Con Nalpantidis v Andrew Stark (No 2) No. SCGRG 95/914 Judgment No. 5461 Number of Pages 11 Private International Law (1996) 65 Sasr 454

[1996] SASC 5461

COURT IN THE FULL COURT OF THE SUPREME COURT OF SOUTH AUSTRALIA DOYLE CJ(1), BOLLEN(2) AND DEBELLE(3) JJ

CWDS
Private international law - choice of law - torts - negligence action in South Australia for injury sustained in motor accident in Victoria - both plaintiff and defendant resident in South Australia - both travelling in one motor vehicle when accident occurs - no other motor vehicle involved - motor vehicle registered and insured in South Australia - rules in McKain v Miller not satisfied - no flexible exception to these rules available in relation to intra-national torts. Breavington v Godleman (1988)169 CLR 41; McKain v A W Miller (SA) Pty Ltd (1992) 174 CLR 1, applied. (per Debelle J) Phillips v Eyre
(1870) LR 6 QB 1; Chaplin v Boys (1971) AC 356 applied. Realted action number 5362, 14 December 1995, (unreported, available on SCALE).

HRNG ADELAIDE, 8-9 August 1995 #DATE 19:3:1996

Counsel for plaintiff:         Mr R Hayes QC with Mr M Kernot

Solicitors for plaintiff:     Palios Meegan and Nicholson

Counsel for defendant:         Mr M Livesey

Solicitors for defendant:     Ward and Partners

Counsel for intervener Attorney-General:                Mr M Walter

Solicitors for intervener Attorney-General:                Crown Solicitor (SA)

ORDER
Orders made

JUDGE1 DOYLE CJ In reasons already published in this matter, I answered certain questions of law set out in a Case Stated by a Judge of the District Court.

2. After the reasons of the members of the Court were published, an opportunity was given to the parties, including the Attorney-General intervening, to make written submissions as to the availability and applicability of a "flexible exception" to the rules in Phillips v Eyre (1870) LR 6 QB 1, as recast by the majority in McKain v RW Miller (SA) Pty Ltd (1992) 174 CLR 1. This was done because Debelle J, in his reasons, answered the questions on the basis that an exception to the rule formulated in McKain was available as a matter of law and should be applied in this particular case.

3. Neither I, nor Bollen J who concurred with me, took this approach. My opinion was that it was not appropriate to do so because the availability of the exception had not been the subject of submissions by the parties. After publishing its reasons, the Court, as already mentioned, allowed the parties to make submissions on this further point.

4. I have come to the conclusion that such an exception is not available to the plaintiff, and therefore in my opinion the answers that I have already given to the Case Stated should not be altered.

5. The plaintiff argued that a flexible exception, as enunciated by Lord Wilberforce in Chaplin v Boys (1971) AC 356, is part of Australian private international law.

6. In examining whether this is so, the starting point must be an examination of the judgments of the High Court in Breavington v Godleman (1988) 169 CLR 41 and McKain. As was pointed out by counsel for the Attorney-General, McKain authoritatively reformulated the law in Australia, and therefore previous cases on the availability of the exception are of limited value. However, the passages of the majority judgment in McKain which are relevant to the present issue are capable, standing alone, of differing interpretations. Therefore, it is useful to refer to the views of the members of the High Court in the immediately preceding case of Breavington.

7. In Breavington, the majority was constituted by Mason CJ, Wilson, Deane and Gaudron JJ. Three members of the High Court (Wilson, Deane and Gaudron JJ) considered that certain choice of law rules were mandated by the Constitution. These views were rejected by a majority in McKain, however, and need not be further adverted to.

8. Mason CJ approached the matter differently. He considered (at 77) that the Phillips v Eyre rules "have little to offer and present needless complications", preferring a formulation whereby the law of the place of the tort is given primacy (see at 70-77). He did not exclude, but did not accept, the possibility that that rule was subject to an exception involving the application of the law which has the closest connection with the parties and the occurrence (at 77-79).

9. But the tenor of his reasons is adverse to the application of a flexible exception in the case of torts occurring within Australia, whatever might be the appropriate approach to torts involving international elements.

