VASILJ CERIC v CE HEATH UNDERWRITING AND INSURANCE (AUSTRALIA) PTY LIMITED No. 108 of 1992, 102 of 1993 Number of pages - 17 Limitation of actions (1993) 91 NTR 26

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No. 108 of 1992, 102 of 1993
Number of pages - 17
Limitation of actions
(1993) 91 NTR 26

  Limitation of actions - Times limited by statute for various claims and
proceedings - Statutory charge sought to be enforced - Action commenced
without leave of the court - Application by the defendant to strike out or, in
the alternative, obtain summary judgment - Leave sought to commence fresh
proceedings or proceed with former action nunc pro tunc - Ascertainment of
relevant limitation period - Accrual of cause of action - Material facts -
Whether order nunc pro tunc can be made where the leave of the court is a
condition precedent to commencing proceedings.  Law Reform (Miscellaneous
Provisions) Act, Part VIII, ss26,27 (1)and(3), 28(1),29.  Limitations Act
(1981), ss12(1)(d), 44(2)(b).  Supreme Court Act, s81.  Supreme Court Rules,
r13.05.  Harris v Gas and Fuel Corporation of Victoria (1975) VR 619, applied.
Cambridge Credit Corporation Ltd (Receivers Appointed) v Andjelkovic v AFG
Insurances Ltd (1980) 47 FLR 348, considered. Lissenden (1987) 8 NSWLR 411;
(1981) 54 FLR 398; (1984) 58 ALJR 52, considered.  Re Testro Bros Consolidated
Ltd (1965) VR 18, considered, applied.  National Mutual Fire Insurance Co Ltd
v Commonwealth of Australia (1981) 1 NSWLR 400, considered, followed.  Hatton
v Beaumont (1977) 2 NSWLR 211, considered, followed.  Sevcon Ltd v Lucas CAV
Ltd (1986) 2 All ER 104, followed.  Grimson v Aviation and General
(Underwriting) Agents Pty Ltd (1991) 25 NSWLR 422, doubted.  Dixon v Royal
Insurance Australia Ltd and Ors (1991) 105 ACTR 1, not followed.

DARWIN, 17-18 June 1993
#DATE 21:10:1993

  Counsel for plaintiff:           J Waters

  Solicitors for plaintiff:        Waters James McCormack

  Counsel for defendant:           T Riley QC

  Solicitors for defendant:        Ward Keller

  No power for to make an order nunc pro tunc.

MILDREN J  This is an application made pursuant to s27(3) of the Law Reform
(Miscellaneous Provisions) Act by the plaintiff for leave to commence
proceedings against the defendant pursuant to s27(1) of the Act, or
alternatively for leave to proceed with action number 108 of 1992 nunc pro
tunc. The defendant also applies to have that action struck out, or
alternatively, summarily dismissed.

2.  On 6 December 1982, the plaintiff issued a writ in action number 584 of
1982 ("the 1982 action") claiming damages at common law against Formstruct
(NT) Pty Ltd ("Formstruct") in respect of injuries allegedly sustained by the
plaintiff on 28 September 1982 in the course of his alleged employment with
Formstruct. On 10 October 1985 Formstruct went into liquidation. On 5 May
1989, the plaintiff obtained interlocutory judgment against Formstruct in
default of defence with damages to be assessed and costs to be taxed. On 30
June 1989, the plaintiff obtained final judgment against Formstruct in the sum
of $600,000, being the amount of his assessed damages. The delay in the
obtaining of final judgment is in part explained by the fact that the
plaintiff also claimed worker's compensation against Formstruct. On 23 January
1987, the plaintiff obtained an award for compensation in the Workers'
Compensation Court, Darwin, in the sum of $268,526.15 plus costs. Subsequently
the plaintiff sued the defendant, Formstruct's worker's compensation insurer,
pursuant to s18A of the former Workers' Compensation Act, in order to recover
the amount of the award, and on 19 June 1987, this Court ordered that the
defendant pay the plaintiff the amount of that determination, plus costs.
Those sums were paid by the defendant to or on behalf of the plaintiff in July
and August 1987.

3.  On 30 April 1992 the plaintiff commenced proceedings against the defendant
in action 108 of 1992 ("the 1992 action") seeking to enforce the statutory
charge allegedly created by s27(1) of the Act to the extent of the unsatisfied
liability of Formstruct to the plaintiff in the 1982 action. The 1992 action
was commenced without the leave of the court as required by s27(3) of the Act.
The defendant pleaded in its defence, inter alia, that the 1992 action was not
able to be maintained, as leave had not been granted, and that the plaintiff's
claim  was, in any event, statute barred. In August 1992, the defendant
applied in the 1992 action for that action to be struck out, or alternatively,
for summary judgment. After a number of adjournments, that application came
before me on 13 April 1993, together with an application filed in the 1992
action by the plaintiff in court on that day for leave to proceed nunc pro
tunc. These summonses were adjourned until later in April 1993, and then
adjourned generally for various reasons not presently relevant.

4.  On 16 June 1993 the plaintiff commenced the present application by
originating motion in action 102 of 1993 seeking leave to commence fresh
proceedings against the defendant pursuant to s27 of the Act. At the same time
the plaintiff sought to rely upon the summons in the 1992 action for leave
nunc pro tunc. Objection was taken to this course by Mr Riley QC who appeared
for the defendant, on the basis that, the application for leave to proceed
nunc pro tunc should be made by originating motion: Andjelkovic v AFG
Insurances Ltd (1980) 47 FLR 348 at 351-2 per Blackburn CJ. Mr Waters for the
plaintiff was then granted leave to amend the originating motion to seek this
relief in the alternative and it then became unnecessary to resolve this
procedural issue.

