I. INTRODUCTION
A. Background to this Reference
1.1 This is the ninth report in the Community Law Reform Program. The Program was established by the then Attorney General, the Hon F J Walker, QC, MP, by letter dated 24 May 1982 addressed to the Chairman of the Commission. The letter contained the following statement:
This letter may therefore be taken as an authority to the Commission in its discretion to give preliminary consideration to proposals for law reform made to it by members of the legal profession and the community at large. The purpose of preliminary consideration will be to bring to my attention matters that warrant my making a reference to the Commission under s.10 of the Law Reform Commission Act, 1967.
The background and progress of the Community Law Reform Program are described in greater detail in the Commission’s Annual Reports since 1982.
1.2 The Commission was alerted to an injustice arising from the operation of the Limitation Act 1969 by the judgment in Bergfels v Port Stephen Shire Council1 (Bergfels) in November 1983. Master Allen of the Supreme Court of New South Wales (as he then was) there called for the reform of the Limitation Act 1969 to remedy the particular hardship caused in that case. The Master further suggested that a general amendment of the Act was perhaps more appropriated.2
1.3 The plaintiff in that case, Mrs Bergfels, sought to commence proceedings under the Compensation to Relatives Act 1897 claiming damages for the death of her husband in 1966. The Limitation Act 1969 requires that such actions be brought within six years of the date of death.3 Ordinary actions claiming damages for personal injuries are also governed by a six year limitation period, as indeed are actions founded on tort or contract generally.4
1.4 The Limitation Act 1969 makes provision for the extension of these primary limitation periods in certain defined circumstances. Master Allen reluctantly held that the benefit of those provisions did not extend to persons claiming under the Compensation to Relatives Act 1897. Such actions must always be brought within six years of the date of death.
1.5 This interpretation meant that Mrs Bergfels was unable to commence her proposed negligence action against Port Stephens Shire Council. This was despite the fact that Mrs Bergfels could not reasonably have been expected to commence her action at an earlier time. Since her husband’s death, Mrs Bergfels had pursued many formal and informal channels to obtain evidence necessary to sustain her cause of action. It was only in 1981 after an inquest was finally ordered that Mrs Bergfels obtained evidence from which it was possible to infer negligence on the part of the Council. Mrs Bergfels’ diligence and tenacity were praised by Master Allen5 and no suggestion was made of delay or impropriety on her part.
1.6 The case aroused considerable and critical media attention and the Commission gave preliminary consideration to the issues raised in the Master’s judgment. Those issues had already been considered and resolution attempted in England, and more recently in Victoria and Western Australia, and the Commission was assisted by reports prepared in those and other jurisdictions. The Commission also consulted the considerable literature dealing with latent injury and disease which is another area in which acute problems arise from limitation of actions.
1.7 By letter dated 20 February 1984 the Commission requested a reference from the Attorney General. The terms of reference subsequently received are set out on page ix. It should be noted that they extend to a consideration of the specific injustice arising in Bergfels and to a general reconsideration of the Limitation Act 1969. In both cases the Commission is required to consider the issues only in relation to personal injury claims. This Includes claims brought under the Compensation to Relatives Act 1897 and the Law Reform (Miscellaneous Provisions) Act 1944. The significant issues arising in relation to latent property damage and economic loss, important as they are, do not fall within this reference.6
B. Limitation Statutes-General Effect
1.8 Limitation statutes operate by specifying a time period within which the plaintiff must commence his or her action. After the expiry of that time period, the statute may be invoked as a complete defence or bar to the plaintiff’s action regardless of the defendant’s culpability in the substantive cause of action. While it is common to refer to the effect of the Act as being to prohibit the commencement of an action after a certain date, or to bar the plaintiff’s action, this is not strictly correct. As this Commission pointed out in its 1967 Report Limitation of Actions,
[a]n action can be brought and can successfully be carried to Judgment notwithstanding the apparent words of prohibition: the effect of the statutes is to give to the defendant matter which he [or she] may, but need not, plead by way of defence.7
1.9 Although limitation statutes are generally categorised as procedural only, in practice they operate on the substantive rights and liabilities of the parties.8 The defendant’s liability ceases and the plaintiff must seek compensation elsewhere, if at all. The New South Wales Limitation Act 1969 is unique in Australia and in most common law countries9 in providing that at the expiration of the limitation period, the right and title of the plaintiff to claim damages from the defendant is extinguished.10 This gives statutory recognition to the fact that the Act operates as a final determination of the litigants’ rights and liabilities regardless of their respective merits in the substantive cause of action. The plaintiff’s interest in always being able to have an issue determined on its merits is consequently overridden.
C. The Rationale for Limitation Periods
1.10 The fact that limitation statutes are enacted reflects a concern both for the defendant’s interests in litigation and for the public interest. By limiting the time within which a plaintiff may make a claim, the defendant’s potential liability is made finite and can be predicted with certainty. The potential defendant is thus able to make the most productive use of his or her resources11 and the disruptive effect of unsettled claims on commercial intercourse is thereby avoided.12 To that extent the public interest is also served.
1.11 A corollary of this principle is that plaintiffs should not be entitled to “sleep on their rights”. Plaintiffs should be encouraged to act promptly to assert their rights and prevent false expectations being aroused in the minds of the defendant or the community.
