Simpson v Lenton[2002] QDC 214

DISTRICT COURT OF QUEENSLAND

1. [1]
   On 20 September 2000 the plaintiff filed a Claim and Statement of Claim in this court seeking from the defendants damages in respect of injuries alleged to have been suffered in a motor vehicle accident on 15 December 1994 at Winton. The plaintiff claimed damages for negligence, together with costs.

2. [2]
   On 31 October 2000 the defendants filed a Notice of Intention to Defend and Defence which in paragraph 1 alleged that the plaintiff’s claim was barred by s 11 of the Limitation of Actions Act 1974 (“the Limitation Act”).  In a Reply filed on 22 December 2000, the plaintiff alleged that there was a contract between the parties under which the second defendant agreed to pay the plaintiff reasonable damages in respect of any injuries sustained in the collision, the amount to be assessed if not agreed, and that the second defendant was estopped from alleging that the plaintiff’s action was barred by the operation of s 11 of the Limitation Act.  On the same day the plaintiff filed an Amended Statement of Claim, but that merely amended the allegation in relation to compliance with the Motor Accident Insurance Act 1994 (“the MAIA”), and contained no amendment which is relevant to the matter presently at issue.

3. [3]
   On 17 May 2002 another judge ordered that the question of whether the second defendant is entitled to plead and rely on paragraph 1 of its Defence filed 31 October 2000 be decided separately to, and before, the trial of the proceeding pursuant to r 483(1).  Presumably the question is directed to ascertaining whether the second defendant is entitled to succeed in the pleading in paragraph 1 of the Defence.  The plea is proper in point of pleading for a defendant who is alleging that the plaintiff’s claim has been commenced outside the period permitted by s 11 of the Limitation  Act, but the issue of whether the defendant is entitled to rely on that pleading can properly be seen as raising the question of whether the second defendant is estopped from alleging that the plaintiff’s claim is statute barred.  The preliminary question came on for hearing before me on 22 July 2002, when affidavits by the plaintiff and his former solicitor were read before me, and each was cross-examined.  I heard submissions directed to both the allegation that there was a contract between the parties, and the allegation that there was an estoppel.

Sequence of events

4. [4]
   The plaintiff was involved in a motor vehicle accident on 5 December 1994 in which he was injured. He contacted a solicitor^[1] concerning a property damage claim arising out of the accident, and subsequently spoke to the solicitor about his injuries.  Those injuries were suffered a little over three months after the commencement of the MAIA, and the solicitor was conscious of that Act’s requirement in relation to any such claim, and the need for the plaintiff to give notice of the claim pursuant to s 37 before bringing an action in a court for damages for that injury.  He was also aware that notice had to be given within one month after the plaintiff first consulted him about the possibility of making such a claim.  The plaintiff at the time was living and working on a rural property some distance north-west of Winton.  The solicitor attended the Courthouse at Winton on 17 January 1995, for another purpose, but while there met the plaintiff by arrangement and obtained instructions to enable him to complete a notice under s 37, which was signed and forwarded to the second defendant the following day.  On that occasion he obtained instructions to pursue the claim.  There is now  no issue between the parties as to the validity of the notice.

5. [5]
   On 1 March 1995, in response to the notice, the second defendant wrote to the plaintiff’s solicitors in the following terms:^[2]  “We refer to previous correspondence in regard to the above matter.  We are prepared to settle liability on the basis of 100% apportionment in favour of your client.”  The letter concluded with the conventional salutation.  The reference to previous correspondence presumably was a reference to the section 37 notice, and any covering letter by which it was forwarded;  there was no other correspondence between the plaintiff’s solicitor and the second defendant prior to that letter of 1 March 1995.^[3]  The plaintiff’s solicitor received it on 6 March 1995, and considered it to be a general admission of liability.  He forwarded a copy of it to the plaintiff on 9 March 1995 under cover of a letter^[4] in the following terms:  “We refer to previous correspondence and enclose copy letter dated 1 March 1995 from the third party insurer to this office.  We note that Dr Hetherington has referred you to a specialist for assessment.  Would you kindly advise us as to the name of that specialist at your earliest convenience.”

