Alcan Gove Pty Ltd v Zabic

Background facts

1. By a Statement of Claim filed 18 April 2017 in the Dust Diseases Tribunal of New South Wales, Mr Talifero sued Amaca Pty Ltd for damages in negligence, alleging that he had contracted mesothelioma as a consequence of exposure to James Hardie asbestos cement products (Amended Statement of Facts [25]).
2. Mr Talifero's Statement of Claim was first filed on 18 April 2017. His claim was made against Amaca Pty Ltd (not the Trustee) in negligence. At paragraph [3] of his Statement of Claim, Mr Talifero asserted that at all material times Amaca Pty Ltd manufactured and supplied asbestos cement building materials in Australia and supplied asbestos cement building materials to hardware stores and retail outlets including Kingsford Timber Co Pty Ltd. Mr Talifero alleged therefore that the cause of his injury, loss and damage was the negligence of Amaca Pty Ltd (Statement of Claim [5]). The claim was framed by reference to exposure that had been experienced in Australia.
3. In Mr Talifero's Statement of Particulars filed 19 May 2017, he did provide a summary of work and exposure to asbestos, which relevantly included exposure whilst employed overseas in the United Kingdom (Exhibit P1, 248).
4. However, I note this Statement of Particulars suggested exposure to asbestos whilst overseas accounted for only 10% (with respect to exposure whilst employed as a Stoker in the British Navy) or less than 1% (with respect to Turnerised Roofing Co Ltd, Birmingham UK and Burberry Brick Co in the United Kingdom). This was no doubt to suggest the exposure overseas was de minimis or at least that the relevant material exposure to asbestos products occurred in Australia.
5. Amaca Pty Ltd filed a defence to Mr Talifero's claim on 25 August 2017 where it relied upon a reduction of liability on account of Mr Talifero's allegations of exposure to asbestos overseas (Exhibit P1, 327). In an Amended Defence filed 4 September 2017, Amaca Pty Ltd withdrew this reduction of liability (Exhibit P1, 333).
6. Mr Talifero passed away on 16 October 2017. On 7 November 2017, orders were made substituting Mr Talifero's son, Anthony David Talifero, as legal representative of the estate of Mr Talifero for the purposes of continuing the Talifero Proceeding (Amended Statement of Facts [26]-[27]).
7. The Talifero Proceeding was set down for hearing and concluded on 23 November 2017. On 11 December 2017, Judge Russell SC delivered his reasons in Anthony David Talifero v Amaca Pty Ltd [2017] NSWDDT 14 and also ordered judgment for the plaintiff against the defendant (Amaca Pty Ltd) for $560,482.00 and ordered the defendant to pay the plaintiff's costs (Amended Statement of Facts [29]).
8. Judge Russell SC made the following findings of fact about Mr Talifero's exposure to asbestos in his written reasons (Amended Statement of Facts [31]): 1. Mr Talifero was born in the United Kingdom on 15 May 1931. Mr Talifero was exposed to asbestos during his employment in the United Kingdom, but that exposure was irrelevant since the disease was the indivisible condition of mesothelioma. 2. Mr Talifero came to Australia in 1971 and worked for 25 years as a house painter. During that time, from time to time he had to replace broken asbestos cement sheets, in order to complete house painting jobs. Mr Talifero always bought new fibro sheets from Kingsford Timber where he had an account. About 20% of Mr Talifero's painting jobs required him to install new fibro. To do this he needed to cut, rasp and sand new fibro sheets. 3. Mr Talifero purchased fibro sheets from Kingsford Timber and the sheets he purchased were James Hardie fibro sheets. 4. Mr Talifero was exposed to asbestos by way of the James Hardie flat fibro sheets. 5. Mr Talifero's exposure to James Hardie products alone in Australia was sufficient to cause Mr Talifero's mesothelioma.
9. As noted Mr Talifero was exposed to asbestos during the following periods of overseas employment (Amended Statement of Facts [35]): 1. From 1949 to 1950 while serving with the British Navy as a Stoker. 2. From 1951 to 1959 while employed by Turnerised Roofing Co Ltd, Birmingham UK, as a labourer painting roofs. 3. From 1960 to 1961 while employed by Burberry Brick Co as a labourer making bricks.
10. Further details of Mr Talifero's exposure to asbestos while employed overseas are set out in the Amended Statement of Facts at [33]-[44]. The relevant correspondences are set out and summarised in the Amended Statement of Facts at [45]-[55].
11. There are in fact three expert reports which include the report of Professor Breslin (Exhibit P1, Tab 13), Professor Fox (Exhibit P1, Tab 14) and Professor Henderson (Exhibit P1, Tab 15). The reports of Professor Breslin and Professor Henderson appear to have been tendered before Judge Russell SC in the Dust Diseases Tribunal. Professor Fox's report appears not to have been before Judge Russell SC, however his opinion is one which has been relied upon by the Trustee in making the reduction of 48%.
12. Professor Breslin expressed the opinion that based on the history of Mr Talifero, he "had a history of definite occupational asbestos exposure as detailed above with some 10-12% of his exposure occurring in the United Kingdom and then later the remainder of his exposure occurring while working in Australia" (Exhibit P1, 370). Professor Breslin noted the overwhelming cause of Mr Talifero's asbestos exposure was his work in Australia. However, he thought there was a material contribution to the development of his mesothelioma from his asbestos exposure while working in the United Kingdom (Exhibit P1, 371).
13. Professor Fox referred to the Peto formula to conclude that Mr Talifero's United Kingdom exposure should be calculated at a contribution of 48% and the Australian exposure at a contribution of 52% (Exhibit P1, 377).
14. Professor Henderson expressed major and serious reservations about Professor Fox's use of the Peto formula for estimating the relative percentage causal contributions from Mr Talifero's' asbestos exposures in the United Kingdom and Australia. Professor Henderson did not himself express an opinion about relevant percentage contributions, except to observe: (Exhibit P1, 382). Even if one were, for the moment, to accept Prof. Fox's modelling of the proportional causal contributions from Mr Talifero's asbestos exposures in the UK (RN) and Australia to the development of his mesothelioma - which I do not, as is evident from my discussion above - I would point out that in my opinion his estimate of a 52% causal contribution from the Australian exposure represents a significant and substantial causal contribution to the singular (i.e., all-or-none; so-called 'indivisible') injury/outcome in the form of the cancer we know as pleural malignant mesothelioma.
15. Professor Henderson however also noted, generally, for an individual case of mesothelioma following multiple exposures to asbestos (Exhibit P1, 381): (1) Each one of those exposures makes a causal contribution towards mesothelioma induction, incremental upon 'background' exposure and any preceding above-'background' exposures from identified (and any non-identified) point sources of exposure. (2) When there were multiple asbestos exposures, one cannot point to any one exposure as being responsible for mesothelioma induction entirely, with exculpation of the others. (3) Furthermore, one cannot point to any one exposure and exculpate it and to blame all of the others. (4) All exposures contribute.
16. The Trustee has made a determination on the basis of the expert reports, particularly evidently the report of Professor Fox, that a 48% deduction should be made from the damages award by reason of Mr Talifero's exposure to asbestos in the United Kingdom (Trustee's Outline of Submissions [23]-[28]). The Trustee asserts this determination has a reasonable and cogent basis, asserting that the actual quantification of the appropriate discount to the amount of damages is not raised on the present application (Trustee's Outline of Submissions [28]-[29]).
17. By Summons filed 29 January 2018, the Trustee applied for advice pursuant to section 55(1) of the 2005 Act. As noted, the Trustee seeks (Summons [1]-[2]): 1. An order pursuant to s 55 of the James Hardie Former Subsidiaries (Winding up and Administration) Act 2005 (NSW) that in the Talifero Proceeding, the plaintiff would be justified in not paying so much of the damages award made in the Talifero Proceeding as reflects the extent to which Mr Talifero's exposure to asbestos or asbestos products occurred outside Australia. 2. Such further or other relief as this Honourable Court deems fit.
18. On 8 March 2018, I granted Allianz Australia Insurance Limited (Allianz) leave to make submissions concerning the application for advice. On that date, I also granted leave for Amaca Pty Ltd (Amaca) to appear in Court, although Amaca did not provide written submissions. On that date, I also permitted the Estate (that is, Anthony David Talifero in his capacity as the executor of the estate of the late Mr Talifero) to be heard on the application for advice (the Estate).
19. The Attorney-General for New South Wales also intervened pursuant to his statutory right under section 58 of the 2005 Act (Attorney-General).

