Commonwealth of Australia v Smith [2005] NSWCA 478 (23 December 2005)

CITATION: COMMONWEALTH OF AUSTRALIA v SMITH [2005] NSWCA 478

FILE NUMBER(S):

40914/04

HEARING DATE(S): 23 June 2005

JUDGMENT DATE: 23/12/2005

PARTIES:

Commonwealth of Australia (Appellant)

Neil Patrick Smith (Respondent)

JUDGMENT OF: Handley JA Santow JA Basten JA

LOWER COURT JURISDICTION: Supreme Court - Common Law Division

LOWER COURT FILE NUMBER(S): SC 20766/01

LOWER COURT JUDICIAL OFFICER: Barr J

COUNSEL:

B. Toomey QC/D. Brogan (Appellant)

G. Little SC/J.L. Sharpe (Respondent)

SOLICITORS:

Australian Government Solicitor (Appellant)

Hollows by their agents, Brian Muir & Co (Respondent)

CATCHWORDS:

LIMITATION OF ACTION – extension of time – mental injury LIMITATION ACT 1969 (NSW) - ss60G and 60I - awareness of mental injury

LEGISLATION CITED:

Civil Procedure Act 2005 (NSW)

Interpretation Act of 1897 (NSW)

Interpretation Act 1987 (NSW)

Judiciary Act 1903 (Cth)

Limitation Act 1969 (NSW)

Limitation Act 1980 (UK)

Limitation of Actions Act 1623 (Imp)

Limitation of Actions 1974 (Qld)

Motor Accidents Act 1988 (NSW)

Supreme Court Rules (NSW)

Supreme Court Rules 1965 (UK)

Uniform Civil Procedure Rules 2005 (NSW)

DECISION:

(1) Appeal dismissed

(2) Appellant to pay the costs of the respondent on appeal.

JUDGMENT:

IN THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA 40914/04

SC 20766/01

HANDLEY JA

SANTOW JA

BASTEN JA

23 December 2005

COMMONWEALTH OF AUSTRALIA v NEIL PATRICK SMITH

The respondent sued the appellant for damages for psychological injuries arising from a collision between the HMAS Melbourne and HMAS Voyager on 16 February 1964. Section 60I of the Limitation Act 1969 sets out matters to be considered by the Court before granting an extension of a limitation period. Section 60G required that the Court consider whether it was just and reasonable to extend a limitation period. The trial judge found that although the plaintiff was aware of his symptoms long before he applied for an extension of the limitation period he was not aware that he had suffered a mental injury until December 2000.

The appellants argued that the trial judge erred in holding that the power to extend time was engaged and in exercising his discretion, in considering the issues under s 60I, to extend the limitation period.

Held:

(1) Knowledge of a mental injury required knowledge that it constituted a recognisable psychiatric illness.

(2) The pre-conditions of an extension of time in s 60I(1)(a) were satisfied.

(3) By Santow JA, (Handley JA agreeing, Basten JA dissenting) the application was made within the time limits in s 60I(1)(b) because this was not a case where the plaintiff ought to have become aware of the matters in s 60I(1)(a) earlier than he did.

(4) By Santow JA, (Handley JA agreeing, Basten JA dissenting) that the judge’s exercise of discretion should not be disturbed.

(5) Observations by Handley JA on the consequences of the principle that damages are recoverable for mental conditions which constitute a recognised psychiatric illness and the effect of DSM-IV in widening the boundaries of legal liability.

IN THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA 40914/04

SC 20766/01

HANDLEY JA

SANTOW JA

BASTEN JA

23 December 2005

COMMONWEALTH OF AUSTRALIA v NEIL PATRICK SMITH

Judgment

1 HANDLEY JA: The issues in this appeal turn on ss 60I and 60G of the Limitation Act 1969. The respondent was a naval rating on HMAS Melbourne on 16 February 1964 when it collided with and sank HMAS Voyager. On 23 September 2004 he obtained an extension of the 6 year limitation period under the Statute of Limitations 1623. The Commonwealth appeals by leave.

2 The threshold questions under s 60I require a plaintiff to satisfy one or more of the paragraphs in s 60I(1)(a). These are that the plaintiff at or before the expiration of the relevant limitation period:

“(i) did not know that personal injury had been suffered, or

(ii) was unaware of the nature or extent of personal injury suffered, or

(iii) was unaware of the connection between the personal injury and the defendant’s act or omission.”

3 Personal injury is defined in s 11(1) as including “any impairment of the physical or mental condition of a person”. Section 60I(1)(b) requires an application for an extension to be made within 3 years after the plaintiff became aware or ought to have become aware of all three matters in s 60I(1)(a).

4 The primary Judge was satisfied that the plaintiff was not aware of any of these matters at the relevant time and that his application was made within the 3 year period in s 60I(1)(b). The difficulties in the case turn on the application of these provisions to an injury to the mental condition of the plaintiff.

5 In most cases of physical injury, other than diseases of gradual onset, the plaintiff will know when and how his injury was received, will recognise his symptoms, and realise that he had been injured. Diseases of gradual onset such as dust diseases or cancer can cause actionable damage without symptoms before the victim becomes aware of his injury. However when the plaintiff becomes aware of his symptoms he will realise that he is suffering from a disease even if he does not know the correct diagnosis, or its connection with the defendant’s act or omission.

6 A mental injury, that is an impairment to the plaintiff’s mental condition, is different because a plaintiff who is aware of his symptoms may not know that he has sustained a mental injury.

7 I have had the benefit of reading the reasons for judgment of Santow and Basten JJA in draft. Both agree, although for different reasons, that when an extension of the limitation period is sought in a case of mental injury the question is whether the victim was aware that he or she suffered from a recognisable psychiatric illness [Santow JA para 104, Basten JA para 181]. They also affirm the finding of the primary Judge that the plaintiff did not know that he had suffered a mental injury until he read Dr Morris’s report in December 2000 [Santow JA para 99, Basten JA para 192].

8 Santow JA would affirm the decision of the primary Judge that the plaintiff’s application was made within 3 years after he became aware of the matters in s 60I(1)(a) and that a finding should not be made that he ought to have become aware of those matters much earlier [para 92]. Basten JA would reverse that finding [para 200]. I agree with Santow JA substantially for the reasons he has given.

9 Santow JA would affirm the primary Judge’s finding that The Commonwealth would not suffer significant prejudice at any trial as a result of the destruction of its records or otherwise [paras 145, 154, 155]. Basten JA disagrees and has marshalled powerful reasons for coming to a different conclusion [paras 203, 207-211].

10 Santow JA summarised the facts [paras 38-55]. The plaintiff was on the Melbourne on the night of the collision and at the moment of impact was in the mess on level 5 below the waterline. The lights went out, there was pandemonium, and the main access door to the mess was shut, probably automatically as part of the ship’s damage control. The sailors had to evacuate the mess through a hatch one at a time. Clearly this was a traumatic experience. I infer that naval records could confirm that the plaintiff was off duty at the time and that this was his correct mess. I also assume that the damage control assessment made on the Melbourne following the collision would confirm that the main access door to this mess was shut and that the damage could or did cause the lights in the mess to go out.

11 The basic facts relating to the plaintiff’s later naval service cannot be in dispute. His mental problems and his increased drinking did not prevent him completing many more years of naval service without significant disciplinary problems. The breakdown of his marriage and his behaviour towards his wife and family before and after the collision can be checked with his wife who is available to the Commonwealth and who swore an affidavit in its interest in these proceedings. There is no suggestion in the naval or medical histories that the plaintiff encountered any other dramatic or traumatic event before his diagnosis by Dr Morris in December 2000, other than the breakdown of his marriage and his divorce.

12 If the plaintiff has been correctly diagnosed as suffering from post traumatic stress disorder the collision with HMAS Voyager and its immediate aftermath present as the obvious cause. The validity of that diagnosis will depend on the plaintiff’s condition at the present time and the Commonwealth has not been prejudiced in that assessment. The real difficulty of course is the question of causation.

13 One cannot help wondering if persons such as this plaintiff and others who were on the Melbourne that night are attempting to blame all of life’s disappointments, ills and problems on something other than themselves and thereby avoid taking responsibility for their own actions. The medical evidence, oral and in report form, in these cases suggests that the experts in the field are disposed to a diagnosis which removes or reduces the responsibility of their patients for their present problems. One cannot help wondering whether their traumatic experiences have really been the cause of so many of their problems.

14 In themselves these doubts and difficulties do not establish that the Commonwealth would relevantly be prejudiced by an extension of the limitation period. Treating the case, as it must be treated, as one where the plaintiff only discovered in December 2000 that he had suffered personal injury, its nature and extent, and its connection with the events of 10 February 1964, this case does not differ in principle from that of a dust disease victim who learns of his illness decades after his exposure.

15 If there are real difficulties it seems to me they flow from the law’s open ended characterisation of compensable mental injuries. The High Court cases from Mount Isa Mines Ltd v Pusey [1970] HCA 60; (1970) 125 CLR 383 to Gifford v Strang Patrick Stevedoring Pty Ltd [2003] HCA 33; (2003) 214 CLR 269 allow recovery for a tortiously caused “recognisable psychiatric illness”, sometimes described as a psychiatric injury. See Mount Isa Mines (above) at 402 per Windeyer J; Jaensch v Coffey [1984] HCA 52; (1984) 155 CLR 549 at 559, 563, 565, 566, 567, 568 per Brennan J; Tame v New South Wales [2002] HCA 35; (2002) 211 CLR 317 at 329 per Gleeson CJ, at 382 per Gummow and Kirby JJ; Gifford (above) at 276 per Gleeson CJ, at 301, 302 per Gummow and Kirby JJ and at 304 per Hayne J: “all conditions which psychiatric medicine would classify as a form of psychiatric injury”.

16 Thus the law does not recognise that emotional and mental problems constitute an injury unless they constitute a psychiatric illness that has been recognised as such by “professional medical opinion”. Accordingly a plaintiff, such as Mr Smith, who is aware of all his symptoms, cannot know that he has suffered a mental injury unless he knows that they constitute a recognisable psychiatric illness. Without this knowledge he cannot know that he has suffered something which the law recognises as an injury.

17 In Tame v New South Wales Gummow and Kirby JJ explained the rationale for this restriction at 382-3:

“The apparent disregard of the distinction between emotional distress and a recognisable psychiatric illness in some United States jurisdictions is significant in appreciating the restrictive common law rules that have there applied. Properly understood, the requirement to establish a recognisable psychiatric illness reduces the scope for indeterminate liability or increased litigation. It restricts recovery to those disorders which are capable of objective determination. To permit recovery for recognisable psychiatric illnesses, but not for other forms of emotional disturbance, is to posit a distinction grounded in principle rather than pragmatism, and one that is illuminated by professional medical opinion rather than fixed purely by idiosyncratic judicial perception. Doubts as to adequacy of proof ... are to be answered not by the denial of a remedy in all cases of mental harm because some claims may be false, but by the insistence of appellate courts upon the observance at trial of principles and rules which control adjudication of disputed issues”.

18 Because of these principles professional opinion in the psychiatric branch of medicine determines the limits of legal responsibility for mental injuries. This also seems to be the position in the United States. I encountered post traumatic stress disorder for the first time in The Commonwealth v McLean (1996) 41 NSWLR 389 but it has since become a regular visitor to this Court. Doubts have recently begun to emerge. In R v Lawrence [2005] NSWCCA 91 the appellant’s reliance on a diagnosis of Antisocial Personality Disorder and PolySubstance Dependence with Psychological Dependence in a Controlled Environment in an appeal on sentence produced misgivings which led Spigelman CJ to say [para 23]:

“Although DSM(IV) has come to be widely used for the purposes of categorisation, it should not be assumed that because, as a result of the rather tortuous process by which DSM(IV) is compiled and amended, some kind of recognition is given, by means of affixing a label to a mental condition, that any such condition is such as to attract the sentencing principle that less weight is to be given to general deterrence. That may not be true of a particular condition. (On the limitations of DSM(IV) see Vernon v Bosley (No 1) [1996] EWCA Civ 1310; [1997] 1 All ER 577 at 610-611; New South Wales v Seedsman [2000] NSWCA 119 at [114] – [120]; Allan Young, The Harmony of Illusions: Inventing Post Traumatic Stress Disorder (1995) passim on DSM (III) and DSM (IV); Ian Freckelton “Post Traumatic Stress Disorder: A Challenge for Public and Private Health Law” (1998) 5 Journal of Law & Medicine 252; George Mendelson “Postraumatic Stress Disorder and Litigation” (1999) Australasian Forensic Psychiatry Bulletin 3; Paul R McHugh “How Psychiatry Lost its Way” (1999) 108 Commentary 32; Chris Tennant “Definition of Psychological Trauma: Psychiatric and Legal Approaches” (2003) 77 Australian Law Journal 369; D Saleeby “The Diagnostic Strengths Manual?” (2001) 46 Social Work 183; Luis A Rivas “Controversial Issues in the Diagnosis of Narcissistic Personality Disorder: A Review of the Literature” (2001) 23 Journal of Mental Health Counselling; Richard J McNally, Remembering Trauma (2003) at 118–213; Alix Spiegel “The Dictionary of Disorder” The New Yorker 3 January 2005.)”

19 One of the monographs cited by Spigelman CJ: “How Psychiatry Lost its Way” by Paul McHugh contains the following (p 4):

“The new DSM approach of using experts and descriptive criteria in identifying psychiatric diseases has encouraged a productive industry. If you can describe it, you can name it; and if you can name it, then you can claim that it exists as a distinct ‘entity’ with, eventually a direct treatment tied to it. Proposals for new psychiatric disorders have multiplied so feverishly that the DSM itself has grown from a mere 119 pages in 1968 to 886 pages in the latest edition; a new and enlarged edition, DSM(V), is also already in the planning stages. Embedded within these hundreds of pages are some categories of disorder that are real; some that are dubious, in the sense that they are more like the normal responses of sensitive people than psychiatric ‘entities’; and some that are purely the inventions of their proponents.”

20 The first example of this process cited by the author was post traumatic stress disorder which he then discussed at some length (pp 4-6). It is a matter of concern that the common law has effectively delegated law making powers to professionals in the psychiatric branch of medicine, and it is also a matter of concern that the body of delegated legislation should have grown so rapidly from 1968 to 1994.

21 These matters cannot affect the decision of the Court in this case, either directly, or indirectly by predisposing us to a finding of prejudice or an exercise of the discretion adversely to the plaintiff. I agree with the orders proposed by Santow JA.

22 SANTOW JA:

INTRODUCTION

The Commonwealth, having obtained leave to appeal, challenges an extension to the applicable limitation period for a cause of action against it in tort, brought by the respondent, Neil Patrick Smith. That extension was granted by the primary judge, Barr J, on 23 September 2004. The Commonwealth also challenges the cost order made by the primary judge against the Commonwealth. In brief compass, the circumstances were these.

23 Mr Smith was a crew member of HMAS Melbourne on the night of 10 February 1964 when it collided with HMAS Voyager, cutting the latter in two. Thirty-seven years after the occurrence of these events, Mr Smith sought an extension to the six-year limitation period, his application being made under s60G of the Limitation Act 1969 (NSW) (“the Act”). That Act came into force on 1 January 1971. Therefore while the Act applied to any extension sought thereafter, the limitation period of six years, as applied to the claim in negligence for the events of 10 February 1964, derived not from that Act but from the earlier Imperial Act, namely the Statute of Limitations of 1623.

24 Mr Smith’s claim was that, following the events of that collision, he had suffered personal injuries by way of impairment to his mental condition. These injuries he particularised as “chronic post-traumatic stress disorder with numerous re-experiencing symptoms, avoidance symptoms and arousal symptoms”, together with associated injuries described in para 6 of the Statement of Claim.

25 The Commonwealth, while admitting that the collision was caused by its negligence, opposed the extension. It disputes that Mr Smith suffered any recoverable injury as a result of these events.

26 Pursuant to s60G(2) and s60I of the Act the primary judge ordered that the limitation period be extended to enable Mr Smith to commence proceedings against the Commonwealth seeking damages for injuries of the kind I have described arising from the collision.

