Bestcare Foods v Origin Energy; Origin Energy v Bestcare Foods

Supreme Court of NSW|2007-04-19|Before: Hammerschlag J

Introduction 1 The question before the Court is whether cl 3 of the Civil Liability Amendment (Proportionate Liability) Regulation 2004 (NSW) made on 1 December 2004 by the Governor under the Civil Liability Act 2002 (NSW) ("the Act") is invalid because it is beyond the regulation making power conferred on the Governor under the Act to the extent that it purports to amend the Civil Liability Regulation 2003 (NSW) relevantly by inserting into it the following regulation ("the Regulation"): 3 Proportionate Liability Any civil liability to which Part 4 of the Act would have applied but for this clause is excluded from the operation of that Part, and from the operation of clauses 6 and 13 of Schedule 1 to the Act in their application to that Part, if the liability arose before 26 July 2004. 2 There are two sets of proceedings in which this issue arises. In the first, the plaintiff Bestcare Foods Limited ("Bestcare") sues the defendant Origin Energy LPG Limited ("Origin") for damages in connection with an explosion which occurred on 25 January 2003 at Bestcare's dog food factory. The outcome of those proceedings may be affected by the validity or otherwise of the Regulation. There is in those proceedings an order made on a motion for separate determination of the question: "Is regulation 3 of the Civil Liability Regulation 2003 (NSW) invalid?". In the second set of proceedings Origin sues Bestcare by summons for a declaration that the Regulation is invalid and has joined the Attorney-General for the State of New South Wales as second defendant. The Act 3 The Act itself came into force on 20 March 2002. It is an Act which makes, amongst other things, provision in relation to recovery of damages for death or personal injury caused by the fault of a person. The Act was amended by the Civil Liability Amendment (Personal Responsibility) Act 2002 (NSW) which, amongst other things, inserted Pt 4 with effect from 1 December 2004. Part 4 is entitled "Proportionate liability" and comprises ss 34 to 39 of the Act. 4 Section 3B of the Act provides:

(1) The provisions of this Act do not apply to or in respect of civil liability (and awards of damages in those proceedings) as follows: (a) civil liability of a person in respect of an intentional act that is done by the person with intent to cause injury or death or that is sexual assault or other sexual misconduct committed by the person - the whole Act except:

(i) section 15B and section 18 (1) (in its application to damages for any loss of the kind referred to in section 18 (1) (c)), and (ii) Part 7 (Self-defence and recovery by criminals) in respect of civil liability in respect of an intentional act that is done with intent to cause injury or death,