Recitals and second reading speech

1. At the heart of this case is the construction of the 2005 Act, the Asbestos Injuries Compensation Fund Amended and Restated Trust Deed dated 14 December 2006 (the Trust Deed) and the Amended and Restated Final Funding Agreement dated 21 November 2006 (Final Funding Agreement).
2. Before I consider the relevant legal principles, it is useful to note that the recitals that appear in the Final Funding Agreement helpfully set out the historical background to the implementation and adoption of the 2005 Act, the Trust Deed and the Final Funding Agreement.
3. Recital A of the Final Funding Agreement refers to the New South Wales government establishing the Jackson Inquiry in February 2004 and sets out some of the findings of that Inquiry. In September 2004, the Jackson Inquiry found that the relevant Medical Research and Compensation Foundation (MRCF) was underfunded in the sense that Amaca and Amaba, being two former subsidiaries of James Hardie then owned by MRCF, would not over time have sufficient funds and other assets to meet their anticipated future liabilities.
4. This recital relevantly highlights how following the release of the Jackson Inquiry Report, the New South Wales government requested the ACTU, Unions NSW and Banton conduct negotiations with James Hardie Industries NV (now JHISE) to resolve the underfunding of the MRCF.
5. Recital A(i) relevantly observes (emphasis added): [I]n those negotiations, the principal objective of the Initial Negotiating Parties, for different reasons, was to achieve a binding agreement intended to ensure that, after taking into account the existing assets of the Liable Entities, sufficient funding is made available by the JHISE Group to fully compensate, on an agreed basis, all proven current and future Australian Asbestos personal injury and death Claimants against the Liable Entities …
6. Recital A(k) notes how the Final Funding Agreement reflects the intention that JHISE's continued commercial viability and success will provide the basis for the long term funding of the claims which are to be subject to the funding arrangement.
7. Recital A(m) also observes: JHISE asserts that a principal purpose of the JHISE Group in entering into this deed is to avert threats from the NSW Government, the federal government and other state and territorial governments (and perhaps governments of other countries in which the JHISE Group is, or the ABN 60 group was, active), that it or they would act, or support the NSW Government acting, to legislatively impose liability upon one or more members of the JHISE Group in relation to Asbestos-related personal injury liabilities of the Liable Entities in excess of the available assets of the Liable Entities unless James Hardie reached a voluntary settlement in relation to such liabilities …
8. Recitals B to E set out the negotiations and compromises that produced the 2005 Act, the Trust Deed and the Final Funding Agreement in response to this underfunding issue. One purpose of this tripartite scheme was clearly in part to ensure the continued profitability of the JHISE Group because its profits would generate income to keep the fund and overall scheme going on a long-term basis: B. On 1 December 2005, JHISE, the NSW Government and the Performing Subsidiary entered into the Original FFA with the common intention of making funding available by JHISE and/or its subsidiaries to pay, on the basis set out in the Original FFA, Proven Claims against the Liable Entities. C. In accordance with the Original FFA, on 7 April 2006 JHISE settled a trust which was intended to be established as a charitable trust and to constitute the special purpose fund contemplated in the Heads of Agreement (the Original Trust Deed), and on 8 June 2006 the AICF in its capacity of trustee of the trust acceded to the terms of the Original FFA. D. Following a ruling from the Australian Taxation Office (ATO) in which the ATO expressed its view that the trust established by the Original Trust Deed was not a charitable trust, the parties to the Original FFA considered (without conceding or considering the ATO's conclusion was or is correct at law) that the relevant condition precedent set out in the Original FFA was not satisfied. In order to achieve the purposes set out in the Original FFA, JHISE proposed an alternative arrangement be pursued, entailing the establishment of separate trusts in respect of the corpus and income arising from the JHISE Contributions or income derived thereon, with the Trustee acting as common trustee of both trusts. E. The Parties enter into this amended and restated deed: (a) to reflect their formal and legally binding agreement to implement the principles set out in the Heads of Agreement and the Modified Objectives; (b) in particular, to record the financial obligations of JHISE and the Performing Subsidiary set out in clauses 6 and 9 below; and (c) to reflect certain amendments agreed between the parties to ensure that the Trustee may at its discretion apply income of the Compensation Funds for the benefit of one or more of the Liable Entities by paying Proven Claims or such other Payable Liabilities of those entities, in accordance with the Trust Deed and the Transaction Legislation, but without creating any entitlement of the Liable Entities to receive such amounts or to give any directions to the Trustee with respect to such payments.
9. I should also note the Second Reading Speech for the James Hardie Former Subsidiaries (Winding up and Administration) Bill 2005 (NSW), which was made on the same date that the Original Final Funding Agreement was entered into on 1 December 2005 (see recital B of the Final Funding Agreement). It again reflects the concerns of the New South Wales government to ensure the continued funding of potential asbestos claims for a substantial period of time in response to the concerns raised by the Jackson Inquiry that there was an underfunding problem (New South Wales, Parliamentary Debates, Legislative Assembly, 1 December 2005, 20551 (Bob Debus)): I turn now to the main bill, the James Hardie Former Subsidiaries (Winding up and Administration) Bill, which implements and supports some of the important structural elements of the Final Funding Agreement. Part 2 of the bill supports the establishment by James Hardie of the trust fund contemplated by the Final Funding Agreement and called the SPF, that is, the Special Purpose Fund, in the bill. The SPF will receive the funding payments from the James Hardie group and will use the funding to pay payable liabilities of the liable entities. The SPF will also manage and resolve claims against the liable entities. Part 2 overcomes any doubt as to whether the SPF will be a valid charitable trust. It also ensures that the trustee of the fund must be a company that is taken under the Corporations Act to be registered in New South Wales. … Clause 35 of the bill makes provision for the Supreme Court to approve an approved payment scheme. This will permit rationing if it appears reasonably likely that for a period of time there will be insufficient funds to pay all claims. The modelling carried out to assess the adequacy of the funding arrangements first agreed in the heads of agreement last December showed that if James Hardie performs as well as expected and the number of claims are as predicted, there will be sufficient funding to meet all asbestos personal injury claims against the liable entities. However, there is inherent uncertainty in these sorts of calculations. Whether there is sufficient funding will depend on the success of James Hardie's global business and the total number of claims. Both of these factors involve some uncertainty, particularly over a period as long as 40 years. The provision enabling the Supreme Court to approve a temporary rationing scheme will ensure that the available funding is shared fairly between claimants, with no discrimination between claimants by reference to the nature or extent of their injuries.

Key objects

1. Clause 3.1 of the Trust Deed provides: Charitable purpose The Charitable Fund shall exist and be maintained by the Trustee, and the Charitable Fund Property must be maintained and applied by the Trustee, for: 3.1 [T]he principal purpose of receiving and providing funding for the payment and paying of Payable Liabilities and providing services with respect to the management and resolution of Payable Liabilities …

Key definitions

1. Clause 1.1 of the Trust Deed provides definitions for the key terms "Personal Asbestos Claim", "Proven Claim", "Payable Liability" and "SPF Funded Liability".
2. "Personal Asbestos Claim" in the Trust Deed is defined: Personal Asbestos Claim means subject to clause 13.7 of the Final Funding Agreement: (a) any present or future personal injury or death claim by an individual or the legal personal representative of an individual, for damages under common law or under other law (disregarding any law which comes into force in breach of clause 13 of the Final Funding Agreement and which breach has been notified to the NSW Government under clause 16.5 of the Final Funding Agreement) which: (i) arises from exposure to Asbestos occurring in Australia, provided that: (A) the individual's exposure to Asbestos occurred wholly within Australia; or (B) where the individual has been exposed to Asbestos both within and outside Australia, damages included in the Personal Asbestos Claim shall be limited to the amount attributable to the proportion of the exposure which caused or contributed to the loss or damage giving rise to the Personal Asbestos Claim which occurred in Australia; (ii) is made in proceedings in an Australian court or tribunal; and is made against all or any of the Liable Entities or any member of the JHINV Group from time to time; (b) any claim made under compensation to relatives legislation by a relative of a deceased individual (or personal representative of such a relative) or (where permitted by law) the legal personal representative of a deceased individual in each case where the individual, but for such individual's death, would have been entitled to bring a claim of the kind described in paragraph (a); or (c) a Contribution Claim made in relation to a claim described in paragraph (a) or (b), but in each case excludes any Marlew Claim and any other claim to the extent they have been recovered or are recoverable under a Worker's Compensation Scheme or Policy.
3. "Proven Claim" in the Trust Deed is defined: Proven Claim means any Personal Asbestos Claim or Marlew Claim in respect of which final judgment has been given against, or a binding settlement has been entered into by a Liable Entity or any member of the JHINV Group from time to time, and in each case, to the extent to which that entity incurs liability under that judgment or settlement (including any interest, costs or damages to be borne by a Liable Entity or the relevant member of the JHINV Group pursuant to such judgment or settlement).
4. "Payable Liability" in the Trust Deed is relevantly defined: Payable Liability means: (a) any Proven Claim (whether arising before or after the date of this deed); …
5. "SPF Funded Liability" in the Trust Deed is defined: SPF Funded Liability means: (a) only those liabilities described in paragraphs (a), (b), (c), (e) and (g) of the definition of "Payable Liability" and excludes the liabilities described in paragraph (d) or (f) of the definition of "Payable Liability"; and (b) a claim or category of claim which JHINV and the NSW Government agree in writing is a "SPF Funded Liability" or a category of "SPF Funded Liability".
6. These key definitions are relevantly the same between the Trust Deed and the Final Funding Agreement.
7. The Trust Deed also defines "Contribution Claim", "Income Beneficiary" and "Liable Entities".
8. "Contribution Claim" in the Trust Deed is defined: Contribution Claim means a cross-claim or other claim under common law or other law (disregarding any law which comes into force in breach of clause 13 of the Final Funding Agreement and which breach has been notified to the NSW Government under clause 16.5 of the Final Funding Agreement): (a) for contribution by a Concurrent Wrongdoer against a Liable Entity or a member of the JHINV Group in relation to facts or circumstances which give rise to a right of a Person to make a Personal Asbestos Claim or a Marlew Claim; or (b) by another Person who is entitled under common law (including by way of contract) to be subrogated to such a first mentioned cross-claim or other claim, provided that any such claim of the kind described in clause 13.7 of the Final Funding Agreement shall be subject to the limits contained in that clause.
9. "Income Beneficiary" in the Trust Deed is defined: Income Beneficiary means each of: (a) the Liable Entities (but only on the basis that the Income is to be applied for the benefit of those entities, only in accordance with clause 4.2 and 4.6); and (b) subject to clause 4.4(c), the Trustee in its capacity as trustee of the Charitable Fund.
10. "Liable Entities" in the Trust Deed is defined: Liable Entities means Amaca, Amaba and ABN 60.
11. "Transaction Legislation" in the Final Funding Agreement is also defined: Transaction Legislation means the Transaction Bill as enacted and amended by the Amending Bill.
12. "Transaction Bill" in the Final Funding Agreement is also defined: Transaction Bill means the James Hardie Former Subsidiaries (Winding up and Administration) Bill 2005 (NSW), as initialled by the parties for the purposes of identification on the Original Execution Date.

