3 September 2010
NOMINAL DEFENDANT v Richard Lindall STAGGS & ORS
Judgment
1 GILES JA: I agree with Basten JA.
2 HODGSON JA: I agree with the orders proposed by Basten JA and with his reasons. I would add the following.
3 In my opinion, the question whether a full and satisfactory explanation of delay is given must be approached bearing in mind that the legislature has prescribed a limit of three months, from receipt of a claim under s 72 of the Motor Accident Compensation Act 1999, for the giving of notice to the Nominal Defendant.
4 It follows in my opinion that generally an insurer that receives a claim under s 72:
(1) should promptly consider and decide whether it wishes to investigate the possibility of a claim against the Nominal Defendant; and
(2) if the decision is to investigate this possibility, should act so as if possible to be in a position, within the three-month period, to make a decision whether to give notice and, if the decision is to give notice, to give that notice.
5 In the present case, so far as the evidence goes, nothing was done by Allianz between 28 August 2006 (when it received the claim) and 12 October 2006 (when it sent its file to its solicitors), a period equal to about half the three month period. Then, it appears that the practice of the solicitors was that a partner would prepare a preliminary advice, this taking about four to six weeks. An inquiry pursuing the possibility of a claim against the Nominal Defendant was sent out by an employed solicitor on 6 November 2006, about three weeks before the expiry of the three month period; and an investigation agency was given instructions on 13 December 2006, about two weeks after the expiry of the three month period.
6 Plainly, by 6 November 2006, the employed solicitor was acting on a decision to investigate the possibility of a claim against the Nominal Defendant. There is no evidence as to when (prior to this time) this had first been considered, or the result of any prior consideration, or any action or inaction resulting from that prior consideration. It may be that no consideration had been given to the question until shortly before 6 November 2006, or that consideration had been given to it and a decision made not to investigate (which was later changed), or that a decision was made to investigate some time before 6 November 2006 but for some reason no action was taken until 6 November 2006. Only Allianz was in a position to give evidence about these matters, and the absence of any evidence about them means in my opinion that there is not a full explanation of the delay until 6 November 2006 (that is, for most of the three month period).
7 Evidence that there was no practice in Allianz of considering whether to investigate the possibility of a claim against the Nominal Defendant, and/or that the person dealing with the file did not advert to the matter, and/or that the ordinary practice of Allianz means that it takes six weeks to have the file sent to solicitors, and/or that the possibility of a claim was considered and dismissed by someone at some time, and/or that the three month limit was overlooked, and so on, might have provided a pertinent and perhaps a full explanation. Consideration could then have been given whether this explanation was a satisfactory one. If the delay thus explained was considered excusable, then the explanation might have been considered satisfactory: as the primary judge said, perfection is not required. But if, as in this case, a pertinent explanation is not given, it is not possible to assess whether the delay is excusable, or to decide if there is a satisfactory explanation of the delay, and the onus lying on the party seeking the extension is not satisfied.
8 BASTEN JA: A person suffering an injury arising from a motor vehicle accident, caused by an unidentified vehicle, may claim damages from the Nominal Defendant. Where a defendant to a motor accident claim wishes to seek contribution or indemnity from the owner or driver of an unidentified vehicle, the defendant may join the Nominal Defendant. A defendant must give notice of an intention to take that step within three months of receiving the claim, unless the court extends time for giving such notice. Absent a valid notice, no proceedings may be commenced against the Nominal Defendant. The present case concerned the circumstances in which it was proper to extend time to give such notice.
9 On 14 October 2009, Garling DCJ extended the time within which the insurer for the defendants could serve notice on the Nominal Defendant to a date more than two years after service of the plaintiff's claim. The Nominal Defendant seeks leave to appeal against the order made in the District Court. The correct approach to the exercise of the discretionary power conferred on the Court to extend time, pursuant to s 36(5) of the Motor Accidents Compensation Act 1999 (NSW) ("the Act") has not been the subject of consideration by any appellate court. The matters raised are of public importance in the administration of justice. The approach adopted by the primary judge was arguably wrong. It is, accordingly, appropriate to grant leave to the Nominal Defendant to pursue its proposed appeal. Further, for the reasons set out below, the appeal should be allowed and the order extending time set aside.
