I. RETROSPECTIVITY
7.1 Any amendments made to limitations legislation raise acutely the problem of retrospectivity. Are the amendments to apply to all causes of action regardless of when they accrued, or only to those which have accrued after the commencement of the legislation? What effect will the amendments have on actions in which proceedings have already been commenced, or final judgment entered? In the absence of an express provision dealing with the operation of the amendments, certain presumptions are raised according to formal rules of statutory interpretation. For example, it is presumed that a statute which affects substantive rights and liabilities is not intended to have a retrospective operation. A statute which merely affects procedural matters will, however, be given a retrospective operation.1 These presumptions can, however, be overridden by express language. Because the application of the presumptions cannot be predicted with certainty, and because they may not in any case achieve Parliament’s wishes, the Commission has thought it necessary to make express recommendations on the issue of retrospectivity.
7.2 Without special provisions to the contrary, the Commission’s recommendations would have the following effects on causes of action which have accrued before the commencement of the proposed amending legislation. Firstly, the reduction of the limitation period from six years to three years would have the effect of depriving some plaintiffs of up to three years of time within which to commence their actions. Secondly, the conferral of the general discretion would give plaintiffs a new opportunity to have a discretion exercised in their favour. This could have the effect of reviving a cause of action which was statute barred before commencement. Thirdly, the ultimate thirty year bar is to be removed. These last two considerations could of course adversely affect the rights and liabilities of particular defendants.
7.3 In considering the issue of retrospectivity there are two competing principles to be considered. Firstly. fairness requires that rights and duties already vested at the time of commencement of a statute should not be adversely affected by that statute. In particular, revival of a statute barred action is said to be unjust because it deprives a defendant of a defence which had already become effective.2 This is an argument against making the Commission’s proposals retrospective in operation. Secondly there is the argument that where the law is changed in response to a particular hardship or injustice, the objective of that change will be partially frustrated if it only applies to causes of action which accrue after its commencement. Thus the benefit of any amendments should be extended to all plaintiffs whether or not their actions were already barred by the amended legislation.3 In Maxwell v Murphy4 for example, Fullagar J rejected an approach which presumed that statutes were not intended to interfere with a “vested defence” or “acquired immunity”.
I am not able to see any inherent probability that the legislature would.....have been zealous to avoid disappointment to a wrongdoer who might have thought himself safe, or his insurance company. I should rather have thought the legislature, being concerned to enlarge the remedy of [plaintiffs], would have seen nothing fundamentally unjust allowed in extending the enlarged remedy to persons who had the old abnormally short period to elapse...5
7.4 The Limitation Act 1969 introduced the discovery rule extension into the New South Wales legislation. The Act was said to be “fully retrospective”,6 in that the extension provisions applied to a cause of action whether or not a limitation period had expired before the commencement of the Act.7 However, plaintiffs whose actions accrued before commencement were to retain the benefit of any limitation period which was shortened by the Act.8 Nor were actions which had already been commenced before the commencement of the Act affected.9
7.5 This approach followed that implemented in the English reforms since 1963. According to that approach, plaintiffs obtained the benefit of any amendment beneficial to them, even though their cause of action had accrued before the date of commencement, and even though their action had been barred already under the amended law. Furthermore, the amendments were also applied to any action in which proceedings had been commenced. Analogously, plaintiffs were able to retain the benefit of any legislation which was more beneficial than the amendments.10 Thus the Law Reform (Limitation of Actions) Act 1954 (UK), which reduced the limitation period for personal injury actions from six years to three years, preserved the benefit of the six year period for those actions which had accrued before its commencement.11
7.6 The Orr Committee pointed out, however, that notwithstanding its concern that any amendments beneficial to a plaintiff be made retrospective, Parliament had not “gone so far as to approve a measure which would enable a judgment or settlement to be upset because of the change in the limitation period”.12 The effect of this is that a plaintiff who had actually been declared statute barred by a court would not be entitled to rely on the new provision. even though there was an appeal pending, or the time for appealing had not expired. The latest English amendments have upheld this principle.13
7.7 This concern that judgments not be overturned has been echoed by the Law Reform Commission of Western Australia which argued that there was a strong public interest in preserving the finality of judgments. This was said to outweigh any injustice experienced by plaintiffs who were thus unable to take advantage of the amendments.14
