Smith v ANL Ltd

Case [2000] HCA 58

HIGH COURT OF AUSTRALIA

GLEESON CJ,
GAUDRON, McHUGH, GUMMOW, KIRBY, HAYNE AND CALLINAN JJ

STEPHEN PAUL SMITH   APPELLANT

AND

ANL LIMITED  RESPONDENT

Smith v ANL Limited [2000] HCA 58
16 November 2000
P56/1999

ORDER

1.        Amend the style of the respondent to "ANL Limited".

2.        Appeal allowed with costs.

3.Set aside orders of the Full Court of the Supreme Court of Western Australia made on 18 November 1998 and, in lieu thereof, order that:

(a)the appeal to that Court from the orders of Registrar Powell dated 9 September 1996 be allowed with costs, those orders be set aside and the application to the Registrar be dismissed with costs;

(b)the appeal to that Court from the orders of Ipp J dated 27 August 1996 be allowed with costs and question 2 of the questions of law ordered to be tried by Owen J on 17 June 1996 as preliminary questions of law be answered: "Section 54 of the Seafarers Rehabilitation and Compensation Act 1992 (Cth) is invalid in its application to the causes of action pleaded by the plaintiff";

(c)costs of the trial of the preliminary questions, including any reserved costs, be the plaintiff's costs in the action.

On appeal from the Supreme Court of Western Australia

Representation:

P J Hanks QC with N J Mullany for the appellant (instructed by Slater & Gordon)

G H Murphy for the respondent (instructed by Cocks Macnish)

Intervener:

D M J Bennett QC, Solicitor-General of the Commonwealth with G R Kennett intervening on behalf of the Attorney-General of the Commonwealth (instructed by Australian Government Solicitor)

Notice:  This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Smith v ANL Limited

Constitutional law (Cth) – Acquisition of property on just terms – Seaman injured on ship during course of employment – Legislation barred existing common law rights to bring action and allowed an action to be brought within six-month period – Whether a law with respect to the acquisition of property on just terms.

Workers' compensation – Seafarers' compensation – Provisions in lieu of entitlement to damages at common law – Whether Act validly abolished entitlement – Whether abolition constituted acquisition of property on just terms.

Constitution, s 51(xxxi).
Seafarers Rehabilitation and Compensation Act 1992 (Cth), s 54.
Seafarers Rehabilitation and Compensation (Transitional Provisions and Consequential Amendments) Act 1992 (Cth), s 13.

  1. GLEESON CJ.   In December 1988 the appellant was injured whilst working as a merchant seaman in the employment of the respondent.  He claims that the respondent became liable to him in damages, for breach of contract (in failing to provide a safe system of work), and in negligence.  In November 1994, the appellant sued the respondent in Western Australia.  In the meantime, the Australian Parliament, as part of a new legislative scheme to compensate injured seafarers, enacted legislation which, if valid, would deprive the appellant of the common law rights asserted in his action.  The relevant statutory provisions are
    s 54…

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AGLC
Smith v ANL Ltd [2000] HCA 58
Case
[2000] HCA 58
Decision Date

CaseChat Overview and Summary

The High Court of Australia heard an appeal from the Full Court of the Supreme Court of Western Australia concerning the constitutional validity of certain legislation. The appellant, Mr. Stephen Smith, a seaman injured in 1988, sought to bring an action for damages against ANL Limited, the respondent, for negligence and breach of contract. The respondent argued that the appellant's common law rights to sue were extinguished by the *Seafarers Rehabilitation and Compensation Act 1992* (Cth) and related transitional provisions, which provided an alternative compensation scheme. The central dispute revolved around whether this extinguishment of common law rights constituted an acquisition of property on "just terms" as required by section 51(xxxi) of the Australian Constitution.

The legal issue before the High Court was whether section 54 of the *Seafarers Rehabilitation and Compensation Act 1992* (Cth), when read with section 13 of the transitional provisions, constituted a law with respect to the acquisition of property on just terms, thereby attracting the operation of section 51(xxxi) of the Constitution. Specifically, the Court had to determine if the legislation, by barring existing common law rights to sue for damages and substituting a limited statutory compensation scheme, effected an acquisition of the appellant's property (his choses in action) for which just terms were not provided.