Background to claim
10 Ms Charlene Towers (the plaintiff below and the third respondent in this Court - "the plaintiff") was injured in an accident whilst a pillion passenger on a Harley Davidson motorcycle being ridden by Mr Richard Staggs. The motorcycle had been hired by Mr Staggs from Harley Davidson Australia Pty Ltd. The plaintiff brought proceedings against Mr Staggs and Harley Davidson Australia (the defendants below and first and second respondents in this Court).
11 The accident occurred on 14 March 2006, when Mr Staggs was riding with the plaintiff on the Warringah Freeway at North Sydney. He was travelling in the right hand lane of three northbound lanes near the Falcon Street exit when the traffic slowed, apparently because two of the lanes had been blocked off progressively towards the Falcon Street exit in order for road works to be undertaken.
12 Mr Staggs said that the accident occurred because the vehicle in front of him "suddenly slowed" causing him to brake, so that the rear wheel of the motorcycle locked and, it would appear, he lost control. Both he and the plaintiff were thrown to the road, although without hitting the vehicle in front. The plaintiff appears to have suffered significant injuries.
13 On 24 August 2006 the plaintiff's solicitor sent a letter to the claims manager of Allianz Australia Insurance Ltd ("Allianz") as the compulsory third party insurer of Mr Staggs. Enclosed with the letter was a motor accidents personal injuries claim form and a police report. The copy of the claim form in evidence was stamped on each page as having been received by Allianz on 28 August 2006. The claim form revealed that both the plaintiff and Mr Staggs lived in the USA. Under paragraph 15, which required a diagram of the accident, the claim form stated:
"Please see police report as I have no recall of the accident".
14 At paragraph 16, the claim form contained a typed description of the accident which appears to have been taken from the same Police report, but read as follows:
"Richard Staggs rode a Harley Davidson motorcycle bearing the NSW Registration number TTZ-25 along the Warringah Freeway in a northerly direction. Charlene Towers was a pillion passenger on the motorcycle. At a distance of approximately 600 meters from the intersection of Falcon Street, a vehicle travelling in front of the motorcycle slowed suddenly. At the same time, Mr Staggs attempted to slow the motorcycle, resulting in the rear wheel of the motorcycle locking. The motorcycle then skidded for a distance of approximately 25 meters before the vehicle fell sideways to the road surface, ejecting both Mr Staggs and Ms Towers. The motorcycle, Mr Staggs and Ms Towers then slid along the roadway for a distance of about 20 meters. As a consequence, Ms Towers sustained severe injuries."
15 The claim form was signed by the plaintiff, who had by that time returned to the USA.
16 The only other significant detail, contained in the Police report, was the statement that Mr Staggs was proceeding north "at an unknown speed, not thought to be excessive, traffic in front of him has slowed suddenly as other cars merged from a terminating left hand lane".
17 On 12 October 2006 Allianz sent a copy of its file to its lawyers, Dibbs Abbott Stillman (now known as DibbsBarker Lawyers) with a request that they "assume conduct of the claim". The letter was in standard form and sought advice in relation to the details of the accident, liability, quantum, likelihood of early settlement and advice as to an offer. The list of matters on which advice was sought also included "Motor Accident Act's Requirements" and "Recovery Prospects and/or Sharing Aspect (if applicable)". It was explained in the course of argument that the reference to "sharing" concerned contribution or indemnity from a known insurer and was not understood to refer to possible claims against the Nominal Defendant. It was not in doubt, however, that advice as to a claim against the Nominal Defendant would have been required if thought appropriate.
18 It is convenient to note at this point that there was no evidence from the claims manager or any other officer of Allianz as to what, if any, steps were taken by the insurer between 28 August 2006 and 12 October 2006. Furthermore, there was thereafter no evidence at all as to what steps (if any) were taken by Allianz itself.