7.8 By way of contrast we refer to other approaches which have been taken to the issue of retrospectivity. The transitional provisions in the Acts Amendment (Asbestos Related Diseases) Act 1983 (WA) were based on suggestions made by the Law Reform Commission of Western Australia. Although they recommended full retrospectivity, the Commission recognised that this could expose defendants or their insurers to a potential liability which did not previously exist.15 The cumulative effect of full retrospectivity could cause hardship to a particular defendant and the Commission considered that the impact on defendants could be lessened, inter alia, by limiting the damages which could be awarded in retrospective cases.16 The Commission’s concern regarding full retrospectivity was echoed in the parliamentary debates on the amendments. The government was most concerned that the amendments would fix insurers with liability which previously did not exist and which would not have been considered when premium levels were set. The effect of potentially large and unanticipated awards could have led to liquidation which would have benefited no one, least of all the plaintiffs.17
7.9 A compromise was struck. The Act, which introduced the discovery rule extension, drew a distinction between actions where the relevant dates of knowledge occurred before and after 1 January 1984. In cases where the plaintiff’s requisite knowledge arises before that date, damages can only be awarded in respect of pecuniary loss and in any case cannot exceed $120,000. Such actions must also be commenced within three years of the date of commencement of the Act, as opposed to the usual six year period which runs from the date of knowledge.18 The choice of the $120,000 limit was said to be an arbitrary one, achieving a balance between being “financially responsible” and providing a “worthwhile amount of damages for a successful plaintiff”.19 This is in contrast to an approach based on the full economic cost of the injury to the plaintiff over a lifetime.
7.10 The latest Victorian amendments, which lengthened the limitation period from three to six years, simplified the discovery rule and introduced a discretionary extension, were stated to have a very limited retrospective operation.20 The amendments apply to all causes of action which had accrued within six years before the commencement of the Act.21 This has the effect of reviving some causes of action which would have been barred under the old three year period. Any actions which had accrued more than six years before commencement will continue to be governed by the repealed legislation.22 This is not a satisfactory solution given that those repealed provisions, which had been found to be unsatisfactory, will continue to govern such actions indefinitely and may result in parallel systems operating for some years to come. This can only exacerbate the feelings of injustice and hardship felt by plaintiffs whose actions had accrued more than six years before commencement.
7.11 The Commission recommends that certain of its recommendations be given full retrospectivity. The discretionary extension for example should be available to all plaintiffs regardless of when their causes of action accrued and notwithstanding that their actions had been statute barred by the previous legislation. Similarly the ultimate thirty year bar should be removed so as not to affect any action. In contrast, the reduction of the limitation period from six years to three years should be prospective and plaintiffs whose actions accrue up until the day of commencement should be able to retain the benefit of the six year period. Such plaintiffs will not, however, be able to retain the benefit of the discovery rule extension which would have been available to them under the repealed legislation. To allow this would be to attract the same criticisms made of the Victorian transitional provisions in the last paragraph. The Commission notes that this will not disadvantage plaintiffs because in New South Wales the discovery rule operates on a discretionary basis. The equivalent English and Victorian provisions entitle the plaintiff to an extension as of right on proof of the knowledge criteria. Moreover the Commission believes that any injustice which may arise due to the removal of the discovery rule extension is more than outweighed by the introduction of the discretionary extension.
7 . 12 The Commission has, however, identified a number of areas where there should be an exception to the otherwise full retrospectivity. The English approach has been to make any matters which have proceeded to judgment an exception to retrospectivity even where an appeal is pending or the time for appealing has not expired.23 The Commission considers that such a blanket exception is unwarranted and operates unfairly as between statute barred plaintiffs who have commenced actions and those who have not. The former class of plaintiffs should not be prejudiced as against the latter class, especially when one considers the often technical and complex reasons for a finding of limitation under the discovery rule. The Commission, however, recommends that where the judgment included a finding against the plaintiff on the substantive merits of the cause of action (apart altogether from any matter of limitation) the plaintiff should not be entitled to commence an action under the amendments. In such circumstances the necessity for finality of judgments does require that there be no retrospectivity.
