Corporations Act 2001 (Cth), s601AG.

Limitation Act 1974 (Tas), s5A(3)(a).

Almario v Allianz Australia Workers Compensation (NSW) Insurance Ltd [2005] NSWCA 19; (2005) 62 NSWLR 148; Fairwater Pty Ltd v QBE Insurance (Australia) Ltd [2012] WASCA 270; Tzaidas v Child [2009] NSWSC 465; (2009) 74 NSWLR 208; Murdock v Lipman Pty Ltd [2012] NSWSC 983; Pagnon v WorkCover Queensland [2000] QCA 421; [2001] 2 Qd R 492, discussed.

1 On 11 March 2008 the plaintiff, Ivan Mercer, was injured when he was struck by a pallet at the premises of Windsor Agencies Pty Ltd at Bridgewater in Tasmania. As a result, he is now a quadriplegic. He was the managing director of Windsor Agencies. That company was deregistered on 26 January 2011. At all material times, that company had a workers compensation insurance policy, issued pursuant to the Workers Rehabilitation and Compensation Act 1988 ("the WRC Act"), s97, with the defendant, Allianz Australia Insurance Ltd. The plaintiff has sued the defendant pursuant to the Corporations Act 2001 (Cth), s601AG, alleging that his injuries were caused by the negligence of a forklift operator employed by Windsor Agencies, and suffered by him in the course of his employment by that company. The defendant denies the allegation of negligence, and has not formally admitted that the plaintiff's injury occurred in the course of his employment.

2 The defendant contends that the plaintiff's claim is statute barred. It relies on the Limitation Act 1974, s5A(3)(a). That provision imposes a limitation period of three years, commencing on the "date of discoverability", for actions for damages for negligence, nuisance or breach of duty involving claims for damages for personal injuries. This action was commenced on 21 February 2012. The defendant contends that the date of discoverability was no later than about 3 September 2008, more than three years before the writ was issued. The plaintiff contends that this is not an action to which s5A(3)(a) applies.

3 On 13 March 2013 I made an order requiring the determination, before the determination of any other issues in the case, of the question whether, assuming all the allegations in the statement of claim are proved, and assuming the allegations of fact pleaded in par16 of the defence are proved, the plaintiff is precluded from recovering any damages or moneys from the defendant in this action. Paragraph 16 of the defence is the paragraph in which allegations relating to the "date of discoverability" issue are pleaded. On 9 April 2013 I determined that, if those assumptions are made, the plaintiff is not precluded from recovering moneys from the defendant in this action. These are my reasons for that determination.

4 Because of the plaintiff's contention that he was injured in the course of his employment by Windsor Agencies, he was precluded from commencing an action for damages against that company until he complied with the requirements of the WRC Act, s138AB. That section was amended in 2009, but the amendment does not apply in relation to the plaintiff's accident, which occurred in 2008: WRC Act, s164A. Under s138AB, as it read in 2008, a worker was precluded from commencing proceedings for damages against an employer until he or she obtained a determination from the Workers Rehabilitation and Compensation Tribunal that his or her degree of impairment was not less than 30% of the whole person, and then lodged with that tribunal an election to claim damages. The plaintiff did those things. He filed his s138AB election with the tribunal on 5 March 2010. A worker to whom s138AB applies does not have a cause of action against his or her employer until the appropriate determination has been made and the appropriate election lodged pursuant to that section: Skilled Engineering Ltd v Glaxo Wellcome Australia Pty Ltd [2005] TASSC 86; (2005) 15 Tas R 88. The plaintiff therefore did not have a cause of action against Windsor Agencies until he filed his election on 5 March 2010. That was less than three years before the issue of the writ. But it does not follow that the plaintiff cannot have a limitation problem, because the limitation period imposed by the Limitation Act, s5A(3)(a), runs from the date of discoverability, and not from the date that a cause of action accrues. Section 5A(3) reads as follows:

"(3) An action for damages for negligence, nuisance or breach of duty (whether that duty exists by virtue of a contract or a provision made by or under an enactment or independently of any contract or any such provision), where the damages claimed by the plaintiff for the negligence, nuisance or breach of duty consist of, or include, damages in respect of personal injuries to any person, must not be brought after the expiration of whichever of the following periods of limitation is the earlier:

(a) 3 years commencing on the date of discoverability;

(b) 12 years commencing on the date of the act or omission which it is alleged resulted in the personal injury or death that is the subject of the action."

