Nominal Defendant v Staggs

[2010] NSWCA 224

New South Wales

Court of Appeal

CITATION:	NOMINAL DEFENDANT v STAGGS [2010] NSWCA 224
HEARING DATE(S):	6 August 2010
JUDGMENT DATE:	3 September 2010
JUDGMENT OF:	Giles JA at 1; Hodgson JA at 2; Basten JA at 8
DECISION:	(1) Grant leave to the Nominal Defendant to appeal against the order made in the District Court on 14 October 2009 extending time for the defendants to serve a notice of intention to join the Nominal Defendant as a party to the claim brought against them by the plaintiff. (2) Allow the appeal and set aside the order of the District Court extending time for giving such notice. (3) In place of the order made in the District Court, order that the motion filed for the defendants on 7 August 2009 (as amended on 14 October 2009) be dismissed. (4) Order that the first and second respondents pay the appellant’s costs of the proceedings in this Court.
CATCHWORDS:	TORT – negligence – motor vehicle accident – involvement of unidentified vehicle – claim against Nominal Defendant – failure to notify within statutory period – Motor Accident Compensation Act 1999 (NSW) s 36 - STATUTORY INTERPRETATION – principles – Act read as a whole – ss 36, 109 - WORDS AND PHRASES – "full and satisfactory explanation"
LEGISLATION CITED:	Legal Profession Act 2004 (NSW), s 347 Motor Accidents Act 1988 (NSW), s 40, Pt 5 Motor Accident Compensation Act 1999 (NSW), ss 36, 66, 72, 109
CATEGORY:	Principal judgment
CASES CITED:	Gashparac v Walter [2000] ACTSC 118 Guest v Southern (unrep, NSWSC, 22 September 1995) Nicholas v Webb (No 2) [1993] 19 MVR 65 Russo v Aiello [2003] HCA 53; 215 CLR 643 Smith v Grant [2006] NSWCA 244; 67 NSWLR 735
PARTIES:	The Nominal Defendant - Appellant Richard Lindall Staggs - First Respondent Harley Davidson Australia Pty Ltd - Second Respondent Charlene Towers - Third Respondent
FILE NUMBER(S):	CA 2009/324938
COUNSEL:	R Stitt QC/B Kelleher - Appellant K P Rewell SC - First and Second Respondents Submitting Appearance - Third Respondent
SOLICITORS:	Moray & Agnew - Appellant DibbsBarker - First and Second Respondents Carneys Lawyers - Third Respondent
LOWER COURT JURISDICTION:	District Court
LOWER COURT FILE NUMBER(S):	DC 6050/2008
LOWER COURT JUDICIAL OFFICER:	Garling DCJ
LOWER COURT DATE OF DECISION:	14 October 2009

CA 2009/324938
DC 6050/2008

GILES JA
HODGSON JA
BASTEN JA

3 September 2010

NOMINAL DEFENDANT v Richard Lindall STAGGS & ORS

Headnote

On 14 March 2006, Ms Charlene Towers was riding as a pillion passenger on a Harley Davidson motorcycle being driven by Mr Richard Staggs, the respondent. They were involved in an accident on the Warringah Freeway at North Sydney when Mr Staggs braked suddenly as a result of traffic slowing because two of the three lanes ahead had been blocked off for road works, apparently causing the rear wheel of the motorcycle to lock, with Mr Staggs and Ms Towers being thrown onto the road. Ms Towers suffered significant injuries.

A statement by police taken at the scene of the accident from the driver of the vehicle in front of Mr Staggs (a Mr Cox) suggested the possible involvement of a third vehicle which merged into the lane in which Mr Cox was travelling, causing him to brake. Where an accident is caused by the conduct of the driver of an unidentified vehicle, a claim may be brought against the Nominal Defendant. Where a person against whom a claim is brought seeks to the join the Nominal Defendant, notice of the claim must be given within three months: Motor Accident Compensation Act 1999 (NSW), s 36.

On 28 August 2006 Ms Towers (the plaintiff) served a claim form on the third party insurer of Mr Staggs, Allianz Australia Insurance Ltd (“Allianz”). On 12 October 2006 Allianz instructed solicitors in relation to the claim. On 6 November 2006 the solicitors wrote to Mr Staggs seeking assistance, in particular as to the possible liability of other drivers. On 28 November 2006 the three month period within which to give notice to the Nominal Defendant of an intention to join it as a party from whom contribution was sought expired. Notice was not in fact given until 22 August 2008.

On 13 December 2006 Allianz’ solicitors instructed a private investigation firm to carry out inquiries on its behalf. On 21 February 2007 the firm indicated that Mr Staggs would not co-operate but provided a copy of the statement taken by police from Mr Cox, the driver of the vehicle immediately in front of Mr Staggs. The solicitors did not attempt to contact Mr Cox until 11 September 2007 and did not confer with him until 23 October 2007.

On 31 July 2008, the solicitors for Allianz wrote to the Nominal Defendant notifying a potential claim against it. This letter was re-sent on 22 August 2008 attaching the claim form, as required by s 36(3) of the Act. On 7 August 2009 Allianz sought an extension of the time within which to give notice to the Nominal Defendant. On 14 October 2009, Garling DCJ extended time to 23 October 2009. The Nominal Defendant sought leave to appeal against that decision.

The issues for determination on appeal were:

(i) whether the trial judge erred in deciding that the first respondent gave a "full and satisfactory" explanation for its failure to give notice within three months of receiving the claim;

(ii) whether the "full and satisfactory" explanation must cover any period beyond the first three months; and if so,

(iii) whether the trial judge erred in deciding that the first respondent gave a "full and satisfactory" explanation for the continuing delay in giving notice.

The Court held, allowing the appeal:

In relation to (i)

(per Hodgson JA):

1. As no pertinent explanation for the delay was given, it was not possible to assess whether the delay was excusable, or to decide if there was a satisfactory explanation of the delay; as the onus lying on Allianz, the party seeking the extension, the requirement was not satisfied: [2]-[6].

(per Basten JA, Giles JA agreeing)

2. The notice required under s 36(3) must be given by a person "seeking to join" the Nominal Defendant and merely foreshadows an application for joinder. The latter application is subject to a three year limitation period from the date on which the claim is made. Although the notice does not need to include "full details of the allegations made against the Nominal Defendant", the insurer considering whether to give such a notice will need to provide such details within two months after the notice is given, a period which is non-extendable: [46]-[48].