Key powers and duties

1. Clause 4.2(a)-(b) of the Trust Deed provides: Power in Relation to Income (a) The Trustee covenants in favour of the Settler to exercise its discretions pursuant to this clause 4 to ensure, to the extent possible and having regard to the information available to it, that there will be no amount of the Net Income of the Compensation Funds of a Financial Year which is not included in the assessable income of one or more Income Beneficiaries during that Financial Year. (b) In determining how the Annual Income is to be applied, the Trustee may in its absolute discretion, but subject to clause 4.2(a) and the remainder of this clause 4, apply some or all of the Annual Income for a Financial Year for the benefit of any one or more of the Income Beneficiaries: (i) by paying a Payable Liability of that Income Beneficiary; (ii) to the exclusion of any one or more of them; (iii) in any shares or proportions; and (iv) at any time, and the Annual Income or part so applied may be Income derived in any particular manner or from a particular source or having a particular character under the Tax Act or otherwise.
2. Clause 5.2 of the Trust Deed provides: General powers of the Trustee Subject to this Deed, the Trustee has all the powers, privileges and other incidents of ownership or possession over and in respect of the Charitable Fund Property and the Income that it is possible under the law to confer on a trustee and as though it were the absolute owner of the Charitable Fund Property and Income and acting in its personal capacity.
3. Clause 5.7 of the Trust Deed provides: Powers under Transaction Legislation In addition to any Powers conferred on the Trustee under this Deed and at law, the Trustee may exercise each and any power conferred on it by the Transaction Legislation or by any other Act or Regulation made under any Act of the State of New South Wales.
4. Clause 5.8 of the Trust Deed provides: Limitations on Powers of the Trustee (a) Notwithstanding any other provision of this Deed, the Trustee has no power to and must not pay or discharge or purport to pay or discharge any liability of a Liable Entity which a Liable Entity is not authorised to pay or discharge by the Final Funding Agreement, a Related Agreement or the Transaction Legislation. (b) Notwithstanding any other provision of this Deed, prior to the Commencement Date the Trustee may not exercise any of its powers under this Deed or at law except to the extent that such exercise is necessary or reasonably incidental to: (i) establish the Compensation Funds Account; (ii) manage any application to the Australian Taxation Office concerning the status of the Fund for income tax purposes; or (iii) other matters or tasks which are purely administrative in nature and preparatory to the discharge by the Trustee of its substantive rights, powers and responsibilities under this Deed, the Final Funding Agreement and the Transaction Legislation.
5. Clause 4.2(d) of the Final Funding Agreement provides: 4.2 Role of the Trustee The Trustee's role is to do the following (and in respect of clauses 4.2(c), (d), (h)(ii), (i) and (k) in relation to a Liable Entity, the Trustee shall only be obliged to take such steps to the extent that the Liable Entity is under the control or direction of the Trustee): … (d) subject to it having the necessary funds to do so and clause 9.15, pay (in accordance with and subject to clause 4.7 and the provisions of the Transaction Legislation) SPF Funded Liabilities itself or through one or more of, or on behalf of, or for the benefit of, one or more of, the Liable Entities (including without limitation by applying the Discretionary Fund Property for the benefit of one or more Liable Entities or otherwise as permitted under the Trust Deed), and in each case for itself, or through, or for the benefit of or on behalf of, one or more of the Liable Entities as the Trustee may in its discretion determine. In any case where an amount is paid through, or on behalf of, or for the benefit of, a Liable Entity, then unless expressly notified by the Trustee to the Liable Entity, the Liable Entity shall have no rights to direct the Trustee as to the payment or manner or timing of any payment of such amounts, nor to have any rights to itself receive such amounts …
6. Clause 8.1 of the Final Funding Agreement provides: 8.1 Application of funds The Parties acknowledge that it is the intent of this deed and the Transaction Legislation and the Trust Deed to ensure that: (a) the monies and other assets provided to the Trustee (including the JHISE Contributions) may only be applied in the payment of SPF Funded Liabilities; and (b) such monies and other assets are not to be applied to satisfy any other creditors of the Trustee or of the Liable Entities or of the JHISE Group.
7. Clause 8.2 of the Final Funding Agreement provides: 8.2 Excluded Claims Each of the Parties agree and acknowledge that: (a) this deed and the Transaction Legislation seek to address, within the limits set out in this deed (including but without limitation the limits set out in clause 9) the funding for payment of SPF Funded Liabilities and the handling of Payable Liabilities; and (b) nothing in this deed requires or shall require JHISE, the Performing Subsidiary or any other member of the JHISE Group to provide any funding for payment of any of the following liabilities of the Liable Entities (together, the Excluded Claims): (i) personal injury or death claims arising from exposure to Asbestos outside Australia; (ii) personal injury or death claims arising from exposure to Asbestos made outside Australia; (iii) claims for economic loss (other than any economic loss forming part of the calculation of an award of damages for personal injury or death) or loss of property, including those relating to land remediation and/or Asbestos or Asbestos products removal, arising out of or in connection with Asbestos or Asbestos products manufactured, sold, distributed or used by or on behalf of the Liable Entities; (iv) any Excluded Marlew Claim; (v) any liabilities of the Liable Entities other than SPF Funded Liabilities.

Key objects

1. Section 3 of the 2005 Act provides: 3 Principal objects of Act (1) The principal objects of this Act are as follows: (a) to set up a State scheme for the winding up and other external administration over an extended period of certain companies that were formerly within the James Hardie corporate group, (b) to ensure that not only present, but also future, liabilities of those companies in respect of personal injury or death of persons arising from exposure to any asbestos or asbestos products that were mined, manufactured, sold, distributed or used by those companies are dealt with: (i) in accordance with the Final Funding Agreement, and (ii) so that preference is given to those claims over other claims which are deferred to the future, and (iii) in a manner that recognises that exposure to such asbestos or asbestos products, or personal injury or death arising from such exposure, may occur for an extended period into the future. (2) To achieve the objects set out in subsection (1), this Act displaces certain provisions of the Corporations Act and includes provisions for the establishment of a trust fund and the administration of the companies concerned during the winding up periods for the companies that are apposite to the unique circumstances of the winding up and administration of the companies.

Key definitions

1. Section 4(1) of the 2005 Act provides the following relevant definitions.
2. For "payable liability" in the 2005 Act: "payable liability" of a liable entity means a liability of the entity to pay any of the following: (a) a proven personal asbestos claim made against the entity in an Australian court or other Australian tribunal, but only to the extent that the exposure to asbestos or asbestos products to which the claim relates occurred wholly within the territorial limits of Australia, (b) a proven personal asbestos contribution claim made against the entity in an Australian court or other Australian tribunal, but only to the extent that the exposure to asbestos or asbestos products to which the claim relates occurred wholly within the territorial limits of Australia …
3. For "proven personal asbestos claim" in the 2005 Act: "proven personal asbestos claim" against a liable entity means a personal asbestos claim against the entity in respect of which: (a) a final judgment has been entered by a court or other tribunal against the entity, or (b) a binding settlement has been entered into by the entity, but only to the extent that the judgment or settlement gives rise to a liability of the entity (including any liability to pay damages, interest or legal costs to the claimant).
4. For "personal asbestos claim" in the 2005 Act: "personal asbestos claim" against a liable entity or concurrent wrongdoer means a claim by any of the following persons for damages (whether arising before, during or after the assent day) in respect of personal injury or death arising from exposure to any asbestos or asbestos products that were mined, manufactured, sold, distributed or used by or on behalf of the liable entity or concurrent wrongdoer (as the case may be): (a) the person who sustains the personal injury, (b) the legal personal representative of a deceased person who sustained the injury or died as a result of the injury, (c) a relative of a deceased person who sustained the injury or died as a result of the injury, and includes such a claim against a liable entity or concurrent wrongdoer pursuant to the joinder of the liable entity or concurrent wrongdoer as a party to proceedings.
5. The more general term "claim" is defined in section 4(1) of the 2005 Act as: "any claim, demand, action, cause of action or proceedings (whether based in tort, contract, under legislation or otherwise)".
6. Section 4(1) also provides the following definitions (emphasis in original): "Amaca" means the company registered under the Corporations Act immediately before the introduction day as Amaca Pty Limited (ACN 000 035 512) that was formerly called James Hardie & Coy Pty Limited, and includes any successor to or continuation of that company. … "SPF" means the trust fund established as referred to in section 8 or, if that trust fund is terminated, such other trust fund as may be prescribed by the regulations. … "SPF trustee" means the person who is the trustee of the SPF from time to time.