5 The Limitation Act contains the following definition in s2(1):

"date of discoverability, in the case of an action for damages for personal injuries, means the date when the plaintiff knew or ought to have known that personal injury or death -

(b) was attributable to the conduct of the defendant; and

(c) in the case of personal injury, was sufficiently significant to warrant bringing proceedings ...".

6 The Limitation Act does not contain any provision whereby the three-year limitation period fixed by s5A(3)(a) can be extended, nor any provision enabling leave to be granted for an action to be brought after that limitation period has expired.

7 The Corporations Act, s601AG, under which the plaintiff has sued the defendant, reads as follows:

"601AG Claims against insurers of deregistered company

A person may recover from the insurer of a company that is deregistered an amount that was payable to the company under the insurance contract if:

(b) the insurance contract covered that liability immediately before deregistration."

8 Before the enactment of s601AG, a person wishing to make a claim against a deregistered company usually needed to apply to a court for the reinstatement of the company in order to bring an action against it. The section now enables such a claimant to proceed directly against the insurer of a deregistered company without having to go to the trouble and expense of seeking the company's reinstatement.

9 The effect of the section was considered by the New South Wales Court of Appeal in Almario v Allianz Australia Workers Compensation (NSW) Insurance Ltd [2005] NSWCA 19; (2005) 62 NSWLR 148. In that case at pars[19] and [20], Ipp JA, with whom Hodgson JA and Hunt A-JA agreed, said the following:

"19 Section 601AG creates a new cause of action. The action is not a claim for damages. It is for an amount that was payable to the deregistered company under the relevant insurance contract. A claim in terms of s 601AG is subject to two conditions, namely, proof that the deregistered company 'had a liability' to the person claiming and that the insurance contract covered that liability immediately before deregistration.

20 The two conditions are expressed in the past tense. The inference is that the time for determining whether the deregistered company had a liability to the person claiming, and whether the insurance contract covered that liability, is 'immediately before deregistration' (being the phrase qualifying condition (b)). This was not disputed."

10 That analysis was accepted as correct by the Court of Appeal of Western Australia in Fairwater Pty Ltd v QBE Insurance (Australia) Ltd [2012] WASCA 270. In that case Pullin JA, with whom Newnes and Murphy JJA agreed, said the following at pars[3] - [4]:

"3 Section 601AG creates a new cause of action against an insurer to recover an amount that was payable to the deregistered company under an insurance contract ...

4 The new cause of action does not arise until the company having the benefit of the insurance is deregistered. Any defences that the insurer may have had at that point to an action on the insurance contract may be pleaded by it in defence to the s 601AG claim and any defence the insured may have had to the claim against the insured may be advanced to show that the insured had no liability to the plaintiff."

11 Section 601AG is of course a law of the Commonwealth. There is no applicable Commonwealth limitation legislation. The limitation legislation of Tasmania is therefore applicable: Judiciary Act 1903 (Cth), s79(1); John Pfeiffer Pty Ltd v Rogerson [2000] HCA 36; (2000) 203 CLR 503. Under the Limitation Act 1974, s4(1)(d), the Tasmanian limitation period for "actions to recover any sum recoverable by virtue of an enactment" is a period of six years, commencing from the date on which the cause of action accrued.

12 In this case, counsel for the plaintiff argued that this action, being an action under s601AG for an amount claimed to be payable under an insurance contract, is not an "action for damages for negligence, nuisance or breach of duty" within the meaning of s5A(3) of the Limitation Act, and that it follows that that provision is of no relevance.