(b) civil liability in proceedings of the kind referred to in section 11 (Claims for damages for dust diseases etc to be brought under this Act) of the Dust Diseases Tribunal Act 1989 - the whole Act except sections 15A and 15B and section 18 (1) (in its application to damages for any loss of the kind referred to in section 18 (1) (c)), (c) civil liability relating to an award of personal injury damages (within the meaning of Part 2) where the injury or death concerned resulted from smoking or other use of tobacco products - the whole Act except section 15B and section 18 (1) (in its application to damages for any loss of the kind referred to in section 18 (1) (c)), (d) civil liability relating to an award to which Part 6 of the Motor Accidents Act 1988 applies - the whole Act except the provisions that subsection (2) provides apply to motor accidents, (e) civil liability relating to an award to which Chapter 5 of the Motor Accidents Compensation Act 1999 applies (including an award to and in respect of which that Chapter applies pursuant to section 121 (Application of common law damages for motor accidents to railway and other public transport accidents) of the Transport Administration Act 1988) - the whole Act except the provisions that subsection (2) provides apply to motor accidents, (f) civil liability relating to an award to which Division 3 of Part 5 of the Workers Compensation Act 1987 applies - the whole Act, (g) civil liability for compensation under the Workers Compensation Act 1987, the Workers Compensation (Bush Fire, Emergency and Rescue Services) Act 1987, the Workers' Compensation (Dust Diseases) Act 1942, the Victims Support and Rehabilitation Act 1996 or the Anti-Discrimination Act 1977 or a benefit payable under the Sporting Injuries Insurance Act 1978 - the whole Act. (2) The following provisions apply to motor accidents: (a) Divisions 1-4 and 8 of Part 1A (Negligence), (a1) section 15B (Damages for loss of capacity to provide domestic services), (b) section 15C (Damages for loss of superannuation entitlements), (c) section 17A (Tariffs for damages for non-economic loss), (c1) section 18 (1) (in its application to damages for any loss of the kind referred to in section 18 (1) (c)), (d) Division 7 (Structured settlements) of Part 2, (e) Part 3 (Mental harm), (f) section 49 (Effect of intoxication on duty and standard of care), (g) Part 7 (Self-defence and recovery by criminals), (h) Part 8 (Good samaritans). (3) The regulations may exclude a specified class or classes of civil liability (and awards of damages in those proceedings) from the operation of all or any specified provisions of this Act. Any such regulation may make transitional provision with respect to claims for acts or omissions before the commencement of the regulation. 5 Section 34(1) of the Act provides: 34 Application of Part (1) This Part applies to the following claims (apportionable claims): (a) a claim for economic loss or damage to property in an action for damages (whether in contract, tort or otherwise) arising from a failure to take reasonable care, but not including any claim arising out of personal injury, (b) a claim for economic loss or damage to property in an action for damages under the Fair Trading Act 1987 for a contravention of section 42 of that Act. 6 Section 35 provides for proportionate liability between defendants for apportionable claims. Section 35A provides for a defendant to proceedings involving an apportionable claim to give the plaintiff information about other persons who may be concurrent wrongdoers. The regulation making power 7 There are three provisions in the Act concerning the power to make regulations: ss 4(2), 3B(3) and par 1(1) of Schedule 1. 8 Section 4(2) of the Act entitled "Regulations" provides as follows: The Governor may make regulations, not inconsistent with this Act, for or with respect to any matter that by this Act is required or permitted to be prescribed or that is necessary or convenient to be prescribed for carrying out or giving effect to this Act. 9 Section 4(4) of the Act which is entitled "Savings and transitional provisions" provides that "Schedule 1 has effect." 10 Schedule 1 to the Act ("the Schedule") is entitled "Savings and transitional provisions". It contains (amongst others) the following paragraphs in the Parts designated: Part 1 Preliminary Regulations 1 (1) The regulations may contain provisions of a savings or transitional nature consequent on the enactment of the following Acts: this Act Civil Liability Amendment (Personal Responsibility) Act 2002

Civil Liability Amendment Act 2003 Civil Liability Amendment (Offender Damages) Act 2004 Civil Liability Amendment (Offender Damages) Act 2005 Civil Liability Amendment (Food Donations) Act 2005 Confiscation of Proceeds of Crime Amendment Act 2005 (but only to the extent that it amends this Act) Civil Liability Amendment (Offender Damages Trust Fund) Act 2005

Part 3 Provisions consequent on enactment of Civil Liability Amendment (Personal Responsibility) Act 2002 6. Application of Amendments 6(1) The amendments to this Act made by the 2002 amending Act extend to civil liability arising before the commencement of the amendments, but do not apply to or in respect of proceedings commenced in a court before that commencement. 6(2) Despite subclause (1), the following provisions of this Act (as inserted by the 2002 amending Act) apply to and in respect of proceedings commenced in a court on or after 3 September 2002 (except in respect of a decision of the court made before the commencement of this clause):

(a) Part 7 (Self-defence and recovery by criminals),

(b) section 30 (Limitation on recovery for pure mental harm arising from shock). 13. Application of amendments concerning proportionate liability Clause 6 (1) extends to Part 4 (as inserted by the Civil Liability Amendment (Personal Responsibility) Act 2002 and amended by the amending Act).

