Australia: Interpretation Of ss 50C And 50D Of The Limitation Act 1969 - Date When A Cause Of Action Is ´Discoverable´

Bostik Australia Pty Ltd v Liddiard and Anor [2009] NSWCA 167

In Brief

• It is not sufficient for the purposes of the Limitation Act 1969, s 50D(1)(b) that a person merely knows the facts necessary to establish the fault of the defendant. The person must also know that the defendant is, as a matter of law, liable to pay damages.

Background

On 30 January 2003 the plaintiff, Warren Liddiard, was injured when he lifted a 44 gallon drum that was being used as a rubbish bin. The plaintiff had carried out this task approximately two times per week over the previous six to eight months but found that the drum was unusually heavy on 30 January 2003.

The accident occurred on premises owned and occupied by Bostik Australia Pty Limited (Bostik). Bostik carried on a packaging business in a factory on the site.

The plaintiff was employed by Brolton Industries Pty Limited (Brolton). Brolton operated an engineering business in a small section of the factory and also had access to the main yard area. Brolton also supplied labour to Bostik in the form of production and non-production workers. However, there was no written agreement in place in respect of these arrangements.

The plaintiff's labour was provided to Bostik by his employer, although at all times the plaintiff remained under the belief that he was employed by Brolton and was unaware of the terms of the arrangement between Brolton and Bostik.

The plaintiff brought proceedings against both Bostik and Brolton alleging breach of duty of care.

District Court Decision

The trial judge Hungerford ADCJ held that both defendants were liable in negligence to the plaintiff. His Honour apportioned 40% of liability in respect of the injury to Brolton and 60% to Bostik.

Court Of Appeal

Bostik appealed raising inter alia the following grounds:

1. That it did not owe a duty of care to the plaintiff.
2. If it did owe a duty of care, it was not in breach of that duty.
3. Whether his Honour erred in his apportionment of liability between Bostik and Brolton.
4. Whether the plaintiff's claim was statute barred.

Limitation Issue

Section 50D of the Limitation Act 1969 provides as follows:

The plaintiff commenced proceedings by filing a Statement of Claim on 13 June 2007. Accordingly the relevant date for the purposes of s 50C was 13 June 2004 and if the plaintiff's claim was discoverable before 13 June 2004, the plaintiff's cause of action against Bostik would be statute barred.

The parties conceded that for the purposes of s 50D(1)(a) the relevant date was 30 January 2003, this being the date of the injury. The dispute between the parties centred on when the plaintiff knew, or ought to have known, of the matters specified in sub-sections 50D(1)(b) or (c).

The plaintiff first retained his solicitor on 13 December 2004. During the course of the claim the plaintiff provided statements to his solicitor, neither of which made reference to Bostik. However, on 18 March 2004 the plaintiff made a statement to the workers compensation insurer which made reference to Bostik.

On 3 November 2006 the plaintiff's solicitor received a letter dated 31 October 2006 from Brolton's solicitors enquiring whether the plaintiff had commenced, or was contemplating common law proceedings against Bostik in relation to the injury on 30 January 2003. Attached was the plaintiff's earlier statement to the workers compensation insurer which made reference to Bostik and a statement that had earlier been made by Mr Lynch, who was the owner of Brolton.

Bostik argued that for the purposes of s 50D(1)(b), it is sufficient for a plaintiff to know the facts necessary to establish the fault of the defendant, not that the defendant is, as a matter of law, liable to pay damages. In this regard Bostik relied on Spandideas v Vellar [2008] VSC 198, which Beazley JA noted was not followed by the New South Wales Court of Appeal in Baker–Morrison v State of New South Wales [2009] NSWCA 35.

Beazley JA held that it was unlikely that the plaintiff had any understanding that his work was being performed for the benefit of Bostik. Her Honour found that the trial judge's factual findings that the plaintiff simply understood that he worked for Brolton and saw no relevance in Bostik's role in the work he performed, were well based.

Accordingly, her Honour found that the plaintiff did not know the fact that the injury was caused by the fault of Bostik until after his solicitor had received a copy of Mr Lynch's statement as he did not know of the relationship between Bostik and Brolton.

