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Accident Compensation Cases

Pou v British American Tobacco (New Zealand) Ltd (HC, 27/08/04)

Judgment Text

Harrison J
Mrs Janet Pou was a heavy smoker throughout her adult life. She started with Capstan and Pall Mall, manufactured and supplied by WD & HO Wills (NZ) Ltd (“Wills”), and Rothmans, now British American Tobacco (NZ) Ltd (“BAT”), respectively. Later she smoked Winfields, also a Rothmans product. In early 2002 Mrs Pou was diagnosed with lung cancer. She then commenced a proceeding in this Court against BAT and Wills, alleging that each owed her and breached duties of care relating to the sale and distribution of their products; and that as a result she contracted lung cancer and was entitled to substantial damages. 
Mrs Pou has since died of lung cancer. She is survived by her adult son, Brandon, and adult daughter, Kasey. They are the executors of her estate. They have been substituted as plaintiffs in this proceeding. As executors, Brandon and Kasey are pursuing a claim for substantial losses under s 3 Law Reform Act 1936. As alleged dependants, they are pursuing a smaller claim under s 6 Deaths by Accidents Compensation Act 1952 which still applies to causes of action arising before 1 April 1974 when the Accident Compensation Act 1972 came into effect. 
BAT and Wills have applied to strike out the latter but not the former claim. A disinterested bystander may inquire of the logic in this division when the Pous' claim under the Law Reform Act remains extant and will apparently proceed to trial. The reason is unashamedly tactical. In their dependant capacities, Brandon and Kasey enjoy a grant of legal aid to fund this proceeding which is not available to them as executors. They may lose the means to continue with the case if their claim under the Deaths by Accidents Compensation Act is struck out. 
I shall discuss in more detail the nature of the Pous' claim before determining BAT and Wills' application. 
Statement of Claim 
In summary the Pous allege as follows: 
In June 2001 Mrs Pou was diagnosed with metastatic small cell cancer of the left lung. At the time of her death on 24 September 2002 Mrs Pou was aged 51 and living on an invalid's benefit; 
Mrs Pou commenced smoking in 1968 when she was aged 17 years. At that time she smoked Capstan and Pall Mall. She chose this brand because “she read, saw and believed advertisements placed [by BAT and Wills] in magazines, newspapers and elsewhere which glamorised [and were designed] to persuade young people to commence smoking cigarettes” including Capstans and Pall Mall. Soon afterwards, and prior to 1974, Mrs Pou became addicted to smoking about 30 cigarettes daily, and continued to smoke heavily until her death. She stopped smoking Capstans when that brand ceased to be available in New Zealand and in the late 1970s switched to various brands of Winfields; 
Both BAT and Wills manufactured or supplied tobacco products for the purpose of and with the intention that the public would purchase and smoke them. They knew or reasonably ought to have known before Mrs Pou started smoking in 1968, and particularly prior to her becoming addicted between 1968 and 1974, that their cigarettes caused some consumers to become addicted and caused or were likely to cause serious illness, particularly lung cancer, to those who smoked; 
Notwithstanding their knowledge about the addictive nature of their products and the risks which they posed for the health of those who smoked them, BAT and Wills promoted smoking through advertisements aimed at persuading children and young persons to commence that activity; failed to take reasonable steps to reduce or eliminate the addictive nature of the cigarettes; failed to take reasonable steps to reduce or eliminate potential risks to the health of smokers, in particular ensuring that they did not contain substances known to be likely to cause lung cancer; failed until 1974 to place notices on packets of cigarettes warning about the potential risks to health; advertised and marketed cigarettes from 1974 onwards in a way which negated the value of warnings; publicly disparaged research and comments from the medical community warning about the risks of smoking cigarettes; and by their advertisements reinforced to Mrs Pou that smoking was a glamorous and pleasurable activity; 
These circumstances gave rise to duties of care owed by BAT and Wills to Mrs Pou to ensure that their cigarettes were free of substances likely to cause addiction to smoking and submission to lung cancer, and to warn her of the possibility of addiction and suffering injury to her health before she became addicted. Both companies breached their duties in the conduct already summarised; 
As a result, Mrs Pou became addicted between 1968 and 1974 to smoking cigarettes manufactured and distributed by BAT and Wills and succumbed to lung cancer which caused her death. 
