McGregor v Franklin [2006] ACTSC 69 (7 July 2006)

Last Updated: 12 February 2007

KATE McGREGOR v ANTHONY LINDSAY FRANKLIN

[2006] ACTSC 69 (7 JULY 2006)

PRACTICE AND PROCEDURE - notice before action - s51, Civil Law (Wrongs) Act 2002 - effect of non-compliance by claimant - failure to serve notice of claim- whether procedural or substantive provision - whether proceeding a nullity - discretion to strike out proceedings for non-compliance on application by respondent - discretion to forgive non-compliance

Civil Law (Wrongs) Act 2002, ss 49, 51, 52, 59(1)(c), 62, 79

Civil Law (Wrongs) Regulation 2003

Safety, Rehabilitation and Compensation Act 1988 (Cth), s50

Motor Accidents (Compensation) Act 1999 (NSW)

Personal Injuries Proceedings Act 2002 (Qld), s9

Road Transport (General) Act 1999, ss 192, 193, 196

State of Queensland v Coffey [2005] QSC 212

Emanuele v Australian Securities Commission [1997] HCA 20; (1997) 188 CLR 114

Woods v Bate (1986) 7 NSWLR 560

Hamilton v Merck and Company Inc [2006] NSWCA 55

Berowra Holdings Pty Ltd v Gordon [2006] HCA 32

No. SC 9 of 2006

Judge: Master Harper

Supreme Court of the ACT

Date: 7 July 2006

IN THE SUPREME COURT OF THE )

) No. SC 9 of 2006

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: KATE McGREGOR

Plaintiff

AND: ANTHONY LINDSAY FRANKLIN

Defendant

ORDER

Judge: Master Harper

Date: 7 July 2006

Place: Canberra

THE COURT ORDERS:

1. That the plaintiff be authorised to proceed further with her claim for damages for personal injury despite her non-compliance with the provisions of section 51 of the Civil Law (Wrongs) Act 2002.

2. That the defendant deliver a defence within fourteen days.

1. The plaintiff in this action seeks an order that she be authorised to proceed further with her claim notwithstanding her failure to serve a complying notice of claim under section 51 of the Civil Law (Wrongs) Act 2002. The defendant argues that the Court has no power to make the order the plaintiff seeks, and that her action is a nullity. If this argument fails, the defendant nevertheless submits that the Court should not exercise its discretion in the plaintiff's favour, but should strike out the originating application.

2. The action is one for damages for personal injuries arising out of a collision between the plaintiff, a pedal cyclist, and the defendant's motor vehicle, at Dickson on 14 January 2000. The plaintiff was on her way to work as a Commonwealth public servant. She initially made a claim for compensation from Comcare, which brings the present action on her behalf through the Australian Government Solicitor, a course open to Comcare under section 50 of the Safety, Rehabilitation and Compensation Act 1988 (Cth) (the SRC Act) where the plaintiff has not instituted proceedings herself. Comcare is a Commonwealth statutory authority established by that Act. Proceedings were commenced on 5 January 2006, nine days before the expiry of the limitation period.

3. It is conceded on behalf of the plaintiff that she failed to give the defendant written notice of her claim before the commencement of the action, and that she was obliged to do so by section 51 of the Civil Law (Wrongs) Act, which for convenience I shall refer to as the Wrongs Act.

4. Section 51 of the Act sets out what the notice is required to include, and this is expanded by the Civil Law (Wrongs) Regulation 2003. The section provides that the notice must be given within nine months of the accident or of the first appearance of symptoms of injury; or within four months of the claimant first instructing a lawyer about the matter or of identification of the respondent. If notice is not given within time, a reasonable excuse for the delay must be given to the respondent.

5. Section 59 of the Wrongs Act relevantly provides as follows:

59 Claimant's failure to give complying notice of claim

(1) If a claimant does not give a complying notice of claim, the claimant cannot proceed further with the claim unless -

...