7.13 The Commission also considered the possibility that the plaintiff may have received damages for the same injury already notwithstanding that he or she was statute barred under the amended legislation. This may have been in the form of a settlement, or a judgment against a negligent solicitor for failing to commence an action within the limitation period.
7.14 The fact that the plaintiff has entered into a settlement which purports to bar future litigation on the merits does not seem a sufficient ground in itself on which to deny retrospectivity. The settlement may well have been compromised because of the parties’ assessment that the plaintiff’s cause of action was likely to have been statute barred by operation of the provisions of the Limitation Act. Also there seems no proper basis on which to distinguish this case from the case where the plaintiff has pursued the matter to judgment, but has been denied relief because of the operation of the 1969 Act. The Commission recognises, however, that there is a distinction to be drawn between a meritorious claim settled unfavourably because of the influence of the Limitation Act and the more speculative claim which, even if reopened, would require little adjustment of the compensation paid. As statutory provisions for the identification of the different types of claims are likely to be cumbersome, and therefore productive of much litigation themselves, the Commission recommends that a discretion to reopen a settlement be given to the court to be exercised in circumstances where it is thought to be just and equitable to do so. The Commission does not anticipate that many such applications are likely to be brought.
7.15 The Victorian Chief Justice’s Law Reform Committee recommended that the discretionary extension should not be available in cases where the failure to commence an action within the limitation period was due “substantially to failure on the part of the legal representative to act with due care, expedition and diligence”.24 The Committee considered that this was the most usual cause of failure to bring proceedings in time and, that if it was so excluded, “cases of genuine hardship” only could be addressed.25 The Law Reform Commission of Western Australia also recommended that the Court take into account the fact that the plaintiff may have a claim in negligence against his or her solicitor.26
7.16 The Law Reform Committee of South Australia has, however, recommended that the fact that the plaintiff has an action against his or her legal representative should not be a factor in the court’s exercise of its discretion. The Committee arrived at this conclusion because it thought that “unless the Court is sure that the plaintiff would have been certain to win (which is certainly not the case in the normal latent injury case), the plaintiff may well not recover the entire amount from the solicitor that would been recovered from the original (intended) defendant”....It also thought that “it should also be borne in mind that the solicitor’s insurance may not provide sufficient coverage”.27 The Commission agrees that this possibility should not be a factor which influences the court’s exercise of its discretion to extend. It should not prevent the bringing of such an action, but money recovered in respect of the same cause of action, whether from the wrongdoer, a negligent solicitor, or his or her agent, should be taken into account by the court when assessing the damages payable to the plaintiff.
7.17 The Court should have power to make its award for damages on the terms that any amount of money already received by the plaintiff by reason of the cause of action being statute barred should be deducted from the award. This formula would not include payments made under the Social Security Act 1947 (Cth) or the Workers’ Compensation system, such payments would continue to be governed by the usual rules against double recovery applicable to them.
7.18 In recommending that the amending legislation have retrospective effect the Commission is conscious that it may give rise to causes of actions which were not within contemplation when the injury occurred. It is in the very nature of many types of latent diseases and injuries that their causes may not have been discoverable at the time they occurred. The fact that the plaintiff suffered injury at all, and the cause of the injury, may be matters which can be discovered only after further advances have been made in medical science. The Commission also recognises that on some occasions the costs of a successful action may have to be borne by the defendant personally as the type of injury or disease found may not have been covered by the policies of insurance in use at the time of the injury. If included within the policy, however, it is likely that the insurance cover provided will extend to events occurring many years in the past, for it is only in recent years that insurers have adopted the practice of insuring only against claims -notified during the currency of the policy.28
II. FINANCIAL IMPACT
7.19 After extensive inquiries the Commission has been unable to estimate in any satisfactory way the potential financial cost of its recommendations. Our inquiries, and those made in the other jurisdictions mentioned below (paras 7.21 -7.22), reveal that there is no sure way of assessing the number of extra claims which could be expected to follow the amendments recommended. Because people who are out of time do not generally institute proceedings there is no official record of their existence. Some indication of the potential effect of our recommendations can be seen from various interstate and international reports on the topic. The Commission considers this information a valuable but inconclusive guide.
