Brownlie v Good Health Wanganui Limited CA64/97 [1998] NZCA 223; [2005] NZAR 289 (10 December 1998)

Last Updated: 13 February 2014

IN THE COURT OF APPEAL OF NEW ZEALAND CA 64/97

BETWEEN CYNTHIA JUNE BROWNLIE

& OTHERS Appellant

AND GOOD HEALTH WANGANUI LIMITED

First Respondent

AND RESIDUAL HEALTH MANAGEMENT UNIT

Second Respondent

AND JAMES BURKINSHAW Third Respondent

Coram: Richardson P Gault J

Henry J Thomas J Blanchard J

Hearing: 19 November 1998

Counsel: J R Billington QC and M Winer for Appellant

P Courtney and A Judelson for First Respondent

A P Duffy QC and P A McCarthy for Second Respondent

D H O’Leary for Third Respondent

_{Judgment: 10 December 1998}

JUDGMENT OF THE COURT DELIVERED BY HENRY J

This appeal raises yet again questions concerning the extent to which the Accident Compensation legislation has impacted on the common law right to seek damages for personal injury resulting from a breach of the duty of care. The first respondent is a Crown Health Enterprise which operates the Good Health Wanganui Hospital, formerly known as the Wanganui Base Hospital. The second respondent is a body corporate established by statute. At all material times the third respondent, Dr Burkinshaw, was employed in the hospital, either by the first respondent or by a former entity represented by the second respondent, as a duly qualified and registered medical practitioner specialising in pathology and histology.

Between 1982 and 1993 all eight appellants underwent surgery at hospital. In the course of that in each case a tissue sample was taken for pathological examination and diagnosis for abnormality, particularly for the presence of cancerous or pre-cancerous conditions. The examinations were carried out by Dr Burkinshaw. In each case his diagnosis was that no malignancy or pre-cancerous condition was detected, and the appellants were so advised.

On or about 4 June 1994 following an audit of Dr Burkinshaw’s work and the hospital’s laboratory practices and procedures, the hospital authorities became aware that a number of patients who had undergone surgery since 1982 may have been misdiagnosed as a result of incorrect pathology reports prepared by Dr Burkinshaw. The possibility that some 54 persons may have been misdiagnosed during those years received media publicity on or about 5 July 1994 and subsequently. The appellants became aware that they might be included in those who were potentially at risk. Following further procedures they were later advised that they had in fact been misdiagnosed. The claims are brought in negligence, and are now restricted in respect of compensatory damages to what can be described in broad terms as mental injury occurring on ascertaining the possibility of the incorrectness of the diagnosis, and the ongoing consequences of that. Although it was not entirely clear from Mr Billington’s oral argument, it appears from Mr Winer’s response when replying to the respondents’ case that the claims are intended also to cover mental injury suffered after ascertainment of the fact of misdiagnosis, and continuing down to the present time. Exemplary damages are also sought.

In each case there was a short period of time between the appellants becoming aware that the diagnosis may have been wrong, and the error being verified following the further investigation when the correct nature of the medical condition was ascertained and appropriate treatment commenced. All appellants are suffering from cancer of varying types with varying degrees of severity. In general terms, the negligence relied on as founding the claims is the failure to correctly diagnose the appellants at the time of the tissue examinations.

Allowing applications by all three respondents, Master Thomson in a judgment delivered on 19 March 1997 struck out the claims for compensatory damages and made declarations to the effect that those claims were barred by s14 of the Accident Rehabilitation and Compensation Insurance Corporation Act 1992. The present appeal is against that judgment. At the time of the hearing before the Master, the statement of claim included claims for physical injury. In this Court, Mr Billington accepted those claims were barred by the relevant statutory provisions, and made it clear that all compensatory claims were now limited to the mental injury suffered by the appellants. An amended statement of claim, intended to give effect to this concession, was lodged.

The 1992 statutory bar

The relevant provisions of s14 of the Accident Rehabilitation and

Compensation Insurance Act 1992 read:

14. Application of Act excludes other rights - (1) No proceedings for damages arising directly or indirectly out of personal injury covered by this Act or personal injury by accident covered by the Accident Compensation Act 1972 or the Accident Compensation Act 1982 that is suffered by any person shall be brought in any Court in New Zealand independently of this Act, whether by that person or any other person, and whether under any rule of law or any enactment.

