Smith v Grant
[2006] NSWCA 244
•5 September 2006
NEW SOUTH WALES COURT OF APPEAL
CITATION: SMITH v GRANT [2006] NSWCA 244
FILE NUMBER(S):
40065/05
HEARING DATE(S): 7 August 2006
DECISION DATE: 05/09/2006
PARTIES:
Daniel Smith - Appellant
Tracy Lynnda Grant - Respondent
JUDGMENT OF: Handley JA McColl JA Basten JA
LOWER COURT JURISDICTION: District Court
LOWER COURT FILE NUMBER(S): DC 3184/04
LOWER COURT JUDICIAL OFFICER: McLoughlin DCJ
COUNSEL:
Mr P.J. Deakin QC/Mr P.J. Nolan - Appellant
Mr D. Campbell SC/Mr T. Meakes - Respondent
SOLICITORS:
Holman Webb Lawyers - Appellant
Beston Macken McManis - Respondent
CATCHWORDS:
LIMITATION OF ACTION – Motor Accidents Compensation Act 1999 (NSW), s 109(3) & s66(2) – dilatory conduct on the part of the applicant’s solicitor – who had onus of proof in the application for extension of time – whether “full” explanation included explanation for the conduct of the solicitor – whether “full” explanation required applicant to explain knowledge of the limitation period – whether the solicitor’s conduct was necessary for the explanation given to be an explanation of “satisfactory”
LEGISLATION CITED:
Civil Liability Act 2002 (NSW), s5F
District Court Rules (NSW), Part 39A, r32
Evidence Act 1995 (NSW), s131
Limitation Act 1980 (UK), s14
Motor Accidents Compensation Act 1999 (NSW), ss 5, 43, 61, 66, 92, 98, 108, 109
Motor Accidents Act 1988 (NSW), ss 40, 43A
Workers Compensation Act 1987 (NSW), s 151D
DECISION:
(1) Leave to appeal granted subject to the condition that the insurer file a notice of appeal within seven days of the date of this judgment
(2) Appeal dismissed
(3) Appellant to pay the Respondent’s costs of the appeal and of the application for leave to appeal.
JUDGMENT:
IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL
CA 40065/05
DC 3184/04HANDLEY JA
McCOLL JA
BASTEN JA5 September 2006
SMITH v GRANT
Judgment
HANDLEY JA: I agree with Basten JA.
McCOLL JA: I agree with Basten JA.
BASTEN JA: On 8 December 1999, Ms Tracy Lynnda Grant was injured in a car accident. Her solicitor took appropriate steps, generally in a timely fashion, to obtain compensation for her pursuant to the Motor Accidents Compensation Act 1999 (NSW) (“the 1999 Act”). He obtained a medical assessment and sought to have the claim resolved, both by informal settlement procedures and through the statutory scheme known as the “Motor Accidents Claims Assessment and Resolution Service” (known as “CARS”): see s 98. What he did not do, however, was to commence proceedings in the District Court, prior to the expiry of the limitation period on 8 December 2002.
The solicitor stated in evidence that the reason for not commencing court proceedings was that, the insurer having admitted liability, he was confident that the matter could be resolved through the CARS process. If the CARS process had been commenced prior to the expiration of the limitation period, time would have ceased to run until two months after a certificate was granted: s 109(2). However, the CARS process was not invoked until 26 September 2003, some nine and a half months after the expiration of the limitation period. The CARS process itself was not restricted by a time limitation. Commencement of court proceedings is, however, conditional upon the issue of a certificate under s 92 of the 1999 Act, by a claims assessor, pursuant to the CARS process, or the issue of a certificate stating that the claim is “exempt” from assessment: s 108(1).
A claim may be exempt pursuant to s 92(1) if it is of a kind that is exempt under the relevant guidelines or the regulations (which was not this case) or if a claims assessor has determined that it is “not suitable for assessment” under Part 4.4. A claims assessor in fact determined that the claim was “not suitable” and was therefore exempt. That determination has not been challenged. The result is that, unless Ms Grant obtains an extension of time within which to proceed in the District Court, her claim for compensation must fail. On 27 July 2004, she filed a notice of motion seeking leave to commence proceedings in the District Court pursuant to s 109(1). On 24 December 2004 McLoughlin DCJ granted the extension of time. The present application for leave to appeal is brought from that decision.
Issues in dispute
Chapter 3 of the 1999 Act, which deals with “Motor accident injuries”, commenced on 5 October 1999. Chapter 3 applies “to and in respect of” an injury caused by a motor accident occurring after its commencement: s 43(1). The accident in question having occurred on 8 December 1999, Chapter 3 applies. The provision for an extension of time is conditioned upon satisfaction of the following requirements identified in sub-s 109(3):
(3)The leave of the court must not be granted unless:
(a)the claimant provides a full and satisfactory explanation to the court for the delay, and
(b)the total damages of all kinds likely to be awarded to the claimant if the claim succeeds are not less than 25% of the maximum amount that may be awarded for non-economic loss under section 134 as at the date of the relevant motor accident.
Both limbs of this requirement were in issue before the primary judge: however, his Honour’s finding, favourable to Ms Grant, in relation to par (b), was not challenged in this Court. Accordingly, the issue resolved itself into the proper application of par (a). That provision is in turn the subject of a definition contained in sub-s 66(2), which reads as follows:
(2)In this Chapter, a reference to a full and satisfactory explanation by a claimant … 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 been justified in experiencing the same delay.
The Appellant raised three issues with respect to the application of these provisions, namely:
(1) on whom lay the onus of proof,
(2)was the explanation provided by or on behalf of Ms Grant a “full” explanation, and
(3) was the explanation so provided a “satisfactory” explanation?
In the course of addressing these questions, the Court was taken to a number of authorities, most of which dealt with the provisions of the Motor Accidents Act 1988 (NSW) (“the 1988 Act”) and s 151D of the Workers Compensation Act 1987 (NSW). These authorities must be applied with caution: the former Act contained the test of a “full and satisfactory explanation”, similarly defined, but adopted a significantly different procedural regime; the latter Act contains a discretion to extend time, unlimited by reference to particular criteria.
