Section 33C(1)(a): the date of the damage
62 Philip Morris submits it is not apparent that any of the claimants has a valid claim against any of the respondents. The description of group members in para 2(a) of the 1 July Amended Application referred to "persons who … between 16 April 1996 and 19 April 1999 contracted" the relevant disease. Counsel say that, if the word "contracted" implies causation, each applicant and group member would need to demonstrate he or she first suffered an "injury beyond what can be regarded as negligible" in the period 16 April 1996 to 16 April 1999. They cite Cartledge v E Jopling & Sons Limited [1963] AC 758 and Scanlon v American Cigarette Company (Overseas) Pty Ltd (No.1) [1987] VR 261.
63 The revised draft reformulates the description by referring to people whose condition "first manifested clinically observable symptoms between 16 April 1996 and 16 April 1999" and was caused by smoking between 1 October 1974 and that date. This reformulation changes the focus of the argument; nonetheless the issue remains important for three reasons. First, s82(2) of the Trade Practices Act limits the right to recover damages for contravention of Part V of the Act, which includes s52, to actions commenced "within 3 years after the date on which the cause of action accrued". Second, a six year limitation period applies to the negligence claims of the various applicants under the applicable State or Territorial Limitation Act, although this is subject to the possibility of extension in some cases. Third, a representative action may be brought under Part IVA of the Federal Court of Australia Act only in respect of a cause of action arising after the commencement of that Part on 5 March 1992: see s33B of that Act
64 In Wardley Australia Limited v State of Western Australia (1992) 175 CLR 514 the High Court of Australia considered the question when a cause of action accrues, for the purposes of s82(2) of the Trade Practices Act. The claim in that case was for economic loss; there was no claim of personal injury. The judgments must be read with that distinction in mind; nonetheless, they contain some relevant statements of principle.
65 At 525 Mason CJ, Dawson J, Gaudron J and McHugh J observed: "As loss or damage is the gist of the statutory cause of action for which s82(1) provides, the cause of action does not accrue until actual loss or damage is sustained". They went on to say that "s82(1) should be understood as taking up the common law practical or common-sense concept of causation recently discussed by this Court in March v E & M H Stramare Pty Ltd (1991) 171 CLR 506, except in so far as that concept is modified or supplemented expressly or impliedly by the provisions of the Act".
66 Their Honours went on to say (at 526) that, "[i]n determining when a plaintiff first suffers economic loss or damage in an action under s82(1) based on misleading conduct constituting a contravention of s52, it is necessary to have regard to the applicable measure of damages". They said that, under s82(1), as under the common law, "a plaintiff can only recover compensation for actual loss or damage incurred, as distinct from potential or likely damage"; a risk of loss is not itself a category of damage.
67 At 527 their Honours entered into a discussion of the concept of loss or damage in the context of misrepresentation. They said:
"When a plaintiff is induced by a misrepresentation to enter into an agreement which is, or proves to be, to his or her disadvantage, the plaintiff sustains a detriment in a general sense on entry into the agreement. That is because the agreement subjects the plaintiff to obligations and liabilities which exceed the value or worth of the rights and benefits which it confers upon the plaintiff. But … detriment in this general sense has not universally been equated with the legal concept of 'loss or damage'. And that is just as well. In many instances the disadvantageous character or effect of the agreement cannot be ascertained until some future date when its impact upon events as they unfold becomes known or apparent and, by then, the relevant limitation period may have expired. To compel a plaintiff to institute proceedings before the existence of his or her loss is ascertained or ascertainable would be unjust. Moreover, it would increase the possibility that the courts would be forced to estimate damages on the basis of likelihood or probability instead of assessing damages by reference to established events. In such a situation, there would be an ever-present risk of undercompensation or overcompensation, the risk of the former being the greater."
68 In separate judgments Brennan, Deane and Toohey JJ expressed similar views. At 545 Deane J echoed the view expressed in the joint judgment about the undesirability of compelling a plaintiff to institute an action "before it was known whether any concrete loss or damage would ever come home, in order to avoid the possible injustice of a legitimate claim being barred if action was not instituted until it could be seen whether the contingent liability would result in ultimate loss."
69 As I have said, Wardley was not concerned with a personal injury claim. And I am not aware of any authoritative statement about the application of s82(2) in a personal injury context. I adverted to the issue briefly in E v Australian Red Cross Society (1991) 27 FCR 310. The blood transfusion that introduced the HIV virus into the applicant's body was administered sometime on 12 or 13 October 1984. I said at 351:
"As the process of sero-conversation was then inevitable, it is strongly arguable that the relevant loss or damage was sustained at that time. But it is not necessary to decide that point. The applicant had an illness consistent with sero-conversion between 13 October and his discharge from hospital on 1 November. He reacted positively to two HIV tests in October 1985. On any view, damage had been sustained by then. So the cause of action was complete. Yet the proceeding was not commenced until 8 November 1989, over four years later. It is clear that the claims under ss 52 and 55A are out of time."