19 There was also a paucity of information as to what took place within the solicitors' office during the first two months of the period after they received instructions. The only evidence tendered by the insurer in respect of this period were two affidavits of an employed solicitor, Mr Seisun, who was called for cross-examination. Neither affidavit indicated that any action had occurred with respect to the file prior to 6 November 2006 when Mr Seisun sent a letter to Mr Staggs, seeking assistance with respect to the possible liability of other drivers. (It will be necessary to refer to the contents of that letter shortly.) In cross-examination, Mr Seisun agreed that he had worked on the matter under the supervision of a partner at the firm, Mr Dean Newell. The following further exchange took place (Tcpt, 14/10/09, p 14):
"Q. Now when you received the file, did you peruse the claim form and the annexures to it?
A. What happens when a claim arrives in our office is my employing solicitor, Dean Newell will hold the file for a period of time. He will prepare a preliminary advice, which will usually take between two and four weeks. I will then receive a copy of his preliminary advice to the client, with the file, with a series of instructions as to what he would like me to begin doing.
Q. So it's your explanation now to this court that following 13 October 2006 Mr Newell had the direct carriage of the matter for some period of time before passing it over to you?
A. That's correct."
20 There was no affidavit from Mr Newell and Mr Seisun did not suggest that he had received any particular instructions, nor any preliminary advice prepared by Mr Newell. There was, in short, no evidence that any significant work was done in the solicitors' office until shortly prior to 6 November 2006.
21 The three-month period within which s 36(4) required that notice be given to the Nominal Defendant of an intention to join the Nominal Defendant expired some three weeks after the letter of 6 November 2006 was sent to Mr Staggs, namely on 28 November 2006. No further steps were taken by the solicitors until a further two weeks had elapsed, when, on 13 December 2006, Mr Seisun "forwarded to MJM Investigations Sydney offices a request that it commission affiliated investigators in the United States to locate and liaise with Mr Staggs for purposes of liability investigations".
22 The insurer's case for an extension of time, so far as it related to the first three months after the claim was served, was based on the proposition that there was then no material available to it suggesting negligent driving on the part of any person other than Mr Staggs. Accordingly, at that stage it was doing no more than carrying out routine inquires to satisfy itself as to the liability of its insured and it had no reason to anticipate seeking to join the Nominal Defendant.
23 There are two difficulties with this part of the case. The first is that there was no evidence from any officer of Allianz that the insurer held that view at that time. All that is known is that it thought it necessary or appropriate to instruct solicitors to provide advice in respect of the claim and also (it may be inferred) approved the cost of obtaining investigators in the USA to contact Mr Staggs and (as will be seen) to make inquiries in Sydney.
24 The second difficulty is that the letter of 6 November 2006 to Mr Staggs, seeking his co-operation, included the following paragraphs:
"The insurer is presently reviewing the circumstances of this accident with a view to determination of the matter's future conduct. New South Wales legislation provides that agreed or determined damages (including medical rehabilitation and treatment) will provided/paid for by the insurer of the at-fault driver and, where the vehicle is properly insured and registered, no penalties or costs will accrue to that driver. The at-fault driver is required to assist the insurer as reasonably requested.
New South Wales legislation provides that if any other vehicle contributed to the cause of the motor vehicle accident then contribution to an insured person's damages may be obtained from an entity representing the contributing vehicle. It is not necessary that the contributing vehicle be identified or located. This includes a situation where, for example, a vehicle (not subsequently identified) negligently slowed or altered its course so as to require you to take evasive action, thus resulting in the accident. The actions of any vehicle/s that may have partly or fully created a need for you to take evasive action is relevant to our investigation and we would like to hear your account of related events."
25 The letter did not suggest that Mr Staggs should respond, but rather anticipated that he would "be contacted in due course by an investigator who will seek to obtain your version of events"; it demonstrated no sense of urgency. However, it indicated appreciation of the possibility that Allianz might seek to join the Nominal Defendant.
26 On 13 December 2006 the solicitors wrote to MJM Investigations, requesting, as the first instruction:
"Please arrange for Mr Staggs to be interviewed by operatives in America. Please ensure that Mr Staggs comments on the role/s of any unidentified vehicle/s in creating the circumstances that gave rise to the accident. Specifically, we seek to learn whether any unidentified vehicle/s may have caused traffic to slow suddenly or affect courses/options available to him or caused him to take evasive action."