27 This appeal primarily concerns the proper interpretation of s60I of the Act and its application in the events that happened. Section 60I is in the following terms:

“60I Matters to be considered by court

(1) A court may not make an order under section 60G or 60H unless it is satisfied that:

(a) the plaintiff:

(i) did not know that personal injury had been suffered, or

(ii) was unaware of the nature or extent of personal injury suffered, or

(iii) was unaware of the connection between the personal injury and the defendant’s act or omission,

at the expiration of the relevant limitation period or at a time before that expiration when proceedings might reasonably have been instituted, and

(b) the application is made within 3 years after the plaintiff became aware (or ought to have become aware) of all 3 matters listed in paragraph (a) (i)–(iii).

(2) Subsections (2), (3) and (4) of section 60E apply, with any necessary adaptations, in relation to applications for orders under this Subdivision.

28 Also relevant is s60G insofar as it requires the primary judge to determine whether “it is just and reasonable” to extend the limitation period.

“60G Ordinary action (including surviving action)

(1) This section applies to a cause of action that accrues on or after 1 September 1990, founded on negligence, nuisance or breach of duty, for damages for personal injury, but does not apply to a cause of action arising under the Compensation to Relatives Act 1897.

(2) If an application for an order under this section is made to a court by a person claiming to have a cause of action to which this section applies, the court, after hearing such of the persons likely to be affected by the application as it sees fit, may, if it decides that it is just and reasonable to do so, order that the limitation period for the cause of action be extended for such period as it determines.

29 “Personal injury” is defined by s11(1) of the Act, so that “unless the context or subject matter otherwise indicates”, it “includes any disease and any impairment of the physical or mental condition of a person”.

30 This appeal is a challenge to the discretionary determination of the primary judge granting the extension sought. The primary judge was satisfied that Mr Smith:

(i) did not know that “personal injury” as defined in the Act had been suffered (s60I(1)(a)(i) of the Act);

(ii) was unaware of the nature or extent of personal injury suffered (s60I(1)(a)(ii) of the Act);

(iii) was unaware of the connection between the personal injury and the Commonwealth’s act or omission (s60I(1)(a)(iii) of the Act),

at the expiration of the six-year limitation period, or at a time before that expiration when proceedings might reasonably have been instituted (“the relevant time”). He was also satisfied that in terms of s60I(1)(b) of the Act, the application was made within three years after Mr Smith either became aware, or ought to have become aware, of matters (i) to (iii) above. Finally, he was satisfied that it was “just and reasonable” to extend the limitation period, under s60G(2) of the Act.

31 The Commonwealth contends that the primary judge’s discretion miscarried on each of these matters and that he should not have been so satisfied. It first submits that the primary judge was in error in concluding that at the relevant time (i) Mr Smith “did not know” of the relevant personal injury or (ii) “was unaware of its nature and extent” or (iii) was unaware of its connection with the collision, until in each case he received advice from psychologist Dr Morris in December 2000 who identified his mental symptoms as a psychiatric illness.

32 The Commonwealth secondly submits that the primary judge erred in concluding in terms of s60I(1)(b) of the Act, that the application to extend the limitation period had been made within three years after Mr Smith “ought to have become aware” of all the matters listed in s60I(1)(a)(i), (ii) and (iii) of the Act. In particular it submits that in so concluding the primary judge:

(a) failed to take proper account of all the evidence, including the evidence given by Mr Smith in cross-examination and the evidence led from Mr Smith,

(b) in particular, failed to act upon “uncontroverted evidence” that Mr Smith had been referred for psychiatric treatment in February 1985, and

(c) failed to follow and/or apply, or to correctly apply, the relevant authorities relied upon by the Commonwealth, namely Commonwealth v Nelson [2001] NSWCA 443; CRA Ltd v Martignago [1996] 39 NSWLR 13 to the facts as established on the evidence.

33 The Commonwealth thirdly submits that the primary judge erred in concluding that the Commonwealth suffered no prejudice as a consequence of the effluxion of time between the collision and the date of the application to extend the limitation period, and in particular erred in deciding “that it is just and reasonable” so to extend the limitation period; see s60G(2) of the Act.

34 Fourthly, there is an overarching issue in the use of evidence. The Commonwealth contended that the primary judge failed to take proper account of the evidence led by, and the submissions of, the Commonwealth, particularly in relation to the prejudice said to be suffered by the Commonwealth.

35 Finally, the Commonwealth challenged the cost order made by the primary judge against the Commonwealth. That challenge is essentially that the primary judge erred in failing to apply, or properly apply, the provisions of Part 52A r 17 Supreme Court Rules in making the order that the Commonwealth pay Mr Smith’s costs of the application to extend the limitation period. Part 52A r 17 is in the following terms:

“When a party applies for an extension of time, unless the court otherwise orders, he or she shall, after the conclusion of the proceedings, pay the costs of and occasioned by the application, or any order made on or in consequence of the application.”

36 There is however an anterior question. It is whether that cost rule applies at all in the circumstances where there is not an extension of time but an extension of the limitation period.

SALIENT FACTS

37 The salient facts are essentially undisputed save where indicated. I set these out below. Insofar as particular facts are disputed or need elaboration for the purposes of disposition of this appeal, I deal with those under “Disposition”.

38 The respondent, Mr Smith, was a member of the crew of the HMAS Melbourne on the night of 10 February 1964 when it collided with the HMAS Voyager on the high seas. He worked as a radio operator.

39 At the time of the collision (8.56pm), he was relaxing in the mess on level 5 which was down at the waterline. He was with about 50 other sailors.

40 The mess shuddered; the lights went out; the main access door was shut tight from the outside and the occupants could not use it. The sailors managed to climb out of a small hatch, one at a time. This took 10 to 15 minutes.

41 During this time, there was pandemonium in the mess. Mr Smith was very afraid; smoke and fumes were entering the mess adding the fear of fire to the terror of those present. He thought that the ship was going to sink, taking with it him and his shipmates.

42 Mr Smith’s services were not required in the radio room, so he spent the evening watching the rescue operation from the flight deck.

43 The Melbourne had cut the Voyager in two. Mr Smith watched the two halves of the Voyager sink.

44 Later, Mr Smith went below decks and spoke to sailors who had been rescued from the Voyager or from the sea. They were covered in oil and in a bad way.

45 A good friend of Mr Smith from recruit school died in the collision.

46 Mr Smith found it difficult to believe what had happened, and the extent of the loss of life. He did not sleep well that night.

47 The primary judge described the aftermath and what was said to Mr Smith in these terms:

“He remembers little of the journey back to Sydney. It was impressed upon him and his shipmates that they should not talk to anybody about the collision once they were ashore. They were told, “You know nothing. Say nothing about what happened. Forget about it and get on with your lives.” No professional support was offered and no particular enquiry was made about any effect the collision and its aftermath might have had on Mr Smith. The subject was simply not mentioned. Those involved were told to “go and get drunk”.” (at [11])

48 Mr Smith did not speak to anyone about the collision, keeping things to himself as instructed. He never discussed the collision with his wife (whom he married the year after the collision) and his children, until two years before he swore his affidavit on 7 February 2002.

49 Mr Smith returned to sea with the Melbourne but had lost his delight in being in the Navy. He was distressed by not being able to talk to anyone about the collision and the apparent indifference towards his and other crew members’ welfare.

50 He became depressed, moody and aggressive and began drinking to excess. His marriage became unpleasant.

51 In the Navy, he lost his career ambitions. He was promoted but not very far.

52 He left the Navy after 12 years and took unskilled builder’s labourer jobs.

53 His drinking worsened over the years. He lost his driving licence in 1985, after having driven with a very large amount of alcohol in his blood.

54 His wife had to call the police a number of times over the years because of his drunkenness and aggression including episodes of violence. They were divorced in 1985.

55 Mr Smith finds it difficult to be close to people. He sleeps poorly, suffers from claustrophobia and other complaints. He says he has beaten his drink habit.

The Primary Judgment

56 What follows is a description of the basis upon which the primary judge concluded that it was open to him to extend the limitation period, and proper to do so in the circumstances. That required a degree of elaboration, as this appeal centres on whether his discretion miscarried. I refer also to the basis for the cost order. I have noted the relevant paragraphs of the judgment in square brackets.

57 The Commonwealth admitted that the collision was caused by its negligence. Accordingly, if Mr Smith obtained the leave sought, the enquiry would be about whether he suffered damage and if so what damage and how he ought to be compensated; Judgment [4].

58 The injuries claimed by Mr Smith in his Statement of Claim were pleaded as follows, being primarily psychological injuries/conditions.

“As a result of the collision the plaintiff was injured and he has suffered loss and damage aggravating, accelerating, exacerbating and/or resulting in the future deterioration of the following-

PARTICULARS OF INJURY

a) Severe shock;

b) Severe anxiety and depression;

c) Claustrophobia;

d) Fear of flying;

e) Difficulties with sleeping, nightmares and night sweats;

f) Irritability, fatigue and headaches;

g) Sexual impotence;

h) Difficulty in concentrating, making decisions and solving problems;

i) Mood swings, frustration and isolation;

j) Obsessive compulsive behaviour;

k) Chronic post-traumatic stress disorder with numerous re-experiencing symptoms, avoidance symptoms and arousal symptoms;

l) Emotional detachment, insecurity and lack of confidence;

m) Attempts to medicate himself by heavy use of alcohol (to 1997 approximately) with consequential impairment of body function;

n) Hypertension;

o) Acid reflux;

p) Chest pain;

q) Stomach discomfort;

r) Dysphoria;

s) Cold sweats;

t) Ulcer;

u) Heart Condition.

But for the collision and the injuries sustained the plaintiff would have continued to progress through naval ranks with promotion.”

59 Mr Smith finally sought advice from a solicitor in mid-1999. As a result he consulted a psychologist, Dr Morris, in December 2000. Tests showed that Mr Smith was suffering from, inter alia, serious depression and serious anxiety; Judgment [19]-[20]. Dr Morris concluded that, as a result of his involvement in the collision and the lack of appropriate support, Mr Smith was suffering from Post Traumatic Stress Disorder (“PTSD”), with delayed onset. Dr Morris found that the PTSD continued to be a major source of psychological distress for him and that it had led to a Major Depressive Episode disorder; Judgment [22].

60 Dr Morris attributed the delayed onset to the instruction given to Mr Smith not to discuss the incident and to get on with his life. Dr Morris also found that Mr Smith’s personality style made it likely that he would use avoidance and aggression to cope with his distress; Judgment [22].

61 On credibility Dr Morris concluded that Mr Smith responded to all the psychological tests in a reasonably forthright manner; Judgment [21]. The primary judge also found Mr Smith was an honest witness; Judgment [21].

62 The primary judge then proceeded on the basis that, although the cause of action was out of time under s14 of the Act, s60G gave the court a discretion to order that the limitation period be extended if he decided that it was just and reasonable. Section 60I(a) and (b), to which I have earlier made reference, sets down the threshold requirements upon which the court must be satisfied before the jurisdiction to make such an order to extend arises.

63 The first question posed by the primary judge concerned those three matters upon which he had to be satisfied, in order to cross the jurisdictional threshold of s60I(1)(a). He did not separately analyse the elements of the definition of “personal injury” in s11(i) of the Act, though his reasoning did recognise that the injuries here in question were not physical but mental. He began by asking “Did the plaintiff not know that personal injury had been suffered? Was he unaware of its nature or extent? Was he unaware of the connection between it and the collision?” In answer (Judgment [23]) he first quoted from Mr Smith’s affidavit of 7 February 2002 in reference to his symptoms (“moody, volatile and had lost my ambition and motivation and had become a loner, with symptoms of claustrophobia, reflux, sleep disturbance, and headaches”). I return to that quotation later.

64 The Commonwealth relied principally on a passage of cross-examination of Mr Smith quoted in full in the Judgment at [24]. It culminated in what for the Commonwealth was the crucial exchange. I first set out below a fair summation of what preceded that exchange:

(a) From the time he came ashore he knew that he was drinking to block out unwanted thoughts about what he referred to as “the accident” meaning the collision.

(b) As time went on, until his drinking reached its peak in about 1985, he knew that he was binge drinking to seek refuge from thoughts about the accident.

(c) He was depressed immediately after he returned to sea.

(d) He knew that it was the result of the collision that he was no longer enjoying life, was depressed and was drinking.

(e) He had a quick temper before the accident, but the accident made him more aggressive, moody etc. He maintained under cross-examination that he did not link his increased aggression to the accident.

(f) He was an entirely different man after the accident, but he maintained that he did not relate this to the accident.

65 The crucial exchange during cross-examination was, according to the Commonwealth, this concluding question and answer (quoted in the Judgment at [24]):

“Q: The thrust of my question is this: you knew, before you saw Dr Morris, that your reactions were the result of the accident but you did not know they amounted to a psychiatric condition?

A: That’s true.”

66 However, I should also quote the preceding question and answer, because of the importance it assumed in the appeal, when earlier Mr Smith was cross-examined about paragraph 3 of his affidavit of 7 October 2002:

“Q. Then, paragraph 3, ‘Prior to that time I had thought that my reactions were simply my own way of dealing with the accident as part of the normal reaction’?

A. I think, yes.”

67 The primary judge summarised the submissions of the Commonwealth in these terms (Judgment at [25]):

“[25] It was submitted on behalf of the Commonwealth that the evidence established that Mr Smith’s symptoms began straight after the collision, that he was aware that they were connected with it, that he kept on drinking to suppress disturbing thoughts about it and that he knew that his problem was related to drinking. In the circumstances he knew for the purposes of s60G that he had suffered personal injury. Then it was submitted that it had not been shown that Mr Smith was unaware of the nature or extent of the personal injury suffered. Rather, the evidence established that he was aware of what was wrong with him. Although he was not aware that it was post-traumatic stress disorder, that was irrelevant. As to para (a)(iii), Mr Smith was well aware of the connection between the personal injury and the collision. During the six years which commenced on 10 February 1970 he was becoming increasingly disturbed, angry and discontented with his work and was drinking heavily and he associated those matters with the collision. For the purposes of para (b) Mr Smith ought to have become aware of all three matters listed in para (a)(i), (ii) and (iii) because, having connected his difficulties with the collision, he ought to have sought medical counselling and psychiatric or other appropriate help. If he had, those advising him would have told him about the connection between the collision and the symptoms he was suffering.”

68 Both on appeal and before the primary judge, the Commonwealth relied on the decisions in Commonwealth v Nelson (supra); CRA Ltd v Martignago (supra) and FJ Walker Ltd v Webber, (CA, 16 November 1989, unreported). It did so as authority for the proposition, expressed by Meagher JA in the latter case, that an applicant may not know the medical description or diagnosis of his or her condition and yet be unable to establish that he is unaware of the nature and the extent of his injury. I interpolate that he so found by reference to examples of physical not mental injury. Reliance was placed by the Commonwealth on this passage from the judgment of Clarke JA in CRA Ltd v Martignago:

“The subsection is concerned to inquire whether, in a real sense, the applicant knows the nature of his or her injury and its broad extent. Having regard to the policy of the legislation it is apparent that it is designed to afford relief to an applicant who is ether (sic) unaware that he or she has suffered an injury or is aware that he or she has suffered an injury, possibly with continuing consequences, but is unaware of its complications, implications or potentially serious consequences. By way of example, and applicant who was aware that a blow on the arm had led to continuing but moderate pain but who was unaware until years later that there were serious complications flowing from that blow (for example, osteomyelitis) would remain unaware of the extent of the injury until the complications and consequences were drawn to his or her attention.