In their capacities as executors the Pous claim damages under the Law Reform Act in excess of $300,000. It is unnecessary for me to discuss that claim further as it is not the subject of BAT and Wills' application to strike out. In their capacities as dependants the Pous' primary claim is for general damages of $100,000 pursuant to s 7(1)(a) Death by Accidents Compensation Act for anxiety, trauma and emotional stress in (a) coping with their late mother's illness; (b) caring for her during her illness; and (c) dealing with her death. Additionally they claim partial dependence upon Mrs Pou prior to her death, for which each seeks nominal damages of $10,000 pursuant to s 7(1)(b). 
Based on these pleadings, the Pous' counsel, Mr David Collins QC, identified two issues for determination on BAT and Wills' application to strike out as follows: 
Does s 7(1)(a) permit a claim by the Pous for compensatory damages for anxiety, trauma or emotional distress? 
Does s 7(1)(b) permit a claim by the Pous for nominal damages for their partial dependency on their late mother?  
Mr Collins submitted that both questions must be answered in the affirmative. However, on the eve of this hearing he formulated a third or alternative issue, to cover the contingency that the first two were answered in the negative, in these terms: 
Does a claim for pecuniary damages under s 7(1) permit an award based on loss of guidance, care and companionship of a parent? Mr Collins submitted that the answer to this question must also be affirmative. 
Since the hearing Mr Collins has filed a further amended statement of claim pleading alternatively a loss of pecuniary benefits which the Pous might reasonably have expected if their mother had not died “including but not limited to loss of guidance, care and companionship”. Their quantification of loss remains the same at $110,000. 
In summary, Messrs Michael Camp QC and Iain Thain, BAT and Wills' counsel, submitted that rights of action under the Deaths by Accidents Compensation Act are limited to claims for pecuniary loss only; and that, accordingly, nonpecuniary losses, such as those claimed by the Pous for anxiety, trauma and emotional distress and nominal damage, are not compensable under the Act. They submitted that the Pous' last minute amendment would not save them; loss of guidance, care and companionship are not pecuniary in nature. 
Mr Camp relied upon the plain meaning of s 7 which materially provides: 
In every such action [where the death of a person is caused by any wrongful act, neglect, or default] the Court may award- 
Such damages as it may think proportioned to the injury resulting from the death to the person or persons for whose benefit the action is brought; and 
Damages in respect of the amount of actual pecuniary benefit which the person or persons for whose benefit the action is brought might reasonably have expected to enjoy if the death had not occurred, whether or not the person or persons have been either wholly or partially dependent upon the deceased person before his death; …  ”
[Emphasis added] 
Mr Camp submitted that I am bound by well settled authority in this country which has stood without challenge for 50 years. In McCarthy v Palmer [1957] NZLR 442 (SC); [1957] NZLR 620 (CA) a widow claimed damages under s 7 for herself and her three children, alleging that her husband's death was caused by the defendant's negligence. She formulated two principal heads of loss: first, for the pecuniary benefit that they might reasonably have expected to enjoy of £20,000; and, second, for the deprivation of Mr McCarthy's society, care, guidance and affection, quantified at £5000. The first was plainly sustainable in law. But the defendant moved to strike out the second on the basis that it was legally untenable. 
The original Deaths by Accidents Compensation Act was enacted in 1908 and has been subject to a series of amendments, particularly those introduced by the Statutes Amendment Act 1937. s 7(1) was in a slightly different form from its predecessor. Mrs McCarthy's counsel accepted that the Courts had long construed the Act as excluding rights of recovery for non-pecuniary loss; that is, for general damages. However, he argued that s 7(1) brought about a material change in the law, and allowed a right of damage for non-pecuniary loss. 
