Loiko v NZI Insurance Australia Ltd & Anor [2002] NSWCA 23 (21 February 2002)

Last Updated: 13 March 2002

NEW SOUTH WALES COURT OF APPEAL

CITATION: Loiko & Anor v NZI Insurance Australia Ltd & Anor [2002] NSWCA 23 revised - 12/03/2002

FILE NUMBER(S):

40734/00

HEARING DATE(S): 18 February 2002

JUDGMENT DATE: 21/02/2002

PARTIES:

Svetlana Loiko - First Appellant

Ludmilla Loiko - Second Appellant

State Rail Authority of NSW - First Respondent

Verena Riegstinsh - Second Respondent

JUDGMENT OF: Sheller JA Giles JA Young CJ in Eq

LOWER COURT JURISDICTION: District Court

LOWER COURT FILE NUMBER(S): DC 2557/00, DC 2558/00

LOWER COURT JUDICIAL OFFICER: Naughton DCJ

COUNSEL:

R de Meyrick - Appellants

D J Russell - Respondents

SOLICITORS:

T D Kelly & Co - Appellants

Turner Whelan - Respondents

CATCHWORDS:

MOTOR ACCIDENTS ACT - three year limitation period - extension where unable to commence proceedings at the end of the three years because of a bar in s 52(1A) - what is the period of extension - construction to promote the purpose of procuring settlement without court proceedings. ND.

LEGISLATION CITED:

DECISION:

Appeal allowed. Orders striking out the statements of claim and the associated costs orders set aside, respondent to pay the costs of the applications below and of the appeal but to have a certificate under the Suitors Fund Act if qualified.

JUDGMENT:

IN THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA 40734/00

DC 2557/00

DC 2558/00

SHELLER JA

GILES JA

YOUNG CJ in EQ

Thursday 21 February 2002

LOIKO & ANOR v NZI INSURANCE AUSTRALIA LTD & ANOR

Judgment

1 SHELLER JA: I have had the benefit of reading in draft the judgments of Giles JA and of the Chief Judge in Equity. I agree with Giles JA's reasons and conclusions. In the course of argument Mr D J Russell of Counsel, who appeared for the respondent, conceded that, on the facts of this case, if s52(4A) were to be construed as he submitted the appellants could have commenced court proceedings on 7 March 2000, that is seven days after they responded to his client's offer. Clearly the legislature contemplated that the insurer should have twenty-eight days in which to consider the claimant's response before the claimant could commence proceedings (s52(1A)(c)). Accordingly, the respondent's construction defeats in part the expressed object of s52 found in subs(1)(a) that is to encourage and facilitate the assessment and negotiation of a claim without the commencement of court proceedings. I accept that the construction of the subsection preferred by Judge Naughton was an available one. But, s33 of the Interpretation Act 1987 requires that in the interpretation of a provision of an Act a construction that would promote the purpose or object underlying the Act shall be preferred to a construction that would not promote that purpose or object. As Giles JA has explained, the alternative available construction urged by the appellants better promotes the purpose of procuring settlement without court proceedings and is to be preferred.

2 GILES JA: This is an appeal from orders striking out statements of claim filed in the District Court on the ground that the proceedings were commenced after the expiry of the limitation period imposed by s 52 of the Motor Accidents Act 1988.

3 Section 52(1) provides:

"(1) The objects of this section are:

(a) to encourage and facilitate the investigation, assessment and negotiation of a claim for damages without the commencement of court proceedings, and

(b) to impose a limitation period of 3 years for the commencement of legal proceedings for damages under this Act and to enable the extension of that period only if:

(i) the claimant can explain the reasons for the delay in not commencing the proceedings within the 3-year period, and

(ii) the claim is likely to result in an award of substantial damages,

or in the circumstances described in subsection (4A)."

4 The limitation period is imposed by s 52(4), which relevantly provides that a claimant is not entitled to commence proceedings in respect of a claim more than three years after the date of the motor accident to which the claim relates except with the leave of the court in which the proceedings are to be taken.

5 Section 52(4A) then provides -

"(4A) However, if at the end of the 3-year period referred to in subsection (4), the claimant has complied with section 50A but is unable to commence court proceedings because of the effect of subsection (1A) (b) or (c), the claimant may commence court proceedings within 28 days after the period under subsection (1A) (b) or (c), or the later of those periods, has elapsed."

