Mercantile Mutual Insurance (Australia) Ltd v Neilson
[2004] WASCA 60
•5 APRIL 2004
MERCANTILE MUTUAL INSURANCE (AUSTRALIA) LTD -v- NEILSON & ORS [2004] WASCA 60
| (2004) 28 WAR 206 | |||
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2004] WASCA 60 | |
| THE FULL COURT (WA) | |||
| Case No: | FUL:154/2002 | 21 NOVEMBER 2003 | |
| Coram: | MCLURE J JOHNSON J WALLWORK AJ | 5/04/04 | |
| 25 | Judgment Part: | 1 of 1 | |
| Result: | Appeal upheld | ||
| A | |||
| PDF Version |
| Parties: | MERCANTILE MUTUAL INSURANCE (AUSTRALIA) LTD (ACN 000 456 799) BARBARA MARY JOSEPHINE NEILSON GEORGE ARNOLD NEILSON OVERSEAS PROJECTS CORPORATION OF VICTORIA LTD 044 192 394 PTY LTD |
Catchwords: | Private international law Foreign tort Choice of law Whether lex loci delicti refers to domestic law Whether "renvoi" applies Whether lex loci delicti Australia or China Personal injuries incurred in the People's Republic of China Whether claim statute barred under Chinese domestic law Whether claimant's injuries arose out of or in the course of her employment |
Legislation: | Private International Law (Miscellaneous Provisions) Act 1995 (UK), s 9(5) Supreme Court Act 1935, s 32 |
Case References: | Allstate Life Insurance Co v Australia & New Zealand Banking Group Limited (No 6) (1996) 64 FCR 79 Danvers v Commissioner for Railways (NSW) (1969) 122 CLR 529 Dow Jones & Company Inc v Gutnick (2002) 210 CLR 575 Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 Haumschild v Continental Casualty Co 7 Wis 2d 130; 95 NW 2d 814 (1959) James Hardie & Co Pty Ltd v Putt (1998) 43 NSWLR 554 John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503 M'Elroy v M'Allister 1949 SC 110 Pfau v Trent Aluminum Co 55 NJ 2d 511; 263 A 2d 129 (1970) Regie National des Usines Renault SA v Zhang (2002) 210 CLR 491 Amin Rasheed Shipping Corp v Kuwait Insurance Co [1984] AC 50 Annetts v Australian Stations Pty Ltd (2000) 23 WAR 35 Barcelo v Electrolytic Zinc Co of Australasia Ltd (1932) 48 CLR 391 Chaplin v Boys [1971] AC 356 Distillers Co (Bio-Chemicals) Ltd v Thompson [1971] AC 458 Fluor Daniel Constructions Pty Ltd v Zurich Australian Insurance Ltd [2002] WASCA 218 ICI Australia Operations Pty Ltd v Kidde-Graviner Ltd [1999] WASCA 65 In the Will of Lambe [1972] 2 NSWLR 273 Lazard Brothers & Co v Midland Bank Ltd [1933] AC 289 Simmons v Simmons (1917) 17 SR (NSW) 419 Tolofson v Jensen; Lucas v Gagnon [1994] 3 SCR 1022 Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 Williams v Milotin (1957) 97 CLR 465 Wong v Lee (2002) 211 DLR (4th) 69 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE FULL COURT (WA) CITATION : MERCANTILE MUTUAL INSURANCE (AUSTRALIA) LTD -v- NEILSON & ORS [2004] WASCA 60 CORAM : MCLURE J
- JOHNSON J
WALLWORK AJ
- Appellant (First Third Party)
AND
BARBARA MARY JOSEPHINE NEILSON
GEORGE ARNOLD NEILSON
First Respondents (Plaintiffs)
OVERSEAS PROJECTS CORPORATION OF VICTORIA LTD
Second Respondent (Defendant)
044 192 394 PTY LTD
Third Respondent (Second Third Party)
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Catchwords:
Private international law - Foreign tort - Choice of law - Whether lex loci delicti refers to domestic law - Whether "renvoi" applies - Whether lex loci delicti Australia or China - Personal injuries incurred in the People's Republic of China - Whether claim statute barred under Chinese domestic law - Whether claimant's injuries arose out of or in the course of her employment
Legislation:
Private International Law (Miscellaneous Provisions) Act 1995 (UK), s 9(5)
Supreme Court Act 1935, s 32
Result:
Appeal upheld
Category: A
Representation:
Counsel:
Appellant (First Third Party) : Mr G Griffith QC & Mr D Wallace
First Respondents (Plaintiffs) : Mr J G Staude
Second Respondent (Defendant) : Mr G M Abbott
Third Respondent
(Second Third Party) : Mr I R Freeman
Solicitors:
Appellant (First Third Party) : Minter Ellison
First Respondents (Plaintiffs) : Talbot & Olivier
Second Respondent (Defendant) : Freehills
Third Respondent
(Second Third Party) : Phillips Fox
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Case(s) referred to in judgment(s):
Allstate Life Insurance Co v Australia & New Zealand Banking Group Limited (No 6) (1996) 64 FCR 79
Danvers v Commissioner for Railways (NSW) (1969) 122 CLR 529
Dow Jones & Company Inc v Gutnick (2002) 210 CLR 575
Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473
Haumschild v Continental Casualty Co 7 Wis 2d 130; 95 NW 2d 814 (1959)
James Hardie & Co Pty Ltd v Putt (1998) 43 NSWLR 554
John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503
M'Elroy v M'Allister 1949 SC 110
Pfau v Trent Aluminum Co 55 NJ 2d 511; 263 A 2d 129 (1970)
Regie National des Usines Renault SA v Zhang (2002) 210 CLR 491
Case(s) also cited:
Amin Rasheed Shipping Corp v Kuwait Insurance Co [1984] AC 50
Annetts v Australian Stations Pty Ltd (2000) 23 WAR 35
Barcelo v Electrolytic Zinc Co of Australasia Ltd (1932) 48 CLR 391
Chaplin v Boys [1971] AC 356
Distillers Co (Bio-Chemicals) Ltd v Thompson [1971] AC 458
Fluor Daniel Constructions Pty Ltd v Zurich Australian Insurance Ltd [2002] WASCA 218
ICI Australia Operations Pty Ltd v Kidde-Graviner Ltd [1999] WASCA 65
In the Will of Lambe [1972] 2 NSWLR 273
Lazard Brothers & Co v Midland Bank Ltd [1933] AC 289
Simmons v Simmons (1917) 17 SR (NSW) 419
Tolofson v Jensen; Lucas v Gagnon [1994] 3 SCR 1022
Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538
Williams v Milotin (1957) 97 CLR 465
Wong v Lee (2002) 211 DLR (4th) 69
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- MCLURE J:
Introduction
1 The central issue in this appeal is whether the private international law doctrine of renvoi applies to international tort claims.