6. [6]
   Accordingly within three months of the plaintiff’s accident the matter had been brought to the attention of the appropriate insurer, and liability was accepted. This was entirely consistent with the legislative intent behind the enactment of the MAIA, as one of its objects was “to encourage the speedy resolution of personal injury claims resulting from motor vehicle accidents”: s 3(c). Thereafter however that objective has been entirely frustrated. As mentioned the claim was not filed until September 2000. Indeed the second defendant heard nothing further from the plaintiff’s solicitor for over two years, and on 9 May 1997 wrote asking him either to forward the plaintiff’s offer of settlement with supporting medical evidence or confirm that the plaintiff was no longer proceeding with his claim. A mere three months later the plaintiff’s solicitor wrote advising that arrangements had been made for the plaintiff to be seen by an orthopaedic surgeon within two months and hoping to be able to make a formal offer within a period of three months. There were however further delays and a report from an orthopaedic surgeon (apparently the first specialist’s report obtained by the plaintiff’s solicitor) did not arrive until 6 June 1998.

7. [7]
   To some extent the delay was caused by the rural pursuits of the plaintiff, and the fact that he moved from a property beyond Winton to one near Rockhampton, which took him further away from his solicitor at Longreach. Nevertheless it is apparent from the solicitor’s affidavit that part of the reason for the delay was that he believed that, because of the acceptance of liability, it would not be necessary for proceedings to be commenced, and therefore not necessarily commenced within the limitation period. He had previously been aware of the limitation period, and had advised his client, either on 17 January 1995 or in the previous telephone conversation, that there was a period of three years within which to take proceedings to pursue his claim. Nevertheless, I accept that he in fact believed that the effect of the letter of 1 March 1995, because of its acceptance of liability, was that it was no longer necessary to commence proceedings within that period.^[5]

8. [8]
   It was submitted on behalf of the second defendant that I should not accept that that was the true situation, and the solicitor was cross-examined with a view to showing that in reality he had simply overlooked the expiration of the limitation period, but it seems to me that the cross-examination, if anything, tended to confirm that the solicitor was telling the truth. He had a system for recording the dates on which limitation periods expired, which had been used in the case of three other clients involved in motor vehicle accidents where liability had not been accepted by the insurer, but this particular claim was never entered into that system, which is consistent with his having formed the view fairly early on (that is after early March 1995 when he received the letter from the second defendant) that the limitation period was not going to be of concern in relation to this claim. He had previously discussed the limitation period with his client,^[6] and although there is no evidence that during the balance of the three year period he actually advised his client that the limitation period had ceased to be an issue, I accept that at the time he genuinely thought that that was the situation, as a result of the letter of 1 March 1995.

9. [9]
   A report from Princess Alexandra Hospital was obtained on 1 July 1998, and a report from the Winton Base Hospital had been forwarded on 28 May 1998. In October 1998 the solicitor sought advice from counsel^[7] as to the adequacy of the material in relation to the quantum of the plaintiff’s claim.  Counsel (with a velocity characteristic of the conduct of this proceeding generally) gave advice on 7 September 1999 recommending further investigation, and arrangements were promptly made for the plaintiff to see a neurosurgeon and an neuropsychologist;  the former provided a report promptly on 16 September 1999, the latter did not report until 17 May 2000.^[8]

10. [10]
    In the meantime the second defendant was still trying to find out what was going on. On 14 April 1998 it wrote again seeking copies of medical reports and an offer of settlement. On 5 June, having realised how long had elapsed since the date of the accident, the second defendant wrote relevantly in the following terms: “Given this incident occurred on 5 December 1994, we look forward to receiving a copy of proceedings.” That letter was not received by the plaintiff’s solicitor until 11 June 1998. The previous day he had written to the second defendant advising that the plaintiff had been seen by the orthopaedic surgeon and promising to forward an offer of settlement as soon as that report had been obtained, but of course not addressing the question of the commencement of proceedings. The plaintiff’s solicitor originally deposed^[9] to the receipt of the letter of 5 June having caused him no particular concern because it did not refer at all to the limitation period nor did it state that the second defendant intended to take the limitation point against the plaintiff.  That is true, because the letter assumes that proceedings have been commenced.

