Tekno Ceramics Pty Ltd v Milat

NEW SOUTH WALES COURT OF APPEAL

CITATION: TEKNO CERAMICS PTY LTD v ZDENKO MILAT [2003] NSWCA 254

FILE NUMBER(S):
40169/03

HEARING DATE(S): 11/09/2003

JUDGMENT DATE: 19/09/2003

PARTIES:
TEKNO CERAMICS PTY LTD - Claimant
ZDENKO MILAT - Respondent

JUDGMENT OF: Meagher JA Handley JA Foster AJA

LOWER COURT JURISDICTION: District Court

LOWER COURT FILE NUMBER(S): 1527/01

LOWER COURT JUDICIAL OFFICER: Delaney J

COUNSEL:
Mr J. Hislop QC / R. de Meyrick - Appellant
Mr David Burwood - Respondent

SOLICITORS:
Sparke Helmore - Appellant
Frisina & Associates - Respondent

CATCHWORDS:
Appeal seeking an extension of time in which to bring an action for damages for personal injury.

LEGISLATION CITED:
s 151D of the Workers Compensation Act 1987 (NSW)
Limitation Act 1969

DECISION:
1. The appeal be upheld. Orders of Delaney DCJ of 4 October 2002 set aside.
2. In lieu thereof order that the respondent's Notice of Motion of 26 November 2001 be dismissed with costs.
3. The respondent to pay the appellant's costs of the appeal and in that respect to have a Certificate under the Suitors Fund Act.

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40169/03
DC 1527/01
MEAGHER JA
HANDLEY JA
FOSTER AJA
Friday, 19 September, 2003