Key powers and duties

1. Section 23(1) of the 2005 Act provides: 23 Conduct of business during winding up period (1) Subject to this Part, the powers of each liable entity must be exercised during the winding up period for the entity so as to: (a) carry on the business of the entity so far as is necessary or convenient for the management of claims made against the entity to ensure that only payable liabilities of the entity are paid in accordance with the provisions of this Part, and (b) pay payable liabilities in accordance with the provisions of this Part, and (c) apply any funds provided from the SPF only in accordance with the conditions on which the funding is provided.
2. Section 31 of the 2005 Act provides: 31 Claims that may be made during the winding up period (1) During the winding up period for a liable entity, claims against the entity may be paid only in the manner permitted by this Part. (2) During the winding up period for a liable entity, a person cannot begin or continue with civil proceedings against the entity in a court or other tribunal unless the proceedings seek to enforce: (a) any of the following kinds of claims of the person: (i) a personal asbestos claim (whether or not a proven personal asbestos claim), (ii) a personal asbestos contribution claim (whether or not a proven personal asbestos contribution claim), or (b) a payable liability of the entity that was incurred to the person, or (c) a right of the person against the liable entity (other than a right to be paid damages or receive other payment).
3. Section 32(1) of the 2005 Act provides: 32 Kinds of claims that are payable (1) During the winding up period for a liable entity, only payable liabilities of the entity (other than a liability to pay a claim that is excluded by subsections (2) and (3)) may be paid (whether by the entity itself or by the SPF trustee on the entity's behalf or for its benefit).
4. Section 35, particularly subsections (1)-(4) of the 2005 Act, provide: 35 SPF trustee may apply to Supreme Court to secure continuing funding of claims (1) Applications to Supreme Court for approved payment scheme orders The SPF trustee may, with the approval of the Minister, apply to the Supreme Court for orders under subsection (5) if it appears reasonably likely that, for a period of time, there will be insufficient funds for all payable liabilities of a liable entity to be paid in full as and when they fall due for payment. (2) Rationing directions from SPF trustee pending application approval The SPF trustee may, by written order served on a liable entity (a rationing direction), direct the entity to defer the payment of payable liabilities (whether in whole or in part) in a manner consistent with the rationing requirements for a scheme set out in subsection (7) if: (a) the SPF trustee has sought but not received approval from the Minister to make an application to the Supreme Court under subsection (1) in respect of the entity, and (b) the SPF trustee is satisfied that the insufficiency of funds to pay the payable liabilities of the entity requires the urgent rationing of payments pending the receipt of approval from the Minister. (3) A liable entity is required and authorised to comply with any rationing direction given to it until the direction ceases to have effect. (4) Unless the Supreme Court orders otherwise (whether in an application under this section or under a provision of Division 9) or the rationing direction is earlier revoked by the SPF trustee, a rationing direction has effect until the Supreme Court determines the application in respect of which approval is sought from the Minister.

Power to seek advice

1. The Trustee has the power to seek judicial advice or directions under section 55(1)-(4) of the 2005 Act: 55 Advice or directions concerning provisions of this Part (1) A liable entity or the SPF trustee may apply for advice or direction by the Supreme Court or the Minister on any matter relating to: (a) the scope of the entity's or trustee's functions under this Part, or (b) the exercise of any function by the entity or trustee under this Part, or (c) any other matter relating to the operation of this Part. (2) The Minister may apply for advice or direction by the Supreme Court on any matter relating to: (a) the scope of the Minister's, the SPF trustee's or a liable entity's functions under this Part, or (b) the exercise of any function by the Minister, the SPF trustee or a liable entity under this Part, or (c) any other matter relating to the operation of this Part. (3) Without limiting subsection (1) or (2), an application may be made with respect to any of the following: (a) the giving of, or failure to give, a direction to a liable entity under section 24, (b) the failure or refusal of the Minister to grant approval to the SPF trustee to make an application to the Supreme Court under section 35, (c) the issuing of a rationing direction by the SPF trustee under section 35, (d) an application, or failure to make an application, to the Supreme Court for an order under section 35, (e) the exercise, or failure to exercise, any function conferred on the SPF trustee under Division 8, (f) the failure or refusal of the Minister to grant written consent to the SPF trustee to make an application to the Supreme Court under section 52. (4) A written statement signed by the applicant is sufficient evidence of the matters set out in it.

Project Blue Sky and harmonious interpretation

1. As is made clear by Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381-2 (McHugh, Gummow, Kirby and Hayne JJ); [1998] HCA 28 ("Project Blue Sky"), at least in a statutory context, provisions should be read as a whole. That is, the primary object of statutory construction is to construe a particular provision so that it is consistent with the language and purpose of all the provisions of the statute or legislation. A legislative instrument must be construed on the prima facie basis that its provisions are intended to give effect to harmonious goals. As McHugh, Gummow, Kirby and Hayne JJ observed (at 382) (citations omitted) (emphasis added): Where conflict appears to arise from the language of particular provisions, the conflict must be alleviated, so far as possible, by adjusting the meaning of the competing provisions to achieve that result which will best give effect to the purpose and language of those provisions while maintaining the unity of all the statutory provisions. Reconciling conflicting provisions will often require the court "to determine which is the leading provision and which the subordinate provision, and which must give way to the other". Only by determining the hierarchy of the provisions will it be possible in many cases to give each provision the meaning which best gives effect to its purpose and language while maintaining the unity of the statutory scheme.
2. In a contractual setting in Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 109; [1973] HCA 36, Gibbs CJ also observed: It is trite law that the primary duty of a court in construing a written contract is to endeavour to discover the intention of the parties from the words of the instrument in which the contract is embodied. Of course the whole of the instrument has to be considered, since the meaning of any one part of it may be revealed by other parts, and the words of every clause must if possible be construed so as to render them all harmonious one with another. If the words used are unambiguous the court must give effect to them, notwithstanding that the result may appear capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something different. The court has no power to remake or amend a contract for the purpose of avoiding a result which is considered to be inconvenient or unjust. On the other hand, if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust
3. See also Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522 at 529 (Gleeson CJ, McHugh, Gummow and Kirby JJ); [2005] HCA 17.
4. In the cases of conflict between particular provisions in a legislative instrument there may be the need to adjust the meaning of the conflicting provisions to give effect to the unified purpose and language of those provisions as a whole. This may involve determining the hierarchy, or predominance, of the provisions within the legislative instrument.
5. With respect to determining hierarchy or predominance in cases of conflict, the Full Court of the Federal Court of Australia has observed in Secretary, Department of Health & Ageing v Nguyen [2002] FCAFC 416; (2002) 124 FCR 425 at [22] (Black CJ, Sundberg and Finkelstein JJ): The principles of construction contained in the passage from Project Blue Sky relied upon by the appellants are dependent on a conflict between different provisions. For the reasons given above, there is no conflict. Nor does according s 98(1) its prima facie meaning deprive s 133(2) of significance or operation. It will be available to the Minister in cases where there is no request for cancellation under s 98(1). In the absence of a conflict between the provisions, no occasion arises to arrange them in hierarchical order, according one precedence over the other. The basis for importing the words "within a reasonable time", or the alternative suggested in oral argument, "subject to section 133", into s 98(1) evaporates. The conditions that must exist before a court may insert words into an Act have been considered in Bermingham v Corrective Services Commission of New South Wales (1988) 15 NSWLR 292 at 302, Newcastle City Council v GIO General Ltd [1997] HCA 53; (1997) 191 CLR 85 at 113 and Reg v Young [1999] NSWCCA 166; (1999) 46 NSWLR 681 at 687-688. One of them is that the court must be satisfied that by inadvertence Parliament has overlooked an eventuality. For the reasons foreshadowed in [20], we are not satisfied that such is the case here.
6. On the above view the need to determine hierarchy or predominance, or a more radical 'reading down' of inconsistent provisions for example, is dependent on a conflict between provisions. Nevertheless, the broader need to interpret an Act or scheme harmoniously or purposively is a matter of common sense in an Act or legislative scheme, will also obviously apply to ambiguity or disconformity.
7. There is here some obvious ambiguity and disconformity between the relevant definitions of the Trust Deed and Final Funding Agreement on one hand and the 2005 Act on the other hand, such as with the definitions of "Personal Asbestos Claim", "Proven Claim" and "Payable Liability". It is clear however that these three instruments are intended to operate together, therefore a harmonious reading of the various related terms is essential.

