Australia: Joining the Nominal Defendant – time limits apply

Nominal Defendant v Staggs and Ors [2010] NSWCA 224

An infrequently encountered provision of the Motor Accidents Compensation Act (MACA) was the subject of analysis and interpretation in this case, in which our Sydney office represented the Nominal Defendant.

The case reinforces the Court of Appeal's approach (eg Richards v Cornford (No 3) [2010] NSWCA 134) that insurers, as institutional litigants, will be assumed to know the law relating to their sphere of operation unless there is evidence to the contrary, and where that law imposes time limits on their actions, they (and their legal advisors) need to act quickly.

The facts

While on vacation in Sydney in March 2006, two American nationals (Mr Staggs and Ms Towers) were involved in an accident on the Warringah Freeway at North Sydney when the Harley Davidson motorcycle Mr Staggs was riding and on which Ms Towers was a pillion passenger braked suddenly in response to merging traffic ahead, causing the rear wheel of the motorcycle to lock, and throwing rider and passenger to the road. Ms Towers suffered significant injuries.

Ms Towers made a CTP claim against Mr Staggs in late August 2006, and his CTP insurer referred the file to its solicitors in October 2006.

A statement taken by police at the scene on the day of the accident from the driver of the vehicle in front of Mr Staggs (Nathan Cox) suggested the possible involvement of a third unidentified vehicle which merged into the lane in front of Mr Cox, causing him to brake. This statement came into possession of the CTP insurer's solicitors in February 2007.

The CTP insurer accepted liability for Ms Towers' claim in June 2007.

In August 2008, the insurer's solicitors sent notice to the Nominal Defendant advising that the insurer intended to join the Nominal Defendant to seek contribution towards Ms Towers' damages, alleging an unidentified vehicle contributed to the accident in which she was injured. Under s36(3) of MACA, such notice should have been given within three months of the insurer receiving Ms Towers' claim form (ie by late November 2006). The Court has the power to extend the time for giving notice (s36(5)), provided the insurer provides a full and satisfactory explanation for the failure to give notice within the three month period.

The Nominal Defendant challenged its joinder to the claim, on the basis that the time in which to join it had passed, and no extension of time had been granted.

In August 2009, the CTP insurer's solicitors filed a motion in the District Court seeking to extend the time within which to give notice to the Nominal Defendant.

The CTP insurer's evidence explaining the delay consisted of two affidavits sworn by an employed solicitor in the firm representing the CTP insurer, and he was cross examined. No evidence was advanced from any officer employed by the CTP insurer, or from the supervising partner at the law firm.

The evidence from the solicitor was in essence that he was at all times aware of the s36 time limit regarding giving notice to the Nominal Defendant, but that by the time it expired, he had no reason to suspect the involvement of an unidentified vehicle. He said he conducted a number of enquiries after the notice period expired, and it was not until July 2008 that he felt he was in a position to certify a cross claim against the Nominal Defendant, and it was then he first attempted to give notice to the Nominal Defendant.

That notice was defective, but effective notice was ultimately given on 22 August 2008 (21 months late). However, no particulars of the alleged negligence of the Nominal Defendant were given within a further two months as required by s36(6) MACA.

The Nominal Defendant argued that sufficient information on which the CTP insurer could have alleged involvement of an unidentified vehicle was contained in a witness statement taken by police on the day of the accident. No attempts were made to obtain access to the police file until after the notice period expired, and although the statement was in the solicitors' possession from late February 2007, notice was not given to the Nominal Defendant for a further 18 months. The Nominal Defendant also argued that the solicitor did not need to be in a position to certify a cross claim in order to give the s36(3) notice. It simply needed to have reason to suspect involvement, and give early notice so that the Nominal Defendant could conduct timely enquiries before the evidentiary trail went cold. The Nominal Defendant also asserted that joining it so late would be highly prejudicial as witness memories had faded (evidenced by enquiries the CTP insurer's solicitor made somewhat belatedly).

On 14 October 2009, Garling DCJ extended the notice period to 23 October 2009 (thus giving the CTP insurer a chance to comply with s36(6) and to supply particulars of the Nominal Defendant's negligence).

As the extension of time was the result of an interlocutory decision, the Nominal Defendant needed leave to appeal. Basten JA noted that s36 MACA had never been the subject of consideration by an appellate court, and leave to appeal was granted.

The Appeal

The Appeal was unanimously allowed.

At the heart of the appeal was whether a 'full and satisfactory explanation' of delay had been provided by the CTP insurer.

Hodgson JA considered that the evidence before Garling DCJ contained virtually no explanation of what occurred in the first three months after the insurer received Ms Towers' claim, or of why the three month notice period passed without notice being given.

He observed that the CTP insurer could have raised a number of matters (eg that the person dealing with the file within the CTP insurer's office did not think of joining the Nominal Defendant; or was not aware of the time limits etc) which might have provided a relevant and perhaps even full explanation, and that would have allowed the court to consider if the explanation was satisfactory. 'Satisfactory' for the purpose of the section means 'excusable'. But as no pertinent explanation had been given, it was not a full explanation, and the Court could not assess whether the delay was excusable. The extension of time should not have been granted, and the appeal should be allowed.

Basten JA (Giles JA agreeing) held that as the CTP insurer had an interest in providing a full explanation, it was therefore appropriate to infer that all information which was available to explain the delay had been provided to Garling DCJ. The explanation given was therefore 'full'. It was not, however, 'satisfactory' because it did not excuse the failure to give notice of intention to join within three months, or even sooner than notice was ultimately given (almost two years after the CTP insurer received Ms Towers' claim). Because there was no evidence to the contrary offered by the insurer, it was appropriate for the Court to infer that the CTP insurer was both aware of and shared the views of its solicitors that there was reason to investigate the role of an identified vehicle in causing the traffic ahead of Mr Staggs to slow suddenly. Those investigations had not even started by the time the three month notice period expired, and there was a lack of urgency about them once they were commenced which resulted in many months of delay accruing for which no satisfactory explanation could be provided.

Basten JA (Giles and Hodgson JA agreeing) noted that once a CTP insurer had given notice of intention to join the Nominal Defendant, the insurer then had a further two months to provide full details of the allegations of negligence made against the driver of the unidentified vehicle (s36(6)), and that period could not be extended.

It was no doubt for this reason that the CTP insurer asked the Trial Judge to extend the time to give notice until late October 2009 (almost three years after notice should have been given), because the insurer failed to comply with s36(6) (it did not give particulars of negligence to the Nominal Defendant) when notice was given in August 2008.

Comments

Giving early notice to the Nominal Defendant is important, noting the obvious difficulties inherent in dealing with a claim against an unknown driver.

CTP insurers should consider at an early stage whether an unidentified vehicle negligently contributed to an accident. If it is appropriate to give notice of intention to join, and notice is given, particulars then have to be provided to the Nominal Defendant within a further two months. No extension of that period is possible.

The giving of notice doesn't compel the CTP insurer to join the Nominal Defendant to a claim, but merely permits it to do so at a later stage, providing the other preconditions in s36 have also been satisfied.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.