McNamara v Fitzgibbon

[2005] NSWCA 274

CITATION:	McNamara v Fitzgibbon [2005] NSWCA 274
HEARING DATE(S):	16/08/05
JUDGMENT DATE:	16 August 2005
JUDGMENT OF:	Santow JA at 1; Ipp JA at 14; Campbell AJA at 45
DECISION:	(1) Leave to appeal granted (2) Appeal upheld (3) Decision of Hughes DCJ set aside (4) Order that Ms Fitzgibbon's application for the reinstatement of her claim be dismissed with costs (5) Order that Ms Fitzgibbon pay Ms McNamara's costs of the application for leave to appeal and the appeal (6) Ms Fitzgibbon to have a certificate under the Suitors' Fund Act 1951 if otherwise entitled.

CATCHWORDS:	INSURANCE - Motor Accidents Compensation Act 1999 (NSW) - Reinstatement of claim under s 110 - Failure to commence proceedings within three-month notice period - Full and satisfactory explanation for failure. D
LEGISLATION CITED:	Interpretation Act 1987 (NSW), s 6 Legal Profession Act 1987 (NSW), s 198L Motor Accidents Compensation Act 1999 (NSW), ss 5(1)(b), 110, 66(2), 70(2) Interpretation Act 1987 (NSW), s 6
PARTIES:	Sally Anne McNamara (Claimant) Anne Elizabeth Fitzgibbon (Opponent)
FILE NUMBER(S):	CA 41012/04
COUNSEL:	A Black/M Hay (Claimant) P Frame (Opponent)
SOLICITORS:	Holman Webb (Claimant) Keddies (Opponent)

LOWER COURT JURISDICTION:	District Court
LOWER COURT FILE NUMBER(S):	DC 3897/04
LOWER COURT JUDICIAL OFFICER:	Hughes DCJ

CA 41012/04
DC 3897/04

SANTOW JA
IPP JA
CAMPBELL AJA

Tuesday, 16 August 2005

SALLY ANNE McNAMARA v ANNE ELIZABETH FITZGIBBON

Judgment

1 SANTOW JA: I agree with Ipp JA both in his reasons and in the orders he proposes. I would however wish to add these observations. Amongst the objects of the Motor Accidents Compensation Act 1999 (NSW) (“the Act”), reference may also be made to s5(1)(b) with its invocation to “encourage the early resolution of compensation claims”.

2 Section 6 of the Act requires that in the interpretation of a provision of the Act, a construction that would promote the objects of the Act is to be preferred to a construction that would not promote those objects.

3 The significance of that object in the present context can readily be appreciated when one draws a time line to reflect the forensic steps that are now mandated by the Act. A particular point in the time line to which s110 is directed is the period commencing eighteen months after the date of the motor accident to which the claim relates: see s110(1)(b).

4 Section 110(2) then provides that the claimant under the Act must comply with the notice in s110(1). This requires the claimant to commence court proceedings in respect of the claim, once the eighteen months to which I have referred has elapsed. It adds a further three months to the time line by which such proceedings must commence.

5 The effect of the construction which was pressed by the opponent in these proceedings was that for the period from the twenty-one months to which I have referred to thirty-six months (when the limitation period expires), there would be no provision in the Act which would fulfil the object to which I have earlier made reference. The object is “to encourage the early resolution of compensation claims”. That would entail in effect that for fifteen months a party may go to sleep on his or her claim with only the requirement of s109 of the Act as the ultimate sanction should thirty-six months be exceeded. That mandates a lacuna of fifteen months. That interpretation would, as I have said, be not one which promotes the objects of the Act but would pro tanto frustrate those objects.

6 Against that background one turns to the language of s110 and in particular subs (5) which reads as follows:

“(5) The court may reinstate the claim if the court is satisfied that the claimant has a full and satisfactory explanation for the failure to comply with the notice.”

7 That provision in turn must be read compatibly with s66(2) of the Act which I quote below:

“(2) In this Chapter, a reference to a full and satisfactory explanation by a claimant for non-compliance with a duty or for delay is a reference to a full account of the conduct, including the actions, knowledge and belief of the claimant, from the date of the accident until the date of providing the explanation. The explanation is not a satisfactory explanation unless a reasonable person in the position of the claimant would have failed to have complied with the duty or would have been justified in experiencing the same delay.”

