Alcan Gove Pty Ltd v Zabic

[2015] HCATrans 110

[2015] HCATrans 110

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Darwin  No D4 of 2015

B e t w e e n -

ALCAN GOVE PTY LTD ACN 000 453 663

Applicant

and

ZORKO ZABIC

Respondent

Application for special leave to appeal

FRENCH CJ
BELL J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 15 MAY 2015, AT 10.47 AM

Copyright in the High Court of Australia

MR G.M. WATSON, SC:   May it please the Court, I appear with MR G.P. GEE for the applicant.  (instructed by Bartier Perry)

MR G.F. LITTLE, SC:   May it please the Court, I appear with my learned friend, MS J.D. LAYANI ELLIS, for the respondent.  (instructed by Shine Lawyers)

FRENCH CJ:   Yes, Mr Watson.

MR WATSON:   There are two points which we submit warrant the grant of special leave.  The first is that, as matters presently stand, there is a conflict in decisions of two intermediate appeal courts, that is the Northern Territory decision below, and the New South Wales Court of Appeal decision in Orica v CGU.  I will come back to the detail of that, but it is also relevant to know that there are other Australian cases which are lined up on each side of that divide.

The second basis for special leave is that, with respect, the decision of the Northern Territory Court of Appeal is just incorrect and it would warrant correction in any event.  Your Honours, apart from anything else, it is an important decision in terms of the administration of the Northern Territory scheme including, incidentally, in the way in which defendants or employers would respond to claims and including, critically, the way in which insurers would respond to demands.

Your Honours, before I develop either of those points, may I just offer a few words to justify why this particular case provides a desirable vehicle to resolve the point.  As your Honours would appreciate, the point is directly raised in these proceedings.  There are no distractions.  All the relevant facts are agreed.  There are no ancillary liability points outstanding and your Honours, although the question arises here in respect of an asbestos related mesothelioma, it is plain that the point of principle would apply more generally to all kinds of claims where an injury or a disease comes about through a slow or insidious process.

Now, your Honours, I return to the first special leave point and the conflict between the two Courts of Appeal.  There were two types of conflict.  The first is that the question raised in Orica v CGU required that court, this was as a first step, to determine whether or not there was a liability for common law damages during the currency of certain insurance policies and they were insurance policies which were issued during the 1960s.  As we have set out in writing, each of the judges in New South Wales rejected that proposition.

Now, precisely the same issue arose in this case in the Northern Territory Court of Appeal and although the decision in Orica v CGU was referred to, their Honours actually do not say whether they declined to follow it or whether they distinguished it or, if they did distinguish it, how or why they distinguish it.

FRENCH CJ:   Well, can you just try to reduce this to the proposition necessary for the application of section 189(1) as to the minimum requirement in relation to a disease of this character for a cause of action to arise in respect of disease.

MR WATSON:   It would be sufficient damage in the eyes of the law to give rise to a cause of action.  I appreciate that is circular but the point is that the courts have been ‑ ‑ ‑

FRENCH CJ:   Does that end up being a factual judgment of some kind?

MR WATSON:   Well, no, not entirely.  Your Honours, it is resolving a key fundamental question of law in a tort case - maybe the key question, because it tells you whether or not the claimant has a cause of action.  In that respect, for example, the United Kingdom Supreme Court looked at this very carefully, the same question in that Durham Case to which we referred which is sometimes called the trigger litigation ‑ trigger litigation meaning when is the liability triggered?

It is an important question, even if it mixes up a question of fact because it will arise all the time in terms of determining these sorts of claims.  At the moment, this kind of claim would succeed under the Northern Territory decision but fail in New South Wales.

The second conflict between the two courts is the use of hindsight.  A central part of the reasoning of the court below depended upon the use of hindsight.  In Orica v CGU, two of the judges expressly, and the third judged implicitly, rejected the idea that hindsight could be employed.  Hindsight in this sense is using knowledge acquired, now that mesothelioma has developed, to say that a cause of action has arisen.  In the court below, in this case ‑ ‑ ‑

FRENCH CJ:   Well, just coming back to the question I was putting to you, the Northern Territory court found the cause of action to arise at the point at which the inhalation of asbestos had caused changes in mesothelial cells.  Is that right?

MR WATSON:   Yes.

FRENCH CJ:   Now, you say, the point of difference in terms of this case is that the cause of action does not arise until you start to, what, suffer the symptoms?

MR WATSON:   Yes.  May I give an example, an analogy, and it works?  We all know that in the harsh Australian sunlight a dose of sunlight will cause changes to the cells in our skin when then remain dormant in most people forever but in some people mutate, change and develop into something awful, melanoma.  It can take 20 years to do so.  It would be an extraordinary proposition if, and if one assumes the other elements of a tort case, it would be an unusual proposition to suggest that a person had a cause of action at the time that they suffered a mild sunburn.

FRENCH CJ:   Yes, there may be a question, I suppose, as to whether there are particular factual dimensions, depending upon what kind of disease you are talking about, what kind of changes you are talking about.