3. Given the interest of Allianz in providing a full explanation, it may be inferred that all information which was available was proffered. The explanation given was therefore "full". It was not, however, "satisfactory" in the sense of providing a basis for excusing the failure to comply with the prescribed period, or even to be in a position to serve a notice as soon as possible, albeit beyond the prescribed period. It should be inferred that Allianz was both aware of and shared the views of its solicitors that inquiries should be made as to the role of any vehicle causing the traffic to slow suddenly. Allianz made no attempt to set those investigations in train at a time which would have created any opportunity to resolve the possible issues prior to the expiration of the three month period: [52]-[53].

Russo v Aiello [2003] HCA 53, 215 CLR 643 cited.

In relation to (ii)

(per Basten JA, Giles and Hodgson JJA agreeing)

4. The party seeking to join the Nominal Defendant shall provide a full and satisfactory explanation for any period of continuing delay beyond the three months; expiration of the three month period being understood as a trigger requiring an extension of time. This construction treats s 36(5) as having similar operation to s 109(3) of the Act. The different language used in the two provisions does not suggest a deliberate attempt to achieve a different operation. The parties in the present case proceeded at all stages on the basis that Allianz was required to provide a full and satisfactory explanation for the delay and that approach should be accepted: [35]-[42].

Gashparac v Walter [2000] ACTSC 118; Nicholas v Webb (No 2) [1993] 19 MVR 65; Guest v Southern (unrep, NSWSC, 22 September 1995) discussed.

In relation to (iii)

(per Basten JA, Giles and Hodgson JJA agreeing)

5. In considering whether any explanation given for further delay is satisfactory, each month following the expiration of the period must be seen as significant. Allianz failed to provide a good reason for failing to take steps within three months which might well have resulted in it being in the position that it was in on 22 August 2008, either within the three month period or shortly thereafter: [56]-[63].

CA 2009/324938
DC 6050/2008

GILES JA
HODGSON JA
BASTEN JA

3 September 2010

NOMINAL DEFENDANT v Richard Lindall STAGGS & ORS

Judgment

1 GILES JA: I agree with Basten JA.

2 HODGSON JA: I agree with the orders proposed by Basten JA and with his reasons. I would add the following.

3 In my opinion, the question whether a full and satisfactory explanation of delay is given must be approached bearing in mind that the legislature has prescribed a limit of three months, from receipt of a claim under s 72 of the Motor Accident Compensation Act 1999, for the giving of notice to the Nominal Defendant.

4 It follows in my opinion that generally an insurer that receives a claim under s 72:

(1) should promptly consider and decide whether it wishes to investigate the possibility of a claim against the Nominal Defendant; and

(2) if the decision is to investigate this possibility, should act so as if possible to be in a position, within the three-month period, to make a decision whether to give notice and, if the decision is to give notice, to give that notice.

5 In the present case, so far as the evidence goes, nothing was done by Allianz between 28 August 2006 (when it received the claim) and 12 October 2006 (when it sent its file to its solicitors), a period equal to about half the three month period. Then, it appears that the practice of the solicitors was that a partner would prepare a preliminary advice, this taking about four to six weeks. An inquiry pursuing the possibility of a claim against the Nominal Defendant was sent out by an employed solicitor on 6 November 2006, about three weeks before the expiry of the three month period; and an investigation agency was given instructions on 13 December 2006, about two weeks after the expiry of the three month period.

6 Plainly, by 6 November 2006, the employed solicitor was acting on a decision to investigate the possibility of a claim against the Nominal Defendant. There is no evidence as to when (prior to this time) this had first been considered, or the result of any prior consideration, or any action or inaction resulting from that prior consideration. It may be that no consideration had been given to the question until shortly before 6 November 2006, or that consideration had been given to it and a decision made not to investigate (which was later changed), or that a decision was made to investigate some time before 6 November 2006 but for some reason no action was taken until 6 November 2006. Only Allianz was in a position to give evidence about these matters, and the absence of any evidence about them means in my opinion that there is not a full explanation of the delay until 6 November 2006 (that is, for most of the three month period).

7 Evidence that there was no practice in Allianz of considering whether to investigate the possibility of a claim against the Nominal Defendant, and/or that the person dealing with the file did not advert to the matter, and/or that the ordinary practice of Allianz means that it takes six weeks to have the file sent to solicitors, and/or that the possibility of a claim was considered and dismissed by someone at some time, and/or that the three month limit was overlooked, and so on, might have provided a pertinent and perhaps a full explanation. Consideration could then have been given whether this explanation was a satisfactory one. If the delay thus explained was considered excusable, then the explanation might have been considered satisfactory: as the primary judge said, perfection is not required. But if, as in this case, a pertinent explanation is not given, it is not possible to assess whether the delay is excusable, or to decide if there is a satisfactory explanation of the delay, and the onus lying on the party seeking the extension is not satisfied.

8 BASTEN JA: A person suffering an injury arising from a motor vehicle accident, caused by an unidentified vehicle, may claim damages from the Nominal Defendant. Where a defendant to a motor accident claim wishes to seek contribution or indemnity from the owner or driver of an unidentified vehicle, the defendant may join the Nominal Defendant. A defendant must give notice of an intention to take that step within three months of receiving the claim, unless the court extends time for giving such notice. Absent a valid notice, no proceedings may be commenced against the Nominal Defendant. The present case concerned the circumstances in which it was proper to extend time to give such notice.

9 On 14 October 2009, Garling DCJ extended the time within which the insurer for the defendants could serve notice on the Nominal Defendant to a date more than two years after service of the plaintiff’s claim. The Nominal Defendant seeks leave to appeal against the order made in the District Court. The correct approach to the exercise of the discretionary power conferred on the Court to extend time, pursuant to s 36(5) of the Motor Accidents Compensation Act 1999 (NSW) (“the Act”) has not been the subject of consideration by any appellate court. The matters raised are of public importance in the administration of justice. The approach adopted by the primary judge was arguably wrong. It is, accordingly, appropriate to grant leave to the Nominal Defendant to pursue its proposed appeal. Further, for the reasons set out below, the appeal should be allowed and the order extending time set aside.

Background to claim

10 Ms Charlene Towers (the plaintiff below and the third respondent in this Court - “the plaintiff”) was injured in an accident whilst a pillion passenger on a Harley Davidson motorcycle being ridden by Mr Richard Staggs. The motorcycle had been hired by Mr Staggs from Harley Davidson Australia Pty Ltd. The plaintiff brought proceedings against Mr Staggs and Harley Davidson Australia (the defendants below and first and second respondents in this Court).