Scope of appeal
The application for leave to appeal in the present matter is brought from the exercise by the primary judge of a discretionary power to grant leave to the claimant to commence proceedings in respect of a motor accident claim more than three years after the date of the accident: s 109(1). However, no challenge is made to the exercise of that discretionary power, except on the basis that a precondition to the engagement of the power was not fulfilled. The jurisdictional precondition is contained in s 109(3)(a) and s 66(2). The challenge is thus concerned with a factual conclusion involving an evaluative or normative judgment. That the challenge in the present case is properly so described may be seen from authorities concerning the 1988 Act, including Blackburn v AllianzAustralia Insurance Ltd (2004) 61 NSWLR 632 at [2]-[4] (Mason P); Buller v Black (2003) 56 NSWLR 425 at [37]-[39] (Mason P) and [96] (Giles JA, Ipp JA agreeing); Figliuzzi v Yonan [2005] NSWCA 290 at [68] (Tobias JA) and [129] (McColl JA) and, most recently, Khoury v Linfox Australia Pty Ltd [2006] NSWCA 51 at [34] (Tobias JA). See also the discussion in a different context in R v Anna Zhang [2005] NSWCCA 437 at [45] and in Perpetual Trustee Company Ltd v Khoshaba [2006] NSWCA 41 at [31]-[40] (Spigelman CJ), [99]-[100] (Handley JA) and [107]-[111] (Basten JA).
The application should therefore be approached on a basis favourable to the insurer, namely that the constraints on challenges to the exercise of a discretionary power, set out in House v The King (1936) 55 CLR 499, need not be applied.
Onus of proof
References to “onus of proof” must be approached with care. The statute does not use such language. Rather, s 109 denies a prospective plaintiff the right to commence proceedings after a certain date, “except with the leave of the court”. By implication, the prospective plaintiff becomes the moving party on an application for leave. The statute then provides that the Court “must not” grant leave unless a precondition is fulfilled. The precondition is that the prospective plaintiff “provides” a full and satisfactory explanation for the delay. That explanation must be provided “to” the Court. Thus, the prospective plaintiff will not obtain leave unless he or she provides material to the Court which will amount to “a full account” of his or her actions, knowledge and beliefs, relevant to the delay in commencing proceedings: see s 66(2). In addition, the prospective plaintiff is at risk of failure if he or she fails to persuade the Court, as a matter of evaluative judgment, that the explanation is “satisfactory” in the defined sense.
In Russo v Aiello (2003) 215 CLR 643, the trial judge, in dealing with an application under s 43A(7) of the 1988 Act, erred in stating that the “onus is on the plaintiff to provide that explanation”: at [14]-[15] (Gleeson CJ). However, in that case the statutory provision was in different form to s 109 of the 1999 Act. It required the Court to dismiss proceedings which had been commenced, “if the court is satisfied that the claimant does not have a full and satisfactory explanation”. In that case, the plaintiff was not the moving party, and the Court needed to be satisfied that the plaintiff did not have a full and satisfactory explanation.
Section 109(3) of the 1999 Act is in different terms; nevertheless, Ms Grant sought to resist the argument that she bore an onus of proof. In relation to administrative decisions, where a particular outcome depends upon the satisfaction or opinion of the decision-maker, there is a reluctance to speak of an onus or burden of proof or persuasion being placed on the applicant: Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 282. However, that language, though arguably imprecise, is not inappropriate in the context of adversarial proceedings. In the present case Ms Grant bore an onus in the sense that she was the moving party, to succeed she needed to provide an explanation which fulfilled the requirements of s 66 and she needed to persuade the Court that the explanation was not only full, but satisfactory.
A full explanation
In the course of the proceedings in the District Court, Ms Grant swore an affidavit of 27 October 2004. She also relied upon two affidavits of her solicitor, John Philip McManis, sworn on 20 July and 19 August 2004. The combined effect of the three affidavits was to provide a reasonably complete history of the steps taken on behalf of Ms Grant and of communications with the insurer for the defendant.
The salient features of the history of the matter, as revealed in the affidavits, included reference to the medical and work history of Ms Grant, which may be put to one side for present purposes. More relevantly, Ms Grant contacted her solicitor on 8 May 2000, some five months after the accident, and some six weeks after an unsuccessful attempt to return to work on restricted duties. On 12 May 2000 the solicitor lodged a motor accident claim form.
On 29 August 2000 the insurer admitted liability. On 9 July 2001 the insurer requested particulars of the claim, which were provided on 9 August 2001. An informal settlement conference was held on 18 March 2002, but was not successful in resolving the claim.
On 28 March 2002, the solicitor made an application for a medical assessment, pursuant to Part 3.4 of the 1999 Act. The application was apparently made on the wrong form, which was duly returned by the authority, with an explanation, on 11 April 2002. A second application, on the correct form, was made on 13 September 2002. In part 6 of the form, it identified the dispute in the following terms:
“Permanent impairment – that is whether the permanent impairment of the injured person as a result of the injury caused by the motor accident is greater than 10% (this includes an assessment of whether the injuries have stabilised).”
By this stage, the time for commencing proceedings was close to expiring. Ms Grant’s affidavit dealt with this period as follows:
“7.My instructing solicitor advised me that I was best to proceed, if I was unable to settle the claim, to the Claims Assessment Resolution Service for an assessment by a CARS assessor and I instructed him to do what he thought was best. I did participate in an Informal Settlement Conference on 18 March 2002 with my solicitor and the compulsory third party insurer however this Informal Settlement Conference was unsuccessful.
8.I was advised by my solicitor that in order to receive damages for non economic loss the insurer would have to agree that I was over the 10% whole person permanent impairment threshold or accordingly an independent medical assessment would be required to determine whether I had exceeded the 10% whole person permanent impairment.
9.Eventually I attended on Dr Rosenthal, an independent medical specialist who assessed me with a 5% whole person permanent impairment and further made a finding that I was considered to have an impairment to my past earning capacity and an impairment to my future earning capacity. There was a long delay encountered from the Motor Accident Service in having this independent medical assessment arranged and then receiving the report, which was not received until 6 June 2003 in my solicitors office.”
