Sola Optical Australia Pty Ltd v Mills

In October 1981 the respondent instructed her solicitors to prosecute both a claim for workers' compensation and a claim for damages at common law. The claim for compensation was instituted and resulted in a settlement which was the subject of a consent order on 23 January 1984. The order preserved the right of the respondent to pursue a common law claim.

Section 36 of the Limitation of Actions Act 1936 SA. as amended ("the Act") provides that all actions for damages in respect of personal injuries "shall be commenced within three years next after the cause of action accrued but not after". The prescribed period in the case of the respondent therefore expired on 23 June 1984. An identical period was prescribed by s. 82(2) of the Workers Compensation Act 1971 SA. as amended (which Act was recently repealed and replaced by the Workers Rehabilitation and Compensation Act 1986 SA). Unfortunately, the respondent's solicitors through inadvertence failed to commence the proceedings within time. The question then arose whether the period within which the action could be commenced might be extended in accordance with the provisions of s. 48 of the Act. So far as material, that section reads as follows:

(1) Subject to this section, where an Act, regulation, rule or by-law prescribes or limits the time for -

(b) doing any act, or taking any step in an action; or

(c) doing any act or taking any step with a view to instituting an action,

a court may extend the time so prescribed or limited to such an extent, and upon such terms (if any) as the justice of the case may require.

(2) A court may exercise the powers conferred by this section in respect of any action that -

(b) the court would, if the action were not out of time, have jurisdiction to entertain.

(b) empower a court to extend a limitation of time prescribed by this Act unless it is satisfied -

(i) that facts material to the plaintiff's case were not ascertained by him until some point of time occurring within twelve months before the expiration of the period of limitation or occurring after the expiration of that period and that the action was instituted within twelve months after the ascertainment of those facts by the plaintiff; or

(ii) that the plaintiff's failure to institute the action within the period of the limitation resulted from representations or conduct of the defendant, or a person whom the plaintiff reasonably believed to be acting on behalf of the defendant, and was reasonable in view of those representations or that conduct and any other relevant circumstances,

and that in all the circumstances of the case it is just to grant the extension of time.

(4) Where an extension of time is sought pursuant to this section in respect of the commencement of an action, the action may be instituted in the normal manner, but the process by which it is instituted must be endorsed with a statement to the effect that the plaintiff seeks an extension of time pursuant to this section.

The answer to the question turns on the proper construction and application of par. (3)(b)(i) of this section.

The respondent met with the solicitor handling her case on 20 March 1985. The solicitor explained to her that the limitation period had expired and invited her to peruse several documents from his file. At the trial, the solicitor agreed that in inviting her to do this he hoped that she would discover new facts material to her case and thereby create grounds upon which an application for an extension of time pursuant to s. 48 could be made. The exercise provided some encouragement because the respondent then read for the first time a report from a surgeon, Mr. Morgan, dated 20 January 1984. Mr. Morgan had first examined the respondent on 22 January 1982. He reported that in his opinion she had suffered "close to 100%" loss of function of the right arm. She underwent surgery in April 1982 and Mr. Morgan examined her again on 16 February 1983. It was the opinion contained in his report, dated 20 January 1984, consequent on that examination of which the respondent first became aware on 20 March 1985. Mr. Morgan's opinion was to the effect that notwithstanding some improvement she still suffered a loss of function of the arm estimated at 80 per cent. The report acknowledged that there may have been continued improvement since the time of his examination.

The action was instituted in the Supreme Court of South Australia on 11 June 1985 and in accordance with s. 48(4) of the Act the writ was indorsed with a statement to the effect that the plaintiff ("the respondent") sought an extension of time pursuant to the section. The application for an extension of time was tried as a preliminary issue by Bollen J. His Honour found that on 20 March 1985 the respondent first became aware of Mr. Morgan's assessment of loss of function of her arm amounting to 80 per cent and that this constituted an ascertainment of a fact material to the plaintiff's case within the meaning of s. 48(3)(b)(i). His Honour concluded that in all the circumstances of the case it was just to grant an extension of time. The appellant appealed. A Full Court of five members was assembled to hear the appeal in order to resolve differences of opinion that had earlier emerged within the Court concerning the meaning and operation of the section. In the result, the decision of Bollen J. was affirmed by majority: King C.J., White and O'Loughlin JJ., Millhouse and Johnston JJ. dissenting.