In the Supreme Court McGregor J struck out Mrs McCarthy's second head of claim for non-pecuniary loss. He did not accept that s 7(1) materially altered the state of the law as it existed in 1952, identifying the principle established by a significant line of authority in England and New Zealand that (444(45-55)): 
“ … damages are recoverable by the members of the family only to the extent of the loss of pecuniary advantage by the persons for whose benefit the action is brought, and that this is the only injury recognised by law. Earlier the Judge had emphasised the compensatory nature of the legislation, excluding any inquiry into mental anguish or wounded feelings. ”
McCarthy went on appeal. The five member Court of Appeal did not consider it necessary to reinvent the wheel of McGregor J's reasoning. In a three paragraph judgment delivered by FB Adams J, the Court dismissed Mrs McCarthy's appeal, adding these words (620(20-28)): 
“We think it desirable to add that we do not approve the suggestion of counsel for the appellant that the law ought to be in such a form as would enable damages to be awarded under the Act otherwise than for pecuniary loss. This basis of damages has been uniformly observed both in England, and in New Zealand for more than a century; and damages should, in our view, continue to be limited to compensation in respect of pecuniary benefits which the claimants might reasonably have expected to enjoy. The expression ‘pecuniary benefits’ is, of course, used in the wide sense which has long been attributed to those words in this connection. ”
In Jamieson v Green [1957] NZLR 1154 a three member Court of Appeal decided another claim under the Deaths by Accidents Compensation Act 1952 three months after the Court delivered its decision in McCarthy. All three members sat on both Courts. Their judgment did not refer to McCarthy, presumably because the issues were different. Nevertheless, Mr Camp emphasised that TA Gresson J, who gave the judgment in Jamieson, referred to the rule which had stood for over a century that the Act limited claims for damages to pecuniary loss only. 
Mr Collins attempted to circumvent the effect of McCarthy on two related grounds. First, while acknowledging McCarthy's correct recital and construction of the law as it applied before 1952, he submitted that it failed to recognise the significant change then introduced by s 7(1). As Mr Camp forecast, Mr Collins relied upon a similar argument advanced by Mrs McCarthy's counsel and rejected both by the Supreme Court and Court of Appeal based upon the introduction in 1952 of the word “and” between s 7(1)(a) and (b), to the effect that the latter repeats and reinforces a claimant's well recognised right to loss of pecuniary benefits and the former must therefore provide an additional or alternative right to claim for all forms of injury. 
Second, or alternatively, Mr Collins submitted that the amendment proposed to the Pous' claim, seeking an award based on loss of their mother's guidance, care and companionship, is not affected by the reasoning in McCarthy. I must record that in argument Mr Collins left me with the distinct impression that he placed most faith in the Pous' prospects of salvation upon their amended claim which he asserted was “supported by powerful and persuasive authorities”. To this end Mr Collins cited decisions of the Supreme Court of Canada (St Lawrence and Ottawa Railway Co v Lett (1885) 11 SCR 422; Vana v Tosta (1968) 66 DLR (2nd) 97), the High Court of Australia (Jacobs v Varley (1976) 9 ALR 219), and English Queen's Bench and Court of Appeal (Hay v Hughes [1975] 2 WLR 34; Regan v Williamson [1976] 1 WLR 305 at 309; Spittle v Bunney [1988] 1 WLR 847; Cresswell v Eaton [1991] 1 WLR 1113 at 1122; Hayden v Hayden [1992] 1 WLR 986 at 990). 
The most convenient means of determining BAT and Wills' application to strike out will be by addressing successively both of the arguments raised by Mr Collins because the Pous' dependant claim will fail unless either is legally tenable. 
(1) McCarthy's case wrongly decided 
Without meaning him any disrespect, Mr Collins' first argument was obviously doomed. McCarthy is a judgment of a five member Court of Appeal, upholding McGregor J's decision at first instance. Both Courts squarely rejected the argument now resurrected by Mr Collins that the introduction of the word “and” between s 7(1)(a) and (b) materially changed the law. Whether or not I agree with the decision is immaterial. I am not free to depart from McCarthy's conclusion; I am bound to follow it. The only ray of hope for the Pous is for Mr Collins to persuade me that, within the scope of my residual discretion, I should decline to strike out but instead leave the issue open for revision in the Court of Appeal following trial (Autex Industries Ltd v Auckland City Council [2000] NZAR 324). 
