Allen & Ors v Depuy International Ltd [2015] EWHC 926 (QB)

Case No TLQ/13/1229[2015] EWHC 926 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 1 April 2015
Before
MRS JUSTICE SIMLER DBE
Between
ALLEN AND OTHERSClaimantsDEPUY INTERNATIONAL LIMITEDDefendant
Mr Hugh Preston QC, Professor Adrian Briggs & Mr Conor Dufficy (instructed by PLI Legal Services) for ClaimantsMr Charles Dougherty QC & Mr Alexander Antelme QC (instructed by Kennedys Solicitors) for DefendantHearing Hearing dates: 17, 18, 19, & 20 March 2015
JudgmentMRS JUSTICE SIMLER DBE :Introduction
[1]Mr Allen, Mr Monks and Mr Myson (“the Claimants”) who are part of a much larger group of New Zealand and other overseas residents from a number of countries, claim damages for personal injury alleged to have resulted from being implanted with defective prosthetic hip implants manufactured by the Defendant and implanted in the course of operations that took place in New Zealand. The Defendant is a company registered in England and manufactured the prosthetic hip implants in England.[2]As the Defendant is domiciled in England, the Claimants are entitled as of right to bring their claims here, whether or not England is otherwise the appropriate forum. By a judgment in these proceedings reported at [2014] EWHC 753, Stewart J dealt with preliminary issues as to the applicable law in these proceedings and, if English law applies to any claim, whether the Consumer Protection Act 1987 applies. He concluded that pursuant to the Private International Law (Miscellaneous Provisions) Act 1995, the applicable law for the New Zealand Sample Claimants is that of New Zealand. Even if English law applied, he held that no Claimants would have the benefit of the provisions of the Consumer Protection Act 1987 as the supply and marketing of the product and the alleged injury, all occurred outside the EU and the Claimants had no connection with the EU.[3]Since the judgment of Stewart J the New Zealand Claimants amended their claims to plead New Zealand law and in particular, reliance on the provisions of the Consumer Guarantees Act 1993 (“CGA”). Under the CGA a consumer has a claim against a manufacturer if goods supplied are not of acceptable quality or fit for purpose. Where goods fail to comply with the acceptable quality guarantee there are rights of redress afforded by the CGA, including a remedy for loss and damage which was reasonably foreseeable (s.27 CGA).[4]Although the Defendant denies that the goods supplied are defective, it submits in any event that claims for damages for personal injury, whether under the CGA or otherwise, are precluded by the statutory bar in s.317(1) of the New Zealand Accident Compensation Act 2001 (“ACA 2001”). Section 317(1) provides that “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 personal injury covered by this Act …”. The effect of the statutory bar, and its proper characterisation for these purposes is challenged by the Claimants.[5]Consequently by order of Master Cook dated 2 July 2014, the trial of a further preliminary issue was directed in relation to four of the New Zealand Sample Claimants, as follows: “whether under the substantive law of New Zealand, as applicable pursuant to the Private International Law (Miscellaneous Provisions) Act 1995, their claims are precluded by section 317 of the ACA 2001”.[6]Following exchange of expert reports, the Defendant conceded the preliminary issue so far as Mr Fletcher, the Third Claimant is concerned, and the Defence was re-re-amended to reflect this. His claim is now stayed with the other New Zealand claims.[7]The parties agree that the preliminary issue raises two essential questions:(i) Is s.317 ACA 2001 a substantive or a procedural rule? If the rule is characterised as procedural only it will be disregarded by this court. By contrast, if it is a substantive rule, it must be applied by this court.(ii) If the rule is substantive, does s.317 remove the right of these Claimants to compensatory damages for personal injury in this case as a matter of New Zealand law? In particular, does s.317 require relevant conduct in New Zealand as the Claimants contend before it has any application?[8]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 CGA, applying New Zealand law.[9]I have been greatly assisted in dealing with the preliminary issue by written and oral submissions on both sides: Charles Dougherty QC and Alexander Antelme QC for the Defendant; and Hugh Preston QC, Professor Adrian Briggs, and Conor Dufficy for the Claimants. I am grateful to them all.

The expert evidence

[10]It is common ground that a New Zealand court called upon to decide the circumstances in which s.317(1) applies would approach this as an exercise in statutory interpretation. The meaning of the enactment in question would have to be ascertained from the text and in light of its purpose.[11]Since foreign law is a matter of fact normally proved by expert evidence, expert evidence as to New Zealand law has been called on both sides directed at predicting the likely decision of a New Zealand court required to address the preliminary issue in this case. In addition to assessing the weight of the expert evidence it is common ground that I am both entitled and indeed bound to bring to bear my own judgement in reaching conclusions as to New Zealand law.[12]I have received expert evidence in the form of expert reports, a statement as to what is agreed and what is disputed and oral evidence that was subject to cross-examination from two eminently qualified experts in New Zealand law. I do not set out their qualifications or their evidence in any detail. Campbell Alan McLachlan QC, Professor of Law at Victoria University of Wellington, whose specialist area of expertise is private international law, and who was called to the Inner Bar in New Zealand in 2007 and has practised extensively both as a barrister and as an arbitrator appeared on behalf of the Defendant. In summary in his opinion where a person has cover under the ACA 2001 in accordance with its territorial scope, in respect of a personal injury, he or she has no actionable claim for or right to compensatory damages under New Zealand law. In his opinion, the bar in s.317(1) ACA 2001 has substantive effect and removes the right to pursue an action for compensatory damages for personal injury, whether in negligence, under the CGA or under any other cause of action as the quid pro quo for the comprehensive cover provided under the statutory scheme of the ACA 2001. Further in his view the ACA 2001 itself determines the scope of cover and therefore the scope of the operation of the statutory bar.[13]By contrast, David Goddard QC, admitted in 1989, appointed as Queen’s Counsel in 2003 and recognised as one of New Zealand’s leading barristers with particular expertise in private international law and with long standing experience of acting in cases concerning tort claims and the author of a number of publications and responsible for a Ministerial Inquiry into Accident Compensation Funding and Accreditation of Physiotherapy Services in 2007, appeared on behalf of the Claimants. In summary in his opinion as a matter of New Zealand law, s.317 does not extinguish any cause of action under New Zealand law or otherwise in respect of accidental personal injury, and does not prevent proceedings being brought in New Zealand or abroad claiming exemplary or punitive damages in respect of accidental personal injury covered by the ACA 2001. Rather it prevents claims for compensatory damages in respect of conduct in New Zealand by a defendant who may have contributed levies to the scheme and who can “reasonably expect” not to have to insure against such claims or face such proceedings. In his expert opinion, the answer to the question at issue is that however the provision is characterised (whether procedural or substantive) as a matter of statutory interpretation it does not apply to claims in an overseas court relating to conduct outside New Zealand. In any event, since he concludes that the bar operates to prevent proceedings being brought for compensatory damages for personal injury and there is no need and no good reason to treat it as having a more far-reaching effect, he considers it to be a procedural rule and not a substantive one: it bars proceedings for the recovery of damages leaving causes of action intact.

