New South Wales Court of Appeal CITATION : ASB-Tech Services Pty. Ltd. (In Liquidation) v. Doeland & Anor. [2003] NSWCA 167 HEARING DATE(S) : 12 June 2003 JUDGMENT DATE : 27 June 2003 JUDGMENT OF : Handley JA at 1; Hodgson JA at 2; Cripps AJA at 40 DECISION : 1. Leave to appeal granted, subject to a Notice of Appeal being filed within 14 days. 2. Appeal allowed, decision of primary judge set aside, and in lieu thereof application by the first opponent as against the claimant dismissed with costs. 3. First opponent to pay claimant's costs of the application and the appeal, and to have a Suitors Fund certificate if otherwise entitled. CATCHWORDS : LIMITATION OF ACTIONS - Extension of period - Explanation of delay - Need for appellant to lead adequate evidence - Explanation and prejudice to be taken into account in deciding whether fair and just to grant extension - Relevance of prejudice to third party which respondent could join. Law Reform (Miscellaneous Provisions) Act 1946, s.5 LEGISLATION CITED : Limitation Act 1969 s.60C Workers Compensation Act 1987 ss.151D, 151Z. Brambles Constructions Pty. Ltd. v. Helmers (1968) 114 CLR 213 CASES CITED : Itex Graphics Pty. Ltd. v. Elliott (2002) 54 NSWLR 207 Leonard v. Smith (1992) 27 NSWLR 5 ASB-Tech Services Pty. Limited (In Liquidation) - claimant PARTIES : Willem Doeland - First opponent Delta Electricity - Second opponent FILE NUMBER(S) : CA 40861/02 COUNSEL : Mr. H.N. Kelly for claimant Mr. R.H. Taperell for first opponent A.O. Ellison & Co., Sydney for claimant SOLICITORS : Cantle Carmichael, Newcastle for 1st opponent Acuiti Legal, Sydney for 2nd opponent LOWER COURT District Court JURISDICTION : LOWER COURT DC 233/00 FILE NUMBER(S) : LOWER COURT Sidis DCJ JUDICIAL OFFICER : IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA40861/02 DC 233/00 HANDLEY JA HODGSON JA CRIPPS AJA Friday 27 June 2003 ASB-TECH SERVICES PTY. LTD. (In Liquidation) V. DOELAND & ANOR. Judgment 1 HANDLEY JA: I agree with Hodgson JA. 2 HODGSON JA: By an Amended Application filed 18 July 2001, the first opponent Willem Doeland sought extensions of time for commencing proceedings against the claimant ASB-Tech Services Pty. Ltd. (In Liquidation) (ASB) and the second opponent Delta Electricity (Delta) in respect of causes of action that accrued on or about 29 May 1996. As against ASB, what was sought was leave to commence proceedings pursuant to s.151D of the Workers Compensation Act 1987; and as against Delta, what was sought was an extension of the limitation period pursuant to s.60C of the Limitation Act 1969. 3 On 4 September 2002, Sidis DCJ granted the leave sought in respect of ASB, and dismissed the application as against Delta. ASB seeks leave to appeal from that decision. The application for leave was argued on the basis that, if leave were granted, the appeal would be decided without further argument. CIRCUMSTANCES 4 On 29 May 1996, Mr. Doeland was employed by ASB as a scaffolder; and he was working at Delta's Vales Point Power Station, pursuant to a contract entered into by ASB with Delta for the removal of asbestos in the course of decommissioning that power station. Mr. Doeland's claim relates to an injury to his left shoulder after he allegedly fell through a hole in the catwalk surrounding a boiler. 5 On 30 July 1996, Mr. Doeland signed a Compensation Claim in respect of that accident. It described the accident as "slipped down between boiler and catway", and gave the witnesses as Paul Kelly and Gavin Wheelan. It gave the time of the injury as 8.30am, and stated that notice of the injury was given at 9.00am to Paul Sweeney. The form referred to an earlier injury to Mr. Doeland's shoulder at work on 6 March 1996, and it gave the date on which he stopped work as 9 July 1996. 6 An Employer's Report of Injury was completed on 22 August 1996 by Paul Sweeney, described as project manager. It described the accident as "slipped down between boiler and catwalk". It confirmed that the accident was reported at 9am on 29 May 1996 to Paul Sweeney. 7 There was also in evidence another form apparently prepared at about the same time, headed "Accident Report". It identified a supervisor Brian Buckley, and although the form did not identify who made it out, it may be inferred that it was made out by Mr. Buckley. It described the accident as "fell on walkway between two beams". 8 ASB's workers compensation insurer accepted liability to pay workers compensation in a letter dated 29 August 1996; and Mr. Doeland's medical expenses were paid by the insurer, and he was also paid some periodic workers compensation payments. 9 The earliest reference in the evidence to Mr. Doeland falling through a hole is contained in a medical report from Dr. Rowan Godwin to ASB's insurer dated 12 February 1997. 10 Mr. Doeland's employment with ASB terminated in December 1996. Some time before 22 April 1997, Mr. Doeland instructed a solicitor, Stephen Marks of Toukley, to act on his behalf in relation to an assault and two accidents at the power station. 11 On 22 April 1997, Mr. Marks commenced proceedings on behalf of Mr. Doeland in relation to the assault; but these were subsequently struck out, apparently for non-compliance with a District Court Practice Note. According to Mr. Doeland, he is unaware why this happened, and he complied with requests made by his former solicitor. 