I recognise that I have put the matter very generally. That is because the nature of the factual inquiry is not susceptible to precise definition. The range of factual situations which may be encountered by the courts is so diverse that it would be overly optimistic and unwise, in my view, to attempt to provide a general formula by which the relevant inquiry may be answered. Rather courts should be concerned to analyse the facts in each case in order to determine whether the applicant knew the nature of the injury and, if so, in a broad way the extent of the injury, the nature of which is known. Practically speaking the resolution of the inquiry whether the applicant was unaware of the nature of the injury should throw considerable light on the task of resolving the second inquiry as to the extent of the injury. For instance, a finding that the applicant is aware that he or she has suffered a serious neck injury involving damage to the spine will, in general, provide an answer to the inquiries as to both nature and extent. In this context I would emphasise that the court is concerned not with the technical name or description of an injury but its effect, actual and potential, upon the applicant.” [at 20]

69 The primary judge then encapsulated the submission of the Commonwealth in these terms (Judgment [30]):

[30] Relying on the principle explained in CRA v Martignago and applied in Commonwealth of Australia v Nelson, counsel for the Commonwealth submitted that Mr Smith had not made out his case. Counsel gave a hypothetical example of a man who got a bang on the leg and a consequent limp. He limped around and thought that he was getting old, getting a bad leg, but he knew and associated the limp with the injury. He did not know that he had a pathological condition but he associated it with the injury.”

70 However, the primary judge did not accept that the facts in the above cases (in which plaintiffs suffered simple physical injuries) were analogous to the facts in this case, involving a mental impairment.

71 The primary judge concluded that none of the symptoms experienced by Mr Smith was likely to make him think that he had been injured or that his symptoms were manifestations of an illness. It was because most people suffer such manifestations without being ill or injured that those matters were unlikely to suggest to him that he was ill or injured; Judgment [32]-[33].

72 The primary judge concluded that Mr Smith did not know until he received advice from Dr Morris that he had suffered an injury, let alone what its nature and extent were. It followed that he was unaware of any connection between it and the collision; Judgment [34].

73 On the question posed by s60I(1)(b) of the Act (“ought” the plaintiff “to have become aware” of the matters in s60I(1)(a)) the Judgment is relatively brief and contains no detailed analysis of the meaning of “ought” in this context. His Honour observed that the Commonwealth’s submission that Mr Smith, knowing about the complaints from which he was suffering, ought to have sought counselling and the like, was “courageous” in view of the manner in which he had been treated by his superior officers; Judgment [36]. The primary judge was referring here, obviously, to the advice Mr Smith received from his superiors, including that he say nothing about what happened. He concluded that “the submission must fail because, as I have said, Mr Smith did not realise that he was ill. This was not a longstanding and troublesome pain in the neck or the leg which might reasonably be expected to cause a patient to seek medical help. Because he did not know that he was ill and injured he had no reason to seek medical help”.

74 On the question posed by s60G (“just and reasonable” to extend the limitation period) the primary judge began by observing that simply satisfying the requirements of s60I(a) and (b) did not entitle Mr Smith to an extension of time. He must persuade the court that it was just and reasonable to do so. In particular, he must prove that no significant prejudice would result to the Commonwealth from the order sought [37].

75 The primary judge dealt as follows with the five categories of matters that the Commonwealth said showed it would suffer significant prejudice.

Events that occurred before Mr Smith joined the Navy:

76 The Commonwealth lost nothing by its asserted absence of records or independent recollection of Mr Smith’s educational and work history prior to joining the Navy. Likewise it lost nothing by the absence of evidence as to which member of Mr Smith’s family had attempted suicide, he having, when he joined the Navy, given an affirmative answer to that question; Judgment [40]-[41].

77 The primary judge observed: “It was never explained, and I do not understand, how such matters would be likely to bear upon the issues to be fought at trial”; Judgment [41].

The period of Mr Smith’s engagement with the Navy up to the time of the collision:

78 There were few records relating to Mr Smith’s time in the Navy and no supervisors, workmates or medical officers able to give evidence. There was no record of any complaint of the symptoms of the injury relied on by Mr Smith, or of people who might have known him, nor any record of his consumption of alcohol. However, the primary judge found that it was highly unlikely that such material would have played a role had the case been brought within a few years of the date of the collision; Judgment [45]-[46].

The collision itself:

79 The lack of witnesses from the mess (47 former sailors identified as being in the same mess and branch of service or as having some involvement in rescue operations of which only 22 had been able to be contacted and only eight remembered Mr Smith) does not prejudice the Commonwealth because:

(a) there is no lack of evidence as to the collision itself since there have been two Royal Commissions; and

(b) it would be surprising if anyone had noticed the effect of the collision on Mr Smith at a time when everyone would have been intent on self-preservation. In any case, he would likely have been panic-stricken like anyone else; Judgment [48].

The period between the collision and the time Mr Smith left the Navy in June 1974:

80 There were limited records and no independent recollection by personnel. Few of those contacted recalled Mr Smith. There were no medical records available; Navy records had been destroyed. The primary judge observed that to the extent that Navy records have been destroyed, the Commonwealth must take the consequences of its own actions. It was obvious from the time that there were hundreds of sailors affected who might bring claims in the future; Judgment [50].

81 The fact that there were limited records and no recollection by personnel is not prejudicial because the nature of Mr Smith’s injury was not likely to have been detectable either from records or from contemporary reports of fellow sailors. They were ordered not to talk about the collision; Judgment [51].

The period between June 1974 and the present:

82 It is unlikely that his drinking, depression and aggression in this period would be in issue; Judgment [55].

83 It was true that there was a lack of witnesses, but there probably always was. Again, his symptoms were unlikely to have impressed themselves upon the attention or memory of others; Judgment [55].

84 Mr Smith’s failure to provide tax returns would make it more difficult for him to establish economic loss, but was not prejudicial to the Commonwealth; Judgment [55].

Overall conclusion of primary judge

85 The primary judge was satisfied that the Commonwealth had lost no evidence likely significantly to bear upon the issues to be fought at trial; Judgment [56].

86 The primary judge concluded that it was just and reasonable to grant Mr Smith the extension of time sought; Judgment [57].

87 On costs, the Commonwealth fought the application to extend as a discrete issue and lost. It should therefore pay Mr Smith’s costs [57].

DISPOSITION

88 I deal first with the threshold requirements for the jurisdiction to extend (s60I). I start with the “aware” or “ought to have become aware” requirements of s60I(1)(b) in relation to the three matters in question. I do so because its ambit is wider than s60I(1)(a), with its concentration on actual awareness or knowledge of those matters.

For purposes of s60I(1)(b) of the Act, did Mr Smith become aware, or ought Mr Smith to have become aware, of the matters listed in s60I(1)(a) at the time of the expiration of the limitation period (or earlier when proceedings might reasonably have been instituted)?

89 At trial, the Commonwealth submitted that for the purposes of s60I(b), Mr Smith “ought” to have been aware of all the three matters because, having connected his symptoms with the collision, he should have sought counselling or other psychiatric help. If he had, he would have been advised that he was suffering from a psychiatric injury as a result of the collision; Judgment [25], [35].

90 The primary judge having stated that the submission that Mr Smith ought to have sought counselling was “a courageous one”, found that the submission failed because Mr Smith did not realise that he was ill. Mr Smith was not suffering from a physical injury such as “a longstanding and troublesome pain in the neck or leg”, one which might reasonably be expected to cause a patient to seek medical help. The primary judge concluded that “because he did not know that he was ill and injured he had no reason to seek medical help”; Judgment, [36].

91 However, the Commonwealth submitted on appeal that the primary judge had erred in failing to take account of evidence that Mr Smith had been referred for psychiatric treatment in February 1985. The Commonwealth relied here on evidence before the primary judge, given in chief by Mr Smith (on 31/08/2004 at T, 53, 54.16 and then in cross-examination at T, 57.52-58.44) and also on evidence given by his wife in their divorce proceedings. This evidence was that, following a fairly turbulent period in his marriage when he was drinking heavily, and when he had made angry and violent outbursts towards his then wife, he in a fit of remorse had in her presence consulted the family doctor, Dr Stephenson, in 1985. Mr Smith’s former wife deposed that Dr Stephenson had in 1985 referred Mr Smith to a psychiatrist (affidavit 26 March 1985 in Family Court proceedings para 10). Mr Smith in his evidence nine years later said that he could not recall being given such a referral to a psychiatrist. He admitted Dr Stephenson may have said “Do you want to go for counselling”. Mr Smith’s evidence was that “as far as I can recall he never said anything about a psychiatrist” (T, 54.10). There was no attack on the credit of his former wife.

92 The Commonwealth relied heavily on this evidence, though it fell short of an admission by Mr Smith that the alleged referral had been proffered. The Commonwealth submitted that Mr Smith “ought” following such a referral, to have been or become “aware” of the three matters listed in s60I(1)(a)(ii)-(iii) and that Mr Smith must have known “that personal injury had been suffered”. The Commonwealth submitted that his awareness (or knowledge as the case may be) may have been actual, from the act of Dr Stephenson in referring him to a psychiatrist, or it may have been constructive. This was because, had he consulted the psychiatrist, he would have become fully aware of his condition. Thus the referral itself would have put “an honest and reasonable person on inquiry” so as to progress to psychiatric consultation.

93 The Commonwealth complains that the primary judge made no reference to this evidence of the 1985 referral in his judgment so that his discretion miscarried. However, the primary judge did cite passages from a psychological assessment of Mr Smith and from Mr Smith’s own affidavit. This evidence strongly suggests that, as a result of his condition and the symptoms he was experiencing, Mr Smith would have been unlikely to have heeded advice to see a psychiatrist, if indeed such advice had been given. Though eleven years had by then elapsed since Mr Smith had left the Navy, he may well have been reinforced in his attitude by the stoicism called for by the Navy instruction to avoid discussing the event, to put it behind him and to get on with his duties.

94 On this issue, the primary judge did cite passages from the psychological assessment of Mr Smith conducted by Dr Laurel Morris, dated 30 May 2001, in which she observed that:

“It is possible that the onset of symptoms of post-traumatic stress was delayed in this case due to the demands of the situation. Mr Smith, along with others, had been instructed to avoid discussing the event, to put it behind them and to get on with their duties. In light of Mr Smith’s personality style it is likely that he would have seen the expression of distress as a weakness and developed strategies of avoidance and aggression as means of coping” [Judgment, [22]].

95 The primary judge then quoted from Mr Smith’s affidavit of 7 February 2002, in which he stated that even when he was advised to consult a psychiatrist in December 2000:

“at first I could not accept that I did have [a psychiatric] disorder, and was reluctant to expose myself and dredge up the memories that I had been instructed to block out over thirty-five years before” [Judgment [23]].

96 Indeed the full passage from that affidavit is important enough to quote in full:

“19 At times I did recognise that I was drinking to excess but felt so depressed that drinking was a relief. I was moody, volatile and had lost my ambition and motivation and had become a loner, with symptoms of claustrophobia, reflux, sleep disturbance and headaches. However, I did not connect these with the collision nor did I have any idea or notion that they were attributable to a psychiatric disorder resulting from my experience in the collision. It was only in approximately mid 1999 that I came into contact with my Solicitor and talked to him about my symptoms. He recommended I should seek assessment by an expert psychiatrist or psychologist. However, at first I could not accept that I did have such a disorder, and was reluctant to expose myself and dredge up the memories that I had been instructed to block out over thirty-five years before. Eventually in December 2000 I did attend an examination arranged by my Solicitor with a psychologist on the Gold Coast, Dr Laurel Morris. In the course of that assessment I had to answer a huge number of questions about my life and condition, and I had some discussion with her at the consultation. I have recently read her report dated the 30th May 2001, and now understand better how the various symptoms from which I have suffered over the many years following the collision are apparently linked to my experience on that night, and my inability to express it or discuss it ever since.”

97 That passage is supportive of Mr Smith’s asserted state of mind and feelings operative until after his examination by his psychologist Dr Laurel Morris upon reading her report of 30 May 2001. It demonstrates consistently with the primary judge’s findings:

(a) Mr Smith’s inability to connect his mental symptoms in particular either to the collision or to a psychiatric condition resulting therefrom,

(b) Mr Smith’s inability to express the experience of that night or the collision or to discuss it ever since,

(c) Mr Smith’s inability, until he absorbed what the psychologist told him, to accept that he had a psychiatric disorder,

(d) Mr Smith’s reluctance to “expose myself and dredge up the memories that I had been instructed to block out over 35 years before”, and

(e) His finally seeing a psychologist at the urging of his solicitor.

98 It could be asked why, if his solicitor was able to persuade him to see a psychologist in 1999/2000, his and his then wife’s GP failed to persuade him to seek psychiatric or counselling advice 15 years earlier, always assuming his wife’s evidence on that be preferred over his non-recall. But it was well open to conclude that the circumstances 15 years earlier were significantly different from those in December 2000. Then, he was being advised to seek that advice, after a period of drunkenness, involving violent behaviour by him to his wife and family. If that referral did occur then it would not have been in the context of the events of 1964, but in the context of a marital breakdown involving domestic violence where the connections were by no means obvious to the events of 1964. There is indeed no suggestion in his wife’s evidence that the GP was urging him to get such advice in connection with the events of 1964. If the referral was for counselling that squarely puts it in the context of marital breakdown, not the 1964 events.

99 It was only by 1999, experiencing the continuing physical and mental symptoms that he did, and at the urging of his solicitor, that he began the process that did lead to him seeing a psychiatrist in December 2000. The primary judge who had the advantage of hearing him give evidence, was entitled to accept his explanation, that “I could not accept that I have [a psychiatric] disorder” [emphasis added], and “was reluctant to expose myself and dredge up the memories that I had been instructed to block out over thirty-five years before”.

100 But what then of constructive knowledge or constructive awareness of these three matters, in the sense of whether he ought to have been known or been aware of each of these under the requirements of s60I(1)(b)? There is no clear distinction in s60I(1)(b) between awareness and knowledge. Thus the cross-reference in s60I(1)(b) to the first of the three matters in s60I(1)(a) (“did not know that personal injury had been suffered”) involves the plaintiff becoming aware of a matter there earlier described in terms of knowledge.

101 The cases of Harris v Commercial Minerals Ltd (1996) 186 CLR 1 and CRA Limited v Martignago (1996) 39 NSWLR 13 note the distinction between s60I(1)(a) and s60I(1)(b) in terms of the knowledge or awareness required of the plaintiff. Neither draw a clear distinction between awareness and knowledge. These cases establish that the knowledge required by s60I(1)(a) is actual knowledge (sub-para (i)) or actual awareness of the plaintiff (Sub-paras (ii) and (iii)). Constructive knowledge has no place in s60I(1)(a) but only arises in s60I(1)(b).

102 Thus s60I(1)(b) imports for the first time a notion of constructive awareness or knowledge. Clarke JA in Martignago (at 19C and 22F) explains that the fact that the plaintiff had the means of knowledge at his disposal would be a highly relevant matter for consideration, in deciding whether the application succeeded or failed under s60I(1)(b). However, this presupposes that the plaintiff had the capacity to have recourse to that means of knowledge, unimpaired by an adverse mental condition and otherwise not constrained. Here Mr Smith was instructed not to talk about the matter by his superiors, so was under that constraint. If Mr Smith, as the primary judge concluded, for a long period lacked sufficient insight even to utilise that “means of knowledge” (consulting a psychiatrist) in order to ascertain his true condition, then that means of knowledge was not in reality “at his disposal”. It was open to the primary judge to conclude on the evidence that Mr Smith did lack the capacity for insight to appreciate that he had a mental impairment; the case for not appreciating its extent is even stronger.

