Austral Pacific Group Ltd. (In Liq) v Airservices Australia

Court of Appeal (NSW)|2003-07-23|Before: Meagher ACJ, Handley JA, Hodgson JA

CITATION : Hobbins v. Commonwealth of Australia [2003] NSWCA 206 HEARING DATE(S) : 23 July 2003 JUDGMENT DATE : 23 July 2003

JUDGMENT OF : Meagher ACJ at 1, 31, 33; Handley JA at 32; Hodgson JA at 2 DECISION : 1. Claimant granted any necessary extension of time for this application. 2. Leave to appeal granted. 3. Claimant to file notice of appeal within fourteen days. 4. Appeal allowed with costs. 5. Order of primary judge set aside, and in lieu thereof opponent's notice of motion dismissed with costs.

CATCHWORDS : LIMITATION OF ACTIONS - Commonwealth authority - Right of action by employee for personal injuries - Statutory removal of that right - Exception requiring election - Election made - When did cause of action arise? LEGISLATION CITED : Safety, Rehabilitation & Compensation Act 1988 (Cth), ss.44 and 45 Limitation Act 1969 (NSW) ss.18A and 63 Austral Pacific Group Ltd. (In Liq) v Airservices Australia (2000) 203 CLR 136 Coburn v. Colledge [1897] 1 QB 702 Commonwealth of Australia v. Mewett (1997) 191 CLR 471 CASES CITED : Harding v. Lithgow Corporation (1937) 57 CLR 186 Janssen v. Commonwealth [1994] 2 QdR 596 Kinzett v McCourt (1999) 46 NSWLR 32 Olkers v. Ellis [1914] 2 KB 139 Walsh v. Commonwealth of Australia (1998) 145 FLR 194 PARTIES : Shane Thomas Hobbins - claimant Commonwealth of Australia - opponent FILE NUMBER(S) : CA 40915/02 COUNSEL : Mr. S.G. Campbell SC with Mr. B. O'Sullivan for claimant Mr. S. Gaegler SC with Mr. G.T. Johnson for opponent SOLICITORS : Whitelaw McDonald, Newcastle for claimant Australian Government Solicitor, Sydney for opponent

LOWER COURT District Court JURISDICTION : LOWER COURT 104/02 (Newcastle) FILE NUMBER(S) : LOWER COURT Nield DCJ JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40915/02 DC 104/02

MEAGHER ACJ HANDLEY JA HODGSON JA

Wednesday 23 July 2003 HOBBINS V. COMMONWEALTH OF AUSTRALIA Judgment 1 MEAGHER ACJ: I will ask Hodgson JA to give the first judgment. 2 HODGSON JA: On 2 August 2002, the opponent brought a Notice of Motion seeking dismissal of an action brought by the claimant, on the ground that the claimant's cause of action had been extinguished by virtue of s.63 of the Limitation Act 1969. 3 On 28 August 2002, Nield DCJ in the District Court acceded to that application, and he ordered that the claimant's action be dismissed and that the claimant pay the opponent's costs of the action and the motion. 4 The claimant seeks leave to appeal from that decision and also a short extension of time. The application has been argued on the basis that, if leave is granted, the appeal will be decided without further argument. 5 The application involves consideration of the provisions of two statutes, namely the Safety, Rehabilitation and Compensation Act 1988 (Cth), which I will call the Comcare Act, and the Limitation Act 1969 (NSW). 6 The relevant sections of the Comcare Act are ss.44 and 45, which are in the following terms: 44. Action for damages not to lie against Commonwealth etc. in certain cases (1) Subject to section 45, an action or other proceeding for damages does not lie against the Commonwealth, a Commonwealth authority, a licensed corporation or an employee in respect of: (a) an injury sustained by an employee in the course of his or her employment, being an injury in respect of which the Commonwealth, Commonwealth authority or licensed corporation would, but for this subsection, be liable (whether vicariously or otherwise) for damages; or (b) the loss of, or damage to, property used by an employee resulting from such an injury; whether that injury, loss or damage occurred before or after the commencement of this section. (2) Subsection (1) does not apply in relation to an action or proceeding instituted before the commencement of this section. (3) If: (a) an employee has suffered an injury in the course of his or her employment; and (b) that injury results in that employee's death; subsection (1) does not prevent a dependant of that employee bringing an action against the Commonwealth, a Commonwealth authority, a licensed corporation or another employee in respect of the death of the first-mentioned employee. (4) Subsection (3) applies whether or not the deceased employee, before his or her death, had made an election under subsection 45(1).

