LIMITATION OF ACTIONS - GENERAL - APPLICATION OF STATUTES OF LIMITATION - whether s 11 Limitation of Actions Act applies to action against insurer pursuant to s 52 Motor Accident Insurance Act

APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - QUEENSLAND - appeal against refusal to join insurer outside 3 year limitation period - whether appeal by way of rehearing or is appeal in strict sense - whether decision is a "final decision in a proceeding" as defined in r 765 Uniform Civil Procedure Rules.

Attorney-General v Vernazza [1960] AC 965

Baker v Campbell [1983] HCA 39; (1983) 153 CLR 52

Builders' Licencing Board v Sperway Constructions (Syd) Pty Ltd [1976] HCA 62; (1976) 135 CLR 616

Do Carmo v Ford Excavations Pty Ltd [1984] HCA 17; (1984) 154 CLR 234

Duralla Pty Ltd v Plant [1984] FCA 146; (1984) 2 FCR 342

Hayward v Darling Downs Aircraft Services Pty Ltd [1993] 2 Qd R 153

Ketteman v Hansel Properties Ltd [1987] AC 189

Lynch v Keddell [1985] 2 Qd R 103

Melbourne Corporation v Barry [1922] HCA 56; (1922) 31 CLR 174

Pyneboard v Trade Practices Commission [1983] HCA 9; (1983) 45 ALR 609

Read v Brown (1888) 22 QBD 128

Sargood Brothers v Commonwealth [1910] HCA 45; (1910) 11 CLR 258

Weldon v Neal (1887) 19 QBD 394

Yrttiaho v Public Curator of Queensland [1971] HCA 29; (1971) 125 CLR 228

Limitation of Actions Act 1974, s 11

Motor Accident Insurance Act 1994, s 34 and s 52

Supreme Court of Queensland Act 1991, s 135

Uniform Civil Procedure Rules 1999, r 69 and r 765

Solicitors: Quinlan, Miller & Treston for the appellant

1 PINCUS JA: I have read the reasons of Chesterman J in which the circumstances giving rise to this appeal are set out.

2 At first sight s 11 of the Limitation of Actions Act 1974 might be thought to apply to joinder of the insurer under s 52 of the Motor Accident Insurance Act 1994. But on a closer examination of the section that conclusion seems difficult to sustain. The respondent's difficulty is that insofar as the action is one to which the insurer is a party, it is hard to characterise it as an action for damages for negligence. The expression "action for damages for negligence" in its natural meaning conveys the idea of an action in which the defendant is sought to be made liable, whether primarily or vicariously, for negligent acts; but here there is no allegation of negligence against the insurer.

3 I agree with Chesterman J, for the reasons his Honour gives, that s 11 of the Limitation of Actions Act 1974 does not protect an insurer joined in such a case as this. It follows that the basis of the decision below is removed; that basis is the strong rule against joining defendants out of time, stemming ultimately from Weldon v Neal (1887) 19 QBD 394.

4 Weldon v Neal dealt with amendment of pleadings, not joinder, but its reasoning has been applied to joinder. In its original field of operation, amendment of pleadings, the rule in Weldon v Neal has gone, since 1965, when O 32 r 1 of the Supreme Court Rules was amended to allow more liberal amendments out of time. Now we have r 69 of the Uniform Civil Procedure Rules 1999 which destroys the former rule against addition of defendants out of time, which rule was based on an extension of Weldon v Neal and is exemplified by Lynch v Keddell [1985] 2 Qd R 103. Rule 69 applies to pending proceedings: see s 135 of the Supreme Court of Queensland Act 1991. Even if that section were not there, it seems that the rule would so apply, by analogy with that considered in Yrttiaho v Public Curator of Queensland [1971] HCA 29; (1971) 125 CLR 228.

5 It appears to me to follow that, if the insurer in this case had the protection of the limitation statute, this Court would have power to, and should, order the joinder of the insurer MMI Insurance Limited. That is so because r 69 applies to the case as it comes before us, for the reasons explained by Chesterman J and on the authority of Attorney-General v Vernazza [1960] AC 965.

