Cigna Insurance Asia Pacific Ltd v Packer
[2000] WASCA 415
•22 DECEMBER 2000
CIGNA INSURANCE ASIA PACIFIC LTD -v- PACKER [2000] WASCA 415
| (2000) 23 WAR 159 | |||
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2000] WASCA 415 | |
| THE FULL COURT (WA) | |||
| Case No: | CIV:1194/2000 | 5 OCTOBER 2000 | |
| Coram: | MALCOLM CJ KENNEDY J PIDGEON J | 22/12/00 | |
| 41 | Judgment Part: | 1 of 1 | |
| Result: | Appeal allowed | ||
| PDF Version |
| Parties: | CIGNA INSURANCE ASIA PACIFIC LTD PHILIP JEFFREY PACKER |
Catchwords: | Limitation of Actions Contracts Claim under a Personal Accident Policy for an injury causing permanent total disablement Writ issued 12 years after accident Date of accrual of cause of action Meaning of cause of action Whether date of accrual is the date when permanent total disablement was known Whether submission of a claim form is necessary to ground an action Whether date of accrual is when insurer refuses to pay the claim |
Legislation: | Limitation Act s 38 |
Case References: | Beale v Nind (1821) 4 B&Ald 568; 106 ER 1044 Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 Cartledge v E Jopling & Sons Ltd [1962] 1 QB 189 Cartledge v E Jopling & Sons Ltd [1963] AC 758 Castelli v Boddington (1852) 1 E & B 66 118 ER 363 Castle Insurance Co v Hong Kong Shipping Co [1984] 1 AC 226 Central Electricity Board v Halifax Corporation [1962] 3 WLR 1313 Chandris v Argo Insurance Co Ltd & Ors (1963) 2 Lloyds List Law Reports 65 Coburn v Colledge [1897] 1 QB 702 Cohen v Cohen (1929) 42 CLR 91 Cooke v Gill [1873] LR 8 CP 107 Council of the City of Penrith v Government Insurance Office of New South Wales (1991) 6 ANZ Insurance Cases 610-070 Dalby v The India and London Life-Assurance Co (1854) 15 CB 364 Darley v Main Colliery Co v Mitchell (1886) 11 App Cas 127 Do Carmo v Ford Excavations Pty Ltd (1984) 154 CLR 234 Farrell v Federated Employers Insurance Association Ltd [1970] 1 WLR 1400 Fenton v Thorley & Co Ltd [1903] AC 443 Green & Silley Weir Ltd v The British Railways Board (1985) 1 All ER 240 Hurst v Parker (1817) 1 B&Ald 92; 106 ER 34 Hurst v Parker (1817) 1 B&Alt 92; 106 ER 34 Ingram v Mohren (1993) 10 WAR 497 Ketteman v Mansel Properties [1987] AC 189 Lickiss v Milestone Motor Policies at Lloyds [1966] 1 WLR 1334 Lochgelly Iron and Coal Co Ltd v McMullan [1934] AC 1 London Congregational Union Inc v Norriss & Norriss [1988] 1 All ER 15 Luckie v Bushby (1853) 13 B & C 864 Marcell Bella Ltd v Hayden [1978] QC 694 Mills v Smith [1964] 1 QB 30 O'Connor v Isaacs (1956) 2 QB 288 Ogilvie v Adams [1981] VR 1041 Pioneer Concrete (UK) Ltd v National Employers Mutual General Insurance Association Ltd [1985] 2 All ER 395 Pullen & Anor v Gutteridge Haskin & Davey Pty Ltd [1993] 1 VR 27 Reid v Brown (1888) 22 QBD 128 Romex Properties Ltd v John Laing Construction Ltd [1983] QB 398 Telfare Shipping Corporation v Inersea Carriers SA, (the Caroline P) (1985) 1 All ER 243 Theobald v Railway Passengers' Assurance Co (1854) 10 Exch 45 Tillotson v ANZ Life Assurance Co Ltd (1997) 9 ANZ Insurance Cases 61 Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107 Trower & Sons Ltd v Ripstein [1944] AC 254 Vanguard Insurance Co Ltd v Darley Pty Ltd [1981] ANZ Insurance Reporter 77,311 Webster v Lampard (1993) 177 CLR 598 Wilby v Henman (18343) 2 Cr&M 658; 149 ER 924 Williams v Milotin (1957) 97 CLR 465 Bahr v Nicolay (No 2) (1988) 164 CLR 604 Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 Giles v The National Mutual Life Association of Australasia Limited (1986) 4 ANZ Insurance Cases 60-751 Johnson v American Home Assurance Company (1998) 192 CLR 266 Legal and General Insurance Ltd v Eather (1986) 6 NSWLR 390 Life Insurance Co of Australia Ltd v Phillips (1925) 36 CLR 60 Pettitt v Dunkley (1971) 1 NSWLR 376 Reardon Smith Line Ltd v Hansen-Tangen (1976) 1 WLR 989 State of Western Australia v Bond Corporation Holding Ltd (1991) 5 WAR 40 Wilson v Harvey Trinder (NSW) Pty Ltd [1973] 2 NSWLR 870 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE FULL COURT (WA) CITATION : CIGNA INSURANCE ASIA PACIFIC LTD -v- PACKER [2000] WASCA 415 CORAM : MALCOLM CJ
- KENNEDY J
PIDGEON J
- Applicant
AND
PHILIP JEFFREY PACKER
Respondent
Catchwords:
Limitation of Actions - Contracts - Claim under a Personal Accident Policy for an injury causing permanent total disablement - Writ issued 12 years after accident - Date of accrual of cause of action - Meaning of cause of action - Whether date of accrual is the date when permanent total disablement was known - Whether submission of a claim form is necessary to ground an action - Whether date of accrual is when insurer refuses to pay the claim
Legislation:
Limitation Act s 38
(Page 2)
Result:
Appeal allowed
Representation:
Counsel:
Applicant : Mr M H Zilko
Respondent : Mr G R Hancy
Solicitors:
Applicant : Jackson McDonald
Respondent : Ilbery Barblett
Case(s) referred to in judgment(s):
Beale v Nind (1821) 4 B&Ald 568; 106 ER 1044
Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541
Cartledge v E Jopling & Sons Ltd [1962] 1 QB 189
Cartledge v E Jopling & Sons Ltd [1963] AC 758
Castelli v Boddington (1852) 1 E & B 66 118 ER 363
Castle Insurance Co v Hong Kong Shipping Co [1984] 1 AC 226
Central Electricity Board v Halifax Corporation [1962] 3 WLR 1313
Chandris v Argo Insurance Co Ltd & Ors (1963) 2 Lloyds List Law Reports 65
Coburn v Colledge [1897] 1 QB 702
Cohen v Cohen (1929) 42 CLR 91
Cooke v Gill [1873] LR 8 CP 107
Council of the City of Penrith v Government Insurance Office of New South Wales (1991) 6 ANZ Insurance Cases 610-070
Dalby v The India and London Life-Assurance Co (1854) 15 CB 364
Darley Main Colliery Co v Mitchell (1886) 11 App Cas 127
Do Carmo v Ford Excavations Pty Ltd (1984) 154 CLR 234
Farrell v Federated Employers Insurance Association Ltd [1970] 1 WLR 1400
Fenton v Thorley & Co Ltd [1903] AC 443
Green & Silley Weir Ltd v The British Railways Board (1985) 1 All ER 240
Hurst v Parker (1817) 1 B&Ald 92; 106 ER 34
Ingram v Mohren (1993) 10 WAR 497
Ketteman v Mansel Properties [1987] AC 189
Lickiss v Milestone Motor Policies at Lloyds [1966] 1 WLR 1334
Lochgelly Iron and Coal Co Ltd v McMullan [1934] AC 1
(Page 3)
London Congregational Union Inc v Norriss & Norriss [1988] 1 All ER 15
Luckie v Bushby (1853) 13 B & C 864
Marcell Bella Ltd v Hayden [1978] QC 694
Mills v Smith [1964] 1 QB 30
O'Connor v Isaacs (1956) 2 QB 288
Ogilvie v Adams [1981] VR 1041
Pioneer Concrete (UK) Ltd v National Employers Mutual General Insurance Association Ltd [1985] 2 All ER 395
Pullen & Anor v Gutteridge Haskin & Davey Pty Ltd [1993] 1 VR 27
Reid v Brown (1888) 22 QBD 128
Romex Properties Ltd v John Laing Construction Ltd [1983] QB 398
Telfare Shipping Corporation v Inersea Carriers SA, (the Caroline P) (1985) 1 All ER 243
Theobald v Railway Passengers' Assurance Co (1854) 10 Exch 45
Tillotson v ANZ Life Assurance Co Ltd (1997) 9 ANZ Insurance Cases 61
Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107
Trower & Sons Ltd v Ripstein [1944] AC 254
Vanguard Insurance Co Ltd v Darley Pty Ltd [1981] ANZ Insurance Reporter 77,311
Webster v Lampard (1993) 177 CLR 598
Wilby v Henman (1834) 2 Car&M 658; 149 ER 924
Williams v Milotin (1957) 97 CLR 465
Case(s) also cited:
Bahr v Nicolay (No 2) (1988) 164 CLR 604
Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337
Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500
Giles v The National Mutual Life Association of Australasia Limited (1986) 4 ANZ Insurance Cases 60-751
Johnson v American Home Assurance Company (1998) 192 CLR 266
Legal and General Insurance Ltd v Eather (1986) 6 NSWLR 390
Life Insurance Co of Australia Ltd v Phillips (1925) 36 CLR 60
Pettitt v Dunkley (1971) 1 NSWLR 376
Reardon Smith Line Ltd v Hansen-Tangen (1976) 1 WLR 989
State of Western Australia v Bond Corporation Holding Ltd (1991) 5 WAR 40
Wilson v Harvey Trinder (NSW) Pty Ltd [1973] 2 NSWLR 870
(Page 4)
1 MALCOLM CJ: This is an application for leave to appeal to the Full Court from an order made on 14 January 2000 by Commissioner Stavrianou in the District Court, by which it was ordered that the District Court action the subject of these proceedings be re-listed for a pre-trial conference on an expedited basis. For reasons unexplained, the application was made not by motion to the Full Court in the first instance, but by originating summons, dated 22 February 2000. On 3 March 2000 Master Bredmeyer heard the application and ordered that the time for making the application for leave be extended and that the application for leave be heard inter parties by the Full Court and, if thought fit, the appeal be heard at the same time. It was also ordered that the application be heard by a court constituted by three Judges.
