages 4 - 6 of his judgment) he concluded that the defendants
had failed to satisfy him that South Africa was clearly or distinctly the more
appropriate forum for the trial of those proceedings. In other words the
defendants had failed on the first stage of the two-stage test laid down in
Spiliada [1987] AC 460. The defendants appealed but, ironically in view of what
has happened in this case, their appeal failed because in the meantime they
had served a defence and the Court of Appeal decided that in so doing they
had submitted to the jurisdiction of the English court.
“In the meantime, 17 other plaintiffs had started proceedings making virtually
the same allegations against the defendants. In March 1996 the defendants
applied to stay those proceedings but later abandoned the application. This
action was then consolidated with the earlier action. After an unsuccessful
attempt to strike out the consolidated action on the grounds that it disclosed no
cause of action and other protracted procedural skirmishing in April 1997 the
defendants settled the plaintiffs' claims for £1.3million. By this time the trial of
the consolidated action was only a few months away. Discovery had taken
place and witness statements had been exchanged. Experts' reports were to be
exchanged shortly.
APLA Submission
“The present proceedings were started in January 1998 and served on Thor at
its registered office in England. The second defendant, who is a British subject,
was alleged by his solicitors to be resident in Spain so the proceedings were
smartly served on him under the provisions of the Brussels Convention. He
applied to set aside service on the basis that he was resident in South Africa
but that application was dismissed by Toulson J on 27 May 1998...
“...I turn to the question of the appeal from Garland J's decision on the question
of forum non conveniens. The two-stage test in Spiliada fell to be applied by the
judge. It is not suggested that he misdirected himself about this. I only need to
refer to the first stage of the test, which required the defendants to show that
South Africa was clearly a more appropriate forum than England for the trial of
the action. In his judgment, after rehearsing the facts and the arguments which
he had heard, the judge said:
" The present action is properly brought in this country and the onus is
on the defendants to demonstrate that South Africa is a clearly more
appropriate forum. That in many respects it might be more appropriate it
cannot be gainsaid, but the burden is to prove that it is clearly more
appropriate. I do not consider that this burden has been discharged."
“That is as clear a finding as you could expect to have in a case of this kind.
It is important to bear in mind that both limbs of Spiliada involve the court in the
exercise of a broad discretion. This court will only interfere with the judge's
exercise of that discretion on well-known grounds: (see Lord Brandon in The
Abidin Daver [1984] 1 AC 398 at page 420). Moreover, in Spiliada at page 465
Lord Templeman said:
"An appeal should be rare and the appellate court should be slow to
interfere."
“In applying for leave, Mr Ter Haar's submissions were admirably succinct. He
said that if you look at other passages in the judge's judgment it is not clear how
he came to reach the conclusion which he did in the passage which I have
cited. He took first a passage in the judgment where the judge said:
"...it is strongly arguable that some of the breaches of duty occurred in

South Africa."
“After referring to the test in Distillers v Thompson [1971] AC 458, that a cause
of action arises where the act or omission on the part of a defendant which
gives the plaintiff his cause of complaint has occurred, the judge said:
"....nearly everything of significance occurred in South Africa although