27 That letter also required MJM Investigations to obtain detailed statements from police officers who attended the accident scene, prepare a detailed plan of the accident scene and, if thought appropriate, canvas the area and attempt to locate any additional witnesses. The letter gave no intimation of the period within which those steps were to be taken.
28 The next stage in the events occurred on 21 February 2007. On that date, the solicitors were advised that Mr Staggs would not co-operate; on the same date the investigators provided a report of their inquiries in Sydney. These disclosed a significant source of further information, namely a statement taken by a police officer from Mr Cox, who was the driver of the vehicle immediately in front of Mr Staggs at the time of the accident. The statement, signed by Mr Cox, was dated 14 March 2006. Mr Cox described the events in the following terms:
"I was travelling northbound in the outside lane. There were three lanes. One was definitely blocked with cones - I didn't realise the other lane was blocked until I saw a champagne silver-coloured four wheel drive trying to merge into my lane. I then [braked]. I would have been going 80 and [braked] down to 60. I then heard a screech of tyres and something braking and then I saw something in my rear vision mirror. I was confused at first because I didn't know what happened. I never knew at any stage that the motorbike was behind me.
…
We were both going around the same speed probably 80 or maybe less.
…
I was in the outside lane the whole time. I had no reason to change lanes."
29 By 21 February 2007, Allianz had available to it material identifying the driver of the vehicle which slowed suddenly immediately ahead of Mr Staggs and also an explanation for the sudden braking, namely that a third vehicle (the "champagne silver coloured four wheel drive") had sought to merge into the lane occupied by Mr Cox. A number of inferences might have been available to the insurer at that stage, including; first, that the driver of the vehicle in front of Mr Cox was negligent in pulling in front of him without warning; secondly, that each of the drivers was negligent in failing to appreciate that three lanes were being reduced to one; thirdly, that the RTA was negligent in failing to provide proper signage warning of the tapering lanes.
30 On 26 February 2007, within a week of receiving a copy of the handwritten statement taken by police from Mr Cox, Mr Seisun had prepared a list of questions he wished to ask Mr Cox. He also had Mr Cox's mobile telephone number. However, he did not attempt to contact Mr Cox for more than six months, commencing those attempts on 11 September 2007. His first telephone contact was on 18 October 2007 and he conferred with Mr Cox on 23 October 2007. Putting to one side an amount of speculation on his part, Mr Cox provided slightly more detail in respect of the events, in the following passages of a draft statement prepared by Mr Seisun based on what Mr Cox had told him:
"I was proceeding in lane 3 of 3. A fourwheel drive ('4WD') vehicle was proceeding slightly ahead of me in lane 2. Both myself and the 4WD were proceeding at or slightly below the 80 kph speed limit.
Ahead of the 4WD I observed a row of traffic cones. I initially thought that those cones reduced the road from 3 lanes to 2 lanes, closing lane 1 only.
Other than the traffic cones, there were no other signs or warning devices.
As I commenced to pass the 4WD, at a time when the front of my vehicle overlapped the rear of the 4WD by about 1/3 rd of the 4WD's length, it performed a lane changing manoeuvre into my lane, cutting me off and almost striking my vehicle.
In my view the 4WD driver was changing lanes and did not observe me to his side. Upon observing me he abruptly accelerated to obtain a position in front of me.
As a consequence of the 4WD driver's manoeuvre I was obliged to brake in a hard and rapid fashion. If I had not braked in this way I believe that my vehicle could have been struck by the 4WD."
31 Over the ensuing months, Mr Seisun sought to have Mr Cox sign his new statement, but was unable to make contact with him until 25 March 2008, when Mr Cox agreed that the statement was substantially correct in content, but said that he did not intend to sign it.