2 By a writ issued out of the District Court on 27 August 1998 the respondent commenced proceedings against the appellant for damages for breach of contract for failing to make to the respondent payment of the sum of $93,000 pursuant to a policy of personal accident insurance.
3 It was pleaded by the respondent in his statement of claim that, on 20 March 1986, he was working as a seaman and crewman on the vessel Withnell Bay in his employment by the vessel's owners, Mermaid Sound Port and Marine Services Pty Ltd ("Mermaid"), a wholly owned subsidiary of Woodside Offshore Petroleum Pty Ltd ("Woodside") and that he was an insured person as defined by a policy of insurance which was pleaded ("the policy").
4 It was alleged in the statement of claim that on 20 March 1986 when the respondent was working on the Withnell Bay, he fell down a ladder and was injured ("the accident"). The respondent claimed that by reason of his injuries and disabilities suffered in the accident, he suffered bodily injury and permanent total disablement as defined in the policy.
5 The respondent said that he made a claim under the policy on 30 August 1988. Although the company denied receipt of the claim, when the matter was pursued, it rejected the claim by letter to the respondent dated 30 April 1993. It was not until 27 August 1998, more than 12 years after the date of the accident, that the respondent issued the writ claiming damages for breach of contract.
6 The appellant pleaded that the action was statute-barred by the Limitation Act 1935. On 25 October 1999 an order was made that one of the pleaded limitation defences be tried as a preliminary issue. The only evidence adduced upon the trial of the preliminary issue was the policy of
(Page 5)
- insurance together with its conditions supplemented by certain admissions. The relevant provision in the Limitation Act would appear to be s 38(1)(v), being an action founded on a simple contract, including a contract implied at law. The relevant period is six years after the cause of action accrued. In the present case the policy was not under seal, but a simple contract signed by an agent of the insurer to pay a sum or sums certain upon the happening of one or other events.
7 The relevant paragraphs of the re-amended statement of claim were:
"5. The policy provided, subject to its terms and conditions, that if during the period of insurance, or any subsequent period in which the [appellant] agreed to accept a renewal premium, any of the events shall happen to an insured person, the [respondent] will pay compensation to the policyholder."
"7. Under the policy the matters referred to in para 5 above were relevantly defined as follows:
(a) The event shall mean bodily injury as defined, caused solely by violent accidental external means and independently of any other cause in … permanent total disablement (other than total loss of sight of one or both eyes or loss of limb).
(b) Bodily injury shall mean injury which is caused by an accident and which shall solely and independently of any other cause result in the Insured Person's death or disablement within 12 calendar months from the date of the accident on which the injury was caused.
(c) Permanent total disablement shall mean disablement by bodily injury caused other than by loss of limb or eye, which has lasted for at least 12 months and entirely prevents the insured person from engaging in any occupation for which he is fitted by reason of education, training or experience for the remainder of his life.
(d) Insured person(s) shall mean 6 seamen/crewmen.
(e) Compensation shall be $93,500."
(Page 6)
8 Paragraphs 8 and 9 of the statement of claim pleaded the respondent's employment and status as an insured person. Paragraph 9 pleaded the accident. Paragraph 11 pleaded that:
"By reason of his injuries and disabilities from the accident the plaintiff has suffered bodily injury and permanent total disablement as defined in the policy."
9 The relevant limitation defence was pleaded in par 8 of the defence as follows:
"Further or alternatively, if the [respondent] suffered permanent total disablement (as defined in the policy), which is denied, then the [appellant] says that:
(a) the [respondent's] entitlement to the payment of benefits pursuant to the policy, and therefore the [respondent's] cause of action, was complete as at the date upon which the [respondent] suffered permanent total disablement (as defined in the policy);
(b) before the [respondent] could have been entitled to the payment of any benefits pursuant to the policy, the permanent total disablement (as defined in the policy) must have been suffered within 12 months of the alleged accident;
(c) at the latest, any cause of action that the [respondent] had against the [appellant] must have therefore arisen by 20 March 1987;
(d) further or alternatively to subparas (a) to (c) herein, if, which is denied, the [respondent's] cause of action only arose once the [appellant] formed the view and/or advised the [respondent] that benefits were not payable under the policy, the [appellant] advised the [appellant's] agent by letter dated 15 July 1988 that it did not consider that the [respondent] had suffered permanent total disablement (as defined in the policy);
(e) by reason of the matters pleaded in subparas (a) to (c) inclusive and/or (d) herein, the limitation period for the [respondent's] cause of action had expired prior to the
(Page 7)
- issuing of these proceedings by the [respondent], and the [respondent's] claim is therefore statute-barred."
10 I note that when the matter was before the learned Commissioner, counsel for the respondent sought to amend par 8(c) of the re-amended statement of claim to add the words, "or alternatively the 20 March 1988". The respondent had pleaded that he had made a claim pursuant to the policy on 30 August 1988 and that the appellant had denied it by letter dated 30 April 1993. This amendment was refused because the learned Commissioner formed a view of the policy that a cause of action against the appellant did not accrue immediately upon the happening of an event.
11 Although no statement of agreed facts was prepared for the trial of the preliminary issue, certain facts were agreed by the parties for the purposes of such trial. These were that:
1. On 17 October 1983 the appellant issued to Woodside a Personal Accident Policy No 395C 0 05817.
2. Mermaid is a wholly owned subsidiary of Woodside and the respondent was an insured person.
3. The policy was renewed from time to time and was in force in the period from 31 December 1985 until 31 December 1986.
4. On 20 March 1986 the respondent was injured in the course of his employment with Mermaid.
5. On 30 April 1993 and 12 September 1994 the appellant denied liability for the respondent's claim under the policy.
The policy is in a printed form and provides that:
"NOW THIS POLICY WITNESSETH that in consideration of the payment of the Premium and subject to the terms conditions exceptions and memoranda contained herein endorsed hereon or attached hereto, if during the Period of Insurance set out above, or any subsequent period for which the Insured shall pay and the Company shall agree to accept a renewal premium, any of the Events shall happen to the Insured Person the Company will pay the Compensation to the Policyholder, or in the case of his death to his Executors or Administrators."
(Page 8)
- "A. Bodily injury as defined, caused solely by violent accidental external means and independently of any other cause in
…
|
|
(ii) Partial disablement from engaging in or attending to profession, business or usual occupation |
(ii) During such disablement $200 per week or 25% of Weekly Wage whichever is the less |
|
14 In the policy there are the following relevant definitions:
"1. 'BODILY INJURY' shall mean injury which is caused by accident and which shall solely and independently of any other cause result in the Insured Person's death or disablement within 12 calendar months from the date of the accident on which injury was caused.
…
3. 'PERMANENT TOTAL DISABLEMENT' shall mean:
disablement by bodily injury caused other than by loss of limb or eye, which has lasted for at least 12 months and entirely prevents the Insured Person from engaging in any occupation for which he is fitted by reason of education training or experience for the remainder of his life.
…
(Page 9)
- 7. 'WAGES' shall mean weekly award wage or salary.
8. 'MEDICAL EXPENSES' shall mean expenses necessarily incurred and arising from treatment (up to a maximum specified under Events A9 following bodily injury to an Insured Person."
15 Section 38(1)(c)(v) of the Limitation Act provides that an action founded on any simple contract, including any contract implied in law shall be commenced within six years from the date on which the cause of action accrues. The respondent pleaded in his statement of claim that he was not aware of the policy until August 1988 and that, having become aware of it, he completed a claim form on 30 August 1988 and sent it to the appellant. The claim form was not in evidence and the appellant does not admit receiving it, as it cannot be located.
16 It is alleged in the statement of claim that the claim was for an amount of $93,500 for permanent total disablement under cl 7 of the policy. The respondent claimed that for five years he received no communication at all from the appellant and that in 1993 he made enquiries. As a result of these enquiries he received a letter from the respondent dated 30 April 1993 by which the appellant denied liability for permanent total disablement. The ground for such denial was that the medical evidence showed that he was not permanently disabled from engaging in any occupation for the remainder of his life.
17 It was against this background that the writ was issued on 27 August 1998 in which the statement of claim alleged that, as a result of his injuries and disabilities from the accident, he had suffered bodily injury and permanent total disablement as defined in the policy. Finally, it is pleaded that, either by a denial of liability by the appellant by letter dated 30 April 1993 or, alternatively, by a letter from the appellant's solicitors dated 12 September 1994 to the respondent's solicitor, the appellant was in breach of the policy as a result of which the respondent suffered loss and damage. The amount sought to be recovered is the amount of compensation which would otherwise have been payable under cl 7 of the schedule to the policy, namely, compensation in the sum of $93,500 together with interest pursuant to s 32 of the Supreme Court Act 1935.
18 The issue before the learned Judge was when the cause of action accrued. When the matter was before the learned Judge, it was submitted by the appellant that the cause of action accrued on 20 March 1987 or 20 March 1988, being the latest date when the relevant insured event
(Page 10)
- occurred, namely, permanent total disablement. The respondent contended that liability did not arise until liability was denied by the appellant in the letter dated 30 April 1993 in which the appellant informed the respondent that "on the evidence available we are unable to entertain a claim for permanent disablement …". Alternatively, the respondent contended that the cause of action accrued on 12 September 1994 when the appellant's solicitors informed the respondent's solicitors by letter of that date that, "your client's claim has prescribed [sic] and for this reason will not be entertained by our client." This letter was regarded by all concerned as containing a contention that the action was statute-barred.
