Whisprun Pty Ltd v Sams & Ors

• 10 -IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40226/02 DC 9221/01 CA 40227/02 DC 9756/01 CA 40536/02 DC 9714/01

Beazley JA Heydon JA Sperling J

Tuesday, 10 December 2002 Whisprun Pty Ltd v Sams Whisprun Pty Ltd v Wetzler Whisprun Pty Ltd v Deverell Judgment 1 Beazley JA: I agree with Sperling J. 2 Heydon JA: I agree with Sperling J. 3 Sperling J: The claimant, Whisprun Pty Limited, is the defendant in three proceedings in the District Court in which the opponents Mr S Sams, Mr M Deverell and Mr D Wetzler are the respective plaintiffs. In the District Court proceedings, the opponents claim damages for personal injury allegedly received in the course of their employment with the claimant. 4 Each of the proceedings was commenced outside the limitation period prescribed by s 151D(2) of the Workers Compensation Act 1987 (hereafter "the WCA") The subsection provides as follows: 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. 5 In each case, a motion for leave was filed before the proceedings were commenced but was not heard until after the proceedings had been commenced. In each case, the claimant filed a notice of motion seeking an order striking out the statement of claim on the ground that the limitation period under s 151D(2) had expired before commencement of the proceedings and leave to commence the proceedings out of time had not been granted before commencement of the proceedings. In each case, Puckeridge DCJ granted leave nunc pro tunc and dismissed the claimant's notice of motion. 6 The claimant now seeks leave to appeal from the decisions by Puckeridge DCJ on the sole ground that the Court had no power to grant leave to commence the proceedings after the time for commencement of the proceedings had elapsed. 7 An approach to the construction of a provision of this kind was formulated and applied by this Court in Jol v State of New South Wales (1998) 45 NSWLR 283. The provision was to be construed as allowing leave to be given nunc pro tunc if the purpose of the provision would be as well served by deciding the question of leave after the proceedings have been commenced as by deciding the question before the proceedings were commenced. 8 Jol was a decision in relation to s 4 of the Felons (Civil Proceedings) Act 1981 which provided as follows: A person who is in custody as a result of having been convicted of, or found to have committed, a felony may not institute any civil proceedings in any court except by the leave of that court granted on application. 9 It was held in Jol that the section allowed a court to give leave nunc pro tunc. Sheller JA (with whom Beazley JA and Sheppard AJA agreed) traversed much of the ground covered on the hearing in the present applications. It is convenient, therefore, to record a lengthy passage from that judgment (at 286-290) in full. The formulation of the Court's approach to the question of construction appears in the last paragraph of the passage. The reasons for the formulated approach are developed in the passage as a whole. The appellant relied on the decision of this Court in Dandashli v Dandashli (Court of Appeal, 16 December 1996, unreported). In that case Handley JA, speaking of s 52(4) of the Motor Accidents Act 1988, which provided that a claimant was not entitled to commence proceedings in respect of a claim more than three years after the date of the motor accident or the making of the claim "except with the leave of the Court in which the proceedings are to be taken", said (at 3-5): "Where a statute imposes a condition precedent of a procedural nature which must be satisfied prior to the commencement of proceedings, it will be difficult for a court to treat the condition as a condition subsequent which can be satisfied after proceedings have been commenced as that will be contrary to the intention of parliament as expressed in the statutory language. The provisions of s 52(1A) appear to be of this character. [This subsection provided that a claimant was 'not entitled to commence court proceedings' until a prescribed time had elapsed.] However in my judgment s 52(4) has a different operation. It is in the common form of a statute of limitations. Despite its language it does not impose a procedural condition precedent to be satisfied before the commencement of litigation. The section is substantially in the same form as sections contained in bankruptcy and company legislation in Britain, Australia and elsewhere in the Commonwealth for a very long time. In Re Saunders [1996] 3 WLR 473 Lindsay J undertook a comprehensive review of the decisions over the last hundred years on provisions requiring the leave of the Court before proceedings are commenced or continued against a bankrupt or a company in liquidation. There has been a long history of decisions that proceedings commenced without leave contrary to such provisions are not nullities but irregularities capable of being cured by the subsequent grant of leave. Lindsay J held that since the Insolvency Act 1986 had refrained from employing emphatic language making retrospective leave impossible but had used language having clear roots in the earlier statutes leave might, in appropriate circumstances, be granted with retrospective effect after the proceedings had been commenced. Many of the cases discussed by Lindsay J were Australian cases including a number in this State. Given the long history of decisions on provisions which, in my judgment are substantially similar to s 52(4), it seems to me that this Court would adopt the same interpretation of s 52(4)."