As noted, the essence of Mr Collins' argument is that McCarthy is wrong for failing to give any effect to the word “and” between s 7(1)(a) and (b), thereby limiting both provisions to the same meaning and rendering the first redundant. In his submission, the natural meaning of s 7(1) is that the Court may award (a) such damages as it may think proportioned to the injury and (b) damages for the amount of actual pecuniary loss. In support he relied upon criticism by the current authors of McGregor on Damages (17th Ed.) 2003, para 36-019, of decisions adopting an overly restrictive construction of the Act which, in their view, is “amply wide enough to allow recovery of non-pecuniary loss”. McGregor does not refer to McCarthy's case. 
Both counsel surveyed the history of the Act, comparing s 7(1) with its statutory predecessors and the relevant jurisprudence. I found the exercise undertaken by Messrs Camp and Thain to be of particular assistance, and I have drawn upon it for the purpose of conducting my own review. In summary, the relevant statutory and common law developments are these: 
Until the passage of the Fatal Accidents Act 1847 (otherwise known as Lord Campbell's Act), the family of a person whose death was wrongfully caused by another was unable to sue for loss suffered as a result (Baker v Bolton (1808) 1 Camp 493). s 2 Fatal Accidents Act introduced a statutory cause of action for the benefit of a spouse, parent or child, and empowered a jury to: 
“ … give such damages as they may think proportioned to the injury resulting from such death to the parties respectively for whom and for whose benefit such action shall be brought. ”
[Emphasis added] 
It should be noted immediately that these words are materially identical to those used in s 7(1)(a). It was open to argument from the outset that the words “such damages” might extend to damages for mental injury. But at an early stage it was held authoritatively that the Act did not allow a claim to a solatium for mental suffering (Blake v Midland Railway Co (1852) 18 QB 93, per Coleridge J at 109-111, followed in McCarthy). The law has remained unchanged in England and New Zealand; 
The English Acts Act 1854 introduced Lord Campbell's Act into the law of New Zealand. In 1880 the first Death by Accidents Compensation Act came into force. s 5 provided: 
“Every such action shall be brought by and in the name of the executor or administrator of the person deceased; and the jury may give such damages as they may think proportioned to the injury resulting from such death to the parties respectively for whom and for whose benefit such action shall be brought. ”
[Emphasis added] 
The Deaths by Accident Compensation Act 1908 followed as a consolidating statute. s 5 was not materially amended, and subsequently our Court of Appeal affirmed the English position that mental suffering was not a subject of compensation under the Act (Shaw v Hill [1935] NZLR 914 per Reed J at 922 (14-19)); 
The next legislative change came with the passage of the Law Reform Act 1936 which, where material, was to be read as part of the Deaths by Accidents Compensation Act 1908. s 5 was left unchanged. The Act introduced a right to claim for funeral expenses and provided that in assessing damages the Court was to take no account of any gains consequent on the deceased's death. The following year the Statutes Amendment Act 1937 was enacted, s 7(1) of which provided that: 
“In any action under the Deaths by Accidents Compensation Act 1908 damages may be awarded in respect of the amount of actual pecuniary benefit which the person or persons for whose benefit the action was brought might reasonably have expected to enjoy if the deceased person had not been killed, notwithstanding that any such person or persons may not have been either wholly or partially dependent upon the deceased person prior to his death. ”
[Emphasis added] 
In McCarthy's case McGregor J opined that the reason for this amendment was “somewhat obscure” but he thought that it was designed to extend the right of compensation to “embrace all perspective pecuniary loss” (446). However, I agree with Messrs Camp and Thain that its purpose was to affirm that actual dependency on the deceased at the time of death was not a prerequisite to recovering damages (Taff Vale Railway Co v Jenkins [1913] AC 1 (HL)). The amendment's rationale is found in the proviso. 