The judgment of Gzell J

1. The 2005 Act, the Trust Deed and the Final Funding Agreement were considered in Asbestos Injuries Compensation Fund Ltd [2011] NSWSC 97. In this case, Gzell J outlined a number of important constructional principles applicable to the interpretation of those instruments.
2. His Honour observed at [76]-[84] (emphasis added): [76] It was common ground that the Trust Deed, the Final Funding Agreement and the 2005 Act should be read together harmoniously. They together formed the structure for the payment of compensation to persons suffering personal injury or death in relation to James Hardie Asbestos. [77] Read in that context, the object of the 2005 Act is, in my view, that persons suffering injury or death from exposure to Asbestos of James Hardie will be compensated in accordance with the Final Funding Agreement. [78] Personal injury or death "arising from" exposure to Asbestos in the 2005 Act Definition must be construed awkwardly if the personal injury is to extend to a person not exposed to those products. [79] The reading of the 2005 Act Definition proposed by Mr Sheahan that nervous shock is personal injury arising from exposure to Asbestos because it was a reaction to another person's suffering personal injury or death from exposure to Asbestos is a strained construction of the definition. I reject it. [80] Harmony is established if the 2005 Act Definition is construed in accordance with the Final Funding Agreement Definition and that in the Trust Deed. [81] As Mr Izzo pointed out, it is not to be concluded that it was intended that a "personal asbestos claim" have a different content from one instrument to the other. [82] That the Final Funding Agreement was intended to be the pre-dominant instrument has been made good by the 2005 Act's reference to it in stating one of its main objects; its determination of the use of the moneys from James Hardie 117 aided by the significance the Minister placed upon it in the Second Reading Speech; and the absence of any provision for funding the SPF trustee in the 2005 Act. [83] I reject the submission that an harmonious interpretation of the Final Funding Agreement Definition is achieved if the reference to an individual can be someone other than the person exposed to Asbestos. [84] Construing the 2005 Act Definition consistently with the Final Funding Agreement and that in the Trust Deed gives rise to no inconsistency upon which cl 4.5 of the Final Funding Agreement can operate but, additionally, I am of the view that when it comes to an inconsistency between it and the 2005 Act, cl 4.5 is silent with respect to any predominance.
3. As is clear in His Honour's observations, the 2005 Act, the Trust Deed and the Final Funding Agreement should be read together harmoniously. His Honour also concluded that the Final Funding Agreement was intended to be the pre-dominant instrument in this scheme.
4. Although Gzell J made no specific reference to Project Blue Sky in the judgment, I am satisfied His Honour's approach concerning harmonious interpretation appears to be substantially along the same lines as the approach adopted in that case.
5. However, I should note that Gzell J did not in the course of his analysis identify a "conflict" as such between the 2005 Act, the Final Funding Agreement and the Trust Deed. His Honour's focus on a harmonious interpretation and predominance appears rather to be a method of resolving a "strained construction" (at [79]) of the provisions.
6. I do agree with Gzell J that harmony is essential in interpreting the scheme of the 2005 Act, the Final Funding Agreement and the Trust Deed. However, I am of the view that there is an ambiguity or disconformity falling short of a "conflict" between the various provisions of the 2005 Act on one hand, and the Final Funding Agreement and Trust Deed on the other hand. In the circumstances of this case, I am of the view that it is not necessary to determine the question of "predominance" as between the three instruments.

The Trustee

1. The Trustee submits that, on a proper construction of the 2005 Act, the Final Funding Agreement and the Trust Deed, the Trustee is justified in not paying so much of the damages award made in the Talifero Proceeding as reflects the extent to which Mr Talifero's exposure to asbestos or asbestos products occurred outside Australia (Outline of Submissions [11]).
2. The Trustee notes the interlocking definitions that appear in the 2005 Act, the Final Funding Agreement and the Trust Deed (noting that the definitions of clause 1.1 of the Final Funding Agreement are relevantly the same as in the Trust Deed). The Trustee places particular regard to the way in which "personal asbestos claim" is defined in the 2005 Act, the Final Funding Agreement and the Trust Deed (Outline of Submissions [12]-[18]). Particular emphasis is based upon proviso (a)(i)(B) of the definition of "Personal Asbestos Claim" in the Final Funding Agreement (T2/3-18).
3. The Trustee submits that the 2005 Act, the Final Funding Agreement and the Trust Deed should be read together harmoniously, with the Final Funding Agreement as the predominant instrument in this tripartite structure (Outline of Submissions [19]-[21]). This submission is made with positive reference to the judgment of Gzell J in Asbestos Injuries Compensation Fund Ltd [2011] NSWSC 97.
4. The Trustee therefore suggests to the extent that the definition of "personal asbestos claim" in the 2005 Act is ambiguous, it should be read to conform with the definition of "Personal Asbestos Claim" in the Final Funding Agreement and the Trust Deed (Outline of Submissions [21]).
5. The crux of the Trustee's argument is therefore to the extent that the definition of "personal asbestos claim" in the 2005 Act is ambiguous, the Final Funding Agreement and the Trust Deed confirm that the only types or kinds of liability that may be paid by the Trustee or the liable entity are those (Outline of Submissions [21]): 1. Arising from exposure to asbestos that occurred wholly within Australia; or 2. Where the individual has been exposed to asbestos within and outside of Australia, any damages awarded in relation to that claim are limited to the amount attributable to the exposure in Australia.
6. The Trustee does not dispute that mesothelioma is an indivisible condition (Outline of Submissions [23]-[26]). With reference to expert witnesses in the Talifero Proceeding and the "Peto Formula", the Trustee submits that it has made a determination that a 48% deduction should be made by reason of Mr Talifero's exposure to asbestos in the United Kingdom (Outline of Submissions [26]-[27]).
7. The Trustee expressly notes, however, that these proceedings are not concerned with the correct percentage quantification of 48% or apportionment of the Trustee's determination (Outline of Submissions [28]-[29]).
8. In oral argument, the Trustee outlined the history of the 2005 Act, the Final Funding Agreement and the Trust Deed, including the Jackson Inquiry and the broader issue of how the New South Wales government attempted to address the need of providing for a compensation fund for current and future Australian asbestos personal injury claimants. This included recognition that James Hardie should remain a viable and profitable business developing profits to fund the asbestos compensation fund (T3/20-T4/21).
9. Importantly, the Trustee argues that the proviso in (a)(i)(B) concerning the definition of "Personal Asbestos Claim" in the Final Funding Agreement is not intended to be dependent on the way in which a claimant expresses their pleading on the "claim" (T4/33-35).
10. The Trustee also submitted in oral argument that "payable liability" as defined in the 2005 Act is expressed in different terms to the definition provided in the Final Funding Agreement and Trust Deed. The Trustee submits that the definition, and particularly the reference to "only to the extent that the exposure to asbestos or asbestos products to which the claim relates occurred wholly within the territorial limits of Australia" in the definition of "payable liability" in the 2005 Act acts as a shorthand paraphrase of the corresponding definitions in the Final Funding Agreement and Trust Deed (notably, I think, proviso (a)(i)(B) of the definition of "Personal Asbestos Claim" in the Trust Deed and Final Funding Agreement).
11. The Trustee submits more generally that the language of the 2005 Act is plainly a shorthand paraphrase of the corresponding definitions in the Funding Agreement and the Trust Deed. Further, that the language in the 2005 Act is too loose to give rise to any clear intention that Parliament had in mind different contents for the statutory definitions as compared to the definitions in the Final Funding Agreement and Trust Deed (T14/1-7). The Trustee submits even if it is wrong on this ground, it still remains nevertheless constrained by the Final Funding Agreement and Trust Deed (T14/9-19).