Although the time period expired during the course of obtaining the medical assessment, there is no reference in the affidavit of Ms Grant to her knowledge or beliefs in relation to the limitation period. Rather, the affidavit moves on to address the steps taken after December 2002 merely noting, at paragraph 13, that the insurer “was aware of the fact that it was more than three (3) years since my motor vehicle accident”. That statement was made in relation to the insurer’s claim for an exemption from the CARS process. It will be necessary to return to that aspect below.
The examination by the medical assessor, Dr Thomas Rosenthal, occurred on 3 March 2003. On 12 March 2003, Dr Rosenthal provided a report to the Medical Assessment Service, which was received on 20 March 2003. Included with the report were a number of certificates addressing the matters referred for assessment, pursuant to s 61(1) of the 1999 Act. Counsel for Ms Grant explained, and it appears to have been common ground, that the Medical Assessment Service received references from the insurer, as well as from Ms Grant. As a result, the medical assessor was required to address a number of issues besides that set out at [18] above, being the issue identified by Ms Grant’s solicitor.
Apart from setting out part of the history of the matter, and annexing various documents, the first affidavit of Mr McManis provided little by way of explanation or justification for the delay. Somewhat ingenuously, he stated at paragraph 11:
“Considerable delays were incurred with the Claims Assessment Resolution Service and the Medical Assessment Service. Without these delays (28/3/2-5/3/04) the matter would have been commenced within time.”
Three comments may be made on that part of the explanation. First, it failed to recognise that there was a period of five and a half months delay caused by his use of the wrong medical assessment form. Secondly, it failed to acknowledge that the application for a CARS determination was only made on 26 September 2003, nine months after the expiration of the limitation period. Thirdly, it failed to note that there was a period of four months delay between receipt of the CARS certificate and the motion seeking leave to commence proceedings. This last period requires explanation because, had the CARS application been made within time, the limitation period would have been suspended, but only so as to allow a period of two months to commence proceedings after the certificate was issued: see s 109(2).
In his second affidavit of 19 August 2004, Mr McManis elaborated on one particular aspect of the process, presently relevant, at paragraphs 2 and 3. These stated:
“2.It was the plaintiff’s intention once liability was admitted that the plaintiff would eventually proceed to have the claim heard by an assessor with the Claims Assessment Resolution Service if the matter could not be settled. It appeared on receipt of correspondence from the Compulsory Third Party Insurer that there were excellent prospects of settlement.
3.The plaintiff was content to have this matter dealt with, if necessary by the Claims Assessment Resolution Service. No pre-emptive application was made to the Claims Assessment Resolution Service to ‘stop the clock’ because it was the plaintiff’s intention that this matter would proceed to a ‘CARS’ assessment only. It was not the Plaintiff’s intention to proceed any further than this assessment. This is a claim where liability was admitted and a claim in my view that was more than capable of being dealt with by an assessor.”
The reference to a “pre-emptive application” is inapt; in the context, the timely filing of an application for an assessment by CARS might better have been described as protective of Ms Grant’s rights, in the event that the CARS process was unsuccessful, from her point of view.
The insurer sought to rely on this material as indicating that, prior to the expiration of the limitation period, Ms Grant had made a decision not to litigate in any circumstances, which explained why no step had been taken to protect her right to pursue her claim by way of litigation, prior to 8 December 2002. It was submitted, in effect, that she should not be permitted to renege on that decision. It will be necessary to return below to the significance of this assertion, in considering whether the explanation given was “satisfactory”, within the terms of the 1999 Act.
Although the solicitor’s affidavit was filed (by him) on behalf of Ms Grant, it is not necessarily conclusive of her state of mind. In particular, in referring to her “intention” there is no reference to the advice which may have been given, which led her to form the intention, nor as to whether, at that time, advice was given, or she otherwise had knowledge of, the possibility that the CARS process would not result in an assessment. As noted by Gleeson CJ in Russo v Aiello, at [10], “the claimant will ordinarily be the person best able, and will often be the only person able, to give information” by way of explanation of his or her conduct. Accordingly, it is necessary to consider the solicitor’s statement in the context of Ms Grant’s affidavit.
Ms Grant’s affidavit, presumably settled by her solicitor, is replete with references to attempts at settlement, including reference to the amounts put forward by way of offers. (As will be noted below, these amounts should not have been included.) It is sufficient for present purposes to note that, following the settlement conference on 18 March 2002, there was a further offer made by the insurer in mid-June 2003, which was revoked and replaced with a different offer. A further settlement conference was held on 28 May 2004. These facts indicate that neither Ms Grant nor the insurer had abandoned the possibility of a settlement, even after the limitation period had expired, without proceedings being commenced. Having referred to the offers of June 2003, Ms Grant continued in her affidavit at paragraphs 13 and 14:
“13.My solicitor advised that we could proceed to a CARS assessment as liability was admitted and my claim was not complex. There was also no time limited with regard to making this application for a CARS assessment. I was then however advised by [my] solicitor that unexpectedly the Compulsory Third Party Insurer submitted an application that my claim should be exempt from a CARS assessment due to its unsuitability on the basis of my economic loss and in regard to my motor vehicle accident on 15 December. The fact that an exemption from CARS was granted was also unexpected. I was left with no choice but to proceed with the claim through the District Court. The Compulsory Third Party Insurer was aware of the fact that it was more than three (3) years since my motor vehicle accident.
14.My solicitor explained to me that in order to proceed with my claim he would now be required to file an Application for an Extension of Time in order to proceed with the matter in the District Court.”
Finally, Ms Grant noted that she had “recently settled” her lump sum claim under the Workers Compensation Act, on the basis of a medical report dated 14 July 2004. The settlement must have occurred between mid-July and the date of her affidavit, namely 27 October 2004. She concluded:
“At all times I have instructed [my] solicitor to proceed as he thought best with regards to my claim.”
