McKain v RW Miller & Company

McKain v RW Miller & Company - [1991] HCA 56 - HCA 1991 case summary — Zoe

[41]

23. Dicey, in his first edition, commented that English lawyers give "the widest possible extension to the meaning of the term 'procedure'". The Conflict of aws (1896), p 712. In Maxwell v. Murphy Dixon C.J. (1957) 96 CLR, at p 267 referred to the "inveterate tendency of English law to regard some matters as evidentiary or procedural which in reality must operate to impair or destroy rights in substance". Various historical explanations have been offered for this tendency. Lorenzen, op. cit., p 496. Obviously, it developed in the context of transnational rather than intranational disputes such as occur within a federation. The tendency developed at a time when the importance of international judicial comity may not have been given the same recognition it nowadays commands. See, e.g., The Abidin Daver (1984) AC 398, per Lord Diplock at p 411; Spiliada Maritime Corporation v. Cansulex Ltd (1987) AC 460, at p 477; Oceanic Sun Line Special Shipping Company Inc. v. Fay [1988] HCA 32; (1988) 165 CLR 197, per Wilson and Toohey JJ. at p 212; Deane J. at pp 250, 253-254, and when the notion of forum shopping was not considered as objectionable a practice as it now is. Breavington v. Godleman (1988) 169 CLR, at pp 88, 113, 161, 170; cf. The Atlantic Star (1973) QB 364, per Lord Denning M.R. at p 382. In contrast to the first edition, the eleventh edition of Dicey and Morris notes that, in general, the practice of giving a broad scope to the classification of a matter as procedural has fallen into disfavour because of its tendency to frustrate the purposes of choice of law rules. Dicey and Morris on the Conflict of Laws, 11th ed. (1987), vol. 1, p 173. Evidence of this change of practice is substantial. English Law Commission, Classification of Limitation in Private International Law, Report No. 114, (1982), pp 6-11; Foreign Limitation Periods Act 1984 (UK); s. 23A of the Prescription and Limitation (Scotland) Act 1973 (Scot.); Art. 10(1)(d) of the EEC Convention on the Law Applicable to Contractual Obligations. Moreover, the rationale behind the change - that choice of law rules should operate to fulfil foreign rights - is in conformity with the approach of the majority of this Court in Breavington in the context of interstate torts. In the circumstances, and notwithstanding Pedersen v. Young, it is appropriate to reconsider the important question whether statutes of limitation should be classified as procedural or substantive, at least in the context of a conflict of laws problem within the Australian federation. In that reconsideration we should bear in mind both the purposes of choice of law rules and the undesirability of the practice of forum shopping to secure a result otherwise not available in the forum of the law of the cause.

[42]

24. It is convenient to begin that reconsideration by observing that the analysis which maintains that most statutes of limitation merely deny a remedy while not touching a plaintiff's rights seems to overlook the fact that the effect of such statutes is to confer upon a defendant a very important right - the right to plead the limitation period as an absolute defence. Wolff, Private International Law, 2nd ed. (1950) p 232; The Commonwealth v. Verwayen (1990) 170 CLR, per Brennan J. at p 425; Dawson J. at p 455. The classification of statutes of limitation as procedural provides a ready means for a plaintiff to circumvent this right of the defendant by choosing to bring proceedings in a forum which has a longer limitation period than that prescribed by the law of the cause. Furthermore, when a classification of limitation provisions as procedural produces an outcome in the forum which differs from the outcome which would result from an adoption of the law of the cause, including the limitation period prescribed for the action under that law, that classification seems to give scant recognition to the substantive operation of limitation provisions. It has the undesirable consequence of frustrating the operation of choice of law rules. It also has the potential to frustrate the very object of statutes of limitation. Their purpose is to prevent stale claims and therefore to relieve potential defendants from the uncertainty that such claims may be brought against them. In circumstances where the limitation period of the law of the cause does not coincide with that of the forum in which the cause is heard, the classification of statutes of limitation as procedural serves to frustrate their aim. A defendant will be left uncertain as to his or her liability and injustice may result, especially in circumstances where the limitation period of the forum is longer than that allowed by the law of the cause. Wolff, op. cit., pp. 232-233; English Law Commission, op. cit., p 8.

