Alcan Gove Pty Ltd v Zabic
[2015] HCATrans 169
[2015] HCATrans 169
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Darwin No D5 of 2015
B e t w e e n -
ALCAN GOVE PTY LTD ACN 000 453 663
Appellant
and
ZORKO ZABIC
Respondent
FRENCH CJ
KIEFEL J
BELL J
KEANE J
NETTLE J
TRANSCRIPT OF PROCEEDINGS
AT CANBERRA ON TUESDAY, 4 AUGUST 2015, AT 10.15 AM
Copyright in the High Court of Australia
MR G.M. WATSON, SC: May it please the Court, I appear with MR J.C. SHELLER, for the appellant. (instructed by Bartier Perry)
MR B.W. WALKER, SC: May it please the Court, I appear with my learned friend, MR G.F. LITTLE, SC, for the respondent. (instructed by Shine Lawyers)
FRENCH CJ: Yes, Mr Watson.
MR WATSON: Your Honours, I want to start by giving a little context to the central piece of legislation that is now known as the Return to Work Act 1986 (NT). We have traced its legislative naming history in the papers. Your Honours, for most of the 20th century, most of the Australian jurisdictions compensated workplace accidents by payments made under one or both of two concurrent streams. One of those streams was purely statutory; that is the comprehensive no‑fault statutory workers compensation scheme. Those schemes operated Australia‑wide from the early parts of the 20th century. The other stream is the payment of common law damages, but that remedy was only available to those who could establish some fault on the part of the employer.
Your Honours, one serious negative consequence of having the dual system was that there was a duplication in legal costs. In the mid‑1980s, criticism of the dual entitlement scheme began to emerge, and a particular criticism was made of it because the maintenance of the dual entitlement scheme duplicated those legal costs. That was seen as a drain on the funds which otherwise would have been available to injured workers.
In the late 1980s, most statutory compensation schemes were substantially reformed reflecting these criticisms. One reform was that under the various statutory schemes, the availability of common law rights was either eliminated entirely, or in some places, it was substituted with a modified – when I say “modified”, read “reduced” – entitlement at common law. As we understand today, there are only one or two places in Australia which retain full common law rights for workers. It was that kind of thinking, at least in theory, which explains the present legislation.
We have given your Honours copies of the legislation as at the date that it was enacted, and a reprint which shows how it was at the time that Mr Zabic first suffered symptoms. Rather than ask your Honours to file through that, we have handed up with our little outline a document which comprises a typescript of the legislation. I am just going to take your Honours now to the text of the relevant parts. If your Honours have the document, you will see that it is in two parts, top and bottom. It has got section 52 of the Act as it was at enactment, and at the bottom half of the page, as it was at the date of the onset of symptoms. Your Honours, we have done that because we think the argument may get to a point where there is a question about which version applied, but may I say this, it will not make any difference on our submission in this case. We have underlined the little changes. There is a change in terminology in the chapeau, whereas “no cause of action for damages” was the provision before it became “no action for damages”.
You consider my substantial amendment is to capture a situation where a worker may have been able to sue a co‑worker, and thus avoid the extinguishment. Now your Honours will see that that provision, extinguishment, turns on there having been a workplace injury. So, the next page has got the definition “injury”. That has been amended over the years, but may I say to your Honours, this part of it has remained exactly the same and it is the only relevant part of it. Your Honours will see that “injury” is defined to include a disease. A disease at all times has been defined that way, and your Honours will see that it includes a disease whether it was “contracted before or after commencement of Part V”. Your Honours, section 52 appears in Part V of the Act.
FRENCH CJ: Would “injury” pick up an adverse genetic change at cellular level?
MR WATSON: That is a contention between us. We would respectfully submit that that would not be at that level something which could be said to be a disease or even at that level.
FRENCH CJ: No, I am asking whether injury – injury, the definition is inclusive, not exhaustive.
MR WATSON: May I just think about that, your Honour. It seems some of the authorities – and I know that Chief Justice Spigelman refers to the asbestos fibres not constituting an injury, but may I just think of that for a moment. The next page has the transitional provision. We have put it as it was at both relevant times, but your Honours will see that it only ever was altered to incorporate a gender matter.
Your Honours, that is the background. The issue pitched for a solution is this - did Mr Zabic have a cause of action which had accrued as of 1 January 1987? Well, if so, he was entitled to commence and prosecute these proceedings. If not, we say that they were barred. Could I just say this on behalf of my client, however? Even if the proceedings are barred, Mr Zabic, of course, retains all the rights, substantial rights, under the workers’ compensation scheme.
Now, before going any further I want to take the Court to the key parts of the decision of the Court of Appeal below. Your Honours, there are two bases upon which the Court of Appeal relied in finding that Mr Zabic had a cause of action. Both of them were said to have established that Mr Zabic had a cause of action which had accrued before 1 January 1987.
I will show your Honours the judgment first and then I will set out to persuade you, your Honours, that it was wrong in principle and contrary to a body of precedent. If your Honours have the appeal book, the first basis is first stated at page 118. On page 118, paragraph [20], right in the middle of the page, there is a statement about the changes to the “mesothelial cells”. The second sentence is important. Their Honours there acknowledge that not everyone gets the disease. That is picked up in the conclusion of the judgment at page 132, this time paragraph [60], and this is the finding:
we consider that the appellant sustained compensable damage at the time when such inhalation caused changes in his mesothelial cells.
That became very soon after the exposure, so it is way back in perhaps 1974. That is one basis for the judgment and I point out to your Honours that their Honours are there saying that that was sufficient to establish non‑negligible damage for the purposes of a cause of action and that is even so, despite the fact that the changes themselves were not detectable. They would usually, if not always, remain dormant for decades. They cause no physical consequences whatsoever and they well may not develop into anything of a serious character. We will show your Honours that that is contrary to authority. The second basis for the decision below turned on the use of hindsight and it first figures in the appeal book page 127.
FRENCH CJ: By “hindsight” do you mean anything more than inference about past events?
MR WATSON: Well, that is what it seems to be, nothing more than that. Your Honours, I shall just show your Honours where it was. There was in Orica v CGU - we will come to it - an authority which was before their Honours where two judges had referred to the fact that hindsight, although available, was not usable. Your Honours, it is at page 127 right at the foot of the page, paragraph [47]. It starts with a reference to “hindsight”, it continues over and it incorporates the whole of paragraph [48]. That was repeated at page 132 and this is probably key to it. At the top of the page, paragraph [58]:
Although the medical evidence was to the effect that a person with abnormalities in the mesothelial cells may or may not acquire malignant mesothelioma –
et cetera.