7.20 In New South Wales, the Supreme Court has expressed concern at the potential cost to defendants and their insurers of asbestos related disease. In James Hardie Industries Ltd v QBE Insurance (International),29 Rogers J noted that the litigation was of “immense consequence to the future financial well-being of the parties”.30
7.21 During the introduction of the Victorian amendments in 1983, concern was expressed especially at the retrospective nature of those changes.
No provision would have been made for those cases in insurance, and, for the various payers who might be required to pay. Therefore, we can look forward to some additional premiums, some additional costs, being required of the community.31
Estimates made by the Victorian Government Insurance Office in 1982 ranged from $40 million to $50 million.32 The Attorney General however considered that there was insufficient information on which such estimates could be made, but that there was
...no evidence of the insurance industry dancing up and down and saying that this will bankrupt it or lead it to enormous increases in premiums.33
Nevertheless he accepted that the amendments would result in increased insurance costs, a sum which would ultimately be paid by the community in increased premiums.34
7.22 The Law Reform Commission of Western Australia referred to the concern expressed by the Motor Vehicle Transport Trust that it would be faced by a large number of stale claims. The Commission concluded that the fear was unfounded and that the Trust would not be unreasonably burdened or inconvenienced.35
7.23 In the debate on the Acts Amendment (Asbestos Related Disease) Act 1983 (WA) reference was made to a possible indebtedness of insurance companies of “anything up to $30 million” in relation to asbestos related disease alone.36 The Attorney General replied that the State Government Insurance Office should be able to meet the prospective claims as they arise. In relation to retrospective claims, the Attorney asserted that the State Government Insurance Office would meet the legal costs of the actions “out of established reserves and its normal margin of profit”. More substantial claims would require government contribution. In any case it was not proposed that the premiums of the insured be increased to cover any additional amounts.37
7.24 An American commentator sent detailed questionnaires to six British insurance companies with a particular interest in latent lung disease to determine the effect on claims of the introduction of the discovery rule and its lenient interpretation as applying to plaintiffs ignorant of their cause of action. The response of the insurance companies was that they did not keep records so as to isolate the effects of changes in limitation periods.38
7.25 In discussing potential cost it should be emphasised that there are two relevant stages of litigation. First the plaintiff must commence the action within the appropriate limitation period and then the substantive cause of action must be proved against the defendant. In relation to actions based on the contraction of disease, and in particular latent disease, plaintiffs face heavy burdens in proving their substantive cause of action. The fact that such plaintiffs may become newly entitled to commence their actions because of amendments recommended in this Report does not necessarily guarantee the subsequent success on the merits. This point was noted by the West Australian Attorney General in presenting that State’s recent amendments.
Frankly, it has been disturbing to observe the apparent assumption that -an amendment to the Limitation Act will ensure the recovery of damages by all persons affected by asbestos-related diseases. This is not a safe assumption. Each case will go on its own facts and merits and will have to satisfy the usual negligence criteria. Two cases that I am aware of on the asbestos-related disease of mesothelioma have already failed, despite being treated as not statute-barred.....[T]his is an area for some restraint in terms of expectations.39
7.26 A similar point was made by the Law Reform Committee of South Australia in its 1985 Report.
Even if satisfactory limitation provisions are devised to assist plaintiffs in latent injury toxic tort claims, that by no means solves the plaintiff’s problems. Once it is established that the plaintiff is within the limitation provisions he must set about the difficult task of proving his cause of action.40
The Committee then went on to examine ways in which plaintiffs could be assisted to establish the substance of their cases including altering the burden of proof, lowering the standard of proof and making recovery easier but placing a limit on the defendant’s liability.41
7.27 We do not accept that reliable data can be found which support the view that our recommendations would lead to a substantial increase in the volume of claims and thus have a significant impact on the cost of insurance. It is not the function of this Report to canvass the broader issues of whether compensation for personal injury in cases of latent injury and disease would be better provided under a special statutory scheme. The Victorian Attorney General noted the possibility of a national insurance scheme not based on fault.42 This Commission has recommended the introduction of a Transport Accident Compensation scheme which provides for compensation within carefully prescribed limits without proof of fault.43 If the compensation of latent injury and disease proves to be beyond the capacity of the common law, a limitation provision which operates to exclude arbitrarily such injury from compensation is a very blunt instrument with which to attempt to solve the problem. It is preferable to reshape limitations legislation so as to make it as fair and equitable as possible across the whole range of personal injury claims without arbitrary distinctions. Alleviation of the general problem of the cost of compensating personal injury has to be faced directly and independently if and when thought necessary.
