McKenzie v Commonwealth of Australia [2001] VSC 361

Supreme Court of Victoria|2001-09-28|Before: Gillard J

APPLICATION TO AMEND DEFENCE - limitation defences - withdrawal of admission - question of prejudice - assertion defendant is estopped - question to be decided at trial - some amendments allowed.

On the night of 10 February 1964, a collision occurred between two Royal Australian naval vessels, HMAS Voyager and HMAS Melbourne, in international waters some 20 miles south-east of Jervis Bay. As a result of the collision, a number of persons were killed.

On that night, the plaintiff, Malcolm Donald McKenzie ("the plaintiff"), was a serving member of the Royal Australian Navy on the HMAS Melbourne. As a result of the collision, the plaintiff alleges that he suffered nervous shock-type injuries. He did not suffer any physical injury.

Some 35 years later, on 27 May 1999, the plaintiff instituted a proceeding in this Court in the Major Torts List against the Commonwealth of Australia ("the Commonwealth"), alleging that the collision was caused by the negligence of the employees and agents of the Commonwealth, and claimed damages for injuries caused as a result of the collision.

On 12 July 1999, the Commonwealth filed its defence. It admitted negligence. Not surprisingly, it relied upon the provisions of 5(1)(a) of the Victorian Limitation of Actions Act 1958 ("the Act"). An action founded on tort shall not be brought after the expiration of six years from the date on which the cause of action occurred. A cause of action in negligence occurs when a negligent act causes injury, even though the victim is unaware that he has been injured.

In the case of Cartledge v Jopling (1963) AC 758, the House of Lords held that a cause of action in a negligence claim involving personal injury, accrued at the time when injury occurred, even though it was not appreciated at the time by the victim. Time under the Limitation Legislation began to run at the time the plaintiff suffered the injury. As a result, the limitation period could pass by without the plaintiff ever being aware that he or she had a cause of action, with the result that the plaintiff could be out of Court. That is what happened in that case. The plaintiff suffered a progressive disease to his lungs. The House of Lords held that knowledge of the injury was irrelevant to the time when the cause of action accrued. His claim was statute barred.

In order to overcome that unjust and draconian result, the Parliament in this State, in 1983, amended the Act and inserted s.5(1A). It relevantly provided -

"(1A) An action for damages for negligence ... where the damages claimed by the plaintiff consist of or include damages in respect of personal injuries consisting of a disease or disorder contracted by any person may be brought not more than six years from, and the cause of action shall be taken to have accrued on, the date on which the person first knows -

(a) that he has suffered those personal injuries; and

(b) that those personal injuries were caused by the act or omission of some person."

In the present proceeding, the plaintiff has pleaded in paragraph 8 of his statement of claim, that his injuries are a disorder within the meaning of s.5(1A) of the Limitations of Action Act 1958, and that he first knew about the injuries in or about 1997.

In my opinion, that was not an appropriate pleading. Until the limitation defence was raised by the defendant, it was not in issue in the case. The proper approach, in my opinion, is to plead s.5(1A) in a reply to a defence which raises s.5(1)(a). If that had been done, one of the issues for my decision may not have arisen.

In his statement of claim, the plaintiff asserted in paragraph 8 the following -

"8. The injuries referred to in paragraph 6 hereof are a disorder within the meaning of s.5(1A) of the Limitation of Actions Act 1958 and the plaintiff first knew that he suffered such injuries and that they were caused by and resulted from the incident referred to in paragraph 3 hereof in or about 1997."

The particulars sub-joined to paragraph 6 asserted that the plaintiff suffered "post traumatic stress disorder" as a result of the collision.

In its defence, the Commonwealth pleaded the following -

"8(a) It admits that post-traumatic stress disorder is a disorder within the meaning of s.5(1A) of the Limitation of Actions Act 1958 (Vic);

(b) It denies that the plaintiff is suffering from post-traumatic stress disorder or any other disease or disorder within the meaning of s.5(1A) of the Limitation of Actions Act 1958 (Vic) as a result of the collision between HMAS Melbourne and HMAS Voyager on 10 February 1964;

It is apparent from that pleading that the Commonwealth admits that if the plaintiff suffered a post-traumatic stress disorder, as he pleads in his particulars subjoined to paragraph 6 of his statement of claim, then s.5(1A) applies. However, the Commonwealth put the plaintiff to proving that he suffered such a disorder, or any other disease or disorder, within the meaning of the section.

The Commonwealth now seeks leave to amend its defence in excess of two years after the date it delivered its defence. The proceeding has not been fixed for trial.

The Commonwealth seeks to amend paragraph 8 by substituting for it, the following -

"It does not admit the allegations contained in paragraph 8."

It is clear that it seeks to put in issue whether post-traumatic stress disorder, or similar mental type injuries, are within the meaning of the phrase "disease or disorder" in s.5(1A).

In addition, the Commonwealth, in its original defence in paragraph 9, asserted that the plaintiff's action was statute barred by reason of s.5(1)(a) of the Act. It now seeks to amend that assertion by substituting for the paragraph, the following -

(a) The plaintiff's action is statute barred by virtue of paragraph 5(1)(a) of the Limitations of Actions Act 1958 (Vic); or alternatively

(b) the plaintiff's action is not maintainable by virtue of s.14(1) of the Limitation Act 1969 (NSW) and the plaintiff's right and title to the action is extinguished by virtue of s.63(1) of the Limitation Act 1969 (NSW); or alternatively

(c) the plaintiff's action is state barred by virtue of s.3 of Imperial Act 21, James 1 Chapter 16 or alternatively is not maintainable by virtue of s.11 of the Limitation Act 1985 (A.C.T.)."

What the Commonwealth seeks by the new paragraph 9 is to assert that the law which should apply to the proceeding is either New South Wales or A.C.T. law, and rely upon the limitation provisions in either jurisdiction.

