Commonwealth Insurance Limited v Hagias
[2008] SADC 93
•5 August 2008
DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Appeal Against a Master's Decision)
COMMONWEALTH INSURANCE LIMITED v HAGIAS & OTHERS
[2008] SADC 93
Judgment of His Honour Judge Beazley
5 August 2008
STATUTES - ACTS OF PARLIAMENT - OPERATION AND EFFECT OF STATUTES
Implied repeal of statute - two statutes prescribing time limits for cause of action for damages for personal injuries - s4(b) of the Survival of Causes of Actions Act 1940 (SA) and s36 of the Limitation of Actions Act 1936 (SA) - whether the latter Act explicitly or implicitly contradicts the limitation provisions of the former Act - whether an extension of time can be granted pursuant to s48 of the Limitation of Actions Act.
HELD: It is arguable that s36 of the latter Act partially repeals s4(b) of the former Act in respect of claims for damages for personal injuries.
Butler v ATT/Gen (Vic) (1961) 106 CLR 268; R v Saraswati (1991) 172 CLR 1 at 17, referred to.
Ferdinands v Commissioner of Police (2006) 225 CLR 130, applied.
PROCEDURE
Appeal from decision of a Master - Plaintiff allegedly seriously injured in a fall - claims against occupier - Occupier insured by the appellant - Occupier dies prior to the commencement of proceedings by the plaintiff - Survival of Causes of Action Act 1940 (SA), s2(1)(b) and s4 - the plaintiff sought orders joining the appellant insurer - The Master found that the plaintiff's claim was not statute barred - He also held that the statutory cause of action under s51 of the Insurance Contracts Act 1984 (Cth) was not barred by time constraints - The Master made orders giving leave to the plaintiff to substitute the executors of the estate of the deceased tortfeasor. He adjourned the application to join the appellant insurer as a second defendant to await evidence as to the refusal of the appellant to indemnify the estate. He subsequently ordered that the plaintiff be given leave to join the appellant and to further amend the statement of claim. The appellant sought to appeal from the "findings" of the Master - whether order for the joinder of the appellant properly made.
HELD: Order for joinder of the appellant interlocutory in nature. The plaintiff has an arguable claim for relief against the appellant at this stage of the proceedings - order for joinder properly made by the Master - appeal dismissed.
District Court Act 1991 s43(2); District Court Rules 6R8, 6R100(2); Survival of Causes of Action Act 1940 (SA) ss 2, 4; Insurance Contracts Act 1984 (Cth) s51; Limitation of Actions Act 1936 (SA) ss 46A, 47 and 48; Wrongs Act 1936 (SA) Part 1 B, referred to.
Employers Reinsurance Corporation v Ashmere Cove Pty Ltd [2008] FCAFC 28; Ashmere Cove v Beekink (No2)(2007) 244 ALR 534 at [33]; QBE Insurance Ltd v Nguyen [2008] SASC 138; Nguyen v QBE Insurance Ltd [2007] SASC 454; [2007] SASC 320 and [2000] SASC 341; Blomme v Sutton (1989) 52 SASR 576; Sampson v The Estate of Ellis deceased (1990) 154 LSJS 209; Deveigne v Askar [2007] NSWCA 45; Vollstedt v Calibre Enterprises Pty Ltd (1999) 10 ANZ Ins Cases 61-440; De Corsey v Monaco (1993) Unreported Decision WA Supreme Court BC9301311; Daniels v Vaux (1938) 2 KB 202; Falls Creek Ski Lift v Leonie Yee (1995) NSWSC 155; Hartley Poynton Ltd v Ali [2005] VSCA 53; Morris v Betcke [2005] NSWCA 308; Webb v The Estate of Herbert [2006] WASCA 43; Lotter v Salmon Street Ltd and Vero Insurance Ltd [2006] VSC 495; Almario v Allianz Australia [2005] NSWCA 19; Airey v Airey [1958] 2 QB 300; E J Tyler Ltd v Ainger (1976) 2 NZLR 310; Minchin v The public Curator (1964) Qdr 543; General Motors-Holden Ltd v Di Fazio (1979) 141 CLR 659; Baulderstone v Workcover Corporation of SA (unreported decision of Full Court of the Supreme Court of SA; 5/7/95 BC 9503787), considered.
COMMONWEALTH INSURANCE LIMITED v HAGIAS & OTHERS
[2008] SADC 93Introduction
This is an appeal instituted by the insurer of a deceased tortfeasor against orders made by a Master of the Court, inter alia, permitting the joinder of that insurer as a defendant to the proceedings. The appeal is brought pursuant to s 43(2) of the District Court Act 1991, and is by way of rehearing.
The appeal raises issues of considerable importance, in particular the circumstances in which a cause of action in tort will abate or be statute barred; pursuant to s 4 of the Survival of Causes of Action Act1940 (SA) (“the Act”)[1]. As appears hereafter s 4 of the Act imposes time constraints upon the maintenance of a cause of action in the event of the death of a tortfeasor. It has been described as a “rule destitute of any rational basis”, the effect of which has been ameliorated by amending legislation in most other jurisdictions[2]. The issues include the proper construction of sections 46A and 48 of the Limitation of Actions Act 1936 (SA) (“the LOA”); s 51 of the Insurance Contracts Act 1984 (Cwlth) (“the ICA”); and potentially Part 1B of the Wrongs Act 1936 (SA)[3].
[1] See Hartley Poynton Ltd v Ali [2005] VSCA 53
[2] Lotter v Vero Insurance [2006] VSC 495 at [19]
[3] Now Part 4 Civil Liability Act 1936
These questions arose before the Master during an interlocutory application by a plaintiff in a personal injuries claim for the joinder of that insurer. It was not an application to strike out the plaintiff’s cause of action. Some of the discrete points of law, argued by the parties, related to matters not even raised, at this stage, in the pleadings. It is important therefore that in any consideration of the reasons of the Master, due regard must be had to the interlocutory nature of the application, the dearth of evidence, and the fact that the pleadings were in a state of flux. The parties appear to have approached the question of joinder on whether, on any view of the facts and law, the plaintiff could succeed in obtaining relief against the appellant insurer. The grounds of appeal involve discrete questions of law.
Background
On 29 March 2002, Arthur Hagias (“the plaintiff”) climbed onto the verandah of the home of his father‑in‑law, Charalambos Prodromou (“the deceased”), to clean roof gutters. The verandah thereupon collapsed, in consequence of which the plaintiff allegedly suffered serious head and spinal injuries.
The plaintiff became aware shortly thereafter that his father in law held a current home and public liability policy issued by the appellant, Commonwealth Insurance Limited (“the appellant”). The deceased died on 24 May 2004. No proceedings had been issued at that time. But for the death of the deceased, the three-year period of limitation, specified in s 36 of the LOA would have ceased on 29 March 2005. The subject proceedings were filed on that latter date.
As the deceased tortfeasor died more than six months after the plaintiff’s cause of action in tort accrued, the action, prima facie, did not meet the conditions prescribed in s 4(b) of the Survival of Causes of Action Act, 1940. Initially the plaintiff’s claim was brought against the “estate” of the deceased. Although the appellant's solicitor purported to file an appearance on behalf of the estate, no defence was filed. If the appellant had been joined as a party, then it would presumably have pleaded any statutory limitation defence, and applied to strike out the plaintiff’s claim. Almario v Allianz Australia Workers Compensation (NSW) [2005] NSWCA 19; Deveigne v Askar [2007] NSWCA 45 at [20].