13 Counsel for the defendant accepted that s601AG creates a new cause of action that is not a claim for damages, but argued to the following effect:

• If Windsor Agencies had not been deregistered, and if the relevant date of discoverability was no later than about 3 September 2008, the plaintiff's cause of action against Windsor Agencies would have become statute barred by virtue of s5A(3)(a) on or about 3 September 2011.
• This action was not commenced until 21 February 2012.
• For the purpose of determining whether Windsor Agencies "had a liability" to the plaintiff within the meaning of s601AG(a), the defendant insurer should be treated as if it were the deregistered company.
• It follows that a limitation defence based on s5A(3)(a) can succeed so as to preclude a plaintiff from recovering moneys pursuant to s601AG, and that such a defence will succeed in this case if it is established that the plaintiff's "date of discoverability" was more than three years before the issue of his writ.

14 Counsel for the defendant relied heavily on the judgment of Ipp JA in Almario (above). That case concerned a claim in respect of injuries suffered by the employee of a company that was later deregistered. Immediately before its deregistration, the applicable limitation period had expired, but there was a statutory provision that empowered a court to grant leave for proceedings for damages to be taken out of time. The insurer contended that, for the purposes of s601AG(a), the deregistered company did not have a liability to the injured man because the limitation period had expired. Further, it contended that the statutory discretion to grant leave to commence proceedings after the expiry of the limitation period could only be exercised in proceedings against the employer, and not in proceedings against an insurer under s601AG. The Court of Appeal held that the expiry of the limitation period did not prevent the company from having a liability to the claimant for the purposes of s601AG(a) when an extension of time could be granted, and that a person making a claim under s601AG was entitled to apply for an extension of time under the applicable workers compensation statute.

15 At pars[34] - [36], Ipp JA said the following:

"34 In my view, the purpose of the legislature in inserting s 601AG in the Corporations Act is to require the insurer of a deregistered company to stand in the shoes of the company to the extent necessary to allow creditors of the company to recover from the insurer whatever amounts they were entitled, by force of law, to recover from the company had it not been deregistered. This purpose is discernible from the section as a whole and the Explanatory Memorandum. The notion that a person may 'recover' from the insurer of a deregistered company 'an amount that was payable' supports this inference. These words convey the idea of a creditor being entitled to recover that which was payable to him or her. Paragraph (a) of s 601AG is not inconsistent with this idea.

35 In accord with such a purpose, an insurer would be able to raise against a claimant under s 601AG whatever defences would have been open to the company - subject to any qualification that might, in law, attach to those defences. So that if a statute caused a creditor's remedy to be time barred, but nevertheless provided that the bar could be relaxed by affording the creditor the opportunity of applying for the time to be extended, any right the insurer would have to rely on the time bar would be subject to the creditor being able to apply (as against the insurer) for an extension of the time period.

36 On this basis, it would be open to the insurer, in a claim against it under s 601AG, to raise the defence that the three-year period under s 151D(2) of the Workers Compensation Act [1987 (NSW)] had expired. But, as that defence is subject to the right of the person claiming to seek the court's leave to extend the three-year period, that person would have the right to apply to the court for leave to extend the time as against the insurer, as if the insurer was the employer of the person concerned."

16 At pars[41] - [43], his Honour said the following:

"41 In my view, s 601AG should not be textually construed. Rather, it should be construed so that the opening words read: 'A person may recover from the insurer of a company that is de-registered (as if the insurer was the deregistered company) an amount that was payable to the company under the insurance contract. ... '.

42 On such a construction, it would be open to the insurer to rely on the three year limit in s 151D(2). It would also be open to a person claiming under s 601AG to seek from the court (as against the insured), in an application under s 151D(2), an extension of the three-year period referred to in the latter section.

43 Construing s601AG in this way accords with a purposive construction of the statute."

17 However that case did not concern any question as to when the limitation period for a s601AG action begins to run. It appears from par[15] of the judgment of Ipp JA that it was held at first instance in that case that the limitation period began to run on deregistration of the company, and that that finding was not challenged before the Court of Appeal.

