SOLICITOR'S NEGLIGENCE - LIMITATION ACT 1969 (NSW) - SS 14, 54 - meaning of "confirmation" - had the limitation period expired.

In June 1985 the appellant initiated proceedings for damages for injuries sustained when a car, driven by D hit him on 24 December 1983. D was insured by FAI Insurance Group (FAI). Correspondence and exchanging of information followed between the appellant's solicitors and FAI during late 1985 until mid 1986. By letter, dated 19 March 1986, FAI advised the appellant's solicitors that they were prepared to accept the claim and forwarded an offer on 3 June 1986 which was not accepted. By 24 December 1989 no proceedings had been commenced. Mendes, now the appellant's solicitor, wrote to the appellant in March 1990 advising him to seek independent legal advice for the limitation period as his claim had expired since Mendes had taken the matter over. The appellant then retained a third firm of solicitors. By letter on 29 January 1991, Mendes sent the appellant's new solicitor an advice note from an independent solicitor stating that FAI's letter of 19 March 1986 was an admission of liability therefore the limitation period would not expire for the six years following 19 March 1986. In April 1991 the new solicitors filed a statement of claim against D. However, this action was discontinued and proceedings against Mendes were commenced on the advice of counsel that by the negligence of Mendes the appellant had become barred against D.

At the trial Murrell DCJ held that the letter of FAI, dated 19 March 1986, was "confirmation" pursuant to s 54, the claim against D had not been statute barred when discontinued, there had been no loss caused to the appellant by Mendes, and thus no negligence by him.

1. FAI's letter dated 19 March 1986 did not confirm the appellant's cause of action pursuant to s 54 of the Limitations Act;

2. Mendes could not rely on s 54 when he was not a party to the alleged "confirmation" given in FAI's letter.

1. The letter from FAI dated 19 March 1986 did not express a preparatory intention to admit liability, rather it confirmed the appellant's cause of action;

2. s 54 put an end to the distinction for limitation purposes, between claims for liquidated and unliquidated damages;

3. there is nothing in the language of s 54 that could prevent Mendes relying on the legal situation that would have arisen if the appellant had pleaded s 54 in the action against D;

4. Giblin v Duggan (Full Court of Queensland, 8 March 1981, Queensland Supreme Court Practice par 7522) not applied, despite the factual similarities, because inter alia there is no equivalent to s 54 in the Queensland Limitations of Actions Act.

Giblin v Duggan (Full Court of Queensland, 8 March 1981, Queensland Supreme Court Practice par 7522).

Morris v FAI General Insurance Co Limited (Queensland Court of Appeal, unreported, 5 May 1995).

Limitation Act 1969 (NSW) ss 14, 54.

Law Reform Commission on the Limitation of Actions (LRC 3).

PRIESTLEY JA: Mr Duncan was standing in a driveway at Boggabilla on 24 December 1983 when a car driven by Mr Dennison hit and injured him. Mr Dennison was insured by a company in the FAI Insurance Group (FAI). In June 1985 Mr Duncan instructed a firm of solicitors to bring proceedings for damages for his injuries. His case from then on should have gone to court without complication. It did not.

Mr Duncan's solicitors wrote to FAI by letter dated 30 September 1985 saying they had instructions to claim damages for his injuries. FAI replied by letter dated 2 October 1985 saying "we have written to our Insured today" and indicating further contact would be made with the solicitors after receipt of an answer from the Insured. By letter dated 11 December 1985 FAI requested information from the solicitors. They sent this by a letter dated 13 March 1986 in which they asserted that the information they were supplying clearly showed negligence on the part of Mr Dennison. By letter dated 19 March 1986 FAI replied in the following terms:

"We acknowledge receipt of your correspondence dated 13 March, 1986 and advise we are now prepared to accept your client's claim for personal injuries.

Would you please forward to our office, copies of the relevant medical reports, to enable us to give consideration to an offer for quantum."

The solicitors obtained a report from the local hospital and sent it to FAI with a letter dated 20 May 1986. This was acknowledged by a letter from FAI dated 3 June 1986 which went on to say:

"We wish to advise we are prepared to make an offer to your client of, $3,000-00 generals, plus reasonable and proven specials, plus your party and party costs.