That case went on appeal - see (1991) 31 FCR 299- but not in relation to the s52 and s55A claims. So the Full Court did not consider the application of s82(2) to personal injury cases.
70 Cartledge, the first of the two authorities cited by Philip Morris, was a decision of the House of Lords concerning the application of s2(1) of the Limitation Act 1939 (UK). That subsection provided that actions in tort "shall not be brought after the expiration of six years from the date on which the cause of action accrued". The House held that, in such cases, the cause of action accrues, in the words of Lord Reid at 771-772, "as soon as a wrongful act has caused personal injury beyond what can be regarded as negligible, even when that injury is unknown to and cannot be discovered by the sufferer …" Lord Reid deplored that result, saying at 772:
"It appears to me to be unreasonable and unjustifiable in principle that a cause of action should be held to accrue before it is possible to discover any injury and, therefore, before it is possible to raise any action. If this were a matter governed by the common law I would hold that a cause of action ought not to be held to accrue until either the injured person has discovered the injury or it would be possible for him to discover it if he took such steps as were reasonable in the circumstances. The common law ought never to produce a wholly unreasonable result, nor ought existing authorities to be read so literally as to produce such a result in circumstances never contemplated when they were decided."
71 The formula used in s2(1) of the United Kingdom Act, "cause of action accrued", is identical to that contained in s82(2) of the Trade Practices Act. It is therefore understandable that counsel for Philip Morris rely heavily on Cartledge. However, it should be noted that Lord Reid felt constrained to his conclusion by the terms of s26 of the United Kingdom Act, a section also mentioned by Lord Morris at 776. Lord Reid said, also at 772:
"But the present question depends on statute, the Limitation Act, 1939, and section 26 of that Act appears to me to make it impossible to reach the result which I have indicated. That section makes special provisions where fraud or mistake is involved: it provides that time shall not begin to run until the fraud has been or could with reasonable diligence have been discovered. Fraud here has been given a wide interpretation, but obviously it could not be extended to cover this case. The necessary implication from that section is that, where fraud or mistake is not involved, time begins to run whether or not the damage could be discovered. So the mischief in the present case can only be prevented by further legislation."
Lord Hodson agreed with Lord Reid.
72 Lord Pearce delivered a speech which commanded the concurrence of all the members of the House. He said at 778 it was:
"impossible to hold that a man who has no knowledge of the secret onset of pneumoconiosis and suffers no present inconvenience from it cannot have suffered any actionable harm. So to hold might possibly on the wording of the Fatal Accidents Act deprive of all remedy a widow whose husband dies of pneumoconiosis without having had any knowledge or symptom of the disease".
Referring at 779 to an observation by Lord Reid in Bonnington Castings Ltd v Wardlaw [1956] AC 613 at 621 about material injury being a matter of degree, Lord Pearce said:
"Although those words were spoken with reference to the emission of the harmful dust, they are equally applicable to the injuries caused by it. It is a question of fact in each case whether a man has suffered material damage by any physical changes in his body. Evidence that those changes are not felt by him and may never be felt tells in favour of the damage coming within the principle of de minimis no curat lex. On the other hand, evidence that in unusual exertion or at the onslaught of disease he may suffer from his hidden impairment tells in favour of the damage being substantial. There is no legal principle that lack of knowledge in the plaintiff must reduce the damage to nothing or make it minimal. Moreover, throughout this contention runs the difficulty in the present cases that since the pneumoconiosis did not increase of itself, whatever was the harm for which the judge awarded damages must have existed before October, 1950, when the cause of it ceased."
73 Following the House of Lords decision in Cartledge, the United Kingdom legislation was amended in such a way as to allow extensions of time in personal injury cases. Cartledge continued to apply to other claims and it was followed by the House of Lords in Pirelli General Cable Works Ltd v Oscar Faber & Partners [1983] 2 AC 1, a defective building case. However, in an Australian defective building case, Pullen v Gutteridge Haskins and Davey Pty Ltd [1993] 1 VR 27, the Appeal Division of the Supreme Court of Victoria (Brooking, Tadgell and Hayne JJ) declined to follow Pirelli. At 71 their Honours said:
"Time began to run in the present case when the latent defect first became known or manifest. The latent defect was the inadequacy or unsuitability of the footings."
Their Honours went on (at 77) to hold that a defendant who pleaded the Limitations of Actions Act bore the onus of proving the cause of action arose outside the limitation period.