TEKNO CERAMICS PTY LTD v ZDENKO MILAT

Judgment

MEAGHER JA: I agree with Foster AJA.
HANDLEY JA: I agree with Foster AJA.
FOSTER AJA: The claimant, Tekno Ceramics Pty Limited (“Tekno”) has appealed by leave from a decision of Delaney DCJ, given on 5 October 2002. His Honour had before him two notices of motion, one brought by the opponent, Zdenko Milat (“Milat”), seeking an extension of time, pursuant to s 151D of the Workers’ Compensation Act 1987 (NSW), in which to bring an action for damages for personal injury occasioned to him in an accident, which occurred on or about 17 September 1993, whilst he was in the employment of Tekno. The other notice of motion was brought by Tekno which, in effect, sought an order that such leave be not granted or, if it were, that the time for Milat to file his statement of claim should run from the date of the order extending time for its filing. This latter order was sought in the context that Milat had already filed a statement of claim in the District Court on 26 November 2001, which, more than eight years having elapsed since the accident, was out of time unless the extension were granted. There were perceived advantages to the claimant if it could avoid the back-dating of any order for extension of time to the date of the filing of the statement of claim.
His Honour granted the leave sought by Milat and directed that it should “apply as and from 26 November 2001 the date on which the statement of claim was filed.” It is necessary to refer briefly to the course of the case at first instance.
His Honour had for consideration the affidavit of Milat dated 13 June 2002 and the affidavit of the solicitor then acting for him, Anthony Frisina, of 13 June 2002, to which was annexed a very large number of documents, including the entire file of Milat’s previous solicitors.
Milat’s affidavit described the accident which he had suffered on 17 September 1993, whilst working for Tekno as a tiler. He was engaged in laying floor tiles at the entrance of a large building forming part of the Marist Brothers High School at 2 Darcy Road, Westmead. Tekno was a sub-contractor to the head building contractor, McNamara Group Constructions Pty Limited (“McNamara”). At the time of the accident he had been working at the site for about a month. In his affidavit, he indicated that David Maynard was the site foreman and was an employee of McNamara.
Milat was cross-examined briefly before his Honour, who, in his judgment, referred to him as a credible witness. It is obvious from the transcript that English was not his first language.
His Honour found that Milat was born on 27 August 1950 in Croatia, left school at age fourteen, worked as an apprentice boilermaker in Croatia and came to Australia in 1968. His employment with Tekno commenced in 1989 and consisted in the laying of tiles.
His Honour made the following findings in relation to the accident and its consequences:-
One of the tasks the applicant said that he had to perform was lifting a steel tray weighing about a hundred kilograms. He said that one of the workers on site who was lifting a tray with him dropped the tray and he took the full weight of the tray whereby he experienced a sharp pain in his lower back. I accept that the medical evidence suggests that the applicant at that stage sustained a lumbar disc lesion. He made immediate complaint about it and sought immediate treatment. That treatment almost within months led to the need for surgery and he has, I find from the medical evidence which was led, there being no issue about any medical prejudice being raised by the respondent, that he has had extensive and consistent constant treatment thereafter for quite significant low back disabilities and has lost work as a result.”
His Honour accepted that, although a workers’ compensation claim had been lodged and weekly benefits, together with medical expenses, paid to and for the opponent, he had never made any claim for lump sum compensation and had sought no legal advice in relation to his accident until April 1995, when a worsening of his medical condition occasioned his attendance at the offices of his previous solicitors. His Honour accepted the opponent’s evidence to the effect that on this occasion, although he was advised in relation to his workers’ compensation rights, he received no explanation as to any rights he might have had at common law, in respect of the accident.
The documents included in the file of the previous solicitors indicated that they had referred him to a barrister in May 1999. Although it appears that this reference to a barrister produced a written advice, to the effect that common law proceedings could be considered, his Honour accepted the evidence of Milat that he did not recall receiving any advice in the conference with counsel, other than advice in relation to his workers’ compensation claim. Specifically, he remembered no advice as to any distinction between his workers’ compensation rights and those at common law. Nor, he said, did he receive any advice from his solicitors, consequent upon any advice that might have been received, in written form, from the barrister. This matter appears to have been visited very briefly in cross-examination, when the opponent appears to have confirmed his affidavit evidence in this regard. His Honour accepted Milat’s evidence that he gained no personal awareness of his common law position, from either the barrister or the solicitors at that time.
After changing his solicitors, the opponent was referred to another barrister. His Honour accepted, in this regard, the following evidence of the opponent, appearing in paragraph 57 of his affidavit:-
“I saw Mr McAuley on 24 September 2001 and he also gave me advice about having rights to sue at common law for negligence but that that claim was out of time and that I needed to make an application for an extension of time. Mr McAuley was the first person who described to me the meaning of negligence and that I might have a claim for negligence against both Tekno Ceramics Pty Limited and McNamara Group Constructions Pty Limited. Whilst I was aware that I could make a claim for Workers Compensation against the defendant it had never previously entered my mind that it was possible to make any sort of claim against the builder.”