2 Mrs Barbara Neilson, the first named first respondent (first named first plaintiff) was injured when she fell down a flight of stairs in a unit in which she was living with her husband, the second named first respondent, in Wuhan, a city in the province of Hubei in the People's Republic of China ("China"). At the time Mrs Neilson suffered her injuries she was employed by Overseas Projects Corporation of Victoria Limited ("OPCV"), the second respondent (defendant). OPCV is a corporation owned by the State of Victoria having its registered office and principal place of business in that State. Mrs Neilson is and was at all material times ordinarily resident in Western Australia.
3 Mrs Neilson brought proceedings in the Supreme Court of Western Australia alleging that her injuries arose out of OPCV's breach of contract and negligence. The matter is in the Court's federal jurisdiction but it is not suggested anything turns on that fact. The trial Judge, McKechnie J, dismissed Mrs Neilson's contract claim. In relation to the negligence claim, the trial Judge applied Australian choice of law rules to determine that the substantive law applicable was the lex loci delicti (the law of the place where the wrong was committed) and that the place of the wrong was China. Accordingly, the trial Judge determined that the relevant substantive law was the law of China. However, he had regard to China's choice of law rules on the basis of which he applied the lex fori (the law of the forum), being the common law of Australia, to the determination of Mrs Neilson's negligence claim. He found in her favour.
4 The appellant (first third party) was OPCV's third party liability insurer. The appellant was held liable to indemnify OPCV in connection with Mrs Neilson's claim. The appellant had contended, inter alia, that the insurance did not respond to Mrs Neilson's claim because of an exclusion clause that exempted liability for personal injury to any person "arising out of or in the course of employment of such person" by OPCV. The issues raised by the appellant in the appeal are whether:
(a) renvoi applies to international torts (if not, the trial Judge should have applied Chinese domestic law);
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- (b) the Chinese law of limitation of actions barred Mrs Neilson's claim;
(c) Mrs Neilson's injuries arose out of or in the course of her employment with OPCV.
5 In its grounds of appeal the appellant also challenges the correctness of the trial Judge's assessment of damages under Chinese law for loss of income and an award of interest under s 32 of the Supreme Court Act 1935 on such damages. However, these matters were not pressed in the appeal.
6 The first respondent filed a notice of contention claiming that:
(a) the place of the wrong was Australia because OPCV's duty arose, and its breach occurred, in Melbourne; alternatively
(b) as the place of the wrong could be ascribed to either Australia or China, it was open and proper to apply Australian law.
7 The third respondent (second third party) was OPCV's insurance broker. In the event that its insurance with the appellant did not respond to Mrs Neilson's claim, OPCV claimed against the third respondent. The second third party claim was adjourned at trial as a result of late amendments. OPCV filed a notice of contention seeking to reactivate its claim against the third respondent in the event the appeal is relevantly allowed in whole or in part. As the pursuit of this claim is contingent upon the outcome of the appeal, it has been deferred pending the outcome of the appeal.
Background and Findings
8 On 16 May 1989 the Government of Australia and the Government of China signed a Memorandum of Understanding relating to a joint China-Australia Iron and Steel Industry Training Centre Project. The Chinese Government had identified a need for training in managerial and technical skills among middle and upper level management in the iron and steel industry in China. Pursuant to the Memorandum of Understanding a joint China-Australia Iron and Steel Industry Training Centre ("Training Centre") was established on the premises of the Wuhan Iron and Steel University in Hubei. It was intended that Australia would provide seven long-term experts and up to 40 short-term experts as course leaders. As part of China's contribution a number of buildings would be supplied including:
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- "five apartments for the Australian long-term staff members, each including a study, living room, dining room and kitchen."
9 China was to be responsible for the building, maintenance and repair of the apartments. OPCV entered into a contract with the Commonwealth Government to supply the training services outlined in the Memorandum of Understanding. Dr Fargher was the Australian Training Centre Director and Professor Shen Shi De was the Chinese Training Centre Director.
10 Mr Neilson was employed by OPCV for a term of two years as a consultant to prepare a curriculum on organisation behaviour to be taught at the Training Centre. His duties required him to live and work in China in accommodation supplied to him by OPCV but built and maintained by China. His contract expressly provided that Mrs Neilson could accompany him to Wuhan. She intended to do so. Allowances were paid for consultants with families, including repatriation expenses and an extra living allowance.
