In the matter of Asbestos Injuries Compensation Fund Limited (and WorkCover Queensland) [2024] NSWSC 1163

The tripartite arrangement

1. On 1 December 2005, JHINV, the NSW Government and James Hardie 117 entered into a Final Funding Agreement. The same day, the Attorney-General introduced three bills into the Legislative Assembly, including the James Hardie Former Subsidiaries (Winding Up and Administration) Bill 2005 (NSW). The Attorney-General informed the House that the Premier had signed "an historic 40-year agreement with James Hardie Industries NV to secure $4.5 billion in compensation for the victims of James Hardie's asbestos." Further, "The passage of these bills will fulfill one of the conditions to the full commencement of the final funding agreement. They are a vital step towards James Hardie making the first payment of funding." The parliament was asked to deal with the bills on an urgent basis. In respect of the James Hardie Former Subsidiaries (Winding Up and Administration) Bill, the Attorney-General explained: (emphasis added) "… the main bill … 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. …"
2. The package of three bills were passed by both houses of Parliament that day, becoming the Winding Up Act, the James Hardie (Civil Liability) Act 2005 (NSW) and the James Hardie (Civil Penalty Compensation Release) Act 2005 (NSW). For completeness, on 8 February 2007, regulations commenced under the Winding Up Act, being the James Hardie Former Subsidiaries (Winding Up and Administration) Regulation 2007 (NSW).
3. In accordance with the Final Funding Agreement, on 7 April 2006, JHINV settled a trust. AICF was the trustee. On 8 June 2006, AICF executed a Deed of Accession and became a party to the Final Funding Agreement. However, the Australian Taxation Office issued a ruling, expressing the view that the trust was not a charitable trust. To address this, JHINV proposed an alternative arrangement, which resulted in the execution of an Amended & Restated Final Funding Agreement executed on 21 November 2006 (the funding agreement). On 14 December 2006, JHINV and AICF executed an Amended and Restated Trust Deed (the trust deed).

Mr Davis

1. Mr Davis was not an employee of Amaca but was exposed to its asbestos products over his career as a carpenter, including when employed by Baumann Bros (1969 to 1975) and Ron Taber (1975 to 1977) in Queensland. In February 2020, Mr Davis was diagnosed with asbestos-related pleural effusion and diffuse pleural thickening. In March 2020, Mr Davis lodged a claim with WorkCover Queensland for an asbestos injury under the Workers' Compensation and Rehabilitation Act 2003 (Qld). WorkCover made workers' compensation payments to Mr Davis totalling $418,640.
2. In July 2023, Mr Davis commenced proceedings against Amaca in the Tribunal, seeking damages for malignant mesothelioma. On 22 February 2024, judgment was given in Mr Davis' favour in the amount of $897,020.64 plus costs: Davis v Amaca Pty Ltd [2024] NSWDDT 2. The trustee has paid $476,820 of this judgment, but not the balance.

Mr Coveney

1. Mr Coveney was not employed by Amaca but was exposed to its asbestos products during the course of his employment as a demolition labourer with Northside Demolitions Pty Limited trading as Bunneys Demolition in Virginia, Queensland, from 1993 to 1996 and as a machine operator with Temcove Pty Limited in Caboolture, Queensland from 1998 to 2000. In March 2023, Mr Coveney was diagnosed with mesothelioma. He lodged a claim with WorkCover Queensland for an asbestos injury. Workcover Queensland accepted Mr Coveney's claim on 2 June 2023, assessing the degree of permanent impairment as 100%. Mr Coveney was paid compensation of $873,720.
2. In August 2023, Mr Coveney commenced proceedings against Amaca in the Tribunal. In September 2023, Amaca filed a cross-claim against Mr Coveney's former employers, Northside Demolitions Pty Ltd, Peter Bunney Enterprises Pty Ltd and Telstra Corporation Ltd, seeking contribution and indemnity. (Northside Demolitions and Peter Bunney Enterprises are also insured by WorkCover Queensland.) In February 2024, Mr Coveney resolved his claim against Amaca: by consent and without admission, judgment was entered against Amaca for $1 million plus costs of $190,000. Amaca's cross-claims remain on foot.

The issue

1. After judgment was obtained by Mr Davis and Mr Coveney, WorkCover Queensland wrote to the trustee, demanding the amounts paid in workers' compensation as a first charge from the judgment moneys, where "That compensation was paid in respect of the injury which is the subject of the Plaintiff's action herein - mesothelioma caused by inhalation of asbestos." WorkCover Queensland's charge arose under s 207B of the Workers' Compensation and Rehabilitation Act 2003 (Qld) which provides: (emphasis added) 207B Insurer's charge on damages for compensation paid … (2) An amount paid as compensation to a person for an injury, to which there is an entitlement to payment of damages at a time or for a period before the person becomes entitled to payment of damages by an employer or another person, is a first charge on any amount of damages recovered by the person to the extent of the amount paid as compensation to the person. … (4) An employer or other person from whom the damages are recoverable must pay the insurer the amount of the first charge or, if the damages are not more than the amount of the first charge, the whole of the damages. …
2. The trustee advised WorkCover Queensland that it was not possible to pay money to the extent that it reflected a liability or claim which had been recovered, or was recoverable, by the claimant under the Workers' Compensation and Rehabilitation Act 2003 (Qld), given the terms of the Winding Up Act and the funding agreement. WorkCover Queensland commenced proceedings against Amaca and Mr Coveney in the Supreme Court of Queensland, seeking a declaration that Amaca was lawfully required to pay the whole of the judgment entered in the Tribunal, without deduction of the amount of compensation paid to Mr Coveney under the Workers' Compensation and Rehabilitation Act 2003 (Qld).
3. These proceedings were also commenced. The Queensland proceedings were transferred to this Court under s 5(2) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth). The trustee also wrote to WorkCover Queensland in respect of Mr Coveney's judgment sum, noting that, of the consent judgment entered, $162,280 and costs of $190,000 were over and above the amount of the judgment over which WorkCover Queensland asserted a charge. WorkCover Queensland was asked to indicate whether it claimed a charge over the remaining amount, so that the trustee could pay that amount to Mr Coveney as soon as practicable. Absent agreement from WorkCover Queensland that it would not seek recourse to those moneys, the trustee stated that it was not in a position to make this payment to Mr Coveney. There was no reply.

THE STATUTE

1. To give advice or direction on this issue, the place to start is the Winding Up Act: see [19]. The objects of the Winding Up Act are stated in s 3, which identifies the importance of the funding agreement at the outset: (emphasis added) 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.
2. Section 5(1) of the Winding Up Act records the intention of the Parliament that the Act shall, as far as possible, operate outside the State. Further, s 7(1) provides that the Winding Up Act binds the State and, in so far as the legislative power of the Parliament of New South Wales permits, the other States, Territories and the Commonwealth.
3. Part 4, entitled "Winding up of liable entities", contains the bulk of the operational provisions. Liable entity means ABN 60, Amaba and Amaca: cl 4(1), Winding Up Act. The winding up period for liable entities commenced on 2 December 2005 and ends, essentially, when the Minister directs: ss 4(1), 20(1), 28, 43(1), 52. During this period, any winding up of a liable entity is to be conducted in accordance with Part 4; other applications to wind up the liable entity are precluded: s 21(1). During the winding up period, s 23(1) also provides: (emphasis added) 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.
4. Section 23 effectively keeps the liable entities alive during the winding up period to manage "claims" made against those entities and to "ensure that only payable liabilities of the entity are paid". Claim means "any claim, demand, action, cause of action or proceedings (whether based in tort, contract, under legislation or otherwise)": s 4(1). The definition of "claim" is broad. Of the wide range of claims that may be made against a liable entity, only a defined sub-set may be paid from the SPF, being payable liabilities, and then "only in accordance with the conditions on which the funding is provided": s 23(1)(c). The repository of those conditions is the funding agreement.
5. The trustee may give directions and orders to liable entities to do, or not to do, any thing that the trustee is satisfied is necessary or appropriate for the winding up of the entity in accordance with Part 4 "or the carrying out of the terms of the Final Funding Agreement or any Related Agreement": s 24(1). A Related Agreement is an agreement contemplated by the funding agreement: ss 4(1), 24(1). For example, the trustee may direct a liable entity to pool funds with other liable entities and allocate the pooled funds to pay the payable liabilities of one or more of those entities: s 24(2)(a). A liable entity must comply with such a direction: s 24(4). A liable entity must operate its bank accounts in accordance with s 29, of which s 29(8) provides: (emphasis added) "Money held in an account required to be established by a liable entity under this section may be applied only for the payment of the payable liabilities of the entity of a kind, and in a manner, that is required, authorised or permitted by or under this Act."