6 I agree with Chesterman J that r 69(1)(b)(i) is applicable. I am also of the opinion that r 69(2)(g) applies in favour of the appellant, the justification for that being the matters set out in para 36 of the reasons of Chesterman J.

7 Subject to these observations I agree with the reasons given by Chesterman J. I also agree with the orders his Honour proposes.

8 THOMAS JA: I agree with the reasons of Chesterman J and with the orders which he proposes.

9 CHESTERMAN J: If the appellant proves the allegations set out in his statement of claim his journey to work on 10 July 1995 will have been an alarming misadventure compounded by serious misunderstanding. According to the pleading he travelled in a bus which was owned by the respondent ("the Council") and driven dangerously by one of its employees. His injuries, which are described as a brain stem injury and a spinal injury, occurred when the appellant, who was standing, was thrown off his feet and into the front stairwell of the bus when it braked savagely. The appellant was taken by ambulance to the Royal Brisbane Hospital where the severity of his injuries went undetected. It is claimed that that those who examined him at the hospital were so unsympathetic that they forcibly removed him from the premises and threw him into the back of his car. His injuries are said to result from one or both of the incidents. The appellant contends that he is completely disabled.

10 On 28 May 1997 the appellant commenced an action for damages by issuing a writ of summons and statement of claim against the Council and the North Brisbane Hospitals Board which was alleged to own and operate the Royal Brisbane Hospital. By an order made without opposition in chambers on 27 November 1998 the name of the second defendant was amended to the State of Queensland.

11 Section 34 of the Motor Accident Insurance Act 1994 ("the Act") obliges "a person who proposes to claim damages for personal injury arising from [a motor vehicle] accident" to give written notice to the insurer of the vehicle by, through or in connection with which the person was injured, within one month of first consulting a lawyer "about the possibility of making a claim".

A notice complying with the section was given on behalf of the appellant on 28 July 1995. The insurer of the bus was MMI Insurance Limited ("MMI").

12 Section 37 of the Act provides that before bringing an action for damages for personal injury arising out of a motor vehicle accident, a claimant must give written notice of the claim to the insurer setting out the details specified in section 37(1). It must be given within nine months after the accident or the first appearance of symptoms of injury. Notice complying with section 37 has also been given.

13 Section 52 of the Act provides that:

"(1) If an action is brought in a court for damages for personal injury arising out of a motor vehicle accident, the action must be brought against the insured person and the insurer as joint defendants.

(4) If judgment is given in favour of the claimant on the claim related to personal injury, the judgment must be given against the insurer and not the insured person ...".

The Council was the "insured person" under the policy issued by MMI in respect of the bus. In contravention of section 52 the appellant's writ did not also name the insurer as a defendant. The omission is remarkable. The solicitors for the Council wrote to the appellant's solicitors on 23 July 1997 drawing attention to the requirements of section 52 and pointing out that the proceedings did not comply with the Act. No response was forthcoming and on 24 September 1997 the Council's solicitors wrote again to bring the matter to the appellant's solicitors' attention. This letter, too, was ignored as was a further reminder contained in a letter of 3 December 1997.

14 The period for bringing an action for damages for personal injury fixed by section 11 of the Limitation of Actions Act 1974 ("the Limitation Act") expired on 10 July 1998. The appellant had not, before then, joined MMI as a party to his action or even indicated that he intended to do so.

On 13 October 1998 the Council issued a summons seeking an order that the appellant's "claim against the first defendant be struck out". On 18 November 1998 the appellant counter attacked by a summons seeking an order that the insurer be joined as a defendant and that the name of the second defendant be altered to "The State of Queensland".

15 The Chamber judge who heard both summonses noted that:

"As a general proposition the requirements of the 1994 Act must be complied with if valid proceedings are to be commenced and prosecuted claiming damages for personal injury arising out of a motor vehicle accident ...

The statute does not make it clear on what basis the statutory insurer is joined as a party. The Act does not appear to create a statutory cause of action for damages for personal injury against the insurer. Nothing in the Act makes the insurer the original tortfeasor. But it is clear from s. 52 that the insurer must be joined ...

The real question is ... the relevance of the requirement that the statutory insurer be a party when considering the application of the limitation statute ...".