5.  The relevant provisions of the Law Reform (Miscellaneous Provisions) Act
are as follows:
    (1) If a person (in this Part referred to as 'the insured')
    has, whether before or after the commencement of this
    Ordinance, entered into a contract of insurance by which he
    is indemnified against liability to pay any damages or
    compensation, the amount of his liability is, on the
    happening of the event giving rise to the claim for damages
    or compensation, and notwithstanding that the amount of the
    liability may not then have been determined, a charge on all
    insurance moneys that are or may become payable in respect
    of that liability.
    (2) If, on the happening of the event giving rise to the
    claim for damages or compensation, the insured (being a
    corporation) is being wound up, or if any subsequent
    winding-up of the insured (being a corporation) is deemed to
    have commenced not later than the happening of that event,
    the provisions of subsection (1) apply notwithstanding the
    (3) Every charge created by this section has priority over
    all other charges affecting the insurance moneys, and where
    the same insurance moneys are subject to 2 or more charges
    by virtue of this section those charges have priority
    between themselves in the order of the dates of the events
    out of which the liability arose, or, if the charges arise
    out of events happening on the same date, they rank equally
    between themselves.
    (1) Subject to subsection (2), a charge created by this Part
    is enforceable by way of an action against the insurer in
    the same way and in the same court as if the action were an
    action to recover damages or compensation from the insured.
    (2) In respect of any such action and of the judgment given
    in any such action the parties have, to the extent of the
    charge, the same rights and liabilities, and the court has
    the same powers, as if the action were against the insured.
    (3) Except where the provisions of subsection (2) of section
    26 apply, no such action shall be commenced in any court
    except with the leave of that court, and leave shall not be
    granted where the court is satisfied that the insurer is
    entitled under the terms of the contract of insurance to
    disclaim liability, and that any proceedings, including
    arbitration proceedings, necessary to establish that the
    insurer is so entitled to disclaim have been taken.
    (4) an action may be brought although judgment has been
    already recovered against the insured for damages or
    compensation in respect of the same matter.
    (1) Notwithstanding anything in this Part, a payment made by
    an insurer under the contract of insurance without actual
    notice of the existence of a charge under this Part is, to
    the extent of that payment, a valid discharge to the
    (2) An insurer is not liable under this Part for any greater
    sum than that fixed by the contract of insurance between
    himself and the insured.
    Nothing in this Part affects the operation of any of the
    provisions of the Workmen's Compensation Ordinance or Part V
    of the Motor Vehicles Ordinance."

6.  There are legislative provisions, in para materia, in other Australian
jurisdictions, viz, in New South Wales and in the Australian Capital

7.  The defendant has pleaded in the 1992 action that the plaintiff's action
is barred by the Limitation Act. The defendant relies on decisions of the
Supreme Court of New South Wales to the effect that time begins to run against
a plaintiff who has a statutory charge, at the time when the plaintiff's cause
of action against the tortfeasor begins to run and that the period of
limitation is the same as in the action against the tortfeasor: see Cambridge
Credit Corporation Ltd (Receivers Appointed) v Lissenden (1987) 8 NSWLR 411
per Clarke J; Grimson v Aviation and General (Underwriting) Agents Pty Ltd
(1991) 25 NSWLR 422 per Meagher JA and Hope A-JA (Kirby J dissenting). Thus,
in New South Wales, where the relevant time limit is six years, a plaintiff
must obtain the leave of the court within six years, and this is so, even if
the plaintiff has already sued the tortfeasor to judgment: see Grimson, supra,
at 429. In the Northern Territory, if that case were to be followed, the
relevant limitation period is three years. Alternatively, the defendant says
the relevant limitation period is three years from the time when the statutory
charge first arose, i.e. from the happening of the event giving rise to the
claim for damages or compensation. In support of this contention, the
defendant relies upon the true construction of Part VIII of the Act in
combination with s12(1)(d) of the Limitation Act. If either of those
submissions are correct, the plaintiff cannot succeed in this application for
leave to commence fresh proceedings (unless the plaintiff is arguably entitled
to an extension of time under the Limitation Act) and leave must be refused.

8.  The purpose of the legislation, and the leave requirement, has been
discussed in a number of cases. In Andjelkovic, supra, Blackburn CJ said (at
    "I may sum up my decision as follows. The main purpose of
    the provision requiring leave to commence the statutory
    action is to prevent the substitution of a statutory claim
    for a claim against the insured where the latter is
    available and will apparently be effective. Leave may also
    be refused where the applicant's claim is unarguable, that
    is, where the applicant's contention that the statutory
    conditions for the vesting in him of a right of action have
    been fulfilled could not possibly succeed. But if on such an
    issue there is an argument in the applicant's favour which
    could be seriously put, then in my opinion, on the proper
    construction of the Ordinance, leave should be granted and
    the issue should be determined in the action in any
    available way."

9.  On appeal to the Federal Court, no criticism was made of that passage in
Blackburn CJ's judgment. The Full Federal Court said (at 400):
    "Section 26(3) commands the court not to grant leave in
    certain circumstances. It is not easy to decide precisely
    what is embraced in the words which describe the
    circumstances where the court is not to grant leave. In our
    opinion the court has a general power to grant leave in all
    cases which do not fall within the provision that it shall
    not grant leave and in which it is made to appear by
    evidence available in the application that there is an
    arguable case of liability against the insured, being a
    liability against which the insured is indemnified by a
    contract of insurance in force at the time of the happening
    of the event said to give rise to the claim. We accept the
    relevant test proposed by the respondent which is really the
    test formulated by the primary judge, namely, has the
    respondent presented a case which is at least arguable?"