Ultimately the executors of the estate of the deceased insured were joined as defendants. No defence has been filed by them. In the ordinary course of events, an insurer may prefer joinder to overcome the potential risk that a third party plaintiff may obtain a default judgment against the insured and then recover such judgment sum from the insurer pursuant to s 51 of the ICA. QBE Insurance Ltd v Nguyen [2008] SASC 138. A question arises whether the constraints in s 4(b) of the Act constitute a procedural limitation which can be waived. Parente v Bell (1967) 116 CLR 258 at [3] and Commonwealth v Verwayen (1990) 170 CLR 394. In the event, when the application was made by the plaintiff to join the appellant insurer as a defendant, based upon a cause of action under s 51 of the ICA, no extension of time had been sought, nor had any statutory limitation defence been pleaded.
The appellant however opposed joinder on the basis that neither the insured nor it could be liable at law to the plaintiff.
Chronology
The chronology of relevant events was not in dispute and is as follows:
29 March 2002 - The plaintiff is injured.
23 July 2002 - The plaintiff’s solicitors gives notice of
the plaintiff’s claim to the appellant insurer.
24 May 2004 - The deceased died.
29 March 2005 - The plaintiff issues a summons in this Court
against a single defendant described as “the estate of Charalambos Prodromou deceased”. The accompanying Statement of Claim made no other mention of the death of the deceased, nor did it refer to the appellant insurer. Although the pleading did not expressly refer to the Wrongs Act 1936 (SA), it was expressed in terms of occupier’s liability.
28 April 2005 - Solicitors engaged by the appellant insurer filed
an address for service on behalf of “the Estate of Charalambos Prodromou deceased”. No defence has been filed.
18 January 2006 - Probate of the Estate of the deceased was
granted to Angelo Prodromou and Helen Hagias.6 March 2006 - By Notice for Specific Directions the plaintiff
sought leave to join: -
(i)Angela Prodromou and Helen Hagias, in their capacity as executors of the estate to be substituted as first defendants, in lieu of “the estate of Charalambos Prodromou deceased”;
(ii)The appellant insurer as the second defendant to the action.
18 December 2006 Master publishes reasons and makes orders the subject of appeal.
12 February 2007 The appellant’s solicitors inform the Master that the appellant had declined indemnity to the executor of the estate of the deceased.
12 February 2007 The Master makes further orders including the joinder of the appellant as the second defendant to the proceedings.
22 February 2007 The appellant institutes the within appeal.
27 February 2007 The plaintiff files a Further Amended Statement of Claim.
The applications before the Master
The plaintiff sought and obtained an order that the executors, approved on 18 January 2006, be substituted for the “estate” of the deceased. In support of his application to join the appellant, the plaintiff filed an affidavit of his solicitor, Mr Alevizos, sworn 5 March 2006.
In the proposed amended Statement of Claim exhibited to that affidavit, the plaintiff:
·pleaded in paragraph 10:
The deceased was negligent in that the verandah was in a defective condition and likely to endanger the plaintiff. Although the plaintiff used reasonable care for his own safety, he was entitled to expect that the deceased shall on his part use reasonable care to prevent damage from unusual danger, which he knows or ought to know.
·pleaded the existence of a contract of insurance between the appellant and the deceased which allegedly covered the deceased’s liability to the plaintiff.
·did not seek any extension of time;
·sought as against the appellant insurer, declaratory and consequential relief pursuant to s 51 of the ICA.
The dearth of evidence is apparent from the reasons of the Master delivered on 18 December 2006 at [243]:
“This issue (of potential factual overlapping) and the terms of the policy have not been addressed by the parties.
Ordinarily I would not direct the joinder of a party unless there was:
1. Evidence of a refusal to indemnify;
2. Evidence that the policy, prima facie, applies to the circumstances of the claim;
3. Evidence the Insurer declined to be bound by the findings of fact at trial”.
By separate application the appellant’s solicitors sought and obtained leave to cease “acting” as solicitors on the record for “the Estate”.
When the matter proceeded before the Master, and indeed on appeal the executors were not represented. No application has been made by the plaintiff to enter judgment against the executors in default of a defence being filed. I do not know whether the executors propose to plead that the plaintiff’s cause of action is statute barred. In consequence of the appellant having declined indemnity it would have been open to the executors to join the appellant as a third party to the proceedings. Having regard to the relationship between the plaintiff and the deceased, it is reasonable to infer that the executors might not wish to contest the plaintiff's claim.
It is convenient at this point to set out the relevant legislation.
The relevant Legislation
The Survival of Causes of Action Act 1940 (SA) ("the Act")
At the time of the subject accident the Act provided:
Section 2 Survival of causes of action
“Subject to the provisions of this Act on the death of any person after the passing of this Act, all causes of action subsisting against or vested in him shall survive against his estate, or as case may be, for the benefit of his estate ……..”.[4]
[4] Following an amendment which commenced on 10 March 2003, section 2 of the Act provides:
(1)Subject to this Act-
(a) a cause of action vested in a person at the time of his or her death survives for the benefit of his or her estate; and
(b) a cause of action existing against a person at the time of his or her death survives against his or her estate.
(2)This section does not apply to a cause of action in defamation.
Section 4. Conditions precedent to survival of cause of action
No proceedings shall be maintainable in respect of a cause of action in tort (my emphasis) which by virtue of this Act has survived against the estate of a deceased person, unless either‑
(a) proceedings against him in respect of that cause of action were pending at the date of his death; or
(b)the cause of action arose not earlier than six months before his death and proceedings are taken in respect thereof not later than six months after his executor or administrator took out probate or letters of administration.
Insurance Contracts Act 1984 (Cwlth) ("the ICA")
Section 51 Right of third party to recover against insurer
(1) Where:
(a)the insured under a contract of liability insurance is liable in damages to a person (in this section called the third party);
(b) the insured has died or cannot, after reasonable enquiry, be found; and
(c) the contract provides insurance cover in respect of the liability;
the third party may recover from the insurer an amount equal to the insurer's liability under the contract in respect of the insured's liability in damages.
(2)A payment under subsection (1) is a discharge, to the extent of the payment, in respect of:
(a) the insurer's liability under the contract; and
(b)the liability of the insured or of the insured's legal personal representative to the third party.
(3)This section does not affect any right that the third party has in respect of the insured's liability, being a right under some other law of the Commonwealth or under a law of a State or Territory.
Limitation of Actions Act 1936 (SA) ("the LOA")
35 Actions on simple contract and in tort
The following actions namely:
(c) actions founded on tort, … shall, save as otherwise provided in this Act, be commenced within six years next after the cause of action accrued
36 Personal Injuries
(1)All actions in which the damages claimed consist of or include damages in respect of personal injuries to any person shall be commenced within three years next after the cause of action accrued but not after.
46A Extension of period of limitation where cause of action survives
Where a cause of action survives for the benefit of the estate of a deceased person, the time limited for the commencement of the action shall be extended by a period equal to the period between the death of the deceased and the grant of probate or letters of administration to the executor or administrator of his estate, or by a period of twelve months, whichever is the lesser.
47 Extension of certain periods of limitation
(1) Where any Act, regulation, rule or by-law limits the time within which an action to which this section applies may be brought to a period of less than twelve months from the time the cause of action arises, then, notwithstanding that limitation, that action may be brought at any time within twelve months from the time the cause of action arises.
(2) This section applies to all actions except—
(a)a criminal action; and
(b)an action to try the validity of an election or of title to an office; and
(c)an action to try the validity of an assessment, rate or loan made by or to a local government body; and
(d)any other action to the nature or purpose of which the limitation is, in the opinion of the court, essential.
