Murdock v Lipman

Supreme Court of NSW|2012-08-03|Before: McCallum J

t) Colin Biggers & Paisley (second defendant) File Number(s): 2010/143429 Publication restriction: None

Judgment 1Harold Murdock sustained injuries during the course of his employment as a dogman at a building site at Fairfield Shopping Centre. According to his claim, Mr Murdock was required to stand on scaffolding which was in the process of being dismantled. Whilst Mr Murdock was loading a pallet of planks onto a crane, the scaffolding collapsed and Mr Murdock fell to the ground. 2The accident occurred on 26 June 2002. Mr Murdock did not commence proceedings until 8 June 2010 and his claim is accordingly out of time. 3Mr Murdock seeks orders to enable him to maintain these proceedings against three parties. Two are already defendants to the proceedings. Lipman Pty Ltd (the first defendant) was the head contractor at the building site. The second defendant is Australis Group (Underwriting) Pty Ltd. Australis is the insurer of one of Lipman's subcontractors, Hire N' Higher Pty Ltd, which was retained to provide scaffolding services at the site. The original statement of claim named Hire N' Higher as the second defendant. On 25 October 2010, Australis was substituted (by consent) for Hire N' Higher, which had been deregistered before the proceedings were commenced. 4The third party against whom Mr Murdock wishes to pursue a claim is his employer at the time of the accident, Deno's Hire Pty Ltd. However, as Deno's Hire is also deregistered, it is necessary for Mr Murdock to pursue that claim against its workers compensation insurer, Gallagher Bassett Services New South Wales Pty Ltd, as allowed under s 601AG of the Corporations Act 2001. 5There are two applications before the Court. The first is Mr Murdock's notice of motion filed 10 February 2011 seeking an extension of the limitation period for bringing the claims against the first and second defendants. The second is Mr Murdock's notice of motion filed 21 November 2011 seeking leave to commence proceedings out of time against Gallagher Bassett (in lieu of the deregistered employer). This judgment determines those two applications. 6The case sought to be put against Lipman is that, since there was more than one subcontractor on the site, Lipman as head contractor had a duty to coordinate the different trades, in accordance with the principles stated in Stevens v Brodribb Sawmilling Co Pty Ltd [1986] HCA 7; (1986) 160 CLR 16 at 47-48 per Brennan J, affirmed by the High Court in Leighton Contractors Pty Ltd v Fox [2009] HCA 35; (2009) 240 CLR 1 at [20]. 7As against Hire N' Higher, Mr Murdock alleges that, by the reason of its having erected, maintained and partially dismantled the scaffolding, it owed him a duty to exercise reasonable care for his safety. The existence of a duty of care owed to Mr Murdock by Deno's Hire Pty Ltd is uncontroversial.

Chronology 8The accident occurred on 26 June 2002. It is not suggested that the cause of action in tort accrued any later. An action on that cause of action was not maintainable if brought after the expiration of a limitation period of three years running from that date (the first bar): s 18A of the Limitation Act. However, that was subject to the court's power under s 60C of the Act to extend the limitation period for a period not exceeding five years (the second bar). 9Hire N' Higher was deregistered on 10 June 2007. The statement of claim (naming Lipman as first defendant and Hire N' Higher as second defendant) was filed on 8 June 2010. Both of those events occurred after the expiration of the first bar but before the expiration of the second bar. Australis was substituted as second defendant on 25 October 2010, after the expiration of the second bar. There is no power to extend the limitation period beyond the second bar (that is, beyond 26 June 2010). 10Section 63 of the Limitation Act operates to extinguish Mr Murdock's right and title to the damages he claims upon the expiration of a limitation period fixed "by or under" the Act unless he has brought an action on the cause of action before that date. It will be necessary to return to the effect of that provision. It is at least clear that Mr Murdock's right and title to the damages he claims was extinguished upon the expiration of the second bar unless he is taken to have brought an action on the cause of action before that date. That follows from the decision of the Court of Appeal in Turagadamudamu v PMP Limited [2009] NSWCA 120, which held that, once the second bar passes without the person having brought an action on the cause of action, the limitation period cannot be extended under s 60C: at [87] per Beazley JA; at [159] per Campbell JA; Ipp JA agreeing with both at [141].

