Morrison v AAI Limited t/as Vero Insurance

[2023] NSWDDT 7

Dust Diseases Tribunal

New South Wales

Medium Neutral Citation:

Morrison v AAI Limited t/as Vero Insurance [2023] NSWDDT 7

Hearing dates:

17 August 2023

Date of orders:

25 August 2023

Decision date:

25 August 2023

Before:

Russell SC DCJ

Decision:

(1) Grant leave nunc pro tunc pursuant to ss 4 and 5 of the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) to the plaintiff to commence and continue these proceedings against AAI Ltd t/as Vero Insurance in respect of any liability for damages and costs against Svitzer Towage Holdings Pty Ltd (formerly known as Howard Smith Industries Ltd).

(2)    Order that the costs of the plaintiff’s Notice of Motion filed on 9 March 2023 be costs in the cause.

(3)    Dismiss the sixth defendant’s Notice of Motion filed on 15 June 2023.

(4)    Order the sixth defendant to pay the plaintiff’s costs of the sixth defendant’s Notice of Motion filed on 15 June 2023.

Catchwords:

DUST DISEASES – prescribed dust diseases – asbestosis

INSURANCE – application for leave to proceed against an insurer – leave granted

DAMAGES – Act abolished common law right to bring action from 24 June 1993 unless cause of action accrued prior to that date as per Smith v ANL Ltd – when did plaintiff’s cause of action arise – exposure to asbestos in 1970s – diagnosis of asbestosis in 2014 – aetiology of asbestosis – initial deposition of fibres when viewed retrospectively caused molecular/cellular changes at time of exposure – eventually and inevitably progressed to asbestosis – reasoning in Alcan Gove Pty Ltd v Zabic applied

Legislation Cited:

Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW), ss 4, 5

Dust Diseases Tribunal Regulation 2019 (NSW), cl 17

Seafarers Rehabilitation and Compensation (Transitional Provisions and Consequential Amendments) Act 1992 (Cth), ss 4, 6 13

Seamen’s Compensation Act 1911 (Cth)

Seafarers Rehabilitation and Compensation Act 1992 (Cth), ss 19, 54

Uniform Civil Procedure Rules 2005 (NSW), r 13.4

Workers Rehabilitation and Compensation Act 1986 (NT), ss 52, 189

Cases Cited:

Alcan Gove Pty Ltd v Zabic [2015] HCA 33; (2015) 257 CLR 1

Avant Insurance Ltd v Burnie [2021] NSWCA 272

Samson Maritime Pty Ltd v Aucote [2014] FCAFC 182

Smith v ANL Ltd [2000] HCA 58; (2000) 204 CLR 493

Texts Cited:

American Thoracic Society, “Diagnosis and Initial Management of Nonmalignant Diseases Related to Asbestos”, (2004) American Journal of Respiratory and Critical Care Medicine Vol 170

Category:

Procedural rulings

Parties:

George Shields Morrison (Plaintiff)
AAI Limited t/as Vero Insurance (Sixth Defendant)

Representation:

Counsel:
S Tzouganatos (Plaintiff)
G Parker SC (Sixth Defendant)

Solicitors:
Turner Freeman Lawyers (Plaintiff)
Thompson Cooper Lawyers Pty Ltd (Sixth Defendant)

File Number(s):

DDT 2021/340002

Judgment

Introduction

1. By an Amended Statement of Claim filed on 9 December 2021 the plaintiff Mr George Morrison has sued 12 defendants seeking damages for the conditions of asbestosis, calcified asbestos-related pleural plaques and asbestos-related pleural disease. Mr Morrison alleges that between May 1960 and November 1983 he was employed on board ships engaged in coastal trading around Australia.

2. The sixth defendant is AAI Limited t/as Vero Insurance (AAI), which is alleged to be the insurer responsible for the liabilities of Mr Morrison’s employer between 14 June 1974 and 3 April 1975. In order to sue AAI, Mr Morrison requires orders pursuant to the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) (the 2017 Act).

3. The pleaded allegation in relation to the employer between 14 June 1974 and 3 April 1975 (including a minor amendment made by leave on 17 August 2023) is as follows:

“Between 14 June 1974 and 3 April 1975, the Plaintiff was employed by Svitzer Towage Holdings Pty Ltd (formerly known as Howard Smith Industries Ltd) while working on the Nancy Heath including in New South Wales. Throughout the course of this period of employment, the Plaintiff worked in areas where asbestos insulation materials were present and where they were being disturbed. As a result of this, the Plaintiff was thereby exposed to and inhaled asbestos dust and fibre.”

Application for Leave to Sue AAI

4. The plaintiff filed a Notice of Motion on 9 March 2023 seeking leave pursuant to ss 4 and 5 of the 2017 Act to continue the proceedings against AAI in respect of any liability for damages and costs against Svitzer Towage Holdings Pty Ltd (Svitzer). The motion also sought an order that the costs of the application be costs in the cause.

