New South Wales Court of Appeal CITATION : Commonwealth of Australia v. Stankowski; Commonwealth of Australia v. May [2002] NSWCA 348 FILE NUMBER(S) : CA 40502/02; CA40503/02 HEARING DATE(S) : 8 October 2002 JUDGMENT DATE : 8 October 2002 Commonwealth of Australia - claimant PARTIES : Stephen Stankowski - opponent (CA40502/02) Peter Neville May - opponent (CA40503/02) JUDGMENT OF : Handley JA at 34; Hodgson JA at 1; Young CJ in Eq at 39 LOWER COURT JURISDICTION : Supreme Court - Common Law Division LOWER COURT CLD21240/95; CLD21247/02 FILE NUMBER(S) : LOWER COURT Grove J JUDICIAL OFFICER : COUNSEL : Mr. C.C. Branson QC with Mr. P. Taylor for claimant Mr. M.J. Joseph SC with Mr. M.J. Leeming and Mr. W. Walsh for opponents SOLICITORS : Australian Government Solicitor for claimant James Taylor & Co, Myrtleford, Victoria for opponents CATCHWORDS : LIMITATION OF ACTIONS - PROCEDURE - AMENDMENT - Whether defendant should be permitted to amend defence to rely on the ACT Limitation Act, when an extension of time had already been granted under the NSW Limitation Act - Re-litigation of issues - Anshun estoppel - Whether leave to amend defence to rely on the ACT Limitation Act, in circumstances where an extension of time under the NSW Limitation Act had been applied for but not granted, should be subject to conditions, and if so what conditions - CONFLICT OF LAWS - Proceedings brought in NSW for tort occurring on the high seas - Whether applicable law is that of NSW, or of the State or Territory having the closest connection to the events. LEGISLATION CITED : Limitation Act 1969 (NSW) ss.60G, 60I Limitation Act 1985 (ACT) s.36 Commonwealth v. Mewett (1997) 191 CLR 471 John Pfeiffer Pty. Ltd. v. Rogerson (2000) 203 CLR 503 CASES CITED: Nominal Defendant v. Manning [2000] NSWCA 80 Parker v. The Commonwealth of Australia (1965) 112 CLR 295 Regie Nationale des Usines Ranault SA v. Zhang [2002] HCA 10 DECISION : 1. In the matter of Stankowski, leave to appeal refused with costs. 2. In the matter of May, leave to appeal granted and appeal allowed. 3. Leave to amend as sought be granted on condition that if the respondent seeks an extension of the limitation period under the ACT Act as well as the New South Wales Act, the Commonwealth accepts that that application will be determined as if it had been made at the same time as the application under the New South Wales Act, the leave to amend being on the basis that any Amended Defence be filed and served within 21 days, and that by taking up the leave, the Commonwealth accepts the condition I have indicated. 4. The Commonwealth to file its Notice of Appeal within 7 days. 5. In both matters, the Commonwealth to pay the costs of the proceedings below, the application for leave, and the appeal, apart from the Notice of Contention and the written argument in support thereof. IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA40502/02 CA40503/01 HANDLY JA HODGSON JA YOUNG CJ in Eq. Tuesday 8 October 2002 COMMONWEALTH OF AUSTRALIA V. STANKOWSKI COMMONWEALTH OF AUSTRALIA V. MAY Judgment 1 HODGSON JA: On 5 November 2001, the Commonwealth of Australia put on a notice of motion in each of two proceedings brought against it in relation to the collision between the naval vessels HMAS Voyager and HMAS Melbourne on 10 February 1964, which occurred on the high seas about 20 miles south-east of Jervis Bay, seeking leave to amend its defence so as to allege that the claim in each case was "statute barred by section 3 of Imperial Act 21 James 1 Chapter 16 or alternatively by section 11 of the Limitation Act 1985 (ACT)." 2 The notice of motion was heard by Grove J, who gave judgment on 17 April 2002. In relation to the proceedings brought by Stephen Stankowski, who I will refer to as Stankowski, the primary judge indicated that he proposed to dismiss the motion with costs. In relation to the proceedings brought by Peter May, who I will refer to as May, the primary judge indicated that he would not allow the amendment to plead the Imperial Statute, that provided the Commonwealth gave an undertaking not to rely on any delay between 21 November 1995 and the hearing of any application for extension of limitation period pursuant to the Limitation Act 1969 (NSW) or the Limitation Act 1985 (ACT), he would give leave to rely on the ACT Act, that in the absence of such undertaking he would dismiss the motion, and (as a provisional view) that the Commonwealth should pay the costs of the motion in any event. 3 The matters were stood over to 21 May 2002, and on that day the Commonwealth did not give the undertaking referred to by the primary judge, so that the notice of motion in each matter was dismissed with costs. The Commonwealth seeks leave to appeal from those orders. 