6 Section 52(4A) requires reference to s 50A and s 52(1A), because the extension of the three years is conditioned upon compliance with s 50A and inability to commence proceedings within the three years because of the effect of para (b) or para (c) of s 52(1A), and further because the period of the extension is reckoned by reference to the periods for which the lastmentioned paragraphs provide.

7 Section 50A provides that a claimant is not entitled to commence court proceedings against another person until the claimant has given that person's insurer details of a number of matters sufficient to enable the insurer to make a proper assessment of the claimant's full entitlement to damages. It and s 52(1A) are part of a scheme to fulfil the object in s 52(1)(a).

8 Section 52(1A) provides -

"(1A) A claimant is not entitled to commence court proceedings against another person in respect of a claim until:

(a) ...

(b) 90 days have elapsed since the details required by section 50A were given to the other person's insurer, or

(c) if the other person's insurer has made an offer of settlement to the claimant before the claimant commences court proceedings, 28 days have elapsed from the date on which the claimant's response to the offer is communicated to the other person's insurer,

whichever is the later or latest."

9 The appellants were injured in a motor accident on 8 December 1996. They commenced the proceedings on 6 April 2000. Thus the proceedings were commenced out of time unless the appellants obtained leave to commence the proceedings or had the benefit of an extended period pursuant to s 52(4A). They did not seek leave, but relied on s 52(4A).

10 The appellants provided the information required by s 50A by letters sent to the insurer dated 7 December 1999, received by the insurer on 8 December 1999. By force of s 52(1A)(b), at the end of the three year period on 8 December 1999 they were unable to commence proceedings until 90 days had elapsed, that is, until 6 March 2000. Putting aside any contribution to the extended period by reference to the period for which s 52(1A)(c) provides, pursuant to s 52(4A) they had a further 28 days within which they could commence proceedings. The 28 days expired on 3 April 2000. The proceedings were still commenced out of time.

11 The appellants submitted that this did not exhaust the operation of s 52(4A). By a facsimile dated 5 January 2000 the insurer made an offer of settlement to the first appellant. According to an affidavit of the insurer's solicitor, the offer "was rejected by the Plaintiff's solicitor under cover of letter dated 28 February 2000". By a facsimile dated 10 January 2000 the insurer made an offer of settlement to the second appellant. According to another affidavit of the insurer's solicitor, this also was rejected "under cover of letter dated 28 February 2000". Taking 28 February 2000 as the date on which the appellants' responses to the offers were communicated to the insurer, the 28 days in s 52(1A)(c) elapsed on 27 March 2000. The appellants submitted that pursuant to s 52(4A) they then had a further 28 days within which they could commence proceedings. The 28 days expired on 24 April 2000. If the submission be correct, the proceedings were commenced within time.

12 The trial judge said -

"The error in the submission for the plaintiffs, in my opinion, is that they seek to rely on s 52(1A)(c) whereas they are not permitted to do so in the circumstances of this case because, for the purposes of s 52(4A), that provision can only be used if the relevant offer of settlement was made before the three year limitation period expired. As that did not occur it follows, in my judgment, that subparagraph (c) of s 51(1A) is irrelevant.

S 52(4A) depends upon a crystallisation of events as at the expiration of the three year limitation period. The relevant events are those referred to in s 52(1) of the Act. As the matter referred to in s 52(1A)(c) had not crystallised as at the expiration of the limitation period that provision is, in accordance with the submission carefully and correctly made by [counsel for the insurer], irrelevant in those circumstances."