Application against Lipman Pty Ltd 11Mr Murdock seeks an order against Lipman under s 60C of the Limitation Act extending the limitation period for bringing the claim against it to 8 June 2010, the date on which the statement of claim was filed. As already noted, the limitation period fixed by s 18A of the Limitation Act 1969 for bringing any claim against Lipman is three years running from 26 June 2002. The proceedings were not commenced until almost five years after the expiration of that period. 12There is power under s 60C the Limitation Act to extend the three-year limitation period for up to five years if, after hearing such of the persons likely to be affected by the application as it sees fit, the court decides that it is just and reasonable to do so. Section 60E(1) directs the court, in exercising that power, to have regard to all the circumstances of the case including, to the extent that they are relevant, the matters set out in that section. 13Section 63 operates so as to extinguish a claimant's right and title to damages for personal injury "on the expiration of a limitation period fixed by or under the Act" except where an action is brought on the cause of action before that date. However, a defendant is not entitled to the benefit of any such extinction of right or title unless the issue is pleaded or otherwise appropriately claimed in the proceedings: s 68A. 14Lipman has pleaded the Limitation Act in its defence filed 10 September 2010 (at paragraph 13). The pleading does not allege, in terms, that Mr Murdock's right and title to damages for personal injury is extinguished. That contention probably should be expressly pleaded but no point was taken by the plaintiff on that basis. It is convenient to proceed on the premise that the point has been duly raised. Australis has not filed a defence. Its position is considered separately below. 15Before turning to Mr Murdock's specific explanation for the delay in commencing proceedings, it is relevant to consider his personal circumstances. Mr Murdock is now 37 years old. He left school in Year 9 and described himself as "not a good student". He has a relatively low level of literacy. He is in a de facto relationship and has three young children. 16Mr Murdock has a forklift licence and qualifications in scaffolding, working on platforms and as a dogman. In 2002 his pay varied from between $900 to $1,000 net per week. He returned to work for a period following the accident but alleges that a significant deterioration in his condition in 2009 has now left him unable to work. 17It is necessary to consider the length of and reasons for the delay in bringing these proceedings: s 60E(1)(a). Plainly, the length of the delay, being close to the maximum period for which an extension may be granted, is a factor against the relief sought. 18As to the reasons for the delay, Mr Murdock's explanation needs to be considered in three stages, by reference to the three solicitors he has retained. Mr Murdock first sought legal advice as to his rights in respect of the accident in late 2002. He consulted a solicitor who worked for what he described as "an Aboriginal firm". Mr Murdock felt comfortable seeing that solicitor because Mr Murdock is also of Aboriginal descent. 19Mr Murdock instructed the solicitor to act on his behalf and understood that the solicitor would pursue a claim. The solicitor did not inform him that there was a three-year time limit for bringing a claim. Mr Murdock was not aware of the existence of such a limit. He received no correspondence from the solicitor and chased him up a number of times, without response. After about a year, he obtained a referral from a friend to a different solicitor. In my assessment, that period is to be regarded as time lost through no fault on the part of Mr Murdock. 20The second solicitor was retained by Mr Murdock from 2003 until 2008. It may be noted that the limitation period expired during that period. Mr Murdock had approximately five or six meetings with the solicitor. The solicitor told him that he was having meetings with barristers about the case and that he had been dealing with the insurance company. At one point he said, "the insurance company is interested in resolving your matter out of court". On another occasion in 2006 or early 2007, he said to Mr Murdock, "your case will be finalised in about six months". That remark was repeated six months later when Mr Murdock again contacted the solicitor to chase him up. On the second occasion when that promise was made, Mr Murdock became concerned that the solicitor was "not really progressing [his] claim quickly". By 2008, Mr Murdock had decided that the second solicitor did not seem to be advancing his claim. He then contacted Slater & Gordon and instructed his present solicitor, Ms Marilyn Cassidy, on 8 April 2008. 21Two things may be noted about the period up to April 2008. First, the evidence supports the conclusion that Mr Murdock was given to believe that his claim was being pursued through the proper channels. Secondly, the evidence reveals no reason for Mr Murdock to have suspected otherwise, until perhaps towards the end of each period. 22As submitted on behalf of Lipman, a litigant is expected to be diligent in his own interest: State of New South Wales v Judd [2004] NSWCA 355 at [43]. However, this is not a situation of a client sitting back whilst, so far as he was aware, the solicitor did nothing. Mr Murdock did contact the second solicitor from time to time. On those occasions, the representations made to him would have conveyed the impression that legal proceedings were being pursued and were progressing. The proposition that a litigant is expected to be diligent in his own interest does not extend to requiring him to doubt the word of his solicitor. In my opinion, Mr Murdock was entitled to trust that the solicitor was pursuing his claim, as the conversations suggested. 23Had Mr Murdock known more about the law himself or spoken to a conscientious lawyer during that time, he may have had cause for concern. In that event, his failure to demand more prompt attention to his case may have operated against him. However, the evidence before me revealed no basis for a man of Mr Murdock's background and education to have done more than to trust the representations made by his solicitor. Although the delay during that period was inordinate, I am satisfied that it does not fall at the feet of Mr Murdock. 24The third solicitor retained by Mr Murdock is his present solicitor, Ms Cassidy. Ms Cassidy provided a detailed account of the steps taken by her before she filed the statement of claim. It is not necessary to go into their detail, save to observe two things. First, they show that there was yet further delay at the hands of a barrister retained to advise Mr Murdock. Secondly, Ms Cassidy's evidence records a conscientious and methodical approach on her part to the commencement of proceedings. 25It was submitted on behalf of Lipman that, after Mr Murdock engaged Ms Cassidy, she ought to have moved more quickly to commence legal proceedings, or at least to put the defendants on notice of the prospect of a claim. It is difficult to judge the fairness of that contention. It may be acknowledged that, once it was appreciated that the limitation period had already expired, proceedings should have been commenced with all due haste. Two things temper the force of that contention. First, Ms Cassidy was herself on the wrong end of some dilatory legal advice from the first barrister she briefed in the proceedings (not the barristers appearing on the present application). 26Secondly, the obligation to act with all due haste must be balanced against the need to prepare a claim thoroughly, not only to ensure that it is properly brought, but also to enable the claim to be prosecuted efficiently once commenced. 27The next matter to be considered is prejudice to the first defendant: s 60E(1)(b). It was initially submitted that the first defendant would suffer actual prejudice if the limitation period were extended because it would be unable to bring cross-claims for contribution against any other tort feasors. That argument was abandoned during the hearing, but it will be necessary to return to it in the context of the application for leave to commence proceedings against the employer, considered below. 28Mr Sheldon SC, who appeared with Mr Stanton for Mr Murdock, acknowledged that there is always presumed to be some prejudice where there is a long delay in the commencement of proceedings: Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541. 29There is no doubt that the passage of time is likely to cause some erosion in the memories of witnesses. However, that prejudice is ameliorated in the present case by the fact that there was a WorkCover investigation of the incident which was both thorough and well-documented. The investigation was followed by the successful prosecution of both Lipman and Hire N' Higher. 30Mr Sheldon took me in some detail to a series of statements obtained during the course of the investigation (Exhibit 1). It is clear from that material that there is a comprehensive record of the recollections of many relevant witnesses made within the limitation period and at a time when their memories are unlikely to have deteriorated unduly. Indeed, in my view there is force in Mr Sheldon's submission that the material and records available to the parties in the present case are substantially more helpful than in many cases commenced within the limitation period. Whilst I do not set at nought the impact of the lengthy delay in commencing these proceedings, I consider the extent of the presumed prejudice to be substantially reduced for that reason. In my view, the material reveals that a fair trial can be conducted in these proceedings, notwithstanding the passage of time. 31A further important consideration is the extent of Mr Murdock's injury or loss: s 60E(1)(h). Mr Murdock is a relatively young man who, according to the allegations made in the statement of claim and the particulars of injury, has suffered a substantial impairment to his working capacity. Before the accident, he was earning good money and supporting a family. The prejudice to him if the limitation period is not extended is manifest. As acknowledged on his behalf, that in itself is not enough to weigh the scales in his favour: Sydney City Council v Zegarac (1998) 43 NSWLR 195 per Mason P at 200; see also Powell JA at 241. However, it is a significant factor, in my view. 32The other matters listed in s 60E(1) neither assist the plaintiff nor add anything to the considerations discussed above. 33In all the circumstances, I have decided that it is just and reasonable to order that the limitation period for the cause of action against Lipman be extended to 8 June 2010, the date on which the statement of claim was filed.