Actions for damages---election by employees (1) Where: (a) compensation is payable under section 24, 25 or 27 in respect of an injury to an employee; and (b) the Commonwealth, a Commonwealth authority, a licensed corporation or another employee would, but for subsection 44(1), be liable for damages for any non-economic loss suffered by the employee as a result of the injury; the employee may, at any time before an amount of compensation is paid to the employee under section 24, 25 or 27 in respect of that injury, elect in writing to institute an action or proceeding against the Commonwealth, the Commonwealth authority, the licensed corporation or other employee for damages for that non-economic loss. (2) Where an employee makes an election: (a) subsection 44(1) does not apply in relation to an action or other proceeding subsequently instituted by the employee against the Commonwealth, the Commonwealth authority, the licensed corporation or the other employee for damages for the non-economic loss to which the election relates; and (b) compensation is not payable after the date of the election under section 24, 25 or 27 in respect of the injury. (3) An election is irrevocable. (4) In any action or proceeding instituted as a result of an election made by an employee, the court shall not award the employee damages of an amount exceeding $110,000 for any non-economic loss suffered by the employee. (5) The election by an employee under this section to institute an action or proceeding against the Commonwealth, a Commonwealth authority, a licensed corporation or another employee does not prevent the employee, before, or instead of, formally instituting such action or proceeding, doing any other thing that constitutes an action for non-economic loss. 7 The relevant sections of the Limitation Act are ss.18A and 63: 18A. Personal injury (1) This section applies to a cause of action, founded on negligence, nuisance or breach of duty, for damages for personal injury, but does not apply to: (a) a cause of action arising under the Compensation to Relatives Act 1897 , or (b) a cause of action that accrued before 1 September 1990, or (c) a cause of action to which Division 6 applies. (2) An action on a cause of action to which this section applies is not maintainable if brought after the expiration of a limitation period of 3 years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims.