103 The capacity to take action to utilise a means of knowledge, while based on what is reasonable in the circumstances, must be judged by reference to the actual qualities of the person concerned, rather than by reference to the qualities of the hypothetical reasonable man; Telstra Corporation v Rea [2002] NSWCA 49. That case stands as authority for the proposition that what a person “ought” to know or be aware of for the purposes of s60I(1)(b) must necessarily take account of the circumstances of the particular applicant. The question is what a person with the actual qualities of the particular plaintiff should have done in the circumstances. Foster AJA, with whom Mason P and Einstein J agreed, said:

“In my opinion, in the same way that subs60I(b) has been called in aid of the construction of s60I(1)(a), the earlier sub-section can assist in the construction of the latter. It is clear that s60F, s60G and s60I are aimed, in general, at alleviating the harsh effect of the limitation period prescribed by the legislation, in its impact upon certain plaintiffs in certain situations. It is the actual position of the plaintiff having regard to his personal state of knowledge which is the subject of the first sub-section of s60I(1). Although the second sub-section cannot, in my view, relate to imputed knowledge of the plaintiff, it clearly relates to his or her constructive knowledge. However, in my view, that constructive knowledge should also be regarded as knowledge peculiar to the plaintiff. I consider, with respect, that this is what Priestley JA was referring to in the passage cited above from [Spadotto & Co Pty Ltd (in liq) v Raber, NSWCA, (unreported 27 October 1995)] where his Honour referred to ‘knowledge of which the plaintiff (as a person) ought to have become aware.’ In this regard, I consider that the remarks of Lord Reid in Smith v Central Asbestos Co [1973] AC 518 at 530, cited by Dawson J in [Do Carmo v Ford Excavations Pty Ltd [1984] HCA 17; (1984) 154 CLR 234] are particularly apt, his Lordship saying:

‘In order to avoid constructive knowledge the plaintiff must have taken all such action as it was reasonable for him to take to find out. I agree with the view expressed in the Court of Appeal that this test is subjective. We are not concerned with "the reasonable man". Less is expected of a stupid or uneducated man than of a man of intelligence and wide experience.’

In the result, I am of the view that the words "or ought to have become aware" in subs60I(1)(b) do not import the concept of imputed awareness on the part of the plaintiff. They import constructive knowledge, but only to the limited extent that I have discussed. The question for the learned primary judge, in the present case, was whether the plaintiff himself, not the hypothetical reasonable man, should have become aware of the existence and relevance of the documents.”

104 The tort of negligence recognises that in claims for nervous shock “[t]here are some people with such a degree of susceptibility to psychiatric injury that it is ordinarily unreasonable for strangers to have in contemplation the possibility of harm to them” (per Gleeson CJ in Tame v New South Wales [2002] HCA 35; (2002) 211 CLR 317 at 333). But we are here dealing with a limitation statute, not recovery for nervous shock. The section focuses in a case such as this on the capacity of someone suffering mental injury to become aware that his symptoms, even distressing ones, represent a psychiatric condition; that is to say, using the language of the statutory definition of “personal injury”, to become aware that they represent “impairment of [his] ... mental condition”.

105 Mr Smith’s difficulties in accepting advice to seek psychiatric help were explained by Dr Glaser who found that Mr Smith exhibited “a marked reluctance to discuss his feelings and behaviours” [Vol 1, page 304] and that he

“has been reluctant to acknowledge the existence of his various psychological symptoms and, as he himself states, he prefers to try and suppress them and ignore them. This is part of an overall pattern of avoidance behaviour that appears to have characterized his psychological functioning since the 1964 collision. As a result, he would have great difficulty in understanding the emotional consequences of the collision and relating them to the collision itself... Thus it is most unlikely that he would have achieved an adequate understanding of his difficulties for him to be able to take legal action, until quite recently.” [Vol 1, page 305]

106 The Commonwealth relied on Commonwealth v Nelson [2001] NSWCA 443. Mr Nelson received psychological counselling and consulted a psychiatrist a few years after a submarine malfunction. He continued to have counselling for about 10 years. The Court of Appeal found that even if Mr Nelson was not subjectively aware of his injury before the expiration of the limitation period under s60I(1)(a) (although the court found that he was), nonetheless he ought to have been aware of the extent of his injuries under s60I(1)(b). This was “by taking the simple step of enquiring of those treating him what his problems were” (Nelson at [89]; see also at [80]).

107 The Commonwealth submitted that Mr Smith had the opportunity to become aware of his injury and “ought to have become aware” that he had suffered an injury. The Commonwealth submitted that his failure to seek the assistance of a psychiatrist was not, in the words of Deane J in Do Carmo v Ford Excavations [1984] HCA 17; (1984) 154 CLR 234, “without fault on his part”.

108 However, in that passage Deane J was referring to the legislative policy underlying the then s57 and s58 of the Limitation Act. Section 57 (now s57B) referred in subs (1)(c), to the knowledge of “a reasonable man, knowing those facts and having taken the appropriate advice on those facts”. It did so in relation to what are termed “material facts of a decisive character relating to the cause of action”. Deane J’s statement can have no bearing upon s60I which does not refer to objective reasonableness nor to the taking of appropriate advice.

109 The basal question in relation to Mr Smith was therefore what someone so circumstanced as he was, ought to have been aware of in relation to each of the three matters in s60I(1)(a). This must take into account his mental impairment, the instructions he received from his superiors and any other circumstances bearing upon his capacity to appreciate that he needed to consult a psychiatrist to find out if he was suffering from “any impairment of [his] mental condition” and if so, its nature and extent.

110 In the United Kingdom, under differing legislation, the limitation periods are extendable by reference to a test which, while likewise not wholly objective, is less accommodating to plaintiffs than that applied in New South Wales. According to Adams v Bracknell Forest Borough Council [2004] UKHL 29; [2005] 1 AC 76, a personal characteristic such as shyness inhibiting a person seeking knowledge about his injury would not preclude constructive knowledge of what that advice would have revealed, had it been sought. By contrast, Telstra Corporation v Rea (supra) held that in New South Wales, personal characteristics of such a kind are relevant. The plaintiff, to avoid constructive knowledge, must have taken all such action as it was reasonable for him to take, taking into account not only any mental impairment but also his personal characteristics and circumstances.

111 There is evidence that a person suffering from the mental impairment Mr Smith was suffering would be likely to adopt coping strategies including avoidance and denial; see, for example, the affidavits of Professor MacFarlane and Dr Morris. This is reinforced by evidence that he and other members of the Melbourne crew had been instructed not to talk about the collision.

112 The effect of the instruction from his Navy superiors to Mr Smith (to avoid discussing the event and put it behind him) should not be underestimated. It would not be unreasonable for former Navy personnel to think this was how men should handle such a situation, even after many years.

Conclusion

113 The primary judge did not refer to the advice said to have been given to Mr Smith by Dr Stephenson in 1985. However, the evidence cited by the primary judge as to Mr Smith’s mental impairment and coping strategies, coupled with his superior’s instructions, strongly support the primary judge’s finding that it was reasonable for Mr Smith not to have sought counselling or other psychiatric help earlier than he did in those circumstances. That evidence indicates that the result would not have been affected by Dr Stephenson’s 1985 advice if it was given. The primary judge made no error of law in concluding for the purposes of s60I(1)(b) that it could not be said that, in his particular circumstances, Mr Smith ought to have become aware of his personal injury in relation to s60I(1)(a)(i). If failure to refer expressly to the evidence in relation to Dr Stephenson meant the primary judge’s exercise of discretion miscarried, calling for its re-exercise, I would reach the same conclusion as the primary judge as to

(a) whether Mr Smith ought to have been aware of the nature or extent of personal injury suffered at the relevant time (s60I(1)(a)(ii));

(b) whether Mr Smith ought to have been aware of the connection between the personal injury and the Commonwealth’s act or omission (s60I(1)(a)(iii)).

Section 60I(1)(a) of the Act – knowledge or awareness

114 I turn to the question of whether the primary judge was in error in concluding that Mr Smith (i) did not know the personal injury he suffered, (ii) was not aware of its nature or extent, or (iii) was not aware of its connection with the Commonwealth’s act or omission. Given an answer in favour of Mr Smith’s lack of knowledge of the personal injury, it must follow that (ii) and (iii) are not made out either.

115 But I would also conclude that, even if Mr Smith did know of the personal injury he suffered, or must be taken to know it, he was not aware of its nature or extent, nor its connection with the Commonwealth’s act or omission. I do so essentially for the same reasons set out above, in relation to s60I(1)(b).

116 It is well settled that the test of awareness posed by s60I(1)(a)(ii) and (iii) requires the court to look at the actual awareness of the plaintiff. Thus in Harris (supra) Dawson, Toohey, Gaudron, McHugh and Gummow JJ (at [10]) say this:

“...What this Court said in Deming No 456 Pty Ltd v Brisbane Unit Development Corporation Pty Ltd [1983] HCA 44; (1983) 155 CLR 129 at 151 about the meaning of the words “first becomes aware of” in a Queensland statute is equally applicable to the term “unaware” in s60I(1)(a):

‘[T]he very words ‘becomes aware’ strongly indicate that the statute is looking to the purchaser’s actual knowledge of the failure which, by description, is a failure to comply with the statutory provisions. We conclude that the words ‘becomes aware of the failure’ in s 49(5) involve not only knowledge that a statement containing the specified material has not been given but an awareness that the fact that such a statement was not given constitutes a ‘failure’ to do something which the Act says should be done.’

Support for a subjective construction of s60I(1)(a)(ii) and (iii) can be found in the words of s60I(1) themselves. The words “or ought to have become aware” appear in subs(1)(b) but not in subs(1)(a). This is a strong indication that neither reasonableness nor constructive knowledge is an element of subs(1)(a).”

117 At [13]-[14], the majority dealt with what this entailed in the case of physical injury:

“In Ditchburn v Seltsam Ltd (1989) 17 NSWLR 697 the New South Wales Court of Appeal held that early signs and symptoms may not constitute sufficient indication of the “nature and extent” of personal injury. In FJ Walker Ltd v Webber (Unreported; NSW Court of Appeal; 16 November 1989) the same Court also stated that:

‘One can know ‘the nature and extent’ of one’s injury even if one is ignorant of the final form which it will take. Few plaintiffs ever know this, even at the time of trial, and it would be difficult to attribute to Parliament an intention that potential plaintiffs may completely disregard limitation periods merely because they are unable to predict their final state.’

These statements imply, correctly in our opinion, that an applicant may have been aware of the extent of his or her injury even though he or she does not expect all its precise consequences, for it is not necessary that the applicant should foresee the exact course of the disease or be aware of all its pathological and physiological incidents. If the applicant was aware that the injury would deteriorate, he or she may be aware of the extent of the injury for the purpose of s60I(1)(a)(ii) even though the injury developed particular consequences that the applicant did not precisely foresee. As long as the consequences are of a kind that an applicant expected to occur, the applicant will be aware of the extent of the injury.”

118 That reasoning is not simply transposable to the case of mental impairment of a psychiatric kind. It is far harder to infer psychological illness from particular emotional feelings, even distressing ones. That is explained by a recent case on extension of a limitation period for sexual assault, where the victim was said to have suffered psychiatric injuries, In Cranbrook School v Stanley [2002] NSWCA 290 Heydon JA at [68-69] (with whom Meagher JA agreed and Hodgson JA substantially agreed) concluded:

“The arguments of counsel for the opponent based on the way in which the opponent presented to Dr Morse have considerable force. Putting aside any question of feigned behaviour, of which there is no evidence, the opponent does seem to have behaved like someone who was confused, incapable of articulating his feelings, not having any insight into his symptoms, and unable to explain his emotions of guilt. An adult with those feelings might perceive them to be the symptoms of an illness, or might only perceive them to be the signs of some personal weakness or defect falling short of an illness. While children or young adults can infer a physical injury from physical symptoms relatively easily, it is far harder to infer psychological illness from particular feelings. That is a field well outside ordinary comprehension. An inference is fairly open that the opponent was aware of signs and symptoms in his condition, but not that they revealed any "personal injury". His very inability to explain his distress and his feelings of guilt suggest that he thought his condition was the result of some personal inadequacy, as distinct from a more serious condition amounting to "personal injury". There is a close analogy between the opponent and Mr Dinnison rather than Mr Nelson. Hence s60I(1)(a)(ii) is satisfied.”

119 I do not agree with the Commonwealth submission that Heydon JA erred in so construing s60I(1)(a). Rather I would adopt that what he there concludes as directly applicable to Mr Smith’s circumstances.

Conclusion

120 I consider that the primary judge was properly able to be satisfied that each of sub-paragraphs (i) to (iii) of s60I(1)(a) were made out.

Section 60G(2) of the Act – did the primary judge err in concluding that it was just and reasonable to extend the limitation period?

121 Pursuant to s60G(2) Limitation Act 1969, if the court is satisfied that the applicant meets the test in s60I(1) Limitation Act 1969, the court may, if it decides it is just and reasonable to do so, order that the limitation period be extended.

122 The leading High Court case in relation to the discretion to extend limitation periods is Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541. That case concerned an application to extend the limitation period to commence an action in tort for medical negligence pursuant to s31(2) Limitation of Actions Act 1974 (Qld). That provision is not precisely equivalent to s60G Limitation Act 1969 (NSW), but both provide for a relatively undirected discretion. Mason P considered s60G to be comparable to the Queensland legislation insofar as both provisions contain “a discretion exercisable according to broad notions of justice between the parties in accordance with the purpose of an enactment authorising an extension of the limitation period”: Jones v Royal Hospital for Women [1998] NSWCA 384. The principles arising from Brisbane South can therefore be taken to be applicable to s60G: see Jones; Sydney City Council v Zegarac (1998) 43 NSWLR 195 at 222-223.

123 The judges constituting the majority in Brisbane South (Toohey and Gummow JJ in a joint judgment, Dawson and McHugh JJ) agreed that, since the purpose of limitation periods is to preclude stale claims which the defendant would find it difficult to defend given the effluxion of time, it is prima facie prejudicial to the defendant to allow the commencement of an action outside that period. The defendant suffers presumptive prejudice where an extension of the limitation period is granted. Presumptive prejudice of itself may not disentitle a plaintiff to the leave sought (Brisbane South per McHugh J at 555; Salido v Nominal Defendant (1993) 32 NSWLR 524 at 538, regarding s52(4) Motor Accidents Act 1988).

124 There appeared to be a divergence of views as to whether the existence of actual or “significant prejudice” to the defendant (as opposed to presumptive prejudice) was decisive of a plaintiff’s application to proceed out of time, such that the application should be refused.

125 For Toohey and Gummow JJ, prejudice to the defendant was a factor to be considered in answering the ultimate question of whether "the delay has made the chances of a fair trial unlikely" (at 548, 550). However, McHugh and Dawson JJ appeared to give more weight to actual significant prejudice to the defendant, treating it as decisive of the question whether the court should exercise its discretion to extend time:

126 Thus Dawson J held that:

“To discharge that onus the applicant must establish that the commencement of an action beyond the limitation period would not result in significant prejudice to the prospective defendant.”

McHugh J stated that:

“When actual prejudice of a significant kind is shown, it is hard to conclude that the legislature intended that the extension provision should trump the limitation period. The general rule that actions must be commenced within the limitation period should therefore prevail once the defendant has proved the fact or the real possibility of significant prejudice...”

127 This apparent divergence in the judgements in Brisbane South was discussed by Priestley JA and Sheller JA in Holt v Wynter [2000] NSWCA 143; (2000) 49 NSWLR 128. That was a case which concerned s52(4) Motor Accidents Act 1988, which required “leave of the court” for proceedings to be commenced out of time. Although Priestley JA interpreted the differences between the judgments in Brisbane South otherwise, the interpretation of Sheller JA (at 146-147), with whom Meagher JA, Handley JA and Brownie AJA agreed, reflected the majority view. Sheller JA concluded that:

“the effect of the decision of the High Court in Brisbane South Regional Health Authority is that an application for an extension of time under limitation legislation should be refused if the effect of granting the extension would result in significant prejudice to the potential defendant.”

128 “Significant prejudice” means such prejudice as would make the chances of a fair trial unlikely. As Hodgson JA, with whom Beazley JA and Rolfe AJA agreed, said in South Western Sydney Area Health Service v Gabriel [2001] NSWCA 477 at [33] (a case concerning s60G Limitation Act 1969):

“the true issue on this matter is whether or not the applicant for the extension discharged the onus of satisfying the Court that there would not be such prejudice as would make the chances of an acceptably fair trial unlikely.”

129 Moreover, for a trial to be fair, it need not be perfect or ideal: Holt v Wynter per Priestley JA at 142; McLean v Sydney Water Corp [2001] NSWCA 122; Gabriel. It is not the case that in the absence of proof of significant prejudice the Court is bound to grant leave to commence proceedings as it must still be shown that it is just and reasonable to grant the necessary extension; Parsons v Doukas [2001] NSWCA 128; (2001) 52 NSWLR 162 at 163, 190 (a case concerning s52 Motor Accidents Act).