5. The motion was heard on 17 August 2023.

6. The plaintiff relied upon the following evidence:

1. Affidavit of J Hughes dated 8 March 2023 (PX 1).

2. Affidavit of J Hughes dated 15 August 2023 (PX 2).

3. The plaintiff’s Statement of Particulars filed on 30 November 2021 (see Tcpt 20/47).

7. On p 28 of the Statement of Particulars Mr Morrison said the following in relation to his service aboard the Nancy Heath:

“I also served onboard the Nancy Heath and in the engine room there would be a funnel head on the deck which had vents which would suck the outside air into the engine room. There were fans which pushed the air down into the engine room and at the back of the ship there was permanent turbulence going through the engine room and disturbing the asbestos lagging. The Nancy Heath was nicknamed the ‘Nasty Heath’ because of how many repairs were required to be undertaken.”

8. On p 25 of the Statement of Particulars Mr Morrison said:

“On average, most of my work was conducted on the deck of the ships, although I also undertook a lot of work inside the ships, including in engine and boiler rooms. I had regular asbestos exposure from working in dusty engine and boiler rooms where I was surrounded by asbestos lagging. Maintenance and repair work was required to be undertaken as asbestos lagging was used to insulate steam and hot water pipes, as well as engine exhausts and engine components which deteriorated and broke down over time. Many seamen worked in these rooms undertaking general maintenance work which involved removing and replacing the existing asbestos insulation materials. I was exposed to asbestos dust and fibre as a result of being in the vicinity when this work was undertaken.”

9. AAI relied upon the following evidence:

1. Affidavit of B Mason dated 1 August 2023 (DX 1).

2. Six Certificates of Discharge in relation to the service of the plaintiff aboard the Nancy Heath (DX 2).

3. Extract re Howard Smith Industries Pty Ltd showing it as the owner of the Nancy Heath (DX 3).

4. American Thoracic Society documents re diagnosis of asbestosis (DX 4).

Issues on the Plaintiff’s Motion

10. Counsel for the plaintiff submitted that the only issue to be determined was when did the plaintiff’s cause of action accrue. If the cause of action accrued before 24 June 1993, then it was submitted that the Tribunal should grant leave under the 2017 Act to continue the proceedings against AAI. Counsel submitted that Mr Morrison had an arguable case that his cause of action accrued before 24 June 1993. The significance of this date is discussed below.

11. Senior Counsel for AAI submitted that Mr Morrison’s cause of action accrued well after 1993, and, as discussed below, he effectively has no right to seek common law damages, and thus leave to sue AAI should be refused.

12. In the alternative, Senior Counsel for AAI submitted that any exposure aboard the Nancy Heath was trivial, and thus leave to sue AAI should be refused as a matter of discretion.

Seafarers Compensation

13. Prior to 1993, workers compensation for seafarers who were injured in the course of their employment was governed by the Seamen’s Compensation Act 1911 (Cth) (the 1911 Act). While the 1911 Act made provision for payment of workers compensation to seamen, it placed no restriction upon such workers making common law claims for damages.

14. In 1992 the Commonwealth parliament passed two Acts, which came into force on 24 June 1993. The primary Act is the Seafarers Rehabilitation and Compensation Act 1992 (Cth) (the Seafarers Act). The companion Act was the Seafarers Rehabilitation and Compensation (Transitional Provisions and Consequential Amendments) Act 1992 (Cth) (the Transitional Act).

15. Section 4 of the Transitional Act stated that it dealt with injuries that happened before the commencing day. Section 4 said that the Act converted rights under the 1911 Act into corresponding rights under the Seafarers Act. Section 6 of the Transitional Act provided that the Seafarers Act applied in relation to an injury, loss or damage suffered by an employee, whether it occurred before or after the commencing day of the Seafarers Act.

16. Section 19(1) of the Seafarers Act provides that it applies to employment of employees on a prescribed ship that is engaged in trade or commerce, inter alia, among the States. It was an agreed fact on the hearing of Mr Morrison’s motion that the Nancy Heath was a prescribed ship.

17. Section 19(2) of the Seafarers Act provides as follows:

“This Act also has the effect it would have if:

(a)    a reference to an employer were limited to a reference to a trading corporation formed within the limits of the Commonwealth; and

(b)   a reference to an employee were limited to a reference to an employee employed by a trading corporation formed within the limits of the Commonwealth.”

18. The Full Court of the Federal Court of Australia has held that s 19(2) of the Seafarers Act, in reliance upon the constitutional power of the Commonwealth parliament to legislate in relation to corporations, extends the operation of the Seafarers Act to the employment of a seaman by a corporation on a prescribed ship which is involved in a purely intrastate voyage or operation: Samson Maritime Pty Ltd v Aucote [2014] FCAFC 182.