Since Dandashli was decided the High Court has delivered its decision in Emanuele v Australian Securities Commission (1997) 188 CLR 114 which concerned the operation of s 459P of the Corporations Law. Section 469P(1) set out who might apply for an order under s 459A that an insolvent company be wound up in insolvency. One of the persons nominated was the Australian Securities Commission. Section 459P(2) provided that an application by the Commission "may only be made with the leave of the Court". The Commission intervened in an application to wind up a number of companies and obtained an order in the Federal Court without seeking or being granted leave to apply for the order. The Full Federal Court, on an appeal by some directors of the companies, made an order amending the original order by adding a grant of leave nunc pro tunc to the Commission to apply for the companies to be wound up. The appeal against the winding up order was dismissed. In the High Court a majority (Dawson J, Toohey J and Kirby J), Brennan CJ and Gaudron J dissenting, dismissed the appeal. Dawson J said (at 125) that the failure to obtain leave was a mere defect or irregularity in the exercise of the jurisdiction conferred on the Federal Court to make a winding up order. It did not affect the validity of the order made, although it may have provided a ground for staying it or setting it aside. Toohey J (at 129) adopted what was said by Sholl J in Re Testro Bros Consolidated Ltd [1965] VR 18 as the approach to be taken to the legislation under consideration. Sholl J said (at 33-34): "There is ... a uniform set of authorities in Australia, extending over 70 years, for the granting of leave under such sections, nunc pro tunc ... Before the Judicature Acts, it was held that the omission to obtain leave to continue a common law action after a winding-up order could not be made the subject of a plea in defence to the action, but that application for a stay must be made to the Court having winding-up jurisdiction. ... Since the Judicature Acts, no doubt an application to stay could be made in the Court in which the action is pending, and it may be that the absence of leave could also be pleaded as a defence. But clearly the absence of leave is not a matter going to jurisdiction. ..."

Later in his judgment Sholl J added (at 35): "... Such legislation is aimed at preserving the control of the Supreme Court over the administration of a company's affairs, a purpose which is sufficiently achieved by interpreting sections like s 199 rather as conferring a control of a directory character on the Court, than as setting up an absolute bar like a statute of limitations."

See also in Re Sydney Formworks Pty Ltd (1965) 82 WN (NSW) (Pt 1) 558; [1965] NSWR 646, per McLelland CJ in Equity. In Emanuele (at 131) Toohey J said that s 459P(3) required the Court to exercise a supervisory role, satisfying itself that there is a prima facie case that the company is insolvent before granting leave. Toohey J (at 132) referred to what Lord Eldon said in Donne v Lewis (1805) 11 Ves Jun 601 at 601; 32 ER 1221 at 1222: "... The Court will enter a Decree nunc pro tunc, if satisfied from its own official documents, that it is only doing now what it would have done then." Kirby J (at 147) quoted the following passage from the judgment of McHugh JA, as he then was, in Woods v Bate (1986) 7 NSWLR 560 at 567: "In recent times the courts have shown great reluctance to invalidate an act done pursuant to a statutory provision because of the failure to comply with an antecedent condition. ... Speaking generally, I think that, at the present time, the proper approach is to regard a statutory requirement, expressed in positive language, as directory unless the purpose of the provision can only be achieved by invalidating the result of any departure from it, irrespective of the circumstances or resulting injustice."