(c) the Court, on application by the claimant -

(i) declares that the complainant has remedied the non-compliance; or

(ii) authorises the complainant to proceed further with the claim despite the non-compliance.

(2) An order of the Court under subsection (1)(c) may be made on conditions the Court considers necessary or appropriate to minimise prejudice to a respondent from the claimant's non-compliance.

6. Other provisions of the Wrongs Act which may be relevant to the present application are section 62 (Consequences of non-compliance with Part 5.2) and section 79 (Need for urgent proceeding). Section 62 deals with potential penalties to a plaintiff in costs and interest where the plaintiff has not complied with a requirement under Part 5.2 (which includes section 51). Section 79 provides that a court may give leave to a claimant to begin a proceeding for damages despite non-compliance with any requirement in Chapter 5, if the court is satisfied that there is an urgent need to bring the proceeding. Leave may be given on conditions, and the proceeding is stayed until the claimant complies with the requirements of Chapter 5.

7. The plaintiff lodged a claim for compensation with Comcare at the end of February 2000. Comcare paid medical expenses on her behalf of $4,273.60, and incapacity payments of $594.53. The latter related to the week immediately following the accident: the last treatment expense paid was for a consultation in July 2001.

8. In November 2004 Comcare instructed a firm of solicitors, Deacons, to commence proceedings in a number of matters where compensation claimants had not commenced proceedings themselves. The plaintiff's claim was one of those. Deacons sent a preliminary notice to NRMA Insurance Ltd in December 2004. In fact NRMA was not the insurer: the defendant's vehicle was registered in New South Wales and insured with Australian Associated Motor Insurers Ltd (AAMI). NRMA Insurance helpfully organised a search of NSW Roads and Traffic Authority records which disclosed that AAMI was the insurer of the defendant's vehicle at the date of the accident. NRMA informed Deacons that they had sent the preliminary notice to AAMI. It is common ground that AAMI did not receive it. In late February 2005 Comcare withdrew instructions from Deacons, and instructed the Australian Government Solicitor to commence proceedings in the plaintiff's name.

9. The Australian Government Solicitor's Office (AGS) applied for a police report on 7 March 2005, which they received early in April. On 20 April AGS located the plaintiff and sent her a Personal Injury Claim Notification Form for signature and return. They received the form back from the plaintiff on 9 June 2005. On 15 June, AGS sent the signed form to AAMI with a lengthy covering letter enclosing medical certificates, details of Comcare payments and a copy of the police report. They informed AAMI that they were acting for Comcare which was making a claim in the name of the plaintiff "under section 50". Unfortunately they did not mention the SRC Act. In the same paragraph, they did make reference to the Wrongs Act though without identifying this as an Act of this territory. It is hardly surprising that this caused some confusion at AAMI's North Sydney office.

10. On 22 June 2005, AGS sent a copy of the claim notification form to the defendant at his address recorded in the police report. Unfortunately Mr Franklin had moved and did not receive the letter. It was eventually returned by Australia Post unclaimed to AGS some time during August 2005.

11. AAMI wrote to AGS on 30 June 2005 acknowledging what they described as a "section 151Z Notice of Intent to Recover". They said that they would advise when they had made a decision about liability, and asked for some further documentation. Like AGS, AAMI did not identify the Act of which section 151Z formed part: it seems to have been a section of a New South Wales Act relating to workers' compensation.

12. On 6 July 2005 AGS wrote to AAMI providing the additional documentation requested. They explained that the claim was made under section 50 of the SRC Act, and that it included a claim for damages generally, not merely for the compensation payments. They referred again to the Wrongs Act and this time identified it as an ACT Act.

13. On 6 July 2005, in a letter to AGS mysteriously headed "Section 81 Notice" (again no reference to any Act) AAMI said that they accepted that the accident had occurred through the fault of their insured driver. They admitted breach of duty of care.