10. The remaining three judges all adopted a version of the Phillips v Eyre rules.

11. Brennan J ( at 110-111) restated the rules in a manner which, subject to a minor qualification, was later adopted by the majority in McKain. His Honour also considered the application of the exception to these rules, which His Honour described as "a qualification upon the common law conditions" (at 112). His Honour discussed the qualification, and ultimately rejected it, saying (at 114):
    "There is no warrant in the decisions of this Court to
    restate the common law so as to extend or to reduce the
    function of the lex fori. I perceive no reason to regard the
    common law principle, restated in the above terms, as
    inapplicable in the Australian context. Nor do I perceive
    any utility in judicial amendment of the common law
    principles in an attempt to circumvent statutory provisions
    affecting local liability in tort or affecting the kind of
    liability for extraterritorial torts which local courts may
    enforce."

12. The virtues which His Honour saw in rejecting the qualification were those of certainty, of uniform enforceability of torts throughout Australia, of discouraging forum shopping, and as well His Honour found it difficult in principle to accept "that mere judicial declaration" could create a liability where none previously existed (at 113-114).

13. Dawson J took a similar approach to Brennan J, adopting the Phillips v Eyre rules and also rejecting the flexible exception, stating (at 147-8):
    "The rule in Phillips v Eyre has never been thought by this
    Court to have a flexible application within Australia and,
    for my part, I do not think that any benefit is to be gained
    from so regarding it. The connexion of the parties with a
    State or Territory in which a wrong is committed in
    Australia could never be as remote as, for example, the
    connexion of the parties to Malta in Chaplin v Boys. This is
    so because the very fact of federation tends against the
    view that one State cannot have a significant interest in
    the operation of its laws upon acts committed within its
    borders by persons from another State or Territory. The
    second condition of the rule in Phillips v Eyre imposes a
    desirable limitation upon the opportunity for forum shopping
    and within a federation it would seem undesirable to
    disregard that limitation even if special circumstances were
    otherwise thought to exist. Despite the existence of
    separate jurisdictions giving rise to a conflict of laws,
    the federation binds together the one country and makes
    inappropriate an approach which may have some validity in
    the case of conflict between the laws of different
    countries. Moreover, within the one country a greater value
    is to be placed upon certainty than upon the supposed
    benefits accompanying flexibility."

14. The third member of the minority, Toohey J, expressly adopted the flexible exception approach, albeit in terms somewhat narrower than those employed by Lord Wilberforce in Phillips v Eyre. His Honour stated (at 163):
    "It is only in special circumstances where, after
    examination of the policy underlying the law which may be
    applied and the interests of the parties to be affected, it
    is clear that the lex loci delicti has no real connexion
    with the proceedings, that the exception can be invoked,
    enabling a plaintiff to recover damages available in the lex
    fori but not available in the lex loci delicti."

15. Therefore, the positions of the Court in Breavington can be summarised as follows. Wilson, Deane and Gaudron JJ favoured a constitutional basis for choice of law rules, which approach can no longer be maintained after the judgments of the Court in McKain, Stevens v Head (1992) 176 CLR 433 and Goryl v Greyhound Australia Pty Ltd (1994) 179 CLR 463. Mason CJ favoured a departure from the Phillips v Eyre rules, to a system whereby the primary rule was that the law of the place of the tort was the applicable law, subject to the possibility of a flexible exception. Brennan, Dawson and Toohey JJ favoured the application of the Phillips v Eyre rules, the first two rejecting the application of a flexible exception and the latter adopting such an exception.

16. I turn now to McKain. The crucial passage in the majority judgment appears in the context of a discussion of the differing views among the members of the Court in Breavington v Godleman, and is best understood in relation to those views.

17. The majority (Brennan, Dawson, Toohey and McHugh JJ) in McKain adopted the Phillips v Eyre rules in the terms formulated by Brennan J in Breavington. They also adverted to the issue of flexibility. The majority addressed the conflicting needs, and, in my opinion, clearly rejected a flexible exception, preferring the virtues of certainty of application.

18. In commenting upon the judgment of Mason CJ in Breavington, the majority said (at 38; footnotes omitted) that the judgment of His Honour:
    "... suggests that his Honour regarded the underlying
    principle ... as having some degree of flexibility,
    sufficient to accommodate a case where the parties had no
    substantial connexion with the lex loci delicti. We do not
    wish to foreclose future consideration of the question
    whether the Phillips v Eyre rule (as we state it in this
    judgment) is suitable for application to actions arising
    from torts outside Australia but, mindful of the freedom of
    intercourse throughout this country and the general
    similarity of laws in force in the various parts of
    Australia (to which the Chief Justice referred in
    Breavington v Godleman) the overwhelming desideratum in a
    rule for intranational torts is certainty of application or,
    more accurately, as much certainty as the subject matter
    admits."