13 The insurer maintained this construction of s 52(4A). The appellants had provided the details required by s 50A. As at the end of the three year period on 8 December 1999 they were unable to commence proceedings, but that was by force of s 52(1A)(b) and not by force of s 52(1A)(c). As at the end of the three year period s 52(1A)(c) did not preclude the commencement of proceedings, because the offers of settlement had not then been made. The insurer submitted that the period of extension must follow from, and be related to, the inability to commence proceedings as at the end of the three year period, and so the 28 days must be reckoned by reference only to the paragraph or paragraphs of s 52(1A) the effect of which precludes the commencement of proceedings. Depending on the facts the paragraph could be s 52(1A)(b) or s 52(1A)(c), or there could be preclusion by force of both paragraphs and the later lapsing period would be taken. But where s 52(1A)(c) did not preclude the commencement of proceedings as at the end of the three year period, there was no extension for the period under s 52(1A)(c). This, it was said, was supported by the use of "not entitled" in s 50A, s 52(4) and s 52(1A), so that s 52(4A) gave an entitlement and gave it only in the limited circumstances of compliance with s 50A and inability to commence proceedings within the three years because of the effect of para (b) or para (c) of s 52(1A).

14 This is an available construction of s 52(4A). But it is a construction which is not consistent with the object in s 52(1)(a) and the scheme to fulfil that object, in particular the bar in s 52(1A)(c) on commencing proceedings if the insurer makes an offer of settlement before the claimant commences court proceedings. An offer of settlement from the insurer precludes commencement of court proceedings until there has been a response to the offer and a further 28 days have elapsed. An offer of settlement before the commencement of proceedings will not necessarily be before the end of the three year period, as this case shows: the appellants were outside the three years but were still able to commence proceedings after 8 December 1999 because they had the benefit of the 90 days plus 28 days. The appellants submitted that on the construction of s 52(4A) accepted by the trial judge, an insurer could force a claimant out of time by making an offer of settlement late in the 90 days in s 52(1A)(b). Unless the claimant responded promptly, perhaps on the same day, the inability to commence proceedings prescribed by s 52(1A)(c) would mean that the proceedings could not be commenced within 28 days after the lapse of the 90 days. Unless there were some other basis for an extension, the claimant would be out of time.

15 On one view, this would not be a consequence of the construction of s 52(4A) maintained by the insurer. It could be argued that s 52(4A) overrode s 52(1A), because it said that court proceedings could be commenced and so the claimant was entitled to commence court proceedings notwithstanding s 52(1A)(c). However, that would cut out from the scheme fulfilling the object in s 52(1)(a) the bar under s 52(1A)(c) where an offer of settlement was made during the 90 days plus 28 days, and has little to commend it. The better view, in my opinion, is that there are two bars or sets of bars, one in s 52(1A) and the other in s 52(4), and that s 52(4A) permits extension of the three year period in s 52(4) but does not override s 52(1A). On the contrary, as I shortly explain s 52(4A) allows that the period under s 52(1A)(c) may be running.

16 The claimant can still apply for leave to commence the proceedings out of time. That is not a satisfactory answer to the appellants' submission, because leave can not be granted unless the delay is fully and satisfactorily explained and the likely damages reach a threshold amount, see s 52(4B). A construction of s 52(4A) which means that because the insurer made an offer of settlement an application for leave is necessary and the claimant faces a not insignificant barrier to obtaining leave is not attractive.

17 Is another construction available? The key, it seems to me, lies in the words in s 54(4A), "after the period under subsection (1A)(b) or (c), or the later of those periods, has elapsed". It may be accepted that in finding inability to commence court proceedings at the end of the three year period only the paragraph of s 52(1A) then precluding the commencement of proceedings is material. But it does not follow that the period of the extension must be reckoned only by reference to the period for which that paragraph provides. If, while the period under the paragraph is running, a period under the other paragraph starts to run, the key words set out above are appropriate to pick up the later of the periods.

18 What those words refer to is the period or periods which run under the paragraphs, not the periods stated in the paragraphs. If a period under s 52(1A)(c) is running as well as the period under s 52(1A)(b), the 28 days begins on the elapsing of the later of the periods. So reading the words does not mean that an offer of settlement made when the claimant is well and truly out of time will revive the ability to commence proceeding. Section 52(1A)(c) refers to making an offer of settlement before the claimant commences court proceedings, and so assumes that court proceedings can be commenced. If court proceedings can not be commenced, then there can not be the running of a period under s 52(1A)(c).

19 This alternative available construction of s 52(4A) better promotes the purpose of procuring settlement without court proceedings, and so is to be preferred. It follows that in the present case the appellants commenced the proceedings within time. The appeal should be allowed, the orders striking out the statements of claim and the associated costs orders should be set aside, and the respondent should pay the costs of the applications below and of the appeal but have a certificate under the Suitors Fund Act if qualified.

