New South Wales Supreme Court CITATION : State of New South Wales v Napier Keen Pty Limited [2007] NSWSC 644 HEARING DATE(S) : 31 May 2007 JUDGMENT DATE : 26 June 2007 JUDGMENT OF : Price J at 1 DECISION : 1. The Amended Summons be dismissed. 2. The State (the plaintiff) is to pay the costs of the first, second and third defendants. CATCHWORDS : Declaration - restrospective operation of Division 6 of Part 2A Civil Liability Act 2002 - personal injury damages - offender damages - not an award of personal injury damages - damages not required to be held in victim trust fund. Civil Liability Act 2002 s 26A, s 26A(1)(b), s 26J, Sch 1 cl 16(2)(a) Civil Liability Amendment (Offender Damages) LEGISLATION CITED : Act 2004 Sch 1 Civil Liability Amendment (Offender Damages) Act 2005, Sch1 Civil Liability Amendment (Offender Damages Trust Fund) 2005 Act, Sch 1 Crimes and Courts Legislation Amendment Act 2006, Sch 1 cl 1.5 Bujdoso v State of New South Wales [2006] NSWSC 896 CASES CITED : Barns v Queensland National Bank Ltd (1906) 3 CLR 925 State of New South Wales v Bujdoso [2007] NSWCA 44 State of New South Wales PARTIES : Napier Keen Pty Limited trading as Napier Keen Solicitors and Attorneys Keen Wayne Oliver Shane Terrence FILE NUMBER(S) : SC 15695 of 2006 COUNSEL : Mr S Davis - Plaintiff Mr R O'Neill - Defendant IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION PRICE J 26 June 2007 15695 of 2006 State of New South Wales v Napier Keen Pty Limited & Others JUDGMENT 1 HIS HONOUR: The State of New South Wales (the State) seeks a declaration that Division 6 of Part 2A of the Civil Liability Act 2002 (NSW) (the CLA) applies to the damages that Shane Terrance Oliver (the third defendant) was awarded in the District Court of New South Wales and to the solicitors who acted for him (the first and second defendants). 2 On 18 June 2001 the third defendant was sentenced to a term of imprisonment to be served by way of periodic detention. On 1 September 2001 whilst serving his sentence at Parklea Periodic Detention Centre he injured his right knee. The third defendant commenced proceedings on 29 August 2002 in the District Court seeking damages for personal injuries founded on the negligence of the State. Coorey DCJ on 17 March 2005 awarded the third defendant damages in the sum of $133,261.00. 3 Although the CLA commenced on 20 March 2002, it was agreed by the parties that damages were to be assessed at common law because the State had been notified of the intention to claim damages by the third defendant before the commencement of the CLA. 4 On 19 November 2004 the Civil Liability Amendment (Offender Damages) Act 2004 commenced. The amending Act inserted into the CLA Part 2A which made special provision for offenders in custody. Within Part 2A were five divisions (ss26A to 26J). Section 26A(1)(b) relevantly defined an offender in custody to mean: "(b) an offender within the meaning of Part 3 (Imprisonment by way of periodic detention) of the CAS Act." 5 The CAS Act means the Crimes (Administration of Sentences) Act 1999 which commenced on 3 April 2000. 6 A protected defendant was relevantly defined in s 26A to include: "(a) the Crown (within the meaning of the Crown Proceedings Act 1988) and its servants; and (b) a Government department and members of staff of a Government department." 7 The new Part 2A did not, however, apply to the third defendant's damages as the proceedings were commenced before 15 January 2004: see clause 16(2)(a) of Part 5 of Schedule 1 of the CLA. 8 Coorey DCJ, as has been mentioned, on 17 March 2005 awarded to the third defendant damages against the State. The State appealed to the Court of Appeal. On 19 May 2005, Beazley JA granted a stay and in accordance with the parties' agreement ordered that 50 per cent of the judgment be paid to the third defendant's solicitors on their undertaking to invest that sum in an interest bearing deposit pending disposal of the appeal. 9 The CLA had been further amended on 14 April 2005 by the commencement of the Civil Liability Amendment (Offender Damages) Act 2005. Part 2A was in particular amended so as to apply "to any civil liability whether arising before, on or after the commencement day". The extended operation of Part 2A did not apply to the third defendant's proceedings as the decision of Coorey DCJ had been made before the commencement day: see clause 18(3)(a) of Part 6 of Schedule 1 of the CLA. 10 On 26 October 2005 further amendments to the CLA commenced. The Civil Liability Amendment (Offender Damages Trust Fund) Act (the Offender Damages Trust Fund Act) added to Part 2A a new Division 6 and Part 7 was inserted into Schedule 1. This amending Act's principal purpose is stated as that of providing: "………..for the satisfaction of personal injury damages claims by victims of crime from certain damages awarded to offenders….." 11 New sections 26K to 26N are included within Division 6. Division 6 establishes a regime whereby offender damages are to be paid into a trust fund pending resolution of any claims which might be made against the offender by victims of his criminal offending. The offender's victims are to be notified and have six months to make a victim claim. As was said by Sully J in Bujdoso v State of New South Wales [2006] NSWSC 896 [at 18]: "The nub of the statutory scheme is the concept of a compulsory attachment of any damages awarded to an offender in custody, the purpose of that attachment being to establish a fund out of which any lawful claim against the offender by any victim of the offender can be paid; and to prevent the offender's rendering such a lawful claim abortive by the expedient of asserting that he has no available property out of which he can pay a claim." 