I. INTRODUCTION

5.1 New South Wales is at the same legislative stage at which the Orr Committee confronted limitations in England in 1974. There are obvious difficulties with the current Limitation Act 1969 as it applies to personal injury actions. The judiciary finds the statutory language obscure and ambiguous. Particular injustices and anomalies have been revealed in the cases, for example in Bergfels. The legislation cannot, in its present form, avoid injustices. If policy demands that plaintiffs be protected from the effects of the application of fixed principles then the difficult question is raised-what statutory provision would provide a better alternative?

II. OPTIONS FOR REFORM

5.2 The Commission has identified four major viable options for the reform of the existing legislation. Each of these could be subject to variation in legislative expression. Where possible the options have been drawn from existing limitations legislation.

A. Option I-Fixed Limitation Period with a Discovery Rule Extension

5.3 This option embodies the current New South Wales position but some modification or clarification of the legislation would be appropriate. The main features of this option are as follows:

• A fixed (currently six year) limitation period running from the date of accrual of the cause of action or from the date of knowledge, whichever is later.
• Redrafting the statutory formulation of the discovery rule to both simplify and clarify it.
• Extend the benefit of the discovery rule to applicants under the Compensation to Relatives Act 1897. Provided that the deceased’s cause of action would not have been barred at the date of death, such applicants would have six years from the date of death or the date of the applicant’s knowledge within which to commence their action. The position of such applicants would thus be assimilated with that of ordinary personal injury plaintiffs and the present anomaly, illustrated in Bergfels, would be eliminated.
• Remove the ultimate thirty year limit on the commencement of actions contained in the Limitation Act 1969, s51.

5.4 The option differs from the existing New South Wales legislation in the following ways. Under the current formulation, satisfaction of the date of knowledge criteria only allows the court to exercise its discretion to extend the limitation period in the plaintiff’s favour. The option would entitle the plaintiff, on proof of the criteria, to an extension as of right. Furthermore the Court is currently empowered to extend the limitation period for up to twelve months from the date of knowledge. Under the above proposal, the plaintiff would be entitled to the full benefit of the primary limitation period running from the date of knowledge. This is the position under both the English and Victorian limitation provisions (paras 4.5,4.23).

5.5 In redrafting the statutory formula for the discovery rule extension. the recent Victorian amendments (para 4.23) illustrate the simplicity and lack of ambiguity which can be achieved. The limitation period there begins to run from the date on which the plaintiff first knows

(a) that he or she has suffered those personal injuries, and

(b) that those personal injuries were caused by the act or omission of some person.

This implicitly excludes the worthwhile cause of action test. The current English legislation goes even further and expressly excludes it as a matter for consideration in the discovery rule extension of the primary limitation period (para 4.5).

5.6 A further issue to be addressed is whether or not the legislation should impose constructive knowledge and thus prevent a plaintiff from relying on the discovery rule extension. In New South Wales provision is currently made for the plaintiff to be attributed with constructive knowledge In certain circumstances. Sub-paragraph 57(1)(e)(ii) provides that a fact is not within a person’s means of knowledge only if

in so far as the fact escapable of being ascertained by him, he has, before that time, taken all reasonable steps to ascertain the fact.(emphasts supplied)

It has generally been accepted that notwithstanding the use of the words “reasonable steps”, this sub-paragraph imposes a subjective test. In England it was held that in relation to a similarly worded provision,

[w]e are not concerned with “the reasonable man.” Less is expected of a stupid or unreasonable man than of a man of intelligence and wide experience.¹

These remarks were approved in Do Carmo v Ford Excavations Pty Ltd² where Dawson J stressed that it was

...the means of knowledge which were available to the [plaintiff] which are relevant and not the means of knowledge of a hypothetical reasonable man.³

5.7 The current English Act also contains a provision imposing constructive knowledge. However, under that provision, a person will not be fixed with knowledge of facts ascertainable only with the help of expert advice if he or she has taken all reasonable steps to obtain that advice.⁴

5.8 The current Victorian legislation does not attempt to define “knowledge” for the purposes of the discovery rule. The legislation, by implication, refers only to the actual knowledge of the plaintiff and does not impose constructive knowledge.

B. Option 2-Fixed Limitation Period with a Discovery Rule Extension and a Discretionary Extension

5.9 This option has been implemented in the most recent amendments to the limitations legislation of England and Victoria.⁵ It combines the preceding option with an overriding discretion to direct that the primary limitation period shall not apply in a particular case. The main features of this option are as follows.

