McGougan v DePuy International Ltd
[2018] NZCA 91
•13 April 2018
| FOR A COURT READY (FEE REQUIRED) VERSION PLEASE FOLLOW THIS LINK |
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA582/2016 [2018] NZCA 91 |
| BETWEEN | MICHAEL JOHN MCGOUGAN AND BRIAN FREDERICK DINGLE |
| AND | DEPUY INTERNATIONAL LIMITED |
| CA45/2017 | ||
| BETWEEN | MICHAEL JOHN MCGOUGAN AND BRIAN FREDERICK DINGLE | |
| AND | DEPUY INTERNATIONAL LIMITED | |
| Hearing: | 28 and 29 November 2017 |
Court: | French, Asher and Gilbert JJ |
Counsel: | D J Goddard QC for Appellants |
Judgment: | 13 April 2018 at 2.30 pm |
JUDGMENT OF THE COURT
AThe appeals are dismissed.
BThe appellants must pay DePuy International Ltd costs for a standard appeal on a band A basis with usual disbursements. We certify for two counsel.
____________________________________________________________________
REASONS OF THE COURT
(Given by Asher J)
Table of Contents
| Para No | |
| Introduction The English proceedings The issues The issue Appeal against the second judgment — estoppel Issue estoppel Abuse of process Conclusion | [1] [2] [7] [13] [15] [15] [21] [25] [41] [49] [50] [56] [62] [63] [64] [64] [74] [78] [91] [93] [99] [105] [106] |
Introduction
Two hip implant systems designed and manufactured by DePuy International Ltd (DePuy), have failed. Forty-one New Zealanders who received DePuy hip implants between 2006 and 2009 claim the products were defective and caused them personal injury. Their claims are represented by the three appellants. In the two decisions of Collins J that are the subject of this appeal, the appellants have been stopped from pursuing claims for compensatory damages in New Zealand. The first judgment concludes the claims to compensatory damages in New Zealand are barred by s 317 of the Accident Compensation Act 2001 (the ACC Act).[1] The second, that 25 of the claimants are estopped from seeking compensatory damages in any event by a judgment of the English and Welsh High Court, and the continuation of the proceedings in New Zealand would be an abuse of process.[2] The appeals against each of these decisions were heard together, and we determine them both.
Relevant background
[1]McGougan v DePuy International Ltd [2016] NZHC 2511, [2017] 2 NZLR 119 [Statutory bar decision].
[2]McGougan v DePuy International Ltd [2016] NZHC 3170 [Estoppel decision].
The basic facts are not in contention for the purposes of this appeal. The hip implants in question are known as DePuy ASR XL Acetabular System or ASR Hip Resurfacing System products (the ASR Implants). Their manufacturer, DePuy, is an English company, a subsidiary of Johnson & Johnson, an American company. The parties are agreed DePuy does not carry on business in New Zealand. It is not registered as an overseas company under pt 18 of the Companies Act 1993, which requires overseas companies carrying on business in New Zealand to register with the Companies Office. DePuy does not design, manufacture or supply the ASR Implants in New Zealand. The design and manufacture occurred outside New Zealand, primarily in Leeds. DePuy supplied the ASR Implants to DePuy Ireland, which in turn supplied them either to DePuy New Zealand Ltd or Johnson & Johnson (New Zealand) Ltd. These companies supplied the ASR Implants in New Zealand from 2003 until they were recalled globally in August 2010. In the relevant period DePuy did not pay income tax or GST in New Zealand.
The appellants have all received ASR Implants and have had to undergo, or will have to undergo, revision surgery to replace them. The costs of the appellants’ revision surgery have been met by companies associated with DePuy as part of the management of the recall of the ASR Implants.
The appellants allege the ASR Implants were defective in both design and manufacture, and this gave rise to an unacceptably high risk that there would be erosion of a component which would release cobalt or chromium debris into the patient’s body. The consequences for the patient included metal poisoning and tissue damage, and the need for revision surgery with all the risk, inconvenience, pain and suffering that major surgery entails. In particular, the appellants pleaded DePuy failed to:
(a)do an appropriate risk assessment of, and appropriately test, the ASR Implants before distributing them to be implanted into patients; and
(b)appropriately test and monitor the ASR Implants after they were distributed to be implanted in patients.
The appellants plead two causes of action. First, there has been a breach of the guarantee of acceptable quality provided for in s 6 of the Consumer Guarantees Act 1993 for which DePuy, as manufacturer, is liable. The appellants seek a declaration to that effect and compensatory damages. Second, the appellants plead DePuy negligently breached its duty of care to the recipients of the ASR Implants. They seek a declaration to that effect, compensatory damages and exemplary damages. Exemplary damages are sought on the basis that DePuy knew of the defects from 2007 at the latest, and failed to issue a safety alert or recall the products until August 2010. The appellants allege DePuy deliberately and outrageously ran a “consciously appreciated risk” of causing personal injury, loss and damage to them. In respect of both causes of action the appellants seek a declaration that s 317 of the ACC Act does not bar the claims.
Each of the appellants has previously lodged claims with the Accident Compensation Corporation (ACC) in respect of the personal injuries they suffered as a result of the ASR Implants. They have each received entitlements under the ACC Act, including compensation for loss of earnings. However, the appellants contend they have suffered loss over and above that which has been compensated under the ACC Act. Their concern is that, while ACC provides compensation for loss of earnings, the scheme only provides for payment of a percentage of weekly earnings from the second week of incapacity up to a maximum weekly payment of $1,341.31 (subject to annual adjustments) until determination of vocational independence or the age of entitlement to New Zealand superannuation. Through their proceedings against DePuy in New Zealand, the appellants seek additional compensation for pain, suffering and loss of enjoyment of life.
The English proceedings
Actions were commenced against DePuy in England between 2012 and 2014. These included claims by the appellants, along with 60 other New Zealanders, referred to throughout as the “New Zealand Claimants”. All of the New Zealand Claimants were represented by Hugh Preston QC of PLI Legal Services.
In proceedings we will call the “Allen Action”, each of the 10 claimants had been implanted with ASR Implants outside the United Kingdom. Four of the claimants in the Allen Action were from New Zealand: Lawrence Allen, Michael Monks, Nicholas Fletcher and Peter Myson. These parties were referred to for the purposes of the English proceedings as the “New Zealand Sample Claimants”. It was directed that there would be a preliminary issue trial to determine the law applicable to the claims in the Allen Action. The claims of all other claimants in the English proceedings (including the other New Zealand Claimants) were stayed by consent.
By a judgment delivered on 18 March 2014, Stewart J of the Queen’s Bench determined that the law applicable to the claims of the New Zealand Sample Claimants was New Zealand law.[3] We refer to this judgment, as did the parties, as “Allen (No 1)”.
[3]Allen v DePuy International Ltd [2014] EWHC 753, [2015] 2 WLR 442 (QB) [Allen (No 1)].
Following Allen (No 1), the New Zealand Sample Claimants filed amended pleadings advancing a single cause of action for breach of the Consumer Guarantees Act. DePuy pleaded, in reply, the claims were barred by s 317 of the ACC Act. The parties agreed a further preliminary issue hearing would be required to determine whether the statutory bar precluded the claims of those claiming under New Zealand law. Mr Preston exchanged letters with the solicitors for DePuy discussing who of the New Zealand Claimants would participate in this preliminary issue hearing. It was ultimately agreed that all of the New Zealand Claimants would be consolidated as a group, but only the New Zealand Sample Claimants would proceed to the preliminary issue hearing. The claims of the other New Zealand Claimants would be stayed, subject to an order that liability for any adverse costs order in the preliminary issue hearing would be shared severally by all of the New Zealand Claimants. The parties’ agreement was reflected in an order of Master Cook dated 2 July 2014.