Paying claims

1. Division 5 of Part 4 concerns the making and payment of claims. Section 31(1) provides that, during the winding up period, claims against a liable entity "may be paid only in the manner permitted by Part 4". The section prevents a claimant who has the benefit of a final judgment against a liable entity from otherwise enforcing that judgment: Talifero at [109].
2. Section 32 of the Winding Up Act restricts the liabilities of a liable entity that may be paid: Talifero at [139]. The section provides: (emphasis added) 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). (2) Despite any other provision of this Part or any other legislation or other law, a proven personal asbestos claim against a liable entity may not be paid (whether by the entity itself or by the SPF trustee on the entity's behalf or for its benefit) during the winding up period for the entity if - (a) the claimant has already been paid compensation (whether on the basis of a cause of action arising at general law, under the Corporations Act or any other legislation) in respect of the same personal injury or death that is the subject of the claim, and (b) the compensation was paid by any of the following - (i) another liable entity, (ii) James Hardie Industries NV or any of its controlled entities, (iii) any person whose liability to pay the compensation arose from the person acting in the capacity of a director or other officer, employee, advisor or agent of a liable entity, James Hardie Industries NV or any of its controlled entities, (iv) any other person who has recovered the amount paid in compensation from an entity or person referred to in subparagraph (i), (ii) or (iii) pursuant to a legal entitlement to do so (whether at general law, under legislation or otherwise), and (c) the compensation paid to the claimant was paid pursuant to a final judgment entered by a court or other tribunal, or a binding settlement entered by a person or entity referred to in paragraph (b), in circumstances where the compensation was intended to compensate the claimant fully and finally for the personal injury or death concerned. (3) Despite any other provision of this Part or any other legislation or other law, statutory recovery claims against a liable entity may only be paid (whether by the entity itself or by the SPF trustee on the entity's behalf or for its benefit) during the winding up period for the entity - (a) if the funding set aside under the Final Funding Agreement for the payment of such claims by the SPF trustee during a financial year (within the meaning of the Agreement) is or will be sufficient to cover all claims (whether actual or anticipated) within the year concerned, or (b) if such funding will not be sufficient for the financial year concerned, in accordance with the regulations. (4) For the purposes of (but without limiting) subsection 3(b), the regulations may make provision for or with respect to the following - (a) the deferral of payments of statutory recovery claims (whether in whole or in party), (b) the part payment of statutory recovery claims (whether in whole or in party), (c) any other matter concerning the rationing of payments of statutory recovery claims.
3. In short, s 32(1) describes the claims that are payable, being "payable liabilities" of a liable entity, whilst s 32(2) and s 32(3) excludes certain liabilities. Looking first at the claims that are payable, "only payable liabilities of the [liable] entity … may be paid": s 32(1).

Payable liability

1. The defined term payable liability is central to the operation of the Winding Up Act: Talifero at [104]. The definition of this term is in substance the same in the funding agreement and the trust deed but different in the Winding Up Act: Talifero at [10]. As to the statutory definition, s 4(1) provides: (further defined terms italicised) payable liability of a liable entity means a liability of the entity to pay any of 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, (c) a pre-commencement claim against the entity, (d) an operating expense of the entity, (e) a claims processing expense of the entity, (f) a claim for the payment of an insurance proceeds right …, (g) an amount in respect of which the SPF trustee has a right to be indemnified by the entity under section 36(2)(b) [where the SPF trustee has paid funds to a payable claimant directly], (h) a statutory recovery claim against the entity. Note - Section 32 (2) of this Act provides that certain proven personal asbestos claims made against a liable entity may not be paid during its winding up period if the claimant has already received compensation for the personal injury or death to which the claim relates from a specified person.
2. Section 4(5) of the Winding Up Act states that "Notes included in this Act do not form part of this Act." The sub-paragraph most likely to apply to the claims made by Mr Davis and Mr Coveney is subpar (a), whilst the sub-paragraph most likely to apply to any obligation to repay WorkCover Queensland is subpar (h).

Proven personal asbestos claim

1. Looking at the sub-paragraph most likely to cover Mr Davis and Mr Coveney's claims, subpar (a), both made a claim against a liable entity, Amaca, in an Australian tribunal in respect of the exposure to asbestos products in Australia. As to whether their claims were a proven personal asbestos claim, this term is defined in s 4(1) of the Winding Up Act as: (further defined terms italicised) 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).
2. Section 4(1) defines damages as including any form of monetary compensation. Mr Davis obtained a final judgment. Mr Coveney entered into a binding settlement, which was reflected in consent orders. Both the judgment and settlement gave rise to a liability of Amaca to pay damages or costs to the claimants.

Personal asbestos claim

1. Did Mr Davis and Mr Coveney bring a personal asbestos claim? Section 4(1) defines this term as follows: (further defined terms italicised) 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.
2. Both Mr Davis and Mr Coveney were persons who sustained a personal injury. Each brought a claim for damages in respect of their injuries arising from exposure to asbestos products that were mined, manufactured, sold, distributed or used by or on behalf of Amaca. As such, their claims were "personal asbestos claims" which resulted in a final judgment or binding settlement and thus were "proven personal asbestos claims". It follows that the liability of Amaca to pay their claims is a "payable liability" within subpar (a) of the definition of that term.
3. WorkCover Queensland's entitlement to reimbursement of workers' compensation payments cannot be accommodated in these defined terms. WorkCover Queensland's entitlement does not fall within the definition of "personal asbestos claim", where WorkCover Queensland neither sustained the injury, nor is a legal personal representative of a worker who sustained the injury, nor a relative of that person. Where WorkCover Queensland's claim is not a "personal asbestos claim", it cannot then be a "proven personal asbestos claim", nor a "payable liability" under subpar (a) of the definition of that term.
4. Finally, in order to address some of the submissions which were made, it is necessary to describe another type of "personal asbestos claim". It will be recalled that JHINV agreed to extend funding to former asbestos mine workers' and residents of the Baryulgil community for claims against former subsidiary, Marlew: see [34]. Section 21(2) of the James Hardie (Civil Liability) Act provides that, for the purposes of the Winding Up Act, "a Marlew asbestos claim against Amaca is a personal asbestos claim under that Act against Amaca as a liable entity under that Act". Amaca is liable for such claims as if Amaca had conducted the mining activities: s 22(1), James Hardie (Civil Liability) Act.
5. Amaca's liability for Marlew asbestos claims does not extend to claims the subject of an indemnity granted by the Minister for Mineral Resources on 11 March 1996, which released JHIL from liability for asbestos claims by employees of the Department of Mineral Resources or Fuller Earthmoving Pty Ltd in connection with the rehabilitation of the mine: s 23, James Hardie (Civil Liability) Act. Further, where there is a concurrent wrongdoer, a plaintiff who brings a Marlew asbestos claim is required to pursue the recovery of damages from those wrongdoers "and is only entitled to recover from Amaca as a defendant of last resort" and then only to the extent that the plaintiff is unable to recover from concurrent wrongdoers: s 25(2), James Hardie (Civil Liability) Act. In addition, concurrent wrongdoers are not entitled to contribution from Amaca as a concurrent wrongdoer but Amaca is entitled to recover contribution from them: s 25(3) and (4), James Hardie (Civil Liability) Act.

Statutory recovery claim

1. Looking at the sub-paragraph of the definition of "payable liability" most likely to cover any obligation on Amaca to repay workers' compensation paid by WorkCover Queensland, subpar (h) includes the liability of Amaca to pay "a statutory recovery claim against the entity". Section 4(1) of the Winding Up Act defines this term as: statutory recovery claim against a liable entity means any of the following claims - (a) a claim against the entity under section 8E of the Workers' Compensation (Dust Diseases) Act 1942 for reimbursement of compensation paid or payable by the Workers' Compensation (Dust Diseases) Board, (b) any other claim against the entity for the payment of compensation, or the reimbursement of compensation paid, under a statute enacted in Australia in circumstances of a kind prescribed by the regulations.
2. Section 8E of the Workers' Compensation (Dust Diseases) Act 1942 (NSW) provides the Workers' Compensation (Dust Diseases) Authority with a right to be reimbursed for compensation paid, where damages are recovered: s 8E(1). Where the worker recovers damages from another party and an amount is deducted from the damages for compensation already paid, then that party is liable to pay the Authority the amount so deducted: s 8E(3).
3. No regulations have been made under subpar (b) of the definition of "statutory recovery claim". As such, a claim by WorkCover Queensland against Amaca for the reimbursement of compensation paid under the Workers' Compensation Rehabilitation Act 2003 (Qld) is not a "statutory recovery claim".