14. On 5 August 2005, AAMI wrote to AGS enclosing a cheque for the amount of the treatment expenses, which they described as "the recoverable amount pursuant to Section 151Z Recovery Action". They said that they had "deducted $594.53 for the first five days of Economic Loss. This amount is not compensable pursuant to the Motor Accident Compensation Act and Regulations of October 1999, Section 124."

15. On 12 August 2005 AGS wrote to AAMI returning the cheque. They pointed out that the Motor Accidents (Compensation) Act 1999 of New South Wales was not relevant, the collision having occurred in this Territory. They again stated that under the Wrongs Act, full damages were recoverable.

16. On 24 August, having by then received the letter to the defendant back from Australia Post, they sent the original Claim Form to AAMI with a covering letter requesting that AAMI accept service of it.

17. On 1 September 2005 AGS received the result of a search from the NSW RTA which gave a current address for Mr Franklin.

18. No further correspondence took place between AGS and AAMI until after commencement of the present proceedings. On 9 January AGS wrote to AAMI enclosing a copy of the originating application and informing them that they were arranging service on the defendant. Service was effected on 17 January 2006. After a further letter with no response, Ms Byrne of AGS telephoned AAMI and spoke to Mr Timmis. Initially Mr Timmis said that the AAMI file had been closed, the claim having been treated as finalised when the cheque was drawn and sent out in July 2005. He subsequently checked and confirmed that the cheque had not been presented for payment. He said that he would instruct solicitors immediately.

19. On 24 March 2006, the solicitors for the defendant entered an appearance. On 4 April, they informed AGS that, section 51 of the Wrongs Act not having been complied with, the action had been commenced prematurely and in their view should be struck out. They invited AGS to discontinue without penalty as to costs. On 5 April AGS responded that they did not agree and did not intend to discontinue.

20. On 24 May, the defendant's solicitors applied for an order that the originating application and statement of claim be struck out with costs. On 30 May AGS applied by notice of motion for an order authorising the plaintiff to proceed notwithstanding the failure to serve a notice of claim.

21. Mr Treffers, who appeared for the defendant, relies on a decision of Moynihan J of the Supreme Court of Queensland, State of Queensland v Coffey [2005] QSC 212, in which his Honour acceded to an application to strike out the originating process and statement of claim with costs, in circumstances where the plaintiff had not given notice under section 9 of the Personal Injuries Proceedings Act 2002 of that State before instituting proceedings. The plaintiff was self-represented: his action arose out of injuries which he alleged he had suffered while in prison. It appears from the report of the decision that the plaintiff was in default in respect of a number of statutory provisions, not merely the requirement to give notice before action. The decision is one of a single judge, who does not appear to have specifically considered whether the Court had any discretion to forgive the plaintiff's failure to give notice, no doubt because for other reasons the plaintiff's action was doomed in any event.

22. Counsel for the plaintiff relies on a majority decision of the High Court of Australia, Emanuele v Australian Securities Commission [1997] HCA 20; (1997) 188 CLR 114. The ASC had applied for the winding up of a number of companies on the ground of insolvency. The then Corporations Law provided that certain applicants for a winding up, including the ASC, could apply only with the leave of the Court. The ASC had not applied for leave: it was subsequently granted nunc pro tunc by the Full Federal Court. The High Court held by majority (Dawson, Toohey and Kirby JJ; Brennan CJ and Gaudron J dissenting) that the failure to obtain leave was a mere defect or irregularity not affecting the validity of the winding up order. The defect or irregularity was one which could be cured by granting leave nunc pro tunc, even by an appellate court. Kirby J devoted a portion of his judgment to setting out a number of general propositions relevant to statutory leave requirements. His Honour said at p. 147 "A feature of the administration of justice in more recent times has been a general disfavour towards procedural rigidities and a preference for a somewhat more flexible approach to statutory preconditions where these are of a procedural character." His Honour quoted McHugh JA when a judge of the NSW Court of Appeal in Woods v Bate (1986) 7 NSWLR 560 at 567:

In recent times the courts have shown great reluctance to invalidate an act done pursuant to a statutory provision because of the failure to comply with an antecedent condition. Speaking generally, I think that, at the present time, the proper approach is to regard a statutory requirement, expressed in positive language, as directory, unless the purpose of the provision can only be achieved by invalidating the result of any departure from it irrespective of the circumstances or resulting injustice.

