McGougan v Depuy International Ltd

JurisdictionNew Zealand
CourtHigh Court
JudgeCOLLINS J
Judgment Date20 October 2016
Neutral Citation[2016] NZHC 2511
Date20 October 2016
Docket NumberCIV-2015-485-001049

[2016] NZHC 2511

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

Court:

Collins J

CIV-2015-485-001049

Between
Michael John Mcgougan And Brian Frederick Dingle
First Plaintiffs
Bevan Malcolm Sanson
Second Plaintiff
and
Depuy International Limited
First Defendant
Accident Compensation Corporation
Second Defendant
Counsel:

J Goddard QC with L Theron and P J L Arnold for Plaintiffs C A McLachlan QC with J L W Wass, D A Campbell and O J Welsh for First Defendant

V E Casey QC for Second Defendant

Class action against the first defendant claiming its prosthetic hip implants were designed or manufactured with defects and that the first defendant had failed to undertake a proper risk assessment and testing of the implants before they were distributed — the plaintiffs alleged negligence and a breach of the Consumer Guarantees Act 1993 and sought compensatory damages and exemplary damages — the first defendant was a company registered in England which manufactured medical devices, including prosthetic hip implants — the three plaintiffs represented a larger group of 38 New Zealanders who, between 2006 and 2009 received defective hip implants in NZ—the plaintiffs had obtained ACC cover from the second defendant — in UK proceedings which included the plaintiffs as sample claimants the High Court of England and Wales (EWHC)concluded that the claims of the NZ sample claimants were precluded by s317 Accident Compensation Act 2001 (ACA) (proceedings for personal injury) — whether s317 ACA barred claims for compensatory damages for personal injury suffered in NZ covered under the ACA where the conduct giving rise to their claims occurred in a foreign jurisdiction — whether principles of territoriality in international law should be applied to the interpretation of s317(1) — whether the plaintiffs were estopped, or otherwise prevented, from pursuing their claims by reason of the EWHC judgment.

The issues were: whether s317 ACA barred claims for compensatory damages for personal injury suffered in NZ covered under the ACA where the conduct giving rise to their claims occurred in a foreign jurisdiction; whether principles of territoriality in international law should be applied to the interpretation of s317(1); and whether the plaintiffs were estopped, or otherwise prevented, from pursuing their claims by reason of the EWHC decisions.

Held: On its face, the bar in s317(1) ACA was clear and unequivocal. Where a plaintiff claimed damages that arose directly or indirectly out of personal injury covered by the ACA, or under the former Acts, then the bar in s317(1) ACA was engaged. The bar did not apply to exemplary damages or applications for a declaration but did apply to compensatory damages.

Section 317(1) ACA also barred the plaintiffs' claims under the CGA because the language of s317(1) CGA referred to proceedings “under any rule of law or any enactment”. The abolition of claims for compensatory damages for personal injury arising from defective products was acknowledged immediately prior to the commencement of the ACC scheme.

This interpretation was supported by the purpose of the Act. The purposes of the ACA included the reinforcement of the social contract represented by the first accident compensation scheme by providing for a fair and sustainable scheme for managing personal injury. The “social contract” underpinning the Act meant that persons who suffered personal injury covered by the Act received the benefits of cover in exchange for relinquishing any right they might have had to commence proceedings for compensatory damages that arose directly or indirectly out of his or her personal injury. The concept of a “social contract” supported the argument that if a person had cover under the ACA then they could not bring proceedings for compensatory damages in a NZ court.

Section 317(1) barred claims for compensatory damages arising directly or indirectly from personal injury for which the plaintiff had cover under the Act, but left intact causes of action and other forms of relief, such as claims for exemplary damages, and claims for a declaration.

The exceptions to the bar in s 17(1) ACA did not assist the plaintiffs' case. Each exception could be distinguished from the plaintiffs' claim for compensatory damages. There was a clear point of difference between the plaintiffs' claims for compensatory damages and the claims for exemplary damages approved in Donselaar v Donselaar and Couch v Attorney-General.