Would you please discuss our offer with your client and advise us further."

Mr Duncan's original solicitors sold their practice in 1988 to Philip Mendes & Co. (Philip Mendes & Co later became Mendes Partners. I will refer to the firm as Mendes.) At the time of the sale there had been no communication with FAI since FAI's letter of 3 June 1986 had been received.

Mendes remained in touch with Mr Duncan, although not with FAI. On 31 January 1989 Mendes wrote to Mr Duncan advising they would keep his file as a current matter and were waiting for him to forward a medical report to them.

Nothing further was done until after 24 December 1989. Then Mendes wrote to Mr Duncan by letter dated 9 March 1990 advising him the limitation period had expired and that he was statute barred from proceeding with his claim. They recommended he seek independent legal advice.

Later that year Mr Duncan went to Messrs. Cheney & Wilson, solicitors at Orange. By letter dated 29 January 1991 Mendes wrote to Messrs Cheney & Wilson enclosing a copy of a letter written to Mendes by Mr I.S. Bowden, solicitor. In that letter Mr Bowden had advised that FAI's letter of 19 March 1986 amounted to an admission of liability so that the limitation period would not expire until six years after 19 March 1986. Mendes asked in their letter to Messrs Cheney & Wilson that they commence proceedings as quickly as possible.

In April 1991 Messrs Cheney & Wilson caused a statement of claim claiming damages from Mr Dennison to be filed in the District Court at Dubbo on behalf of Mr Duncan.

In a notice of grounds of defence dated 25 June 1991 Mr Dennison pleaded that the limitation period had expired and the cause of action was barred by s 14 of the Limitation Act.

Messrs Cheney & Wilson then sought advice from counsel. He returned an opinion dated 30 October 1991 saying that FAI's letter of 19 March 1986 did not prevent time running against Mr Duncan under the Limitation Act. He advised that proceedings for negligence be brought against Mendes.

In accordance with counsel's advice Messrs Cheney & Wilson discontinued the proceedings against Mr Dennison on 14 January 1992.

In 1993 Messrs Cheney & Wilson caused a statement of claim on behalf of Mr Duncan to be filed against Philip Mendes in the District Court at Orange alleging negligence. Those proceedings came on for hearing before her Honour Judge Murrell on 11 and 12 November 1996 and were decided by her on 13 November 1996. Her opinion was that FAI's letter of 19 March 1986 was "confirmation" within the meaning of s 54 of the Limitation Act of Mr Duncan's cause of action against Mr Dennison and that the defence raised by Mr Dennison that in April 1991 Mr Duncan's claim was statute barred could not have succeeded. Putting it in her words,

"... the proceedings against Mr Dennison were commenced within time, the plaintiff sustained no loss as a result of negligence by the defendant, and the plaintiff must fail in these proceedings."

Although she dismissed the proceedings, she made an assessment of what the plaintiff would have recovered in damages had his case against Mr Dennison proceeded. Her assessment totalled $146,117.

Before Murrell DCJ the defendant had relied on a number of cases decided in the Full Court of Queensland. The principal one of these was Giblin v Duggan (Full Court, 8 March 1981, unreported) in which, in circumstances somewhat similar to those in the present case, a letter from FAI in almost identical terms to that in the present case had been held not to stop time running under the Queensland Limitation Act. Murrell DCJ, correctly in my opinion, held that these cases were neither of binding nor persuasive authority in regard to the question she had to decide for two reasons. The first reason is quite decisive: the cases did not concern any provision such as s 54 of the New South Wales Limitation Act. The other reason is that the authority of the cases relied on appears to be in some doubt even in Queensland, in light of Morris v FAI General Insurance Co Limited (Queensland Court of Appeal, unreported, 5 May 1995). (I should add in regard to the first reason that counsel for FAI stated without qualification that the Queensland Limitation of Actions Act had no equivalent to s 54. In view of that statement I have not checked the Queensland Act beyond noting that ss 35-37 appear to be the possibly relevant sections, and they do not touch upon unliquidated claims for personal injury.)