4 The statement of claim in each case was filed on 29 November 1995, alleging that the collision in question was caused by the negligence of the officers and crew of one or both vessels and other officers and servants of the Commonwealth, thereby causing injury to the plaintiff in each case. On 6 December 1995, the plaintiff in each case filed a notice of motion for an order extending the limitation period pursuant to section 58 and/or section 60C and/or section 60G of the New South Wales Limitation Act 1969. 5 On 31 January 1996, the Commonwealth filed a defence in each case, relying inter alia on sections 14 and 61 of the New South Wales Limitation Act. 6 The application for extension made in the case of May has not yet been heard; but that in the case of Stankowski was heard by Master Malpass on 15 December 1999, and on 17 December 1999, Master Malpass made an order extending the limitation period for the cause of action specified in the Stankowski statement of claim to 29 November 1995. 7 The Commonwealth's notice of motion in each case was heard by Grove J on 26 March 2002. The primary judge held in each case that the proposed amendments were not futile; and that the Commonwealth had explained its conduct in not seeking to raise the defences previously, had made no irrevocable election to rely only on New South Wales Limitation Law and had not conducted itself so as to attract a result along the lines and for the reasons discussed in The Commonwealth v Verwayen (1991) 170 CLR 394. The primary judge indicated that he did not consider matters subjective to the plaintiffs, including distress caused by the Commonwealth's application and its possible effects, provoked refusal of the orders sought by the Commonwealth. 8 In the case of Stankowski the primary judge noted as follows: 22 Mr Stankowski has already undertaken the not insignificant task of demonstrating an entitlement for extension under the provisions of the statute which the defendant initially chose to plead. Leave to amend as sought would require him to repeat his experience. I regard that as unreasonably burdensome and a prejudice which is not capable of being mitigated by costs or otherwise. I would not grant leave to amend the pleading against Mr Stankowski. 9 In the case of May, the primary judge stated that there was potential that pleading the Imperial statute would leave the plaintiff without an opportunity for an extension of the limitation period, and that the potential prejudice of this would be such that appropriate consequential orders could not compensate; and that accordingly he would not allow the amendment to plead the Imperial statute. However, he considered the Commonwealth should be permitted to plead the ACT statute in the alternative to the New South Wales statute, subject to giving the undertaking which I mentioned above. 10 The Commonwealth proposes to rely on the following grounds of appeal in the case of Stankowski: 1. The Learned trial judge made a fundamental and significant error of law in relation to the respondent's right to have the limitation period extended, in the event that the leave to amend, as sought by the Commonwealth was granted. His Honour incorrectly asserted that it was common ground that no such extension could be granted, when the contrary was the clear contention of the Commonwealth. 2. The findings of fact made by the learned trial judge in relation to prejudice suffered by the plaintiff, were inconsistent with the stated reasons given for the exercise of the discretion to refuse the leave sought by the Commonwealth; His Honour had rejected the evidence of the respondent's doctors and the plaintiffs case on subjective complaints of distress, yet refused the leave sought, apparently for those very reasons. 11 In the case of May, the grounds are as follows: 1. The Learned trial judge made a fundamental and significant error of law in relation to the plaintiff's right to have the limitation period extended, in the event that the leave to amend as sought by the Commonwealth was granted. His Honour incorrectly asserted that it was common ground that no such extension could be granted, when the contrary was the clear contention of the Commonwealth. 2. The learned trial judge erred in law in taking into account that the appellant would not give an undertaking not to rely upon the delay by the plaintiff between the original filing of his motion for extension (21 November 1995) and the hearing of the motion in respect of any other statute raised in the amended defence, in any application brought by the plaintiff to extend the limitation period. 