74 Extension of time provisions have been enacted in most Australian jurisdictions: see Limitation Act 1969(NSW) ss60F-62; Limitation of Actions Act 1958 (Vic) s23A, Limitation of Actions Act 1974 (Qld), s31, Limitation of Actions Act 1936 (SA) s48, Limitation Act 1935 (WA) s38A, Limitation Act 1985 (ACT) ss35-36, Limitation Act 1981 (NT) s44.
75 There are several decisions in which Australian judges, sitting at first instance, considered the application of Cartledge to limitation periods, and extension of time to institute proceedings, in relation to insidious diseases such as cancer and mesothelioma.
76 In Footner v Broken Hill Associated Smelters Pty Ltd [1983] 33 SASR 58, Jacobs J of the South Australian Supreme Court held that a workman who had been exposed to asbestos particles and fibres between 1944 and 1952, but was not diagnosed as suffering from mesothelioma until 1982, did not sustain damage before 19 May 1969, the date of commencement of legislation permitting the Court to grant an extension of time for instituting proceedings. At 73-74 Jacobs J distinguished Cartledge on the basis that the factual finding in that case was that the physical injury sustained by the plaintiff occurred outside the limitation period, whereas "any damage to the plaintiff in this case was not merely undiscoverable, but was so infinitesimal as to be negligible in the eyes of the law".
77 In Scanlon Nicholson J, then of the Supreme Court of Victoria, held that an applicant for an extension of the limitation period prescribed by the Victorian Limitation of Actions Act was not aware of material facts relating to her cause of action until a date later than two years after the cause of action occurred. The damage claimed in that case was the contraction of lung cancer as a result of smoking the defendant's cigarettes. It appears from Nicholson J's reasons that it was common ground between the parties that Cartledge applied; the issue was only the date when the known facts indicated damage.
78 Derrington J of the Supreme Court of Queensland reviewed the case law in another mesothelioma case, Martindale v Burrows [1997] 1 Qd R 243. He held an extension of time was necessary, if the plaintiff was to maintain the proceeding. He granted the extension. At 246 his Honour referred to the High Court's decision in Wardley that "vulnerability to injury or the potential for harm does not itself amount to an injury", but he commented:
"… that is different from the position where a morbid condition is initiated, leading naturally to more serious developments at a later stage. It is not a matter of potentiality in such a case simply because in other cases such a consequence might not follow. In Wardley, no harm whatever was done at the earlier stage and it was only when another event in the form of a trigger occurred that any harm followed.
There is authority on the point. It has been held that where there has been an inhalation of asbestos that has led to pleural thickening of the lung which, by the time of trial, has caused no physical discomfort or disability and has only the potential for more serious developments, the physiological changes wrought to that stage could not be said to have amounted to an injury because of the lack of any established harm, and the potential for more harmful developments could not alter that situation: Battaglia v. James Hardie & Co. Pty Ltd (unreported, Vincent J., Supreme Court of Victoria, 12 March 1987); Papadopoulos v. James Hardie & Co. Pty Ltd (unreported, Kaye J., Supreme Court of Victoria, 12 February 1988).
It does not follow that if it is established that the condition has developed into mesothelioma, there will have been no relevant injury until the commencement of that development. The appearance of that condition establishes that the earlier morbid changes were indeed so serious as to be productive of mesothelioma at the later stage and were not merely potentially so. This means that the early changes did cause harm substantial enough to amount to injury at law."
79 American Home Assurance v Saunders (1987) 11 NSWLR 363 was a decision of the New South Wales Court of Appeal, dealing with mesothelioma in the context of a claim under an insurance policy. The policy covered a "bodily injury" that satisfied specified criteria. The respondent had been exposed to asbestos fibres during the course of his employment between 1950 and 1955 and again in 1959 and 1960. In December 1985 the respondent began to suffer fatigue. He was diagnosed as suffering from mesothelioma and ceased work. All three members of the Court held the injury was sustained after the commencement of the policy cover on 24 June 1985, but there was a division of opinion as to whether the injury satisfied all the specified criteria. Mahoney JA, with whom McHugh JA agreed, at 379 noted a concession by counsel:
"… that the physiological process may be seen as involving three steps: inhalation of the relevant fibres into the lungs; after a considerable time, the penetration of the lungs by the fibres and their lodgment in the pleura; and the development of mesothelioma. If the fibres are inhaled into the lungs, they do not always penetrate the lung or lodge in the pleura. And, if they are lodged in the pleura, mesothelioma does not always develop; fibres may either produce no condition or produce merely pleural plaques."
At 381 his Honour said:
"The disease of mesothelioma is caused by an outside factor, viz, the inhalation of and the penetration of the lung by the asbestos fibres. As was said by Dr Lee in the evidence to which I have referred, when the relevant fibres penetrate the periphery of the lung the malignant disease mesothelioma develops on the outer covering of the lung and, sometimes, on the inner wall of the thoracic cavity. There is then the accumulation of fluid and shortness of breath which leads to incapacity. Dr Lee said that, when that happens, 'there is a malignant disease called mesothelioma which develops on the outer covering of the lung'".
