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Barry Lane
3 August, 2006  
A question of characterisation

Barry Lane examines the entrails of the High Court’s thinking in the Citilink and Geoff Clark cases and wonders how some curious “characterisations” were conjured

imageJustice Michael Kirby, or the “Kirbster” as our editor fondly calls him, explains in Commissioner of Taxation v Citylink Melbourne Limited [2006] HCA 35 that “characterising” a piece of legislation can be a rather unscientific process:

“Characterisation, in every branch of the law, is problematic and usually disputable. Different minds categorise payments on different sides of the income and capital divide. That is why, in new and unusual circumstances such as the present case, it is necessary to return to the statutory text and to the novel means adopted to acquire the concession and thereby to secure, fund, establish, maintain and ultimately operate this major project of capital infrastructure.”

In the Citylink case ten judges had to “characterise” payments made by Citylink to the State of Victoria. Were those payments outgoings on revenue account as “characterised” by Citylink, and therefore deductible against income or were they in the nature of capital, as claimed by the Commissioner of Taxation, and not deductible at all?

There was a rather neat summary of the issues, arguments and outcome by Kenneth Davidson the other day in The Age.

Only the trial judge, Justice Merkel of the Federal Court and the “Kirbster” were of the opinion that the payments for the 1996 to 1998 income years, some $126 million, were in the nature of capital and therefore not deductible.

The other eight judges of the Federal and High Courts were all of the view that the arrangements entered into between Citylink’s financial alchemists and the State of Victoria, which resulted in an outcome Justice Merkel fancied could only be produced in “a taxpayer’s heaven”, were outgoings in the nature of revenue and therefore deductible.

Stingel v Clark [2006] HCA 37, which fell from the High Court on the same day as Citylink, also presented problems of “characterisation”.

imageCarol Anne Stingel (pic), who was born in 1955, alleges that in 1971 she was assaulted and raped by “Gentle” Geoff Clark. She says that as a result she suffered injury in the form of post-traumatic stress disorder of delayed onset. She also alleged that she first became aware of the connection between the assault and rape, and the injury, in 2000.

In August 2002 Stingel brought an action for damages against Clark in the County Court of Victoria. She claimed aggravated, exemplary and punitive damages. Her cause of action was for trespass to the person.

Section 5(1)(a) of the Limitation of Actions Act 1958 presented the first hurdle for Stingel because it prescribed a general limitation period of six years for any action “founded on tort including actions for damages for breach of statutory duty”.

The strictures of that provision have been somewhat ameliorated by two sets of amendments to the Act, in 1972 and 1983. Both amendments extended the limit of six years but only in relation to “actions for damages for negligence, nuisance or breach of duty”.

A County Court judge found, contrary to the case put by Geoff Clark, but consistent with binding Supreme Court authority, that a cause of action based on intentional trespass to the person was included in the phrase “breach of duty”.

The historical context of this strange process of “characterisation” is explored at length in the joint reasons of Chief Justice Gleeson and Justices Callinan, Heydon and Crennan.

Justice Hayne agreed with the majority on the question of construction, which is probably not surprising given that he was part of the unanimous Court of Appeal in Mason v Mason [1997] 1 VR 325 which was the decision binding the County Court judge.

The “Kirbster” and Justice Gummow dissented, holding like the House of Lords in 1993 (Stubbings v Webb) and the Supreme Court of Ireland in 2002 (Devlin v Roche) that “breach of duty” does not include the intentional tort of trespass.

imageOn appeal by Clark, the Court of Appeal affirmed the previous decision in Mason where it was held that an intentional trespass was included in the “breach of duty” cause of action but allowed Gentle Geoff’s (seen here with his lawyer) appeal on other grounds.

The High Court’s justification for upholding the Court of Appeal’s interpretation in Mason was spelled out in the joint reasons:

“This court should uphold the decision in Mason v Mason, which was followed by the Court of Appeal of Victoria in the present case. There are three reasons for this.

First, as a matter of principle, for the reasons given by the English Court of Appeal in Letang v Cooper, the words ‘breach of duty’ are capable of covering intentional trespass. In view of the difference of opinion between Diplock LJ in Letang v Cooper and Lord Griffiths in Stubbings v Webb, it is clear that eminent judges may disagree about whether, upon jurisprudential analysis, the expression ‘breach of duty’ is apt in the case of trespass, but statutes of limitation are more concerned with practical justice than with jurisprudential analysis, and, at the very least, the language is ambiguous.

Secondly, the legislative history in Victoria is significant, and in some respects different from that in the United Kingdom. The House of Lords, in Stubbings v Webb, considering the same expression in the Law Reform (Limitation of Actions, &c) Act 1954 (UK), attached significance to some remarks in the Report of the Tucker Committee, but in his evidence to the Committee of the Victorian Parliament, Mr Justice O’Bryan had earlier glossed those remarks differently in a manner consistent with the approach that later prevailed in Victoria. More significantly, ss 23A and 5(1A), both of which were the product of reviews of the existing law by expert committees, adopted language which, at the time of its adoption, had been construed judicially in a certain fashion. That history of judicial construction was part of the context in which the provisions are to be understood. It would certainly have been known to the committees advising on changes to the Act. We are dealing here with a matter of ‘lawyers’ law’; and considerations of judicial precedent would have been to the forefront of matters taken into account.

Thirdly, the alternative construction preferred in Stubbings v Webb results in anomalies; it attributes to parliament an intention to draw a distinction which defeats, rather than advances, the purpose of the legislation. The evident purpose of both s 23A and s 5(1A) is to relieve the position of victims of tort: the former by giving a court a discretionary power to extend the time bar; the latter by providing for an automatic extension in cases of injuries of delayed onset. There is no discernible difference, in point of legislative policy, between victims of intentional and unintentional torts. No legislative purpose is served by putting the perpetrators of intentional torts in a better position than the perpetrators of unintentional torts. There being, as the Supreme Court of Ireland said, two constructions reasonably open, that should be preferred which produces a fair result that promotes the purpose of the legislation.

The construction of the words ‘breach of duty’ in the Victorian legislation accepted in Mason v Mason accords with legislative history, context and purpose. It is, therefore, to be preferred to that advanced by the respondent.”

With the greatest of respect, it occurs to me that in the context of the various classifications that have been applied to causes of actions over the years, it is not at all “apt” to say that “breach of duty” includes the intentional tort of trespass to the person.

Parliaments can say that “dog includes cat, bird and fish” but judges can’t, and shouldn’t.

Now that many benches of “eminent judges” in Australia have toed the party line, up to date, what should be done now to sort out the policy mess inherent in Stingel?

In my view, the Victorian Parliament must now act to negate Stingel and its predecessors in title and put the law back on the course it was on before Adam J of the Supreme Court took it off on a tangent in Kruber v. Grzesiak [1963] VR 621.

It should be noted that Kruber was a common or garden running down case where the plaintiff was outside the then applicable three year limitation period for personal injury claims but Adam J put him back in the game by his “characterisation” of the claim as an unintentional trespass for which the limitation period was six years.

Brings to mind that old aphorism about hard cases and bad law – don’t you think?


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