Baker-Morrison v State of NSW

CATCHWORDS: Res judicata - Limitation - Final decision - Separate question

Civil Liability Amendment (Personal Responsibility) Act 2002 LEGISLATION CITED: Evidence Act 1995 Limitation Act 1969 Uniform Civil Procedure Rules 2005

Baker-Morrison v State of NSW [2009] NSWCA 35 Chanel Ltd v FW Woolworth & Co Ltd [1981] 1 WLR 485 CASES CITED: Fidelitas Shipping Co Ltd v V/O Exportchleb [1996] 1 QB 630 Guthrie v Spence [2009] NSWCA 369 O'Toole v Charles David Pty Ltd (1990-1991) 171 CLR 232 Rojo Building Pty Limited v Jillcris Pty Ltd [2006] NSWSC 649

TEXTS CITED: Spencer Bower, G & Handley, KR 2009, Res Judicata, 4th ed, LexisNexis UK

PARTIES: Shakyra Baker-Morrison by her next friend Alicia Baker (Plaintiff/Applicant) State of NSW (Defendant/Respondent)

COUNSEL: Mr L King SC and R Quickenden (Plaintiff/Applicant) Mr P Menzies QC and G Bateman (Defendant/Respondent)

SOLICITORS: John Ryan Solicitor (Plaintiff/Applicant) Crown Solicitor's Office (Defendant/Respondent)

1 By notice of motion filed on 19 November 2009 the plaintiff seeks an order that para (19) of the defence be struck out. That paragraph reads: 19. In relation to the whole of the Statement of Claim the defendant says that the claim for damages is barred pursuant to the Limitation Act 1969 (NSW) and the defendant relies on such barring in answer to the whole of the plaintiff's claim.

2 The plaintiff submits that the limitation issue has already been determined by the Court of Appeal (Baker-Morrison v State of NSW [2009] NSWCA 35) and that the defendant is thereby now estopped from raising this issue in its defence.

3 The defendant opposed the motion on the basis that the Court of Appeal decision was not a final decision capable of giving rise to res judicata or issue estoppel but was an interlocutory order disposing of a notice of motion which the defendant had filed in this Court.

4 The Court's determination was assisted by written submissions supplemented by oral argument. Both parties referred to passages in Spencer Bower and Handley, Res Judicata (3rd Edition), which I understand was published in 1996. A fourth edition was published in 2009 and I propose to refer to that edition.

5 On the application counsel for the plaintiff read an affidavit from Mr Ryan, the plaintiff's solicitor, sworn on 18 November 2009.

6 The factual matters relevant to this application and which are uncontroversial, are: (a) The plaintiff allegedly sustained injury to her right hand whilst at the Gosford Police Station with her mother on 26 May 2004. She was then aged 22 months. (b) The statement of claim was filed on 21 June 2007, three years and 26 days after the date of injury. (c) By notice of motion filed on 27 November 2007 the defendant, which had not at that point filed a defence, sought an order that the plaintiff's statement of claim be struck out on the ground that it was statute barred by virtue of s 50C of the Limitation Act 1969 (NSW). The defendant did not rely upon any other ground. (d) On 27 June 2008 Judge Johnstone ordered that the statement of claim be struck out. (e) The plaintiff appealed and on 4 March 2009 the Court of Appeal allowed the appeal and dismissed the defendant's motion. (f) The defence in respect of which this application is brought was filed on 28 October 2009.

7 Division 6 of the Limitation Act 1969 (NSW), entitled Personal injury actions and which comprises s 50A to 50F applies to the plaintiff's claim. This Division was inserted by the Civil Liability Amendment (Personal Responsibility) Act 2002 (NSW).

8 For causes of action accruing on or after 6 December 2002 the limitation period for personal injury actions is three years from the date on which the cause of action is discoverable by the plaintiff. The Limitation Act now provides: 50C Limitation period for personal injury actions (1) An action on a cause of action to which this Division applies is not maintainable if brought after the expiration of a limitation period of whichever of the following periods is the first to expire: (a) the 3 year post discoverability limitation period, which is the period of 3 years running from and including the date on which the cause of action is discoverable by the plaintiff,

9 Unlike the previous regime (ss 14, 60G and 60I), the Court does not have the power to extend time in respect of matters governed by Division 6.