Whilst the withdrawal of the admission made in the original paragraph 8 is separate and distinct from the matters raised in the new paragraph 9, there is a degree of overlap between each amendment.

The Commonwealth asserts that since it filed its original defence, there have been a number of authorities which have raised arguable points of law which the Commonwealth now wish to rely upon at trial.

Mr J. Kaufman QC, who appeared with Mr C.B. Thomson for the plaintiff, opposed the amendments. In a nutshell, their arguments were, that the Commonwealth had not provided adequate and sufficient reasons for explaining why, at this late stage, they wished to change their pleading; that the matters raised by the proposed amendments were not arguable; that in any event, if the amendments were allowed, the plaintiff would suffer prejudice which could not be overcome; and finally, that the Commonwealth was estopped from relying upon the proposed amendments.

The Rules of Court authorise amendment of a pleading at any time. Rule 36.03(b) provides -

(a) ...

(b) at any time by leave of the Court or with the consent of all other parties."

(Emphasis added).

The general rule which applies to all applications for amendments is set out in Rule 36.01(1) and it relevantly provides:

"(1) For the purpose of determining the real question in controversy between the parties to any proceeding or of correcting any defect or error in any proceeding ... the Court may at any stage order that any document in the proceeding be amended, or that any party have leave to amend any document in the proceeding."

This paragraph is both the rationale for the power and the criterion for its exercise. It is the guiding principle. See G.L. Baker Ltd v Medway Building and Supplies Ltd (1958) 1 WLR 1216 at 1231, per Jenkins LJ.

I interpolate to note that the present proceeding has not been fixed for trial. However, the Commonwealth has made application to amend its defence in a number of other cases brought by persons who were on the HMAS Melbourne on the night of the collision, and some of the cases have been fixed for hearing in October and November this year.

Mr Moshinsky QC, who appeared with Ms M. Fox, informed the Court that if the defendant's application was successful, it would seek to have the questions raised by the amendments decided as a preliminary issue.

The rule concerning the power to amend a pleading in this State has been in similar form since the Judicature Act Rules were first passed in the Colony of Victoria. The general rule is that all amendments should be permitted, unless the amendment will cause prejudice to the other party which cannot be overcome in some way. Of course, no amendment would be allowed if it raised a false issue or the proposed amendment did not raise an arguable defence.

Very soon after the Judicature Act Rules were passed in England, the Courts adopted a practice which has been followed in this State and applied ever since.

In the case of Cropper v Smith (1884) 26 Ch D 700, Lord Justice Bowen said at p.710 -

"Now I think it is a well established principle that the object of courts is to decide the rights of the parties and not to punish them for mistakes they make in the conduct of their cases by deciding otherwise than in accordance with their rights ... I know of no kind of error or mistake, which if not fraudulent or intending to overreach, the court ought not to correct if it can be done without injustice to the other party. Courts do not exist for the sake of discipline, but for the sake of deciding matters in controversy and I do not regard such amendment as a matter of favour or grace ... it seems to me that as soon as it appears that the way in which a party has framed his cause will not lead to a decision of the real matter in controversy, it is much a matter of right on his part to have it corrected if it can be done without injustice, as anything else in the case is a matter of right." (Emphases added).

What his Lordship said, emphasises that it is a question of justice as between the parties, ensuring that the real matters in controversy are decided. The question of prejudice, of course, is a very relevant matter.

In the recent High Court case of Queensland v J.L. Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146 at p.155, the High Court said -

"Justice is the paramount consideration in determining an application such as the one in question. Save in so far as costs may be awarded against the party seeking the amendment, such an application is not the occasion for the punishment of a party for its mistake or for its delay in making the application. Case management, involving as it does the efficiency of the procedures of the court, was in this case a relevant consideration. But it should not have been allowed to prevail over the injustice of shutting the applicants out from raising an arguable defence, thus precluding the determination of an issue between the parties. In taking an opposite view, the primary judge was, in our view, in error in the exercise of her discretion." (Emphasis added).

As a general proposition, parties to litigation should be permitted, at any time, to amend their pleadings to raise bona fide and relevant matters, unless the amendment is likely to prejudice the other party, and the prejudice cannot be overcome. Justice, in my view, demands amendment, unless the effect would be to cause an injustice to the other party. See observations of Dawson J in The Commonwealth v Verwayen (1990) 170 CLR 394 at 456-7.

Further, in my opinion, it is in the course of the trial that all claims and defences should be exhaustively considered and determined, and it is not appropriate, except in a clear case, on a summary application to amend, to attempt to exhaustively investigate the facts and the law. Often, it is impossible to do so because of conflicting versions of the facts or substantial uncertainty of the law. However, the burden of proof or persuasion may be crucial where there are disputed facts.

The general rule was expressed by Brett MR in Clarapede & Co v Commercial Union Ass. (1883) 32 WR 262 at 263 -

"the amendment should be allowed if it can be made without injustice to the other side. There is no injustice if the other side can be compensated by costs."

I do not limit overcoming prejudice or potential injustice to an order for costs. There may be other orders that can be made, to avoid injustice or prejudice.

Mr Kaufman QC submitted that the deletion of paragraph 8 of the original defence and substitution of the non-admission in the proposed amendment, would result in the Commonwealth withdrawing an admission that it had made. He submitted that a party should not be permitted to resile from an admission unless it was shown that the admission was made inadvertently or through error, and that the other party would not suffer any prejudice if the amendment was allowed. He referred to what the English Court of Appeal said in Hollis v Burton (1892) 3 Ch 226. In that case, an admission was made in the defence and answers to interrogatories which resulted in an order being made for the payment into Court of a sum of money. Later, the defendant wished to withdraw the admission and the Court permitted him to do so, but only on the basis that he did pay the money into Court. The defendant asserted that he made the admission by mistake and it was not in accordance with the facts. In my view, the case does not establish a proposition that an admission cannot be withdrawn unless it is shown that it was made inadvertently or through error. Such a requirement would fetter a wide discretion to do justice between the parties and may, if it was applied, cause an injustice.

