Legal Briefing No. 37

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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