(2) For the avoidance of doubt, it is hereby declared that nothing in this section shall be affected by-

(a) The failure or refusal of any person to lodge a claim for any treatment, service, rehabilitation, related transport,

compensation, grant, or allowance under this Act or those Acts;

or

(b) Any purported denial or surrender by any person of any rights under this Act or those Acts; or

(c) The fact that a person who has suffered personal injury covered by this Act or personal injury by accident covered by the Accident Compensation Act 1972 or the Accident Compensation Act 1982 is not entitled to any treatment, service, rehabilitation, related transport, compensation, grant, or allowance under this Act.

Six of the appellants underwent their respective surgical procedures prior to

1 July 1992 when the 1992 Act came into force, but during the currency of either the

1982 Act or the 1972 Act. We turn first to the other two who may be termed the post

1992 claimants, whose biopsies were carried out after 1 July 1992. Although not relevant for present purposes it is possible one of those was in fact a “pre 1992” patient.

The first enquiry is whether they suffered personal injury which is covered by the 1992 Act. Under s8(2)(c) cover extends to personal injury which is medical misadventure as defined in s5. Medical misadventure means personal injury resulting from medical error or medical mishap, but does not include a failure to diagnose correctly or a failure to provide treatment unless the failure is negligent. Medical error in turn means the failure of a registered health professional to observe a reasonable standard of care and skill (s5(1). Medical error in these terms is pleaded, and therefore cover will exist if these appellants suffered personal injury as a result of the medical error. Personal injury is defined by s4, the relevant provision being contained in subs (1):

For the purposes of this Act, “personal injury” means the death of, or physical injuries to, a person, and any mental injury suffered by that person which is an outcome of those physical injuries to that person,....

The term “physical injuries” is not defined, but it is common ground that the appellants did suffer resulting physical injury in the form of progression of the cancerous condition. This is in accord with Green v Matheson [1989] 3 NZLR 564, where it was accepted that the development of carcinoma in situ of the cervix into

invasive cancer was personal injury for the purpose of the 1982 Act. The present section 10(1), which generally excepts from cover personal injury caused by gradual process, disease or infection, does not apply to medical misadventure (para (b)). The appellants would also appear to have suffered physical injury if, as the original pleading alleged, operative procedures were carried out after the correct diagnoses were made. Although s4 also includes as personal injury mental injury which is the outcome of physical injury, Mr Billington presented his case on the basis that the mental injury alleged was not within that description. As we understood Ms Courtney and Ms Duffy, they were content to proceed on that assumption, submitting that nevertheless s14(1) applied. The formulation of the claims is expressed in wide terms, and includes mental consequence of a kind which would appear to be outside that description.

Proceeding therefore on the basis that the appellants suffered physical injury and therefore have cover under the Act for that reason, the further question is whether the present claims, in their restricted form, are for damages which arise directly or indirectly out of the physical injury suffered. In due course both appellants became aware of their correct diagnosis, and therefore of the fact that they suffered from cancer and had done so for some period of time. They obtained this knowledge within a relatively short time after first being informed that the original diagnosis may have been incorrect.

The pleading as presently framed alleges in this respect that the appellants:

1. have suffered and will continue to suffer mental shock, canceritus, post traumatic stress disorder etc, arising from the fact of having relied upon advice that they were not suffering from any illness or disease and therefore did not require any treatment or care when in fact they were suffering from a malignant or pre-malignant and potentially fatal disease which required appropriate and immediate treatment and/or on-going monitoring.

2. are now suffering a great deal of depression and anxiety in respect of the possibility that the delay in treatment and/or monitoring caused by the third defendant’s negligence may have permitted fatal cancer cells to thrive undetected in their bodies.

100. have and will continue to suffer a diminished quality of life as a consequence their mental shock and/or cancerities.

