A plaintiff faced with this situation can either pursue the insurer(s) of the deregistered entity under ss4 and 5 of the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) or pursue the deregistered company. The latter course requires the plaintiff to apply for an order against ASIC to restore the registered company to the register. Such an Application is maintained under s601AH of the Corporations Act 2001 (Cth).

In personal injury claims for common law damages s2 of the Law Reform (Miscellaneous Provisions) Act 1944 (NSW) operates to extinguish an entitlement to recover damages for non-economic loss if the plaintiff dies as a consequence of the injury/disease being the subject of the claim prior to the delivery of judgment. Section 2 of the 1944 Act operates to preserve the right to recover other heads of damages to the benefit of the plaintiff’s estate.

That orthodox position is altered by s12B of the Dust Diseases Tribunal Act 1989 (NSW) which preserves the entitlement to recover damages for non-economic loss to the estate if the proceedings are ‘commenced and pending’ against the defendant at the time of the plaintiff’s death.

It is common in toxic tort litigation for a plaintiff to commenced proceedings naming one or more deregistered companies as defendants and die prior to restoration of those companies. The question determined in this case was whether it was appropriate to make an order requiring ASIC to restore the deregistered company and whether such an order operated to ‘validate’ the proceedings such that they were ‘commenced and pending’ at the time of the plaintiff’s death so as to enliven the operation of s12B. That required assessment of the effect of an order under s601AH and, in particular whether ancillary orders under s601AH(3) were necessary to validate the making of an order that ASIC restore a deregistered company under s601AH so as to trigger s12B.

Background and Argument

The proceedings concerned a claim by Mr Viskne who developed mesothelioma. By the time he instructed solicitors he has a short time to live. He claimed that he was exposed to asbestos dust and fibre in the course of employment by John Darlington Pty Limited, by then deregistered. He commenced proceedings naming Darlington and other parties as defendants. After Mr Viskne died the proceedings were reconstituted to substitute his legal personal representative as plaintiff. It was uncontroversial between the parties that at the time of naming Darlington as a defendant in the proceedings Darlington was deregistered and as such, without taking the further step of restoration, the proceedings were a nullity.

The legal personal representative then made an Application to the Supreme Court of NSW for orders under s601AH that ASIC restore Darlington. The purpose of that course was to achieve the benefit of s12B so as to preserve the right to recover damages for non-economic loss. Allianz, the insurer of Darlington, opposed the orders being made.

The first question for determination was whether the Supreme Court of NSW ought to order ASIC to restore Darlington.

Allianz argued that the retrospective restoration of Darlington did not have the effect of rendering the naming of it in proceedings commenced prior to Mr Viskne’s death as ‘commenced and pending’ but rather that the date of the restoration was the relevant ‘trigger date’ in that respect. Allianz argued that there was no pragmatic benefit warranting the making of an order to restore the companies because, in effect, that order gave no different entitlement to recover damages than if the estate commenced proceedings against Allianz under the 2017 Act [which uncontroversially would not engage s12B because proceedings as against the insurer were not commenced and pending at the date of the death of the claimant].

Further, Allianz contended that retrospective deeming of commencement of proceedings at the time a deregistered company was named in proceedings filed cannot appropriately operate in a case in which s12B is relevant because s5E(1) of the 2001 Act operates to prevent the Corporations Legislation from excluding or limiting the concurrent operation of any law of a state or territory.

Allianz argued that an order which retrospectively validates the naming of a deregistered company in proceedings prior to the death of the claimant offends s5E because such an order limits or excludes the operation of the state law being s12B(2) of the DDT Act. Allianz asserted that s12B was enacted to protect valid cases at the time of death such that it is triggered to exclude the entitlement to damages for non-economic loss if the proceedings were not ‘commenced and pending’ as against that deregistered entity at the time of the claimant’s death. In Allianz’s submission, the effect of 212B operated at the time of the death such that the purported ‘validation’ of the commencement of proceedings at the time of the restoration of the deregistered company was not permissible under s5E.