KIEFEL J: The problem is not so much with hindsight as with the evidence. I mean, it is theoretically possible that one could retrospectively determine, if the science was with you, so to speak, that a person suffered damage and that one could work backwards to say that they must have had a particular condition but the key is obviously whether or not science says that his condition was such that it would inevitably progress.
MR WATSON: There is another problem pointed up by the authorities. For example, even if one looks at a conclusion like that, the poor person exposed to asbestos might have died from some unrelated cause in the interim and it would be, in a sense, a strange conclusion to say that one had a cause of action for mesothelioma because of some change in the cells way back in 1987 but in the interim the person had passed away.
KIEFEL J: But what paragraph [58] of the Court of Appeal’s judgment points up is that it depends entirely upon there being scientific evidence that his condition at the relevant time was such that the transformation into the malignancy would occur.
MR WATSON: Yes. This has always been described in the authorities as the plaintiff being left in a position of a problem of proof but, nevertheless, that has meant that there was not a cause of action at the earlier point in time. For example, it was not known in 1987 or before that, that the progression would occur, so what would a court sit and determine as at 1 January 1987 if that be the case?
KIEFEL J: But to show that the Court of Appeal was wrong about the condition requires reference to the scientific evidence and these cases are so dependent upon the science of the time. At the moment, no one knows what the triggering cause is ‑ ‑ ‑
MR WATSON: Exactly.
KIEFEL J: ‑ ‑ ‑into the malignant condition. That is a difficulty for plaintiffs.
MR WATSON: Exactly. It also has led to problems for defendants and insurers which – your Honours have seen that awful creation now called the Fairchild enclave in the UK. Those problems of proof do not apply only here to asbestos‑related mesothelioma. They apply in all sorts of areas including, I would imagine, to things involving, for example, physical damage to a building or to a defect in an aeroplane, or something like that which can only be said later that it was caused by something. The courts are always engaged in that exercise. But, the problem here is then saying that meant that the cause of action arose at a much earlier point in time could be very, very problematical in many areas of law.
FRENCH CJ: Can I just take you back to the question I put to you initially and, perhaps, preface that with this question? Do you accept that, on a proper view of the evidence, there was a – it can be inferred that following the respondent’s exposure to asbestos fibre at some stage during his employment, there was a change, at a molecular level, perhaps a genetic change in his mesothelial cells, or some of them?
MR WATSON: That must be accepted.
FRENCH CJ: And that is a matter of inference from what happened later.
MR WATSON: Yes.
FRENCH CJ: And secondly, that that change opened, as it were, a causal pathway where if some triggering event occurred, that change coupled with the triggering event would lead to a cascading process and the disease onset.
MR WATSON: Yes.
FRENCH CJ: Okay. So, the question is whether that change which creates what you might loosely call the susceptibility or open the causal pathway, if you like, subject to a triggering event, does that change an injury within the meaning of the definition?
MR WATSON: It must be. When I paused before, it was because there was a distinction drawn in some of the cases for the purposes of construing insurance policies ‑ ‑ ‑
FRENCH CJ: Yes.
MR WATSON: ‑ ‑ ‑ but a distinction drawn between the actual inhalation of the fibre and it remaining and consequences, but if one thinks about it, perhaps it would be better to describe both as being injuries of their own kind.
FRENCH CJ: Well, maybe some people who inhale the fibre are lucky that it does not cause any change.
MR WATSON: That may well be so. We do not know.
FRENCH CJ: Because I think there was some figure of only 3 per cent of people exposed actually get the condition.
MR WATSON: Yes. I think that was in a high risk group exposed to very nasty asbestos.
FRENCH CJ: Yes, yes.
BELL J: Where do we get that evidence, the 3 per cent?
MR WATSON: I will try and find that for your Honour.
NETTLE J: Mr Watson, is that mesothelial change, of which you have just spoken to the Chief Justice, the same as the “pleural thickening” or “pleural plaques” one sees reference to?
MR WATSON: Not at all. I am going to come to a “pleural plaques” case. It is actually quite different. It seems to be some sort of bodily reaction to inhaling asbestos so that some sort of film grows over the lining of the lung. I am coming to a description of “pleural plaques”, for they are quite different things. Both of them are caused by inhaling asbestos and it is highly probable, almost inevitable, that anybody who inhaled asbestos to develop pleural plaques had also had the mesothelial cell changes.
Your Honours, just before I leave the appeal book, just say that there are some other facts. I will just mention these; I do not think they are contentious – I will cite them. In the appeal book at page 115, judgment paragraph [13], it is said that Mr Zabic first experienced symptoms either in late 2013 or early 2014. Legally speaking, for this case, it does not matter which, because the law remained the same over that whole time. Secondly, it was an agreed fact that mesothelioma in Mr Zabic’s case only commenced well after 1 January 1987. That is at appeal book 115, paragraph [14]. During the interim it is said that the cell changes are dormant.
FRENCH CJ: Well, by “dormant” you mean no triggering event had occurred, so far as one can tell, which in combination with those cell changes would lead to the disease process?
MR WATSON: Exactly. May I say this, however? The medical evidence was also this, that there was a long latency period – so there was a period during which it would be expected that there would be no triggering. That was, I think, in one of the doctors a minimum of 10 years.
FRENCH CJ: Well, it can go to 30 or 40 years. I think that is common ‑ ‑ ‑
MR WATSON: It can go on, as I understand it; just keep going on. Could I take your Honours to the decision of the House of Lords in Rothwell?
KEANE J: Just before we leave the appeal book, Mr Watson, can I ask you – if one looks at page 4, one sees that a claim is made for:
damages for personal injury . . . arising from the Defendant’s breach of duty of care, breach of contract –
and so on. Insofar as the cause of action was a cause of action in contract, none of this matters, does it?
MR WATSON: Well, it was never actually pleaded; beyond that statement there, never pleaded that way, nor was it put that way, and that is in the ‑ ‑ ‑
KEANE J: Well, it is pleaded that he was employed by your client ‑ ‑ ‑
MR WATSON: Yes.