In relation to this material, the insurer made the following complaints, in its written submissions, with respect to the completeness of the explanation. These included the failure of the solicitor to explain:
(a)why an application for medical assessment was not made until 28 March 2002;
(b)why there was a delay of a further five months after the first application was rejected, before the second was made;
(c)why proceedings were not commenced pending receipt of the medical assessment;
(d)why a CARS assessment was not sought prior to receipt of the medical assessment?
These complaints give rise to an issue as to whether an applicant for an extension of time is required to give a “full” explanation of dilatory conduct of her solicitor. In the present case, the solicitor who made the application was the solicitor whose conduct was in question and no doubt he could have provided such explanation as might have been required. In other cases, where delay has resulted in the expiration of a limitation period, an applicant may have sought alternative legal assistance, with the result that the there might be no explanation forthcoming as to the dilatory conduct of the first solicitor.
The submissions put on behalf of the Appellant, by the third party insurer, involved two parts. First, he said that because the solicitor was the agent of the applicant, his acts should be treated as the acts of the applicant. Accordingly, the full and satisfactory explanation required by the Act must include a full and satisfactory explanation of the solicitor’s conduct. If the explanation were less than satisfactory, because the solicitor was negligent, then the applicant would fail and the burden of any loss she suffered would properly fall on the professional indemnity insurer rather than the third party insurer.
This submission appeared to assume, perhaps unnecessarily, that the Court would be required to make a judgment as to the solicitor’s conduct. No doubt it may be possible to infer from the lack of any substantial explanation, that the solicitor was dilatory, and possibly negligent. However, such an inference would not be drawn unless the occasion for explanation by the solicitor had arisen. On one view, it had not: what was required was a full account of the “conduct, including the actions, knowledge and belief of the claimant”, and not that of her solicitor. Nor should the two limbs of the definition contained in s 66(2) be taken in isolation from each other. Thus, the test of whether an explanation is satisfactory, requires consideration of whether “a reasonable person in the position of the claimant … would have been justified in experiencing the same delay”. That would appear to view the matter from the position of the claimant, and not the claimant’s solicitor. Accordingly what is relevant is any explanation given by the solicitor to the claimant, or, in the absence of explanation, a delay of a kind which might induce a reasonable person in the position of the claimant to seek an explanation.
As noted above, the insurer contended that the conduct of a claimant must be taken to include the conduct of her authorised agent, namely the solicitor. To an extent that contention should be accepted. Thus the claimant seeks to rely upon steps taken by her solicitor and, indeed, his omissions. Those are objectively identifiable matters which may form part of a full explanation. However, for reasons given below, it does not follow that an assessment of whether the explanation is satisfactory or not, requires any normative judgment about the conduct of the solicitor: see [60]. That being so, it follows that an explanation may be a “full explanation” without exploring the blameworthiness, or otherwise, of the solicitor.
The remaining complaint as to the incompleteness of the explanation is the absence of reference by the claimant to any knowledge of, or beliefs about, the significance of the three-year limitation period. That is clearly a relevant complaint and has some force. It is also correct to say that the primary judge did not address that issue in his judgement of 24 December 2004, although it was raised on behalf of the defendant, in the course of argument.
The comments of Gleeson CJ in Russo at [11] are relevant in this circumstance, albeit made in a different statutory context, which required a claimant to provide information to the insurer as well as to the Court. His Honour noted that the explanation given to the insurer may be the whole of the information before the Court, or the claimant may seek to add to it. His Honour continued:
“Either way, since it is the claimant's explanation of his or her own conduct that is the subject of judicial evaluation, and since the claimant is at risk of having the proceedings dismissed, common sense will ordinarily justify the inference that a claimant does not possess undisclosed information that might assist his or her case, especially where, as here, the claimant is professionally represented.”
Gleeson CJ continued in Russo at [13]:
“There may be cases in which a primary judge, or an appellate court, is tempted to speculate that, perhaps because of deficiencies in a claimant's legal representation, or because of some accident or mistake, there is information helpful to a claimant that has not been put before a court when considering whether to dismiss proceedings.”
His Honour warned against indulging in such speculation, as a departure from the ordinary processes of fact-finding and drawing of inferences.
Although Ms Grant does not expressly say so in her affidavit, I would draw the inference, against her interests, that she knew there was a limitation period, albeit one which could be extended by leave. That inference may be drawn from the fact that she said (at par 13) that there was no time limit with regard to a CARS assessment. However, I also draw the inference that the time limit for commencing proceedings was treated as largely irrelevant because her solicitor believed there were “excellent prospects of settlement” and that the case was one which, if not settled, would be resolved through the CARS process. I infer that he advised her accordingly, and that her statement that she instructed him to proceed “as he thought best” led to his belief as to her intentions, as noted at [23] above.
No doubt those matters could have been more directly identified and stated; however, I would not infer that the claimant’s explanation failed to satisfy the statutory requirement for a “full account” of her conduct.
Whether explanation satisfactory
The focus of the challenge to the judgment below was that the primary judge had failed properly to assess whether the explanation given by the claimant was satisfactory, within the terms of s 66(2). At a factual level the complaint was that his Honour erred in not addressing the failure of the claimant to make an application for an assessment by CARS under Part 4.4, before the expiration of the limitation period. This omission was significant in a legal and factual sense. In a legal sense, the suspension of the limitation period whilst the assessment was undertaken reflected, it was contended, the appropriate resolution of the tension between the requirement for a prompt initiation of litigation, with the provision of an alternative means of dispute resolution, but one which was not intended to exclude the possibility of litigation. At a factual level, it was contended that the failure to initiate the CARS assessment prior to the expiration of the limitation period demonstrated that a decision had been taken to pursue the alternative dispute resolution process only and that there was no intention to keep alive the possibility of litigation. Taken together, these two aspects were said to demonstrate that there was no satisfactory explanation for the delay in commencing proceedings.
The complaint that the primary judge did not take this aspect of the delay into account is correct: the question is whether this failure should have led to a different outcome of the application.
In support of its contention as to the significance of a decision not to pursue litigation, the defendant relied upon the reasoning of this Court in Itek Graphix Pty Ltd v Elliott (2002) 54 NSWLR 207. Thus, at [91], Ipp A-JA (with whom Spigelman CJ and Sheller JA agreed, the latter adding a comment of his own at [4]) stated:
“A deliberate decision to allow a statutory limitation period to expire would be a powerful factor against the grant of leave. Where a deliberate decision to allow the period to expire has been made, ordinarily it will be difficult to provide an explanation for that decision sufficiently cogent to warrant the grant of leave.”