The Regulation and its effect 11 The Schedule is part of the Act. Paragraph 6(1) of the Schedule extends the operation of the Act to civil liability arising before 1 December 2004 but not to proceedings commenced before that date. By the Regulation, however, any civil liability to which Pt 4 of the Act would have applied is excluded from the operation of par 6 of the Schedule if the liability concerned arose before 26 July 2004. 12 The object of the Regulation is, according to its accompanying explanatory note, to bring the application of the Act into line with Commonwealth legislation in respect of proportionate liability. Is the regulation within power? 13 According to the explanatory note, "[t]his Regulation is made under the Civil Liability Act 2002, including ss 3B and 4(2) (the general regulation-making power)". 14 The Regulation diminishes and derogates from rights conferred under par 6(1) of the Schedule and to that extent it is inconsistent with the Act: Vwok v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 336 at [33] per Crennan J. It cannot therefore be sustained as being within "the general regulation-making power" under s 4(2) of the Act read on its own. In that regard the position here is on all fours with that considered by Street CJ in Ira, L & AC Berk Ltd v The Commonwealth of Australia (1930) 30 SR (NSW) 119 at 122. The Regulation was not sought to be saved on the basis that s 4(2) standing alone authorises it. A contention to that effect originally put was abandoned at the hearing. 15 The Regulation was, however, submitted to be within power on two bases on behalf of Bestcare by Ms Perry QC (with whom Mr Weinberger appeared), namely firstly that the Regulation is a savings or transitional provision permissible under par 1(1) of the Schedule, and secondly, on the basis that the Regulation comes within the express terms of s 3B(3). 16 Both bases were originally put by Mr Perram SC with whom Mr Kuklik appeared for the Attorney, however the first basis was abandoned in supplementary submissions made by the Attorney in writing after the hearing.