11 The accident occurred on 14 March 2006, when Mr Staggs was riding with the plaintiff on the Warringah Freeway at North Sydney. He was travelling in the right hand lane of three northbound lanes near the Falcon Street exit when the traffic slowed, apparently because two of the lanes had been blocked off progressively towards the Falcon Street exit in order for road works to be undertaken.

12 Mr Staggs said that the accident occurred because the vehicle in front of him “suddenly slowed” causing him to brake, so that the rear wheel of the motorcycle locked and, it would appear, he lost control. Both he and the plaintiff were thrown to the road, although without hitting the vehicle in front. The plaintiff appears to have suffered significant injuries.

13 On 24 August 2006 the plaintiff’s solicitor sent a letter to the claims manager of Allianz Australia Insurance Ltd (“Allianz”) as the compulsory third party insurer of Mr Staggs. Enclosed with the letter was a motor accidents personal injuries claim form and a police report. The copy of the claim form in evidence was stamped on each page as having been received by Allianz on 28 August 2006. The claim form revealed that both the plaintiff and Mr Staggs lived in the USA. Under paragraph 15, which required a diagram of the accident, the claim form stated:

“Please see police report as I have no recall of the accident”.

14 At paragraph 16, the claim form contained a typed description of the accident which appears to have been taken from the same Police report, but read as follows:

“Richard Staggs rode a Harley Davidson motorcycle bearing the NSW Registration number TTZ-25 along the Warringah Freeway in a northerly direction. Charlene Towers was a pillion passenger on the motorcycle. At a distance of approximately 600 meters from the intersection of Falcon Street, a vehicle travelling in front of the motorcycle slowed suddenly. At the same time, Mr Staggs attempted to slow the motorcycle, resulting in the rear wheel of the motorcycle locking. The motorcycle then skidded for a distance of approximately 25 meters before the vehicle fell sideways to the road surface, ejecting both Mr Staggs and Ms Towers. The motorcycle, Mr Staggs and Ms Towers then slid along the roadway for a distance of about 20 meters. As a consequence, Ms Towers sustained severe injuries.”

15 The claim form was signed by the plaintiff, who had by that time returned to the USA.

16 The only other significant detail, contained in the Police report, was the statement that Mr Staggs was proceeding north “at an unknown speed, not thought to be excessive, traffic in front of him has slowed suddenly as other cars merged from a terminating left hand lane”.

17 On 12 October 2006 Allianz sent a copy of its file to its lawyers, Dibbs Abbott Stillman (now known as DibbsBarker Lawyers) with a request that they “assume conduct of the claim”. The letter was in standard form and sought advice in relation to the details of the accident, liability, quantum, likelihood of early settlement and advice as to an offer. The list of matters on which advice was sought also included “Motor Accident Act’s Requirements” and “Recovery Prospects and/or Sharing Aspect (if applicable)”. It was explained in the course of argument that the reference to “sharing” concerned contribution or indemnity from a known insurer and was not understood to refer to possible claims against the Nominal Defendant. It was not in doubt, however, that advice as to a claim against the Nominal Defendant would have been required if thought appropriate.

18 It is convenient to note at this point that there was no evidence from the claims manager or any other officer of Allianz as to what, if any, steps were taken by the insurer between 28 August 2006 and 12 October 2006. Furthermore, there was thereafter no evidence at all as to what steps (if any) were taken by Allianz itself.

19 There was also a paucity of information as to what took place within the solicitors’ office during the first two months of the period after they received instructions. The only evidence tendered by the insurer in respect of this period were two affidavits of an employed solicitor, Mr Seisun, who was called for cross-examination. Neither affidavit indicated that any action had occurred with respect to the file prior to 6 November 2006 when Mr Seisun sent a letter to Mr Staggs, seeking assistance with respect to the possible liability of other drivers. (It will be necessary to refer to the contents of that letter shortly.) In cross-examination, Mr Seisun agreed that he had worked on the matter under the supervision of a partner at the firm, Mr Dean Newell. The following further exchange took place (Tcpt, 14/10/09, p 14):

“Q. Now when you received the file, did you peruse the claim form and the annexures to it?
A. What happens when a claim arrives in our office is my employing solicitor, Dean Newell will hold the file for a period of time. He will prepare a preliminary advice, which will usually take between two and four weeks. I will then receive a copy of his preliminary advice to the client, with the file, with a series of instructions as to what he would like me to begin doing.

Q. So it’s your explanation now to this court that following 13 October 2006 Mr Newell had the direct carriage of the matter for some period of time before passing it over to you?
A. That’s correct.”

20 There was no affidavit from Mr Newell and Mr Seisun did not suggest that he had received any particular instructions, nor any preliminary advice prepared by Mr Newell. There was, in short, no evidence that any significant work was done in the solicitors’ office until shortly prior to 6 November 2006.

21 The three-month period within which s 36(4) required that notice be given to the Nominal Defendant of an intention to join the Nominal Defendant expired some three weeks after the letter of 6 November 2006 was sent to Mr Staggs, namely on 28 November 2006. No further steps were taken by the solicitors until a further two weeks had elapsed, when, on 13 December 2006, Mr Seisun “forwarded to MJM Investigations Sydney offices a request that it commission affiliated investigators in the United States to locate and liaise with Mr Staggs for purposes of liability investigations”.

22 The insurer’s case for an extension of time, so far as it related to the first three months after the claim was served, was based on the proposition that there was then no material available to it suggesting negligent driving on the part of any person other than Mr Staggs. Accordingly, at that stage it was doing no more than carrying out routine inquires to satisfy itself as to the liability of its insured and it had no reason to anticipate seeking to join the Nominal Defendant.

23 There are two difficulties with this part of the case. The first is that there was no evidence from any officer of Allianz that the insurer held that view at that time. All that is known is that it thought it necessary or appropriate to instruct solicitors to provide advice in respect of the claim and also (it may be inferred) approved the cost of obtaining investigators in the USA to contact Mr Staggs and (as will be seen) to make inquiries in Sydney.

24 The second difficulty is that the letter of 6 November 2006 to Mr Staggs, seeking his co-operation, included the following paragraphs:

“The insurer is presently reviewing the circumstances of this accident with a view to determination of the matter’s future conduct. New South Wales legislation provides that agreed or determined damages (including medical rehabilitation and treatment) will provided/paid for by the insurer of the at-fault driver and, where the vehicle is properly insured and registered, no penalties or costs will accrue to that driver. The at-fault driver is required to assist the insurer as reasonably requested.
New South Wales legislation provides that if any other vehicle contributed to the cause of the motor vehicle accident then contribution to an insured person’s damages may be obtained from an entity representing the contributing vehicle. It is not necessary that the contributing vehicle be identified or located. This includes a situation where, for example, a vehicle (not subsequently identified) negligently slowed or altered its course so as to require you to take evasive action, thus resulting in the accident. The actions of any vehicle/s that may have partly or fully created a need for you to take evasive action is relevant to our investigation and we would like to hear your account of related events.”