19 It should be noted that no point was pleaded regarding the right of the respondent to sue under the policy. The policy was issued by Insurance Company of North America (Australia) Ltd which, by the time the action was instituted, appears to have changed its name to that of the appellant. The Personal Accident Policy names Woodside as the "Policyholder". The "Insured Persons" are described as "6 SEAMEN/CREWMEN". The policy recites:
"WHEREAS the Named Insured has made to the Company a written Proposal and Declaration which together with all statements made in writing by the Named Insured shall be the basis of this contract and be considered as incorporated herein."
20 This is immediately followed by the operative contractual provision as follows:
"NOW THIS POLICY WITNESSETH that in consideration of the payment of a Premium and subject to the terms conditions exceptions and memoranda contained herein endorsed hereon or attached hereto, if during the Period of Insurance set out above, or any subsequent period for which the Insured shall pay and the Company shall agree to accept a renewal premium, any of the Events shall happen to the Insured Person the Company will pay the Compensation to the Policyholder, or in case of his death to his Executors or Administrators."
21 It is apparent that, so far as the policy was concerned, the party taking out the insurance, namely, Woodside, was the policyholder and "the Named Insured" and "the Insured", while the respondent, as one of the seamen, was "the Insured Person" for present purposes. Alternatively, "the Named Insured" in the recital could be a reference to an "Insured Person" in the box containing the reference to "6 Seamen/Crewmen". In
(Page 11)
- my opinion, this latter construction is preferable, given that proviso 1(d) provides that:
"After the occurrence of Events A2 to A7 there shall be no further liability under the Policy in respect of the same Insured Person for any injury sustained or illness contracted or manifested thereafter.
PROVIDED ALWAYS that if the Named Insured becomes entitled to compensation under one of the Events A1 to A7 of the Schedule he may elect to receive compensation either under that Event or under Event No. A8."
"… unless the Insured Person shall as soon as possible after the happening of any of the Events procure and follow proper medical advice from a legally qualified medical practitioner."
- There was no suggestion in this case of non-compliance with that provision.
23 Notwithstanding any of the above, the proceedings before the learned Judge were conducted on the basis that the respondent had a cause of action directly against the insurer. In my opinion, given the dealings between the parties leading to the rejection of the respondent's claim, the respondent was entitled to bring the proceedings on the same basis as the contractor, who was not a party to the insurance contract, but was within the definition of the "insured", in Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107. This appears to have been the basis upon which the proceedings were conducted before the learned Judge, notwithstanding the provision in the policy to the effect that on the happening of any of "the Events" to "the Insured Person", the respondent would pay "the Compensation" to "the Policyholder", namely Woodside. It follows that it is appropriate to deal with the matter on the basis that the respondent had a cause of action against the appellant to recover the amount payable in respect of "Permanent Total Disablement".
24 There was admitted into evidence without objection as exhibit 2 on the appeal a copy of the conditions of the policy. The conditions included the following:
(Page 12)
- "3(a) Written notice containing full particulars of any Event in respect of which a claim is to be made shall be given to the Company at the office of the Company at which the Policy is issued as soon as possible but in any case within 21 days of
(i) the sustaining of the Bodily Injury;
OR
(ii) the commencement of any other herein specified cause of disablement."
- Clearly the latter would include the commencement of "Permanent Total Disablement". It is to be noted that cl 3(a) was not expressed as a pre-condition to liability, but notice of an Event in respect of which a claim is to be made. In this respect the policy in this case is to be distinguished from that in Pioneer Concrete (UK) Ltd v National Employers Mutual General Insurance Association Ltd [1985] 2 All ER 395 which contained a similar requirement of notification by an insured to the insurer:
"… of any accident or claim or proceedings immediately the same shall have come to the knowledge of the Insured or his representative."
"The due observance and fulfilment of the terms conditions and endorsements of this Policy insofar as they relate to anything to be done or complied with by the Insured and the truth of the statements and answers in the said proposal shall be conditions precedent to any liability of the Association to make any payment under this Policy."
26 In all the cases where failure to give notice of an accident or claim has been held to be a good defence, there has been a provision that compliance with the notice requirement is a condition precedent to the liability of the insurer: see, for example, in addition to the Pioneer Concrete case, Lickiss v Milestone Motor Policies at Lloyds [1966] 1 WLR 1334; and Farrell v Federated Employers Insurance Association Ltd [1970] 1 WLR 1400. No point of that kind is taken in the present case.
(Page 13)
27 The learned Judge approached the matter on the basis that the policy under consideration was not a policy of indemnity insurance. An accident policy, like a life policy, which provides for the payment of a fixed sum upon the happening of a certain event, such as permanent disability and a periodic payment for a period of temporary disability is not an indemnity policy: Theobald v Railway Passengers' Assurance Co (1854) 10 Exch 45 at 53 per Alderson B; Fenton v Thorley & Co Ltd [1903] AC 443 at 41 per Lord Shand; and at 453 per Lord Lindley; Mills v Smith [1964] 1 QB 30; and Marcell Bella Ltd v Hayden [1978] QC 694. Whether and when liability upon the insurer to make a payment under it depended upon the proper interpretation of the contract in the relevant circumstances. The learned Judge went on to say at par 18 and par 19 of his reasons:
"18 In this case what the [appellant] promised was to pay specified compensation in relation to particular events (as defined). In this case the event is bodily injury which results in permanent total disablement. There is no agreement between the parties as to the date upon which permanent total disablement occurred.
19 In determining when an event occurred it is first necessary to consider the definition of bodily injury. The policy provides that bodily injury is injury resulting in a person's death or disablement and may occur within 12 calendar months from the date of the accident on which injury was caused. In other words an insured person could suffer bodily injury (as defined) if at any time within the period of 12 months following the date of the accident disablement occurred. In the context of the facts this means that provided disablement occurred by the 20 March 1987 bodily injury (as defined) could have been suffered."
28 So far as "Permanent Total Disablement" was concerned, the learned Judge said in pars 20 to 22 that:
"20 The next question is when does permanent total disablement occur. The definition of the term in the policy requires disablement by bodily injury and for disablement to have lasted for at least twelve months. Thus, if an accident occurring on 20 March 1986 produces bodily injury (as defined) which lasts at least twelve months (the injury not being the loss of a limb or
(Page 14)
- eye) the earliest date on which a claim might be made on account of permanent total disablement would be 20 March 1987. However the defendant does not then without more come under a liability to make a payment for the non-performance of which the defendant is thenceforward in breach of contract. The plaintiff must first make a claim and the claim must be refused, or possibly not dealt with within a reasonable time. The policy permits an insured to elect whether to receive weekly payments or a lump sum. Further, in the event of death the obligation is to make payment to the executors or administrators of the insured. Clearly, payment in that circumstance could only be made after the event. The nature and purpose of the contract was one to provide compensation in the event of accident or sickness resulting in disablement. The event may not occur within the policy period as appears from the definition of bodily injury. Until notice of claim is given the insurer may not know of the happening of an event. All of these matters support the conclusion that the occurrence of an event may give rise to an entitlement to payment under the policy but does not ipso facto place the insurer in breach of its obligation under the policy. I consider it improbable that the intention of the parties was that the defendant would immediately be in breach upon the occurrence of an event (as defined).
- 21 Upon the trial of a preliminary issue the parties must take especial care to ensure that all aspects of the matters necessary for the determination of the issue are agreed or established by the evidence. The question or issue must of course appear clearly from the pleadings. In this case the issue to be determined was in my view clearly identified namely whether the cause of action must have arisen by the 20 March 1987. The plaintiff proceeded to trial on the narrow issue identified and I am not prepared to allow the defendant to raise issues other than as arise from the pleadings as were before the Court at the time the order was made for the trial of the preliminary issue. In this regard I accept the plaintiff’s submission that the only issues to be determined are those specifically pleaded in paras 8 (a), (b), (c) and (e). Paragraph 8(b) of the
(Page 15)
- re-amended defence asserts that permanent total disablement must be suffered within twelve months of the alleged accident. In my view the cause of action need not, as a matter of law, have arisen by the 20 March 1987, and there is nothing in the evidence before the Court to show, as a matter of law, that it did so. Accordingly, the limitation defence raised by paras 8(a), (b), (c) and (e) fails.
- 22 The defendant’s application for leave to further amend the re-amended defence was made in the course of closing addresses. The application was opposed by counsel for the plaintiff. The plaintiff has pleaded that it made a claim pursuant to the policy in August 1988 and that the defendant denied it. The view, which I have formed of the policy, is that the cause of action did not accrue immediately upon the happening of an event. The proposed amendment seeks to maintain the assertion that the cause of action accrued on the happening of an event. Given my view as to when the cause of action accrued the application to amend is refused."
29 The learned Judge proceeded to order that there be judgment for the respondent on the preliminary issue pleaded in par 8(a), (b), (c) and (e) of the re-amended defence; the applicant's leave to further amend the re-amended defence be refused; and that the action be re-listed for a pre-trial conference on an expedited basis. By a notice of appeal dated 4 February 2000 the applicant purported to appeal against the judgment and the refusal of the application for leave to amend and sought an order in lieu that the respondent's claim be dismissed as statute-barred.
30 The grounds on which the applicant sought to appeal contended that the learned Commissioner erred in law in refusing the applicant's application for leave to amend the re-amended defence by reason alone of his finding on the preliminary issue (ground 1); in failing to find that the amendment would cause no prejudice (ground 2); and in failing to give adequate reasons for refusing leave to amend (ground 3). So far as the accrual of the cause of action was concerned, it was contended that the learned Commissioner erred in law in finding that no cause of action accrued under the policy until the respondent made a claim under it, which was refused or not dealt with by the applicant within a reasonable time when there was no evidence upon which a finding could be made (ground 4). Further or alternatively, it was contended that the learned
(Page 16)
- Commissioner erred in law in finding that it was improbable that the intention of the parties was that the applicant would be in breach of the contract immediately upon the happening of the event giving rise to liability under the contract of insurance (ground 5). Further or alternatively, it was contended that the Commissioner erred in law in finding that the occurrence of an event (as defined in the policy) might give rise to an entitlement of the appellant under the policy but did not without more:
"… place the appellant in breach of its obligation to pay the benefit under the policy when there was no evidence upon which such a finding could be made."