Was there here an appellable error?

130 There is no suggestion in the reasoning of the primary judge that he was unaware of these principles. Ultimately, the primary judge was satisfied that the Commonwealth lost no evidence likely significantly to bear upon the issues to be fought at trial and concluded that it was just and reasonable to grant Mr Smith the extension of time sought; Judgment, [56]-[57]. The Commonwealth’s primary contention was that the primary judge, in the exercise of his discretion under s60G, failed to take proper account of the whole of the evidence led by the Commonwealth and by Mr Smith in considering the prejudice suffered by the Commonwealth.

131 The primary judge dealt with the five categories of evidence which the Commonwealth argued showed it would suffer significant prejudice. In relation to the first category, evidence of events that occurred before Mr Smith joined the Navy, the Commonwealth submitted that the primary judge’s finding that it had lost nothing by the absence of records from this period (Judgment [41]) indicated that he had erroneously reversed the onus. The primary judge correctly stated that Mr Smith bore the ultimate onus of satisfying the court that it was just and reasonable to extend the limitation period. However, although the primary judge did not expressly state this, the Commonwealth was subject to an evidentiary onus to raise any consideration telling against the exercise of the discretion to extend: Brisbane South per Toohey and Gummow JJ at 547 and per Kirby J at 566-567; Sydney City Council v Zegarac; Parsons v Doukas; Jones v Royal Hospital for Women; South Western Sydney Area Health Service v Gabriel. As Kirby J commented in Brisbane South (at 566):

“If a defendant does not call evidence, or calls evidence which is unpersuasive or insignificant, provided it is reasonable to infer that some evidence was available to it in the circumstances the defendant cannot complain if the court concludes that no particular prejudice, over and beyond the generalities, could have been established by it.”

132 Mason P likewise in Sydney City Council v Zegarac at [197] observed:

“Persuasive dicta in Brisbane South indicate that it is for the party opposing the application to adduce evidence of facts suggesting particular prejudice if the discretion were exercised in the applicant's favour: see (at 547), per Toohey J and Gummow J citing Cowie v State Electricity Commission (Vic) [1964] VR 788 at 793 and Campbell v United Pacific Transport Pty Ltd [1966] Qd R 465 at 474; see also Kirby J (at 566-567). Failure to adduce such evidence may draw the unfavourable inference that specific prejudice is absent, due to the fact that it is very much in that party's camp to know of the existence, impact and "extent" of such prejudice.”

133 Thus it was open to the primary judge to find that the Commonwealth suffered no prejudice by the absence of evidence relating to events that occurred before Mr Smith joined the Navy.

134 In relation to the second category of evidence, the period of Mr Smith’s service in the Navy up to the time of the collision, the Commonwealth submitted that, contrary to the primary judge’s finding that material relating to this period would be unlikely to have played a role in any action brought in the years following the collision, it was in fact highly relevant. Its relevance was to the question of whether Mr Smith’s behavioural and mental condition changed after the collision regardless of when the action was brought.

135 However, I consider that the primary judge was entitled to “identify issues likely to arise and to consider the effect of non-availability of evidence in relation to those issues” (Gabriel per Hodgson JA at [20]). In concluding against the likely significance of pre-collision material not now available concerning Mr Smith, I do not consider that the primary judge’s exercise of discretion has been shown to have miscarried. The weight which the primary judge attached to the non-availability of this evidence is not a matter with which an appellate court should interfere, given that he was able to take into account that the Commonwealth did have access to Mr Smith’s medical and employment records for the period prior to the collision. These were in the possession of Mr Smith and included the medical report completed upon Mr Smith’s entry into the Navy in 1962, which assessed his physical and mental state. I discuss below the documentary evidence available to the Commonwealth in relation to the fourth category of evidence.

136 As for evidence relating to the collision itself, the Commonwealth submitted that the lack of witnesses and documentary evidence was prejudicial because this evidence was directly relevant to whether or not the relevant events occurred and affected Mr Smith in the way in which he says it did. The primary judge appears to have based his findings in relation to this evidence on some assumptions (Judgment [48]). These were not the subject of specific evidence apart from Mr Smith’s own account. First, it was assumed that the evidence turned up by two Royal Commissions, would have been of direct assistance to the Commonwealth in testing Mr Smith’s claim, whereas the Commonwealth submitted that because this evidence focussed on the activities of deck officers it would not. Secondly, the primary judge assumed in Mr Smith’s favour the content of any evidence able to be given by witnesses (to the effect that Mr Smith would likely have been panic-stricken).

137 However, there is nothing implausible about either assumption, given the known events and the likely fear and panic. Whether the event occurred precisely in the way Mr Smith says it did is unlikely to be a critical question since the events surrounding the collision are well known. As to evidence from witnesses, the Commonwealth set out to show “the very great diminution in the number of people... who could give evidence about the events” and that, even if there were people who could recall the events, the delay of 41 years meant that their memories may not have been reliable (T, 47-48). The Commonwealth submitted that it had embarked on a thorough investigation to find Mr Smith’s messmates, but that of the 47 sailors who were identified as having been in the same mess, service branch or rescue operation as Mr Smith (22 of whom were contacted), only seven recalled Mr Smith (T, 41-45).

138 Certainly the court must be alert to the deterioration in the quality of evidence with the passing of time. As McHugh J pointed out in Brisbane South (at 551), sometimes “...the deterioration in quality is not recognisable even by the parties. Prejudice may exist without the parties or anybody else realising that it exists.” In this case, it was unknown whether the evidence of these potential witnesses would have contradicted Mr Smith’s account of the night of the collision or of his demeanour on that night and generally during his service in the Navy before and after the collision. However, his account was consistent with what might have been expected from the known events of the collision. That said, it cannot be known for certain whether those crew-members who were contacted would have corroborated Mr Smith’s account.

139 However, these matters are unknown because, although Mr Campanella, the Commonwealth investigator, located and contacted members of the Melbourne crew, he asked them only whether they recalled Mr Smith and nothing more, and did not take any formal statements from them (T, 66-67). Similarly, no attempt was made to contact the commanding officer who completed the personal assessment on the trade certificate issued to Mr Smith upon his discharge (T, 52). It may not be possible to draw the inference pressed by counsel for Mr Smith that the effect of this evidence (elicited from Mr Campanella during cross-examination (Vol 3 p91)) was that it should be inferred that the people who were contacted and who knew Mr Smith did not say anything that would assist the Commonwealth’s case (T, 67). However, it is true that the Commonwealth does not appear to have completed its investigation into the use that could be made of potential witnesses, so satisfying its evidentiary onus in that regard.

140 Moreover, the Commonwealth has located some witnesses who recall Mr Smith. As McDougall J said in Gretton v Commonwealth [2005] NSWSC 437 at [54]:

“[i]t does not follow, simply because many of those thought to be relevant as witnesses have not (for whatever reason) been available or helpful, that no defence can be mounted from the evidence of those who are found to be available or helpful. It does not follow that the evidence based on [the Commonwealth’s] investigations takes this category of prejudice from presumptive to actual.”

141 Mr Smith’s account need not be corroborated by every member of the Melbourne crew who was in his mess on the night of the collision. Further, those witnesses who are available are unlikely to have forgotten such a traumatic event.

142 The fourth category of evidence relates to the period between the collision and Mr Smith’s discharge from the Navy in June 1974. It is convenient here to deal with the issue of the destruction of government records. Files, other than medical and service records, held by the Commonwealth relating to Mr Smith’s service in the Navy both before and after the collision have been destroyed in accordance with the normal practice of Defence Archives. The evidence suggested that these records were probably destroyed sometime between 1980 and 1986 (see affidavit of Donna Robinson Vol 2 pp66-67; affidavit of Alan Melrose Vol 2 pp387-388; T, 65).

143 The primary judge found that “to the extent that Navy records were destroyed the Commonwealth must take the consequences of its own actions. It was obvious from the time of the collision that many hundreds of sailors had been affected and were likely to be affected in the future” (Judgment [50]). Given that claims for psychological injury were being brought by crew members of the Voyager from the early 1980s (see discussion by Mason CJ in Commonwealth v Verwayen [1990] HCA 39; (1990) 170 CLR 394 at 400-402), the Commonwealth was aware at least from the early 1980s that other members of the Voyager crew were likely to be affected. The critical question is whether the Commonwealth should have been aware at the time when Mr Smith’s records were probably destroyed that members of the Melbourne were likely to be similarly affected. It is reasonable to assume that the first Melbourne claim was not brought until 1995, being McLean v Commonwealth (Sperling J, 28 June 1996, unreported) and subsequently on appeal, Commonwealth v McLean (1996) 41 NSWLR 389.

144 However, even if some of Mr Smith’s records were destroyed by the Commonwealth without fault on its part, this does not require a finding of significant prejudice. This is because the Commonwealth can have access to Mr Smith’s Navy service and medical records. These are in the possession of Mr Smith, having been given to him upon his discharge from the Navy. The Commonwealth retained no copies (Vol 2 p317). They include:

(a) His responses to the Royal Commission questionnaire about the collision (Vol 1 pp109-111);

(b) The medical and psychological report completed upon his entry into the Navy in 1962 (Vol 1 pp113-114);

(c) Records of his medical treatment during his service 1962-1974 [Vol 1 pp115-127, 145-174, 177-180];

(d) The medical and psychological report completed upon his discharge in 1974 (Vol 1 pp175-176);

(e) His certificate of service, which includes (Vol 1 pp231-234):

(i) His service record, documenting the ships he served on;

(ii) His yearly character and efficiency ratings, 1962-1967

(f) His certificate of discharge, which includes (Vol 1 pp250, 252-261):

(i) His service record, documenting the ships he served on, courses taken, leave taken, and awards and promotions obtained (Vol 1 pp256-261);

(ii) A trade certificate, recording the qualifications he obtained in radio operations as well as the commanding officer’s personal assessment (Vol 1 pp253-254).

145 Although it is not known what documents were lost, the medical and other records in the possession of Mr Smith constitute an extensive record of his medical and psychological condition and his performance in the Navy before and after the collision. It is true that their authors may not be available. However, it is unlikely that the Commonwealth has lost anything of any significance by reason of their unavailability. The primary judge made no error in finding that the Commonwealth did not suffer significant prejudice as a result of the destruction of government records.

146 The Commonwealth further submitted that the primary judge failed to address the fact that Dr Stephenson, the GP Mr Smith visited in 1985, has no records relating to Mr Smith and no memory of him. The Commonwealth argued that it suffered prejudice because, on Mrs Smith’s affidavit, Dr Stephenson recommended that Mr Smith see a psychiatrist and this recommendation was presumably based on a history given or acknowledged by Mr Smith (T, 73; Vol 2 p75). However, I do not consider that evidence was of such significance that its loss precludes a fair trial. The Commonwealth will still be able to rely for the substance of that history and Dr Stephenson’s advice on Mr Smith’s affidavit in the Family Court.

147 Finally, the Commonwealth submitted that the primary judge failed properly to consider the remainder of its evidence as to prejudice, for the period between June 1974 and the present. It was not necessary for the judge to refer to every piece of evidence in order to exercise his discretion as to whether it was just and reasonable for the period to be extended.

The Commonwealth’s approach to s60G applications

148 There is one further matter which bears generically on this argument as well as on costs. There have now been at least 30 other matters heard in the Supreme Court of NSW in which former members of the Melbourne crew have applied for an extension of the limitation period under s60G and s60I Limitation Act. Blyth v Commonwealth [2005] NSWSC 721; Baragwanath v Commonwealth [2005] NSWSC 575; Fullarton v Commonwealth [2005] NSWSC 444; Gretton v Commonwealth [2005] NSWSC 437; Pearce v Commonwealth [2005] NSWSC 359; Simmonds v Commonwealth [2005] NSWSC 290; Evans v Commonwealth [2005] NSWSC 280; Stringer v Commonwealth [2004] NSWSC 1132; Commonwealth v Diston [2003] NSWCA 51 confirming the decision of Harrison M [2001] NSWSC 1142; Hill v Commonwealth [2001] NSWSC 800; Lancett v Commonwealth [2002] NSWSC 589; Beasley v Commonwealth [2001] NSWSC 998; Ackland v Commonwealth [2001] NSWSC 991; Blaxter v Commonwealth [2001] NSWSC 957; Fisher v Commonwealth [2001] NSWSC 779; Terry v Commonwealth [2001] NSWSC 778; Andrew v Commonwealth [2001] NSWSC 733; Levis v Commonwealth [2001] NSWSC 725; Heffernan v Commonwealth [2001] NSWSC 687; Aussems v Commonwealth [2001] NSWSC 44; confirmed on appeal [2001] NSWSC 615; Windle v Commonwealth [2000] NSWSC 1209; McVee v Commonwealth [2000] NSWSC 1194; Norman v Commonwealth [2000] NSWSC 931; Kermode v Commonwealth [2000] NSWSC 758; Brittain v Commonwealth [2000] NSWSC 731; Sendy v Commonwealth [1999] NSWSC 1259; Stankowski v Commonwealth [1999] NSWSC 1258; appealed on different issue; Cooke v Commonwealth [1999] NSWSC 1233; Watkins v Commonwealth [1999] NSWSC 1127; Philippe v Commonwealth [1999] NSWSC 1118; Mancer v Commonwealth [1999] NSWSC 693 This accords with the respondent’s submissions (Vol 1, p8). The Commonwealth has opposed every case on the ground (inter alia) that it would suffer significant prejudice by the effluxion of time. In only three of these cases did the court decline to extend the limitation period (Commonwealth v Diston [2003] NSWCA 51 confirming the decision of Harrison M; Pearce v Commonwealth [2005] NSWSC 359; Blyth v Commonwealth [2005] NSWSC 721).

149 In Blyth, significant prejudice to the Commonwealth arose primarily as a result of the difficulty that the Commonwealth would face in determining the applicant’s loss of earnings and loss of earning capacity since leaving the Navy. However, Studdert J commented at [97] that the unavailability of witnesses who could give evidence of the applicant’s behaviour before the collision, of the circumstances surrounding his discharge and of what the applicant was doing at the time of the collision would not have influenced him to refuse the application (although each would have contributed in some degree to the overall extent of the prejudicial exposure of the Commonwealth had the application succeeded). In Diston, the absence of medical and employment records was found to be significantly prejudicial in circumstances where the applicant’s evidence was found to be unreliable, making it more difficult for the Commonwealth to investigate his claims. In Pearce, the judge found that the applicant had failed to pass the threshold test in s60I but that there could have been a fair trial if leave were granted.