Mr Crowe SC also referred to a recent NSW decision, Hamilton v Merck and Company Inc [2006] NSWCA 55, a decision of the Court of Appeal (Spigelman CJ, Handley and Tobias JJA) handed down on 30 March 2006. Action had been commenced in the Supreme Court of New South Wales in respect of torts committed, inter alia, in Queensland. The Court noted that the substantive law of Queensland governed those torts, whereas the procedural law of the forum applied to the entire action. Their Honours held that the provisions of the Queensland Personal Injuries Proceedings Act as to notice before action were procedural and not substantive. Accordingly compliance with those provisions was not necessary for the NSW action. This was so notwithstanding a provision in the Queensland Act which stated that certain of its provisions, including the notice before action requirement, were provisions of substantive as opposed to procedural law. Their Honours called this a "self-characterising legislative provision" and referred to a number of decisions where such provisions had proved to be ineffective. The section was not, in the opinion of the Court, determinative of the issue.

23. Since the hearing of the applications, the High Court has published its reasons for decision in Berowra Holdings Pty Ltd v Gordon [2006] HCA 32. This was an appeal from the Court of Appeal of the Supreme Court of New South Wales on appeal from a judge of the District Court of that State. The plaintiff at first instance had commenced proceedings for damages for a work injury less than six months after giving notice to his employer, in contravention of section 151C of the Workers Compensation Act 1987 of New South Wales as in force at the relevant time. The applicable subsection provided:

151C(1) A person to whom compensation is payable under this Act is not entitled to commence court proceedings for damages in respect of the injury concerned against the employer liable to pay that compensation until six months have elapsed since notice of the injury was given to the employer.

24. The contravention of the section had not been pleaded by the defendant in its defence. It was raised for the first time on the day before the date fixed for hearing. The action had proceeded until that point without reference by either party to the section. An offer of compromise under another section of the same Act had been made and remained open when the point was taken.

25. The judge at first instance accepted the defendant's submission that the plaintiff's failure to comply with the section rendered the proceedings a nullity. This decision was overturned by the Court of Appeal, which in the exercise of its discretion refused the defendant leave to amend its defence at so late a stage and permitted the plaintiff to accept the offer of compromise. The High Court (Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ in a joint judgment; Kirby J agreeing for separately expressed reasons) dismissed the appeal. The Court described the section as imposing on a claimant a duty of imperfect obligation. That is to say, the statute did not spell out the consequences of non-compliance. If it were the intention of the legislature to attach a consequence of nullity to non-compliance, one would expect plain words in the Act to that effect. Further, the language of the section imposed a duty on the claimant but did not contain any injunction directed to a court.

26. It was also relevant that whilst a proceeding in a court of limited statutory jurisdiction such as the District Court might be held to be a nullity, this was not a possibility in a court of unlimited jurisdiction such as the Supreme Court of New South Wales. The section referred to the commencement of proceedings in any court, not differentiating between courts in those two categories. This militated against a construction that non-compliance might in some circumstances cause proceedings to be a nullity.

27. It followed that the section was not to be read as if the entitlement of a plaintiff to commence court proceedings after the passage of six months from the giving of notice was a pre-condition to the jurisdiction conferred upon the Court to determine claims for damages for work injury. The better view was that the provision did not inevitably result in the invalidity of proceedings commenced in contravention of it. The section did not extinguish rights or create new rights, but rather postponed the remedy for the common law right to initiate proceedings in a court of competent jurisdiction. The right it conferred was conferred upon the defendant employer and had to be raised in accordance with the procedural rules of the court in which proceedings were commenced. Hence proceedings commenced by a worker in contravention of the section engaged the jurisdiction and procedural rules of the court in question, although the proceedings were vulnerable to an application by the defendant to strike out the initiating process or to move for summary dismissal. The upshot was that the effect of non-compliance would depend in each case on the actions of the defendant in the context of the relevant rules of court. The court would be required to exercise its discretion, and in doing so, to take numerous factors into account. In the particular case, the defendant did not take issue with the manner in which the Court of Appeal had exercised the discretion.