12 In each case there has been filed a notice of contention in the same terms, as follows: 1. The proceedings appealed from were heard on 26 March 2002 and decided on 21 May 2002. The respondent contends that the decision of His Honour Mr. Justice Grove, the trial judge ought to be affirmed on grounds other than those relied upon by Mr. Justice Grove on the following grounds: GROUNDS 2. His Honour should have held that the amendments sought were futile for the following reasons: A. The relevant limitation law is the Limitation Act (NSW) 1969. B. The place where the federal jurisdiction was being exercised was in NSW: see sections 79 and 80 Judiciary Act (Com) 1903. C. There are sufficient connecting features between the vessels and NSW that the NSW law should apply including: (i) the training exercise was planned in Nowra NSW; (ii) Sydney Harbour was the last "port" for both vessels; (iii) Commonwealth initially breached its duty to the men of the HMAS Melbourne when it allowed HMAS Melbourne to leave Sydney Harbour; (iv) the collision occurred off the coast of NSW; and (v) HMAS Melbourne returned to Sydney Harbour after the collision. D. Alternatively His Honour should have held that no limitation law applied as New South Wales law does not extend to accidents arising on the high seas and there is no Commonwealth limitation law. E. Further His Honour should have held that the defendant had elected that New South Wales law was the substantive law of the accident by pleading the New South Wales Limitation Act as its defence. 13 The grounds of appeal and notice of contention give rise to the following issues which I will consider. Firstly, the question of whether an error was made in relation to the Imperial Act. Secondly, other alleged errors in the case of Stankowski. Thirdly, the condition imposed in the case of May. And fourthly, the question of futility raised by the notice of contention in each case. The matter has been argued on the basis that, if leave is granted, there will be no further argument on the appeal. 14 Dealing first with the question concerning the Imperial Act the primary judge said this: 24 I have noticed the terms in which the defendant conceded the retrospective operation of the Limitation Act 1985 (ACT). It was common ground that the Act 21 James 1 Chapter 16 contained no provision enabling extension. There was no concession that the Limitation Act 1969 (NSW) had similar retrospective operation to the ACT statute enabling extension even if the Imperial Act applied. As it is not for decision in this application whether, of the two, the NSW or ACT statute applies there is potential that pleading the Imperial Statute would leave the plaintiff without opportunity for extension. That would be fatal to his action. So different is that from the situation in which he was in terms of pleadings which had been in place for some years, and noting that his appropriate application was placed in pendency as I understand it by the court's case management arrangements rather than any action of his, I conclude that the potential prejudice to the plaintiff of pleading the Imperial Statute would be such as appropriate consequential orders could not compensate. 15 Mr Branson QC for the Commonwealth submitted that this showed a misconception: the Imperial Act was being relied on only as being possibly the applicable limitation law for the Australian Capital Territory prior to the passage of the 1985 Limitation Act for that territory; and in that event, the 1985 Act would permit an extension of the time limited by the Imperial Act. 16 I think it is fair to say that there may have been a misunderstanding by the primary judge of this position advanced by the Commonwealth, due to some lack of clarity in the pleadings and the submissions. It seems to me that, now it is clear that the Commonwealth is relying on the Imperial Act only as part of ACT law, as being perhaps the relevant ACT limitation law prior to 1985, and in circumstances where the Commonwealth concedes that the limitation provided by that Act can be extended pursuant to the provisions of the 1985 ACT Act, it would be appropriate, if other matters justifying an amendment are satisfied, to allow the amendment to rely on the Imperial Act just to that extent. 17 Turning next to other alleged errors in the case of Stankowski, Mr Branson QC submitted that, where the judge had found that an amendment was not futile, that the Commonwealth had acted reasonably and had not elected to rely only on the New South Wales Act, and that Mr Stankowski's distress and other subjective matters did not justify refusal, it was not possible to discern how an amendment requiring a further application for an extension of time would be unreasonably burdensome and a prejudice incapable of being mitigated by costs or otherwise. He submitted also that there were no sufficient reasons for such a finding. In any event, he submitted, such a finding was erroneous, in that there need not be any separate hearing of such an application apart from the final hearing of the action, and in that any questions of costs and delay can be dealt with by conditions. 