Application against the second defendant 34The order sought is that the limitation period for commencing proceedings "against the second defendant" be extended to the date on which the statement of claim was filed. The issues raised by Australis in response to that application are complex. 35Ms Burke, who appeared for Australis, raised a threshold issue as to the efficacy of the order by which Australis became the second defendant to the proceedings. As already noted, that order was made by consent. The Registrar made the order precisely in the terms sought in the plaintiff's notice of motion filed 12 October 2010, as follows: That Australis Group (Underwriting) Pty Ltd be substituted for the second defendant in these proceedings pursuant to s 601AG of the Corporations Act 2001. 36Ms Burke's concern arose from the fact that the order, in terms, purported to be an exercise of power under s 601AG of the Corporations Act. That section provides: 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: (a)the company had a liability to the person; and (b)the insurance contract covered that liability immediately before deregistration. 37Ms Burke submitted that the terms of the order made give rise to a jurisdictional issue as to the manner in which Australis has been "joined" (T28.39). She submitted that s 601AG confers no power to join the insurer as a party to proceedings or to substitute it for the deregistered company. In raising that issue, Ms Burke emphasised that Australis does not seek to avoid the consequences of having been joined. Ms Burke felt compelled to raise the issue in case it might affect a party's rights at a later point in time. 38It was submitted that the order should have been made pursuant to r 6.24 or r 6.32 of the Uniform Civil Procedure Rules 2005 and that there is no jurisdiction under s 601AG to make an order in the terms made. Ms Burke suggested that the appropriate course, if the Court were minded to accede to the submission, would be to vary the order under r 36.16(3) or r 36.17 or, alternatively, to make the order now (retrospectively) under r 6.24 or r 6.32. 39The submissions referred variously to "joinder" and "substitution". It is important to note that the rules draw a distinction between the two types of order. Rule 6.24 (in Div 5 of the rules) confers an express power to order that a person be joined as a party. Rule 6.28 provides, in that event, that the date of commencement of the proceedings in relation to that person is taken to be the date on which the order is made or such later date as the court may specify in the order. 40It may be noted that there is also an express power under r 6.29 (in Div 6 of the rules) to order the removal of a party. 41Rule 6.32 confers power, where the court makes an order under Div 5 or 6, to make orders as to the future conduct of the proceedings, including an order with respect to the substitution of one party for a former party. In terms, that power is expressed to arise upon the making of an order under Div 5 or 6, but no point was taken by Australis on that basis. Taking a punctilious approach, the orders of the Registrar might have included an order under Div 6 removing Hire N' Higher as a party but I do not think the fact that no such order was made is of any consequence. To consider the substitution order inoperative on that basis would be a triumph of form over substance. 42Importantly, r 6.32(2) provides that, if the court orders the substitution of one party for a former party, "all things previously done in the proceedings have the same effect in relation to the new party as they had in relation to the old, subject to any other order by the court". 43Putting that issue aside, I do not think the Registrar's order lacked efficacy by reason of the inclusion of the reference to s 601AG. As submitted by Ms Burke, s 601AG is not the source of the court's power to make an order substituting the insurer for the deregistered company. However, it explains the substantive juridical basis for taking that procedural step. For doctrinal purity the words "pursuant to s 601AG of the Corporations Act 2001" should perhaps have been omitted from the order, but I would not see the inclusion of those words as vitiating its operation. The substitution order was otherwise within power, in my view.