48 General power to extend periods of limitation
(1)Subject to this section, where an Act, regulation, rule or by-law prescribes or limits the time for—
(a) instituting an action; or
(b) doing any act, or taking any step in an action; or
(c)doing any act or taking any step with a view to instituting an action,
a court may extend the time so prescribed or limited to such an extent, and upon such terms (if any) as the justice of the case may require.
(2)A court may exercise the powers conferred by this section in respect of any action that—
(a) the court has jurisdiction to entertain; or
(b)the court would, if the action were not out of time, have jurisdiction to entertain.
(3) This section does not—
(a) apply to criminal proceedings; or
(b)empower a court to extend a limitation of time prescribed by this Act unless it is satisfied—
(i)that facts material to the plaintiff's case were not ascertained by him until some point of time occurring within twelve months before the expiration of the period of limitation or occurring after the expiration of that period and that the action was instituted within twelve months after the ascertainment of those facts by the plaintiff; or
(ii)that the plaintiff's failure to institute the action within the period of the limitation resulted from representations or conduct of the defendant, or a person whom the plaintiff reasonably believed to be acting on behalf of the defendant, and was reasonable in view of those representations or that conduct and any other relevant circumstances,
and that in all the circumstances of the case it is just to grant the extension of time.
(3a)A fact is not to be regarded as material to the plaintiff's case for the purposes of subsection (3)(b)(i) unless—
(a) it forms an essential element of the plaintiff's cause of action; or
(b)it would have major significance on an assessment of the plaintiff's loss.
Example—
In a case involving personal injury, a fact might qualify as a fact material to the plaintiff's case if it establishes—
(a) a substantial reduction of the plaintiff's capacity to work; or
(b)that the plaintiff will require substantially more medical care than previously expected; or
(c) a significant loss of expectation of life.
(3b)In determining whether it is, in all the circumstances of a case, just to grant an extension of time, the court should have regard to—
(a)the period of extension sought and, in particular, whether the passage of time has prejudiced a fair trial; and
(b)the desirability of bringing litigation to an end within a reasonable period and thus promoting a more certain basis for the calculation of insurance premiums; and
(c)the nature and extent of the plaintiff's loss and the conduct of the parties generally; and
(d) any other relevant factor.
(4)Where an extension of time is sought pursuant to this section in respect of the commencement of an action, the action may be instituted in the normal manner, but the process by which it is instituted must be endorsed with a statement to the effect that the plaintiff seeks an extension of time pursuant to this section.
(5)Proceedings under this section may be determined by the court at any time before or after the close of pleadings.
(6)This section does not derogate from any other provision under which a court may extend or abridge time prescribed or limited by an Act, regulation, rule or by-law.
Wrongs Act 1936 (SA)
17C Occupier’s duty of care
(1) Subject to this Part, the liability of the occupier of premises for injury, damage or loss attributable to the dangerous state or condition of the premises shall be determined in accordance with the principles of the law of negligence.
(2) In determining the standard of care to be exercised by the occupier of premises, a court shall take into account—
(a) the nature and extent of the premises; and
(b)the nature and extent of the danger arising from the state or condition of the premises;
and
(c)the circumstances in which the person alleged to have suffered injury, damage or loss, or the property of that person, became exposed to that danger; and
(d)the age of the person alleged to have suffered injury, damage or loss, and the ability of that person to appreciate the danger; and
(e)the extent (if at all) to which the occupier was aware, or ought to have been aware, of—
(i) the danger; and
(ii) the entry of persons onto the premises; and
(f)the measures (if any) taken to eliminate, reduce or warn against the danger; and
(g)the extent (if at all) to which it would have been reasonable and practicable for the occupier to take measures to eliminate, reduce or warn against the danger; and
(h) any other matter that the court thinks relevant.
(3) The fact that an occupier has not taken any measures to eliminate, reduce or warn against a danger arising from the state or condition of premises does not necessarily show that the occupier has failed to exercise a reasonable standard of care.
(4) Subject to any Act or law to the contrary, an occupier’s duty of care may be reduced or excluded by contract but no contractual reduction or exclusion of the duty affects the rights of any person who is a stranger to the contract.
(5) Where an occupier is, by contract or by reason of some other Act or law, subject to a higher standard of care than would be applicable apart from this subsection, the question of whether the occupier is liable for injury, damage or loss shall be determined by reference to that higher standard of care.
(6) An occupier owes no duty of care to a trespasser unless—
(a)the presence of trespassers on the premises, and their consequent exposure to danger, were reasonably foreseeable; and
(b)the nature or extent of the danger was such that measures which were not in fact taken should have been taken for their protection.
17E Exclusion of conflicting common law principles
(1) Subject to subsection (2), this Part operates to the exclusion of any other principles on which liability for injury, damage or loss attributable to the state or condition of premises would, but for this Part, be determined in tort (my emphasis).
(2) This Part does not apply to a case where an occupier causes a dangerous state or condition of premises, or allows premises to fall into a dangerous state or condition, intending to cause injury, damage or loss to another.
The reasons and orders of the Master
The Master delivered comprehensive reasons of some forty pages. In fact the only issue for the Master to determine was whether the plaintiff had an arguable cause of action or entitlement to relief against the appellant insurer. However, various matters were canvassed by the parties, even though they were not the subject of any pleading. Those matters generally concerned the question of whether the plaintiff had a cause of action against the executors of the estate of the deceased – even though those executors were not represented before the Master.
The Master provided a detailed historical overview of s 4 of the Act, and an excellent analysis of the case law relating to its proper construction. In detailing the history of similar legislation the Master noted that subsequent legislation in other jurisdictions had ameliorated the “draconian effects” of s 4 of the Act in respect of claims “in tort”.[5]
[5] See Western Australia Law Reform Commission - Final Report on Limitation and Notice of Actions (1997) WALCR 36(ii) paragraph 22.25.
The Master noted that, "subject to the Act", the plaintiff’s cause of action survived the death of the deceased pursuant to s 2 of the Act. He concluded that the plaintiff’s claim was “in tort”, and that accordingly it was subject to the constraints in s 4 of the Act. Insofar as it may be said that the plaintiff’s claim against the executors is a statutory claim, and not one “in tort”, the Master said that he was bound by the decision of the Full Court of the Supreme Court in Blomme v Sutton (1989) 52 SASR 576, and concluded that the action against the executors was in tort. Accordingly, prima facie, s 4(b) of the Act applied.
The Master construed the words “proceedings” and “pending” in s 4(a) of the Act, to have the effect that the initiating summons must have been issued as at the date of the death of the deceased. There was abundant authority to support that conclusion. EJ Tyler Ltd v Ainger [1976] 2 NZLR 310 and Falls Creek Ski Lift v Leonie Yee (1995) NSWSC 155[6]. The plaintiff had argued that, in the subject case, a letter of demand sent to the insurer before the death of the deceased should be construed as complying with Rule 6A of the District Court Rules. He submitted that a Notice pursuant to that Rule, formed part of the “proceedings”. Hamilton v Merck (2006) NSWCA 55. The Master did not need to resolve that question, as he found, correctly in my view, that the letter did not constitute a Rule 6A Notice. As the cause of action had accrued on 29 March 2002, approximately two years prior to the death of the deceased, the Master held that neither ss 4(a) nor 4(b) of the Act had been satisfied. Upon the assumption that the plaintiff's action was one "in tort", the Master was clearly correct in that finding.
[6] In the Second Reading Speech on 24/9/40, the Att/Gen described "pending" as the legal proceedings being "in progress".