19. That is, the approach of Mason CJ, to adopt a primary "law of the place" rule with a flexible exception, is rejected, at least in relation to intranational torts; and the virtue given an "overwhelming" priority is that of certainty of application. Instead, the majority required the application of the Phillips v Eyre rules.

20. The majority then considered the view of Toohey J in Breavington, noting that in that case His Honour had adopted the Phillips v Eyre formulation, subject to the flexible exception introduced by Lord Wilberforce in Chaplin v Boys.

21. Tha majority (which included Toohey J) stated (at 38-9; omitting footnotes):
    "In Breavington v Godleman, Toohey J was prepared to accept
    the general rule in Phillips v Eyre but subject to the
    flexible exception enunciated by Lord Wilberforce in Chaplin
    v Boys. ... However, the flexible exception would apply only
    in special circumstances where 'the lex loci delicti has no
    real connection with the proceedings'. As such circumstances
    would be out of the ordinary in cases of intranational
    torts, and it is now preferable to state the common law
    rules for application by Australian torts in terms to which
    a majority of this Court assent, we think it right to adopt
    rules expressed in more categorical terms."

22. The majority then go on to state the Phillips v Eyre rules as reformulated by Brennan J in Breavington.

23. Therefore, in my opinion, the majority must be taken to have rejected the flexible exception, which Toohey J had advocated in Breavington, in the interests of certainty of application. When one bears in mind the firm rejection of the exception or qualification by Brennan J and Dawson J in Breavington, it would be surprising if they had, without further discussion, departed from their previous views. One commentator described the majority opinion as "an obvious compromise statement" which "made it clear that there was no room for any exception in the case of Australian torts" (Nygh, Conflict of Laws in Australia (6th ed) at 349). Or, as Hunt CJ at CL said, in Jones v TCN Channel Nine Pty Ltd (1992) 26 NSWLR 732 in rejecting an argument that McKain left open the possibility of the application of the flexible exception (omitting references):
    "As I understand the majority judgment, it was the
    unlikelihood of any 'flexible exception' being required in
    relation to torts committed within Australia that led Toohey
    J to withdraw his recognition of that flexibility in order
    to produce a majority decision in McKain's case ..." (at
    736)

24. Therefore I consider that the flexible exception does not form part of the common law of Australia.

25. This might be seen as being rather unfortunate for the plaintiff. In relation to the first quotation from the majority judgment in McKain, above, it might be pointed out that the area of damages claims for personal injury arising out of road traffic accidents is one in which there is no longer general similarity of laws throughout Australia, which is highlighted by cases such as this where there is interaction between a statutory compensation scheme and a largely common law system.

26. In relation to the second quotation, it might have been argued (as to which I need express no opinion) that this was one of the "out of the ordinary" cases where there was no real connection between the proceedings and the place of the wrong, and hence is one that was sacrificed on the altar of certainty by the majority decision in McKain. On the other hand it might be said that in a federation such as ours accidents such as the present one, involving parties with no connection with the State in which the accident happened, are by no means out of the ordinary.

27. I do not wish to be taken as saying that the flexible exception or qualification should form part of the law of Australia. I express no concluded view on the matter, it not being my function to do so in light of the decision in McKain.

28. I do no more than note that if I did not consider the matter concluded by the decision in McKain, I would regard the question of the correct approach to take as a difficult one. Quite apart from the points just touched upon, I do not consider it as at all obvious that the Parliament of Victoria, or the law of Victoria, has no interest in the law applicable to this accident, or in the legal outcome of damages claims arising from it. This is a complex issue. The starting point in our system must be, in my opinion, the primacy of the role of the legislature of the State in which relevant events occur, and in our federal system one must approach with caution a principle which grants to a Court the power to decide that the law of the State in which events occur has no significant interest in or connection with events occurring there; cf Port MacDonnell Professional Fishermen's Association Inc v South Australia
(1989) 168 CLR 340 at 369-374. These points are valid even though it is the law of the forum which is applied to resolve the action: Gardner v Wallace
(1995) 132 ALR 323 at 325 Dawson J. It is worth reminding oneself that this case has been conducted on the basis that, as a matter of construction, the Transport Accident Act 1986 (Vic), applies to the events in question. If it did not, the issues of concern would not arise. The flexible exception would empower the Court to decide, nevertheless, that the law of the forum should not give effect to it for the purposes of the plaintiff's claim for damages.