11 At some stage before Mrs Neilson left for China, she was offered casual employment by OPCV as the personal assistant to Dr Fargher for 15 hours per week. There was no agreement in writing between Mrs Neilson and OPCV.
12 The Australian contingent arrived in Wuhan in early September 1990. They were accommodated in a group of units built around a central quadrangle. Mr and Mrs Neilson were allocated a double storey unit. Access to the upper storey was by a flight of stairs ending in an open area. The main bedroom, in which Mr and Mrs Neilson slept, led off the open area. Directly to the right of the main bedroom was a short passage with doors to a bathroom and a second bedroom. The light in the open area was controlled by a light switch on a wall between the stairwell and the bathroom door. On the first floor landing to the left of the stairwell there was no balustrade.
13 Mrs Neilson sustained her injuries the subject of the proceedings at about 4.00 am on 6 October 1991. She awoke with a thirst. As the tap water in the bathroom was not potable she decided to go downstairs for a drink of water. She did not turn on the bedroom light because she did not want to wake her husband. She intended to reach the light switch between the stairwell and bathroom to turn on the light to illuminate the stairs. In the course of doing so, she stepped over the edge of the stairs and fell. She suffered injuries which included a laceration to her head and a painful
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- immobilising injury to her back. Mrs Neilson was admitted to Tongji Medical University Hospital where she remained from 6 to 24 October 1991.
14 Mr and Mrs Neilson, along with others, had complained about the condition of the stairwell and the lack of a balustrade. The complaints were made to Dr Fargher and the Australian Project Manager, Mr Peter Burgess (both of whom were part of the Australian contingent in China). The trial Judge found that OPCV, through its servants Dr Fargher and Mr Burgess, knew of the dangerous condition of the stairwell but took no positive steps to obviate the danger. He further found that the construction and installation of a balustrade for each unit was a simple matter.
15 The trial Judge determined that the contract between Mr Neilson and OPCV was made in Victoria, that it contained an express term that OPCV would maintain the accommodation in China in a reasonably fit condition for use as a residence and that OPCV had breached that term because of the danger posed by the lack of a balustrade at the top of the stairs. The trial Judge also found that Mrs Neilson was unable to take the benefit of Mr Neilson's contract with OPCV and that there was no express or implied term in Mrs Neilson's contract with OPCV relating to the provision, or standard, of accommodation in China. There is no appeal from these findings.
16 The trial Judge then considered Mrs Neilson's tortious claim. As previously noted, he determined that the lex loci delicti should apply and that the place of the wrong was China.
Chinese Law and Legal System
17 Foreign law is a question of fact, not of law. It must be proved by a person who is expert in that law. OPCV called Mr Hongliang Liu, the holder of a Bachelor of Laws from Shanghai University, a Master of Laws from Macquarie University and a partner in a Shanghai law firm. The trial Judge found him to be a relevantly qualified expert and an honest and impartial witness. Mr Liu was the only expert called to give evidence concerning Chinese law.
18 Mr Lui explained that Chinese law does not know of a doctrine of precedent and that it finds its source within what we would regard as statutes or legislation. The trial Judge found that the relevant legislation applicable to Mrs Neilson's claim was the General Principles of Civil Law of the People's Republic of China adopted at the Fourth Conference of the
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- Third National People's Congress on 12 April 1986 with effect from 1 January 1997 ("General Principles"). The Intermediate People's Court in Wuhan had jurisdiction over claims of the type made by Mrs Neilson.
19 The trial Judge concluded that Article 106 of the General Principles was the source of OPCV's liability to Mrs Neilson. Article 106 provides:
"A citizen or legal person who violates a contract or fails to fulfil other obligations shall assume civil liability.
A citizen or legal person who through his own fault infringes upon State or collective property or upon another person, or who harms another person, shall assume civil liability …"
20 Having determined that the lex loci delicti should apply and that the place of the wrong was China, the trial Judge found that OPCV was liable to Mrs Neilson under Article 106 of the General Principles, that the claim was not statute barred and he made an assessment of the measure of damages payable by OPCV under Chinese law. After deciding these matters, the trial Judge then turned his attention to the Chinese conflict of law provisions.
21 Chapter VIII of the General Principles deals with the application of the law to civil relations involving foreigners. Article 146 provides:
"With regard to compensation for damages resulting from an infringement of rights, the law of the place in which the infringement occurred shall be applied. If both parties are nationals of the same country or domiciled in the same country, the law of their own country or of their place of domicile may also be applied.
Acts which occur outside the territory of the People's Republic of China and which the law of the People's Republic of China does not recognise as acts of infringement of rights shall not be dealt with as such."
22 Article 150 materially provides that:
"Where this Chapter provides for the application of the law of a foreign country …, this must not be contrary to the public interest of the People's Republic of China."
23 The trial Judge said of Article 146:
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- "It gives me a right to choose to apply the law of Australia because both parties are nationals of Australia.
…
The dispute between the parties has its genesis in Australia in the assumption of the duty of care by [OPCV] as I have described, even though Australia was not the actual place of the delict which gave rise to the cause of action.
Accordingly, in the exercise of my jurisdiction and the application of Chinese law, under that application I choose to apply Australian law to the circumstances."
24 The trial Judge then considered and applied the Australian common law of negligence and found OPCV liable to Mrs Neilson in negligence. There is no reference in the trial Judge's reasons to the doctrine of renvoi.