Mr Kaufman QC also referred to the decision of Celestino v Celestino, an unreported decision of the Federal Court delivered 16 August 1990. In that case, the Full Court was concerned with an admission that had been made in a letter which had the effect of limiting the issues at trial. In that case, defence counsel, on the sixth day of the trial, sought to withdraw an admission that had been made of liability. The application was refused.

The Full Court referred to the principle stated in Cropper's case, supra, and equated the admission that had been made prior to trial in a letter with an admission made in the pleadings.

However, the Court then went on to state that the principles concerning amendment, resulting in the withdrawal of an admission, assumed that "an error or mistake by or on behalf of the party seeking the amendment has been demonstrated".

The Court went on to state that in their opinion, "where leave to withdraw an admission is sought, the Court will require an explanation for the making of the admission."

"The explanation must be a sensible one based on evidence of a solid and substantial character:"

Reference was made to the House of Lords decision of Langdale and Anor v Danby (1982) 1 WLR 1123 at 1134, Hollis v Burton, supra, and Cumper v Pothecary (1941) 2 KB 58 at 70.

42 Langdale v Danby in the House of Lords was concerned with the question of fresh evidence on appeal.

What Lord Bridge of Harwich said at p.1134 was said in the context of an explanation for failing to call the evidence. In Cumper v Pothecary, supra, the Court of Appeal was concerned with a payment into Court and the question whether a defendant who had served a bad notice was entitled to amend it.

I respectfully disagree with the Full Court of the Federal Court if it was seeking to lay down any principle, that it is necessary to show that there was an error or mistake and that there was a reasonable explanation for making an admission, before a party was entitled to withdraw the admission in a pleading.

It cannot be denied that the Court would expect some explanation for the change, but the absence of an explanation or what the Court considered was an adequate or reasonable explanation, could hardly be determinant of the application. In the end, it is a question of doing justice between the parties.

But if an explanation was required to explain why the admission was made, what constitutes a reasonable explanation and what constitutes a mistake or inadvertence? How often, in the course of litigation, are amendments made to the pleadings? Most big litigation usually involves an amendment of pleadings along the way. That is because further investigation of the facts reveal new facts, or further consideration of the law reveals different legal outcomes, or the application of a fresh mind to the litigation results in a different view being taken of the facts, the law and/or the issues. In my opinion, to fetter the exercise of the discretion by requiring proof of inadvertence or mistake or error, and/or a reasonable explanation when leave is sought to withdraw an admission, would sometimes result in an injustice. Parties to litigation should have every opportunity to properly put their claims and properly defend the claims of others. It would be a rare case to deny a party the opportunity in the absence of prejudice.

But if I am required to consider the question of why there has been a change, the material filed on behalf of the Commonwealth demonstrates that in a recent Court of Appeal decision in this State of Mazzeo v Caleandro Guastalegname & Co (2000) VSCA 230, delivered on 12 December 2000, Chernov JA discussed the application of s.5(1A) of the Act, and it is put by Counsel on behalf of the Commonwealth that what His Honour said, for the first time, raised the probability of a complete defence to the plaintiff's proceeding based upon s.5(1A), because it was arguable that a psychiatric injury does not constitute an injury for the purpose of that section.

At paragraph 45 of the judgment, Chernov JA said -

"The conclusion that, on its proper construction, s.5(1A) is concerned only with actions arising out of 'insidious' personal injuries (i.e. those which have not been caused by trauma), gain support from the extrinsic material relating to the 1983 amending legislation."

Winneke P seemed to support the approach of Chernov JA. Tadgell JA did not consider the issue.

It is put on behalf of the Commonwealth that the views expressed by Chernov JA, supported to some extent by the views of Winneke P, may form the basis of an argument that s.5(1A) does not apply to the plaintiff, who was exposed to physical trauma as a result of the collision which occurred in 1964.

In my opinion, in accordance with the principles governing amendment, the Commonwealth should have the opportunity to argue that matter at trial and prima facie, is entitled to amend its pleading. If it was necessary to characterise the reason for the admission being made in the first place as an error or a mistake, in my view, the Commonwealth was mistaken in following decisions of other single judges of this Court, which the Court of Appeal has now raised doubts about. But I am not concerned about that. An adequate explanation has been given for the withdrawal of the admission, and prima facie, applying the general rule, the defendant should have the opportunity at trial to raise the issue.

It is necessary to consider the questions of prejudice and estoppel.

Before considering those issues, it is convenient to consider the other proposed amendment. This amendment seeks to plead foreign law, and prove and rely upon it at trial.

The alleged cause of action did not arise in the jurisdiction of this Court. The negligent act and the alleged injury occurred to the plaintiff when he was in an Australian ship in the high seas. The reason for the amendment raising a choice of law question has been explained in affidavits sworn by Richard Boughton and Andrew Berger, solicitors in the employ of the Australian Government Solicitor. In a recent High Court case of John Pfeiffer Pty Ltd v Rogerson [2000] HCA 36; (2000) 74 ALJR 1109, the High Court held that in relation to claims for compensation for torts occurring in a State or Territory of the Commonwealth, the law to be applied as the substantive law was the lex loci delicti and not the lex fori, and that limitation laws should be regarded as substantive rather than procedural.

Prior to that decision, the High Court had held in McKain v R.W. Miller (SA) Pty Ltd [1991] HCA 56; (1991) 174 CLR 1, that limitation laws were procedural even though some States, including this State, have passed Acts to the effect that the limitation laws were to be treated as substantive laws.

