McGougan v Depuy International Ltd
| Jurisdiction | New Zealand |
| Judge | COLLINS J |
| Judgment Date | 20 October 2016 |
| Neutral Citation | [2016] NZHC 2511 |
| Docket Number | CIV-2015-485-001049 |
| Court | High Court |
| Date | 20 October 2016 |
Collins J
CIV-2015-485-001049
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
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.
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
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?
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.
…
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.
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.
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
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.
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.
DePuy does not carry on business in New Zealand. 2 DePuy designed and manufactured the hip implant systems in issue, primarily at its premises in Leeds, England. The hip implants were supplied by DePuy to related companies, including DePuy New Zealand Ltd and Johnson & Johnson (New Zealand) Ltd, who in turn supplied the DePuy hip implants in New Zealand.
After the plaintiffs received their DePuy hip implants, serious issues began emerging concerning the effectiveness and safety of those implants. DePuy recalled its hip implants in August 2010. The plaintiffs underwent revision surgery in 2011 and 2012 to replace the DePuy hip implants.
The statement of claim alleges the DePuy hip implants were designed and or manufactured with defects which led to the breakdown of part of the implant which in turn led to the release of cobalt and chromium into patients. This is said to have led to metal poisoning and tissue damage.
The plaintiffs plead that DePuy failed to undertake a proper risk assessment and testing of the implants before they were distributed. It is also alleged DePuy failed to adequately monitor the implants after they were placed into patients.
Two causes of action are pleaded by the plaintiffs. They say DePuy committed the tort of negligence and breached the Consumer Guarantees Act 1993. The relief sought by the plaintiffs include a prayer for a declaration that DePuy acted negligently and unlawfully in designing, manufacturing, marketing and distributing the DePuy hip implants, compensatory damages and exemplary damages.
For the purposes of this proceeding it is accepted the plaintiffs applied for and obtained cover from ACC. 3 Cover was acknowledged by ACC on the basis the plaintiffs had suffered a treatment injury as defined in the Act. 4 As a consequence, the plaintiffs have received various entitlements under the ACC scheme, including, in some instances, weekly compensation and rehabilitation benefits.
Seven groups of plaintiffs commenced proceedings in England against DePuy between 2012 and 2014. Sixty-three New Zealanders were included in those proceedings, including the three plaintiffs in the proceeding before me and 22 of the claimants they represent.
One of the seven groups of plaintiffs in England proceeded to a preliminary issues trial. That proceeding, referred to as the “Allen proceeding”, included four of the sixty-three New Zealand claimants (the New Zealand sample claimants). On 18 March 2014, Stewart J determined that New Zealand law applied to the claims of the New Zealand sample claimants. 5 The New Zealand sample claimants then filed and served amended particulars of their claims. DePuy responded with a statement of defence which pleaded, amongst other matters, the claims advanced by the New Zealand sample claimants were barred by s 317(1) of the Act.
The issue as to whether or not the New Zealand sample claimants were barred by s 317(1) of the Act from bringing their claims for compensatory damages in England was the subject of a further preliminary issues trial. In a judgment delivered on 1 April 2015, Simler J concluded “… the claims of the New Zealand sample claimants were precluded by [s 317 of the Act]”. 6
The plaintiffs then commenced their proceedings in New Zealand on 18 December 2015.
On 17 March 2016, this Court directed that, by consent, two preliminary issues be determined in this proceeding, namely:
The question set out in [1] of this judgment accurately encapsulates the issues raised by the first preliminary question posed by the parties.
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(1) Does s 317(1) of the Act bar the plaintiffs' claims for compensatory damages? (the statutory bar issue)
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(2) Are the plaintiffs estopped, or otherwise prevented, from pursuing their claims by reason of the judgment of Simler J delivered on 1 April 2015? (the estoppel issue)
Two days were allocated to hear both preliminary questions. As it transpired those two days were taken up hearing submissions only in relation to the statutory bar issue. The estoppel issue is scheduled to be heard on 12 December 2016. The parties agreed that even if I found in favour of DePuy on the statutory bar issue, thereby possibly rendering the estoppel issue moot, I should nevertheless hear and determine the estoppel issue and that any appeals from my judgments would be heard in tandem.
In their enlightened report into Compensation for Personal Injury in New Zealand 7 (the Woodhouse Report), Sir Owen Woodhouse and his fellow commissioners recommended the abolition of claims for damages to compensate those who suffered personal injury by accident in exchange for a scheme which aimed to address the causes and consequences of personal injuries caused by accidents. This fundamental change in the way New Zealand endeavours to prevent injuries and rehabilitate and compensate those who have the misfortune to be injured
by accident, underpins the five statutory iterations of the ACC scheme. 8 An essential component of the ACC scheme has been described as a “social contract” in which those who suffer personal injury covered by the scheme receive a set of entitlements funded by the community in exchange for which they relinquished their right to sue for compensatory damages in respect of their injury. 9As noted by Glazebrook J in Accident Compensation Corporation v Ambros, the ACC scheme aims to promote distributive rather than corrective justice by spreading the economic consequences of negligent conduct across the community and to provide for rehabilitation and compensation regardless of fault. 10 In exchange for this cover, victims of personal injury by accident forego the opportunity to sue those who might...
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McGougan and Dingle v Depuy International Ltd
...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 decision]. 2 McGougan v DePuy International Ltd [2016] NZHC 3170 [ Estoppel decision]. 3 Allen v DePuy Inte......