Nature of the claim against Australis 44The remaining points relied upon by Australis raise interesting questions as to the procedure for recovering an amount from the insurer of a deregistered company as allowed under s 601AG of the Corporations Act. 45The relevant chronology is set out above. Importantly for present purposes, proceedings were commenced against the deregistered company before the expiration of the second bar, while Australis was substituted as second defendant after that date. 46To determine the points raised on behalf of Australis, it is necessary to consider the nature of the claim brought by Mr Murdock against Australis. The rights and liabilities of the parties in the present case are governed by the interaction of three legal constructs. The first is the plaintiff's cause of action in tort against Hire N' Higher for damages for personal injury. The second is the principle of subrogation, which entitles an insurer, upon indemnifying an insured in respect of a claim, to be subrogated to the rights of the insured as against the plaintiff. The third is the plaintiff's entitlement under s 601AG of the Corporations Act to recover from Australis the amount (if any) that would have been awarded against Hire N' Higher, but for its deregistration. That is a species of statutory subrogation, in which a person in the position of the plaintiff is entitled to be subrogated to the rights of the deregistered company as against its insurer. 47In Almario v Allianz Australia Workers Compensation (NSW) Insurance Ltd [2005] NSWCA 19; (2005) 62 NSWLR 148, the Court of Appeal held that s 601AG creates a new cause of action which is not a claim for damages: at [19] per Ipp JA; Hodgson JA and Hunt AJA agreeing at [1] and [48] respectively. However, that was by no means the end of the analysis in that case. 48Mr Almario sought to maintain a claim for damages for personal injury in respect of an accident at work. Proceedings were initially brought against the employer after it had been wound up and deregistered and after the expiration of the three-year limitation period under s 151D(2) of the Workers Compensation Act 1987. A later application for leave to proceed against the employer company in liquidation was dismissed. 49Mr Almario then commenced proceedings against Allianz, the employer's insurer, under s 601AG. In those proceedings, Mr Almario sought an order against Allianz for leave under s 151D(2) to commence the proceedings out of time. That application was refused by Balla DCJ on the basis that s 151D(2) referred only to the employer, not to its insurer. The proceedings against Allianz were then dismissed by Walmsley DCJ on the basis that Allianz was entitled to rely upon the limitation defence which could have been pleaded by the employer, had it been sued. 50The effect of those two decisions was neatly summarised by Ipp JA at [16] as follows: Thus, on the findings of Balla DCJ and Walmsley DCJ, Mr Almario fell between two stools. His claim that he was entitled to apply for an order under s 151D(2) extending the three year time period was dismissed on the basis that he could only obtain an extension as against the deregistered company but not the company's insurer. Then, his claim against Allianz, as the insurer, was dismissed on the ground that Allianz was entitled to rely on the time bar under s 151D(2) (even though Mr Almario was held not to be entitled to seek an extension of time under that section). The anomaly of this situation is obvious. 51The Court of Appeal upheld an appeal against both decisions, holding that it is open to a person claiming under s 601AG to seek (as against the insured) an extension of the limitation period under s 151D(2): at [42] per Ipp JA. 52The decision was based on a purposive construction of s 601AG. Ipp JA said (at [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. 53Hodgson JA added the following remarks (at [2]): I would add that, in my opinion, under the purposive construction proposed by Ipp JA, s 601AG of the Corporations Act in effect deems the insurer to be the employer for the purposes of s 151D(2) of the Workers Compensation Act. I am inclined to think also that, in the event that there is recovery from the insurer under s 601AG on the basis that money was payable to the company because the company was liable as a tortfeasor in respect of damage, s 601AG would in effect deem the insurer to be a tortfeasor liable in respect of damage within the meaning of s 5 of the Law Reform (Miscellaneous Provisions) Act 1946, so as to enable it to recover contribution in an appropriate case. 54The decision in Almario thus acknowledged some bifurcation in the position of an insurer responding to a claim under s 601AG. In its own right the insurer is responding to a claim for indemnity under the contract of insurance. For that purpose, the plaintiff is subrogated (by the statute) to the rights of the deregistered insured and must establish the insured's entitlement to cover under the insurance contract. However, the insurer also stands, in effect, as the keeper of the cause of action in tort against its deregistered insured. For that purpose, the insurer is subrogated to the rights of the deregistered insured in defending the claim at the suit of the plaintiff. An insurer can adopt that position by consent, if it accepts indemnity. Alternatively, it can be substituted for the deregistered company by order of the court, preserving its right to contest indemnity. 55The submissions made on behalf of Australis in the present application assumed that the nature of the cause of action against it must be either a claim in tort for damages for personal injury or a claim under the statutory cause of action for recovery under s 601AG recognised in Almario at [19]. As the foregoing analysis reveals, that is a false dichotomy. The proceedings potentially entail elements of both. 56The same thinking informed correspondence between the parties after the substitution order had been made by consent. The solicitor for Australis wrote to Mr Murdock's solicitor asking her to specify whether the nature of the cause of action was an action to recover an amount that may have been payable by "the named second defendant" (Australis) to Hire N' Higher or, alternatively, an action for damages for personal injury. 57With great respect to the legal representatives involved, who have evidently given careful consideration to this complex issue, I think that question entailed some misconception. 58Pressed for a response to the letter, Ms Cassidy asserted (referring to Almario at [19]) that the action is one under s 601AG and is not a claim for damages against Australis. Whilst that is a correct characterisation of a cause of action Mr Murdock has against Australis, it is not a complete description of the present proceedings. 59As explained by Ipp JA in Almario at [34], the purpose of inserting s 601AG was to require the insurer of a deregistered company to stand in the shoes of the company to the extent necessary to allow "creditors" to recover. The use of the term "creditors" in that passage of the judgment requires some analysis. In the present context, the plaintiff is no more than a prospective, contingent creditor but that is no impediment to recovery under s 601AG. 60In inserting that provision, the legislature created a new statutory cause of action. However, it does not follow that that is the only characterisation or even a correct characterisation of a claim against an insurer that has been substituted for the deregistered company as a defendant in proceedings for damages for personal injury, particularly where, as occurred here, the substitution order was made by consent. 61As noted in Almario at [19], the entitlement of a person to make a claim under s 601AG is subject to the two conditions identified in the section. The two conditions are that the (now deregistered) company had a liability to the person and that the insurance contract covered that liability immediately before deregistration. The appropriate procedure for pursuing a claim under s 601AG in any individual case must be informed by the extent to which the satisfaction of those conditions is contested. 62In the present case, the satisfaction of the first condition turns on the determination of a claim for damages for personal injury against the deregistered company. One of the objects of s 601AG is to enable a person in Mr Murdock's position to have that claim determined without having to take the step of restoring the company to the register. The mechanism by which that is achieved is by requiring the insurer to stand in the shoes of the deregistered company to defend that claim. To that extent, the claim is one for damages for personal injury in which the insurer is subrogated to the rights of insured. That is the capacity in which Australis stands in defending the present claim. 63The satisfaction of the second condition turns on the terms of the contract of insurance between Hire N' Higher and Australis. If there was a contest as to whether that condition is fulfilled, that issue ought to have been raised when the notice of motion seeking to substitute Australis for Hire N' Higher as second defendant was determined. 64The points raised by Australis fall to be determined against that analysis.