Mr Berger deposed to the fact that the Commonwealth had, over the years, adopted the view that because the collision occurred in international waters, the applicable limitation laws would be the law of the forum in which the claim was commenced. It appears in a recent case, which is now subject to an application for leave to appeal to the High Court, that the plaintiff, Mr Blunden, has filed a summary of argument before the Court, submitting that no limitation law applied in relation to torts occurring on the high seas and alternatively, that the limitation law applicable to his claim was the NSW Limitations Act 1969. He had brought his claim in the A.C.T. Supreme Court.

After due consideration, officers of the Commonwealth have come to the view that it is arguable that the principles stated in Pfeiffer's case applied to the collision in international waters, and that since the collision occurred adjacent to either the State of New South Wales or the A.C.T., the laws of either of those jurisdictions applied to the present case. Accordingly, the Commonwealth now wishes to raise the question of the applicable law to the proceeding, and to assert that the limitation provisions of either New South Wales or A.C.T. applied.

The Commonwealth wishes to rely upon an observation made by Guadron J in Commonwealth of Australia v Menett (1997) 146 ALR 299 at 329, concerning choice of law.

Plaintiff's counsel argue with some force that Pfeiffer's case does not apply to anything other than an interstate tort, and that what Gaudron J stated is not the law.

The second proposed amendment does not result in the withdrawal of an admission and accordingly, the principles relied upon by Mr Kaufman QC would not appear to apply. But if I am obliged to consider whether a reasonable explanation has been given, I am satisfied that there has been a reasonable explanation purely and simply because, arguably, the law has been changed. The law is not that clear that the Court, on a summary application to amend, should attempt to resolve the issues. They are better left for trial. If that be so, then a defendant is entitled, as a matter of justice, to be able to raise the issues, provided that that does not cause irreparable prejudice to the plaintiff.

In my opinion, the Commonwealth, prima facie, is entitled to raise the question of choice of law in this proceeding.

This brings me to the question of prejudice. It was submitted, on behalf of the plaintiff, that if either amendment was allowed, he would suffer a prejudice.

In opposition to the application, the plaintiff has sworn an affidavit, and his solicitor, David Brian Forster, has sworn three affidavits. Mr Forster has exhibited a number of reports and letters. In substance, it is put, on behalf of the plaintiff, that if either amendment is allowed, he will suffer prejudice, brought about by the fact that -

(i) he has conducted his litigation on the basis of the admission that had been earlier made and that the limitation provisions of this State were the only ones that applied to his proceeding;

(ii) that the new defences would prolong the litigation and any delay in bringing on the proceeding would cause him more distress, stress and emotional damage;

(iii) that if either amendment was allowed, he would be prejudiced in that if the defences had been raised in 1999, he would have made application to this Court pursuant to s.23A of the Act or given consideration to withdrawing his proceeding and commencing a new proceeding in New South Wales or the A.C.T..

The evidence revealed that it was pointed out to him that he could bring his proceeding in New South Wales, if he so wished, and after considering the pros and cons, which included the necessity of making an application to extend time in New South Wales, he decided to bring his proceeding in this Court. He was re-inforced in that course by the fact known to his solicitor, Mr Forster, that the Commonwealth had, by May 1999, adopted the course, in other Melbourne litigation, of accepting that s.5(1A) applied, and the only issue was whether the plaintiff suffered personal injury consisting of a disease or disorder. The plaintiff's proceeding was issued without making any application for extension of time.

The first factor relied upon by way of prejudice is, that if either amendment is made, there will be a delay in bringing this proceeding to a conclusion, with consequential distress, stress and further emotional damage to a person who is already suffering from mental injuries.

Plaintiff's counsel referred to what Lord Griffiths said in Ketterman v Hansall Properties (1987) AC 189 at 220. His Lordship pointed out that the question of amendment was a matter for the discretion of the judge, and that in the exercise of the discretion, the judge should make an assessment of where justice lies. His Lordship stated that it was relevant to the assessment, to take into account the strain litigation imposes on litigants, and the anxieties occasioned by facing new issues, the raising of false hopes and the legitimate expectation that a trial will be determined on the issues one way or the other.

What His Lordship was referring to was an application made to amend a defence during the course of closing speeches at the end of the trial. What His Lordship said, no doubt, is of more potent effect when application is made at such a late stage. But as His Lordship said -

"Furthermore to allow an amendment before a trial begins is quite different from allowing it at the end of the trial to give an apparently unsuccessful defendant an opportunity to renew the fight on an entirely different defence."

Whilst I accept that the questions of anxiety and the like are no doubt relevant factors, the weight that should be attached to such factors, when application is made to amend before the proceeding is set down for trial, would be slight. I do not accept that the concerns about delaying the proceeding and the effect upon the plaintiff is any reason why the amendment should not be allowed. This proceeding is in a case managed list, and any delay can be kept to a minimum. In regard to the question of delay, I do point out that the proceeding was issued in May 1999, that a defence and discovery was completed by the end of October 1999 and that thereafter, very little has been done in relation to interlocutory steps, other than the filing of various outlines of evidence. Whilst I have no doubt that the delay in bringing the proceeding on has been brought about, to some extent, by the efforts of the parties to get together to try and settle the proceeding, the most potent weapon in bringing a settlement about is to get the parties to the door of the Court. It seems to me that the delay here is now such that a further prolongation of the proceeding by a month or two is of slight effect when it comes to the question of amendment.

Further, the proposed amendments raise questions to be decided at trial. The proposed amendments raise questions of law and will not delay the fixing of the proceeding for trial.

However, the question of prejudice, based upon the plaintiff losing opportunities to take advantage of other statutory provisions, is a matter of substantial concern.

