Australian Croatian Cultural and Educational Association "Braca Radici" Blacktown Ltd v Benkovic; Australian Croatian Cultural and Educational Association "Braca Radici" Blacktown Ltd v BAB Tiling Pty Ltd

LOWER COURT JURISDICTION : District Court LOWER COURT FILE NUMBER(S) : 8649/97 8780/97 LOWER COURT JUDICIAL OFFICER : McLoughlin ADCJ

COUNSEL : A - I Wales SC; J Priestley R - B Robison SOLICITORS : A - Low Doherty & Stratford, Blacktown R - David Landa Stewart, Broadway CATCHWORDS : Limitation Act - Trial judge's decision reversed. ACTS CITED : Limitation Act 1969 CASES CITED: Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 Sydney City Council v Zegarac (1998) 43 NSWLR 195 DECISION : Appeal allowed with costs

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 41045/98 CA 41046/98 DC 8649/97 DC 8780/97

MASON P MEAGHER JA COLE AJA

AUSTRALIAN CROATIAN CULTURAL AND EDUCATIONAL ASSOCIATION "BRACA RADICI" BLACKTOWN LIMITED v Boris BENKOVIC AUSTRALIAN CROATIAN CULTURAL AND EDUCATIONAL ASSOCIATION "BRACA RADICI" BLACKTOWN LIMITED v BAB TILING PTY LIMITED JUDGMENT 1 MASON P: The facts relevant to these two appeals are set out in the judgment of Cole AJA. 2 I was for a time troubled about proceeding on the basis of the respondents' concession that there was error in the trial judge confining himself to presumptive prejudice during the (two and a half year) period starting from the date on which the primary limitation period expired. It is clear that this would have involved error of law in the application of the Queensland statute (Limitation of Actions Act 1974 (Qld), s31) considered in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541. As I pointed out in Sydney City Council v Zegarac (1998) 43 NSWLR 195 at 200, it is not clear to me that there would be error of principle in choosing to take that position in a particular case in New South Wales in the light of s60E(1)(b) of the Limitation Act 1969. See also per Priestley JA at 222. 3 However, the impact of delay on the quality of justice is not the only relevant factor (see Brisbane South at 552 per McHugh J). As Cole AJA points out, stale justice harms other interests as well, including the interests of persons in utilising their resources on the basis that claims can no longer be made against them. These were of particular relevance in a case brought against an uninsured voluntary association with a floating membership. It is the omission to have any regard to those interests and a particular error of fact (referred to at par 6, below) that persuade me that the primary judge's discretion miscarried. 4 Exercising the discretion afresh, I am not satisfied that it is "just and reasonable" to make the order for extension even though the delay has not made a fair trial unlikely (cf Brisbane South at 550). There is no evidence of actual prejudice. Indeed, presumptive prejudice has probably been negated because the appellant was notified of the risk of a claim as early as April 1994, eight months after the accident. The respondent Mr Benkovic was the only witness to the accident and he submitted himself to fairly extensive questioning by an investigator representing the body then thought to be the association's insurer. The record of this interview reads like a deposition. Photographs of the offending scaffolding were taken. In these circumstances, I incline to the view that this is one of those rare cases where even presumptive prejudice has been negated. I do not think that a fair trial of the issues is likely to be compromised in any way by the respondents' delay. 5 But the Court must be satisfied that it is "just and reasonable". The expression is probably a hendiadys. However, the added emphasis conveyed by the word "reasonable" is critical. As Cole AJA points out, the respondents made a fully informed decision, based upon legal advice, not to bring proceedings against the association within the primary limitation period. The decision was taken because Mr Benkovic did not wish to cause the uninsured association financial difficulties. No conduct of the association contributed to this decision. 6 The respondents seek to resile on the basis of Mr Benkovic's change of heart towards some or all of the members of the association. The reasons were personal to Mr Benkovic and the change actually occurred before the limitation period expired. (It would appear that this was overlooked by the primary judge, who referred to Mr Benkovic having allowed the time to pass because of his deep emotional contact with club members and with the cultural centre from the period of the accident to a period "shortly after the three year period expired" (p2 of judgment. See also p 3.6) 7 The respondents submitted that their initial decision not to sue the uninsured association conferred a "boon" upon it. They contend that when there was the later falling out and when it was confirmed that Mr Benkovic's injuries were serious and continuing it became just and reasonable to extend time. The difficulty with this argument is that the "boon" is essentially illusory and the argument essentially circular. 8 It is true that Mr Benkovic appears to have suffered a significant, continuing physical injury productive of financial loss. This is clearly a relevant factor (cf. s60E(1)). But so too are several other factors mentioned in the remaining paragraphs of the subsection. In this regard, it is pertinent that proceedings were commenced in time against the painting company that erected the scaffolding from which Mr Benkovic fell. If the respondents have a good cause of action, then that company would appear to be the primary target. Perhaps it is without funds or insurer, but the evidence is silent on this matter. 9 Indeed it may be the only available target, although this issue was not debated below. For that reason, I do not regard this as a further instance of an error in the exercise of the primary judge's discretion. This said, it is a factor in the exercise of mine. I think it relevant to pay regard to my perception that the respondents would be likely to have difficulties in making good their putative claims against the association. I have not been referred to evidence suggesting that the association was responsible in any way for the erection of the scaffolding or that it would have owed a non-delegable duty of care to the respondents in relation to the scaffolding . 10 I agree with the orders proposed by Cole AJA. 11 MEAGHER JA: I agree with Cole AJA. 12 COLE AJA: In a judgment dated 2 December 1998 McLoughlin ADCJ granted to prospective plaintiffs, Boris Benkovic and his company BAB Tiling Pty Limited, an extension of time to permit each of them to join Australian Croatian Cultural and Educational Association "Braca Radici" Blacktown Limited ("the association") as a defendant. Mr Benkovic was injured on 6 July 1993 when he fell from a painting scaffold whilst performing voluntary work at the association's premises. Mr Benkovic and his company have also sued the owners of the scaffolding from which he fell. 13 The association sought leave to appeal from the decision of McLoughlin ADCJ. That leave was granted after counsel for Mr Benkovic accepted that the judgment disclosed error of principle. The error accepted was that, in the circumstances where the application for an extension of time was brought five and a half years after the accident, the limitation period being three years, the Judge held that he must "make some allowance for the presumptive prejudice that may flow within that two and a half year period", being the two and a half year period after the limitation period expired. Mr Benkovic's counsel accepted that the decision of the High Court in Brisbane South Regional Health Authority v Taylor 186 CLR 541 required that regard be had to presumptive prejudice throughout the entire five and a half years, not merely the two and a half years after the expiry of the limitation period See McHugh J 186 CLR at 556 cf Sydney City Council v Zegarac (1998) 43 NSWLR 195 at 200E. 14 Certain matters were not in dispute either at the hearing before the primary Judge or in these appeals. They include the following:

(i) Mr Benkovic was seriously injured on 6 July 1993 when he fell from a painting scaffold whilst performing voluntary work at the appellants' premises. He suffered two broken ankles and has since been seriously disabled. This has greatly restricted his capacity to work since that time.

(ii) Prior to the expiration of the three year limitation period Mr Benkovic was fully aware of the serious nature of his injuries, of the fact that they had disabled him from working up to that time, and of the circumstance that they would continue to disable him from working for a significant period of time in the future.

(iii) Mr Benkovic sought legal advice from a competent solicitor in April 1994, eight months after the accident. In March 1994 his solicitor forwarded a letter of demand to the association. In May 1994 the association completed a claim form at the request of its insurer having given notice of the accident to its insurer. In January 1995 the insurer advised the association that the policy did not cover the accident. Counsel were briefed on Mr Benkovic's behalf in April 1995. Between July 1993 and July 1995 Mr Benkovic received moneys weekly under his own personal insurance policy.

(iv) On 28 June 1996 Mr Benkovic consulted his solicitor. He was informed that it appeared that the association had no responding insurance policy. Mr Benkovic informed his solicitor that he did not wish to sue the association if it did not have an insurance policy to back it as he did not wish to cause it financial difficulties. He instructed his solicitor not to commence proceedings against the association.

(v) When Mr Benkovic gave those instructions to his solicitor, he was fully aware of the nature, extent and likely permanence of his injuries. He was fully aware of the provisions of the Limitation Act 1969 and of the circumstance that his rights to claim against the association would be statute barred if he did not commence proceedings prior to 6 July 1996. With that knowledge he elected not to sue the association.