29. These are matters on which arguments may be made on both sides, and the merits have been debated vigorously outside the courts, for instance in the Australian Law Reform Commission (see ALRC Report No.58, Choice of Law). However, whatever these merits, it is my opinion that the applicable rule is that which has been categorically stated by the High Court: Goryl v Greyhound Australia Pty Ltd (1994) 179 CLR 463 at 471 Mason CJ, 480 Deane and Gaudron JJ.

30. Therefore, I would adhere to the answers to the Case Stated which I have already given.

JUDGE2 BOLLEN J I agree with the learned Chief Justice that the "flexible exception" as enunciated by Lord Wilberforce in Chaplin v Boys (1971) AC 356, is not part of the common law of Australia. I agree with the reasoning of the Chief Justice. I adhere to my agreement with the answers returned by the Chief Justice to the case stated.

JUDGE3 DEBELLE J On 14 December 1995 the Court answered the questions in the case stated. The Court was not unanimous in its view. I held that the rule in Phillips v Eyre (1870) LR 6 QB 1 as reformulated by the High Court in McKain v R W Miller and Co (SA) Pty Ltd (1991) 174 CLR 1 is subject to the so-called flexibility exception which permits a plaintiff to proceed in the forum chosen by him in respect of a tort committed in another jurisdiction even though both limbs of the rule in Phillips v Eyre as restated in McKain have not been satisfied. The Chief Justice and Bollen J held that, as no party had argued the application of the flexibility exception, it was not appropriate to apply it. Since it was possible to determine whether the flexibility exception applied without any further enquiry as to fact, the Court permitted the parties the opportunity of making written submissions on the question. Written submissions have been filed by each party.

2. The plaintiff contends that the flexibility exception applies. This is opposed by both the defendant and the Attorney-General who was granted leave to intervene. They both contend that the modern expression of the test in Phillips v Eyre as formulated in McKain leaves no room for the operation of the flexibility exception. They further contend that, even if the flexibility exception does apply, it is not appropriate to apply it in this case. For the reasons which follow I think that the rule formulated in McKain permits the flexibility exception and this action provides a compelling instance of a case falling within the exception.

3. I incorporate as part of these reasons the reasons I have already given on the case stated. In those reasons I have set out the flexibility exception as it was formulated by Lord Wilberforce in Chaplin v Boys (1971) AC 356 and have noted what Toohey J said in Breavington v Godleman (1988) 169 CLR 41 as to the circumstances when the exception would apply. His Honour said at 163:
    "It is only in special circumstances where, after
    examination of the policy underlying the law which may be
    applied and the interests of the parties to be affected, it
    is clear that the lex loci delicti has no real connexion
    with the proceedings, that the exception can be invoked,
    enabling a plaintiff to recover damages available in the lex
    fori but not available in the lex loci delicti. Such a
    requirement should do much to alleviate any fears that
    unacceptable uncertainty will be introduced into this area
    of the law."

4. I added that, on my understanding of them, the reasons of the majority in McKain permitted the flexibility exception to be applied in the special circumstances identified by Toohey J. At the risk of repetition, I supplement my reasons for that conclusion and for concluding that this action provides a compelling instance of an action which properly falls within the exception.

5. It is to be noted that the reformulation in McKain was not expressed in absolute terms. Having stated the test, the majority immediately recognised that it required qualification in the terms expressed in the judgment: McKain at 39.

6. The majority referred (at 38) to what it called "the overwhelming desideratum in a rule for intranational torts (of) certainty of application or, more accurately, as much certainty as the subject matter admits". The subject matter cannot admit of absolute certainty. The majority identified two factors leading to the desire for certainty, namely, the freedom of intercourse throughout this country and the general similarity of the law enforced in the various parts of Australia. It might be noted that there is at present a degree of diversity between the laws operating in the several jurisdictions in Australia as to compensation payable to those injured in motor vehicle accidents. Laws which hitherto were of relatively similar operation in most States and Territories have been replaced by laws which differ from jurisdiction to jurisdiction and which, in some cases, are markedly different. In this case the law of Victoria and the law of South Australia provide different levels of compensation, the law in Victoria being more restrictive than the law of South Australia.