The plaintiff asserted in his statement of claim that the first time he knew that he had suffered injuries, and that they were caused by the collision in 1964, was in 1997. In an affidavit which was not contested, he asserted that he first knew that he had suffered from a post-traumatic stress disorder in about November 1997. The writ was issued on 27 May 1999. The evidence revealed that prior to the issue of the writ, he had discussions with his solicitor, Mr Forster, who had had, at that stage, considerable experience in litigation involving persons who were on both vessels on the night of the collision, and who was very aware of the general attitude of the Commonwealth and its legal advisers to the litigation. The question of where he should bring his proceeding was discussed and a decision was made to bring the proceeding in Victoria. It was pointed out to him that if he brought his proceeding in the State of New South Wales, he would recover a larger sum of damages, nevertheless it would be necessary for him to make application to extend time. Mr Forster's experience, as at May 1999, was that the Commonwealth had taken the view that s.5(1A)of the Act would apply to the litigation, that it did not plead any other limitation provisions of another State or Territory, and that the only real issue was whether the plaintiff's injuries fell within s.5(1A). The plaintiff decided, in the light of that information and after due consideration, to bring his proceeding in this State.

The defence was delivered on 12 July 1999, and if either of the proposed amendments had been pleaded at that time, the plaintiff would have been faced with the decision of deciding what he should do. If there was any doubt about the application of s.5(1A) to the injury he had suffered, then thought would have been given to making application to extend time under s.23A of the Act. If the Commonwealth had pleaded some other law applying to the proceeding, such as the New South Wales law, he would have been faced with the decision whether or not to make application in New South Wales to extend time and issue a proceeding in that State. However, as events turned out, he was not confronted with either of those difficult decisions because the Commonwealth did not plead either, first, that s.5(1A) did not apply to his circumstances, and secondly, that the law which this Court would apply at trial would be New South Wales or A.C.T. law with their limitation statutes.

Now, some two years after the defence was delivered, the Commonwealth wishes to plead that s.5(1A) did not apply to the circumstances because it only applied to insidious-type diseases not arising out of any trauma and, secondly, that the New South Wales law applied, including s.63(1) of the New South Wales Limitation Act 1969, or A.C.T. law applied, including s.11 of the A.C.T. Limitation Act 1985.

If the amendments were allowed, in order to protect himself, the plaintiff would have to consider whether he could and should make application in this State to extend time under s.23A of the Limitation of Actions Act in this State, or withdraw his proceeding and commence an application to extend time in New South Wales or the A.C.T..

In respect of the New South Wales position, his solicitor, Mr Forster, swore in his affidavit, the following -

"The time allowed by the New South Wales legislation for bringing an application for extension of time is three years from when an applicant became aware or ought to have become aware of the requisite matters, namely:

(i) That he has suffered personal injury;

(ii) the nature and extend of that personal injury; or

(iii) the connection between such personal injury and the defendant's act or omission: s.60I(1)(b)."

"Thus, Mr McKenzie is at risk of being out of time under the New South Wales legislation, if that is held to be applicable, through relying for so long upon the above assumption."

I requested the parties to make further submissions in respect of the application of the various statutory provisions, which they did, and Mr Moshinsky QC raised a factual issue in respect of the New South Wales legislation.

I have considered the provisions of the New South Wales Limitation Act 1969. Division 3 is concerned with personal injury cases and is divided into a number of sub-divisions. Sub-division 3 is concerned with the discretionary extension for latent injury et cetera.

Section 60F sets out the purpose of the sub-division, which is to provide for a further discretionary extension of limitation periods "where the plaintiff was unaware of the fact, nature, extent or cause of the injury, disease or impairment at the relevant time. This procedure is available for causes of action accruing on or after 1 September 1990, and also (by operation of Schedule 5) for causes of action that accrued before that date."

A perusal of Schedule 5 reveals that sub-division 3 does apply to causes of action that accrued before that date and would apply to the plaintiff's cause of action. See clause 4 of Schedule 5.

Section 60G, which would have applied to the plaintiff, gives jurisdiction to the Court to extend the limitation period for such a period as it determines. It is a discretionary remedy and the Court must be satisfied "that it is just and reasonable to do so". The Court is obliged, by reason of s.60I, to take into account a number of matters, and a plaintiff is obliged to satisfy the Court, inter alia, that he did not know that he had suffered personal injury or was unaware of the nature or extent of it, prior to the expiration of the relevant limitation period.

Section 60I(1)(b) requires the application to be made "within three years after the plaintiff became aware (or ought to have become aware) of all three matters listed in paragraph (a)(i)-(iii)".

Counsel accepted the above analysis of the effect of the legislation.

The evidence in the present matter revealed that the plaintiff became aware of the relevant matters in or about November 1997 and accordingly, could have made application in New South Wales for an extension of time within three years. He would not have been out of time. Now he is. That is a prejudice which could not be overcome, and in my opinion, the amendment seeking to plead the limitation law of New South Wales as being applicable to the cause of action should not be allowed, because to do so would prejudice the plaintiff. He has already lost his opportunity to apply for an extension of time in New South Wales. If the defence had been raised in the first defence, it would have been open to him to have applied for an extension of time in New South Wales and brought his litigation in that State.