Renvoi
25 "Renvoi" is a French word that means "return" or "reference back". It is said that renvoi hardly ever arises in practice and is a subject loved by academics, hated by students (because the questions are notoriously difficult and have no answer or no right answer) and ignored, when noticed, by lawyers and Judges: Davies M, Ricketson S and Lindell G, "Conflict of Laws Commentary and Materials" Butterworths, Melbourne, 1997 at [7.3.1].
26 The issue of renvoi arises whenever a choice of law rule refers to the law of a foreign country, but the choice of law rules of the foreign country would have referred the question to the law of the first country or to the law of some third country. In other words, the problem arises when the legal system selected by the choice of law rules of the forum applies different choice of law rules or different connecting factors. In such a case there may be a reference back to the law of the forum (remission) or to the law of a third country (transmission): see "Dicey and Morris, The Conflict of Laws" 13th ed, Vol 1 at [4-005]; Halsbury's Laws of Australia, Vol 4 at [85-75].
27 Renvoi does not usually arise in Australian interstate and/or Territory disputes because the common law choice of law rules are the same throughout the Federation. It can arise if the choice of law rules are altered or affected by statute.
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28 In this case there was the potential for a conflict between Australia's choice of law rule in tort and China's choice of law rule. A potential conflict because it depended on the exercise of a discretion under Article 146 to apply Australian law. Three solutions have been put forward in connection with renvoi. They are:
1. the Court of the forum may apply the domestic law of the foreign country, that is, the law of the foreign country applicable to a purely domestic situation without regard to foreign elements. This is called "rejecting the renvoi" or the "no renvoi" solution;
2. the Court of the forum may apply the foreign choice of law rules, accept the remission to its law by the foreign law and apply the law which it would have applied had the case been entirely domestic to the forum, or in the case of transmission, the domestic law of the third country. This requires proof of the choice of law rules of the foreign country but not of the foreign rules about renvoi. This is called "single renvoi";
3. the Court of the forum may resolve the issue in the same manner as a court of the legal system selected by its choice of law rules might resolve it had the foreign court exercised jurisdiction in the same case on the same facts. This method requires proof not only of the choice of law rules of the foreign country but also the foreign rules about renvoi. This is called "double renvoi".
29 Applying the no renvoi solution to the facts of this case and assuming for present purposes that the place of the wrong was China, the trial Judge would be referred by Australia's choice of law rules to the law of China excluding any choice of law rules forming part of Chinese law, in particular, without reference to Article 146. Accordingly, Chinese domestic law would apply. This means that the Australian forum court would apply foreign domestic law when a court of the foreign country would or may not.
30 Applying the single renvoi solution to the facts of this case, the trial Judge would be referred by Australian choice of law rules to the law of China, including Article 146, under which a Chinese court could, in the exercise of its discretion, remit the matter back to Australian law in which case the trial Judge would accept the remission and apply Australian domestic law. Thus the Australian choice of law rule refers to Chinese domestic and choice of law rules excluding renvoi but the Chinese
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- reference back is to Australian domestic law. This is a pragmatic rather than principled solution.
31 Applying the theory of double renvoi,if Chinese law refers back to Australian law and rejects the renvoi doctrine then Australian domestic law is applicable. If Chinese law refers to Australian law and adopts the single renvoi doctrine, the result would be that Chinese domestic law would be applicable. However, if both Australia and China apply the double renvoi doctrine,no solution is possible while both parties maintain their position, described as circulus inextricabilis: Dicey and Morris (supra), Vol 1 at [4-031]; Nygh P E and Davies M, "Conflict of Laws in Australia" 7th ed Butterworths, Australia, 2002 at [15.10]. One way of stopping the endless cycle would be for the forum court to stop at some stage, probably at the second reference, accept the remission and apply the domestic law of the forum: Griswold E N "Renvoi Revisited" (1938) 51 Harv L Rev 1165 at 1192-1193.
32 On any view of the effect of trial Judge's reasons he did not reject the renvoi. He must have in effect applied either the single or double renvoi solution or some hybrid thereof. Although he placed himself in the position of a Chinese Judge for the purposes of exercising the discretion, it is unlikely that he applied the double renvoi solution because there was no evidence as to the law of China relating to renvoi.
33 In limited and specific categories of cases, English and Australian courts at first instance have applied the double renvoi solution. The categories include formal validity of wills, intestate succession to moveables and immoveables, capacity to enter into a marriage and recognition of foreign legitimations at common law: Halsbury's Laws of Australia, Vol 4 at [85-90] and the cases cited therein; Dicey and Morris (supra), Vol 1 at [4-019]; Nygh and Davies (supra), at [15.8]. The single renvoi solution is essentially pragmatic and is not supported by authority. The real contest is between the no renvoi and double renvoi doctrines.
34 This Court has not been referred to any Australian authority or authority from any other jurisdiction applying the renvoi doctrine to torts. The reason for the lack of decided cases may be that the issue has not arisen within Australia because there is seldom any conflict in the choice of law rules and because for much of the time the choice of law for tort has been the lex fori. However, there are Scottish and American authorities rejecting the renvoi doctrine in tort: M'Elroy v M'Allister 1949 SC 110 at 126; Haumschild v Continental Casualty Co 7 Wis 2d
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- 130 at 141 - 142; 95 NW 2d 814 at 820 (1959); Pfau v Trent Aluminum Co 55 NJ 2d 511; 263 A 2d 129 at 136 - 137 (1970).
35 The no renvoi solution for tort and delict has been statutorily adopted in the United Kingdom. Section 9(5) of the Private International Law (Miscellaneous Provisions) Act 1995 (UK) provides:
"The applicable law to be used for determining the issues arising in a claim [in tort or delict] shall exclude any choice of law rules forming part of the law of the country or countries concerned."