10 The concept of discoverable is defined as follows: 50D Date cause of action is discoverable (1) For the purposes of this Division, a cause of action is discoverable by a person on the first date that the person knows or ought to know of each of the following facts: (a) the fact that the injury or death concerned has occurred, (b) the fact that the injury or death was caused by the fault of the defendant, (c) in the case of injury, the fact that the injury was sufficiently serious to justify the bringing of an action on the cause of action. (2) A person ought to know of a fact at a particular time if the fact would have been ascertained by the person had the person taken all reasonable steps before that time to ascertain the fact. (3) In determining what a person knows or ought to have known, a court may have regard to the conduct and statements, oral or in writing, of the person. …

11 As I read the Court of Appeal decision, the focus was on the interpretation of s 50D and the factual issues which arose there under.

12 In [46] the Court concluded that the plaintiff's mother did not at any stage within the relevant period have actual knowledge sufficient to satisfy s 50D(1)(c) or in all probability subs (1)(b). The Court went on to say: 60 It was not suggested that, in the 26 day period after the accident, the plaintiff's mother should reasonably have taken any step which she did not take. Accordingly, unless the plaintiff's mother in fact had the relevant knowledge, the defence must fail.

61 It may be added that, even if an inquiry into whether the solicitor acted reasonably were called for, the State neither called evidence to show that he had failed, nor cross-examined him to suggest that he had failed, to take particular steps which he should reasonably have taken in order to supply the mother with appropriate advice or information.

13 The Court concluded that the District Court was in error in acceding to the application by the State and made the following orders:

(1) Grant leave to appeal. (2) Set aside the judgment and orders of the District Court made on 27 June 2008 and, in lieu thereof, order that: (a) the defendant's motion be dismissed, and (b) the defendant pay the plaintiff's costs of motion. (3) Order that the respondent pay the appellant's costs in this Court.

Whether the Court of Appeal decision created an estoppel

14 Mr Handley in his text (at 11) defines res judicata as a decision on the merits pronounced by a tribunal which is judicial in the relevant sense and excludes decisions on procedural grounds and decisions which are not final in any sense.

15 S 78 of the Limitation Act 1969 (NSW) (Characterisation of limitation laws) provides that a limitation law of this state is to be regarded as part of the substantive law of the state (subs (2)).

16 There was no suggestion that the decisions of Judge Johnstone and of the Court of Appeal were not on the merits.

17 The plaintiff identified the critical question as being whether the decision of the Court of Appeal, although interlocutory in the sense of varying an order made upon an interlocutory application in this Court, was relevantly final.

18 The defendant's position was that although its motion was expressed as a strike out application it was in the nature of an interlocutory application which required the Court to determine one issue, limitation, which could also have been determined at the hearing of the substantive proceedings. However, by the filing of the notice of motion, the defendant required the Court to determine this as a preliminary and separate issue. The defendant also submitted that the Court's decision ought not be characterised as final because it only disposed of the issue on the evidence before the Court at that particular time.

19 In my experience, it is not uncommon for parties to seek to have the limitation issue determined as a preliminary matter which has the attraction of avoiding the incurrence of unnecessary costs if the plaintiff were found to be statute barred as the proceedings would then be dismissed. In the past, there have been occasions involving, for example, work-related psychological injury when the Court has declined to determine limitation as a preliminary issue because the factual complexities made it difficult to ascertain when the cause of action could be said to have arisen and it was considered to be more appropriate to determine this at the hearing with the benefit of all the evidence.

20 I accept that had the defendant been successful in the Court of Appeal the statement of claim would have been struck out and the plaintiff, in theory, could have commenced fresh proceedings. In that event it could probably be anticipated that the defendant would make a further application to strike out, possibly alleging an abuse of process and in any event, given the evidence available in these proceedings the issue of discoverability would have presented an almost insurmountable obstacle for the plaintiff.