32 During 2007-2008, Mr Seisun took numerous steps to contact Mr Staggs, pursued an application under the Freedom of Information Act in respect of the entire police file, sought CCTV footage from the RTA (there was none) and, in April/May 2008 spoke to four possible witnesses identified from police documentation (none of whom could provide useful assistance).
33 In his first affidavit, Mr Seisun stated at paragraphs 37-41:
"37. After my discussions with Nathan Cox … I formed an opinion that an unidentified vehicle may have contributed to the cause of the subject accident.
38. I decided that a coherent and persuasive argument in favour of the involvement of an unidentified vehicle could only be articulated if Mr Cox co-operatively assisted.
39. At this time I was not assured of establishing Mr Staggs' assistance and I did not know whether he was aware of the existence of the unidentified vehicle and, if so, whether he was prepared to ascribe a causal role to it.
40. Prior to receiving documents from police, I was of the view that the evidence available to the defendants was insufficient for me to certify that a cross-claim against the Nominal Defendant had reasonable prospects of success, in accordance with the Legal Profession Act .
41. Upon receipt of the police file on 28 April 2008 … I decided that I had sufficient evidence to give the Nominal Defendant notice of a possible causal role by an unidentified vehicle and the potentiality of claim arising."
34 The affidavit did not explain what new material in the police file obtained in April 2008 assisted Mr Seisun to reach the conclusion noted in paragraph 41. So far as the affidavit revealed, the only further information received with the police file on 28 April 2008 was the identity of four possible witnesses, none of whom was of any assistance.
35 On 31 July 2008 Mr Seisun wrote to the Nominal Defendant notifying a potential claim against it, but not including the claim form served by the plaintiff. The letter was returned by the Nominal Defendant on 6 August and resent, with the claim form, on 22 August 2008, six days short of two years after the claim form was received.
Legal requirements
36 The statutory scheme permitting the joinder of the Nominal Defendant as a party from whom contribution may be obtained where one tortfeasor is the driver of an unidentified vehicle, is set out in s 36 of the Act in the following terms:
" 36 Nominal Defendant as tortfeasor
(1) The Nominal Defendant may join another person, or may be joined, for contribution or indemnity in respect of a claim or proceedings under this Act as if the Nominal Defendant were a tortfeasor.
(2) Joinder of the Nominal Defendant is required to be effected in accordance with this section.
(3) A person seeking to join the Nominal Defendant in respect of a claim or proceedings must give the Nominal Defendant notice of the person's intention to do so. The notice must include a copy of the notice of claim under section 72 given to the person.
(4) The notice must be given within 3 months after the claim is made against the person under section 72, or within 3 months after the person becomes a party to proceedings in respect of the claim, whichever occurs first.
(5) The court may extend the period for giving notice to the Nominal Defendant if the person seeking to join the Nominal Defendant gives a full and satisfactory explanation for not having given notice within the 3-month period.
(6) Within 2 months after notice is given, the person giving notice must provide the Nominal Defendant with full details of the allegations made against the Nominal Defendant (or against the person to whom the Nominal Defendant is taken to have issued a third-party policy).
(7) An application may not be made to join the Nominal Defendant as a party to proceedings before the court after 3 years from the date on which the claim under section 72 in respect of which contribution or indemnity is sought must be made, except with the leave of the court.
(8) If the Nominal Defendant is sought to be joined because the identity of another motor vehicle is not known, joinder may not be effected unless due inquiry or search to identify the vehicle has been made. The inquiry or search may be proved orally or by affidavit of the person who made the inquiry or search.
(9) Except as provided by this section, nothing in this section affects any rules of court relating to the joinder of parties."
37 Much of the debate before the primary judge and in this Court concerned the assessment of the explanation given by or on behalf of Allianz and the assessment of it as "full and satisfactory", for the purposes of s 36(5). On that basis, the discussion treated the critical date as being 22 August 2008, as the date when a notice was given complying in all respects with s 36(3). However, thereafter there was a failure to comply with s 36(6) by providing the Nominal Defendant with "full details of the allegations", which was (arguably) required to be done by 22 October 2008, if an extension of time were to be forthcoming.
