Innes v Commonwealth of Australia
[2017] ACTSC 44
•2 March 2017
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Innes v Commonwealth of Australia |
Citation: | [2017] ACTSC 44 |
Hearing Date: | 27 February 2017 |
DecisionDate: | 2 March 2017 |
Before: | Elkaim J |
Decision: | 1. The plaintiff’s application lodged on 15 September 2016 is dismissed. 2. The plaintiff is to pay the defendant’s costs of the application. |
Catchwords: | PRACTICE AND PROCEDURE – application to amend pleadings – limitation of actions – futility – actual and presumptive prejudice – whether the institution of proceedings constituted an abuse of process. |
Legislation Cited: | Court Procedures Rules 2006 (ACT) rr 501, 502 and 503 Limitation Act 1985 (ACT) s 11 |
Cases Cited: | AON Risk Services Australia Ltd v Australian National University [2009] HCA 27; 239 CLR 175 Bennett v Minister of Community Welfare [1992] HCA 27; 176 CLR 408 Gorton v The Commonwealth of Australia [1992] 2 Qd R 603 Hawkins v Clayton [1988] HCA 15; 164 CLR 539 Innes v Commonwealth [2015] ACTCA 33 Timbercorp Finance Pty Ltd (in liquidation) v Collins; Timbercorp Finance Pty Ltd (in liquidation) v Tomes [2016] HCA 44; 339 ALR 11 |
Parties: | Barry Charles Innes (Plaintiff) Commonwealth of Australia (Defendant) |
Representation: | Counsel Mr J Gordon (Plaintiff) Mr T Howe QC, Mr A Berger (Defendant) |
| Solicitors Snedden Hall & Gallop (Plaintiff) Australian Government Solicitor (Defendant) | |
File Number: | SC 304 of 2011 |
ELKAIM J:
This is an application to amend a Statement of Claim. The application is made under rules 501, 502 and 503 of the Court Procedure Rules 2006 (ACT).
It is necessary to begin with some history. In 1963 the plaintiff commenced employment with the defendant. Although he worked on a full-time basis he was classified as a temporary employee. On his case, he was informed when he commenced employment that he was not able, as a temporary employee, to join the Commonwealth Superannuation Scheme. It seems that he was one of a number of employees who received this advice. The advice was wrong.
In 1993 the plaintiff accepted a voluntary redundancy. Not being a member of the superannuation scheme, he was denied significant benefits.
In May 2011 the plaintiff commenced proceedings against his former employer alleging that the incorrect advice he had received when commencing employment had caused him to suffer a loss. In September 2014 the plaintiff sought a determination from the court about the commencement of the limitation period in respect of his claim.
Section 11(1) of the Limitation Act 1985 (ACT) provides that “an action on any cause of action is not maintainable if brought after the end of a limitation period of 6 years running from the date when the cause of action first accrues to the plaintiff.”
The limitation issue was referred to the Court of Appeal, which delivered its decision on 17 July 2015 (Innes v Commonwealth [2015] ACTCA 33). The Court found in favour of the defendant’s position, namely that the cause of action accrued on 5 April 1993, the date when the plaintiff’s employment came to an end. The plaintiff had submitted that the cause of action did not accrue until 5 June 2007, being the plaintiff’s 60th birthday.
The effect of the Court of Appeal’s decision was to render the plaintiff’s claim out of time. I do note, however, that the plaintiff still contends that there are aspects of the claim that are capable of surviving.
On 13 November 2015 the High Court refused the plaintiff’s application for special leave to appeal on the limitation issue.
In January 2016 the plaintiff informed the defendant that he intended to amend his Statement of Claim. After a significant and unexplained delay the defendant informed the plaintiff that the proposed amendments would be opposed.
On 15 September 2016 the plaintiff filed the present application for leave to amend the Statement of Claim.
The plaintiff relied on the affidavit of Mr Faulks dated 15 September 2016 and the affidavit of Ms Shoemark dated 21 February 2017. The defendant relied on an affidavit of Mr Kelly dated 23 November 2016 and also on a letter from the defendant’s solicitor dated 15 September 2011 (Exhibit 1).
Subject to some minor amendments, the proposed Statement of Claim is in the form annexed to the application.
The new pleading is wide-ranging in its assertions, covering causes of action in tort, equity and breaches of the Trade Practices Act 1974 (now the Competition and Consumer Act 2010 (Cth)). In essence, however, the new case sought to be pleaded by the plaintiff is as follows:
(a)The plaintiff was employed by the defendant. The right to superannuation was part of the reward of that employment.
(b)The defendant was a tortfeasor which, through a Mr Rees, breached its duty owed to the plaintiff in 1963 through the provision of negligent advice.