KEANE J: ‑ ‑ ‑ and these things happened. I mean, I suppose it is true to say that there was not an allegation in terms of breach, but no doubt the findings by the primary judge amounted to a breach and the cause of action in contract was complete upon the breach.
MR WATSON: Yes. May I say this? That is actually one of the first things I looked at because there would be nominal damages presumably for ‑ ‑ ‑
KEANE J: Well, there would have been a complete cause of action. The entitlement would have been to recover full damages as they were established at the time of trial.
MR WATSON: That is true. That is if it was not statute barred and a whole lot of other things which might have been considered had the case been put that way. Could I show your Honour at page 5, for example, the way in which the case is put is at paragraph 8 of that pleading – and it is particularised as a negligence claim – I looked at the papers because the question about whether or not there was a concurrent claim in contract obviously is an issue and it was never put as a contract claim. It was just not put that way, and it may have given rise to other issues.
I was going to take your Honours to Rothwell, if I may. I will cite it. It is Rothwell v Chemical & Insulating Co Ltd [2008] 1 AC 289. I will just tell your Honours something very briefly about the facts. It really was a test case. It related to an issue which was contentious in the United Kingdom relating to compensation for pleural plaques. I will come back to what pleural plaques are in a moment. A group of workers had been exposed to asbestos and they developed pleural plaques. Some of them had gone on to develop anxiety. Your Honours, anxiety is not a psychiatric illness and hence is not compensable. Others of the workers had gone on to develop depression, which is a psychiatric injury and can be compensated.
The question which came before the House was whether pleural plaques alone or whether pleural plaques coupled with anxiety and/or depression could give rise to what was called a compensatable claim. The House of Lords held unanimously that it did not. I was going to take your Honours to some portions of the judgment. There is Lord Hoffmann, and I will take your Honours to page 287, paragraph 1. I do that, your Honour Justice Nettle, partly because his Lordship described what pleural plaques are. In paragraph 1, his Lordship posed the question and then said about pleural plaques that they were a:
fibrous thickening of the pleural membrane which surrounds the lungs. Save in very exceptional cases, they cause no symptoms. Nor do they cause other asbestos‑related diseases ‑
In other words, they do not provide the causal pathway to which his Honour the Chief Justice referred earlier –
But they signal the presence in the lungs and pleura of asbestos fibres which may independently cause life‑threatening or fatal diseases such as asbestosis or mesothelioma.
Then over the page, in consequence, a person might understandably suffer anxiety and/or depression. I will just show your Honours the first sentence of the next paragraph because this is a summary of his Honour’s conclusion:
Proof of damage is an essential element . . . symptomless plaques are not compensatable damage.
That is where I got that word from. At paragraph 7 is really the solution, and paragraph 8 bears upon it.
FRENCH CJ: Sorry, how does this bear upon our case?
MR WATSON: The Northern Territory Court of Appeal said the changes in the mesothelial cells themselves – even though that they were unnoticeable, unable to be noticed – they were actually differently to plaques, not able to be seen on testing, that sort of thing. Even though symptomless, that was compensable damage. But the Court of Appeal used the word “compensable”, and Lord Hoffmann said “compensatable”.
FRENCH CJ: Well, you have accepted they were an injury, the question is whether the cause of action arose by reason of that injury, or whether there is a disconnect between that and the disease process.
MR WATSON: Exactly, it is – we are looking, or focusing, upon the issue of sufficiency of damage to give rise to ‑ ‑ ‑
FRENCH CJ: You mean sufficiency of injury, or ‑ ‑ ‑
MR WATSON: Sufficiency of damage.
FRENCH CJ: Yes.
MR WATSON: For example, it has been held in most of the authorities that inhaling the asbestos fibres themselves as an injury but that by itself is not accompanied by damage as the essential element in an action in tort.
KIEFEL J: Is another way of looking at it though that the damage for which this action was brought was not that injury – it was the damage which he finally suffered?
MR WATSON: Well, yes, except I have shown your Honours that the Northern Territory Court of Appeal did say that that was enough, the inhalation of the fibres at the point of the symptomless biological changes. We put this is writing, and I do not mean to be flippant about it, but cellular changes, biological changes, sounds serious. They happen to us every day, they happen as a process of ageing, of eating, of – well, et cetera.
KEANE J: But if one is asking whether one is worse off because of those changes, there does seem to be something to be said for the view that where your mesothelial cells are undergoing changes – genetic changes – that raise a risk of developing mesothelioma, as a matter of ordinary understanding it is not hard to say that the person who is suffering those changes is not worse off.
MR WATSON: No doubt. Your Honour, may I say this. In terms of whether or not it gives rise to a risk, that is a matter that has been considered in the authorities, and so far rejected. It was not put that way here, and I will take your Honours to some statements about that in the cases. But, to say that somebody is worse off in some sort of abstract manner, that is exactly what Lord Hope’s decision in this very case is driving at. So, if I just show your Honours the paragraphs, and I will not labour it. In paragraph 7, Lord Hoffmann had referred to the issue. I will just go about four or five lines down, where his Honour said:
Damage in this sense –
and that means damage sufficient to provide a basis for negligence –
Damage in this sense is an abstract concept of being worse off, physically or economically, so that compensation is an appropriate remedy. It does not mean simply a physical change –
then there is an interpolation ‑
which is consistent with making one better, as in the case of a successful operation, or with being neutral –
so if you read it, it does not mean simply a physical change –
having no perceptible effect upon one’s health or capability.
Lord Hope addressed the same sorts of things at page 297. The whole of the paragraph is relevant, particularly as it refers to Cartledge v Jopling. It is the last four or five lines. His Lordship said that these descriptions are not helpful on the question of law:
which is whether a physical change of this kind is actionable ‑
and this is the point to which your Honour Justice Keane refers ‑
There must be real damage . . . Where that element is lacking, as it plainly is in the case of pleural plaques, the physical change which they represent is not by itself actionable.
May I say this? Pleural plaques are quite distinctly different physical change to a change in a mesothelial cell, but they do reflect the fact – as was pointed out in Lord Hoffmann’s paragraph 1 – they do reflect the fact that you have inhaled asbestos and that you are at an increased risk of the serious diseases.