7. After referring to the desirability of certainty, the majority then proceeded to note the views of Toohey J in Breavington v Godleman (supra) at 77-80. In a passage immediately preceding the restatement of the rule, the majority said:
    "In Breavington v. Godleman (1988), 169 CLR at p 162,
    Toohey J was prepared to accept the general rule in
    Phillips v. Eyre but subject to the flexible exception
    enunciated by Lord Wilberforce in Chaplin v. Boys. His
    Honour was attracted to that view as being 'less parochial
    and (capable of being) applied to give appropriate
    significance to the lex loci delicti and the lex fori in all
    the circumstances'. However, the flexible exception would
    apply only in special circumstances where 'the lex loci
    delicti has no real connexion with the proceedings'
    Breavington v. Godleman (supra) at 163. As such
    circumstances would be out of the ordinary in cases of
    intranational torts, and as it is now preferable to state
    the common law rules for application by Australian courts in
    cases of Australian torts in terms to which a majority of
    this Court assent, we think it right to adopt rules
    expressed in more categorical terms."

8. The majority then set out the reformulated rule. I do not understand the passage just quoted to exclude the operation of the flexibility exception. The latter part of the passage just quoted acknowledges that there will be circumstances which will justify exceptions. However, it will only be in extraordinary circumstances that an exception will be permitted. As I understand this passage, it was not intended to overrule what Toohey J had said but, instead, to emphasise that it will be appropriate to allow the exception only in special circumstances where the lex loci delicti has no real connexion with the proceedings.

9. This is a case which can fairly be described as out of the ordinary and where the lex loci delicti has little, if any, real connexion with the proceedings. The plaintiff suffered his injuries when the car in which he was a passenger overturned. No other vehicle was involved in the accident. The motor car is the subject of a policy of compulsory third party insurance issued by the State Government Insurance Corporation of South Australia. Both the plaintiff and the defendant reside in South Australia. The accident occurred in the course of a short trip from Port MacDonnell in South Australia to Portland in Victoria. The occasion for the trip was a surfing excursion. It was the kind of temporary short visit made to another State by many who reside near a State boundary. The only connexion with Victoria is the fortuitous event that the accident happened in Victoria. This recitation of the circumstances of this action not only show that it is out of the ordinary but demonstrate also that the State of Victoria has little, if any, interest in the outcome of this action and that the interests of South Australia are clearly associated with it. These are all factors which point to the conclusion that the natural forum is a court in South Australia. There are no parties to the action other than the defendant driver and the plaintiff passenger. The plaintiff and defendant both reside in the State in which the action is brought and the car is insured in the State in which both parties reside. It is not necessary to apply the lex loci delicti for the purpose of resolving any of the issues in the action. It is rare indeed that an action is brought in the Court of one jurisdiction for injuries received in another jurisdiction where all of these factors are present. However viewed, these are special and extraordinary circumstances which attract the operation of the exception. To allow an exception of this kind will not result in any unacceptable uncertainty being introduced to the rule as it was stated by the majority in McKain. It is such a rare combination of events that it can be recognised as a legitimate exception. An exception of this kind obviously promotes the interests of justice and does little to impair the interests of certainty.

10. The other advantage identified for the rule as reformulated in McKain was the avoidance of forum shopping: Breavington v Godleman (supra) per Brennan J at 113 and per Dawson J at 147. Where, as here, the action is brought in a court of the State in which the plaintiff resides and that court is the forum which has the real connexion with the proceedings, there is little scope for forum shopping. For the reasons already stated, the courts of South Australia are the natural forum for this case.

11. While certainty is desirable, it must as Brennan J acknowledged in Breavington v Godleman at 113-114, be weighed against the desirability to do justice in particular cases. A South Australian plaintiff who, as a passenger in a motor vehicle, is injured in a motor accident involving no other vehicle than the vehicle in which he was a passenger, who knows that motor vehicle in which he is a passenger is registered and insured pursuant to the law of South Australia and is being driven by a fellow South Australian on a short trip into Victoria has a legitimate expectation that his claim for damages for the injuries he received would be resolved according to the law of South Australia. He would be surprised to learn that a claim for damages he might have had available to him in a South Australian court if the accident had occurred in like circumstances in South Australia would not be available to him because the accident occurred in Victoria. For all of these reasons, there are the special circumstances in this case of the kind referred to by Toohey J and adopted by the majority in McKain.

12. It is appropriate to provide an exception at least where parties involved in the wrongful act are residents of one State which is the State of the forum and are travelling in one motor vehicle and that motor vehicle is registered and insured in the State of the forum and no other motor vehicle is involved in the wrongful act. The manner in which the exception is couched expressly limits any potential for forum shopping and promotes the interests of certainty.

13. For these reasons, I would answer the case stated as follows:
    1. Yes.
    2. Not necessary to answer. The action may, nevertheless,
    be maintained in South Australia.
    3. Not necessary to answer.
    4. No.
    5. No.
    6. No.
    7. Not necessary to answer.
    8. No.
    9. Yes.