His Honour also accepted that, had the opponent’s rights been previously explained to him, he would have given appropriate instructions to bring common law proceedings.
It may be noted that his Honour reached this conclusion after considering arguments submitted to him, based upon the file of the previous solicitors and, in particular, upon the advices received from counsel in relation to common law proceedings, to which reference has been made. It also appeared that the barrister had received instructions to draft documents to commence proceedings in the Compensation Court on behalf of the applicant. The draft documents are in the file. His Honour was satisfied, however, “based on the evidence about the plaintiff’s education and background and the fact that English is not his first language,” that he should accept, as he did, Milat’s evidence that he was unaware of a potential common law claim and the need to make an application for extension of time, before 24 September 2001.
His Honour then considered the terms of s 151D(2) of the Workers’ Compensation Act 1987, which provides:-
“A person to whom compensation is payable under this Act is not entitled to commence court proceedings for damages in respect of the injury concerned against the employer liable to pay that compensation more than 3 years after the date on which the injury was received, except with the leave of the court in which the proceedings are to be taken.”
His Honour discussed statements of principle from relevant authorities, pointing out that this was not a case, such as that considered in Itex Graphix Pty Limited v Elliott 54 NSWLR 207, where the applicant had made a deliberate and fully informed decision to allow the statutory period to expire. However, he noted that the onus was on Milat to satisfy him that it was just and reasonable in all the circumstances to extend the time, having regard to the extensive period of delay which was involved. He referred to the presumed injustice resulting from stale claims and the need for Milat to demonstrate the absence of significant forensic disadvantage to Tekno, in relation to its ability to defend the action.
His Honour also noted that this was not merely a case of presumed prejudice to Tekno. It was also a case where actual prejudice was claimed.
This claim was made in the affidavit of Mark Nelson dated 29 August 2002, solicitor for Tekno. This affidavit put forward two grounds of actual prejudice, namely that, if the proceedings had been brought within time, consideration would have been given to joining McNamara in the proceedings, as a third party. This possibility was now no longer available, as the time to join it had expired pursuant to ss 18A and 60C of the Limitation Act 1969 and the right to bring any cross-claim had also expired pursuant to s 26 of that Act. It was also contended that there would now be problems in establishing contact with persons who could have provided evidence in relation to the accident. It was conceded, however, that, as the opponent had been in receipt of workers’ compensation and subject to regular medical examinations, that there was no prejudice in relation to the assessment of the opponent’s injuries resulting from the accident. His Honour was not persuaded by arguments as to the unavailability of witnesses. In this respect he was persuaded that a fair trial could still be held, if leave were granted.
In relation to Tekno’s argument that it had lost its rights against the McNamara Group, his Honour said that, in his view, “this is not determinative of this matter and should not be the basis upon which an application of this type should be refused.”
His Honour, accordingly, granted leave.
His Honour also held that it was appropriate that his grant of leave should apply “as and from 26 November 2001”, that being the date, as previously indicated, when the statement of claim, then out of time, had been filed. It is not contested, in this appeal, that his Honour could, in the exercise of his discretion, give this direction.
At the conclusion of the concurrent hearing, the Court granted leave to appeal and reserved its decision on the appeal.
Counsel for the appellant divided his argument in the appeal into a consideration of three main issues. The first was whether there was any adequate explanation for the delay in the bringing of the proceedings. The second was the existence of significant prejudice to the appellant, in relation to the obtaining of witnesses for the trial. The third was the existence of significant prejudice resulting from the loss of the ability to bring a cross-claim, in the proceedings, against McNamara. Before considering the arguments in relation to these three issues, it is convenient to refer to statements of principle in relation to the construction and operation of s 151D(2) of the Workers’ Compensation Act 1987, which appear in Itek Graphix Pty Limited v Elliott 54 NSWLR 207.
Ipp AJA (with whom Spigelman CJ agreed) said (at 219):
“64. The Workers Compensation Act does not contain any specific criteria to be taken into account by the court when exercising the discretion contained in s 152D(2). There is no list of matters to be considered, such as those set out in s 60E of the Limitation Act 1969. There is no equivalent to s 52(1) and s 52(4B) provides that the leave of the Court must not be granted unless the claimant provides a full and satisfactory explanation to the Court for the delay. Provisions of this kind, that give specific content to the discretion to be exercised under s 52(4), are absent from the Workers Compensation Act.
65. Nevertheless, a broad discretion such as that provided by s 152D(2) is not unconfined and does not entitle the court to act upon whim. As Kirby P said in Salido (at 535) in regard to such a discretion:
“…The discretion must be exercised according to the terms in which, and to achieve the purposes for which, parliament has provided. It must be exercised in good faith and with due regard to those who may be affected by the exercise…”