12 According to Mr. Doeland, he discussed with this solicitor whether he should take proceedings to recover benefits under the Workers Compensation Act 1987 or seek damages at common law. In an affidavit, Mr. Doeland said that, to the best of his recollection, the solicitor advised that he should not seek lump sum benefits under the Workers Compensation Act, but should rather seek damages at common law, and that if necessary he could take proceedings in the Compensation Court for weekly benefits and medical expenses. However, in cross-examination, he appeared to assent to a proposition that he decided to prefer to claim weekly payments of compensation and lump sums under the Workers Compensation Act; although it is fair to say that Mr. Doeland showed little understanding of the difference between claiming lump sums under the Workers Compensation Act and damages at common law. 13 No evidence was led from Mr. Doeland's former solicitor, Mr. Marks; although there is in evidence a doctor's report dated 24 August 1999 concerning Mr. Doeland and addressed to Mr. Marks. 14 It appears that Mr. Doeland consulted his present solicitors in about early 2000, and on 9 March 2000, there was filed in the District Court an application against ASB (only) under s.60C of the Limitation Act 1969 to extend the limitation period. However, that application did not then proceed, because it turned out that ASB had been wound up in 1997. (In fact, it appears that the application was not served at that time, and that ASB's insurer did not become aware of any such application until a year later). An application for leave to proceed against ASB was brought in the Victorian Supreme Court, and on 17 November 2000, that Court made an order giving Mr. Doeland leave to commence proceedings against ASB. Subsequently, the application in the District Court was amended to the application noted at the beginning of the judgment, being an application against both ASB and Delta. 15 In an affidavit sworn 9 March 2000 in support of his application, Mr. Doeland said that he had fallen in circumstances where he unexpectedly encountered an area where there was a hole in the catwalk but black plastic sheeting had been laid down so as to conceal the gap. That appears to be the earliest reference in the material before the Court to the concealing of the hole by black plastic. 16 Mr. Doeland's application was also supported by an affidavit by Gavin Whelan, which confirmed that he had been present on 29 May 1996 when Mr. Doeland had an accident, although he did not see him actually fall. However, he said that he saw Mr. Doeland after he had been pulled out of the hole, and saw the hole he had fallen through, and confirmed that it had been covered with black plastic. The affidavit gave a description of the system of work, suggesting it to be dangerous. 17 There were a number of affidavits filed by Barbara Ames, a solicitor for ASB. Ms. Ames said that, while there was investigation of Mr. Doeland's medical condition arising from the accident, she had been instructed by the insurer that there was no investigation of the circumstances of the accident before it first became aware of this application on 9 March 2001. Ms. Ames asserted that the insurer could not locate former directors of ASB, or relevant records of the company. Contact was made with one Ian Dawson, who was the representative of Delta managing the job of asbestos removal at the power station, but he had no recollection of Mr. Doeland or the accident. The affidavit also dealt with contact with Mr. Sweeney, who was the site manager for ASB at the time, and who remembered Mr. Doeland but not any accident concerning him. Mr. Sweeney was not asked about the system of work described by Mr. Whelan, or the existence of holes and the use of black plastic. Mr. Sweeney could not locate his 1996 diary. No other witness, including Mr. Kelly, could be located. 18 There were a number of affidavits filed by Christine Wearne, a solicitor for Delta. Ms. Wearne also contacted Mr. Dawson, who referred her to Mr. Wayne Miller, the project manager for Delta at the power station at the relevant time. He was unaware of the whereabouts of documents relating to injuries at the time. DECISION OF PRIMARY JUDGE 19 The primary judge gave two judgments concerning the matter. 20 In the first judgment, given on 28 June 2002, the primary judge dealt with Mr. Doeland's explanation for the delay in commencing proceedings as follows: Essentially, the applicant's explanation is that a solicitor was instructed in about April 1997 to take action on his behalf but failed to do so. The applicant was cross-examined concerning the advice that was given by his former solicitor in an attempt to establish that this solicitor had advised the applicant in respect of his worker's (sic) compensation and common law rights, and that an election had been made to pursue the worker's compensation rights rather than the common law rights. It was apparent from the applicant's answers, however, that he had little appreciation of the niceties of the distinction between worker's compensation and common law rights, and I am far from satisfied that he was sufficiently aware of the distinction to make any informed election. I would not find against him, therefore, on that basis. 