21 It was submitted on behalf of the defendant that it ought be entitled to re-litigate the limitation issue for these reasons: (a) The evidence before Judge Johnstone and the Court of Appeal was the affidavit in support of the defendant's motion, the affidavit of the plaintiff's solicitor, Mr Ryan and his oral evidence. (b) Whilst the issue on its motion called for an examination of the state of knowledge of the plaintiff's mother following injury, she did not give evidence on the hearing of the motion. The defendant, which bore the onus of proof as to her state of knowledge, fell short of establishing it. (c) Both liability and quantum of damages are in issue in these proceedings and there can be no doubt that before the final determination of the proceedings the plaintiff's mother will be giving evidence. (d) The Court of Appeal decision was based on the relevant shortfall of evidence at the time of the interlocutory proceedings, and that it cannot be taken to determine the final rights of the parties prior to the final determination of the proceedings on all the evidence which will then be adduced.

22 Whilst I accept that the plaintiff's mother did not give oral evidence on the application, it is clear from the Court of Appeal judgment, for example [21], that there was evidence from her before the Court, albeit in hearsay form, through Mr Ryan, her solicitor. As the application was interlocutory it was admissible in that form (s 75 of the Evidence Act 1995 (NSW)).

23 Issue was taken with any assertion that the defendant was powerless to adduce evidence from the plaintiff's mother/tutor. It was submitted that the defendant could have sought leave to call the plaintiff's mother/tutor and to lead oral evidence from her or could have sought leave to interrogate her in relation to this issue.

24 The plaintiff relied upon the following statement by Diplock LJ in Fidelitas Shipping Co Ltd v V/O Exportchleb [1996] 1 QB 630 at 642 which was referred to with approval by various justices in O'Toole v Charles David Pty Ltd (1990-1991­) 171 CLR 232: "Where the issue separately determined is not decisive of the suit, the judgment upon that issue is an interlocutory judgment and the suit continues. Yet I take it to be too clear to need citation of authority that the parties to the suit are bound by the determination of the issue. They cannot subsequently in the same suit advance argument or adduce further evidence directed to showing that the issue was wrongly determined. Their only remedy is by way of appeal from the interlocutory judgment and, where appropriate, an application to the appellate court to adduce further evidence ... "

25 It was submitted that this makes it clear that the defendant had the obligation to present all its relevant evidence on the motion it brought and that having failed, it ought not be entitled to re-litigate this at the hearing.

26 The plaintiff relied upon statements in Chapter 5 of Handley as authority for the proposition that to ground on estoppel the decision must finally decide some question between the parties in the proceedings although they continue on other questions, a classic example being the determination of a separate question such as liability.

27 Mr Handley observed (at 5.02) that interlocutory orders in matters of practice and procedure remain under the control of the Court and subject to review and in such matters a dismissal is not a bar to another action. It is clear from what fell from the Court of Appeal in Guthrie v Spence [2009] NSWCA 369 that applications for summary judgment fall into this category. The issue in that case was whether, for the purposes of the relevant provisions of the Limitation Act 1969 (NSW), the plaintiff was under a disability because of his mental health after his 18th birthday.

28 In Rojo Building Pty Limited v Jillcris Pty Ltd [2006] NSWSC 649, Justice McDougall referred to the third edition of Mr Handley's text and stated:

37 It is clear, as a matter of general principle, that interlocutory decisions do not ordinarily give rise to estoppels. However, there are categories of decisions which are not, for all purposes, final (or, put another way, are for some purposes interlocutory) but which, nonetheless, do give rise to estoppels. One clear example is where a question is determined as a separate question in a suit between the parties. When the court decides that question, and enters judgment accordingly, that judgment is final for the purposes of res judicata and is binding on the parties, notwithstanding that it does not finally dispose of the matters in suit.

29 The Uniform Civil Procedure Rules 2005 (NSW) provide: 28.1 Definition … In this Part, question includes any question or issue in any proceedings, whether of fact or law or partly of fact and partly of law, and whether raised by pleadings, agreement of parties or otherwise. … 28.2 Order for decision … The court may make orders for the decision of any question separately from any other question, whether before, at or after any trial or further trial in the proceedings. 28.3 Record of decision … If any question is decided under this Part, the court must, subject to rule 28.4, either: (a) cause the decision to be recorded, or (b) give or make such judgment or order as the nature of the case requires.