18 There is some force in these submissions. However, in my opinion it is a very significant factor that there has already been one contested hearing between the Commonwealth and Stankowski in which issues relating to the justification of an extension have been decided, and that the amendment sought would assist the Commonwealth in relation to the limitation question only if a different decision was reached on issues which are either identical or very similar. The relevant statutory provisions are as follows: New South Wales Act 60G(1) This section applies to a cause of action that accrues on or after 1 September 1990, founded on negligence, nuisance or breach of duty, for damages for personal injury, but does not apply to a cause of action arising under the Compensation to Relatives Act 1897. (2) If an application for an order under this section is made to a court by a person claiming to have a cause of action to which this section applies, the court, after hearing such of the persons likely to be affected by the application as it sees fit, may, if it decides that it is just and reasonable to do so, order that the limitation period for the cause of action be extended for such period as it determines. 60I(1) A court may not make an order under section 60G or 60H unless it is satisfied that: (a) the plaintiff: (i) did not know that personal injury had been suffered, or (ii) was unaware of the nature or extent of personal injury suffered, or (iii) was unaware of the connection between the personal injury and the defendant's act or omission, at the expiration of the relevant limitation period or at a time before that expiration when proceedings might reasonably have been instituted, and (b) the application is made within 3 years after the plaintiff became aware (or ought to have become aware) of all 3 matters listed in paragraph (a) (i)--(iii). (2) Subsections (2), (3) and (4) of section 60E apply, with any necessary adaptations, in relation to applications for orders under this Subdivision. ACT Act 36(1) This section applies to any action for damages where the damages claimed consist of or include damages in respect of personal injuries to any person. (2) Where an application is made to a court by a person claiming to have a cause of action to which this section applies, the court, subject to subsection (3) and after hearing such of the persons likely to be affected by that application as it sees fit, may, if it decides that it is just and reasonable so to do, order that the period within which an action on the cause of action may be brought be extended for such period as it determines. (3) In exercising the powers conferred on it by subsection (2), a court shall have regard to all the circumstances of the case, including (without derogating from the generality of the foregoing) the following: (a) the length of and reasons for the delay on the part of the plaintiff; (b) the extent to which, having regard to the delay, there is or is likely to be prejudice to the defendant; (c) the conduct of the defendant after the cause of action accrued to the plaintiff, including the extent (if any) to which the defendant took steps to make available to the plaintiff means of ascertaining facts which were or might be relevant to the cause of action of the plaintiff against the defendant; (d) the duration of any disability of the plaintiff arising on or after the date of the accrual of the cause of action; (e) the extent to which the plaintiff acted promptly and reasonably once he or she knew that the act or omission of the defendant, to which the injury of the plaintiff was attributable, might be capable at that time of giving rise to an action for damages; (f) the steps (if any) taken by the plaintiff to obtain medical, legal or other expert advice and the nature of any such advice he or she may have received. (4) The powers conferred on a court by subsection (2) may be exercised at any time notwithstanding— (a) that the limitation period in respect of the relevant cause of action has expired since the cause of action accrued; or (b) that an action in respect of such personal injuries has been commenced. (5) This section does not apply in respect of a cause of action to which the Compensation (Fatal Injuries) Act 1968 applies. 19 Both sets of provisions require a judgment essentially on whether it is just and reasonable to grant an extension, with the question of prejudice to the defendant being a very important element in that decision. 