8 Section 6 of the Interpretation Act necessarily entails that one substitutes in s66(2) of the Act for the words “from the date of the accident” the words “from the date of the notice”. There is however no basis for ignoring the concluding words “until the date of providing the explanation”. To do so would create the lacuna to which I have earlier made reference.

9 There are other indications in s66(2) that the explanation that is required is one which does not stop at the three months in s110(2). Importantly, reference is made in s66(2) to “a full account of the conduct, including the actions, knowledge and belief of the claimant...until the date of providing the explanation” [emphasis added].

10 An account of conduct after the three months may work both for or against the claimant in terms of explanation. The wording of s66(2) clearly points against artificial segmentation of the conduct. That artificiality would be the result were conduct not to be explained from the point the three months expired. One might for example envisage conduct of a continuing kind. It could be either delay of the kind that would work against the claimant, or of exculpatory circumstances explaining that delay working in favour of the claimant. In either case it would be artificial in the extreme to limit the explanation to that which occurred over the three months. It would moreover be in direct conflict with the object of forensic diligence to which I have referred.

11 I should add that the definition of full and satisfactory explanation includes an important normative second limb, contained in the last sentence. That second limb is premised upon the conduct of a reasonable person in the position of the claimant and whether such a person would have been justified in experiencing the same delay. That objective and normative requirement, to work in a logical fashion, could not be expected to focus only on the three months referred to in s110(3). Moreover, if the interpretation pressed by the opponent were correct, it would equally apply with similar anomalous results to s70(2) of the Act.

12 In those circumstances it is unnecessary to consider whether the word “may” in s110(5) is of a permissive character such that, if a full and satisfactory explanation is given in terms of the Act, the court yet retains a discretion not to reinstate the relevant claim. The interpretation of s110(5) which I prefer obviates the need to consider whether such an ultimate residual discretion would be needed to be invoked in order to overcome the anomalies which the opponent’s interpretation would entail. It is therefore better to leave that question for resolution for a case that requires it.

13 Accordingly I would agree with the orders proposed by Ipp JA.

14 IPP JA: This is an application for leave to appeal and, if granted, an appeal against a judgment of Hughes DCJ.

15 The dispute between the parties concerns s 110 of the Motor Accidents Compensation Act 1999 (NSW) (“the Act”). This section provides:

“(1) The insurer of a person against whom a claim is made may give the claimant notice requiring the claimant to commence court proceedings in respect of the claim if:
(a) the claimant has been entitled to commence the proceedings for a period of at least 6 months, and
(b) at least 18 months have elapsed since the date of the motor accident to which the claim relates.
(2) The claimant must comply with the notice within 3 months after its receipt.
(3) If the claimant does not comply with the notice as required by this section, the claimant is taken to have withdrawn the claim.
(4) A claimant whose claim is taken to have been withdrawn by the operation of this section may apply to a court of competent jurisdiction for reinstatement of the claim.
(5) The court may reinstate the claim if the court is satisfied that the claimant has a full and satisfactory explanation for the failure to comply with the notice.”

16 Ms McNamara, the claimant, contends that Hughes DCJ wrongly held that the opponent, Ms Fitzgibbon, gave a full and satisfactory explanation as required by s 110(5) for her failure to comply within three months with a notice given to her in terms of s 110(1) by Ms McNamara’s insurer.

17 On 19 September 2001 Ms Fitzgibbon was injured in a motor vehicle accident. She alleges that her vehicle was struck in the rear by a vehicle driven by Ms McNamara, and also that Ms McNamara admitted liability for the damages that were thereby incurred.

18 On 21 November 2001 Ms Fitzgibbon made a claim against Ms McNamara. On 10 May 2002 Ms McNamara’s insurer wrote to Ms Fitzgibbon denying that Ms McNamara was at fault in the accident. Ms Fitzgibbon thereupon retained solicitors, Stacks - The Law Firm, to represent her.

19 By the Act, Ms Fitzgibbon was required initially to prosecute her claim for damages by way of the claims assessment and resolution procedures laid down in Pt 4 of the Act. By letter dated 3 September 2002, the Claims Assessment and Resolution Service of the Motor Accidents Authority provided Stacks with a certificate issued under s 92(1)(a) of the Act exempting Ms Fitzgibbon’s claim from assessment “due to the denial of liability of the insurer”.