(c)When the plaintiff was made redundant, or when the offer of redundancy was made to him, the defendant, as an adviser and knowing the plaintiff was a vulnerable person, should have informed him of its earlier negligence (in 1963) and warned him that there was a 6 year limitation period commencing in April 1993 during which time he should institute, if he so desired, any proceedings for damages.
The defendant opposed the application for a number of reasons, which I will summarise in this way:
(a)The causes of action now proposed by the plaintiff are, as a matter of law, not open to him.
(b)The new pleading contains pleading deficiencies which doom the new allegations to failure.
(c)If, contrary to the above submissions, there are sound and available causes of action, the limitation period expired in 2005.
(d)In any event leave should not be granted because the institution of the amended proceedings amounts to an abuse of process. The defendant said this was not a case of an Anshun estoppel (referring to Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45), although it did refer me, in support of its submissions, to Timbercorp Finance Pty Ltd (in liquidation) v Collins; Timbercorp Finance Pty Ltd (in liquidation) v Tomes [2016] HCA 44.
(e)There had been no explanation for the delay. The defendant relied upon the principles stated in AON Risk Services Australia Ltd v Australian National University [2009] HCA 27; 239 CLR 175.
(f)The defendant would be prejudiced by the amendments. This prejudice was both actual and presumptive.
The plaintiff correctly submitted that the gateway to success in his application did not involve a finding that his fresh causes of action would be successful. It was enough that they were not untenable.
The plaintiff submitted that the central question was whether the defendant was “obliged to advise, warn or inform the plaintiff, that acceptance of the redundancy would cause him to suffer loss and damage”. The plaintiff further submitted that any time limitation attached to this duty did not commence until 2014 when the defendant filed its Defence.
I note here that although the application purports to rely on r 503, it is the plaintiff’s case that the limitation period has not expired. Therefore, the rule is not applicable.
The plaintiff primarily relied upon the High Court decision in Bennett v Minister of Community Welfare (1992) 176 CLR 408 to establish the validity of his new allegations.
The defendant conceded that the type of cause of action envisaged in Bennett could potentially arise but said the case illustrated that if it did arise it would have become statute barred in 2005. The position of both parties is illustrated in this passage from the decision:
It follows then that, subject to consideration of the legal significance of the obtaining of the advice in 1976, the appellant’s cause of action would not have become statute-barred but for the Director’s breach of duty. Had the Director performed his duty and procured the advice, that advice would have changed the course of events, namely, the inaction on the part of the appellant which led to the loss, and prompted instead a decision by him which would have both preserved and enforced his cause of action, thereby deflecting the loss which occurred. In this respect, the Director’s breach of duty, his omission to do what he should have done, was a causal factor which continued to operate until the limitation period expired, unless the obtaining by the appellant of legal advice in 1976 had the effect of superseding the continuing operation of the Director’s omission to procure independent legal advice.
The plaintiff submitted that the duty described in the above passage was analogous to the duty on the defendant when his employment came to an end. The defendant said the same passage illustrated that if there was such a duty the limitation period would have commenced in 1999 and expired in 2005.
Perhaps the passage in Bennett most supportive of the plaintiff’s case is at page 419. Gaudron J stated:
The case against the Minister was based on an omission or failure to act, rather than on the doing of some positive act. There are occasions when a failure to do something may have a direct physical consequence such that the failure and the consequence may together be viewed as a positive act. Thus, a failure to keep a proper look out may lead directly to one motor vehicle being driven into another. In situations of that kind the physical act of driving one car into another, rather than the failure to keep a look out, will ordinarily be treated as the act by reference to which questions of causation are to be answered. And there are occasions when an omission or failure to act, although not attended by any physical act, is properly treated as a positive act. Thus, where silence gives rise to an inference that a particular state of affairs does or does not exist, a failure to inform may be treated as a misstatement of fact. Again, in cases of that kind questions of causation may be approached as though the positive act had, in fact, occurred. But this case, so far as it involves the Director and, vicariously, the Minister, does not fall into either of those categories: it does not involve any positive act and it does not involve an omission which can be treated as a positive act. It must be approached on the basis of omission and nothing else.
Leaving aside cases involving some positive act and those in which an omission can be treated as a positive act, a case based on omission or a failure to act will, in certain respects, fall for analysis in a way that differs from that appropriate for a case based on a positive act. Thus, in the case of a positive act, questions of causation are answered by reference to what, in fact, happened. In the case of an omission, they are answered by reference to what would or would not have happened had the act occurred.