19. Section 54 of the Seafarers Act provides as follows:

“Employee not to have right to bring action for damages against employer etc. in certain cases

(1) Subject to section 55, a person does not have a right to bring an action or other proceedings against his or her employer, or an employee of the employer in respect of:

(a) an injury sustained by an employee in the course of his or her employment, being an injury in respect of which the employer would, apart from this subsection, be liable (whether vicariously or otherwise) for damages; or

(b) the loss of, or damage to, property used by an employee resulting from such an injury.

(2) Subsection (1) applies whether that injury, loss or damage occurred before or after the commencement of this section.

(3) Subsection (1) does not apply in relation to an action or proceeding instituted before the commencement of this section.”

20. Section 13 of the Transitional Act is as follows:

“Employee to have right to bring action for damages against employer etc. in certain circumstances

13. Despite section 54 of the Principal Act, an employee has the right to bring, within 6 months after the commencing day, an action or other proceeding against his or her employer, or an employee of the employer, in respect of:

(a)   an injury sustained before the commencing day by the employee in the course of his or her employment, being an injury in respect of which the employer would, apart from this subsection, be liable (whether vicariously or otherwise) for damages; or

(b)    the loss of, or damage to, property used by an employee resulting from such an injury.”

21. The intention of the Commonwealth parliament, discerned from the above provisions, was to retrospectively abolish common law rights, unless a common law claim was brought within six months after 24 June 1993.

22. The intended retrospective abolition of common law rights was challenged in the High Court of Australia in Smith v ANL Ltd [2000] HCA 58; (2000) 204 CLR 493. Mr Smith suffered a back injury on 7 and 8 December 1988 on board an Australian ship in Japanese waters. The decision of the High Court, as set out in the CLR headnote, was as follows:

“Held, by Gleeson CJ, Gaudron, Gummow, Kirby and Callinan JJ, McHugh and Hayne JJ dissenting, that in its application to an employee who had, but for its enactment, a right to bring an action against an employer, s 54 effected an acquisition of property, namely the employee’s right to bring an action for damages, and s 13 did not provide the just terms required by s 51(xxxi) of the Commonwealth Constitution. Hence s 54 was invalid in its application to seaman’s causes of action.”

23. It was common ground in the present case that if Mr Morrison’s cause of action arose before 24 June 1993, then the decision in Smith v ANL Ltd meant that the purported abolition of his common law rights was invalid. On the other hand, if his cause of action arose after 24 June 1993, then he had no right to common law damages and there would be no utility in granting leave to sue AAI as the insurer of Svitzer.

Expert Evidence in Relation to Asbestosis

24. Counsel for Mr Morrison conceded that Mr Morrison did not have any pulmonary fibrosis which was apparent on radiology before 2014. Counsel also conceded that Mr Morrison did not have a diagnosis of asbestosis before 2014. However, his submission, put broadly, was that the exposure to asbestos aboard the Nancy Heath had caused or contributed to damage at a cellular level within Mr Morrison’s lungs, which had led eventually to the development of asbestosis. The submission was that such damage was sufficient to make a finding that the cause of action arose well before 24 June 1993. If that finding were made, then the decision in Smith v ANL Ltd would dictate that Mr Morrison still had a common law right to sue Svitzer (and in turn its insurer) for damages.

25. The plaintiff relied upon two reports by Associate Professor Klebe, a pathologist with particular expertise in asbestos-related diseases. Her two reports were annexed to PX 2.

26. The first Klebe report is dated 31 May 2023. On p 4 of that report Associate Professor Klebe reproduced two questions asked of her by the solicitors for Mr Morrison. Those questions were:

1. Is it more likely than not that Mr Morrison’s asbestos exposure in the period between 14 June 1974 and 3 April 1975 while onboard the Nancy Heath made initial molecular/pathological changes which preceded the appearance of symptoms of asbestosis?

2. If so, when are those changes likely to have occurred? If you are unable to specify a particular date, is it more likely than not that the changes occurred prior to 1992, or after 1992?

27. On p 5 of the report, Associate Professor Klebe said:

“Therefore, there is evidence that asbestos fibres like other dusts can stimulate an inflammatory reaction within the interstitium of the lung, in which process alveolar macrophages and interstitial fibroblasts play a crucial role, eventually leading over time to additive development of histological and clinical/radiological asbestosis by the gradual accumulation of tiny points of inflammation followed by fibrosis over protracted time. Although the intensity of exposure or cumulative exposure is a determinant of whether asbestosis develops or not -- and if does how soon after inhalation of asbestos fibres it does so -- it is not possible to date to give any reasonable estimate of the time frames required for each of the stages of the process from inhalation of fibres to the development of ‘gross’ changes, to develop except in broad terms and by analogy with the development of fibrosis as part of a repair mechanism as a consequence of on-going inflammatory processes (i.e., the formation of scar tissue).”