150 In all the other applications the court found that the Commonwealth would not suffer significant prejudice and extended the limitation period. The circumstances of each case and the history of each applicant are of course different. The Commonwealth is entitled to argue that it would suffer prejudice particular to the circumstances of the applicant in each case. However, the Commonwealth continues to contend that lack of medical and employment records and the unavailability of witnesses have created significant prejudice. This is despite the fact that these arguments have so frequently been rejected by the court in finding that it is just and reasonable to extend the limitation period. Similarly, the Commonwealth has consistently run (and lost) arguments that it would suffer significant prejudice resulting from the loss or destruction of defence records, principally consisting of the applicant’s service records. Gretton v Commonwealth [2005] NSWSC 437; Evans v Commonwealth [2005] NSWSC 280; Stringer v Commonwealth [2004] NSWSC 1132; Beasley v Commonwealth [2001] NSWSC 998; Ackland v Commonwealth [2001] NSWSC 991; Fisher v Commonwealth [2001] NSWSC 779; Terry v Commonwealth [2001] NSWSC 778; Andrew v Commonwealth [2001] NSWSC 733; Heffernan v Commonwealth [2001] NSWSC 687; Philippe v Commonwealth [1999] NSWSC 1118;

151 The Court has regularly found that sufficient evidence had been retained either by the applicant or the Commonwealth or both. This was either sufficient to allow a fair trial or the Court found that the difficulties were more likely to affect the plaintiff who bore the onus of establishing the injury. Baragwanath v Commonwealth [2005] NSWSC 575; Pearce v Commonwealth [2005] NSWSC 359; Simmonds v Commonwealth [2005] NSWSC 290; Evans v Commonwealth [2005] NSWSC 280; Stringer v Commonwealth [2004] NSWSC 1132; Hill v Commonwealth [2001] NSWSC 800; Beasley v Commonwealth [2001] NSWSC 998; Ackland v Commonwealth [2001] NSWSC 991; Blaxter v Commonwealth [2001] NSWSC 957; Fisher v Commonwealth [2001] NSWSC 779; Terry v Commonwealth [2001] NSWSC 778; Andrew v Commonwealth [2001] NSWSC 733; Aussems v Commonwealth [2001] NSWSC 44; confirmed on appeal [2001] NSWSC 615; Windle v Commonwealth [2000] NSWSC 1209; Watkins v Commonwealth [1999] NSWSC 1127; Philippe v Commonwealth [1999] NSWSC 1118; Mancer v Commonwealth [1999] NSWSC 693

152 The Commonwealth has also regularly failed in submissions that it would suffer significant prejudice as a result of:

(a) being deprived of witnesses (due to their unavailability or inability to recall) who could give evidence of the applicant’s behaviour during his service in the Navy before, during and after the collision; Fullarton v Commonwealth [2005] NSWSC 444; Gretton v Commonwealth [2005] NSWSC 437; Watkins v Commonwealth [1999] NSWSC 1127; Mancer v Commonwealth [1999] NSWSC 693;

(b) the doctors and medical officers who examined the applicant and wrote medical reports being unavailable or unable to recall the applicant; Fullarton v Commonwealth [2005] NSWSC 444; Beasley v Commonwealth [2001] NSWSC 998; Andrew v Commonwealth [2001] NSWSC 733; Norman v Commonwealth [2000] NSWSC 931; Philippe v Commonwealth [1999] NSWSC 1118

(c) the absence of medical records for the applicant since leaving the Navy. Levis v Commonwealth [2001] NSWSC 725; Heffernan v Commonwealth [2001] NSWSC 687; Aussems v Commonwealth [2001] NSWSC 44; confirmed on appeal [2001] NSWSC 615; Mancer v Commonwealth [1999] NSWSC 693

153 In no case has the Commonwealth succeeded in discharging the evidentiary onus by establishing that it would suffer significant prejudice on the basis of the loss or absence of this evidence.

154 To sum up, s60G(2) Limitation Act confers a discretion to order that the limitation period be extended, if the Court decides it is just and reasonable to do so. An appellate court may only interfere with an exercise of discretion in limited circumstances: House v The King [1936] HCA 40; (1936) 55 CLR 499 at 504-505. The Commonwealth submitted, in essence, that the primary judge failed to take proper account of all the evidence. However, it is clear that the primary judge did take account of the whole of the evidence in relation to prejudice and more generally in relation to whether it was just and reasonable to grant the extension sought. The weight to be attached to a relevant consideration in exercising a discretion such as this is a matter upon which reasonable minds may differ. It cannot be said that the primary judge attached so little weight to particular aspects of the evidence that he effectively disregarded a material consideration. Nor can it be said that the exercise of the primary judge’s discretion was so unreasonable or unjust as to point to appellable error; House v The King at 505.

Conclusion

155 No sufficient basis has been shown for appellate intervention in the primary judge’s exercise of discretion in granting leave under s60G.

COSTS

156 The primary judge held that because the Commonwealth had fought the application as a discrete issue and lost it should pay Mr Smith’s costs [57].

157 The Commonwealth submitted that the primary judge erred in not applying Pt 52A r17 Supreme Court Rules, which provides

“Where a party applies for an extension of time, unless the Court otherwise orders, he or she shall, after the conclusion of the proceedings, pay the costs of and occasioned by the application, or any order made on or in consequence of the application.”

158 However, an application for extension of a limitation period is not an application for an extension of time within the meaning of the Rules. Part 52A rule 17 applies to procedural matters arising under the Rules (for example, an extension of time to lodge a notice of appeal) and has no application to proceedings under a statute for the extension of a limitation period.

159 Sheller JA (with whom Meagher, Handley JJA and Brownie AJA agreed) said in Holt v Wynter [2000] NSWCA 143; (2000) 49 NSWLR 128 at 147, that:

“... ordinarily a successful applicant, who allowed him or herself to get out of time, should pay the costs of the application unless the respondent’s opposition was wholly unreasonable.”

160 However, there is no rule that binds the judge to deny costs to an applicant for extension of the limitation period. A costs order for such an application is a matter of practice and procedure within the discretion of the primary judge. In view of the Commonwealth’s failure in so many of these extension cases over six years [para 133] the judge would have been entitled to find that the Commonwealth acted unreasonably in opposing an extension in this case and should pay the applicant’s costs. It has not been shown that the primary judge erred in the exercise of his discretion so as to warrant the interference of an appellate court (Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274; House v The King (supra); Lovell v Lovell [1950] HCA 52; (1950) 81 CLR 513 at 518-519 and 532-533).

161 Although not relied upon specifically, there is also the overriding purpose rule enjoining the parties to assist the Court in the just, quick and cheap resolution of the real issues in the proceedings; Pt 1 r3(1), (2) now to be found in s56(3) Civil Procedure Act 2005. By putting unsuccessful submissions as to prejudice based on the unavailability of documentation when this has so frequently been found insufficient to constitute significant prejudice, and was again so found here, that Rule would support the result that the primary judge’s cost order should not be interfered with.

OVERALL CONCLUSION

162 I would decline to interfere with the primary judge’s exercise of discretion with regard to costs and as to the other matters subject of appeal. I propose orders as follows:

(1) Appeal dismissed.

(2) Appellant to pay the costs of the respondent on appeal.

163 BASTEN JA: When the HMAS Melbourne collided with the HMAS Voyager, on 10 February 1964, Neil Patrick Smith (“the Applicant”) was a member of the crew of the Melbourne. On 12 September 2001 he commenced proceedings in the Supreme Court against the Commonwealth seeking damages for mental impairment caused by the collision.

164 The case requires the exercise of federal jurisdiction by the Supreme Court. Unless there is a law of the Commonwealth which makes provision otherwise, ss 79 and 80 of the Judiciary Act 1903 (Cth) will render the law of New South Wales applicable. For the purposes of the present proceedings it was assumed that there was a limitation period applicable under New South Wales law which had expired well before the commencement of the proceedings in the present case. The primary judge noted that the proceeding was affected by s 14 of the Limitation Act 1969 (NSW) (“the Limitation Act”) and was therefore not maintainable after the expiration of 6 years from the date on which the cause of action first accrued. (That date was not identified.) The Limitation Act commenced on 1 January 1971. The limitation period which operated at the date of the collision was the 6 year period provided by s 3 of the Limitation of Actions Act, 1623 (Imp). Arguably that period had expired prior to the commencement of the 1969 Act, with the result that s 14 of that Act was not engaged: see Limitation Act 1969, s 5 and Interpretation Act of 1897 (NSW), s 8 (to similar effect as Interpretation Act 1987 (NSW), s 30).

165 In any event, it was accepted by both parties that the Applicant could rely upon Part 3, Div 3, Subdiv 3 of the Limitation Act, which provides for discretionary extension for latent injury and similar matters. Schedule 5 provides that a limitation period for a cause of action may be extended, where the cause of action is founded on negligence, even though it accrued or would have accrued before 1 September 1990: Schedule 5, cl 4(1). It was not suggested that the relevant provision did not apply to a cause of action which arose prior to 1 January 1971. The issue raised was whether an order could, and should, be made pursuant to s 60G(2) in the present circumstances.

Relevant statutory provisions

166 On 12 September 2001, at the time of filing the statement of claim, the Applicant filed a notice of motion seeking an extension of the limitation period pursuant to s 60G and, in the alternative, an extension of the limitation period pursuant to s 58 of the Limitation Act. No argument has been based on the latter provision.

167 The first issue raised by the present proceeding was whether the Applicant had satisfied the Court that the preconditions established by s 60I had been met. The second issue concerned the exercise of the discretionary power conferred on the Court by s 60G(2), namely that it was “just and reasonable” to order the extension. According to s 60I(1)(b), the application for extension must have been made within 3 years after the Applicant became aware, or ought to have become aware, of the matters identified in par (a), the critical date for that purpose therefore being 12 September 1998.

168 The terms of s 60I have been set out above at [27]. The definition of “personal injury”, a term used in each of the sub-paragraphs of par (a), is set out at [29].

169 Two questions of construction which arise from s 60I(1)(a) may be identified as follows:

(a) To what extent must the Applicant establish the existence of a “personal injury” which can be known and which can have a connection with an act of the Defendant, but of which the Applicant was, for a period, “unaware”?

(b) If an applicant is aware of all the signs and symptoms of a physical or mental condition, is there some further element of which he or she can relevantly be “unaware”?

The questions are related, but arise from the fact that the Applicant knew of the “act of the defendant” with which his mental condition may have been connected (the collision of the two ships on the night in question) and knew of the symptoms of his personal injury. As was accepted in the course of argument, he became aware of his condition shortly after the collision, this not being a case in which it was argued that the on-set of the relevant symptoms or condition was delayed for more than a matter of weeks or possibly months, despite Dr Morris’ diagnosis.

170 In addition, the case raises an important question as to the scope and purpose of the language in parenthesis in par (b), “or ought to have become aware”. Clearly this language imposes some condition beyond actual awareness, the question being the extent to which the individual characteristics of the Applicant can justify, as well as explain, steps which might have been taken, but which were not.

Awareness of mental illness

171 There are two matters going beyond awareness of one’s physical symptoms and their manifestation, which are potentially relevant in determining whether one is aware of factors which might give rise to a cause of action against the Defendant. The first is the legal requirement in relation to so much of the definition of “personal injury” as relates to an “impairment of the mental condition” of a person. An early statement of the principle that a victim can recover damages in negligence as a result of a shock which has created a recognisable psychiatric illness is found in the judgment of Windeyer J in Mount Isa Mines Ltd v Pusey [1970] HCA 60; (1970) 125 CLR 383 at 394-395, though his Honour was at pains to state that the principle was not new. His Honour stated (at 395):

“An illness of the mind set off by shock is not the less an injury because it is functional, not organic, and its progress is psychogenic.”

More recently, in Tame v New South Wales [2002] HCA 35; (2002) 211 CLR 317 the need to make “the distinction between emotional distress and a recognisable psychiatric illness” was affirmed: at [193] (Gummow and Kirby JJ, Gaudron J agreeing at [44]). As their Honours further stated:

“In the judgment of four members of the New Zealand Court of Appeal in Van Soest v Residual Health Management Unit [2000] 1 NZLR 179 at 197, it was seen as significant that psychiatry distinguished between mere mental distress and psychiatric illness, albeit the distinction was one of degree rather than kind and might change with advances in medical knowledge.”

172 The question is whether, given this limitation on legal entitlement to recover, a person who is aware of symptoms and behavioural consequences is aware that he or she has suffered a personal injury, or whether awareness of the existence of an identifiable mental illness is necessary in order to satisfy the definition of “personal injury” in s 11(1) of the Limitation Act.

173 Different approaches to this question appear to have been taken in the reported cases. Thus, in The Commonwealth v Dinnison (1995) 56 FCR 389, the Full Court of the Federal Court concluded that knowledge of a diagnosis of psychiatric illness was necessary for sufficient awareness to satisfy the terms of s 60I(a). Thus (at 402G), Gummow and Cooper JJ noted:

“The respondent’s oral evidence and the documentary material to which we have referred certainly is capable of supporting the proposition that from aspects of his service at Maralinga, culminating in exposure to the shock of the third atomic blast, the respondent derived a deep seated fear that he had been affected by radiation, which condition of fear manifested itself in dreams and in disturbed sleep. This state of affairs might be accurately described, as it was, in his claim for compensation as ‘anxiety – troubled, uneasy and concerned about exposure to radiation’. But, in our view, the primary judge ... correctly emphasised the importance of awareness by the respondent that his anxiety amounted to psychiatric illness.”

The trial judge had accepted the respondent’s evidence that he was “surprised when an appointment was made for him to go and see a psychiatrist”, that evidence being sufficient to support a finding that he “did not know that personal injury, being an anxiety state amounting to illness, had been suffered by him”: at 403C. In the alternative, their Honours concluded that he was not, until advised by the psychiatrist, aware of “the nature and extent of the illness”.

174 The approach thus adopted in the Federal Court was referred to in Harris v Commercial Minerals Ltd (1995-96) 186 CLR 1 at 11-12, in a judgment of the Court, in the following terms:

“Thus in The Commonwealth v Dinnison, although the applicant was aware during the limitation period that he had an anxiety state, it was only after the expiration of that period that he became aware that he had a psychiatric illness. Because of that fact, the Full Court of the Federal Court held that he was not aware of the extent of his injury.”

This statement, although affirming the position taken in the Full Court, was made in the context of concluding that the date at which “the extent” of an injury is to be determined is at the date of the application, and not at the expiration of the limitation period: at p 12.

175 A different approach was adopted in this Court in Commonwealth v Nelson [2001] NSWCA 443. Both Dinnison and Harris were referred to, but not on this point. However, Harris was relied upon as affirmation of the approach adopted by this Court in CRA Ltd v Martignago (1996) 39 NSWLR 13. Unlike Nelson, Dinnison and the present case, Martignago involved a physical injury to a worker’s neck. The case was apparently run, not on the basis that he did not know he had a physical injury, but that he was not aware of the nature and extent of it, for the purposes of sub-par (a)(ii). The passage in the judgment of Clarke JA, cited with approval in Harris, stated (at 20F):

“The subsection is concerned to inquire whether, in a real sense, the applicant knows the nature of his or her injury and its broad extent. Having regard to the policy of the legislation it is apparent that it is designed to afford relief to an applicant who is either unaware that he or she has suffered an injury or is aware that he or she has suffered an injury, possibly with continuing consequences, but is unaware of its complications, implications or potentially serious consequences.”

176 Just prior to that passage, Clarke JA had cited with approval a passage in the judgment of Meagher JA in FJ Walker Ltd v Webber (unrep, 16 November 1989), a case involving ss 57 and 58 of the Limitation Act, to the following effect:

“One can know ‘the nature and extent’ of one’s injury even if one is ignorant of the final form which it will take. ... In general, not only need the applicant not know his final state, he need not know from what condition he is suffering. If he knows ‘the various signs and symptoms’ of his condition, and a reasonable man in his position would know of this potential, that is sufficient ... .”

177 It seems unlikely that the latter part of this passage in Webber would have been approved in Harris, because the point of departure in the High Court, from the reasoning in this Court, was the introduction, in the context of the application of s 60I(1)(a)(ii), of an objective test in relation to further deterioration: 186 CLR at 9.

178 In Nelson, no question of deterioration was in issue. As held by Rolfe AJA (Sheller and Hodgson JJA agreeing) at [68]:

“In the instant case, Mr Nelson was aware of all the symptoms from which he was suffering. He had received psychological counselling and had seen a psychiatrist. There was no suggestion that the symptoms would become worse. The extent or limits of the condition from which Mr Nelson was suffering had been reached. In these circumstances, it seems to me, that his lack of knowledge that the problems could be described as Post Traumatic Stress did not in any way affect the extent of his personal injury. Rather, that was a way in which it could be described. However, as Clarke JA said, the Court is not concerned ‘with the technical name or description of an injury but its effect, actual and potential, upon the applicant’. It would be very strange if a person, aware of all the symptoms and in circumstances where there was no evidence that they would worsen, could say that he or she was not aware of their extent merely because different doctors may describe them differently.”

At [73], his Honour continued the analysis as follows:

“He sought, thereupon, to draw a distinction between what he had thought was an emotional condition and a medical condition. However, whether one describes the condition as emotional or medical, the symptoms and effect upon him were the same, and there is certainly no suggestion that having been told that he was suffering ... from post traumatic stress, that he sought any further treatment or that his condition changed. In these circumstances it would be, in my opinion, fanciful to suggest that Mr Nelson was not aware of the extent of his injury for many years prior to November 1995, or that his becoming aware of [the psychiatrist’s] report in any way had an effect upon the extent of the injury.”