[98]

12. The rule in Phillips v. Eyre (1870) LR 6 QB 1, its consideration by this Court in a line of authoritative cases, the aberration introduced by Machado v. Fontes (1897) 2 QB 231, and the extirpation of that aberration by Chaplin v. Boys (1971) AC 356, are sufficiently described in judgments in Breavington v. Godleman (1988) 169 CLR see per Mason C.J. at pp 71-73; per Brennan J. at pp 108-111; per Dawson J. at pp 141-146; per Toohey J. at pp 155-158. Among the Justices who rejected a constitutional solution to the problem of conflict of laws, Brennan and Dawson JJ. substantially followed the rule in Phillips v. Eyre. Mason C.J., ibid., at pp 77-80, observing that the Phillips v. Eyre conditions "have little to offer and present a needless complication" in relation to foreign torts where the parties may have no substantial connection with the law of the place of the tort, contrasted the situation of parties resident in Australia suing in relation to a tort which occurred in another part of Australia. His Honour saw no reason (at least in the circumstances of that case) "to depart from the lex loci delicti as the primary or basic law to be applied", ibid., at p 79; and note a similar approach to the exercise of a discretionary power to remit in Pozniak v. Smith and Robinson v. Shirley. Provided effect be accorded to statutes which are part of the lex fori, this approach is similar in its operation to that favoured by Brennan and Dawson JJ. But his Honour's reference to the lex loci delicti as the primary law to be applied suggests that his Honour regarded the underlying principle, applicable to torts occurring outside as well as to torts occurring inside Australia, as having some degree of flexibility, sufficient to accommodate a case where the parties had no substantial connection with the lex loci delicti. We do not wish to foreclose. See per Dawson J. in Breavington v. Godleman (1988) 169 CLR, at pp 147-148, future consideration of the question whether the Phillips v. Eyre rule (as we state it in this judgment) is suitable for application to actions arising from torts occurring outside Australia but, mindful of the freedom of intercourse throughout this country and the general similarity of the laws in force in the various parts of Australia (to which the Chief Justice referred in Breavington v. Godleman, ibid., at p 78, the overwhelming desideratum in a rule for intra-national torts is certainty of application or, more accurately, as much certainty as the subject matter admits.

[129]

DEANE J. In Breavington v. Godleman [1988] HCA 40; (1988) 169 CLR 41, at pp 77-79 (Mason C.J.), 98-99 (Wilson and Gaudron JJ.), 135-136 (Deane J.), a majority of the Court rejected the approach that the common law rules of private international law, which have been adopted to resolve competition between the tort laws of different independent nations and which are the antithesis of a single system of law, are directly and automatically applicable to resolve competition or conflict between the tort laws of the Australian States and Territories. The rejection of that approach seems to me to conform with the emerging trend as to internal conflicts of domestic laws in other common law jurisdictions and in the European Economic Community. Consequent upon it, the majority of the Court also rejected, ibid. the applicability of the so-called "rule" in Phillips v. Eyre (1870) LR 6 QB 1, to resolve internal conflicts of law within the legal system of this country. It was held that, at least prima facie, conflict or competition between the tort laws of the different States and Territories of Australia should be resolved in favour of the substantive law of the locus and the procedural law of the forum. The decision in Breavington to that effect has been subsequently followed and applied in the courts of this country(127). See, e.g., Byrnes v. Groote Eylandt Mining (1990) 19 NSWLR 13, at pp 23,27,32-33; Waterhouse v. ABC (1989) 86 ACTR 1, at p 19; Amor v. Macpak Pty Ltd (1989) 95 FLR 10, at pp 12-13; Anglo Australian Foods v. Von Planta (1988) 20 FCR 34, at pp 38-39. While its correctness was formally challenged in some of the written outlines of argument in the present case, it was not attacked in the course of oral argument. Indeed, it was expressly accepted by senior counsel for the plaintiff employee that Breavington had decided that, "for torts committed within Australia, the law to be applied is the substantive law of the lex loci delicti". The oral argument in the case was primarily directed to the question of the preferable basis of that decision and the question whether the South Australian limitation provisions involved in the present case are, for relevant purposes, part of the substantive law of that State.