Special leave to appeal to this Court was granted but the leave was limited to three grounds, namely, that the Full Court erred in: (1) holding that, upon a proper construction of s. 48 of the Act, the ascertainment of the fact said to be material to the plaintiff's case within the meaning of s. 48(3)(b)(i) need have no effect upon any decision of the plaintiff to take proceedings either within time or out of time; (2) holding that the ascertainment of material facts must be by the plaintiff personally and that the ascertainment of such facts by an agent, e.g. the plaintiff's solicitor, did not satisfy the requirements of the sub-section; and (3) holding that the ascertainment by the plaintiff that Mr. Morgan, in his report dated 20 January 1984, had written:

Although I have not seen Mrs. Mills since February at that time I thought that there was some improvement in the function of the right hand and probably she had an 80% loss of function. There may of course have been continued improvement since that time. was, in the circumstances, the ascertainment of a fact material to her case. Leave to contest the propriety of the exercise of discretion by the trial judge was refused.

It is the question of construction involved in the first of these grounds that has given rise to the difference of opinion evidenced in recent decisions of the Supreme Court of South Australia. In Lovett v Le Gall [1] , a Full Court (Bray C.J., Walters and Wells JJ.) unanimously upheld the construction placed by the trial judge, Judge White (as his Honour then was), in the Local Court upon the phrase "facts material to the plaintiff's case" in s. 48, as inserted in the Act by amendment in 1972. The section in its present form replaced the former s. 48 in 1975. There is no material difference in the operation of the condition based on the discovery of "facts material to the plaintiff's case" to which the former section was subject and the equivalent condition, s. 48(3)(b)(i), in the present section. Judge White had held that the section did not require the ascertainment of the new facts to be decisive of the plaintiff's intention or decision to prosecute or proceed with the claim, but that in order to satisfy the test of materiality referred to in the section the new facts must be "relevant to the plaintiff's case in a not unimportant way" [2] .

1. (1975) 10 SA.S.R. 479. 2. (1975) 10 SA.S.R., at p. 490.

In Napolitano v Coyle [3] , Bray C.J. applied Lovett . Referring to that decision, his Honour said:

I said [4] that "a fact is material within the meaning of the sub-section if it is of such significance as to be able to influence the determination of the case", and I think my brethren agreed with that. 1. (1977) 15 SA.S.R. 559, at p. 568. 2. (1975) 10 SA.S.R., at p. 483.

However, in Cakebread v Henriks [5] , a majority of the Full Court (Zelling J., with whom Millhouse J. agreed, Jacobs J. not deciding) held that in order to attract the operation of s. 48(3)(b)(i) there must "be some interaction between the material fact and the plaintiff's decision, by reason of her belated knowledge of the material fact, to take proceedings out of time" [6] . Cakebread was followed in Raison v Alexoudis [7] . A Full Court (Zelling A.C.J., Millhouse and Prior JJ.) refused an extension of time on the ground that there was no interaction between the plaintiff's ascertainment of fresh facts and the decision to institute proceedings. The plaintiff had always intended to institute proceedings and it was only through inadvertence that none were commenced before the expiry of the limitation period. Upon discovering the new facts he did not make a fresh decision to sue; in the words of the court [8] , he "simply stuck to" his previous decision. In the present case, the Full Court by majority decision (Millhouse J. dissenting) overruled both Cakebread and Raison and returned to the principles enunciated in Lovett .

1. (1986) 128 L.S.J.S. 139. 2. (1986) 128 L.S.J.S., at p. 145. 3. (1986) 130 L.S.J.S. 174. 4. (1986) 130 L.S.J.S., at p. 180.