The New Zealand Accident Compensation Scheme

[14]There is broad agreement between the experts about the origins, character and operation of the New Zealand Accident Compensation Scheme (referred to as “the Scheme”) including the scope of cover and the claims process and administration of the Scheme.[15]The Scheme derives from a Royal Commission of Inquiry Report in 1967, known as the Woodhouse Report which recommended the creation of a comprehensive, universal and compulsory no fault compensation scheme and “extinguishing present common law rights in respect personal injuries …” (paragraph 306(b)). The Woodhouse Report identified common law actions for damages as hindering the rehabilitation of injured persons, and the fault principle as an illogical justification for the common law remedy in negligence, erratic and capricious in its operation (paragraph 485(1) and (2)). At paragraph 489 the Woodhouse Report dealt with the consequential changes that would result from the establishment of a no-fault scheme and at paragraph 490 the compulsory nature of the scheme, as follows: “489(1) Given a suitably generous scheme on the foregoing basis it follows automatically that previous ways of seeking to achieve the same or a similar purpose become irrelevant.(2) Thus the common law rights in respect of personal injuries should be abolished and the Workers' Compensation Act repealed.(3) …(4) Such a scheme, involving the acceptance of community wide responsibility in respect of every injured citizen, must clearly be handled as a social service by an agency of the Government. (5)…..” “490 (1) The scheme which has been outlined involves comprehensive entitlement. It must be given comprehensive support. (2) Protection is not to be restricted to work accidents or to road accidents, or to any period of the day, or to any group in the community. Individual liability, moreover, will disappear in favour of national responsibility. (3) If the scheme is to be universal in scope it must be compulsory in application. Accordingly there will be no place for special arrangements or for "contracting out". ..”.[16]As a result of those recommendations, the Scheme was originally introduced by the Accident Compensation Act 1972 and has been continued by a succession of statutes: the Accident Compensation Act 1982, the Accident Insurance Act 1998, and the Injury Prevention, Rehabilitation and Compensation Act 2001. In 2010, the 2001 Act was renamed the Accident Compensation Act 2001 (or ACA 2001) and remains in force. The Scheme is administered by the Accident Compensation Corporation (“the Corporation”), a Crown entity administered by a Board appointed by the responsible Minister. Its duties are to determine cover, provide entitlements under the legislation, collect levies, manage the relevant accounts and administer disputes.[17]The purpose of the ACA 2001 as set out at s.3 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 it 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) …”
[18]Coverage under the Scheme is dealt with by Part 2 of the ACA 2001. Cover is defined by s.8(1) as “cover for a personal injury” and generally depends on whether(i) the personal injury is suffered in New Zealand (s.20 ACA 2001); or(ii) if the injury is suffered outside New Zealand, the injured person is ordinarily resident in New Zealand at the time (s.22 ACA 2001).[19]The ACA 2001 deals specifically with “treatment injuries”. Treatment includes the failure of a prosthesis (s.33(1)(g)). Cover in respect of a “treatment injury” exists when the injury is suffered in New Zealand (s.20(2)(b) ACA 2001) or where the treatment injury was suffered outside New Zealand if the victim was ordinarily resident in New Zealand at the time (s.22(3) and (4) ACA 2001). Both experts agree that for these purposes, an injury is suffered where the treatment took place and for all three Claimants, that this was in New Zealand. Accordingly they are all covered by the Scheme.[20]By s.67 ACA 2001 where a person is ‘covered’, he or she may be eligible for entitlements listed by s.69 and described in further detail by Part 4 ACA 2001. A covered person’s eligibility for entitlements does not generally depend on the category of injury they have suffered (such as injury by accident or treatment injury), but on their assessed need in light of the actual injury. For example, s.70 provides that a person who has suffered personal injury for which he or she has cover— “(a) is entitled to be provided by the Corporation with rehabilitation, to the extent provided by this Act, to assist in restoring the claimant’s health, independence, and participation to the maximum extent practicable; but (b) is responsible for his or her own rehabilitation to the extent practicable having regard to the consequences of his or her personal injury”.[21]Compensation or eligibility for entitlements does not depend on the establishment of any wrong or on the acts of a third party. Accidental self-inflicted injuries are covered and the focus of the Scheme is on the injury rather than its cause.[22]Individuals seeking compensation under the ACA 2001 must lodge a claim (s.48) within the time limits prescribed, but the scope of the Scheme depends on the existence of cover and not on whether the person has lodged a claim in respect of a covered injury. In other words, a person may not avoid the operation of the ACA 2001 and chose instead to pursue a civil claim in respect of his or her injury by failing or declining to lodge a claim. Conversely, however, a person who is covered may lose their entitlement to compensation by failing to lodge a claim within the time limits prescribed.[23]The Scheme is funded by specific levies and general taxation. Entitlement to compensation under the Scheme does not depend on having made a contribution to it. There are levies collected by the Corporation which is required to maintain and operate five separate accounts: a Work Account; a Motor Vehicle Account; an Earners’ Account; a Non-Earners’ Account; and a Treatment Injury Account. As Professor McLachlan explains, the manner in which the Scheme is funded, consistent with its comprehensive no-fault character, is not correlated with any particular class of putative defendants. Rather it prescribes a set of levies which when added to general taxation are geared to ensuring adequate financial provision in the Accounts of the Corporation for all those personal injuries in respect of which there is cover under the ACA 2001.[24]The structure of the Accounts that the Corporation is required to maintain reflects the categories of cover provided under the ACA 2001 and the sources of the levies (where appropriate) that primarily fund that cover. So for example, the Work Account finances entitlements for employees or workers for work-related personal injuries, primarily funded by levies payable by employers. The Treatment Injury Account finances entitlements in respect of ‘treatment injury’ and s.228(2) describes how the funds for the Treatment Injury Account are to be sourced:
“(2) The funds for the Treatment Injury Account are to be derived from— (a) any levies payable by registered health professionals or any organisation that provides treatment under this Act, or a prescribed class of such persons or organisations; and (b) if there is no such levy or the levy relates only to funding part of the Account, from the Earners’ Account (in the case of an earner) or the Non-Earners’ Account (in the case of a non-earner); and (c) in the case of injuries suffered before the prescribed date from which levies become payable, from the Earners’ Account (in the case of an earner) or the Non-Earners’ Account (in the case of a non-earner).”
[25]The funds in the Treatment Injury Account must be applied to the treatment of ‘entitlements in respect of persons who have cover for treatment injury’ (s.228(4)). Although s.229 provides for the promulgation of regulations specifying the persons who are liable to pay levies (and in what amount) in respect of the Treatment Injury Account, no regulations have been promulgated, so that this Account is funded by levies from both the Earners’ and Non-Earners’ Accounts, the latter being funded by general taxation.[26]The quid pro quo of the right to statutory compensation under the Scheme is the statutory bar to proceedings for damages for personal injury that might otherwise have been available. The bar in s.317(1) on proceedings for damages for personal injury has the effect of precluding any claim for compensatory damages for personal injury in New Zealand where there is cover under the Scheme. The basis of the claim for personal injury does not matter and claims for negligently inflicted personal injury and claims under the CGA are equally affected by the statutory bar. The statutory bar does not preclude claims which fall outside the scope of cover under the ACA 2001 and furthermore, it is possible to bring a claim in trespass or negligence for exemplary damages in New Zealand, such damages not being compensatory in nature but punitive, and arising not out of the injury itself, but the outrageous manner in which the wrong was committed by the defendant.