1.12 The public interest demands that the proceedings be commenced with as little delay as possible for delay can only prejudice the fair trial of the issues involved. The litigation of claims at a time when witnesses or records may no longer be available or reliable is to be discouraged. This is an especially significant consideration in personal injury actions which rely so much for their resolution on the proof of factual matters. These considerations have led in recent times to the development of the branch of the courts’ inherent jurisdiction in relation to the stay or dismissal of proceedings for want of prosecution.13
1.13 Limitations legislation thus aims at the prevention of avoidable delay and seeks to achieve more abstract objectives of justice in the public interest. Its operation may, however, lead to particular instances of hardship where the plaintiff could not be said to have acted improperly or unreasonably in failing to commence an action within the limitation period. The application of a limitation period in such cases has been justified, albeit reluctantly, by reference to these wider objectives which are said to transcend the individual case.14
D. Problems with the Law in Personal Injury Claims
1.14 In recent decades there has been an increasing recognition of circumstances in which the application of limitation statutes according to the above criteria has led to injustice to plaintiffs. The injustice may be the consequence of an unusual set of circumstances against which no general statutory formula could effectively guard. The Bergfels case is an example of this. Other problem areas can be classified more generally.
1.15 Limitation statutes usually provide that the period within which an action must be commenced runs from the date on which the plaintiff’s cause of action is complete or said “to accrue”. Where the action is one for personal injury this occurs when the plaintiff suffers damage or injury which can be termed as “real” or not negligible.15
1.16 The existence of an injury will normally be apparent to the plaintiff, if not at the time of the wrong, then soon after. Of course some time may need to pass before the full extent of the injury or any complications are known. The length of the limitation period is designed to allow for such developments.
1.17 In many cases, however, the diagnosis of a disease (using the currently available methods of diagnosis) may not be possible until many years, or even generations,16 after the date of “injury”.
1.18 A similar problem may arise in determining the cause of a disease. While a person may be aware that he or she is suffering from a particular disease, the current state of medical knowledge may not have established the existence of a causal link between the disease and a particular activity. The injured person may only become aware of this link, and hence of the possibility of a cause of action, after the expiry of the limitation period.
1.19 A person may also be ignorant as to the right to commence an action. A prospective plaintiff may have received incorrect or misleading advice from a solicitor or from a friend, fellow worker or official. Alternatively, a person may have failed to obtain legal advice due to timidity, ignorance, poverty or fear of reprisals from a prospective defendant.
II. OUTLINE OF THIS REPORT
1.20 The growing concern expressed at the injustice exposed in the above types of cases has led to pressure for the reform of limitations legislation. Attempts have been made to obtain a new balance of the respective litigants’ rights which is more favourable to the plaintiff.
1.21 Throughout its deliberations the Commission has been conscious of two competing factors to be accommodated in a limitations statute. On the one hand there must be certainty and an end to litigation. On the other there is a need to see that those who suffer disability at the hands of another do not go uncompensated because of the operation of technical rules. In this Report the Commission examines the ways in which law reform bodies and legislatures in other jurisdictions have attempted to meet these demands. The results of that research are set out in Chapter 4 and a summary of the available options for reform appears in Chapter 5. In Chapter 6 the conclusions which the Commission has reached are stated and explained and its recommendations made. Chapter 7 contains discussion of the Commission’s views on whether the amendments recommended should be made retrospective in effect and the likely cost of implementing them. A draft of the amendments which would be necessary to the Limitation Act 1969 if the recommendations are to be implemented is attached in Appendix A.
III. ACKNOWLEDGEMENTS
1.22 In preparing its Report the Commission has had assistance from many people. Thanks are due in particular to Master Allen, now the Honourable Mr Justice Allen, of the Supreme Court of New South Wales, who first drew our attention to the hardship caused by the decision in the Bergfels case. Dr P R Handford, Executive Officer and Director of Research with the Law Reform Commission of Western Australia, and Mr G Bellamy, of the Commonwealth Attorney-General’s Department, assisted by providing the Commission with copies of papers on the topic on which they had worked. Mr Bellamy also read and commented on a draft of the Report. Ms Anna Nemanic, Legal Research Consultant with the Commission throughout 1985, was responsible for much of the research and writing involved in the first draft of the Report.
1.23 The Commission is also especially grateful to Parliamentary Counsel, Mr D R Murphy QC, who made a substantial contribution to the Commission’s deliberations. The Draft Bill which Mr Murphy prepared appears in Appendix A of the Report and contains the amendments suggested by the Commission to implement its proposals.
FOOTNOTES
1. [1983] 2 NSWLR 578.
2. Id at 584.
3. Limitation Act 1969 s19.
4. Id s14(1).
5. Note 1 at 579.
6. This is a matter which the Commission is currently considering in the Community Law Reform Program.
7. New South Wales Law Reform Commission Limitation of Actions (LRC 3, 1967) at 106, para 98.
8. D C Pearce Statutory Interpretation in Australia (2nd ed, 1981) at 156-157, paras 221-222.
9. The New South Wales approach has since been followed in Scotland: Prescription and Limitation (Scotland) Act 1985; British Columbia: Limitation Act RSBC 1979 c236; and has been recommended for Ontario: Ontario Law Reform Commission Report on the Limitation of Actions (1969) at 133.
10. Limitation Act 1969 ss 63-68.
11. P J Kelley “The Discovery Rule for Personal Injury Statutes of Limitations: Reflections on the British Experience” (1978) 24 Wayne Law Review 1641 at 1644.
12. Harvard Law Review “Developments in the Law, Statutes of Limitations” (1949-50) 63 Harvard Law Review 1177 at 1185.
13. Birkett v James [1978] AC 197.
14. Central Asbestos Co Ltd v Dodd [1973] AC 518 at 546, per Lord Simon of Glaisdale.
15. Cartledge v E Jopling and Sons, Ltd [1963] AC 758, at 772, per Lord Reid; at 774, per Lord Evershed.
16. Diethylstilbesterol (DES), for example, administered in early pregnancy to prevent spontaneous abortion, creates a risk of vaginal or cervical cancer in the recipient’s daughter.