11. [11]
    But that was not the whole story. On the day he received that letter the solicitor contacted his professional indemnity insurer, and obtained urgent advice from counsel as to his position.^[10]  The following day he spoke to a solicitor with the second defendant, and was told that the second defendant would take the point that any claim was statute barred.^[11]  On 16 June 1998 the second defendant wrote to the plaintiff’s solicitor saying that the file had been closed as court proceedings had not been instituted.  He responded with a further letter on 25 June 1998, advising that: “We will be in a position to forward to you our client’s offer to settle in the near future”, and that if the action could not be settled it would be necessary for the firm to institute proceedings, drew attention to the letter of 1 March 1995 where liability was admitted, and enclosed the medical report which had been received from the orthopaedic surgeon.

12. [12]
    The plaintiff’s solicitor seems to have placed some reliance on the absence of any challenge by the second defendant to the correctness of the letter of 25 June 1998,^[12] but there was noting in that letter which was incorrect or particularly invited a challenge;  there is no evidence that there was any response from the second defendant accepting the implication behind that letter, that the limitation period did not apply to any proceeding to be commenced.  Nevertheless, the claim was not filed until September 2000.  That delay appears to have been caused by the time taken to obtain the report from the psychologist, obtaining further instructions from the plaintiff as sought by counsel, and the finalisation of the pleadings which occurred early in September.  After a flurry of activity in the latter part of 2000, nothing further was done (so far as the material before me reveals) until the application which led to the order for the determination of the separate question was filed on 29 April 2002.

The claim in contract

13. [13]
    The plaintiff’s first submission was that the effect of the admission of liability was to produce a contract as identified by the Full Court in Newton, Bellamy and Wolfe v SGIO [1986] 1 QdR 431, and by the Court of Appeal in Lindsay v Smith [2002] 1 QdR 610.  In the latter case Chesterman J with whom the other members of the court agreed, said that an admission of liability by a compulsory motor vehicle insurer would commonly give rise to a contract in the terms described by McPherson J (as His Honour then was) in Newton.  His Honour identified the terms of the contract as being in essence (p. 617):  “In consideration of the claimant forbearing to sue and not incurring the expense of proving liability, which the insurer will ultimately have to pay, the insurer admits liability and agrees to pay reasonable damages.”

14. [14]
    That on its face is not an agreement as to the conduct of any proceedings to be commenced in respect of the plaintiff’s claim in negligence, and would not obviously give rise to any alteration in the ordinary period of limitation in respect of that claim. However, the creation of this agreement to pay reasonable damages means that a separate cause of action arises in respect of it, as pointed out by McPherson J in Newton at p. 445.  The action for payment under or for damages for breach of that contract is not within s 11, but within s 10(1)(a) of the Limitation Act, so that the relevant period of limitation is six years from the date on which the cause of action arose.  His Honour said in that case that that was six years from the date of the letter by which liability was accepted: p. 445.  His Honour went on to consider at p. 446 an alternative interpretation of the implied contract, as a contract not to plead the Limitation Act;  but that was not the interpretation placed on the implied contract in Lindsay v Smith:  it was held to be a contract to pay reasonable damages.^[13]  The plaintiff did not have to accept that contract in satisfaction of the original cause of action for negligence, but once the cause of action for negligence became statute barred he had no alternative but to rely on the effect of that contract.

15. [15]
    However, this claim has been pursued at such a glacial pace that, not only has the limitation period in s 11 expired, but the limitation period of six years from the date of the letter accepting liability has also expired, in March last year. Although the proceeding had been commenced by then, no claim was brought in respect of that contract. There is still no claim pleaded seeking money payable pursuant to, or damages for breach of, that contract, and I cannot see why any application for leave to amend to include such claim now would not be refused on the ground that the claim is statute barred.^[14]  However, the plea in paragraph 1 of the existing Defence is not directed to a claim for damages for breach of contract, but directed to a claim for damages for negligence.  I see no reason why the existence of a contract in the terms identified by Chesterman J in Lindsay v Smith at p. 617 would prevent the defendant from pleading that defence to that cause of action, or would now prevent it from being a good defence to that cause of action.  In my opinion the plaintiff’s argument, so far as it is based on contract, fails.