At the hearing of this application, the statement on oath by the plaintiff that he first became aware of the relevant matters in or about November 1997 was not contested, either by any affidavit material or in submissions. However, upon the hearing of submissions relating to the operation of the statutory provisions, Mr Moshinsky QC asserted from the Bar table that the statement on oath by the plaintiff was contested, and it was the assertion of the Commonwealth that he became aware of the matters referred to in s.60I(1)(a) of the New South Wales legislation well before November 1997. He submitted that if that fact was established, then he could not have made application prior to the issue of the present proceeding in New South Wales because he would have been out of time, assuming that he ought to have known all matters at least three years prior to the date of the issue of this proceeding. Mr Moshinsky QC submitted that the Court should give the Commonwealth the opportunity of contesting the factual matters on the application, and that the Court should make a determination whether it would have been open to the plaintiff to have brought an application to extend time, in any event, prior to the date when the defence was delivered. That was 12 July 1999. In other words, the Commonwealth contends that the plaintiff knew, prior to July 1996, all the relevant matters and if he had made application in New South Wales, he would have failed.

The plaintiff resides near Esperance, in the south-west of Western Australia. The evidence before the Court shows that he is emotionally disturbed by not only the effects of the collision, but also the present litigation. What Mr Moshinsky QC is proposing is that the Commonwealth be given an opportunity to contest his sworn evidence, which no doubt would include cross-examination of him.

It must not be overlooked that the Commonwealth failed to raise these matters when it had the opportunity to do so in July 1999, and at this late stage, is seeking an indulgence. It is asserting that the general rule should apply, namely, the right to amendment, and the plaintiff responds to that allegation by raising prejudice, and has sworn an affidavit in support of the factual matters. The Commonwealth now puts in issue that assertion.

The question of the burden in applications such as this was discussed by the Court of Appeal in Hancock Shipping Co v Kawasaki Ltd (1992) 1 WLR 1025. At p.1030, Staughton LJ said -

"In my judgment, it is not helpful to speak of the burden of proof, but rather of the burden of persuasion. If the court concludes that it cannot decide whether or not it is just to allow the amendment the party applying for leave must fail. The burden of persuasion lies on him, and if it is not discharged his application should not succeed. But the party making the application cannot be expected to adduce evidence on all points which might conceivably affect the justice of the case. He must undertake the task of establishing the factors which he relies on as relevant; his opponent in turn may say there are other relevant factors pointing in the other directions, and those are for him to prove."

The Commonwealth asserts that it is entitled to raise the New South Wales legislation, and the plaintiff responds by stating that he would be prejudiced at this late stage, because he would be denied the opportunity of making an application to extend time. Whether or not he would succeed in that application would depend upon all the facts before the Court. But in my opinion, it is not a matter for this Court to, in effect, have a trial of an application in time under the New South Wales legislation. It would be on such an application that the Commonwealth could point, in contest, when he knew or ought to have known the relevant matters which are specified in s.60I(1)(a).

In my opinion, to allow this amendment, at this stage, would be to deny the plaintiff his opportunity to make application under the section in New South Wales to extend time. Whether or not he would have succeeded, does not appear to me to be to the point. He has placed sufficient evidence before this Court to show that he had an arguable basis for bringing the application. But if the Court was to allow the amendment, he would be denied that opportunity. He is, in my view, irreparably prejudiced.

It follows that the prejudice could not be overcome if the Commonwealth was permitted to plead the New South Wales limitation defence, and leave to amend should be refused. But in addition, going back to what Staughton LJ said in the Hancock Shipping case, the Commonwealth has the burden of persuading this Court that it is just to allow the amendment. In my view, it fails to persuade the Court that it would be just, in all the circumstances, to allow the amendment.

Section 11 of the A.C.T. Limitation Act (1985) provides the general rule with respect to the limitation period for all causes of action, being at the expiration of six years from the date on which the cause of action first accrues. By reason of sub-s.(2), that general rule does not apply in respect of other limitation periods provided by the Act.

Division 2 of Part 3 of the Act is concerned with the postponement of the bar in respect of, inter alia, personal injuries. Section 35 applies the division to any cause of action, whether it accrued before or after the commencement of the Act. Further, in respect of a cause of action that accrued before the commencement of the Act, it does not matter whether the proceeding has been instituted or not. Clearly, Division 2 could apply to the plaintiff. Section 36 gives power to the Court to extend the period of limitation as it determines "if it decides that it is just and reasonable so to do."

The Court is required to take into account matters set out in s.36(3), and application may be made to extend time, notwithstanding that the limitation period has expired or that a proceeding has commenced. There is no time limit on making the application.

If leave was granted to the Commonwealth to plead A.C.T. law as applicable to the collision and reliance is made upon the A.C.T. Limitation Act 1985, it would be open to the plaintiff to withdraw the present proceeding and make application in the A.C.T. for an extension of time. Any prejudice that may be suffered by adopting that course would be the costs thrown away and, no doubt, an order could be made against the Commonwealth for costs thrown away, if the plaintiff decides to go down that path. There was no evidence before the Court as to the attitude of the plaintiff and his legal advisers, prior to the institution of this proceeding, to bringing a proceeding in the A.C.T. or indeed, making application to extend time. Indeed, the evidence reveals that no consideration was given to that course.

In my opinion, the Commonwealth should be permitted to raise the A.C.T. law as being applicable to the case, and if the plaintiff desires to bring a proceeding in the Territory and to apply for an extension of time, he may apply for a costs order which, subject to any further submissions from Counsel, would no doubt be ordered in his favour.

That brings me to the amendment which seeks to put in issue that s.5(1A) of the Act did not apply to the circumstances, because the injuries suffered by the plaintiff were consequential upon exposure to physical trauma.

There is no time limit under the present s.23A, and the power to extend time may be exercised at any time and even where the action has already been commenced. See s.23A(4). However, in considering whether or not it is just and reasonable to extend time, the Court is required, under sub-s.(3), to take into account certain matters including, inter alia, the length of and reasons for the delay on the part of the plaintiff. But does the present provision apply to the plaintiff? Mr Kaufman QC submits that it does not.

Jurisdiction to extend limitation periods in personal injury claims was first given to the courts in this State in 1972. The present s.23A was inserted by s.5 of Act 9884 of 1983.