Debt, damages etc (1) Subject to subsection (2), on the expiration of a limitation period fixed by or under this Act for a cause of action to recover any debt damages or other money, the right and title of the person formerly having the cause of action to the debt damages or other money is, as against the person against whom the cause of action formerly lay and as against the person's successors, extinguished. (2) Where, before the expiration of a limitation period fixed by or under this Act for a cause of action to recover any debt damages or other money, an action is brought on the cause of action, the expiration of the limitation period does not affect the right or title of the plaintiff to the debt damages or other money: (a) for the purposes of the action, or (b) so far as the right or title is established in the action. (3) This section does not apply to a cause of action to which section 64 or section 65 applies. 8 The claimant's proceedings had been commenced on 27 February 2002. The Statement of Claim alleged that the claimant was injured in the course of his employment by the opponent on 15 October 1996, and that the claimant had made an election pursuant to s.45 of the Comcare Act on or about 9 October 2000. 9 Before the primary judge, the opponent contended that the claimant's cause of action arose on 15 October 1996, and that by reason of ss.18A and 63 of the Limitation Act, it was extinguished on 15 October 1999. 10 The claimant contended before the primary judge that his cause of action did not arise until he made the election on about 9 October 2000, and also that he was subject to a disability within s.52 of the Limitation Act until that time. I would mention that the latter contention is no longer pursued. 11 Both those contentions were rejected by the primary judge, who held that the claimant's making of an election was not part of his cause of action. The primary judge referred to Walsh v Commonwealth of Australia (1998) 145 FLR 194. 12 The claimant seeks leave to appeal on just one ground: 3. His Honour erred: (a) in failing to find that time began to run under the Limitation Act 1969 (NSW) from the time that the appellant was first entitled to bring an action against the respondent pursuant to the provisions of Section 45 of the Safety Rehabilitation and Compensation Act (Cth) upon the making of a valid election. 13 The claimant sought to adduce evidence on the appeal, namely an affidavit of the claimant's solicitor. This was not opposed and the affidavit was read, but it is not necessary to refer to its contents. 14 Mr Campbell SC for the claimant referred the Court to the case of Austral Pacific Group Limited (in Liquidation) v Airservices Australia (2000) 203 CLR 136. He submitted that this case established that the making of election under s.45 of the Comcare Act was not merely a procedural step but an essential element of the claimant's cause of action. Accordingly, he submitted, the claimant's cause of action did not arise until about 9 October 2000. 15 Mr Gaegler SC for the opponent submitted that the case of Austral Pacific showed that, once an election is made, the effect of s.45 is to deem s.44 of the Act never to have applied so that, subject to the limitation to non-economic loss provided by s.45(2)(a) and the limitation in quantum provided by s.45(4), an employee's common law action proceeds as if s.44 had never been engaged: see Austral Pacific at [22]. That is, he submitted, s.45 is not itself a source of liability in the Commonwealth. The employee's cause of action arises wholly at common law, at the time when the ordinary elements of that action occur. Mr Gaegler submitted that all s.45 does is to expunge the operation of s.44, both prospectively and retrospectively. 16 Mr Gaegler also referred to the Commonwealth of Australia v Mewett (1997) 191 CLR 471 at 516 and 533, referring to the analogy of the extension of a limitation period after a cause of action has been extinguished. In such a case, Mr Gaegler submitted, the earlier extinguishment is annulled and the cause of action is to be treated as if it had persisted from its origin. 17 Mr Gaegler also referred to the case of Walsh, in which it was decided that an employee may be able to make an election under s 45 of the Comcare Act even though there has been no determination that compensation is payable under ss.24, 25 or 27 of that Act. One reason given for that decision, and also for a similar decision in Janssen v Commonwealth [1994] 2 QdR 596, was that an employee's claim could become statute barred before a determination was made: see 145 FLR at 202 and [1994] 2 QdR at 602. Mr Gaegler submitted that this reason was part of the ratio of those cases. 18 In my opinion, if the making of an election under s.45 were merely a statutory condition precedent to the commencement of proceedings, of the type discussed in Harding v The Council of the Municipality of Lithgow (1937) 57 CLR 186, then the primary judge's view that the cause of action was complete on 15 October 1996 and was statute-barred as from 15 October 1999 would be correct: see Coburn v Colledge [1897] 1 QB 702, Kinzett v McCourt (1999) 46 NSWLR 32 at 52. It would seem that no authority to the contrary was put to the primary judge. 19 However, the case of Austral Pacific, which was not cited to the primary judge, establishes that the making of such an election is not merely a statutory condition precedent to the commencement of proceedings, but is something without which the employee has no cause of action at all. 20 The question in that case was whether a Commonwealth authority, Airservices, in respect of which the Comcare Act applied, was a tortfeasor who "would if sued have been liable" within the Queensland contribution legislation, in respect of a work injury of its employee, in circumstances where no s.45 election had been made. The High Court of Australia unanimously held that it was not, because s.44 of the Comcare Act extinguished the employee's cause of action, so that election under s.45 was not merely a condition precedent necessary if proceedings were to be taken to enforce a cause of action, but a step necessary if a cause of action was to exist at all. 21 Gleeson CJ and Gummow and Hayne JJ said this: 21 Here the relevant events occurred whilst s 44 was in force. No question of validity arises. But, consistently with the meaning given in Georgiadis to the phrase "an action ... does not lie", s 44 operated to deny from the outset the existence of a cause of action in respect of those relevant events. This was subject only to the operation of s 45(2). In the present case, as McPherson JA pointed out, consistently with the holding in Georgiadis, the effect of s 44 is not merely procedural, but substantive.

22 The effect of s 45 is to deem s 44 never to have applied in relation to an action or other proceeding to recover damages for non-economic loss which is instituted by the employee subsequently to the making of the election referred to in s 45(1). The result is that in respect of that action or proceeding events take the course they would have taken if s 44 had never been engaged. That course is qualified in two respects. First, after the date of the election compensation is not payable (s 45(2)(b)). Secondly, not only does the annihilating effect of s 44 still operate to prevent any right to recovery of economic loss, but an award for non-economic loss shall not exceed the amount specified in s 45(4).

… 24 In the present case, there is no evidence of an election by the plaintiff in respect of the pursuit of rights against Airservices. It follows that in respect of his injuries at no time did an action or other proceeding by the plaintiff for damages lie against Airservices. That is a significant matter in determining the operation of the Contribution Act if it is "picked up" by s 79. To that question we return.