The Master held that s 4 of the Act had been impliedly repealed or suspended by later amendments to s 36 of the LOA. The Master alternatively considered whether an extension of time could be granted in the event s 4(b) was not so suspended. He noted that s 4(b) contained two time constraints. In the subject case the plaintiff's claim did not comply with the "first period" which specified that the cause of action should accrue no earlier than six months before the death of the tortfeasor. He adopted the expression employed in Airey v Airey [1958] 2 QB 300 that this first period was not a limitation provision but an “ambulatory” condition precedent.
The Master accepted that an extension of time could be granted in respect of the second period in s 4(b) of the Act. Blomme v Sutton (supra) and Sampson v Estate of Darryl Wayne Ellis (deceased) (1990) 154 LSJS 209. However, he declined to apply the dicta of King CJ in Blomme v Sutton, (supra), that an extension of time could be granted in respect of that first period of s 4(b) of the Act. He concluded that as the cause of action had accrued more than six months before the death of the deceased tortfeasor, no extension of time could be granted, pursuant to s 48 of the LOA.
The Master then considered whether the plaintiff had a cause of action against the appellant, upon the assumption that he could not maintain a cause of action against the executors. He concluded that a cause of action existed against the appellant, independently, under s 51 of the ICA. It seems implicit in the Master’s reasons at [232]-[233], that the appellant insurer could not take advantage of the defence in s 4(b) of the Act, even though the executor could do so. He held that such a cause of action was not one "in tort", and accordingly, s 4 of the Act had no application. He noted that s 51 was remedial legislation and should be given a liberal construction. He said that on its face s 51(1) of the ICA applied, as it was arguable that the deceased insured “is liable” to the plaintiff in damages.
He concluded therefore that the plaintiff’s claim against the executors of the estate of the deceased tortfeasor was not statute-barred because s 4(b) of the Act had been impliedly repealed. In addition, irrespective of an implied repeal, the plaintiff’s claim against the appellant under s 51 of the ICA, was not barred by s 4(b) of the Act.
On 18 December 2006 the Master made the following orders:
1. On the plaintiff’s application (FDN3) I give leave to the plaintiff to substitute Angela Prodromou and Helen Hagias as the defendants in the action in lieu of the “estate of Charalambos Prodromou”.
2. The application to join Commonwealth Insurance Limited as a second defendant is adjourned.
2.1The plaintiff is to advise the Court if it has been advised that the insurer has refused to indemnify Mr Prodromou or the estate. The advice is to be provided to the Court in writing within 21 days and is to be copied to Mr Burdett, solicitor.
2.2I adjourn the issue of joinder of Commonwealth Insurance Limited as a defendant.
3. I give leave to the plaintiff to amend the Statement of Claim:
3.1 Plaintiff to provide draft Statement of Claim within 21 days.
3.2To the extent that it will be necessary to join Commonwealth Insurance Limited as a defendant (depending on the advice in paragraph 2 above) the plaintiff is to provide a draft Statement of Claim with the proposed second defendant within 35 days.
4. Leave to Mr A Burdett, solicitor, to cease acting for the named defendant on his application (FDN5).
5. Costs reserved.
6. Liberty to apply at short notice.
As can be seen no order was made at that time for the joinder of the appellant. The Master adjourned the application until the question of indemnity was clarified. He was, with respect, plainly correct in so adjourning. Had the question of indemnity been left open, the Master may well have declined joinder. See Employer Re-Insurance Corporation v Ashmere Cove Pty Ltd [2008] FCAFC 28; Ashmere Cove Pty Ltdv Beekink (NO 2) (2007) FCA 1421; JN Taylor Holdings Ltd (in Liq) v Bond (1993) 59 SASR 432; and Beneficial Finance v Price Waterhouse (1996) 68 SASR 19.
It is unclear whether the Master was provided with a copy of the relevant policy of insurance or whether he assumed on the basis of the case most favourable to the plaintiff that the relevant policy did cover the liability of the deceased to the plaintiff.
Ultimately on 12 February 2007, the Master was informed by the appellant’s solicitors that the appellant had formally declined indemnity to the executors of the estate of the deceased. At the invitation of the appellant’s solicitors, the Master made the following further orders:
1.I give leave to the plaintiff to join Commonwealth Insurance Ltd as a defendant to the action.
2.I note the advice of the solicitor that the insurer will appeal the decision. The joinder order is for the purposes of an appeal arising on the joinder application and any subsequent application by the plaintiff to amend the Statement of Claim for orders joining Commonwealth Insurance Ltd as a defendant to the action.
3. I extend the time to appeal to 4.00 pm on 23/2/07.
4. Costs reserved.
It is not clear whether the Master exercised his discretion to join the appellant insurer or whether he ordered joinder of the appellant in accordance with the request of the appellant “for the purpose of the appeal”.
Notice of Appeal
By Notice, dated 22 February 2007, the appellant asserted:
1.The learned Master (Master) erred in law in his findings and judgment published 18th December 2006. The said judgment was in part based upon the Defendants Notice for Specific Directions (FDN 5) dated 27th April 2006, which were supported by relevant facts contained in the Affidavit of David Michael Leydon (FDN 6) also dated 27th April 2006. The Master found in his judgment that a statutory cause of action exists pursuant to Section 51 of the Insurance Contracts Act 1984 (Cth) against the appellant notwithstanding that the Master also found that the plaintiffs claim was barred pursuant to the Survival of Causes of Actions Act 1940 (Survival Act). The appellant complains against that finding. The orders made by the Master operate because of the said finding.
2.The Master reasoned that pursuant to Sections 2 and 4 of the Survival Act the respondent had not invoked section 4(a) of the said Act as “proceedings were not pending at the death” of the tortfeasor. Reasons page 13 and 32. The Master then when considering section 4(b) of the Survival Act found that the respondent could not rely upon section 48 of the Limitation of Actions Act 1936 to extend the time period provisions applicable in section 4(b) of the Survival Act. Reasons page 35.
3.The Master despite the aforementioned findings then held pursuant to Section 51 of the Insurance Contracts Act 1984 (Cth) that the respondent has a statutory cause of action that he can pursue against the appellant notwithstanding the finding of a bar to the personal injuries claim pursuant to the Survival Act. The Master was in error and should have found that the operation of the said sections in the Survival Act operate so there is no claim that is capable of being pursued by the respondent against the appellant both at common law and the pursuant to the Insurance Contracts Act 1984.
The grounds of appeal are:
1.That the Master erred in law when interpreting Section 51 of the Insurance Contracts Act 1984 (Cth). The Master was in error as he should have found and the grounds of the appeal are:
1.1 That the operation of the Survival Act barring the claim of the respondent also operated to defeat any claim pursuant to the Insurance Contracts Act as pursuant to section 51(1)(a) the insured is not “liable in damages”, and pursuant to section 51(1)(c) there is no relevant “liability in damages”. Further with regard to the final limb of 51(1) there is no “insured’s liability in damages”.
1.2 That the operation of the Survival Act barring the claim of the respondent also operated to bar any claim pursuant to the section 51(3) of the Insurance Contracts Act 1984 as the right to bring a claim in the Survival Act recognised in that subsection was not pursued by the appellant. See subsection (3) which provided that “This section does not affect any right that the third party has in respect of the insured’s liability, being a right under some other law of the Commonwealth or under a law of a State or Territory”. The Master did not consider that subsection in his reasons.
Although the Notice of Appeal expressly refers only to the “findings and judgment” of the Master published on 18 December 2006, it was clear that both parties represented on the appeal, intended their arguments to extend to the orders made by the Master on 18 December 2006 and 12 February 2007, respectively.