Is the plaintiff's application as against Australis premature? 65The first point raised on behalf of Australis stems from the fact that it has not yet filed a defence. Ms Burke submitted that, the limitation point not having (yet) been pleaded by Australis, it is premature for the Court to determine Mr Murdock's application as against it. 66Mr Burke explained that Australis has not filed a defence due to uncertainty as to the nature of the claim brought against it. An aspect of that submission was the contention that, for the purposes of the Limitation Act, an action has not been brought against Australis even now, since the amended statement of claim fails to plead the two elements of a cause of action under s 601AG. I doubt whether the failure to plead an element of a cause of action means that the statement of claim filed fails to bring "an action on the cause of action" for the purpose of considering whether it is statute-barred. However, it is not necessary to resolve that question in the present case. 67On the analysis explained above of the operation of s 601AG in the present context, I think the submission misconceives the capacity in which Australis stands to defend the present application. The proceedings were commenced as a claim for damages for personal injury against a company. The fact that the company's alleged liability in response to that claim constitutes an element of a statutory claim against its insurer under s 601AG makes it convenient for the insurer to stand in the company's shoes to defend that claim. However, whether (or the terms on which) the insurer should be required to do so also turns on the second element of the statutory claim (whether the insurance contract covered that liability immediately before deregistration). 68As already noted, if cover is disputed, Australis ought to have resisted the substitution order on that basis, or at least qualified its consent on terms that preserved its entitlement to have that dispute determined. 69In any event and even if that is wrong, I do not think the plaintiff's application is premature. In my view it is clear from the decision of the Court of Appeal in Almario that, at least on this issue, Australis stands in the shoes of the insured. It follows that the application for an extension of the limitation period "against the second defendant" is to be determined as an application under the Limitation Act to extend the period for bringing a claim for damages for personal injury. 70I accept, as submitted by Mr Sheldon, that there is no impediment to the Court's determining such an application if made by a plaintiff, subject only to the Court's obligation under s 60C(2) first to hear such persons likely to be affected by the application as the Court sees fit. 71At the conclusion of her submissions, Ms Burke stated that, if the Court were satisfied that there is power to determine an application to extend the limitation period without that issue having been raised on the pleadings, Australis would not seek to invoke the Limitation Act. I do not know whether it was intended to make the concession conditional upon my being so satisfied but that is how it was expressed (at T36.15). In any event, I am satisfied that the court has power in an appropriate case to determine an application for an extension of the limitation period notwithstanding the fact that the matter has not been pleaded by a defendant. 72The vulnerability of a plaintiff to the expiration of a limitation period notwithstanding a defendant's failure to plead it is illustrated in Turagadamudamu. The main judgment in that case was delivered by Beazley JA. Noting that a statutory requirement that a matter be pleaded does not confer a substantive right on the opposing party, her Honour said (at [90]; Ipp JA agreeing at [141]; Campbell JA agreeing "in broad terms" at [142]): In this case, PMP did not [plead that the cause of action had been extinguished] when it was defending the notice of notion (sic). However, if the court had no jurisdiction to make an order extending the limitation period, a failure to plead extinguishment on the hearing of the notice of motion cannot confer that jurisdiction. 73Although the court ordinarily confines itself to determining the issues raised on the pleadings, the pleadings are not the determinant of its powers. In my view, it follows from the decision in Turagadamudamu that, at least where there is uncertainty as to the court's jurisdiction to make the order sought (and perhaps otherwise), a plaintiff has a proper basis to seek an extension of the limitation period notwithstanding the fact that it is not an issue raised on the pleadings. 74In the present case, the point arises for determination in any event between the plaintiff and the first defendant, who has pleaded it. The second defendant has been heard, and expressly raises no issue as to delay or prejudice. In the circumstances, I consider it appropriate to determine the position as against the second defendant at the same time.