32 In the present case it was necessary for the respondent to commence his action within six years from the date on which the cause of action accrued. The substantive issue in the appeal, therefore, is the identification of the date on which the cause of action accrued. In the particular context of the trial of the preliminary issue, the question was whether the cause of action had accrued on 20 March 1987. The policy in this case was a policy to pay a fixed amount of compensation upon the happening of one or other of the defined events. I agree with Pidgeon J for the reasons he has stated that liability was not dependent on the respondent making a claim. In the present case, the relevant defined event was bodily injury which resulted in permanent total disablement. The definition contains three elements, namely:
(1) disablement by bodily injury caused other than by loss of limb or eye;
(2) which has lasted for at least 12 months; and
(Page 17)
- (3) entirely prevents the Insured Person from engaging in any occupation for which he is fitted by reason of education, training or experience for the remainder of his life.
33 It is to be observed that the bodily injury must have lasted for at least 12 months and be such as entirely prevents the insured from engaging in any relevant occupation for the remainder of his life. It was submitted on behalf of the appellant that, for the respondent to be entitled to benefits under the policy, his permanent total disablement must have occurred within 12 months from the date of the accident in which injury was caused to him, namely, by 20 March 1987. It was submitted that this was the event for which the respondent was insured and upon the happening of which the applicant must pay the agreed compensation. On this basis, it was contended that the respondent's cause of action accrued on 20 March 1987 and that any proceedings to recover the compensation had to be commenced within six years of that date. The proceedings were in fact commenced on 27 August 1998, more than 13 years after his injuries were sustained, with the consequence that the action was statute-barred.
34 It is to be noted that permanent total disablement could not be determined unless it lasted for at least 12 months after the date of the accident. It was conceded during the course of argument, however, that the respondent "should have perhaps another 12 months in which to then sustain what is described as 'permanent total disablement' ". In response to a suggestion from the Bench that the respondent would have such time as was necessary to determine whether or not he had been permanently totally disabled, it was submitted that he must have known that, by 20 March 1987, by virtue of the relevant definition. This was the reason why the applicant sought to make a minor amendment to plead that time began to run from either 20 March 1987 or 20 March 1988 at the latest. Even on that basis, it was contended that the respondent was some six years out of time when the writ was issued.
35 In my opinion, however, there are three elements for the definition to be satisfied, namely, first, the suffering of a bodily injury other than by loss of limb or eye. Secondly, that the bodily injury has lasted for at least 12 months. Thirdly, that the bodily injury entirely prevents the insured person from engaging in any occupation for which he is fitted by reason of education, training or experience for the remainder of his life. The possibility must be envisaged that, as a matter of fact, that may not become apparent for some indefinite period of time. It was contended, however, that the definition of "permanent total disablement" had to be read with the definition of "bodily injury", namely, one which results in
(Page 18)
- the Insured Person's "death or disablement within 12 calendar months from the date of the accident". It was submitted that this meant that the resultant disablement must occur within the 12 calendar months. In my view, this overlooks the fact that the definition of "bodily injury" is relevantly limited to "disablement within 12 calendar months from the date of the accident". In other words, that definition is concerned only with the onset of disablement and not whether it is permanent or temporary. Hence the requirement in the definition of "permanent total disablement" which requires that the disablement last for "at least 12 months" and prevents the insured from engaging in any occupation for which he is fitted for the remainder of his life. On the facts before the Court, the date on which it is alleged that the disablement became or was diagnosed as permanent does not appear. In my view, the relevant date is the date upon which it could reasonably be concluded that the respondent was entirely prevented from engaging in any occupation for which he was relevantly fitted for the remainder of his life. What is pleaded in par 11 of the statement of claim is that:
"By reason of his injuries and disabilities from the accident the [respondent] has suffered Bodily Injury and Permanent Total Disablement as defined in the policy."
No particulars were sought by the applicant or interrogatories administered to determine the date upon which it was alleged that the disablement became permanent in the sense that a prognosis could be made that the disablement entirely prevented the respondent from engaging in any occupation for which he was relevantly fitted for the remainder of his life. It is that date, in my opinion, which would have to be identified so as to determine the date upon which the cause of action would accrue. It would have been open to the respondent to seek particulars. The respondent has not done so. The fact is that no time limit is specified in relation to any particular date by which there must be a diagnosis of permanent total disablement. Naturally, the onus of proof of permanent total disablement is on the plaintiff in an action of this kind.
36 It is for a defendant who says that an action is statute-barred to specifically plead the defence: Romex Properties Ltd v John Laing Construction Ltd [1983] QB 398; Ketteman v Mansel Properties [1987] AC 189. Where, as in the present case, the limitation statute bars the remedy, but not the right the defence under the statute must be expressly pleaded. There is some controversy about the burden of proof where a defendant pleads the statute. Halsbury's Laws of England (4th Ed) Vol 28, par 847 asserts that:
(Page 19)
- "Where the defendant has pleaded that the action is time-barred, the burden is on the plaintiff to prove that the relevant limitation period has not expired."
37 The authority cited for that proposition is London Congregational Union Inc v Norriss & Norriss [1988] 1 All ER 15, a decision of the Court of Appeal. In that case, the principal authority relied upon was Cartledge v E Jopling & Sons Ltd [1962] 1 QB 189 in which it was held at first instance that the cause of action for personal injury in that case had accrued more than six years before the issue of the writ. In the Court of Appeal Harman LJ said at 202 that:
"Where … the defendant raises the State of Limitations it is, I think, for the plaintiff to show that he is not within it and not for the defendant to prove the opposite (see Darley Main Colliery Co v Mitchell (1886) 11 App Cas 127 at 135)."
38 Pearson LJ was of the same view and referred to Hurst v Parker (1817) 1 B&Ald 92; 106 ER 34; and Beale v Nind (1821) 4 B&Ald 568 at 571; 106 ER 1044 at 1045; Wilby v Henman (1834) 2 Car&M 658; 149 ER 924; Darley Main Colliery Co v Mitchell (1886) 11 App Cas 127 at 135 - 136 per Lord Blackburn; and O'Connor v Isaacs (1956) 2 QB 288 at 364 per Romer LJ.
39 In the House of Lords, Cartledge v E Jopling & Sons Ltd [1963] AC 758, Lord Pearce (with whom Lords Reid, Evershed and Morris agreed) said at 784:
"I agree with the judgments of the Court of Appeal and I share their regret. I would only wish to add a gloss to what was said on the onus of proof in the case of the plaintiff South. I agree that when a defendant raises the Statute of Limitations the initial onus is on the plaintiff to prove that his cause of action accrued within the statutory period."
40 No authority was cited for that proposition. In the present case counsel for the respondent relied upon the judgment of Megaw J in Chandris v Argo Insurance Company Ltd & Ors [1963] 2 LIL Rep 65 at 73 who said:
"It is conceded that an action on a policy of marine insurance is an action on a simple contract. Therefore, the issue raised in each case is: At what date did the relevant cause or causes of action accrue?
(Page 20)
- There is recent authority which puts the onus of proof beyond doubt. In Cartledge and Others v E Jopling & Sons Ltd [1963] 1 Lloyd's Rep 1; [1963] 2 WLR 210 …"
- Megaw J then quoted the proposition of Lord Pearce to which I have already referred.
41 In Halsbury, par 851, it is stated that when a defendant pleads the statute of limitations, "the burden of proving that the cause of action arose within the statutory period lies on the plaintiff". The authorities cited for that proposition are Romex Properties Ltd v John Laing Construction Ltd, supra, and Ketteman v Mansel Properties, supra. A denial that the action is time barred is said to put in issue only the time at which the cause of action accrued. Consequently, if the plaintiff relies on some disability to take the case out of the statute he must reply specifically alleging the disability.
42 In Cohen v Cohen (1929) 42 CLR 91 there was a plea in reliance on the statute of limitations in relation to sums of money claimed by a wife against her husband. Dixon J said at 102:
"On the other hand, I consider it clear in the case of the German marks that the defendant was not accountable specifically for the money he received nor the goods into which it was transformed or the proceeds of these goods. This cause of action is, therefore, subject to the time bar. But in answer to the Statute of Limitations (by an amendment to an unfiled reply) the plaintiff pleaded an acknowledgement in writing dated 6th September 1922."
43 His Honour then went on to deal with the merits of the matter. This passage is consistent with there being an onus on the plaintiff both to plead a reply to a plea of the statute and to prove it.
44 In Webster v Lampard (1993) 177 CLR 598 on appeal from this Court it was held that where a statutory defence, having some designated connection with the actual or intended course of official duty, is available to a defendant (in that case s 47A of the Limitation Act 1935 (WA)), the general onus of establishing that connection (absent any identified contrary legislative intention) is on the defendant who invokes the defence. However, the onus of proving that the defendant's ostensible pursuit of public duty was actuated by a wrong or indirect motive rests upon the plaintiff who asserts it: at 606 - 607 per Mason CJ, Deane and Dawson JJ. This seems to be more consistent with a view that the onus of
(Page 21)
- proof of a defence under the statute is on the defendant rather than on the plaintiff to show that an action is not statute-barred.
45 Halsbury's Laws of Australia Vol 16, par [255-90] at 470,047 - 470,048 deals with pleading and proof in relation to the limitation of actions. It is there said on p 470,048 that there is conflicting authority on the question whether, once a limitation defence has been raised by a defendant, it is the plaintiff who bears the onus of proving that the claim is not statute-barred. The cases referred to are Pullen & Anor v Gutteridge Haskin & Davey Pty Ltd [1993] 1 VR 27; and Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541.