28. It seems to me that the reasoning of the High Court applies with equal force to section 51 of the Wrongs Act. Non-compliance by the plaintiff does not render the proceedings a nullity but exposes the plaintiff to an application, as has been made here, seeking that the action be dismissed.

29. This construction of the legislation is supported by the inclusion in the Act of section 59, which gives the Court in which proceedings are commenced the power, on application by the claimant, to declare that the non-compliance has been remedied, or to authorise the claimant to proceed further with the claim despite the non-compliance. Court is defined in section 49 to mean the court in which a proceeding has been begun, or, if no proceeding has been begun, a court with jurisdiction to hear the claim. It seems to me that section 59 contemplates an application to a court in which a proceeding has been begun, for a declaration or authorisation under subsection (c), an interpretation inconsistent with the conclusion that a proceeding commenced in contravention of section 51 is a nullity.

30. Counsel for the defendant argued that the plaintiff, before instituting proceedings, should have sought leave under section 79 to begin the proceeding despite the non-compliance, on the basis that there was an urgent need to do so. True it is that the limitation period was within days of expiring when proceedings were commenced. I accept that it would have been open to the plaintiff to make an application under section 79, but there is nothing in the section or elsewhere in the Act which leads me to the conclusion that the existence of section 79 removes the power of the Court to make an order under section 59(1)(c).

31. For those reasons I am satisfied that the Court has the power to make the principal order sought by the plaintiff. I am also satisfied that there is power to make the principal order sought by the defendant, and that it would be appropriate to make that order if I were not persuaded to exercise my discretion in the plaintiff's favour under section 59.

32. Perhaps oddly, section 51 requires the notice before action to be given to the respondent: in this case, the named defendant. There is no obligation on the plaintiff to give notice to the insurer, even in cases like the present one where there is known to be compulsory statutory insurance and the identity of the insurer can be readily established on search. Compulsory motor vehicle third party insurance covers the driver as well as the owner of a motor vehicle, and there is an irrebuttable presumption of agency in the legislation of each of the states and territories: see for example section 196, Road Transport (General) Act 1999. Thus the defendant in an action for damages for personal injury arising out of a motor vehicle collision may be a car thief. The owner and driver are required to notify the authorised insurer of receipt of notice of intention to make a claim: for example, section 192, Road Transport (General) Act 1999. It can no doubt be assumed that most respondents will notify the relevant insurer, and that most claimants will provide copies of the section 51 documents to the insurer as well as to the respondent. But non-compliance does not affect the plaintiff's right to proceed and ultimately to recover damages from the insurer. Compliance with section 51 is thus not guaranteed to bring the claim to the attention of the insurer immediately or at all. Where the proposed defendant does not bring the matter to the attention of the insurer, presumably the insurer will not find out about it until served with a copy of the originating process: cf section 193, Road Transport (General) Act 1999. This being so, it is hard to see that compliance with section 51 of the Wrongs Act will necessarily put the insurer in any better position than it would have been in if the section had not been enacted.

33. In the present case, because of the defendant's change of address, he has not been given notice direct at all, although he has been served with the originating process. The intention of the legislation could perhaps be achieved in some measure by staying the action until Mr Franklin is provided personally with the section 52 documentation. It does not seem to me that a stay for that purpose would achieve much in practical terms. It is the insurer, AAMI, which will be liable for any damages recovered on the plaintiff's behalf. AAMI will have the carriage of the action on behalf of the defendant. AAMI has already admitted breach of duty of care, although Mr Treffers indicated that consistently with the admission the defendant could plead contributory negligence and might decide to do so. AGS have located the defendant at his new address. It is now known to AAMI who may wish to have their solicitors take a statement or proof of evidence from him.