On 1 April 2015, Simler J issued a decision on this further preliminary issue.[4] We refer to this judgment, as did the parties, as “Allen (No 2)”. She concluded that s 317 of the ACC Act barred the claims for compensatory damages brought in England by the New Zealand Sample Claimants.
[4]Allen v DePuy International Ltd [2015] EWHC 926 (QB) [Allen (No 2)].
In his second judgment, Collins J found that those persons involved in the present proceeding who had also been New Zealand Claimants in the English proceedings, including the appellants, were estopped from pursuing compensatory damages in New Zealand because they were privies to the plaintiffs in Allen (No 2).[5] Alternatively, the Judge found that it would be an abuse of process for those 25 persons to continue their claim for compensatory damages in New Zealand.[6] We return to the English proceedings when we consider the appeal against Collins J’s second judgment.
The issues
[5]Estoppel decision, above n 2, at [99].
[6]At [94].
Two issues arise:
(a)The statutory bar question: does s 317 of the ACC Act bar the appellants’ claims for compensation?
(b)The issue estoppel question: are the appellants estopped (or otherwise prevented by abuse of process principles) from pursuing their claims by reason of the judgment in Allen (No 2)?
Collins J answered both questions in the affirmative.
The determination of these preliminary questions will not dispose of the appellants’ proceeding, but will determine who can participate in the proceeding and what remedies are available. If both appeals are dismissed, then the proceedings can continue, but the appellants will be limited to seeking exemplary damages and declarations; the core compensatory claims will not be permitted to proceed. If the appeal on the statutory bar question is allowed but the appeal on the estoppel issue is dismissed, then the appellants who participated in the English proceedings will be limited to seeking exemplary damages and declarations, but the other appellants can seek compensatory damages as well. If both appeals are allowed, then the proceedings will continue as pleaded.
Appeal against the first judgment — the statutory bar in s 317
The issue
Collins J framed the issue as follows:[7]
May claims for compensatory damages be brought by the plaintiffs in New Zealand for personal injury they have suffered in this country, and for which they have cover under the Accident Compensation Act 2001 (the Act), in circumstances where the conduct giving rise to their claims occurred in a foreign jurisdiction?
[7]Statutory bar decision, above n 1, at [1].
It is common ground that the appellants have cover under the ACC Act. They satisfy the three criteria set out in s 20(1) of the ACC Act:
(1)they have suffered personal injury in New Zealand;[8]
(2)their personal injury includes physical injuries and damage to prostheses that replace a part of the human body;[9] and
(3)their personal injury is “treatment injury” because their personal injury arose from receiving treatment from one or more registered health professionals, and in circumstances where their personal injury was “not a necessary part, or ordinary consequence of the treatment”.[10]
[8]Accident Compensation Act 2001, s 20(1)(a).
[9]Sections 20(1)(b), 26(1)(b) and 26(1)(e).
[10]Sections 20(1)(c), (2)(b) and 32(1)(c).
It is also accepted that under s 22(1) of the ACC Act, the plaintiffs suffered their personal injury either inside New Zealand or in circumstances where they were ordinarily resident in New Zealand.
Mr McLachlan QC for DePuy asserts that, given the appellants are covered for their injuries, s 317 of the ACC Act bars their claim for compensatory damages. In contrast, Mr Goddard QC for the appellants contends that, properly interpreted, s 317 does not apply to claims in respect of conduct outside New Zealand. As we have set out, the design and manufacture of the ASR Implants occurred outside New Zealand. Mr Goddard argues that, in these circumstances, the statutory bar does not apply.
Collins J found that the appellants’ interpretation of s 317 was contrary to the plain words and purpose of the ACC Act.[11] Parliament’s clear intention was to bar proceedings for personal injury where the plaintiff has cover under the ACC Act, irrespective of the fact that the conduct occurred in another jurisdiction.
[11]Statutory bar decision, above n 1, at [125].
The issue is one of statutory interpretation. Does s 317(1) only apply where the conduct giving rise to a claim for compensatory damages for personal injury covered by the ACC Act occurred within New Zealand? We must consider the plain meaning of s 317 in the light of its purpose, having regard to the immediate and general legislative context.[12]
Section 317
[12]Interpretation Act 1999, s 5. See also Commerce Commission v Fonterra Co-operative Group Ltd [2007] NZSC 36, [2007] 3 NZLR 767 at [22].
Section 317(1) provides:
317 Proceedings for personal injury
(1)No person may bring proceedings independently of this Act, whether under any rule of law or any enactment, in any court in New Zealand, for damages arising directly or indirectly out of—
(a)personal injury covered by this Act; or
(b) personal injury covered by the former Acts.
The language of s 317(1) is plain and uncomplicated. It prohibits claims for damages arising directly or indirectly out of personal injury covered by the ACC Act. The focus is on the presence of personal injury and cover, not the nature or circumstances of the proceedings brought independently of the ACC Act. The application of the bar is not qualified by any requirement that the conduct giving rise to the proceedings occur within New Zealand.
The appellants concede they have suffered personal injury in New Zealand for which they have received cover under the ACC Act. Their claims in negligence and under the Consumer Guarantees Act are claims for damages “under any rule of law or any enactment” arising directly out of the personal injuries for which they have cover under the ACC Act. Therefore, the plain words of s 317 prohibit a plaintiff from doing exactly what the appellants seek to do in this case.
Mr Goddard recognised that, on its face, s 317 is an absolute prohibition on proceedings in a New Zealand court for damages arising directly or indirectly out of personal injury covered by the ACC Act. However, he argued the section does not apply to claims in respect of conduct outside New Zealand. He submitted this interpretation of s 317 is required by:
(a)The presumption against denial of access to the courts. The bar should only be interpreted to curtail the rights of personal injury victims to bring proceedings to the extent necessary to give effect to the purpose of the ACC scheme.
(b)The purpose of the statutory bar, which is to protect the financial viability of the scheme.
(c)The “social contract” underlying the ACC scheme and the principle of community responsibility. A person who engages in conduct outside New Zealand that causes harm to a member of the New Zealand community is not a party to the social contract and does not share community responsibility for such injuries.
(d)Statutes should not be treated as applying to matters outside New Zealand.
The purpose of the ACC Act
The purpose of the ACC Act is set out in s 3:
3 Purpose
The purpose of this Act is to enhance the public good and reinforce the social contract represented by the first accident compensation scheme by providing for a fair and sustainable scheme for managing personal injury that has, as its overriding goals, minimising both the overall incidence of injury in the community, and the impact of injury on the community (including economic, social, and personal costs) …
(Emphasis added.)
The ACC Act expresses the goals of the original accident compensation scheme, which was based on the report of the Royal Commission in 1967, generally referred to as the “Woodhouse Report” after its chair, Sir Owen Woodhouse.[13] The scheme was originally implemented by the Accident Compensation Act 1972 (the 1972 Act). The Woodhouse Report noted that only a small number of accident victims received adequate or any compensation through an action for damages at common law. Claims for damages at common law were described as a “lottery” liable to “erratic achievements” and “inconsistent solutions” due to the need to prove fault.[14] It also noted the very high costs involved in the common law system. The Woodhouse Report identified that a no-fault scheme with low administration costs would channel much of those funds to victims, rather than participants in the common law system such as insurers and lawyers.[15] The social problem caused by personal injuries required a coordinated and comprehensive response, rather than a fragmented and capricious system of common law liability.[16] Importantly for the purposes of this appeal, it was stated:[17]
We recommend, therefore, that the Court action based on fault should now be abolished in respect of all cases of personal injury, no matter how occurring.
[13]Royal Commission of Inquiry Compensation for Personal Injury in New Zealand (December 1967) [Woodhouse Report].