Claims not payable

1. As matters presently stand, Mr Davis and Mr Coveney's "proven personal asbestos claims" are a "payable liability" under s 32(1). Are their claims excluded under s 32(2) or 32(3)?
2. Section 32(2) provides that "a proven personal asbestos claim … may not be paid" during the winding up period if three elements are present. First, "the claimant has already been paid compensation (whether on the basis of a cause of action arising at general law, under the Corporations Act or any other legislation) in respect of the same personal injury or death that is the subject of the claim": s 32(2)(a). Compensation is not a defined term. Workers' compensation readily fits within the description of "compensation … on the basis of a cause of action arising … under … any other legislation … in respect of the same personal injury or death that is the subject of the claim" against a liable entity.
3. But it is necessary to also meet the criteria in s 32(b) and (c) before a "proven personal asbestos claim" against a liable entity is excluded by s 32(2). Section 32(2)(b) requires that the compensation was paid by James Hardie or a related person or entity. That requirement is not satisfied. Further, the compensation must be paid under a final judgment or binding settlement, in circumstances where the compensation was intended to compensate the claimant "fully and finally" for their injury: s 32(2)(c). I agree with WorkCover Queensland that these elements are inapt to describe workers' compensation payments made under the Workers' Compensation and Rehabilitation Act 2003 (Qld). Such compensation is not paid by James Hardie, nor under a judgment or settlement, but by acceptance of a claim for benefits under the Workers' Compensation and Rehabilitation Act 2003 (Qld). The trustee did not suggest otherwise.
4. I agree with WorkCover Queensland that the purpose of s 32(2) is to prevent double recovery against a James Hardie entity, or a related person, in respect of the same injury. While the defined term damages is not used in the sub-section, but "compensation (whether [paid] on the basis of a cause of action arising at general law, under the Corporations Act or any other legislation)", it is the double recovery of damages which is sought to be excluded when the three elements of s 32(2) are viewed together, rather than workers' compensation. (Section 32(2) may capture other forms of compensation which are not relevant to this debate).
5. Indeed, workers' compensation is dealt with in the next sub-section. Section 32(3) provides that "statutory recovery claims against a liable entity may only be paid" if the funding set aside under the funding agreement for the payment of such claims during a financial year is sufficient to cover all claims (s 32(3)(a)) or, if funding is insufficient, "in accordance with the regulations (s 32(3)(b)).
6. Regulations have been made for the purposes of s 32(3)(b) of the Winding Up Act: reg 4(1), James Hardie Former Subsidiaries (Winding Up and Administration) Regulation 2007. Under these regulations, the payment of "statutory recovery claims" for amounts payable under s 8E of the Workers' Compensation (Dust Diseases) Act 1942 are addressed in some detail. In short, if the annual funding set aside under the funding agreement for the payment of "statutory recovery claims" is insufficient, then the payment of such claims is deferred until the last week of the financial year. A detailed mechanism for apportioning the available funding between new and existing "statutory recovery claims" is then set out.
7. That is, the Winding Up Act does allow for "statutory recovery claims" to be paid if finances permit. So far, these provisions have only been activated in respect of reimbursement of compensation paid by the Workers' Compensation (Dust Diseases) Authority, and then with regulations to permit partial and deferred payment depending on available funding in any given year. No regulations have been made to extend this arrangement to compensation paid by WorkCover Queensland.

Time of payment

1. Having determined whether a claim is a payable liability and thus one which the trustee "may" pay (s 32(1)), the Winding Up Act then turns to when that claim can be paid. Section 33 sets out the matters to be considered when determining whether there are "sufficient funds" to pay the payable liabilities of a liable entity, including the amount of funding available from the SPF, loan facilities or funds of the liable entity, together with the amount of funding available from funds pooled as directed by the trustee. If there are sufficient funds, a liable entity (or the trustee) is authorised to pay the payable liabilities of the entity as and when they fall due for payment: s 34.
2. Section 35 enables the trustee, with the approval of the Minister, to apply to this Court for the approval of a payment scheme, where it appears reasonably likely there will be insufficient funds for all payable liabilities to be paid as and when they fall due. In that event, the trustee may direct the liable entities to ration the payment of payable liabilities: s 35(2). The Court may approve the payment by instalments, or the deferral of payment: s 35(5).
3. The liable entity may pay the payable liability, or the trustee may pay the payable claimant directly in discharge of the payable liability of the liable entity: s 36(1), 36(2). Section 4(1) defines the payable claimant of a liable entity as "any person to whom the entity has incurred a payable liability." The trustee is entitled to be indemnified by the liable entity in respect of such payments: s 36(3)-(3A).
4. In summary, Mr Davis and Mr Coveney's judgments are "payable liabilities" under the Winding Up Act; the statute provides that the claims "may be paid", either by Amaca or by the trustee on Amaca's behalf: s 32(1). But the statute does not require Amaca, or the trustee, to pay the payable liability. The Winding Up Act also contemplates that the funding agreement may impose additional restrictions on the trustee's power to make payments, and endorses the primacy of those obligations: ss 3(1)(b)(i), 23(1)(c), 24(1). (As will be seen, "payable liabilities" are not necessarily the same thing as an SPF Funded Liability: see [104].)
5. Further, the Winding Up Act anticipates that there may be insufficient funds to pay "payable liabilities" as and when due, such that a variety of methods of payment may be deployed, including pooling funds of liable entities, rationing payments and instalment plans. These payment options are explicable given the events which led to the "tripartite arrangement", being the establishment of the MRCF and the findings of the Special Commission of Inquiry. These events highlighted the difficulty in estimating future asbestos liabilities of the liable entities and the prospect that the SPF, together with the assets of the liable entities, may not be enough in any given year to meet claims. Whilst there is also some provision for the SPF to be used to pay statutory recovery claims, depending on the sufficiency of funding in any given financial year, those provisions do not presently extend beyond reimbursement of compensation paid by the Workers' Compensation (Dust Diseases) Authority.

THE CONTRACTS

1. Having considered the statute, the next step is to examine the "pre-dominant" instrument, being the funding agreement. As mentioned, the defined term Payable Liability is in substance the same in the funding agreement and the trust deed, but different to the Winding Up Act: Talifero at [10]. Before considering this defined term, it may assist to set out the broad structure effected by each contract.

