Cottle v Smith & Anor [2008] QCA 244

SUPREME COURT OF QUEENSLAND CITATION: Cottle v Smith & Anor [2008] QCA 244 PARTIES: TOVAH ISMINI COTTLE (applicant/respondent) v CHRISTOPHER DAVID SMITH (first respondent/not a party to the application) RACQ INSURANCE LIMITED ACN 009 704 152 (second respondent/applicant) FILE NO/S: Appeal No 1870 of 2008 DC No 3621 of 2007 DIVISION: Court of Appeal PROCEEDING: Application for leave s 118 DCA (Civil) ORIGINATING COURT: District Court at Brisbane DELIVERED ON: 22 August 2008 DELIVERED AT: Brisbane HEARING DATE: 14 August 2008 JUDGES: Keane JA and Wilson and Dutney JJ Separate reasons for judgment of each member of the Court, each concurring as to the orders made ORDER: 1. Application for leave to appeal dismissed 2. Applicant to pay the respondent's costs of the application to be assessed on the standard basis CATCHWORDS: INSURANCE – THIRD-PARTY LIABILITY INSURANCE - MOTOR VEHICLES – COMPULSORY INSURANCE LEGISLATION – GENERALLY – QUEENSLAND – where the respondent applied under s 57(2)(b) of the Motor Accident Insurance Act 1994 (Qld) for an extension of time within which to commence proceedings in respect of her claim – where the respondent's delay in bringing the claim was not related to any need to comply with the pre-proceeding provisions of the Motor Accident Insurance Act 1994 (Qld) – whether the trial judge erred in exercising the discretion in favour of the respondent, and granting an extension of time within which to bring the proceedings District Court of Queensland Act 1967 (Qld), s 118(3) Motor Accident Insurance Act 1994 (Qld), s 57 Morrison-Gardiner v Car Choice Pty Ltd [2005] 1 Qd R 378; [2004] QCA 480, considered -- 1 of 7 -- 2 Ward v Wiltshire Australia P/L & Anor [2008] QCA 93, cited Winters v Doyle [2006] 2 Qd R 285; [2006] QCA 110, considered COUNSEL: S C Williams QC, with T Matthews, for the applicant M Grant-Taylor SC, with R D Green, for the respondent SOLICITORS: Quinlan Miller & Treston for the applicant Bennett & Philp for the respondent [1] KEANE JA: The respondent suffered personal injuries in a motor vehicle accident which occurred on 3 October 2003. The applicant in this Court is the licensed insurer under the Motor Accident Insurance Act 1994 (Qld) ("the MAIA") of the driver of the motor vehicle allegedly responsible for the respondent's injuries. [2] A notice of accident claim form, as required by s 37 of the MAIA, was first sent to the applicant on 8 December 2003. Certain compliance issues in respect of the notice were raised by the applicant, and the notice was re-executed by the respondent in January 2004. On 13 January 2004 the applicant advised that the notice was compliant with the Act. On 7 June 2004 the applicant admitted its liability for the respondent's injuries but reserved its right "to rely upon any failure by [the respondent] to comply with any statutory time limitations, including those imposed by the Limitation of Actions Act 1974." [3] On 11 October 2004 the respondent was examined by Dr Gillett, an orthopaedic surgeon, and, on 4 November 2004, a copy of Dr Gillett's report on the respondent's injuries was provided to the applicant. In October 2005, at the respondent's request, the applicant arranged for the respondent to be examined by Dr John Morris. [4] On 21 October 2005 the respondent was sentenced to a term of imprisonment. On 16 November 2005 the respondent's solicitor advised the applicant of the respondent's incarceration for a "non-parole period of two years" and that, upon the respondent's solicitor receiving further instructions, they would renew their correspondence with the applicant in respect of the respondent's claim. [5] The respondent's solicitor had formed the view that time did not run against the respondent for the purposes of the Limitation of Actions Act during the period of her incarceration. It has been, and remains, common ground that this view was erroneous. [6] It was, and remains, common ground that the time within which the respondent was entitled to commence her action for damages against the applicant expired on 3 October 2006. [7] On 13 September 2006 the respondent's solicitor drafted a document intended for facsimile transmission to the applicant. The document solicited the applicant's agreement to the view that time did not run against the respondent's claim during the period of her incarceration. Unfortunately, due to an oversight in the solicitor's office, this document was never sent to the applicant. [8] The respondent's solicitor assumed, from the absence of any response from the