25 The letter did not suggest that Mr Staggs should respond, but rather anticipated that he would “be contacted in due course by an investigator who will seek to obtain your version of events”; it demonstrated no sense of urgency. However, it indicated appreciation of the possibility that Allianz might seek to join the Nominal Defendant.

26 On 13 December 2006 the solicitors wrote to MJM Investigations, requesting, as the first instruction:

“Please arrange for Mr Staggs to be interviewed by operatives in America. Please ensure that Mr Staggs comments on the role/s of any unidentified vehicle/s in creating the circumstances that gave rise to the accident. Specifically, we seek to learn whether any unidentified vehicle/s may have caused traffic to slow suddenly or affect courses/options available to him or caused him to take evasive action.”

27 That letter also required MJM Investigations to obtain detailed statements from police officers who attended the accident scene, prepare a detailed plan of the accident scene and, if thought appropriate, canvas the area and attempt to locate any additional witnesses. The letter gave no intimation of the period within which those steps were to be taken.

28 The next stage in the events occurred on 21 February 2007. On that date, the solicitors were advised that Mr Staggs would not co-operate; on the same date the investigators provided a report of their inquiries in Sydney. These disclosed a significant source of further information, namely a statement taken by a police officer from Mr Cox, who was the driver of the vehicle immediately in front of Mr Staggs at the time of the accident. The statement, signed by Mr Cox, was dated 14 March 2006. Mr Cox described the events in the following terms:

“I was travelling northbound in the outside lane. There were three lanes. One was definitely blocked with cones – I didn’t realise the other lane was blocked until I saw a champagne silver-coloured four wheel drive trying to merge into my lane. I then [braked]. I would have been going 80 and [braked] down to 60. I then heard a screech of tyres and something braking and then I saw something in my rear vision mirror. I was confused at first because I didn’t know what happened. I never knew at any stage that the motorbike was behind me.
…
We were both going around the same speed probably 80 or maybe less.
…
I was in the outside lane the whole time. I had no reason to change lanes.”

29 By 21 February 2007, Allianz had available to it material identifying the driver of the vehicle which slowed suddenly immediately ahead of Mr Staggs and also an explanation for the sudden braking, namely that a third vehicle (the “champagne silver coloured four wheel drive”) had sought to merge into the lane occupied by Mr Cox. A number of inferences might have been available to the insurer at that stage, including; first, that the driver of the vehicle in front of Mr Cox was negligent in pulling in front of him without warning; secondly, that each of the drivers was negligent in failing to appreciate that three lanes were being reduced to one; thirdly, that the RTA was negligent in failing to provide proper signage warning of the tapering lanes.

30 On 26 February 2007, within a week of receiving a copy of the handwritten statement taken by police from Mr Cox, Mr Seisun had prepared a list of questions he wished to ask Mr Cox. He also had Mr Cox’s mobile telephone number. However, he did not attempt to contact Mr Cox for more than six months, commencing those attempts on 11 September 2007. His first telephone contact was on 18 October 2007 and he conferred with Mr Cox on 23 October 2007. Putting to one side an amount of speculation on his part, Mr Cox provided slightly more detail in respect of the events, in the following passages of a draft statement prepared by Mr Seisun based on what Mr Cox had told him:

“I was proceeding in lane 3 of 3. A fourwheel drive (‘4WD’) vehicle was proceeding slightly ahead of me in lane 2. Both myself and the 4WD were proceeding at or slightly below the 80 kph speed limit.
Ahead of the 4WD I observed a row of traffic cones. I initially thought that those cones reduced the road from 3 lanes to 2 lanes, closing lane 1 only.
Other than the traffic cones, there were no other signs or warning devices.
As I commenced to pass the 4WD, at a time when the front of my vehicle overlapped the rear of the 4WD by about 1/3 ^rd of the 4WD’s length, it performed a lane changing manoeuvre into my lane, cutting me off and almost striking my vehicle.
In my view the 4WD driver was changing lanes and did not observe me to his side. Upon observing me he abruptly accelerated to obtain a position in front of me.
As a consequence of the 4WD driver’s manoeuvre I was obliged to brake in a hard and rapid fashion. If I had not braked in this way I believe that my vehicle could have been struck by the 4WD.”

31 Over the ensuing months, Mr Seisun sought to have Mr Cox sign his new statement, but was unable to make contact with him until 25 March 2008, when Mr Cox agreed that the statement was substantially correct in content, but said that he did not intend to sign it.

32 During 2007-2008, Mr Seisun took numerous steps to contact Mr Staggs, pursued an application under the Freedom of Information Act in respect of the entire police file, sought CCTV footage from the RTA (there was none) and, in April/May 2008 spoke to four possible witnesses identified from police documentation (none of whom could provide useful assistance).

33 In his first affidavit, Mr Seisun stated at paragraphs 37-41:

“37. After my discussions with Nathan Cox … I formed an opinion that an unidentified vehicle may have contributed to the cause of the subject accident.
38. I decided that a coherent and persuasive argument in favour of the involvement of an unidentified vehicle could only be articulated if Mr Cox co-operatively assisted.
39. At this time I was not assured of establishing Mr Staggs’ assistance and I did not know whether he was aware of the existence of the unidentified vehicle and, if so, whether he was prepared to ascribe a causal role to it.
40. Prior to receiving documents from police, I was of the view that the evidence available to the defendants was insufficient for me to certify that a cross-claim against the Nominal Defendant had reasonable prospects of success, in accordance with the Legal Profession Act .
41. Upon receipt of the police file on 28 April 2008 … I decided that I had sufficient evidence to give the Nominal Defendant notice of a possible causal role by an unidentified vehicle and the potentiality of claim arising.”

34 The affidavit did not explain what new material in the police file obtained in April 2008 assisted Mr Seisun to reach the conclusion noted in paragraph 41. So far as the affidavit revealed, the only further information received with the police file on 28 April 2008 was the identity of four possible witnesses, none of whom was of any assistance.

35 On 31 July 2008 Mr Seisun wrote to the Nominal Defendant notifying a potential claim against it, but not including the claim form served by the plaintiff. The letter was returned by the Nominal Defendant on 6 August and resent, with the claim form, on 22 August 2008, six days short of two years after the claim form was received.