Section 11 of that Act dealt with transitional matters, and the new section only applied to a cause of action arising not more than six years before the date of commencement of the Act, and to a cause of action arising on and after the date of the commencement of the Act.

"(2) The Acts amended by this Act shall apply as in force immediately before the commencement of this Act to a cause of action arising more than six years before the date of commencement of this Act."

It follows that since the plaintiff's cause of action arose more than six years before 1983, the new section did not apply, and if the plaintiff now sought to make application for extension of time, it would be necessary for him to make application under the old s.23A.

If it was necessary for the plaintiff to now make application under the old s.23A, he would be met with an insurmountable defence that he was required to bring his application within one year after he determined the material fact which was not known to him. The material fact, no doubt, here would be the nature and extent of his injury. Further, there is authority that an application had to be made under the old s.23A before the proceeding was brought. See Bestobell Overseas Ltd v Carden [1988] VicRp 80; (1988) VR 891. Hence, he could not bring the application in the present proceeding.

In my opinion, if the amendment was allowed to withdraw the admission concerning s.5(1A), then the plaintiff would be placed in a very difficult position, in that he could not, at this stage, make application for an extension of time under the relevant s.23A. Even if he withdrew the present proceeding and made application to extend time, he would be met with a clear insurmountable defence that he was out of time to bring the application.

But it is clear that his right to bring an application under the old s.23A was extinguished prior to him issuing the present proceeding. If the defence had been taken when the first defence was delivered, the plaintiff could not have withdrawn his proceeding and made application. He was out of time.

He was out of time when he commenced the present proceeding. He went ahead with the present proceeding, knowing that if s.5(1A) did not apply, then he was out of court.

It follows that the amendment to the defence to withdraw the admission should be allowed. It would not cause irreparable prejudice to the plaintiff. He could not have taken advantage of the section prior to the institution of the proceeding. It follows that the amendment should be allowed.

This brings me to the question of estoppel. The plaintiff relied upon the decision of The Commonwealth v Verwayen (1990) 170 CLR 394. It was submitted that the conduct of the Commonwealth, through its legal officers, induced the plaintiff to believe that the post-traumatic stress disorder was a disorder within the meaning of s.5(1A) of the Act, and that if the plaintiff satisfied the Court that he had suffered from such disorder, which was caused by the collision, the proceeding was not statute barred. It is said that these representations, which induced the assumption, were made in correspondence between solicitors and statements made in open court by representatives of the defendant. It is also said that it could be spelled out by the admissions in the defence.

But it is not contended that there was any representation made with respect to the question of what law was to apply in this State to the collision. In my view, there is no evidence to support the contention that there was any assumption, induced by the defendant, that the law which would be applied in the case would be Victorian law, and no other law. Indeed, Mr Kaufman QC did not argue to the contrary. Hence, the defence that A.C.T. law applied could not be the subject of any estoppel on the evidence on this application. This would not stop the plaintiff pleading an estoppel in his reply, if so advised.

The decision in Verwayen was a majority decision of 4-3. Of the majority, two judges, Deane and Dawson JJ, held that the principle of estoppel applied and the Commonwealth was estopped from relying upon a limitation defence. The other two judges, Toohey and Gaudron JJ, held that the Commonwealth had waived its right to rely on the limitation defences. It is difficult to determine the ratio decidendi of the decision - see Fullagar J in The Commonwealth v Clark [1994] VicRp 66; (1994) 2 VR 333 at 335.

I am concerned with a pleading summons. In Verwayen's case, the defence was amended to raise the limitation defence, and the plaintiff in the proceeding then delivered a reply in which he alleged that estoppel and/or waiver applied, so that the Commonwealth defendant could not rely upon the defence. This became an issue at trial. The issue was considered and determined by the trial judge prior to a jury being empanelled. He held that the Commonwealth was not estopped or its right to rely upon the defence had been waived. An appeal by the plaintiff to the Full Court was successful.

The Full Court decision binds me. The facts in Clark were very similar to the facts in Verwayen, and the same result was reached.

The plaintiff has placed evidence before the Court by affidavit, which has not been tested. In my view, a court should be reluctant to decide factual questions concerning a proposed defence unless it is clear that the facts are all one way and lead to a conclusion that the defence is hopeless or it is clear, is not open to the defendant.

The principles that guide a court in respect to estoppel were summarised by Deane J in Verwayen at pp.444-446. As His Honour said at p.444 -

"The central principle of the doctrine is that the law will not permit an unconscionable - or, more accurately, unconscientious - departure by one party from the subject matter of an assumption which has been adopted by the other party as a basis of some relationship, course of conduct, act or omission which would operate to that other party's detriment if the assumption be not adhered to for the purposes of the litigation."

As His Honour pointed out, and also stated by the other High Court judges, the question whether a departure would be unconscionable concerns the conduct of the alleged estopped party in all the circumstances. At p.460, Dawson J held, as a matter of fact that the Commonwealth conduct resulted in the adoption of an assumption on the part of the plaintiff, which led him to assume that the Commonwealth would not raise the limitation defence. He further held that there was no doubt that the departure from that assumption would be unconscionable. His Honour said -

"It was the result of a deliberate course of action on the part of the appellant pursued consistently over a considerable period of time."

As the dissenting judges made clear, the so-called unconscionability could be overcome by an appropriate order for costs. It is clear, in my opinion, that the question of estoppel raises questions of fact to be decided after due consideration of all matters.

In Verwayen's case, all judges were prepared to find that the Commonwealth had adopted a deliberate course of action over a considerable period of time, that it would not rely upon the limitation defence and also what is known as the groves defences. The evidence was substantial, showed a constant course of conduct over a considerable period of time and led inexorably to that conclusion. That was also the position in Clark's case, supra. But does the evidence in the present matter, adduced on behalf of the plaintiff by his solicitor, lead to the conclusion that the Commonwealth induced an assumption that a post-traumatic stress disorder was a disorder within the meaning of s.5(1A), and that it would be unconscionable for the Commonwealth to adopt a course contrary to that assumption?