18 Further, it would be wrong to treat Almario as authority for the proposition that, when s601AG is relied on, the insurer must be treated as if it were the deregistered company for all purposes and without qualification. It is worth noting that in par[34] of his judgment, quoted above, Ipp JA said that the purpose of the legislature was "to require the insurer of a deregistered company to stand in the shoes of the company to the extent necessary to allow creditors of the company to recover from the insurer ...". [My emphasis.]

19 In my view this case is distinguishable from Almario because this plaintiff's claim was not time barred at the time of the company's deregistration. Nothing said in Almario warrants the conclusion that, if the deregistered company had a liability to a person at the time of deregistration, that person could recover from the insurer only if he or she commenced proceedings within the limitation period which, but for the deregistration, would have been applicable.

20 Counsel for the defendant relied on par[32] of the judgment of Ipp JA in Almario, in which his Honour said this:

"32 Take the notional case where a worker is injured through the negligence of his employer but takes no legal proceedings to recover damages. Assume that, say, 20 years later, the employer company is deregistered and the worker then sues the deregistered company's insurer. It would give rise to a serious inequity if, in those circumstances, the insurer would be fixed with liability and not be afforded the protection given to employers by s 151D(2)."

21 In that passage his Honour was addressing an argument that, when a limitation statute bars a remedy but not a right, the liability to the claimant constitutes a liability for the purposes of s601AG(a) after the limitation period has expired. If that were correct, a new cause of action would accrue to the claimant upon the deregistration of the company, even if that deregistration occurred decades after the expiry of the limitation period, and the insurer would not be able to rely on the expiry of the limitation period. His Honour was rejecting that argument, on the basis that there could be no liability for the purposes of s601AG(a) if the original limitation period had expired and there was no discretion to extend time. His comments do not support an argument that the limitation period applicable to a claim against a deregistered insured could be relied upon by an insurer if it expired after the deregistration.

22 Counsel for the defendant relied on two further New South Wales decisions, both of them decisions of McCallum J: Tzaidas v Child [2009] NSWSC 465; (2009) 74 NSWLR 208, and Murdock v Lipman Pty Ltd [2012] NSWSC 983. The first of those cases, Tzaidas v Child, concerned the applicability of s601AG to a claim for contribution between tortfeasors. Three plaintiffs sued two doctors and a corporation that operated a hospital. The corporation subsequently became deregistered. The doctors filed cross-claims against the hospital's insurer, based on assertions that, before deregistration, the hospital corporation had a liability for contribution or indemnity as a joint tortfeasor. Although proceedings for contribution and indemnity can be instituted before judgment is given for a plaintiff, strictly speaking there can be no liability for contribution or indemnity until the plaintiff obtains judgment. Her Honour held that, for the purposes of s601AG, the term "liability" was not confined to a liability that was ascertained, crystallised or determinate immediately before deregistration, but that it could include a liability which was then potential, contingent or inchoate. The doctors were thus able to maintain their cross-claims against the hospital's insurers. That result was clearly consistent with the purpose or object of s601AG.

23 Counsel for the defendant placed particular reliance on par[34] of the judgment in that case, in which McCallum J said the following:

"34 In my view, the apparent complexity of s 601AG is resolved in the recognition of the following matters. The section is remedial. It creates a new cause of action to recover an amount that was payable to the deregistered company under the relevant insurance contract: Almario (at 152 [19]). There is no requirement for leave to bring an action under the section: compare s 6(4) of the Law Reform (Miscellaneous Provisions) Act [1946 (NSW)]. In particular, the conditions set out in s 601AG(a) and s 601AG(b) 601AG [sic] are not expressed as pre-conditions to the commencement of proceedings to recover an amount under that section. Rather, proof of those matters is expressed as a condition of recovery in accordance with the section."