17 As to the first basis, that the Regulation is a savings or transitional provision permissible under par 1(1) of the Schedule, it was accepted that the Regulation was in its terms or its operation (or both) inconsistent with par 6(1) of the Schedule but it was put that this was nevertheless permissible because the words in s 4(2) "not inconsistent with this Act" mean not inconsistent with the Act as a whole, par 1(1) of the Schedule is just as much part of the Act as is s 4(2), and that paragraph itself has no limitation that a regulation under it not be inconsistent with the Act. In conjunction with this submission it was put that it was inevitable (that is there was no conceptual possibility to the contrary) that any savings or transitional regulation contemplated in par 1(1) of the Schedule would be inconsistent with the remainder of Pt 3 of the Schedule. 18 Hence, it was put, so as to give par 1(1) of the Schedule any field of operation, it must be read as authorising regulations inconsistent with other provisions in Pt 3 of the Schedule. Support for this approach was derived from the principles of statutory construction referred to in the well known passage in the judgment of the High Court in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381-382. Those principles include that a court construing a statutory provision must strive to give meaning to every word of the provision and must strive to give each provision the meaning which best gives effect to its purpose and language while maintaining the unity of the statutory scheme. 19 The first basis put is, in my view unsustainable. In Project Blue Sky Inc v Australian Broadcasting Authority the High Court cited with approval the statement of Lord Herschell LC in Institute of Patent Agents v Lockwood [1894] AC 347 at 360 to the effect that "[r]econciling conflicting provisions will often require the Court to determine which is the leading provision and which is the subordinate provision, and which must give way to the other". Paragraph 1(1) of the Schedule is not a separate and independent regulation making power. "The regulations" referred to in that paragraph are regulations which are made, and only made, under s 4(2). Section 4(2) is the leading provision and par 1(1) of the Schedule, the subordinate one. Paragraph 1(1) must give way to s 4(2). Any regulation which is made must not be inconsistent with the Act even if it is a regulation under par 1(1) of the Schedule and there is nothing in that paragraph which either expressly or by implication permits an outcome inconsistent with other provisions of the Act. 20 It also is not the case, in my view, that every conceivable savings or transitional provision capable of being made under par 1(1) of the Schedule necessarily involves inconsistency with - that is diminution of or derogation from rights granted under - other provisions of Pt 3 of the Schedule. It was accepted by Mr Perram on behalf of the Attorney that if there was scope for a savings or transitional provision made under par 1(1) of the Schedule which was not inconsistent with other provisions in Pt 3 of the Schedule, the argument was bound to fail. 21 Mr Gageler SC who, together with Mr Smith, appeared for Origin, gave the following example of a conceivable savings or transitional provision permissible under par 1(1) of the Schedule which would not be inconsistent with Pt 3 of the Schedule. Paragraph 6(2) of the Schedule refers to Pt 7 of the Act (which amongst others gives a defence of self-defence). It introduces what would be a new defence in respect of proceedings already commenced in a court. An example of a valid savings and transitional regulation which was not necessarily inconsistent with Pt 3 of the Schedule would, he put, and I agree, be one which was directed to the costs of proceedings commenced on or after 3 September 2002 and on foot at the time Pt 7 of the Act commenced. 22 Counsel for Bestcare submitted that although a regulation in those terms would be valid under s 4(2) and par 1(1) of the Schedule, it would nonetheless be inconsistent with Pt 3 of the Schedule. It was submitted that prior to such a regulation being made, the determination of a defendant's entitlement to costs upon the plaintiff discontinuing the matter would have depended upon the ordinary rules as to costs. The Schedule left those rights and liabilities intact, and provided for the status quo ante to be maintained notwithstanding the enactment of Pt 7 of the Act. The proposed regulation alters those rights and liabilities and hence would necessarily be inconsistent with the Schedule. I do not agree. The Act neither expressly nor impliedly provides for rights and liabilities in relation to costs, and consequently the proposed regulation does not present any inconsistency in that regard. 23 Further, in my view, there is scope for regulations contemplated in par 1(1) of the Schedule to work in a subordinate way with s 3B(3) as might be thought to be the case with the Regulation in this case, as appears below. 24 I turn to the second basis put, namely, that the Regulation comes within the express terms of s 3B(3). This provision, which like the Schedule is equally part of the Act, has a different quality to par 1(1) of the Schedule. It expressly contemplates the exclusion by regulation from the operation of the Act of a specified class or classes of civil liability which would otherwise be covered. Whether or not this inevitably entails the regulation being inconsistent with the Act, it, in my view, contemplates that possibility. Because this possibility is contemplated by the Act itself, a regulation within it is not inconsistent with the Act. 25 For the exclusion by regulation under s 3B(3) to be valid it must satisfy the requirement of being an exclusion of a specified class or classes of civil liability. 26 The question is thus whether what is excluded by the Regulation from the operation of the Act is a specified class or classes of civil liability. 27 Mr Gageler put that what was excluded here was not a "class of civil liability". 28 The argument entailed the following series of propositions. The term "civil liability" is not itself defined in the Act; the heads of civil liability specified in ss 3B(1) and 3B(2) were all classes of civil liability where the class is delineated by the circumstances giving rise to the liability; the term "class or classes of civil liability" in s 3B(3) should be construed ejusdem generis (or perhaps more accurately noscitur a sociis: Prior v Sherwood (1906) 3 CLR 1054) to mean a category or categories of civil liability so delineated, and delineated only, by specified circumstances without any temporal barrier; here the purported delineation imposed by the Regulation was according to time and not circumstance; ergo the delineation here was not by "class or classes of civil liability". 29 In my view this argument is unsustainable. 30 Part 4 of the Act is concerned with what are termed apportionable claims which are delineated by the circumstances giving rise to those claims. The Part does not cover the entire field of civil liability. A class is a group the members of which come within a certain category or description defined by a general or collective formula: Pearks v Moseley (1880) 5 App Cas 714 at 723 per Lord Selborne; ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No1) (1990) 27 FCR 460 at 488. The term "class" is defined in the Macquarie Concise Dictionary, 4th ed at 221 as "a number of persons, things, animals etc., regarded as forming one group through the possession of similar qualities; a kind; sort". In my view, Pt 4 applies to a category or categories of civil liability. Hence, in my view, the Part represents a class or classes of civil liability defined by a general or collective formula. 31 This delineation is according to the circumstances which give rise to the civil liability concerned. 32 Additionally, there is difficulty with the proposition that the meaning of "class or classes of liability" in s 3B(3) is to be interpreted ejusdem generis with ss 3B(1) and 3B(2). The term "class or classes" is not to be found in the earlier subsections. There does not seem to be a discernible and workable genus capable of being extracted from the earlier subsections: The King v Regos & Morgan (1947) 74 CLR 613 at 623-623 per Latham CJ; Canwan Coals Pty Ltd v Commissioner of Taxation [1974] 1 NSWLR 728 at 733. Finally, even if the ejusdem generis canon of construction were to be appropriate, no good reason was proffered why Pt 4 claims do not fall into the genus derived from the earlier subsections. 33 Mr Gageler was ultimately driven to put that if Pt 4 claims were a class (as they appeared to be on the basis that they were defined by circumstance) the addition of a timing element in the Regulation took the category of Pt 4 claims covered out of the notion of a class. He accepted that on this analysis a regulation excluding Pt 4 simpliciter would be good, but one excluding the Part only from a particular point in time was bad. This is an outcome which exposes, in my view, the proposition as being unsustainable both in logic and on policy grounds.