It is also apparent that the appellant did not specifically appeal against the finding of the Master that s 36 of the LOA had impliedly repealed s 4(b) of the Act. Counsel for the appellant referred to a misunderstanding as to the findings of the Master and sought to argue that the Master had erred. No objection was taken by the plaintiff, and I heard the argument in respect of that additional ground.
It is also appropriate to treat the Notice of Appeal as an appeal against both sets of orders as contrasted with “the findings” made by the Master in his Reasons of 18 December 2006.
Notice of alternative contention
The plaintiff contends that the Master erred in his conclusion that no extension of time could be granted under s 48 of the LOA. He further contends, insofar as the Master did not find as such, that in respect of a cause of action under s 51 of the ICA, the appellant insurer cannot defend the action on the basis that there was no liability in the “insured”, as the claim was statute-barred under s 4(b) of the Act.
Principal issues on the appeal
To a large extent the parties repeated the submissions which they had made to the Master. Underpinning those submissions was the question whether the plaintiff could maintain an action against the executors of the estate. The thrust of the appellant's submissions is that if the executors were not liable to the plaintiff, then the appellant insurer could not be liable. These reasons are therefore more extensive than they might otherwise have been.
The principal grounds of appeal by the appellant insurer centre upon the proper construction of s 2 and s 4 of the Act and s 51 of the ICA, as follows:
(i)whether s 4(b) of the Act fixes an absolute time limit as a condition precedent to the maintaining of proceedings, and that no extension of time can be granted.
(ii)whether s 4 of the Act has been impliedly repealed by the Limitation of Actions Act 1936 (SA).
(iii)whether the plaintiff may claim against the appellant to recover damages pursuant to s 51 of the Insurance Contracts Act 1984 (Cwth) irrespective of the construction of s 4 of the Act.
(iv)whether at this interlocutory stage of the proceedings, joinder of the appellant ought be permitted irrespective of the construction of s 4 of the Act.
The respective submissions of counsel
(a) the appellant
Counsel for the appellant, Mr McCarthy, concentrated his submissions upon the findings of the Master favourable to the appellant, namely that, in the event of no implied repeal of s 4(b), the plaintiff’s claim against the executors of the estate of the deceased had at no time been maintainable, pursuant to s 4 of the Act; and that as the cause of action had accrued more than six months before the death of the deceased no extension of time could be granted.
He submitted that the consequence of the subject proceedings never having been maintainable against the executors of the estate of the deceased, is that the plaintiff could have no claim against the appellant pursuant to s 51 of the ICA. In short if the proceedings are not maintainable against the executors, it was submitted that as “the insured under a contract of liability insurance” was not liable to the plaintiff, then the plaintiff had no right of recovery against the appellant.
(b) the plaintiff
The plaintiff’s counsel, Mr Burnett, submitted that s 4 of the Act did not apply as it had been impliedly repealed, or alternatively, the claim was not based “in tort”. In the event that s 4 did apply, he submitted that the “proceedings” were “pending” as at the date of death of the deceased as specified in s 4(a) of the Act. He alternatively submitted that an extension of time could be granted, relying on the dicta of the Full Court of the Supreme Court in Bloome v Sutton (supra).
Finally, he submitted that s 51 of the ICA provided the plaintiff with a separate statutory cause of action against the appellant, which was not subject to s 4 of the Act. He submitted that prima facie the plaintiff's claim complied with the conditions specified in s 51(1)(a), (b) and (c) of the ICA, and was at least arguable. Section 4(b) of the Act did not apply to such a statutory cause of action. Accordingly, Mr Burnett submitted that the appellant could not plead s 4(b) as a bar to the claim by the plaintiff to recover from the appellant. In the absence of any submission that the Master’s discretion had miscarried, he submitted that the order for joinder ought not be disturbed.
Discussion
I repeat that at issue was an interlocutory application for the joinder of the appellant as a defendant to the plaintiff’s claim. It could not be said that the pleadings are in a final form. No defence has been filed and therefore no plea alleging the action is statute-barred has been made.
The plaintiff has asserted an independent cause of action against the appellant. Even had there been no cause of action asserted, this would not have been a bar to the grant of declaratory relief. Employers Reinsurance Corporation v Ashmere Cove [2008] FCAFC 28, and J N Taylor Holdings Ltd (In Liq) v Bond (1993) 59 SASR 432.
Prima facie, s 51 of the ICA creates a new right of action in a third party if the conditions in that section are satisfied. Little evidence was placed before the Master, and therefore it is proper to approach the interlocutory application on the basis that all matters ought be assumed to be favourable to the plaintiff.
The issues in this appeal involve discrete issues of law. An order for joinder ought not be made if the plaintiff could not at law obtain any relief against the appellant. I accept that it would not generally be proper to simply defer the resolution of such questions to a trial even if the law is complex. In the subject case the Master appears to have reached final conclusions that in law s 4(b) of the Act has been implicitly repealed; that no extension of time can be granted under s 48(1) of the LOA, and that a claim against the insurer under s 51 of the ICA is not statute-barred by s 4(b) of the Act.
The Court of Appeal in RG Carter Ltd v Clarke (1990) 2 All ER 209 expressed the view that such discrete questions of law may be decided finally in interlocutory proceedings. It did however say at p213:
But it is quite different if the issue of law is not decisive of all the issues between the parties or, if decisive of part of the plaintiff’s claim or some of those issues, is of such a character as would not justify its being determined as a preliminary point, because little or no savings in costs would ensure. It is an a fortiori case if the answer to the question of law is in any way dependent on undecided issues of fact.
In my opinion the Master ought to have determined only whether the plaintiff’s claim against the appellant insurer was arguable. That was the way in which the parties had addressed the application. The parties would not have wished to be bound by such final conclusions in their ultimate pleadings: EJ Tyler Ltd v Ainger (1976) 2 NZLR 310. In Morris v Betcke [2005] NSWCA 308, and Webb v The Estate of Herbert [2006] WASCA 43, the respective Courts of Appeal referred to the complex nature of a claim under s 51 of the ICA, and held that the respective claims were arguable and best left to trial. In my opinion the subject case is not one in which it would be appropriate for the court at an interlocutory stage to finally determine complex questions of law, particularly given the state of the pleadings.
The question is whether the plaintiff’s claim against the appellant under s 51 of the ICA is arguable at this interlocutory stage of the proceedings. A subsidiary question of whether an order for joinder ought be refused in the proper exercise of the Court’s discretion was not the subject of any argument by the appellant.
I have concluded that the plaintiff has an arguable case to obtain relief against the appellant, and that accordingly the appeal must be dismissed. As my conclusions differ in some respects from those of the Master, it is necessary to set out in my reasons the relevant issues of law and to explain why these issues ought be determined at trial.
The discrete issues of law
(A) Section 4 of the Act
The plaintiff had a cause of action against the insured tortfeasor prior to the latter’s death. At common law no executor or administrator could sue or be sued for any tort committed against or by the deceased in his lifetime. Sections 2 and 4 of the Act “did not create a new cause of action in tort, but merely invested an existing cause of action with the quality of survival”. Lotter v Vero Insurance, (supra), at [22].
An underlying issue is the nature of the “bar” in s 4(b) of the Act. There is a clear distinction between statutes which take away only the remedy available to a party without affecting the underlying existing right, and those which expressly or impliedly extinguish the underlying existing right. McKain v R W Miller & Co (SA) (1991) 174 CLR 1 at [8].