[14]At [1] and [14].
[15]At [59].
[16]At [14].
[17]At [14] (emphasis added).
The Woodhouse Report concluded “common law rights in respect of personal injury should be abolished” and “[t]he procedures and techniques of private litigation” should be replaced by a comprehensive compensation scheme.[18] Individual liability should disappear in favour of national responsibility.[19] In the Parliamentary debates leading to the Accident Compensation Act 1982, the Hon J B Bolger said:[20]
[T]he New Zealand experiment, as it has been deemed, has been watched with interest by many countries. All I have spoken to envy the New Zealand legislation, because it guarantees compensation, and avoids the lottery that exists in many countries where the right to sue for negligence under common law remains. Not only is there a considerable element of luck in the compensation under the old common law rights, but, of equal importance, to succeed with a claim in the court of law it must be proved that someone else was at fault. I raise that point because one of the witnesses from the Law Society suggested that in certain circumstances he might seek to return to the common law right to sue. Such an approach would be a retrograde step, and should not be contemplated.
[18]At [280].
[19]At [280], [316] and [489].
[20](14 December 1982) 449 NZPD 5567 at 5570 (emphasis added).
An essential component of the ACC scheme is the social contract in which those who suffer personal injury covered by the ACC Act receive a set of entitlements funded by the community in exchange for relinquishing their right to sue for compensatory damages at common law.[21] The scheme aims to spread the economic consequences of negligent conduct across the community and provide for rehabilitation and compensation regardless of fault.[22] In 1974 the Torts and General Law Reform Committee recognised that the ACC scheme would substantially abrogate product liability in New Zealand, and:[23]
[A]ll personal injury by accident in New Zealand will be catered for by the scheme, with the corresponding elimination of any common law action. … This development cuts right across the principle of tort liability, whether strict or otherwise, for defective products.
[21]Brightwell v Accident Compensation Corp [1985] 1 NZLR 132 (CA) at 146–147; Queenstown Lakes District Council v Palmer [1999] 1 NZLR 549 (CA) at 555; Wilding v Attorney‑General [2003] 3 NZLR 787 (CA) at [6] and [11]; Accident Compensation Corp v Ambros [2007] NZCA 304, [2008] 1 NZLR 340 at [25]; and Davies (Peter) v Police [2009] NZSC 47, [2009] 3 NZLR 189 at [15], [18], [27] and [37].
[22]Accident Compensation Corp v Ambros, above n 21, at [25].
[23]Torts and General Law Reform Committee Products Liability (March 1974) at 3–4 (footnotes omitted).
In Donselaar v Donselaar this Court held the statutory bar in s 5(1) of the 1972 Act did not prevent a plaintiff from pursuing a claim for exemplary damages.[24] Richardson and Somers JJ said the bar was concerned with remedies and left rights of action intact.[25] In Couch v Attorney-General (No 2) Tipping J said Donselaar involved a “narrow reading” of the word “damages” and may have been a debateable conclusion at the time, but “far too much water has gone under the bridge since then” to contemplate a different view.[26] The Supreme Court held s 317(1) of the ACC Act did not prevent the plaintiff from establishing that she had suffered personal injury caused by negligence. The bar, however, prevented the plaintiff from recovering compensatory damages. Tipping J, with whom Elias CJ, Blanchard and Wilson JJ agreed, observed:[27]
[T]here is no actionable tort of negligence for causing personal injury in New Zealand unless the case justifies exemplary damages.
[24]Donselaar v Donselaar [1982] 1 NZLR 97 (CA).
[25]At 109 per Richardson J and 116 per Somers J.
[26]Couch v Attorney-General (No 2) [2010] NZSC 27, [2010] 3 NZLR 149 at [86].
[27]At [89] per Tipping J, [7] per Elias CJ, [71] per Blanchard J and [250] per Wilson J. McGrath J stated that s 317(1) did not abolish the cause of action, and that it may give rise to a claim for exemplary damages at [199]–[203].
Section 319 of the ACC Act gives statutory recognition to Donselaar, providing that nothing in the ACC Act prevents any person from bringing proceedings in any court in New Zealand for exemplary damages for conduct that has caused the plaintiff personal injury covered by the ACC Act.
Mr Goddard submitted that Donselaar is an example of the courts arriving at a result through statutory interpretation, notwithstanding what he termed the “superficially absolute language of s 317” (or more accurately, its precursors). We do not consider this point assists the appellants. While Donselaar can be seen, to an extent, as a reading down of the bar, it was based on the clearly distinguishable difference between ordinary compensatory damages based on loss and exemplary damages arising from the outrageous manner in which the defendant had conducted itself. The same goes for other remedies not caught by the bar, such as declarations, which are plainly not claims for compensatory damages.
Section 3 of the ACC Act expressly states that one of the purposes of the Act is to “reinforce the social contract represented by the first accident compensation scheme”. Victims of personal injury receive the benefit of cover in exchange for relinquishing the right to sue for compensatory damages at common law. It is fundamental to that social contract that the statutory bar is coextensive with cover under the ACC Act.[28]
[28]Queenstown Lakes District Council v Palmer, above n 21, at 555–556.
Mr Goddard submitted that this approach to the social contract is too simplistic. In particular, it does not indicate who is entitled to invoke the social contract as a defence to a claim. He argued that overseas persons who are not present in New Zealand, and who do not carry on business in New Zealand, are not parties to this social contract. They do not share in the collective responsibility for the damage wreaked by personal injury in New Zealand because they make no contribution to the funding of the ACC scheme. To allow such persons to invoke the statutory bar to escape liability is to grant them a windfall for which there is no rationale. In contrast, a person carrying on business in New Zealand is required to pay levies of various kinds to ACC. In exchange, they receive protection from claims for compensatory damages for personal injury arising out of their business activities.
In our view this submission carries the social contract concept into the area of a commercial dealing, where something must be given before there can be a benefit. However, the reference to the social contract in s 3 of the ACC Act is not a reference to a commercial contract, but rather a surrender of individual rights, in particular the right to sue for damages, in exchange for a common benefit, namely the right to compensation for personal injuries covered by the ACC Act.[29]
[29]In Statutory bar decision, above n 1, at [63]–[64] Collins J referred to this as the “Hobbesian” notion of a “social contract” whereby citizens enter into a social contract in which they relinquish their individual rights and liberties in exchange for a common security. The Judge relied on Christopher Morris (ed) The Social Contract Theorists: Critical Essays on Hobbes, Locke, and Rousseau (1st ed, Rowman & Littlefield Publishers, Maryland, 1999).
Mr Goddard’s argument views the social contract as a bargain between the government and those whose activities have the potential to cause personal injury: the latter purchases immunity from proceedings for personal injury in exchange for contributions to the funding of compensation for all, administered by the government. In this analysis, the government effectively acts as insurer. We consider that this analysis begins from a false premise. The social contract is not between the government and those whose activities have the potential to cause personal injury. It is between the government and the New Zealand community, who are inevitably exposed to some risk of personal injury. As we have set out, those persons relinquish the right to bring proceedings in exchange for comprehensive cover under the ACC Act. That is the social contract referred to s 3 of the ACC Act. The purpose of the bar is not to protect persons who have contributed to the funding of the scheme, but rather to maintain a scheme through various funding sources for the benefit of all persons who suffer injuries in New Zealand. The manner in which compensation under the ACC Act is funded is ancillary. There is no necessary correlation between those who fund the scheme and those who benefit from the statutory bar in s 317. In this regard it is to be noted that temporary visitors to New Zealand are protected by the statutory bar when they cause an accident.
Mr Goddard argued that DePuy could not reasonably expect to rely on the statutory bar where it is not a party to the social contract underpinning the ACC Act and has therefore made no contribution to the funding of the ACC scheme. In Allen (No 2) Simler J found there is no place for reasonable expectations in the concept of the ACC scheme, and in any event the only reasonable expectation a person manufacturing and exporting goods to New Zealand from abroad could have is to take the law as he or she found it.[30] Collins J agreed with this reasoning and so do we.[31]
[30]Allen (No 2), above n 4, at [84].
[31]Statutory bar decision, above n 1, at [123].
There is nothing in the Woodhouse Report or in the purpose section of the ACC Act to support Mr Goddard’s approach. Section 317 does not contain any prerequisite that the person claiming the benefit of the statutory bar has made direct or indirect contributions to the ACC scheme. To engage in such an analysis would first require identification of who is at fault. Only then could it be ascertained whether that person or entity had made contributions to the funding of the scheme so that they are entitled to the benefit of the statutory bar. Such an approach would be contrary to one of the fundamental purposes of the ACC Act, which is to extinguish the previous tort-based focus on fault.
Mr Goddard’s suggested focus on who has contributed to the funding of the ACC scheme would give rise to retrograde anomalies and puzzles. The courts would have to draw difficult distinctions between the design and manufacture of goods overseas, and the marketing and supply of those products in New Zealand, in order to determine what aspects of a claim were actionable. The present case offers an example of the sort of difficulties that would arise. The appellants plead the ASR Implants were negligently designed and manufactured. That design and manufacture occurred outside New Zealand, primarily in Leeds. Yet they also plead that DePuy negligently failed to issue a safety alert and recall the ASR Implants once the defects in their design and manufacture became clear. Such omissions could be seen as having occurred in New Zealand, given the safety alert and recall would involve activity in New Zealand. The interpretation of s 317 advanced by Mr Goddard would therefore lead to exactly the sort of capricious and unpredictable court proceeding the Woodhouse Report sought to eliminate.
It would be expected that, if Parliament had intended that s 317 would not apply to overseas persons whose conduct overseas had caused damage, it would have said so, given the large number of possible defendants who fall under this category. New Zealand is a small country, and the majority of goods used by consumers that may cause injury in New Zealand are manufactured overseas.
No New Zealand court has ever recognised the type of exception to s 317 now proposed by the appellants. There is quite simply no precedent for reading the concept of fault back into the statutory bar in the way proposed by the appellants.
Section 321
Section 321 of the ACC Act provides:
321Powers of Corporation when person has right to bring proceedings
(1)Subsection (2) applies when—
(a)any entitlement is required to be provided under this Act for personal injury to a person; and
(b)the person has the right to bring proceedings for damages in New Zealand or elsewhere for the personal injury.
(2)When this subsection applies, the Corporation may require a person to do one of the following things, at the person’s option and at the Corporation’s expense:
(a)to take all reasonable steps to enforce the right; or
(b)to assign the right to the Corporation, and to do all other things necessary to enable the right to be enforced by the Corporation, within a reasonable period.
(3)Subsection (4) applies when—
(a)any entitlement has been or is required to be provided under this Act for personal injury to a person; and
(b)the person has received a sum of money by way of damages, compensation, or settlement of any claim in New Zealand or elsewhere for the personal injury.
(4)When this subsection applies, the Corporation may, as the case requires,—
(a)deduct, from the cost of the entitlement required to be provided to a person, a sum equivalent to the net amount received by way of damages, compensation, or settlement; or
(b)recover from the person, as a debt due, the entitlement provided.
(5) Nothing in subsection (4) applies to—
(a)any money paid on a claim by the person under an insurance contract (other than an accident insurance contract under the Accident Insurance Act 1998) taken out by the person:
(b) any payment from a retirement scheme (within the meaning of section 6(1) of the Financial Markets Conduct Act 2013):
(c) [Repealed]
(d) any damages awarded under any Act.
This provision means that a person who has cover under the ACC Act may be required to take reasonable steps to enforce a right to bring proceedings in New Zealand or elsewhere. If a person succeeds in such a claim and receives damages, compensation or settlement, ACC may deduct a sum equivalent to the net amount of compensation paid to that person. In other words, a person who receives damages must repay any entitlements received under the ACC Act up to the amount of damages received, but is not obliged to account to ACC for any damages that remain after the entitlement is repaid.
Some confusion as to the effect of s 321 appears to have arisen in the High Court. Collins J stated that s 321 “ensures a person who has cover does not receive more than their entitlements under the Act”.[32] We accept Mr Goddard’s submission that this misstates the effect of s 321. Section 321 does not require persons who recover in proceedings overseas or in New Zealand to account for what is received to ACC. Rather, such persons can be compelled to repay an amount equal to the compensation they received under the ACC Act.
[32]Statutory bar decision, above n 1, at [90]. Simler J made a similar statement in Allen (No 2), above n 4, at [47]: “In each case the Corporation is entitled to take the benefit of the injured person’s rights or award.”
Mr Goddard submitted that s 321 expressly contemplates the possibility that there will be both cover for personal injury under the ACC Act and a right to bring proceedings for compensatory damages in or outside New Zealand. Indeed, in some circumstances a person who has cover may be required to take proceedings in New Zealand or overseas. He submitted the provision is a statutory parallel to the concept of subrogation in insurance law. He submitted that this provision indicates that a person receiving more than the amount of entitlements under the ACC Act is not in and of itself contrary to the policy underlying the ACC scheme.
We do not accept that the words of s 321 in any way erode the statutory bar in s 317. We say this for two reasons. First, with respect to proceedings in New Zealand, s 321 goes no further than recognising the exceptions to the statutory bar expressly delineated in s 317(5) and (6). Section 317(5) provides:
(5)Subsection (1) does not prevent any person bringing proceedings in any court in New Zealand for damages for personal injury of the kinds described in subsection (1), suffered in New Zealand or elsewhere, if the cause of action is the defendant’s liability for damages under the law of New Zealand under any international convention relating to the carriage of passengers.
Section 317(5) merely recognises New Zealand’s international obligations with respect to carriage conventions. Section 317(6) provides that the statutory bar does not affect proceedings to which s 318(3) applies. Section 318(3) provides:
(3)Subsection (2) does not prevent a person who commenced proceedings to which this section applies before 1 April 1993 from completing the proceedings.
We consider that s 321 simply prevents double recovery of the amount of entitlements under the ACC Act in circumstances where one of the exceptions in s 317(5) or (6) applies. It does not provide any justification for reading down the statutory bar. Indeed, these tightly circumscribed exceptions serve to emphasise the primacy of the s 317(1) prohibition.
Second, in relation to proceedings outside New Zealand, s 321 does no more than recognise the reality that New Zealand legislation cannot control the conduct of foreign courts, and that persons who have cover under the ACC Act may obtain compensation in a foreign jurisdiction under foreign law. In those circumstances ACC, through the claimant, may take the opportunity to recover what it has spent by enforcing the right of action overseas. Alternatively, a claimant can be required to pay back to ACC any damages received up to the amount of cover received by that claimant under the ACC Act.
Section 321 is, therefore, a general catchall aimed at preventing double recovery and, if appropriate, a subrogation-type intervention by ACC. As Ms Casey QC for ACC pointed out, a provision preventing double recovery was contemplated by the Woodhouse Report.[33] Section 321 plainly does not purport to create or define what rights of action might exist in New Zealand outside s 317, or support any reading down of the statutory bar.
The Sentencing Act 2002
[33]Woodhouse Report, above n 13, at [286].