12 By the insertion of Part 7 into Schedule 1 of the CLA, clauses 20 and 21 are added to the Schedule. They are as follows: " 20 Extended operation of Part 2A Division 6 For the purposes of the operation of Division 6 (Offender damages trust funds) of Part 2A: (a) that Part extends to an award of personal injury damages in proceedings commenced before the commencement of that Part, and (b) Parts 5 and 6 of this Schedule do not limit the operation of that Part. Note. This clause has the effect of extending the operation of Division 6 of Part 2A beyond the operation of the other provisions of that Part. 21 Amendments extend to existing claims and damages awards A provision of Division 6 (Offender damages trust funds) of Part 2A extends to: (a) an award of offender damages made before the commencement of the provision that has not been satisfied by the protected defendant concerned as at that commencement, and (b) an award of offender damages made after the commencement of the provision in respect of a claim for damages that arose before that commencement, and (c) a victim claim made in respect of a cause of action that arose before the commencement of the provision." 13 The Court of Appeal on 19 May 2006 dismissed the State's appeal. In a letter dated 7 June 2006 to the solicitors for the third defendant the Crown solicitor expressed the view that "the matter has now been overtaken by the offender damages provisions of the Civil Liability Act 2002" and requested that the funds held in trust be released to the Public Trustee in accordance with the CLA. The Crown solicitor proposed to forward the remainder of the judgment sum (after deduction of a payment to Medicare Australia) to the Public Trustee. The third defendant's solicitors, however, declined the request but have undertaken to retain the funds in trust until the resolution of the present proceedings. 14 The principal issue raised in these proceedings is whether Part 7 of Schedule 1 of the CLA has the effect of extending the retrospective operation of Division 6 of Part 2A so that it applies to the third defendant's damages. 15 The State argues that the terms of clause 20 of Part 7 are plainly satisfied. The third defendant's proceedings commenced before the commencement of Part 2A. Parts 5 and 6 of Schedule 1 do not limit the operation of Part 2A. Clause 20, of itself, the State contends, has the effect that the offender damages provisions in Part 2A apply such that the declaration in the amended summons ought to be made. 16 A further contention made by the State is that the terms of clause 21(a) of Part 7 are satisfied. The damages awarded to the third defendant, the State submits, are an award of offender damages as defined in s 26K of the CLA made before the commencement of the new Division 6. Although part of the damages award has been paid to the third defendant's solicitors, the State argues that the payment does not constitute satisfaction of the award as payment in full is required. 17 An additional contention is that the terms of clause 21(c) are satisfied. By a statement of claim filed in the District Court on 6 November 2006, Mr Oren alleges that the third defendant assaulted him on 24 January 1993 and seeks damages. The State argues that Mr Oren's claim is a victim claim as defined in s 26K of the CLA. Mr Oren's victim claim is in respect of a cause of action that arose before the commencement of the provisions of Division 6 of Part 2A and clause 21(c) retrospectively operates so that Division 6 applies, the State submits, to the third defendant's damages. 18 The defendants' principal contention is that the award of damages made by Coorey DCJ on 17 March 2005 was not an award of "personal injury damages" as defined in Part 2 and it follows that clauses 20 and 21 do not operate so as to apply Division 6 to these damages. The defendants point to what was said by Basten JA in State of New South Wales v Bujdoso [2007] NSWCA 44 at [81-82]: "81 The first issue raised by clause 20 is the scope of the phrase "personal injury damages". However, leaving that matter to one side, because it has broader ramifications, it is apparent that the form of Part 7 follows the structure evinced in other Parts of Schedule 1, namely to state a broad operation and impose limitations. It is clear Division 6 of Part 2A does not extend to all awards of personal injury damages in proceedings commenced before the commencement of Part 2A. Indeed, it is arguable that clause 21 and not clause 20 was intended to refer to damages awarded before the commencement of the Part. Furthermore, the intended effect of clause 20(b) is obscure. Parts 5 and 6 of the Schedule did not in terms limit the operation of Part 2A: rather, they extended it, subject to limitations on that extended operation. Without that extended operation, it would be presumed that Parliament did not intend to affect any accrued right or liability. 