The “Hug of Death” – expanding the scope of ACC cover for mesothelioma beyond a work-place injury
The dreadful and always fatal disease of mesothelioma, directly linked with exposure to asbestos, has given rise to much litigation in the common law world. Three years after her death due to mesothelioma, Deanna Trevarthen has recently been the subject of the decision in Calver v Accident Compensation Corporation  NZHC 1581, in which Mallon J determined that Ms Trevarthen’s estate qualified for ACC compensation.
Ms Trevarthen contracted the disease through contact with the work clothes of her father, an electrician who had been exposed to asbestos, and she died at the age of 45. This story has sparked much media attention and leads us to examine New Zealand’s current legal position in comparison with other jurisdictions.
Proving a causal link between exposure and the disease
The legal difficulty posed by the disease is that it remains all but impossible to identify the exact exposures that have given rise to the disease. The typical process begins with exposure to asbestos, leading to asbestos strands becoming lodged in the lungs. Anything up to 40 years later the lungs become damaged. It may take a further two years for symptoms to manifest. There is rarely more than 15 months between diagnosis and death.
Those legal systems that - unlike New Zealand - offer compensation only on proof of fault, have faced intractable problems with causation, because it is impossible for the victim to prove a causal link between any one exposure and the onset of the disease. If, therefore, the victim has been exposed to asbestos by a sequence of employers, none of them can be shown by ordinary legal standards to have caused the disease.
England and Wales
In England the problem was addressed by the House of Lords in Fairchild v Glenhaven Funeral Services Ltd  UKHL 22. The solution given in Fairchild was to abandon causation and to treat every exposure as giving rise to liability. Parliament subsequently enacted the Compensation Act 2006; under which each employer faces 100% of the liability for any one exposure, irrespective of the duration of exposure.
A series of complex cases followed on how liability insurance should be applied to that scenario. Durham v BAI (Run off) Ltd  UKSC 14 concluded that where mesothelioma did develop, the relevant injury was the exposure and not the lung damage itself. This captures any insurance policy in force on the date of exposure, rather than when the lung damage manifests. In Zurich Insurance plc UK Branch v International Energy Group  UKSC 33, the Supreme Court ruled that every exposure inflicted 100% of the liability on the insurer at risk at the time.
This was an important finding, in that employers’ liability policies respond only to injury to a current employee. Very few employees would have remained in the same employment forty or more years after exposure. The net effect was that an insured employer could choose to claim the full amount of their liability from any insurer on risk on the date when any exposure occurred.
This gave rise to reinsurance issues. If an employee is exposed over a number of years, and the employer has different reinsurance arrangements throughout those years, the question arises whether an insurer is entitled to choose the most favourable year of reinsurance coverage. The issue is presently under appeal to the Supreme Court in Equitas Insurance v Municipal Mutual Insurance  EWCA Civ 718, the Court of Appeal having held that any reinsurance claim is subject to an implied term based upon utmost good faith and should be spread proportionately amongst reinsurers. More than one judge has publicly expressed regret that Fairchild had been decided as it was.
The litigation in Australia has been thus far confined to the question of when injury occurs. It was held in Orica Ltd v CGU Insurance Ltd  NSWCA 331 that there was no injury until lung damage occurred. However, subsequently, in Alcan Gove Pty v Zabic  HCA 33, the High Court ruled that the initial molecular changes on inhalation amounted to injury, giving rise to as yet unresolved causation issues if more than one employer has been guilty of exposure.
New Zealand: Calver v ACC
The position in New Zealand is quite different as a result of the ACC scheme.
There is no personal injury claim against an employer guilty of exposure, and the only question is how the ACC scheme responds to mesothelioma. This was discussed by Mallon J in Calver.
For Ms Trevarthen’s estate to be entitled to ACC cover, it was necessary to show that there was “personal injury” that had been “caused by” the inhalation of asbestos. Personal injury may be caused by:
- An accident (s 20(2)(a)), defined in s 25 as including:
- A specific event or series of events, other than a gradual process that ... involves the application of a force (s 25(1)(a)); or
- The inhalation of any ... foreign object on a specific occasion (s 25(1)(b));
- A work-related gradual process, disease or infection suffered by the person (ss 20(2)(e) and 26(2)); or
- A gradual process, disease or infection consequential on personal injury (ss 20(2)(g) and 26(2)).
In the present case the onset of disease was not “work-related” and so the question was whether either of the other definitions applied. Mallon J held that Ms Trevarthen had sustained personal injuries caused by an accident and that the ACC scheme was engaged.
In determining “personal injury”, Mallon J applied the approach of Allenby v H  NZSC 33 by considering the claimant’s condition as a whole. The condition qualified as a personal injury if it had physical impacts, even if those impacts were progressive.
On the meaning of “accident”, Mallon J held that the inhalation of asbestos fell within section 25(1)(b) in that the “specific occasion” was the occasion giving rise to sufficient dose. On the Fairchild principle, it was unnecessary to identify precise exposure, and the phrase did not contemplate that there had been only one act of inhalation.
Mallon J expressed the opinion, following Zabic, that initial damage to the cells from inhaling fibres constituted personal injury rather than a gradual process and that she had a fully formed cause of action at that date of inhalation.
It was unnecessary for Mallon J to decide whether there was an accident within section 25(1)(a). In theory, she saw no difficulty in applying the Fairchild analogy to separate incidents of inhalation amounting to a specific event or series of events: the problem would be whether the hugs received by Ms Trevarthen from her father constituted “the application of a force”.
Calver is the first mesothelioma decision on the current wording of the ACC legislation. The outcome, therefore, is that mesothelioma is to be regarded as the consequence of an accident (inhalation of asbestos) giving rise to personal injury (even if the injury is progressive) rather than a gradual process.
This decision could impact many future claimants. One such claimant is Elva Halliday, who is suing building products supplier James Hardie over asbestos exposure she suffered from washing her husband’s work uniform.
If you have any questions about this article, please contact a member of our litigation and dispute resolution team.
Disclaimer: the content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.