the argument remains that breaches of duty occurred in England.”
“Looked at in context, these passages are directed simply to the question which
the judge was considering in this part of his judgment which was where, as a
matter of law, the breaches of duty alleged occurred. This was a relevant
connecting factor which had to be considered but in no way decisive of the
more general question which the judge had to answer on the first stage of the
Spiliada test.
“Mr Ter Haar then points to a passage just before the conclusion in the
judgment which I have quoted, where the judge said:
APLA Submission
"The arguments and considerations are, in my view, very finely
balanced. On first impression, the proposition that 21 plaintiffs resident
in South Africa bringing an action in this country arising out of their
employment in South Africa prompts the question, 'why are they not
proceeding in South Africa?'"
“The question which the judge posed was perfectly sensible. It shows that he
clearly appreciated the task he had to perform. But it is not difficult from the
whole of his judgment to discern the reasons why he reached the conclusion
which he did. They are to be derived from his consideration of the parties'
arguments between pages 23 and 26 of his judgment. They include the fact that
the plaintiffs wished to call English expert evidence; the fact that the plaintiffs
allege that the defendants had moved their factory from this country to South
Africa because the Health and Safety Executive were on to the lack of safety at
their factory here; that the applicable law might be English law but if it was not
there was no evidence that South African law was negligent and different from
our own.
“There was one factor to which the judge referred which to my mind is important
and may distinguish this case from other cases where foreign employees try to
sue English parent companies in this country. That is what the judge called "the
Cambridgeshire factor". That was a reference to the earlier actions which had
reached an advanced stage of preparation before they settled, and in which the
same solicitors were involved on behalf of the plaintiffs.
“With respect to Mr Ter Haar's submissions, I think there were good reasons for
the judge's decision. At the very least, there are no arguable grounds upon
which this court could be persuaded to interfere with it. "
APLA Submission
3 Case Law Analysis
3.1 The Legacy
The breaches of duty committed by one or more James Hardie company have left a
substantial legacy of asbestos-related disease. It is a legacy that those corporations
should bear in full (subject to any right to obtain contribution from others, and
supplemented by whatever recourse they have to insurance).
All of the companies in the James Hardie group profited from the sale of asbestos
products (in which area James Hardie held substantial, and often near-monopoly levels
of market share), and the present multinational company (JHI), with sales over $1
billion, owes its existence and strength to its asbestos heritage.
In such circumstances the proposition that the James Hardie companies might escape
the responsibility to compensate those who have been harmed by the manufacture and
sale of the products that have generated their wealth, by means of the limited liability
company and the creation of trusts, is antithetical to notions of common justice and
concepts of what is right.
There can, we submit, be no argument on the moral question of the culpability and
responsibility of the Hardie companies, jointly and severally, to redress the legacy that
they have created, by ensuring that all those who have been injured are appropriately
compensated.
3.2 Does the present law permit recourse to all James Hardie assets to
compensate victims of negligence?
Based upon the cases set out in the legal analysis contained above, there is at least an
arguable case that the parent company might be liable in negligence to those affected
by its acts and omissions.
But if there be any doubt about that, then the doubt should be removed by legislation.
The courts, especially in Australia, have been reluctant to lift the corporate veil to
attribute culpability to a parent or holding company, or shareholder, for the acts of a
subsidiary or fully-owned entity. Where the courts have been prepared to lift or pierce
the veil, it has been done where, in all the circumstances of the case, justice demanded
that it be done.
Generally, where this approach has been adopted, criteria such as those stated by
Atkinson J in Smith Stone and Knight v City of Birmingham [1939] 4 KBD 116 at 121,
were held to be applicable to answer the question (at 118), "To whom, in truth; did the
business belong?":
i. Were the profits treated as the profits of the parent company?
ii. Were the persons conducting the business appointed by the parent company?
iii. Was the company the head and brain of the trading venture?
iv. Did the company govern the venture; decide what should be done and what
capital should be embarked upon the venture?
v. Did the company make the profits by its skill and direction?
APLA Submission
vi. Was the company in effectual and constant control?
Instances of preparedness to lift the corporate veil, outside of the obvious

circumstances of fraud and deceit, include the following:
A. State of war: Daimler Co Ltd v Continental Tyre and Rubber Co (Great Britain)
Limited (1916) 2 AC 307 at 340;
B. Disturbance compensation: DHN Food Distributors Ltd v Tower Hamlets

London Borough Council [1976] 1 WLR 852; J.R McKenzie Ltd v Gianoutsis
and Booleris [1957] NZLR 309; Smith, Stone and Knight v City of Birmingham
[1939] 4 KBD 116;
C. Funds provided by private company but damages for loss awarded to

individual, being the 'alter ego' of the company: Esso Petroleum Ltd v
Mardon [1976] 1 QB 801;Patek v City of Melbourne (unreported) Federal Court
of Australia, Smithers J.,(20 August 1986); Walker v Hungerfords (1988) 19
ATR 745: Malyon v Plummer [1962] 3 All ER 884; Musca v Astle Corporation
(1988) 80 ALR 251;
D. Existence of agency agreement either expressly or where true

relationship is such that business carried on is other party's business:
Tate v Freecorns Pty Ltd [1972] WAR 204 at 210;
E. Taxation (to Revenue's advantage): Littlewoods Mail Order Stores Limited v