36 The United Kingdom legislation was based upon a report of the Law Commission and the Scottish Law Commission (No 193 and No 129 respectively). The Commissions' working paper (No 87 and No 62 respectively) (at [2.18] and [4.23]) makes the unqualified assertion that at common law, renvoi does not apply in tort. No authority is cited for this proposition. However, it is a proposition generally accepted and repeated by academic commentators albeit with little or no justification save for a general antipathy to renvoi. The Commissions' Report states (at [3.56]):
"The Consultation Paper provisionally concluded that, under either model of reform canvassed therein, renvoi should be excluded. In other words, a reference to a foreign law would be to its internal law and not its rules of private international law. It has been argued that, in the field of choice of law rules in tort and delict, renvoi would create uncertainty and would not accord with the reasonable expectations of the parties. We agree with this. Furthermore, were renvoi not excluded, there could be circumstances where our proposed rules would not achieve the desired result. By way of example, assume that D, domiciled in England, injures P in Ruritania. Under our reformed rules, the prima facie applicable law is the law of Ruritania. Let us also assume that the court finds that Ruritanian law is in fact the applicable law. Under Ruritanian private international law, let us assume that personal injury actions are governed by the law of D's domicile, which in our example would be English law. If the reference to Ruritanian law includes Ruritanian private international law, then English law would be the applicable law. Yet it is the application of this law which our choice of law rules are specifically designed to avoid. Hence, the draft Bill makes it clear that references to the
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- law of a country are references to its internal law, not its private international law."
37 The Australian Law Reform Commission in its Choice of Law Report No 58 (see [4.11], [4.12] and [5.13]) also recommended that renvoi be abolished by defining foreign "law" to mean the internal or domestic law.
38 The majority of academic commentators and authors are critical of the doctrine of renvoi: Dicey and Morris (supra), Vol 1 at [4-032]; Nygh and Davies (supra), at [15.9] - [15.12]; Tilbury M, Davis G and Opeskin B, "Conflict of Laws in Australia" Oxford University Press, 2002 at 1005 - 1006. The authors Nygh and Davies refer to the widely stated academic view that renvoi is used as a device to soften the rigidity of the formal choice of law rules and continue (at [15.12]):
"This is certainly true. Indeed, the origin of the renvoi theories is probably due to this rather than to any attempts at uniformity … But the answer to this surely lies in the framing of new and more sensible choice of law rules. Pending this revision, renvoi is a device at best to be tolerated, but certainly not to be encouraged or extended."
39 In summary, there is no binding (or any other) authority that renvoi is applicable in tort cases; there is non-binding authority to the contrary; there is widespread academic opinion that renvoi is not applicable to tort; finally, there is much academic criticism of the renvoi doctrine in general.
40 In addition, the appellant submits that any form of renvoi reflecting back to the lex fori would be inconsistent with the reasoning and result in Regie National des Usines Renault SA v Zhang (2002) 210 CLR 491 and John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503. The High Court in Zhang held that the substantive law for the determination of rights and liabilities in respect of foreign torts was the lex loci delicti and that the double actionability rule had no application in Australia to international torts. It also held that there should be no flexible exception to the application of lex loci delicti in respect of foreign torts. Thus, the law relating to intranational torts stated by the High Court in Pfeiffer was extended to foreign (international) torts.
41 In Pfeiffer (supra)the Court considered the various possibilities for the choice of law rule in tort, in particular, the lex fori, the lex locidelicti or the proper law of the tort, in each case with or without a flexible exception. Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ in a
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- joint judgment in that case gave three reasons for adopting the lex loci delicti rule. They are, in no particular order, that:
(a) subject to the possible difficulty of locating the tort, liability is fixed by reference to geography and is certain;
(b) the lex loci delicti recognises and gives effect to the predominate concern of local legislatures with acts, matters and things within their territory;
(c) so far as the subject matter permits, the lex loci delicti gives effect to the reasonable expectation of parties.
"Adopting any flexible rule or exception to a universal rule would require the closest attention to identifying what criteria are to be used to make the choice of law. Describing a flexible rule in terms such as 'real and substantial' or 'most significant' connection with the jurisdiction will not give sufficient guidance to courts, to parties or to those, like insurers, who must order their affairs on the basis of predictions about the future application of the rule. What emerges very clearly from the United States experience in those States where the proper law of the tort theory has been adopted is that it has led to very great uncertainty. That can only increase the cost to parties, insurers and society at large.
Whatever may be the advantages of a flexible rule or of a flexible exception to a universal rule in the case of international torts, the practical disadvantages are such that neither approach should be adopted with respect to Australian torts which involve an interstate element."
43 The implication in the reasoning of the majority in Pfeiffer, particularly in their reasoning relating to certainty and territoriality, is that the Australian choice of law rule identifies or defines the law applicable to determine substantive rights (the lex causae) not the jurisdiction (or law area) which is to determine the relevant applicable law.
44 Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ in their joint judgment in Zhang determined that the reasoning and conclusions in
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- Pfeiffer (that the choice of law in tort was the lex loci delicti without the addition of any flexible exception) should be extended to foreign torts. The Court in Zhang (supra) focussed again on the need for certainty. The majority said (at 517 [66] – [67]):
"The selection of the lex loci delicti as the source of substantive law meets one of the objectives of any choice of law rule, the promotion of certainty in the law. Uncertainty as to the choice of the lex causae engenders doubt as to liability and impedes settlement. It is true that to undertake proof of foreign law is a different and more onerous task than, in the case of an intra-Australian tort, to establish the content of federal, State and Territory law. But proof of foreign law is concomitant of reliance upon any choice of law rule which selects a non-Australian lex causae.