46 In Pullen at 72 - 73 Brooking, Tadgell and Hayne JJ said:
"We confess we were surprised to hear it suggested that, leaving aside any reliance placed on the way in which the matter is dealt with in the pleadings in a particular case, it is for the plaintiff in an action for negligence to show that his cause of action arose within the limitation period. On principle one would expect the defendant to bear the onus, on the basis that it is no part of the cause of action for negligence that the claim is not statute-barred. We imagine that this is the explanation of the clear view on onus of proof expressed by McHugh JA (as his Honour then was) in Hawkins v Clayton (1986) 5 NSWLR 109 at p142. The same view appears by implication from what was said by Lopes LJ in Reeves v Butcher as reported in (1891) 60 LJQB 619 at p620. This passage was deleted by his Lordship in the course of revising his judgment, as appears from the report in [1891] 2 QB 509 at p512. It may be that his Lordship had, by the time of revision, come to be aware of authorities to which we shall shortly refer. The joint judgment of Mason CJ and Gaudron J in Banque Commerciale SA v Akhil Holdings Ltd (1990) 169 CLR 279 at p283, accepts that it was for the bank to establish its defence that the breaches of trust occurred more than six years before the action was commenced. Toohey J was of the same opinion, as appears from what his Honour said, at pp303-4. (We regard his Honour's reference to the 'evidential onus' as lying initially on the defendants as concerned with the legal burden of proof, the distinction drawn being between the defendants' need to prove when the cause of action accrued and the plaintiff's need to prove that the case was one of fraud if it then wished to escape from the operation of the statute.)"
(Page 22)
47 As their Honours pointed out at 73 the elements of the cause of action in negligence are duty, breach and damage: Lochgelly Iron and Coal Co Ltd v McMullan [1934] AC 1 at 25 per Lord Wright. It was noted that there were some cases which could be explained on the basis that there was a need for the plaintiff to prove that the case fell within an exception allowed by the statute: Beale v Nind, supra; and O'Connor v Isaacs, supra, at 364 per Romer LJ. Their Honours, however, at 73 - 74 referred to and explained a number of cases which supported the proposition that the plaintiff had the onus of proving that the cause of action arose within the limitation period: Hurst v Parker (1817) 1 B&Ald 92; 106 ER 34; Wilby v Henman (1834) 2 Car&M 658; 149 ER 924; and Darley Main Colliery Co v Mitchell (1886) 11 App Cas 127 at 135 per Lord Blackburn.
48 As to Cohen v Cohen, their Honours held that in holding that the relevant onus in that case lay on the plaintiff, Dixon J had relied on Hurst v Parker, supra; Wilby v Henman, supra; as well as Beale v Nind, supra. The latter was a case of acknowledgement. That case was explained by the need for the plaintiff to prove that the case fell within an exception allowed by the statute.
49 As to Hurst v Parker and Wilby v Henman, their Honours said at 75 - 76:
"We return now to the early cases of Hurst v Parker (1817) 1 B&Ald 92; 106 ER 34 and Wilby v Henman (1834) 2 Cr&M 658; 149 ER 924. In each of these the defendant pleaded that the action did not accrue within six years and the plaintiff replied that it did. In each it was held that it was for the plaintiff to prove the affirmative of the issue raised on the plea of the statute. In Hurst v Parker Lord Ellenborough CJ said at p93: 'Now the affirmative of the issue is on the plaintiff, who says that the cause of action did accrue within six years …'. Holroyd J said at p94: 'By the form of the pleadings the onus probandi lies on the plaintiff: he has taken upon himself to prove that a trespass was committed within six years …'. In Wilby v Henman, the trial judge, Taunton J, held that it was for the defendant to show that the claim was statute-barred but a different view was taken in the Court of Exchequer. Counsel for the defendant there argued that by his reply the plaintiff had undertaken to show affirmatively that the cause of action did accrue within six years. Vaughan B accepted the argument that
(Page 23)
- the plaintiff bore the onus 'as the party who maintains the affirmative is bound to prove it'.
Both these cases may be explained as based upon an over-literal reading of the rule that the burden of proof lies on the party who asserts the affirmative of the issue. For statements of the rule see, for example, Saunders on Pleading and Evidence, 2nd ed, vol 1, p1088; Stephen on Pleading, 6th ed, p74 and Roscoe's Nisi Prius Evidence, 8th ed, p83. Resort is often had to a maxim, one version being 'Ei qui affirmat, non ei qui negat, incumbit probatio'. But it has been clear for many years now that the true meaning of the rule is that where a given allegation, whether affirmative or negative, forms an essential part of a party's case the proof of the allegation rests on him. The rule is correctly stated in Archbold's Civil Pleading, 2nd ed, (1837) p324: 'The general rule usually laid down upon this subject is, that he who asserts the affirmative, must prove it. … But this is far from being universally true: in the first place, where the gist of the cause of action stated in the declaration is a negative, as in the case of an action for non-feasance, the plaintiff must prove the negative, if the defendant put it in issue by his plea. … So, where the gist of a plea (not consisting of a traverse) is a negative … the defendant is bound to prove the negative, if it be put in issue by the plaintiff's replication. … [T]he rule we are now considering, and the several cases which qualify it, will be found to resolve themselves ultimately into the simple rule above laid down, namely, that the matter of a pleading (always excepting a traverse, general or special), if put in issue, must be proved by the party pleading it, whether it be affirmative or negative.' "
50 It is against the background of Cartledge v E Jopling & Sons Ltd, supra, that one must consider the comments of their Honours in the Victorian Court of Appeal in at 73 - 74 that:
"Further authority for the view that it is the plaintiff who bears the burden of proving that his claim is not statute-barred is what was said in Cartledge v E Jopling & Sons Ltd [1962] 1 QB 189, at p202, by Harman LJ and, at p208, by Pearson LJ. There is, in addition, the authority of the House of Lords, for on the appeal in that case ([1963] AC 758 at p784) Lord Pearce spoke of the 'initial onus' as being on the plaintiff to prove that his cause of action was not statute-barred and of the passing of a burden to
(Page 24)
- the defendant once the plaintiff has proved the apparent accrual of a cause of action within the limitation period. This speech was concurred in by Lord Reid, at p771, by Lord Morris, at p775 and possibly by Lord Evershed, at p773. Against what was said in Cartledge v E Jopling & Sons Ltd is to be set the citing by Lord Fraser of Tullybelton with apparent approval in the later case of Pirelli General Cable Works Ltd v Oscar Faber & Partners [1983] 2 AC 1 at p18, of a passage from the speech of Lord Salmon in Anns v Merton London Borough Council [1978] AC 728, at p771. This passage accepts that it is for the defendant to show that the claim is statute-barred, unless Lord Salmon's observations can be explained on the basis, in accordance with what Lord Pearce said in Cartledge, that the plaintiff had proved an accrual of damage within the six years, so as to cause a burden to pass to the defendant. For in Anns cracking had occurred about two years before the issue of the writ. On the other hand, in Pirelli itself the cracking took place more than six years before the issue of the writ, so that this explanation is not possible here. Counsel for the defendants there conceded (at p3) that their clients bore the onus of proving that the damage occurred outside the limitation period, and, at p12, Lord Fraser dealt with the trial judge's finding in terms which appeared to accept that the defendants did carry the onus. His Lordship was in effect speaking for the House of Lords.
In the cases which support the view that the plaintiff bears the burden the matter is often dealt with by way of obiter dictum only and in none of them is there any substantial discussion on the question. The body of authority is, however, such as to require respectful attention and in particular weight must be given to what was said in the House of Lords in Cartledge v E Jopling & Sons Ltd. As regards Cohen v Cohen, the words used by Dixon J ('it was held that') leave us in doubt whether his Honour intended to endorse the proposition that the onus of proof lay on the plaintiff. With all respect to those who have thought otherwise, we cannot accept that it is the plaintiff who bears the burden. It is for a plaintiff to plead and prove the elements of his cause of action. If the accruing of the cause of action in time is no part of the cause of action, the plaintiff need not allege or prove it. We refer to Coburn v Colledge [1897] 1 QB 702; the learned article by Lowenstern in (1928) 2 ALJR 191; Tozer Kemsley & Millbourn (A'asia) Pty Ltd v Collier's
(Page 25)
- Interstate Transport Service Ltd (1956) 94 CLR 384, at pp407-8, per Fullagar J and, at p408, per Kitto J; Young v Queensland Trustees Ltd (1956) 99 CLR 560 and Marginson v Ian Potter & Co (1976) 136 CLR 161, at p168; 11 ALR 64; 50 ALJR 735, at p737, per Gibbs and Mason JJ. The last-mentioned case contains an observation that it is for the defendant to plead and prove non-compliance with the requirements of the statute of frauds; the approach in Dawkins v Lord Penrhyn (1878) 4 App Cas 51 and other cases suggests that the principle should be the same for both the statute of frauds and a statute of limitations which bars the remedy."
51 In Pullen & Anor v Gutteridge Haskins & Davey Pty Ltd the Court of Appeal of Victoria held that it was no part of a cause of action that time had not run under a statute of limitations which merely bars the remedy as is the case under s 38(1)(v) of the Limitation Act. Hence, the plea of the statute of limitations is in confession and avoidance, so that it is the defendant who relies on the statute to plead and prove that the damage was suffered outside the limitation period. As Brooking, Tadgell and Hayne JJ said in that case at 76:
"In the words of Bowen LJ in Abrath v North Eastern Railway Co (1883) 11 QBD 440, at p457: 'If the assertion of a negative is an essential part of the plaintiff's case, the proof of the assertion still rests upon the plaintiff. The terms "negative" and "affirmative" are after all relative and not absolute … Wherever a person asserts affirmatively as part of his case that a certain state of facts is present or is absent, or that a particular thing is insufficient for a particular purpose, that is an averment which he is bound to prove positively.' Of the authorities which accept that the true meaning of the rule is as stated by Bowen LJ it will be enough to refer to what was said by Walsh JA (as his Honour then was) in Currie v Dempsey (1967) 86 WN (Pt II) (NSW) 460, at p469. With all respect to the learned judges who have accepted that it is for the plaintiff to show that his claim is not statute-barred, the proposition can be traced back to the erroneous adoption, in the two early cases to which we have referred, of the literal meaning of the rule that he who asserts the affirmative bears the burden of proof."