Inland Revenue Commissioners [1969] 1 WLR 1241.
Against these cases are the judgments on the issue of piercing the corporate veil
referred to above in James Hardie & Co Pty Ltd v Hall as administrator of estate of Putt
(1998) 43 NSWLR 554 and Briggs v James Hardie & Co Pty Ltd (1989) 16 NSWLR
549, which suggest (but, importantly, only on the basis of the pleadings and materials
examined in those cases) that the corporate veil might be difficult to pierce with respect
to the various Hardie entities, on a strict application of corporations law.
But, as Ormerod LJ said in Esso v Mardon (at 830) in response to an argument that, as
the capital for the venture operated by Mr Mardon had been put up by a private
corporation, Mr Mardon was not entitled personally to the damages for the loss
suffered by the business:
“ It would be extremely unrealistic and a denial of justice in a case like this to

allow [Esso], who were quite unaffected by the existence of the company, to
take advantage of a piece of legalistic purism. As Lord Reid once said; 'the life
blood of the law is not logic but common sense', R v Smith [1975] AC 476, 500."
We would simply urge the converse in the case of hundreds of Australians who
bought 'James Hardie' products, quite unaffected by the existence of the
parent/subsidiary dichotomy, and who are now suffering fatal illnesses as a
consequence. It would be equally unrealistic, we would submit, and a denial of justice,
to permit James Hardie Industries or ABN 60 or JHX to avail themselves of the
legalistic purism, to the detriment of common sense, and the dependants of those who
will die uncompensated.
If necessary, legislation should be enacted to ensure that they may not.
APLA Submission
4 Issues raised by the Special Commission
The Commission, in inviting APLA to make a submission, foreshadowed consideration