The substance/ procedure divide

[27]The first question for determination is whether s.317(1) is a rule of substantive law or a rule of procedure it being common ground that English private international law distinguishes between questions of procedure, governed by the law of the forum, and questions of substance, governed by the applicable law (or lex causae). If s.317(1) is properly characterised as a rule of substantive law, since the applicable law in this case has been held to be New Zealand law, it will apply even in proceedings brought in this court, (subject only to any further consideration as to its scope). If, however, it is a rule of procedure, English law will apply as the law of the forum. An English court will apply foreign substantive law but will apply English procedural rules, for example as to mode and form of trial, evidence and the availability of remedies.[28]The question of the characterisation of a statutory provision as substantive or procedural is a question for the law of the forum, and so is a matter of English law here. However in order to characterise the provision properly it is important to understand its effect under the applicable law. The distinction may not be clear cut. The proper approach is described by Dicey, Morris and Collins at paragraph 7–004 as follows:
“.. regard should be had in each case to the purpose for which the distinction is being used and to the consequences of the decision in the instant context. The rule under examination must be considered as a whole, without giving undue weight to the verbal formula selected by previous judges, or by the draughtsman of a statute to introduce the rule. …..The mechanistic approach, sometimes found in English cases, of relying on the classification of the introductory verbal formula as used in a quite different statute, or of accepting a classification as procedural or substantive made for some purpose quite unrelated to the conflict of laws is now discredited. …”
[29]Words or phrases used in a private international law context (such as substance, procedure, rights and remedies) may have a different meaning when used in other contexts. English common law has drawn a long-standing and a well-established distinction between matters that affect a claimant’s cause of action (his rights) and those that affect the way in which those rights are enforced (the remedies available); the former regarded as substantive and the latter as procedural.[30]The leading case in England on the proper dividing line between substance and procedure is Harding v Wealands [2007] 2 AC 1 where the claimant was injured in a road traffic accident in New South Wales. The New South Wales Motor Accident Compensation Act 1999 (“MACA”) placed floors and ceilings on compensation for injury and the question in proceedings commenced in England was whether those compensation provisions, contained in chapter 5 MACA, were substantive or procedural. The House of Lords affirmed the distinction between questions of actionability or liability (substantive) and questions of quantification and assessment which went to the availability and extent of the remedy (procedural). The House held that this distinction at common law was unaffected by the Act of 1995, rejecting the proposition that "questions of procedure" referred only to rules governing the manner in which proceedings were to be conducted. That meant that the floors and ceilings on compensation placed by chapter 5 MACA, did not apply because they were all procedural and therefore to be disregarded even though New South Wales law applied to the claim. At paragraph 24 Lord Hoffmann (with whom all other members of the House agreed) dealt with the substance/procedure distinction as follows:
“In applying this distinction to actions in tort, the courts have distinguished between the kind of damage which constitutes an actionable injury and the assessment of compensation (i.e. damages) for the injury which has been held to be actionable. The identification of actionable damage is an integral part of the rules which determine liability. As I have previously had occasion to say, it makes no sense simply to say that someone is liable in tort. He must be liable for something and the rules which determine what he is liable for are inseparable from the rules which determine the conduct which gives rise to liability. Thus the rules which exclude damage from the scope of liability on the grounds that it does not fall within the ambit of the liability rule or does not have the prescribed causal connection with the wrongful act, or which require that the damage should have been reasonably foreseeable, are all rules which determine whether there is liability for the damage in question. On the other hand, whether the claimant is awarded money damages (and if so, how much) or, for example, restitution in kind, is a question of remedy.”
[31]In reaching those conclusions, the House of Lords followed the approach of the majority of the Australian Court of Appeal in Stevens v Head (1993) 176 CLR 433 which had adopted this traditional view of the substance/procedure divide.[32]This distinction had earlier been considered and addressed in Boys v Chaplin [1971] AC 356, where the majority of the House of Lords held that the identification of heads of recoverable loss for the purposes of establishing civil liability for negligent infliction of a particular head of damage (pain and suffering) was a matter of substantive law going to the existence of liability. Once liability had been established however, the remedy available to a plaintiff who had established liability, was a matter of procedural law to be determined under the law of the forum.[33]Although the result in Harding was questioned by the Supreme Court in Cox v Ergo Versicherung [2014] AC 1379 where at paragraph 43 Lord Mance observed in relation to the relevant provisions contained within chapter 5 MACA that the “application of the difficult distinction between substantive and procedural issues may on the facts of that case appear in some respects questionable” it is common ground that it remains binding on me. (See also Lord Sumption at paragraph 15, where he expressed surprise “as regards some of them, such as the exclusion of economic loss, which would appear to be substantive according to Lord Hoffmann's test. This may be why in their concurring judgments Lord Woolf and Lord Rodger of Earlsferry justified this classification not only on the grounds given by Lord Hoffmann but on additional grounds. Lord Woolf at paragraph 11 considered that because the greater part of the provisions of the MACA relating to damages were procedural, the rest which were "arguably" substantive should be regarded as procedural also.”)[34]It follows accordingly that: i) the availability of heads of loss or kinds of damage is substantive; but ii) once the substantive right or liability is established, the remedy or response is a matter of procedural law to be determined by the rules of the forum; and iii) assessment or quantification of damages, (including limits, caps or floors) are all questions of remedy and procedural.