(vi) Mr Benkovic had been a long time member of the association serving on its executive, and during 1994 and until December 1995 as treasurer. During most of the three year limitation period he had a good relationship with the association and its members. That position changed. His feeling towards the association and its members had changed prior to June 1996 Transcript 27 November 1998 p8 l15 and following. . His membership lapsed in October 1996. Nonetheless, with adverse feelings towards the membership of the association, with knowledge of the seriousness and permanence of his disabilities, and with knowledge that if he did not sue the association by 6 July 1996 he would be barred from doing so, he instructed his solicitor not to do so. The reason advanced for that decision was that he did not wish cause hardship to the association, it being uninsured, nor did he wish to be seen within his community as destroying or damaging the association.

(vii) Subsequent to June 1996, he changed his mind and wished to sue the association because he did not "like the treatment [he] received", presumably from the association or its members. 15 At the hearing before the primary Judge, and this Court, it was accepted that the association had suffered no actual prejudice from the delay in commencement of proceedings up to the time when the application was brought for an extension of time. Mr Benkovic contended that there was no "presumptive prejudice". This was because of a number of factors. First, there were no witnesses to the accident. Ultimately, the outcome of litigation would depend upon the acceptance or rejection of his evidence. This submission was put notwithstanding suggestions by the association that he had given different accounts concerning the accident at different times. Second, eight months after the accident, in March 1994, the association was put on notice of Mr Benkovic's claim by the letter of demand from his solicitor. Subsequent to that, he attended a conference with the association's insurer which had also engaged an investigator. He attended an interview and a transcript was kept of his account of the accident. It is apparent from that transcript that the association had photographs of various aspects of the accident scene. Thus, there had been early investigation on behalf of the association of the accident. It was contended that there being no actual or presumptive prejudice to the association, having regard to the factors referred to in s.60E of the Limitation Act, the interests of justice required the granting of an extension of time. Reliance was placed upon the passage in the judgment of Toohey and Gummow JJ in Brisbane South Regional Health Authority 186 CLR at 550 where their Honours said the real question is "whether the delay has made the chances of a fair trial unlikely. If it has not, there is no reason why the discretion should not be exercised in favour of the respondent". 16 In my view it was an erroneous exercise of the discretion to grant an extension of time. Presumptive prejudice from delay includes, not only the unavailability of evidence, but a possible diminution in the clarity or quality of evidence. This was alluded to by McHugh J in Brisbane South Regional Health Authority who also referred to other factors of importance in considering the justice of granting an extension. Such factors include the oppressiveness on a defendant of permitting an action to be brought distant from an accident, the desirability of persons and corporations being able to organise their affairs on the basis of certainty of knowledge, and the unfairness of imposing on later interest holders in a defendant a liability for events which may have preceded their interest in the defendant. This latter factor has considerable weight where the defendant is not insured. 17 Although the ratio to be drawn from Brisbane South Regional Health Authority may not be easy to state with precision, two things are entirely clear. The first is that the applicant bears an onus of establishing that the justice of the case requires the granting of an extension of time. The second is that the justice of a case requires consideration of the particular circumstances of each case. 18 In my judgment, the justice of the case does not require the granting of an extension of time in this instance. Mr Benkovic with full knowledge of the accident, with full knowledge of his injuries, their severity and likely permanence, with full knowledge of difficult financial circumstances in which he was placed in the twelve months since his personal insurance policy had expired in July 1995, with full knowledge of his diminished or diminishing relationship with the association and its members, and with full knowledge of the provisions of the Limitation Act and the circumstance that if he did not sue the association by 6 July 1996, he would be unable to sue the association, determined that he would not sue the association and so instructed his solicitor. 19 The only change in circumstances since that decision is that his relationship either with the association or its members has further deteriorated. I am unable to see that that factor alone requires, as a matter of justice, that he now be permitted to sue the association. 20 I am of the view that in each of these two matters the appeals should be allowed, the orders of McLoughlin DCJ set aside, and the respondents should pay the appellant's costs of the appeal and the motions but should have, if qualified, a certificate under the Suitors Fund Act 1951 in respect of the appeal. * * * * * * * * * *

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