24 Counsel for the defendant submitted to me that a plaintiff could succeed under s601AG only if a liability existed at the date of trial. He argued that that was because the existence of a s601AG(a) liability was a pre-condition to recovery, and not a pre-condition to the commencement of proceedings. He argued that support for those propositions could be found in the paragraph I have just quoted. I reject those submissions. Before the enactment of s601AG, there was a somewhat similar legislative provision in New South Wales: Law Reform (Miscellaneous Provisions) Act 1946 (NSW), s6. However proceedings could be instituted against an insurer under that section only if a court granted leave: s6(4). The grant of leave was a pre-condition to the commencement of proceedings. All that her Honour was saying in the latter part of par[34] was that s601AG did not impose a leave requirement, but specified matters that needed to be established in order for a claim under the section to succeed. She said those things in the context of determining whether or not a defendant's contingent liability to another defendant for contribution or indemnity should be regarded as a s601AG(a) liability before the claim by the plaintiff had been determined. There is nothing in Tzaidas v Child to suggest that the time for determining whether or not a s601AG(a) liability existed was any time other than the time immediately before deregistration.

25 Murdock v Lipman Pty Ltd concerned claims in respect of personal injuries suffered by a worker at a building site. The first defendant was the head contractor. The original second defendant was a company that had been a subcontractor. It had been deregistered. An order was made substituting its insurer as the second defendant. The plaintiff's employer was a company that also became deregistered. He sought to join its insurer as a third defendant. He sought extensions of time against the head contractor, the insurer of the deregistered subcontractor, and the insurer of the deregistered employer. No proceedings were instituted until nearly eight years after the plaintiff's injury. By that time the applicable limitation periods had expired. In relation to the subcontractor, the Limitation Act 1969 (NSW), s60C, empowered the court to grant an extension of time for the institution of proceedings up to a maximum of eight years after the cause of action arose. McCallum J followed Almario, held that an extension of time could be granted in the s601AG proceedings, held that it could be granted after the eight-year bar had expired if the proceedings had been instituted before that expiry, and granted the extension of time. In relation to the employer's insurer, Almario was directly in point. Her Honour held that she had the power to grant an extension of time, but afforded the insurer an opportunity to make submissions in relation to a possible cross-claim for contribution or indemnity.

26 Counsel for the defendant relied on passages in Murdock v Lipman Pty Ltd in which McCallum J made comments to the effect that, in s601AG proceedings, the insurer was "subrogated to the rights of the deregistered insured in defending the claim at the suit of the plaintiff", and required "to stand in the shoes of the deregistered company to defend that claim": pars[55] and [62]. He relied on those comments in arguing to the effect that the rights of the insurer corresponded to those of the deregistered insured to the extent that an insurer could rely on a limitation defence that would have existed if proceedings had been brought against the insured at the time when the s601AG proceedings were instituted. I reject that argument. There is nothing in Murdock v Lipman Pty Ltd to suggest that an insurer sued under s601AG could take advantage of a limitation defence that was not available to the deregistered insured immediately before the time of deregistration. In the paragraphs relied upon, McCallum J was simply analysing the effect that s601AG has of making available to an insurer two kinds of defences - defences that were available to the deregistered insured, and defences relating to the insurance contract.

27 Counsel for the defendant also relied on par[79] of the judgment in Murdock v Lipman Pty Ltd. In pars[78] and [79], McCallum J said the following:

"78 ... On my understanding of the operation of s 601AG, the substitution of Australis [the deregistered subcontractor's insurer]as second defendant (by consent) gave effect to the purpose of the statute of requiring the insurer to stand in the shoes of its insured to respond to the claim.

79 The action on the cause of action against the insured was not novated by that event. For the purpose of the present application, Australis is Hire N' Higher [the deregistered subcontractor], not a new party lately joined to the proceedings."

28 However the situation that her Honour was discussing in those paragraphs is different from the present one in two respects. First of all her Honour was dealing with an application for an extension of time. In the light of the New South Wales Court of Appeal's decision in Almario, Mr Murdock was entitled to apply for an extension of time as if the insurer in question was the relevant deregistered company. Secondly, the relevant insurer had been substituted as a defendant in place of the deregistered company pursuant to an order that was made by consent. The rights of the plaintiff against the substituted defendant depended in part on the applicable rules of court, and not just on s601AG.