It is helpful, in undertaking the task of construction of s. 48, to have in mind the model provided by the innovative legislation in this field enacted by the Parliament of the United Kingdom in the Limitation Act 1963 ("the 1963 Act"). Section 1 of that Act provided that the period of three years prescribed by the Limitation Act 1939 UK for bringing a personal injuries action based on negligence, other breach of duty or nuisance (hereinafter collectively referred to as "negligence") shall not afford any defence to such an action provided, inter alia, that it was proved that the material facts relating to the cause of action were or included facts of a decisive character which were at all times outside the knowledge (actual or constructive) of the plaintiff until a date which satisfied the time prescriptions in the section. Section 7 was an interpretation section which, inter alia, elaborated in some detail the meaning that was to be given to "material facts", "facts of a decisive character" and "knowledge (actual or constructive) of a person". "Material facts" were defined exhaustively to refer to any one or more of (a) the fact that personal injuries resulted from the negligence constituting the cause of action, (b) the nature or extent of the personal injuries resulting from the negligence, and (c) the fact that or the extent to which the personal injuries or any of them were attributable to the negligence. Material facts relating to a cause of action were to be taken to have been "facts of a decisive character" if a reasonable person, knowing them and having obtained appropriate advice about them, would have regarded them as determining that an action would have a reasonable prospect of success resulting in an award of damages sufficient to justify bringing the action. A fact was to have been outside the "knowledge (actual or constructive) of a person" at any time only if he did not then know the fact and had taken all such action as was reasonable for him to have taken in order to ascertain it, including, in some cases, obtaining appropriate advice. The Limitation Act 1975 UK repealed these provisions and inserted fresh provisions in the Limitation Act 1939. It is unnecessary to detail those provisions for present purposes since the South Australian legislation was enacted whilst the 1963 Act was in force.

It is quite clear that the South Australian legislature preferred a simpler model to that contained in the 1963 Act. No doubt the broad purpose of the Act was substantially the same, namely, to eliminate the injustice a prospective plaintiff might suffer by reason of the imposition of a rigid time limit within which an action was to be commenced. Section 48(1) confers, subject to the section, a general and unfettered power upon a court to extend the time prescribed by any Act (including the Limitation of Actions Act 1936 itself) or piece of subordinate legislation for instituting an action, or for doing any act in an action or with a view to instituting an action. The wide general power so conferred is limited by sub-s. (3). That sub-section denies to a court the power to extend the time within which an action may be instituted unless it is satisfied of the existence of the circumstances set out in either par. (i) or (ii). The contrast between the matters described in par. (i) and the 1963 Act is significant. The former is not limited to material facts which relate to a cause of action and satisfy the exhaustive enumeration in s. 7 of the 1963 Act. The subject-matter of par. (i) is facts which are material to the plaintiff's case, with no attempt to provide any definition of the categories to which such facts must conform. The reference to the plaintiff's case supplies a broader canvas than the reference in the 1963 Act to the cause of action. Unlike the 1963 Act, there is no requirement that the material facts be of a decisive character, no reference to constructive knowledge, no obligation to have used due diligence in seeking to discover at an earlier time the facts in question and no mention of seeking appropriate advice. The effect of the paragraph was described by Bray C.J. in Napolitano [9] in words which we are glad to adopt:

A plaintiff may still be entitled to ask the Court to extend the time under the section, notwithstanding that he has been supinely inactive and notwithstanding that the material facts might easily have been ascertained earlier and notwithstanding that their nature is not such as to be decisive of the success of the action or even such as to have in his mind weighed down the balance in favour of litigation. All these matters, of course, are relevant to the discretion, and it seems to me that the South Australian Parliament, having made one qualifying condition, which in some cases may not be of great significance, has left all the rest to the discretion of the court. 1. (1977) 15 SA.S.R., at p. 569.

In our opinion the Full Court was correct in overruling Cakebread and Raison . There is no warrant for writing into the Act a further qualification that, to attract the operation of s. 48(3)(b)(i), there must be some interaction between the material fact and the plaintiff's decision to sue. It is materiality to the plaintiff's case that must be shown. This is a broad general requirement that is capable of satisfaction by objective inquiry. To introduce notions, related to the decision to sue, that would require an examination of the subjective workings of the plaintiff's mind would complicate the court's task and impede rather than advance the purpose of the Act. A fact is material to the plaintiff's case if it is both relevant to the issues to be proved if the plaintiff is to succeed in obtaining an award of damages sufficient to justify bringing the action and is of sufficient importance to be likely to have a bearing on the case. The Shorter Oxford English Dictionary defines the word "material", inter alia, to mean "Of such significance as to be likely to influence the determination of a cause". Although a definition attributed to the sixteenth century, in our opinion it provides an apt guide to the intention of the legislature in choosing to refer, without any elaboration, to "facts material to the plaintiff's case".