10.  On further appeal to the High Court it was held that the Full Federal
Court was correct in rescinding leave and in concluding that the plaintiff's
case was not arguable: see (1984) 58 ALJR 52 at 53.

11.  Useful guidance as to the purposes of the provisions is also to be found
in the judgment of Moffit P in National Mutual Fire Insurance Co Ltd v
Commonwealth of Australia (1981) 1 NSWLR 400, especially at 401-4. Moffit P
said (at 401-2):
    "The essential function and purpose of s6 of the Law Reform
    (Miscellaneous Provisions) Act, 1946, is to create and
    define a charge over insurance moneys in favour of a person
    having an appropriate right to recover moneys from an
    insured person and to provide a procedure to enforce that
    charge. The section recognizes that the need for enforcement
    of the charge may arise after a judgment has been obtained
    against the insured (s6(5)) or may arise although there is
    no such judgment (s6(4)). Situations which the section is
    designed to remedy include those which may be produced where
    an insured being a company is being wound up. Subsections
    (2) and (3) of s6 operating with s6(1) are specifically
    designed to meet that situation. To effectively meet it, the
    person entitled to sue the insured can by s6(4) proceed
    directly against the insurer in 'the same way as if the
    action were an action to recover (the moneys) from the
    insured.' In such a case no leave is required. Where the
    insured is in liquidation s6(1) having created the charge
    which attached at the same time when the liability of the
    insured arose, s6(2),(3) accept that to enable the
    enforcement of the charge to be effective in the face of the
    liquidation, the liability of the insured should be
    determined in and enforced by one action directly against
    the insurer.
    In other cases leave is required. A proper exercise of a
    judicial discretion conferred by statute will need to be for
    reasons which in a general sense further the policy of the
    legislation to be derived from its terms but so that a
    particular reason is not foreign to or in conflict with that
    policy. Such is the case with the exercise of the discretion
    conferred by s6(4) to grant leave. As earlier stated the
    legislative purpose of s6 is to create the charge and
    provide for its enforcement. Its subject matter is not to
    provide some optional alternative to the ordinary method of
    establishing liability by proceeding against the tortfeasor.
    Indeed the policy is to preserve that method except where
    some reason related to the enforcement of the statutory
    charge dictates otherwise. Other than where the insured is
    in liquidation, s6(4) does not spell out the cases where the
    charge should be allowed to be enforced to the extent of
    allowing action being taken directly against the insurer to
    the extent that liability of the tortfeasor and liability of
    the insurer will be determined in the one action, ie by
    proceedings directly against the insurer. Cases other than
    where the insured is in liquidation can be envisaged where
    to enforce the charge it may be necessary or desirable that
    the action be brought directly against the insurer, but in
    the case of s6(4) have not been defined but are left to be
    determined by the exercise of the discretion to grant

12.  At 403, Moffit P said:
    "The legislative purpose of s6 is to provide for the person
    to whom the insured is liable direct access to the insurance
    fund, in those cases where enforcement might be frustrated
    unless such direct access were available. Section 6 does not
    ... provide an optional alternative procedure enabling a
    plaintiff to sue the insurer rather than the insured
    tortfeasor, for example on some basis of convenience to the

13.  These observations are consistent with the notion that leave will not
ordinarily be given unless direct access to the funds, the subject of the
charge, is necessary to ensure that the plaintiff's rights to recovery against
the tortfeasor is not frustrated. An example of such a case which comes to
mind is where the tortfeasor goes bankrupt, or being a company, goes into
liquidation, after, for example, the commencement of proceedings, in
circumstances where s26(2) does not apply. In Grimson, supra, Meagher AJ
referred to "the historical fact that the original object of the legislation
... was to prevent a plaintiff being damnified by a defendant entering into a
corrupt bargain with his insurer in fraud of the plaintiff's rights ..." (at
429). Nevertheless, according to the reported cases on the topic, the most
common situation in practice  occurs when the defendant has become insolvent.
It will be seen that there is tension between the object of the leave
provisions as discussed in the authorities, if the action to enforce the
charge must be brought within three years from the date of the accident. If it
is necessary, in order to avoid the consequence that the right of action to
enforce the charge has become statute barred, that leave be sought and
obtained within three years, and at the same time to demonstrate that unless
leave is granted, the plaintiff's rights of recovery against the tortfeasor
might be frustrated, rights could become lost. The insolvency of the defendant
might not occur within the three year time limit; indeed, the insolvency might
not occur until after judgment. There is power to enlarge time limits
conferred by s44 of the Limitation Act, but it is a moot point whether the
fact of the defendant's insolvency would be regarded as "a fact material to
the plaintiff's case" within the meaning of s44(2)(b) of the Limitation Act.
It is not uncommon for the situation to occur where the insurer denies
liability to the insured, but that information may not become known to the
plaintiff until after the three year limitation has expired. It is similarly
questionable as to whether or not that is a "material fact." As Kirby P
observed in Grimson's case (at 425):
    "Clearly, the section contemplates the supervening winding
    up of an insured corporation or the death or disappearance
    of an individual who was insured before the plaintiff has
    recovered. Such events are the very circumstances which
    attract the application of the section and demonstrate its
    utility. But if the construction urged by the respondents
    and accepted by Newman J is correct, no relief would be
    available under the section to a plaintiff who commenced
    proceedings within time, discovered the need for resort to
    the section outside the limitation period otherwise
    protecting the insured, and thus, at the gateway of leave,
    faces the impenetrable barrier of a limitation defence
    invoked by the insurer."