At [4] Sheller JA noted:
“Ipp A-JA has concluded that the appellant suffered no prejudice in consequence of the resultant delay but that the decision initially taken not to proceed at common law and allow the three year period under s151D(2) of the Workers Compensation Act to expire were taken quite deliberately on a fully informed basis. The respondent further delayed for a significant period before changing her mind. I entirely agree that this in itself is a potent circumstance which must be taken into account and will ordinarily weigh heavily against an applicant. If the discretion was to be exercised favourably to the respondent, she was bound to give some explanation both satisfactory and pertinent to a conclusion that justice would be best served by granting her application.”
As already noted, the power to extend time under the provision of the Workers Compensation Act there in question was unconfined by reference to specified criteria. Accordingly, the principles enunciated may not be transposed without consideration of the specific criteria identified in s 66(2) of the 1999 Act. On the other hand, the broad principle identified by Ipp A-JA as relevant and set out in Itek Graphix at [89], bears similarity to that identified in the second limb of s 66(2):
“The rule that an applicant, who applies for leave to bring proceedings after a limitation period has expired, must provide a reasonable explanation for the delay (and show that there has not been an absence of diligence on his or her part) forms part of limitation legislation throughout the country and, independently, has long been recognised by the courts.”
The need to exercise care in transposing principles from one statutory context to another was recognised by Mason P in Bluescope Steel Ltd v De Caires [2005] NSWCA 431 at [29], in a judgment with which Handley and Hodgson JJA agreed. His Honour also noted at [30], the finding in Itek Graphix that the plaintiff had made “a fully informed decision” not to pursue her claim. As has been seen, the present was not a case in which the claimant did not seek to pursue her claim, but was rather a case in which she chose a statutory alternative to litigation, on advice that this was an available and appropriate option in the circumstances. Although it may be said that she took a deliberate and tactical decision, it was not a decision to abandon a claim, and it was based upon advice which proved wrong, because, whether properly or not, the solicitor had treated the objection to the CARS process as “unexpected”, and unlikely to succeed.
The following factors weigh in favour of the conclusion that the explanation given by the claimant was satisfactory:
(1)she relied on her solicitor to take appropriate steps within the statutory framework of the 1999 Act, in order to pursue her claim for damages;
(2)she knew from an early stage that liability was conceded by the defendant’s insurer and thus that the only relevant issue was the assessment of her loss;
(3)she was aware that an assessment of damages required medical evidence and that reports were obtained from doctors, but that the extent of her injuries was in dispute;
(4)her solicitor advised that informal settlement procedures should be pursued, but that if settlement were not achieved, an assessment could be obtained through the CARS process;
(5)that process would require (at least as a practical matter) an independent medical assessment to be undertaken by a medical assessor;
(6)the medical assessment had been sought, but there had been a significant delay in obtaining a date for a consultation from the medical assessor;
(7)a CARS application had been made within three months of obtaining the assessment;
(8) an exemption had been sought (unexpectedly) by the insurer;
(9) an exemption certificate was given by CARS;
(10)an informal settlement conference was held three months after the exemption certificate was given, and
(11)two months later an application to commence proceedings was filed.
Relevant conduct
Differing views have been expressed in relation to the operation of the definition in the 1988 Act (s 40(2)) as to the nature of the conduct which is to be considered. Thus in Diaz v Truong [2002] NSWCA 265, (2002) 37 MVR 158, Giles JA at [39] discussed the conduct identified in the first limb of the definition in the following terms:
“The conduct is clearly not confined to that of the claimant himself or herself, as shown by the words ‘including the actions, knowledge and belief of the claimant’. That is only to be expected, since the description must have been written in the knowledge that claimants usually act through others, typically solicitors, in making claims and commencing proceedings.”
His Honour also concluded, at [43], that an assessment of satisfactoriness, for the purposes of the second limb, must be undertaken by reference to the same category of conduct, which may include that of the claimant and of others.
Hodgson JA agreed with respect to the first sentence in the section, but not the second. After noting that the 1988 Act (like the 1999 Act) did not postpone the running of time during minority or disability, he pointed out at [91]:
“This squarely raises the problem that a cause of action may be lost to a young child because persons acting on behalf of the child do not act with due diligence; and if their failure to act with due diligence means that an explanation for the delay will not be a satisfactory explanation, there will be an absolute bar to an extension of time.”
His Honour dealt with the definition in s 40(2) of the 1988 Act, taking into account these considerations, at [92]:
“In my opinion, what is necessary is a full account of acts and omissions of the claimant and of persons acting on behalf of the claimant, in so far as those acts and omissions are relevant to the explanation for the delay. When one comes to the second sentence of s.40(2), the specific reference to ‘a reasonable person in the position of the claimant’ means, in my opinion, that the focus there is directed solely at the acts and omissions of the claimant himself or herself, and must be judged as against what would have been the actions and omissions of a reasonable person in the position of the claimant, that is having the relevant characteristics of the claimant, in this case a nine year old girl suffering brain damage.”
The result of adopting a more restricted scope for the conduct to be addressed under the second limb, was to focus attention upon the relevant characteristics of the claimant. Foster AJA agreed with Hodgson JA that the focus of the second limb, referring to a reasonable person in the position of the claimant, required attention to the claimant’s activities, knowledge and belief: at [125]-[127]. His Honour concluded that the objective element was, in that case “an absurdly artificial yardstick, namely the standard of a reasonable brain-damaged infant”. His Honour concluded that the objective test in the second sentence could not operate (at [128]) but concluded:
“Having regard to the reasonable reliance of the family upon the solicitor’s advice and the total incapacity of the opponent herself, I am satisfied that the explanation is satisfactory.”
