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Australian Government Solicitor

 

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Legal Briefing

Number 37

16 September 1997

COMMONWEALTH EMPLOYEE CLAIMS FOR NEGLIGENCE

Commonwealth v Mewett
Commonwealth v Brandon
Commonwealth v Rock

The High Court decided these three cases on 31 July 1997. They were dealt with together because of common issues relating to s.44 of the Safety, Rehabilitation and Compensation Act 1988 ('SRC Act'). In each case, the plaintiff's cause of action had arisen before 1 December 1988 (the date on which s.44 took effect) but proceedings were commenced after that date. This was outside the applicable limitation period.

In each case the Court held that s.44 could not validly extinguish the plaintiff's claim. A majority held that s.44 could only purport to apply to a cause of action as it stood on 1 December 1988.

As at 1 December 1988, either no limitation of action provision applied to any of the plaintiffs' cases or, if a limitation period did apply, it did not extinguish their cause of action. This could have been because either the original limitation period had not expired or, if it had, the cause of action could still be revived by a successful application to extend time.

To the extent that a limitation of action provision did apply, the Court's earlier decision in Georgiadis1 was applied and, as at 1December 1988, each plaintiff's cause of action or right to seek to have the cause of action revived by an extension of time, as the case may have been, constituted property protected by the guarantee in s.51(xxxi) of the Constitution against acquisition of property on other than just terms. Accordingly, s.44, to the extent that it purported to take away this property by extinguishing the cause of action other than on just terms, was constitutionally invalid.

Implications for Clients

The High Court's decision means that where a present or former Commonwealth employee sues the Commonwealth for damages for injury or disease arising from events occurring in Commonwealth employment before 1 December 1988, but the relevant limitation period has expired prior to the institution of the suit, s.44 of the SRC Act cannot extinguish the employee's cause of action to the extent that the employee can still apply to have the limitation period for the action extended.

For practical purposes, this means that s.44 cannot be relied upon as a defence to any cause of action arising before 1 December 1988 where an employee sues for damages for an injury occurring in the course of Commonwealth employment.

In addition, where the Commonwealth employee's action is being determined by a court in a different State or Territory to that in which the events giving rise to the injury or disease occurred, the effect of legislation in each State and Territory - for example, the Choice of Law (Limitation Periods) Act 1993 (NSW) - is that the court in such a case is required to apply the limitation of action laws of the State or Territory where the events occurred.

The Facts

On 20 June 1994, each of the three plaintiffs, all former members of the Royal Australian Navy, instituted an action against the Commonwealth in the High Court, in Sydney. Mr Mewett's claim seeks damages for acute psychological injury, resulting in a post traumatic stress disorder arising from events on 31 August 1979 when the RAN vessel in which he was serving was struck by heavy waves as it sailed out of Port Phillip Bay in Victoria.

The claims of Messrs Rock and Brandon allege that each, on or about 22 October 1985, was exposed to noxious gases while serving on a RAN vessel some hundreds of kilometres off the Queensland coast on a voyage from Sydney to Indonesia.

In all claims it was alleged that the Commonwealth was liable in the tort of negligence and for breach of contract.

Each claim was remitted under s.44(2A) of the Judiciary Act 1903 to the Federal Court on the basis that it proceed in that Court as if Sydney had been stated in the High Court writ as the place of trial. In each, the Commonwealth pleaded that the claim was barred by the relevant statutes of limitation and also by s.44 of the SRC Act. The plaintiffs alleged in reply that s.44 was invalid in its application to the claims. They relied on Georgiadis in which the High Court had held that s.44 was invalid as an acquisition of property on other than just terms, in so far as it purported to extinguish a Commonwealth employee's cause of action against the Commonwealth for events occurring in Commonwealth employment prior to 1December 1988 where the relevant limitation period had not expired when the action commenced. In Georgiadis the validity of s.44 in relation to a cause of action that was statute-barred when proceedings were commenced was left open.

Each plaintiff filed a notice of motion seeking an extension of time under the NSW limitation legislation in which to institute the action. The Commonwealth, on the other hand, filed a motion claiming that the actions should be struck out on the ground that s.44 prevented any extension of the limitation period. Foster J dismissed the Commonwealth's motion.