52 In my opinion there is no conflict between the decision in Pullen by the Court of Appeal in Victoria and the decision of the High Court in Brisbane South Regional Health Authority v Taylor, supra. In that case
(Page 26)
- it was held that an applicant for an extension of time under s 31(2) of the Limitation of Actions Act 1974 (Q) does not have a presumptive right to an order once the conditions in s 31(2)(a) and (b) are satisfied. An applicant still bears the legal onus of showing that the justice of the case requires that the discretion must be exercised in favour of the applicant. This requires proof that the extension will not result in significant prejudice to the prospective defendant.
53 In this case the applicant pleaded in its defence that the permanent total disablement must have been suffered within 12 months of the alleged accident on 20 March 1986 so that, at the latest, the cause of action accrued on 20 March 1987. Alternatively, it is said that if an additional 12 months were allowed for the total permanent disablement to be determined as having accrued, the relevant date would be 20 March 1988. For the reasons I have stated, I consider that both of these contentions as pleaded must fail. The result is that there is no plea by the defence which alleges an alternative date by which it is said that the respondent had been permanently totally disabled. The only facts pleaded are that the respondent made a claim on 30 August 1988 which was rejected by the applicant by letter dated 30 April 1993, on the basis of medical evidence that he was not permanently totally disabled. The applicant pleads as an alternative defence in par 8(d) of the defence that, if the cause of action arose:
"… only when the [applicant] formed the view and/or advised the [respondent's] agent by letter dated 15 July 1988 that it did not consider that the [respondent] had suffered Permanent Total Disablement …"
54 There is a conflict of allegations of fact. The correspondence was not before the learned District Court Judge. The respondent's case, however, was that by 30 August 1988 he had suffered permanent total disablement. If that be correct, his cause of action must have accrued by that date. Hence, it was necessary for his proceedings to be commenced within six years of 30 August 1988, that is by 30 August 1994. The writ was not issued until 27 August 1998, which was almost four years after the action became statute-barred.
55 For these reasons the appeal should be allowed, the order of the District Court set aside and in lieu thereof there should be an order that the respondent's action be dismissed.
(Page 27)
56 KENNEDY J: I have had the advantage of reading in draft the reasons published by the Chief Justice, with which I am entirely in agreement. I agree with the orders which his Honour proposes.
57 PIDGEON J: On 20 March 1986 the respondent received an injury to his spine when he fell from a ladder. More than 12 years later, on 27 August 1998, he issued a writ in the District Court claiming he was entitled to a payment under a personal accident policy issued by the appellant to the respondent's employer. For the purposes of this appeal it can be assumed that he is a person covered by the policy for the event that occurred. The questions which have arisen are questions relating to whether the claim is beyond the limitation period.
58 The respondent, in his statement of claim, said that he was not aware of the policy until August 1988, but, when he became aware of it, he filled in a claim form on 30 August 1988 and sent it to the appellant. The claim form is not in evidence and I understand it cannot be located as the appellant does not admit receiving it. The respondent, however, in his statement of claim, says that in the form he made a claim in respect of the accident. The statement of claim indicates that the claim was for an amount of $93,500 for permanent total disablement under clause 7 of the policy. The respondent claimed that for five years he received no communication at all from the appellant and in 1993 he made enquiries. The respondent said that, as a result of these inquiries, he received a letter dated 30 April 1993 whereby the appellant denied liability for permanent total disablement. The reason given was that the medical evidence showed that he was not permanently disabled from engaging in any occupation for the remainder of his life.
59 The respondent, on 27 August 1998, issued the writ claiming that the appellant on 30 April 1993 became in breach of the policy by writing the letter of that date saying it would not pay. The respondent claimed that he thereby suffered damage. Particulars of the damage were given which read:
"Under cl 7 of the schedule to the Policy, Compensation in the sum of $93,500.00."
60 The appellant, in its defence, denied that the respondent had suffered bodily injury or permanent total disablement. The appellant also pleaded that the claim was outside the limitation period and thus statute barred by reason of the fact that the latest any cause of action the respondent had
(Page 28)
- against the appellant must have arisen by 20 March 1987. The reason why the appellant specified this date was because of the following definition in the policy of the term "Permanent total disablement":
"Disablement by bodily injury caused other than by loss of limb or eye, which has lasted for at least 12 months and entirely prevents the Insured Person from engaging in any occupation for which he is fitted by reason of education training or experience for the remainder of his life."
62 These limitation questions were ordered to be tried as a preliminary matter and they were tried by a Commissioner of the District Court. The questions ordered to be tried were contained in four paragraphs of the defence. The first paragraph claimed that the respondent's entitlement to the payment of benefits under the policy, and therefore the respondent's cause of action, was complete as at the date the respondent suffered permanent total disablement as defined in the policy. The second paragraph claimed that before the respondent could have been entitled to any benefits under the policy, the permanent total disablement must have been suffered within twelve months of the accident. The third paragraph claimed that, at the latest any cause of action must have therefore arisen by 20 March 1987. Towards the end of the hearing before the learned Commissioner, counsel for the appellant moved to add an alternate date to the date which it was claimed was the latest date when the cause of action had arisen. The date sought to be included was 20 March 1988, two years after the accident. His Honour refused this application to amend. The fourth paragraph referred to the Commissioner did no more than plead that the action was statute barred by reason of the matters already pleaded.
63 The learned Commissioner held that the cause of action in respect of the policy would not arise until the insured person first made the claim and the claim was refused or, possibly, not dealt with within a reasonable time. The learned Commissioner saw the breach of contract as being the refusal to pay the claim which occurred, as pleaded, on 30 April 1993 and which meant that the writ was within time. The Commissioner considered, therefore, that the action must proceed. The order his Honour made (AB32) was that the action be re-listed for a pre-trial conference on an expedited basis.
64 His Honour gave reasons as to why he considered that the respondent must first make a claim. He said that until this was done the appellant, as
(Page 29)
- the insurer, would not know under which head the respondent was making the claim and would not know whether he was seeking weekly payments or a lump sum. The policy gave this option. The insurer might not otherwise be aware that there was an accident. His Honour said that the happening of the event may give rise to an entitlement to payment under the policy but that does not ipso facto place the insurer in breach of its obligations under the policy. His Honour said it was improbable that the intention of the parties was that the insurer would immediately be in breach upon the occurrence of the defined event.
65 The appellant was granted leave to appeal. The first ground relating to the accrual of the cause of action claims that the learned Commissioner erred in finding that it was a term of a policy that the respondent first must make a claim under the policy and the claim be refused or be not dealt with within a reasonable time. The second ground brings into question his Honour's finding in respect of the intention of the parties and the third ground claims that his Honour erred in finding that while the occurrence of an event might give rise to an entitlement it did not ipso facto place the appellant in breach of its obligations. The appellant claims in each of the latter two grounds there was no evidence on which such a finding could be made. The grounds also claim that his Honour erred in refusing to allow the amendment to the defence. Mr Zilko, for the appellant, said the essential issue of the grounds relating to the accrual of the cause of action could be narrowed to the one question and that is on what date did the cause of action accrue. He submitted that it would have accrued on 20 March 1987 or at the very latest on 20 March 1988.
66 The operative clause of the policy provided that if any of the events later set out in the policy shall happen to the insured person the appellant will pay compensation. The policy then sets out the events and the compensation payable in respect of each particular event. There is more than one event which could have applied to the circumstances of the respondent but cl 2(a) of the policy provided that compensation shall not be payable under more than one of the events in respect of the same period of time. The event for which the respondent claimed was the event referred to under clause 7, namely "Total Disablement". There was an endorsement (ex 2) requiring the insured person to give to the appellant, written notice containing full particulars of any event in respect of which a claim is to be made as soon as possible but within 21 days of the sustaining of bodily injuries or the commencement of any other specified cause of disablement.
(Page 30)
67 The provision of the Limitation Act 1935 which is applicable is s 38. The relevant part of this section reads:
"…actions, suits, or other proceedings as herein set out shall and may be commenced within the time herein expressed after the cause of such actions, suits, or other proceedings respectively:-
…
(c) (v) All other actions founded on any simple contract, including a contract implied in law."
68 The time assigned is six years. The section is in similar but not identical terms to the Limitation Act 1623(UK) (21 James I, c 16, s 3). Each enactment uses the following words to mark the commencement as to when time runs: "after the cause of such actions or suits" The enactment in this State includes the word "or other proceedings" but this would not affect the question. The following paragraph in 19 Halsbury (1st edition) 42 sets out the law that has long been applied:
"63. The period of limitation under the Limitation Act, 1623 begins when the cause of action accrues. A cause of action accrues, when there is in existence a person who can sue and another who can be sued and when all the facts have happened which are material to be proved to entitle the plaintiff to succeed."
69 The words in bold are based on the authority of Cooke v Gill [1873] LR 8 CP 107 per Brett J at p 116. I would see these words being critical to the questions in this appeal. This has been the test in Australia. (see 16 Halsbury's Laws of Australia 255-45). Wilson J in Do Carmo v Ford Excavations Pty Ltd (1984) 154 CLR 234 at 245 said "a cause of action" is the fact or combination of facts which gives rise to a right to sue and he made reference by way of comparison to Cooke v Gill.
70 In England the same test has subsequently been expressed in other but similar ways. In Coburn v Colledge [1897] 1 QB 702, Lord Esher (at 706) expressed it as:
"Every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the court."
(Page 31)
71 In Central Electricity Board v Halifax Corporation [1962] 3 WLR 1313, Lord Guest (at 1323) said:
"The date when a cause of action accrues may be said to be the date on which the plaintiff would be able to issue a statement of claim capable of stating every existing fact which, if traversed, it would be necessary for the plaintiff to prove in order to support his right of judgment."