14.  The first question, therefore, is what, if any, limitation period
applies. I have had some difficulty accepting what appears to have been the
view of the majority in Grimson's case that the relevant limitation period is
that limitation period which applied to the plaintiff's action against the
tortfeasor. Following the logic of that argument, the defendant insurer would
be entitled to rely upon a plea that no action was brought against the
tortfeasor within three years. The defendant insurer is taken to be in the
position of the insured by s27(2) as if the insurer is the insured; therefore
the insurer could plead that the action to enforce the statutory charge was
statute-barred, notwithstanding that an action was in fact commenced against
the insured within the limitation period. This may appear to be logically
sound, but, with respect, somewhat Kafkaesque. Further, it is difficult to see
how it can be said that the action, which is to enforce a statutory charge, is
an action founded on tort. In my view, the action is a statutory one, sui
generis and not derivative, in much the same way as are actions under the
Compensation (Fatal Injuries) Act: cf Haber v Walker (1963) VR 339. In my
view, the relevant limitation period is s12(d) of the Limitation Act. Section
12 of the Limitation Act is in the following terms:
    (1) Subject to sub-section (2), the following actions are
    not maintainable after the expiration of a limitation period
    of 3 years from the date on which the cause of action first
    accrues to the plaintiff or to a person through whom he
    claims -
    (a) an action founded on contract (including quasi-contract)
    not being a cause of action which is evidenced by a deed;
    (b) an action founded on tort including a cause of action
    founded on a breach of statutory duty;
    (c) an action to enforce a recognisance; and
    (d) an action to recover money recoverable by virtue of an
    enactment, other than a penalty or forfeiture or sum by way
    of penalty or forfeiture.
    (2) Sub-section (1) does not apply to a cause of action-
    (a) to which section 17 applies; or
    (b) for contribution to which section 24 applies.
    (3) For the purposes of sub-section (1)(d), 'enactment'
    includes a statute of the legislature of the Commonwealth or
    a State or another Territory of the Commonwealth, or any
    country or part of a country."

15.  I am aware that in Grimson, supra, Meagher JA observed (at 429) that
unless the limitation prescribed by s14(1)(b) of the Limitation Act 1969 (NSW)
applied in the manner he discussed, "it is difficult to see what (if any)
limitation period would be available as a defence." I note that s14 of the New
South Wales Act is in para materia to s12 of the Northern Territory provision.
However there is no mention by the court of the New South Wales equivalent to
s12(1)(d); yet what could be more clear than that the action conferred by
s27(1) of the Act is "an action to recover money recoverable by virtue of an
enactment"? As a single judge I am very reluctant to disagree with the
decision of the Court of Appeal of a State court, and fully conscious of the
dangers of doing so; but I feel that in conscience I must in this case prefer
my own view. In any event, the ultimate conclusion which I have reached is the
same as that of the Court of Appeal for all practical purposes.

16.  If I am right so far, the next question is   when does the cause of
action conferred by s27(1) of the Act accrue? Mr Waters submitted that the
cause of action does not accrue until leave to institute the proceedings was
obtained, because until then, no money was 'recoverable.' Mr Riley submitted
that the cause of action accrued from the moment the charge was created, and
relied principally upon the reasoning of Clarke J in Cambridge Credit
Corporation Ltd (Receivers Appointed) v Lissenden (1987) 8 NSWLR 411, but also
upon Ratcliffe and Anor v VS and B Border Homes Ltd and Ors (1987) 9 NSWLR 390
per Hunt J. The reasoning in both cases is similar. In the Border Homes case,
Hunt J's approach was similar to that in Grimson, supra, which I have already
discussed. In Lissenden's case Clarke J did not specifically identify which
provision of the Limitation Act 1969 (NSW) was involved, but it is likely that
the provision relied upon was probably s14(1)(b) rather than s14(1)(d) (the
equivalent of s12(1)(d) of the Limitation Act (NT)). Be that as it may, Clarke
J (at 420-1) did consider specifically the argument that, the requirement for
leave meant that time did not begin to run. I consider, with respect, that
Clarke J's approach to this question and the result he reached, namely that
the cause of action arose at the time the charge was created, and that the
requirement for leave does not delay the running of time, is correct, and is
both supported by the authorities he cited, as well as by the provisions of
the Act. In Harris v Gas and Fuel Corporation of Victoria (1975) VR 619 at
623, Gillard, Menhennett and Norris JJ said:
    "The locus classicus on the subject is a statement by Lord
    Esher MR (with whom the two other members of the Court of
    Appeal concurred) in Read v Brown (1888) 22 QBD 128 at 131
    where he said a 'cause of action' was 'Every fact which it
    would be necessary for the plaintiff to prove, if traversed,
    in order to support his right to the judgment of the Court.
    It does not comprise every bit of evidence which is
    necessary to prove each fact, but every fact which is
    necessary to be proved.' The warning set out in the last
    sentence must be borne in mind in considering the
    submissions for the applicant. The Master of the Rolls was
    merely repeating what he had said earlier in Cooke v Gill
    (1873) LR 8 CP 107 at 116. Although these two cases were
    concerned with the phrase in relation to jurisdiction,
    nevertheless the definition was a short time later accepted
    by the Court of Appeal (also presided over by Lord Esher) in
    an action by a solicitor for his costs, and in those
    proceedings, the question arose, in relation to barring the
    solicitor's remedy by effluxion of time, as to when the
    solicitor's cause of action accrued; was it when he did the
    work or at the expiration of one month after he delivered
    his bill? Adopting the test laid down in Read v Brown,
    supra, the Court of Appeal held that the solicitor's cause
    of action accrued when he did the work (see Coburn v
    Colledge (1897) 1 QB 702 at 706,709-10. See also Trower and
    Sons Ltd v Ripstein (1944) AC 254 at 263; (1944) 2 All ER
    274; O'Connor v Isaacs (1956) 2 QB 288; (1956) 2 All ER 417;
    Central Electricity Generating Board v Halifax Corporation
    (1963) AC at 800; (1962) 3 All ER at 919 per Lord Reid cf.
    Ward v Lewis (1896) 22 VLR 410). It may therefore be
    accepted that a cause of action accrues when there have
    occurred all the facts which are material to be proved to
    entitle the plaintiff to succeed. Some positive act is
    frequently needed to be proved to complete the cause of
    action. (Halsbury's Laws of England 3rd ed, Vol 24 at 194
    (note(s))). At the point thus ascertained the period of
    limitation to bar a claimant's remedy commences."