applicant, that it agreed with his view of the operation of the Limitation of Actions Act. This assumption was fortified by a letter dated 17 January 2007 from the -- 2 of 7 -- 3 applicant which enquired as to when the respondent's incarceration would cease and seeking a schedule of damages. [9] By letter dated 24 July 2007 the respondent's solicitor provided the applicant with information concerning the respondent's economic loss and advised that the respondent would be examined in January 2008 to update the medical evidence following her release on parole. [10] By letter dated 6 November 2007 the applicant advised the respondent's solicitor that the applicant asserted that the respondent's claim was time barred under the Limitation of Actions Act. [11] The respondent was released from custody on parole on 5 December 2007. On 20 December 2007 she applied, pursuant to s 57(2)(b) of the MAIA, to the District Court for an extension of time within which to commence proceedings in respect of her claim. That application was granted on 7 February 2008. [12] The applicant now seeks leave to appeal to this Court against the grant of the extension of time. Leave is necessary because of the provisions of s 118(3) of the District Court of Queensland Act 1967 (Qld). [13] If there were merit in the applicant's contention that the decision below has wrongly deprived it of a complete defence to the respondent's claim, then it would be appropriate to grant leave to appeal in order to correct that injustice. It is therefore convenient to proceed directly to consider whether there is merit in the applicant's challenge to the decision of the District Court. [14] In order to understand the applicant's argument, it is necessary now to set out in some more detail the reasoning which led the learned District Court judge to accede to the respondent's application for an extension of time. The decision of the learned primary judge [15] Section 57 of the MAIA provides: "Alteration of period of limitation (1) If notice of a motor vehicle accident claim is given under division 3, or an application for leave to bring a proceeding based on a motor vehicle accident claim is made under division 3, before the end of the period of limitation applying to the claim, the claimant may bring a proceeding in court based on the claim even though the period of limitation has ended. (2) However, the proceeding may only be brought after the end of the period of limitation if it is brought within– (a) 6 months after the notice is given or leave to bring the proceeding is granted; or (b) a longer period allowed by the court. …" [16] The learned primary judge held that because the notice of a motor vehicle accident claim had been given to the applicant, the discretion to extend time under s 57(1) of -- 3 of 7 -- 4 the MAIA was enlivened.1 I note that there is no challenge to this obviously correct conclusion. [17] The applicant submitted to the learned primary judge that, because the respondent's failure to commence proceedings within the time limited by the Limitation of Actions Act was in no way related to the need to comply with the pre-proceeding provisions of the MAIA, the Court's discretion under s 57 should not be exercised in the respondent's favour. In support of that submission, reference was made to observations made by me in Winters v Doyle2 in relation to the considerations which inform the exercise of that discretion. The applicant relied, in particular, on the passage in my reasons which followed my discussion of the reasons of the members of this Court in Morrison-Gardiner v Car Choice Pty Ltd.3 I said: "It can be seen that each member of this Court in Morrison-Gardiner v Car Choice Pty Ltd identified, as a consideration of central relevance to the proper exercise of the discretion conferred by s 57(2)(b) of the MAI Act, the relationship between the delay which has occasioned the need to seek relief from the operation of the statutory time bar and the plaintiff's attempts to comply with the requirements of the MAI Act. A plaintiff will usually be able to show good reason for the favourable exercise of the discretion conferred by s 57(2)(b) only if he or she can show that the delay which occurred was occasioned by a 'conscientious effort to comply' with the MAI Act."4 [18] The learned primary judge referred to this passage and went on to say: "… Keane JA refers to the usual path to success for an applicant seeking an extension of time pursuant to s 57(2)(b) of the Act. In the case before me, the applicant has not shown that the delay was occasioned