28. On p 6 of the first report, Associate Professor Klebe said:

“Therefore, in the case of asbestosis, one can state that the initial molecular/cellular inflammatory events that take place shortly (days/weeks) after the deposition of asbestos fibres in lung tissue and they are maintained and accumulate over years related to bio-persistence of the inhaled and deposited fibres, and by the further inhalation and deposition of additional asbestos fibres over time. Therefore, in patients with asbestosis one can say that the development of asbestosis is the outcome of a continuing process of inflammation and deposition of fibrous tissue, occurring over many years, but starting shortly after exposure, eventually producing a gradual summation of many small injuries to produce clinical disease. In Mr Morrison, the initial inflammatory response and molecular changes preceded the diagnosis of asbestosis were present before 1992. However, one cannot state that the initial inflammatory/fibrotic events at the molecular/cellular level will in fact or inevitably progress to asbestos.

In reality, not everyone heavily exposed to asbestos develops asbestosis. In other words, the process from inhalation of asbestos fibres to the development of asbestosis is not inevitable and inexorable: in some cases, the reasons as to why asbestosis does not develop despite substantial exposures is unclear -- whereas others die from other diseases before they develop asbestosis. Some recent considerations include genetic predispositions, but this is a subject in the process of being investigated (95).

In summary, asbestosis can be regarded as a continuing and additive/incremental tissue injury so that it represents an on-going non-singular disorder that develops as a consequence the additive/continuing effects of the retained asbestos fibres that cannot be cleared from the lung over time, with additional further asbestos exposures adding to the injury over time; it stays or continues even after exposure has ceased because asbestos fibres (notably amphibole fibres) remain resident in lung tissue for protracted periods of time. Asbestosis is generally regarded as an irreversible condition, even when it is non- or slowly progressive.”

29. Associate Professor Klebe expressed her “Final Summary and Opinion” on p 7 of the report as follows:

“It is my opinion that molecular/cellular changes that eventually progressed to asbestosis in Mr Morrison were present prior to 1992.”

30. On pp 3 and 4 of her second report Associate Professor Klebe said:

“Was disease development inevitable in Mr Morrison?

Mr Morrison has an undisputed diagnosis of asbestos-related disorders, namely, asbestosis and pleural plaque.

• The in principle role of asbestos in the pathogenesis of benign asbestos related conditions, including asbestosis, has been established (as summarised before)

• The molecular changes that eventually lead to clinically detectable asbestosis began very shortly after each inhalation, i.e., in this case, prior to 1992.

• There is no known intervention that could have prevented the development of asbestosis for Mr Morrison following cessation of inhalation of asbestos.

• There is no known further event which was necessary to occur for Mr Morrison to develop asbestosis.

As outlined in my previous report, asbestosis is not an invariable outcome of substantial asbestos exposure for every patient. Instead, this is an event that occurs only in some patients. However, once the required asbestos dose for that person has been reached, there is no known intervention to prevent disease development.

I had previously outlined that:

Therefore, in the case of asbestosis, one can state that the initial molecular/cellular inflammatory events that take place shortly (days/weeks) after the deposition of asbestos fibres in lung tissue and they are maintained and accumulate over years related to bio-persistence of the inhaled and deposited fibres, and by the further inhalation and deposition of additional asbestos fibres over time. Therefore, in patients with asbestosis, one can say that the development of asbestosis is the outcome of a continuing process of inflammation and deposition of fibrous tissue, occurring over many years but starting shortly after exposure, eventually producing a gradual summation of many small injuries to produce clinical disease. In Mr Morrison, the initial inflammatory response and molecular changes preceded the diagnosis of asbestosis were present before 1992. However, one cannot state that the initial inflammatory/fibrotic events at the molecular/cellular level will in fact or inevitably progress to asbestos ...

This is to say that it is not possible to date to predict prospectively who will progress to asbestosis. Some individuals may inhale asbestos fibres and asbestos bodies are found many years later in non-fibrotic lung tissue. However, retrospectively, for a patient like Mr Morrison where the event - asbestosis - has occurred, the situation is different: for that individual patient in those particular circumstances that outcome was inevitable, given that to date there is no known way to prospectively identify those individuals amongst workers with identical exposures who will actually progress to asbestosis, nor is there any known preventative treatment. (Although there are now some clinical trials involving antifibrotics aimed at slowing disease progression, these are applicable only once asbestosis has actually developed.) We know that disease development and rate of progression are related to cumulative dose (92).

After deposition and transmigration of asbestos fibers in the lung, there is an accumulation of macrophages followed by fibroblasts that initiate fibrosis. Reactive oxygen species produced by immune cells and phagocytes in response to asbestos fibers result in oxidative injury, including injury to type 1 alveolar cells. Injured epithelial cells also produce fibroblast growth factor-beta, which induces fibrosis. Frustrated phagocytosis leads to the macrophage-related release of inflammatory mediators such as tissue necrosis factors, interleukins, and stimulation of the phospholipase C pathway. These mediators stimulate other cells including inflammatory cells and myofibroblasts, with resultant fibroblast proliferation and an increased cell density in the matrix by about 2-fold. Macrophages also produce growth factors that may drive fibrosis directly, and plasminogen activator produced by macrophages degrades the matrix glycoproteins, which may lead to further scarring of the interstitium. With this is mind, variations in an individual's macrophage profiles may impact the risk of developing asbestosis.(93, 94)