Funding agreement

1. Looking first at the funding agreement, the parties are James Hardie Industries plc (JHI), James Hardie 117, the State of New South Wales and AICF. (In what follows, I have generally referred to JHI or James Hardie 117 as James Hardie.) The funding agreement is lengthy, comprising 152 pages plus 11 schedules and 11 annexures. As earlier noted, the funding agreement "involves navigating an extraordinary number of definitions and cross-references": Talifero at [62].
2. The agreement begins with extensive recitals, containing "a convenient if not complete record" of the Jackson Inquiry and subsequent events: Talifero at [29]. The recitals refer to the negotiations to resolve the underfunding of the MRCF, initially undertaken by the ACTU, Unions NSW and Mr Banton and, subsequently, also by the NSW Government: recital A(h). Recital A(i) notes: (emphasis added) "in 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 JHI Group to fully compensate, on an agreed basis, all proven current and future Australian Asbestos personal injury and death Claimants against the Liable Entities."
3. Mr Coveney placed some reliance on this recital in support of his preferred construction of the tripartite arrangement as intended to "fully compensate" him. I do not think the recital advances the argument, where the recital made plain that James Hardie agreed to "fully compensate, on an agreed basis", and where that basis is set in great detail in the funding agreement. Similarly, the recitals recorded entry into the Final Funding Agreement on 1 December 2005, noting the common intention of thereby making funding available by JHI "to pay, on the basis set out in the Original [Final Funding Agreement], Proven Claims against the Liable Entities": recital B.
4. Clause 3 provides: (emphasis added) 3.1 Agreed Structure The Parties agree to the structure set out in the Transaction Legislation [the Winding Up Act] and the Trust Deed for establishing the Compensation Funds [basically, the SPF trust] for the purpose of funding the payment of liabilities to Claimants in respect of Proven Claims, and for meeting reasonable Operating Expenses and Claims Legal Costs, and other Payable Liabilities, and for dealing with such Liable Entities. … 3.3 No recourse (a) The Parties agree that [subject to certain qualifications], neither JHI nor any other member of the JHI Group shall have any obligations, and there shall be no (and the Parties shall not seek) recourse to any of them, with respect to any liabilities of the Liable Entities, other than and then only to the extent set out in: (i) this deed and the Related Agreements [ancillary documents listed in Schedule 1]; and (ii) the [Winding Up Act] and the Release Legislation [the James Hardie (Civil Liability) Act 2005 and James Hardie (Civil Penalty Compensation Release) Act 2005] … (b) The Parties agree that Claimants have no rights arising under this deed or any Related Agreement against any of the Parties to this deed or any Related Agreement."
5. Unlike the Winding Up Act, the funding agreement and trust deed do not define "claims" but do define Claimants as follows: Claimant means an individual (or legal personal representative of an individual) who makes a Personal Asbestos Claim or a Marlew Claim.
6. As I read it, cl 3.1 specifies, in broad terms, the extent of James Hardie's funding obligations while cl 3.3 is akin to a release, making plain that the tripartite arrangement is the complete extent of James Hardie's funding obligations. (More detailed releases are given in cl 12.) As Sackville AJA also observed in Talifero, cl 3.1 of the funding agreement makes clear that the funding agreement is intended to operate within the framework or structure created by the Winding Up Act, including the provisions authorising the trustee to pay the "payable liabilities" of the liable entities: at [114].
7. Clause 4, "The Compensation Funds", concerns the role of the trustee. Clause 4.2 provides that the trustee is to manage all Payable Liabilities but is to pay only SPF Funded Liabilities: (emphasis added, bold in original) 4.2 Role of the Trustee The Trustee's role is to do the following …: … (c) manage … the response to all Payable Liabilities for itself or for or on behalf of the Liable Entities (and in respect of Payable Liabilities which are not SPF Funded Liabilities, on the basis that the Liable Entities must bear the full cost and all liabilities associated with such claims); (d) subject to it having the necessary funds to do so and clause 9.15 [rationing arrangements], pay (in accordance with and subject to clause 4.7 [indemnity from Liable Entities] and the provisions of the [Winding Up Act]) SPF Funded Liabilities … as the Trustee may in its discretion determine; … (i) generally do all things necessary and convenient for the purposes of handling and finalising Payable Liabilities for itself, or through, for the benefit of, or for or on behalf of, one or more of the Liable Entities (provided that nothing in this deed shall require the Trustee to incur any liability or pay any amount with respect to a liability which is not a SPF Funded Liability. …
8. Clause 4.5 of the funding agreement provides that, in the event of inconsistency with the trust deed, the funding agreement prevails save to the extent that the Winding Up Act established or governs the trustee.
9. Clause 6 addresses the all-important funding obligations of James Hardie. James Hardie 117 is nominated as the entity primarily liable to provide funding: cl 6.1. Critically, cl 8 provides again that the trustee may only pay SPF Funded Liabilities: (emphasis added, bold in original) 8 SCOPE OF OBLIGATIONS 8.1 Application of funds The Parties acknowledge that it is the intent of this deed and the [Winding Up Act] and the Trust Deed to ensure that: (a) the monies and other assets provided to the Trustee (including the JHI 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 JHI Group. 8.2 Excluded Claims Each of the Parties agree and acknowledge that: (a) this deed and the [Winding Up Act] 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 JHI, the Performing Subsidiary or any other member of the JHI 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 …; (iv) any Excluded Marlew Claims; (v) any liabilities of the Liable Entities other than SPF Funded Liabilities.
10. In short, James Hardie 117 was obliged to provide initial funding of $184.3 million and an annual payment: cl 9. The parties acknowledged that the assets of the SPF may, from time to time, be insufficient to meet in full all Operating Expenses, Proven Claims, Claims Legal Costs and other SPF Funded Liabilities as and when due; in that event, the trustee may ration payments under Part 4 of the Winding Up Act: cl 9.15(a) and (b). If it becomes apparent to the trustee that its available assets, and those of the Liable Entities, are insufficient to fund all reasonably foreseeable SPF Funded Liabilities, then the trustee is to notify the NSW Government and JHI and may defer the payment of Proven Claims under the Winding Up Act: cl 9.15(c)(i). In that event, whilst JHI Group will not be relieved from its funding obligations, nor will the JHI Group have any liability in respect of the shortfall: cl 9.15(c)(ii).
11. Clause 13 of the funding agreement is entitled "No Adverse or Discriminatory Legislative or Regulatory Action and Discussions with Other Governments". Other Government is defined as "each of the Australian government and the governments of the states and territories of Australia other than the NSW Government": cl 1.1. The NSW Government agreed not to undertake any adverse legislative action directed at James Hardie, the trustee, or the Liable Entities in respect of their asbestos liabilities: cl 13.2. If Other Governments introduce a scheme providing compensation or benefits to Claimants, to which James Hardie, the trustee or any Liable Entity is required to make payments, then James Hardie's funding obligations will be adjusted to ensure there is no net increase: cl 13.4.
12. Clause 13.7 deals with "statutory recovery claims" consistently with s 32(3) of the Winding Up Act and the accompanying regulations. Clause 13.7(a) provides: (emphasis added) 13.7 Limitations on Recoveries (a) (i) For the purposes of this cl 13.7, "Recoveries" means any statutory entitlement of the NSW Government or any Other Government or any governmental agency or authority of any such government ("Relevant Body") to impose liability on or to recover an amount or amounts from any person in respect of any payments made or to be made or benefits provided by a Relevant Body in respect of Personal Asbestos Claims or Marlew Claims (other than as a defendant or in settlement of any claim, including a cross claim or claim for contribution) that is from time to time a "statutory recovery claim" for the purposes of the [Winding Up Act]. Note: Any statutory entitlement of a Relevant Body properly paid out of the damages payable as part of a Proven Claim pursuant to a judgment or settlement of a Personal Asbestos Claim or a Marlew Claim is not to be treated as a Recovery for the purposes of this clause 13.7. (ii) The Parties agree and acknowledge that the intent of this clause 13.7 is to establish a framework for and to limit the JHI Group's funding of Recoveries under this deed and that the reference in section 32(3)(a) of the [Winding Up Act] to "the funding set aside" under this deed for the payment of statutory recovery claims is a reference to the Annual Limit and the Term Limit provide for in clause 13.7(b).
13. The fact that a statutory entitlement must be a "statutory recovery claim" under the Winding Up Act before it can qualify as "Recoveries" is emphasised in the Note to cl 13.7(a)(i). As I read it, to the extent that, say, Medicare payments are deducted from damages before a Claimant receives payment does not, without more, make Medicare a "statutory recovery claim" absent regulations, nor would Medicare payments be an item which James Hardie is obliged to fund under cl 13.7(b).
14. The fact that a statutory entitlement of a Relevant Body cannot be a Recovery unless it is a "statutory recovery claim" under the Winding Up Act and regulations is reinforced by cl 13.7(e) and (f). The parties agreed that Recoveries are to be paid in accordance with the regulations as if reference to "statutory recovery claims" in the regulations is a reference to Recoveries, unless the parties otherwise agree in writing: cl 13.7(e). Further, the parties acknowledge NSW Government's obligation not to undertake any adverse legislative action and "the NSW Government undertakes and agrees that it will not amend the [regulations], or make any regulation to prescribe any claim as a 'statutory recovery claim' without the consent in writing of JHI": cl 13.7(f)(ii).
15. Clause 13.7(b) provides that, in consideration of JHI and James Hardie 117's agreement "to include Recoveries within the scope of the funding arrangements set out in this deed (but only to the limited extent provided for in this clause 13.7), the NSW Government agrees to use its best endeavours to ensure, through the [Winding Up Act], that the Liable Entities (or the Trustee on their behalf) cannot be compelled to pay (whether paid directly to Relevant Bodies or as a component of amounts payable or liabilities incurred in respect of Personal Asbestos Claims …) Recoveries which in aggregate exceed in any Financial Year" the lesser of the Liable Entities' liability to pay Recoveries or $750,000 per annum (indexed for inflation) and, in aggregate, not more than $30 million over the term of the funding agreement.
16. If these limits were exceeded, then James Hardie's funding obligation will be adjusted by the amount of the excess as if the excess was a payment under a scheme to which cl 13.4 applies, that is, the payment obligations will be adjusted to ensure there was no net increase in the funding obligation: cl 13.7(c). Likewise, if a Liable Entity, the trustee, or James Hardie is required to pay any amount representing any statutory entitlement of a Relevant Body that is not a Recovery for the purposes of cl 13.7, or an amount otherwise permitted to be paid by the funding agreement or the Winding Up Act, then the payment obligations of James Hardie will be adjusted accordingly as if the payment was made under a scheme to which cl 13.4 applied: cl 13.7(c).
17. In sum, the obligation of James Hardie to pay Recoveries is very tightly circumscribed by the funding agreement, together with the Winding Up Act. Is WorkCover Queensland entitled to recover workers' compensation paid to Mr Davis and Mr Coveney as a Recovery? The first question is whether WorkCover Queensland falls with the definition of "Other Government" or "Relevant Body". According to the Workers' Compensation and Rehabilitation Act 2003 (Qld), WorkCover is a body corporate (s 381) that has a "statement of corporate intent" (s 401) and a board of directors (s 424). It appears to be an authority of Other Governments and thus a Relevant Body.
18. The second question is whether WorkCover's first charge imposed by s 207B is a "statutory entitlement of [a Relevant Body] to impose liability on or to recover an amount for any person in respect of any payments made … or benefits provided by a Relevant Body in respect of Personal Asbestos Claims … that is from time to time a "statutory recovery claim" for the purposes of the [Winding Up Act.]": cl 13.7(a). As mentioned, given the absence of regulations including WorkCover Queensland as a "statutory recovery claim", this element is not satisfied. James Hardie is not obliged to fund Recoveries to WorkCover Queensland under cl 13.7 of the funding agreement.