It appears that a focus on the possible deterioration in his health may have distracted attention from the antecedent question, whether he was aware he had suffered a personal injury at all.

179 In Hill v The Commonwealth [2005] NSWCA 94, this Court considered a claim involving a member of the crew of HMAS Melbourne. The limitation period had been extended, but the claim was unsuccessful. The appeal against the substantive decision was dismissed.

180 In Cranbrook School v Stanley [2002] NSWCA 290 the Court dealt with the refusal of an application for an extension of time by an applicant who alleged mental injury resulting from sexual molestation whilst a student at the defendant school in 1988, when the applicant was in his fourteenth year. The relevant limitation period expired on 16 December 1998. The applicant asserted that his awareness that he had suffered a personal injury came with his reading of a report by Dr Morse of 6 April 1999. The questions identified by Heydon JA (at [35]) were, first, whether the opponent was “unaware of the nature or extent of the personal injury he suffered” at the end of the relevant period and, secondly, whether the application was made within three years “after the opponent became aware, or ought to have become aware, of the nature or extent of the personal injury”. The case was argued, and determined, by asking whether the facts fell more clearly within the parameters of Nelson, or Dinnison: see [68] in Stanley, extracted at [118] above. The question answered in the passage extracted was formulated as a factual one, namely whether, when the applicant “went to Dr Morse he already knew he had suffered from or was suffering from psychological or psychiatric illnesses to an extent sufficient to answer what is meant by the words ‘personal injury’ in s 60I(1)(a)(ii)”. The applicant had not been cross-examined about his state of knowledge prior to seeing Dr Morse and the description (at [68]) was a statement of the evidence consistent with absence of prior awareness of a personal injury.

181 It is a curious feature of each of the three mental impairment cases, Dinnison, Nelson and Stanley, and, indeed, of the physical impairment cases, Martignago and Harris, that each addressed the factor found in sub-par (a)(ii), namely, awareness of the nature and extent of personal injury suffered. In Stanley, at [36], Heydon JA summarised the submission of the prospective defendant in the following terms, namely:

“... first, that the question was not when [the applicant] became aware of ‘the technical name or description of an injury, but its effect, actual or potential, upon’ him: CRA Ltd v Martignago (1996) 39 NSWLR 13 at 20; Harris v Commercial Minerals Ltd (1996) 186 CLR 1 at 12-13. Ignorance on [the applicant’s] part of the medical description or diagnosis of his condition did not establish unawareness of its nature and extent if he knew his own ‘signs and symptoms’: CRA Ltd v Martignago (1996) 39 NSWLR 13 at 20; Commonwealth of Australia v Nelson [2001] NSWCA 443 at [67].”

In reality, the question faced by each of the applicants (and the present Applicant) is not whether they were unaware of the nature and extent of the injury, in the sense of its symptoms and manifestations, but whether they were aware that they had an illness at all. If they did not, prior to diagnosis, then the proper conclusion should be that they did not know that “personal injury had been suffered”. In other words, the authorities appear to support the proposition that, at least in the case of mental impairment, diagnosis and identification by a technical name or description, being one accepted by psychiatrists or psychologists, may in fact be an essential element of the relevant level of awareness. That is in part because the Limitation Act should be understood as picking up the concept of “personal injury” in the sense necessary to constitute a basis for a claim for damages which, in the case of a mental condition, must be a cognizable psychiatric illness. Approached in this way, the cases dealing with physical conditions may be understood as holding that the “nature and extent” of an injury may be known without knowing the relevant medical label. In the case of a mental condition, the question is whether the victim is aware that he or she suffers from a cognizable psychiatric illness (which may involve knowledge of its name) for the purposes of sub-par (a)(i).

The normative element

182 The second requirement of s 60I(1) is that the application is made within three years after the applicant becomes aware “or ought to have become aware” of the matters listed in paragraph (a).

183 Determining whether he or she ought to have been so aware is not greatly assisted by describing the test as “objective” or “subjective”. Nor does it help to describe the test as not involving the hypothetical “reasonable person”, but rather the applicant himself or herself, including his or her actual characteristics and circumstances.

184 The content of the normative element must be identified from its context. That context requires that claims be brought in a timely fashion, so that issues in dispute may be identified and, if necessary tried, when memories are fresh and documents available. There is a public interest in the expeditious administration of justice, in addition to the particular interests of the respective parties to a dispute. Delay beyond the limitation period caused by ignorance of relevant facts should be accepted, but only where the means of knowledge are not reasonably available or, if available, could not reasonably have been availed of. Where a person has been placed in an environment with a known hazard, but one with a long latency period once inhaled, it may be argued that the person ought to undergo available non-invasive tests which could identify an injury before symptoms become apparent. On the other hand, where symptoms are apparent, the person may be expected to seek readily available professional assistance to determine the existence or otherwise of illness or injury. Resistance to diagnosis and treatment may be explicable in terms of cultural circumstances or personal characteristics, particularly in the case of possible mental illness. However, the fact that failure to avail oneself of such services is explicable and understandable, does not mean that the failure ought to be ignored when weighing in the balance the interests of the prospective defendant and the public interest in the expeditious administration of justice.

185 In Adams v Bracknell Forest Borough Council [2004] UKHL 29; [2005] 1 AC 76, discussed above by Santow JA at [110], the House of Lords was, as his Honour noted, dealing with differently worded legislation. The claim in question sought damages from a school authority for failure to deal with a pattern of specific learning disabilities, including dyslexia. That failure was said to have given rise to his literacy problems as an adult and to psychological or psychiatric syndromes, including panic attacks, social phobia and symptoms of depression. At [71] Lord Scott of Foscote stated:

“The reference in s 14(3) to ‘knowledge which he might reasonably have been expected to acquire’ should, in my opinion, be taken to be a reference to knowledge which a person in the situation of the claimant, ie an adult who knows he is illiterate, could reasonably be expected to acquire. Personal characteristics such as shyness and embarrassment, which may have inhibited the claimant from seeking advice about his illiteracy problems but which would not be expected to have inhibited others with a like disability, should be left out of the equation. It is the norms of behaviour of persons in the situation of the claimant that should be the test.”

Lord Scott continued at [72]:

“My own, non-expert, inclination would be to think that a person of average intelligence (Mr Adams was rated as above average intelligence) who knew himself to be illiterate, knew that his illiteracy was at the back of problems such as stress, depression, etc and who consulted a doctor about those problems, could reasonably be expected to inform the doctor about the illiteracy. Expert evidence to the contrary could lead to a different conclusion but in the present case there has been no evidence to the contrary.”

In my view little turns on the semantic variations between the language of s 14(3) of the Limitation Act 1980 (UK), relied on by Lord Scott, and the language of s 60I(1)(b) referring to matters of which an applicant “ought to have become aware”.

186 In Adams, Baroness Hale of Richmond cited a conclusion reached by the Law Commission (UK) in its consultation paper “Limitations of Action” (LCCP 151, 1998) at par 12.54:

“As it is fairer to plaintiffs and would not create significant extra uncertainty, we also consider that the test for constructive knowledge should contain a large subjective element: what ought the plaintiff, in his circumstances and with his abilities, to have known had he acted reasonably? The question should not be what a reasonable person would have discovered, but what the plaintiff himself would have discovered if he had acted reasonably. The personal characteristics of the plaintiff, such as his or her level of education and intelligence, and the plaintiff’s resources, would therefore be relevant to the question whether the plaintiff acted reasonably ... A number of the employment-related personal injuries cases have involved plaintiffs in unskilled manual jobs having little education. ... Conversely, in cases where the plaintiff has some degree of expert knowledge which should have caused him to appreciate facts at an earlier stage than would have been appropriate for the average person, that knowledge should be taken into account to advance the date of discoverability.”

After considering differences of approach taken by English courts in relation to the subjective circumstances of applicants, Baroness Hale concluded at [88]:

“I wonder, therefore, how much difference there is in practice between the two approaches. We are not here concerned with knowledge that the claimant might reasonably have been expected to acquire from facts observable or ascertainable by him. We are concerned with knowledge he might reasonably be expected to acquire with the help of medical or other advice which it is reasonable for him to seek. The question is when is it reasonable to expect a potential claimant to seek such advice? Objectively it will be reasonable to seek such advice when he has good reason to do so. This will depend upon the situation in which the claimant finds himself, which includes the consequences of the accident, illness or other injury which he has suffered. Rarely, if ever, will it depend upon his personal characteristics. If, faced with a situation in which it is reasonable to seek advice, a person fails to do so, then the fact that he was reluctant to make a fuss, or embarrassed to talk to his doctor, while understandable, does not take him outside the subsection.”

187 In my view this approach sits comfortably with the language of s 60I(1)(b). The circumstances and characteristics of an applicant may well explain why he or she did not ask a question or seek advice at a particular time. The term “ought” requires more than explanation – it requires justification. That additional element requires a standard, not a mere description of the characteristics and circumstances of the individual which led to the failure to inquire.

Application of principles

188 In an affidavit filed on 5 March 2002, the Applicant referred to a pattern of “drinking to shut out the memories [of the evening of the collision]”. He noted:

“Gradually and without realising I turned into a binge drinker, and my habit worsened with the years. It became a natural outlet to try and seek refuge from my thoughts, as I had learned to shut them up and not talk about them.”

He also stated:

“Following the collision I became disillusioned with the Navy, I lost my drive and motivation to pursue my career and to seek advancement.”

He further stated:

“I note that following my experience in that darkened mess following the collision, with all the men trying to escape through the one man hatch, I have suffered claustrophobia, particularly when I am not able to be in control. I have to avoid confined spaces as a result.”

189 In his affidavit filed on 5 March 2002, he also said that around the time of his divorce in 1985 he “started to realise” that his life was in ruins and that alcohol was destroying him. He said that he knew he “had to try and beat it”. Although the timing is not entirely clear, his statement that he had “managed to curb” his drinking habit appears to relate to a period no later than 1990, when he met his current partner. In addition, there was evidence of at least a suggestion that he was advised to seek psychiatric assistance from a Dr Stephenson at about the time of the breakdown of his marriage in 1985.

190 The Applicant was cross-examined about his affidavit and about his asserted ignorance of his condition and failure to attribute it to the collision, despite what he described as a dramatic change in his personality following the collision. At the end of the cross-examination he was asked and answered the following question:

Q. The thrust of my question is this: you knew, before you saw Dr Morris, that your reactions were the result of the accident but you did not know that they amounted to a psychiatric condition?

A. That is true.

191 At trial, the Commonwealth relied upon an affidavit sworn by the Applicant’s former wife on 26 March 1985. In it she recounted a series of telephone calls, including abuse and death threats, made by the Applicant to her in February 1985. The affidavit continued:

“On Monday, eleventh day of February 1985 my husband telephoned me at 7.30am. I had just arrived home after collecting the children from my friend’s residence. My husband was extremely upset and crying and apologised for his conduct and I accompanied my husband to a Dr Stephenson’s surgery and discussed the problems with my husband with the doctor. My husband was referred to a psychiatrist. My husband has not kept or made any appointments with the psychiatrist concerned.”

The Commonwealth complained that this material had not been addressed by the primary judge in his reasons. It provided support for the view that at a time when, on his wife’s evidence, he was behaving in a deplorable manner, he was given medical advice to seek psychiatric assistance, no doubt both for his own benefit and for the benefit of his family, and did not.

192 The primary judge referred to the Applicant’s description of his symptoms and concluded at [33]:

“None of the symptoms experienced by Mr Smith was likely, I think, to make him think that he had been injured, that it was an aspect of an illness. It is because most people suffer such manifestations without being ill or injured that those matters were unlikely to suggest to him that he was ill or injured.”

The second sentence in this conclusion carries little persuasive weight. What people do without experiencing a traumatic event gives little assistance in identifying the level of awareness of the Applicant, who undoubtedly had suffered a traumatic event. In relation to the first sentence, the primary judge had commenced his summary of the circumstances relating to the Applicant with the following statement at [32]:

“Mr Smith was well aware that he had unwanted thoughts about the collision and that he drank to shut them out. But that does not mean that he knew that he had suffered an injury.”

This finding recognises the connection actually drawn between the change in mental condition and the collision, a matter of which the Applicant was well aware for many years prior to September 1998. Accordingly, it follows that the conclusion relating to “illness” depends upon the absence of diagnosis of psychiatric illness, prior to reading the report of Dr Morris in 2000. On the basis that the authorities do require, at least in relation to a psychiatric illness, awareness of the existence of such an illness for the purpose of knowing that one has suffered a “personal injury” for the purposes of sub-par (a)(i), his Honour’s conclusion with respect to the lack of actual knowledge prior to the relevant time may be accepted. The next question is to consider his Honour’s application of the test required by par (b).

193 Whether he “ought” to have been aware earlier than September 1998 that he had suffered a personal injury was dealt with dismissively. After noting the submission on behalf of the Commonwealth that this requirement was not satisfied, his Honour stated at [36]:

“I thought that the submission that Mr Smith ought to have sought counselling was a courageous one in view of the manner in which he had been treated by his superior officers. This submission must fail because, as I have said, Mr Smith did not realise that he was ill. This was not a long-standing and troublesome pain in the neck or the leg which might reasonably be expected to cause a patient to seek medical help. Because he did not know that he was ill and injured he had no reason to seek medical help.”

194 The description of the submission as “courageous” because of the treatment by “superior officers” is perhaps a rhetorical flourish. It appears to be unrelated to the reasoning which follows. Nevertheless, it is a reference to the evidence that the crew of the Melbourne were told after the collision:

“You know nothing. Say nothing about what happened. Forget about it and get on with your lives.”

As his Honour also noted, no “professional support” was offered. The Applicant sought to place some reliance on this instruction to explain why he did not seek professional assistance with his symptoms. He referred, in his affidavit, to the direction given by senior officers and stated:

“This silence was impressed upon me and I maintained my silence ever after, never speaking about the event to any other person until about two years ago. I kept all my thoughts, concerns and feelings bottled up inside me throughout that time.”

That evidence appears to have been accepted. But the suggestion that the direction given to the crew was in some way morally reprehensible is, in my view, to take it out of context, both in relation to the incident which had occurred, involving two naval ships, and the understanding of how best to deal with psychological trauma in 1964. Given the subsequent inquiries, litigation and publicity surrounding the collision, it would be difficult to conclude, generally speaking, that such a direction given in the immediate aftermath of the tragedy would be understood even then, let alone 10, 20 and even 30 years later, to constitute a prohibition on seeking medical assistance. It seems that the Applicant did not so view it when he obtained advice from a solicitor in mid-1999. There is no express finding that the Applicant so viewed it in August 1998. Nor would I draw that inference.

195 The second aspect of his Honour’s conclusion in this respect fails, in my opinion, to give adequate attention to the normative element of par (b). First, whilst knowledge of symptoms and behavioural manifestations may not constitute awareness of an illness, it does not follow that such lack of awareness justifies failure to inquire as to the existence of an illness. The distinction between physical pain and mental pain is by no means watertight or absolute. Many people with recurrent physical pain ignore it and hope it will go away without medical assistance. Understandably, a person may fear a diagnosis of serious illness, or fear that the treatment will be worse than the ailment. The Applicant was a man who claimed his life had been seriously diminished in the aftermath of the collision. He said that he drank to drown his depression and sadness. Understandable as such a course may be, to take alcohol rather than medical treatment is a choice which explains, but does not justify, more than 30 years delay in obtaining advice which resulted in him bringing proceedings for damages.

196 Santow JA refers to this evidence at [90]-[92] above. I accept his Honour’s conclusion that the Applicant did not in fact see a psychiatrist: so much seems to follow expressly from his wife’s affidavit. However, I would not rely upon “the instruction he and others received from the Navy to avoid discussing the event, to put it behind him and to get on with his duties” as the reason for not taking that step. It is at least speculative to suggest that, more than 21 years after the collision and some 11 years after he had left the Navy, the direction continued to influence him in his approach to medical advice.