• A fixed limitation period running from the date of accrual of the cause of action or from the date of knowledge, whichever is later.
• A general discretion is conferred on the court to direct that the above requirements of the statutory formula shall not apply to a particular individual where the court considers it inequitable so to do.
• Applicants claiming under the Compensation to Relatives Act 1897 are integrated into the above scheme. Both the discovery rule and the discretion extension are thus applicable to such actions.

5.10 The Victorian legislation although based largely on the English provisions contains significant improvements in legislative expression. The English provisions were so drafted as to require, as a prerequisite to the exercise of the discretion to extend, proof that the primary limitation period had caused the plaintiff prejudice. The discretion is thus not available in cases where the plaintiff has commenced an action within the requisite period but due to a lapse the action has been discontinued.⁶ The Victorian provisions have avoided such technicality by giving the court jurisdiction to exercise its discretion if it is just and reasonable so to do.⁷ Moreover the Act expressly provides that the discretion can be exercised notwithstanding the fact that “an action in respect of such personal injuries has been commenced”.⁸

5.11 The guidelines prescribed for the exercise of the discretion in Victoria and England are virtually identical. While the guidelines are not exclusive and the court is able to consider all the circumstances of the case, they are comprehensive.

5.12 Both Victoria and England have extended the benefit of the discretion to claims made under their equivalents of the Compensation to Relatives Act 1897. The discretion is applicable to both the deceased’s hypothetical cause of action and to the applicant’s cause of action. The applicant thus has the opportunity of persuading the court that had the proceedings been instituted immediately before the date of death the discretion would have been exercised in favour of the deceased. The Orr Committee recognised that this may involve the court in “too difficult a task” due to the extremely hypothetical nature of such a submission. The Court may be called upon to make a judgment in relation to the circumstances of a person who had died many years before and to an action which had not in fact been instituted.⁹ Nevertheless the court was given power to do so by the amending legislation.¹⁰

5.13 In Victoria, the discretion may be exercised in circumstances where

(a) the death of the deceased person was caused by a wrongful act, neglect or default; and

(b) the deceased did not before his or her death bring an action in respect of the wrongful act, neglect or default.¹¹

The guidelines prescribed for the exercise of that discretion include a specific reference to the knowledge and reasons for the delay of both the claimant and the deceased.¹²

C. Option 3-Fixed Limitation Period with a Discretionary Extension

5.14 This option differs from that preceding in that there is no provision for extension of the primary limitation period as of right from the date of knowledge. That is, there is no discovery rule extension. All plaintiffs who fall outside of the primary limitation period must rely on the court’s discretion. The option is similar to one recommended by the Law Reform Commission of Western Australia in its Report on Limitation and Notice of Actions: Latent Disease and Injury. (para 4.32) The main features of this option are as follows:

• A fixed limitation period running from the date of accrual of cause of action.
• A general discretion is conferred on the Court to direct that the primary limitation period shall not apply to a particular individual where the court considers it equitable so to do.
• Applicants claiming under the Compensation to Relatives Act 1897 are integrated into the above scheme. After the expiration of a fixed period from the date of death, the applicant may apply for an exercise of the court’s discretion.

5.15 Although this option does not contain the discovery rule extension, the guidelines prescribed for the exercise of the discretion specifically refer to the special circumstances encountered by such plaintiffs. The Law Reform Commission of Western Australia, for example, recommended that the Court have regard to

• the reasons why the plaintiff did not commence the action within the limitation period including..... that there was a significant period of time after the cause of action accrued during which the plaintiff neither knew nor ought reasonably to have known that he had suffered the injury giving rise to the cause of action.
• the steps, if any, taken by the plaintiff to obtain medical, legal or other expert advice and the nature of any such advice he may have received.¹³

D. Option 4-No Limitation Period

5.16 The suggestion that limitation statutes be abolished in relation to personal injury claims has been made at various stages in the development of modern limitations legislation. It is a suggestion which has generally been dismissed, often peremptorily, with arguments of practice and principle.