Section 317 in more detail

[35]It is common ground between the parties and the experts that in New Zealand the process of statutory interpretation is governed by s.5 of the Interpretation Act 1999. This provides that the meaning of any enactment must be ascertained from its text and in the light of its purpose. The importance of considering both purpose and context in the process of statutory interpretation in New Zealand was emphasised by the Supreme Court in Commerce Commission v Fonterra Co-operative Group Limited [2007] NZSC 36 at paragraph 22 where the court held that even:
“if the meaning of the text may appear plain in isolation of purpose, that meaning should always be cross checked against purpose in order to observe the dual requirements of s.5. In determining purpose the Court must obviously have regard to both the immediate and the general legislative context. Of relevance to may be the social, commercial or other objective of the enactment.”
[36]Accordingly, I turn to consider first the text of s.317 in light of the expert evidence. It provides relevantly as follows:
“Proceedings 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. (2) Subsection (1) does not prevent any person bringing proceedings relating to, or arising from,— (a) any damage to property; or (b) any express term of any contract or agreement (other than an accident insurance contract under the Accident Insurance Act 1998); or (c) the unjustifiable dismissal of any person or any other personal grievance arising out of a contract of service. (3) ….. (4) Subsection (1) does not prevent any person bringing proceedings under— (a) Section 50 or s.51 of the Health and Disability Commissioner Act 1994; or (b) any of sections 92B, 92E, 92R, 122, 122A, 122B, 123, or 124 of the Human Rights Act 1993. (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. (6) …. (7) Nothing in this section is affected by— (a) the failure or refusal of any person to lodge a claim for personal injury of the kinds described in subsection (1); or (b) any purported denial or surrender by any person of any rights relating to personal injury of the kinds described in subsection (1); or (c) the fact that a person who has suffered personal injury of the kinds described in subsection (1) is not entitled to any entitlement under this Act.”
[37]A number of points may be noted about the text of the provision at this stage. The statutory bar in s.317(1) operates on its strict wording by prohibiting a person from commencing proceedings for damages arising directly or indirectly out of personal injury in any court in New Zealand and does not expressly extinguish the underlying cause of action (albeit that this may be its effect). By contrast, in the original 1972 Act, the New Zealand Parliament chose to abolish expressly certain causes of action (for loss of services and loss of consortium), and the distinction between that approach of abolishing permanently a cause of action as the original 1972 Act did, and the approach adopted by s. 317(1) is relied on by the Claimants here. In agreement with Professor McLachlan however I do not consider that that distinction takes one very far in these particular circumstances. It is clear that the New Zealand legislature had no intention of abolishing causes of action entirely (for example in negligence) but rather intended to replace the availability of certain civil claims for personal injury with claims for compensation under the statutory Scheme where it applied.[38]Subject to the qualifications within s.317, the statutory bar operates automatically by force of law and coterminously with cover under the Scheme. In other words, a claimant either has cover for personal injury under the ACA 2001 in which case he or she will be prohibited from pursuing civil claims for damages for personal injury, or if there is no cover under the ACA 2001, the statutory bar will not apply and the claimant will be able to bring civil proceedings outside the scope of the ACA 2001. This is not a question of election as Professor McLachlan explains, since s.317(7) provides that the statutory bar applies irrespective of whether a covered person makes a claim under the Scheme, or has purported to deny his or her rights under the Scheme.[39]The conclusion that the bar operates coterminously with cover is consistent with the decision in Queenstown Lakes DC v Palmer [1999] 1 NZLR 549 where Henry J described the right to seek damages at common law as having been removed by the legislation, the quid pro quo being the right to compensation under the Scheme. At pg. 556 he said:
“it follows from what has been said that the application of the Act and the corresponding scope for common law proceedings automatically adjust as and when the scope of cover provided by the act is extended or contracted. To the extent that the statutory cover is extended, the right to sue at common law is removed; to the extent that the cover is withdrawn or contracted, the right to sue at common law is revived. So it is in this case.”
[40]The bar in s.317 (1) does not have to be raised as a defence. It cannot be waived or contracted out of by parties subject to it: see s.299 and 317(7)(b).[41]Section 317 identifies a number of qualifications to the scope of the bar in s.317(1). Section 317(5) has been described as the only true exception to the application of statutory the bar since a person has both cover under the ACA 2001 and at the same time, a right to bring civil proceedings under this subparagraph. It can be explained as a specific exception by reference to New Zealand’s international obligations relating to the carriage of passengers.[42]There are also express qualifications on the scope of the statutory bar contained in subparagraphs (2) and (4). By contrast, there is nothing in s.317 that addresses the question of where conduct takes place or that provides an express qualification to the application of the bar on that basis. As Mr Goddard accepts, the language of s.317 on its face applies to all claims before a New Zealand court regardless of where a defendant’s conduct occurred.[43]Read literally s.317(1) appears only to apply to courts in New Zealand, and Mr Goddard has concluded that it should and would be read as not applying in an overseas court. He suggests that if the New Zealand Parliament intended the provision to have effect overseas, the choice of language adopted was particularly inept. On this basis, in his opinion it is unnecessary to decide whether the bar in s.317(1) should be characterised as procedural or substantive for private international law purposes. Rather, in his view, however the bar is characterised, as a matter of statutory interpretation, s.317(1) simply does not apply to claims in an overseas court by virtue of the words limiting it to “proceedings in any court in New Zealand”. I shall return to this point below.[44]Section 319 deals with exemplary damages and was introduced following Donselaar v Donselaar [1982] 1 NZLR 289 (CA) in terms as follows:
“319 Exemplary damages (1) Nothing in this Act, and no rule of law, prevents any person from bringing proceedings in any court in New Zealand for exemplary damages for conduct by the defendant that has resulted in— (a) personal injury covered by this Act; or (b) personal injury covered by the former Acts.”
[45]Section 320 affords the Corporation a right to be heard in proceedings in which the existence or extent of cover is in issue. It provides:
“320 Corporation to be heard (1) This section applies to proceedings in which a question arises as to whether or not a person— (a) has suffered personal injury for which he or she has cover; or (b) has suffered personal injury covered by the former Acts; or (c) has died because of personal injury of a kind described in paragraph (a) or paragraph (b). (2) The court, tribunal, or other body hearing the proceedings may not make a determination unless the Corporation is a party to the proceedings or is given an opportunity to be heard.”
[46]Whilst s.320 is obviously a procedural provision, that cannot and does not affect the question whether s.317(1) is procedural or substantive. The same is true of s.321 which reflects the policy of the Scheme to avoid double recovery, but does not reflect on the scope of s.317 (contrary to the arguments advanced by the Claimants). It provides:
“321 Powers 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) …… ”
[47]Section 321 entitles the Corporation to step into the shoes of a covered person, where either the covered person is entitled to bring proceedings in New Zealand or elsewhere in respect of the injury (subsection (2)) or has received a sum by way of damages, compensation or settlement in respect of the injury (subsection (4)). In each case the Corporation is entitled to take the benefit of the injured person’s rights or award.[48]Mr Goddard relies on this provision as a clear indication that the statutory bar in s.317 (1) was not intended to prevent proceedings being brought outside New Zealand in all circumstances. He points to the fact that this section expressly contemplates the possibility that there will be both cover in respect of personal injury under the Scheme and a right to bring proceedings in respect of that personal injury in New Zealand or abroad.[49]I do not consider that s.321 affords any basis for inferring that Parliament intended the bar to be inapplicable abroad. Section 321 is designed to ensure that the Corporation has the fullest ability possible to recoup a covered person’s statutory entitlements and to avoid double recovery. It says nothing about the scope of s.317. Section 321(1) recognises that cover may be provided in circumstances where a foreign court does not regard New Zealand law as applicable to the claim so that the bar does not apply even if characterised as substantive by the foreign court – for example, in a case where a person ordinarily resident in New Zealand has cover for an accident suffered overseas where overseas law applies. Furthermore, s.321 might also apply (whether in New Zealand or abroad) to claims brought under international conventions on the carriage of passengers preserved by s.317(5). There is nothing inconsistent in s.321 recognising that proceedings for personal injury might be brought overseas (or in New Zealand) in circumstances where the statutory bar is not in issue and might result in a recovery and therefore providing for a mechanism to avoid double recovery (s.321(3)). The section as a whole simply ensures that if a covered person is entitled to recover damages wherever that may be and for whatever reason, the Corporation can take the benefit of that recovery: see by way of example of this happening, Schlaadt v Accident Rehabilitation and Compensation Insurance Corp [2000] 2 NZLR 318 (HC).[50]Moreover, the mere fact that s.317(1) is defined by reference to the New Zealand courts does not mean that the New Zealand legislature intended that foreign courts should not be able to apply it, as Mr Goddard accepted. I cannot see what purpose would have been served in allowing someone with cover under the Scheme in New Zealand, and a technical right to sue abroad (as a result of happenstance) simply to bypass the statutory Scheme. No evidence that this was the intention of the legislature has been produced, and no compelling basis for inferring such an intention on the part of the New Zealand legislature has been advanced. In reaching that conclusion I am supported by the decision in Rimini v Manning Management and Marketing Pty Ltd [2003] 3 NZLR 22 where in analogous circumstances Randerson J held that the statutory purpose of a similar provision was not to restrict the application of the relevant Act to New Zealand courts, it remaining open to the Australian courts to apply it in a case where performance of the contract took place in Australia, and though New Zealand law was the applicable law, the claim otherwise had no connection with New Zealand. Randerson J held that where a statute does not expressly or by clear implication exclude its application by foreign courts, it must be open to foreign courts to apply it.[51]In my judgment the language of s.317(1) in this regard is best explained, as Mr Dougherty submitted, on the basis that the New Zealand legislature did not regard itself as competent to give directions to foreign courts. However neither expressly nor by clear implication has the ACA 2001 excluded the application of the statutory bar by foreign courts, who may accordingly apply it.