4. suffered and continue to suffer mental shock and canceritus as a result of:

1. being advised, either directly by the first defendant or indirectly as a result of publicity and media reporting that the diagnoses referred to herein were wrong and that the plaintiffs had in fact been suffering from life threatening illness or disease; and

ii) the knowledge that:

1. they did not receive necessary treatment and/or monitoring
2. they face uncertainty as to their future health and well-being

100. the trust and reliance they placed in the hospital administered by the first defendant and/or its predecessors was misplaced.

These consequences, in so far as they relate to a time after knowledge of the misdiagnosis was obtained, in our view are consequences which arose indirectly from the fact that the cancerous condition remained undetected and untreated over a period of time. Once that initial period of being in a state of uncertainty came to an end, it seems unarguable that the mental consequences which flowed thereafter arose at least indirectly from the physical injury, even if it could be said they were not the outcome of physical injury. There is an undoubted causal connection. The damages claimed therefore arose from medical misadventure for which cover is given by the Act. Section 14(1) accordingly operates as a bar to common law claims for those damages. The fact that the cover does not extend to the particular kind of injury for which compensation is sought does not assist.

The result is that for these mental consequences (assuming, but without deciding, they are not the outcome of physical injury) the appellants are entitled neither to relief under the Act, nor to damages at common law. That however is a necessary consequence of the legislation. The 1992 Act, in contrast with both earlier Acts, has placed a strict limitation on the availability of cover for mental injury. In doing that, it has still retained the abolition of the common law claim for damages for other kinds of mental injury, providing they arise directly or indirectly from injury which is covered.

That is consistent with the removal of the right to be fully compensated for other consequences of personal injury, for example loss of past and future income, pain and suffering, loss of enjoyment of life and other monetary losses attributable to personal injury.

Different considerations however would appear to apply to the mental injury suffered as an immediate result of an appellant ascertaining that she may have been one of a number of patients who had been misdiagnosed. Obviously not every patient who had been under the care of the hospital and had undergone an investigation for cancer over the period had been misdiagnosed. There was therefore a relatively short period of time when the appellants, and other patients, on becoming aware that there was a problem in this regard, were in a state of uncertainty as to whether or not, contrary to earlier advice, they were in fact suffering from cancer. We do not see how the mental stress which would have existed over this period of uncertainty can be said to have arisen directly or indirectly from any physical injury. Even in the case of the appellants, who had in fact suffered medical misadventure, there could be no causal connection. Certainly there could be none for those who were subsequently found to be clear. There can be no mental injury arising from a physical injury which is unknown to exist even if it is suspected. Over the intervening time until confirmation one way or the other, the same kind of mental injury will be suffered whether or not there has in fact been physical injury. The actual existence of physical injury is irrelevant.

There is accordingly a very limited kind of damages claim which may be available to the appellants which is not barred by s14. Although this “window” as it was referred to in the course of argument has not been expressly addressed in the pleading as it is now presented, it could be incorporated by way of amendment and should therefore be left open to the appellants.

The 1972 and 1982 Acts

The Accident Compensation Act 1972 came into force on 1 April 1974. Cover extended to persons who suffered personal injury by accident. At the relevant time section 5(1) provided:

5. Act to be a code - (1) Subject to the provisions of this section, where any person suffers personal injury by accident in New Zealand or dies as a result of personal injury so suffered, or where any person suffers outside New Zealand personal injury by accident in respect of which he has cover under this Act or dies as a result of personal injury so suffered, no proceedings for damages arising directly or indirectly out of the injury or death shall be brought in any Court in New Zealand independently of this Act, whether by that person or any other person, and whether under any rule of law or any enactment.

Cover extended to personal injury by accident, and included physical and mental consequences. Mental consequences did not need to be related to physical injury. By the 1974 amendment, medical misadventure was also included in the definition of personal injury by accident (s2). The 1972 Act remained in force until 31