20 By letter dated 31 March 2003, Ms McNamara’s insurer gave Ms Fitzgibbon notice in terms of s 110(1) of the Act requiring her to commence proceedings within three months. It is common ground that the conditions empowering the giving of such a notice under s 110(1) had been fulfilled. Accordingly, by s 110(3) read with s 110(2) of the Act, were Ms Fitzgibbon not to commence court proceedings in respect of her claim within three months after 31 March 2003, she would be taken to have withdrawn her claim. In effect, Ms Fitzgibbon was required to commence proceedings by 30 June 2003.

21 At the time the notice of 31 March 2003 was given, Ms Fitzgibbon was being represented by Mr Goudkamp, a solicitor in the employ of Stacks. In an affidavit made by Mr Goudkamp, he stated that, after receipt of the s 110(1) notice dated 31 March 2003, he advised Ms Fitzgibbon against commencing court proceedings and suggested to her that she lodge an application for “general assessment” by the Claims Assessment and Resolution Service of the Motor Accidents Authority. He explained:

“The reason for this is that I did not think that the expense of suing two insurers was justified, given the relatively minor nature of [Ms Fitzgibbon’s] injuries. Further, and more importantly, I was not able to certify that she had reasonable prospects of succeeding against either insurer, and therefore I would have been in breach of s 198L of the Legal Profession Act 1987 (NSW) if I had commenced court proceedings on [Ms Fitzgibbon’s] behalf.”

22 Mr Goudkamp testified that, on 16 July 2003, Ms Fitzgibbon’s application for general assessment was rejected. On 23 July 2003 Mr Goudkamp met with Ms Fitzgibbon and her husband. He said that he advised her to discontinue her claim. He testified:

“I also advised her against commencing proceedings, due to the difficulties in establishing which vehicle was at fault, and due to the minor nature of her injuries.”

23 On 31 July 2003 Ms Fitzgibbon terminated Stacks’ retainer and instructed Keddies as her new solicitors. Keddies made several requests to Stacks for their file relating to Ms Fitzgibbon. Eventually, in early November 2003, Stacks sent their file to Keddies.

24 On 4 November 2003 Ms Fitzgibbon attended a conference with her new solicitors and counsel. She there first learned that an exemption had been issued in terms of s 92(1) of the Act and that she had been required to commence court proceedings within three months from 31 March 2003. She was informed for the first time that by operation of s 110(1) of the Act her claim was deemed to have been withdrawn and there was a need to apply to court for reinstatement of her claim.

25 On 1 March 2004 Ms Fitzgibbon had a further conference with counsel when she gave him instructions in relation to matters that were subsequently included in an affidavit to which she deposed on 3 September 2004 in support of her application for reinstatement of her claim.

26 On 8 September 2004 Ms Fitzgibbon applied for reinstatement of her claim and on 22 October 2004 Hughes DCJ made an order to this effect. In his reasons his Honour said merely:

“I think the explanation given by [Ms Fitzgibbon’s] affidavits, those of Mark Schreuder and Mr Goudkamp, is sufficient for me to find that that is a full and satisfactory explanation.”

His Honour did not identify that explanation.

27 In effect, Mr Goudkamp’s evidence provides a full and satisfactory explanation for the failure on the part of Ms Fitzgibbon to commence proceedings within the three-month period following the letter of 31 March 2003. His testimony, however, does not explain the delay in prosecuting Ms Fitzgibbon’s claim thereafter, save that he states that he had advised Ms Fitzgibbon that in his opinion she did not have good prospects in succeeding in her claim.

28 Neither Ms Fitzgibbon nor Mr Schreuder provides any explanation for the failure to take any further steps in the matter after the three-month period expired on 30 June 2003 until the application for reinstatement was made in September 2004, save that Mr Schreuder states that Keddies only received Stacks’ file in early November 2003.

29 Ms McNamara now contends that Hughes DCJ erred in failing to have regard to the fact that no explanation whatever was given for the delay of approximately ten months from November 2003 to the bringing of the application for reinstatement in September 2004.

30 Mr Frame, who appeared for Ms Fitzgibbon, submitted that on a proper construction of s 110 all that is required of a person seeking reinstatement is to give a full and satisfactory explanation for the failure to commence proceedings within the three-month notice period provided by s 110(2).

31 Section 66(2) of the Act provides:

“(2) In this Chapter, a reference to a full and satisfactory explanation by a claimant for non-compliance with a duty or for delay is a reference to a full account of the conduct, including the actions, knowledge and belief of the claimant, from the date of the accident until the date of providing the explanation. The explanation is not a satisfactory explanation unless a reasonable person in the position of the claimant would have failed to have complied with the duty or would have been justified in experiencing the same delay.”