Interpretation of effect of s.317(1) by New Zealand courts

[52]In addition to Queenstown Lakes DC (referred to above), and Daniels v Thompson [1998] 3 NZLR 22 (where the Court of Appeal referred to the accident compensation legislation as having removed liability to compensate for causing personal injury), both experts refer to two particular decisions of the New Zealand courts interpreting the effect of the statutory bar in s.317 and its predecessor provisions, and each side submits that the relevant decisions support their arguments.[53]The two decisions are Donselaar (referred to above) and Couch v Attorney General (No.2) [2010] 3 NZLR 149 (SC). I deal with each in turn having summarised briefly what Mr Goddard had to say about them, and Professor McLachan’s response. Mr Goddard states at paragraph 51 of his report that the New Zealand courts have held that the statutory bar does not extinguish the underlying cause of action in tort and that this interpretation was central to the reasoning of the Court of Appeal in Donselaar. In this regard, Professor McLachlan fundamentally disagrees. In the body of his report Mr Goddard refers only to the judgment of Richardson J in Donselaar who said that the statutory bar “is concerned with remedies and leaves rights of action intact”.[54]In Donselaar, there were two other judgments to different effect on this issue, albeit agreeing in the result, and I find it surprising that no reference is made by Mr Goddard to these judgments. In the view of Mr Goddard, the decision in Donselaar reflects a concern on the part of the New Zealand courts that the statutory bar be given effect so far as necessary to preserve the integrity of the ACA 2001 but no further; the bar should not be read as curtailing rights of personal injury victims to a greater extent than necessary to give effect to the policy of the Scheme. Although Mr Goddard refers in his report to Couch in a footnote as approving an aspect of the reasoning in Donselaar, there is no further reference to it. Again, I find this surprising since Couch is a decision of the Supreme Court and as I shall explain, it directly addressed the question whether the underlying cause of action was itself affected by the statutory bar. Professor McLachlan regards Couch as conclusively supporting his approach to the character of the statutory bar in s.317(1) ACA 2001.[55]It is common ground that the question of the availability of exemplary damages in light of the statutory bar in s.317(1) (or its predecessor sections) was a controversial one, with decisions going both ways in the New Zealand courts before the decision of the Court of Appeal in Donselaar, some 10 years after the Act was introduced. The decision in Donselaar was itself controversial. It arose out of a dispute between two brothers where a trespass involving assault and battery occurred. Again, it is common ground that the cause of action relied on was complete without damage because the torts are actionable per se. There were two questions for the court on an application to strike out the claim in assault or battery as disclosing no cause of action. First, whether actions for exemplary damages for assault or battery could still be brought in New Zealand notwithstanding the provisions of the 1972 Act and secondly, the scope of the predecessor section to s.317(1). The Court of Appeal concluded that there was no basis for a claim for exemplary damages in Donselaar so that the remainder of the judgments are strictly obiter. However each member of the court concluded that the statutory bar did not apply to exemplary damages, arising as they did not out of any injury but out of the outrageous manner in which the defendant committed the tort, and in doing so made observations that have been referred to and relied on by the parties albeit to very different effect.[56]The first judgment in Donselaar is given by Cooke J who said at pg 107:
“All in all, in a situation where the right course for this court is far from self-evident I think that we should try to meet a problem occasioned by the Accident Compensation Act by consciously moulding the law of damages to meet social needs. The only feasible way of doing so, without intruding into the field of compensation which the Act has taken over, appears to be to allow actions for damages for purely punitive purposes; and to accept that as compensatory damages (aggravated or otherwise) can no longer be awarded, exemplary damages will have to take over part of the latter’s former role.….”
[57]Somers J adopted a similar approach to that of Cooke J stating at pg 116 that the “substratum of compensatory damages has disappeared and with it all practical possibility of taking account of their award in estimating whether and to what extent there should be any addition by way of exemplary damages. A new approach is necessary. …. ” There is no suggestion in his judgment that compensatory damages remain available but in the background to be used in assessing an award of exemplary damages. Indeed if the bar was merely a bar to recovery as Mr Goddard suggests, then there should have been no difficulty in assessing the compensatory element (albeit that it could not have been recovered) and adding exemplary damages on top to reflect the punitive element that could be recovered.[58]If anything, it seems to me that these two judgments are consistent with all heads of compensatory damages (in other words economic and non-economic heads of damage) having been removed or having disappeared as a result of the statutory bar.[59]Richardson J took a significantly different approach. As Mr Goddard said in his report, Richardson J observed that the function of the bar was limited, its sole concern being to prohibit suits for damages in certain cases being “concerned with remedies and leaves rights of action intact.” (at pg 109). This is interpreted by Mr Goddard as the judge drawing a careful distinction between damage and damages in the context of the bar on proceedings. I disagree. Donselaar was not concerned with that question since the tort at issue was actionable per se without proof of any damage, and he was not therefore dealing with actionability. It seems to me that Richardson J’s concern is about how to assess exemplary damages where there are no compensatory damages and in the context of an actionable tort of battery or assault. Richardson J addresses the question whether it is possible to award exemplary damages without a substratum of compensatory damages; in other words, on a notional basis. But he does not suggest that those damages had in fact been suffered or that they would be actionable but for the bar. In any event, his observations received no express support from either of the other two members of the Court. They do not form part of the ratio of the decision.[60]In any event, the decision in Donselaar was overtaken by Couch v AG in the Supreme Court. This was also concerned with an application to strike out a claim as disclosing no reasonable cause of action. Ms Couch brought proceedings alleging negligence and claiming exemplary damages against the Attorney General on behalf of the Department of Corrections when she was severely injured by a prisoner released on parole. Her claim was based on tortious negligence and two questions arose. Firstly, whether the “damages” referred to in s.317(1) included exemplary damages. Secondly whether, since no claim could be brought for compensatory damages arising out of personal injury covered by the Act, exemplary damages could nevertheless be awarded on a stand-alone basis. The Attorney General argued that without actionable compensatory damages the tort of negligence was incomplete as damage is an essential ingredient and there was therefore no tort for which exemplary damages could be awarded. Accordingly the issue that lies at the heart of this dispute was raised squarely for decision by the New Zealand Supreme Court.[61]The Supreme Court held unanimously that the statutory bar on actions arising out of personal injury applies only to compensatory damages and did not bar an action for exemplary damages, nor was an action for exemplary damages barred by the fact that the plaintiff could not obtain compensatory damages. Although doubt was expressed about the decision in Donselaar described by Tipping J as a “debatable conclusion at the time”, he held that too much water had since gone under the bridge to contemplate taking a different view and that since the decision in that case the New Zealand Parliament had had several opportunities to include exemplary damages expressly within the statutory bar but had chosen not to do so. Importantly, at [89] Tipping J (with whom Elias CJ at [7], Blanchard J at [71] and Wilson J at [248] agreed) having identified the critical question at [85] held:
“Section 319 also has relevance to the second aspect of this first issue. Parliament has expressly provided that exemplary damages may be awarded despite the Courts inability to award compensatory damages. It is therefore no bar to a claim for exemplary damages for personal injury that no compensatory damages may be awarded. The ordinary need for there to be damage to complete the tort of negligence must for this purpose be satisfied by there being a case for the award of exemplary damages. The consequence is that there is no actionable tort of negligence for causing personal injury in New Zealand unless the case justifies exemplary damages.”
[62]In my judgment, the natural meaning of the last two sentences read together is that the tort of negligence for personal injury heads of damage in New Zealand is no longer available (or to put it another way, has been removed, replaced or extinguished where there is cover) except where the claim is for exemplary damages. In effect a stand-alone tort was created and thus like Cooke J in Donselaar, the Supreme Court fashioned the law of damages creating a special cause of action in personal injury cases where the only form of actionable damage is exemplary damage or damages.[63]I do not accept that this interpretation leads to absurd results as Mr Preston submitted. In order to advance a claim for exemplary damages a claimant would need to establish a duty of care owed to the individual, together with breach of that duty. The absence of injury beyond exemplary damage is not surprising in circumstances where exemplary damages are available in New Zealand law for a touch or a push, both of which are actionable per se. Nor do I accept the Claimants’ case that the last sentence of [89] is merely stating that there is no actionable claim for compensatory damages in a remedies inclusive sense, so that the better view of the ratio of Couch is that the tort of negligent infliction of personal injury remains unchanged and intact, but only the availability of remedies for that tort is affected, compensatory damages not being available but exemplary damages being so available. In my judgment the Supreme Court redefined the nature of the loss or head of damage that would have to be established as a constituent element of the tort, and was not merely dealing with enforcement or recoverability of certain remedies.[64]Significant reliance was placed by Mr Goddard and Mr Preston on the judgment of McGrath J at in Couch [202] and [203]. I do not find these passages easy. In so far as McGrath J was suggesting that it was necessary to prove compensatory loss before claiming exemplary damages (thereby suggesting that the right to compensatory damages remained available even where the bar applied) he was clearly in the minority. However I have come to the conclusion that this is not what these paragraphs mean in any event. It seems to me most likely that he was merely saying that if what Tipping J said about the case for exemplary damages itself being sufficient damage is not correct, then the approach identified in Donselaar by Richardson J was available. In other words, he accepted the primary reasoning of Tipping J, but by way of alternative analysis, agreed that the notional exercise of assessing compensatory damages for the purposes of an assessment of exemplary damages, could be undertaken despite the fact that they could not be recovered.