82 An important further limitation is to be found in the language of clause 20 itself. The term "personal injury damages", which appears in clause 20, is not defined in Part 2A, but is defined in Part 2, as noted at [45]. Section 26A(2) picks up that definition for the purposes of Part 2A. However, Part 2 does not apply to an award of damages in proceedings commenced before the commencement of the Act on 20 March 2002: see clause 2 at [74] above. (There is in fact a further limitation in relation to claims against the Crown, of which the Crown had notification in writing before 20 March 2002, but it is not necessary to rely on the provision in this case: see Schedule 1, clause 4.) Accordingly, such an award of damages will not be "personal injury damages" for the purposes of Part 2. As that phrase is picked up and applied in Part 2A, it follows that such damages will not be "personal injury damages" under that Part either and will therefore not constitute "offender damages" as defined in s 26K(1). Since the proceedings which gave rise to an award of damages in favour of the Respondent were commenced in 1994, it follows that damages obtained in those proceedings are not "personal injury damages" for the purposes of Parts 2 and 2A and will not be "offender damages" within Part 2A……." 19 Basten JA's reasoning, it seems to me, at least in so far as clauses 20 and 21(a)-(b) are concerned, applies to the third defendant's damages. Offender damages are defined within Part 2A as meaning "personal injury damages awarded pursuant to an award to which this Part applies": see s 26K(1). 20 Part 2A does not define the term "personal injury damages," however, s 26A Definitions provides: "(2) Other expressions used in this Part have the same meaning as in Part 2." 21 In Part 2 the term personal injury damages is defined to mean "damages that relate to the death of or injury to a person": see s 11 of the CLA. By s 11A(1), Part 2 "applies to and in respect of an award of personal injury damages, except an award that is excluded from the operation of this Part by section 3B". Section 3B(3) provides for the making of regulations excluding a "specified class or classes of civil liability (and awards of damages in those proceedings) from the operation of all or any specified provisions" of the CLA. Clause 4 of Schedule 1 excluded from the application of the CLA certain awards of damages against the Crown of which written notification had been provided to the Crown before 20 March 2002. 22 Part 2 did not apply to the third defendant's award of damages as the Crown had been notified in writing of the claim before 20 March 2002 and the proceedings on the claim had been commenced in the District Court before 1 September 2002: see Schedule 1 clause 4(1)(b). The award of damages made by Coorey DCJ could neither be "personal injury damages" for the purposes of Part 2 and Part 2A nor "offender damages" within Part 2A. It follows that the third defendant's damages could not be an "award of personal injury damages" to which the operation of Part 2A Division 6 extends by virtue of clause 20 of Part 7 or an award of "offender damages" to which clauses 21(a) – (b) of Part 7 apply. 23 The State argues that the quoted passages in Basten JA's judgment are obiter dictum and the Court "needs to tread very delicately" in the way in which these passages are used. His Honour, the State says, has identified "an anomaly in [the] legislation which otherwise overwhelmingly has the intention of impounding offender/plaintiff's damages". 24 The State made reference to the second reading speech delivered in the Legislative Assembly by the Parliamentary Secretary on 27 October 2006 when the Crimes and Courts Legislation Amendment Bill was introduced. It is common ground that the Crimes and Courts Legislation Amendment Act 2006 (the 2006 Amendment Act) has no direct relevance in the present case. The amendments to s 3B(1)(a) and s 26A(1) of the CLA introduced by the 2006 Amendment Act sought to deal with the issues that arose from Sully J's judgment in Bujdoso. The State contends that the 2006 Amendment Act demonstrates the intention of the Legislature to "catch" the damages of persons such as Mr Bujdoso or the third defendant. 25 It is true that neither Hodgson JA nor Ipp JA in the State of New South Wales v Bujdoso expressly considered the issues raised by Basten JA in the quoted passages but that does not mean his Honour's remarks are without considerable weight: see Barns v Queensland National Bank Ltd (1906) 3 CLR 925 at 941. In any event, counsel for the State was unable to identify error in his Honour's reasoning. 26 Although the principal purpose of the Offender Damages Trust Fund Act makes reference to "certain damages awarded to offenders", the Legislative intention to confine the operation of clauses 20 and 21 of Part 7 to awards to offenders of personal injury damages is evinced from the use of the terms "personal injury damages" and "offender damages". During the second reading speech of the Civil Liability Amendment (Offender Damages Trust Fund) Bill in the Legislative Assembly, Mr Newell, the Parliamentary Secretary, on behalf of the Attorney General said that: "Proposed section 26K contains definitions, including definitions of "offender", "offender damages", "victim claims" and "victim trust fund". The definitions, together with Part 7 of schedule 1, apply the scheme to an offender, as defined in existing section 26A, who receives an award of personal injury damages from a protected defendant, also defined in section 26A, whether those proceedings were conducted under Part 2A or otherwise…………"(emphasis added) (Hansard, Legislative Assembly, 15 September 2005 at 17858). 27 Identical words were used by the Honourable Henry Tsang when the Bill was read for a second time in the Legislative Council (see Hansard, Legislative Council, 19 October 2005 at 18854). 