YOUNG LAWYERS
Upcoming Changes to Dust Diseases Litigation
(Check Against Delivery May 24, 2005)
Laurie Glanfield AM
Director General
NSW Attorney General’s Department
Background to the Review:
The issue of improving the efficiency with which dust diseases compensation claims are resolved arose in the course of negotiations between James Hardie and victims’ groups and unions.
I conducted the Review of Legal and Administrative Costs in Dust Diseases Compensation Claims with Leigh Sanderson, who is the Deputy Director General of The Cabinet Office.
In developing the reforms, which will be discussed today, the Review aimed to reduce costs by promoting early settlement of claims and streamlining processes and procedures. That is the aim of all of the reforms we are introducing.
Our report was released in March this year, a draft Regulation and draft Order were released for consultation in April.
The Dust Diseases Tribunal Amendment (Claims Resolution) Bill 2005 was introduced into NSW Parliament on 5 May 2005. It is expected that the Bill will be debated this week.
The Government intends to commence the new scheme on 1 July 2005.
The new claims resolution process will apply to all asbestos related claims commenced by statement of claim filed on or after 1 July 2005. The new scheme will also apply to asbestos related claims commenced before this date, unless the parties agree that the new process should not apply or unless a hearing date has been set. Even if a hearing date has been set the parties can agree that the new claims resolution process will apply (clause 14 of Reg).
The Bill will also amend provisions relating to subpoena, offers of compromise and costs assessment. These changes will apply to all matters in the Dust Diseases Tribunal.
So there are a number of changes that practitioners working in the area of dust diseases will need to be aware of.
However the new claims process should not be entirely unfamiliar to practitioners in the area. The Review received a number of submissions that promoted claims resolution protocols for our consideration, some of which were currently being followed by the parties.
These reforms provide practitioners with the opportunity to make significant savings in terms of time and cost to clients.
I would like to emphasise today that the success of the new claims resolution process really depends on the willingness of practitioners to actively use the new procedures in good faith. The process can be used as a valuable tool to streamline claims and reduce costs.
This afternoon I will highlight some of the main features of the new claims resolution process. As the steps in the process are outlined in detail in the Bill and the Review’s report I will speak in quite a general way about the steps in the process. If you require more detailed information I recommend you refer to the Bill and Regulation. These can be found on the website of the New South Wales Parliament.
I should add also that my paper will be available on my Department’s website: www.lawlink.nsw.gov.au
Claims that have already commenced
If you have claims that have already commenced, to which the new claims resolution process will apply, you need to be aware that under the new scheme no action will be taken on the claim until the plaintiff provides a current claim proposal to each defendant and cross defendant (clause 14 of Reg).
The current claim proposal will outline how the new claims resolution process should apply to the particular claim, to avoid parties doubling up on procedures and to identify what still needs to be done to finalise the claim.
If the parties cannot agree between themselves about the current claim proposal, the Registrar will determine the issues in dispute.
The submissions we received on the draft Regulation expressed some concern that by applying the new claims resolution process to existing claims we could cause an increase in costs. Let me assure you that we do not intend parties to be required to repeat steps they have already undertaken.
The current claim proposal will enable the parties, on the initiative of the plaintiff, to modify the steps of the new claims resolution process to ensure that work, which has already been completed, is not duplicated.
Commencing new claims under the new process
Claims under the new system will still be commenced by filing a statement of claim.
However, when the statement of claim is served on the defendants the plaintiff now also serves a statement of particulars of the plaintiff’s claim (clause 20 of Reg). The statement of claim will not be properly served, and the timetable will not begin to run, until the statement of particulars has been provided. This statement of particulars is in a standard form. It is set out in Schedule 2 to the Regulation.
After receiving the statement of claim and statement of particulars the listed defendants then have a fixed amount of time to file and serve any cross claims (clause 21 of Reg).
The Review found that there are likely to be substantial benefits in having as many defendants as possible ‘at the table’ during the claims resolution process so that issues of contribution can be resolved quickly. Once the time limit for filing cross claims has expired defendants will still be able to seek contribution from other liable parties but to do so they will need to commence separate contribution proceedings after the claim is resolved.
A number of submissions we received on the draft Regulation suggested the time limit under the draft Regulation for filing cross claims was too short. The final Regulation was amended to provide that this time might be extended with the agreement of the claimant and the original defendants.
Under the new claims process defendants also have a limited amount of time in which to notify the plaintiff if they require the plaintiff to be medically examined (clause 24 of Reg).
Plaintiff solicitors should be aware that if more than one defendant requires the plaintiff to undergo a medical examination the plaintiff has the option of choosing to have the medical examinations all conducted as one examination by all the doctors concerned unless one of the defendants objects (clause 24 of Reg).