Principles of private international law did not assist in ascertaining the purpose of s317(1) ACA. The plaintiffs' injuries were suffered in NZ, they brought their claims in NZ and sought to invoke NZ d law without attempting to plead foreign law. In these circumstances NZ law governed the plaintiffs' claims. Secondly, Parliament clearly defined the territorial scope of s317(1) by reference to claimants who had cover under the ACA. The bar in s317(1) only applied where a plaintiff had cover because he or she had been injured in NZ or was a resident of NZ. Thirdly, the rule against the extra-territorial reach of legislation aimed to ensure one state did not unduly interfere with property rights or activities within another state's jurisdiction. The ACA did not create the prospect of any such conflict.

The place of the defendant's conduct giving rise to a claim did not assist in determining the purpose of s317(1) ACA. If the place of conduct concept were engaged, it would only be relevant to the choice of law issue. The plaintiffs relied exclusively on NZ law and did not seek to invoke foreign law. Secondly, the plaintiffs said that the place of conduct was where the hip implants were designed and manufactured. Private international law principles, however, tended to focus on where the substance of the cause of action arose.

Thirdly, the place of conduct criterion was ambiguous and would create uncertainty. Although DePuy's products were designed and manufactured overseas, the distribution of the products occurred in NZ. The courts would have to draw difficult distinctions between the various steps in the design, manufacture, marketing and supply of products in order to determine what aspect of the claim was actionable in NZ and what aspect was not actionable in this country. This in turn would lead to anomalies and unacceptable uncertainty.

The bar in s317(1) ACA would always apply to a tort committed in NZ, where the plaintiff had cover under the ACA. A claim for compensatory damages would never be actionable in NZ for personal injury covered by the ACA regardless of where the relevant conduct occurred.

It was suggested that the ACC scheme's integrity and economic viability would be compromised if DePuy could escape civil liability for compensatory damages without having contributed to the ACC scheme and that denying the plaintiffs' the opportunity to recover compensatory damages from DePuy created an unexpected windfall for DePuy. The focus of the ACC scheme was on the person who suffered injury, not on the potential defendants who had caused or contributed to the claimant's injury. Allowing the plaintiffs to sue for compensatory damages for personal injury in circumstances where they had cover under the Act would undermine the basic tenets of the ACC scheme, not enhance its integrity. In addition, the purpose of the bar in s317(1) was broader than protecting financial viability. The ACC scheme's objective included rehabilitation. Likewise, the windfall argument was not relevant.

The plaintiffs' claims for compensatory damages were barred by s317(1) ACA.

Costs were reserved until after the “estoppel issue” preliminary question had been determined.

JUDGMENT OF COLLINS J
Introduction
1

This judgment focuses upon the following question:

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?

2

The answer to this question depends on the scope of the bar against proceedings for personal injury set out in s 317(1) of the Act. That subsection 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.

3

An examination of the text and purpose of s 317(1) of the Act leads to the answer to the question posed in [1]. That answer is “No”. The plaintiffs' claims for compensatory damages are not actionable in New Zealand.

4

This judgment is divided into two parts. Part I sets out the background to the litigation, including a summary of the agreed facts, the legislative history to s 317 of the Act and a brief summary of the parties' competing contentions. Part II analyses the issues and explains the reasons for my conclusion.

PART I: BACKGROUND
The parties
5

The first defendant (DePuy) is a company registered in England. It manufactures medical devices, including prosthetic hip implants. Two hip implant systems designed and manufactured by DePuy between July 2003 and August 2010 (DePuy hip implants) feature in this proceeding. 1

6

The three plaintiffs in this proceeding represent a larger group of 38 New Zealanders who, between 2006 and 2009 received DePuy hip implants in New Zealand.

7

The second defendant, Accident Compensation Corporation (ACC), was joined as a party to this proceeding only in relation to the preliminary question of law set out in [1]. ACC administers the New Zealand Accident Compensation scheme in accordance with the Act and earlier manifestations of the Act.

The claim
8

DePuy does not carry...

To continue reading

Request your trial
1 cases
  • McGougan and Dingle v Depuy International Ltd
    • New Zealand
    • Court of Appeal
    • 13 April 2018
    ...for a standard appeal on a band A basis with usual disbursements. We certify for two counsel. 1 McGougan v DePuy International Ltd [2016] NZHC 2511 , [2017] 2 NZLR 119 [ Statutory bar 2 McGougan v DePuy International Ltd [2016] NZHC 3170 [ Estoppel decision]. 3Allen v DePuy International L......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT