Australia: The benefit of hindsight - The High Court re-examines when a cause of action arises in mesothelioma (asbestos) cases

The High Court's decision last week in Alcan Gove Pty v Zabic [2015] HCA 33 has re-examined when a cause of action arises in respect of the condition of mesothelioma. The High Court held that a cause of action in relation to the condition of mesothelioma is accrued when initial mesothelial cell changes commence, as opposed to when there is a "trigger" and these cell changes develop into the disease of mesothelioma.

Somewhat paradoxically, the High Court has also confirmed that it is not possible to sustain a cause of action for negligence unless the risk of mesothelioma actually eventuates (i.e. when symptoms of the disease first develop).

The facts

Mr Zabic, in the course of his employment as a manual labourer with Alcan Gove Pty Ltd (Alcan Gove) in the Northern Territory, inhaled asbestos fibres between 1974 and 1977. As a result of this exposure, Mr Zabic contracted malignant mesothelioma and was diagnosed in January 2014.

In the Northern Territory of Australia, section 52 of the Worker's Rehabilitation and Compensation Act 1986 (subsequently renamed as the Return to Work Act) abolished common law actions for injury against an employer where a cause of action had not arisen prior to its inception i.e. prior to 1 January 1987.

Mr Zabic opted to pursue a claim for damages at common law rather than seek compensation for mesothelioma sustained as a result of his employment. The key question for determination by the High Court was whether Mr Zabic's cause of action arose before or after 1 January 1987.

Determining when a cause of action is accrued

The judge at first instance (Barr J) held that the cause of action did not accrue until the onset of malignant mesothelioma. The Northern Territory Court of Appeal and the High Court (subsequently agreeing) determined that the cause of action accrued during the initial mesothelial cell changes. This cell change was found to have developed shortly after inhalation of the asbestos fibres during employment with Alcan Gove—the period between 1974 and 1977. Consequently, it was held that Mr Zabic's common law cause of action accrued well before 1 January 1987 and was therefore not statute barred.

Analysis of the High Court's reasoning

Initial mesothelial cell changes

The High Court examined the unique characteristics of mesothelioma and the individual experience of Mr Zabic. In this case, although Mr Zabic inhaled asbestos fibres between 1974 and 1977, it was probable that he did not develop a malignant mesothelial tumour until shortly before experiencing the symptoms of mesothelioma between 2013 and 2014.

The High Court agreed with the Northern Territory Court of Appeal's reliance on the benefit of hindsight principle to determine that this cause of action accrued between 1974 and 1977. The High Court held that the question is whether it could be inferred in hindsight that a cause of action had accrued before it could have been detected. The decision acknowledged that during the timeframe of 1974 to 1977 Mr Zabic could not have pursued a claim then because no damage had eventuated.

Ultimately, through the benefit of hindsight, it was held by the High Court that these early mesothelial cell changes were the "beginning of a continuum that led inexorably to the onset of mesothelioma" for Mr Zabic. It was accepted by the Court that even with today's science, those changes may not have been detectable and these cell changes could lay dormant for years without ever developing into mesothelioma.

The gist of negligence

The previous decision in the NSW Court of Appeal in Orica Ltd v CGU Insurance Ltd (2003) 59 NSWLR 14 held that mere inhalation of asbestos fibres is not compensable damage and therefore a cause of action does not accrue unless and until mesothelioma develops.

In Zabic the judge at first instance relied heavily on the decision in Orica in finding that during the initial mesothelial cell changes the "tort was not complete" and accordingly the cause of action had not accrued.

The High Court has remarked that the reliance on the decision of Orica was problematic as the issues and evidence in Mr Zabic's case greatly differed. The High Court concluded that the issue in Zabic should not be misconstrued as one of risk because that risk had eventuated.

Conclusion

The decision is somewhat contradictory in that it recognises that damage is an essential element of a negligence action yet concludes that, even where damage has not yet eventuated, a cause of action has accrued for mesothelioma.

The decision is unlikely to have application outside of the Northern Territory although it may well affect the way in which claims are pursued in that jurisdiction.

The decision may also be relevant to insurers in determining the policy of insurance to respond particularly to public liability mesothelioma claims in those jurisdictions where the issue has not already been clarified by statute.

We would like to acknowledge the contribution of Monique Azzopardi to this article.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.