Furthermore, individual predisposition is thought to also play a role in the development of fibrotic lung disease, but this area is under active investigation and only some of the relevant factors are recognised to date. (95)

However, in addition to the size of the fibres (96), the composition of the asbestos fibres may also play a role as fibres coated by metals leads to increase formation of reactive oxygen species. In a cell-free system, iron-coating asbestos fibres caused free radical injury.(97)

The severity of asbestos-related pulmonary fibrosis is related to the total dose of exposure, and whilst some antifibrotic therapies are being trialled, there is no known intervention that may reverse or prevent asbestosis (98).

For Mr Morrison, and in response to the question above, by the time Mr Morrison had had his last exposure to asbestos, he had inhaled all the fibres necessary for him to develop asbestosis. While the cellular fibrogenic processes would be ongoing, the basis of disease development had irreversibly been laid at that point. Treatment trials with antifibrotics, currently under investigation, are aimed at slowing disease progression, but not at preventing disease (98).

In summary, the entire 'dose' necessary for disease development had been inhaled by Mr Morrison before 1992. Based on what we know about the disease progression today, for him, the disease development was the inevitable outcome once he had inhaled the necessary fibre dose. The future effect of fibre inhalation had become irreversible once the critical dose had been reached.

In summary, based on the material available it is my opinion that the initial molecular/cellular changes that eventually progressed to asbestosis in Mr Morrison were present prior to 1992. Once the 'required dose' (which would be a threshold individual to Mr Morrison) for induction of asbestosis was reached, there was no possibility to prevent disease development, and the outcome- asbestosis- was inevitable.”

31. AAI relied upon the American Thoracic Society Document entitled “Diagnosis and Initial Management of Nonmalignant Diseases Related to Asbestos” (DX 4). In particular, Senior Counsel for AAI drew attention to the following passage:

“The criteria formulated in this statement are intended for the diagnosis of nonmalignant asbestos-related disease in an individual in a clinical setting for the purpose of managing that person’s current condition and future health. These general criteria are slightly modified from those presented in 1986 (Table 1) (2):

•   Evidence of structural pathology consistent with asbestos-related disease as documented by imaging or histology

•   Evidence of causation by asbestos as documented by the occupational and environmental history, markers of expo-sure (usually pleural plaques), recovery of asbestos bodies, or other means

•   Exclusion of alternative plausible causes for the findings.”

32. Senior Counsel also drew attention to the following passage in the document:

“Clinical diagnosis. Asbestosis is asbestos-induced pulmonary parenchymal fibrosis, with or without pleural thickening. To diagnose this disorder, one must establish the presence of pulmonary fibrosis and determine whether an exposure has occurred that is of sufficient duration, latency, and intensity to be causal.

Asbestosis becomes evident only after an appreciable latency period, often two decades under current conditions in the United States. In one study of former workers from an amosite asbestos insulation factory that had high levels of asbestos dust, employment for as little as 1 month resulted in a prevalence of 20% of parenchymal opacities 20 years after exposure ceased (70). The duration and intensity of exposure probably influence the length of the latency period: relatively short-term, high-intensity expo-sures may be associated with a shorter latency than prolonged, lower intensity exposures.”

33. As its title suggests, the American Thoracic Society Document deals with the diagnosis and initial management of asbestosis. The document did not deal with the aetiology of asbestos, by contrast with the reports of Associate Professor Klebe, which were directed to that issue.

34. The concessions made by counsel for Mr Morrison, recorded above, mean that there is no dispute between the parties about when a diagnosis of asbestosis could be made. Counsel for Mr Morrison conceded that he did not have a diagnosis of asbestosis, and thus Mr Morrison had not developed that disease, until more than 20 years after 24 June 1993.

Alcan Gove Pty Ltd v Zabic

35. Counsel for the plaintiff relied upon the decision of the High Court of Australia in Alcan Gove Pty Ltd v Zabic [2015] HCA 33; (2015) 257 CLR 1 (Zabic). Mr Zabic inhaled asbestos fibres in the course of his employment in the Northern Territory between 1974 and 1977. Evidence was presented that shortly after the inhalation of those fibres there were molecular changes to the mesothelial cells in his lungs.

36. Mr Zabic did not develop mesothelioma until 2013 or 2014. Section 52(1) of the Workers Rehabilitation and Compensation Act 1986 (NT) (the NT Act) came into force on 1 January 1987. It provided that no action for damages would lie against the employer of a worker in respect of an injury to the worker. Section 189(1) of that Act provided that, where a cause of action in respect of an injury to or a death of a person arose before 1 January 1987, a claim or action in respect of that injury or death could be made, commenced or continued as if the NT Act had never commenced.

37. Mr Zabic did not develop mesothelioma until 2013 or 2014. He commenced common law proceedings against his employer in 2014 seeking damages in negligence for personal injury.