After considering a number of authorities, relating to other provisions dealing with extensions of time, his Honour turned to a consideration of the section, noting the statement by Kirby P in Salido (at 536) that it was essential “to approach the statutory discretion having regard to the context in which it appears and the purposes for which it is provided”. Ipp AJA said (at 221):-
“70 Section 151D(2) is part of Pt 5 of the Act. Part 5 deals with common law remedies and contains a series of provisions that restrict the right of a person to claim damages at common law. Section 151A provides that a person to whom compensation is payable under the Act is not entitled to both permanent loss compensation and damages in respect of the injury, but is required to make an election between the two remedies. Section 151B provides that if a person recovers damages in respect of an injury from the employer liable to pay compensation under the Act, then the person ceases to be entitled to any further compensation in respect of the injury concerned. Section 151C provides for a 6 months delay before a person to whom compensation is payable is entitled to commence court proceedings for damages in respect of the injury against the employer concerned. Division 3 of Pt 5 modifies common law damages and regulates court awards generally. It contains restrictions on damages for non-economic loss, economic loss generally and provision for certain home care services. Restrictive provisions are imposed in relation to matters such as mitigation of damages, payment of interest, damages for psychological or psychiatric injury and other matters”.
“The Part as a whole is in effect a scheme whereby the rights of persons claiming common law remedies from employers are limited and strictly controlled. The general tenor of the Part indicates that Parliament, generally, speaking, intends that claimants will have to exercise their rights to common law remedies in a closely defined way during the stipulated period (subject to the remedial leave provision contained in s 151D(2)).
72.. Nothing in the context of Pt 5 suggests that the discretion to be exercised under s 151D(2) is less confined than the discretion typically afforded to courts when power is conferred upon them to ameliorate time barring provisions. As is apparent from cases that I have cited, where a wide discretion of the kind contained in s 151D(2) is conferred, the justice of the case is to be determined by its own individual circumstances on a broad basis and, ordinarily, the conduct of the applicant will be an important factor.”
After a detailed consideration of the judgments in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541, in which his Honour made particular reference to the four broad rationales for the enactment of limitation periods, enunciated by McHugh J (at 552) (which I shall not set out here), his Honour continued (at 224-5) as follows:-
“87. In my opinion, in limitation legislation such as s 151D(2) of the Workers Compensation Act, where a broad discretion is conferred to grant leave to sue after expiry of the limitation period, the general question that has to be asked is what is fair and just (per Gleeson CJ in Salido). Or what does the justice of the case require (per McHugh J in Brisbane South Regional Health Authority v Taylor). In answering such a question, the justice of the case must be evaluated by reference to the rationales of the limitation period that has barred the action, including the four rationales to which McHugh J referred.
88. I have pointed out that the justice of the case is to be determined by its own individual circumstances. Often, a failure satisfactorily to explain the delay will not be decisive. Ordinarily, the issue of prejudice will be of paramount importance: Nowlan v Marson Transport Pty Ltd [2001] NSWCA 346 at [34]-[36]; Malone v New South Wales National Parks and Wildlife Service [2001] NSWCA 345 at [9]. Nevertheless, the justice of the case may be such that the failure to explain the delay and to prosecute the case with the requisite diligence will result in an extension of time being refused.
89. The rule that an applicant, who applies for leave to bring proceedings after a limitation period has expired, must provide a reasonable explanation for the delay (and show that there has not been an absence of diligence on his or her part) forms part of limitation legislation throughout the country and, independently, has long been recognised by the courts………..(reference to authorities omitted).
90. The reason for this requirement is not hard to understand. A limitation provision is an expression of intent by Parliament that persons who wish to sue must do so within the stipulated time unless circumstances exist entitling them to obtain leave. A limitation provision is the general rule and an extension is the exception. In obtaining leave, a party is in effect obtaining an indulgence. To allow parties leave, when they have been careless of their rights and careless of the need to proceed with their disputes within the limitation period, would, ordinarily, be contrary to the justice of the case and would subvert the intent of Parliament. Just as the rules of court must prima facie be obeyed (Ratnam v Cumarasamy [1965] 1 WLR 8 at 12; [1964] 3 All ER 933), so must the laws of Parliament.
91. A deliberate decision to allow a statutory limitation period to expire would be a powerful factor against the grant of leave. Where a deliberate decision to allow the period to expire has been made, ordinarily it will be difficult to provide an explanation for that decision sufficiently cogent to warrant the grant of leave….”
After further consideration of authority, his Honour said (at 226):-
“98. In my opinion, to grant leave to sue long after the expiry of a limitation period, when the applicant has made a deliberate decision to allow the statutory period to expire, in the absence of special circumstances explaining satisfactorily the conduct of the applicant, would set at naught the purpose of the legislation.”
Sheller JA, in a separate judgment, did not disagree with the principles expounded by Ipp AJA in relation to the construction and operation of the section.