20 The policy of the law is strongly against the re-litigation of the same or similar issues, this policy being illustrated by the principles of res judicata, issue estoppel and so-called Anshun estoppel, and also by the way in which courts deal with successive interlocutory applications seeking similar orders (see Nominal Defendant v Manning (2000) 50 NSWLR 139). These principles are concerned with the importance of finality, and also with the possibility of unfairness. To allow the Commonwealth in this case to re-litigate the issue of the justice of an extension would give the Commonwealth the opportunity to seek to overcome any deficiency in the way it dealt with the application that was previously heard under the New South Wales Act. 21 One further consideration that I would have regard to is the element of distress that this would cause to the opponent Stankowski. It seems to me that it was an error in the approach of the primary judge to come to the view that distress and subjective factors on their own would not justify a refusal of the amendment and then, in effect, to treat them as having no relevance to the question of amendment. It seems to me that those factors can be considered, along with the question of re-litigation of issues already litigated, to justify refusal of the amendment. 22 Having regard to those considerations, I do not think leave to appeal should be granted in the case of Stankowski. 23 Turning to the question of the condition imposed in the case of May, Mr Branson has submitted that the question of the effect of any delay by Mr May in making applications for extension of time, or having those applications brought to determination, are matters properly to be taken into account in the determination of those applications and not for the imposition of conditions at the time of the amendment application. 24 Mr Joseph SC for May pointed to the submissions which he had made to the primary judge, and submitted that the condition imposed was an appropriate condition in all the circumstances, and certainly that it was not a basis on which leave should be granted to appeal from the primary judge's decision. 25 I note that in his submissions to the primary judge, Mr Joseph began by pointing out that no application had been made for extension of time under the ACT Act for the reason that it had never been pleaded. The submissions themselves did not appear to be seeking any exoneration from any delay in relation to the New South Wales Act. However, the condition actually imposed by the primary judge did purport to exonerate May from any delay since the commencement of the proceedings in relation to the application under the New South Wales Act as well as any application which might have to be made under the ACT Act. 26 It seems to me that in that respect certainly the condition went too far. It seems to me also that it went too far in seeking to prevent the Commonwealth relying on delay by May in relation to the ACT application which may be unrelated to the lateness of the Commonwealth amendment. I think an appropriate condition would have been along the lines that the Commonwealth must accept that, if May seeks an extension of the limitation period under the ACT Act as well as under the New South Wales Act, that application must be dealt with as if the application under the ACT Act had been made at the same time as the application under the New South Wales Act. I would propose, subject to what I say in relation to the futility point, that leave be granted in the case of May, and that an amendment be granted on that condition, with the leave to amend requiring the amended document to be filed within 21 days and indicating that, by taking up that leave to amend, the Commonwealth accepts the condition I have indicated. 27 The final matter is the question of futility raised under the notice of contention. Originally it was suggested that there was some estoppel which would prevent the Commonwealth taking advantage of the ACT Act even in the case of May, but that was not pursued. Ultimately the question that was pursued was the question whether it was arguable that ACT law in general and the ACT Limitation Act in particular could apply in this case. 28 Mr Leeming for May accepted that the view expressed by Gaudron J in the Commonwealth v Mewett (1997) 191 CLR 471 at 527, if correct, could raise a question as to whether the ACT law applied as being the law of the state or territory with which the events in question have their closest connection. However, he submitted that those views were merely a suggestion made as obiter, which was greatly outweighed by persuasive dicta to the opposite effect; and he referred to the views of the other judges in that case, and also to the views expressed by Windeyer J in Parker v The Commonwealth of Australia (1965) 112 CLR 295. However, he conceded that this area of the law is in some flux at the moment, and that the views contrary to those of Gaudron J are themselves put under some doubt by the decisions of John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503 and Regie Nationale des Usines Renault SA v Zhang [2002] HCA 10. I would note also that Gummow and Kirby JJ offered some guarded support to the approach of Gaudron J in Mewett at pages 554-5. 