Lord Hope went on at page 299, in paragraph 47. I just want to take your Honours to the last three lines. I am not shirking what is in the rest. There is nothing there that hurts my case. But his Honour said, or posed the question, or answered it, that:
it can at least be said that an injury which is without any symptoms at all because it cannot be seen or felt and which will not lead to some other event that is harmful has no consequences that will attract an award of damages. Damages are given for injuries that cause harm –
et cetera. At the middle of the page in 49, right in the middle of the page below D:
Furthermore it is not possible to bring the risks of developing a harmful disease into account . . . The risks are no doubt due to the same exposure to asbestos. But they are not created . . . by the pleural plaques.
Then at G at the end of paragraph 50:
Time has not yet begun to run against any of the claimants –
Your Honour Justice Keane asked a question. Maybe it can be answered this way. A person who had suffered the changes to his or her mesothelial cells puts on a statement of claim and gets into the witness box. How was your health? Perfect. Do you notice any change? No. Does it interfere with your sport? No. Are you still working full‑time? Yes. Do you need medical treatment? No. The damages would be nil. There is no cause of action because there is no sufficient injury at that time.
FRENCH CJ: Well, he has answered the question, how is your health? It might turn out to be wrong. There have been these changes which ‑ ‑ ‑
MR WATSON: Well, if it had been asked of Mr Zabic as at 1987, he would have correctly answered, well, subject to unrelated matters, perfect.
FRENCH CJ: Of course, it is not unusual, is it, that in a personal injuries case you might have an injury – say it is in a running down case which is clear – there is a broken leg and some other things – and then before the case comes to trial, subsequent conditions emerge, maybe a reactive depression. So, all of those would be compensable.
MR WATSON: That would be true. There would also – I try to think – I am not trying to ram my point of view home. Your Honours, there are cases where, for example, in the running down case, the person may have fractured their ankle and at the date of trial there would be evidence saying it is very likely to lead to osteoarthritis.
FRENCH CJ: Yes, that is common.
MR WATSON: That is very common, but then the judge would have persuaded – be persuaded by evidence – that that was going to happen and it is a very common concomitant and the question here is whether or not this was there at the time.
FRENCH CJ: Often it is a case of risk, is it not? A risk of osteoarthritis would be taken into account in assessment.
MR WATSON: Yes, in the assessment, but that was not the suggestion here, it is – in any event, could I just go on and say ‑ ‑ ‑
KEANE J: But if the plaintiff had notionally been having a trial in 1988 and the evidence were that these mesothelial cell changes had occurred and were occurring so that there was, in prospect, a risk, why would not the same sort of process of assessment occur as with the risk of changes from a broken ankle?
MR WATSON: In this particular area, the courts have so far not accepted that that kind of risk is compensable. There have been some large cases on it, I think. The most famous is Gregg v Scott in the House of Lords.
FRENCH CJ: The question is why?
MR WATSON: The question is why is because the thing at that stage where the plaintiff would bear the onus to establish causation was talking about a risk of something occurring which you could never establish on balance that it would occur. I mean, if somebody was to sue today, just any person on the basis I inhaled asbestos 20 years ago, I may get a serious illness. That kind of case has never been considered in Australia and it is not really the one I was coming along to answer today. Wardley, I seem to remember, has said as a general principle that you cannot sue in respect of a risk. I think we referred to that in writing. I am sorry, that is not a very good answer because it is a non‑answer.
KIEFEL J: Is another explanation, perhaps, that whilst the courts may accept a particular injury as constituting damage and making the cause of action good, when they come to assess damages, they are sometimes looking at the future effects as in a complication arising from a fractured leg, the complication might be osteoarthritis, that is part of the assessment of damages, not the damage, because the courts are in a position to allow for future chances in the assessment of damages.
MR WATSON: That is the way in which it works but here the very thing upon which the action is brought is not a condition which has emerged, as opposed to the broken ankle.
KIEFEL J: Yes, but the distinction is that the broken ankle is what constitutes the damages. The possibility of osteoarthritic changes is simply a complication that the Court may take into account but it is not necessary to make the action good.
BELL J: On 31 December 1986, were it possible to have detected changes in the genetic structure of the cells, what could have been said was that there was a risk greater than the risk that a person without those changes has of developing a range of lung‑related illnesses that is like the evidence of the plaques in Rothwell, the risk is of asbestosis, of black lung, of a variety of conditions and mesothelioma.
MR WATSON: Yes, that would be true, I accept that.
BELL J: And this was a claim argued in negligence for damages for mesothelioma.
MR WATSON: Yes.
FRENCH CJ: But with the pleural plaques, there is no causal connection between them and the onset of mesothelioma.
MR WATSON: That is true. There is not the “causal pathway”, which were the words that your Honour used earlier. In other words, they have not shown any statistical link that those people with pleural plaques ‑ ‑ ‑
FRENCH CJ: There might be a correlation simply because they are an indication that you have been exposed to asbestos.
MR WATSON: Yes, exactly, but that has not been an increased risk amongst that group as opposed to other persons who inhaled asbestos but did not develop plaques. I think I need to take your Honours to Cartledge v Jopling because it really has emerged as an issue between us. I will just cite it. It is Cartledge v E. Jopling & Sons Ltd [1963] AC 758. Your Honours, we submit that this case is very poorly understood, but we will explain to your Honours how it should be understood, and hope we will get there. We submit it is entirely consistent with our contention. It is a surprising result, one would say, but your Honours will see in due course that it was because of the words of a statute, and if the common law had applied, the House of Lords would have arrived at the same result for which we contend.