In Blomme v Sutton, supra, the Full Court at [584] concluded that the constraints in s 4(b) of the Act simply bar the availability of a remedy, and do not extinguish the cause of action. Accordingly a party may waive its right to rely on s 4(b) or may be estopped from doing so. The Commonwealth v Verwayen (1990) 170 CLR 394, and Almario v Allianz Australia [2005] NSWCA 19.
(B) Do the constraints in s 4(b) of the Act apply to the plaintiff’s claim?
(a) Tortious claim
(i) As against the executors
As presently pleaded the plaintiff’s claim is “in tort” based as it is upon the negligence of the deceased.
It is conceivable that in the future the plaintiff may plead a statutory claim in occupier’s liability pursuant to ss 17C and 17E of the Wrongs Act, as it was at the date of the accident. As to this question, what I say is simply by way of some guidance to the parties in respect of future pleadings.
In Watch Tower Bible Society v Sahas [2008] WASCA 51 the Court of Appeal in Western Australia discussed the opposing authorities that on the one hand suggest that its equivalent legislation gives rise to a new statutory cause of action to the exclusion of the common law, and on the other that the legislation does no more than reform the common law by regulating the standard of care. The Court referred at [37] to the dicta of the High Court in Jones v Bartlett (2000) 205 CLR 166, and noted that it seemed to assume the parallel existence of an action for negligence at law and a statutory cause of action”. See also Neindorf v Junkovic [2005] 80 ALJR 341 at [47].
The Court ultimately concluded that the question of whether it was a statutory cause of action should be decided in the light of the evidence at trial.
In the subject case, in s 17C of the Wrongs Act (SA), Parliament provided that, “subject to this Part”, the liability of an occupier is to be determined in accordance with the “principles of negligence”. Section 17E(1) however provides that “this Part” operates to the exclusion of any other principles that “would but for this Part be determined “in tort”.
Bloome v Sutton (supra) involved a claim by dependents pursuant to ss 19, 20 and 23b of the Wrongs Act 1936 (SA). The trial judge had taken the view that the action was a statutory cause of action and not one “in tort”, so that it was not constrained by s 4 of the Act.
On appeal the Full Court acknowledged that while the cause of action was “a creature of statute” its effect was to place the defendants in the position of the deceased in pursuing a tortious claim. At pages 582-583 the Court said:
The right of action under the Wrongs Act is in essence a right of action conferred by statute to obtain a remedy against the tortfeasor for “injuriously affecting the interests of the dead man’s family”. It seems to me that the action so understood fits exactly, unless one erects an artificial exclusion of rights of action conferred by statute as distinct from the common law, the description of an action in tort … the strong trend of the authorities supports what one would suppose as a matter of principle namely that the Wrongs Act action for the benefit of dependants and for solatium is an action in tort within the meaning of section 4 of [the Act].
In accordance with the reasoning in Blomme v Sutton, supra, a statutory claim based upon principles of negligence would arguably constitute a claim against the executors “in tort”, and thus, prima facie, subject to the time constraints in s 4(b) of the Act.
(ii) As proposed against the appellant insurer
The plaintiff’s proposed claim against the appellant is based upon s 51 of the ICA. Section 51 creates a new statutory cause of action. It is different from the tortious claim brought by the plaintiff against the executors. See Morris v Betcke [2005] NSWCA 308 at [59] and “The Law of Liability Insurance” 2nd ed, Derrington and Ashton at 13-220.
Prima facie a cause of action under s 51 of the ICA is not a claim in tort and not subject to the constraints in s 4(b) of the Act. The subsidiary question is whether an insurer may plead as a defence to an action under s 51, that it is not liable because the executor of the deceased estate would not be liable in consequence of s 4(b) of the Act. I will deal with that subsidiary question later in these reasons.
(b) Was s 4(b) impliedly repealed by subsequent amendments to the LOA?
By Act No 17 of 1956, Parliament, inter alia, amended the LOA. It inserted a specific time limit in s 35(c) for “actions founded on tort”. In particular, however, it enacted a new s 36 providing that “all actions in which the damages claimed consist of or include damages in respect of personal injuries shall be commenced within three years after the cause of action accrued”.
Parliament did not expressly refer to s 4(b) of the Act, nor indeed to any other legislation.
In respect of slightly different legislation in Queensland, the Full Court of the Queensland Supreme Court in Minchin v The Public Curator (1964) Qd R 545 concluded that an implied repeal had been effected by a subsequent, albeit general limitation statute. The reasoning in that case was approved in Parente v Bell (1967) 116 CLR 528.
Earlier in Airey v Airey (1958) 2 QBD 300 the Court of Appeal said, obiter, in respect of similar legislation at p314:
If the (later) Act had imposed its own substituted period of limitation on all actions in tort without saving or qualification it might have been found, surprisingly enough, to have applied for the first time sub silentio to actions such as the present one a [three] year period of limitation to which they had never before been subject.
The question of whether a statute of the same legislature has been impliedly repealed has been considered in various decisions of the High Court, including most recently in Ferdinands v Commissioner of Police [2006] 225 CLR 130.
It is clear that a statue will not be held to be repealed by implication without a strong basis for that conclusion.
Gleeson CJ at p134 said:
The problem is one of statutory interpretation; a problem that arises only because the legislature did not state an intention either that the two statutory regimes should both apply in such a case, or that the second regime should apply to the exclusion of the first. The legislature may, by necessary implication, manifest an intention of the latter kind, although partial repeal of an earlier statute by a later statute will only be inferred on “very serious grounds”.
Gummow and Hayne JJ at p138 said:
There are, however, two cardinal considerations. First, as Gaundron J said in R v Saraswati:
There must be very strong grounds to support [the] implication, for there is a general presumption that the legislature intended that both provisions should operate.
Secondly, deciding whether there is such inconsistency (contrariety or repugnancy) that the two cannot stand or live together (or cannot be reconciled) requires the construction of, and close attention to, the particular provisions in question.
In Butler v ATT/Gen (Victoria) (1961) 106 CLR 268, the court held that there had been such an implied repeal in the case of two statutes enacted by the same legislature just three years apart. A Victorian statute of 1943 provided for preference to be given to discharged servicemen in respect of promotions. A statute of 1946 prescribed that in respect of promotions in the Public Service, priority must be given to efficiency and then to seniority.
The majority held that the subsequent statute left no room for preference to be given to discharged servicemen.
In the subject case the appellant submitted that s 4(b) of the Act, and s 36 of the LOA can stand together, with the former Act being excluded from “all actions”, because it specifically relates to a deceased tortfeasor, and because it imposes a condition precedent rather than a limitation period in the first “ambulatory” restriction in s 4(b).
In considering the “construction of and close attention to, the particular provisions in question”, the expression employed by Parliament in s 36 of the LOA of “all actions” is one of “apparent exhaustiveness”, so as, prima facie, to have the effect of implicitly partially repealing s 4(b) of the Act, insofar as it applies to actions for damages for personal injuries.
The appellant, however, submitted that I should have regard to subsequent amendments which suggest that Parliament was conscious of and at all times intended that s 4 of the Act ought remain in force. These amendments included s 46A of the LOA inserted in 1972, amendments to s2 of the Act in 2002 and thereafter. Courts should be loathe to draw any inference from the legislative history of the section; Sola Optical Australia Pty Ltd v Mills (1987) 163 CLR 628 at [14].
I accept however that it is “curious” that Parliament should subsequent enact s 46A of the LOA. However, s 46A relates to a true Lord Campbell’s Act claim, and is not “an action for damages in respect of personal injury”. Minchin v The Public Curator (1964) Qd R 543 at 551.