Finally, Allianz argued that in order to ‘validate’ a retrospective reinstatement of a company it was necessary for a court to make an ancillary order under s601AH(3) of the 2001 Act. That required assessment of whether the making of that retrospective validation was ‘just’. Allianz argued that, first, on a proper construction of s601AH the order upon ASIC to restore the company had effect from the date of the restoration rather than the date the deregistered company was named in the proceedings such that an order under s601AH(3) was required to make that reinstatement retrospective. It was thus argued that it was not ‘just’ to make that order because the purpose of it was to outflank the operation of s2(d) of the 1944 Act and section 12B of the 1989 Act.

The arguments made by Allianz were in part successful at trial before Justice Rees of the Supreme Court. That is, Justice Rees held that the order to ASIC to restore a deregistered company did not have retrospective effect so as to engage s12B without an ancillary order under s601AH(3). Justice Rees has held it appropriate to make that ancillary order because it was ‘just’ to do so from consideration based in the claimants’ position.

In that regard Justice Rees had assessed the appropriateness of the order under subsection (3) noting that the only reason that the original commencement of proceedings did not trigger s12B was due to the fact of the deregistration of Darlington and the clear purpose of s12B was appropriately served by making an order retrospectively reinstating those companies.

Court of Appeal

The Court of Appeal dismissed the substance of the appeals by Allianz.

In doing so the Court upheld a notice of contention filed by the Estate that, properly considered, the reinstatement of Darlington under s601AH of itself validated the proceeding in which it was named from the time of filing the proceedings. As such, the Court of Appeal held that it was unnecessary for an ancillary order under s601AH(3) to be made.

The Court held that, in line with Authority, the order restoring a company which had been named when deregistered as a defendant in proceedings rendered the naming of it as a valid commencement of proceedings against it at the time those proceedings were filed. As such, in a s12B sense, the restoration of Darlington rendered the proceedings ‘commenced and pending’ prior to the death of Mr Viskne.

Otherwise, the Court considered the argument by Allianz as to s5E to be misconceived. The court did not accept that the making of an order restoring Darlington operated to limit or impact upon s12B.

Rather, the Court held that the authorities identified a clear entitlement to order restoration of a deregistered which operated to ‘validate anything done’ against that deregistered company. The Court of Appeal found that to include commencement of proceedings.

Comment

The decision of the Court of Appeal is not unexpected perhaps with the exception of the decision concerning the absence of need for an ancillary order under s601AH(3).

Unusual circumstances arise in the context of toxic tort litigation because of the preservation of the right to damages for non-economic loss. In case in which the claimant is alive at the time of restoration of a deregistered company (whether in a toxic tort case or otherwise) that step will not vest a claimant with any alternative benefits, perhaps with the exception of the potential impact of limitation periods, because no equivalent provision to s12B is available in non-toxic tort litigation to preserve any entitlement to a head of damages and, in any event, it is unusual for such a claimant to die prior to making the order restoring the deregistered company.

Section 12B is benevolent legislation enacted to right the perceived unfairness to all parties associated with the historical need to accelerate hearing of toxic tort cases to facilitate judgment being delivered within a claimant’s lifetime. The prejudice to a defendant in being forced litigate with little or no preparation is said to be alleviated by allowing longer preparation time but offset by the potential to nonetheless be liable to pay damages for non-economic loss even if the claimant does not survive to the date of judgment.

Practically speaking, it is regularly the case that proceedings are commenced against deregistered defendants (and for that matter extant defendants) but not served until after the claimant dies. Those defendants, whether after an order restoring or regardless of the fact that they were extant at the time the proceedings were commenced but were unaware of them until after the claimant’s death, remain prejudiced by the fact that they did not have an opportunity to hear evidence from the plaintiff or otherwise undertake normal preparation during the claimant’s lifetime. That is an unfortunate feature of this class of litigation.

Overall, the decision provides clarity to litigants in this area.

Further information / assistance regarding the issues raised in this article is available from the author, Stephen Taylor-Jones, Partner, or your usual contact at Moray & Agnew.