This approach supported that of Hodgson JA, in that it looked to the conduct of the claimant and, in the circumstances of the case, her family, but did not seek to assess the satisfactoriness of the solicitor’s conduct. On the other hand, that support was weakened by the fact that his Honour expressly derived the test from the first sentence of the statutory provision and not the second. His reliance on the judgment of Studdert J in Guest v Southern (unrep, 22 September 1995), which dealt with an earlier legislative provision in significantly different form and which did not include reference to “a reasonable person in the position of the claimant”, cast doubt on the basis of Foster AJA’s approach to satisfactoriness.
A second matter, Manderson v Ellis (by his Tutor) (2002) 37 MVR 214 was heard before judgment was handed down in Diaz, but decided after Diaz. The case apparently involved the same solicitors and also a plaintiff with a disability including brain damage sufficient to prevent him giving instructions. Santow JA referred to Diaz, noting at [18] that the views of Foster AJA “generally” favoured the views of Hodgson JA. His Honour continued:
“But Foster AJA agrees with Hodgson JA that the second sentence in s40 (2) … focuses attention on the claimant, at least to the extent that his particular position in the whole of the factual situation is to be taken into account: [125]. But he would require, as would Giles JA, that the explanation also satisfy an objective standard of reasonableness applied to the claimant circumstanced as he was … . I would apply that double-barrelled test here, and focus on the explanation the claimant has, not his solicitor, but including under ‘claimant’ the person in charge of his affairs … .”
Davies AJA, in Manderson at [58]-[60] concluded that the solicitors for the claimant had been negligent, not only in failing to commence proceedings in time, but also in failing to provide a full and satisfactory explanation for the delay. Because the onus was on the defendant under the 1988 Act, it failed to establish that there was no full and satisfactory explanation. McClellan J agreed with the reasoning of Davies AJA in relation to the application under s 43A(7). In effect, Manderson is authority for so much of the approach of Foster AJA in Diaz as has been set out at [48] above and cited by Davies AJA in Manderson at [60].
In March 2003, this Court delivered judgment in Buller v Black (2003) 56 NSWLR 425. The President (in dissent as to the outcome) quoted with approval the reasoning of Giles JA in Diaz at [40]-[42]: see Buller at [46]. His Honour continued at [47]:
“In some circumstances it will be necessary to examine the conduct of the plaintiff's agents, and this may throw up legal and factual issues regarding the extent to which the plaintiff is affected by the inappropriate dilatoriness of appointed agents (cf Diaz). Such issues do not arise in the present case … .”
Giles JA, in a judgment with which Ipp JA agreed, stated at [94], in relation to the second limb of the test:
“This, as I observed in Diaz … at [41]-[42], is intended to set an objective standard of conduct and meaning that the reasonable person in the position of the claimant would have been subjected to the delay and the subjection to the delay would have been justified. The language of experiencing the delay must have been intended to take account of other persons' conduct affecting the making of a claim.”
There was no reference to other views expressed in Diaz, nor to Manderson.
In September 2003, the High Court handed down judgment in Russo v Aiello (2003) 215 CLR 643. That case concerned the application of s 43A(7) of the 1988 Act, which required that, in respect of a late claim, the Court “must” dismiss the proceedings if satisfied that the claimant “does not have a full and satisfactory explanation for the delay in making the claim”. Further, as already noted, the procedural steps in question differed significantly from the present case. Nevertheless, the Court gave careful attention to the elements of the definition contained in s 40(2), corresponding with s 66(2) of the 1999 Act. In dealing with the second sentence of the provision, at [7], Gleeson CJ stated:
“It is to be noted that what the Act requires is justification for delay; not demonstration that the delay caused no harm. That does not mean that the Act is unconcerned with the presence or absence of prejudice to insurers resulting from delay. … However, while the problems that insurers might experience as a result of delays in making claims form part of the general legislative concern, the focus of the statutory concept of a satisfactory explanation is upon justifying delay, rather than excusing it. It is one thing to say the conduct is justified by reference to the way in which a reasonable person in the position of a claimant could have been expected to behave. It is another thing to say the delay ought to be excused because it caused no identifiable harm to an insurer. It is the former, not the latter, question that is raised for consideration.”
This approach was expressly accepted by McHugh J at [25] and is consistent with the identification of “the question” which the statute presents, as explained by Gummow and Hayne JJ at [58]. These judgments are inconsistent with the proposition that there is any separate or additional test of satisfactoriness to be derived from the first sentence of the statutory provision. If there were, it would be necessary to determine what considerations would be relevant to it and to explain why questions of prejudice were not relevant. It follows that the High Court in Russo took a different view to that of Foster AJA in Diaz, with respect to this question. The test of satisfactoriness is found in the second sentence in s 66(2). Whether other considerations become relevant to the exercise of the discretionary power in s 109 is a separate question which is not presently in issue.
This Court returned to s 40(2) in Blackburn v Allianz Australia Insurance Ltd (2004) 61 NSWLR 632. Sheller JA, with whom the other members of the Court agreed, set out in some detail the differences of opinion in earlier decisions of the Court, including those set out above. His Honour noted the differences of view expressed by members of the Court in Diaz, also noting that the critical step in the approach of Foster AJA was flawed in the manner noted above: Blackburn at [48]. Like Diaz and Manderson, Blackburn involved a child who had suffered serious injuries in a motor vehicle accident in which the driver was her mother. In the proceedings, her mother was her tutor Her solicitor was Ms Walsh. At [49] Sheller JA concluded:
“In this case, neither the claimant nor her mother were in any way responsible for the failure to institute proceedings within time. The claimant was incapable of giving any explanation. The mother's explanation of the delay was satisfactory. She learnt of Ms Walsh’s mistake and the need to obtain leave to commence proceedings on 1 September 2003, two days before the application was filed. Whether the expression ‘in the position of’ in s40(2) embraces only the claimant herself or embraces also her mother, the posited ‘reasonable person’ would have been justified in experiencing the same delay since neither knew anything about the limitation period or the need to make the application until 1 September 2003. Ms Walsh fully explained her further delay after 11 April 2003 in the cross-examination … . Applying either the test in Diaz v Truong as articulated by Hodgson JA or as articulated by Foster AJA the explanation was, within the meaning of s40(2) of the Act, satisfactory.”