It is clear from the consideration of principle in Itek, that the issues referred to by counsel for the appellant in the present proceedings necessarily arose for consideration by his Honour at first instance and by this Court on appeal. It is convenient to consider the second issue, relating to the difficulty with witnesses, before turning to the other issues.
The availability of witnesses to the potential defendant, should a limitation period be extended, relates, of course, to the question whether, after the passage of time, a fair trial can be held. In the present case, it was argued on behalf of the appellant that the absence of two witnesses, Messrs Martin and Bell, who were, at the relevant time, employed by the appellant as supervisors, would significantly prejudice the appellant in the conduct of its defence at a trial. These witnesses were important in that they could provide relevant evidence in relation to part of the claim brought by Milat, that there had been a negligent failure to provide him with adequate training and to supervise him in the conduct of his work. The evidence of Mr Nelson indicated that Mr Martin could be contacted but had no relevant recollection and Mr Bell was not able to be found. It was reasonably clear that further enquiries could be made to ascertain the whereabouts of Mr Bell. Other evidence in the case indicated that witnesses to the accident were still available. In these circumstances, his Honour found that the delay would not, relevantly, prevent a fair trial. For my part, I consider that this aspect of his Honour’s discretionary judgment does not warrant appellant interference. However, in my respectful opinion, his Honour placed too great an emphasis upon this aspect of the case, to the exclusion of a full and proper consideration of the other issues.
As to the first issue, his Honour formed the view that the extensive period of delay in the bringing of Common Law proceedings was sufficiently explained on the basis that Milat had not achieved any understanding of his potential rights at Common Law, until his conference with the second barrister, Mr McAuley. It is clear that his Honour placed considerable emphasis upon the view he formed of the credibility and reliability of Milat.This view was formed as the result of a short and rushed cross-examination of Milat, conducted in circumstances where, if it were not so confined, the matter could not proceed in the day’s busy list. There was, however, a very significant question whether Milat’s assertion of ignorance of his rights at an earlier stage should, reasonably, have been accepted. Documentary evidence in the case weighed heavily against such an acceptance. In this regard, it was necessary for his Honour to bear in mind, in the exercise of his discretion, the admonitions of the High Court in Fox v Percy (2003) 77 ALJR 989, which include, (per Gleeson CJ at 995), the following passage:-
“30. It is true, as McHugh J has pointed out, that for a very long time judges in appellate courts have given as a reason for appellate deference to the decision of a trial judge, the assessment of the appearance of witnesses as they give their testimony that is possible at trial and normally impossible in an appellate court. However, it is equally true that, for almost as long, other judges have cautioned against the dangers of too readily drawing conclusions about truthfulness and reliability solely or mainly from the appearance of witnesses. Thus, in 1924Atkin LJ observed in Societe d’Avances Commerciales (Societe Anonyme Egyptienne) v Merchants’ Marine Insurance Co (The “Palitana”):…….I think that an ounce of intrinsic merit or demerit in the evidence, that is to say, the value of the comparison of evidence with known facts, is worth pounds of demeanour.”
Further, in recent years, judges have become more aware of scientific research that has cast doubt on the ability of judges (or anyone else) to tell truth from falsehood accurately on the basis of such appearances. Considerations such as these have encouraged judges, both at a trial and on appeal, to limit their reliance on the appearances of witnesses and to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events. This does not eliminate the established principles about witness credibility; but it tends to reduce the occasions where those principles are seen as critical.”
The documentary material, in question, comprises the two advices and relevant correspondence provided by counsel, Mr Watson, in May and June 1999. This material is referred to briefly in his Honour’s judgment but it is necessary, for present purposes, to refer to it in more detail.
Mr Watson’s first advice, dated 24 May 1999, is extensive, occupying 17 pages of the appeal book. It sets out, in detail, relevant aspects of Milat’s background, the facts of the accident on 17 September 1993, and his injuries and subsequent medical history, which indicate that the accident had had significantly serious consequences for Milat.It speaks of a “recent conference with Mr Milat”, in which it became evident “that he also suffers the usual symptoms and difficulties one would associate with this type of injury including difficulty with sitting or standing for extended periods, being unable to undertake heavy lifting; being unable to walk for extended periods; and a general restriction in his ability to perform pre-injury employment, social, domestic and recreational activities including driving a vehicle, mowing the lawn, undertaking chores and repairs around the house and any sporting activities or hobbies which he previously undertook.”