FOOTNOTES
1. Maxwell v Murphy (1957) 96 CLR 261 at 267, per Dixon C J.
2. Law Reform Committee (Orr Committee) Interim Report on Limitation of Actions, Personal Injury Claims (Cmnd 5630, 1974) at 49, para 146.
3. Ibid.
4. (1957) 96 CLR 261.
5. Id at 284-285.
6. New South Wales Law Reform Commission Limitation of Actions (LRC 3, 1967) at 135, para 299.
7. Limitation Act 1969 s58(3).
8. Id s6(d).
9. Id s6(a).
10. Law Reform Committee, note 2 at 49, para 145.
11. Section 7.
12. Law Reform Committee, note 2 at 49, para 145.
13. Law Reform Committee, note 2 at 49, para 144. The Committee was here referring to the effects of the Limitation Act 1963 (UK) s6, the Law Reform (Miscellaneous Provisions) Act 1971 (UK) Sch 2 and the Limitation Act 1975 (UK) s3(1), (2).
14. Law Reform Commission of Western Australia Report on Limitation and Notice of Actions: Latent Disease and Injury (Project No 36, Part 1, 1982) at 84, para 4.38.
15. Id at 85, para 4.39.
16. Id at 86, para 4.40.
17. West Australian Parliamentary Debates, Legislative Council, 3 November 1983 at 5550, the Hon J M Berinson, MLC, Attorney General.
18. Acts Amendment (Asbestos Related Diseases) Act 1983 (WA) s38(2),(3),(4) and (5).
19. West Australian Parliamentary Debates, Legislative Council, 6 December 1983 at 5987, the Hon J M Berinson, MLC, Attorney General.
20. Victorian Parliamentary Debates, Legislative Assembly, 14 December 1982. at 2767-2768, the Hon J Cain, MLA, Attorney General.
21. Limitation of Actions (Personal Injury Claims) Act 1983 (Vic) s11(1).
22. Id s11(2).
23. Limitation Act 1975 (UK) s3(1), (2).
24 Victorian Chief Justice’s Law Reform Committee Report on Limitation of Actions in Personal Injury Claims (1981) at 2.
25. Id at 5.
26. Law Reform Commission of Western Australia, note 14 at 79-80, para 4.31.
27. Law Reform Committee of South Australia Claims for Injuries from Toxic Substances and Radiation Effects (No 87. 1985) at 26.
28. A view expressed by representatives of the Insurance Council of Australia during a meeting with the Commission in June 1986.
29. (Unreported) 19 November 1984, Supreme Court of New South Wales, Rogers J.
30. Id at 6.
31. Victorian Parliamentary Debates, Legislative Assembly, 23 March 1983 at 3449, Mr Maclellan, MLA.
32. Ibid.
33. Id at 3453, the Hon J Cain, MLA, Attorney General.
34. Ibid.
35. Law Reform Commission of Western Australia, note 14 para 4.35.
36. West Australian Parliamentary Debates, Legislative Council, 6 December 1983 at 5983, the Hon G C McKinnon, MLC.
37. Id at 5987, per the Hon J M Berinson, MLC, Attorney General. It should be recalled perhaps that the Western Australian legislation limited the damages recoverable to a maximum of $120.000 [para 4.35].
38. P J Kelley “The Discovery Rule for Personal Injury Statutes of Limitations: Reflections on the British Experience” (1978) 24 Wayne L R at 1672, fn 108.
39. West Australian Parliamentary Debates, Legislative Council, 30 November 1983 at 5551, the Hon J M Berinson, MLC, Attorney General,
40. Law Reform Committee of South Australia, note 27 at 31.
41. Id at 31-47.
42. Victorian Parliamentary Debates, Legislative Assembly, 23 March 1983 at 3453, the Hon J Cain, MLA, Attorney General.
43. Law Reform Commission of New South Wales Report on a Transport Accidents Scheme for New South Wales (LRC 43, 1984).