Mr Goddard argued that the provision for reparation for physical or emotional harm in s 32 of the Sentencing Act 2002 indicates that the victims of personal injury should not be denied full compensation merely because they have cover under the ACC Act. In 2014 the Sentencing Act was amended to permit reparation orders to be made in respect of any shortfall between losses caused by an offence resulting in personal injury or death, and compensation provided by ACC.[34] However, as Collins J observed, reparation orders are not the product of proceedings for compensatory damages, and only apply following the committal of a criminal offence.[35] They cannot be used as a basis for re‑interpreting the plain language of s 317.
The presumption against denial of access to the courts
[34]Sentencing Amendment Act 2014, s 6. See also Victims of Crime Reform Bill 2011 (319-1) (explanatory note).
[35]Statutory bar decision, above n 1, at [89].
There is a longstanding principle that clear and unequivocal language is required to oust a person’s right to access to the courts. Thomas J said in Queenstown Lakes District Council v Palmer: “citizens are not to be denied access to the courts, save in rare and appropriate circumstances, and then only pursuant to explicit statutory language”.[36]
[36]Queenstown Lakes District Council v Palmer, above n 21, at 555. See also Spencer v Attorney‑General [2013] NZHC 2580, [2014] 2 NZLR 780; aff’d [2015] NZCA 143, [2015] 3 NZLR 449 at [73]–[75].
Clear as the principle is, there are now many provisions in New Zealand where clear and unequivocal statutory language denies certain court remedies to claimants. Privative clauses excluding judicial review are an apt example. For instance, s 133(5) of the ACC Act itself states:[37]
(5)If a person has a claim under this Act, and has a right of review or appeal in relation to that claim, no court, Employment Relations Authority, Disputes Tribunal, or other body may consider or grant remedies in relation to that matter if it is covered by this Act, unless this Act otherwise provides.
[37]For further examples see also Tax Administration Act 1994, s 109; and Immigration Act 2009, s 249(1).
As we have set out, the language of s 317 creates an explicit and unequivocal prohibition on proceedings for compensatory damages. In the absence of any ambiguity, the presumption against denial of access to the courts simply does not apply.
In any event, we are not convinced that the presumption against denial of access to the courts is engaged. As we have outlined, the statutory bar does not prohibit access to the courts in general to those who suffer personal injury. Rather, it is a prohibition on the award of compensatory damages in an action for a personal injury where there is cover under the ACC Act. Claimants are still free to seek exemplary damages.[38]
[38]Accident Compensation Act, s 319.
Mr Goddard argued that the option of a claim for exemplary damages is inadequate for claimants in the position of the appellants, given the relatively small amounts that tend to be awarded. He commented that, while lawyers might act pro bono, the cost of procuring expert witnesses and conducting proceedings more generally would significantly reduce any net gain for claimants. We understand that submission, but it begs the point; the policy decision has been made to compensate through ACC.
We reject Mr Goddard’s argument that the ACC regime does not treat the right to bring proceedings for compensatory damages as an “inherently undesirable thing”. To the contrary, the whole point of the statutory bar is that the lottery of compensatory damages based on fault, and all of its associated cost, was to be substituted by a comprehensive compensation scheme. Section 317 is an explicit and unequivocal prohibition on proceedings for compensatory damages to achieve that objective. As we have said, this is central to the whole scheme of the ACC Act. It could not be more clear.
The territorial scope of the ACC Act
Mr Goddard submitted that the courts must conduct an inquiry into whether a claim for compensatory damages is sufficiently closely connected to New Zealand for the statutory bar to apply. He submitted that the mere fact of cover is not a sufficient touchstone to ensure that s 317’s sphere of operation is consistent with its purpose. He based this submission on the principles of private international law. He relied in particular on the following passage from the judgment of Dixon J in The Wanganui‑Rangitikei Electric Power Board v The Australian Mutual Provident Society:[39]
The rule is that an enactment describing acts, matters or things in general words, so that, if restrained by no consideration lying outside its expressed meaning, its intended application would be universal, is to be read as confined to what, according to the rules of international law administered or recognized in our Courts, it is within the province of our law to affect or control. The rule is one of construction only, and it may have little or no place where some other restriction is supplied by context or subject matter. But, in the absence of any countervailing consideration, the principle is, I think, that general words should not be understood as extending to cases which, according to the rules of private international law administered in our Courts, are governed by foreign law.
[39]The Wanganui-Rangitikei Electric Power Board v The Australian Mutual Provident Society (1934) 50 CLR 581 at 601. This statement was referred to with approval by the Supreme Court in Ludgater Holdings Ltd v Gerling Australia Insurance Co Pty Ltd [2010] NZSC 49, [2010] 3 NZLR 713.
However, in the Supreme Court decision of Brown v New Zealand Basing Ltd the majority indicated that, where Parliament has given express consideration to a statute’s territorial ambit, that will tend to prevail regardless of any contrary choice of law.[40] This reflects Dixon J’s observation that the general rule of construction has “no place” where there is some other restriction, in this case in the form of the express language of s 317. Those words plainly limit the application of the bar to circumstances where the claimant has cover for personal injury under the ACC Act. The availability of cover under the ACC Act is limited by reference to two factors: the place that the injury occurred or the person who suffered the injury. In basic terms, the ACC Act provides cover for anybody who suffers personal injury in New Zealand and for personal injury to New Zealand residents temporarily overseas. In any event, the prohibition in s 317 applies in respect of personal injuries that take place within a territorial sphere that is expressly demarcated by Parliament, namely proceedings “in any court in New Zealand”.
[40]Brown v New Zealand Basing Ltd [2017] NZSC 139, [2018] 1 NZLR 245 at [88]–[90].
In this case New Zealand law, including the bar, applies. The section itself does not purport to have any extraterritorial application and indeed does not do so. It applies only to proceedings brought in a court in New Zealand. The ACC Act does not interfere unduly with property rights and activities within foreign states, because its application is restricted to New Zealand; there is not a risk of conflict with another country’s exercise of its own jurisdiction. The Judge was right to find that s 317 does not offend the presumption against the extraterritorial reach of legislation.[41]
[41]Statutory bar decision, above n 1, at [100].
It is also significant that private international law principles favour the place of injury over place of manufacture.[42] This avoids the prospect of multi-state product liability proceedings where there is a complaint of error in assembly or failure to warn, as well as defective manufacture. The United Kingdom and Scottish Law Commissions’ review of the choice of law in tort in 1984 concluded that the country of manufacture should not dictate the choice of law; there may be multiple places of manufacture, or it may not be possible to ascertain the place of manufacture at all.[43] The alternative of place of manufacture would result in different products on the same shelf being subject to different product liability regimes.[44]
[42]United Kingdom Law Commission and Scottish Law Commission Private International Law: Choice of Law in Tort and Delict (UKLC 193, SLC 129, 1984).
[43]At [5.16].
[44]At [5.16].
These proposals are in substance recognised in the Private International Law (Miscellaneous Provisions) Act 1995 (UK) (PIL Act). Section 11(2)(a) provides, as a general rule, that the applicable law for a cause of action in respect of personal injury is the law of the country where the individual was when that person suffered the injury.
This section was applied by Stewart J in Allen (No 1).[45] The Judge concluded that the injuries suffered by each of the New Zealand Sample Claimants were suffered in New Zealand, and New Zealand law therefore applied.[46] It is to be noted that s 12(1) of the PIL Act states that the general rule can be displaced where it is substantially more appropriate for the proceeding to be governed by the law of another country. Stewart J concluded there were insufficient factors to depart from the general rule in this case.[47] We agree with that conclusion.
Deterrence
[45]Allen (No 1), above n 3.
[46]At [17].
[47]At [33].
Mr Goddard argued the Woodhouse Report envisaged that prevention and deterrence of bad practice would be achieved not by damages awards but by regulation and criminal sanctions. These are not available against overseas defendants. To that it must be said there are regulatory restrictions relating to imported goods in New Zealand, and importers, marketers and vendors of defective goods made overseas are all exposed to regulation and, on occasions, prosecution.
