Report No. 193
Australia: Mckain v. R.W. Miller & Co (South Australia) Pvt. Ltd, (1992) 174 CLRI
In Australia, in Breavington v. Godleman, (1988) 169 CLR 41, the majority of the Judges who decided the case, deviated from common law 24and held that the forum law was not applicable to determine liability for torts committed in Australia. This view, however, suffered reversal at the hands of the majority in Mckain v. R.W.Miller and Co. (South Australia) Pvt. Ltd, (1992) Vol. 174 CLR 1. In that case, a tort was allegedly committed in South Australia, but an action was filed in New South Wales because the action stood barred in the former State and was alive in the latter.
The majority retained the common law rule and held, in a conservative ruling, that the lex fori in New South Wales applied and the defendant could not plead that the action was barred in South Australia. (In order to rectify this position, most of the States in Australia have since brought about statutes on lines with the English Act of 1984). The minority judgment of Mason CJ in the above case which sought to apply the lex causae is illuminating. After stating that matters of substance should be governed by the lex causae and not the original common law principle that limitation statutes bar the remedy and do not extinguish the underlying right, Mason CJ stated that the common law 'distinction has been described as both artificial and semantic'. He observed:
"The distinction has been described as both artificial and semantic. Cheshire and North, Private International Law, 11th ed (1987) p 80; Mcleod, The Conflict of Laws (1983), p 215; Sykes and Pryles (Australian Private International Law, 3rd ed, 1991, p 258) where it is said that the distinction is not meaningful. Leflar observes that 'a right for which the legal remedy is barred is not much of a right' (Leflar, McDougal and Felix, American Conflicts Law 4 th ed., 1986, p 349).
To a similar effect is Lorenzen's observation that 'a right which can be enforced no longer by an action at law is shorn of its most valuable attribute'. (1919) 28 Yale Law Journal, p 492 at p 496)". Mason CJ referred to the law in the United States, where the Supreme Court took the position that with the remedy which became barred, the underlying right too vanished. In The Harrisburg (1886) 119 US 199 (p 214) it said:
"The time within which the suit must be brought operates as a limitation of the liability itself as created, and not of the remedy alone. It is a condition attached to the right to sue at all Time has been made of the essence of the right, and the right is lost if the time is disregarded. The liability and the remedy are created by the same statutes, and the limitations of the remedy are, therefore, to be treated as limitations of the right."
While the historical preference to the lex fori was based on the need to enable judges to decide cases in accordance with the law of the country where the action was initiated, because they were more familiar with the procedure of their own country rather than the intricacies of the procedure in the country where the cause of action accrued,- a principle quite pragmatic, the real issue here is whether to treat the law of limitation of another country as procedural and ignore it. That has become the central issue for jurists and Judges.
According to Mason CJ, treating several matters as 'procedural' in its widest sense was a matter of history in England and was the relic of times where 'the importance of international judicial comity may not have been given the same recognition it now-a-days commends and where the notion of "forum-shopping" was not considered as 26objectionable a practice as it now is'.
He points out that in contrast to the first edition of Dicey and Morris, Conflict of Laws, (1890) (p 712) where the crude meaning to the word 'procedure' was advocated, the change became discernible in the eleventh edition (1987, Vol 1 p. 173) of that book where it was acknowledged that the practice of giving a broad scope to 'procedure' has fallen into disfavour because of its tendency to frustrate the purposes of choice of law rules. Evidence of this change was recognized by the British Law Commission in its Report No. 114 (1982) on 'Classification of Limitation in Private International Law', pp 6-11.
This came also to be recognized in the English Foreign Limitation Periods Act 1984 (UK), section 23A of the Prescription and Limitation (Scotland) Act, 1973 (Scot) and Art 10(1)(d) of the EEC Convention on the Law Applicable to Contractual Obligations. The basis of the rule was that the choice of rules should prevail and not be frustrated by forum shopping. Stale claims have to be prevented and there is need to relieve the defendants from the uncertainty that such claims may be brought against them.
Injustice may result where, in the circumstances of a case, the limitation period of the forum is longer than that allowed by the law of the cause (Wolff, Private International Law, 2nd ed. (1950) p 232-233; British Law Commission, (op. cit. p 18). Mason CJ says that several matters relating to heads of damages, limiting damages etc. are now treated as substantive and not procedural. The principles are expanding the change from procedural to substantive law. It follows that, even if it is correct to say that a statute of limitation only affects the availability or otherwise of the remedy, that circumstance, of itself, should not dictate that statutes of limitation should be treated as procedural. Logic based on remedy has been criticized by Falconbridge in his 'Essays on the Conflicting Laws', 2nd ed. (1954)( p 308) as follows:
"On principle, it is difficult to understand why a rule of law which denies a right of action should be construed as procedural. Even if a right of action is sometimes regarded as in the nature of a remedy, remedy is a wider concept than procedure."
Mere distinction between barring the remedy and extinguishing the right should not lead to law of limitation being classified as procedural. Mason CJ quotes the reservation of Story (Conflict and Laws 7th ed. 1872) wherein that jurist, in spite of his leaning towards characterizing limitation as part of procedure, agrees with Baldous that the statute of limitation or prescription 'does go to the decision of the cause'. But that limitation does not go to 'original merits'. This logic ignores the problems of 'forum shopping'. Mason CJ observed:
"A dividing line between substance and procedure which lends itself to manipulations in this way is not in harmony with the concerted effort demonstrated by Courts in other areas to guard against forum shopping."
Mason CJ refers to a statement by Prof. Cook ('Substance and Procedure' in Conflict of Laws) (1933), 42 Yale Law Journal 333 (pp 343-344) that indeed the line between substance and procedure does not exist, to be discovered merely by logic or analysis but the difference has to be drawn by answer to the question: "How far can the Court of the forum go in applying the rules taken from the foreign system of law without unduly hindering or inconveniencing itself?'
The learned Judge says that 'in the case of statutes 28of limitation, it is difficult to see what inconvenience or hindrance would be caused to a forum Court in giving effect to the limitation period prescribed by the law of the cause. He says further that: "If a statute of limitation forming part of the law of the cause is classified as 'substantive', the forum Court will apply to it in any event". Thus, there is no inconvenience in applying the foreign limitation period or the foreign substantive limitation law. Indeed, that is the reason why several jurists have said that 'procedure' is more appropriately described by the words 'machinery of litigation' or 'mechanism of litigation'.
We are in agreement with the views so strongly expressed by Mason CJ in Mckain.
In Australia, the Queensland Law Reform Commission in its Report on Review of the Limitation of Actions Act 1974 (QLD) (Report No.52) (Sept., 1998) (Chapter 3), after stating that limitation statutes are treated as procedural in some countries, refers to the principle of substantive law as follows:
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