"Ultimately I have come to the conclusion that s. 52 requires an action to be commenced within the three year limitation period against both the tortfeasor and the statutory insurer as joint defendants. Once the limitation period has expired then the statutory insurer could only be added as a defendant if the matter could be brought within the well established principles applicable where it is sought to add a defendant after the expiration of the limitation period."

His Honour thought that consistently with the principles expressed in Lynch v Keddell [1985] 2 Qd R 103 the insurer could not be joined because the circumstance which constituted the reason for the omission to join it within time was not "special or peculiar". The failure to respond to the Council's timely warnings of the need to comply with section 52 indicated the appellant's solicitors were grossly negligent or openly defiant of the requirements of the Act. In either case,

"It is not a case of inadvertence or the [appellant's] side being lulled into a sense of false security by some conduct on the part of the insurer."

An order was made striking out the appellant's claim against the Council.

16 Before passing to the arguments of the parties section 57 of the Act should be noted. It provides:

"(1) If notice of a motor vehicle accident claim is given ... 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 6 months after the day on which the notice is given ...

(5) If a period of limitation is extended under part 3 (Extension of Periods of Limitation) of the Limitation of Actions Act 1974, this section applies to the period of limitation as extended under the part."

17 The appellant challenges the judgment of the Chamber judge by submitting that section 52 does not create a new statutory cause of action and is not repugnant to the provisions of section 11 of the Limitation Act so that the insurer may be joined as a party to the action at any time prior to judgment.

The Council submits that the appellant's cause of action has been reconstituted by the provisions of the Act into an action against the tortfeasor (the insured person) and the insurer with the result that section 11 applies to actions for damages for personal injuries regulated by the Act.

18 Section 11 of the Limitation Act provides that:

"... an action for damages for negligence, trespass, nuisance or breach of duty (whether the duty exists by virtue of a contract or a provision made by or under a statute or independently of a contract or such provision) in which damages claimed by the plaintiff consist of or include damages in respect of personal injury to any person or damages in respect of injury resulting from the death of any person shall not be brought after the expiration of 3 years from the date on which the cause of action arose."

A cause of action is "every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to a judgment of the court": see Read v Brown [1888] 22 QBD 128 at 131. According to Wilson J in Do Carmo v Ford Excavations Pty Ltd [1984] HCA 17; (1984) 154 CLR 234 at 245:

"In an action for negligence, it consists of the wrongful act or omission and the consequent damage."

19 Having made out a case against an insured person for damages for personal injury the only facts which a plaintiff needs to prove to obtain judgment against an insurer are the existence of a policy of insurance pursuant to which the insurer indemnified the insured person against liability in respect of personal injury caused by, through or in connection with the motor vehicle the subject of the policy.

20 The words of section 11 do not appear referable to an action against an insurer who must, by section 52, be made a party to an action against an insured person for damages for personal injuries. Section 11 contemplates a cause of action "for damages for negligence, trespass, nuisance or breach of duty ... in which damages claimed ... consist of ... damages in respect of personal injury ...". The damages claimed against an insurer may be within the terms of the section but the facts out of which the entitlement to claim damages arise cannot be depicted as an action for damages for negligence or breach of duty. Section 52 does not effect a substitution of the insurer for the tortfeasor. It requires the insurer to be made a party in addition to the insured person, and directs judgment be given against the insurer rather than the person who would be made liable but for section 52(4) of the Act. The insurer is not made vicariously liable for the fault of its insured.

21 There is, I think, a statutory cause of action but it depends only upon proof of the insurance policy. It is not a cause of action for negligence or breach of duty. There is no warrant for reading section 52 as creating a cause of action in favour of an injured plaintiff against an insurer who is deemed to have acted, or omitted to act, negligently.

22 The barring of actions by reference to a period of time which has elapsed since the right to sue arose is a matter entirely controlled by statute. Without statutory intervention a plaintiff whose rights had been infringed could sue at any time as long as the defendant remained alive or his estate could be sued in his stead: see Collin v Duke of Westminster [1985] QB 518 at 600.

"It is a well recognized rule in the interpretation of Statutes that an Act will never be construed as taking away an existing right unless its language is reasonably capable of no other construction."