Conclusion
The plain meaning of s 317 is reinforced by its clear purpose. There is no basis for reinterpreting the statutory bar in the manner proposed by the appellants.
Appeal against the second judgment — estoppel
Issue estoppel
DePuy argues that the proceeding is an abusive attempt to relitigate issues that the appellants in their capacity as New Zealand Claimants lost in the English proceedings. It relies in particular on the judgment of Simler J in Allen (No 2), in which she concluded s 317 of the ACC Act barred the claims for compensatory damages brought in England by the New Zealand Sample Claimants, and that the New Zealand Claimants were to pay costs in relation to the determination of that preliminary issue.[48]
[48]Allen (No 2), above n 4.
Simler J set out her understanding of the procedure that had been agreed to in the following way:[49]
If the preliminary issue is determined in the Defendant’s favour it will bring the New Zealand Claimants’ claims to an end. If it is determined in the Claimants’ favour then they (and others) will be able to proceed with their claims in the English courts, under the [Consumer Guarantees Act], applying New Zealand law.
[49]At [8].
Each of the New Zealand Claimants discontinued their claims in England on or about 28 May 2015. The three New Zealand Sample Claimants accept the doctrine of res judicata prevents them from initiating proceedings in New Zealand and they have not done so. Twenty-five of the 63 New Zealand Claimants in the English proceedings have however joined the proceedings commenced in New Zealand, including Mr McGougan, Mr Dingle and Mr Sanson, who are the named appellants and the named plaintiffs in the proceeding. In addition, 16 New Zealanders who were not claimants in England are plaintiffs in the New Zealand proceedings.
The second judgment of Collins J concerns the 25 plaintiffs in this case who were New Zealand Claimants in England, and relates only to their claims for compensatory damages. This estoppel issue is not strictly relevant given our finding that s 317 is a bar to the claim. Nevertheless it is necessary for us to determine the appeal against Collins J’s decision on the point.
The parties were agreed as to the general principles of issue estoppel. Cause of action estoppel and abuse of process were explained by this Court in New Zealand Social Credit Political League Inc v O’Brien:[50]
[A] matter once determined may not be again litigated … a matter which could and should have been raised in proceedings which have been determined should not be allowed to be raised subsequently, and … a collateral attack upon a final decision in other proceedings will not be permitted. The dual objects are finality of litigation and fair use of curial procedures.
[50]New Zealand Social Credit Political League Inc v O’Brien [1984] 1 NZLR 84 (CA) at 95.
There is no doubt that a foreign judgment may lead to cause of action estoppel, issue estoppel or a finding of abuse of process in New Zealand.[51] Parties seeking to assert an issue estoppel based on a foreign judgment must show the foreign court had jurisdiction in the proceedings and that:
(a)the foreign judgment decided the same issue that is in contention in the New Zealand proceedings, and it was necessary for the foreign court to do so;
(b)the decision was on the merits, and final and conclusive; and
(c)the previous litigation was between the same parties or their privies.
[51]Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2) [1967] 1 AC 853 (HL).
Of these various requirements it is only the last that is in dispute. Collins J found the New Zealand Claimants were not parties to the Allen (No 2) proceedings and judgment, but were estopped from bringing their claim for compensatory damages in New Zealand because they were privies.[52] Alternatively, he found it would be an abuse of process to permit the New Zealand Claimants to continue their claim for compensatory damages in New Zealand. The appellants argue that Collins J erred in finding that they and the other New Zealand Claimants were privies. DePuy formally sought to support the judgment of Collins J on other grounds, namely that the New Zealand Claimants were parties to Allen (No 2).
[52]Estoppel decision, above n 2, at [99].
The 25 New Zealand Claimants, in resisting the application of issue estoppel, also rely on the “special circumstances exception”, asserting that this arises because it would be unjust to rigidly apply the principles of issue estoppel in their circumstances.
Both sides called expert evidence before Collins J on English law and procedure. The experts set out their views on the law of issue estoppel in England and whether an English court would have permitted a relitigation of the issues.
Collins J considered first whether the New Zealand Claimants were parties to the Allen (No 2) decision, and then whether they were privies. We will assume without deciding the point that Collins J was correct in concluding that the New Zealand Claimants were not parties because, as we will set out, we are satisfied that the New Zealand Claimants were plainly privies of the New Zealand Sample Claimants.
Privies
We follow the same approach as that adopted by this Court in Shiels v Blakeley where a question of issue estoppel had to be determined.[53] The Court, having determined that the plaintiff was a party, turned to the question of whether he was a privy. The Court stated:[54]
The next question is whether the present plaintiff, Mr Shiels, who was not a party to the first action, is nevertheless estopped from bringing the present action because he was a privy of one or more of the plaintiffs in the first action. Privity in this sense denotes a derivative interest founded on, or flowing from, blood, estate, or contract, or some other sufficient connection, bond, or mutuality of interest. No case has yet sought to define exhaustively the degree or nature of the link necessary to render a person privy in interest. That this is so is not surprising for the necessary connection may arise in a variety of ways and its existence falls to be tested in the light of the object of the rules about estoppel by res judicata and their effect in preventing the party in the subsequent proceeding from putting his case in suit. But while there is no ready definition the cases give some indication of what is necessary.
[53]Shiels v Blakeley [1986] 2 NZLR 262 (CA) at 268.
[54]At 268.
The Court considered the decision of Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2) where it was noted by Lord Reid that it was essential that a person estopped “must have had some kind of interest in the previous litigation or its subject‑matter”.[55] In that case Lord Guest had put it as a “community or privity of interest between them”.[56] This Court concluded:[57]
[T]here must be shown such a union or nexus, such a community or mutuality of interest, such an identity between a party to the first proceeding and the person claimed to be estopped in the subsequent proceeding, that to estop the latter will produce a fair and just result having regard to the purposes of the doctrine of estoppel and its effect on the party estopped.
[55]Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2), above n 51, at 910.
[56]At 936.
[57]Shiels v Blakeley, above n 53, at 268.
It was observed by the Court of Appeal of England and Wales in Resolution Chemicals Ltd v H Lundbeck A/S that a privy must have an interest with a sufficient degree of identification with the interest of a party, and:[58]
[A] court which has the task of assessing whether there is privity of interest between a new party and a party to previous proceedings needs to examine (a) the extent to which the new party had an interest in the subject matter of the previous action; (b) the extent to which the new party can be said to be, in reality, the party to the original proceedings by reason of his relationship with that party; and (c) against this background to ask whether it is just that the new party should be bound by the outcome of the previous litigation.
[58]Resolution Chemicals Ltd v H Lundbeck A/S [2013] EWCA Civ 924 at [32].
We agree with Collins J that persons cannot avoid the consequences of litigation from which they have “stood aside” in circumstances where they have agreed to the litigation continuing as a means of resolving their dispute.[59] There must be both a sufficient union of interest in the subject matter of the previous action, and relationship with the party to that previous action, that it is just that the new party should be bound by the outcome of that previous litigation. Against this background we turn to consider the nature of and degree of involvement of the New Zealand Claimants in the English proceedings.
Relevant history
[59]Estoppel decision, above n 2, at [66].
Following the delivery of Allen (No 1), the New Zealand Sample Claimants filed and served amended particulars of their claim. They advanced a single cause of action under New Zealand law, alleging that the ASR Implants were defective and in breach of the Consumer Guarantees Act. DePuy filed and served its defence, pleading that the claims advanced under New Zealand law were barred by s 317 of the ACC Act. The parties filed an agreed statement of facts before Collins J. That statement records:
39.The New Zealand Claimants and DePuy anticipated that the other New Zealand Claimants would advance substantially the same allegations (under New Zealand law and in reliance on the [Consumer Guarantees Act]), as those advanced by the New Zealand Sample Claimants, if they were ultimately pleaded and pursued.