of the following questions:
a) Does the law make adequate provision for managing the claims of present and
future unascertained creditors of a company with assets that are inadequate to
meet anticipated but as yet unascertained future claims? If not, what reform
would be appropriate?
b) Does the law make adequate provision for a company that cannot meet claims
against it arising from its tortious conduct, to obtain indemnity and contribution
in respect of those liabilities from a parent company, or for those liabilities to be
reduced by permitting claimants to make claims directly against the parent? If
not, what reform would be appropriate?
The answer in each case, in light of the discussion above, is "No".
4.1 Recourse under current law
While the law may permit recourse to the parent in limited circumstances, where the
plaintiff proves the existence of foreseeability and a proximate relationship between the
parent and the injured plaintiff, or the even more limited circumstances in which
withdrawal of the corporate veil is sanctioned, these are both difficult to prove,
dependent upon full discovery or disclosure from both parent and subsidiary, and are
forensically problematic.
Why should a dying plaintiff in the last weeks of his or her life have to carry the burden
of proving the facts necessary to establish liability against a company of whose
existence the plaintiff, at the time the duty was breached, had no knowledge, nor
reason to enquire?
Indeed, the very failure of the entities, possessed of knowledge that should have been
made clear to the plaintiff, to pass on that knowledge, ensured that the plaintiff would
have no reason to want to know who was behind the product; who was profiting from it;
who was controlling the enterprise or who might have had the information or power to
protect the plaintiff from the harm that was suffered many years later.
They were given a product to use. It was a James Hardie product. There was nothing
to alert them to any concern. They used the product as the James Hardie guides
directed (eg, cutting with power tools). Forty years on they are dying and are told that
the company that could have warned them is in the Netherlands and can’t be sued.
4.2 Analogy with unconscionability cases
The situation is not dissimilar from the legal and equitable doctrines enunciated in such
cases as Hawkins v Clayton (1988) 164 CLR 539, in which the Court would regard it as
unconscionable for a party whose breach of duty had caused the plaintiff to be
unaware of a claim, to avail itself of a defence founded on the statute of limitations.
In Hawkins v Clayton, the High Court held that the same wrongful (negligent) conduct
as constituted the breach of duty also prevented discovery of the breach, and thus held
the limitation provisions in abeyance until the plaintiff learnt of the wrong. The court
also noted that equity could intervene to grant relief upon the notion of “unconscionable
APLA Submission
reliance” upon the provisions of a statute of limitations, in the case of concealment of
cause of action until after the limitation period had expired.
The application of the rule is illustrated by the decision of the Queensland Supreme
Court in Gorton v Commonwealth of Australia (1992) 2 Qd R 603, (1992) Aust Torts
Rep 81-162 . The plaintiff, while a member of the armed forces, was diagnosed and
treated for essential hypertension. The plaintiff was not told of this, nor was he
informed of his entitlement, as a consequence, to a war-service pension. It was 40
years before the plaintiff first learnt that his condition was war-related, and he sued for
the lost pension and free medical care he had lost over that period. The
Commonwealth contended that the claim was statute-barred. Demack J in the
Supreme Court rejected that application, and ruled that the defendant’s wrongful
(though not fraudulent) conduct had effectively prevented the institution of proceedings
against the defendant.
There are obvious differences to the issue here, but the question of the conscionability
of the conduct is similar: A fortiori if the conduct was intentional.
4.3 Recourse under the Trade Practices Act
The only other possible means of recourse is under the provisions of Part V of the
Trade Practices Act 1974 (Cth) relating to unconscionable conduct, or the misleading
conduct provisions, if someone relied on statements by the parent company that there
would be sufficient funds to meet all claims (plus medical research).
In this regard though, there are difficulties in the proof of the statements being
misleading and deceptive, and in causation. But more critical, perhaps, is the intention
of the Commonwealth to abolish claims for injuries and death pursuant to Part V of the
TPA (Trade Practices Amendment (Personal Injuries and Death) Bill 2003).
APLA Submission
5 Law Reform Proposal
5.1 Recovery under insurance policy from corporation in liquidation and

recent Government reforms of Corporations Law – a model for
corporate liability reform?
The Commonwealth Parliament addressed the recovery of funds by company creditors

against liquidated corporations by making available the funds of any insurance policy
directed to the losses faced by the creditors. It finds expression in Section 601 AG of
the Corporations Law.
APLA submits that a similar provision might address the specific problem contemplated
in this inquiry.
5.2 Proposed Legislation
APLA submits the following suggested legislative amendments to the corporations law.
"Definitions; In this section;-
"acts or omissions" means act or omission which has caused the injury for which the
applicant seeks or has been awarded damages;
"applicant" means a person who has suffered a physical or psychiatric injury or

disease as a consequence of any act or omission or any alleged act or omission by a
subsidiary company, its officers, servants or agents and includes any legal personal
representative and any dependant of the applicant;
"benefit" means any fiscal or financial benefit including but not limited to transferred
profits, dividends, receipt of cash, property, loan funds, shares or any form of chose in
action; any financial or fiscal advantage including but not limited to taxation deductions,
taxation benefits or the use of transferred losses which reduce net income, assets or
profits; or any guarantee or indemnity;
"parent company" means any company that at the time of the acts or omissions of the
subsidiary company owned, or held more than 50% of the issued shares of the
subsidiary company, and at any time received a benefit from or by reason of the
existence of the subsidiary company;
"subsidiary company" means any company that at the time of the acts or omissions
of that company, was owned by or had more than 50% of its issued shares held by
another company which other company, at any time received a benefit from, or by
reason of the existence of the company;
"successor company" means any company that succeeds to the parent company
either by acquisition of a majority of shares of the parent company, or is assigned by
the parent company or otherwise receives a benefit from the existence of the
subsidiary company that the parent company would have received; or is incorporated
by the parent company for the purpose (whether it be the sole purpose or otherwise) of
avoiding liability of the parent company for the acts or omissions of the subsidiary
company or any acts or omissions of the parent company;
APLA Submission
xx)
a) If any person suffers any injury as a consequence of acts or omissions of a
subsidiary company, and is unable to recover damages for that injury from the
subsidiary company, or from any insurer of the subsidiary company pursuant to
Section 601 AG or otherwise, then the person ( hereinafter "the applicant") may
recover the amount of such damages from the parent company of the
subsidiary company, or from any successor company of the parent company.
b) For the purpose of giving effect to the recovery of damages referred to in (a),
the applicant may;
i) proceed to enforce any judgment obtained by the applicant from the