… 32. However, the election required by s 45 of the Compensation Act is more than the giving of a notice which is a condition precedent or necessary antecedent step to the maintenance of an action or the issue of initiating process. As indicated earlier in these reasons, s 44 is a provision going, to adapt the words of Dixon J in Harding v Lithgow Corporation , "to the validity of the title to enforce the liability" not merely "to the mode of enforcing it, or the fulfilment of a preliminary procedural condition". In respect of the claim for non-economic loss, at no time had s 45 applied to deem s 44 never to have operated. The action in respect of economic loss was beyond recall and could never be enlivened by the operation of s 45. 22 McHugh J said this: 68 However, this submission of the defendant must be rejected. Georgiadis v Australian and Overseas Telecommunications Corporation determined that s 44(1) of the Compensation Act operated not just to bar but to extinguish an action against the Commonwealth or a Commonwealth authority in respect of an injury sustained by an employee in the course of his or her employment. Section 45(1) permits the employee, in certain circumstances, to elect in writing to institute an action against the Commonwealth or a Commonwealth authority. Section 45(2) has the effect that, "in relation to an action ... subsequently instituted by the employee", s 44(1) does not apply (emphasis added). Until the employee makes the election and subsequently institutes the action against the Commonwealth or the Commonwealth authority, however, there is not and has never been a time when the Commonwealth or the Commonwealth authority could be sued for damages in respect of the injury sustained by the employee. The plaintiff does not have and never has had a cause of action against the third party. The third party is not therefore a tortfeasor "who is, or would if sued have been, liable in respect of the same damage". Nothing said in Brambles Constructions assists the defendant. Section 6 of the Contribution Act has no temporal connotation. But for that provision to apply there must be a recognisable liability of the party from whom contribution or indemnity is sought. Here there is none. 23 Callinan J said this: 110 The circumstances alone of the plaintiff's injuries in February 1994 did not give rise to a right of action against the respondent. It is only those circumstances together with the making of an election in compliance with s 45 of the Act that would do so. In Georgiadis v Australian and Overseas Telecommunications Corporation Mason CJ, Deane and Gaudron JJ said that s 44 puts an end to a cause of action against the Commonwealth, or its agencies, and that it is inaccurate to describe s 44 as a provision which modifies the action of Commonwealth employees against Commonwealth employers. Earlier, I contrasted other introductory language which might have been used such as "an employee may either claim compensation or sue for damages" with the unequivocal words of s 44, "an action ... does not lie". 24 Mr Gaegler's submission was that, consistently with what was said at par.[22] of that judgment, the effect of the election was to write s.44 out of the picture, so that the common law action then, subject to the s.45 restrictions, could proceed as a cause of action arising just when it would have arisen at common law. 25 In my opinion that submission should be rejected. In this case it would mean that the claimant's cause of action was extinguished on 15 October 1999, at a time when, according to Austral Pacific, no such cause of action had arisen or existed. The fact that the later election could be considered as retrospectively creating a cause of action treated as having arisen on 15 October 1996 does not alter the plain fact that on 15 October 1996 and on 15 October 1999 there was no cause of action then actually in existence. 26 Although it is not a perfect analogy, this approach is not inconsistent with the position which obtains when a transaction is set aside ab initio on the basis of subsequently-discovered fraud, when the limitation period is treated as running from the time of discovery of the fraud. In such cases, it appears that the plaintiff can recover payments made under the transaction at earlier times: see Oelkers v Ellis [1914] 2 KB 139. 27 As regards to the statements in Walsh and Janssen, they refer to the possibility of limitation periods expiring before the Commonwealth authority makes its determination, not before election under s.45, so they are not directly in point. In any event, in my opinion they are not part of the ratio of those cases, and they were made prior to the decision of the High Court in Austral Pacific. In those circumstances I do not think they weigh against the view that I have expressed. 28 For those reasons, in my opinion the claimant's cause of action was not statute-barred. There is no reason not to grant the short extension of time sought by the claimant for this application. The effect of the primary judge's decision was to put an end to the claimant's proceedings, and the application does raise a question of principle. In my opinion, leave to appeal should be granted and the appeal allowed. 29 The case on which the appellant succeeded was not raised below: however, it was a case that should have been well known to the opponent's lawyers. In my opinion, the costs below and on appeal should follow the event. 30 I propose that the following orders be made: 1. Claimant granted any necessary extension of time for this application. 2. Leave to appeal granted. 3. Claimant to file notice of appeal within fourteen days. 4. Appeal allowed with costs. 5. Order of primary judge set aside, and in lieu thereof opponent's notice of motion dismissed with costs. 31 MEAGHER ACJ: I agree. 32 HANDLEY JA: I agree. 33 MEAGHER ACJ: The orders of the Court therefore will be the orders proposed by Hodgson JA. **********

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Compensation Act 1988(Cth)

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