The next step in the process is for the defendant to file and serve a reply (clause 22 of Reg). This is also in a standard form and appears in Schedule 2 of the Regulation.
There was some concern expressed in submissions, we received on the draft Regulation, that the statement of particulars and the defendant’s reply requires quite a lot of information to be provided and that all the information sought would not be able to be obtained within the time limit for the defendant’s reply.
However this is not the intention. It will not be necessary to – and parties should not- obtain expensive, detailed expert reports, such as medical reports or reports of occupational hygienists or therapists, until it is clear that this material is actually needed.
The parties should focus on those issues that are genuinely in dispute and should only obtain additional reports and evidence where this is clearly necessary.
Parties will not be limited to the information they have provided in the information exchange process. Parties will be able to change the facts they rely on after serving their statement of particulars and reply. However this will attract costs penalties unless the facts weren’t known and weren’t reasonably discoverable, if the plaintiff only just remembered the details or if the change is due to another party changing the facts they rely on (clause 25 of Reg).
The obligation on parties to provide information is ongoing. Parties must provide information on the claim as and when it becomes available. Parties should update their answers, and continue to narrow the issues in dispute (clause 19 of Reg).
Parties will still be able to seek the Tribunal’s assistance to amend their statement of claim to join a new defendant if the Tribunal is satisfied that it is necessary to do so to preserve the claimant’s cause of action. We expect that if parties need to amend their statements of claim to revise issues such as the period during which they were exposed, this will need to wait until the claim completes the new claims process and proceeds to the Tribunal. This is assuming, of course, that the claim does not settle before it reaches that stage.
MULTIPLE DEFENDANT ISSUES
I will now briefly address a couple of issues that become relevant, at this point in the process, to claims with more than one defendant.
a) Apportionment of liability between defendants (Div 5 of Reg)
One area where significant changes will be introduced over the coming months is related to the apportionment of liability between defendants.
Under the new claims resolution process defendants are encouraged to agree between themselves on their contributions to the plaintiff’s claim.
If they cannot agree a Contributions Assessor will determine their contribution using standard presumptions. These standard presumptions were contained in the draft Dust Diseases Tribunal (Standard Presumptions – Apportionment) Order 2005, which was released for public comment in April. The final draft Order is available on The Cabinet Office website and will be formally made shortly.
A Contributions Assessor can only make his or her decision on the basis of the plaintiff’s statement of particulars, the defendants’ replies and the standard presumptions. So the information provided during the early stage will be important.
The decision of the Contributions Assessor cannot be challenged until after the claimant’s claim is resolved. Defendants should also be aware that if they do choose to challenge their apportionment and they do not materially improve their position in the judgment at the Tribunal, they will be liable to pay the costs of the other defendants, which are related to the challenge. A material improvement is defined as improving the defendant’s position by $20 000 or by ten percent, whichever is the greater. Costs will be assessed on an indemnity basis.
The Contributions Assessor’s fees are paid by the defendants, in proportion to their determined shares of contribution (clause 43 of Reg).
Defendants may also like to keep in mind that at any stage in the process they are free to agree between themselves on apportionment.
b) Single Claims Manager (Div 6 of Reg)
Another important issue for multiple defendant claims is that a Single Claims Manager (SCM) must be used in multiple defendant claims, unless all defendants agree not to use one.
The Regulation outlines a process to be undertaken to select the SCM (clause 47 of Reg).
The SCM will manage, negotiate and seek to resolve the plaintiff’s claim on behalf of all defendants. They will not play a role in determining the apportionment of liability between defendants (clause 48 of Reg).
SCMs will be taken to have authority to settle the matter with the claimant. Defendants are able to impose a monetary limit on the authority of the Single Claims Manager to settle the claim, however they must act reasonably in imposing that limit. A defendant who does not act reasonably is at risk of having a certificate issued against them by the mediator to the effect that they have not mediated in good faith. Cost consequences could flow from such a certificate.
Single Claims Managers also have the authority to agree on each defendant’s behalf to the issues that are in dispute between the parties and the facts that are relevant to those issues, if the claim doesn’t settle at mediation.
The Attorney General’s Department and The Cabinet Office convened a meeting of defendants and insurers on 21 March to discuss the use of a SCM.
Many who expressed opposition to the use of a SCM at the meeting were concerned that Single Claims Managers would have a conflict of interest. However the Review does not consider this is an issue given the fact that the SCM will have no role or function in the determination of apportionment between defendants.