38 The plaintiff commenced proceedings against Mr Staggs on 18 December 2008. On 2 June 2009 the insurer filed a cross-claim against the Nominal Defendant but, there having been no extension of time, there had been no compliance with s 36(4) nor with s 36(6). The cross-claim was withdrawn by motion filed on 29 July 2009. However, it was not until 7 August 2009 that the orders for extension of time were first sought. That motion was heard and determined by Garling DCJ on 14 October 2009, extending time to 23 October 2009.
39 Because of the failure to comply with s 36(6), Allianz abandoned the possibility of relying upon the notice in fact served on 22 August 2008, although the fact that the Nominal Defendant had notice at that time would no doubt have been relevant to the discretionary exercise of the power to extend time to a later date. It is therefore not necessary to consider whether a notice given outside the three month period, but before an extension of time is granted, is itself a valid notice and, if so, at what point the further two month period specified by s 36(6) (which cannot be extended) expires.
40 A second issue raised by the terms of s 36 is that the full and satisfactory explanation is required "for not having given notice within the 3-month period": s 36(5). This does not in terms require that the full and satisfactory explanation address any period beyond the three month period prescribed by s 36(4). The power to extend time is discretionary, and what happened to cause delay beyond the three month period would undoubtedly be relevant to the exercise of the discretion. However, on one view, the party seeking to join the Nominal Defendant does not need to provide a full and satisfactory explanation for any period beyond the three months, so as to engage the power to extend time. This is significant in the present case if Allianz' argument is accepted and there was no basis for seeking to join the Nominal Defendant until after the expiration of the three month period. The initial delay is thus fully explained in an entirely satisfactory manner and, thereafter, the matter is left to the discretion of the Court.
41 This approach does not appear to accord with the purpose of s 36: the preferable approach is to require a full and satisfactory explanation for the whole period of the delay, reference to the three month period being understood as a reference to the conduct which triggers the requirement for the application.
42 This construction, it should be conceded, treats s 36(5) as having a similar operation to s 109(3) of the Act which requires that a plaintiff not commence proceedings after more than three years from the date of the accident, unless he or she provides "a full and satisfactory explanation to the court for the delay": s 109(3)(a). However, the different language used in s 36(5) does not suggest a deliberate attempt to achieve a different operation. The parties in the present case proceeded at all stages on the basis that Allianz was required to provide a full and satisfactory explanation for its delay, at least up to 22 August 2008. That approach should be accepted for the purposes of the present appeal.
43 The only authority discussing the operation of s 36(5) identified by the parties was a decision of Gray J, sitting in the ACT Supreme Court, in Gashparac v Walter [2000] ACTSC 118. Four issues of present relevance arose in that case. First, in relation to the period for which explanation was required, his Honour noted at [27]:
"When the matter came on for hearing, the defendant sought to relate the full explanation to the period up to the giving of notice rather than seeking to explain why the notice was not given in the three month period after the claim was made."
44 Whether his Honour considered that the explanation was required only for the three month period is not entirely clear. In that case, the relevant period was held to have commenced on 11 September 1998 (at [11]) and would therefore have ended on 11 December 1998. The notice was given on 19 January 1999, some five weeks later (being an additional period which included Christmas and the New Year holidays, although that factor was not referred to).
45 Secondly, the application was made long after the notice was given (by motion filed on 25 September 2000) but it appears to have been assumed that the notice could be retrospectively validated by an extension of time. (Details required by s 36(6) had been provided with the notice.)
46 Thirdly, the explanation given was considered inadequate to explain why the Nominal Defendant should have been joined at all: at [32]. That was apparently because there was no factual basis for allegations of negligence in any of the material: at [36]-[37].
47 Fourthly, although the point was in the circumstances just noted, arguably obiter, his Honour considered what needed to be addressed by the explanation. In particular, he rejected a submission that, in the context of s 36(5) the words "full and satisfactory" merely identify qualities of the explanation and do not relate to the behaviour or conduct underlying the explanation. He declined to adopt the approach accepted in Nicholas v Webb (No 2) [1993] 19 MVR 65 at 67 (Master Greenwood), addressing that phrase in the predecessor to Ch 4 of the Act, dealing with motor accident claims. His Honour preferred the reasoning of Studdert J in Guest v Southern (unrep, NSWSC, 22 September 1995), holding that "before an explanation can be 'satisfactory', it must persuade the Court that the delay ought to be excused in all the circumstances": Gashparac at [22]-[23].