Counsel then referred to the fact that “on the face of these instructions, it appears that Mr Milat has a potential entitlement to seek Common Law damages from his employer in respect of the injury.” The advice points out that Mr Milat was outside the three year time limit for commencement of proceedings, prescribed by s 151D of the Act, but that he could make application to commence proceedings outside the prescribed time limit. Counsel advised that:-
“Broadly speaking, Mr Milat will need to provide the court with a satisfactory explanation for his delay in commencing proceedings, and satisfy the court that a fair trial may still be conducted as between the plaintiff and defendant given the effluxion of time. In considering that question, details of when the insurer was put on notice and the opportunity they have had to investigate the claim both in regards to liability and causation will be relevant.”
Counsel then dealt with matters that would need to be established, in order to prosecute a claim against Tekno for common law negligence or breach of statutory duty, and advised what steps should be taken and what further information should be obtained, both on the issue of liability and of damages. The advice, in this regard, was extensive and finished with a recommendation “that the above matters be attended to as a matter of urgency and a conference be arranged for me to see Mr Milat and my instructing solicitors so that his prospects of success in Common Law proceedings, including his prospects of obtaining an extension of time in which to commence proceedings may be ascertained.”
On 15 June 1999 Mr Watson wrote to Mr Milat’s solicitors, a copy of the letter being in the appeal book, and referred to “our recent discussions about Mr Milat’s instructions.” The letter said:-
“I enclose my further advice and draft Application for Determination. Please note that there are procedures that must be followed prior to the commencement of proceedings. Those procedures are set out in my advice.”
The opening words of the advice are:-
“My instructing solicitors have requested that I draft the appropriate notice to commence proceedings in the Compensation Court for Mr Milat.”
The rest of the advice is directed to the taking of proceedings in that Court, on Milat’s behalf, together with necessary draft documents. The advice was dated 11 June 1999.
There was no evidence in the application before his Honour from Milat’s previous solicitors. Apart from a very large number of medical reports, which apparently came from their file, there are no copy file notes relating to any conferences with Milat, other than a short handwritten one which details some particular physical problems suffered by him and which also provides some information as to his wife’s age and employment. In particular, there is no copy of any letter of instructions from Milat to the solicitors to take proceedings in the Compensation Court rather than at Common Law. Those proceedings would have required that an election under s 151A of the Workers Compensation Act 1987 be made. There is no evidence that any such election was, in fact, made. Also, it appears that the proceedings in the Compensation Court, contemplated in counsel’s second advice, were never commenced.
The inference is clearly open from the content of the two advices and the letter that accompanied the second advice that the content of counsel’s first advice was discussed between Milat and his solicitors and that instructions were given to seek lump sum compensation in the Compensation Court rather than to proceed at Common Law. If this inference be correct, then, at a time when Milat was three years out of time to commence Common Law proceedings, he made a considered and informed decision not to seek an extension of time but to proceed, instead, in the Compensation Court. It is almost impossible to accept that his solicitors, upon obtaining counsel’s first advice, would not have had a full discussion with their client as to the taking of proceedings at Common Law, in which they would have taken steps to ensure that he fully understood the position.
In view of these inferences from these contemporaneous documents, there was a clear and heavy onus upon Milat to satisfy his Honour that his explanation of the delay should be accepted. As already indicated, his Honour’s finding that there was a satisfactory explanation was based upon his acceptance of Milat as a credible witness. This acceptance resulted from, apparently, a favourable impression created by Milat when giving his short oral testimony. Because of its obvious significance in the case, it is appropriate that I now set out this testimony as it appears in the transcript:-