30 In Guthrie, the Court of Appeal observed: 17 Those rules permit the making of an order for separate determination of a question even before a defence has been filed, if the parties so agree, or if the judge directs that the question be tried…Courts commonly choose the procedural frame of a separate determination of a question as the means for litigating, in advance of a trial, a question about whether the plaintiff has been under a disability (eg Kotulski v Attard [1981] 1 NSWLR 115 at 116; State of New South Wales v Harlum [2007] NSWCA 120 at [5]).

18 When any court is engaged in activity that amounts in substance to considering a separate question, it is most important that the question be precisely formulated, and actually answered…

19 A decision of a District Court judge following the determination of a separate question can constitute a "judgment or order" for the purpose of section 127 District Court Act : Damjanovic v Sharpe Hume & Co (Services) Pty Ltd [2001] NSWCA 130 at [7]…

31 I accept that in these proceedings, no specific order under r 28.2 Uniform Civil Procedure Rules 2005 (NSW) was made for the separate determination of the limitation issue. However: (a) In my view, the decision of Judge Johnstone and that of the Court of Appeal ought be characterised as decisions upon what was, in reality, a separate question, namely, whether the plaintiff's statement of claim was statute barred. (b) It is clear from its notice of motion and affidavit in support that the only basis upon which the defendant sought relief was that the claim was statute barred. In [14], the Court of Appeal recorded that: Although the State had not pleaded to the statement of claim, the plaintiff accepted that by filing a notice of motion seeking to strike out that pleading, it was, in effect, giving notice that it sought to rely upon a limitation defence and that the defence warranted summary dismissal of the proceedings…

(c) The defendant posed for the Court one question, which was whether the claim was statute barred, and the parties joined issue on that question. (d) The defendant did not, in my view, properly contend that the plaintiff's statement of claim was an abuse of process. The fact that proceedings have been commenced outside the limitation period does not of itself deprive the Court of jurisdiction to hear and determine the matter nor does it operate to deprive the plaintiff of a cause of action. What it does, however, is to provide the defendant with a potential defence which, if relied on successfully will be a complete answer to the plaintiff's claim.

32 Whilst the decision of the Court of Appeal was, in one sense, interlocutory because, given the Court's decision, it did not result in disposal of the proceedings, in another sense, in my view, it ought be regarded as final because it disposed of the question which the Court was asked to determine, namely, whether the proceedings had been commenced within time as though this had been formulated as a separate question.

33 Subject to one matter, to which I shall shortly refer, the Court concludes that the decision of the Court of Appeal was relevantly final, in that it was a final decision on the separate issue of limitation with the consequence that the defendant is now estopped from asserting in its defence that the plaintiff's claim is statute barred.

34 The defendant referred to statements in the third edition of the Handley text at [172] which now appear at [5.32] of the fourth edition in a revised version. The learned author makes the statement that the dismissal of an interlocutory application on procedural grounds or on merits is not final and does not bar a further application which is unlikely to succeed unless supported by additional evidence on a different argument. Mr Handley then makes the observations: …Courts have sometimes enforced a requirement for the additional evidence to be fresh but in other cases a second application has been granted on evidence which should have been before the Court on the first.

35 On the issue of fresh, Mr Handley referred to the following statement by Buckley LJ in Chanel Ltd v FW Woolworth & Co Ltd [1981] 1 WLR 485, 492-493: Even in interlocutory matters a party cannot fight over again a battle which has already been fought unless there has been some significant change of circumstances, or the party has become aware of facts which he could not reasonably have known, or found out in time.

36 I do not consider that this assists the defendant's argument because, although the issue was brought before the Court by way of an interlocutory application, I do not consider that it ought be characterised as a procedural matter. Further, for the purposes of considering the issue of finality in this context regard ought be had to the substance of the application rather than its form and I have already stated what I consider the substance to be. In any event, once issue estoppel or res judicata applies, the question of fresh or different evidence becomes irrelevant as the practical effect of estoppel is to prevent re-litigation of the same question.

The Court orders that: 1. Para [19] of the defence filed on 28 October 2009 be struck out. 2. The defendant pay the plaintiff's costs of the motion (including fees for senior counsel). The Court notes that the claim for indemnity costs is not pressed.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.