subsidiary company against the parent company or any successor
company as if the judgment against the subsidiary company was a
judgment against the parent company or the successor company;
ii) proceed against the parent company or any successor company in

any proceedings brought in relation to the acts or omissions, if it
appears that the subsidiary company will be unable to satisfy any
judgment ultimately obtained against it by the applicant.
c) In any proceeding of the kind referred to in b) i) brought by the applicant against

the parent or any successor company, any acts or omissions of the subsidiary
company are to be regarded as acts or omissions of the parent company and
any successor company, and any judgment, but for the apparent inability of the
subsidiary to satisfy such judgment, that might have been entered against the
subsidiary, may be entered and enforced against any parent or successor
company.
Such a scheme - a statutory piercing of the corporate veil - may be regarded as

somewhat radical, but it is unlikely to be often required, as historically judgments for
injuries are likely to be satisfied by tortfeasors or their insurers. But it does provide
comfort in situations illustrated by the present James Hardie case, that an injured
person, their family or dependants will not go uncompensated for corporate misconduct
because of the inability of the subsidiary to meet its obligations. Where a parent or
successor corporation has control over the subsidiary and has received a benefit from
having the structure in place, we consider that most in the community would regard it
as fair that the liability flows up (and if necessary along) the corporate chain.
Were it otherwise, then the ability for a corporate group to restructure itself to avoid
liabilities would be too easy, or becomes subject to injured creditors only through the
problematic blunt instrument of insolvency law.
APLA Submission
6 Legal Costs
The CEO of James Hardie International has publicly commented that the reason, or a
substantial reason, for the blow-out in costs payable by Amaca is legal costs. Without
more, the subtext of such a comment is that the lawyers of people making claims - our
members - are receiving exorbitant sums in legal costs to the detriment of the fund and
its claimants.
We absolutely reject this unwarranted and unsubstantiated inference.
Without the efforts of the lawyers to expose the conduct of companies like James
Hardie, through strenuously fought test cases occupying many months in the 1980s
and early 1990s there would be no common law liability established against asbestos
corporations.
Even in the most straightforward assessment of damages now, people who are under
significant pressure from health problems in asbestos disease claims require careful
and experienced guidance to know what their entitlements are, and when to accept and
reject offers made to them.
There are few claims that warrant the descriptor; "straightforward", and the greater the
difficulty with liability or damages issues (and all manner of available defences are
taken by defendants like James Hardie, including statute of limitations, contributory
negligence, divisibility) the greater the need for astute legal guidance.
But, ultimately, unless defendants through their own conduct put themselves at risk of
an indemnity or solicitor/client costs order, all that a defendant is required to pay are
party and party costs fixed by court scales. The potential for any costs blow out
attributable to payment of such costs is impossible.
However, if Amaca has sustained a demonstrable increase in legal costs, we suggest

the reasons might include the following:
1. Failure to adopt a reasonable approach to liability and damages issues at a

sufficiently early stage in proceedings to avoid significant legal costs in its own
defence, and an unnecessary amount of party and party costs. Too many cases
have settled at the door of the court, or after a day of evidence, too many have
become assessments of damages well after circumstances of exposures have been
sworn to by plaintiffs in answers to interrogatories, with resultant increase in costs
liability, and too many claims have resolved for figures that were put by plaintiffs
early in a claim, which were met by nonsensical and unrealistic assessments on
behalf of Amaca.
2. Certain cases have resulted in a payment of indemnity costs to plaintiffs because of