20 YOUNG CJ in Eq: The relevant facts and legislation have been well set out in the reasons of Giles JA and there is no purpose in me repeating them.

21 I think that if the exercise in which the court was involved was merely to establish the literal construction of s 52(4A) of the Motor Accidents Act, 1988 as an academic exercise, I would reach the view that the learned trial judge was quite correct.

22 In my view, read literally, this subsection only comes into play if on 8 December 1998, the putative plaintiff was unable to sue because of the suspension of rights imposed by paragraphs (a) (b) and/or (c) of s 52.

23 As at 8 December 1999, paragraph (a) imposed the suspension which would expire on 6 March 2000. The plaintiff would thus be required to file her claim by 3 April 2000.

24 The facts and circumstances bringing the case within paragraph (c) did not occur until 28 February 2000. These facts and circumstances did not extend the period of the extension provided for by paragraph (a). As the period in paragraph (c) had not commenced at the vital date, 6 December 1999, it is irrelevant. Therefore the plaintiff in commencing proceedings on 6 April 2000 was out of time.

25 However, when one reaches that point, one becomes uneasy for a number of reasons. One becomes more uneasy when one remembers that construction of statutes is an exercise involving a large slice of subjectivity. Different minds may be impressed by the same words in different ways. The principal reasons for my unease are:

(a) As pointed out by Mr de Meyrick, that construction leaves open the scenario whereby the insurer may, by making an offer of settlement on the last day of the extended period stymie the whole statutory procedure. In fact, the problem is deeper. If the offer is made the 89th day after the 50A particulars are supplied, realistically, there would be no time to respond to the offer.

(b) The construction means as a matter of practice (unless there are countervailing commercial considerations) that once the three year period (plus, perhaps 90 days) has elapsed, there is no need to consider making any offer of settlement nor, indeed, is there any need for a 90 day moratorium.

(c) It is an odd result to allow a claim to die a sudden death particularly after a recent offer of settlement was made and where the insurer has admitted liability (as it did years ago in the present case). This is indeed a singular result in a case where the governing statute encourages settlement of claims out of court and imposes duties upon insurers from the time of admission of liability. Of course, an answer is that plaintiff's solicitors must be alive to time limits, though this is a weak answer.

26 These problems make me re-examine my conclusion.

27 With respect, I do not see the construction put on the section by Giles JA, as being the true literal construction of the sub-section, though I acknowledge that a strong argument can be made for that proposition.

28 However, as acknowledged before us (though it does not seem to have been emphasized before the judge below), when construing the section, the court, under the general principles of modern purposive statutory construction, looks to the purpose of the statute. Indeed, s 2B of the instant statute requires the court to prefer the construction of the statute which would promote the object of the Act or the provision rather than one which would not promote that object.

29 Although the second of the objects stated in s 52 is to impose a three year limitation period on claims, the principal object is to encourage and facilitate the investigation, assessment and negotiation of a claim for damages without the commencement of court proceedings. Even a quick examination of ss 42-50A reinforce that aim. At the core of these sections is s 45(1) which imposes a duty on insurers to endeavour to resolve a claim, by settlement or otherwise, as expeditiously as possible. It is to be noted that the avoidance of the commencement of court proceedings is what is to be avoided unde s 52(1).

30 Mr D J Russell of counsel for the respondent emphasizes the object stated in s 52(1)(b). However, the whole flavour of the Act shows that this is very much a secondary object in aid of the general settlement of claims expeditiously without litigation. The words of s 52(1)(a) provide a more reliable guide to the general purpose of the statute.

31 Mr de Meyrick says that he sees that there may be a problem with s 52(1A)(c) in that no time limit is laid down for the claimant's response to the insurer's offer. However, the normal rules as to offers lapsing after a reasonable time has expired without response would operate to remove this difficulty.

32 Thus, a construction which still accepts a basic three year limitation period yet allows for the avoidance of the commencement of litigation by permitting a proper exploration of settlement offers is to be preferred.

33 In my view, the construction adopted by Giles JA, carries out the object of the statute generally and s 52 in particular.

34 Accordingly, I agree with the orders his Honour proposes.

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LAST UPDATED: 12/03/2002