29 Counsel for the defendant drew my attention to the Limitation Act 1969 (NSW), s14(1)(d). That provision is indistinguishable from Tasmania's s4(1)(d). It imposes a limitation period of six years, running from the date on which a cause of action first accrues to the plaintiff, in respect of "a cause of action to recover money recoverable by virtue of an enactment". He made a submission to the effect that s14(1)(d) was not referred to in Almario or in Murdock v Lipman Pty Ltd, and that it followed that no such limitation provision was applicable to s601AG. I disagree. As I have already said, Ipp JA made it clear in par[15] of his judgment in Almario that it had been determined at first instance in that case that the relevant limitation period began to run at the time of deregistration, and that that finding was not challenged in the appeal proceedings. Plainly the limitation period that began to run upon deregistration was that imposed by s14(1)(d) of the New South Wales statute. In Murdock v Lipman Pty Ltd, the subcontractor had been deregistered less than six years before the institution of proceedings. There was therefore no need for s14(1)(d) to be referred to in relation to the action against its insurer. The date of the employer's deregistration does not appear in the judgment. It could well have been less than six years before the judgment. In any event, there is nothing in the judgment to suggest that any point was taken as to the applicability or otherwise of s14(1)(d). Neither of the two cases can be regarded as authority for the proposition that s601AG somehow implicitly excludes the operation of State limitation legislation relating to actions to recover money recoverable by virtue of enactments.

30 Counsel for the defendant relied on the judgment of McPherson JA in Pagnon v WorkCover Queensland [2000] QCA 421; [2001] 2 Qd R 492. That was a case before the Queensland Court of Appeal concerning an action by a worker to recover damages for personal injuries from a statutory authority pursuant to the Workers' Compensation Act 1990 (Qld), s186, following the deregistration of the company that had employed him. The Court of Appeal held that s186 created a new cause of action that was not complete until all procedural requirements for the bringing of the action were complied with. At first instance in that case, it was held that the limitation period applicable to personal injuries actions did not apply to an action by a worker under s186 against the statutory authority. On an application for leave to appeal, the Court of Appeal upheld the decision at first instance. That case supports the arguments advanced on behalf of the plaintiff in this case. There is no reason to distinguish it. It is authority for the proposition that the limitation period applicable to the plaintiff's claim against his employer does not apply to a separate cause of action against another party for the recovery of moneys in respect of that liability pursuant to an enactment.

31 When a company is reinstated, it is taken to have continued in existence as if it had not been deregistered: Corporations Act, s601AH(5). In that situation, therefore, the prima facie position is that, for limitation purposes, time is taken to have continued to run during the period of deregistration. However, when a court makes an order for the reinstatement of the registration of a company, s601AH(3)(b) empowers that court to "make any other order it considers appropriate". Under that provision, an order can be made for the period of deregistration not to be counted for the purposes of a limitation statute: In re Lindsay Bowman Ltd [1969] 1 WLR 1443; Pagnon v WorkCover Queensland (above) per McPherson JA, with whom Thomas JA and Muir J agreed, at pars[12] - [17]. If the arguments advanced on behalf of the defendant in this case are correct, it would follow that, when a company is deregistered, and the limitation period for proceedings against it subsequently expires without proceedings having been instituted, then, unless there is a statutory discretion to extend time, the claimant would need to apply to a court for the reinstatement of the company and an order under s601AH(3)(b) for the period of deregistration not to be counted for the purposes of the limitation statute. That is exactly the sort of situation that s601AG was intended to avoid. And the interpretation of the section that would best achieve its purpose or object must be preferred to any other interpretation: Acts Interpretation Act 1901 (Cth), s15AA.

32 This case raises the question whether, when the limitation period applicable to a claim against a company expires after deregistration without any statutory discretion to extend time, the liability that the company had constitutes a liability within the meaning of s601AG(a). Adopting a purposive interpretation of that provision must lead to the answer that, in that situation, the liability of the deregistered company constitutes a liability within the meaning of s601AG(a).

33 The only limitation period relevant to this case is that imposed by the Limitation Act, s4(1)(d), which imposes a six-year limitation period commencing upon the date of deregistration. Section 5A(3)(a) of that Act cannot be relied upon by the defendant.