Judgment date: 3 September 2010
Nominal Defendant v Staggs  NSWCA 224 NSW Court of Appeal1
- An insurer which intends to join the Nominal Defendant to proceedings must give notice of that intention within three months of receiving a claim form from the claimant, and must provide details of the allegations against the Nominal Defendant within two months thereafter.
- A Court may extend the time limit for providing notice to the Nominal Defendant if it provides a full and satisfactory explanation for the entire period of the delay.
- A Court can not extend the time for providing details of the allegations against the Nominal Defendant.
- Each additional month of delay in providing notice to the Nominal Defendant is significant.
- In considering an insurer's explanation for delay, a Court may draw inferences regarding the insurer's actions, knowledge and beliefs having regard to the insurer's status as an institutional litigant.
The claimant was a pillion passenger on a motorcycle driven by Richards Staggs, the defendant in the District Court proceedings (and first respondent to the appeal) which was involved in a motor accident occurring on 14 March 2006. The claimant was thrown from the motorcycle when Mr Staggs broke suddenly to avoid colliding with traffic which was merging ahead of him due to road works. A witness driving in front of Mr Staggs provided a statement to Police to the effect that an unidentified vehicle cut in front of him, causing him to brake suddenly.
The claimant served a claim form on Mr Staggs' CTP insurer on 28 August 2006. On 12 October 2006 the CTP insurer's solicitors wrote to Mr Staggs seeking his assistance in identifying any other parties who may be liable for the accident. Mr Staggs, who was living abroad, refused to cooperate. On 13 December 2006, the CTP insurer engaged an investigator to carry out inquiries on its behalf. On 21 February 2007, the investigator provided them with a copy of the witness' statement to police regarding the unidentified vehicle. The CTP insurer's solicitors did not attempt to contact the witness until late 2007.
Section 36(4) of the Motor Accidents Compensation Act 1999 (the Act) requires the CTP insurer to give notice to the Nominal Defendant of its intention to join them as a party within three months of receiving notice of the claim. In this case, the CTP insurer did not, in fact, give notice until 22 August 2008. As such, notice to the Nominal Defendant was given almost exactly 2 years after the CTP insurer received the claim form and, therefore, 1 year and 9 months late.
The CTP insurer also failed to provide full details of the allegations within two months thereafter in accordance with s 36(6).
The claimant commenced proceedings in December 2008. In August 2009 the CTP insurer sought an extension of time in which to give notice to the Nominal Defendant pursuant to s 36(5). Such extension was granted by the District Court. The Nominal Defendant sought leave to appeal this decision in the Court of Appeal.
Court of Appeal
The Court of Appeal found the trial judge erred in deciding that the CTP insurer provided a "full and satisfactory" explanation for its failure to give notice within three months of receiving the claim. The Court granted the Nominal Defendant leave to appeal and allowed the appeal.
The Court determined that although the time within which to give notice to the Nominal Defendant under s 36(4) of a claim could be extended, there could be no extension of time to give details of the allegations against the nominal Defendant beyond the two months allowed by s 36(6).
In interpreting the provisions of s 36, the Court determined that the CTP insurer must provide a full and satisfactory explanation for the whole of the delay, not only for the failure in providing notice to the Nominal Defendant within three months.
The Court also held that although s 36(5) and s 109(3) employ different language, this 'does not suggest a deliberate attempt to achieve a different operation'. Therefore the test as to whether the CTP insurer has provided a full and satisfactory explanation pursuant to s 36(5) should be the same as the test prescribed in s 66 of the Act.
However, the Court applied the principle in Russo v Aiello2 to raise an inference that, given that no other party was able to explain the delay and given the CTP insurer's interest in providing a full explanation, the CTP insurer has proffered all available information and thus the explanation is full. Additionally, the Court inferred that the explanation provided by the CTP insurer must be full because the CTP insurer is 'an institutional litigant which, in the absence of evidence to the contrary, should be assumed to be in the position to make informed decisions as to steps to be taken in protecting its interests in litigation'.
Nevertheless, the Court held the explanation was not satisfactory. The Court inferred that the CTP insurer was aware of the relevant time limits and was aware of and shared the views of its legal representatives in relation to investigating the potential for a claim against the unidentified vehicle, but despite this made no efforts to set the investigations in train within time. In addition the Court held that further significant delays in providing notice were not satisfactorily explained and that 'each month following the expiration of the period must be seen as significant'.
The trial judge's decision was set aside and the CTP insurer's motion to extend time for providing notice to the Nominal Defendant was dismissed.
This case confirms that the test applied for a full and satisfactory explanation under s 36(5) is the same as the test applied under s 109(3).
Importantly, this case also confirms that a Court will infer that an insurer is aware of all the relevant legislative provisions and is aware of and shares the views of its legal representatives.
Therefore an insurer is unlikely to obtain relief from a Court where it has relied on its legal representatives to act on its behalf and they have been guilty of unsatisfactory delay.
This is in stark contrast to the Court's attitude towards late claimants. Where a claimant has reasonably relied on his or her solicitor and as a result of the solicitor's acts or omissions finds themselves in default, this will ordinarily constitute a full and satisfactory explanation. The double standard appears to arise due to the insurer's status as an institutional litigant who has a high degree of knowledge of the relevant legislation and exercises a high degree of control over its solicitors. Therefore insurers need to be careful that their legal representatives adhere to all time limits prescribed by the Act.
Finally, this case confirms that where a party's delay in taking action is in breach of a provision of the Act, that party must act quickly at all times to remedy the delay and provide an explanation if required. Given the interpretation of the relevant provision by the Court, this principle is likely to apply equally to delays occasioned in giving notice of a claim under s 72 and commencing Court proceedings under s 109. Therefore insurers should be mindful to require claimants to remedy breaches of these sections in a timely manner.
1 Basten JA, Giles and Hodgson JJA
2  HCA 53 at paragraph 10
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