Marlew Claim

1. Again, in order to address some of the submissions which were made, it is necessary to understand what a Marlew Claim is, where that defined term appears in cl 13.7 of the funding agreement and is embedded in other key definitions.
2. Clause 1.1 of the funding agreement (and trust deed) defines a Marlew Claim as, essentially, a personal injury claim brought by an individual or their legal personal representative in the Tribunal for damages arising from exposure to asbestos in the Baryulgil region from mining conducted by Marlew "and which is not an Excluded Marlew Claim". An Excluded Marlew Claim is defined in c 1.1 of the funding agreement (and trust deed) as: (emphasis added) Excluded Marlew Claim means a Marlew Claim: (a) covered by the indemnities granted by the Minister of Mineral Resources under the deed between the Minister, Fuller Earthmoving Pty Limited and James Hardie Industries Limited dated 11 March 1996; or (b) by a current or former employee of Marlew in relation to an exposure to Asbestos in the course of such employment to the extent: (i) the loss is recoverable under a Worker's Compensation Scheme or Policy; or (ii) the Claimant is not unable to recover damages from a Marlew Joint Tortfeasor in accordance with the Marlew Legislation; (c) by an individual who was or is an employee of a person other than Marlew arising from exposure to Asbestos in the course of such employment by that other person where such loss is recoverable from that person or under a Worker's Compensation Scheme or Policy: or (d) in which another defendant (or its insurer) is a Marlew Joint Tortfeasor from whom the plaintiff is entitled to recover compensation in proceedings in the Dust Diseases Tribunal, and the Claimant is not unable to recover damages from that Marlew Joint Tortfeasor in accordance with the Marlew Legislation.
3. In short, a Marlew Claim does not include claims the subject of the indemnity granted by the Minister for Mineral Resources in 1996, which released JHIL from liability for claims by employees of the Department of Mineral Resources or Fuller Earthmoving Pty Ltd in connection with the rehabilitation of the mine: see [60]. Nor does it include a claim by workers, whether employed by Marlew or third party employers, to the extent that their loss is recoverable from or under a Worker's Compensation Scheme or Policy, the third party employer or a joint tortfeasor. The definitions are consistent with Part 4 of the James Hardie (Civil Liability) Act 2005, restricting Marlew Claims against Amaca "as a defendant of last resort".
4. Perhaps significant in resolving the issue in this case, an Excluded Marlew Claim expressly includes a worker employed by a third-party employer to the extent that the loss is recoverable from that employer or a Worker's Compensation Scheme or Policy. The same cannot be said for the contractual provisions concerning other claims.

Trust deed

1. Turning to the trust deed, the parties are JHNIV (as settlor) and AICF (as trustee). The key terms, again, are SPF Funded Liability and Payable Liability. The trustee holds the trust monies "on trust for the Charitable Purpose": cl 2.3(a). The Charitable Purpose is set out in cl 3: cl 1.1. Clause 3 provides: (emphasis added) 3. 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 the 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; and 3.2 the following additional purposes which are for the Trustee to: … (c) manage … the response to all Payable Liabilities for itself or for or on behalf of the Liable Entities, including by entry into Claims Management Agreement with the Liable Entities (and in respect of Payable Liabilities which are not SPF Funded Liabilities, on the basis that the Liable Entities must bear the full cost of all liabilities associated with such claims); … (e) subject to it having the necessary funds to do so and clause 9.15 of the Final Funding Agreement [rationing arrangements], pay in accordance with and subject to clause 4.7 of the Final Funding Agreement [indemnity by Liable Entities] and the provisions of the [Winding Up Act]… as the Trustee may in its discretion determine; … … (j) generally do all things necessary and convenient for the purposes of handling and finalising Payable Liabilities for itself or for and on behalf of the Liable Entities (provided that nothing in the Final Funding Agreement shall require the Trustee to incur any liability or pay any amount with respect to a liability which is not a SPF Funded Liability);
2. Clause 5 of the trust deed sets out the trustee's powers. Clause 5.3(h) provides that the Charitable Fund Property may only be dealt with and applied by the trustee in connection with or in furtherance of the Charitable Purpose. Clause 5.8 sets out limitations on the trustee's powers, including: "5.8 Limitations on Powers of the Trustee (a) Notwithstanding any other provisions 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 [Winding Up Act].
3. In Talifero, Sackville AJA observed that the effect of cl 5.8(a), when read with s 32(1) of the Winding Up Act, is that the trustee is permitted only to pay "payable liabilities": at [84]. Clause 5 continues: 5.9 Exercise of Discretion The Trustee may at its absolute discretion decide how and when to exercise its Powers. 5.10 Compliance with the Final Funding Agreement (a) The Trustee must at all times comply fully with the obligations imposed on the Trustee by the Final Funding Agreement. (b) In the event of any inconsistency between the Final Funding Agreement and this Deed, the terms of the Final Funding Agreement prevail to the extent of the inconsistency but otherwise this Deed shall have effect.
4. Power means a power, right, authority, discretion or remedy which is conferred on the trustee by the trust deed, the funding agreement, the constitution of the trustee, the Winding Up Act or other laws of the State: cl 1.1. Clause 5.10 reinforces that the funding agreement is the "pre-dominant instrument".

SPF Funded Liability

1. Having considered the broad structure effected by the contracts, one can focus on the key defined terms. It will have been observed from the overall structure of the funding agreement and trust deed that the trustee may only apply the SPF to SPF Funded Liabilities. The Liable Entities must bear the full cost of Payable Liabilities which are not SPF Funded Liabilities. What then is an SPF Funded Liability? Clause 1.1 of the funding agreement provides: SPF Funded Liability means: (a) only those liabilities described in paragraphs (a), (b), (c), (e), (g) and (h) 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 JHI and the NSW Government agree in writing is a "SPF Funded Liability" or a category of "SPF Funded Liability".
2. The comparable definition in the trust deed does not refer to subpar (h), which is of no moment. As Mr Coveney submitted, subpar (b) of the definition permits the parties, in the future, to extend the category of claims which are a SPF Funded Liability, where circumstances may alter (and, I add, where James Hardie and the NSW Government agree).