Hodgson JA made some additional remarks with which Mason P agreed. The first related to Foster AJA’s view that the satisfactoriness of the explanation was confined to compliance with the second sentence in the definition. He agreed that in principle it was not, but continued at [54]:
“However, if the delay experienced by the claimant is one which a reasonable person in the position of the claimant would have been justified in experiencing, and if a full explanation for the delay is given by the claimant and the claimant's advisers, I find it difficult to envisage any circumstance in which the explanation would not be considered full and satisfactory. In particular, I do not think unsatisfactory conduct by the legal advisers would have this effect, although of course it could be relevant to whether it is just to grant the extension.”
Figliuzzi v Yonan [2005] NSWCA 290 also considered provisions in the 1988 Act. The facts of the case differed significantly from other authorities, in that the delay in question was caused by the failure of the claimant to obtain any legal advice. This was determinative of the outcome, which was adverse to the claimant: at [100]-[104]. McColl JA, (who with Tobias JA constituted the majority) stated the test, after reference to authority including Russo, in the following terms at [128]:
“While the question in a case such as this is whether the claimant has provided an explanation for delay (Russo v Aiello at [10]), that question is to be determined by the hypothetical objective standard invoked by the requirement that the claimant’s explanation be tested against the standard of a ‘reasonable person in the position of the claimant’: see Russo v Aiello at [74] per Gummow and Hayne JJ.”
With respect, I would adopt that approach and not the first additional remark by Hodgson JA in Blackburn to the extent that it adopted Foster AJA in Diaz.
Accordingly, the weight of authority under the 1988 Act in this Court favoured the view that if a claimant could reasonably rely upon the conduct and advice of his or her solicitors, although it was negligent, such reliance could provide a satisfactory explanation for delay in commencing proceedings. That is consistent also with the approach revealed in Khoury v Linfox Australia Pty Ltd [2006] NSWCA 51 at [22] (Beazley JA, Tobias JA agreeing) in relation to the 1999 Act.
The second matter to which Hodgson JA drew attention in Blackburn, at [56], was the suggestion that the characteristics of a “reasonable person in the position of the claimant” might leave out of account tender years, or perhaps brain damage. His Honour expressed no concluded view on that question although he thought it “unlikely that the legislature intended to promote legal proceedings by a child against its uninsured parent”. Similarly, in this case, nothing was said to turn upon the particular characteristics of the claimant, nor was it suggested that any particular characteristics should be excluded from the equation. Like Hodgson JA, I would reserve this question to a case in which it arises. A cautious approach is required because the test is one which is not restricted to this legislation. For example, s 5F of the Civil Liability Act 2002 (NSW) refers to an “obvious risk” in relation to negligence proceedings, as a risk that in the circumstances “would have been obvious to a reasonable person in the position of” the person who suffers harm. Further, there is a considerable jurisprudence, to which the Court was not taken, no doubt because it was not directly relevant in this case, dealing with the concept of constructive knowledge in the area of limitation provisions: see, for example, Adams v Bracknell Forest Borough Council [2005] 1 AC 76. Lord Hoffmann noted, in relation to s 14(3) of the Limitation Act 1980 (UK) at [33]:
“Section 14(3) uses the word ‘reasonable’ three times. The word is generally used in the law to import an objective standard, as in ‘the reasonable man’. But the degree of objectivity may vary according to the assumptions which are made about the person whose conduct is in question. … The breadth of the appropriate assumptions and the degree to which they reflect the actual situation and characteristics of the person in question will depend upon the reasons why the law imports an objective standard.”
See also the comments of Lord Scott of Foscote at [71], Lord Walker of Gestingthorpe at [77] and Baroness Hale of Richmond at [81]-[83] and [91].
Application of principles
There are two aspects of this case which are critical to its resolution. The first is whether the claimant sought to put all her eggs in the CARS basket, to the deliberate exclusion of the possibility of taking proceedings in the District Court if the alternative option proved unavailable. The second issue concerns the engagement by the insurer in considering the claim up to its application for exemption from the CARS process, and even thereafter.
In relation to the first aspect, it is apparent from the affidavits of both the claimant and her solicitor that she, on professional advice, was confident that her claim would be dealt with either by settlement or through the CARS process. She may well have given no thought to the need to keep alive the possibility of court proceedings until the CARS process was terminated, but that was because her professional advice gave her no reason to believe that it would be terminated without reaching an assessment of damages. It is clearly arguable that her solicitor’s conduct was at fault in failing to alert her to the possibility that no result would be reached by that process and to the fact that the CARS process could be commenced within the limitation period, so that her right to go to court would be protected, but there is no reason to suppose that a reasonable person in her position would have raised that issue, rather than experiencing the delay as part of the statutory process being followed.
The insurer did not seek to rely upon any delay prior to 29 August 2000, when it admitted liability. It did not request particulars until 9 July 2001, which particulars were provided promptly. Up until March 2002, when the first settlement conference was held, it was by no means clear that there was a medical dispute which would not be resolved without independent assessment. The application for medical assessment having been made, the claimant treated the delay as part of a bureaucratic process, and beyond her control. That was a reasonable belief for a person in her position, nor was it necessarily incorrect. Following receipt of the medical assessment, there were offers, the first being revoked and revised, in mid-June 2003. The CARS application was filed approximately three months later. Until the application for exemption was filed on 31 October 2003, the claimant had been given no reason, either by the insurer, or by her solicitor, to doubt that the appropriate processes were on foot and that a satisfactory resolution would be achieved, either through informal settlement, although that possibility was no doubt receding, or through the CARS process.
Section 109(2) reveals an intention that, at least where the CARS process is invoked in a timely fashion, a claimant should have a further two months after the issue of a certificate, within which to commence proceedings. In fact, almost five months elapsed before the filing of an application for leave, but within that time there had been a further informal settlement conference on 28 May 2004.