36 The statutory scheme permitting the joinder of the Nominal Defendant as a party from whom contribution may be obtained where one tortfeasor is the driver of an unidentified vehicle, is set out in s 36 of the Act in the following terms:

“ 36 Nominal Defendant as tortfeasor
(1) The Nominal Defendant may join another person, or may be joined, for contribution or indemnity in respect of a claim or proceedings under this Act as if the Nominal Defendant were a tortfeasor.
(2) Joinder of the Nominal Defendant is required to be effected in accordance with this section.
(3) A person seeking to join the Nominal Defendant in respect of a claim or proceedings must give the Nominal Defendant notice of the person’s intention to do so. The notice must include a copy of the notice of claim under section 72 given to the person.
(4) The notice must be given within 3 months after the claim is made against the person under section 72, or within 3 months after the person becomes a party to proceedings in respect of the claim, whichever occurs first.
(5) The court may extend the period for giving notice to the Nominal Defendant if the person seeking to join the Nominal Defendant gives a full and satisfactory explanation for not having given notice within the 3-month period.
(6) Within 2 months after notice is given, the person giving notice must provide the Nominal Defendant with full details of the allegations made against the Nominal Defendant (or against the person to whom the Nominal Defendant is taken to have issued a third-party policy).
(7) An application may not be made to join the Nominal Defendant as a party to proceedings before the court after 3 years from the date on which the claim under section 72 in respect of which contribution or indemnity is sought must be made, except with the leave of the court.
(8) If the Nominal Defendant is sought to be joined because the identity of another motor vehicle is not known, joinder may not be effected unless due inquiry or search to identify the vehicle has been made. The inquiry or search may be proved orally or by affidavit of the person who made the inquiry or search.
(9) Except as provided by this section, nothing in this section affects any rules of court relating to the joinder of parties.”

37 Much of the debate before the primary judge and in this Court concerned the assessment of the explanation given by or on behalf of Allianz and the assessment of it as “full and satisfactory”, for the purposes of s 36(5). On that basis, the discussion treated the critical date as being 22 August 2008, as the date when a notice was given complying in all respects with s 36(3). However, thereafter there was a failure to comply with s 36(6) by providing the Nominal Defendant with “full details of the allegations”, which was (arguably) required to be done by 22 October 2008, if an extension of time were to be forthcoming.

38 The plaintiff commenced proceedings against Mr Staggs on 18 December 2008. On 2 June 2009 the insurer filed a cross-claim against the Nominal Defendant but, there having been no extension of time, there had been no compliance with s 36(4) nor with s 36(6). The cross-claim was withdrawn by motion filed on 29 July 2009. However, it was not until 7 August 2009 that the orders for extension of time were first sought. That motion was heard and determined by Garling DCJ on 14 October 2009, extending time to 23 October 2009.

39 Because of the failure to comply with s 36(6), Allianz abandoned the possibility of relying upon the notice in fact served on 22 August 2008, although the fact that the Nominal Defendant had notice at that time would no doubt have been relevant to the discretionary exercise of the power to extend time to a later date. It is therefore not necessary to consider whether a notice given outside the three month period, but before an extension of time is granted, is itself a valid notice and, if so, at what point the further two month period specified by s 36(6) (which cannot be extended) expires.

40 A second issue raised by the terms of s 36 is that the full and satisfactory explanation is required “for not having given notice within the 3-month period”: s 36(5). This does not in terms require that the full and satisfactory explanation address any period beyond the three month period prescribed by s 36(4). The power to extend time is discretionary, and what happened to cause delay beyond the three month period would undoubtedly be relevant to the exercise of the discretion. However, on one view, the party seeking to join the Nominal Defendant does not need to provide a full and satisfactory explanation for any period beyond the three months, so as to engage the power to extend time. This is significant in the present case if Allianz’ argument is accepted and there was no basis for seeking to join the Nominal Defendant until after the expiration of the three month period. The initial delay is thus fully explained in an entirely satisfactory manner and, thereafter, the matter is left to the discretion of the Court.

41 This approach does not appear to accord with the purpose of s 36: the preferable approach is to require a full and satisfactory explanation for the whole period of the delay, reference to the three month period being understood as a reference to the conduct which triggers the requirement for the application.

42 This construction, it should be conceded, treats s 36(5) as having a similar operation to s 109(3) of the Act which requires that a plaintiff not commence proceedings after more than three years from the date of the accident, unless he or she provides “a full and satisfactory explanation to the court for the delay”: s 109(3)(a). However, the different language used in s 36(5) does not suggest a deliberate attempt to achieve a different operation. The parties in the present case proceeded at all stages on the basis that Allianz was required to provide a full and satisfactory explanation for its delay, at least up to 22 August 2008. That approach should be accepted for the purposes of the present appeal.

43 The only authority discussing the operation of s 36(5) identified by the parties was a decision of Gray J, sitting in the ACT Supreme Court, in Gashparac v Walter [2000] ACTSC 118. Four issues of present relevance arose in that case. First, in relation to the period for which explanation was required, his Honour noted at [27]:

“When the matter came on for hearing, the defendant sought to relate the full explanation to the period up to the giving of notice rather than seeking to explain why the notice was not given in the three month period after the claim was made.”

44 Whether his Honour considered that the explanation was required only for the three month period is not entirely clear. In that case, the relevant period was held to have commenced on 11 September 1998 (at [11]) and would therefore have ended on 11 December 1998. The notice was given on 19 January 1999, some five weeks later (being an additional period which included Christmas and the New Year holidays, although that factor was not referred to).

45 Secondly, the application was made long after the notice was given (by motion filed on 25 September 2000) but it appears to have been assumed that the notice could be retrospectively validated by an extension of time. (Details required by s 36(6) had been provided with the notice.)

46 Thirdly, the explanation given was considered inadequate to explain why the Nominal Defendant should have been joined at all: at [32]. That was apparently because there was no factual basis for allegations of negligence in any of the material: at [36]-[37].

47 Fourthly, although the point was in the circumstances just noted, arguably obiter, his Honour considered what needed to be addressed by the explanation. In particular, he rejected a submission that, in the context of s 36(5) the words “full and satisfactory” merely identify qualities of the explanation and do not relate to the behaviour or conduct underlying the explanation. He declined to adopt the approach accepted in Nicholas v Webb (No 2) [1993] 19 MVR 65 at 67 (Master Greenwood), addressing that phrase in the predecessor to Ch 4 of the Act, dealing with motor accident claims. His Honour preferred the reasoning of Studdert J in Guest v Southern (unrep, NSWSC, 22 September 1995), holding that “before an explanation can be ‘satisfactory’, it must persuade the Court that the delay ought to be excused in all the circumstances”: Gashparac at [22]-[23].