Attorney-General

1. The Attorney-General does not make submissions on the specific facts of this case (Outline of Submissions [4]).
2. The Attorney-General makes reference to the judgment of Gzell J in Asbestos Injuries Compensation Fund Ltd [2011] NSWSC 97 as applicable to the construction of the 2005 Act, the Final Funding Agreement and the Trust Deed (Outline of Submissions [5]-[16]).
3. Particularly, the Attorney-General refers to instances in which His Honour proposed that the 2005 Act, the Final Funding Agreement and the Trust Deed should be read together harmoniously (Asbestos Injuries Compensation Fund Ltd [2011] NSWSC 97 at [76]) and that the Final Funding Agreement is the predominant instrument in the scheme (Asbestos Injuries Compensation Fund Ltd [2011] NSWSC 97 at [80]). The Attorney-General also submits that this judgment of Gzell J reflects the broader principle that as between the three instruments, the same phrases were presumptively intended to bear the same meaning (Outline of Submissions [13]).
4. The Attorney-General submits that the Trustee's power to pay out on damages derives from at least three sources (Outline of Submissions [17]-[21]): 1. Clause 5.2 of the Trust Deed. 2. Clause 3.1 of the Trust Deed. 3. Clause 5.7 of the Trust Deed as read with clause 4.2(d) of the Final Funding Agreement.
5. The Attorney-General suggests that particularly clause 3.1 and clause 4.2(d) of the Final Funding Agreement not only provides the Attorney-General with a power to pay out on damages, but provides a duty to pay out on the relevant liabilities (Outline of Submissions [22]-[23]).
6. Importantly, the Attorney-General submits that the Trustee has a duty to pay out a "Payable Liability" or a "SPF Funded Liability" and that this duty extends to the whole of the defined liability absent some express carve-out (Outline of Submissions [24]).
7. With respect to the question of whether an "SPF Funded Liability" for the purposes of the Final Funding Agreement necessarily encompasses the whole of a damages award in asbestos proceedings, or whether the relevant liability may be less if there is exposure to asbestos outside Australia, the Attorney-General submits (Outline of Submissions [31]-[45]): 1. The Attorney-General refers to the interlocking definitions of "SPF Funded Liability", "Payable Liability", "Proven Claim" and "Personal Asbestos Claim" as defined in clause 1.1 of the Final Funding Agreement. 2. The Attorney-General submits within these definitions, the negative element in (a)(i)(B) of the definition of "Personal Asbestos Claim" is critical. 3. The Attorney-General submits the apparent purpose of this subclause (a)(i)(B) is to reduce the Trustee's duty to pay out the quantum of damages included in the relevant claim by the proportion of loss or damage caused or contributed to by exposure to asbestos outside Australia. 4. The Attorney-General submits this reduction is a question of fact to be determined on the evidence in each case, with reference to expert scientific evidence if appropriate and does not give rise to absurd results.
8. With respect to any relevant issue estoppels, the Attorney-General does not make explicit submissions on whether any issue estoppels relevantly arise (Outline of Submissions [39]-[45]).
9. The Attorney-General submits that the term "Payable Liabilities" in the Trust Deed, through the interposed phrases "Proven Claim" and "Personal Asbestos Claim", should be defined in relevantly the same way as "SPF Funded Liability" in the Final Funding Agreement (Outline of Submissions [46]-[47]).
10. With respect to the 2005 Act, the Attorney-General submits (Outline of Submissions [48]-[60]): 1. Section 32(1) of the 2005 Act does not confer a power (or impose a positive duty) to pay out on payable liabilities. Rather, it imposes a negative duty not to pay out on liabilities that are not payable liabilities. 2. The source of the Trustee's power to pay out on damages awards is correctly sourced from the Trust Deed and the Final Funding Agreement. 3. The Attorney-General refers to the interlocking definitions of "payable liability", "personal asbestos claim", "proven personal asbestos claim" and "claim" defined in section 4(1) of the 2005 Act. The Attorney-General submits the definition of "payable liability" in the 2005 Act refers to the concept of a "claim". He submits this is different to the negative element of the definitions of "Personal Asbestos Claim" and "Payable Liability" in the Trust Deed and Final Funding Agreement, which refer to the concept of "damages". 4. This textual difference between "claim" and "damages" means that this is not a case where the presumption identified in Asbestos Injuries Compensation Fund Ltd [2011] NSWSC 97 that the definitions in the three instruments bear a common meaning should apply. 5. The definition of "payable liability" within the 2005 Act therefore refers to exposure to asbestos products to which a particular claim for damages relates, and not to exposure to which a particular award of damages relates. 6. Even if the Trustee is empowered under the Trust Deed or Final Funding Agreement to pay out on an award of damages, it cannot do so to the extent that the award of damages arises out of a claim in respect of exposure to asbestos that occurred outside Australia (T16/50-T17/35).

The Estate

1. The Estate submits that the Trustee should be advised that it is required to pay the whole of the liability of Amaca under the judgment given in the Estate's favour by Judge Russell SC on 11 December 2017 (including Amaca's liability under that judgment to pay pre-and post-judgment interest and costs) (Outline of Submissions [2]).
2. The Estate contends that the Trustee's refusal to discharge the judgment obtained in the Dust Diseases Tribunal of New South Wales amounts to a breach of the Final Funding Agreement and the Trust Deed. The Estate submits this breach is confirmed by a consideration of the text and context of the 2005 Act, the Final Funding Agreement and the Trust Deed (Outline of Submissions [14]).
3. The Estate submits (Outline of Submissions [26]-[53]): 1. The term "Personal Asbestos Claim" defined in the Final Funding Agreement is ambiguous, and that this ambiguity should be resolved by consideration of the compensation scheme as a whole, reading the Final Funding Agreement, the Trust Deed and the 2005 Act harmoniously. 2. The scheme obliges the Trustee to pay proven personal asbestos claims of the requisite kinds by clause 4.2(d) of the Final Funding Agreement and clause 3 of the Trust Deed. 3. The scheme prohibits the Trustee from paying personal asbestos claims which are not proven personal asbestos claims of that kind by section 32(1) of the 2005 Act. 4. Therefore clause 4.2(d) of the Final Funding Agreement and clause 3 of the Trust Deed act as obligations, whereas section 32(1) of the 2005 Act operates as the flip-side prohibition. 5. This scheme reflects a legislative purpose of preventing forum-shopping and prohibits the Trustee from paying a proven personal asbestos claim to the extent that "the exposure to asbestos or asbestos products to which the claim relates" did not occur wholly within the territorial limits of Australia. 6. However, this does not extend to introducing something in the nature of a proportionate liability scheme against the relevant entities. If the Trustee considers some other person also caused the same loss, it is a matter for the Trustee or Amaca to join other parties as a cross-defendant or joint tortfeasor for contribution (T18/13-31).
4. The Estate submits a contrary approach would introduce unintended and unnecessary absurdity into the compensation scheme and relevant instruments. This could include providing Amaca with a unique proportionate liability-style defence distinct from any other Australian asbestos manufacturer (Outline of Submissions [54]-[57]).
5. Importantly, the Estate argues it is impossible to provide for such a proportionate liability scheme for mesothelioma as it is an "indivisible injury" (T22/35-T23/2). The Estate submits the word "proportion" evident in the legislative scheme, such as in proviso (a)(i)(B) of the definition of "Personal Asbestos Claim" in the Trust Deed, has work to do in cases of "divisible injury". However, the Estate argues this word does not invite an assessment of any causational contributions. The Estate suggests it invites only a focus on the amount of damages attributable, and that in the Talifero Proceeding the entirety of the damages were attributed to Australian exposure alone. In the case of the indivisible injury of mesothelioma, the Trustee has no discretion.
6. The Estate does not dispute that the quantification of the appropriate discount to the amount of damages is not raised on the Trustee's present application. However, it argues the approach suggested by the Trustee invites a separate question of calculating the appropriate discount, which could be reviewed afresh by a court and would require victims of James Hardie Asbestos to navigate two or more separate procedures in order to obtain compensation (Outline of Submissions [75]-[83]).
7. The Estate therefore submits the correct view is that sections 31 and 32 of the 2005 Act require consideration, at a preliminary stage, as to whether a claim does or does not relate to overseas exposure. The Estate contends these sections (and their counterparts in the Final Funding Agreement and the Trust Deed) do not intend to contemplate a secondary process of proportionate liability or the likes (Outline of Submissions [82]-[83]).
8. In oral argument, the Estate emphasised three salient points (T17/45-T18/11): 1. The Estate argues the whole of the claim that Mr Talifero successfully made in the Dust Diseases Tribunal was in relation to Australian, not overseas, exposure. 2. The whole of the damages (or compensation) awarded to Mr Talifero was therefore in relation to Australian exposure. 3. The Trustee is obliged to pay the whole of the judgment entered into in Mr Talifero's favour by the Dust Diseases Tribunal.
9. The Estate therefore interprets the proviso (a)(i)(B) in the definition "Personal Asbestos Claim" in the Trust Deed and Final Funding Agreement as concerned with damages included in a personal asbestos claim (T19/25-32). The Estate submits once a claim is made and judgment is given in favour of a claimant, the Trustee has no discretion to exercise any further steps in paying out the liability (T23/11-30).

Allianz

1. Allianz embraces the Estate's submissions and makes a number of additional submissions in support (Outline of Submissions [4]).
2. Allianz submits that the Trustee's construction of the scheme is strained and contrary to legislative intention, as neither the 2005 Act nor the Final Funding Agreement repose any power, discretion or scheme for the Trustee to decide the degree to which liability should be reduced by overseas exposure (Outline of Submissions [5]-[7]).
3. Allianz submits that the Trustee's construction is inconsistent with the definition of "Proven Claim" in the Final Funding Agreement, and that subclause (a)(i)(B) of the definition of "Personal Asbestos Claim" in the Final Funding Agreement does not arise in the present case (Outline of Submissions [8]-[13]).
4. Allianz also opines that the Trustee's reliance upon the 2005 Act cannot be reconciled with the definition of "payable liability" in section 4 of the 2005 Act (Outline of Submissions [14]).
5. Allianz admits this Court is "probably" bound by Asbestos Injuries Compensation Fund Ltd [2011] NSWSC 97 (Outline of Submissions [15]).
6. Allianz submits the 2005 Act is beneficial legislation and should be construed in a way that does not curtail Mr Talifero's right of recovery because of overseas exposure (Outline of Submissions [16]).

Amaca

1. As I have noted, I granted Amaca leave to appear in Court on 8 March 2018. However, Amaca did not provide any written or oral submissions. Though a representative did appear in court. This accords with Amaca's position as a debtor in the relevant scheme.