Other authority

[65]Although not binding, the Defendant also relies (as highly persuasive authority) on the characterisation of s.317(1) as a substantive provision by the Australian appellate courts when applying the ACA 2001 and its predecessor Acts at a time when Australian and English law on the distinction between substance and procedure (as set out in Stevens v Head (1993) at 453, and followed in Harding) were materially identical. Of most significance in my view, is a decision of the Court of Appeal in James Hardie and Company Pty Ltd v Hall (1998) 42 NSWLR 554 where a New Zealand domiciled claimant diagnosed with mesothelioma, with cover under the Scheme, sought to recover damages, not from his New Zealand employer, but in New South Wales from two New South Wales companies responsible for supplying and exporting the asbestos. Shellar JA (with whom the other members of the Court agreed) considered s.17 of the Accident Rehabilitation and Compensation Act 1992 (a predecessor provision to s.317(1) ) to be a substantive provision although read literally it merely barred an action to enforce a right to damages. He held (applying Stevens v Head) that the New Zealand accident compensation scheme is a “comprehensive system of exclusive compensation, replacing tort recovery” with statutory compensation. The relevant sections substituted cover under the Act for the right to recover common law damages so that in effect the Scheme extinguished the common law right to recover damages. Accordingly he held that the relevant provision (s.17):
“must be read as extinguishing any cause of action for damages arising directly or indirectly out of personal injury caused and arising in the manner therein described. While the language of the section in form bars an action to enforce the right to damages, its substantial effect, read in the context of the Act as a whole, is to substitute cover under the Act for the right to recover common law damages. It is a substantive law. … The section extinguished the plaintiff’s common law right to recover damages for his injury. ”
[66]Although that judgment was followed by Spigelman CJ in Amaca Pty Ltd v Frost (2006) 67 NSWLR 635 at [65] I accept Mr Preston’s submission that this decision was reached after the “no advantage principle” had been adopted by the Australian courts and is therefore of limited assistance in this respect.[67]Mr Goddard suggests that the Court of Appeal’s decision in James Hardie was based on an incomplete analysis of the New Zealand legislation, not having been referred to the precursor to s.321 or to Donselaar (see paragraph 104 of his report). So far as the first point is concerned, I do not regard s.321 as shedding any light on the character of the bar in s.317 as I have already indicated. As to the latter, he is wrong: Donselaar was cited in argument and submissions – see pg. 556 of the report. More fundamentally, the decision is challenged on behalf of the Claimants on the basis that the legislation does not nullify or extinguish causes of action save where this is expressly made clear (for example in s.5(2) Accident Compensation Act 1972) but is concerned with remedies (see reference to substitution of the “right to recover common law damages”), leaving rights of action intact. The distinction sought to be drawn between damages and damage in this context appears to me to be semantic: the rights referred to by Shellar JA as having been extinguished are in effect rights to recover all heads of loss encompassed within the term “damages”. Accordingly I am not persuaded by Mr Goddard’s conclusion that this reasoning is unlikely to be followed by the New Zealand courts.[68]I was also referred to academic commentary in New Zealand on the effect of the statutory bar. Both sides referred to Tobin and Shoeman, “The New Zealand Accident Compensation Scheme: the Statutory Bar and the Conflict of Laws” (2005) Am J Comp L 493. At paragraph 105 of his report, Mr Goddard refers to an examination at pg.504 of the article of statements in a US case in 1982 Bennett v Enstrom (679 F 2d 630) to the effect that there is “simply no longer, under New Zealand substantive law, a common law tort action for persons covered”. The authors describe this and like statements as “too wide” and he expresses agreement with those observations. However the criticism made by the authors is explained by reference to the continuing availability of a stand-alone tort action for personal injury for exemplary damages meaning it remains actionable but for that purpose alone. The ultimate conclusion reached by the authors supports the Defendant’s contentions: namely that the statutory bar is properly to be regarded as having substantive effect and as having destroyed substantive rights. The authors state expressly that by denying recovery for a particular head of damage the bar is substantive so that although tort actions for personal injury have not been abolished because exemplary damages can be recovered, “compensatory damages, as a particular head of damage, cannot be recovered.”

First issue: The proper characterisation of the statutory bar in section 317(1)

[69]Against that background I turn to the proper characterisation of the statutory bar in the context of the purpose and objectives of the comprehensive no fault compensation scheme in New Zealand, on the premise that this court has already held that New Zealand is the applicable law.[70]Whilst the dividing line between substance and procedure can be clearly drawn and a bright line identified in the case of certain rules or statutory provisions, I do not consider that it is always an easy line to draw. In particular where common law rules on the availability of certain heads of damage or damages are concerned, the line between substance and procedure can be blurred because such rules can be seen as affecting both rights (regarded as substantive) and remedies (regarded as procedural).[71]Read literally the language of s.317(1) bars proceedings to enforce personal injury claims, but the language is not determinative and may be an uncertain guide. Subject to the exemplary damages exception, the language used to describe the effect of the statutory bar in the cases (and the academic material) to which I have referred above, is overwhelmingly consistent with the removal of civil liability for damages for personal injury within the scope of cover, and with that liability having disappeared and been replaced by cover under the Scheme. This is consistent with the concerns and recommendations in the Woodhouse Report which identified problems caused by common law personal injury litigation (both in terms of their negative effect on rehabilitation and uneven and capricious results) and recommended the abolition of common law rights in respect of personal injuries and their substitution for cover under the Scheme.