unrealistic assessments being made, unwillingness to negotiate, and plaintiffs
ultimately securing judgment for a higher award than they were prepared to accept
in compromise. One clear example is the case of McGilvray in the WA Supreme
Court. In July 2001, some five months before trial, the plaintiff provided a schedule
of damages that indicated the value of the claim to be in excess of $850,000. He
offered to accept $800,000 in July 2001. The plaintiff ultimately offered to settle for
$775,000 shortly before trial but this offer was rejected. Despite evidence that
suggested the plaintiff's assessments were well justified, Amaca did not revisit that
offer. The plaintiff was awarded $1,079,394 plus costs assessed on an indemnity
basis from July 2001, including for the costs of the trial. The approach adopted by
APLA Submission
Amaca in that case cost it about $400,000 including two sets of unnecessary costs
and substantial damages.
APLA Submission
7 Conclusion
James Hardie and its insurers have been agitating for some alternative to the common
law as a way of resolving asbestos claims. This is manifestly against the interests of
claimants for many of the reasons set out above in the submission on costs.
APLA is already on the record with respect to this issue. We reproduce hereunder the
response made to the proposal by APLA President John Gordon to the Insurance
Council of Australia conference in Perth last July.
"I want to conclude by saying something about asbestos claims.
Let me declare an interest. I have acted for the victims of negligent asbestos
exposure for 20 years as a solicitor and as a barrister.
I consider the epidemic of disease, pain, suffering and loss that such exposure has
precipitated to be one of the most shameful things in this country's history.
Workers and their families at Wittenoom in the north-west of this state, workers in
James Hardie plants around the country, including at Welshpool and Rivervale here
in Perth, builders and carpenters, waterfront workers, women washing their
husband's clothes, children helping their dad cut a.c sheets for a garage or sleep-
out; the list of those now suffering goes on and on.
And the diseases they suffer are not pleasant. Asbestosis is a scarring of the lungs
which stops oxygen getting into the blood. As it progresses, you gradually
suffocate. Mesothelioma is a cancer which crushes the lung and invades nerves
and vital organs killing you slowly and with intense levels of pain. Lung cancer (is)
much the same, but perhaps over a longer time.
The general damages that sufferers receive is small compensation for what they
and their families must endure. They usually require months of constant care in the
last six months of their lives. I can think of no other short-term injury that more
warrants complete compensation for the pain and suffering and gratuitous attendant
care.
Allianz Insurance, insurer for some of James Hardie's asbestos liabilities, on behalf
of this association, the ICA, has written a submission calling on governments to
legislate for, among other things, a no-fault scheme for asbestos sufferers,
exclusion of some heads of damages and caps on damages for general damages
and gratuitous attendant care.
The submission is obviously self-interested, is based on erroneous factual and legal