72 These further definitions have explained, but do not alter, the definition to which I referred in Cooke v Gill
73 In the present case the learned Commissioner set out the correct tests. He said that action must be commenced within six years from the date that the cause of action accrues and he referred to the definition of Wilson J. The critical question is when did the cause of action accrue? The answer must be found by applying the test to which I have referred of determining when all the facts have happened which are material to be proved. It may well be arguable that all the facts necessary to be proved had occurred in the latter part of 1988 after the respondent had submitted the claim form but still well beyond the limitation period. As a claim form had by that time, in fact, been submitted there would be no need to determine whether that was a fact necessary to prove. However the question whether the cause of action accrued in these circumstances was not a question before the Commissioner. The question before him, as raised in the pleading submitted to him for consideration, was whether the cause of action had accrued on 20 March 1987, which was a date prior to the claim being submitted. Mr Zilko's submission is that it had accrued by that earlier date and that there is no requirement to prove that the insured person had made a claim.
74 There is, as I mentioned, a clause in the endorsements (Ex 2) referring to the giving of a notice and for the purposes of these reasons I will assume that it was part of the policy. The clause reads:
"3. (a) Written notice containing full particulars of any Event in respect of which a claim is to be made shall be given to the Company at the office of the Company at which the Policy is issued as soon as possible but in any case within twenty-one days of
(i) the sustaining of the Bodily injury;
OR
(Page 32)
- (ii) the commencement of any other herein specified cause of disablement."
- There are, however, no words saying that the giving of this notice is a condition precedent to the insured person bringing action. It is a clause requiring such notice to be given within 21 days. The respondent has brought and is maintaining his claim without pleading that he has given the notice within the required time. It may be open to the insurer to say that a failure to give the notice is a breach of the policy and would relieve the insurer of the obligation to pay. This has not been raised as a defence. There is no other clause saying that a claim form must be sent prior to payment being made or action being brought. His Honour must have seen it that way as he reached his conclusion by implication and not by any express provisions in the policy.
The question which must be asked is, as I mentioned, whether all the facts have happened which are material to be proved to entitle the respondent to succeed? It is apparent that most facts have happened. There are, however, two matters to consider in order to determine whether all the facts have happened. The first matter was one raised by Mr Hancy that the definition of the term "permanent total disablement" contains a requirement that would have the effect of extending time before an action can be brought and the second matter is whether his Honour was correct in saying that the insured person must first make a claim and that the claim must be refused or possibly not dealt with within a reasonable time.
The submission by Mr Hancy, in respect of the first matter, is that the definition of "permanent total disablement" in the policy contains an element which could expand the time in which an action can be brought. The definition provides that the disablement must have lasted for at least twelve months and in addition it must entirely prevent the insured person from engaging in any occupation for the remainder of his life. It is submitted that the state of the record at present shows that there is no evidence on this question so there would be a question of fact to be determined by the trial Judge. Mr Zilko's response to this submission is that a proper interpretation of the clause would mean that, before the insured person could become entitled to any payment of benefits, the permanent total disablement must have been suffered within twelve months of the accident and this is what is pleaded in para 8B of the defence, this being one of the paragraphs of the defence referred to the Commissioner as a preliminary matter.
In my view, there is no need to determine this question of interpretation on the facts of this case because the claim, as pleaded, is an injury which
(Page 33)
- has within the twelve month period caused total permanent disablement. It is pleaded that as a result of the accident the respondent suffered injury to two vertebrae of the spine with a prolapsed disc and damage to the spinal cord, nerve fibres and soft tissues in the lumbo sacral area. It is pleaded that this has caused acute right sciatic pains down the right leg. It is pleaded, further, that by reason of these injuries the respondent had suffered bodily injury and permanent total disablement. In many cases the injuries received at the time of the occurrence of an accident can be so severe that the conclusion can be drawn at the time of the accident or within a short time thereafter that the person injured will, for the remainder of his life, be unable to engage in the occupation for which he is fitted by reason of his education, training and experience. I consider that this case, as pleaded, is one of those cases. This was therefore a fact that happened prior to 20 March 1988. In these circumstances, subject to the next question to be considered, it would have been open to the respondent to issue the writ he did on 20 March 1988. To follow the expanded definition of Lord Guest, the respondent on that date would have been able to state, in his statement of claim, every existing fact, which, if traversed, it would have been necessary to prove to obtain judgment. They were so stated in the claim that issued and they could have been so stated on 20 March 1987. The facts are the bodily injury received; the disablement caused by the bodily injury lasting for the twelve months and the allegation that the disablement caused by the bodily injury will entirely prevent the respondent engaging in the specified occupation for the remainder of his life. This last proposition is an inference to be drawn from the nature of the bodily injury which was received at the time of the original accident. The fact that at the time of trial, or at any later time, the disablement has continued is evidence to strengthen the inference but is not a fact to be pleaded. It is sufficient to plead, as the respondent did plead, that the bodily injury received at the time of the accident will cause permanent total disablement as defined in the policy.
The next question to consider is whether his Honour was correct in saying that the insured person must first make a claim and, further, that the claim must be refused or possibly not dealt with within a reasonable time. There is, as I mentioned, no express provision in the policy requiring a claim form to be submitted as a condition precedent to liability. The basis on which his Honour reached the conclusion that this was a requirement was that this must have been the intention of the parties. I do not consider that his Honour was suggesting that there was an implied term to this effect although it was submitted in argument on this appeal that it would be open to come to this view. This Court in Tillotson v ANZ Life
(Page 34)
- Assurance Co Ltd (1997) 9 ANZ Insurance Cases 61 refused to imply such a term in a similar policy. Mr Hancy submitted that the inclusion of the clause in the present policy of requiring notice to be given would distinguish this case. I do not consider it does for reasons I have mentioned. There are no words in the policy suggesting that the notice referred to in the endorsement must be given before there is a liability to pay. The failure to give the notice could be no more than a breach of the policy giving rise to a possible argument that the breach may relieve the insurer of liability. It was submitted further that what was said in Tillotsonwas inconsistent with an earlier decision of a single Judge in Vanguard Insurance Co Ltd v Darley Pty Ltd [1981] ANZ Insurance Reporter 77,311. That case was dealing with the question as to whether a winding up notice could issue against an insurance company which had not immediately paid a claim. That raises a different question and I consider it can be distinguished for reasons to which I shall later refer. I do not consider that it is open to imply a term in this particular policy that a claim must first be made for the reasons stated by the Full Court in Tillotson.
One of the reason why his Honour reached the view that a claim must first be made and must also be refused by the insurer is that, as the action was pleaded as a breach of contract, he considered that the questions to be asked were what has been promised and when did the defendant fail to fulfil that promise? His Honour considered that the answer to this last question would determine when the action accrued. His Honour formulated the questions in this way after considering the reasons in Council of the City of Penrith v Government Insurance Office of New South Wales (1991) 6 ANZ Insurance Cases 61-070 where Giles J considered that a breach could not occur while there was a possibility of the defendant performing its promise. In that case Giles J was dealing with a contract of indemnity insurance. He said that it was not in question that the plaintiff was entitled to indemnity from the defendant insurer in respect of a claim that had been made against it. His Honour said that the cause of action was for unliquidated damages for breach of contract and referred to the authorities to show that an action on a policy of insurance is an action of this type. He referred to the fact that, as it was a claim under a policy of indemnity, the claim was for unliquidated damages for breach of contract. His Honour said that the plaintiff must establish a breach as the plaintiff's cause of action accrued upon breach. His Honour then said:
"It could then recover the loss suffered as a consequence of that breach. The plaintiff's cause of action accrued upon breach.
(Page 35)
- Thus it must be asked what the defendant was required to do in performance of its promise, and when it failed to do what was required of it. Only when the defendant failed to do what was required of it could a cause of action for damages for breach of contract accrue to the plaintiff. There was no cause of action simply because Mitora made its claim or the claim was notified to the defendant - the defendant could have thereafter fully performed its promise."
75 There is contrary authority to these propositions. Megaw J said in Chandris v Argo Insurance Co Ltd & Ors (1963) 2 Lloyds List Law Reports 65, that where the claim is for unliquidated damages, it is not a condition precedent - it is not a fact which must exist and be pleaded - that the plaintiff has quantified the amount of his claim: or even that all the facts exist at the date of the writ which will enable the proper amount of the claim to be determined. His Lordship continued:
"That such matters, in a claim for unliquidated damages, are matters of evidence, not pre-requisites of a cause of action, was strikingly demonstrated in Pegler v Railway Executive, [1948] AC 332. That was a case arising out of a contract. In tort, the position is at least equally clear, as is shown by the recent decision of the House of Lords in Cartledge and Others v E Jopling & Sons, Ltd [1963] 1 Lloyd's Rep 1; [1963] 2 WLR 210."
76 Giles J said that there was no cause of action simply because a claim has been made against the insured or simply because the claim was notified to the defendant insurer, and he said the reason why there was no such cause of action at that stage is that the insurer could still have performed its promise. If this proposition were of general application, then it would mean that a further fact must have happened which is material to be proved, namely that the insurer was not going to perform its promise when it had an opportunity to do so. It may not have been intended to be a general proposition as Giles J was dealing with an insurance contract of indemnity. In England there has been some inconsistency as to when time runs in indemnity cases. This was referred to by Dillon J in Green & Silley Weir Ltd v The British Railways Board (1985) 1 All ER 240 where it was held that a general indemnity was an indemnity not against liabilities arising under the principal claim, but against the payment and discharge of those liabilities. The position is summarised in 20 Halsbury (4th ed re issue par 357) when the editors state that the date when time begins to run against the person entitled to an
(Page 36)
- indemnity depends on the nature and extent of the indemnity, and the nature of the relief claimed, and the editors refer to the judgment of Neill J in Telfare Shipping Corporation v Inersea Carriers SA, (the Caroline P) (1985) 1 All ER 243. Giles J referred to these English cases and indicated he did not favour the distinction made in those cases. If a court did follow that distinction, there may possibly have been a similar result to that arrived at by Giles J when considering the contract of indemnity which was before him.