48 The need to provide a “full and satisfactory explanation” for the delay in making a claim (as opposed to a notice seeking contribution) has been the subject of significant statutory revision since Nicholas v Webb(No 2). In particular, by the time the issue of construction came before the High Court in Russo v Aiello [2003] HCA 53; 215 CLR 643, s 40(2) of the Motor Accidents Act1988 (NSW) required that a “full and satisfactory explanation” should involve:

“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."

49 Part 5 of the Motor Accidents Act, in which provisions with respect to claims were then found, also contained a statement of objects specific to that Part.

50 The differing purposes of various provisions in legislation relating to motor accidents, together with the definition applicable in respect of some provisions and not others, mean that care must be taken in applying principles stated in one context to another. Further, some of the complexities which can arise from the definition of full and satisfactory explanation (now found in s 66(2) of the Act), and discussed by this Court in Smith v Grant [2006] NSWCA 244; 67 NSWLR 735 are not relevant. In the present case, the party having control of the proceedings for the defendants was the third party insurer, Allianz. It is an institutional litigant which, in the absence of evidence to the contrary, should be assumed to be in the position to make informed decisions as to steps to be taken in protecting its interests in litigation. Unlike an accident victim, who is likely to be uninformed about the technical requirements of legislation and is almost wholly reliant on solicitors for advice and timely compliance with legislative requirements, an insurer will generally be knowledgeable as to the legislation and will have a close relationship with solicitors who act for it on a regular basis (as, it may be inferred, was the case with the solicitors retained by Allianz).

51 In assessing any explanation given for the purposes of s 36(5), three factors should be taken into account. First, a decision to join the Nominal Defendant, as opposed to the commencement of proceedings against the Nominal Defendant by a plaintiff, is subject to strict time limits. Thus, the period of three months from the date of receipt of a claim is undoubtedly a short period. That is no doubt because Ch 2 of the Act is concerned with third party insurance, which is compulsory: joinder by a party seeking contribution or indemnity will be the responsibility of a compulsory third party insurer, which may be understood to have the resources and ability to act promptly when the relevant occasion arises.

52 Secondly, the notice required under s 36(3) must be given by a person “seeking to join” the Nominal Defendant and merely foreshadows an application for joinder. The latter application is subject to a three year limitation period from the date on which the claim is made: s 36(7). Clearly notification is required in circumstances where further investigations and advice may be necessary before an application to join can properly be made.

53 Thirdly, although the notice does not need to include “full details of the allegations made against the Nominal Defendant”, the insurer considering whether to give such notice will be conscious that such details must be provided within two months after the notice is given, a period which is non-extendable.

Application of principles

54 In relation to the three month period permitted by the Act, two points arose for consideration in this case. The first was whether the material available, being the claim form and the police report which accompanied it, were sufficient to trigger an inquiry as to whether an unidentified second vehicle was involved. The possibility of involvement of a second vehicle cannot be doubted. When Mr Staggs said that the vehicle in front of him “suddenly slowed”, causing him to brake, there were, in effect, three possible causal explanations. The first was that Mr Staggs was going too fast to adjust to a change in the speed of the traffic ahead; secondly, there was no “sudden” slowing, but merely a failure by Mr Staggs to attend to the speed of the traffic ahead; thirdly, his description may have been apt, in which case the cause of the sudden slowing required consideration.

55 The second point was that, although inquiry was appropriate, the possibility of negligence on the part of another driver was, at that stage, speculative. Thus, the primary judge accepted that the wording in the letter of 6 November 2006 to Mr Staggs did not indicate any belief in a basis at that stage for seeking to join the Nominal Defendant: Judgment, pp 5-6.

56 At the time of writing the letter of 13 December 2006 to MJM Investigators, Mr Seisun had no information available to him beyond that which had been received by Allianz on 28 August 2006. Accepting that that information was inadequate to form the basis of a notice to the Nominal Defendant, there was nevertheless no satisfactory explanation as to why, with the exception of the letter of 6 November 2006 to Mr Staggs, neither Allianz nor its solicitors took any step to commence investigations until two weeks after the three month period had expired. As already noted, the letter to Mr Staggs did not expressly invite a response, but merely noted that agents in the USA would contact him. Accordingly, although aware of the possibility of an unidentified vehicle bearing some responsibility for the accident, no steps were taken within the three month period to obtain information, to be supplied within that period, which would assist in confirming or undermining the possibility.

57 As remarked by Gleeson CJ in Russo v Aiello at [10], given that no other party was able to explain the delay in serving the notice, and given the interest of Allianz in providing a full explanation, to which may be added the character of the insurer and its solicitors, it may readily be inferred that all information which was available was proffered. The explanation given was therefore “full”, in the sense that it did not omit any steps which had been taken. On the other hand, it was not “satisfactory” in the sense of providing a basis for excusing the failure to comply with the prescribed period, or even to be in a position to serve a notice as soon as possible, albeit beyond the prescribed period. That conclusion is based on three reasons.

58 The first is that, in the absence of any evidence to contrary, it should be inferred that Allianz was aware of the time limit for serving a notice on the Nominal Defendant, that being a necessary precursor to joining it in proceedings for contribution or indemnity. Secondly, it should be inferred that Allianz was both aware of and shared the views of its solicitors that inquiries should be made as to the role of any as yet unidentified vehicle in causing the traffic to slow suddenly. Thirdly, despite the intention to investigate that matter, it made no attempt to set those investigations in train within a time-frame which would have created any opportunity to resolve the possible issues prior to the expiration of the three month period. For example, there was no explanation as to why MJM Investigations could not have been invited by 13 September 2006 to do precisely what they were invited to do on 13 December 2006. Similarly, the letter to Mr Staggs, if thought necessary, could have been sent by the same date. Finally, an initial response could have been sought from MJM Investigations and Mr Staggs by, say, 13 October 2006. If such steps had been taken, even if they were not productive of decisive results, Allianz would then have been better placed to assert that its explanation was satisfactory.