Payable Liability

1. The liabilities described in paras (a), (b), (c), (e), (g) and (h) of the definition of Payable Liability are as follows (cl 1.1, funding agreement): (emphasis added) Payable Liability means: (a) any Proven Claim (whether arising before or after the date of this deed); (b) Operating Expenses: (c) Claims Legal Costs: … (e) any pre-commencement claim (as defined in the [Winding Up Act]) against a Liable Entity; … (g) Recoveries within the meaning and subject to the limits set out in clause 13.7; and (h) any amount payable in connection with an Authorised Loan Facility …, but in the cases of paragraphs (a), (c) and (e), excludes any such liabilities or claims to the extent that they have been recovered or are recoverable under a Worker's Compensation Scheme or Policy.
2. The sub-paragraphs of the definition of Payable Liability broadly correspond with the statutory definition of "payable liability", where "Proven Claim" in subpar (a) of the contractual documents is akin to "proven personal asbestos claim" and "proven personal asbestos contribution claim" in subpars (a) and (b) of the statutory definition. Operating expenses, legal costs and pre-commencement claims may also be seen in the contractual definition. "Recoveries" in subpar (g) of the contractual definition corresponds with a "statutory recovery claim" in subpar (h) of the statutory definition, as confirmed by the definition of "Recoveries" in cl 13.7(a)(i) of the funding agreement.
3. In the exclusion at the end of the definition of Payable Liability, "such" liabilities or claims refers to those described in subpars (a), (c) and (e) of the definition. "They" refers to the same liabilities or claims described in subpars (a), (c) and (e). The fact that the exception does not include subpar (g) of the definition of Payable Liability makes sense. Where Recoveries may be a Payable Liability. It would not make sense to include and exclude a Payable Liability in respect of a recovery under a workers' compensation scheme.
4. Before considering the meaning of the exclusion in more detail, it is necessary to consider the sub-paragraphs of the definition of Payable Liability which are dealt with in the exclusion, being subpars (a), (c) and (e). Sub-paragraph (a), "any Proven Claim", appears most relevant to Mr Davis and Mr Coveney's claims. Proven Claim is defined in cl 1.1 of the funding agreement (and identically in the trust deed) as follows: (emphasis added) 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 JHI 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 JHI Group pursuant to such judgment or settlement).
5. This definition is indistinguishable from the statutory definition of "proven personal asbestos claim". Sub-paragraph (c), "Claims Legal Costs", is defined as follows: Claims Legal Costs means all costs, charges, expenses and outgoings incurred or expected to be borne by the Trustee or the Liable Entities, in respect of legal advisors, other advisors, experts, Court proceedings and other dispute resolution methods in connection with Personal Asbestos Claims and Marlew Claims but in all cases excluding any costs included as a component of calculating a Proven Claim.
6. The costs include those of the trustee or the liable entities. The definition prevents double counting of such costs, excluding costs to the extent that they have already been included as a component of calculating a Proven Claim. Finally, subpar (e) is "any pre-commencement claim (as defined in the [Winding Up Act]) against a Liable Entity". Section 4(1) of the Winding Up Act defines this term as follows: Pre-commencement claim against a liable entity means any claim that was made or brought in legal proceedings commenced before 1 December 2005.
7. The broad definition of "claim" in the Winding Up Act will be recalled: see [48]. There is some duplication in subpar (e), where a Pre-commencement claim may only be against a liable entity, and this qualification is repeated in subpar (e) of the definition of Payable Liability. This is not the only instance of duplication in the drafting: see [122].

Personal Asbestos Claim

1. Subparagraph (a) of the definition of Payable Liability is relevant here, being a Proven Claim. A Proven Claim includes a Personal Asbestos Claim, which is defined in cl 1.1 of the funding agreement (and the trust fund) as follows: (emphasis added) Personal Asbestos Claim means, subject to clause 13.7: (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 … which: (i) arises from exposure to Asbestos occurring 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.
2. Sub paragraph (a) is relevant here, being a personal injury claim for damages arising from the exposure to asbestos. This definition is broadly similar to the statutory definition of "personal asbestos claim". But the contractual definition adds an exclusion - which also appears in the definition of Payable Liability - excluding "any Marlew Claim and any other claim" to the extent that it has been recovered under a Worker's Compensation Scheme or Policy. The reference in the chapeau of the definition of Personal Asbestos Claim - "Personal Asbestos Claim means, subject to clause 13.7" - is a further reminder that James Hardie's obligation to fund Recoveries is strictly confined.
3. In the exclusion, "each case" refers to subpars (a), (b) and (c) of the definition of Personal Asbestos Claim. "Any other claim" means any claim referred to in subpars (a), (b) and (c) other than a Marlew Claim. We are not here concerned with Marlew Claims. In short, a personal injury claim for damages is a Personal Asbestos Claim except to the extent that "they" - the claims - have been recovered or are recoverable under a Worker's Compensation Scheme or Policy.

The exclusion

1. It will have been observed that the exclusions to Payable Liability and Personal Asbestos Claim are largely identical. The parties agreed that slight differences should not be overly emphasised, where there was no reason to think that the drafters intended to express something fundamentally different; see likewise Asbestos Injuries Compensation Fund Ltd at [80]-[81].
2. Both exclusions use the defined term Worker's Compensation Scheme or Policy. Clause 1.1 of the funding agreement (and the trust deed) define this term as follows: (emphasis added) Worker's Compensation Scheme or Policy means any of the following: (a) any worker's compensation scheme established by any law of the Commonwealth of Australia or of any State or Territory of Australia; (b) any fund established to cover liabilities under insurance policies upon the actual or prospective insolvency of the insurer (including without limitation the Insurer Guarantee Fund established under the Worker's Compensation Act 1987 (NSW)); and (c) any policy of insurance issued under or pursuant to such a scheme.
3. The use of the word "any" in the chapeau and in each of the sub-paragraphs of the definition embraces each and every scheme, fund or policy there described. Reference to "any" policy of insurance in subpar (c) of the definition of Worker's Compensation Scheme or Policy encompasses policies of workers' compensation insurance held by a liable entity or third-party employers. This is so as a matter of plain language.
4. I note that the definition of Excluded Marlew Claims expressly refers to third-party employers, whilst the definition of Worker's Compensation Scheme or Policy does not. This may suggest that the drafters did not intend to capture workers' compensation payments made in respect of a policy obtained by a third-party employer. But there is just no hint in the "tripartite arrangement" that any delineation was sought to be drawn between workers' compensation payments made in respect of a policy issued to a liable entity or to another employer. Where the definition of a Worker's Compensation Scheme or Policy embraces "all" policies of insurance, there is no matter of language which would require a constrained deployment of the definition. Nor is there any context or surrounding circumstances which would warrant such a construction.