The plaintiff also relied on this passage from the judgment of McHugh J at page 430:
However, the terms of the duty which the Director owed to the appellant demonstrate that it was a duty which continued until 22 May 1980. It was a general duty to take such steps as were necessary to obtain independent legal advice for the appellant so as to avoid the loss which would arise if the appellant did not pursue any rights which he had in respect of his injury.
While the above quoted passage provides support for the plaintiff’s assertion of the existence of the cause of action it may also be seen as supporting the defendant’s submission on the limitation period.
Another case heavily relied upon by the plaintiff was Hawkins v Clayton (1988) 164 CLR 539. I think the two passages that most support the plaintiff’s contentions are to be found at pages 553 and 554 in the judgment of Brennan J:
[553] In my opinion, a duty of disclosure arises from custody of the will after the death of the testator, the nature of the will and the purpose for which custody is accepted as well as from the foreseeable consequences of non-disclosure.
Analogous duties are not numerous, for the occasions are few when a person with an interest in property needs to be told of it in order to be able to enjoy it.
[554] It may be that there is a broad principle, founded on general standards of honesty and fair dealing, that some duty of disclosure is imposed on one who holds the property of another or an instrument of title to the property of another as a bare custodian or trustee when the other does not know of his entitlement to the property and the holder has reason to believe that the other does not know of his entitlement...
... The loss is a loss of the exercise or enjoyment of the rights of ownership by an executor who does not know of his entitlement. As such a loss increases with the passing of time, the duty to disclose is a duty to disclose promptly.
The facts in the present case are obviously very different to those in Hawkins and Bennett. However the plaintiff pointed to the view of the High Court that the factual circumstances in which the relevant duty may arise are not closed. As already stated, the defendant did not argue against this proposition.
The plaintiff gave Gorton v The Commonwealth of Australia [1992] 2 Qd R 603 as an example of a factual scenario in which the relevant duty had been established.
I think the existence of the duties alleged by the plaintiff in the proposed Amended Statement of Claim will be difficult to substantiate but will nevertheless be arguable. I cannot therefore say that the allegations are untenable and, in and of themselves, should lead to the rejection of the application.
I do, however, consider the limitation issue to be fatal to the plaintiff’s application.
The plaintiff submitted that the causes of action on which he now wishes to sue did not accrue until October 2014 when the defendant formally filed a Defence raising the limitation issue. The defendant’s position is that, assuming the existence of a cause of action, the limitation period would have commenced when the plaintiff was made redundant and expired 6 years later, in 2005. Accordingly, the proposed amendments are well out of time and “not maintainable”.
Thus the issue for me to decide, in order to determine the success or otherwise of the defendant’s submission that the application should be rejected, was whether or not the plaintiff’s assertions about the accrual of the causes of action were untenable.
The plaintiff said:
So it is no answer (and most certainly not at this interlocutory stage) for the Defendant to say that in 1993 it hadn’t turned its mind to the consequences of the redundancy for the plaintiff vis-à-vis the Limitation Act. It did so in its own interests in 2014... if there is a duty as contended by the Plaintiff it can only be productive of loss upon the Defendant pleading the statute as a bar (in 2014). (Plaintiff’s written submissions).
The plaintiff also submitted that the accrual of these courses of action may not have legitimately occurred for some time. So, for example, if he had decided to wait another 10 years before making the application to amend, or even commencing fresh proceedings, his case would not be statute barred until 6 years after the defendant filed a Defence raising the bar. This cannot be correct.
Following the quoted passage from the decision of McHugh J in Bennett (paragraph [21], above), the cause of action would have accrued, at the latest, on 5 April 1999, being 6 years after the plaintiff accepted the voluntary redundancy and when the defendant had the duty to warn the plaintiff of the commencement of the limitation period arising from the negligent advice given by Mr Rees in 1963.
Similarly, in Gorton, also otherwise relied upon by the plaintiff, Demack J held that, quoting, like the plaintiff, from the head note:
[F]or the purposes of s 10(1) (a) of the Limitations of Actions Act, a cause of action did not accrue until the expiration of the period during which the wrongful act itself effectively precluded the institution of proceedings.
In this case, the expiration of the period during which the wrongful act precluded proceedings was April 1999. Six years from this date came to April 2005 when the limitation period on the cause of action that had accrued in 1999 expired.