21 The primary judge went on to deal with other matters not now relevant, before proceeding to consider the question of prejudice. The primary judge said this concerning investigations made by ASB's insurer: The affidavit evidence suggested that the first respondent faces difficulty in locating documentation relating to the applicant's employment and relating to the incident in question. The evidence also indicated that the worker's compensation insurer undertook no investigation of the incident of 29 May 1996. I have some concerns about the veracity of that evidence, having regard to the report of Jones Stewart dated 29 January 1997 to the insurer concerning surveillance of the applicant. It appears to me that the insurer was very much alert to investigation of the applicant, and I see no reason why, in those circumstances, the insurer should not have investigated the incident itself. 22 The primary judge went on to consider the absence of witnesses, and indicated that she would stand the matter over to allow all parties to undertake further investigations as to the whereabouts of witnesses. 23 In the second judgment, given on 4 September 2002, the primary judge dealt with the question of explanation and prejudice to ASB as follows: The first respondent continued to press the argument concerning the unsatisfactory nature of the explanation, provided by the plaintiff, in particular the absence of evidence from the solicitor who advised the plaintiff in April 1997. This aspect has already been argued before me and had been dealt with in my reasons of 28 June 2002. However, in case those reasons did not make it clear I repeat that I found that it was apparent from cross-examination of the applicant that regardless of the advice that may have been given in 1997 he did not understand the distinction between his workers' compensation and his common law rights and I do not think that evidence from his former solicitor would have taken the matter any further. As I have already stated I do not find against the applicant on this basis. It was agreed in the course of debate in the further submissions that there was no dispute that the applicant had reported an injury and that his injury had been investigated. It was argued that there was no evidence to establish the claim in respect of an unsafe system of work, that the first respondent was aware of it, or that the first respondent should have taken steps to remedy this situation. The first respondent relied for this submission on the response from its project manager Mr Sweeney to the effect that he did not remember the applicant's injury. It was agreed that Mr Sweeney had not been shown the employer's report of injury signed by him in which he did not challenge the validity of the claim, nor was there any evidence that Mr Sweeney had been questioned regarding the system of work as described in some detail by Mr Whelan. The authorities make it clear that a claim of specific prejudice on behalf of a respondent to an application such as that currently before the Court requires supporting evidence. There is an (sic) none to counter to the evidence of Mr Whelan, or to suggest that Mr Sweeney could not recall the system of work that was employed at the time of the plaintiff's injury. I therefore reject this submission. Finally it was claimed that the first respondent would face overwhelming prejudice in securing instructions in respect of any prospective cross claim against the second respondent because the first respondent has been placed in liquidation and its directors cannot be located. However, as I have already noted Mr Sweeney, the first respondent's project manager, is available and I have no evidence to suggest that he could not provide those instructions. In addition the contract documents are available and are in evidence before me. In summary as far as the first respondent is concerned I regard the applicant's explanation as satisfactory. I am satisfied that there is sufficient evidence in respect of his medical history to allow the first respondent to deal with his claim of injury. I note the fact that he suffered injury on the site on the date in question is not in dispute. I note that there is no evidence to dispute the system of work as described by Mr Whelan and note that Mr Sweeney, the project manager, is available to deal with the information necessary for the defendant to institute a cross claim. In those circumstances it seems to me that whilst there would be prejudice to the first respondent, it is not of such nature that it would be unduly prejudicial if I allowed to allow the claim to proceed against the first respondent. 24 The primary judge continued, in relation to Delta, to say that, in circumstances where there was no evidence that the injury was ever reported to Delta or ever investigated, or even that Delta was aware of the system of work, the prejudice to Delta was "sufficiently substantial to render it improbable that it could deal with the issues adequately to secure a fair trial". GROUNDS OF APPEAL 25 ASB seeks leave to appeal on the following grounds: 1. There was no basis in Her Honour finding the insurer being alerted to the investigation of the opponent had in fact investigated the incident itself. 2. Her Honour was not entitled to express concerns as to the veracity of the evidence (ie, affidavit evidence relied upon by the respondent) such evidence being not contested by the opponent nor his seeking to cross examine the deponent. 3. Her Honour erred in finding the explanation given by the applicant as to the failure by him to commence proceedings in time not (sic) sufficient. 4. There was no basis for Her Honour to find that there was sufficient material available notwithstanding the claimant being in liquidation to have a fair trial. 