The Commonwealth was granted leave to appeal to the Full Federal Court against this dismissal. In addition, Foster J reserved for the Full Federal Court's final determination the question whether s.44(1) was invalid in its application to the plaintiffs' actions. The Full Federal Court answered 'Yes' to this question and dismissed the appeals against the dismissal of the strike out motions. The Commonwealth obtained special leave to appeal to the High Court against this outcome.

Relevant Legislation

Section 51(XXXI) of the Constitution

Section 51(xxxi) provides:

'The Parliament shall, subject to this Constitution, have power to make laws...with respect to:

...

(xxxi) the acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws;'.

Section 44 if the SRC Act

Section 44 of the SRC Act relevantly provides:

'(1) Subject to section 45 [not presently relevant], an action or other proceeding for damages does not lie against the Commonwealth, a Commonwealth authority, a licensed corporation or an employee in respect of:

(a) an injury sustained by an employee in the course of his or her employment, being an injury in respect of which the Commonwealth, Commonwealth authority or licensed corporation would, but for this subsection, be liable (whether vicariously or otherwise) for damages; or

...

whether that injury, loss or damage occurred before or after the commencement of this section.

(2) Subsection (1) does not apply in relation to an action or proceeding instituted before the commencement of this section.'

Section 44's commencement date was 1 December 1988.

Judiciary Act 1903

Section 56 of the Judiciary Act enables a suit against the Commonwealth in contract or tort to proceed in the High Court or in certain other courts.

Section 64 provides that in any suit to which the Commonwealth or a State is a party, the rights of the parties shall as nearly as possible be the same.

Section 79 provides:

'The laws of each State or Territory, including the laws relating to procedure, evidence, and the competency of witnesses, shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all Courts exercising federal jurisdiction in that State or Territory in all cases to which they are applicable.'

Section 80 applies the common law in Australia, so far as it is applicable and not inconsistent with the Constitution and the laws of the Commonwealth, to all courts exercising federal jurisdiction.

Relevant Limitation Provisions

Section 14(1) of the Limitation Act 1969 (NSW) ('the NSW Limitation Act') provides that a cause of action founded on contract or tort is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom he or she claims. A three-year limitation period now applies to personal injury claims in NSW but that was not relevant to these cases.

The NSW Limitation Act is special in that, unlike limitation laws in other States and Territories, it not only bars the remedy for the cause of action, but extinguishes the cause of action itself. Section 63(1) of the Act effects this.

Notwithstanding s.63(1), ss. 60F, 60G and Schedule 5 to the Act confer a discretion upon a court to extend a limitation period for a cause of action for damages for personal injury, among other things, in relation to events occurring prior to 1 September 1990 where:

  • the plaintiff was unaware of the injury or its connection with the defendant's act or omission,
  • the application for extension was made within three years of the plaintiff becoming aware of these matters, and
  • it is just and reasonable that the limitation period be so extended.

Under s.5(1) of the Limitation of Actions Act 1958 (Vic) ('the Victorian Limitation Act'), among actions which shall not be brought after the expiration of six years from the date on which the cause of action accrued, are actions founded on contract or tort including actions for damages for breach of statutory duty.

This is a provision which simply bars the remedy, but does not extinguish the cause of action. It is subject to s.5(1A) which provides, among other things, that an action for damages for negligence - where the damages claimed by the plaintiff consist of damages in respect of personal injuries consisting of a disease or disorder contracted by any person - may be brought not more than six years from, and the cause of action shall be taken to have accrued on, the date on which the person first knows that:

(a) he or she has suffered those personal injuries; and

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

Choice of Law (Limitation Periods) Act 1993 (NSW)

The Choice of Law (Limitation Periods) Act 1993 (NSW) commenced operation on 3 December 1993. This Act applies to a 'limitation law' defined by s.3 of the Act as being, in essence, a law providing for the limitation of any liability or the barring of a right of action in respect of a claim by reference to the time when a proceeding on the claim commenced.