MR WATSON:   Well, that is true and that, however, would never reduce the impact of a decision like this which is suggesting that the mild sunburn example could attract liability in due course.  That, of itself, is something worthy of this Court’s attention, as we have pointed out.

FRENCH CJ:   All right, I might stop you there, Mr Watson.  We will hear from you, Mr Little.

MR LITTLE:   Thank you, your Honour.  We say that it is clearly a question of fact as to when sufficient damage has occurred for a cause of action to be complete.

BELL J:   But the approach of the Court of Appeal of the Northern Territory was to conclude on the basis of the common medical evidence that there had been some change in cellular structure in consequence of the inhalation of asbestos, that that was sufficient for the purposes of the tort.  Was it also the case that it was common that persons inhaling asbestos would undergo cellular change but that in many instances that would not progress to mesothelioma?

MR LITTLE:   That is correct, your Honour.

BELL J:   Well, that does raise the point, does it not?

MR LITTLE:   Well, the point is that hindsight has been used since Cartledge v Jopling in cases involving medical conflict.  That is the rootstock of this jurisprudence.  In that case the men did not know they had anything wrong with them.  They had no symptoms but a breach of duty had caused them to inhale silica and years later, when they were struck down, they had lost their cause of action.

BELL J:   How does Cartledge sit with BAE (Runoff)?

MR LITTLE:   Well, BAE (Runoff) is an English case where they have crafted a special rule there to deal with mesothelioma because of the imprecision in medical evidence to actually identify a most likely or most probable exposure that has been causative.  Your Honours have grasped this before in cases such as Booth v Amaba when you have looked at the Fairchild exception in the UK. 

Now, the Fairchild exception, whether one says that it merely substitute a proof of increase of risk for actual cause or simply said it was an aid to proof, whatever it was, it gave rise to totally difference considerations with insurance policies and the whole point about insurance policies is, of course, they are policies of indemnity.  They indemnify somebody against a liability that person then has.

Now, what was at issue in Orica was everybody accepted that there had been an injury early on at the time of exposure, but the indemnity was only triggered by a liability to pay damages during the currency of the policy.  The liability to pay damages did not occur until three things were available.  That was proof of the breach of duty and proof of the initial injury, the breach of duty causing the initial injury and then proof of the ultimate damage.  They were the three things ‑ ‑ ‑

BELL J:   The latter being the gist of the ‑ ‑ ‑

MR LITTLE:   Yes, the mesothelioma but as Justice Derrington so lucidly says in Martindale v Burrows and as this Court said, with respect, lucidly in Crimmins, once the mesothelioma develops and it can be causally traced back to the initial genetic changes that occurred at the time of inhalation in those who get mesothelioma, or any long latency disease, there is an unbroken inexorable progress from the one to the other.

BELL J:   That is the reasoning of Justice Derrington?

MR LITTLE:   Yes, and that proves - our learned friends would say that is impermissible use of hindsight.  It is not.  It is what the House of Lords did in Cartledge v Jopling.  They said these men, because they had changes at the time, have lost their cause of action even though their serious consequences did not appear until long after.

FRENCH CJ:   Is there any inferential material arising out of the fact of the onset of the mesothelioma and the character of the changes that had occurred at the cellular level.  I mean, there seems to be an assumption in some of what has been said that you have changes, then it is a roll of the dice as to whether they go in one direction or the other.

MR LITTLE:   The medical evidence is much more extensive than that in this case, your Honour, and this case differs from Cartledge v Jopling and Orica whether in fact - Orica was a cross‑claim between an employer and an insurer and it proceeded on the most limited medical basis and some elderly medicine about mesothelioma was accepted by both parties.  In this case, both medical practitioners on each side of the record gave detailed descriptions of how the changes took place, how they progressed and then the fact that, although it was a very long process, something ultimately triggered in the sufferers of mesothelioma, the malignancy. 

So that the medical evidence was there was pre‑malignant change and damage at the time of inhalation and both doctors say that.  Those pre‑malignant changes meant there was the potential for malignancy without any outside intervention or trigger.  That is what differs from Wardley, with respect.  Wardley needed the failure of the personal guarantee to pay before the liability arose.

But, as this Court said, at least four or five of the Judges in this Court said in Crimmins, where really they were dealing with the same point, once the mesothelioma does develop in the individual, it is traced back to the original inhalation and the genetic change that takes place then and it progresses so that we know from the outcome, we know the harm that was caused initially.

When Mr Zabic, in this case, was at Christmas Eve 1986, the day before the legislation came into effect, he had lungs that were overloaded with a toxic carcinogen, asbestos, all sorts of genetic changes had been going on, unbeknownst to him, in his lungs, without his knowledge of symptoms but presumably, the die had been cast and he was on track for a terminal illness and Justice Derrington uses the result to go back to the original cause.

That happens in medicine all the time.  Epidemiologists do it all the time, to find the cause of diseases.  It is our case that in this particular application there could not be clearer medical evidence, far stronger than what was assumed in Crimmins and in Crimmins, when they were looking at whether a liability was transferred they fixed on the fact that there had been a breach of duty that exposed the sufferer to asbestos.  They said that it was a long latency disease but once it occurred there had obviously been rights and obligations constructed by the breach of duty, followed by injury at the time of inhalation.