197 At [98] Santow JA suggests that his failure to seek psychiatric assistance or counselling in 1985 may lack weight because if advice to do so were given “it would not have been in the context of the events of 1964, but in the context of a marital breakdown involving domestic violence where the connections were by no means obvious to the events of 1964”. With respect, I do not find that fact persuasive. Since he said he did not then make any connection between the collision and his mental health, the fact that the advice was given in the course of his family breakdown is of quite peripheral relevance. The context in which he was being advised to seek psychiatric or counselling assistance was concern as to the state of his mental health. It is at least likely that, had such advice been obtained, the cause of his mental impairment may have been identified. The evidence of the medical consultation with Dr Stephenson is not decisive, but it is relevant in relation to the question whether he ought, in the circumstances which then arose, to have taken the opportunity to explore his mental condition, rather than ignore it.

198 In his affidavit, the Applicant stated that when his solicitor recommended he seek expert assessment in mid-1999 he was doubtful about that course.

“However, at first I could not accept that I did have such a disorder, and was reluctant to expose myself and dredge up the memories that I had been instructed to block out over 35-years before.”

That attitude was no doubt consistent with the description given by Dr Glaser, with whom he consulted on 9 April 2002. Dr Glaser noted that in terms of his psychiatric state, “the picture is complicated by his marked reluctance to discuss his feelings and behaviours”.

199 This evidence appears to identify a personal characteristic of the Applicant which explains, at least in part, why he may not have sought expert diagnosis until persuaded by his solicitor in mid-1999. However, the evidence does not demonstrate that this was an element of his mental impairment. Had it done so, that would have been a material consideration.

200 In my view the Applicant has not established that the application was made within three years after the time at which he ought to have become aware of the fact that he had suffered a personal injury of the kind identified in the statement of claim. Accordingly he has not satisfied the Court as to the matters identified in s 60I(1)(b).

Discretionary considerations

201 As others take a different view in relation to the last conclusion set out above, it is necessary to address the further question of whether it was “just and reasonable” to order that the limitation period be extended, in the terms provided by s 60G(2). I address that question on the assumption that the Applicant was neither aware of, nor ought to have become aware of, the matters set out in s 60I(1)(a) before 12 September 1998.

202 The principles relevant to the exercise of this power are discussed by Santow JA at [122]-[129] above. However, I differ from his Honour in relation to the application of these principles.

203 The first complaint of the Commonwealth dealt with by the primary judge was in relation to records and independent recollections of the Applicant prior to and around the time that he joined the Navy. His Honour did not suggest that such material had not been lost, but that the Commonwealth had lost nothing by its absence: at [41]. He also dismissed the concern that the Applicant had, in his application to join the Navy, affirmed that a member of his family had attempted to commit suicide and that records in relation to that matter were not available, as irrelevant on the basis that it “gave the Navy no cause for concern about Mr Smith’s suitability for service”. However, that is not the relevant issue for present purposes. The two broad issues which would no doubt arise if the matter were to go to trial would be the Applicant’s general character, behaviour and state of mental health prior to the collision and his equivalent position immediately afterwards and in later years. Assuming that Mr Smith suffers from some recognisable mental illness (albeit one in relation to which, despite his claim, he gave evidence that he had never received any counselling or treatment) the question will be whether the collision caused or contributed to that condition. Other factors in his life and family history may suggest a different cause or causes. It is clearly tenable that, 37 years after the event, it will not be possible to disentangle those circumstances with any sufficient level of confidence in the outcome.

204 The next category of material dealt with by the primary judge (at [45]) concerned Naval records, including records of his consumption of alcohol, which had been destroyed in the ordinary course of business. His Honour concluded (at [46]):

“If this case had been brought within a few years after the date of the collision I think it highly unlikely that material of the kind adverted to would have played any part in the trial. The passage of time does not change that. The Commonwealth has lost nothing of significance.”

With respect, this is more akin to speculation than a finding of fact. In an “alcohol questionnaire” completed for the Department of Veterans Affairs on 26 March 2001, the Applicant gave an affirmative answer to the question “do you consider that your alcohol consumption was due to, or contributed to, by your service?” and added by way of explanation:

“Stress of service life. Particularly after FESR service – and Vietnam service when I started to consume larger amounts of alchol (sic) such as drinking to excess.”

(“FESR” is presumably a reference to a more recent version of the “Far East Strategic Reserve”, a British Commonwealth force used in Malaya in 1959-1961.) It is likely to be part of the Commonwealth’s case on a disputed trial, as foreshadowed in the cross-examination on the present application, that the Applicant’s excessive consumption of alcohol was related to factors other than the night of the collision.

205 His Honour also held (at [50]) that:

“To the extent that Navy records were destroyed the Commonwealth must take the consequences of its actions. ... Any service that destroyed its records, ignoring the possibility of future claims by sailors claiming compensation, took upon itself the risk that it would become less able to defend any such claim.”

That involves an unacceptably broad brush approach. Santow JA concludes that the first claim by a member of the crew of the Melbourne was not brought until 1995: [143] above. That date is after the enactment of the provisions of the Limitation Act on which reliance is now placed. There was no evidence identified before this Court to suggest that the Commonwealth had destroyed documents after the first notification of claims by members of the Melbourne, or at a time when the Limitation Act had been amended to allow claims which might not theretofor have reasonably been anticipated. Large employers are entitled to destroy records after a period has elapsed during which, in accordance with the law, potential claims might reasonably have been expected to be commenced.

206 In relation to witnesses generally, his Honour held that “the nature of Mr Smith’s injury is not likely to have been detectable either from records or from contemporary reports of fellow sailors. He did not know that he had been injured”: (at [51]). At [52] his Honour further held that:

“The Commonwealth has lost nothing because its case would not have been assisted if it had been able to call a succession of witnesses who said that they never heard Mr Smith complain about the effects of the collision. Such of the symptoms as were manifesting themselves during the remainder of his service were not, as I have observed, likely to impress themselves on others because if they had been noticed they would not have been recognised as symptoms of an injury. Moreover, the symptoms would have been no more than any sailor might display from time to time: drinking too much and losing his temper from time to time. Nobody would have noticed his broken sleep. Nobody would have learned about his nightmares. His loss of enthusiasm for his job is not likely to have impressed itself on others.”

Again, this is, with respect, to misstate the question. The Applicant’s case was that his behaviour and attitude to the Navy changed significantly within months of the collision. He stated in his affidavit that the Melbourne returned to sea after a few months but, “I had lost my delight in being in the Navy”. He continued:

“As a result, I tended to be aggressive, moody and quick to anger, and believe I was very unpleasant in my marriage because of my temper.”

207 If these changes had occurred as the Applicant described them, it would have been surprising if his shipmates had noticed no change. The fact that they might not identify them as “symptoms of an injury” is beside the point. If they did not observe them, it may have been because they did not occur. Thirty-seven years later, no weight could be placed upon any evidence as to whether and when they observed such changes. No doubt it is true that the Applicant has lost the opportunity for corroborating evidence: but more importantly, the Commonwealth has lost the means of contradicting the Applicant’s sworn testimony.

208 The central problem is that, some 37 years after the event, it is difficult to comprehend how any reasonable objective assessment can be made of the pre-collision character of the Applicant and the effect of the collision upon him. Further, it is difficult to comprehend how any reasonable assessment can be made of possible effects of subsequent events, the effects of which the Applicant may not admit or as to which he may genuinely lack insight, and which are no longer capable of independent investigation.

209 Psychiatry is not (yet) a precise, science-based discipline. The diagnosis undertaken by Dr Morris (a psychologist) was based upon what the Applicant described as “a huge number of questions about my life and condition”. Although lack of insight into one’s mental health may reduce the risk of manipulation of the facts, Professor Glaser at least described the picture as “complicated” by the Applicant’s “marked reluctance to discuss his feelings and behaviours”. There are, presumably, entirely separate questions as to the accuracy of his recall and therefore the accuracy of the answers given to the questions. For example, in his cross-examination on this application, he was unable to recall whether or not he had done a number of unpleasant and violent things in the course of his marriage. Again, passage of time will render it difficult for the Commonwealth to test the accuracy of his recollections, upon which the diagnosis appears to have been based. There is no objectively established mechanism for testing recovered memories or distinguishing facts from fantasy, observation from speculation or recall from reconstruction. Such exercises become more unreliable with the passage of time.

210 The fact that causes of “mental impairment” are difficult to determine should tend to discourage a grant of leave to allow an applicant to present evidence to a court of the effects on him and on his mental condition of events which occurred more than 37 years ago. For this purpose, a “fair trial” is one in which the likelihood of a correct assessment of the facts has not been so diminished by the passage of time as to longer enjoy sufficient prospects of achievement. In some cases, the usual prejudice caused by delay may be off-set by advances in medical science. Indeed, a condition or causal connection which could not have been identified at an earlier time might later be capable of identification. However, there was no evidence in the present case that psychiatry, despite modern attempts to classify and systematise definitions of mental conditions, had achieved such an state, relevantly to the present circumstances.

211 It follows that, even if the preconditions to the exercise of the power had been met, the assessment of the discretionary considerations made by the primary judge did reveal appellable error. The order extending the limitation period should not, in my view, have been made.

212 My conclusion in that regard is not affected by the matters set out at [148]-[153] above. Statistics in relation to other applications made by members of the crew of the HMAS Melbourne, and their fate before single judges of the Court, do not, in my view, constitute a relevant consideration for present purposes. None of those other matters is before the Court for review, nor is this Court aware of what precise facts and arguments were presented, without considering each case in detail. The present application must be assessed on the basis of the material presented before the primary judge and questions of error or otherwise must be determined by reference to his Honour’s findings and reasons. Whether it is true that the Commonwealth “has consistently run (and lost)” certain arguments, or that judges of the Court have “regularly found that sufficient evidence had been retained” are not matters on which I am able to comment. Nor, as appears below, do I think that such considerations should influence this Court in its order with respect to costs.

Costs

213 In granting the application, the trial judge dealt with the issue of costs succinctly. His Honour simply stated at [57]:

“The Commonwealth has fought the application as a discrete issue and has lost. It should pay Mr Smith’s costs.”

214 One may infer from this brief statement that his Honour dealt with the question of costs on the basis that they should follow the event of the discrete issue. In my view, that approach demonstrates error.

215 Before this Court, the Commonwealth argued that the question of costs should be determined by application of Part 52A r 17 of the Supreme Court Rules. That rule provides:

17 Where a party applies for an extension of time, unless the Court other orders, he or she shall, after the conclusion of the proceedings, pay the costs of and occasioned by the application, or any order made on or in consequence of the application.

The term “extension of time” is not a defined phrase. It may well be that, read in context and by reference to its precursor in the 1965 Supreme Court Rules (UK), this rule is limited to applications for an extension of time pursuant to Part 2 r 3, or other such provision for extension found in the Supreme Court Rules. (See now, Uniform Civil Procedure Rules 2005, r 1.12: there is no equivalent of old Part 52A, r 17.) However, for reasons noted below, this rule may properly be understood as a specific case illustrating a more general principle.

216 Secondly, reference was made to s 60L of the Limitation Act. That section provides:

60L Costs

Without affecting any discretion that a court has in relation to costs, a court hearing an action brought as a result of an order under Subdivision 2 or 3 may reduce the costs otherwise payable to a successful plaintiff, on account of the expense to which the defendant has been put because the action was commenced outside the original limitation period.

If the costs of the application for extension of time are not dealt with as a separate matter, it would seem that an order in favour of a successful plaintiff may be reduced by costs which could include the costs of resisting an application for extension of the limitation period.

217 As noted by Santow JA at [159], this Court held in Holt v Wynter [2000] NSWCA 143; (2000) 49 NSWLR 128 at [121]:

“In relation to costs ordinarily a successful applicant, who has allowed him or herself to get out of time, should pay the costs of the application unless the respondent’s opposition was wholly unreasonable.”

On one view, this principle may be limited to the circumstances of that case, in which an intention to make a claim arose within time, but was not effected before the expiration of the period.

218 The issue of costs also arose in Nowlan v Marson Transport Pty Ltd [2001] NSWCA 346; (2001) 53 NSWLR 116. In that case, this Court was emphatic in its disapproval of the conduct of the opposition to an application for an extension of time by the prospective defendant, which opposition was described as based on “the ambush theory of life” (at [30]) and “trial by ambush” (at [40]). Nevertheless, the prospective plaintiff did not receive an order for the costs of the application. Rather, Heydon JA held at [37]:

“Since the respondent’s opposition to the application before the primary judge rested on one primary point on which it has failed, the costs of the hearing before the primary judge should be the appellant’s costs in the proceedings. That is, if the appellant wins the trial, he will have his costs of the [extension of time] application; if not, there will be no order as to costs. It may be that that type of order is not typical of those made in relation to [extension of time] applications which succeed. In argument before this Court expressions were used to the effect that the appellant had been seeking an ‘indulgence’. In a limited sense that is true. There are some types of opposition which ought not to result in adverse costs orders even if the opposition fails. In other cases it can be seen, if opposition fails, that there ought not to have been opposition, and different types of costs orders may be appropriate. The failure of the respondent here is in the latter category.”

219 Although his Honour did not expressly so state, it would seem to follow that where opposition is reasonable there should either be no order as to costs or the prospective defendant should have its costs, although unsuccessful. In Williams v Minister, Aboriginal Land Rights Act 1983 (1994) 35 NSWLR 497, the costs of a successful application for extension of time were said to be “costs in the plaintiff’s action”: at p 515F. This would appear to be a similar order to that made in Nowlan.

220 It is fair to say that the Applicant does not in the present proceedings seek an indulgence in the sense of being relieved of some penalty imposed by the law, for relief from which it should pay the costs of the defendant in any case. These proceedings may be contrasted with those which used to be brought by credit providers under s 85 of the Credit Act 1984, to be relieved of civil penalties for contravention of the mandatory requirements of that Act. In such cases, costs orders were routinely made against successful applicants, in favour of borrowers who opposed reinstatement in full of credit charges payable by them: see, eg, Australian Guarantee Corporation Ltd v Stander (1987) ASC ¶ 55-546 at p 57,155. However, the effect of a successful application for an extension of time is analogous in the sense that the prospective defendant loses an immunity from suit which it would otherwise enjoy as a result of the expiration of the limitation period and the prospective plaintiff obtains a concomitant benefit. The difference lies in the fact that, the applicant having been unaware of the circumstances which gave rise to the cause of action, cannot properly be said to be “at fault” in failing to proceed earlier.

221 Taking into account these factors, together with the practice in recent cases, it would seem that the Applicant should not get his costs unless the Respondent has acted in a manifestly unreasonable fashion. Even then, it may be that an appropriate order would grant the Applicant his costs if ultimately successful in the substantive proceedings. Absent unreasonable conduct on the part of the Respondent, it may nevertheless seem inappropriate, generally speaking, that the Respondent should obtain its costs of its unsuccessful opposition, unless the Applicant has acted unreasonably. In such circumstances the costs of the application might be allowed to lie where they fall, or the costs could be the Respondent’s costs of the action.

222 Because I have reached a different view to Santow JA as to the merits of the case presented by the Commonwealth, it follows that I do not think it acted in any sense unreasonably in resisting the present application. However, even if I had been of a different view, in relation to the merits of this case, I would not be inclined to take account of speculation as to the merit of arguments run by the Commonwealth in other cases: c.f. [160] above.

223 If the appeal is upheld, in accordance with my views of the merits of the application, the Applicant should pay the costs of the proceedings in the Court below and of the appeal. If the Applicant is successful, in my view the order below should be varied so that there is no order as to those costs, but the Commonwealth should pay the costs of the appeal.

Orders

224 I would propose the following orders:

(1) Allow the appeal and set aside the orders made by the primary judge on the motion on 23 September 2004.

(2) In lieu of the orders made below, order that:

(a) the motion to extend the limitation period be dismissed with costs, and

(b) there be judgment for the defendant in the proceedings, with costs.

(3) The Respondent pay the Appellant’s costs of the appeal.

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LAST UPDATED: 16/01/2006