The Trustee

1. In response to the Estate, the Trustee argues in its Submissions in Reply dated 18 April 2018: 1. The Estate incorrectly relies on the idea of a "claim" in its arguments, where the real starting point for consideration is what the Final Funding Agreement defines as "SPF Funded Liabilities" and "Personal Asbestos Claim" (Submissions in Reply [2]). 2. The clear definition of "Personal Asbestos Claim" provides that the Trustee should not be obliged to pay for any liability attributable to overseas exposure (Submissions in Reply [3]-[4]).
2. The Trustee responds to the written submissions filed for Allianz on 6 March 2018 (Outline of Submissions [22]): 1. Contrary to paragraph 8(a) of Allianz's submissions, the Trustee submits that the exclusion of liability attributable to exposure to asbestos outside Australia does not depend on how the claimant has framed his or her pleading. 2. Contrary to paragraph 8(b) of Allianz's submissions, the Trustee submits the construction contended by the Estate would subvert the clear intention of the 2005 Act as rendering otiose, in practical terms, the exclusion of liability attributable to exposure outside of Australia. 3. Contrary to paragraph 8(c) of Allianz's submissions, the Trustee accepts that mesothelioma is an indivisible condition. However, it is clear these instruments intend that an apportionment be made as to reflect the relative contribution of exposure to asbestos as within and outside Australia. 4. Contrary to paragraph 8(d) of Allianz's submissions, the Trustee submits that the Trustee is expressly under a duty not to pay the proportion of liabilities that are attributable to exposure outside of Australia, regardless of the potential difficulty in precisely formulating such a proportion. 5. Contrary to paragraph 8(e) of Allianz's submissions, the Trustee submits that the Estate and Mr Talifero have no common law rights against the Trustee that could relevantly be trespassed upon.
3. In response to Allianz, the Trustee also argues in its Submissions in Reply dated 18 April 2018: 1. The Trustee's analysis of the scheme that provides an absolute discretion in the Trustee is not misconceived or strained, as it accords with the Final Funding Agreement, the 2005 Act and general law principles (Submissions in Reply [5]-[6]). 2. Allianz also incorrectly relies on the wrong premise of focusing on the relevant "claim". This ignores the real question of whether the Trustee is required to only pay the amount of the liability as relates to asbestos exposure within Australia (Submissions in Reply [6]).

The Estate

1. The Estate also provides response to the Trustee's Outline of Submissions. The Estate submits (Outline of Submissions [58]-[74]): 1. The 2005 Act, the Final Funding Agreement and the Trust Deed all focus on the claimant's "claim" as achieving a particular legislative and contractual purpose. The Estate suggests this contemplates that successful "claims" against Amaca in relation to Australian exposure will be paid, whereas "claims" in relation to overseas exposure will not. 2. The Estate's approach reflects the clear intention of the scheme that victims of James Hardie Asbestos in Australia would have access to full compensation for the loss caused by exposure to asbestos in Australia. 3. This intention would be subverted by the approach suggested by the Trustee. It would introduce by stealth a proportionate liability regime inconsistent with the text, context and purpose of the relevant instruments.

Analysis of the scheme

1. Although I have set out in some detail above the key definitions, objects, powers and duties of the 2005 Act, the Final Funding Agreement and the Trust Deed, it is useful to observe more broadly how these provisions interact and the evident synchronicity intended of the various instruments. In that respect in my view Gzell J was clearly correct.
2. As noted in the Recitals to the Final Funding Agreement, it is clear that the genesis of the tripartite scheme was the concern generated by the Jackson Inquiry that the MRCF was underfunded. That is, there was a concern that James Hardie entities would not have enough funding or assets to meet all of the asbestos claims that could be brought against them in Australia presently and in the future. This is the 'evil' that the 2005 Act, the Final Funding Agreement and the Trust Deed attempt to address.

The 2005 Act

1. With respect to the 2005 Act, the following broad and non-exhaustive observations can be made: 1. The 2005 Act has the principal object of setting up a state scheme for the winding up and external administration over an extended period of certain companies that were formerly within the James Hardie corporate group: section 3(1)(a). 2. The 2005 Act also has the principal object of ensuring that not only present, but also future liabilities of those James Hardie entities in respect of exposure to asbestos mined, manufactured, sold or used by James Hardie companies are dealt with in accordance with the Final Funding Agreement: section 3(1)(b). 3. The 2005 Act operates to establish the SPF (that is, the trust fund) as contemplated by the Final Funding Agreement as a charitable trust. However, the 2005 Act also modifies the general law relating to charitable trusts and the Charitable Trusts Act 1993 (NSW) as it applies to the SPF trust fund. This includes the modification that charitable trust fund proceedings or any other proceedings relating to the administration of the SPF may only be brought by the Attorney-General or the Trustee or James Hardie Industries NV: sections 8-10. 4. The 2005 Act also makes considerable limitations on corporate restructuring of the relevant James Hardie companies ("relevant company" being defined in section 11). It places limits on the powers of directors of the relevant companies and displaces particular provisions of Corporations legislation as would normally apply to the relevant companies. It also provides, inter alia, restrictions for and controls on the winding up, account-keeping, insurance, transfer of shares and entering into of loan facilities of the relevant companies: sections 11-30A. 5. The 2005 Act controls the making and payment of claims against any of the liable entities, placing limits on the certain circumstances on how and when claims can be paid out: sections 31-2. 6. The 2005 Act also provides for the eventuality that there may be insufficient funds for the payment of payable liabilities of a liable entity, including providing for rationing: sections 33-6. 7. The 2005 Act provides controls for the reporting requirements and the likes of the liable entities: sections 37-41. 8. The 2005 Act allows for the Minister or the Trustee to apply to the Court for orders to remove a director of a liable entity: section 42. 9. The 2005 Act allows for a liable entity or the Trustee to apply to the Court for advice: section 55.
2. The 2005 Act therefore provides for the legislative environment surrounding the Trust Deed and the Final Funding Agreement. In addition to placing numerous controls on how the corporate entities of the various liable entities may operate, the 2005 Act operates as the legislative vehicle for implementing the Trust Deed and the Final Funding Agreement.

The Trust Deed

1. The Trust Deed, on the other hand, is directed towards constituting the SPF trust and setting out the terms of the trust, the powers of the Trustee and the way in which the Trustee can exercise its discretion.
2. The Trust Deed is between James Hardie Industries NV (the settlor) and Asbestos Injuries Compensation Fund Limited (the trustee).
3. The following broad and non-exhaustive observations can be made of the Trust Deed: 1. The Trust Deed provides Recitals A-J which set out briefly the history of the entering into of the original long term funding agreement and the Final Funding Agreement. 2. The Trust Deed provides definitions of various terms in substantially similar language to the definitions in the Final Funding Agreement: clause 1.1. 3. The Trust Deed constitutes the appointment of the Trustee as the requisite manager or trustee of the charitable fund property, with the requisite acceptance and declarations: clause 2. 4. The Trust Deed sets out the charitable purpose of the Trustee, including the principal purpose of receiving and providing funding for the payment of payable liabilities, and providing services with respect to the management and resolution of these payable liabilities: clause 3. 5. The Trust Deed governs the Trustee's powers in relation to the income of the compensation fund: clause 4. 6. The Trust Deed governs the general powers of the Trustee, as well as general administration, compensation, contracting, investing or delegation powers: clause 5. 7. The Trust Deed also notes in addition to any powers conferred on the Trustee under the Trust Deed that the Trustee may exercise each and any power conferred on it by the Transaction Legislation. "Transaction Legislation" is defined in the Final Funding Agreement with reference to the "Transaction Bill" and the James Hardie Former Subsidiaries (Winding up and Administration) Bill 2005 (NSW): clause 5.7.

Final Funding Agreement

1. The Final Funding Agreement is an agreement between James Hardie Industries SE, James Hardie 117 Pty Ltd, the New South Wales government and the Trustee.
2. The Final Funding Agreement plays a role in facilitating the ongoing funding and payment of claims against the liable entities. Although it is concerned with the Trustee's powers and discretion, it operates more broadly to facilitate ongoing funding and payment of potential claims.
3. The following broad observations can be made of the Final Funding Agreement: 1. The Final Funding Agreement likewise sets out in Recitals A-G the history of the legislative scheme and the funding problem noted by the Jackson Inquiry. 2. The Final Funding Agreement provides definitions in substantially similar terms to the Trust Deed: clause 1.1. 3. The Final Funding Agreement stipulates the agreed structure for establishing the compensation funds for the purpose of funding the payment of liabilities to claimants in respect of proven claims, and other related costs: clause 3. 4. The Final Funding Agreement sets out the role of the Trustee, such as its role to hold the charitable fund for the benefit of the funding obligations and for paying SPF funded liabilities: clause 4.2 5. The Final Funding Agreement sets out requirements for the governance and audit of the compensation funds: clause 5. 6. The Final Funding Agreement stipulates the scope of obligations of the parties and the mechanics of funding the amounts to be provided to the Trustee: clause 8.
4. From this brief survey, in my view, it is clear that the 2005 Act, the Final Funding Agreement and the Trust Deed are distinct instruments that play their own bespoke role in addressing the concern that funding of personal asbestos claims in Australia would be insufficient to meet those claims.
5. Each of the three instruments plays a different role. However, the three instruments clearly act as a regime that was intended to operate synchronously. This is demonstrated by the significant level of interrelation and interdependence of the various terms and provisions of the 2005 Act, the Final Funding Agreement and the Trust Deed.