When an Australian court selects a non-Australian lex causae it does so in the application of Australian, not foreign, law. While the content of the rights and duties of the litigant is determined according to that lex causae, it is necessary to recall that selection of the lex causae is determined by Australian choice of law rule."
46 However, the requirement for certainty and predictability is not limited to avoiding or minimising forum shopping. It is also aimed at avoiding uncertainty as to the law to be applied in resolving the dispute. It is the need for certainty as to the lex causae that resulted in the High Court refusing to countenance a flexible exception to the universal rule of the lex loci delicti notwithstanding it recognised that there may be
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- situations in which the lex loci delicti would not be in accordance with the reasonable expectation of the parties.
47 The application of the double renvoi doctrine to international torts would not promote certainty and predictability. It would require identification of Australia's choice of law rules, the foreign country's choice of law rules and its attitude to renvoi, from which a conclusion can then be reached as to the domestic law of which country applies. This exercise has the potential to be an "extraordinary complex, unwieldy, phantasmagorical journey to make": Tilbury, Davis and Opeskin (supra), at 1005.
48 The High Court in Zhang has deliberately selected a rigid choice of law rule in tort to promote certainty and predictability. It would be inconsistent with the reasoning and result in Zhang to superimpose a renvoi doctrine the purpose and effect of which is to soften or avoid the rigidity of choice of law rules. Further, the implication in the reasons and reasoning of the majority in Pfeiffer and Zhang, particularly relating to certainty and territoriality, is that the chosen choice of law rule identifies or defines the law applicable to the determination of the relevant substantive rights in dispute (the lex causae) not the jurisdiction or law area which in turn will identify (or facilitate the identification of) the lex causae. It follows that the no renvoi solution should apply and the lex loci delicti be construed as a reference to the domestic law of the place of the wrong. In summary, I am satisfied that the reasoning of the High Court in Pfeiffer and Zhang is inconsistent with the application of the renvoi doctrine to international torts. Accordingly, the trial Judge erred in applying Australian domestic law to Mrs Neilson's tort claim.
49 The next issues to consider are those raised by the first respondents in their Notice of Contention relating to the place of the wrong.
The Place of the Wrong – Notice of Contention
50 Notwithstanding the terms of the Notice of Contention, the first respondents' case at the hearing of the appeal was that it was open to the trial Judge to find that China was the place of the wrong. That is, the first respondents did not contend that the trial Judge had erred in making this finding. The first respondents' concession was correctly made having regard to the findings made by the trial Judge concerning OPCV's breach of duty and the fact that the accident occurred and injuries were sustained in China. The facts found by the trial Judge that gave rise to the breach by OPCV of its duty of care to Mrs Neilson (which also formed the basis for his finding of fault in breach of Article 106 of the General Principles)
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- were that OPCV supplied the accommodation in which the accident occurred, OPCV by its China based servants was aware of the danger occasioned by the lack of a balustrade, the danger was easily averted by the erection of a balustrade and that OPCV did not fix the problem or arrange for it to be fixed. Thus, the facts found by the trial Judge giving rise to the breach are very closely connected with events in China. The findings reflect the way Mrs Neilson's claim was pleaded.
51 It is the case that the trial Judge found that OPCV owed a duty of care to Mrs Neilson by virtue of the terms of Mr Neilson's Australian contract of employment in which it was contemplated that Mrs Neilson would or may accompany her husband to China and live with him in accommodation supplied by OPCV. On the other hand the trial Judge also found a duty of care was owed by OPCV in its capacity as the landlord of the unit.
52 The first respondents' contention was, in substance, that there may be more than one place of the wrong, that Australia was also a place of the wrong and I interpolate, that the trial Judge should have so found. So the question in issue is whether on the facts of this case there can be more than one "place of the wrong" and as a consequence more than one law that may govern the settlement of the dispute.
53 This is not a situation of multiple causes of action or wrongs as in the case of the multiple defamatory publications considered by the High Court in Dow Jones & Company Inc v Gutnick (2002) 210 CLR 575 at 606 [43]. This is a case of a single wrong where not all of the indicators or connections point to one law area as the place of the wrong. The High Court in Pfeiffer (supra) (at 538 - 539 [81] - [82]) and in Zhang (supra) (at 519 [74], 526 - 527 [100] - [101]) recognised that there may be difficulties in identifying the place of the wrong and that the place of the wrong may be affected by how a claim is formulated or characterised. However, in my view there is no support in the High Court decisions for the proposition that where there is a single wrong there may be multiple places of the wrong and as many different laws potentially applicable. To the contrary, such an outcome would undermine the stated twin objectives identified by the High Court in selecting the lex loci delicti as the choice of law in tort namely the need for certainty and predictability in the lex causae. There being only one place of the wrong which the trial Judge correctly found to be China, I would dismiss the first respondents' notice of contention.
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54 As the lex loci delicti is the domestic law of China, the next issue for consideration is whether Mrs Neilson's claim is time barred.
Whether claim is time barred
55 It was accepted by all parties that matters affecting limitation are part of the substantive law to be determined by the lex loci delicti and not a matter of procedure to which the lex fori applies. Articles 135, 136 and 137 of the General Principles deal with limitation. They materially provide:
"Article 135 The period of limitation of actions on a request to the People's Court for the protection of civil rights is two years, unless otherwise stipulated by law.
Article 136 In the following cases, the period of limitation of action shall be one year:
(i) demand for compensation for bodily harm
...
56 This action was commenced in 1997. Accordingly, it was time barred in the absence of the grant of an extension of time under Article 137 of the General Principles.