5. What is then meant by the common phrase in the exclusions, "to the extent that [the liability or claim] has been recovered or are recoverable under a Worker's Compensation Scheme or Policy"? While "in strict legal language recover means recover by action … it is now often used in the larger sense of obtaining in any legal manner": Haines v Welch (1868) L R 4 CP 91 at 93; followed in Bluehaven Transport Pty Ltd v Deputy Commissioner of Taxation (2000) 157 FLR 26 at [13]-[14] (Williams J). In Cinema Plus Ltd (Administrators Appointed) v Australia and New Zealand Banking Group Ltd [2000] NSWCA 195, Sheller JA considered "Recover" means: "to get back into one's hands or possession something lost or taken away": at [121]. Everything depends on context. As used in the exceptions, I think "recovered or recoverable" is used in its ordinary English meaning 'to make up for or make good loss or damage to one's self': Macquarie Dictionary (9th ed, 2024, Pan Macmillan).
6. That is, if a personal injury or death claim made against a liable entity has been fully recovered under a Worker's Compensation Scheme or Policy, then the claim is wholly excluded. If a personal injury or death claim made against a liable entity has been partly recovered under a Worker's Compensation Scheme or Policy, then it is not a Personal Asbestos Claim or Payable Liability to that extent.
7. The only curiosity is the fact that the exclusion is stated twice, both in the definition of Personal Asbestos Claim and in the definition of Payable Liability. This appears to be for 'good measure', to ensure that a Payable Liability in subpar (a), and thus a SPF Funded Liability, excludes claims to the extent that they have been recovered under a Worker's Compensation Scheme or Policy. A further element of duplication arises as the exclusion also applies to Marlew Claims. The definition of Excluded Marlew Claim has already removed claims by workers, whether employed by Marlew or third-party employers, to the extent that their loss is recoverable from that employer.
8. WorkCover Queensland argued that the exclusion only applied to damages and not a statutory liability to pay defined benefits, which does not relieve the liability of a wrongdoer in damages: Northern Sydney Local Health District v Amaca Pty Ltd (under NSW administered winding up) [2017] NSWCA 251 at [69]; State of Queensland v Seltsam (2019) 2 QR 495 at [16]; James Hardie & Co Pty Ltd v Newton (1997) 42 NSWLR 729. Along the same lines, Mr Davis submitted that the "claim" was that propounded in the Tribunal: Talifero at [108]. (Sackville AJA's observations there on the statutory definition of "claim" addressed a particular argument raised in respect of a different problem and does not transpose here.)
9. I accept WorkCover Queensland's analysis of the difference between common law damages and the nature of compensation paid under the Workers' Compensation and Rehabilitation Act 2003 (Qld). I accept also that the concepts of compensation and damages have similar characteristics: Haines v Bendall (1991) 172 CLR 60 at 63, 68-69; Harris (as Administratrix of the Estate of Hollins) v Commercial Minerals Ltd (1996) 186 CLR 1 at 18. Consideration of these concepts in other statutes or contractual arrangements is of limited assistance; the question is what is the proper construction of the funding agreement and trust deed read in light of the Winding Up Act?
10. There are four problems with the construction proposed by WorkCover Queensland.
11. First, as a matter of language, the argument requires a restriction to be placed on the exclusion which is not readily apparent from the words used, nor otherwise evident from the contractual documents in which the exclusion appears, nor the context or surrounding circumstances. The funding agreement is not concerned with a precise identity, in terms of underlying cause of action or remedy, between the claim brought by an injured person in the Tribunal and any claim they may have lodged with a workers' compensation authority in respect of the same injuries. The funding agreement is concerned with the extent of James Hardie's obligation to fund the SPF to pay asbestos claims made against liable entities, whatever those claims may be and wherever those claims may be brought.
12. Through a series of defined terms, James Hardie's obligation is paired back, removing any obligation to fund claims which are not brought by an individual (or their legal personal representative), not for economic loss, not caused by exposure to asbestos in Australia or made in Australia, not brought in an Australian court or tribunal and not proven. James Hardie's funding obligation is further paired back "to the extent [the claim has] been recovered … under a Worker's Compensation Scheme or Policy". The exclusion simply reduces the funding obligation - in clear and plain terms - to the extent that the claimant has already obtained funds in respect of loss caused by their asbestos injuries from workers' compensation.
13. Second, adopting the construction proposed by WorkCover Queensland would radically reduce the operation of the exception, where common law damages are generally not paid under workers' compensation schemes. Whilst I do not expect the draftspersons to have had intricate knowledge of the workings of workers' compensation schemes across the land, it is the very nature of such schemes that they are 'no fault', paying workers scheduled payments for their injuries without limiting their ability to recover (generally) higher common law damages from responsible parties in due course. A court will strain against interpreting a contract so that a particular clause is nugatory or ineffective: Chapmans Ltd v Australian Stock Exchange Limited (1996) 67 FCR 402 at 411 (Lockhart and Hill JJ).
14. Third, for the trustee to pay money to WorkCover Queensland from the funds available to fund Payment Liabilities generally would run counter to the very specific arrangements to pay moneys to statutory authorities, which I have endeavoured to explain. The Winding Up Act and funding agreement together provide a mechanism by which a workers' compensation authority can recover payments from the SPF, which is very tightly circumscribed. WorkCover Queensland's entitlement to reimbursement could be a Payable Liability and, more relevantly, an SPF Funded Liability, if it met the requirements of subpar (g) of the definition of Payable Liability - "Recoveries within the meaning and subject to the limits set out in clause 13.7" - but presently does not in the absence of any regulations making this a "statutory recovery claim". The construction of the exception for which WorkCover Queensland contends is inconsistent with cl 13.7, where it is important to construe the provisions as a whole having regard to purpose and context.
15. Fourth, the construction contended for by WorkCover Queensland does not work particularly well for the exclusion to the definition of Payable Liability, which picks up liabilities or claims described in sub-par (c) of the definition, including Claims Legal Costs. This item cannot be described as common law damages either but is subject to the same exclusion. This indicates that the exclusion is not limited to damages.
16. As the trustee submitted, ss 32(2) and 32(3) of the Winding Up Act and the exclusion in the funding agreement seek to address the same issue in different ways, limiting recourse to the SPF in circumstances where the asbestos victim is recovering funding in respect of their injuries from another source. It is rational for the tripartite arrangement not to pay money to a person suffering from an asbestos injury where they have recovered money for that injury under a Worker's Compensation Scheme or Policy, be it one for the benefit of Amaca or a third-party employer. From the worker's perspective, they will receive full compensation once a 'top up' payment is received from the trustee, in addition to workers' compensation already received. From the trustee's perspective, funds are retained to pay other injured parties and extend the life of the fund.