29 In those circumstances, it seems to me that the principle sought to be relied on by the Commonwealth is arguable. Mr Leeming faintly submitted that the factual question of close connection with the Australian Capital Territory may not be arguable; but it seems to me that the affidavit relied on by the Commonwealth does show that there is at least a possible argument in support of the factual matter. 30 Finally Mr Leeming submitted that this was a case where, even if the question was arguable, this Court should undertake a decision of the question in this application. I think it is sufficient to say that the primary judge did not undertake that exercise, and I do not think the primary judge was incorrect in not undertaking that exercise. 31 For those reasons, I would propose the following orders. 32 In the case of Stankowski, leave to appeal refused with costs. 33 In the case of May, I would propose that leave to appeal be granted, and that the appeal be allowed, and that the amendment be granted on condition that if May seeks an extension of the limitation period under the ACT Act as well as the New South Wales Act, the Commonwealth accepts that that application will be determined as if it had been made at the same time as the application under the New South Wales Act, the leave being on the basis that any amended defence be filed and served within 21 days and that by taking up the leave the Commonwealth accept the condition I have indicated. In my opinion, the Commonwealth should still pay the costs of the application to amend, and my tentative view is that it should pay the costs of the appeal, but that is a matter on which I would hear further submissions. 34 HANDLEY JA: I agree. I would simply seek to add some brief additional reasons. The power to extend the limitation period in personal injury cases conferred by section 36 of the Limitation Act (1985) (ACT) does not raise in either of the present cases any additional or separate issue to those arising under sections 60G and 60I of the Limitation Act 1969 (New South Wales). 35 Accordingly, the extension granted by Master Malpass in favour of Stephen Stankowski under the New South Wales Act established for all practical and legal purposes that he was also entitled at that time to an extension under the ACT Act. An order extending the limitation period is interlocutory, so that there is strictly no issue estoppel or res judicata. Nevertheless the Court, on an application by a defendant for leave to amend the statement of defence, is entitled to exercise a broad judicial discretion. In my judgment, leave to amend was correctly refused by Grove J in the case of Stephen Stankowski where the amendment would have required the plaintiff re-litigate the question of an extension of the limitation period under the ACT Act where what amounts to the same question had already been litigated under the New South Wales Act. 36 The same reasoning applies to the case of Peter Neville May. I see no reason why he should be in a better position at this stage to obtain an extension of the limitation period under the ACT Act than he would be to obtain an extension under the New South Wales Act. In my judgment in these circumstances the condition which the primary judge sought to impose was not appropriate and leave to appeal should be granted and the appeal allowed. 37 The reasons which have led this Court, at least so far as I am concerned, to refuse the Commonwealth leave to appeal in the case of Stephen Stankowski should not be seen as preventing the Commonwealth amending its statement of defence to raise any substantive questions under the law of the Australian Capital Territory relating to the assessment of the plaintiff's damages. 38 Subject to those matters, I agree with the reasons given by Hodgson JA and the orders he has proposed. 39 YOUNG CJ IN EQ: I also agree and would only add one comment. In the case of Peter Neville May, if no condition were imposed, in my view it would be unfair or inappropriate to grant the amendment so that the appeal would have to be dismissed. However, I agree with the orders proposed by Hodgson JA in both applications and the additional remarks of Handley JA. (FURTHER ADJOURNMENT) 40 HANDLEY JA: The Commonwealth is to pay the costs of the proceedings in this Court in both cases but such costs are not to include the costs of the notices of contention and the written argument in support thereof. We will also add to the oral orders in the case of May, a condition that the Commonwealth file its notice of appeal within seven days. ********** 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.