57 Mr Liu gave evidence that limitation periods are substantive under Chinese law and operate to extinguish a cause of action as that is understood under Australian law. The trial Judge, having regard to Article 137, rejected Mr Liu's evidence concerning the extinguishment of the cause of action. The trial Judge also rejected Mr Liu's evidence that limitation periods are substantive under Chinese law although he appears to link that evidence with the issue of extinguishment. However, there is no suggestion the trial Judge was characterising the limitation issue as procedural to which the lex fori applies and the parties do not contend for
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- that position. Nothing of significance to this appeal turns on the trial Judge's rejection of Mr Liu's evidence in this regard.
58 It was Mr Liu's uncontradicted evidence-in-chief that the relevant legislation applicable to the determination of this case was the General Principles and the "Opinion of the Supreme People's Court on Implementation of the General Principles". The latter provides detail as to how the broad statements of rights and obligations in the General Principles are to be implemented. It is also apparent that the Supreme People's Court is a superior court in the Chinese judicial hierarchy than the Intermediate People's Court of Wuhan. Mr Liu also gave uncontradicted evidence concerning Article 137. His evidence was as follows:
"Can I ask you to refer to 137?---Okay. So should I read out, or
We have got the document in front of us. Does that not provide, 'The People's Court may, under special circumstances, extend the period of limitation of actions'?---That's a possibility. There are possibilities, so there is a way for the court to extend the limitation, but that's impractical. It's very difficult and they are very rare cases and in fact the opinion of Supreme Court has a relevant explanation in this article, in this particular article or sentence.
What does the opinion say? We don't have a translation of that?---I do have one by myself. The opinion at 169 says:
(indistinct) force the meaning of article 137 of the General Principle of Civil Law, if the right holder cannot exercise his right of request due to the objective barriers during the legal time limitation period.
So impractically this is very difficult use, only, for example, if there's some war which stopped a person, for example, going for overseas qualification or some (indistinct)
Can I just ask you once again, so we get this right, we don't have it in writing in front of us, to read that part of the opinion again and any other part of the opinion that is directed towards article 137?---In the opinions it's only 169 of the opinion refers to article 137 of the General Principle in relation to special circumstances and this.
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- ...
Could you just read the first two words again? Is it 'If force'?---It force. I mean it means if – I use the words 'If' force which may be a Chinese – it means or it can be considered as the meaning of special circumstances under article 137. If the right holder cannot exercise his rights due to the objective barriers during this, so I keep on
STAUDE, MR: Could you spell those two words that you used at the beginning of your statement, Mr Liu?---I'm not sure whether this translates it correctly but it force – I use the words 'It force.'
It, i-t?---I-t, yes, force.
F o r c e?---For meaning translation it says it should be considered as (indistinct)
McKECHNIE J: So we could read it as, 'It may be considered as the meaning of'?---Considered.
...
STAUDE, MR: In the researches that you've carried out for the purposes of preparing your opinion have you discovered any cases where article 137 has been applied?---No, actually not."
59 The trial Judge did not deal with all aspects of Mr Liu's evidence relating to Article 137. He said (at [187] - [191]):
"As to [Article 137], Mr Liu gave evidence:
'That's a possibility. There are possibilities, so there is a way for the court to extend the limitation, but that's impractical ... '
- The limitation, Mr Liu explained, is if the right-holder cannot exercise his right of request due to the objective barriers during the legal time limitation period.
In my judgment the 20 year limitation period is absolute and would bar any claim completely. However a People's Court may exercise discretion to extend a period of limitation within a period of 20 years where there are special circumstances.
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- I am not a People's Court. I am a Western Australian Judge applying Chinese law as my criterion and in accordance with principles of fairness and justice. I am not bound by any precedent.
In my opinion there are special circumstances why the limitation period should be extended under Chinese law."
- The special circumstances relied on by the trial Judge included the following: the parties are Australian nationals, both were in China on a temporary project, Mrs Neilson returned to Australia in 1992 and lived there thereafter, OPCV was aware at an early stage of Mrs Neilson's intention to commence proceedings and OPCV suffered no (relevant) prejudice if the limitation period was extended.
60 There is no finding or suggestion by the trial Judge that Mrs Neilson was prevented by any objective barrier from commencing proceedings within the limitation period. Indeed, there is no evidence to support such a finding. In substance the trial Judge rejected Mr Liu's evidence as to what constitutes special circumstances, based as it was on the opinion of the Supreme People's Court.
61 An Australian court should only in exceptional circumstances make a finding about the meaning and effect of a foreign statute contrary to the uncontradicted evidence of a qualified expert in the law of that country: James Hardie & Co Pty Ltd v Putt (1998) 43 NSWLR 554 at 573. It would be appropriate to reject the uncontradicted evidence of such an expert if it was patently absurd or inconsistent with higher judicial authority in the country concerned.
62 However, there is a distinction between identifying and expounding in general terms the scope, meaning and effect of relevant statutory foreign law and giving an opinion as to how that foreign law applies to the facts of a particular case, the latter impinging upon the essential curial function: Allstate Life Insurance Co v Australia & New Zealand Banking Group Limited (No 6) (1996) 64 FCR 79.