I will just remind your Honours of the facts. A group of workers were exposed to silica. They were then given lung tests and X‑rays – radiographs, I think they called them back in the day – and they had definite changes to their lungs. They had developed the condition, even to a mild degree. But a young person has got an excess capacity of lungs. None of these men had noticed that they were ill, and they do not have an X‑ray machine at home, but it could be shown that there were definite changes, an injury. The men commenced proceedings and they were held to be statute‑barred. I will show your Honours in a moment that result was entirely due to the applicable statute, and that was the English Limitation Act 1939. Could I show your Honours Lord Reid at page 771? At the foot of the page, his Lordship says:
It is now too late for the courts to question or modify the rules that a cause of action accrues as soon as a wrongful act has caused personal injury beyond what can be regarded as negligible, even when that injury is unknown to and cannot be discovered . . . It appears to me to be unreasonable and unjustifiable in principle that a cause of action should be held to accrue before it is possible . . . to raise any action. If this were a matter governed by the common law I would hold that a cause of action ought not to be held to accrue until either the injured person has discovered the injury or it would be possible for him to discover it if he took [reasonable] steps . . . The common law ought never to produce a wholly unreasonable result –
Then in the next paragraph –
But the present question depends on statute, the Limitation Act, 1939 –
Your Honours, I should have probably shown your Honours this. The statute is set out in the early pages of the report, at page 759. What it is is that it fixed the limited period for an action in tort, and section 26 gave very limited opportunities to extend any limitation period depending upon fraud and the like. His Lordship went on –
[that] make it impossible to reach the result which I have indicated. That section makes special provisions [for] fraud or mistake –
and just at the end of the paragraph –
The necessary implication from that section is that, where fraud or mistake is not involved, time begins to run –
His Lordship described it as a “mischief”. In other words, this case depended upon the way in which that particular statute had been interpreted before and it led to this bad result. Now, I will just show your Honours – Lord Evershed at page 774 was saying the same thing in the first lines there, where his Lordship said:
To postpone the date in such a case as the present would, in my opinion, necessarily require the insertion of some words qualifying the statutory formula.
If I just mention this, that Lord Morris said the same thing at 776, and Lord Pearce was of the same view.
KIEFEL J: But is not the relevance of this case to the present that it appears to have been accepted that damage can be symptomless?
MR WATSON: For the purpose of that statute, it was accepted that what was shown on the lung testing and the X‑ray evidence was damage such as to commence time to run.
FRENCH CJ: Complete the cause of action.
MR WATSON: Therefore, there was a cause of action under that statute, whereas Lord Reid said, if I was going to decide it at common law, symptomless ‑ ‑ ‑
KIEFEL J: But it was not the statute’s description of damage, was it, that caused that result, it was the court’s acceptance that damage could be unknown and symptomless and nevertheless be damage for the purpose of the statute?
MR WATSON: It seems to be better explained by the courts for 30 years having interpreted that statute that way. That is the way in which they had interpreted that statute, and Lord Reid felt that it was impossible to do otherwise than follow those cases. I was just going to show your Honours Lord Pearce, but these provisions are pretty well‑known, so if I just tell your Honours it is at page 777 and 778. At 779, right in the middle of the page, there is a paragraph:
It is a question of fact in each case . . . Evidence that those changes are not felt by him and may never be felt tells in favour of the damage coming within the principle of de minimis non curat lex.
Could I just pass up five copies to the Bench and I will make some copies available to Mr Walker. The case is - this is just an extract from it - the decision of Central Asbestos Co Ltd v Dodd [1973] AC 518. At page 528, Lord Reid looked back on the decision in Cartledge v Jopling, at the foot of the page. His Lordship said that he must recall Cartedge v Jopling and over the page his Honour described how the House was compelled by the terms of the statute to reach an “absurd result”, et cetera. Of course this case of Central Asbestos was being decided under new legislation. Your Honours may recall that it – well, Cartledge v Jopling was an extremely harsh result and it led to a lot of academic writing.
BELL J: Coming back to Lord Pearce at 779, his Honour went on in describing whether or not damage is to be viewed as merely de minimis, evidence that the onslaught of disease the man may suffer from his hidden impairment tells in favour of it being substantial. I mean, the issue here, to the extent that Cartledge sheds light on it, concerns how one characterises the cellular change, whether or not it would be right to say that the onslaught of mesothelioma was significant, having regard to the evidence that was before the court concerning the significance of the changes in the mesothelial cells.
MR WATSON: We accept all of that, your Honour, but that is the point at which we say that the evidence at that time simply said that there had been physical changes which may not go on to anything.
BELL J: If the evidence disclosed whether those physical changes in the cell might have exposed one to other forms of lung disease or was it confined only to ‑ ‑ ‑
MR WATSON: It was only mesothelioma.
BELL J: Right, I see.
MR WATSON: I should say this - that is that key word “mesothelial” cells, they were on the lining of the lung. They were in a particular place. So, those same fibres may be doing something else which ends up being asbestosis but the changing cell was, I think, tied only to mesothelioma.
BELL J: I understand that but – yes.
MR WATSON: Your Honours, what I wanted to do was take that very general idea from those cases and take your Honours now to a couple of cases where it has been more specifically determined and one of them is Orica Limited v CGU Insurance Limited (2003) 59 NSWLR 14. Your Honours, I want to go to this for a couple of reasons because - well, we say it is directly on point, but, your Honours, it also encapsulates really what we want to say. I
I will remind you of the facts. Orica employed a worker between 1959 and 1961. Orica had three consecutive separate workers compensation insurance policies with CGU over those three years. Each of those policies had what was called a common law extension with a limit of $60,000 for common law damages. In 2001, the worker contracted mesothelioma and sued Orica. The worker and Orica settled their case. They agreed on a figure of $240,000 inclusive of legal costs.
Orica then sued CGU seeking either $180,000, being the aggregate of the three years – the evidence was the worker had been exposed over ‑ on each of the three years - or, in the alternative, if only one policy responded, Orica wanted $60,000. The majority of the New South Wales Court of Appeal found that Orica was not entitled to anything but that is not the point in issue. The Court of Appeal had a number of complicated issues before it here and that was whether – which policy would respond, whether one could aggregate and it also involved construing words like “injury” under the workers compensation legislation in New South Wales.
KIEFEL J: Was the critical question when liability accrued within the term of the policy?
MR WATSON: Not a critical question but certainly one of the questions. That is why I was going to take your Honour ‑ each of the judges offered a solution to that. Chief Justice Spigelman is at page 23. It is at paragraph 32. The whole of that paragraph is important. Those early words of “liable to pay” and “compensation” - that is referring to the statutory scheme and independently of the Act that is referring to common law liability. What his Honour went on to say is that when you are determining the answer to that:
the policy responds in the latter case only if the employer’s liability has –
It is a common law liability -
within the relevant period, “vested” or “accrued”. In my opinion, that does not occur earlier than the time of onset of mesothelioma. Damage is the gist of the action in negligence. The “injury” occasioned at the time of penetration of the lung by a fibre –
if that is an injury -
is so negligible in and of itself, as distinct from its potential, that it does not constitute damage –
The decision of President Mason at page ‑ ‑ ‑
FRENCH CJ: Now, in reaching that conclusion, is his Honour relying on anything – any evidence – about the probability or the causal pathways, or is it just on the basis that there are no symptoms from the mere penetration of the lung?