Although dealing with a different legislative scheme, the reasoning in Emanuele suggests that s 4 of the Act should not be read as preventing a court from granting leave after proceedings have been instituted and making an order nunc pro tunc. Mr Capelin QC, relied particularly on the judgment of Glass JA in National Mutual Fire Insurance Co Ltd v Commonwealth 1 NSWLR 400 at 408. In that case the Court held that failure to obtain leave of the Court in advance under s 6(4) of the Law Reform (Miscellaneous Provisions) Act 1946 which provided that every charge on insurance moneys created under subs (1) should be enforceable by way of an action against the insurer provided that (with an exception not material) "no such action shall be commenced in any court except with the leave of that court". Glass JA, with whose judgment Moffit P and Samuels JA agreed, said (at 408): "The problem which arises when the act of a litigant is subjected by statute to the prior performance of conditions has been recently discussed in this Court: Attorney-General (NSW) ex rel Franklins Stores Pty Ltd v Lizelle Pty Ltd [1977] 2 NSWLR 955; Hatton v Beaumont [1977] 2 NSWLR 211; Tasker v Fullwood [1978] 1 NSWLR 20 especially at 23, 24. It is there pointed out that it is an encouragement to error to investigate whether the statute is mandatory or directory in its terms by assimilating it to other statutory requirements of like kind and then noting whether these have been held to be mandatory or directory by nature. In the plethora of reported decisions, it will be found that directory has been used in two contradictory senses, viz, to describe a statute which renders the act invalid in the absence of substantial compliance as well as one which preserves the validity of the act notwithstanding total non-observance of the condition. The inquiry properly to be made eschews the tripartite classification of mandatory and directory in both senses, disregards other statutes and concentrates on the terms of the statute in question. By having regard to the nature of the precondition, its place in the legislative scheme and the extent of the failure to observe the requirement, the question is posed as a matter of construction whether there was a legislative intention that such a failure should nullify the act in question. When the requirement of subs (4) is examined from this standpoint, unencumbered by reference to other and different procedural requirements, the question is not difficult to answer. There is no question of strict or substantial compliance. The action is commenced with leave or it is not. If it is commenced without leave, the proceeding is either a complete nullity or else it remains valid irrespective of whether or not leave is subsequently granted or else it continues in a state of suspended validity which will come to an end if leave is not obtained within an unspecified time. I can see nothing to support the attribution of a legislative intention of the two last-mentioned kinds. In my view the legislative intention properly to be garnered from the terms of subs (4) and its place in the framework of s 6 is that a failure to obtain the leave of the Court in advance invalidates the action and renders it incapable of being revived by leave retrospectively given."

This decision should, perhaps, be regarded as one upholding the statutory imposition of a condition precedent to be satisfied before proceedings could be begun. In Project Blue Sky Inc v Australian Broadcasting Authority (1998) 72 ALJR 841 at 860-861; 153 ALR 490 at 516-517, four members of the High Court, referring to a number of cases including National Mutual Fire Insurance Co Ltd v Commonwealth said that the classifications between directory and mandatory requirements and directory acts which had substantially complied with a statutory command and those which had not, had outlived their usefulness because they deflected attention from the real issue which was whether an act done in breach of the legislative provision was invalid. "... The classification of a statutory provision as mandatory or directory records a result which has been reached on other grounds. The classification is the end of the inquiry, not the beginning. That being so, a court, determining the validity of an act done in breach of a statutory provision, may easily focus on the wrong factors if it asks itself whether compliance with the provision is mandatory or directory and, if directory, whether there has been substantial compliance with the provision. A better test for determining the issue of validity is to ask whether it was a purpose of the legislation that an act done in breach of the provision should be invalid. This has been the preferred approach of courts in this country in recent years, particularly in New South Wales. In determining the question of purpose, regard must be had to 'the language of the relevant provision and the scope and object of the whole statute': Tasker v Fullwood (at 24)."