17.  In Sevcon Ltd v Lucas CAV Ltd (1986) 2 All ER 104 at 106 Lord MacKay, in
whose opinion the other members of the House of Lords concurred, adopted the
same test. In that case, the House was called upon to consider when a cause of
action accrued for the purposes of the Statute of Limitations in circumstances
where an action was brought in respect of infringements of patents which at
the time of the infringements had been applied for, but not yet granted.
Section 13(4) of the Patents Act 1949 (UK) created rights in respect of
pending applications, but precluded any action to enforce those rights until
the patent had been sealed. By the time the patent had been sealed and the
plaintiff had issued his writ more than six years had passed from the date of
the infringement. The plaintiff contended that the statutory bar to action
prevented time from running. Lord MacKay said (at 108):
    "However, s13(4) in terms deals with the situation in the
    period after the date of the publication of a complete
    specification and until the sealing of a patent in respect
    thereof, and provides for the applicant having rights and
    privileges in this period. In his opening counsel for the
    appellants very fairly recognised that the provisions to
    which I have already referred in s65(2) might well produce
    results in favour of the applicant before any patent was
    sealed. Indeed, it is very difficult to see what effect can
    be given to the principal provisions of s13(4) unless they
    have the meaning contended for by the respondents. So far as
    infringement is concerned everything which the submission of
    counsel for the appellants would accord to a patentee would
    be provided by s22(1) alone. I conclude therefore that
    s13(4) does provide rights to an applicant for letters
    patent immediately after the publication of the complete
    specification and that, if he is in a position to allege
    that acts have been committed by a defendant which
    constitute infringement of any claim of the complete
    specification as published, he has a cause of action from
    the date of these acts although he may subsequently lose
    that cause of action by failing to obtain a patent or by the
    complete specification being amended with retrospective
    effect in such a way that these acts no longer constitute
    infringement of any of its claims. I consider that the
    proviso does not make it necessary for the applicant to
    allege as part of his cause of action that he is the grantee
    of letters patent. Indeed, the proviso itself in describing
    his entitlement refers to him as 'an applicant.' As an
    applicant whose complete specification has been published he
    has the necessary foundation in the shape of the privileges
    and rights that he would have had if a patent for the
    invention had been sealed on the date of that publication to
    constitute the necessary monopoly and allegations of acts of
    infringement after that date would complete all that is
    required for a cause of action. If he were to institute
    proceedings for infringement before the patent for the
    invention was sealed, the procedural requirement of the
    proviso would not be satisfied but a statement of claim
    could not be struck out as disclosing no cause of action
    although it might be liable to be struck out as an abuse of
    the process of the court.
    The appellants contend that the conclusion which, for the
    reasons which I have set out, appears to be the correct one
    would lead to results which offend the policy of Parliament
    as manifested in the Limitation Act 1980 as a whole. They
    submit that the exceptions, for example, for those under
    disability, show that Parliament did not intend time to run
    where a person was not in a position to pursue his claim.
    However, the true principle as illustrated in the cases to
    which I have referred is that time runs generally when a
    cause of action accrues and that bars to enforcement of
    accrued causes of action which are merely procedural do not
    prevent the running of time unless they are covered by one
    of the exceptions provided in the 1980 Act itself. The
    appellants submit further that it is possible having regard
    to what may be required to happen between publication of a
    complete specification and the sealing of the patent that
    rights of action may be lost before they may be enforced. If
    this were bound to happen Parliament might well have dealt
    with it expressly but it has not done so. However, the
    period of six years from the date of publication of the
    complete specification appears amply sufficient in the light
    of the provisions of the relevant rules for all that
    Parliament might have anticipated as taking place between
    the publication of the complete specification and the
    sealing of the letters patent."