63 The trial Judge did not identify any relevant exceptional ground on which to reject Mr Liu's evidence. None have been identified. Further, the evidence was not of such a nature as to impinge on the essential curial function. A reason given for the rejection of Mr Liu's evidence concerning Article 137 is that the trial Judge was not a People's Court but a Western Australian Judge. The implication is that the content and interpretation of Chinese law differs according to whether the
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- decision-maker is part of the Chinese judicial system or the Australian judicial system. That cannot be correct. The trial Judge's role in construing Article 137 is to make findings of fact based on the expert evidence. Further, the Opinion of the Supreme People's Court cannot be put to one side or ignored on the basis that Chinese law knows no doctrine of precedent. Mr Liu's uncontradicted evidence was that it is relevant to the determination of the detail of the General Principles. Finally, the determination of the factual issue is not to be found in generalised notions of fairness and justice to a particular claimant. There are broader questions of public policy involved in this area of the law as is amply demonstrated in this Federation by the wide ranging tort law reforms introduced to address third party liability insurance issues connected with fault based claims.
64 I am satisfied that the trial Judge erred in rejecting the evidence of Mr Liu on the interpretation of Article 137 of the General Principles. He should have accepted Mr Liu's evidence and found there were no special circumstances within the meaning of Article 137 that warranted the extension of the one year time limitation imposed by Article 136 of the General Principles and accordingly determined that Mrs Neilson's claim under Article 106 of the General Principles was time barred.
65 In summary, the trial Judge erred in applying Australian common law to the determination of Mrs Neilson's tortious claim. He should have applied Chinese domestic law and held that the claim was statute barred. In the circumstances, it is not necessary to determine the question whether the trial Judge erred in holding that Mrs Neilson's injuries did not arise out of or in the course of her employment with OPCV. However the matter was fully argued and it is appropriate to deal with it.
Arising out of or in the course of employment
66 The phrase "arising out of or in the course of employment" is well-known in the law of workers' compensation. It is usually a basis for establishing a statutory entitlement to such compensation under a compulsory third party liability scheme. It is in that context that there is a mirror exclusion clause in the OPCV third party liability cover with the appellant. It is not suggested by any party that different rules of construction should apply to the phrase depending on its context as a basis for entitlement or alternatively to exclude liability.
67 The trial Judge held that Mrs Neilson's injuries were not arising out of or in the course of her employment with OPCV. In reaching that decision the trial Judge referred to the High Court decisions of Danvers v
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- Commissioner for Railways (NSW) (1969) 122 CLR 529 and Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473. The trial Judge then said (at [270]):
"I consider that the majority judgment in Hatzimanolis ... represents the law and to the extent that any earlier authorities may differ, they are to be disregarded. I apply the test laid out in Hatzimanolis to the present case."
69 The trial Judge reached his conclusion on the basis of factual findings which included the following: Mr Neilson was engaged by OPCV months earlier than his wife; it was only shortly before her departure for Wuhan that an oral employment contract was negotiated between Mrs Neilson and OPCV; at that time she intended to travel to Wuhan with her husband and live in the accommodation which was provided as part of his contract; she was not going to Wuhan because she had obtained employment there, the true position being that she was going to live in Wuhan in any event and therefore obtained employment; before her engagement as an employee, it was accepted by all parties that she would be living in the unit in Wuhan in any event as Mr Neilson's family member who was accompanying him.
70 In this case Mrs Neilson's injuries occurred during an interval between carrying out her duties to OPCV. It occurred outside her working hours and while she was engaged in an activity ordinarily performed for private purposes. However, that does not determine the question.
71 The principle formulated by the High Court in Hatzimanolis (supra) is that "an interval or interlude within an overall period or episode of work occurs within the course of employment if, expressly or impliedly, the employer has induced or encouraged the employee to spend that interval or interlude at a particular place or in a particular way". There are two aspects to this statement of principle. The first is that the interval must be within an overall period or episode or work. The second is that the employer has induced or encouraged the employee to spend the interval or
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- interlude at a particular place or in a particular way. These elements were satisfied in Danvers (supra) where an existing employee was required by his employer to go to a remote place and live in accommodation provided by his employer for a limited time until a particular undertaking was completed. The employee died during such an interlude in a fire which destroyed his accommodation. The facts in Hatzimanolis (supra) are similar. An existing employee successfully applied for a job with his employer in the northwest of Western Australia. The job was for a period of three months. This satisfied the first element. The second element was satisfied because the employer encouraged the worker to spend a work-free Sunday on a social outing organised by the employer using the employer's vehicle. The employee was injured in the course of the outing when the employer's vehicle crashed.
72 It is implicit in the High Court's statement of principle in Hatzimanolis (supra) that regard is only to be had to relevant acts of the parties in their existing or proposed capacity as, and pursuant to an existing or future relationship between them of, employer and employee. So it is of particular relevance that, as the trial Judge found, Mrs Neilson intended to travel to China and live with her husband in accommodation provided by OPCV before any question of her employment by OPCV arose. It was because of that fact that she was offered casual part time employment in China. It is to turn the facts on their head to say that she was induced or encouraged by OPCV in its capacity as her future employer to live in the unit in China. There is no such finding made by the trial Judge. On the facts found by the trial Judge the second element of the Hatzimanolis principle was not satisfied. Accordingly, I agree with the trial Judge's finding and would dismiss this ground of appeal.
Conclusion
73 I have concluded that the trial Judge erred in resolving Mrs Neilson's claim in tort by applying Australian domestic law and in concluding that the fault based claim under Chinese law was not time barred. Accordingly, I would make the appellant's proposed orders 1(a), (b) and (c) and 2(a). I would also dismiss the first respondents' notice of contention and hear from the parties as to the balance of the orders to be made.
74 JOHNSON J: I have had the advantage of reading the judgment of McLure J. I agree entirely with it. There is nothing further I wish to add.
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75 WALLWORK AJ: I agree with the reasons for judgment and the conclusions of McLure J. There is nothing I wish to add.
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