Harmonious interpretation

1. As to the key definitions referred to there is in my view no conflict, but rather a measure of disconformity or ambiguity in the language between definitions of which would prima facie be identical or like provisions.
2. For example, "claim" is defined in section 4(1) of the 2005 Act broadly as "any claim, demand, action, cause of action or proceedings (whether based in tort, contract, under legislation or otherwise)" and does not appear to be confined simply to the pleading made by a claimant. In the Final Funding Agreement and Trust Deed, the general term "claim" is not defined, although the more specific term "Proven Claim" is defined by clause 1.1 of the Trust Deed and Final Funding Agreement.
3. There is also a disconformity between the singularly important definition of "Personal Asbestos Claim" in the Final Funding Agreement and Trust Deed on one hand, and the definition of "personal asbestos claim" in the 2005 Act on the other hand. The proviso in section (a)(i)(B) of the definition of "Personal Asbestos Claim" in the Final Funding Agreement and Trust Deed states (emphasis added): "where the individual has been exposed to Asbestos both within and outside Australia, damages included in the Personal Asbestos Claim shall be limited to the amount attributable to the proportion of the exposure which caused or contributed to the loss or damage giving rise to the Personal Asbestos Claim which occurred in Australia".
4. The definition of "personal asbestos claim" in the 2005 Act is by contrast a blander definition that does not refer to any limit to the amount attributable to exposure caused or contributed outside of Australia.
5. However, it is true that the definition of "payable liability" in the 2005 Act makes reference to claims "made against the entity in an Australian court or other Australian tribunal, but only to the extent that the exposure to asbestos or asbestos products to which the claim relates occurred wholly within the territorial limits of Australia" (emphasis added). This appears to pick up on the distinction provided in proviso (a)(i)(B) of the definition in the Final Funding Agreement and Trust Deed between domestic and foreign exposure.
6. Given the palpable synchronicity between the Final Funding Agreement, the Trust Deed and the 2005 Act, it is clear the overarching legislative intention in facilitating the scheme was that the three instruments were to be read harmoniously. That is, the tripartite scheme should be construed on the basis that the provisions are intended to give effect to harmonious goals.
7. It seems to me when one reads these various provisions together harmoniously, the Trustee is not able to pay for any loss by reason of exposure outside of Australia. The Trustee is obliged to limit the payment attributable to the proportion of overseas exposure as stipulated by proviso (a)(i)(B) in the definition of "Personal Asbestos Claim" in the Final Funding Agreement and Trust Deed. The blander definition of "personal asbestos claim" in the 2005 Act should be read harmoniously as to give best effect to the purpose and language of the scheme as a whole, which attempts to address the funding and payment of asbestos claims against James Hardie entities or subsidiaries. There is no apparent intention in the scheme for the various definitions between the instruments somehow to be treated differently or separately.
8. The tripartite scheme is not one intended to provide for largesse and is not intended to cover the potential liabilities of foreign asbestos manufacturers or the similar foreign exposure (see for example clause 8.2 of the Final Funding Agreement). There is no reason to read down the definition of "Personal Asbestos Claim" in the Final Funding Agreement or Trust Deed to conform with the blander definition in the 2005 Act.
9. This conclusion is reinforced by noting that the 2005 Act unsurprisingly does not provide an exhaustive list of the trustee's obligations, duties or discretions or the entire mechanics of the legislative scheme. The 2005 Act's role in the scheme is as a legislative framework and facilitation of the Funding Agreement and Trust Deed, as well as control over the corporate operation of the James Hardie entities. That the definition of "personal asbestos claim" in the 2005 Act is a blander definition is attributable to the different functions the instruments each play in the scheme.
10. I am further not satisfied that the word "claim" in the 2005 Act, the Final Funding Agreement or the Trust Deed is intended to be confined merely to a party's pleading. It is intended to indicate no more than the method or means by which a party may make a request for compensation. The Estate's construction of the word "claim" in my view relies on an overly literal reading.
11. Again, the history of the scheme as set out in the relevant Recitals and the principal provisions is directed towards the concern that there needs to be a method of funding any potential claims made against the liable entities (those entities that constitute the James Hardie Group) and not companies worldwide. The negotiation process and history of the scheme reflects the concern that the compensation fund might run out of money or would not have sufficient funds (see for example the potential for rationing provided for in section 35(2) of the 2005 Act). The Trustee has access to finite resources for claimants now and into the future.

Mesothelioma as indivisible

1. I am also of the view that the Trustee's obligation not to pay out the amount attributable to the proportion of exposure occurring outside of Australia is not diminished by the indivisibility of mesothelioma (cf T22/35-50).
2. It is uncontroversial that mesothelioma is an indivisible injury: Orica Ltd v CGU Insurance Ltd (2003) 59 NSWLR 14; [2003] NSWCA 331 at [196]-[202] (Santow JA); Amaca Pty Ltd v CSR Ltd [2007] NSWDDT 17 at [16] (O'Meally P). This has been, long before the 2005 Act, an uncontroversial proposition.
3. I should note in passing that as between the United Kingdom and Australia, Courts have approached the question of causation in instances of injuries like mesothelioma somewhat differently.
4. In the United Kingdom, the House of Lords, particularly in Fairchild v Glenhaven Funeral Services Ltd [2002] 3 All ER 305; [2002] UKHL 22 ("Fairchild"), has accepted in certain circumstances of injury such as mesothelioma a court may depart from the usual 'but for' test of causal connection. A court may treat a lesser degree of causal connection as sufficient; such as the defendant's breach materially increased the risk of the disease, falling short of the 'but for' test of causation (see for example, at 342 and 357-8). See also Barker v Corus UK Ltd [2006] 3 All ER 785; [2006] UKHL 20 and Sienkiewicz v Greif (UK) Ltd; Willmore v Knowsley Metropolitan Borough Council [2011] 2 All ER 857; [2011] UKSC 10.
5. However, in Australia in Amaca Pty Ltd v Booth (2011) 246 CLR 36; [2011] HCA 53 ("Amaca v Booth"), the High Court has so far distinguished the Fairchild exception (at 58 and 66-7). See also Alcan Gove Pty Ltd v Zabic (2015) 257 CLR 1 at 10; [2015] HCA 33. If the cause of action is made out against a defendant in Australia and causation is satisfied on the standard principles of causation, the defendant is liable to bear the entirety of the loss. Of course, the defendant may seek contribution for any other parties it wishes to argue should be held as jointly liable.
6. Nevertheless, accepting these jurisdictional differences with regards to the legal test of causation does little to illuminate the role of the Trustee under the scheme established by the 2005 Act, the Final Funding Agreement and Trust Deed. This is because the Trustee is obliged by the Final Funding Agreement and Trust Deed, particularly proviso (a)(i)(B), to make a proportionate determination as a matter of fact apportioning or distinguishing exposure to asbestos within Australia and outside of Australia.
7. This can be through court-tendered evidence, such as the reports of Professor Breslin and Professor Henderson whose evidence was before the Dust Diseases Tribunal. The Trustee can also procure expert evidence for its own determination of a claim absent any court proceedings.
8. The scheme does not distinguish between mesothelioma or asbestosis or other forms of asbestos disease or injury. The scheme is instead concerned generally with "personal injury or death of persons arising from exposure to any asbestos or asbestos products that were mined, manufactured, sold, distributed or used by those companies" (section 3(1)(b) of the 2005 Act).
9. To say, as the Estate does at T22/35-T23/2, that mesothelioma is indivisible and is therefore incapable of being apportioned, is in my view to confuse the role of a court and the role of the Trustee.
10. There is therefore a fundamental difference between what a court needs to do in determining causation curially and what the Trustee is obliged to do under the exercise of its discretion in the tripartite scheme. A court decides causation, whereas the Trustee's discretion is governed by the Trust Deed, the Final Funding Agreement and the 2005 Act, and particularly the proviso (a)(i)(B) in the definition of "Personal Asbestos Claim" in the Trust Deed and Final Funding Agreement.
11. Merely because the pleading of Mr Talifero before the Dust Diseases Tribunal gave rise to a global figure of $560,482.00 to be paid by Amaca, and the current evidence that mesothelioma is indivisible, does not detract from the requirement stipulated in the definition of "Personal Asbestos Claim" in the Final Funding Agreement and Trust Deed for the Trustee to make this apportionment exercise as a matter of fact. It is rather concerned with providing for a fair method of apportioning and paying claimants harmed by James Hardie asbestos now and into the future, and in the interests of the scheme as a whole.
12. Of course medicine can express expert views as to whether particular exposure is material or non-material as a matter of fact. It can also be determined as a matter of fact whether overseas exposure materially contributed to the injury or death of the claimant.

Conclusion

1. I am of the view that the 2005 Act, the Final Funding Agreement and the Trust Deed, when read together harmoniously, oblige the Trustee to only pay those personal asbestos claims as limited to the amount attributable to the proportion of the exposure which caused or contributed to the loss or damage which occurred in Australia.
2. I would make an order in accordance with paragraph [1] of the Trustee's Summons filed 29 January 2018.
3. The Estate submits that the Trustee should pay its costs of the proceedings on an indemnity basis (Outline of Submissions [87]-[90]). The Trustee does not oppose such a course (T14/30-45).
4. Unsurprisingly the Attorney-General did not make submissions on costs. Allianz does not seek a costs order and notes if necessary there should be an order that it pay its own costs. Amaca did not make submissions on costs.
5. On that basis the only other order I would make is that the costs of the Estate be paid by the Trustee on an indemnity basis.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 04 May 2018