40.The allegations made by the New Zealand Sample Claimants in the English proceedings are substantially the same as the allegations of breach of the [Consumer Guarantees Act] made by the plaintiffs in the present proceeding.
41.The nature and application of the statutory bar in s 317 of [the ACC Act] were issues in the English proceedings.
42.The Civil Procedure Rules applicable to proceedings in the Queen’s Bench Division allow for a Group Litigation Order (GLO) procedure by which determinations of issues common to a number of claims are binding on all claimants. Neither party suggested that the GLO procedure should be adopted in the present case.
The solicitors for DePuy and Mr Preston, counsel for all of the New Zealand Claimants, agreed that the application of s 317 of the ACC Act should be decided separately as a preliminary issue. In a letter of 19 May 2014 to the solicitors for DePuy, Mr Preston set out three options as to the procedure to be followed. The agreed statement of facts describes the second option as follows:
[T]hat all of the New Zealand Claimants be consolidated as a group, but only the New Zealand Sample Claimants proceed to a preliminary issue hearing, subject to a cost-sharing order which would ensure that liability for any adverse costs order would be shared severally by all the New Zealand Claimants …
Mr Preston explained the logic behind this proposal as being “once a ruling on the NZ law preliminary issue has been given, that will in practice be dispositive for any other claims that are subject to New Zealand law”.
Mr Preston prepared a draft order reflecting this option. DePuy accepted this second option, which was reflected in an order of Master Cook dated 2 July 2014 made by consent. That order defined the “NZ Claimants” by reference to a schedule of names. Those who were conducting the preliminary issue trial were referred to as the “NZ Sample Claimants”. Master Cook ordered:
There shall be a preliminary issue trial in respect of each of the NZ Sample Claimants as to whether under the substantive law of New Zealand … their claims are precluded by section 317 of the Accident Compensation Act 2001 (New Zealand).
The claims of the other New Zealand Claimants were stayed until further order of the Court. Master Cook also made orders as to joint and several liability for, and entitlement to, costs on the part of the New Zealand Claimants. That order was later followed by Allen (No 2), in which Simler J concluded that s 317 operated as a bar to the claims of the New Zealand Sample Claimants.
A formal order was made on 1 April 2015 reflecting Simler J’s determination of the preliminary issue. It provided that:
2.The NZ Claimants as defined in the order of Master Cook dated 2 July 2014 … shall pay the Defendant’s costs of the Preliminary Issue …
…
4.In respect of the claims of each of the NZ Claimants referred to in paragraph 2 of this order, unless the NZ Claimant in question has either made an application for permission to amend his/her statement of case or alternatively has applied for further directions or has discontinued his/her claim by 4pm 29 May 2015, his/her claim shall be struck out pursuant to CPR 3.4(2)(a) and he/she shall pay the costs of the claim, to be subject to detailed assessment if not agreed.
On 30 March 2015 Mr Preston had written to DePuy in relation to the draft judgment of Simler J, indicating he would be taking instructions:
… as to how our New Zealand clients generally (both in Allen & Others and in other actions) wish to proceed with their claims, subject to the possibility of an appeal. In particular, we shall be taking instructions as to whether they wish to claim exemplary damages.
There was then a request on 31 March 2015 for further time for the New Zealand Claimants to re-plead or discontinue. Ultimately, on or around 28 May 2015, the New Zealand Claimants discontinued their claims.
This summary of facts in our view shows quite plainly that the New Zealand Sample Claimants were acting openly and explicitly on behalf of the New Zealand Claimants, which included the appellants. Although they were not recorded as parties for the purposes of the preliminary issue hearing, they and the other New Zealand Claimants were, in reality, behind the action and various court orders reflected that. The decision of Simler J in Allen (No 2) was in substance a decision against all of the New Zealand Claimants. This is reflected in particular by:
(a)the fact that the New Zealand Claimants were liable for costs on the preliminary issue hearing;
(b)the New Zealand Claimants accepted that their claims could be struck out as a consequence of the decision of Simler J (although in the end they opted to file notices of discontinuance); and
(c)the order of 1 April 2015 was headed with all of the action numbers for proceedings commenced against DePuy between 2012 and 2014 in respect of the ASR Implants, including the actions by the New Zealand Claimants.
We have no doubt, therefore, that if the New Zealand Sample Claimants had succeeded in the English proceedings, then the English courts would not have permitted DePuy to relitigate the s 317 question against each of the remaining New Zealand Claimants in their English actions. This is clear from the statement of Simler J that we have quoted earlier, that a determination in DePuy’s favour would bring the New Zealand Claimants’ claims to an end, and, if in their favour, would enable them to proceed with their claims.[60] It would be strange if the expectation of the Judge who heard the case in England, and whose decision is at issue, was misplaced. In summary:
(a)The New Zealand Claimants, although not named in the intituling in Allen (No 2), were parties to the actions listed by number on the intituling of the order of 1 April 2015.
(b)It is stated in the agreed facts that, for reasons of convenience, all the New Zealand Claimants were consolidated as a group, and the New Zealand Sample Claimants were chosen as a “sample” of those in the group to proceed to a preliminary issue hearing.
(c)The New Zealand Claimants were not represented in the Allen (No 2) hearing, but counsel who appeared, Mr Preston, was the same lawyer who acted for them in their proceedings.
(d)The New Zealand Claimants were liable for costs equally with the New Zealand Sample Claimants.
(e)The New Zealand Claimants had a vital interest in the proceedings. If the claim had not been struck out they would have been able to proceed with their claim for compensatory damages.
(f)As a consequence of the decision, the New Zealand Claimants’ claims were liable to be struck out under the formal order of 1 April 2015, and were only not struck out because they were discontinued.
(g)The Judge thought her decision was determinative of the claims of the New Zealand Claimants.
[60]Allen (No 2), above n 4, at [8].
It was argued for the appellants that the Civil Procedure Rules 1998 (UK) make a clear distinction between parties to a proceeding and non-parties who pay costs. While that may be so, this is not enough to displace our view that, on the particular history of the case we have outlined, the appellants were privies. We accept that the parties chose not to adopt a formal representative procedural group or to obtain a “group litigation order” under the Civil Procedure Rules. However, the procedure adopted in this case was similar to that which would have been achieved by a representative order and we accept the submission for DePuy that such group litigation orders are primarily used in complicated cases where disparate claimants and defendants are represented by different solicitors. The group of claimants in this case was comparatively small and the procedure adopted a central one.
Mr Goddard argued that the New Zealand Claimants had no right of appeal in England against Allen (No 2). He submitted that this Court should not find the appellants are estopped from pursuing proceedings in New Zealand by a judgment they were unable to appeal. We do not accept that argument. Appeals may be only brought in England with permission,[61] and both parties and non-parties are entitled to apply for permission to appeal.[62] Both the New Zealand Sample Claimants and New Zealand Claimants had the same ability to appeal.
[61]There are exceptions to this in a limited class of cases, none of which arise here.
[62]George Wimpey UK Ltd v Tewkesbury Borough Council [2008] EWCA Civ 12, [2008] 1 WLR 1649.
Mr Goddard submitted that the High Court glossed over the distinction between a common legal issue arising in different claims and true privity of interest, and that representative action procedures have been developed because a common issue is not enough. However in this case the factors connecting the New Zealand Sample Claimants and the New Zealand Claimants were far more than a common legal issue. As we have set out, the allegations made were essentially the same and thus the cases were managed together. The future progress of all the proceedings depended on the resolution of a common legal issue and they agreed on a common process. Once Allen (No 2) was delivered the New Zealand Claimants accepted that their claims for compensatory damages had to be discontinued.