MR WATSON: He was also relying upon medical evidence. Earlier in his judgment he had referred to the fact that the medical evidence was set out in Justice Santow’s judgment. I will just show you what that was. At page 68 of the report, it is paragraph 195, where there was a discussion about what was called the aetiology of mesothelioma. It is probably paragraph (a) which is the key to it:
The development of the disease is related to the cumulative effect of all asbestos fibre inhaled ‑
Sorry, I should have said (b) –
There is no single “mesothelioma cell” in the early stages. A protracted series of genetic mutations occurs in the lungs. Eventually there is a clonal growth, which invades tissue and results in mesothelioma -
There are other references there, but they are the two most important.
FRENCH CJ: When his Honour describes it as negligible, what is the criterion that he is applying?
MR WATSON: Well, I would suppose it must be a question of fact.
FRENCH CJ: Is the criterion the fact that it is symptomless or that there is a mere probability as distinct from a certainty, one does not know.
MR WATSON: Well, that is something which is incorporated in his Honour’s final sentence where it:
is so negligible in and of itself, as distinct from its potential –
So it does take into account both those things.
KEANE J: In a sense, this was by the by for the Chief Justice, because he was concerned really to construe a policy of insurance that provided for indemnity in respect of a liability to pay compensation in a particular sum, and so what really mattered for the purpose of deciding the case, was whether the policy responded in respect of an established liability to pay a given sum. That sum reflected an assessment of damages which itself took into account all the consequences that were established by the time of trial – all the adverse consequences – that were established by the time of trial.
MR WATSON: Exactly. That is absolutely correct. Your Honour may recall that when her Honour Justice Kiefel said was this the critical question, I resisted the word “critical” because there were several steps along the way. But this was a necessary consideration insofar as, for example, it might be contended loosely that the liability for the purposes of looking at insurance arose in 2001. But of course, that insurer – that is when the mesothelioma occurred – that insurer, of course, was not insuring at the relevant period.
So then you would look at, well, does it arise in respect of the three years – 1959 to 1961 – and the Court of Appeal also had to look at when, in that period, could it be said that it arose. So there were a number of complex questions, and we were at pains in our written submissions to identify just those portions which dealt with the common law issue.
There is a lot of material in here, including interesting but totally irrelevant material about the aggregation of policies when they can occur. Justice Santow arrived at a completely different conclusion, although he was at ad idem with the other judges on this particular issue.
BELL J: On this particular issue, the Chief Justice at paragraph 25 makes clear that he did not regard it as necessary to decide the controversy about whether:
the initial penetration of the lungs by asbestos [fibre] is not sufficiently material to constitute damage for the purposes of . . . a cause of action ‑ ‑ ‑
MR WATSON: Sorry, I should have pointed that out. Your Honour is quite right.
BELL J: I think more recently, the Court of Appeal in Vero Insurance has said something about this analysis in Orica, has it not?
MR WATSON: It has, your Honour. We saw that in my learned friend’s written submissions, but the thing is that what they were talking about there was the analysis about how policies of insurance respond. That was in a compensation setting. That was not actually dealing with this question that we have before us now. They were raising questions there about whether Orica was right on the aggregation issue, and the like. They were not dealing with this issue and there is no statement – I have been through that case – which would undermine the proposition for which we are contending.
President Mason at page 28 – there are about four or five paragraphs which are relevant, and they actually answer some of the issues, or provide an answer to some of the issues which have been raised this morning. In paragraph 71, there is a discussion by his Honour about causes of action; I will not take your Honours through that. At paragraph 72, commencing with the important words “With the benefit of hindsight we know as a fact” – this is another appeal court judge looking at the issue of hindsight – we know that the worker has contracted mesothelioma as a result of that exposure. The last sentence is the telling one:
But that liability remained inchoate, in the eyes of tort law, because damage is the gist of the relevant cause or causes of action.
Your Honour Justice Keane asked a question or two about risk. The next paragraph looks at that –
The worker did not sue or recover damages on the debatable basis that the chance or fear of contracting mesothelioma –
Then in paragraph 74, his Honour addressed some of the practical consequences of all of this. Mr Dunstan – that is the worker:
might have suffered devastating injury or been killed, perhaps due to a third party’s negligence, before the ingested asbestos fibre triggered –
the mesothelioma. Then his Honour addressed what would happen – the relatives could not sue – and said this –
This is merely to restate the proposition that any tortious cause of action against –
That is Orica –
required proof –
et cetera, and a repetition over that at paragraph 75. Justice Santow dissented in the result. He said that you could construe the workers compensation policy a different way and you could allow aggregation. But on the issue with which we are dealing today at page 54, in paragraph 149, he had this to say:
In the present case, had the employee in 1961 sought to bring proceedings for his increased risk of contracting mesothelioma, it is clear he could not have succeeded then. But that is only for want of proof –
This is reminiscent of questions asked by your Honour Justice Kiefel -
available only in hindsight –
about the asbestos that had caused him damages. I will not read the whole but that whole paragraph is important. His Honour is saying there how the courts have, to date, shut their face to claims of this kind – Gregg v Scott being the key case.
Your Honours, could I just say this? Orica was subsequently considered and applied in a lung cancer case. It was a lung cancer case which showed that the asbestos inhaled had induced the lung cancer. We put it in writing but I will not take your Honours to it. It is Lay v Employers Mutual Limited (2005) 66 NSWLR 270. The principal judgment is by Justice Bryson, especially at paragraph 18. The other judges agreed with Justice Bryson.
I will not take your Honours to it because I wanted to go to back overseas to Scotland and show your Honours the case of Brown v North British Steel Foundry (1968) SC 51 and it is a decision of the Scottish Court of Sessions. Your Honours, the reason why we take your Honours to this is because we think it is important. This is a – they call it a British court – considering how to apply Cartledge v Jopling in circumstances very, very similar to this.
The facts were that a worker had been exposed to silica between 1941 and 1949. Now, extraordinary though it may seem, Scotland only introduced the Limitation Act in 1954. That imposed a three‑year limitation period on a negligence claim. That is why I corrected myself in terms of the Limitation Act in Cartledge v Jopling. But it introduced a three‑year limitation period. That legislation was expressed so that it did not restrict a claim which was based upon a cause of action which arose before 1954.