It was argued for the appellant that this construction of the section opens it up to contrivance and absurdity. On the other hand, to introduce, by a process of construction, controlling criteria to limit its abuse is to compound rather than to alleviate any difficulty. The breadth of the residual discretion vested in the court provides an ample safeguard against abuse and provides that flexibility which will facilitate the achievement of the legislative purpose, namely, a just result in a wide range of circumstances.

In the course of argument reference was made to the reliance placed by White J. in his reasons for judgment on the significance of the legislative history of the section from which his Honour drew an inference that the Parliament had sub silentio endorsed the construction adopted by the Full Court in Lovett . However, this Court has recently repeated its earlier discouragement of reliance on considerations of this kind: see Flaherty v Girgis [10] ; see also Reg. v Reynhoudt [11] .

1. (1987) 162 C.L.R. 574, at p. 594. 2. (1962) 107 C.L.R. 381, at p. 388.

The second ground of appeal was that the Full Court erred in holding that the ascertainment of material facts must be by the plaintiff personally. Mr. Morgan's report of 20 January 1984 was read by the respondent's solicitor shortly after that date. The appellant's submission was that since the solicitor was the respondent's agent, his knowledge of the report should be imputed to her, with the consequence that s. 48(3)(b)(i) was not satisfied. That submission cannot be accepted. It does not fit well with the use in the paragraph of the words "by him". These words would ordinarily convey the meaning of "by him personally" rather than "by him or his agents": cf. In re Prince Blucher; Ex parte Debtor [12] . Furthermore, the express references in the paragraph to "the plaintiff" support that construction. The paragraph is concerned with the materiality to the plaintiff's case of the facts which were not ascertained by him before the expiration of the prescribed term. The concluding phrase of the paragraph is emphatic in declaring that the outside limit is twelve months after the ascertainment of the material facts by the plaintiff. There has been no difference of judicial opinion on this point in South Australia; the view, adverse to the appellant's submission, adopted by all the judges in Lovett has been followed consistently in later cases. And the view taken in South Australia is consistent with the trend of authority on the construction of analogous legislation in other jurisdictions: see Anisiena v Crane Haulage Pty. Ltd. [13] ; Smith v Browne [14] ; Neilson v Peters Ship Repair Pty. Ltd. [15] . Finally it is to be noted that, unlike the 1963 Act, s. 48 says nothing about constructive notice and facts of which the plaintiff ought to have known. Read as a whole, the section yields the conclusion that it is ascertainment of material facts by the plaintiff personally that is required by par. (i). Where the intention is to accommodate the concept of agency, the section expressly refers to it: see s. 48(3)(b)(ii), which refers to the defendant "or a person whom the plaintiff reasonably believed to be acting on behalf of the defendant".

1. [1931] 2 Ch. 70. 2. [1974] V.R. 670. 3. [1974] V.R. 842. 4. [1983] 2 Qd R. 419.

Finally, it was contended for the appellant that the Full Court erred in holding that the discovery by the respondent of Mr. Morgan's second report was, in the circumstances, the ascertainment of a fact material to her case. It was submitted that the dissenting view of Johnston J. was correct; the Court should have held that the fact found to have been ascertained by the respondent on 20 March 1985 was not a fact material to her case for the reason that Mr. Morgan in his second report was only putting a percentage on the disabilities which she had described and demonstrated to him and of which she must necessarily have been aware at the time of his second examination. But the second report was doing more than that. It was expressing a specialist medical opinion as to the effect of the disabilities upon the functional capacity of the respondent's arm. The respondent certainly had a knowledge of the physical disabilities that she suffered, but it was material to her case to learn that a medical assessment of the effect of those disabilities upon her capacity to function was expressed in terms of 80 per cent loss of function. Such a fact was material to the issue of damages. Whilst the cogency of the evidence was undoubtedly affected by the fact that the assessment was made in the light of an examination carried out in February 1983 and that it mentioned the possibility of some further improvement, we do not think that the passage of time destroyed its materiality completely. It remained a significant benchmark pointing to a very substantial disability that was still present in 1983 several months after surgery. In any event, the fact of the existence and contents of Mr. Morgan's report was also capable of being material to the respondent's case in the sense that the report represented available evidence that could be called in support of her case.

The final issue in the appeal to the Supreme Court was the question whether the trial judge erred in the exercise of his discretion to extend the time within which the action could be instituted. But, as we have said, that question is foreclosed from consideration in the appeal to this Court by reason of the limited grant of special leave.