The Deaths by Accidents Compensation Act 1952 was also a consolidating statute. In this spirit it incorporated the essence of s 5 of the 1880 and 1908 Acts and s 7(1) Statutes Amendment Act into s 7(1)(a) and (b). Messrs Camp and Thain relied upon Hansard's report of the address by the then Attorney-General in the House of Representatives on 18 September 1952 when moving that the Bill be read a second time. In the course of his speech the Attorney observed: 
“The action [under the Deaths by Accidents Compensation Act] is quite different from one which the deceased himself would have been entitled to maintain if he had lived. What the Act did was to give to certain near relatives of the deceased a right to compensation for the pecuniary loss they had suffered as a result of the death of the deceased. This is still the principle of the present legislation and of the Bill now before the House …  
Clause 5 explains that such an action is for the benefit of the wife, husband, parents, and children of the deceased. I emphasise that the action is not for the benefit of the deceased's estate, but to compensate the persons I have mentioned for the material loss that they have suffered. The main changes which the Bill makes are in the provisions relating to apportionment of any damages that may be awarded …  ”
[Counsel's emphasis]
The balance of the Attorney's lengthy address emphasised that the remedial aspects of the statute were directed towards providing for the establishment and administration of class funds for the benefit principally of dependant infants. He simply rehearsed the provisions of clause 7 (s 7) without explanation, and did not suggest that the legislature intended a radical alteration to the existing law by introducing a right of action for injured feelings. 
In my judgment it is not arguable that s 7 entitles the Pous to claim damages for anxiety, trauma or emotional distress, or nominal damages for their partial dependency on their late mother. The legislative intent is clear even if expressed with an element of superfluity. The purpose of s 7(1)(a) is to provide a test or measure for assessing damages. As I have noted, the leading cases have long established that this provision restricts the type of recoverable damage to pecuniary loss and excludes mental anguish. Any award must be proportioned to the injury - what Mr Collins acknowledged in argument as fair and appropriate in the circumstances. In this exercise the jury must exclude legal irrelevancies like compensation for bereavement and mental suffering (Shaw (supra) per Reed J at 919-920 and 922). s 7(1)(a) is a statutory declaration of the common law requirement for a relationship of proportionality between the injury and the loss. A Court could interfere and set aside an award where the two bore no reasonable proportion (Taff Vale Railway Co (supra) per Lord Atkinson at 7). But s 7(1)(a) did not create a new right to general damages. 
s 7(1)(b) reinforces the same restricted right of claim but serves a different purpose. It was designed, as I have said, to record that a person did not have to prove actual dependency on the deceased at the date of death; a reasonable expectation was sufficient. To a certain extent it overlaps with s 7(1)(a) (McCarthy (supra) at 620 per FB Adams J). But s 7(1)(b) is specific in limiting the right of claim to an “actual pecuniary benefit”, reinforcing the exclusion already affirmed by s 7(1)(a). 
In this statutory context I cannot accept as arguable and appropriate for revision by a higher Court a proposition that by adding the word “and” where it appears between s 7(1)(a) and (b) Parliament intended when enacting a consolidating statute in 1952 to change the law as it had been interpreted in England since 1846 and in New Zealand since 1935 by allowing dependants a right to claim general damages for “anxiety, trauma or emotional distress” or for “nominal damages” (whatever that phrase may mean here). 
(2) Loss of guidance, care and companionship 
In my judgment the Pous' amendment to include a claim for loss of their mother's guidance, care and companionship cannot survive s 7 and the authority of McCarthy's case. The essence of Mr Collins' argument is that McCarthy is distinguishable because Mrs McCarthy did not seek damages for loss of her husband's guidance, care and companionship within and as an element of pecuniary loss but as an additional head of claim. Furthermore, he submitted that McCarthy does not reflect contemporary judicial approaches found in other Commonwealth jurisdictions. 