JUDICIAL ADVICE

1. Bringing all of this together, under the Winding Up Act, Mr Davis and Mr Coveney's claims are a "payable liability" which the trustee "may" pay under s 32(1), but subject to the conditions on which funding was provided in the funding agreement: sub-ss 3(1)(b)(i), 23(1)(c), 24(1), Winding Up Act.
2. The trustee may only apply the SPF to SPF Funded Liabilities: cll 4.2(c), (d), (i), 8.1(a) and 8.2(b)(v), funding agreement; cl 3.2(c) and (j), trust deed.
3. Under the funding agreement and trust deed, Mr Davis and Mr Coveney's claims against Amaca are Personal Asbestos Claims, but only to the extent that their claims had not been recovered under a Worker's Compensation Scheme or Policy. Having obtained judgment in the Tribunal, their Personal Asbestos Claims - excluding their claims to the extent that they had been recovered under such a scheme or policy - became Proven Claims. These Proven Claims became a Payable Liability within subpar (a) of the contractual definition, which repeats the exclusion that the claims are excluded to the extent that they have been recovered under a Worker's Compensation Scheme or Policy. This Payable Liability - excluded to the extent that it has been recovered under a Worker's Compensation Scheme or Policy - is an SPF Funded Liability under subpar (a) of the contractual definition of that term.
4. Turning to the exclusion, the Workers' Compensation and Rehabilitation Act 2003 (Qld) establishes a workers' compensation scheme within the meaning of subpar (a) of the definition of Worker's Compensation Scheme or Policy in the funding agreement. Section 5 of that Act provides: 5 Workers' compensation scheme (1) This Act establishes a workers' compensation scheme for Queensland - (a) providing benefits for workers who sustain injury in their employment, for dependants if a worker's injury results in the worker's death, for persons other than workers, and for other benefits; and (b) encouraging improved health and safety performance by employers.
5. "Any" policy of insurance issued under or pursuant to that scheme, whether to Amaca, Northside Demolitions or Peter Bunney Enterprises, falls within the subpar (c) of the definition of Worker's Compensation Scheme or Policy.
6. Mr Davis has received workers' compensation payments of $418,640 and has a judgment in his favour against Amaca in the amount of $897,020.64. The SPF Funded Liability is $897,020.64 to the extent that it has not been recovered in workers' compensation, that is, $478,380.64. The trustee has already paid $476,820 and thus the balance of the SPF Funded Liability is $1,560.64.
7. Mr Coveney has received workers' compensation payments of $873,720. He has a binding settlement with Amaca of $1 million plus costs in the agreed amount of $190,000. The SPF Funded Liability is $1,190,000 to the extent that it has not been recovered in workers' compensation, that is, $316,280.
8. The trustee does not have power to pay the judgment amounts entered against Amaca in favour of Mr Davis or Mr Coveney, but only the SPF Funded Liability, being $478,380.64 and $316,280 respectively. The conundrum is that, even if the trustee pays the SPF Funded Liability to Mr Davis and Mr Coveney, those funds will become subject to a charge in favour of WorkCover Queensland in their hands such that they will not retain those funds and thereby, in combination, be compensated for their injuries in full.
9. The provisions of the trust instrument provide that, subject to having the necessary funds to do so, the trustee's role is to pay SPF Funded Liabilities … "as the Trustee may in its discretion determine": cl 4.2(d), funding agreement; cl 3.2(e), trust deed. Further, cl 5.9 of the trust deed provides that the trustee "may at its absolute discretion decide how and when to exercise its Powers."
10. It will have been observed that the trust deed refers to the trustee's powers rather than duties. The choice of language was no doubt deliberate. A trustee's powers are "acts which trustees may do if they think fit - namely, those acts in respect of which they have a discretion whether they will do them or not … In the case of duties, the trustees are bound to do the thing prescribed, whether in their view it is wise to do it or not. … In the case of powers … [t]rustees may exercise their discretion by deciding not to perform a discretionary act, but they must in fact exercise their discretion … and if they decide that the discretionary act should be done, then they are bound to do it:" JD Heydon and MJ Leeming, Jacobs' Law of Trusts (8th ed, 2016, LexisNexis) at [16-06].
11. The limits of the discretion conferred on the trustee, being "absolute discretion", are wide: Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 at 427, citing Whishaw v Stephens; Re Gulbenkian's Settlement Trusts [1970] AC 508 at 518. In Whishaw v Stephens, Lord Reid considered a trustee's absolute discretion to distribute trust funds at 518: (citations omitted) "So if they decide in good faith at appropriate times to give none of the income to any of the beneficiaries the court cannot pronounce their reasons to be bad. And similarly if they decide to give some or all of the income to a particular beneficiary the court will not review their decision. … But their 'absolute discretion' must, I think, be subject to two conditions. … they cannot simply push aside the power and refuse to consider whether it ought in their judgment to be exercised. And they cannot give money to a person who is not within the classes of persons designated by the settlor …"
12. In Owies v JJE Nominees Pty Ltd [2022] VSCA 142, Kyrou, Niall and Walker JJA considered a trustee's "absolute and uncontrolled" discretion to distribute income each year and noted, "Despite the breadth of the language used, it may be accepted that the discretionary power is not without bounds": at [81]. The nature of the trust and the terms in which the power is expressed will be important in determining the matters to which the trustee must have regard in the exercise of a power, noting the trustee's obligation to be properly informed: at [92]-[93]. In considering how a trustee may exercise their discretion where the number of potential objects of a trust might be very large, the Court (at [96]) cited Sir Robert Megarry VC in Re Hay's Settlement Trusts [1981] 3 All ER 786 at 793: "The trustee must not simply proceed to exercise the power in favour of such of the objects as happen to be at hand or claim his attention. He must first consider what persons or classes of persons are objects of the power within the definition in the settlement or will. In doing this, there is no need to compile a complete list of the objects, or even to make an accurate assessment of the number of them: what is needed is an appreciation of the width of the field, and thus whether a selection is to be made merely from a dozen or, instead, from thousands or millions. … Only when the trustee has applied his mind to the 'size of the problem' should he then consider in individual cases whether, in relation to other possible claimants, a particular grant is appropriate. In doing this, no doubt he should not prefer the undeserving to the deserving; but he is not required to make an exact calculation whether, as between deserving claimants, A is more deserving than B."
13. In an earlier decision, Cowan v Scargill [1984] 2 All ER 750, Sir Robert Megarry VC also observed at 760: "The starting point is the duty of trustees to exercise their powers in the best interests of present and future beneficiaries of the trust, holding the scales impartially between different classes of beneficiaries. This duty of the trustees towards their beneficiaries is paramount. … When the purpose of the trust is to provide financial benefits for their beneficiaries, as is usually the case, the best interests of the beneficiaries are normally their best financial interests…" Cowan v Scargill was followed in Gritzman v McRae [2022] NSWSC 745 at [184] (per Ward CJ in Eq).
14. The SPF was established to last for 40 years. (The prescribed end date of the funding agreement is 31 March 2045, which may be extended pursuant to cl 9.9.) The tripartite arrangement is replete with mechanisms to ensure the sustainability and longevity of the SPF to meet claims over that period, but also recognises that this goal may not be achieved in any given year or at all. Indeed, the principal object of the Winding Up Act is "to ensure that not only present, but also future" asbestos liabilities of liable entities are dealt with in accordance with the funding agreement and "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": s 3(1)(b). As such, the trustee is entitled to consider whether it has the necessary funds to pay SPF Funded Liabilities to Mr Davis and Mr Coveney and also whether it should pay those SPF Funded Liabilities having regard to the "tripartite arrangement" more broadly, the Charitable Purpose and the interests of future beneficiaries of the SPF.
15. True it is that the Court "has no concern with the manner in which the plaintiff uses [damages] awarded to him; the plaintiff is free to do what he likes with it": Todorovic v Waller (1981) 150 CLR 402 at 412 (Gibbs CJ and Wilson J). Presumably, the trustee would feel equally sanguine if it knew that the SPF Funded Liabilities paid to Mr Davis and Mr Coveney would stay in their hands. But WorkCover Queensland asserts a charge over those monies. The trustee is amenable to paying the SPF Funded Liabilities if WorkCover Queensland will exercise its discretion not to enforce its charge: Northern Sydney Local Health District v Amaca Pty Ltd (under NSW administered winding up) [2017] NSWCA 251 at [63] (where Basten JA observed "there is no statutory obligation to pursue moneys which might become the subject of the charge"). WorkCover Queensland does not agree not to assert its charge over any payments made by the trustee to Mr Davis or Mr Coveney.
16. As such, I consider that the trustee would be justified in not paying the judgments entered against Amaca in favour of Mr Davis or Mr Coveney to the extent that these gentlemen have already recovered those amounts from WorkCover Queensland. The trustee has no power to proceed otherwise as the judgment sums do not equate to the SPF Funded Liability.
17. Further, the trustee would be justified in not paying the SPF Funded Liabilities to Mr Davis or Mr Coveney where WorkCover Queensland has asserted a charge over any payments made by the trustee to Mr Davis or Mr Coveney. To proceed otherwise would circumvent the strict arrangements in place for the SPF to be used to pay Recoveries or "statutory recovery claims". Further, such payments from the SPF, whilst within power, would not actually benefit the Claimants but would pass straight through to WorkCover Queensland. The funds may be better deployed by attending to payment of other SPF Funded Liabilities, either today or in the remaining years of the fund.
18. Non-payment by the trustee does not relieve Amaca of its liability to pay Mr Davis and Mr Coveney. Amaca is the judgment debtor, not the trustee. As such, non-payment by the trustee does not "deprive a sufferer from mesothelioma … of the legal entitlement to enforce a final judgment obtained in accordance with law against the entity held responsible for inflicting the condition": Talifero at [124]. Mr Coveney and Mr Davis still have their judgment debts against the tortfeasor, Amaca, albeit with the attendant risk that the wrongdoer does not have the means of payment. WorkCover Queensland continues to have rights against Amaca as an "other person from whom the damages are recoverable": s 207B(4), Workers' Compensation and Rehabilitation Act 2003 (Qld). Those rights are subject to the limitations imposed by Part 4 of the Winding Up Act on WorkCover's ability to pursue Amaca for those monies.

Orders

1. For these reasons, I make the following orders: 1. Order pursuant to s 55 of the James Hardie Former Subsidiaries (Winding Up and Administration) Act 2005 (NSW) and s 63 of the Trustee Act 1925 (NSW) that the plaintiff would be justified in not paying the sum of $873,720 to either WorkCover Queensland under s 207B(4) of the Workers' Compensation and Rehabilitation Act 2003 (Qld) or Eric Thomas Coveney in satisfaction of the judgment against Amaca Pty Ltd (under NSW Administered Winding Up) (ACN 000 035 512) in proceeding number 2023/255894 in the Dust Diseases Tribunal of New South Wales (the Coveney Proceeding). 2. Further order pursuant to s 55 of the James Hardie Former Subsidiaries (Winding Up and Administration) Act 2005 (NSW) and s 63 of the Trustee Act 1925 (NSW) that the plaintiff would be justified in not paying the sum of $316,280 to Eric Thomas Coveney in satisfaction of the judgment against Amaca Pty Ltd (under NSW Administered Winding Up) (ACN 000 035 512) in the Coveney Proceeding in circumstances where WorkCover Queensland would or could enforce its statutory charge under s 207B(2) of the Workers' Compensation and Rehabilitation Act 2003 (Qld) over that sum. 3. Order pursuant to s 55 of the James Hardie Former Subsidiaries (Winding Up and Administration) Act 2005 (NSW) and s 63 of the Trustee Act 1925 (NSW) that the plaintiff would be justified in not paying the sum of $418,640 to WorkCover Queensland under s 207B(4) of the Workers' Compensation and Rehabilitation Act 2003 (Qld) or Barry Edward Davis in satisfaction of the judgment against Amaca Pty Ltd (under NSW Administered Winding Up) (ACN 000 035 512) in proceeding number 2023/232314 in the Dust Diseases Tribunal of New South Wales (the Davis Proceeding). 4. Order that the plaintiff be indemnified for its costs from the "SPF" as defined in James Hardie Former Subsidiaries (Winding Up and Administration) Act 2005 (NSW). 5. In the event that any other party seeks a costs order in their favour: 1. direct that party to file and serve any affidavits and submissions (limited to 3 pages) within 7 days; 2. direct the plaintiff to file and serve any affidavits and submissions in reply (limited to 3 pages for each party's submissions filed under sub-order (a)) within 14 days; such application to be determined on the papers. 1. Parties to notify any errors or omissions within 7 days.

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: 13 September 2024