32 Mr Frame submitted that the definition of full and satisfactory explanation in s 66(2) is not appropriate to that phrase as it is used in s 110(5).

33 He pointed out that the full and satisfactory explanation required by s 66(2) is for the period commencing from the date of the accident, whereas that could not be the case with the full and satisfactory explanation required by s 110(5) as that commences upon the giving of the s 110(1) notice.

34 He pointed out further that, by 110(3), if the claimant (that is, the person seeking reinstatement) does not comply with the notice, the claimant is taken to have withdrawn the claim. He submitted that there is then nothing more that the claimant could do to comply with the notice. On that basis, he submitted, there would be no purpose in requiring an explanation to be provided after the notice period had expired.

35 Finally, he drew attention to the fact that there was nothing in s 110 that stipulates expressly that a claimant under that section must provide a full and satisfactory explanation for any delay in the period subsequent to the expiry of the three-month notice period.

36 The complete picture, however, is fuller than the provisions of the Act mentioned specifically by Mr Frame.

37 The objects of the Act are set out in s 5. These include encouraging the early resolution of compensation claims (s 5(1)(b)) and ensuring that insurers charge premiums that fully fund their anticipated liability (s 5(1)(f)). Both these objects involve the expedition in the processing of claims and, more particularly, the taking of prompt steps to apply for the reinstatement of claims once the claims have been taken to be withdrawn. It would be inconsistent with those objects if a delay subsequent to the expiry of the three-month period for a court were to be immaterial to an application for reinstatement under s 110(5).

38 The policy revealed by 66(2) accords with the objects of the Act to which I have referred and the scheme of the Act generally (which is designed to ensure that claims are dealt with as expeditiously as possible). To use the phrase employed by Santow JA in the course of argument, “forensic prods” are provided by the Act that promote expedition at various stages of the claim process introduced by the Act. These forensic prods are over and above the requirements of the limitation periods laid down. If Mr Frame’s argument were to be accepted, a claimant would be able to lie supinely by once the s 110(1) notice period had expired without having to explain his or her lack of activity and without being subject to any forensic prod. That would be contrary to the policy and spirit of the Act.

39 Put in another way, if the court – in determining an application for reinstatement - were to be entitled to ignore the period from the expiry of the three-months s 110 notice period to the date on which application for reinstatement were to be made, there would be an anomaly in the Act. This period would simply not be governed by any provision that would serve as an incentive to a claimant to proceed expeditiously. Such a construction would be inconsistent with the objects of the Act, the scheme of the Act as a whole and the policy underlying the definition in s 66(2) of a full and satisfactory explanation.

40 In my opinion, the use of the word “may” in s 110(5) indicates that the court has a discretion in determining whether a claim should be reinstated. The discretion is triggered once the court is satisfied that the claimant has a full and satisfactory explanation for the failure to comply with the notice.

41 In my opinion, if Mr Frame’s submission (that s 110(5) requires only a full and satisfactory explanation to be given for the failure to comply with the three-month notice period and no more) were to be accepted, the court, in the exercise of that discretion, would be bound to take into account whether the claimant has given a full and satisfactory explanation for any delay after the expiry of the three-month period.

42 Thus, in my opinion, whatever construction one gives to the phrase “failure to comply with the notice” in s 110(5), the court, in the exercise of its discretion under that section, is required to have regard to the explanation, if any, given by the claimant for any delay between the expiry of the notice period and the date on which the application for reinstatement is made.

43 In this case, as I have pointed out, Ms Fitzgibbon gave no explanation whatever for the delay of ten months subsequent to the receipt by Keddies of Stacks’ file in early November 2003. This is a material factor that was ignored by his Honour and in my opinion he erred in that respect.

44 Accordingly, I would grant leave to appeal, uphold the appeal, set aside the decision made by Hughes DCJ, order that Ms Fitzgibbon’s application for the reinstatement of her claim be dismissed with costs, and order that she pay Ms McNamara’s costs of the application for leave to appeal and the appeal. I would order that Ms Fitzgibbon be entitled to a certificate under the Suitors’ Fund Act 1951 (NSW) if she is otherwise entitled thereto.

45 CAMPBELL AJA: I agree with the decision of Ipp JA and with the further comments of Santow JA.

46 SANTOW JA: Accordingly the orders of the court are as proposed by Ipp JA.

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