16. [16]
    This analysis makes it unnecessary for me to consider the decision of the Full Court in Giblin v Duggan, (Writ 3105/80, 19 March 1981, noted Queensland Supreme Court Practice, ¶ 7522) where it was held that the claim in contract in such circumstances could not be based on a statement or letter from the insurer that it was “prepared to admit liability”, since that was merely a statement of intention to accept liability and was not couched in the language of contract, and was inconsistent with the notion that a concluded contract came into existence.  That decision was followed in Lynn v Sbravati (1986) 3 ANZIC 79,050, but was criticised in strong terms by the Court of Appeal in Morris v FAI General Insurance Co Ltd [1996] 1 QdR 495.  In light of the decision in Morris, however, if it were necessary for me to decide the point I would be obliged to conclude that Giblin v Duggan is no longer good law in Queensland.  I have no doubt that if that issue arose directly for determination now by the Court of Appeal that decision would not be followed, and in those circumstances I think it would be inappropriate for me to follow it rather than the exposition of principle in Lindsay v Smith.

Estoppel

17. [17]
    It was submitted in the alternative that the letter of 1 March 1995 amounted to a representation by the plaintiff’s solicitor (and hence the plaintiff) that:

“(i) liability for the collision included in paragraph 3 of the Statement of Claim and for the plaintiff’s injuries was accepted to the extent of 100% by the second defendant;

2. (ii)
   the second defendant would not rely on s 11 of the Act in respect of the plaintiff’s claim against it;

3. (iii)
   the plaintiff need not issue proceedings with respect to the issue of liability, but only with respect to the question of quantum of the plaintiff’s damages if that issue could not otherwise be resolved.”

It was said that each of the representations was implied from the terms of the letter, although it seems to me that representation (i) is express in the terms of the letter.  That representation alone in my opinion is of no assistance to the plaintiff.

18. [18]
    The principal authority here is the decision of the Court of Appeal in Morris v FAI General Insurance Co Ltd [1996] 1 QdR 495.  In that case the solicitor for the plaintiff wrote to the insurer, some five months before the limitation period expired, intimating that he had instructions to commence proceedings, and advising that proceedings would be issued unless within 28 days the insurer advised “whether it is your intention to offer a settlement in this matter ….”.  In response within the 28 day period the insurer replied stating relevantly:  “We wish to advise we are prepared to accept your client’s claim for personal injuries.  Would you please forward to our office copies of the relevant medical reports to enable us to give consideration to an offer for quantum.”  In that case the Court of Appeal upheld a finding that the defendant was estopped from relying on the statute of limitations when proceedings were eventually commenced outside the limitation period.  The primary judge rejected the proposition that there was on that occasion a contract between the parties arising out of the correspondence.

19. [19]
    In the joint judgment of Pincus and Davies JJA at p. 501 their Honours said: “The appellant is faced with a finding that there was an assumption, adopted by the respondent and induced by the letter of 11 September 1987, that the appellant admitted liability and would not rely on the limitation period. … Once one accepts that … the question becomes whether it would be unjust and oppressive on the part of the appellant to depart from it. It was not necessary for the respondent to show that every recipient of such a letter would treat it as making the institution of proceedings unnecessary; it is enough that the respondent did so. Then the appellant’s difficulty is that its letter of 11 September 1987 is well capable of conveying to a prospective plaintiff that liability will not be disputed and that it is unnecessary to institute the proceedings threatened by the letter to which the appellant’s letter was an answer. … Subject then to the question of detriment, it must follow that a departure from the assumption thus induced would be unconscionable and cannot be permitted.” Their Honours then identified the relevant detriment as being a failure to institute proceedings prior to the expiration of the limitation period. The approach in Morris was confirmed in Lindsay v Smith (supra) where it was held that there was nothing arising under the MAIA which modified the effect of that decision.