These passages indicate that Mahoney JA thought there was no "injury" until the fibres penetrated the lung or lodged in the pleura and thereby caused the development of mesothelioma. It was not to the point that the fibres, which were the ultimate cause of the mesothelioma, had been present in the respondent's body for many years before that time.
80 I make four observations about the authorities I have mentioned. First, Cartledge seems an uncertain foundation for a rule of general application. As will be apparent from the passages from his speech set out above, Lord Reid rested his decision squarely upon s26 of the United Kingdom statute. Lord Hodson agreed with him and Lord Morris also relied on s26. Lord Reid emphasised the matter was not governed by the common law and indicated that, if it were, he would hold that a cause of action did not accrue until the injured person discovered, or should have discovered, the injury. Yet he also agreed with Lord Pearce, as did Lord Morris. Lord Pearce thought that, in determining "whether a man has suffered material damage by any physical changes", it is relevant that the "changes are not felt by him and may never be felt". This seems difficult to reconcile with Lord Reid's view that a cause of action accrues "as soon as a wrongful act has caused personal injury beyond what can be regarded as negligible, even when that injury is unknown to and cannot be discovered by the sufferer". Such an injury obviously will be one in respect of which physical changes are not felt by the sufferer. Perhaps Lord Reid had in mind Lord Pearce's words "may never be felt", and intended to make his general principle apply to cases where the physiological change that had occurred prior to the expiration of the limitation period made inevitable the onset of debilitating injury. If that is the way in which the two speeches are to be reconciled, it would appear from American Home Assurance that Cartledge has no application to mesothelioma cases. Whether it has any application to the cases of the present applicants and group members cannot be determined in advance of taking evidence about them.
81 Second, although Cartledge has routinely been mentioned by Australian judges sitting at first instance, usually in the determination of an application for extension of a limitation period, it has not been upheld or applied by the High Court of Australia or (so far as I am aware) any Australian intermediate court of appeal. In the United Kingdom, Cartledge continues to apply to defective building cases; but the House of Lords' application of the decision in that context, in Pirelli, was not followed by the Appeal Division of the Victorian Supreme Court in Pullen.
82 Third, there seem to be good reasons why an Australian appellate court might decide not to follow Cartledge. The view of at least three members of the House (Lord Reid, Lord Morris and Lord Hodson) was heavily influenced by s26 of the United Kingdom Act. Even Lord Pearce referred to this section in the context of approving (at 783) a decision, R B Policies at Lloyds v Butler [1950] 1 KB 76, based on that section. Perhaps more importantly, since 1969 there have been major advances in diagnostic techniques; it is now much more likely that a person will become aware of an asymptomatic physiological change in his or her body, which causes no disability and may never do so. For all the reasons articulated in Wardley, in relation to economic loss, it seems undesirable policy to force such a person into immediate litigation.
83 The problems inherent in Cartledge are illustrated by the first instance decisions to which I have referred. As Derrington J mentioned in Martindale, in two unreported Victorian cases, Battaglia and Papadopoulos, judges held the plaintiffs did not have a cause of action because no damage had yet accrued; and this despite the fact that the inhalation of asbestos had led to a pleural thickening of the lung. They so held because the pleural thickening had not yet caused, and might never cause, physical discomfort or disability. Yet Derrington J thought that, if such a condition subsequently developed into mesothelioma, that development would establish "that the earlier morbid changes were indeed so serious as to be productive of mesothelioma at the later stage … [and] did cause harm substantial enough to amount to injury at law". In other words, the question whether particular physiological changes in a person's body amount to an accrual of damage in the eyes of the law depends upon later events. This seems to be an unsatisfactory position. A plaintiff who sues immediately he or she becomes aware of a non-symptomatic physiological change is likely to be met with a defence that no damage has accrued; a plaintiff who waits until the physiological change becomes symptomatic may be met with a defence that the claim is now statute-barred.
84 Finally, if one thing is clear, it is that an issue whether a claim is out of time ought not be determined on a strike-out application. In Cartledge all the other members of the House of Lords agreed with Lord Pearce's statement that the question is one of fact in each case. It follows it ought to be decided at trial. In Wardley at 533, Mason CJ, Dawson J, Gaudron J and McHugh J said the same thing, in express and emphatic terms and in the context of s82(2) of the Trade Practices Act:
"We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question."
85 I decline to hold that the present case ought to be struck out on the basis that the causes of action of the applicants arose outside the three year period specified in s82(2) of the Trade Practices Act, or the limitation period specified in the relevant State Act in respect of the negligence claims of the various applicants, or before 5 March 1992.