One did not get just entitlements, as they were described by Chief Justice Gleeson, or the right to bring an action without having a cause of action.  The cause of action was simply completed because really substantial damage occurred when the terminal illness appeared so that the Northern Territory court has used carefully chosen language.

Crimmins was obligations that existed at the date of transfer.  The Northern Territory legislation was a cause of action that arose before it and whenever it was sought to proceed for it, it could proceed and the fact that the intention of that legislation was to comply with their constitutional obligation as a delegated assembly from the Commonwealth was not to cancel rights of action which were available if and when mesothelioma ever developed.

Secondly, the Northern Territory legislation when it amended the limitation law, the Attorney‑General in his second reading speech, the very concluding passages of that, made it clear that it was to apply to make proceedings much easier for workers to bring claims.  Now, if the intention of the Parliament had been to cancel workers’ rights to bring claims in 1986, when their breach of duty had occurred, giving them rights prior to that date, one would wonder why ‑ ‑ ‑

BELL J:   Mr Little, I think the point that is sought to be agitated as the special leave point is somewhat removed from the issue of construction that you are now addressing.

MR LITTLE:   It is, your Honour.  Well, we say first, that there is extensive authority on the highest appellate courts, both in the United Kingdom in Cartledge and here in Crimmins and Wardley against our friend’s proposition, against the suggestion that hindsight is impermissible and that the Northern Territory court used hindsight.  Our submission is that Cartledge v Jopling and Crimmins both used hindsight.  It is commonplace.  In a motor accident where there are no eyewitnesses, parties are all dead, one reconstructs the scene from what is there, sees where the debris is, where the vehicles ‑ ‑ ‑

FRENCH CJ:   Well, that is just the uncontroversial proposition that inferences about things that happened in the past may be drawn from their consequences.

MR LITTLE:   Exactly, your Honour, but our friends seem to say that is impermissible ‑ ‑ ‑

FRENCH CJ:   The real question here, for the purposes of this application, is does this case raise a question of principle or of importance warranting the grant of special leave.  Now, so far you have been really directing your submissions, as I see it, to a proposition that the Northern Territory court got it right and that there is no doubt about the question.

MR LITTLE:   Well, secondly, our other two points are that it is a question of fact and the cases make that clear as to when sufficient damage has occurred to give rise to a cause of action.  So that is the first point.  The second point is the cases have consistently in mesothelioma dealt with in the way we have just submitted.  They have looked at the result, gone back and said this person suffered a terminal illness on the inhalation of this, so the cause of action was completed.  All that was absent was proof.  Orica, which is dealing with a totally different proposition, which is when an employer’s liability arises in a way he can claim indemnity from an insurer, has got nothing to do with this.

BELL J:   There are statements in Orica concerning when the cause of action arises and I think it is those statements that the applicant relies on.

MR LITTLE:   Well, Chief Justice Spigelman at [24] to [26] in Orica says that as to when the cause of action - no such issue arises here, he says.

BELL J:   I think it is what the Chief Justice said at paragraph [32] that is relied on and similarly President Mason at paragraph [72].  These may or may not be right, Mr Little, but they seem to raise the issue.

MR LITTLE:   Well, as we understand it, the other two members of the Court of Appeal agreed with Justice Santow.  Justice Santow dissented on only one issue and the issue that he dissented on was, he would have said that not only was injury and damage suffered on inhalation but the cause of action was completed at that time and that was during the currency of the policy.  The other two judges said that when you are looking at an indemnity, the question of an inchoate cause of action is not relevant.  It has got to be a perfected and completed cause of action. 

So we say that that is a million miles away from the Northern Territory statute.  Nothing is to be gained from looking at that case.  In fact, it was restricted in a subsequent case, which we have referred to in our submissions, of Vero where, in another insurance policy, with slightly different wording, the court decided it differently to the decision in Orica.

They reviewed Orica, said that there was a different wording in the policy, the trial judge was entitled to find cause of action arose at the time when the policy was current and therefore the policy responded.  There was a contrast between public liability policy on the one hand and employer’s liability policy on the other.  So Orica itself has been restricted by the Court of Appeal of New South Wales to its own facts.

So we say that there is a strong line of authority already determining this issue and in this case the factual case is far stronger than any of the

other cases that have considered the medical situation and the causes of mesothelioma.

FRENCH CJ:   Mr Watson, will your client give an undertaking, if special leave were granted, not to seek to disturb costs orders below in the event that it is successful and to pay the respondent’s costs in any event?

MR WATSON:   I give that undertaking on behalf of my client.

FRENCH CJ:   All right.  On that basis, there will be a grant of special leave.  Half a day to a day?

MR WATSON:   Yes.  It may trickle into a day.

MR LITTLE:   A day, your Honour.

FRENCH CJ:   Yes, we will seek to list this for the August sittings.  There is a timetable for submissions that should be available to both of you.

MR WATSON:   May it please the Court.

MR LITTLE:   Thank you, your Honour.

AT 11.10 AM THE MATTER WAS CONCLUDED