[132]

4. It has long been accepted as a rule of the common law that, for the purposes of resolving competition or conflict between the laws of different countries (domestic law and foreign law or different systems of foreign law), statutes of limitations expressed to relate to the institution of proceedings are, at least when title to property is not affected, treated as procedural only. "They 'affect procedure, not substance'", per Kitto J., Pedersen v. Young [1964] HCA 28; (1964) 110 CLR 162, at p 166, quoting Cheshire, Private International Law, 6th ed (1961) p 686 (see Cheshire and North, 11th ed (1987) p 79); and see, generally Black-Clawson Ltd v. Papierwerke AG [1975] UKHL 2; (1975) AC 591, at p 630. That principle has been applied, as part of the rules of private international law, to cases involving competition or conflict between the laws of different States of the Commonwealth. Pedersen (1964) 110 CLR, at pp 165, 166-167, 170; and see e.g. John Robertson and Co Ltd v Ferguson Transformers Pty Ltd (1973) 129 CLR 65; Bargen v. State Government Insurance Office (Q.) [1982] HCA 22; (1982) 154 CLR 318. Its application in that context was a consequence of a perception that the rules of private international law are directly applicable to resolve competition or inconsistency between the laws of different Australian States on the basis that those States "are separate countries in private international law, and are to be so regarded in relation to one another", per Windeyer J., Pedersen (1964) 110 CLR, at p 170; and see also Koop v. Bebb [1951] HCA 77; (1951) 84 CLR 629, at pp 641-644; Anderson v. Eric Anderson Radio and TV Pty Ltd [1965] HCA 61; (1965) 114 CLR 20, at pp 23, 27-28, 34-35, 40. The correctness of the approach that the common law rules of private international law are automatically applicable for the resolution of conflict or competition between the laws of different States of the Commonwealth as if the States were separate or "foreign" countries. See e.g. Varawa v. Howard Smith Co. Ltd [1911] HCA 46; (1911) 13 CLR 35, at p 69; Chaff and Hay Acquisition Committee v. J.A Hemphill and Sons Pty Ltd [1947] HCA 20; (1947) 74 CLR 375, at p 396, was not, however, subjected to adequate critical examination in any of the earlier cases and, as has been seen, was rejected by a majority of the Court in Breavington. Its rejection necessarily gives rise to the question whether the private international law rule that limitation provisions such as s.36(1) of the Limitation Act and s.82(2) of the Compensation Act are, for the purposes of resolving competition or conflict between the laws of separate countries, to be characterized as merely procedural should continue to be accepted as appropriate to the resolution, under the Constitution, of competition or inconsistency between the laws of different Australian States.

[140]

8. The common law rule that, for private international law purposes, limitation provisions are procedural and not substantive has long been subjected to criticism. See, e.g., per Cockburn C.J. Harris v. Quine (1869) LR 4 QB 653, at p 657. In some common law jurisdictions, it has been reversed by statute. See, e.g. Limitation Act 1969 (NSW), s. 63 as to the effect of limitation periods fixed under that Act; Foreign Limitation Periods Act 1984 (UK) s. 1; Limitation Act 1979 (British Columbia), c. 236, ss. 9 and 13; and, as to the United States position, cf. "Borrowing Statutes - Personal Injury Suits", (1985) 41 ALR 4th 1025. In others, it is under increasing challenge. See English Law Commission Working Paper No. 75, (1980) pars 24-30; Kelly and Crawford, "Choice of Law Under the Cross-vesting Legislation", (1988) 62 Australian Law Journal 589, at p 590. Outside the common law world, it is generally accepted that, for private international law purposes, limitation provisions ordinarily constitute substantive law. Rabel, The Conflict of Laws, 2nd ed (1964) vol 3, pp 511-512. That is not surprising. As the English Law Commission pointed out in its 1980 working paper. See Engoish Law Commission Working Paper No. 75, (1980) par 16, it is generally acknowledged that private international law exists to fulfil foreign rights, not to destroy them, and the rule that limitation provisions are procedural is anomalous in that its effect may be to bar a claim which is still alive in the jurisdiction in which it arose or to allow a claim already barred by the lex causae. Moreover, the anomaly of the common law rule defeats what would otherwise be the rationalizing effect of universal acceptance of the proposition that procedure is governed by the lex fori. That common law rule, with its unsound theoretical basis and its discordant practical effect, is inappropriate to be applied, within the context of the domestic law of this country, to the resolution of competition or conflict between the laws of the States of the Commonwealth, cf. Morguard Investments Ltd v. De Savoye (1990) 76 DLR (4th) 256, at pp 270-273. Indeed, in the Australian domestic context, the common law rule represents a source of uncertainty and inconsistency and an incentive for undesirable forum shopping.