The role of the SCM does not, in any way, limit or interfere with the ability of each defendant to prepare and serve the defendant’s reply to the plaintiff’s statement of particulars. Each defendant will still have the right to attend and be represented at the mediation of the claim with the claimant. Each defendant will also be able to question the claimant on issues relating to contribution if the claimant is required to give evidence by a defendant who wishes to challenge apportionment, but only if the claim resolves at mediation (clause 49 of Reg).
The Single Claims manager, once appointed, will continue in that role until the claim settles before or at mediation. If the claim does not settle within the time set for completion of the mediation the SCM’s role concludes when the parties reach agreement on the issues in dispute between them or when they finish trying to agree on the issues in dispute between them.
· Costs of Single Claims Manager (clause 50 of Reg)
The way in which the costs of the SCM should be met was an issue also discussed at the meeting of defendants and insurers in March.
If the SCM is one of the defendants to the claim the other defendants must reimburse the SCM for their costs incurred in exercising the functions of the SCM. These costs include the defendant’s operational costs, such as their internal legal costs and their external costs, such as the costs incurred in obtaining expert reports and external legal costs.
We have decided to introduce a model for apportioning the costs of the SCM which involves a combination of half the Single Claims Manager’s costs divided by the number of defendants and the other half of the costs being met in the same proportions as each defendant’s apportioned share of the plaintiff’s claim.
I should also point out that under the Regulation the Minister may establish a scale of costs for use in determining the operational costs of the SCM, by order published in the Gazette.
Mediation – (Div 4 of Reg)
All claims in the new claims resolution process will proceed to mediation. In multiple defendant claims this will occur after apportionment between defendants has been determined. There is a time limit within which the claim must be referred for mediation and within which it must be completed (clauses 28 and 29 of Reg – see attachment A).
It is important to note that settlement negotiations can occur at any time during the new claims resolution process. We anticipate that settlement negotiations in multiple defendant claims will be much easier once the Single Claims Manager has been appointed, as the plaintiff’s solicitor will have a single point of contact for the negotiations.
At the relevant time in the process a mediator will be appointed. If the parties refer the claim to mediation themselves and it does not have to be referred to mediation by the Registrar as a result of the relevant time period expiring, the parties can agree to the mediator to be appointed to their claim from the list of mediators maintained by the DDT President. Otherwise the Registrar will appoint the mediator (clause 30 of Reg).
A person with sufficient authority to make binding decisions on behalf of the party must attend the mediation so that decisions can be made and claims settled more quickly. The plaintiff must also attend, unless they are too ill (clause 32 of Reg).
If the mediator requires it, a defendant may need to be represented at a mediation session by a designated officer of the defendant who has the role of management or control of the administration of claims against the defendant, such as the defendant’s Claims Manager (clause 32 of Reg).
In the interests of minimising legal costs the mediator may control who attends the mediation and can limit the number of representatives that a party has at a mediation session (clause 32 of Reg).
After consultation on the draft Regulation we have amended the Regulation to provide that the mediator has the power to issue a certificate stating that in the mediator’s opinion a party did not negotiate in good faith. This can be taken into account by the Tribunal in awarding costs (clause 31 of Reg).
The costs of the mediation will be met by the defendant or defendants if the claim does not settle, or in proportions that the parties agree on between themselves, if the claim settles (clause 39 of Reg).
· If claim settles at mediation the claimant’s evidence can be taken (clause 35 of Reg)
If the mediation results in the claim being settled the claimant may be required to give evidence on issues relating to contribution.
For this to occur a defendant, who intends to dispute the contribution apportionment, must give notice to the mediator, the claimant and each other party, at least 2 business days before the start of the mediation.
The evidence will be taken on oath before the mediator, after the end of the mediation.
The defendant requesting the taking of evidence from the claimant must pay the costs associated with taking the evidence.
· If claim does not settle at mediation (clause 33 of Reg)
If the claim does not settle at the mediation the parties must agree on the issues, which are in dispute between the parties, and on the facts that are relevant to those issues. The mediator prepares a certificate outlining these issues and the relevant facts. The proceedings in the Tribunal are then limited to these issues and parties cannot raise other issues.
If the parties are unable to agree on a list of issues and relevant facts then each party must lodge with the Tribunal a statement of the issues that they consider are in dispute and the facts that are relevant to those issues.
There are cost penalties if the parties unreasonably leave issues in dispute and they are not decided in favour of the party that left them in dispute (clause 34 of Reg).