5.17 As noted in paras 1.10- 1.12, there are three major justifications given for the enactment of limitations legislation. Firstly, such statutes prevent actions being brought at a time when evidence has become unreliable or non-existent. This has been called the evidentiary rationale.¹⁴ Secondly, the defendant is able to achieve a certainty with respect to his or her potential liability and this encourages a productive and efficient use of resources. This has been called the personal certainty rationale.¹⁵ Thirdly, plaintiffs are discouraged from sleeping on their rights, the so-called diligence rationale.¹⁶ These rationales were espoused by the Edmund Davies Committee in 1962¹⁷ and have been repeatedly referred to in subsequent inquiries.¹⁸

5.18 These major rationales have been undermined by the changing circumstances and conditions of litigation. It is said for example that the evidentiary rationale may be better addressed by the development of stricter rules of evidence and by appropriate training being given to those who are to try the facts.¹⁹ Furthermore, it has been argued that as the onus of proof falls on the plaintiff, it is as much in the plaintiff’s as in the defendant’s interest to bring an action promptly.²⁰ It is argued that the plaintiff’s self interest in having an action heard promptly is sufficient, and defendants do not need the extra protection of a limitation statute.²¹

5.19 The personal certainty rationale has also been questioned. The Scottish Law Commission referred to the argument that

the general principle of the law should be against limiting the right of a person to seek redress for injury due to the negligence of another person....²²

The historical view of litigation as a necessary evil to be discouraged is no longer held, and in fact litigation is seen as a positive vehicle for compensation, discouragement of negligent behaviour and the shifting of losses associated with personal injury.²³ Limitations legislation affects the balance achievable by litigation.

5.20 Furthermore, it is argued that the availability of insurance has released potential defendants from the uncertainty associated with personal injury actions.²⁴ Moreover, it is argued that defendants should be required to consider the latent potential of their products or practices and should be required to allocate resources with a view to their long term liability.²⁵

5.21 Finally, the diligence rationale has been undermined. Whilst in 1974, the Orr Committee asserted that

all experience shows that plaintiffs do not start proceedings promptly unless there is a sanction for failing to do so²⁶

it failed to provide any evidence in support of this assertion. A different conclusion was reached by the Committee on the Limitation of Actions (the Tucker Committee) which reported in 1949 on the then current twelve month limitation period applicable to actions brought against public authorities. The Committee considered statistics supplied by the Scottish Motor Traction Co Ltd in relation to a jurisdiction then governed only by a twenty year prescription period. Over a five year period, it was found that ten percent of claims were commenced within nine months of the date of injury; a further fifty percent within nine to twelve months. a further thirty percent within one to two years; and a further nine percent within two to three years. Only one percent of claims was commenced more than three years after the date of injury.²⁷ The Committee considered that these figures confirmed Its view that

save in exceptional circumstances, claims are made, and actions brought where necessary, with reasonable promptitude, irrespective of the existence of any special period of limitation.²⁸

5.22 The impact of limitations legislation on victims of latent injury and disease cannot be justified by reference to the diligence rationale. Their delay in commencing actions within the limitation period is due to the imperceptibility of their injury, or its causation, and not to any lack of diligence on their part.

5.23 It has been argued also that in the absence of limitation periods,

new traditions and standards of diligence may substitute for the present professional tradition of relying on the statute of limitations to help make decisions about the timing of claims.²⁹

Lawyers could be expected to use current limitation periods as a guideline for the bringing of actions and would be encouraged by professional pride or fear of negligent loss of evidence to commence actions in good time.³⁰

5.24 There is a modern variation on the personal certainty theme. Although insurance has to a significant extent removed the uncertainty of the risk of future liability from the individual defendant, in order to function insurance companies themselves require limits to be placed on their liability.³¹ Ultimately, therefore some limitations provision is necessary to make the risk of liability insurable.³² The Orr Committee considered that open ended liability might make some risks uninsurable resulting in no benefit to anyone.³³

5.25 However. one commentator has argued that the same problem arises in relation to a system of limitation which includes an unfettered discretion such as that recommended by the Orr Committee. It has been suggested that the existence of such a discretion has the same effect In practice as no limitation provision at all.