In Blomme v Sutton, (supra), no submission was made that s 4(b) of the Act had been repealed. However, that case was again a Lord Campbell’s Act claim, and not an action for damages for personal injuries. At their highest the subsequent amendments simply disclose that Parliament intended that special time limits ought continue to apply to some causes of action.
One question is why would the legislature distinguish between claims for personal injuries and other “torts”? As the Court of Appeal in Airey v Airey, (supra), said: “The short answer is that for whatever reason it did”. Historically the need to limit tortious claims against estates in respect of property matters had been well settled before the Act was enacted.[7]
[7] See 2nd reading speech, supra note 6.
I am conscious of the high onus faced by a party asserting the implied partial repeal of a statute.
However, I repeat that the express reference to all actions for damages for personal damages in s 36 of the LOA is prima facie exhaustive of such personal injuries claims. In my opinion it is at least arguable that s 36 of the LOA does by implication partially repeal s 4(b) of the Act so as to suspend the operation of the latter in respect of claims such as the plaintiff in the subject case.
It is not appropriate for me to finally determine that point of law. It would be open to the “defendants” to plead non-compliance with the “ambulatory condition” in s 4(b), and for this issue to be determined at trial. If the implied repeal construction were to be adopted at trial, the effect would be that the within proceedings are not statute-barred, having been issued within the three year limitation period prescribed by s 36 of the LOA.
(C) Extension of time in the event that section 4(b) of the Act has not been impliedly repealed or suspended
In this case the plaintiff has not pleaded relief in the nature of extension of time under s 48(1) of the LOA. It was in the event not necessary for the Master to consider this question.
In Blomme v Sutton, supra, King CJ at p584 said:
The survival or continued survival of the cause of action is not in question but only thee maintainability of proceedings. This is the classic language of Limitation of Actions, rather than extinction, provisions. Moreover I see no reason of policy for construing the provisions in a way that would exclude the operation of s 48 of the Limitation of Actions Act….I consider that there is power under Section 48 of the Limitation of Actions Act to extend the time limit under section 4 of the Survival of Causes of Actions Act.
As the Master pointed out the Full Court was directly concerned only with the second period in s 4(b) of the Act. I have already referred to the Master’s conclusion that the first period is not a “limitation period” but an ambulatory condition precedent, introduced by Parliament to prevent “old” claims being pursued against executors of a deceased estate. There is considerable authority to justify the Master’s conclusion. Airey v Airey (supra) at 310; De Corsey v Monaco (1993) Butterworth Cases 9301311. Daniels v Vaux (1938) 2 K B 202; EJ Tyler Ltd v Ainger (1976) 2 NZLR 310; and Minchin v The Public Curator, (supra).
In General Motors-Holden Ltd v Di Fazio [1979] 141 CLR 659 the High Court considered whether the Industrial Court had power to extend the time in respect of a statute which provided that a Court “ought not exercise jurisdiction unless an application was made within 21 days.”
The High Court held that s 48(1) of the LOA applied, so as to enable “an extension of time to be granted in a case in which the initial limitation of time is thought to be essential to the nature and purpose of the proceedings…”
That reasoning was applied by the Full Court of the Supreme Court in Baulderstone v Workcover Corporation of SA (unreported decision 5/7/95 BC 9503787). Lander J said at [20]:
It seems to me that that case is authority for the proposition to which I have earlier referred, viz that s 48 may operate to extend a time limit even if jurisdiction to grant the extension of time has expired and even if the time limit is an element of the existence of the right (my emphasis).
Section 48(1) of the LOA is remedial legislation. It was described in Sola Optical, (supra), as a general and unfettered power to eliminate the injustice caused to a plaintiff by a rigid time limit. It is a power which extends beyond the “institution of an action”, and includes time limits “for doing any act, or taking any step in an action”. The subject ambulatory condition precedent is one which is impossible for a plaintiff to predict, other than by ensuring that proceedings are issued within six months of the accrual of the cause of action.
There is no doubt that the second period taken in isolation in s 4(b) of the Act, and which bars the action unless the proceedings are taken within six months of the taking out of probate, does constitute a limitation upon “the institution of an action” which can be extended pursuant to s 48(1)(a) of the LOA.
In Blomme v Sutton the Full Court did not expressly refer to the first period in s 4(b) of the Act. It is possible that the Court might have regarded the whole of s 4(B) of the Act as imposing one period for the “instituting of the proceedings” which commences with the cause of action arising not earlier than six months before the death of the tortfeasor and ends with the period of six months after the taking out of probate.
It is submitted by the plaintiff that King CJ treated the whole of s 4(b) and “the maintainability of proceedings” as being a limitation of time which may be extended under s 48 of the LOA. I take that submission to mean that s 4(b), as a, whole, restricts the taking of any act or step in the proceedings unless the time limits in both periods are complied with.
Prior to the death of the deceased the plaintiff had vested in him a cause of action. The death of the deceased did not extinguish the plaintiff’s cause of action pursuant to s 4(b) of the Act, but simply denied him a remedy.
In EJ Tyler Ltd v Ainger (1976) 2 NZLR 310 the court equated, in similar legislation, the words “maintain”, “bring” and “take”.
In accordance with the dicta of King CJ in Blomme v Sutton, (supra), it is the maintainability (as so defined) of the action which is proscribed.
The Master concluded that no extension of time could be granted in respect of the failure to comply with the “ambulatory” condition precedent.
The dicta of the Full Court is highly persuasive in respect of this discrete question of law. I also accept that there is a great deal of force in the dicta of the Court of Appeal in Airey v Airey, (supra), that the first period in s 4 of the Act is not a period of limitation but a condition precedent which cannot be extended. That latter dicta has been approved by appeal courts in various jurisdictions. They did not generally involve applications for an extension of time. The only case in which it has been decided that no extension of time can be granted in respect of the “ambulatory condition” is that of DeCorsey v Monaco, (supra), a decision of the Master of the Supreme Court of Western Australia, and from which there had been no appeal. To similar effect however in a different statutory context, is Jones v Tio (1988) 55 NTR 17.
I repeat however that it is both unnecessary and undesirable to finally determine this issue which is not properly raised in the pleadings.
(D) Plaintiff’s claim pursuant to s 51 of the ICA
For the purposes only of the subject application and appeal there was no dispute that the deceased was insured by the appellant under a contract of liability insurance; that the deceased had died and, that the contract of insurance provided cover in respect of the liability the subject of the plaintiff’s proceedings. At issue for the purposes of s 51 of the ICA was whether the insured “is liable in damages” to the plaintiff; and whether the plaintiff is entitled to recover any sum from the appellant insurer in the event that the plaintiff was barred from obtaining relief from the executors of the deceased.
There is no doubt that the statutory cause of action under s 51 of the ICA is a new action, different from that which a plaintiff would have against an insured. The Master concluded that as the “action” is a statutory cause of action, not being one in tort, then it is not subject to the constraints in s 4(b) of the Act. However, if the plaintiff’s action against the insured is statute-barred, the question arises whether the insurer appellant may defend the action against it on all grounds which were available to the executors. At common law an insurer can raise against a claimant whatever defences were available to the insured including limitation defences. Kinzett v McCourt (1999) 46 NSWLR 32 and Ratcliffe v VS & B Border Homes Ltd (1987) 9 NSWLR 390.
It is trite that upon the death of the insured any cover issued by the insurer ceases but enures to the benefit of the executors only to the extent that the indemnity is provided in respect of liability incurred in the life time of the insured. It is probable that “the insured” in s 51 of the ICA will be construed as including the executors of a deceased insured. Cowley v National Employers Accident & General Insurance Ltd (1885) 1 TLR 255.