34 There is in any event, in my view, no good reason why a class cannot, on ordinary principles, be determined by a time limit. 35 I was referred to the decision of the Court of Appeal in the State of New South Wales v Law [1992] 45 IR 62 in which a challenge was upheld to an order of the Governor as being beyond the power conferred by the enactment in that case namely, s 46(1) of the State Authorities Superannuation Act 1987 (NSW). The provision there empowered the Governor to amend Schedule 2 of that Act which listed certain categories of employees who were excluded from the definition of "employee" in the Act and thereby the operation of the superannuation scheme which it established. The Governor purported to order, by the device of amending the Schedule, to "close off" the scheme in circumstances where there was no express provision in the Act for the scheme to be closed to eligible employees who elected to contribute. The order was held to be beyond power because properly characterised, its effect was not to amend Schedule 2, but in substance, to repeal or suspend the operation of the Act in respect of all persons otherwise entitled by its terms to the benefits conferred by Parliament: per Kirby P at 74. The Court adopted what was said by Woodhouse P in Combined State Unions v State Service Co-ordinating Committee [1982] 1 NZLR 742 (CA) namely, that: "[i]t is an important constitutional principle that subordinate legislation cannot repeal or interfere with the operation of a statute except with the antecedent authority of Parliament itself. It is a constitutional principle because it gives effect to the primacy of Parliament in the whole field of legislation. And as a corollary, a rule of construction springs from it that the Courts will not accept that Parliament has intended its own enactments to be subject to suspension, amendment or repeal by any kind of subordinate legislation at the hands of the Executive unless direct and unambiguous authority has been expressly spelled out to that effect, or is to be found as a matter of necessary intendment, in the parent statute." 36 Here, unlike the position in Law's case, s 3B(3) contemplates an exclusion by regulation provided it is the exclusion of a class or classes of civil liability. 37 The proposition put by Ms Perry was that the class here was bounded by both circumstances and time. In my view, a category or description defined by circumstance is no less a category or description if it is further limited by a time element. I consider this submission to be sound. 38 Moreover, if it were the case that s 3B(3) confined the concept of class to be one bound by circumstances only, the addition of a temporal element subordinate to it could be added using the subordinate general transitional power contemplated in par 1(1) of the Schedule, which would be a convenient saving or transitional regulation. 39 In my view the Regulation is validly made. 40 The answer to the separate question: "Is regulation 3 of the Civil Liability Regulation 2003 (NSW) invalid?" is thus No. 41 The summons is dismissed with costs. Origin is to pay the costs of the motion and the determination of the separate question. **********

19/04/2007 - Spelling error corrected - Paragraph(s) 19 23/04/2007 - Missing words "a timing element in" inserted into paragraph 33Correction of file number from 50180/2005 to 50170/2005 on coversheet - Paragraph(s) 33 and coversheet 24/04/2007 - Correction of file number from 50180/2005 to 50170/2005 - Paragraph(s) Coversheet

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Civil Liability Amendment (Proportionate Liability) Regulation 2004(NSW)

Civil Liability Regulation 2003(NSW)

Civil Liability Amendment (Personal Responsibility) Act 2002(NSW)

CITATION : Bestcare Foods v Origin Energy; Origin Energy v Bestcare Foods [2007] NSWSC 354 This decision has been amended. Please see the end of the judgment for a list of the amendments.

Vwok v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 336 Ira, L & AC Berk Ltd v The Commonwealth of Australia (1930) 30 SR (NSW) 119 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 Institute of Patent Agents v Lockwood [1894] AC 347 Prior v Sherwood (1906) 3 CLR 1054 CASES CITED : Pearks v Moseley (1880) 5 App Cas 714 ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No1) (1990) 27 FCR 460 The King v Regos & Morgan (1947) 74 CLR 613 Canwan Coals Pty Ltd v Commissioner of Taxation [1974] 1 NSWLR 728 State of New South Wales v Law [1992] 45 IR 62 Combined State Unions v State Service Co-ordinating Committee [1982] 1 NZLR 742 (CA)

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