The High Court, by majority, allowed the appeal. The Court reasoned that the legislation, by extinguishing the appellant's existing common law rights to bring an action for damages, effectively deprived him of a form of property. This deprivation was for the benefit of the respondent, which was relieved of its potential liability. The Court found this to be an acquisition of property within the meaning of section 51(xxxi) of the Constitution. Applying the principles established in cases such as *Georgiadis v Australian and Overseas Telecommunications Corporation*, the Court held that the legislation did not provide just terms for this acquisition, rendering it invalid in its application to the appellant's cause of action.

Consequently, the High Court set aside the orders of the Full Court of the Supreme Court of Western Australia and ordered that the appeal to that Court be allowed. The High Court further ordered that the question of law concerning the validity of section 54 of the *Seafarers Rehabilitation and Compensation Act 1992* be answered in favour of the appellant, finding the section invalid in its application to his pleaded causes of action. The appeal was allowed with costs.

Orders

Orders of the court

1. Amend the style of the respondent to "ANL Limited".

2. Appeal allowed with costs.

3. Set aside orders of the Full Court of the Supreme Court of Western Australia made on 18 November 1998 and, in lieu thereof, order that:

(a) the appeal to that Court from the orders of Registrar Powell dated 9 September 1996 be allowed with costs, those orders be set aside and the application to the Registrar be dismissed with costs;

(b) the appeal to that Court from the orders of Ipp J dated 27 August 1996 be allowed with costs and question 2 of the questions of law ordered to be tried by Owen J on 17 June 1996 as preliminary questions of law be answered: "Section 54 of the Seafarers Rehabilitation and Compensation Act 1992 (Cth) is invalid in its application to the causes of action pleaded by the plaintiff";

(c) costs of the trial of the preliminary questions, including any reserved costs, be the plaintiff's costs in the action.

Background

Background to the litigation

This appeal concerns s 51(xxxi) of the Constitution. That paragraph requires that federal laws with respect to the acquisition of property from any State or person for a federal purpose must provide "just terms" for the acquisition. In deciding the appeal, this Court must revisit the principles elaborated in numerous earlier decisions concerning s 51(xxxi), especially Georgiadis v Australian and Overseas Telecommunications Corporation[61] and The Commonwealth v Mewett[62].[61](1994) 179 CLR 297 ("Georgiadis").[62](1997) 191 CLR 471 ("Mewett").The facts In late 1988, Mr Stephen Smith (the appellant) was employed in Western Australia by the Australian Shipping Commission as a merchant seaman on board its ship "Australian Prospector". He claimed that, in the course of such employment, in December 1988, while approaching port in Japan, he suffered injuries resulting in loss and damage. He asserted that such loss and damage were the consequence of negligence on the part of the Australian Shipping Commission for which the public company, ANL Limited (the respondent), since created[63], is liable. He also sued the respondent for breach of the implied terms of his contract of employment that he would be provided by his employer with safe conditions of work and a safe place of work.[63]ANL (Conversion into Public Company) Act 1988 (Cth). That Act was assented to on 14 December 1988 and was proclaimed to come into operation on a later date. It amended the Australian Shipping Commission Act 1956 (Cth). See now ANL Act 1956 (Cth). By s 25B(2)(b) of the Acts Interpretation Act 1901 (Cth), it is provided that, where an Act alters the constitution of a body, then, unless the contrary intention appears, the liabilities of the body are not affected by the alteration. See Smith v Australian National Line Ltd (1998) 20 WAR 219 at 243. On 9 November 1994, the appellant issued a writ out of the District Court of Western Australia. This named the respondent and the Commonwealth as defendants. The accompanying statement of claim sought damages from each. The writ was issued a month short of the expiry of the six year limitation period provided under s 38(1)(c) of the Limitation Act 1935 (WA) in respect of claims in negligence and for breach of contract. By federal law, that Act is rendered applicable to the exercise of federal jurisdiction by a State court[64].[64]Judiciary Act 1903 (Cth), ss 79. The appellant's proceedings were transferred to the Supreme Court of Western Australia. Relevantly, the respondent raised two defences to the claim. The first concerned a suggested application to the appellant's case of s 47A of the Limitation Act which, it was submitted, would have put the appellant out of court without any need to consider a constitutional question. Although that defence was upheld by the primary judge, Ipp J[65], the Full Court of the Supreme Court of Western Australia overruled his decision in that respect[66]. No cross-appeal or notice of contention being filed, the first defence can be disregarded by this Court. Special leave to appeal was confined to that part of the reasoning of the Full Court that concerned the constitutional question.[65]Smith v Australian National Line unreported, Supreme Court of Western Australia, 27 August 1996 at 5-19.[66]Smith v Australian National Line Ltd (1998) 20 WAR 219 at 226 per Kennedy J, 245 per Pidgeon J, 253 per Templeman J.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