Demack J primarily based his reasoning on the decision of the High Court in Hawkins. The plaintiff submitted that his argument was also derived from Hawkins. For example, he referred to this passage from the judgment of Brennan J at page 562:
For reasons earlier stated damage is not temporally the last element of the cause of action to occur. Unlike the ordinary case, the last element to occur in a case of the present case is the nominated executor’s assumption of the office of executor. Until that occurs, the cause of action is not complete. For the purposes of s. 14 (1) (b) of the Limitation Act, “time runs from the accruer of the cause of action, but a cause of action does not accrue unless there be some one who can institute the action”.... Until the nominated executor assumes the office of executor, the cause of action does not accrue and time does not begin to run. If a cause of action is itself an asset which devolves on the executor or arises from an infringement of the proprietary or possessory rights of an executor in respect of the estate, the executor’s ignorance of his title would not prevent the time from running... But where no action can be brought by the nominated executor until he assumes office, time runs only from that event.
There is a relevant distinction, however, between this plaintiff’s situation and that of the nominated executor in Hawkins who could not sue until he assumed the office of executor. The plaintiff here was able to sue from April 1999. It is also to be recalled that throughout this period the plaintiff had retained solicitors (the affidavit of Mr Kelly contains a letter dated 9 September 1998 from Snedden Hall & Gallop which annexes a list of clients, including a Mr B C Innes).
In my view the plaintiff’s submissions on the accrual of the causes of action raised in the proposed Amended Statement of Claim are incorrect. The plaintiff’s claims are no longer maintainable. They ceased to be maintainable in April 2005. It is clear that the defendant will raise the statutory bar against the plaintiff. The Amended Statement of Claim is therefore bound to fail. To allow the application would be to permit the plaintiff to embark on a futile exercise. The application must therefore be dismissed.
I do not regard it as necessary to deal in any detail with the defendant’s other reasons for the application to be rejected. I will, however, make the following comments:
(a)Abuse of process: I initially thought that there was merit in the defendant’s position. On one reading of the transcript of the proceedings before Refshauge J there appears to be a plain expression on behalf of the plaintiff that the resolution of the limitation issue will determine the future of the proceedings. On further reflection, however, I note that the proceedings that were then at stake do not include the allegations currently being made and secondly the comments of the plaintiff’s lawyer are restricted to the limitation period concerning the causes of action then pleaded.
(b)Prejudice: I would not have found that the defendant had established actual prejudice. The basis for the assertion is to be found in Mr Kelly’s affidavit commencing at paragraph [40]. In paragraph [43] Mr Kelly states that “AGS holds copies of Mr Rees’ Commonwealth personnel and Commonwealth superannuation files.” He then observes that, following a review of these documents, he does not consider that their contents would assist either party. Mr Kelly also relates that Mr Rees died in 2008 and he notes that “the plaintiff seeks to allege that, among other things, the incorrect advice that Mr Rees provided him was negligently not corrected.” As a result of a call for production by the plaintiff for certain documents, it became evident that there were other documents relating to Mr Rees that were not included in his description in paragraph [43]. I was informed that legal professional privilege was claimed in respect of these documents. I have no reason to think the privilege claim is not legitimately made. I also do not suggest that Mr Kelly improperly omitted to mention the documents in paragraph [43]. However the inadequacy of the paragraph leaves me unconvinced of any claim for prejudice. I do recognise the existence of presumptive prejudice but not to an extent that, without more, would have led me to reject the plaintiff’s application.
(c)Delay: I found the defendant’s submission on delay to be unconvincing. The criticised period of delay was taken back to 1999. I think this is inappropriate. It was not until the decision of the ACT Court of Appeal in July 2015 and the rejection of the leave to appeal application in the High Court in November 2015 that attention was necessarily focused on the current application. Acting diligently the plaintiff’s solicitors informed the defendant’s solicitors of the intention to amend on 22 January 2016. What is unexplained is the defendant’s delay in responding until 3 August 2016.
Notwithstanding the result of the application, there is one matter that I would like to add. Both parties provided helpful written submissions. However there is an element in the defendant’s written submissions which I think deserves comment.
The written submissions are replete with phrases such as “not a tittle of evidence” (paragraph [9]), “sophistry of the highest order” (paragraph [20]), “hopelessly misconceived and confounding” (paragraph [21]), “not a whit of evidence” (paragraph [25a]) and the allegation is “absurd” (paragraph [25b]).
“Sophistry” suggests “the use of clever but false arguments, especially with the intention of deceiving” (Online Oxford English Dictionary). Here the sophistry is magnified to the “highest order”. I recognise that parties are entitled to put their cases forward ‘stridently’ however language of the type I have identified neither advances a party’s case nor provides any assistance to the Court.
The orders of the Court are:
(i)The plaintiff’s application lodged on 15 September 2016 is dismissed.
| I certify that the preceding forty-three [43] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Elkaim. Associate: Date: 2 March 2017 |
(ii)The plaintiff is to pay the defendant’s costs of the application.
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