18.  In my opinion, s26(1) created rights immediately upon "the happening of
the event giving rise to the claim for damages or compensation." It is
unnecessary to decide in this case whether the "happening of the event" means,
in negligence cases, the time when the breach of duty occurred, or whether it
means the time when the cause of action is completed by the suffering of
damage. In this case, both the breach of duty and the damage occurred
simultaneously on 28 September 1982. The right created was a charge over
"monies that are or may become payable" in respect of the liability of the
insurer under its policy. Section 26(3) deals with priorities as between those
entitled to a charge and in cases which fall within s26(2) no leave is
necessary to enforce the charge immediately. If the insurer has notice of the
charge, a payment before leave to sue is granted by the insurer other than to
the injured party does not act as a valid discharge of the insurer's liability
under the policy (s28(1)). Further, there is no requirement for the plaintiff
to plead or prove as part of the cause of action that leave has been granted:
see O13.05 of the Supreme Court Rules. There is no doubt that the requirement
for leave under s27(3) is procedural, and not a condition precedent to the
acquisition to the right to a charge, because, as I have explained, the right
to the charge arises immediately upon the happening of the event. In this
respect I agree with the view of Clarke J in Lissenden's case and with Higgins
J in Dixon v Royal Insurance Australia Ltd and Ors (1991) 105 ACTR 1 at 6. It
may be, as I have already said, that because the period of the limitation is
only three years, the limitation period is unreasonably short. But, there is
nothing in the decided cases that would prevent a court, in the proper
exercise of its discretion, to grant leave if application were made to it, in
order to prevent the charge from becoming unenforceable if action were not
brought in time. This would be consistent with the policy of the legislation,
ie to provide direct access to a source of funds in those cases where direct
access is necessary if enforcement proceedings against the tortfeasor might
otherwise be frustrated. Even if the only basis for the leave sought was to
prevent the charge from becoming unenforceable, I do not see how that would be
a wrong exercise of discretion, given the effect of s28(1) of the Act.
Further, I note that in the Northern Territory, there is a power to extend the
time limits conferred by s44 of the Limitation Act which would seem to give
some added protection in appropriate cases, e.g. in those cases where the
identity of the insurer was not known. The conclusion I have reached,
therefore, is that the plaintiff's cause of action to enforce the statutory
charge became statute barred on 29 September 1985.

19.  The plaintiff next contends that facts material to his case to enforce
the charge were first ascertained by him on 26 May 1992 when he learned, for
the first time, that the liability of the insurer under the policy to the
tortfeasor was unlimited, rather than limited in amount, as he had first
thought. Section 44(2)(b) of the Limitation Act requires, inter alia, an
action which is statute barred to be commenced within twelve months after the
alleged material facts were first ascertained. Mr Riley QC objected to the
reception of the plaintiff's affidavit averring to these matters. Mr Waters
conceded that this material was not properly before me but asked that I rule
on the question of law involved and, if those rulings favoured the plaintiff
he would then seek to put that material before me in an admissible manner. I
have decided to adopt that course.

20.  Mr Riley QC submitted that as it was now over twelve months since the
alleged material facts became known leave could not now be granted to enable
fresh proceedings to be issued, because no extension would be possible even if
those facts (a) were true and (b) were 'material facts' within the meaning of
the section. Mr Waters submitted that the court could, however, grant leave
nunc pro tunc to the 1992 action, and if this were to be done, the twelve
month limitation provided by s44(2) would not be fatal, relying on the
decision of the Court of Appeal in Ward v Walton (1989) 66 NTR 20. There is no
doubt that Mr Riley QC is correct so far as the granting of leave to issue
fresh proceedings is concerned. That cannot now be done. This leaves only the
possibility that an order could be made nunc pro tunc in respect of the 1992
action, and it is to that question which I now turn.

21.  Mr Riley QC submitted that leave cannot be granted nunc pro tunc. If
leave is to be granted at all, it can only be in respect of fresh proceedings.
Mr Riley QC relied upon authorities from the Supreme Court of New South Wales.
Mr Waters on the other hand, relied upon authorities from the Supreme Court of
the Australian Capital Territory. These authorities conflict. It is therefore
necessary for this Court to resolve this question for itself.