So in this case that question was relevant because in 1955 the worker became aware of symptoms of pneumoconiosis. He died but his family pursued the claim. The question before the Scottish courts was whether the cause of action arose before or after 1954. If yes, the claim can proceed. If no, the claim was statute barred. The Scottish Court of Sessions held – and it was unanimous – that the cause of action arose no earlier than 1955.
Could I show your Honours the decision of Lord President Clyde at page 64? Actually, I might just show your Honours something at the foot of page 63 before we go there. In the last paragraph his Honour is talking about the question and just at the end he was saying how the worker, Mr Brown, had no doubt inhaled silica in the dressing shop – it was steel dressing:
it is nowhere suggested in the evidence that by 1949 he was in any way then suffering from pneumoconiosis. All the men in the dressing shops inhale such dust, but few are infected with pneumoconiosis, which involves the scarring and inflammation of the tissues in the lungs.
Then the question we would respectfully submit is nearly identical. About 10 lines down, Lord President Clyde said:
In my opinion this is fatal . . . If section 7 can be invoked to exclude the time‑bar –
Section 7 was the preserving provision –
it is necessary to establish that a cause of action had arisen before 4th June 1954.
Then down in the middle of the page:
To succeed in the present case the pursuer would require to show that his pneumoconiosis was established to a degree which was not negligible . . . prior to 4th June 1954 . . . failed to do so . . . In 1949, and indeed at any time prior to 1st January 1955, no Court could competently have awarded damages –
Your Honours, this is an old case but it is a good case, we would respectfully submit, showing that the idea which we propose today is not in any sense heretical. At page 68, Lord Guthrie right in the middle of the page said something very similar:
Between 1941 and 1949 the deceased did not suffer from pneumoconiosis, and was not at all disabled . . . if an action had been raised shortly after May 1949, it could not have succeeded, since it could not have been averred or proved that the deceased suffered from the pneumoconiosis . . . All that he could have averred and proved was that he had inhaled dust which might or might not –
et cetera. Lord Migdale said more or less the same thing at page 70, just again around about the middle of the page:
It was clear on the evidence that pneumoconiosis does not inevitably follow –
and the next few lines.
KIEFEL J: Just returning for a moment – I think not necessary to Cartledge, had it not been for the X‑rays showing something, would the worker have failed?
MR WATSON: Could I say there were two things? There were X‑rays and also some breathing tests, but those breathing tests show your absolute lung ability. There was only a relatively small restriction. But if I treat your Honour’s question as being if that evidence was not available, there would have been no evidence of damage and so time would not have commenced until ‑ ‑ ‑
KIEFEL J: Yes, it was the X‑rays that caused the problem for the plaintiffs.
MR WATSON: I am not certain of this, but I think the facts were that the rotten employer in those cases that had the men X‑rayed and tested, as it were, for the sake of their own health and then were able to use the records which they had collected but not told the workers about.
KIEFEL J: As a defence, to show damage – yes.
MR WATSON: Your Honours, I am not going to take your Honours to the more recent decisions in the House of Lords or the Supreme Court. They are becoming more difficult to apply because of the so‑called Fairchild enclave. But that said, your Honours, there is nothing in those cases – I have read them, I speak of course of Barker v Corus and the Trigger Litigation Case, BAI v Durham – there is nothing inconsistent in those cases with what we are saying here. In fact, there is a good deal that seems to be an assumption in the courts over there that there was no cause of action.
I will just refer your Honours – we have put these things in writing, we have put the references, but in the Trigger Litigation, which is BAI (Run Off) Ltd v Durham [2012] 1 WLR 867 – I am not going to take your Honours to it – it is the judgment – sorry, it is the Supreme Court – it is the judgment of Lord Mance at paragraph 64 and there is also a reference, and the judgment of Lord Clarke at paragraph 77. Your Honours, that is what I really wanted to put to you on the appeal but because the arguments overlap entirely, if your Honours preferred, I would address just the first of our four arguments on the notice of contention.
FRENCH CJ: Well, the submissions on the notice of contention, for which leave is still required, raise succinctness to a new level. I think it best if we hear what Mr Walker has to say, subject to leave being given. Ultimately then you can deal with those matters in reply.
MR WATSON: Well, I can tell your Honours that my instructions are firmly – and my client is sympathetic to the physical condition of Mr Zabic and does not oppose a grant of leave.
FRENCH CJ: It does not oppose a grant of leave.
MR WATSON: It does not oppose it.
FRENCH CJ: Those are your submissions otherwise.
MR WATSON: I am told, and this means I have said something which was wrong ‑ Mr Sheller tells me there was no evidence about the 3 per cent rate. I could have had in mind another case. I apologise for that.
FRENCH CJ: Well, somehow I had 3 per cent in my mind, but where I got it from I do not know. It is not in the papers.
KIEFEL J: Another case.
FRENCH CJ: Another case, perhaps.
MR WATSON: May it please the Court.
FRENCH CJ: Yes, Mr Walker.
MR WALKER: May it please the Court. Your Honours, the first question of course is how the facts as found in this case fitted the words of the governing statute. The parties are not at odds about that being the primary task. We do differ on the outcome of the application of those facts. They start, with respect, as we have noted in our outline of propositions, with the summary – to which other context is necessary – at appeal book 128, paragraph [48], where the conclusion is expressed that:
there was compensable damage, namely changes to the mesothelial cells, prior to 1987 –
the critical date –
The toxic carcinogen amphibole asbestos had lodged in the appellant’s lungs and caused genetic change leading to aberrant and abnormal cell growth which culminated many years later into malignant mesothelioma. The cause of action arose when the non‑negligible damage was first suffered.
Now, those are expressions which obviously call in aid the common law jurisprudence where, famously, Cartledge v Jopling is supposed to stand as some high‑water mark of the application in the face of what Lord Reid regarded as the dictates of, in an 18th century sense, natural justice. However, in our submission, it was orthodoxy then. It has remained orthodoxy since, at least in this country, bearing in mind that this country has not yet embarked on what might be called a Fairchild, et cetera, et cetera digression.
