Is time running? – Limitation periods and latent conditions

16 May 2016

The unanimous High Court decision of Alcan Gove Pty Ltd v Zabic [2015] HCA 33 (Zabic) has important ramifications for determining when a latent injury accrues. It also has the potential to give rise to significant issues for health care providers and claims managers dealing with matters arising from latent conditions such as developmental hip dysplasia and juvenile rheumatoid arthritis.

The Zabic decision

Mr Zabic was employed by Alcan Gove Pty Ltd (Alcan Gove) as a manual labourer at its refinery from 1974 to 1977. He regularly carried out repairs and maintenance of pipelines during which time he was exposed to and inhaled materials containing asbestos dust and fibre. He experienced chest pain and shortness of breath in November 2013 and was diagnosed with malignant mesothelioma in January 2014.

Subsequently, Mr Zabic commenced common law proceedings against Alcan Gove, alleging it knew of the dangers of asbestos inhalation and failed to take any precautions for his safety.

Alcan Gove relied on sections 52 and 189 of the Workers Rehabilitation and Compensation Act 1986 (NT) in its defence of Mr Zabic’s claim. Under these sections, damages are only payable if a worker establishes a cause of action arose before 1 January 1987.

Mr Zabic argued that his cause of action arose with the inhalation of asbestos dust and fibre which caused mesothelial cell changes before 1 January 1987. Alcan Gove argued that the cause of action accrued when Mr Zabic developed symptoms of mesothelioma after 1 January 1987. The main issue in contention was whether or not Mr Zabic was statute barred due to the operation of s 52 of the Act.

At first instance, Justice Barr held that the cause of action did not accrue until the onset of malignant mesothelioma, which was well after 1 January 1987.  Mr Zabic appealed to the Northern Territory Court of Appeal, who reversed Justice Barr’s decision. Alcan then sought, and was granted, special leave to appeal to the High Court.

In handing down a unanimous judgement upholding the Court of Appeal’s decision, the High Court accepted medical evidence that Mr Zabic’s mesothelial cells were damaged shortly after inhalation of asbestos fibres between 1974 and 1977 and that this “inevitably and inexorably” lead to the eventual onset of the malignant mesothelioma. The Court found that while Mr Zabic did not develop a malignant mesothelial tumour until shortly before experiencing the symptoms in 2013 or 2014 he sustained compensable damage at the time the changes to his mesothelial cells occurred.

Likely Australia wide application

Whilst the Zabic decision considers NT legislation and has yet to be considered or applied in other Australian jurisdictions, given it is a unanimous High Court decision it is very likely that it will be applied throughout Australia in relation to latent conditions.

The decision has potentially significant ramifications for insurers and re-insurers in relation to which policy will respond to claims and could result in companies rewording policies to exclude liability for latent injuries where the symptoms do not manifest until significantly after the policy period has expired or charging additional premiums for such cover.

The decision may also cause legislators to make changes to limitation legislation to avoid the limitation period expiring for additional latent conditions to those that are covered by industrial disease extensions to limitation periods.

Practical ramifications for health care providers

With a view to assisting defending claims in relation to latent conditions (and in providing quality medical care), health care providers should review the processes they have in place to thoroughly investigate and document what was considered where conditions are difficult to diagnose. In particular, what history was given by the family (and questions asked by the health care practitioners to obtain the history), what conditions were tested for, what might be the potential ramifications of the conditions being tested for and should those potential ramifications give rise to additional specialist involvement?

The Zabic decision may also create more onerous discovery obligations to provide medical records dating back many years before the issuing of proceedings. This will increase the need to ensure that medical records are preserved and maintained in an accessible format for future use.

Lessons for claims managers

When receiving claims that appear to arise from latent conditions careful assessment must be made of when the limitation period runs:

  • Has a compensable condition occurred – for instance, was a disease present and not identified by medical practitioners or nurses?;
  • What medical evidence might be available to establish when a compensable condition might have arisen?;
  • Which insurance policies might respond to the claim depending on when it arises;
  • Ensuring all potential insurers are put on notice; and
  • Can any proceedings that are commenced be challenged on the basis of the expiry of the limitation period?

This article was written by Sarah Harrison, Partner, Natasha Burn, Associate and Tessa Flynn, Solicitor.

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