Per O'Connor J in Sargood Brothers v Commonwealth [1910] HCA 45; (1910) 11 CLR 258 at 279. The point has frequently been repeated: Pyneboard Pty Ltd v Trade Practices Commission [1983] HCA 9; (1983) 45 ALR 609 at 617; Melbourne Corporation v Barry [1922] HCA 56; (1922) 31 CLR 174 at 206; Baker v Campbell [1983] HCA 39; (1983) 153 CLR 52 at 123. If section 11, construed according to this principle, does not impose a time limit on the institution of a suit against an insurer it may be sued at any time subject to the need to commence an action against the tortfeasor within time.

23 The words of section 11 do not fit the situation created by section 52 of the Act. They have to be contorted to arrive at the result that the statutory right to obtain a judgment against an insurer who has insured a person against whom there is a cause of action for damages for personal injuries, is itself a cause of action of that kind.

24 In Ketteman v Hansel Properties Ltd [1987] AC 189, Lord Keith explained (at 200):

"A cause of action is necessarily a cause of action against a particular defendant, and the bringing of the action which is referred to must be the bringing of the action against that defendant in respect of that cause of action. The causes of action here against Mid-Sussex and the architects were separate and distinct from the cause of action against Hansel."

"Mid-Sussex" was a local authority which had negligently approved building plans for a number of houses built by Hansel. The foundations of the houses were defective. The plaintiffs were purchasers of the houses.

25 Although Lord Keith was a dissentient in the appeal, on that point he enjoyed the support of Lord Templeman (at 217), Lord Griffiths (at 223) and Lord Goff (at 223). Lord Keith's remarks were applied by Clarke J in The Gilbert Rowe (1997) 2 Lloyd's Rep 218 (at 226) to claims brought against partners sued in different capacities with the result that the plaintiff's rights against the partners in one of their capacities were out of time but rights against them in their other capacity were not.

26 The point made by Lord Keith appears to have been accepted as a correct statement of principle by Pincus JA and Ambrose J in their joint judgment in Hayward v Darling Downs Aircraft Services Pty Ltd [1993] 2 Qd R 153 at 159.

27 This understanding of the operation of limitation statutes makes it impossible to apply section 11 willy nilly to the cause of action against the insurer. A defendant who seeks to rely upon section 11 must be one who is sued in an action for damages for negligence or breach of duty causing personal injury.

28 There is nothing in either section 52 or section 57 of the Act which, expressly or by necessary implication, applies section 11 of the Limitation Act to the right to obtain judgment against an insurer. Section 11 is not referred to. Section 52(4) does not, as I have mentioned, deem the right against the insurer to be a cause of action for damages for negligence. Nor does it replace the cause of action against the insured person with one against the insurer. More importantly the provisions of both section 52 and section 57 are capable of operation whether or not section 11 of the Limitation Act should apply to the claim against the insurer. Neither the evident purpose of those sections nor their operation will be affected should the insurer not be sued within three years of the accrual of the cause of action against the insured person. There is thus no basis for concluding that the three year time limit applies to actions against insurers. The principles of statutory construction referred to militate against such a process.

29 Section 52(1) is, to use the old terminology, mandatory. An action for damages for personal injury arising out of a motor vehicle accident must be brought against the insured person and the insurer jointly. The action was brought when the writ of summons issued on 28 May 1997. The action was not properly constituted; it lacked a necessary party, indeed the only party against whom judgment could be given. Unless section 52 is to be construed as making an action which does not comply with its terms irremediably defective then the defect (the lack of a necessary party) can be cured by an order joining the insurer. Clear words would be required before the court would construe a statute as depriving it of the power conferred by sections 53 and/or 229 of the Supreme Court Act 1995, and the rules of court, to make good errors or defects in proceedings before it. The words of section 52 do not compel such a construction. It should be concluded that an action of the type referred to in section 52 which does not join the insurer may be saved by an order joining the missing party and amending the proceedings.