48 The need to provide a "full and satisfactory explanation" for the delay in making a claim (as opposed to a notice seeking contribution) has been the subject of significant statutory revision since Nicholas v Webb (No 2). In particular, by the time the issue of construction came before the High Court in Russo v Aiello [2003] HCA 53; 215 CLR 643, s 40(2) of the Motor Accidents Act 1988 (NSW) required that a "full and satisfactory explanation" should involve:
"a full account of the conduct, including the actions, knowledge and belief of the claimant, from the date of the accident until the date of providing the explanation. The explanation is not a satisfactory explanation unless a reasonable person in the position of the claimant would have failed to have complied with the duty or would have been justified in experiencing the same delay."
49 Part 5 of the Motor Accidents Act, in which provisions with respect to claims were then found, also contained a statement of objects specific to that Part.
50 The differing purposes of various provisions in legislation relating to motor accidents, together with the definition applicable in respect of some provisions and not others, mean that care must be taken in applying principles stated in one context to another. Further, some of the complexities which can arise from the definition of full and satisfactory explanation (now found in s 66(2) of the Act), and discussed by this Court in Smith v Grant [2006] NSWCA 244; 67 NSWLR 735 are not relevant. In the present case, the party having control of the proceedings for the defendants was the third party insurer, Allianz. It 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. Unlike an accident victim, who is likely to be uninformed about the technical requirements of legislation and is almost wholly reliant on solicitors for advice and timely compliance with legislative requirements, an insurer will generally be knowledgeable as to the legislation and will have a close relationship with solicitors who act for it on a regular basis (as, it may be inferred, was the case with the solicitors retained by Allianz).
51 In assessing any explanation given for the purposes of s 36(5), three factors should be taken into account. First, a decision to join the Nominal Defendant, as opposed to the commencement of proceedings against the Nominal Defendant by a plaintiff, is subject to strict time limits. Thus, the period of three months from the date of receipt of a claim is undoubtedly a short period. That is no doubt because Ch 2 of the Act is concerned with third party insurance, which is compulsory: joinder by a party seeking contribution or indemnity will be the responsibility of a compulsory third party insurer, which may be understood to have the resources and ability to act promptly when the relevant occasion arises.
52 Secondly, the notice required under s 36(3) must be given by a person "seeking to join" the Nominal Defendant and merely foreshadows an application for joinder. The latter application is subject to a three year limitation period from the date on which the claim is made: s 36(7). Clearly notification is required in circumstances where further investigations and advice may be necessary before an application to join can properly be made.
53 Thirdly, although the notice does not need to include "full details of the allegations made against the Nominal Defendant", the insurer considering whether to give such notice will be conscious that such details must be provided within two months after the notice is given, a period which is non-extendable.
Application of principles
54 In relation to the three month period permitted by the Act, two points arose for consideration in this case. The first was whether the material available, being the claim form and the police report which accompanied it, were sufficient to trigger an inquiry as to whether an unidentified second vehicle was involved. The possibility of involvement of a second vehicle cannot be doubted. When Mr Staggs said that the vehicle in front of him "suddenly slowed", causing him to brake, there were, in effect, three possible causal explanations. The first was that Mr Staggs was going too fast to adjust to a change in the speed of the traffic ahead; secondly, there was no "sudden" slowing, but merely a failure by Mr Staggs to attend to the speed of the traffic ahead; thirdly, his description may have been apt, in which case the cause of the sudden slowing required consideration.
55 The second point was that, although inquiry was appropriate, the possibility of negligence on the part of another driver was, at that stage, speculative. Thus, the primary judge accepted that the wording in the letter of 6 November 2006 to Mr Staggs did not indicate any belief in a basis at that stage for seeking to join the Nominal Defendant: Judgment, pp 5-6.