assumptions, and is misleading and tendentious. It does this Association no credit
at all to be associated with it.
More galling than these things, however, is the suggestion in the submission that
the changes proposed should be made for the benefit of the sufferers themselves.
The fight to achieve justice for the victims of asbestos disease was one of the most
hard fought in Australian legal history. In the face of denials of the most appalling
negligence, long and difficult trials had to be run. One of them remains the longest
civil case in this state (WA) and one of the longest ever in Australia at 132 days
(Barrow and Heys v CSR and Midalco Ltd). Many of the plaintiffs who sought some
compensation died before such epic fights could be concluded.
APLA Submission
Where were the insurance companies then? Where were the calls for support for
the sufferers of asbestos-related disease? Where were the demands for a no-fault
scheme in which liability would be admitted?
I'll tell you where the insurers were then. Standing shoulder to shoulder with
companies like CSR, and like Hardies, fighting tooth and nail to defend what was
ultimately proven to be indefensible.
Asbestos victims, more than perhaps any other group of injured persons, had to
fight for their common law damages, when no one wanted to know them. Having
achieved the right to receive them, they are not going to be given up to benefit the
bottom lines of companies that tried to deny them.
I understand that this is part of a campaign that is going on in Britain and in the
USA. But let me offer a suggestion. If insurers are genuinely aggrieved at having to
pay damages for the minimal premiums taken from negligent companies 30 and 40
years ago, sue the companies for recovery. Don't try and take the damages from
the asbestos sufferers as Allianz and the ICA propose. After all, the companies
have been proven to have been aware of the risks to which they were exposing
people. The Commonwealth Health Department made it known in 1922 that
asbestos exposure was a workplace hazard. There was no excuse for ignorance.
I will conclude by reading to you a letter written to The Australian newspaper by the
wife of a young man dying of mesothelioma, in the hope that it will give to you an
insight into the human perspective of this issue.
"When they told me there was no cure and he probably had only nine months left to
live and be with us, I became hysterical, and uncontrollable to the point where
Garry was apologising for causing me so much pain. What a guy! Facing death and
still thinking of others.
With the lack of oxygen as the mesothelioma strangled his left lung, he found it hard
to speak. He became nauseous, his hair fell out, he coughed constantly, spitting up
white frothy fluid and lost weight until he looked skeletal.
I remember every detail of Garry's last five hours with us and they continue to haunt
me and cause me great pain and grief. Garry and I shared a room at the hospital. I
was awoken by movement from Garry's bed and saw Garry lying across the bed as if
he was trying to get out. I asked the nurse the time and Garry looked at his watch
and told me it was 3am – the last words I heard him speak.
The next morning he was making strange noises and the nurse told me he was
'running out of puff'. I became anxious and rang my daughters, his mum and dad
and his brother. I sat next to him and cried my heart out, even though I knew this
moment was inevitable, I was not prepared when it happened.
At one stage he looked at me and tears rolled out of his beautiful eyes. As I sat close
to him I was completely saturated by his urine when his bladder emptied and I was
distraught to see my once proud and handsome husband had been robbed of all his
dignity by this horror of a disease."
The campaign by insurers continues.”
APLA Submission
Appendix 1
APLA Submission
MEDIA RELEASE
October 31, 2003
Lawyers call for end to “pty ltd” protection

in wake of James Hardie fiasco
Leading consumer lawyer association, APLA, many of whose members represent victims of
asbestos disease, today called for the end of the limited liability company in the wake of what it
called “morally disgraceful corporate governance” by Australia’s biggest asbestos products
manufacturer, James Hardie.
“If James Hardie is able to avoid its responsibilities to the thousands of Australians it injured by
ignoring clear warnings of the lethal nature of the asbestos products it manufactured, it will go
down in history as Australia’s worst example of morally disgraceful corporate governance,” said
APLA President John Gordon.
“Hardies became Australia’s biggest building products company by ignoring information about
asbestos dangers and failing to warn its product users,” said Mr Gordon. “Now it pockets its
millions and runs off to the Netherlands in what it thinks is a clever corporate ploy to avoid paying
for the harm, pain and misery it has caused.”
APLA also called for a review of the circumstances in which companies could use the protection
of limited liability to avoid providing for its future liabilities.
“The ‘pty ltd’ company was meant to be a device for people of enterprise to try new ideas without
risking everything. It was never meant to be for companies like Hardies who cynically make their
millions and then seek to avoid the consequences of their actions by tipping a pittance into an
entity and saying ‘sorry, that’s all there is’ and sneaking out of the country.”
“The corporations law should be overhauled so that in circumstances like this liability follows the
controlling entity. If such outrageous examples like this continue, it may be time to bring an end
to the device,” said Mr Gordon. “Corporate Australia will have James Hardie to thank if that
happens.”
Mr Gordon called for an immediate injection of funds by Hardie into the corporation that pays its
asbestos claims.
“Over the last 12 months a lot of politicians have been calling on injured people to take
responsibility for their own actions and have been changing the law to force them to do so. What
about corporate personal responsibility for the injuries and death caused in the pursuit of profit?”
“Let us be consistent in our demands for facing up to the consequences of actions. Hardie’s
responsibility is to ensure that those who will suffer, and the families that they leave behind, are
properly compensated. Governments should ensure that they face up to that responsibility.”
For more information, please contact Eva Scheerlinck on 0404 881 433 or John Gordon on
0408 945 928
APLA Submission