Applying that test to the present case and taking account of the language of s 4 and the scope and object of the Act, I can see no reason why the legislature should have intended that a civil action instituted without the leave of the court by a person in custody on a conviction of felony should be treated as a nullity rather than as an irregularity. The purpose of the Act, as appears from s 5, is to enable the court to supervise such proceedings by ensuring that they do not go forward to trial if they amount to an abuse of process or there is no prima facie ground for them. That purpose is equally well served if leave must be obtained but may be obtained after the proceedings have been instituted. 10 In Attikullah v Sefton (2001) 53 NSWLR 574, the Court had under consideration s 52(4) of the Motor Accidents Act 1988 (hereafter "the MAA") in its current legislative context. Hodgson JA (at 590) (with whom Sheller JA and Ipp AJA agreed) held that leave could be granted nunc pro tunc under that section on the authority of Dandashli v Dandashli (Court of Appeal, 16 December 1996, unreported). 11 On the hearing of the present applications, the claimant did not submit that Dandashli, Jol or Attikullah were incorrectly decided. The claimant's case was limited to the argument that these decisions and the authorities referred to in them are to be distinguished on the basis that a different legislative purpose is to be discerned in relation to s 151D(2). I will examine that argument. 12 As mentioned above, Dandashli and Attikullah decided that leave could be granted nunc pro tunc under s 52(4) of the MAA. That section provided as follows at the time of each of those decisions. The claimant is not entitled to commence proceedings in respect of a claim more than 3 years after: (a) the date of the motor accident to which the claim relates or; (b) … except with the leave of the court in which the proceedings are to be taken. 13 Section 151D(2) of the WCA and s 52(4) of the MAA are very similar. They are both time limitation provisions with a leave proviso. They are also in materially identical terms. The following text is in common to both. [The claimant] is not entitled to commence proceedings … more than 3 years after [the specified event] except with the leave of the court in which the proceedings are to be taken.

The two provisions also have a similar legislative context, each being part of a code for the recovery of damages for personal injury. 14 Notwithstanding these similarities, the claimant submits that s 151D(2) of the WCA should not be construed in the same way as s 52(4) of the MAA. It was submitted that one should infer from the context of s 151D(2) in the WCA that the subsection was intended by the legislature to be strictly construed. This, it was said, is implied by other restrictive provisions. The argument is unsound. The limitation provision in s 151D(2) is restrictive but the leave provision is not a restrictive provision. It is a beneficial provision. Furthermore, a context of restrictive provisions does not distinguish s 151D(2) of the WCA from s 52(4) of the MAA, and hence from Dandashli and Attikulla. Section 52(4) of the MAA was only one of a suite of restrictive provisions in the MAA by the time Attikulla was decided. 15 An application of the approach laid down in Jol - which is not disputed in principle - leads to the same result. The purpose of s151D(2) of the WCA is to preclude claims from being brought after the lapse of a specified time, otherwise than under the supervision of the court for cause shown. That purpose is equally well served by deciding the question of leave after the proceedings are commenced as by deciding the question before the proceedings are instituted. 16 Counsel for the claimant referred to passages in Emanuele v Australian Securities Commission (1997) 188 CLR 114 and Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355. As appears from the passage I have quoted from Jol, these decisions were taken into account by the Court in arriving at the approach formulated and applied in that case. The passages cited go no further than to identify legislative purpose as the touchstone. That is recognised in the approach formulated in Jol. 17 Counsel for the claimant also referred to the decision of the High Court in John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503. Nothing in that decision bears on the question of construction for determination in the present case. 18 In its written submissions, the claimant relied heavily on National Mutual Fire Insurance Co Ltd v Commonwealth [1981] 1 NSWLR 400. As appears above, that case was considered by this Court in Jol. The court did not see the decision as an impediment. It is unnecessary to decide in the present case - as it was unnecessary in Jol - whether National Mutual was correctly decided. It is sufficient to recognise s 6(4) of the Law Reform (Miscellaneous Provisions) Act 1946 as a special case - as was done in Jol - and as perhaps embodying a legislative intention to create a true condition precedent. The Law Reform (Miscellaneous Provisions) Act is a very different kind of legislation from the MAA and the WCA. There is scope for discerning a different kind of legislative purpose behind the limitation provision in that statute. 19 Dandashli and Attikullah are applicable to s 151D(2) of the WCA. The approach formulated in Jol is also applicable to s 151D(2) of the WCA, with the same result. For these reasons, s 151D(2) of the WCA should be construed as allowing leave to be granted nunc pro tunc. 20 I would grant leave to appeal in each case before the Court, but would dismiss the appeal in each case. -o0o-

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