“de MEYRICK: Q. Sir, you said in your affidavit at paragraph 57 that Mr McAuley, barrister, was the first person to describe to you the meaning of negligence, and that you might have a negligence claim, is that correct?
A.           That’s correct, yes.
Q.           You said earlier that you had a meeting with a barrister by the name of Mr Watson in May 1999, do you remember that meeting?
A.           Yes.
Q.           Was it not the case that – was negligence or fault discussed at that meeting at all?
A.           He doesn’t discuss anything for that negligence, for the Court just he said that he’s going to meet me another day, and that’s it,..(not transcribable)..court or anything, that’s all, nobody mentioned to come to low(?) court or anything.
Q.           See what I want to suggest to you is that following your meeting in May 1999 with Mr Watson, barrister, that your solicitor spoke to you about whether you wanted to pursue a fault base claim or not and obtain some instructions from you about that, does that accord with your recollection or not, do you remember that?
A.           That was second time was me down there, and then he said that – he said he needed some more evidence from my solicitor, and doesn’t say anything to the court or anything, just only say needed more evidence, ..(not transcribable)..more paper to him and then let me know, he doesn’t call any more, doesn’t say anything from that, he doesn’t anything from there.
Q.           You understand I’m suggesting to you that perhaps in or about June of 1999, after you had met Mr Watson, that your solicitor asked you to make a decision on what type of case you wanted to pursue?
A.           No.”
I have had considerable difficulty in deciding whether or not to accede to the appellant’s submission that, in light of the inferences so obviously open from the documentary material, and because of the very slight opportunity to assess credibility from demeanour that this oral evidence provided, this Court should reverse his Honour’s finding that a reasonable explanation for the delay had been provided. One cannot help but feel uneasy that, having regard to the admonitions of the High Court in Fox v Percy, his Honour too readily accepted Milat’s oral and affidavit evidence, to the effect that he received no information as to his Common Law rights in 1999, and that far too little weight was given to the evidence to the contrary. However, after considerable hesitation, I have come to a finely balanced conclusion that, in all the circumstances, his Honour’s decision on this aspect of the case should not be disturbed.
The third question is whether the appellant has established that its inability to sue McNamara by way of cross-claim, to recover indemnity or contribution, has occasioned it such prejudice, as to require the reversal of his Honour’s order. There was no dispute before his Honour, nor before this Court, that the effect of the relevant sections of the Limitation Act 1969 precluded the bringing of any action by Tekno against McNamara. On the facts of the accident, as alleged by Milat, there would have been a viable cross-claim, available to Tekno. At the time of the accident Milat was acting under the direction of Mr Maynard, a foreman employed by McNamara. He was lifting the metal tray, at the request of Mr Maynard, in order to assist Mr O’Brien, another employee of McNamara, in placing it in its correct position. It was Mr O’Brien who dropped his end of the tray and occasioned the injury to Milat. Clearly, Tekno would have had available a substantial claim for contribution. It would have had this claim available in June 1999, as the relevant limitation period did not expire until 17 September 2000. I am unable to agree that the loss of the right to seek contribution “should not be the basis upon which an application of this type should be refused.” Whether one regards the ability to bring a cross-claim for contribution or indemnity as an ordinary incident of the ability to have a fair trial, or whether the loss of it is to be regarded simply as an incident of prejudice arising from a plaintiff’s failure to sue a defendant within time, the result, in my opinion, is the same. The prejudice is obvious and significant. In the present case, it should have been taken into account by his Honour. His failure to do so, with respect, amounted to an error of principle in the exercise of his discretion. It means, in my view, that his Honour’s decision must be set aside and the discretion re-exercised by this Court. The re-exercising of the discretion, taking into account this element of prejudice, must, in my view, lead to the decision that it is not just and reasonable to extend the time for the bringing of this action.
Accordingly, I propose the following orders:-
1.The appeal be upheld. Orders of Delaney DCJ of 4 October 2002 set aside.
2.In lieu thereof order that the respondent’s Notice of Motion of 26 November 2001 be dismissed with costs.
3. The respondent to pay the appellant’s costs of the appeal and in that respect to have a Certificate under the Suitors Fund Act.
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LAST UPDATED: 19/09/2003

[2003] NSWCA 254

19 September 2003