38. The unanimous findings of the High Court, as recorded in the CLR headnote, were as follows:

1. That the changes to the worker’s mesothelial cells shortly after the inhalation of asbestos fibres between 1974 and 1977 amounted to compensable damage sufficient to found a cause of action in negligence for personal injury, and the malignant mesothelioma was part of the damage arising in that accrued course of action. Based on the evidence adduced at the trial, it could be inferred that the trigger whereby the initial mesothelial cell changes developed into mesothelioma was endogenous, that is, there was a state of affairs inside the cells which created an inherent predisposition or susceptibility to mesothelioma, and therefore that the initial cell changes were from the moment of their occurrence bound to lead inevitably and inexorably to mesothelioma.

2. The worker’s cause of action arose before 1 January 1987, and was thus not barred by s 52(1) of the NT Act read in conjunction with s 189(1).

39. The trial judge held that the cause of action did not accrue until the onset of malignant mesothelioma, and thus the cause of action did not accrue until well after 1 January 1987. On appeal to the Court of Appeal of the Northern Territory, it was found that, with the benefit of hindsight, it was possible to say that Mr Zabic’s mesothelial cells were so damaged shortly after the inhalation of asbestos fibres between 1974 and 1977 as to lead “inevitably and inexorably” to the eventual onset of malignant mesothelioma. The Court of Appeal concluded that the damage done to the mesothelial cells shortly after inhalation was non-negligible compensable damage sufficient to found a cause of action and that the subsequent malignant mesothelioma was part of the damage arising in that accrued cause of action.

40. The High Court of Australia unanimously accepted that view as correct. The High Court said that while actual damage or injury is an essential element of a cause of action in negligence for personal injury, what may qualify as actionable damage is a question of fact and degree and ultimately of policy – at [8].

41. After reviewing previous decisions concerning the aetiology of mesothelioma, the High Court said at [17]:

“In summary, therefore, the effect of the previous decisions mentioned to

this point appears to be that:

(1) The mere risk of contracting mesothelioma which arises upon the inhalation of asbestos fibres is not compensable damage, because the risk may not eventuate.

(2) Pleural plaques or pleural thickening, which may occur shortly after inhalation of asbestos fibres, although a form of physical injury, are not compensable damage because they are asymptomatic and there is not, or at least there was not at the time of the relevant decisions, evidence that the pleural plaques or thickening had any potentiality for harm, whether considered on its own or in conjunction with some other process.

(3) The risk of contracting mesothelioma to which a claimant is exposed upon the inhalation of asbestos fibres does not become compensable damage by reason only that, with the benefit of hindsight, it is possible to say that the risk has eventuated and therefore that the inhalation of asbestos fibres caused the claimant's mesothelioma.

(4) Nevertheless, the kind of mesothelial cell changes which sometimes occur shortly after the inhalation of asbestos fibres may be regarded as compensable damage if, in the case of a claimant who is suffering from mesothelioma, and so with the benefit of hindsight, it can be seen that those mesothelial cell changes were the beginning of a continuum that led inexorably to the onset of mesothelioma.”

42. The High Court said at [40] that the question is not to look for the time at which sufficient evidence first became available to establish the existence of a cause of action, but rather whether it could be inferred in hindsight that a cause of action had accrued before the disease could have been detected. At [41] the High Court said:

“In point of principle, there is no reason why that could not be inferred. As was established in Cartledge, there is nothing illogical or otherwise exceptionable about drawing an inference after symptoms of a disease first appear that, because of what is known of the aetiology and pathology of the disease, the disease is likely to have begun at an earlier point of time when there were no symptoms or other means of detecting its presence.”

43. The High Court held at [42]:

“On the evidence which was available in this case, there is also no reason in fact why it could not be inferred that there were initial molecular changes in the mesothelial cells which preceded the appearance of symptoms of mesothelioma, and that those initial cell changes led inevitably and inexorably to mesothelioma.”

44. The ultimate conclusion of the High Court was expressed in [48] as follows:

“Parity of reasoning dictates the same result here. Given that with the benefit of hindsight it can be seen that initial mesothelial cell changes occurred shortly after the respondent's inhalation of asbestos fibres, and that they were bound to and did lead inevitably and inexorably to the malignant mesothelioma from which he now suffers, the respondent's cause of action in negligence accrued when those initial mesothelial cell changes occurred and, as the Court of Appeal held, damages for the mesothelial tumour from which he now suffers are recoverable in that cause of action.”

Submissions for Mr Morrison

45. Counsel for Mr Morrison submitted as follows:

1. The jurisprudence of the Tribunal has considered asbestosis to be a “divisible” disease caused by the inhalation of a cumulative threshold of asbestos fibres (MFI 1, par 23).