I must say at once that Mr Collins' primary ground for distinguishing McCarthy incorrectly represents the decision. The argument which Mr Collins now advances was addressed and dismissed by McGregor J. Mrs McCarthy sought damages for the loss of her husband's “society, care, guidance and affection … ” (442 (15-16)). Her counsel expressly argued that s 7(1) as amended in 1952 enabled him to advance this claim (445 (40-45)). Nevertheless, as a substantial plank in his argument, Mr Collins submitted that the Court was not invited to consider whether loss of a husband's society, care, guidance and affection was in itself a discrete head of pecuniary loss within s 7(1)(b). While Mrs McCarthy's claim may not have been formulated in that way, McGregor J expressly held (447 (35-45)): 
“The loss of the society, care, guidance, and affection of a husband or father is not, in general, the loss of a future pecuniary advantage. It may, in one sense, have a pecuniary effect in regard to such matters as requirements of expenditure for additional educational assistance or the necessity of additional assistance in the home. In so far as such matters might call for consideration, they would be equally matters for consideration in the alternative claim for loss of pecuniary benefits. It seems to me, therefore, that the claim for damages in respect of the loss of the society, care, guidance, and affection of the husband and father cannot in law be sustained. ”
McCarthy is directly on point against Mr Collins' argument. McGregor J held that loss of society, care, guidance and affection is not of itself loss of a pecuniary benefit within the meaning of s 7, although it does have elements which can be specifically proven in a claim for special damages. McCarthy spells an end to both grounds on which the Pous' claim is now advanced. 
However, in case the issue goes further, I should also address the other arguments advanced by Mr Collins based upon developments elsewhere in the Commonwealth. First, he relied on: 
Lord Edmund-Davies' observation in Hay v Hughes (supra) at 40 to the effect that, while young children are unable to recover loss for deprivation of their mother's love for the reason that the Fatal Accidents Act restricts their right to claim for pecuniary loss only, a Court may have to consider in the future a proposition from McGregor on Damages, 13th Ed., at para 1232 that: 
“ … The benefit of a mother's personal attention to a child's upbringing, morals, education and psychology, which the services of a housekeeper, nurse or governess could never provide, has in the long run a financial value for the child, difficult as it is to assess. ”
Lord Edmund-Davies' statement was made in the context of a claim by two pre-school aged boys whose parents were killed in a car crash. Their maternal grandmother then cared, and intended to continue caring, for them whether she was paid or not. The Court of Appeal upheld the trial Judge's decision that the defendant was not entitled to claim a deduction for the grandmother's voluntary services to the children. The case is a long way from this one; 
Watkins J's adoption in Regan v Williamson (supra) at 308-309 of Lord Edmund-Davies' invitation in Hay to the extent of opining that the word “services” has been too narrowly construed and should be expanded to acknowledge that a wife and mother does not work to set hours or to rule but is in constant attendance of children when she frequently gives them instruction on essential matters. In the Judge's view, such attention is as much a service and probably more valuable to her children than other kinds of conventionally regarded services. In fixing damages for the cost of employing a housekeeper to look after the widower's four young dependant children, Watkins J took into account the unique services which their late mother provided in raising the dependency figure significantly above the weekly cost of employing a housekeeper. Again the facts of that case were far removed from this claim; 
Simon Brown J's recognition in Cresswell v Eaton (supra) of the special qualitative factor of lost maternal care identified by Watkins J in Regan. The claimant was the aunt of three young children aged under 10 years whose separated mother was killed in a motor accident. In Simon Brown J's judgment this factor can properly apply in some cases to increase a claim for lost services, although its impact is diminished by a child's lessening requirement for care as he or she grows older. Again the case is of no assistance here. 
These authorities, and dicta of the Court of Appeal in two other cases, Spittle v Bunney (supra) and Hayden v Hayden (supra), do not advance the Pous' case. The special qualitative factor evolved in England in the context of claims on behalf of dependant pre-school and school aged children where the Court was called upon to value a specific head of pecuniary loss; namely, the cost of employing the services of a substitute housekeeper or caregiver. That rule has no place here. It is hardly surprising that Mr Collins was unable to cite any English authority where the same rule has been applied in a claim by adult children for loss of their mother's caregiving services. 
Second, Mr Collins sought to rely upon Canadian authority, starting with St Lawrence and Ottawa Railway Co (supra) where the Supreme Court (by a majority of 3:2) held that pecuniary loss under the Canadian equivalent of Lord Campbell's Act included children's loss of their mother's care and guidance. 

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