March 1983. The misdiagnosis of one appellant comes within that time period. The

1972 Act was replaced by the Accident Corporation Act 1982. By s122(4) of that, the provisions of the old s5 continued to apply in respect of personal injury by accident occurring between 1 April 1974 and 1 April 1983. In the case of this one appellant, subject to consideration of a further submission by Mr Billington, there was cover under the 1972 Act for the mental injury which is the subject of the claim for compensatory damages. The submission was that because the injury (mental shock, distress etc), was not suffered until July 1994, there was no entitlement to cover. In our view the fallacy in this submission is that it ignores the definition of personal injury by accident, which included medical misadventure. Although medical misadventure is not defined in the 1972 Act, it included the mishandling of a patient’s case (Green v Matheson at p573; Childs v Hillock [1994] 2 NZLR 65; Attorney-General v McVeagh [1995] 1 NZLR 558). Here, for the reasons earlier discussed, the appellant was caused harm by not being diagnosed correctly and thereafter properly treated for her condition. The events giving rise to cover had occurred, and the fact that she was

unaware of those did not affect her entitlement to cover under the Act. Relief from the limitation provisions under s149(2) clearly would have been available.

The relevant provisions of the 1982 Act, which are referable to the other five

“pre 1992” appellants are for present purposes in terms indistinguishable from the

1972 Act. The same consequences follow. They are entitled to cover under that Act. Accordingly, in all cases the statutory bar prevented claims for damages for the injuries now in question.

It remains to see whether the advent of the 1992 Act and its repeal of the 1982

Act can assist these appellants. The transitional provisions are contained in s135:

135. Relationship of this Act and former Acts - (1) Any person who has had a claim accepted for personal injury by accident within the meaning of the Accident Compensation Act 1972 or the Accident Compensation Act 1982 suffered before the 1st day of July 1992 shall be deemed to have suffered personal injury that is covered by this Act. (2) Nothing in subsection (1) of this section shall apply if it is subsequently determined that the person had not suffered personal injury by accident within the meaning of the Accident Compensation Act 1972 or the Accident Compensation Act 1982.

(3) Any person who has suffered personal injury by accident within the meaning of the Accident Compensation Act 1972 or the Accident Compensation Act 1982 before the 1st day of July 1992 and who has lodged a claim with the Corporation in respect of that personal injury by accident before the 1st day of October 1992, shall have the acceptability of the claim determined under the Accident Compensation Act 1982 as if it had not been repealed.

(4) Where subsection (3) of this section applies, the continued entitlement of the person to rehabilitation, compensation, grants, and allowances shall be determined under those Acts, as appropriate, but subject to this Part of this Act.

(5) Any person who has suffered personal injury by accident within the meaning of the Accident Compensation Act 1972 or the Accident Compensation Act 1982 that is covered by either of those Acts, and who has not lodged a claim with the Corporation in respect of that personal injury by accident before the 1st day of October 1992, shall have cover under this Act only if that personal injury by accident is also personal injury that would be covered by this Act had it occurred on or after the 1st day of July 1992.

Subsection (5) is the only provision which applies to the present situation. It does not preserve the rights of those who had cover under the previous legislation. Preservation is confined to claims either already accepted under the 1972 and 1982

Acts (subs (1)), or lodged with the Corporation before 1 October 1992 (subs (3)). Persons not within those two categories will only have cover if their personal injury by accident was covered not only by the earlier applicable Act but also by the 1992 Act. Accordingly the “pre 1992” appellants, although they were covered by the earlier Acts, will now get cover only if they suffered personal injury by accident as it is now defined. It can be noted that it is the existence of cover under the Act which is the requirement, not the extent of the cover. For the reasons already expressed in respect of the “post

1992” appellants, there is also cover under the 1992 Act for these appellants. Again, except for the “window” covering the period between knowledge of possible misdiagnosis, the claims for compensatory damages arise directly or indirectly out of personal injury covered by the 1992 Act and are therefore barred by s14(1).

Conclusion

We therefore dismiss the appeal, but without prejudice to the right of the appellants to amend their statement of claim to include claims for compensatory damages for mental injury arising from the uncertainty of not knowing whether they had been misdiagnosed. Any such damages would appear to be confined to the period beginning at the time of becoming aware of the possibility of misdiagnosis and ending when each became aware of the fact of misdiagnosis.

Costs are reserved.

Solicitors

Grant Cameron Associates, Christchurch, for appellants

McElroys, Auckland, for first respondent

Crown Law Office, Wellington, for second respondent

Roger Crowley, Wanganui, for third respondent