2. The opinion of Associate Professor Klebe, regarding the pathogenesis of Mr Morrison’s asbestosis, supports the contention that his cause of action in negligence against Svitzer accrued shortly after the cessation of his total exposure to asbestos dust and fibres in or about 1983. By that time Mr Morrison had acquired the total cumulative fibre load which made it inevitable that he would develop asbestosis (MFI 1, par 24).

3. The fact that in or about 1983 Mr Morrison did not know and could not prove that he would go on to develop asbestosis is, on the authorities, neither here nor there (MFI 1, par 24).

4. The time at which a cause of action accrues is a question of fact, not a matter of a litigant’s ability to call evidence to establish the cause of action. The use of hindsight is permitted in drawing inferences of fact regarding the accrual of a cause of action (MFI 1, par 24).

5. On the available medical evidence and adopting the principles enunciated by the High Court in Zabic, it is at the very least arguable that Mr Morrison’s cause of action in negligence against Svitzer had accrued before 24 June 1993 (MFI 1, par 36).

Submissions for AAI

46. Senior Counsel for AAI submitted as follows:

1. The issue is whether or not as at 24 June 1993 Mr Morrison had a completed cause of action against Svitzer. If he did not, then s 54 of the Seafarers Act removed his right to bring action against Svitzer (MFI 2, par 34).

2. Actual damage or injury is a necessary element of tort liability for negligence (MFI 2, par 49).

3. Mr Morrison had no evidence of pulmonary fibrosis until 2014 and he did not have a diagnosis of asbestosis before 24 June 1993 (MFI 2, par 52).

4. Asbestosis is a divisible condition in which the plaintiff must show actionable damage caused by a defendant’s negligent exposure of the plaintiff to asbestos (MFI 2, par 53). (Submissions 1 to 4 are matters of common ground between the parties).

5. To be actionable the plaintiff needs to establish that before 24 June 1993 he suffered measurable damage – in effect he must show that he was then suffering from asbestosis (MFI 2, par 55). I reject this submission for reasons set out below.

6. Because Mr Morrison did not have a clinical diagnosis of asbestosis prior to 24 June 1993, it follows that he did not have a completed cause of action against Svitzer by the date (MFI 2, par 56). I reject this submission for reasons set out below.

7. The exposure aboard the Nancy Heath was so trivial that a discretion to refuse leave should be exercised, even if Mr Morrison were otherwise entitled to an order under the 2017 Act (Tcpt 15/28; 20/22). I reject this submission. As asbestosis is a divisible disease, it can be and is caused by numerous daily insults to the lungs. While each contribution may be small, it is not to be ignored as “trivial”.

8. Associate Professor Klebe’s evidence was that any one of the exposures from 1960 to 1983 could have caused the asbestosis diagnosed in 2014 (Tcpt 16/19). I reject this submission. That is not what the expert said. In particular I refer to the following, which is part of the expert’s opinion reproduced above:

“Therefore, in patients with asbestosis one can say that the development of asbestosis is the outcome of a continuing process of inflammation and deposition of fibrous tissue, occurring over many years, but starting shortly after exposure, eventually producing a gradual summation of many small injuries to produce clinical disease.”

9. Mr Morrison ought not to bring proceedings against each of his employers, he should only sue the last employer in time (Tcpt 20/10). I reject this submission. It is most unorthodox and fails to recognise the divisible nature of asbestosis which is a disease of gradual accumulation.

Criteria for a Grant of Leave

47. Both parties were agreed, based upon the decision of the Court of Appeal in Avant Insurance Ltd v Burnie [2021] NSWCA 272 that an applicant for leave under s 5 of the 2017 Act had to establish three elements (MFI 1, par 21; MFI 2, par 17).

48. Firstly, Mr Morrison must establish that he has an arguable case that the holder of the insurance policy (in this case Svitzer) would be liable to him given the allegations made by Mr Morrison in his Statement of Particulars, which show that there was significant exposure to asbestos in the engine room of the Nancy Heath, and given the evidence of Associate Professor Klebe that such exposure was (along with other employment exposures), causative of asbestos. I find that this element is established (subject to determining when the cause of action arose).

49. Secondly, Mr Morrison must show that there is an arguable case that the AAI policy responds to that liability. There was evidence that AAI was the employers indemnity insurer of Svitzer as at the last date of Mr Morrison’s employment with Svitzer: DX 1, Annexure B.

50. Thirdly, Mr Morrison must show that there is a real possibility that the insured will be unable to satisfy any judgment against it. The evidence was that Svitzer was deregistered on 4 February 2021: DX 1, Annexure A.

51. Thus there was little argument that Mr Morrison could establish the three elements required for leave to be granted under the 2017 Act. The real issue was that, while on the facts Mr Morrison had an arguable case against Svitzer, he had lost the right to bring his common law claim against Svitzer because his cause of action against Svitzer had not accrued prior to 24 June 1993.

Consideration: When did the Cause of Action Arise?

52. I accept the unchallenged evidence of Associate Professor Klebe that initial molecular/cellular inflammatory events took place within a matter of days or weeks after the deposition of asbestos fibres in Mr Morrison’s lung tissue.