[143]

11. The most important of the earlier decisions is the unanimous decision of five members of this Court in Pedersen v. Young. In that case, it was held (1964) 110 CLR at pp 166-167, 169, 170, that limitation provisions were procedural only and that, accordingly, a Queensland limitation provision should be construed as applying only to proceedings commenced in Queensland and as not purporting to afford a defence to an action for damages for negligence brought in a State other than Queensland but founded upon a cause of action which arose in Queensland. The consequence of that would seem to be that the success or failure of a limitations defence in an action in this Court would depend upon which Registry, however inappropriate, the plaintiff selected for the institution of the proceedings: the same action could be barred if instituted in the Registry in one State but not barred if instituted in the Registry of another State, ibid., at pp 166-167, 170-171; but cf. at pp 169-170. And see John Robertson and Co Ltd v. Ferguson Transformers Pty Ltd (1973) 129 CLR at pp 80-81, 95. If, for example, the defendant in Pedersen v. Young had sued the plaintiff in negligence in proceedings instituted in the Registry of this Court in the prima facie appropriate place (i.e. Queensland) on the day on which the plaintiff instituted the proceedings against him in New South Wales and the proceedings had been heard in Chambers, the defendant's action would have been barred but the plaintiff's would not, notwithstanding that both actions arose out of the same accident and had been instituted in the same court on the same day. Such a situation not only borders on the absurd. It offends against ordinary notions of justice and consistency and affronts the unitary system of law which was established by the Constitution. In my view, and notwithstanding the weight of authority to the contrary, the proposition that limitation provisions are procedural only should be rejected in so far as the resolution of competition or conflict between the laws of the States of the Commonwealth is concerned. In a context where, subject to s.109 of the Constitution, such competition or conflict falls to be resolved in a national context by reference to territorial operation or territorial nexus, limitation provisions of the locus State which confine rights of action or bar the availability of remedies constitute part of the substantive law to be applied by all Australian courts as the lex causae. In that context, the laws applicable as procedural provisions of the forum State are confined to provisions which are genuinely concerned with the regulation of court proceedings within that State. It is unnecessary, for the purposes of the present case, to consider whether the rule that limitation provisions are procedural only should, notwithstanding its anomalous and unreal character, continue to be accepted in this country as a common law rule of private international law applicable in cases involving competition or conflict between the laws of separate countries. Nor is it necessary to consider the effect of s.63 of the Limitation Act (N.S.W.) which expressly provides that, subject to certain specified exceptions, the effect of the expiry of a limitation period is to extinguish "the right and title of the person formerly having the cause of action".

[157]

10. As already indicated, it is not in issue that liability is to be determined in accordance with the law of South Australia. But it is argued on behalf of Mr McKain that the question whether his action is statute barred raises an issue of a different kind. The issue, it is said, is not liability but whether his action can proceed in the Supreme Court of New South Wales. And that distinction is treated as equivalent to or based upon the distinction between "procedural" and "substantive" laws - a distinction which, so long as it is applied to distinguish laws which are "directed to regulating court proceedings". Breavington v. Godleman (1988) 169 CLR, per Deane J. at p 136, from those which operate to identify and define rights, is both convenient and longstanding. It has always been accepted that, no matter that a court is required to apply the substantive law of some other jurisdiction, it should apply its own practices and procedures. See, for example, De La Vega v. Vianna (1830) 1 B and Ad 284, at p 288 [1830] EngR 51; (109 ER 792, at p 793); Huber v. Steiner [1835] EngR 842; (1835) 2 Bing (NC) 202, at pp 210-211 [1835] EngR 842; (132 ER 80, at p 83); Leroux v. Brown [1852] EngR 966; (1852) 12 CB 801, at pp 803, 827 [1852] EngR 966; (138 ER 1119, at p 1121, 1130); Phillips v. Eyre (1870) LR 6 QB 1, at pp 29-30; Chaplin v. Boys (1971) AC 356, at pp 378-379, 394. And that is so even in the Australian federal context. Breavington v. Godleman (1988) 169 CLR at pp 135-136, Pedersen v. Young [1964] HCA 28; (1964) 110 CLR 162, at pp 166-167, 169, 170; and John Robertson and Co Ltd v. Ferguson Transformers Pty Ltd (1973) 129 CLR 65, at pp 92-93. Were it otherwise, it would be as productive of inconvenience, for a general discussion of inconvenience, see Cook, "'Substance' and 'Procedure' in the Conflict of Laws", (1933) 42 Yale Law Journal 333, at pp 343-344. See also Heavner v. Uniroyal Inc (1973) 305 A 2d 412, at p 415, in that context as in the international context.

At a glance

Court

Decision date

Before

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Judgment (186 paragraphs)

McKain v RW Miller & Company (SA) Pty Ltd [1991] HCA 56; (1992) 174 CLR 1 (19 December 1991)

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Legislation Cited (11)

Cases Cited (28)