[72]In my judgment, on its true construction, having regard to the purpose and objectives of the Scheme, the substantive effect of the statutory bar is to remove or render unavailable the right to recover common law (compensatory) damages for personal injuries, the phrase “compensatory damages” being shorthand for the heads of loss comprised by all non-economic and economic heads of loss (or damage) in a personal injury claim, but excluding exemplary damages. A claim for any such heads of loss no longer remains available because the basis for and scope of liability has been replaced by cover under the ACA 200. This is a matter of substantive law that determines for what there is liability. This conclusion that the statutory bar operates substantively is supported by the fact that it cannot be waived and operates automatically; that parties cannot contract out of its effect; and that courts and practitioners in New Zealand treat the statutory bar as a basis for striking out a claim in appropriate cases, as disclosing no reasonable cause of action.[73]Mr Preston placed significant reliance on a number of passages in Professor McLachlan’s evidence where he suggested that Professor McLachlan accepted that the cause of action continues to exist but is not enforceable by way of a claim for compensatory damages. I do not accept this characterisation of Professor McLachlan’s evidence. Both in his report and his evidence he states that there is no longer any “actionable claim for compensatory damages” and that the effect of the statutory bar has been to remove rights to compensatory damages where there is cover. A fair reading of his evidence shows that he treats the phrase “compensatory damages” as necessarily including economic and non-economic heads of damage or loss. In his expert opinion, the ACA 2001 takes away the whole cause of action for damages for personal injury (save in the special case of exemplary damages) and replaces it with cover under the Scheme.[74]In my judgment, whether viewed as extinguishing, abolishing, rendering not available or non-actionable, the effect of the statutory bar is that no heads of loss or kinds of damage for negligently inflicted or other personal injury remain where there is cover, subject to the exception for exemplary damages. This is not a rule that deals merely with remedy. The liability here (and therefore what is actionable) is for compensatory damages for personal injury. That is a substantive right, not merely a remedy. This is the kind of damage for which there is no longer any liability where there is cover, and rights of action are accordingly affected.[75]The fact that a cause of action for exemplary damages remains is not inconsistent with this conclusion. This remaining cause of action is a stand-alone cause of action for exemplary damages and does not entail the continued existence of an underlying cause of action for negligently inflicted (or other) personal injury compensatory damages. A defendant in such a case is only liable for exemplary damages, the effect of s.317(1) being to remove any liability such a defendant might otherwise have had for compensatory damages and the heads of damage encompassed within that phrase.[76]A similar point may be made in relation to the existence of other potential remedies, such as a declaration or an injunction, relied on by the Claimants. One cannot identify the existence of a theoretical remedy and extrapolate from that the continuing existence of a right to sue for personal injury. The mere fact that a declaration or an injunction might in future be awarded tells one nothing about the underlying cause of action or liability that might give rise to such a remedy. There has been no case yet (in 40 years since the Scheme’s inception) where such a remedy has been granted – in Re Chase [1989] 1 NZLR 325, declarations were sought but not on the basis of personal injury claims, and none was granted in any event. Even if an injunction or declaration were to be granted, the underlying basis or cause of action supporting such relief would have to be identified, and it cannot be assumed that such a cause of action would involve personal injury. In any event, if a court decides that injunctive or declaratory relief may be available in a case that would (absent the ACA 2001) be a cause of action for accidental personal injury that would not lead to the conclusion that such a cause of action or liability has been preserved. Just as in Couch where the law was moulded or re-fashioned to support a stand-alone claim for exemplary damages, the same may be possible in a claim for injunctive or declaratory relief. The theoretical availability of these remedies accordingly, provides no support in my judgment for the contention that substantive rights of action for personal injury remain intact.[77]The Claimants point to the similarity of the language used in English limitation provisions (typically, “an action founded on… shall not be brought…”) and other statutory provisions that bar rights of access to the courts (for example, s.34 Civil Jurisdiction and Judgments Act 1982, “no proceedings may be brought…”) but leave substantive causes of action intact, and have been held to be procedural in nature, and contend that the statutory bar operates procedurally by analogy. I do not accept this analogy. There is a distinction between a statute of limitation which merely bars access to the courts for enforcement of the claim and a statute that removes or renders altogether unavailable a cause of action or head of loss. The former is obviously procedural, while the latter substantive. In the case of a limitation provision it is uncontroversial that the underlying cause of action remains and only the ability to bring a claim based on that underlying cause of action is removed by the expiry of the limitation period if it is relied on. The fact that the limitation period can be waived is itself confirmation that the underlying cause of action remains. I agree with Mr Dougherty that a limitation provision operates as an elected statutory defence that does not destroy the underlying right. Similar points can be made in relation to the other statutory provisions barring the bringing of proceedings relied on by the Claimants.[78]The fact that substantive rights are available to be revived if and when the scope of the statutory bar is altered is also relied on by the Claimants as consistent with the statutory bar being procedural, leaving substantive rights intact. Mr Preston contends that it is incompatible with the extinction of substantive rights as in those circumstances there would be nothing left to revive. Again, I do not agree. In the context of a unique scheme where the application of the statutory bar and the corresponding scope for common law proceedings automatically adjusts as and when the scope of cover extends or contracts, the language of revival is specific and says nothing about the nature of the statutory bar itself. The question of characterisation is to be answered in light of the existence of the statutory bar and having regard to its nature and effect; and not by looking at the position when the bar is adjusted or removed.