22.  The position in New South Wales is clear. The court has no power to make
an order granting leave  nunc pro tunc under the equivalent provision in that
State, s6(4) of the Law Reform (Miscellaneous Provisions) Act: National Mutual
Fire Insurance Co Ltd v Commonwealth of Australia, supra; Ratcliffe and Anor v
VS and B Border Homes Ltd and Ors (1987) 9 NSWLR 390 (Hunt J). The reasoning
of the Court of Appeal is to be found in the judgment of Glass JA (with whom
Moffitt P and Samuels JA agreed) at 408:
    "The next question with which his Honour dealt was whether
    it was open to him to give the leave required by s6(4) after
    the action had been commenced. He decided that 'the
    legislative intention thus perceived will be given
    sufficient effect by a requirement that the plaintiff be
    required at an early stage in the proceedings to seek such
    leave, the absence of which would of course constitute a
    complete defence if pleaded' ((1980) 2 NSWLR 719 at 725).
    This conclusion was based in part upon the belief that
    guidance could be obtained from the approach adopted in
    Rendall v Blair (1890) 45 Ch D 139, where a procedural
    requirement was held to be directory only.
    The problem which arises when the act of a litigant is
    subjected by statute to the prior performance of conditions
    has been recently discussed in this Court: Attorney-General
    (NSW) ex rel Franklins Stores Pty Ltd v Lizelle Pty Ltd
    (1977) 2 NSWLR 955; Hatton v Beaumont (1977) 2 NSWLR 211;
    Tasker v Fullwood (1978) 1 NSWLR 20, especially at 23-4. It
    is there pointed out that it is an encouragement to error to
    investigate whether the statute is mandatory or directory in
    its terms by assimilating it to other statutory requirements
    of like kind and then noting whether these have been held to
    be mandatory or directory by nature. In the plethora of
    reported decisions, it will be found that directory has been
    used in two contradictory senses, viz, to describe a statute
    which renders the act invalid in the absence of substantial
    compliance as well as one which preserves the validity of
    the act notwithstanding total non-observance of the
    condition. The inquiry properly to be made eschews the
    tripartite classification of mandatory and directory in both
    senses, disregards other statutes and concentrates on the
    terms of the statute in question. By having regard to the
    nature of the precondition, its place in the legislative
    scheme and the extent of the failure to observe the
    requirement, the question is posed as a matter of
    construction whether there was a legislative intention that
    such a failure should nullify the act in question.
    When the requirement of subs(4) is examined from this
    standpoint, unencumbered by reference to other and different
    procedural requirements, the question is not difficult to
    answer. There is no question of strict or substantial
    compliance. The action is commenced with leave or it is not.
    If it is commenced without leave, the proceeding is either a
    complete nullity or else it remains valid irrespective of
    whether or not leave is subsequently granted or else it
    continues in a state of suspended validity which will come
    to an end if leave is not obtained within an unspecified
    time. I can see nothing to support the attribution of a
    legislative intention of the two last-mentioned kinds. In my
    view the legislative intention properly to be garnered from
    the terms of subs(4) and its place in the framework of s6 is
    that a failure to obtain the leave of the Court in advance
    invalidates the action and renders it incapable of being
    revived by leave retrospectively given. It follows that the
    order granting leave to the Commonwealth to commence its
    proceedings against the insurer cannot be supported."

23.  The position in the Australian Capital Territory is also clear. The court
may make an order nunc pro tunc: Andjelkovic v AFG Insurances Ltd (1980) 47
FLR 348; 31 ACTR 17; Dixon v Royal Insurance Australia Ltd and Ors (Higgins J)
(1991) 105 ACTR 1. Andjelkovic was reversed on appeal by the Federal Court of
Australia (1981) 54 FLR 398, but on other grounds   the Federal Court making
no comment on this point. On further appeal to the High Court of Australia
(1982) 49 ALR 245; 58 ALJR 52, the appeal was dismissed. Again, there was no
comment by the High Court on this issue. In Dixon's case, Higgins J said (at
    "A provision requiring leave before an action can be
    commence or pursued would usually be construed as
    procedural: see Maxwell v Murphy (1957) 96 CLR 261; Yrttiaho
    v Public Curator (Qld) (1971) 125 CLR 228; Cambridge Credit
    Corporation Ltd (receivers apptd) v Lissenden (1987) 8 NSWLR
    411 at 420. This is confirmed by the fact that leave may be
    granted nunc pro tunc: Andjelkovic v AFG Insurances, supra;
    Cambridge Credit Corp Ltd v Lissenden.
    It was asserted in argument that National Mutual Fire
    Insurance Co Ltd v Commonwealth (1981) 1 NSWLR 400 was
    authority for the proposition that leave could not be
    granted under s26(3) nun pro tunc.
    It is true that Glass JA, with whom Moffitt P and Samuels JA
    agreed, decided that a proceeding commenced without leave is
    a nullity. However, given that Moffitt P had already decided
    that leave should have been refused in any event as a matter
    of discretion, a conclusion with which Glass JA agreed, the
    decision, in so far as it so held, may be viewed as obiter
    dicta. Neither Cambridge Credit Corp Ltd v Lissenden nor
    Andjelkovic v AFG Insurances was cited on the point. It is
    noteworthy, also, that neither the Federal Court nor the
    High Court in the latter case expressed any disagreement
    with the view of Blackburn CJ that leave could be granted
    nunc pro tunc.
    With all due respect to their Honours in the National Mutual
    case, I cannot see why the legislature should be taken to
    have adopted a different approach to leave applications
    under this legislation to that taken under the various
    limitations Acts. I see nothing strange in the view that
    lack of leave may be pleaded as a defence in the same way as
    the expiry of a limitation period may be so pleaded.
    The decision in National Mutual Fire Insurance Co Ltd v
    Commonwealth, of course, has been followed in New South
    Wales: see Ratcliffe v VS and B Border Homes Ltd (1987) 9
    NSWLR 390 at 393; Spautz v Kirby (1989) 21 NSWLR 27 at 30.
    However, the manifest injustice of the conclusion to which
    the court came in the National Mutual case on this point
    leads me to conclude that, unless persuaded by compelling
    reasons or higher authority, I would not be disposed to
    regard it as applicable to the legislation of this
    It needs only to be pointed out that proceedings for leave
    can (as here) be protracted so that a relevant limitation
    period, perhaps not an extendable one, could well expire
    before leave to commence the substantive proceedings can be
    given notwithstanding that the application for leave was
    commenced before that expiry.
    It may be the case that the drafting of the relevant
    provisions (creation of the charge and the procedure for
    enforcement) in two separate sections was intended, in the
    Australian Capital Territory, to emphasise that there should
    be a distinction observed between them. One provision may,
    as a result, be regarded as substantive and the other as a
    procedural provision. That distinction has not been accepted
    in New South Wales in respect of the New South Wales Act.
    Whatever may be the situation in New South Wales, it should
    not, in my opinion, entail in this jurisdiction any
    departure from the course endorsed by Blackburn CJ in
    Andjelkovic v AFG Insurances, supra."