5. The opponent failed to discharge the onus of showing that as between the parties it would be fair and just for the trial to be held and that the trial would be fair. 6. The opponent failed to establish having regard to all the circumstances of the case it was fair and just to grant the application. 7. Her Honour having found there was some prejudice to the claimant ought have refused the application to grant leave. 8. Her Honour misdirected herself as to the exercise of her discretion in stating that the claimant had to show undue prejudice. 9. Her Honour was in error in exercising her discretion to grant leave on the following basis: (a) although there was some prejudice to the claimant there was not enough evidence to show undue prejudice; (b) the opponent provided a satisfactory explanation for his conduct in not commencing proceedings in time. 10. Such other grounds as my (sic) appear upon the publication of evidence on 29 August 2002 and Her Honour's judgment on 4 September 2002. SUBMISSIONS 26 Mr. Kelly for ASB submitted that the primary judge was in error in holding that Mr. Doeland had given an explanation, let along a sufficient explanation, of the failure to commence proceedings in time. There was no explanation as to why his previous solicitor did not commence proceedings, and no explanation as to what Mr. Doeland himself did about the matter between about April 1997 and early 2000. Not only was there no evidence from the solicitor himself, there was not even any evidence concerning communications with the solicitor, explanations offered by the solicitor, the availability of his file, and other matters that might have thrown light on the question. The primary judge was plainly in error in stating that she did not think that evidence from the former solicitor would have taken the matter any further. 27 Turning to the question of prejudice, Mr. Kelly submitted that the primary judge was in error in raising any question as to whether the circumstances of the accident had been investigated, when the solicitor's evidence of her instructions had not been questioned in cross-examination. Plainly, Mr. Kelly submitted, there was actual prejudice in the failure to investigate the circumstances at any time until about March 2001, particularly where the first time it was suggested to ASB's insurer that a hole through which Mr. Doeland fell had been disguised by plastic was when his affidavit was served, presumably in about March 2001. There was severe prejudice, and the primary judge erred in stating the test in terms of whether ASB was "unduly prejudiced". 28 Mr. Taperell for Mr. Doeland submitted that Mr. Doeland had given an adequate explanation, namely that he instructed his solicitor to take action, and the solicitor said he would do it. The primary judge correctly held that Mr. Doeland did not understand the difference between a lump sum claim under the Workers' Compensation Act and common law damages, so there was no question of a choice being made by Mr. Doeland, as had been the case in Itex Graphix Pty. Ltd. v. Elliott (2002) 54 NSWLR 207. This was a sufficient explanation, especially in circumstances where Mr. Doeland suffered from dyslexia, and had left school at the age of 16. 29 Mr. Taperell submitted that the primary judge correctly held that there was an evidentiary onus on ASB in relation to proof of actual prejudice; and that ASB's proof of prejudice was deficient, in circumstances where it had not even questioned Mr. Sweeney concerning the system of work in operation at the time or the use of black plastic. In those circumstances, it was open to the primary judge to hold that it was fair and just to grant the extension, despite such prejudice as may be caused to ASB. DECISION 30 In my opinion, a first step for an applicant in relation to an application such as this is to lead evidence appropriate to give the Court a satisfactory understanding of why it was that proceedings were not commenced in time. In this case, the absence of any material from Mr. Doeland's previous solicitor meant that the Court could only guess at the true explanation of why proceedings were not commenced. It is not for the respondent to such an application to search out a previous solicitor so that the respondent can explore the circumstances: the onus is squarely on an applicant to provide an explanation, and in the course of doing so to put the Court in a position of understanding just why the proceedings were not commenced in time. 31 Of course, there may be occasions where there is a clear conflict between an applicant and a former solicitor, for example where the former solicitor asserts that it was the applicant's failure to provide funds or give instructions that led to proceedings not being commenced, while the applicant denies this. In such a case, one might expect that the applicant would not rely on sworn evidence from the solicitor in support of the applicant's case. However, at least there should be before the Court the sworn evidence of the applicant as to what the applicant says about the matter, and evidence of enquiries of the solicitor and the response if any of the solicitor to those enquiries; so that the Court is at least given some understanding of the position, and the respondent is given material to enable it to decide whether it wishes to call the solicitor to give evidence on its behalf. Where the oral evidence is unclear as to the explanation for the proceedings not being brought, one would normally expect relevant parts of the solicitor's file to be obtained by the applicant, by subpoena if necessary, and put into evidence. 