59 Further delays were not satisfactorily explained. As appears from the timetable set out above, and despite the intervention of the Christmas and New Year holiday periods, MJM Investigations was able to provide to the solicitors the statement of Mr Cox contained in the police officer’s notebook within two months and one week from the day on which they were first instructed. At that point, Allianz knew of the identity of the vehicle which had slowed suddenly and also knew of the existence (though not the identity) of a third vehicle, being that which had pulled out in front of Mr Cox, causing him to brake, in order to avoid a collision.

60 Assuming for present purposes, contrary to the conclusion reached above, that a full and satisfactory explanation was available for the failure of Allianz to serve a notice prior to 21 February 2007, a further question arises as to the delay thereafter, given the information then available to it in the form of Mr Cox’ statement.

61 It would undermine the purpose of s 36(4) if, once the three month period had expired, the party seeking to join the Nominal Defendant were to treat time as no longer a critical consideration. In considering whether any explanation given for further delay is satisfactory and in considering whether to exercise the statutory discretion once engaged, each month following the expiration of the period must be seen as significant. However, no such understanding is revealed by the chronology in the present case. Within five days of received Mr Cox’ statement, Mr Seisun had prepared a list of questions for him, suggesting that he was not entirely satisfied that he had all the information which Mr Cox might be able to provide. Accepting that it was reasonable, despite the existence of a signed statement, to seek to interview Mr Cox before serving a notice on the Nominal Defendant, the lapse of more than six months (being a period twice the prescribed period) before the first attempt to telephone Mr Cox fell far short of conduct providing a satisfactory explanation for the continuing delay. Indeed, in that period, Mr Seisun took only two steps relied upon by Allianz. The first had nothing to do with the present issue, namely writing to the plaintiff’s solicitors on 7 June 2007 to admit liability. The second, a step taken on the same day, was to write again to Mr Staggs requesting his co-operation. Even that step was taken more than three months after receiving the statement from Mr Cox.

62 Between 7 June and 11 September 2006, when the first attempt was made to telephone Mr Cox, a further period of more than three months passed without any step being taken to seek information concerning the unidentified vehicle and its role in the accident.

63 In late October 2007, numerous steps were taken, including:

(a) contacting Mr Cox;
(b) conferring with Mr Cox;
(c) writing again to Mr Staggs;
(d) making an FOI request to the police;
(e) attempting to obtain information from the Local Court with respect to a charge brought against Mr Staggs;
(f) seeking to obtain CCTV footage from the RTA (and the police), and
(g) forwarding a draft statement to Mr Cox for his signature.

64 Each of the steps identified above could have been taken in late February or early March 2007 and some could have been taken a year earlier, in September or October 2006. There was no attempt to explain those delays.

65 During the nine months from 31 October 2007 until 31 July 2008 various steps were taken by the solicitors on behalf of Allianz, but they were productive of no significant improvement in its knowledge of the circumstances of the accident.

66 Mr Seisun stated that he was in a position to give the Nominal Defendant a notice under s 36(3) after receipt of the police file on 28 April 2008. He did not explain what it was in the material he obtained from the police file which caused him to form that conclusion. He did not annex the police file to his affidavit, but only a copy of the covering letter confirming the date of the request and the date on which the material was provided. The suggestion that there had been some change in the state of his knowledge justifying a course of action which had not previously been open to him, cannot be accepted.

67 Mr Seisun noted that on 16 July 2009, he conferred with Mr Staggs in Australia. Mr Staggs had decided to co-operate, apparently having received advice that he might himself have a claim against the Nominal Defendant. Mr Seisun stated that, because Mr Staggs lived beyond the jurisdiction, his co-operative assistance was “an essential pre-condition to a cross-claim”. He noted that a cross-claim was filed and served against the Nominal Defendant on 2 June 2009.

68 This subsequent history might well be material to a consideration of the Court’s exercise of this discretion to extend time, were the power engaged. In my view the power was not engaged, because neither during the prescribed period, nor subsequently, was the explanation given “satisfactory”. Allianz failed to provide a good reason for failing to take steps within three months which might well have resulted in it being in the position that it was in on 22 August 2008, either within the three months period (that is, by 28 November 2006) or shortly thereafter. This view was not that adopted by the primary judge.

Approach of primary judge

69 In respect of the first three month period, his Honour accepted that there was no material available to Allianz which would have justified the service of a notice. At that stage, his Honour concluded that Mr Staggs “had no case against anyone”: judgment, p 6. That view may be accepted: however, it does not dispose of the issue. Allianz need never have sought to obtain contribution from another party. However, as it did not take that stance, but actively pursued the possibility that some other party might be at fault, it is necessary to ask what steps could have been taken at that time which were not. That question, his Honour did not address. To find that the explanation of the failure to take the desired step within the three month period was “satisfactory”, that question needed to be addressed.

70 His Honour appeared to accept a submission that there was “no explanation relating to the first three months”, which he described as “a fair comment”: p 9. His Honour referred to the “system” within the firm, involving the senior solicitor spending a period of time providing advice, before the preparation commenced. He stated that he did not see “that that is not a reasonable explanation of what happens in these matters”: p 10.

71 This passage, in common with others, revealed that his Honour was particularly concerned about “what happens in these matters”, in a practical sense, and whether that course is “reasonable”, from the point of view of the solicitors. His Honour further noted at pp 10-11:

“I often feel that there is a standard of perfection which is asked of, which is unrealistic. Solicitors need a period of time in which to consider matters and to act on them. …
So I do not believe you can demand perfection. You can demand that they act properly and professionally. There have been some very good points made on behalf of the Nominal Defendant and if I was to judge this on perfection, they would be very good points but I think you have got to judge this on what happens.”

72 This statement, which appears to have coloured his Honour’s assessment of the circumstances in issue, reveals error in a number of respects. First, as the appellant noted, there was no evidence that the system operated in the present case, nor, if it did, as to the outcome. Secondly, it disregards the statutory period of three months as the critical factor in assessing delay. By inference, that period is treated as requiring a “standard of perfection” which goes further than a requirement that solicitors act “properly and professionally”. Thirdly, it focuses on the conduct of the solicitors, whereas the explanation is to be provided by the insurer. Of high importance in this context is the question whether the insurer was at any stage concerned with the passage of time, once the possibility of the involvement of an unidentified vehicle had been noted. The absence of any evidence in that regard was, arguably, critical to the assessment of the case: his Honour made no reference to it. Fourthly, if “what happens in these matters” is not conducive to complying with statutory limitation periods, what happens must change. The mandate of the Parliament is not to be set at nought by the “practices” of insurers or their solicitors. What needed to be addressed in the present case were the possible steps set out at [58] above. Why an insurer and its solicitors, acting properly and professionally, could not reasonably be expected to take the steps proposed within the times suggested was not considered by his Honour.