Is the plaintiff's application as against Australis too late? 75It was further submitted on behalf of Australis that the Court has no power to extend the limitation period, since Australis was "joined" with effect from a date after the expiration of the second bar. Ms Burke relied upon the provision in r 6.28 of the UCPR that, if the court orders that a person be joined as a party, the date of commencement of the proceedings in relation to that person is taken to be the date on which the order is made. 76Australis was substituted as second defendant on 25 October 2010. It was submitted on that basis that the plaintiff's right and title to claim damages from Australis is extinguished and unable to be revived by a retrospective extension of the limitation period, as held in Turagadamudamu. 77As already noted, no order was in fact made joining Australis as a party. The only order made was a substitution order. That is probably a sufficient basis to reject the argument. The effect of a substitution order is that "all things previously done in the proceedings have the same effect" in relation to Australis as they had in relation to Hire N' Higher. As submitted by Mr Sheldon, there is no reason not to give that provision full force and effect. 78Approaching the question as a matter of principle rather than form produces the same result. On my understanding of the operation of s 601AG, the substitution of Australis 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. 79The 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, not a new party lately joined to the proceedings. Whether it remains open to Australis in its own right to contest cover under the policy (having regard to fact that the substitution order was made by consent and without qualification) is a question for another day. 80Subject to one potential complication, it may be accepted that the original statement of claim in the present case brought an action on the cause of action in tort against Hire N' Higher before the expiration of the second bar. In my view, it follows that, consequent upon its substitution as second defendant, Australis is amenable to the determination of the present application as if it were Hire N' Higher. 81The complication is that Hire N' Higher was already deregistered as at the date on which the proceedings were commenced, and so had ceased to exist: s 601AD of the Corporations Act. After preparing these reasons in draft, I formed the view that I should give the parties an opportunity to be heard as to the significance of that fact. I sought further submissions from the parties as to whether a claim can be taken to have been brought against a non-existent company. 82In a comprehensive and carefully reasoned supplementary submission, Mr Sheldon contended that it would be inaccurate to characterise the proceedings as a nullity on that account. He noted that, in accordance with s 601AH(5) of the Act, there exists "a relevantly unfettered power" to resurrect the company with retrospective effect. The object of s 601AG was to obviate the need to take that step. Further, there is no occasion (and arguably no warrant) for exercising the power to reinstate a deregistered company if it is clear that s 601AG applies to a claim sought to be brought against it: AMP Capital Investors Ltd & Ors v Parsons Brinckerhoff Australia Pty Ltd & Ors [2010] NSWSC 129 at [10] per Palmer J; citing Stone v ACN 000 337 940 Pty Ltd (2008) 68 ACSR 242 at [18] per Barrett J. 83Mr Sheldon pointed to the need to consider the present issue in that statutory context. He submitted that the commencement of the proceedings against two defendants including one that was deregistered at the time may, at worst, have entailed a procedural irregularity that was cured by the substitution of Australis for the deregistered defendant. 84As already noted, the effect of that order in accordance with rule 6.32 was "all things previously done in the proceedings have the same effect in relation to the new party as they had in relation to the old". The substituted defendant is placed in the "exact position" of the original defendant: Charlton v Dickie (1987) 13 Ch D 160 at 161. 85Mr Sheldon addressed the basis of the distinction between a nullity and an irregularity, an issue considered in the decision of the Court of Appeal in Carey v Australian Broadcasting Corporation [2012] NSWCA 176. That case was concerned with the power of the court to make an order "nunc pro tunc" where proceedings had been commenced without the leave of the court required under s 23 of the Defamation Act 2005. The Court's conclusion (by majority) that such an order could be made in that statutory context was based on the conclusion that the requirement for leave was procedural rather than jurisdictional. 86By parity of reasoning, Mr Sheldon submitted that the existence of a power under the Corporations Act to reinstate the deregistered company with retrospective effect points to the conclusion that the commencement of proceedings against it after deregistration was an irregularity capable of being cured by order of the court. In my view, there is force in that analysis. 87Further, the irregularity has in fact been cured in the present case by the order substituting Australis for Hire N' Higher as second defendant in the proceedings. I am satisfied that the fact that Hire N' Higher was deregistered at the time the proceedings were commenced is no impediment to the maintenance of the proceedings against Australis. 88One final point raised in the supplementary submissions is the contention on behalf of Australis that the extinction (under s 63 of the Limitation Act) of Mr Murdock's right to damages in tort means that he cannot establish that he "had a liability" "immediately prior to deregistration". 89The requirement of s 601AG is to establish that the deregistered company had a liability to Mr Murdock (and that the insurance contract covered that liability immediately before deregistration). Section 63 extinguished the liability only if no action was brought on the cause of action before the expiration of a limitation period fixed "by or under" the Act. 90Leaving aside the issue that arose in Turagadamudamu, where the action had not been brought before expiration of the second bar, it is well established that an order under s 60C can be made after the expiration of a limitation period. Indeed, that is almost always the circumstance in which such applications are brought. It follows that the extension (now) of the limitation period for bringing the claim against the second defendant will have the effect that the liability was not extinguished as at the time "immediately prior to deregistration".

