Amaca Pty Ltd v Frost [2006] NSWCA 173; (2006) 67 NSWLR 635

Case Name & Citation

Amaca Pty Ltd v Frost [2006] NSWCA 173

Court & Year

New South Wales Court of Appeal, 3 May and 4 July 2006. Spigelman CJ, Santow JA, and McColl JA.

Facts

Frost was employed in New Zealand between 1963 and 1966, where he inhaled asbestos dust and fibres from insulation products manufactured by Amaca in New South Wales. The products were distributed to New Zealand and used there. Frost developed asbestos-related disease, which became clinically apparent and was diagnosed in 2000 when he was resident in Queensland. He received statutory compensation under the Accident Insurance Act 1998 (NZ), which was considerably less than common law damages available under New South Wales law. The Dust Diseases Tribunal found the place of tort to be New South Wales and applied that law, but also held alternatively that New Zealand law barred the proceedings. Amaca appealed on the location of the tort; Frost cross-appealed on whether New Zealand law barred recovery in Australia.

Issues

• Where was the place of tort — New South Wales (manufacture) or New Zealand (exposure and use)?
• If the tort occurred in New Zealand, does New Zealand statutory law prevent proceedings in Australian courts?

Decision

The appeal was allowed and the cross-appeal dismissed. The Court held the place of tort was New Zealand; New Zealand law applied; and the Accident Insurance Act 1998 (NZ) barred the proceedings.

Legal Reasoning

Identifying the Place of the Tort

The court applied the authoritative test from Jackson v Spittall (1870) and Distillers Co (Biochemicals) Ltd v Thompson [1971], as refined in Voth v Manildra Flour Mills Pty Ltd (1990). The test requires identifying "the act on the part of the defendant which gave the plaintiff his cause of complaint" and determining where, "in substance", that act occurred [14]-[16]. The court rejected characterising the case as one of "negligent manufacture" in the sense of a defective manufacturing process [43]. Although the products were inherently dangerous, nothing went wrong in manufacturing itself; the products were defective only in the sense that they contained a toxic element (asbestos) [44].

Crucially, the agreed facts established that: (1) the defendant owed a duty of care to the plaintiff, a person situated in New Zealand [33]; (2) distribution and supply to New Zealand were acts done "by" the defendant under agreed facts (8)(b) and (8)(c) [50]; and (3) causation occurred in New Zealand — it was the act of inhalation there that crystallised the tort [35]. Spigelman CJ emphasised that "it was always intended that the product would be distributed in New Zealand" and "the respondent, to whom the duty was owed, was always located in New Zealand" [43]. The exposure to risk was not fortuitous; it was within the defendant's contemplation that the products would cause harm in New Zealand [42].

The Chief Justice rejected the Tribunal's reasoning that manufacture was the relevant act. When goods are manufactured in one locality with a view to distribution in another, "particular weight must be given to the place where the act was directed, rather than to the place where it originated" [41]. This principle derives from Voth, where the court held that a statement made in one place but directed to another is, in substance, made where it was directed [40]. Here, the relevant act of the defendant — continuing to use asbestos in products intended for New Zealand distribution while owing a duty to persons in New Zealand — assumed its legal significance only when the plaintiff was exposed to risk in New Zealand [44].

Application of New Zealand Law

By cross-appeal, Frost contended that even if New Zealand law applied, it did not bar proceedings in Australia. The court rejected this on two alternative grounds.

First, under the Australian choice of law rule established in John Pfeiffer Pty Ltd v Rogerson (2000) and Régie Nationale des Usines Renault SA v Zhang (2002), Australian courts must apply the "whole of the substantive law" of the lex loci delicti, including rules that affect "the existence, extent or enforceability" of liability [67]. Although the old "double actionability" rule had been abolished, the court held that a requirement of "actionability" in the lex loci remains embedded in contemporary Australian doctrine [77]. The court endorsed a "single actionability" rule: proceedings cannot be maintained in Australia for a foreign tort if proceedings cannot be brought in the place where the tort occurred [96].

Spigelman CJ emphasised the "no advantage" principle articulated in Neilson v Overseas Projects Corporation of Victoria Ltd (2005): parties should not gain advantages by litigating in Australia that would be unavailable if the matter were litigated in the place where the tort occurred [82]-[83]. To permit Australian proceedings when New Zealand law barred them would permit forum-shopping and undermine the "certainty and simplicity" that the lex loci delicti rule promotes [90]-[92].

Second, as a matter of New Zealand law itself, the court rejected the argument that the statutory reference to "in any court in New Zealand" should be read as permitting proceedings elsewhere [104]. The court accepted expert evidence that Parliament intended only to restrict proceedings in New Zealand courts, on the assumption that it lacked power to legislate for foreign courts; but when an Australian court applies New Zealand substantive law, this linguistic limitation must be disregarded [130]. The statute establishes a "no-fault" scheme that replaces common law rights with statutory compensation for torts occurring in New Zealand [121], [128]. This reflects a "social contract" extending to all proceedings for New Zealand torts, regardless of forum.

Rule

The place of a tort is determined by identifying the act of the defendant which gave the plaintiff a cause of complaint and locating it in substance, having regard to the defendant's intention and the scope of the duty owed. Where goods are manufactured for intended distribution in a foreign jurisdiction and cause injury there, the place of tort is the place of exposure and use, not manufacture. An Australian court must apply the entire substantive law of the lex loci delicti, including statutory bars on actionability, to prevent forum-shopping and ensure uniform outcomes regardless of where proceedings are brought.