Mr Duncan's notice of appeal contained three grounds. The third of these was abandoned at the commencement of the hearing. The other two were:

"(a) Her Honour erred in finding that the letter dated 19th March, 1986 from FAI Insurance to the Plaintiff's Solicitors at the time Dodgson Mackerras and Co, was a confirmation of the Plaintiff's cause of action within the meaning of Section 54 of the Limitation Act, 1969.

(b) Her Honour Judge Murrell erred in finding that the Defendant could rely on Section 54 of the Limitation Act, 1969 when he was not a party to the alleged `confirmation' given by FAI Insurance in its letter of the 19th March, 1986."

In argument on ground (a) it was contended for Mr Duncan, no doubt at the instance of FAI, which seems to have used its letter as a standard form since it was blessed in Giblin, that the reasoning in that case should be applied to a letter in the same form although in the different context of the New South Wales s 54. For the reasons indicated in my brief summary of the trial judge's reasons for rejecting this argument, I think it fails.

Counsel then came to deal with the question on what seems to me to be the correct basis, namely, looking at FAI's letter of 19 March 1986 (and also the later letter of 3 June 1986) in context and upon a proper construction of s 54, did the first letter (or the second, or the two together) confirm the cause of action of Mr Duncan. The context includes the solicitors' letter of 13 March 1986 to which FAI's letters were responding.

As a matter of first impression, I see no reason why in the present case each letter is not a confirmation of Mr Duncan's cause of action.

The arguments against such a view were of two kinds. The first was to the effect that on a close reading of the letter or letters neither conveyed an unqualified confirmation of a cause of action claiming an unliquidated sum. Each was said to be qualified by reference to "preparedness"; alternatively they were expressing, as counsel submitted, "a preparatory intention to admit liability". I doubt whether Jacques Derrida himself would regard these meanings as likely to be derived from the text of the letters by any ordinary reader receiving them. In Morris, Fitzgerald P said of a similar letter of FAI, for which a similar interpretation was being sought that, in his opinion,

"that was not the effect of the appellant's letter, and courts should not encourage such pedantry, or the injustice it would produce."

I agree with both propositions embodied in Fitzgerald P's comment, which was made eighteen months before the same discredited point was persisted in before Judge Murrell and three years before it was again relied on in this court.

The other kind of construction argument involved analysis of s 54 itself. After some debate between counsel and the bench, the submission in the end was put in the form that a confirmation must say that the person making the statement will compensate the person to whom it is being made to the value of that person's claim; the value of the claim was said to be an essential element of "the right or title" referred to in s 54(2)(a)(i). Although as counsel sought to develop these arguments, they became seemingly more subtle and arcane, I do not think they really went further than the summary I have set out. There were some references to the law as it stood under the Statute of Limitations of 1623 and distinctions that were then drawn between claims for liquidated and unliquidated damages. I do not think it necessary to go into these arguments, because one of the objectives of s 54 was to do away with the earlier distinctions between unliquidated and liquidated claims, at least in respects presently relevant: see the report of the New South Wales Law Reform Commission on the Limitation of Actions, (LRC 3), especially pars 249 to 254. The New South Wales Limitation Act 1969 was based on the draft recommended in LRC 3 and in respect of the objective I have mentioned, it is my opinion that it was successfully achieved by s 54.

Ground (b) was supported by the following argument in the written submissions:

"Section 54 is a procedure to postpone time running against the plaintiff. It is not available to the defendant.

Section 54 applies in relation to a cause of action where the `person against whom the cause of action lies' confirms the cause of action. Mendes cannot invoke the acknowledgment when he is not a party to it."

No authority was cited in support of this argument. The fact that it misses the point of the present case is shown I think by looking at the instant situation as follows. For the plaintiff to succeed against Mendes he had to show that his proceedings against Mr Dennison would have been defeated by the defence that his cause of action was barred by s 14 of the Limitation Act. However, had he proceeded with his case against Mr Dennison the defence of s 14 would in my opinion have been defeated by proof of the confirmation of his cause of action by FAI's letter or letters of March 1986. The s 14 defence would not have availed Mr Dennison. There is nothing in the language of s 54 which to my mind can possibly operate to prevent Mendes pointing out the confirmation that Mr Duncan could have relied on, and what would have happened if Mr Duncan had "invoked" it.