In Gefken v Union Assurance of Australia Ltd (1972) ALR 282, Forster J in the Northern Territory Supreme Court considered the effect of two pieces of legislation. One statute provided that an action for the benefit of the dependants of the person whose death had been caused by the wrongful act of another, must be commenced within twelve months after the death of the injured person. The widow and dependent children issued proceedings out of time under that statute against the authorised insurer of the tortfeasor who also died in the motor vehicle accident. The second statute provided that when death had occurred in a motor vehicle accident, and the insured person is dead or cannot be served with the process, any person who could have obtained judgment in respect of such death may recover by action against the authorised insurer. In answer to the submission that the latter legislation provided a separate cause of action, the court held that because the action was statute-barred under the first statute, the plaintiff could not recover from the authorised insurer.
In Almario v Allianz Australia Workers Compensation (NSW) (supra) the Court of Appeal in NSW considered the maintenance of a claim under the Workers Compensation Act 1987(NSW) which was not commenced within the three year time limitation. Indeed it was some nine years after the cause of action accrued that proceedings were commenced, not against the employer, but against the insurer. The plaintiff brought that claim pursuant to s 601AG of the Corporations Act, which provided:
A person may recover from the insurer of a company that is deregistered an amount that was payable to the company under the insurance contract if:
(a) the company had a liability to the person, and
(b) the insurance contract covered that liability immediately before deregistration.
The court noted that s 601AG created a new cause of action. It noted that the two conditions therein were expressed in the past tense leading to the inference that the time for determining whether the deregistered company had a liability to the person claiming was immediately before deregistration.
In that case, immediately prior to deregistration, no remedy was available to the plaintiff against the company because of the time limits. The court indicated that on a strictly textual construction the expiry of the three year period did not extinguish whatever liability the company may have had to the plaintiff, but simply barred the remedy. On that basis the three year period would not prevent the plaintiff from establishing that as at that date it had “a liability to him within the meaning of s 601AG of the Act”. It said that in consequence the word “liability” would then include a time-barred cause of action.
However, adopting “a purposive” construction of the Act, Ipp JA at [34] to [36] said:
In my view the purpose of the legislature in inserting (the section) is to require the insurer of a deregistered company to stand in the shoes of the company to the extent necessary to allow creditors of the company to recover from the insurer whatever amounts they were entitled, by force of law, to recover from the company had it not been deregistered. This purpose is discernable from the section as a whole and the explanatory memorandum. The notion that a person may “recover” from the insurer of a deregistered company “an amount that was payable” supports this inference. These words conveyed the idea of a creditor being entitled to recover that which was payable to him or her.
In accord with such a purpose, an insurer would be able to raise against a claimant under the section whatever defences would have been open to the company – subject to any qualification that might, in law, attach to those defences. So that if a statute caused a creditor’s remedy to be time-barred, but nevertheless provided that the bar could be relaxed by affording the creditor the opportunity of applying for the time to be extended, any right the insurer would have to rely upon the time-bar would be subject to the creditor being able to apply (as against the insurer) for an extension of the time period.
The court referred to similar legislation which had also been construed with the statutory object of assimilating proceedings against the insurer to those against the insured. This effect was to place the insurer in the same position as its insured giving the same rights and liabilities as if the action were against the insured. Accordingly, the court concluded that upon that purposive construction it was open to the insurer to rely upon the three-year limit in the workers compensation legislation.
Inevitably the question of whether the appellant can rely upon the defence available to the “insured” will need to be resolved by the construction of the particular statute.
Section 51 of the ICA is expressed in terms of a recovery “in respect of the insured’s liability in damages”. It is not necessary for the liability of the insured to be determined prior to an action commenced under s 51 of the ICA. See Vollstedt v Calibre Enterprises Pty Ltd (1999) 10 ANZ ins. Cases 61-440.[8]
[8] Cf QBE Insurance Ltdv Nguyen in respect of "legally liable".
It may be that the “liability in damages” subsists notwithstanding the plaintiff’s claim against the executors of the estate of the deceased had expired. See Tickle Industries Ltd v Hann (1974) 130 CLR 321 in respect of a statutory cause of action vested in an employer. The question of what time it is that the “liability” exists is yet to be authoritatively determined. cf Baulderstone v Workcover Corporation, supra at [10].
In the subject case the plaintiff had a cause of action against the tortfeasor prior to his death. He had a cause of action in damages against the executors of the deceased, however, no remedy was available to him because of s 4(b) of the Act. Construing s 51 of the ICA strictly, the plaintiff has a statutory cause of action not barred by s 4(b) of the Act.
While it is not appropriate to finally determine this issue, I disagree with the conclusion implicitly reached by the Master that the insurer ought not be permitted to plead the statutory time defence available to the insured. In my opinion, s 51 of the ICA may arguably be construed in a manner similar to the legislation in Almario’s case, so that the appellant is placed in the same position as the executors, and entitled to plead that the “insured” is not liable in damages because of the time constraints in s 4(b) of the Act. The appellant also complained that the Master did not consider the effect of s 51(3) of the ICA. In my opinion, s 51(3) does not assist the appellant at all. That section simply preserves any alternative claims of the plaintiff.
In Webb v The Estate of Herbert (2006) WASCA 43, the Court of Appeal in Western Australia, considered a case in which the plaintiff’s claim against an insured had become statute-barred and for various reasons the plaintiff was unable to proceed with a claim against the executors of the estate of the deceased tortfeasor. In respect of a direct claim by the plaintiff against the insurer of the deceased tortfeasor under s 51 of the ICA, the Court of Appeal noted that the case law including Almario’s case suggested that the appellant may not be able to succeed in the action. However, it was not able to conclude that the cause of action must inevitably fail. The Court noted that the proper construction of s 51 of the Act “is a question of some complexity, in relation to which there is limited authority and in relation to which such authority that there is, does not appear to be all one way”.
In Morris vBetcke, supra, the Court considered the joinder of the insurer of a defendant pursuant to s 51 of the ICA. Again the court noted that there was a dearth of authority as to the proper construction of s 51 of the Act and permitted the joinder so that the substantive issues could be determined at trial.
While I have concluded that it is arguable that the appellant may be able to defend the plaintiff’s action on the same basis as could the executors, I readily accept that it remains a question of complexity and should be left to the trial. This is particularly so where the pleadings are in a state of flux, and no defence has been filed.
Conclusion
In my opinion, it is arguable that the proceedings brought by the plaintiff against the executors and consequently against the insurer are not out of time because the time constraints in s 4(b) of the Act have been suspended or impliedly repealed by s 36 of the LOA. It is unnecessary and undesirable to reach a conclusion as to whether an extension of time could be granted pursuant to s 48(1) of the LOA notwithstanding the weight of authority suggesting that no extension can be granted. As to the independent cause of action proposed by the plaintiff against the appellant insurer pursuant to section 51 of the ICA, it is arguable that the appellant/insurer is entitled to plead any defences which were available to the executor. This would include the pleading that it is not liable, because the “insured” is not liable in respect of a statute-barred cause of action.
As is clear from these reasons it was not necessary in the absence of pleadings for the Master to finally determine the points of law raised in submissions by the parties. In my opinion the Master was however justified in ordering the joinder of the appellant insurer on the basis that the plaintiff has an arguable entitlement to relief against the appellant. In my opinion these “discrete” questions of law ought be determined in the substantive action in accordance with the final settled pleadings.
The parties will need to consider respective pleadings accordingly.
The formal order of the Court is that the appeal against the order for joinder is dismissed. I will hear the parties as to the question of costs.
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