Second issue: Conduct outside New Zealand

[79]On the basis that s.317(1) is a substantive provision, the next question is whether there is an additional requirement under New Zealand law before the statutory bar applies to preclude a claim for compensatory damages. On this question Professor McLachlan’s position is that if there is cover under the ACA 2001, s. 317(1) applies without more and there is no basis for importing any additional requirements.[80]Mr Goddard takes a different view. He considers that in addition to cover under the Scheme, it is necessary to establish that the relevant “conduct” occurred in New Zealand before the statutory bar has application (see paragraphs 17 to 23 and 70 to 78 of his report) and this is how the New Zealand courts would interpret s.317(1). In other words, s.317(1) does not apply to claims relating to conduct outside New Zealand as a matter of interpretation.[81]In Mr Goddard’s opinion any other interpretation would restrict claimants’ rights of access to the courts to a greater extent than necessary to ensure the integrity of the Scheme. He considers that where a potential defendant engages in conduct in New Zealand, that person can reasonably expect that they will not be exposed to personal injury claims in respect of that conduct and can reasonably proceed on the basis that they do not need to insure against liability for personal injury claims in respect of that conduct. Where the person’s conduct in New Zealand results in liability to pay levies to the scheme or general taxes, that person will have contributed to the costs of the scheme. Accordingly, they can reasonably expect not to have to pay damages or insurance premiums in those circumstances. In Mr Goddard’s opinion the same cannot be said of a person engaging in conduct outside New Zealand. Such a person does not have a reasonable expectation that they will be protected from liability by the Scheme and does not have a reasonable expectation that there is no need to insure in respect of such liability. Such a person makes no contribution to the costs of the Scheme and if protected from liability in respect of conduct outside New Zealand despite not making any contribution whether directly or indirectly, would receive a windfall benefit. Moreover it would deny the victim the ability to recover losses caused by the overseas person’s conduct, an ability expressly contemplated by s.321. Although Mr Goddard accepts that the language of s.317(1) on its face applies to all claims regardless of where a potential defendant’s conduct occurred and accepts that some judges may be reluctant to read the provision down in the manner he has suggested, he concludes on balance that the likely approach of both first instance and appellate courts would be to read down s.317(1) in this way so that it does not apply to claims relating to conduct outside New Zealand.[82]I do not accept this argument. Quite apart from the fact that there is neither appellate or other authority for it, nor any academic support for it and it is rejected by Professor McLachlan, the ACA 2001 does not depend on the existence of a defendant or some third-party responsible for the injury, so that any focus on a defendant’s conduct (or a defendant’s reasonable expectation of being protected from liability) is irrelevant and inconsistent with the Scheme’s purposes. It is the injury rather than its cause or the conduct that is in issue and that gives rise to rights to compensation.[83]The ACA 2001 carefully defines the scope of cover, addressing expressly its extraterritorial effect. It provides cover for those suffering personal injuries in New Zealand irrespective of the location of the conduct said to have caused that injury, and cover for New Zealand residents abroad. In both cases the focus is on the person injured and the location of the injury rather than on the conduct of a third party which is irrelevant to the scope of cover. Further, on the face of its terms, s.317(5) proceeds on the basis that s.317(1) does apply in relation to conduct overseas because if it did not there would have been no reason to refer to claims where the injury was overseas. Section 317 itself contains exceptions and qualifications but none relate to the conduct of a potential defendant. This would be a major exception from its scope and given that the Scheme has been amended on a number of occasions since its inception, it is significant that there has never been any amendment in this regard.[84]Moreover, there is no basis in the text or purpose of the statute for inferring that the New Zealand legislature intended the application of the statutory bar to depend on the “reasonable expectation” of a potential defendant in relation to protection from liability. The purpose of the statutory bar is to protect the integrity of the comprehensive no-fault compensation scheme by ensuring that covered persons are restricted to their entitlements under the ACA 2001. It is difficult to see any place for a concept of reasonable expectation in the context of this Scheme. In any event, it seems to me that the only reasonable expectation a person manufacturing and exporting goods to New Zealand from abroad can have is to expect to take the law as he or she finds it.

Conclusion

[85]For the reasons given above, on a proper construction in light of its purpose and context, the statutory bar in s.317(1)has substantive effect. Its application is not limited to the courts of New Zealand. There is no additional “conduct” or other requirement under New Zealand law, beyond cover under the ACA 2001 before the statutory bar in s.317(1) applies.[86]The result is that the three Claimants who are covered under the ACA 2001 have no right to bring civil proceedings in England for compensatory damages for personal injury by reason of the statutory bar in s.317(1).[87]My answer to the question set by the preliminary issue is accordingly as follows: the claims of the New Zealand Sample Claimants are precluded by s.317(1) ACA 2001.