77 The question is whether the principle referred to by Giles J, of its being required to be shown that the defendant insurer was not going to perform its promise after it had an opportunity to do so, is a principle of general application. I consider this proposition would be contrary to what was said by this Court in Tillotson where it was held that the action against the insurer could proceed without the giving of a notice and without the insurer being aware of the claim. It would also be inconsistent with the approach of this Court in Ingram v Mohren (1993) 10 WAR 497. The question there was whether a demand was necessary on a mortgage debt to cause an action to recover it to accrue. The Court, in that case, considered that the terms of the contract required a demand to be made. The Court was, however, of the view that the common law was set out by Fullagar J in Ogilvie v Adams [1981] VR 1041 where his Honour said at 1043:
"The common law has always regarded the fact of indebtedness as a continuing detention by the debtor of the creditor's money, and this whether the creditor brought an action of debt or an action in indebitatis assumpsit. Therefore if A lends money to B, then instantly B is detaining A's money. In order to prevent a cause of action for recovery arising in A instantaneously on paying the money, the parties must expressly contract out of that situation by words clearly inconsistent with that situation."
78 The fact that the debtor may have been willing to pay the debt is not a fact which is material to be proved in the absence of the parties contracting out of the situation. The appropriate section of the Limitation Act in that case was s 32, but I do not consider this affects the general principle. To suggest that it must be negated that the defendant could have thereafter fully performed its promise would indicate that a demand or claim must be made to see if the defendant was going to perform its obligation. This would give rise to a further difficulty referred to by Megaw J at 76 (col 2) that the interpretation would mean that it would be within the power of the insured to postpone indefinitely the accrual of a
(Page 37)
- cause of action and the commencement of the running of time. His Lordship was referring to the insured not producing an average adjustment. In the present case time would be postponed by the insured not taking steps to ascertain whether the insured company was intending to pay.
79 The fact that the insured has a right to elect which of two amounts he or she can claim raises a further question. I consider, that in order to answer this question the analysis made by Megaw J in Chandris is of assistance. Megaw J's reasons were approved by the Privy Council in Castle Insurance Co v Hong Kong Shipping Co [1984] 1 AC 226. The reason why I am referring to this analysis is because His Lordship applied the basic test of determining when all the facts have happened which are material to be proved to entitle the plaintiff to succeed. He applied it in the way the test was later explained by Lord Esher and Lord Guest. Megaw J was dealing with a marine policy of indemnity, consequently the claim was for unliquidated damages. His Lordship said for reasons to which I have earlier referred that by reason of this no demand was necessary. He refused to hold that there was an implied term to issue an average adjustment and he did this for reasons similar to those of this Court in Tillotson.
80 His Lordship was considering, amongst other things, when time began to run for a claim for a general average loss under a marine policy. He referred to the Marine Insurance Act 1906 (UK) which provided in s 66(3) that where there is a general average loss, the party on whom it falls is entitled to a rateable contribution from the other parties interested. His Lordship said that, by reason of that section, the liability to pay contribution arises on the occurrence of the general average loss. However, at that stage the insurer would not know the amount to pay. The insurer would not know how much to pay until insurance adjusters had prepared a general average statement. This often does not issue until a considerable time later. When it issues, it is not binding on the insurer who has the right to show it is incorrect. His Lordship said time is not postponed until the amount of contribution is or can be assessed. For the purpose of computing the limitation period, time runs from the earlier date even though the insurer does not know the amount of the claim.
81 Megaw J's reasons were approved by the Privy Council in Castle Insurance Co. Their Lordships said that as a matter of law, in the absence of any agreement to the contrary, the publication of the average statement settles nothing. It is no more than an expression of opinion by a professional man. It is just not capable of giving rise to any fresh cause of
(Page 38)
- action or of postponing the accrual of an existing cause of action for an unliquidated sum. Their Lordships said that causes of action for unliquidated sums, that will only become quantified by the judgment of a court, accrue at the time that the event occurs which gives rise to the liability to pay to the plaintiff compensation in an amount to be subsequently ascertained.
82 Mr Hancy sought to distinguish these cases on the basis that the commencement of liability was explained by s 66 of the Marine Insurance Act 1906(UK) under which provision the insurer liable to pay general average contribution could "recover therefore from the insurer". Giles J saw this as a distinction in respect of the type of claim with which he was dealing.
83 I consider that this is not a basis of distinction in respect of the matters being considered in this particular appeal. The relevant section of the United Kingdom enactment (s 66 ss (5)) provided that where the assured is liable to pay a general average contribution in respect of the subject insured, he may recover therefor from the insurer. This means that the right to recovery arises on the assured becoming liable to pay contribution to the owner of the cargo which has been sacrificed to save the ship and this arises as soon as the general average loss has occurred. I would see no difference between this and the insured plaintiff in Council of the City of Penrith becoming entitled to indemnity when a claim against which it has insured is made against it. The section of the Act referred to in Chandris is performing the same function as the words of the policy in the present case. The policy in the present case says that on the happening of the event the insurer will pay compensation. Franklyn J in Tillotson referred to similar words in the policy being considered in that case when refusing to imply a term that a claim must be made. If no term is to be implied the words in the policy operate. Likewise in Chandris if no term is to be implied the words in the Act operate.
84 I have mentioned that what was said in Council of the City of Penrith in the passages to which I have referred would result in its being necessary to lodge a claim in order to ascertain whether or not the defendant intended to perform its promise. I consider that this, in so far as it is applicable to personal accident policies, is contrary to what was said in Tillotson and contrary to the other authorities I have set out. For these reasons I consider this aspect of Council of the City of Penrith should not be followed. There is no requirement to prove that the defendant was not going to carry out its promise. There is therefore no requirement for this purpose to submit a claim on this account and, as I mentioned, the
(Page 39)
- reasoning in Tillotson would show that there is no implied term requiring a claim to be submitted.
85 The cases to which I have referred are cases considering contracts of indemnity. Personal accident policies providing for fixed sums payable on the happening of an event are not contracts of indemnity. Parke B in Dalby v The India and London Life-Assurance Co (1854) 15 CB 364 at 474 referred to a contract of life assurance paying a certain sum of money on the death of the assured and said, "This species of insurance in no way resembles a contract of indemnity." His Lordship went on to say that policies of assurance against fire and against marine risks are properly contracts of indemnity.
86 The authorities followed by both Giles J and Megaw J show that an action on a policy of insurance is an action for unliquidated damages. A source for this rule can be found in what was said in Castelli v Boddington (1852) 1 E & B 66 118 ER 363 where Lord Campbell CJ said, "A set off cannot be pleaded to an action for unliquidated damages; and this, which is an action for a partial loss under a policy of insurance, is an action for unliquidated damages. Mr Bramwell admits that such is now the general opinion of the profession: and such has been the general opinion ever since I knew anything of it." In Luckie v Bushby (1853) 13 B & C 864 a defendant endeavoured to make a set off against the claim under an indemnity policy. Jarvis CJ said that as it was a claim for unliquidated damages, there could be no set off and that a mere adjustment does not per se render the amount liquidated so as to reduce the plaintiff's claim to an account stated. His Lordship said later "It may be that, if the adjustment were an absolute and definite arrangement from which neither party could recede, it would be one against which a set off might be pleaded, although the action was in point of form an action for unliquidated damages."
87 It may be arguable that the accepted rule that a claim under a policy of insurance is a claim for unliquidated damages may be limited to indemnity policies and might not apply where there is an agreement to pay a fixed sum. I can find no authority on this question and there is no need to resolve it for the purposes of determining this appeal. If the claim now being considered is a claim for unliquidated damages, then the principles referred to by Megaw J would apply. His Lordship, after referring to the fact it was a claim for unliquidated damages said (at 74), "In claims on a policy of insurance, this conception of the nature of the action may be thought to produce curious results. The claim, since it is not for a debt or liquidated sum due under the contract, is presumably a
(Page 40)
- claim for breach of contract. If so, the insurer may technically be in breach of his contract before any demand is made on him and before it is possible for him, or the assured, to compute the amount which he ought to pay. Yet that, as I see it, is a necessary result of the claim for unliquidated damages." In these circumstances it does not matter that the insurer does not know of the happening of the accident or of the amount of the claim.
88 If the claim can be seen as a claim to recover a fixed sum promised to be paid on the happening of an event, and in that sense a liquidated sum, I would see a similar result being reached. I consider that the effect of Tillotson is that there is no requirement to lodge a claim or make a demand. The words of the policy state that the money is payable on the happening of the event. The happening of the event is the only fact to be proved. It would not matter if the insurer was not aware of the happening of that event and that is consistent if the claim is seen as unliquidated or liquidated. I do not consider that the position changes by reason of the fact that the insurer is not aware of which amount the insurer is claiming until the issue of the writ. It has been held that business efficacy does not require the implication of the term to submit a claim. The position would not change to require the assured to state the type of claim being made. It would be open to the insurer, if the assured issues a writ in these circumstances, to claim it had no opportunity to make a tender and it should consequently receive a remedy in costs. I consider therefore, the facts which have happened and which are material to be proved are the happening of the accident, the permanent total disablement as claimed in the writ, and its lasting for the 12 month period.
Although a writ can issue at the risk of a plaintiff suffering in costs, does it follow that an insured person, without obtaining a judgment, may proceed with a winding up notice against an apparently solvent insurer? This was the position in Vanguard Insurance Co Ltd v Darley Pty Ltd. I am referring to this as I indicated earlier that I would give further reasons for distinguishing this case. I consider that a court would inevitably set aside such a notice and require the claimant to proceed in another way particularly when the company is apparently solvent and had no opportunity to make a payment.
89 For these reasons I consider that the cause of action had accrued upon the expiration of 12 months after the accident, namely on 20 March 1987. This would have entitled the appellant to judgment on the issue tried by his Honour. There is accordingly no need to consider whether the trial Judge ought to have allowed the amendment to bring into
(Page 41)
- consideration another date, namely 20 March 1988. It follows that the writ was issued at a time when the claim was statute-barred.
90 I would allow the appeal and order that the order made in the District Court be set aside and it be replaced with an order that the action stand dismissed.
86