by a 'conscientious effort to comply' with the Act. However, the absence of a relationship between the delay and difficulties in complying with the Act, is not fatal to this application for an extension of time. In paragraph 26 of His Honour's judgment, Keane JA said as follows: 'It should be emphasised that an explanation for delay which shows that the delay was associated with the plaintiff's attempts to comply with the requirements of the MAI Act, and evidence negativing of the possibility of unfair prejudice to the defendant, are not conditions precedent to the enlivening of the power conferred by s 57(2)(b) of the MAI Act. Rather, they are considerations relevant to the proper exercise of that power...' Fryberg J, in the same case, at paragraph 56, stated as follows: 'The discretion is at large. Considerations relevant to the exercise of the discretion are well-known and there is no 1 Cottle v Smith and Anor, unreported, Martin SC DCJ, District Court, Qld, No 3621 of 2007, 7 February 2008 at [26]. 2 [2006] 2 Qd R 285. 3 [2005] 1 Qd R 378 at 386 – 387, 390 – 391, 401 – 402. 4 [2006] 2 Qd R 285 at 292 – 293 [24]. -- 4 of 7 -- 5 challenge in this application to the decision in Morrison-Gardiner. They include whether the delay was occasioned by the need to comply with the Act. That is an important, but not a dominating consideration. Its existence favours an extension of time. Its absence is by no means fatal to such an extension.' Chesterman J, with whom the other members of the Court agreed, in Morrison-Gardiner v Car Choice Pty Ltd & Anor ([2005] 1 Qd R 378) stated as follows: 'The discretion is likely to be exercised favourably only in those cases where a claimant's circumstances make it difficult to comply with the requirements of the Act and commence proceedings within three years or where, despite making conscientious efforts to comply with the requirements of the Act, a claimant nevertheless does not do so within three years of the accident. Any delay on the part of a claimant in complying with the Act's requirements or in applying for an extension of time will be relevant to the exercise of the discretion. Claimants who ignore the obligations imposed on them by the Act or who make no conscientious effort to comply with them are unlikely to obtain an extension of time though, of course, each case must be decided on its individual merits.'" 5 (emphasis in original) [19] The learned primary judge went on to conclude that, although the respondent did not show good reason for the exercise of the discretion in her favour by the "usual path", there was nevertheless good reason to exercise the discretion in her favour. His Honour was of the view that the respondent had not dragged out the pursuit of her claim in any way that could be said to be due to fault on her part.6 The applicant had not been prejudiced by delay on the respondent's part.7 And, most importantly, the applicant had actually admitted its liability to compensate the respondent for her injuries. In this regard, his Honour said: "If the application were allowed the second respondent would be deprived of a complete defence to the applicant's claim. That is, of course, a significant consideration. The second respondent does not assert any other prejudice if the application were granted. The second respondent admitted liability in full in June 2004. After the limitation period had expired, the second respondent proceeded as if the period had not expired, seeking an offer of settlement in January 2007. The second respondent itself only became aware of the expiration of the limitation period in September 2007 and only advised the applicant 5 Cottle v Smith and Anor, unreported, Martin SC DCJ, District Court, Qld, No 3621 of 2007, 7 February 2008 at [29]. 6 Cottle v Smith and Anor, unreported, Martin SC DCJ, District Court, Qld, No 3621 of 2007, 7 February 2008 at [32]. 7 Cottle v Smith and Anor, unreported, Martin SC DCJ, District Court, Qld, No 3621 of 2007, 7 February 2008 at [33] – [34]. -- 5 of 7 -- 6 of its opposition to any extension of time by letter dated 6 November 2007." 