Navigating the global liability defence agenda
Recent developments in Australian liability defence
As part of Kennedys Global Liability Brief for 2022, our Australian Liability teams in Melbourne and Perth discuss current public liability trends key risks for Australian property owners, insurers, employers and employees.
Silicosis is emerging as the worst crisis in occupational lung disease since the peak of asbestos claims in Australia and poses significant risks to insurers and employers.
Silicosis has re-emerged in Australia on the back of a housing and renovation boom that has driven demand for engineered stone products for kitchen and bathroom benchtops. Engineered stone contains very high amounts of silica (93% or more) but is less expensive than natural materials (marble 2% or granite 30%).
Respirable crystalline silica (RCS) is released when engineered stone is manipulated by dry cutting, sanding, grinding and polishing. In the absence of adequate control measures (dust suppression, respirator masks) and health monitoring, workers may be exposed to hazardous levels of RCS, which when inhaled can cause silicosis amongst other serious conditions including lung cancer, pulmonary fibrosis, sarcoidosis, tuberculosis, rheumatoid arthritis, lupus, scleroderma, renal disease and lymphadenopathy.
In June 2021, the National Dust Disease Taskforce reported that almost 25% of engineered stone workers who were in the industry prior to 2018 were suffering from silicosis or related diseases. It alleged “a systemic failure to recognise and control the risk associated with … engineered stone”.
Key risks for insurers and employers
As cases rise so are the number of claims for compensation brought against employers and the manufacturers and suppliers of engineered stone products. Employers are also particularly at risk of prosecution and severe penalties for failing to adequately manage the risks associated with RCS.
It is difficult for insurers to reserve for silicosis claims: the latency period for the disease can range from weeks to decades depending on the level of RCS exposure and the variance in prognosis for diagnosed workers. Nevertheless the quantum of claims is likely to be significant, because the condition is incurable and treatment is focused on slowing progression of the disease. The sudden onset and affliction of relatively young workers (20-40 years old) also informs larger damages awards.
As urban populations grow, apartment buildings have changed skylines worldwide. Ownership of these complexes in Australia is predominantly subdivided under the “strata title” system.
As the number of strata developments grows, we have seen a corresponding rise in personal injury cases brought by claimants who sustained injury on those properties. This article outlines some key considerations for insurers and insureds who may be subject to those claims.
The strata title system originated in Australia but has been adopted in parts of Canada, India, South Africa, Singapore, Malaysia, New Zealand and Indonesia. It allows for the ownership of individual lots (apartments, garages, parking spaces and storage rooms) with everything else on the parcel of land (roofs, stairwells, driveways, gardens and other amenities) defined as common property.
It can be unclear, in a strata claim, whose negligence caused or contributed to the injury, and therefore which party to pursue for damages. Owners Corporations (OC) (or ‘body corporates’) or their management companies, tenants, owners, developers, builders and surveyors may be exposed. Manufacturers of equipment or fittings at the property, maintenance contractors including cleaners, or even safety auditors also can be brought into a claim.
Complexity escalates when multiple parties have multiple insurance policies with any number applying situationally:
- Home and/or Contents Insurance - includes cover for legal liability for harm suffered on an individual lot.
- Owners Corporation Public Liability Insurance - provides cover for injury suffered on the common property.
- Professional Indemnity Insurance – provides cover for alleged harm caused by professionals involved in construction, installation, or maintenance of the property such as OC maintenance companies, developers and builders.
In Australia, if a party is lawfully on the property an occupier owes a duty to take reasonable care to avoid foreseeable risk of injury. Whether a party is an ‘occupier’ is determined as a matter of fact by reference to whether they have undertaken the care, supervision or control of the property so as to assume responsibility for its safety. Close examination of contractual agreements between the OC and its management company will help determine where such a duty has been assumed.
Beyond Occupiers’ Liability
The key determinants of liability are factual: where, when and how the injury occurred.
Scenario 1: Location
A person falls in a parking garage. The precise location of the fall determines who may be liable:
- A fall in a parking space means the owner or tenant may be liable, as the space forms part of their lot.
- A fall in the driveway exposes the OC as the space is common property.
Scenario 2: Causation
A person trips on unstuck carpet and falls in a stairwell. Liability could be shared by multiple parties:
- The OC may be liable for not arranging adequate inspection of the stairwell.
- The OC management company may be liable if they contractually assumed the risk from the OC.
- A maintenance contractor engaged to fix the carpet may attract liability if it failed to repair the fault.
- The carpet installers would attract liability if installation was defective.
- The carpet manufacturer could be liable if the carpet or related products were defective.
Inevitably, every claim is different and it is very possible that multiple parties (and by extension, their insurers) could be liable for injuries sustained on a strata titled property. These complex situations require professional legal advice to untangle liability and manage exposure to potential claims.