The provisions of the NSW Limitation Act and the Victorian Limitation Act, referred to above, constitute or form part of a 'limitation law' within this definition. At general law, a limitation provision in a statute which bars the remedy but not the cause of action, is, for the purpose of applying choice of law rules, regarded as part of the procedural law in the place governed by the statute, not part of that place's substantive law. Accordingly, the provision would not be taken into account in determining whether or not events gave rise to a cause of action in that place where this is relevant to determining whether a claim based on those events can be entertained in the courts of another place. Section 5 of the Choice of Law (Limitation Periods) Act has the effect of reversing this, so far as the limitation law is the law of another State, Territory or New Zealand, making the limitation provision part of the substantive law. Legislation in the same terms has been enacted in each other State and Territory.

The Court's Decision

Removal of Commonwealth Immunity from Suit

All seven justices dismissed the Commonwealth's appeal against the refusal to strike out the plaintiffs' claims. All justices, with the exception of Gaudron J, agreed with the Full Federal Court's answer of 'Yes' to the question whether s.44(1) was invalid in its purported application to the plaintiffs' claims. Gaudron J differed only to the extent of holding that it was inappropriate to answer that question until, in the case of Messrs Rock and Brandon, their applications to extend the limitation period had been determined and, in the case of Mr Mewett, it became clear, for the purpose of ascertaining whether the limitation period for his action had expired, when he first became aware of the his injury and its causal connection with the alleged negligence of the Commonwealth.

The Commonwealth argued that each plaintiff's cause of action against the Commonwealth arose by statute, under the provisions of ss. 56 and 64 of the Judiciary Act. Prior to the enactment of these provisions, the Commonwealth, on this argument, was said to be immune from suit on traditional grounds of Crown immunity. The Commonwealth sought to reopen the Court's earlier decision in Georgiadis by submitting that there is no acquisition of property under s.51(xxxi) involved in taking away a right - as did s.44(1) of the SRC Act here - which had been created by statute. The plaintiffs countered this argument by submitting that the right to sue the Commonwealth in contract or tort arose under the Constitution (see s.75(iii)) and was not simply the creation of Commonwealth statute. They submitted that their rights were not capable of modification by statute and that s.44, in purporting to do so, constituted an acquisition on other than just terms within the meaning of s.51(xxxi).

The Commonwealth submitted that, if the Georgiadis decision were to be affirmed, that decision was to be distinguished on the basis that the limitation period there had not expired when the action was commenced. It was submitted that, when the limitation period expired in each of the present cases, s.44 operated at that point in time to preclude the importation under s.79 of the Judiciary Act of the provisions under the State or Territory limitation legislation permitting extension of the limitation period.

All justices rejected these Commonwealth arguments. All refused to reopen Georgiadis (including Dawson, Toohey and McHugh JJ who had dissented in that case) and held that the rights to sue the Commonwealth in contract and tort were rights at common law, and not statutory in the sense of being created and conditioned by statute. Gummow and Kirby JJ expressed the view that the removal of Commonwealth immunity from suit was effected by the Constitution (ss. 75 and 77); whereas Dawson J (with whom McHugh J agreed) and Toohey J saw that removal as being effected by statute. Dawson and McHugh JJ attributed this to s.64 of the Judiciary Act. Toohey J, on the other hand, without expressing a firm view, identified s.56 of the Judiciary Act as the source of removal.

Applicable Laws

Brennan CJ, Gummow and Kirby JJ were of the view that s.79 of the Judiciary Act prescribes not only the procedural but also the substantive law to be applied in exercise of federal jurisdiction. Section 79 picks up State and Territory laws relating to procedure, evidence and the competency of witnesses whether those laws be statutory or common law and applies them as 'surrogate Commonwealth law'. Dawson J (with whom McHugh JJ agreed) saw the same effect being achieved through the combined operation of ss. 79 and 80 of the Judiciary Act. Toohey J saw this effect being achieved by a combined operation of ss. 64 and 79 of the Act. Gaudron J, on the other hand, saw s.80 applying, as part of 'the common law in Australia', choice of law rules for matters within federal jurisdiction. These rules determined the applicable State or Territory limitation provisions in an exercise of federal jurisdiction, not s.79. However, Gaudron J did state that, if she were wrong about this, she would adopt the position that s.79 picked up the relevant State or Territory limitation and choice of law rules.