20. [20]
    There is clear evidence in the affidavits, confirmed by the cross-examination, as I have indicated earlier, that in fact the plaintiff’s solicitor concluded from the letter of 1 March 1995 not only that liability was accepted 100%, but that the plaintiff did not need to issue proceedings unless the issue of quantum could not be resolved, and that if proceedings did have to be issued for that purpose they did not have to be issued within the period allowed by the Limitation Act, and therefore that the second defendant would not rely on that Act.^[15]  It is necessary for the plaintiff to show that the letter was capable of conveying to someone in his position that it was unnecessary to institute proceedings within time.  In the light of the authorities, particularly Lindsay v Smith  (supra), and bearing in mind the approach adopted by the Court of Appeal in Morris (supra), the second defendant’s letter must be regarded as capable of conveying such a conclusion.  In these circumstances, if in fact the plaintiff has relied on the representation to his detriment then the estoppel will be complete.

21. [21]
    The relevant detriment is the detriment the plaintiff will suffer if the defendant resiles from the effect of the representation, that is, the detriment that the plaintiff will suffer if the defendant is able to rely on the plea that the plaintiff’s claim is statute barred. Plainly if that plea is successful the plaintiff will suffer a detriment, in that he will lose his cause of action against the defendants. In those circumstances, a departure from the assumption thus induced would be unconscionable and cannot be permitted: Morris p. 501.  It is the fact that the detriment would be suffered if there were a departure which renders the departure unconscionable, and hence supports the estoppel.  It is not a question of whether it would be unconscionable to allow the defendant to depart from the assumption, for example because of prejudice suffered by the defendant as a result of the delay on the part of the plaintiff.

22. [22]
    The practical effect of the estoppel upheld by the Court of Appeal in Morris is that the insurer was estopped from relying on the limitation period whenever proceedings were commenced.  Indeed, the proceedings in Morris were to establish the existence of a contract or an estoppel, not an action for damages in tort:  see p. 498.  The defendant in that case was willing if the appeal was unsuccessful to consent to judgment for damages to be assessed, but had that course not been followed it would have been necessary for the plaintiff to commence a separate action, although in that proceeding the defendant would not then have been entitled  (pursuant to the earlier judgment which was upheld by the Court of Appeal) to plead that the action was statute barred.  It is not immediately obvious from the reasoning of the Court of Appeal in that case how a point would be reached where that estoppel would cease to apply;  there is no “use by” date on an estoppel.  In the present case the course which was followed, of pleading the estoppel in response to the plea in the defence, was in my opinion the correct procedure, and so long as the estoppel was open pursuant to the decision of Morris the practical effect appears to be that, once there is an admission of liability which is relied on in this way, there is no limit to the time within which proceedings can be commenced.

23. [23]
    The outcome in relation to the question of estoppel does not depend on whether I think that the correct interpretation of the letter of 1 March 1995 is that the second defendant is representing that proceedings need not be commenced within the limitation period specified in s 11; the question is simply whether it was in fact treated by the recipient as a representation in those terms, and whether it was capable of being so interpreted. In the light of the approach in Lindsay v Smith, that an admission of liability will commonly be characterised in a way which does not involve the preservation of the original limitation period, a finding to the contrary is clearly impossible.  Although there is in the present case nothing like the particular context considered by the Court of Appeal in Morris, there is nothing in the reasoning of the court in Morris to suggest that the context is relevant, except to the question of whether the letter is capable of being interpreted in such a way.  The crucial question is whether it was in fact interpreted in that way.

24. [24]
    The evidence shows that in this case it was. It follows that the plaintiff has made out the estoppel pleaded in paragraph 2 of the Reply, and accordingly the second defendant is estopped from relying on the plea of the Limitations Act in paragraph 1 of the Defence. Accordingly the question which has been reserved must be answered “no”.