If there are problems of insurability without any statute of limitations there is good reason to believe there are problems of insurability under the [Orr] Committee’s proposal.³⁴

5.26 Alternatively it has been suggested that the whole issue of limitation could be left to the discretion of the court and the “largely, if not entirely, superfluous fixed periods” could be repealed. A system could be envisaged where the commencement of actions by plaintiffs was not governed by any limitation period. Defendants would, however, be entitled to apply for an exercise of the court’s discretion that the plaintiff be prevented from bringing an action. The onus would then be on the defendant to satisfy the court that it was unfair to allow the action to proceed. A similar provision, but in a very different context, was recommended in 1975 by this Commission in its Report on The Limitation of Actions-Special Protections. The Commission recommended a fixed limitation period of three years with a power to extend for up to one year further “if satisfied that sufficient cause is shown or that having regard to all the circumstances of the case, it would be reasonable so to do.”³⁵ However the defendant could apply for a Court order that the plaintiff commence proceedings within a period expiring before the expiration of the limitation period.³⁶ The defendant would have to show “sufficient cause” for such an order to be made or that “having regard to all the circumstances of the case it [was] reasonable to make” such an order.³⁷ The Commission envisaged that a defendant could rely on the provision where there was a possibility that witnesses may be lost or die; where the possibility of litigation could frustrate future planning; or where fear of the outcome of litigation was so severe that it might prejudice the defendant’s hopes so much as to “sap his present incentives to work and save money.”³⁸

1. Central Asbestos Co Ltd v Dodd [1973] AC 518 at 530, per Lord Reid.

2. (1984) 154 CLR 234.

3. Id at 258-259.

4. Limitation Act 1980 (UK) s14(3).

5. Limitation Act 1975 (UK) (now consolidated in Limitation Act 1980 (UK)): Limitation of Actions (Personal Injury Claims) Act 1983 (Vic).

6. Walkley v Precision Forgings Ltd [1972] 2 AII ER 548; Thompson v Brown Construction Ltd [1981] 2 All ER 296.See also para 4.12.

7. Limitation of Actions Act 1958 (Vic) s23A(2).

8. Id s23A(4).

9. Law Reform Committee (Orr Committee), Interim Report on Limitation of Actions, Personal Injury Claims (Cmnd 5630, 1974) at 45, paras 128-129

10. Limitation Act 1980 (UK) ss12(3), 33(4) and (5).

11. Wrongs Act 1958 (Vic) s20(2).

12. Id s20(3)(a) and (e).

13. Law Reform Commission of Western Australia Report on Limitation and Notice of Actions (Project No. 36 Part 1 1982) at 77-78, paras 4.25-4.26.

14. 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.

15. Ibid.

16. Ibid.

17. Committee on Limitation of Actions in Cases of Personal Injury (Edmund Davies Committee) Report (Cmnd 1829, 1962) at 9, para 17.

18. See for example: Law Reform Committee (Orr Committee) note 9 at 9, para 24: New South Wales Law Reform Commission Limitation of Actions (LRC 3, 1967) at 133, para 280; Law Reform Commission of Western Australia, note 13 at 8-9, para 1.10; Law Reform Committee of South Australia Claims.for Injuries from Toxic Substances and Radiation Effects (No

87. 1985) at 6: Law Reform Commission of British Columbia Report on Limitations (1974)

at 9.

19. Harvard Law Review “Developments in the Law. Statutes of Limitations” (1949-50) 63 Harvard Law Review 1177 at 1186.

20. Trades Union Congress, Submission to the Orr Committee, note 9 at 9, para 26.

21. P J Kelley, note 14 at 1670.

22. Scottish Law Commission Prescription and Limitation of Actions (Memo No 9, 1969) at 48, para 74.

23. P J Kelley, note 14 at 1646-1647.

24. P J Kelley, note 14 at 1646.

25. S Peters “Occupational Carcinogenesis and Statutes of Limitation: Resolving Relevant Policy Goals” (I 979) 10 Environmental law 13 at 124.

26. Law Reform Committee, note 9 at 9. para 27.

27. Committee on the Limitation of Actions (Tucker Committee) Report (Cmd 7740, 1949) at 8. para 15.

28. Ibid.

29. P J Kelley, note 14 at 1671-1672.

30. Id at 1671.

31. P J Kelley. note 14 at 1672.

32. Id at 1646-1647.

33. Law Reform Committee, note 9 at 10, para 27.

34. P J Kelley. note 14 at 1675.

35. New South Wales Law Reform Commission The Limitation of Actions-Special Protections (LRC 21. 1975) at 42. para 140.

36. Id at 43, para 143.

37. Id Appendix D at 64, s50A. Proposed Limitation (Amendment) Bill.

38. Id at 43, para 143.