GLEESON CJ GAUDRON AND GUMMOW JJ HUGH J KIRBY J (dissent)
The appellant was thereupon granted leave to appeal to the Full Court from the judgment of the primary judge. His appeal, so far as it challenged the dismissal of his action against the Commonwealth, was discontinued. This left on foot his appeal against the determination in favour of the respondent of the preliminary issue concerning the validity of s 54 of the Seafarers Act, read with s 13 of the Transitional Provisions Act ("the impugned legislation").The decision of the Full Court The Full Court divided on this question. The majority, Kennedy and Templeman JJ, dismissed the appeal. Their Honours concluded that, properly characterised, the impugned legislation merely modified the limitation period applicable to the appellant's claim. It did not extinguish the appellant's causes of action. Section 54 was not, therefore, a law with respect to the acquisition of property. Consequently, no question arose as to the validity of the section under s 51(xxxi) of the Constitution[70]. In this respect, their Honours differed from the conclusion of the primary judge, who had held that the impugned legislation did effect an acquisition of property. However, the primary judge went on to hold that s 54 of the Seafarers Act did not bear the distinct character of a law "with respect to" the acquisition of property and, for that reason, did not attract the obligations of s 51(xxxi)[71].[70]Smith v Australian National Line Ltd (1998) 20 WAR 219 at 231 per Kennedy J, 255 per Templeman J.[71]Smith v Australian National Line unreported, Supreme Court of Western Australia, 27 August 1996 at 22-24 per Ipp J. The dissenting judge in the Full Court, Pidgeon J, felt unable to distinguish the present case from Georgiadis[72].He concluded that, but for the interposition of the impugned legislation, the appellant enjoyed rights at common law, vested in him, to bring his action against the respondent. The impugned legislation had purported to extinguish those rights. Although the operative effect of such extinguishment was postponed by reason of s 13 of the Transitional Provisions Act, s 54 of the Seafarers Act eventually achieved that end, resulting in a purported deprivation of the appellant's property (in the form of the choses in action which he propounded). The extinguishment of the appellant's rights had been to the equivalent benefit of the respondent which was thereby effectively relieved of liability to the appellant. This amounted to an "acquisition" of the appellant's property. Pidgeon J rejected the argument that s 54 of the Seafarers Act could not be characterised as a law of the kind referred to in s 51(xxxi)[73].[72]Smith v Australian National Line Ltd (1998) 20 WAR 219 at 247.[73]Smith v Australian National Line Ltd (1998) 20 WAR 219 at 247-250 per Pidgeon J. The Full Court granted the appellant leave to appeal. However, because of the adverse determination of the constitutional point by the majority, the appeal was dismissed. It is from that outcome that, by special leave, the appeal now comes to this Court.The legislation

Ratio Decidendi

Legal Principle Established

Established by: GLEESON CJ, GAUDRON AND GUMMOW JJ, HUGH J,

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