28 The third defendant did not receive an award of "personal injury damages" for the purposes of Parts 2 and 2A with the consequence that the damages are not "offender damages" to which Division 6 applies. 29 The State's approach that some guidance of the Legislature's intention is provided by the 2006 Amendment Act, it seems to me, is misconceived. There is no ambiguity and the purpose of the Offender Damages Trust Fund Act is clear. 30 Unlike sub-paragraphs (a) – (b) of clause 21, sub-paragraph (c) does not refer to "an award of offender damages", but refers to "a victim claim". A "victim claim" relevantly is defined in s 26K(1) to mean: " victim claim means a claim for personal injury damages in respect of: (a) an injury to a person caused by conduct of an offender that, on the balance of probabilities, constitutes an offence……" 31 Section 26K(2) further defines "victim claim" as follows: "The definition of victim claim in this section: (a) operates whether or not a person whose conduct is alleged to constitute an offence has been, will be or is capable of being proceeded against or convicted of any offence concerned, and (b) extends to conduct of a person that would have constituted an offence if the person had not been suffering from a mental illness at the time of the conduct (whether or not the person was acquitted of an offence concerning that conduct by reason of mental illness or was found by a court not to be fit to be tried for an offence concerning that conduct by reason of such an illness)." 32 It seems that Mr Oren's proceedings in the District Court are a claim for personal injury damages in respect of an injury to him caused by the conduct of the third defendant that, on the balance of probabilities (if proven), constitute an offence. By the retrospective operation of clause 21(c), the definition of "victim claim" in Division 6 extends to Mr Oren's claim such that is a "victim claim" within the Division. That finding, however, does not assist the State as the requirements of Division 6 apply only to "offender damages". 33 I conclude that Part 7 of Schedule 1 of the CLA does not have the effect of extending the retrospective operation of Division 6 of Part 2A so that it applies to the third defendant's damages. The State is not entitled to succeed. 34 A secondary submission for the defendant is that the State was not entitled to succeed on the ground that s 26L does not apply to the defendants as they do not fall within the definition of "protected defendant". It is clear, the defendants submit, from the wording of s 26L that the scheme is designed to cover amounts that are only payable by a "protected defendant" as defined in s 26A. If the legislation had intended to cover moneys held by anyone by way of award for "personal injury damages" for injury to a person who was an offender in custody, the defendants argue, s 26A would have said so. This submission was made in the event that the principal contention of the defendants did not succeed. 35 The defendants do not fall within the definition of a "protected defendant" in s 26A. 36 Section 26L is as follows: "26L Offender damages to be held in trust as victim trust fund (1) The amount of any offender damages awarded to an offender is to be held in trust for the offender by the protected defendant liable to pay those damages and may be paid out only as authorised by this Division. (2) Offender damages held by a protected defendant in trust for an offender under this Division comprise a victim trust fund for victims of the offender. The protected defendant is responsible for the fund. (3) This section does not affect (and is subject to) any obligation imposed on the protected defendant by or under an enactment of the State or the Commonwealth to pay to some other person money owed or due to or held on account of the offender. Note. Section 26T also provides an exception to this section for legal costs. (4) An amount deducted or withheld from offender damages under Division 5 (Victims support payments owed by offender) is not required to be held in trust under this section. (5) An amount held in a victim trust fund for victims of an offender is: (a) not available for the payment of a creditor of the offender, and (b) not liable to be attached or taken in execution at the instance of a creditor of the offender." 37 Section 26L(1) speaks of "any offender damages" (emphasis added) awarded to an offender. The requirement for "offender damages" to be held in trust is not restricted, to my mind, to "offender damages" which are being held by the protected defendant. Had the third defendant's damages been found to be "offender damages", it seems to me, that the moneys invested for the third defendant would have been "any offender damages" to which s 26L(1) applied. These moneys would then have been required to be repaid to the State as the "protected defendant" to be held in a victim trust fund. Conclusion 38 I conclude that Division 6 of Part 2A of the CLA does not apply to the damages that Shane Terrance Oliver (the third defendant) was awarded in the District Court of New South Wales proceedings number 990 of 2004 nor to the solicitors who acted for him (the first and second defendants). The defendants are not required to pay $66,630.00 to the Public Trustee. Orders 39 I make the following orders 1. The Amended Summons be dismissed. 2. The State (the plaintiff) is to pay the costs of the first, second and third defendants. ********** 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.