73 His Honour then proceeded to consider the position of Allianz, during the second period, from 21 February 2007, when a copy of the statement of Mr Cox to police was first obtained. After setting out the significance of that statement, his Honour proceeded (pp 7-8):

“So at that time he [Mr Seisun] becomes aware that in the vicinity is another vehicle. However, the version he has from the police notebook is that the four-wheel drive was trying to merge into the lane. The solicitor said that he was not in a position to commence action against the Nominal Defendant because at no stage was he in a position where he or indeed, I suppose, his master solicitor, could have signed the required certification to the effect that they had an arguable case.”

74 The reference to “certification” was a reference to the requirement of the Legal Profession Act 2004 (NSW) precluding lawyers from filing in court a claim for damages unless a responsible legal practitioner certifies that there are reasonable grounds for believing, on the basis of provable facts and a reasonably arguable view of the law, that the claim has reasonable prospects of success: s 347(2). However, that test is not applicable in respect of a notice given under s 36(3) and the respondent did not seek, on the appeal, to argue otherwise.

75 In setting out the facets of the explanation given, at points the judgment is clearly descriptive and at other points appears to adopt or reject particular aspects of the explanation. It is not entirely clear whether, in setting out what the solicitor had said as to certification, his Honour accepted that it was correct to approach the matter in that way. The appellant contended that his Honour did accept that approach, having been led into error by counsel for the defendants in his opening: Tcpt, 14/10/09, p 4(30), 5(30), 5-6 and 6(45). If that were so, his Honour must have disregarded the contrary submission of the appellant: Tcpt, p 45(35)-(50).

76 An alternative view was that the late giving of notice resulted from a mistaken understanding of s 36 on the part of Mr Seisun. However, that “explanation” does not appear to have been relied upon below, nor, the appellant submitted, was it available. That was because the view of Mr Seisun was only formulated after discussing the matter with his principal, Mr Newell, in April 2008: Tcpt, p 21(40). That, it was submitted, was too late to affect the explanation for action taken or not taken by him over the preceding 18 months. That submission is sound.

77 In relation to the second period, his Honour said that Mr Seisun wanted “to investigate the matter further”: p 8. He noted that an unsigned statement was obtained from Mr Cox on 23 October 2007. His Honour also stated that it was “not until Mr Cox was interviewed by the solicitor that, in my view, there were any grounds for believing there was any claim against any other vehicle”: p 10. That comment omitted two important considerations. The first was that, subject to some further detail as to the precise position of the third vehicle in relation to Mr Cox’ vehicle when it pulled in front of Mr Cox, his statement to the solicitor added little or nothing of substance to his signed statement to the police obtained on 21 February 2007. Secondly, the comment failed to take account of the six month delay in even attempting to contact Mr Cox to obtain the statement. The failure to consider that delay was a failure to address a highly significant matter.

78 His Honour then turned to the next material event which was the receipt on 28 April 2008 of a further police report which included an entry of which his Honour noted (at p 8):

“’The witness who was travelling in front of the accused’ – I should interpret, the witness in front is Mr Cox, the accused is [Mr Staggs] – ‘stated that he was also forced to brake harshly prior to this incident. He further stated that the saw the cycle collide with the roadway.”

79 His Honour continued (at p 9):

“There is no doubt by the time of that information [Mr Seisun] would have well and truly known that there was at least an allegation that an unidentified vehicle was involved.”

80 In so classifying the information, his Honour accepted the view of Mr Seisun that it was this material which put him in a position where he could properly serve a notice on the Nominal Defendant. However, his Honour failed to identify in what respect the information thus provided was new. He also failed to consider the fact that more than three months elapsed thereafter before a valid notice was served. His failure to consider these matters constituted a further failure to take highly material factors into account.

81 His Honour concluded at p 11:

“I believe that is a full explanation and I believe subject to other matters, it is satisfactory.
The other matters, of course, which I have got to consider come in another form. The other form or forms are related and they are these. To what extent, if any, was the Nominal Defendant prejudiced by the fact that, over a relatively short period of time, eight or nine months, they were not notified. That is, if you had a system of perfection and you notified them it would have occurred, I suppose, in November/December 2007. In fact it occurred in July 2008.”

82 There may be two ways of reading this passage. The first is as a conclusion that the explanation was not satisfactory unless it were shown the Nominal Defendant had not been prejudiced by the delay. The second reading is that, assuming a full and satisfactory explanation, the extension of time may not be granted in the exercise of discretion, if it were shown that the Nominal Defendant had been prejudiced by the delay.

83 The latter reading was not said to reveal error. However, the appellant contended that, on an ordinary reading of this passage, his Honour was incorporating into his assessment as to whether the explanation was satisfactory a consideration of prejudice to the appellant. The appellant said such an approach would be erroneous. In my view both limbs of that submission should be upheld. However, it is not necessary to reach a firm conclusion in that regard because the premise upon which the assessment was based, namely that it was only necessary to take into account prejudice between November or December 2007 and July 2008, was erroneous even if prejudice were a component of the assessment of the explanation. If his Honour were taken to accept that the explanation was satisfactory up until late 2007, so that prejudice would not relevant up until that time, it must be erroneous to conclude that the explanation for the later period, which was otherwise unsatisfactory, would become satisfactory upon showing an absence of prejudice during that period.

Conclusions

84 As noted at [9] above, it is appropriate to grant leave to appeal.

85 Because, for the reasons set out above, his Honour erred in the approach he adopted to determining whether the explanation proffered was full and satisfactory, the appeal should be upheld and the decision of the primary judge set aside. On a proper understanding of the statutory test and of the facts, the explanation was not satisfactory and the power to extend time was not engaged. The respondents’ application for an extension of time should have been dismissed.

86 No reason was proffered as to why the respondents should not pay the appellant’s costs of the leave application and the appeal, in the event that it was successful. The appellant received its costs in the Court below and there is no need to interfere with that order.

87 The Court should make the following orders:

(1) Grant leave to the Nominal Defendant to appeal against the order made in the District Court on 14 October 2009 extending time for the defendants to serve a notice of intention to join the Nominal Defendant as a party to the claim brought against them by the plaintiff.

(2) Allow the appeal and set aside the order of the District Court extending time for giving such notice.

(3) In place of the order made in the District Court, order that the motion filed for the defendants on 7 August 2009 (as amended on 14 October 2009) be dismissed.

(4) Order that the first and second respondents pay the appellant’s costs of the proceedings in this Court.

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