30 It follows, in my opinion, that the chamber judge approached the exercise of discretion whether to join MMI by reference to a wrong principle. His Honour thought that the appellant was barred by the Limitation Act from commencing proceedings against MMI so that "special or peculiar" circumstances needed to be shown before an order joining it to the action could be made. For the reasons I have expressed section 11 of the Limitation Act does not apply to the statutory obligation to include an insurer as a defendant in an action for damages for personal injury caused by, through or in connection with a motor vehicle. It follows that the discretion should have been exercised by reference to the principles applicable where it is sought to add a defendant to an action without the complication of the expiration of a limitation period. Much of the argument upon the appeal was taken up with the question whether, on the assumption that the insurer could rely on section 11 of the Limitation Act, the circumstances were sufficiently special to justify the joinder. The knowledge of the insurer of the claim at material times, the absence of prejudice to it and its limited function as a party, make this a distinctly arguable proposition for the appellant. However it is unnecessary to express a view as to whether the appeal should be upheld on that alternative assumption.

31 Because a wrong principle was applied in the exercise of discretion the Court of Appeal may itself decide the application. The original application was determined pursuant to the Supreme Court Rules. The appeal was heard after the commencement of the Uniform Civil Procedure Rules. Which rules are applicable depends upon whether the appeal is by way of rehearing or is an appeal in the strict sense. If the former, then the decision should be made by reference to the Uniform Civil Procedure Rules: see Builders' Licencing Board v Sperway Constructions (Syd) Pty Ltd [1976] HCA 62; (1976) 135 CLR 616 at 619-20 and Duralla Pty Ltd v Plant [1984] FCA 146; (1984) 2 FCR 342.

32 Rule 765 provides that:

"(1) An appeal to the Court of Appeal under this chapter is an appeal by way of rehearing.

(2) However, an appeal from a decision, other than a final decision in a proceeding, or about the amount of damages or compensation awarded by a court is brought by way of an appeal.

In a case such as at present whether the discretion is to be exercised in accordance with rule 69 or the former O 3 r 10 is not likely to be important. I would, however, think that the appeal is from a final decision in a proceeding so that it is a rehearing.

33 There was some debate as to whether the judgment appealed from, which dismissed the appellant's claim against the Council leaving his action against the second defendant to proceed, should be categorised as final or interlocutory. It was said to be interlocutory in form but final in effect. The distinction has been productive of confusion and no entirely satisfactory test has evolved to determine into which category a judgment should be placed.

34 The wording of rule 765 must have been chosen deliberately to avoid the necessity of resolving such fine points. It uses the term "final decision" and not "final judgment". The draftsman cannot have been ignorant of the wealth of learning that has been built up with respect to what are "final judgments". The new rule has been so expressed as to make that knowledge obsolete. One looks only to see whether an appeal is brought from something which answers the description "final decision in a proceeding". "Decision" has a wider connotation than "judgment". There is no doubt the chamber judge made a decision. He struck out the appellant's claim against the Council. This is final in the sense that it brought that claim to an end. The decision precludes further controversy on all questions involved in that claim. No further decision with respect to the claim is necessary or possible. The decision is therefore final. It follows that the application should be decided by reference to rule 69. That provides:

"The court may at any stage of a proceeding order that -

(b) any of the following persons be included as a party -

(i) a person whose presence before the court is necessary to enable the court to adjudicate effectually and completely all matters in dispute in the proceeding; ...".

35 Where the proceedings have been commenced in time against the insured person, and the insurer has received the notices required by sections 34 and 37, it is hard to see why an order joining the insurer should not be made as a matter of routine. There being no limitation period applicable with respect to the action against the insurer the only relevant enquiry will be whether it has been given due notice of the proposed claim or, if it has not, whether the joinder should be made despite the lack of notice.

36 In the present case MMI was given proper notice of the appellant's claim and has suffered no prejudice by reason that it was not made a defendant within three years of 10 July 1995. There was no requirement that it be sued within that time and an order joining it should have been made. There does not appear any reason why the insurer must be a party from the inception of the action or why it must be made a party before the limitation period applicable to the insured person expires. The evident purpose of the insurer's joinder is to allow judgment to go against it rather than the individual tortfeasor. But that purpose can be served whenever, before judgment, the insurer is made a party.

37 The appeal should be allowed and the order of the Chamber judge made on the Council's summons should be set aside. Instead there should be an order that MMI Insurance Limited be joined in action 4742 of 1997 and be made the third defendant. The respondent should pay the appellant's costs of that summons and of the appeal to be taxed.