53. I also accept the evidence of Associate Professor Klebe that those initial changes were maintained and accumulated over the years due to the bio-persistence of the deposited fibres, and by the further inhalation and deposition of additional asbestos fibres during later periods of employment by other employers.

54. I accept the evidence of Associate Professor Klebe that the development by Mr Morrison of asbestosis is the outcome of a continuing process of inflammation and deposition of fibrous tissue, occurring over many years, but starting shortly after exposure. The gradual summation of many small injuries produces the clinical disease of asbestosis.

55. Applying the reasoning of the High Court in Zabic, the outcome of the initial deposition of the fibres, when viewed retrospectively, means that the molecular/cellular changes caused by the exposure during the time aboard the Nancy Heath, eventually progressed to asbestosis in Mr Morrison. Further, this progress was inevitable once the necessary cumulative dose of asbestos had been inhaled, which at the very latest was by the end of his asbestos exposure in 1983.

52. I therefore find that Mr Morrison had a cause of action against Svitzer many years prior to 24 June 1993. As a result of the decision of the High Court in Smith v ANL Ltd, he did not lose his right of action because of the Seafarers Act or the Transitional Act.

53. In the end result, I find that:

1. Mr Morrison had an arguable cause of action against Svitzer, which accrued to him prior to 24 June 1993.

2. AAI is the insurer on risk for Svitzer.

3. It is appropriate to grant leave to Mr Morrison under the 2017 Act to bring and continue the proceedings against the sixth defendant AAI.

58. There will be an order in accordance with par 1 of Mr Morrison’s Notice of Motion filed on 9 March 2023.

59. That Notice of Motion sought an order that costs of the application be costs in the cause. At the hearing of the motion, counsel for the plaintiff sought a different order – that the defendant to pay the plaintiff’s costs of the motion. I do not propose to make that different order. The two reports of Associate Professor Klebe were crucial in the plaintiff establishing that he had a cause of action which arose before 24 June 1993. The first of those reports was in the possession of the solicitor for the plaintiff in late May 2023, but it was not annexed to an affidavit, so as to become evidence on the motion, until 15 August 2023. Further, there was no notice given to the defendant that the plaintiff would seek a costs order different to that sought in the Notice of Motion.

60. I find that it is appropriate to make an order that the costs of Mr Morrison’s motion be costs in the cause. If he succeeds in his claim against AAI as the insurer of Svitzer, then it is appropriate that AAI pay the costs of the motion as well as the costs of the proceedings generally. On the other hand, if AAI successfully defends the claim in relation to the Svitzer employment, then it would be appropriate that the plaintiff pay all of AAI’s costs. In my view it was appropriate for AAI to defend the plaintiff’s motion, as there was no cited authority directly in point as to when a cause of action for asbestosis arises. In those circumstances I will make an order that the costs of the plaintiff’s motion be costs in the cause.

Notice of Motion of AAI

61. AAI filed its own Notice of Motion on 15 June 2023. This was listed for hearing at the same time as the plaintiff’s Notice of Motion. The defendant’s Notice of Motion sought an order pursuant to r 13.4(b) of the Uniform Civil Procedure Rules 2005 (NSW) that the proceedings against the sixth defendant be dismissed. That rule provides:

“If in any proceedings it appears to the court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings:

(a)   …

(b)   no reasonable cause of action is disclosed …

(c)   …

the court may order that the proceedings be dismissed generally or in relation to that claim.”

62. Counsel for the plaintiff submitted that because Mr Morrison’s claim is for an asbestos-related disease, it is subject to the Claims Resolution Process (CRP) created by Part 3 of the Dust Diseases Tribunal Regulation 2019 (NSW) (the DDT Regulation).

63. Once a matter is within the CRP, the Tribunal only has jurisdiction over the matters listed in cl 17(2) of the DDT Regulation. An application for an order under r 13.4 of the UCPR is not a matter listed in cl 17(2) of the DDT Regulation.

64. This point was properly conceded by Senior Counsel for the defendant, who indicated that he wished to withdraw the defendant’s Notice of Motion filed on 15 June 2023. There will therefore be an order dismissing that Notice of Motion with costs.

Orders of the Tribunal

65. The orders of the Tribunal are:

1. Grant leave nunc pro tunc pursuant to ss 4 and 5 of the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) to the plaintiff to commence and continue these proceedings against AAI Ltd t/as Vero Insurance in respect of any liability for damages and costs against Svitzer Towage Holdings Pty Ltd (formerly known as Howard Smith Industries Ltd).

2. Order that the costs of the plaintiff’s Notice of Motion filed on 9 March 2023 be costs in the cause.

3. Dismiss the sixth defendant’s Notice of Motion filed on 15 June 2023.

4. Order the sixth defendant to pay the plaintiff’s costs of the sixth defendant’s Notice of Motion filed on 15 June 2023.

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Decision last updated: 25 August 2023