Application against the proposed third defendant 91The application to join the insurer of the deregistered employer, Gallagher Bassett, raises different issues. The liability of the employer is governed by the Workers Compensation Act 1987. The "time limit" for commencing proceedings against the employer is addressed in s 151D of that Act, which expressly excludes the application of the Limitation Act to that claim. Section 151D provides: 151D Time limit for commencement of court proceedings against employer for damages (1) (Repealed) (2) A person to whom compensation is payable under this Act is not entitled to commence court proceedings for damages in respect of the injury concerned against the employer liable to pay that compensation more than 3 years after the date on which the injury was received, except with the leave of the court in which the proceedings are to be taken. (3) The Limitation Act 1969 does not apply to or in respect of court proceedings to which this section applies. (4) This section does not apply to the commencement of court proceedings in respect of a claim within the meaning of Part 5 of the Motor Accidents Act 1988 or Chapter 5 of the Motor Accidents Compensation Act 1999. 92The section is concerned with remedy and is silent as to right. Unlike the position under s 63 of the Limitation Act, there is no extinction of the plaintiff's right to damages at any point. 93In determining whether to grant leave under s 151D(2), the question to be considered is what is fair and just, or what the justice of the case requires: Itek Graphix Pty Ltd v Elliott [2002] NSWCA 104; (2002) 54 NSWLR 207 at [87] per Ipp JA; Spigelman agreeing at [1]; and see [2] per Sheller JA. 94Mr Flett, who appeared for Gallagher Bassett, adopted the submissions put on behalf of Lipman as to delay and prejudice. For the reasons stated above in respect of the application against Lipman, I do not think those matters warrant refusal of the relief sought. 95It is necessary in the case of the employer to give separate consideration to the additional delay after the commencement of these proceedings. The steps taken by Ms Cassidy during that period are addressed in detail in her affidavits. I am satisfied that she has given an adequate explanation for the delay. 96Mr Flett also relied on two further matters of alleged prejudice. The first related to the availability of witnesses. There was some evidence to suggest that the person operating the crane at the time of the accident, Mr Zammit, was either failing or refusing to cooperate with inquiries made on behalf of those instructing Mr Flett. In my assessment of the evidence, it is not possible to attribute Mr Zammit's stance to the passage of time. Although it is a matter of speculation, any lack of cooperation on his part is just as likely to be due to reluctance (as a fellow employee) to assist those assisting the employer's insurer. I do not think that amounts to prejudice in the relevant sense. 97Subject to one further issue, I consider it fair and just to grant leave under s 151D(2) to commence proceedings against Gallagher Bassett in substitution for the employer. The one issue that requires further consideration is the contention that there would be actual prejudice to Gallagher Bassett in allowing the claim to proceed, since any cross-claim by Gallagher Bassett for contribution under s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 would now be statute-barred. 98The argument assumed that the limitation period for bringing such a cross-claim is fixed by s 26(1) of the Limitation Act. It was not submitted that s 151D(3) dictates otherwise. I consider myself bound to accept that approach to be correct, since it is consistent with the approach taken by the Court of Appeal in Creevey v Barrois [2005] NSWCA 264 at [52] per Basten JA; Handley and McColl JJA agreeing at [1] and [5] respectively. 99Section 26(1) provides: 26 Contribution between tort-feasors (1) An action on a cause of action for contribution under subsection (1) of section 5 of the Law Reform (Miscellaneous Provisions) Act 1946 is not maintainable if brought after the first to expire of: (a) a limitation period of two years running from the date on which the cause of action for contribution first accrues to the plaintiff or to a person through whom the plaintiff claims, and (b) a limitation period of four years running from the date of the expiration of the limitation period for the principal cause of action. 100As already noted, the same point was initially taken by Lipman but subsequently abandoned, appropriately, in my view. An extension of the limitation period for Mr Murdock to bring an action against Lipman would produce no prejudice in terms of claims by Lipman for contribution under section 5 of the Law Reform (Miscellaneous Provisions) Act 1946. That is because s 60K of the Limitation Act makes it clear that the limitation period, if extended under s 60C, is extended for the purpose of s 26(1)(b). 101Accordingly, if the Court extends the limitation period to 8 June 2010 (the date on which the statement of claim was filed), Lipman has a further four years from that date to bring any cross-claim for contribution under section 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (including against a person who is not already a party to these proceedings). 102Mr Flett submitted that Gallagher Bassett would be in a different position. Under s 26(1)(b) of the Limitation Act, Gallagher Bassett has four years to bring such cross-claims "running from the date of the expiration of the limitation period for the principal cause of action". The "principal action" in this context is Mr Murdock's action for damages against Gallagher Bassett (standing in the shoes of the employer). 103The critical task is to understand what is the "limitation period for the principal cause of action" for the purpose of the section. The limiting mechanism of s 151D(2) of the Workers Compensation Act is to preclude the commencement of proceedings after more than three years "except with the leave of the court". 104Mr Sheldon submitted on behalf of the plaintiff that a grant of leave under s 151D(2) of the Workers Compensation Act to commence proceedings against the employer would have the same effect as an extension of the limitation period against Lipton, that is, it would extend (or remove) the limitation period for the purpose of s 26(1)(b) of the Limitation Act. That submission has the force of common sense. Having regard to the meticulous provisions of the Workers Compensation Act for apportionment between employer and non-employer tortfeasors, it is difficult to imagine a reason for differential treatment on this particular issue. 105However, whereas the Limitation Act addresses that issue in terms (in s 60K), the Workers Compensation Act does not. What, then, is the effect (for the purpose of s 26(1)(b) of the Limitation Act) of a grant of leave under s 151D(2) of the Workers Compensation Act? 106A similar issue arose in Creevey v Barrois. Mr Flett drew my attention to the following statement of Basten JA at [41] in that decision as evidently supporting the employer's position: Thus, where leave [under s 54(4) of the Motor Accidents Act] is sought and granted, proceedings may properly be commenced in accordance with that leave, but there is no change in the limitation period. 