In relation to the application for exemption from the CARS assessment, some time was spent during the hearing of the appeal in considering the basis of the application. Two matter relied upon by the insurer, and noted in the statement of reasons for granting the exemption, were the involvement of the claimant in a further motor vehicle accident on 15 December 1999, which the insurer considered gave rise to serious causation issues which needed to be investigated, and the fact that the component of the claim for economic loss appeared to be affected by allegations of discrimination by her employer, which also needed to be fully investigated. The latter issue appears to have been decisive for the principal claims assessor, in upholding the application for exemption.
At the beginning of her statement of reasons, the claims assessor also noted that if the application for exemption were upheld, Ms Grant “will be entitled to commence legal proceedings and pursue in Court her claim for damages under the [1999 Act]”. The reference to an entitlement appears to have been in error, but nothing turns on this belief of the assessor, for present purposes. Nor was it suggested that the application for exemption was made by the insurer in the knowledge that the limitation period had expired and with the intention of improperly removing the remaining basis for an independent assessment of damages.
Further, it must be accepted that the statutory test in s 109(3) involves no relevant consideration as to whether or not the insurer suffered prejudice as a result of the delay in commencing proceedings. On the other hand, the fact that the insurer, from the time of its admission of liability on 29 August 2000 through to the settlement discussions on 28 May 2004, did nothing to suggest to the claimant that appropriate steps were not being taken in a timely fashion, led to her belief that the insurer was not complaining of delay. Those matters were relevant to considering whether a reasonable person in the position of the claimant would have been justified in experiencing the same delay. In my view, such a person would.
Without prejudice correspondence
There remained a complaint by the Appellant that the primary judge had admitted into evidence correspondence which referred not only to the fact of settlement negotiations, but to the terms of the offers made. That ground appears to have been raised as part of an initial challenge to the satisfaction of par (b) of s 109(3), concerning the likely award of damages, being a challenge which was abandoned at the commencement of the hearing of the appeal.
Adducing such evidence is prohibited by s 131(1) of the Evidence Act 1995 (NSW), unless one of the exceptions provided in sub-s (2) applies. On the face of it, no exception applied and it was inappropriate for the solicitor to draft an affidavit containing details of the communications, it was inappropriate for counsel to seek to rely on the affidavit material to that effect and its admission involved legal error. The error was compounded by reference to specific amounts in his Honour’s judgment. The Court was informed that an appropriate objection was taken by the defendant to the tender of the evidence, but the objection was overruled. However, because the conduct in question, both of the claimant’s legal practitioners and of the judge, have no material bearing on the outcome of the appeal, no further consideration of this issue is appropriate.
Conclusions
As noted above, the assessment required to be made of the explanation given by the claimant, for it to be “full and satisfactory” has been said to involve a normative judgment. The normative element is encompassed by the need to describe the delay incurred as something which a reasonable person in the position of the claimant “would have been justified” in experiencing. The relevant norms or standards are those to be derived from the scheme of the 1999 Act, including its objects, as set out in s 5. One relevant object of the Act is “to provide compensation for compensable injuries” and “to encourage the early resolution of compensation claims”: s 5(1)(b). Of more immediate relevance, is the statutory scheme in Chapter 3, Part 3.4, with respect to medical assessment where there is a medical dispute between the claimant and an insurer, and the establishment of the CARS process as an alternative to litigation.
Both of these statutory procedures were invoked in the present case. Reasonable attempts were made at settlement. These steps were all in conformity with the norms applicable to a reasonable person pursuing a claim for motor accident compensation.
The insurer was critical in certain respects of the conduct of the claimant’s solicitor. The actions of the solicitor were undoubtedly a relevant part of the explanation for the delay. However, there is nothing in the language of s 66(2) which directly requires that the conduct of the solicitor be “justified”. Indirectly, the solicitor’s conduct may be called into question to the extent that it is relevant to determining whether a reasonable person in the position of the claimant would have been justified in experiencing the delay. However, it was not necessary for the claimant to anticipate each criticism which might have been made of her solicitor and identify what her state of knowledge or belief was in relation to his compliance with standards of diligence which might be applicable to him. Her account, which included the material contained in her solicitor’s affidavits, is properly described as a “full account” without her having undertaken that task. If the insurer wished to demonstrate that a reasonable person in her position would have questioned her solicitor about aspects of the delay, or sought other advice, those matters could have been put to her in cross-examination. However, the insurer did not cross-examine either her or her solicitor.
In those circumstances, I would conclude that the claimant did provide a full and satisfactory explanation for the delay and thus fulfilled the steps required by s 109(3)(a). There being no challenge to the conclusion of the trial judge that paragraph (b) was fulfilled and no separate basis being proposed upon which, if sub-s (3) were satisfied, leave should not be granted, the decision of the trial judge to grant leave to commence proceedings out of time should be upheld.
Because the criticism of the reasoning of the trial judge was justified, in the respects noted above, I would grant leave to appeal, subject to the condition that the insurer file a notice of appeal within seven days of the date of this judgment. I would further order that the appeal be dismissed.
Costs
In the District Court, the defendant submitted that, because the claimant was seeking an indulgence, by way of leave to commence proceedings out of time, even if successful, pursuant to Part 39A, r 32 of the District Court Rules (as then in force) she should pay the defendant’s costs. His Honour rejected that submission and ordered that costs of the application be costs in the cause. The reason for his rejection was as follows:
“In my view there is no evidence to support the attitude by the insurer in forcing this matter into a court system when the whole purpose of this legislation is to bring about expedition in relation to settlement and ease in relation to the determination of matters.”
On the application for leave to appeal, the insurer complained that this criticism was without merit. It ignored the fact that the application for assessment under the CARS process was made well after the expiration of the limitation period and also ignored the fact that the insurer’s application for exemption had been upheld and the certificate of exemption had not been challenged.
While these complaints may be justified, they raise no issue of substance. There is no inflexible rule that a party seeking leave to file out of time must pay the costs of the application. There is no suggestion his Honour was not aware of the relevant rule. The rule in question has now been repealed. The grant of leave should not extend to this order.
With respect to the costs in this Court, the defendant conceded that, if the application for leave to appeal were unsuccessful, he should pay Ms Grant’s costs. Leave has been granted, but the appeal has been unsuccessful. It follows that the Appellant must pay the Respondent’s costs of the appeal and of the application for leave to appeal.
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