James Hardie 220404

Încărcat de

Informații document

Descriere originală:

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

James Hardie 220404

Încărcat de

Drepturi de autor:

Formate disponibile

Special Commission of Inquiry into the Medical

Research and Compensation Foundation

In light of this conclusion, the APLA submission offers a legislative solution.

APLA’s submission commences with a preliminary consideration of the issues that we

Our submission then considers relevant case law:

• in dangerous goods generally;

• international cases in which claimants have attempted to recover damages for

The following issues raised by the inquiry are of concern to APLA:

• Compensation of the victims of James Hardie’s negligence;

• Legal costs in delivering compensation to the victims of James Hardie

• Historical conduct of James Hardie and its companies as background to the

• Adequacy of the Corporations Law to protect the rights to compensation at

• Desirability of reform to the Corporations Law (or statutory enhancement of

• Adequacy of the present system for delivery of compensation to persons

James Hardie was the biggest manufacturer of products containing asbestos in

Having found cases of asbestosis among employees of James Hardie at Rivervale,

2.1 The duty owed by a product manufacturer, and those in 'identical'

(per McHugh J in Dovuro v Wilkins [2003] HCA 51at [29])

"In Wyong Shire Council v Shirt Mason J emphasised:

(per Gummow J in Dovuro at [59]-[60])

(per Kirby J in Dovuro at [120])

The plaintiffs also pointed to the implementation of a reduction of Midalco's capital in

O’Meally J at first instance, “after examining in detail documentary evidence” (560),

2.4 Liability of foreign parent companies

2.4.1 Lubbe v Cape PLC (2000) 1 WLR 1545 (HL)

“Whether a parent company which is proved to exercise defacto control over

“The 21 plaintiffs, or those they represent, are or were employed by Thor SA at

"...it is strongly arguable that some of the breaches of duty occurred in

"....nearly everything of significance occurred in South Africa although

3.1 The Legacy

i. Were the profits treated as the profits of the parent company?

Instances of preparedness to lift the corporate veil, outside of the obvious

B. Disturbance compensation: DHN Food Distributors Ltd v Tower Hamlets

C. Funds provided by private company but damages for loss awarded to

D. Existence of agency agreement either expressly or where true

E. Taxation (to Revenue's advantage): Littlewoods Mail Order Stores Limited v

“ It would be extremely unrealistic and a denial of justice in a case like this to

If necessary, legislation should be enacted to ensure that they may not.

The Commission, in inviting APLA to make a submission, foreshadowed consideration

The answer in each case, in light of the discussion above, is "No".

4.1 Recourse under current law

4.2 Analogy with unconscionability cases

4.3 Recourse under the Trade Practices Act

5.1 Recovery under insurance policy from corporation in liquidation and

The Commonwealth Parliament addressed the recovery of funds by company creditors

5.2 Proposed Legislation

"Definitions; In this section;-

"applicant" means a person who has suffered a physical or psychiatric injury or

i) proceed to enforce any judgment obtained by the applicant from the

ii) proceed against the parent company or any successor company in

c) In any proceeding of the kind referred to in b) i) brought by the applicant against

Such a scheme - a statutory piercing of the corporate veil - may be regarded as

We absolutely reject this unwarranted and unsubstantiated inference.

However, if Amaca has sustained a demonstrable increase in legal costs, we suggest

1. Failure to adopt a reasonable approach to liability and damages issues at a

2. Certain cases have resulted in a payment of indemnity costs to plaintiffs because of

"I want to conclude by saying something about asbestos claims.

The submission is obviously self-interested, is based on erroneous factual and legal

The campaign by insurers continues.”

Lawyers call for end to “pty ltd” protection

S-ar putea să vă placă și