107Upon analysis, however, it may be seen that his Honour was there recording an argument which, if he had felt free to determine the point, he may well have rejected. Basten JA thought it was clearly arguable that the effect of a grant of leave under s 151D(2) is to remove any limitation period "for the principal cause of action": at [53] to [55]. However, the correctness of that argument was not determined in that case. Basten JA said (at [55]): This construction has the attraction that it avoids the apparently arbitrary results referred to at [42] above, and by Hayne JA in Robins v Downes (supra) at 189-190. However, because this construction is inconsistent with that assumed in previous cases and because it was not argued in the present proceedings, its correctness must be left for another day. It is therefore necessary to proceed on the basis that the primary judge was in error in his conclusion in relation to s 26(1)(b) and that the provision does apply in the way suggested by the proposed defendant. 108Handley JA came to the opposite conclusion at [2] to [3], holding that s 54(4) of the Motor Accidents Act 1988 "fixes a limitation period" and that the exercise of the court's power to grant leave to bring a claim outside that period does not extend it or fix a new one. 109There is a distinction between that section and s 151D(2) which may be significant. Section 54(4) of the Motor Accidents Act expresses the time limit to run from "the date on which the claim must be made in accordance with section 43" whereas, under s 151D(2) of the Workers Compensation Act, time runs from the date on which the injury was received. Otherwise, it may be accepted that the two sections are in similar terms. 110The third member of the Court in Creevey v Barrois was McColl JA. Her Honour preferred not to decide the point, for the reasons identified by Basten JA (that it had not been argued and that the view favoured by his Honour was inconsistent with the construction assumed in earlier authorities): at [5]. 111Unguided by authority, I would have thought that the construction put forward by Mr Sheldon, which enjoys some support from Basten JA in Creevey v Barrois, is correct. On one view, s 151D(2) fixes no limitation period for the cause of action at all, but speaks only to limiting the time for commencing proceedings. Perhaps that is an illusory distinction. In any event, as noted by Basten JA in Creevey v Barrois at [55], earlier authorities have proceeded on a premise inconsistent with the position contended for by Mr Sheldon. 112In particular, Basten JA referred to the decision of the Court of Appeal in Tekno Ceramics Pty Ltd v Milat [2003] NSWCA 254. That decision concerned an application for leave under s 151D(2) of the Workers Compensation Act and is accordingly squarely on point in the present application. It is clear from the judgment that the present point was not argued and determined. Foster AJA noted at [41] (Meagher and Handley JA agreeing) that there was no dispute at first instance or in the Court of Appeal that the effect of the relevant provisions of the Limitation Act was to preclude the proposed defendant from bringing any action against a sub-contractor. 113Mr Flett also drew my attention to the decision of the Court of Appeal (decided after Creevey) in Taouk v Maroun Taouk & Anor [2010] NSWCA 372. That decision also assumed the correctness of the proposition that any cross-claim under s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 was statute-barred seven years after the date of the injury. Although Taouk was decided after Creevey, it is clear that the point raised by Basten JA was not argued in Taouk. The judgment notes that the applicant did not challenge the primary judge's conclusion that any cross-claim was barred. The application on appeal was therefore conducted on that premise: at [12] per Sackville JA, Giles JA and Handley AJA agreeing at [1] and [2] respectively. 114Although none of the authorities referred to by Basten JA determined the point after argument, the decisions in both Tekno Ceramics and Taouk proceed on an assumption that is inconsistent with my view. Since they are both judgments of the Court of Appeal, I have respectfully concluded that it is not appropriate for me to depart from that assumption. 115Unfortunately, that is not the end of the complexities of the present application. Mr Sheldon submitted on behalf of the plaintiff that, even if the employer is precluded from bringing any cross-claim under s 5 of the Law Reform (Miscellaneous Provisions) Act 1946, the apportionment of contribution required to be undertaken under s 151Z of the Workers Compensation Act will achieve the same result, and so remove any prejudice. 116The mind-numbing complexity of that section has been acknowledged (not in those terms) even at an appellate level: see Taouk at [54] per Sackville AJA, citing the helpful analysis of Campbell JA in J Blackwood & Son Ltd v Skilled Engineering Ltd [2008] NSWCA 142. 117Mr Flett did not seek to dispute the correctness of Mr Sheldon's submission (as to the effect of apportionment) except in one limited respect. He submitted that the application of s 151Z will not cure the prejudice of his client's being unable to bring any cross-claim under s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 because, as to some of the compensation payments made by the employer, any claim for indemnity under s 151Z(1)(d) would be statute-barred. 118The limitation period for such a claim is 6 years from the time the cause of action accrues: s 14(1)(d) of the Limitation Act. Each compensation payment gives rise to a separate right to claim indemnity: Taouk at [58], citing South Sydney Area Health Service v Gadiry [2002] NSWCA 161; (2002) 54 NSWLR 495. The employer in this case is accordingly precluded from recovering payments made earlier than 2006. It was common ground that Mr Murdock has been receiving compensation payments since the time of the accident in 2002. 119A similar argument was accepted in Taouk particularly at [58], [65] and [72]. However, it is not clear to me why that should be regarded as prejudice occasioned by Mr Murdock's delay in bringing his claim. In particular, I do not understand why the employer in this case could not have sought indemnity under s 151Z(1)(d) for such payments within time. Indemnity could have been sought under that section regardless of any claim by Mr Murdock. That is what occurred in J Blackwood & Son Ltd v Skilled Engineering Ltd: see [18] of the judgment. 120The Court of Appeal declined to have regard to that consideration in Taouk because it had not been raised at first instance: at [70] to [72]. In the present case, the employer appears to have had every reason to consider claiming indemnity under s 151Z(1)(d) against the first and second defendants before the limitation period for doing so expired. The liability of those parties should have been brought to mind by the WorkCover prosecution, which was heard in 2005 and determined in 2006. 121That could well be an answer to the employer's submissions in the present case. However, it is an issue that occurred to me only after the hearing and as to which Gallagher Bassett has not been heard. Accordingly, before entering orders against Gallagher Bassett on that basis, I consider I should afford the parties an opportunity to address that point, should such an opportunity be sought.

Orders 122I order that the limitation period for the plaintiff's cause of action against the first and second defendants be extended to 8 June 2010. 123I direct the proposed third defendant to inform the parties and my Associate within 48 hours whether it wishes to be heard as to the point raised at [119] to [121] above, failing which orders in accordance with this judgment may be brought in by the plaintiff, such orders to be made in chambers. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 27 August 2012

At a glance

Court

Decision date

Before

Source

Judgment (10 paragraphs)

Parties

Cases Cited (22)

Cited By (5)