Comment

25. [25]
    It will doubtless be apparent from these reasons in general that I reach this conclusion with reluctance, and consider the outcome to be thoroughly unsatisfactory. Although in this case the notice under s 37 was given promptly and the second defendant’s response was prompt and constructive, there has been thereafter in the pursuit of this claim the most appalling delay. One of the objects of the MAIA was “to encourage speedy resolution of personal injury claims”: s 3(c). It is entirely inconsistent with that object to litigate at a rate where for example it takes more than three years for the plaintiff and his solicitor to obtain one medical report. The Court of Appeal has, in another context, said that the old approach to litigation at leisure is no longer acceptable.^[16]

26. [26]
    Although the approach in Lindsay v Smith may commend itself to solicitors and their professional indemnity insurers,^[17] in my respectful opinion it is out of step with the times.  The most recent manifestation of the modern emphasis on speedy resolution of claims of this nature may be found in the Personal Injuries Proceedings Act 2002 which was recently enacted.^[18]  That Act also provides for notice of a claim to be given by a litigant before starting a proceeding in a court (s 9) and the person who is given such notice is expect in due course to give notice to the claimant stating whether liability is admitted or denied and whether (and if so to what extent) contributory negligence is claimed:  s 20(1)(b).  A compulsory conference is to be held to attempt to resolve the claim prior to litigation, but in view of the various time limits specified in the Act it is apparent that the intent of legislature is that, if a claim is not otherwise settled, a proceeding in a court ought ordinarily to be started within a period of about 18 months after the incident giving rise to the personal injury.^[19]  But if the approach adopted by the Court of Appeal in Lindsay v Smith is to apply equally to an admission of liability made in proceedings to which the 2002 Act applies, this legislative intent may well be frequently frustrated.

27. [27]
    In the present case, although more than seven and a half years have elapsed since the date of the accident, and although a proceeding has been commenced, nothing useful has yet been done to carry the action forward, and (so far as the material before me reveals) there has been no attempt to settle the matter, even on the part of the plaintiff. There has apparently been no disclosure, no statement of loss and damage, and no exchange of expert reports, except for one medical report provided in June 1998.

28. [28]
    In Croft v Francis [2000] QDC 109 I pointed out that a bare admission of liability may be interpreted in two ways:  “Liability is admitted (but if quantum is not agreed any action to enforce the claim will have to be brought within the limitation period)” or “liability is admitted (and if quantum is not also agreed it is not necessary for any action to enforce the claim to be brought within the limitation period)”.  I noted that the interpretation in a particular case would depend on the context, but expressed the opinion that in the absence of some context to indicate that the latter was the correct interpretation, the former was in my opinion prima facie the correct interpretation.  However, the Court of Appeal in Lindsay v Smith has emphatically rejected that approach, by saying in effect that the latter is to be regarded as the ordinary interpretation.  I remain entirely unable to see why that follows, either as a matter of logic, or in conformity with the ordinary rules of implication of terms in contracts.  It seems to me that none of the requirements for the implication of terms in a contract laid down by the Privy Council in BP Refinery (Western Port) v Hastings Shire Council (1977) 52 ALJR 20 are satisfied.  In my opinion there are other conceptual difficulties in seeking to construct such a contract on such an admission.

29. [29]
    Under our system of law it is necessary, for an admission of liability to be binding, for a court to hold that it is supported by a contract or an estoppel. That is perhaps unfortunate, and may well justify some intellectual inventiveness in characterising the situation one way or another, but in my opinion that provides no justification (in the absence of some special context) for taking the further step of treating the admission as also tearing up the Limitation Act. Plainly however, that is the approach of the Court of Appeal, and I accept that I am bound by it. No doubt in the context of the MAIA, where the relevant parties concerned with making admissions as to liability are a handful of licensed insurers, they can take precautions against the decision in Lindsay v Smith (supra) by routinely adding to any admission of liability a statement that the Limitation Act will still be relied on and any action to enforce the claim must be commenced within the ordinary limitation period notwithstanding the admission.  Presumably that will prevent any contract or estoppel in relation to the Limitation Act.  I have already seen in other proceedings examples of such admissions, so evidently this precaution is now being commonly taken.

30. [30]
    Under the 2002 Act, however, responses will not necessarily be only by insurers; commonly they will be ordinary people or companies, who cannot be expected to know that “I accept liability” generally means “forget about the Limitation Act” in the absence of an express statement to the contrary. The implications therefore of a combination of Lindsay v Smith and s 20(1)(b) of the 2002 Act are potentially very serious for many defendants.  No doubt the 2002 Act will in due course require some fine tuning from the legislature;  it might be as well for it then to consider whether something needs to be inserted in the Act to prevent the application, in the context of that Act, of the decision in Lindsay v Smith.