Claims to go to DDT
I’d like to now briefly outline the circumstances in which claims can be removed from the above process and proceed to the Tribunal, before the mediation stage is complete (clause 18 of Reg).
a) Urgent cases
The first involves the claimant applying to the Tribunal, on the basis that their claim is urgent. This application can be made after the Statement of Claim is filed, even if the Statement of Particulars has not been completed and served. The Tribunal can remove the urgent claim from the claims resolution process if the Tribunal is satisfied on medical evidence that the claimant’s life expectancy is so short that insufficient time is left for the requirements of the claims resolution process to be completed and the claim finally determined by the Tribunal, if required.
b) Where parties agree
The second involves the parties agreeing that the new claims process should not apply to the claim. This can be done after the information exchange has occurred and is intended to cover claims which raise novel issues, such as a test cases, which are unlikely to be resolved by the new claims process.
c) Non compliance
The Review believes that if the new claims resolution process is properly followed by parties it has the potential to result in real cost savings for everyone involved in the system. The success of the process does rely, however, on practitioners approaching the scheme in good faith.
One concern that I’m sure some of you may have is whether a claim can be removed from the new process if the other side isn’t complying with the requirements of the new process and is thereby frustrating the process and causing delay.
Either party is able to apply to the Tribunal to have the claim removed from the new process if another party has failed to comply with the new process and that failure has resulted in substantial prejudice to the party that is applying for the claim’s removal, or the failure has resulted in substantial delay.
To make this order the Tribunal must be satisfied that the failure to comply is continuing and that the offending party has been notified of and requested to remedy the failure (Clause 18 of Reg).
APPLICATION OF NEW PROCESS (Div 2 of Reg)
The new claims process will apply to claims until the claim is settled, or if the matter does not settle at mediation, until the issues still in dispute are finalised. The parties may agree to extend the period the claim stays in the new claims process (clause 16 of Reg).
While the claim is in the new process it will not be subject to case management by the Tribunal. This recommendation was made to prevent unnecessary attendances at court (clause 17 of Reg).
The power of the Tribunal to make certain orders has been preserved in a number of specific areas. For example, the plaintiff will be able to seek the Tribunal’s assistance to amend his or her Statement of Claim to join a new defendant if the Tribunal is satisfied that it is necessary to do so to preserve the plaintiff’s cause of action.
Once the claim moves from the new claims resolution process to the Tribunal it attracts a First Directions Hearing Fee (Sch 2 of Bill inserts clause 8A into Reg). This First Directions Hearing Fee will be $571, or $1,142 for a corporation. However, filing fees for commencing and for filing a cross claim will be reduced from $615 to $147, or from $1230 to $294 for a corporation.
If the claim has been removed from the new claims resolution process by agreement between the parties or if the claim has returned to the Tribunal because it failed to settle at the mediation then the claimant must prepare a written proposal of the further steps that are needed to prepare the matter for hearing. The first defendant prepares this if the claim has been resolved (clause 51 of Reg).
If the parties agree on the necessary steps the Tribunal will enter orders giving effect to this agreement. The Tribunal will only order that further steps are required if it is satisfied that there is a need to do so.
DATA COLLECTION PROVISIONS
(Sch 1 of Bill inserts section 32 I into DDT Act and clause 81 of Reg)
Another significant change for legal practitioners is the data collection provisions. From 1 July 2005 information on all claims that are settled or determined must be collected and recorded on a central database.
The Review recommended that this occur because we found that there was very little data available in this area. In the Issues Paper released by the Review late last year we specifically requested that data be provided in a number of areas to assist the Review. However, we received very little information from submissions.
The data that will be collected will provide the Government with a reliable source of information to assist understanding this specialised jurisdiction.
The information to be collected will include information on the claimant’s injury, the amount of damages obtained and details about the party’s legal costs and disbursements on a solicitor/client basis.
A standard form will be completed to provide this information. This form appears in Schedule 2 of the Bill. The Bill can be found on the NSW Parliamentary website.
As the collection of this data may raise privacy and confidentiality concerns the individual reports provided to the Tribunal will not be subject to the Freedom of Information Act 1989.
The Government will, however, be able to request that consolidated reports of the information contained in the database be prepared. These reports will be subject to applications under the Freedom of Information Act 1989.
We anticipate that reports of this kind will assist the further review of the recommended reforms and the existing common law system more generally. This further review will be conducted after data in relation to the reforms’ first 12 months of operation is available.
· Penalties for non-compliance
If a legal practitioner fails to comply with the information reporting requirements their failure is capable of being unsatisfactory professional conduct by the legal practitioner.
If a legal practitioner does not represent a party to a claim on the claim, the party must provide the information required. The party will incur a fine if they fail to do this.
Conclusion
Finally, I’d like to take this opportunity to thank everyone who made a submission to the Review. The Review has appreciated the positive approach that stakeholders have taken throughout the Review process |
