Historic out-of-court silicosis deal cheered
Publish date: 08 May 2018
Issue Number: 555
Diary: Legalbrief Environmental
Category: South Africa
Last week's R5bn out-of-court settlement between gold mines and workers with lung diseases will not set a class action precedent, but is nonetheless significant in that it is the 'first of its kind' in SA, writes Legalbrief. Now the lawyers who won the settlement have set their sights on coal companies, notes a Business Day report. Richard Spoor, one of a group of lawyers fighting for compensation for former mineworkers in gold mines suffering from silicosis and tuberculosis, reportedly said companies such as Sasol and Exxaro would be subject to legal action on a company-by-company basis. Last week's settlement, between the Legal Resources Centre, Abrahams Kiewitz Inc and Richard Spoor Attorneys, on behalf of thousands of mineworkers, and the Occupational Lung Disease (OLD) Working Group, representing the mines, is the result of three years of extensive negotiations between the representative attorneys and the OLD Working Group representing African Rainbow Minerals, Anglo American SA, AngloGold Ashanti, Gold Fields, Harmony, Sibanye Stillwater and Pan African Resources. The parties emphasised that the signing of the settlement did not mean that finality has been reached, saying it must still be approved by the Gauteng High Court (Johannesburg). As reported in Legalbrief Today, mining companies have made provisions for about R5bn to be placed in a trust to pay miners afflicted with silicosis after working underground in their gold mines. The mining companies would pay a lump sum into a trust that would locate, verify and assess former miners with silicosis and occupational tuberculosis. Once confirmed, the trust would make a payment to the former miner, or their family if the miner, who had a confirmed occupational lung disease, had died, Graham Briggs, the former Harmony Gold CEO who chairs the industry's Occupational Lung Disease working group, said, according to TimesLIVE.
The miners will secure payments of between R70 000 and R500 000 from the trust fund, according to a BusinessLIVE report. The agreement set out 10 classes of claimants who can benefit from the agreement, which is over and above the statutory payments from a government-administered fund that disburses money for those afflicted by occupational diseases. ‘There is no limit on the number of potential claimants. Any claimant who has a qualifying claim will receive the compensation due to them during the lifetime of the trust,’ the parties to the agreement said. The mining companies will pay R845m towards the administration of the trust during its lifespan, with an initial R5m to set it up, then R100m in the first year to ensure it is operationally effective. The companies will put in R1.4bn for the first two years of benefit payments and thereafter be called on by the trust to make annual contributions based on the claims laid against the companies by sick mineworkers or their dependents. The three law firms acting on behalf of the claimants, Richard Spoor, Abrahams Kiewitz, Motley Rice, and Hausfeld will be paid R335m for the work done over the past 14 years. The Legal Resources Centre will receive R15m. The trust will comprise three members nominated by the mining companies, two by the claimants’ lawyers, one by the government, and one consensus person nominated by the companies and lawyers.
Attorney Richard Spoor, who led the silicosis class action, has clarified the R355m set aside for legal fees in the settlement between mining firms and victims, saying his firm will get R20m profit at most. He reportedly told Rapport he has been working on the case since 2005 and had hired a full-time attorney and part-time attorney for the past five years. The R355m will be split between Richard Spoor Inc and Abrahams Kiewitz, the other law firm involved. Spoor says R100m of his R177.5m has to cover office, administration and salary expenses related to offices run in places where the affected mine workers live. Another R50m will go to Motley Rice LLC, the American law firm which sponsored the class action.
The settlement has met with wide-reaching praise. The Cape Times quotes LRC national director, Janet Love as saying: ‘This settlement marks the end of a long road for the LRC, starting in 2003, which led to the Blom-President Steyn Mine silicosis litigation. The Blom-President Steyn Mine matter was the first case on silicosis in South Africa. It served as a test case to establish the liability of Anglo American SA as a parent company. It laid the foundation for Mbuyisa Neale and Leigh Day to negotiate the establishment of the Q(h)ubeka Trust in March 2016 and it provided the primary evidentiary basis to launch the class action.’ Love said the litigation was delayed for more than six years, primarily as a result of procedural objections raised by the mining company. LRC attorney Carina du Toit said the settlement was the product of long hours and hard work. ‘There was a real goodfaith attempt from both sides to find a solution that compensates as many mineworkers and the surviving dependants of silicotic mineworkers as possible. The settlement is the product of commercial negotiation and compromise, but we believe this is a beneficial settlement for the mineworkers. We have consulted extensively with our clients and they are also convinced this is a good settlement.’ In a statement, the Southern African Miners Association said: ‘...this (settlement) is a landmark moment in the long struggle of the working class in mines from 1866 to 2018, bringing an end to the prolonged negotiations between the former mine workers and mining corporations.’
DRDGold declined to be party to the settlement, opening the smaller gold producer to a prolonged court battle alone. A Business Day report says Spoor noted that DRDGold and Randgold & Exploration had decided not to participate in the settlement agreement and would be subject to ongoing litigation. DRDGold CE Niel Pretorius declined to comment on the reasons for staying out of the settlement, saying there was likely to be a litigation process brought against the company and he could not make any remarks at this point. In the company’s most recent annual report, however, the point is raised that it was ‘not possible’ to see what the outcome of the matter would be. For a company like DRDGold, which had relatively small exposure to underground gold mining and is a small company compared with the six that have settled, the cost of participating in the out-of-court settlement would be an expensive exercise compared to what the outcome could be from litigation. The litigants’ lawyers would have to prove DRDGold was negligent in the way it handled the silicosis and dust matter and that a subsidiary established liabilities for the holding company. DRDGold has not operated underground mines for years, preferring to extract gold from old dumps.