On this reasoning, s.79 rendered the laws of NSW (including its choice of law rules) binding on the Federal Court as it was 'exercising federal jurisdiction in that State'. Section 79 only applies to pick up the relevant State or Territory law as it exists at the time that the actions were commenced. The Commonwealth could only rely upon the NSW Limitation Act on its own terms. That Act allowed the plaintiffs to utilise the means and procedures for extensions of time, to use the words of Gummow and Kirby JJ, as 'counters to what otherwise would be limitation defences against them'.

Brennan CJ, Gummow and Kirby JJ took the view that under s.79, whatever State limitation law is applied as 'surrogate Commonwealth law', that State law only applies to the cause of action once the cause of action becomes the subject of the exercise of federal jurisdiction. As all three actions were instituted after 1 December 1988, s.79 had not been engaged at that date. Accordingly, the terms and operation of any State law, which later became applied under s.79 as 'surrogate' law, could not have any effect on how s.44 would have applied to the plaintiff's cause of action at 1 December 1988, the date on which s.44 would have applied to the cause of action 'once and for all'.

In any event, applying the law of NSW under s.79, the limitation periods for the actions of Messrs Rock and Brandon, as at 1 December 1988, had not expired. All justices accepted that, on the authority of Georgiardis, s.44 was invalid in its purported application to these actions.

Likewise, applying the law of NSW under s.79 to Mr Mewett's action, Gummow and Kirby JJ, with the apparent agreement of Brennan CJ, held that no law could be identified as having barred Mr Mewett's application in or before 1988. Dawson J (with McHugh J agreeing) and Toohey J considered Mr Mewett's action on the basis that the NSW Limitation Act applied. Under the NSW Limitation Act, the original limitation period would have expired before 1 December 1988. Dawson, Toohey and McHugh JJ held that, to the extent that MrMewett claimed to be entitled to an extension of time under ss. 60F, 60G and Schedule 5 of the NSW Limitation Act, his cause of action could not be said to be finally extinguished, and therefore remained property for the purposes of s.51(xxxi) which, following Georgiadis, was protected by the constitutional guarantee.

Given that the relevant events to Mr Mewett's action had occurred in Victoria, Dawson J (with Brennan CJ, Gaudron (on the basis that s.79 of the Judiciary Act applied) and McHugh JJ agreeing) invoked the choice of law rules in NSW as laid down in the Court's own decision in McKain v R.W. Miller Co (SA) Pty Ltd (1991) 174 CLR 1. The choice of law rules were a reflection of the 'double actionability' test laid down in Phillips v Eyre (1870) LR 6 QB 1 for suing in tort in a different legal system to that applying where the alleged tortious conduct occurred. Under the second limb of this test, as refined in McKain's case, the events must give rise in Victoria to a civil liability of the kind which Mr Mewett seeks to enforce in NSW. While a court in NSW would not take into account a Victorian statute that was merely procedural, the effect of s.5 of the Choice of Law (Limitation Periods) Act 1993 (NSW) was to render ss. 5(1) and 5(1A) of the Victorian Limitation Act part of the substantive law to be applied to the determination of Mr Mewett's action. It was necessary to plead the Victorian Limitation Act provision in order for the Commonwealth to rely upon it. Dawson J said that, while the Commonwealth could apply to amend its defence to plead the Victorian provision, it was precluded at present from alleging that the claim was statute-barred in Victoria.

Even if the provision had been pleaded, there being no extinguishment provision in the Victorian Limitation Act such as s.63(1) in the NSW Limitation Act, and it not being clear whether the limitation period had expired, the position remained that, as at 1 December 1988, Mr Mewett's cause of action continued to exist as property for the purposes of s.51(xxxi) which, again, following Georgiadis, was protected by the constitutional guarantee.

1 (1994) 179 CLR 297. See Legal Practice Briefing No. 10, 16 March 1994 (Back to text)

ISSN 1448-4803 (Print)
ISSN 2204-6283 (Online)

The material in this briefing is provided for general information only and should not be relied upon for the purpose of a particular matter. Please contact AGS before any action or decision is taken on the basis of any of the material in this briefing.

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