24.  So far as I am aware, the question has not previously been raised in this

25.  There is considerable force in the view of Higgins J that there is
nothing strange in the view that lack of leave does not result in the
proceedings being a nullity. As his Honour observes, leave provisions under
certain of the limitations Acts have been so treated: see, for example, Carden
v Allen Insulations Pty Ltd (1987) VR 29 at 35-7. Similarly, the requirement
for leave before bringing an action against a company in liquidation under the
various companies Acts has for well over a century been held to be a provision
which did not impose a condition precedent to the jurisdiction of the court,
and which could be cured by an order nunc pro tunc: see Re Testro Bros
Consolidated Ltd (1965) VR 18 at 32-5; Re Sydney Formworks Ltd (1965) 83 WN
(Pt 1) NSW 558 at 560-4.

26.  But I am constrained by authority binding on me from approaching the
problem in this way. In Hatton v Beaumont and Ors (1978) 52 ALJR 589, the High
Court of Australia was unanimous in its approach to problems of this kind.
Where the statutory requirement was clearly a condition precedent to the
taking of proceedings, there is nothing that can be done. If the legislative
intent is not clear, the primary necessity is to examine the framework and
language of the Act to see if the position is otherwise. This was the approach
of the Court of Appeal in National Mutual Fire Insurance Co Ltd v
Commonwealth, supra. Although that decision is not binding upon me, I
consider, reluctantly, that sitting as a judge at nisi prius, I ought to
follow it. I am unable to distinguish it, as the legislation is in para
materia; I do not think there is any distinction to be made upon the basis
that the relevant provision in New South Wales was expressed as a proviso to
the statutory right to enforce the charge, whilst the provision in the
Northern Territory Act is a separate subsection. I note also that Rogers J at
first instance was referred to the cases under the companies Acts, but did not
find them illuminating: see (1980) 2 NSWLR 719 at 724. I have considered also
the approach of Higgins J in Dixon's case. I do not agree with his Honour that
the decision of the Full Court was obiter dicta. It is true, as his Honour
says, that neither Cambridge Credit Corp Ltd v Lissenden nor Andjelkovic v AFG
Insurances were cited; but the former case had not then been decided, and the
latter was referred to Rogers J at first instance, and I cannot think that the
Full Court's decision can be treated as if it were per incuriam. Whilst the
manifest injustice of the result of the Full Court's decision may be
recognised (and see also Kirby P in Grimson at 427 where his Honour expresses
the view that there is a strong need for reform of those provisions   a view
with which I respectfully concur) I am unable to find any convincing reason
which would permit me to decline to follow the reasoning of the unanimous
decision of the Full Court. I have considered also whether s81 of the Supreme
Court Act might assist the plaintiff, even though Mr Waters did not rely on
this section, but I am persuaded by the approach of Sholl J in Re Testro Bros
Consolidated Ltd, supra,  at 35, that this section does not apply to
irregularities of this kind.

27.  I concur, with respect, in the observation of Mahoney JA in Hatton v
Beaumont, (1977) 2 NSWLR 211 at 225, that:
    "The function of the Court in such a case as this is to give
    effect to the intention of the legislature. This it may do
    without difficulty where it appears from the terms of the
    legislation that the legislature directed its attention to
    the question and expressed an intention upon the effect to
    be given to the particular provision. But in most cases, of
    which the present is one, such an intention is not expressed
    and the Court's task is, by the application of the
    appropriate principles, to divine or impute that intention:
    see Black-Clawson International Ltd v Papierwerke
    Waldhoff-Aschaffenberg AG (1975) AC 591; Farrell v Alexander
    (1977) AC 59; and this frequently leads, not merely to
    litigation, but also to uncertainty in the day-to-day
    operation of the legislation. The administration of the law
    would be facilitated if, in the formulating of legislation,
    attention was given as a matter of routine to this question.
    If this were done by a specific indication in the particular
    enactment of the effect of non-compliance with its
    provisions: cf. the Supreme Court Act 1970, s81; or by a
    general enactment which provided for relief against the
    consequences of non-compliance with a mandatory statute, the
    cases of the present kind would be, if not avoided, at least
    greatly reduced in number."

28.  I conclude therefore that there is no power for me to make an order nunc
pro tunc.

29.  The conclusions I have so far reached would ordinarily result in the
motion and the summons in the action being dismissed, and with consequential
orders dismissing the 1992 action with costs, but Mr Waters has asked that I
give to him an opportunity to persuade me, by the calling of further evidence,
that there is a fact material to the plaintiff's case which, even now, would
enable the court to grant leave to issue fresh proceedings. However, the only
evidence foreshadowed was that in May 1992 the plaintiff learned for the first
time that the policy in question had unlimited cover. For the reasons I have
already given, this evidence would not assist the plaintiff.

30.  Finally, I should mention that Mr Riley QC submitted there was no
arguable case that the defendant was required to indemnify Formstruct in any
event as (a) the plaintiff was an independent contractor and not a worker, and
therefore the claim did not fall within the terms of the indemnity granted by
the policy and (b) Formstruct was in any event in breach of a condition of the
policy the performance of which by Formstruct was a condition precedent to the
defendant's liability under the policy. As to these arguments, it is
unnecessary for me to consider them; but for what it is worth, had the result
of this application depended solely upon the outcome of those submissions, I
would have found that there was an arguable case to the contrary and granted
the plaintiff leave.

31.  I will hear counsel as to the appropriate orders that should now be made.