In respect of s 50D(1)(c) the plaintiff argued that he did not know the injury he sustained was sufficiently serious to justify the bringing of an action until after his first operation.

The plaintiff underwent operative treatment on 17 November 2004 in the form of decompression surgery. The operation was unsuccessful and the plaintiff required a second operation which was performed on 28 November 2005. The second operation was also unsuccessful.

Beazley JA held that the plaintiff's initial injury was relatively minor, involving a tear to the right bicep. Her Honour held that such an injury would not normally be sufficiently serious to justify the bringing of proceedings but that by the time that surgery was recommended the problem had become sufficiently serious. Her Honour added that had significant relief occurred following the first operation it is likely that the injury would not have been sufficiently serious to justify the commencement of proceedings.

Her Honour found that the earliest that the cause of action was discoverable was some time after November of 2004 when the first operation did not provide the relief that the plaintiff's specialist anticipated. Accordingly the claim was held to have been brought within time.

Basten JA agreed and held that the cause of action was not discoverable until the plaintiff had actual or constructive knowledge of a "reasonably arguable case involving a connection between his injury and fault on the part of the appellant". His Honour held that this included an understanding of the practical and contractual relationship between Brolton and Bostik.

Duty Of Care And Breach

Beazley JA

Beazley JA held that Bostik owed the plaintiff a duty of care that was akin to the duty owed to an employee. In this regard her Honour held that although the plaintiff was employed by Brolton, he performed work for Bostik, and in turn Bostik paid Brolton for the services provided. Bostik was also the principal occupier of the premises and had overall control of the activities that took place on the premises. Her Honour held that it was aware of the method of rubbish removal from the shed and permitted its empty drums to be used as rubbish bins. Her Honour further held that Bostik breached its duty of care to the plaintiff by leaving any response to the admitted unsafe system of work to Brolton.

Ipp JA (Basten JA agreeing) held that Bostik's control over the site was insignificant and ought to be regarded as "theoretical rather than actual". His Honour held that Bostik did not exercise any measure of control over Brolton and was not involved in the training of Brolton's employees and did not supervise or instruct them. As such his Honour held that Bostik did not owe the plaintiff any duty of care.

Basten JA held that neither the legal arrangement nor the practical circumstances in which the plaintiff's work was undertaken imposed a duty on Bostik to the plaintiff. His Honour further held that in the absence of a finding as to the specific cause of the injury, there was no basis for a conclusion that Bostik was in breach of such a duty, if it were accepted that a duty existed.

Accordingly, the majority of the Court of Appeal overturned the trial judge's verdict in favour of the plaintiff against the second defendant.

Implications

Whether an occupier of premises owes a duty of care to an employee of an independent contractor depends to a significant extent upon the relationship between the occupier and the contractor. The degree of control or direction exercised or which the occupier is entitled to exercise over the worker is a significant factor to be taken into account in determining whether a duty of care exists.

Section 50C provides no relief for a plaintiff to extend a limitation period as was previously the case under Pt 3, Div 3, Sub Div 2 of the Limitation Act 1969. However, as the decision in Baker-Morrison v State of New South Wales illustrated, the seemingly rigid regime imposed by s 50C is ameliorated by the flexible criteria embodied in s 50D

Confirming the approach adopted in Baker-Morrison, the Court of Appeal held that an element of legal knowledge is required for the purposes of satisfying s 50D(1)(b). Baker-Morrison seemed to suggest that the act of instructing a solicitor is sufficient for a prospective plaintiff to satisfy s 50D(1)(b), although this decision illustrates that the mere act of instructing a solicitor is not sufficient for the purposes of s 50D(1)(b). In this case it was not until the contractual relationship between Bostik and Brolton became apparent did the Court hold that the cause of action was discoverable.

Defendants cannot simply assume that a cause of action will be discoverable on the date on which it accrues. The decision highlights the difficulty defendants and their insurers face in asserting that a limitation period has expired in situations involving complex commercial and contractual relationships between parties and in circumstances where a plaintiff is not initially aware his or her injuries are sufficiently serious to justify the commencement of proceedings.

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