The next sentence in paragraph [48] is equally orthodox and it is an entirely familiar aspect of personal injuries litigation, but whether it be called “complications”, as Justice Kiefel raised with my learned friend, or consequences or sequelae or any other number of things, those things which are causally related to the injury – I am sorry, to the negligence usually, of course, mediated through the occurrence of what might be first called “the damage” constituted by an injury or disease, will be within the ambit of the court’s compensating function.
KIEFEL J: I think there is a distinction and then that is what I was trying to point out before between damages for future loss and damage. I do not think we should elide the two.
MR WALKER: Quite so and that, in our submission, in the assessment of damages which may occur, of course, at a time when many of the sequelae have fallen in and when the prospects of others are better known than they would have been, for example, when the cause of action accrued, they will be artefacts of both the timing of litigation, the availability of evidence and above all other things, in this field, the state of art in medical science.
The context to which we would refer, in particular, includes what your Honours have already been shown at appeal book 118 paragraph [20] and that includes the finding that those changes were the start of a process that resulted in the appellant suffering from malignant mesothelioma. The causal chain is clear. Then, starting on page 132 of the appeal book, paragraphs [58] to [62] complete the reasoning or elaborate the conclusion in paragraph [48] and, in particular, one sees at about line 11:
the appellant’s condition was such that the cells would so develop.
BELL J: How does that fit with the concession that was made at appeal book 89, paragraph [60] of the primary judge’s reasons:
that it would not have been possible, immediately prior to 1 January 1987, to state that the changes in the plaintiff’s mesothelial cells . . . would probably lead to the development of malignant mesothelioma.
MR WALKER: Doing the best I can, I think that is a reference to what was available by way of evidence at the time, that is, there being nothing – I do not know whether the word “biopsy” is appropriate, there being nothing which had seen mesothelial changes which are a fact inferred from subsequent development of mesothelioma.
BELL J: Well, it also raises this issue of whether the changes in the mesothelial cells were likely to produce a malignant mesothelioma. Clearly, it is accepted there is a causal link, but where on the continuum that likelihood existed as at 31 December 1986 may have been unclear on the evidence.
MR WALKER: There is a difference between the evidence at the trial and the hypothetical state of evidence, had there been a trial at an earlier stage – that is, immediately prior to 1 January 1987. That is a radical difference. I think the concession that is noted at trial – paragraph [60], page 89 of the appeal book – is about the fact that “it would not have been possible” then to say that there were changes which would “probably lead” to the development of mesothelioma. It is what follows in paragraph [60] that governed the case.
BELL J: But that then comes to the question of characterisation. On the one hand, it is said it was just a want of the capacity to prove that which is known. The other way of looking at it is as at 31 December 1986, as a matter of fact, it could not have been known.
MR WALKER: That is discoverability, but it was a fact at that date is what the rest of paragraph [60] at trial finds, what I have already drawn to attention in the Court of Appeal at paragraph [20] and I will come back to page 132. It was a fact that there had been by that stage changes in the mesothelial cells which did in fact lead to – I am there quoting from paragraph [60] at trial at line 41:
did in fact lead to the development of malignant mesothelioma –
not a question of probabilities; it is finding, no doubt on the balance of probabilities, that it did in fact lead to. It is not a question of risk.
BELL J: In the events that happened, that is clear, but the matter that I am raising, and it may be that the evidence just really did not explore this, but as at 31 December 1986, it may not have been the fact, namely that other things might have intervened that then led to the onset of the malignancy – it is just how one characterises it, but that is ‑ ‑ ‑
MR WALKER: I think partly this is a matter about which there is not further evidence, none I can point to not already taken up in the holdings to which I have drawn attention and in the course of drawing attention. But in particular, it is a matter of discoverability or capacity to prove, rather than the fact itself which I understand to be the object of the concession as seen by the trial judge at paragraph [60]. That appears to be so from what follows in that paragraph, which, in particular, employs what is now in a certain manner regarded by the appellant as “hindsight reasoning”.
Of course it is hindsight reasoning; all finding of fact is hindsight reasoning in the relevant sense. From what happened to the unfortunate man in light of medical science, which was in evidence, the finding, which is not challenged in this Court and really does not lend itself to factual dispute in a given state of art, is that “prior to January 1987” – that is line 45 on page 89:
the plaintiff had suffered damage, albeit not then apparent but still sufficient to enable his cause of action to arise.
Your Honours, the final point that I was going to make – maybe I have already said this but there are, we would respectfully submit, some large consequences in accepting my learned friend’s attractively put argument. Your Honour Justice Kiefel asked a question that if the respondent’s proposition is accepted, could that alter the way in which statutes of limitation operated. Mr Walker properly quickly considered that it would. Your Honour Justice Keane then said, but any difficulty in a post‑Cartledge v Jopling era is covered by the fact that there are amendments which allow for extensions. With respect, that is absolutely correct, but limited to the field of personal injuries.
What we are dealing with here now is something which operates more broadly than just purely asbestos and mesothelial cells and mesothelioma. But it does look as though it is any agent which, in the field of tort, can have some sort of adverse effect on cells in a human and it could operate very broadly. It is not yet predictable as to how that may operate in other areas, but may I say this? We see no reason why your Honours would think that it would only operate in the field of personal injury.
It might be the case, as I said before, that there are a number of products in the area of product liability – things which might have
something, some trivial flaw or problem in it, and all of a sudden the limitation period is set well back in time with some remarkable consequences. The jurisprudence of Australia has carefully developed around discoverability in terms of setting times for the limitation period to run. A finding that a change as minor as, as slight as this, as symptomless, change which may not give rise to any other problem, gives rise to a cause of action may have effects in other areas. Never put a floodgates argument to the High Court, but I am going to. It would seem as though it may have a fairly dramatic effect on the way in which ‑ ‑ ‑
FRENCH CJ: Floodgates are often closed by statute anyway, are they not? That is what we are looking at.
MR WATSON: I will not say any more. Times change; science changes. It may well come to a point where we know a great deal more about this than we do now. It was not that long ago that people spoke about a single fibre causing mesothelioma, and then in some ways, some ‑ ‑ ‑
FRENCH CJ: That informed Fairchild, did it not?
MR WATSON: Then it went away, and then some have flirted with it again. Your Honours, they are my submissions.
FRENCH CJ: Yes, thank you, Mr Watson. The Court will reserve its decision, and adjourns until 10.15 tomorrow morning.
AT 3.05 PM THE MATTER WAS ADJOURNED
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