Plaintiff's counsel relied upon the fact that there was an admission in the defence to that effect. But in my opinion, in most cases, the mere fact that there has been an admission made in a defence, could not constitute evidence of an assumption that was not subject to change. This was made clear by what Mason CJ said in Verwayen at p.414 -

"In an ordinary case, the nature of pleadings and their susceptibility, whether by leave or otherwise, to amendment would make it most unlikely that it could be inferred from the pleadings alone that the pleader had induced another party to make an assumption that a particular matter would or would not be pleaded. The other party might reasonably be expected to appreciate that no inference can be drawn from the state of the pleadings alone at a particular time as to the future course which the pleader may decide to take. Still less would it be reasonable to assume that an implied promise not to amend the pleadings, if such a promise could be identified, would be enforceable in the absence of consideration."

It is observed that His Honour is talking about the ordinary case and secondly, that the mere admission in a pleading would not be sufficient. However, the fact of an admission in a pleading may constitute evidence, which supports other evidence which led to the assumption.

In considering the evidence in the present case, I am not persuaded that the Commonwealth has induced any assumption in the present case that the plaintiff only had to prove post-traumatic stress disorder and that s.5(1A) applied to his case.

Mr Forster, in his affidavit, referred to a number of mediation schemes which were put in place by the Commonwealth Attorneys-General, in the period from 1994. But none of the schemes which were put in place to settle the Voyager cases related to the cases brought by the Melbourne crewmen. Indeed, on the contrary, on 5 February 1998, Mr Williams QC, the Attorney-General, said in respect of the Melbourne claims, that there would be no settlement scheme and "the Commonwealth will continue to respond to HMAS Melbourne claims in accordance with the normal legal principle and practice." Further, at a directions hearing in relation to another matter in November 1997, certain statements were made on behalf of the Commonwealth by its counsel, but it could not be said that any admission was made as to the application of s.5(1A).

At a directions hearing on 26 June 1998, in which the proceedings concerning five of Mr Forster's other clients were discussed, it was noted that the defences in at least one of the cases accepted that s.5(1A) applied, if it was proven that a post-traumatic stress disorder was suffered by the plaintiff. Again, it is noted that it was a statement made in a defence. Again, the observations made by Mason CJ apply to such a statement. Other than that evidence, there is no other evidence, prior to the issue of the present proceeding, which would lead one to the conclusion that the Commonwealth had pursued a deliberate course of action over a considerable period of time not to raise the defence. In Verwayen's case, it was a question of raising a limitation defence. What is sought here is not to raise a limitation defence, but to put in issue the application of s.5(1A) of the Act. I am not persuaded on the evidence that the Commonwealth has induced an assumption that it would not put in issue that question.

Mr Forster gave further evidence that from January 2000 onwards, he has had many discussions with the Commonwealth, all aimed at attempting to settle cases, and that some cases are settled. That may be so. But in my view, it does not support the contention put forward as to the assumption.

This is a pleading summons. I think it inappropriate to say anything more about the material and the chances of the plaintiff successfully establishing, at trial, the estoppel which he relies upon.

On the material, I am not persuaded that there is a complete answer by way of estoppel to the defence sought to be raised by the Commonwealth, and I propose to allow the amendment.

That is not to say that the plaintiff is not entitled to plead by way of reply and estoppel or waiver, and I will grant him leave to do so. What I have said in relation to the material before the Court, on this application, does not decide that issue and the plaintiff will no doubt be given the opportunity at trial, if so advised, to rely upon the principles established and applied in Verwayen's case.

I am satisfied that the plaintiff would not suffer irreparable prejudice if the Commonwealth was permitted to withdraw the admission it made in paragraph 8 of its defence. But, he would suffer irreparable prejudice if the Commonwealth was permitted to plead the New South Wales Limitation Act 1969. In my view, on the materials before the Court, he would not be irreparably prejudiced if the Commonwealth was permitted to rely upon the law of the A.C.T., and in accordance with the well established principles, it is appropriate to permit the defendant to raise the issue.

I am not persuaded, on the material before the Court, that the Commonwealth is estopped from raising the two defences concerning s.5(1A) of the Victorian Act or the A.C.T. limitation provision. Strictly, the Commonwealth, by withdrawing the admission, does not raise a defence. It puts the plaintiff to his proof.

Subject to any submissions from Counsel, I propose to make the following orders -

(i) That the defendant have leave to amend paragraph 8 of its defence, by substituting for the said paragraph 8, the following -

"It does not admit the allegations contained in paragraph 8."

(ii) That the defendant have leave to amend paragraph 9 of its defence, by deleting the said paragraph 9 and substituting therefor -

(a) The plaintiff's action is statute barred by virtue of paragraph 5(1)(a) of the Limitations of Actions Act 1958 (Vic); or alternatively.

(b) that the plaintiff's action is statute barred by virtue of s.3 of Imperial Act 21 , James 1, Chapter 16, or alternatively is not maintainable by virtue of s.11 of the Limitation Act 1985 (A.C.T.)."

(iii) That the plaintiff have liberty to apply for any costs thrown away as a consequence of the amendments.

(iv) That the plaintiff deliver and file any reply by 4.30 pm on 5 October 2001.

(v) That the defendant pay the plaintiff's costs of its summons.

Limitations of Actions Act 1958(Vic)

Limitations Act 1969

At a glance

Court

Decision date

Before

Source

Judgment (160 paragraphs)

Parties

Legislation Cited (3)

Cases Cited (6)