32 There may be cases where the previous solicitor asserts no recollection as to what happened or fails to respond to correspondence, and also cases where the solicitor's file is lost; and in those cases the Court might be asked to do its best on the very limited material available. However, it will first be necessary for the applicant to demonstrate that he or she is not in a position to provide the Court with adequate material, before the Court can be asked to draw inferences on less than adequate material. 33 As I have said, in my opinion the Court was, in the present case, left in a position where it could do no more than guess at the true explanation for proceedings not being commenced; and in my opinion, where no reason was advanced by Mr. Doeland why the Court should be left in that position, the Court could not regard the offered explanation as satisfactory. 34 Although this matter was not made a ground of appeal or separately argued by Mr. Kelly, it seems to me also that there was further error in the primary judge's approach to the question of explanation, in that the primary judge treated the matter as a discrete question which might cause her to refuse an application, and having found that it did not, thereafter disregarded it. This could suggest a reversal of the onus of proof; but in any event, the correct approach is to regard the provision of an explanation as a necessary step in the application, and the nature of the explanation as being a matter which has to be taken into account in the ultimate determination of whether it is fair and just to grant the extension. The weaker the explanation, the greater the need to show that there would be little prejudice to a respondent. 35 Turning to the matter of prejudice, there is in my opinion force in the submission for Mr. Doeland that ASB's case for prejudice was much weakened by the failure to ask Mr. Sweeney what he had to say about the system of work and the covering of holes by plastic. Where possible, it is desirable that the question of prejudice be considered having regard to the issues that are likely to arise at the hearing; and questioning of Mr. Sweeney about those matters would have both clarified what issues were likely to arise at the hearing, and also clarified the extent to which ASB would be prejudiced. On the other hand, I think there is force in the submissions for ASB that some actual prejudice, in addition to presumptive prejudice, was shown by the unchallenged evidence that no investigation of the circumstances of the accident, with a view to considering common law liability, was undertaken between May 1996 and March 2001, particularly where there had been no suggestion to ASB's insurer of concealment of the hole by plastic prior to about March 2001. 36 On the whole, I am doubtful if the aspect of prejudice on its own would have justified the granting of leave to appeal or the allowing of an appeal. However, the view of the primary judge that ASB was not "unduly prejudiced" could be regarded as manifesting an error of law, if it is taken as indicating that the test to be applied is whether a respondent is "unduly prejudiced". In fact, the test to be applied is whether it is fair and just that an extension be granted, and the strength of the explanation and the degree of presumptive and actual prejudice are matters to be taken into account, together, in coming to a conclusion on this question. Where the prejudice is such that a fair trial is unlikely, it will as a general rule not be fair and just to grant the extension. However, where there is prejudice falling short of this, that prejudice will still weigh in the assessment, and is a matter to be considered along with the adequacy of the explanation in making the ultimate determination. 37 I would mention one other matter which was not argued. The primary judge dismissed the application against Delta, because of substantial prejudice. However, the granting of the application against ASB meant that Delta could be sued for contribution (see Law Reform (Miscellaneous Provisions) Act 1946 s.5, Workers Compensation Act 1987 s.151Z, Brambles Constructions Pty. Ltd v. Helmers (1968) 114 CLR 213, Leonard v. Smith (1992) 27 NSWLR 5). In those circumstances, the possible prejudice to a third party, that is Delta, could have been a circumstance relevant to the granting of the application against ASB. CONCLUSION 38 In my opinion, for the reasons I have given, this is a case where an extension should not have been granted. In my opinion the primary judge was in error. There are questions of principle involved, and in my opinion it is an appropriate case for the grant of leave. 39 For those reasons, in my opinion the Court should make the following orders: 1. Leave to appeal granted, subject to a Notice of Appeal being filed within 14 days. 2. Appeal allowed, decision of primary judge set aside, and in lieu thereof application by the first opponent as against the claimant dismissed with costs. 3. First opponent to pay claimant's costs of the application and the appeal, and to have a Suitors Fund certificate if otherwise entitled. 40 CRIPPS AJA: I agree with Hodgson JA. ********** Last Modified: 07/01/2003 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.