8 Discussion [20] The considerations to which the learned primary judge referred were clearly relevant to whether the respondent had shown good reason for his Honour to exercise his discretion under s 57 in favour of the respondent. His Honour clearly understood that it was a consideration relevant to the exercise of his discretion that the applicant would be deprived of a defence to the respondent's claim. On the other hand, the circumstance that the applicant had admitted liability was a competing consideration, and one which was entitled to substantial weight. The applicant was advised that the respondent would not be in a position to pursue any negotiation towards the quantification of her admitted claim while she was in custody and raised no objection in that regard. His Honour was, in my respectful opinion, clearly correct in taking into account these, and the other considerations to which he referred as bearing on the question whether good reason had been shown for exercising the discretion in the respondent's favour. [21] The ultimate question in relation to the exercise of the discretion conferred by s 57 of the MAIA is whether good reason has been shown by the party seeking the benefit of the discretion for its exercise in his or her favour. The learned primary judge was correct to understand the observations in Winters v Doyle upon which the applicant seeks to rely as addressing considerations relevant to that ultimate question rather than as an attempt to define and confine the discretion by treating an explanation for the delay in terms of a conscientious attempt to comply with the Act as essential to an exercise of the discretion favourably to the claimant. His Honour's view also conforms to that expressed in the recent decision of Ward v Wiltshire Australia P/L & Anor.9 [22] Indeed, in this Court, the applicant eschewed the proposition that a demonstrated relationship between the reasons for a claimant's delay and the claimant's need to satisfy the pre-proceeding requirements of the MAIA is essential in order for a claimant to show good reason for exercising the discretion under s 57 in the claimant's favour. The applicant's argument, while avoiding this proposition, nevertheless sought to criticise the decision of the learned primary judge on the basis that his Honour had not recognised the importance of this consideration. But it is clear that his Honour did recognise that this consideration was material to the exercise of his discretion. His Honour simply concluded that the absence of a demonstrated relationship between the respondent's delay and the requirements of the Act had, in the circumstances of this case, a less compelling claim upon the exercise of the discretion than other relevant factors. [23] In this latter regard, the circumstances that the applicant admitted its liability to the respondent and (notwithstanding its earlier reservation of its right to rely upon the Limitation of Actions Act) acquiesced in the respondent's proposal for some limited delay in the quantification of the damages recoverable by the respondent serve radically to distinguish this case from Winters v Doyle. The learned primary judge did not err in proceeding on the basis that these circumstances tipped the balance in favour of exercising his discretion in favour of the respondent. 8 Cottle v Smith and Anor, unreported, Martin SC DCJ, District Court, Qld, No 3621 of 2007, 7 February 2008 at [35]. 9 [2008] QCA 93 at [61], [70]. -- 6 of 7 -- 7 [24] To the extent that the applicant seeks to emphasise in its submissions to this Court that the reason the respondent missed the time limit applicable to her action was an error of her solicitor unrelated to the requirements of the MAIA, it may be accepted that the respondent's personal blamelessness in this regard might not, of itself, establish good reason to exercise the discretion in favour of the respondent. But the learned primary judge did not treat this consideration as if it alone provided a sufficient basis on which to exercise his discretion in the respondent's favour. The respondent's personal blamelessness for the delay was merely one of a number of circumstances which his Honour was required to balance in order to come to a view as to whether he was satisfied that there was good reason to exercise his discretion in the respondent's favour. Conclusion and orders [25] I am respectfully of the opinion that the applicant is unable to show that the exercise of discretion by the learned primary judge miscarried in any way. Accordingly, there is no prospect that the appeal which the applicant wishes to pursue will be successful. [26] The application for leave to appeal should be dismissed. [27] The applicant should pay the respondent's costs of the application to be assessed on the standard basis. [28] WILSON J: I agree with the reasons for judgment of Keane JA, and with the orders His Honour proposes. [29] DUTNEY J: I agree with the reasons for judgment of Keane JA, and with the orders His Honour proposes. -- 7 of 7 --