34. I am satisfied that AAMI has been on notice of the claim since June 2005. The plaintiff in this case took no steps to commence proceedings herself, and seems to have been unaware that she had any entitlement to do so. The proceedings are brought by Comcare in the plaintiff's name. If the section 51 notice and accompanying documents had been provided to the defendant personally during June 2005, I would have regarded the circumstances surrounding the claim as giving rise to a reasonable excuse for late service under subsection 51(5). Whilst it is unnecessary for me to make a definitive finding about it, it seems to me strongly arguable that the notice would not have been late in any event, because it would have been given less than four months after the date the claimant first notionally instructed a lawyer to provide advice about seeking damages for personal injury: subsection 51(3).

35. AAMI responded inappropriately to the notice it was given in June 2005, but I think that this was because of inexperience on the part of, or lack of proper training of, the claims officer to whom the matter was allocated at AAMI. It does not seem to me that any fault from that point as to notice can be laid at the door of the plaintiff, Comcare or AGS.

36. Counsel for the defendant was unable to identify any actual prejudice to the defendant arising from the failure to give notice to the defendant personally. If the Court were to decline to exercise its discretion in favour of the plaintiff, it would follow that the action would be struck out. The limitation period has now passed and it would be too late for proceedings on behalf of the plaintiff to be begun again. AAMI as the defendant's insurer would in those circumstances avoid liability entirely for a claim in respect of which it admits breach of duty of care and has tendered an amount equal to the out-of-pocket expenses.

37. I am satisfied that the discretion should be exercised in the plaintiff's favour, authorising her to proceed further with the claim despite her non-compliance or the non-compliance on her behalf with section 51 of the Wrongs Act.

38. The defendant's notice of motion of 24 May 2006 will be dismissed.

39. An order was sought on behalf of each party that the other pay the costs of its application. The defendant's application, which was filed first, has failed. The plaintiff's application has succeeded, but was made necessary only because of non-compliance with the requirements of section 51. She came to the Court seeking an indulgence, which would normally be granted to her only on terms as to costs. If the indulgence had not been granted, the defendant's application would have succeeded. The defendant cannot be criticised for taking the point.

40. I take into account, in relation to costs, that this is the first contested application in relation to failure to comply with section 51 of the Wrongs Act. Its outcome has been considerably influenced by the decision of the High Court in Berowra Holdings Pty Ltd v Gordon, which was not decided until after both applications were made, argued, and my decision reserved. The decision is potentially a significant one for plaintiffs and insurers generally. I take account of the fact that the application on behalf of the plaintiff was instituted by AGS on instructions from Comcare. I was informed in the course of the hearing by counsel for the plaintiff that the plaintiff would not be required to bear the impact of any costs order personally.

41. I have considered making the costs of both applications costs in the cause, but am disinclined to do so having regard to the defendant's admission of breach of duty of care, which would seem likely to result in the plaintiff eventually obtaining the benefit of such an order. It seems to me fairer in the interests of justice to allow the costs to lie where they fall. Accordingly I do not propose to make any order as to costs.

42. The plaintiff's notice of motion also sought an order that the defendant deliver a defence within seven days. Nothing was said on behalf of either party about this order on the hearing of the applications. It seems to me appropriate that such a direction be made. Fourteen days would seem a more appropriate period. I propose to direct accordingly.

I certify that the preceding forty-two (42) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Master.

Associate:

Date: 7 July 2006

Counsel for the plaintiff: Mr R L Crowe SC

Solicitors for the plaintiff: Australian Government Solicitor

Counsel for the defendant: Mr M F Treffers

Solicitors for the defendant: Minter Ellison

Date of hearing: 2 June 2006

Date of order: 7 July 2006