Conclusion on issue estoppel
The New Zealand Claimants had a clear and obvious interest in the subject matter of the Allen (No 2) proceeding, were directly affected by the outcome, and the New Zealand Sample Claimants were acting on their behalf. They can be seen as claiming under or through the New Zealand Sample Claimants. There was a sufficient level of connection between them both in terms of the common issue they sought to have determined, and their close relationship to the proceedings that we have outlined.
In examining whether a person is a privy for issue estoppel purposes, the substance of the person’s involvement in the earlier litigation is the key. The justice of that person being bound is examined. Plainly, for the reasons we have outlined, the New Zealand Claimants, including the appellants, must be bound by the English procedures that they accepted and implemented. They should not be permitted to relitigate the same issue in New Zealand.
Special circumstances
In Arnold v National Westminster Bank Plc the House of Lords recognised a special circumstances exception to the application of issue estoppel where new material becomes available relevant to the correct determination of the point decided in the earlier proceeding, being material that could not by reasonable diligence have been adduced in the earlier proceedings.[63] Mr Goddard argued that, in New Zealand at least, the special circumstances exception also applies where there is no right of appeal. He argued further that, even if the special circumstances exception was limited to new material, a New Zealand appellate decision on s 317 of the ACC Act favourable to the appellants would be new material.
[63]Arnold v National Westminster Bank Plc [1991] 2 AC 93 (HL) at 109.
The determination of the s 317 issue in Allen (No 2) was treated as a determination of a question of fact before an English Court. Mr Goddard submitted that this limited the ability of an appellate court to hear an appeal on such a matter of fact in England. The right of appeal in England was limited, even for the New Zealand Sample Claimants themselves. He argued that, in those circumstances, there was a real injustice to the appellants in depriving them of their ability to have a merits hearing on the issue before the New Zealand courts, with an unconstrained right of appeal.
Further it was argued there would be no practical unfairness to DePuy in permitting the New Zealand Claimants to pursue a claim for compensatory damages before New Zealand courts. The issue estoppel asserted by DePuy was merely to preclude one head of damages as a form of relief in the causes of action. It did not determine all the causes of action. This means there is no particular additional litigation burden on DePuy.
We are not persuaded by Mr Goddard’s arguments. There is no further material relevant to the correct determination of the s 317 issue that could not by reasonable diligence have been put to the English court. Here the appellants chose to sue in England. They did not have to do so. Having done so they cannot claim unfairness because the issue was treated as a question of fact in England, but would be a question of law in New Zealand, therefore they are now better off suing in New Zealand. They are stuck with the course they chose. If the appellants’ argument was correct, any party who was unhappy with a foreign judgment on New Zealand law could apply to relitigate the question in New Zealand on the basis that the overseas determination was a matter of fact.
The case is distinguishable from Arnold, in which the House of Lords found that the application of issue estoppel was prevented by special circumstances. The special circumstances arose because in earlier litigation Walton J had interpreted a rent review clause in a way adverse to the appellant tenants. The tenants’ application for leave to appeal was declined. In subsequent cases involving different parties the Court of Appeal of England and Wales cast doubt on Walton J’s interpretation of the same clause. The original parties endeavoured to challenge Walton J’s interpretation of the clause during a subsequent rent review. The House of Lords decided that the rejection of Walton J’s interpretation by the Court of Appeal in subsequent cases constituted a materially altered circumstance that warranted relitigation of the point.[64] This case is clearly distinguishable. There has been no materially altered circumstance between Allen (No 2) and the hearing of this appeal. Indeed, we have agreed with the decision in Allen (No 2) that the statutory bar applies to the appellants’ claims for compensatory damages. Furthermore, in Arnold the arbitral forum in which the issue was originally decided limited the tenants’ ability to appeal. In contrast, in the present case the appellants chose to sue in England and did not exhaust all appeal avenues.
[64]At 109 and 112–113.
We also accept Mr McLachlan’s submission that the case of Arbuthnot v Chief Executive of the Department of Work and Income, relied on by the appellants, is distinguishable.[65] In Arbuthnot the Supreme Court referred to the absence of any right of appeal in determining whether estoppel arose in the first place. There was no suggestion that the absence of an appeal right would be an independent ground for invoking the special circumstances exception. In any event, as we have set out, the appellants here chose to bring their claim in the English courts, and have chosen not to pursue an appeal in the English courts. They could have sought leave to appeal in England, albeit from a finding of fact, but chose not to do so.
Abuse of process
[65]Arbuthnot v Chief Executive of the Department of Work and Income [2007] NZSC 55, [2008] 1 NZLR 13.
Collins J stated that if he was wrong in his conclusions that the New Zealand Claimants were privies of the New Zealand Sample Claimants in Allen (No 2), he was satisfied that this was a rare case in which it would be an abuse of the processes of the New Zealand High Court for the 25 New Zealand Claimants to continue with their proceedings in New Zealand.[66]
[66]Estoppel decision, above n 2, at [94].
In considering the concept of abuse of process, the Judge quoted from Elias CJ in Lai v Chamberlains, referring to the opinions of Lords Bingham and Millett in Johnson v Gore Wood & Co:[67]
Lord Bingham considered that what constituted abuse is a “broad, merits‑based judgment”, incapable of capture in hard and fast rules of determination and not limited to further litigation between the same parties or their privies. Lord Millett in the same case thought it “primarily an ancillary and salutary principle” which prevents res judicata and issue estoppel being “deliberately or inadvertently subverted”.
[67]Lai v Chamberlains [2006] NZSC 70, [2007] 2 NZLR 7 at [62], referring to Johnson v Gore Wood & Co [2002] 2 AC 1 (HL) at 31 and 59 .
Mr McLachlan, in supporting the judgment of Collins J, argued that the New Zealand proceedings constitute a collateral attack on Allen (No 2), and are an abuse for that reason.
We agree. The proceedings by the 25 New Zealand Claimants in the High Court are an attempt to circumvent the effect of Allen (No 2). Given that the issues and parties (or privies) were the same, it would subvert the English process to allow the New Zealand Claimants a second bite at the cherry. It would be unfair to DePuy, having submitted to the English jurisdiction, to have to argue the same point again in New Zealand.
Like Collins J, we see similarities between the facts of this case and those of Ashmore v British Coal Corp.[68]There, the plaintiff’s case was stayed while other chosen claimants litigated sample cases in the Industrial Tribunal. The plaintiff sought to pursue her claim separately following the failure of the sample cases before the Tribunal. It was held that this was an abuse of process on the basis that it was contrary to the interests of justice to allow the same issues to be relitigated. Ashmore was approved by the House of Lords in Re Norris.[69] In Re Norris it was held that, where an interested party had acceded to the procedural arrangements (including the use of sample claims), that interested party had to abide by the result even if adverse, save a belated intervention to support an appeal against the substantive decision.[70]
[68]Ashmore v British Coal Corp [1990] 2 QB 338 (CA).
[69]Re Norris [2001] UKHL 34, [2001] 1 WLR 1388.
[70]At [26].
We therefore agree with Collins J that these proceedings were an abuse of process.
Conclusion
We agree with both decisions of Collins J. The claims for compensatory damages are prohibited by s 317, and the 25 New Zealand Claimants, including the appellants, are prevented from proceeding by issue estoppel. For them to proceed would be an abuse of process.
Result
The appeals are dismissed.
The parties agree that costs should follow the event. ACC does not seek costs.
Therefore the appellants must pay DePuy International Ltd costs for a standard appeal on a band A basis with usual disbursements. We certify for two counsel.
Solicitors:
Meredith Connell, Wellington for Appellants
Kensington Swan, Auckland for DePuy International Ltd
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