Court of Appeal (WA)|1998-02-20|Before: Malcolm CJ

The applicant subsequently appointed another firm of solicitors to act for it and, by letter dated 20 August 1996, its new solicitors wrote to the respondent indicating that its instructions were that, in or about August 1992, Mr Scott had spoken with Mr Massey, who was then the respondent's building inspector, as to whether there were any problems in finishing the house and that their instructions were that Mr Massey, on behalf of the Shire, represented that there were no problems with the applicant's completing the house and occupying it once completed. This representation was said to have been made negligently. It was further indicated that the applicant had instructed its solicitors to issue proceedings, but nevertheless they were inquiring as to whether the respondent would be "amenable to the possibility of settling [the applicant's] claim".

By an originating summons dated 23 October 1996, the applicant sought leave to issue proceedings against the respondent pursuant to the provisions of both s660(2) of the Local Government Act 1960 and s47A of the . It is now accepted that the only relevant provision is of the .

Section 47A(1) of the Limitation Act prohibits any action being brought against the respondent in a matter such as the present unless the applicant has given to the respondent, as soon as practicable after the cause of action accrued, notice in writing giving reasonable information of the circumstances upon which the proposed action will be based. It is also a requirement that the action be commenced before the expiration of one year from the date on which the cause of action accrued. By subs(3), application may be made for leave to bring an action at any time before the expiration of six years from the date on which the cause of action accrued, whether or not notice as required by subs(1) has been given. Where the court considers that the failure to give the required notice or the delay in bringing the action, as the case may be, was occasioned by a mistake or by any other reasonable cause, or that the respondent is not materially prejudiced in its defence or otherwise by the failure or delay, the court may, if it thinks it is just to do so, grant leave to bring the action, subject to such conditions as it thinks it is just to impose.

The originating summons came on for hearing in the District Court on 12 May 1997. The learned Chief Judge of that court found that the building licence which had been issued for the second dwelling on the land had been issued improperly and invalidly because, at the time it was applied for, the application did not make it clear that an existing dwelling was already built on the lot. Regrettably, due to the manner in which the material was placed before his Honour in the District Court, he was not made aware of the fact that the site plan to which he was referred was a site plan for the original building on the land, in respect of which the building licence was issued in 1988. It was not the site plan lodged in respect of the application for a licence in 1990. As to the latter application, the Chief Executive Officer of the respondent has since deposed that the respondent's records do not contain any site plan for the land showing the location of the proposed cottage or the location of any existing cottage on the land as having been submitted with the application in June 1990 for a building licence for the second dwelling. The affidavit is somewhat equivocal. It could mean either that no plan was submitted with the application, in which event, it would seem, a site plan should have been demanded before the licence was issued, or that a site plan was provided, but has since been mislaid. Counsel for the respondent at the hearing acknowledged, however, that it was not known whether the 1990 application was accompanied by any, and if so what, site plan.

The respondent claimed that there was something of a change of emphasis in the nature of the applicant's allegation between the handwritten letter of 3 January 1995 and the formal notice of action of 19 March 1996, the latter emphasising that the building surveyor had given specific advice that the building of the residence was lawful. His Honour found that it was not until March 1996 that the required notice was given under the Limitation Act and he went on to consider whether the delay in the giving of that notice was occasioned by a mistake or by any other reasonable cause. He found that the critical moment, so far as the applicant was concerned, was late 1994 and that the delay that had to be considered was the delay between that time and March 1996, when the formal notice was given. In relation to that delay, his Honour indicated that the applicant had consulted solicitors in mid 1995, some six months or so after "the initial discovery". He found that, although there did appear to have been some delay up to that time, the delay up to March 1996, when the formal notice was given, was occasioned by "reasonable cause" within the meaning of the Limitation Act.

The question of material prejudice was then considered by his Honour. He emphasised two aspects. First, his Honour said, the pivot of the applicant's proposed claim would be dependent upon the proof of "a sentence or two" and he considered that the respondent would be materially prejudiced in its defence were leave to be granted to bring an action, on the basis that a prospective witness was not likely to have a clear memory. He did not, nor did this Court, have any evidence from the prospective witness. Nor was there any indication that the proposed witness had been contacted, or attempted to be contacted, at any time during the quite extensive period during which the parties corresponded. His Honour simply ssumed that memories and recollections must have faded by mid March 1996. Secondly, his Honour said that, at the time of hearing, the position with respect to indemnity appeared, at the least, to be cloudy and that the applicant's delay in clearly spelling out the nature of its claim against the respondent had brought about a difficulty in the respondent's then position.

As to whether it would be just to grant leave, his Honour said:

"I am of the view and finding that it is not just to grant the proposed applicant the applicant herein (sic) leave to bring an action as sought because in all the circumstances I do not find it a just order to make."

"It would in the totality of the circumstances not be just to permit the applicant to attempt to rectify what might be described as a defective bargain by a tenuous action against the Shire which itself was in the circumstances misled and I do not propose therefore to grant leave."

The applicant seeks leave to appeal against his Honour's decision on two grounds, namely, that the learned Judge erred in law in taking into account prejudice to the respondent arising up until the time the application was made and, secondly, that the learned Judge erred in fact in not finding that any prejudice to the respondent had arisen out of the respondent's misinterpretation of the circumstances which gave rise to the claim, rather than as a result of the applicant's delay. The respondent has filed a notice of contention, claiming that the learned Judge should have found that the applicant knew the true position from at least June 1992, on the basis, apparently, that the estate agent claimed to have given to all prospective purchasers a copy of the relevant town planning scheme. The agent, it should be added, also claimed that it requested all prospective purchasers to further their inquiries with the relevant Shire officers, and that the applicant had in fact contacted the respondent's building surveyor, from whom he was alleged to have received the advice which is the subject of the proposed proceedings. The respondent further contended that his Honour erred in holding that it was relevant to consider only the period between the applicant's discovering the true position and the giving of notice to the respondent, it being submitted that the learned Judge should have held that it was relevant to consider the period between the time when the incorrect advice was given by the respondent's building surveyor in July or August 1992 and the giving of the notice in March 1996. The difficulty with this last submission is that the period only commences when the cause of action accrues.

In this case, in my view, the notice was given as soon as practicable after the cause of action accrued. On the applicant's case, the cause of action, I accept, had accrued when the applicant first learnt of the illegality of the building which it had completed in reliance upon the advice of the respondent's building surveyor. In my opinion, Mr Scott's letter of 3 January 1995, either on its own, or read with the letter from Mr Griffiths to the respondent dated 17 March 1995, gave sufficient notice for the purposes of the Limitation Act, the second letter warning of the applicant's intention to obtain compensation. There is no requirement for any formality in the notice. All that is required is that there should be notice in writing giving "reasonable information of the circumstances upon which the proposed action will be based". No issue arises as to the provision of the name and address of the applicant and that of the applicant's solicitor or agent (if any) in the letter (or letters). The purpose of this provision is, inter alia, to enable authorities acting in pursuance or execution of any Act to be given timely notice of prospective claims, so that they may be investigated. In this case, it is to be noted that the respondent, following the receipt of the initial correspondence, indicated in its letter of 24 January 1995 that it intended to seek legal advice. Thereafter, quite extensive correspondence was conducted between the parties. This was not a case in which a public authority has been taken by surprise when, years after the event, and without warning, a claim has been made upon it.

Even if I am wrong in relation to the early correspondence satisfying the statutory requirements for notice, in my opinion, the delay until the formal notice was given in March 1996 was occasioned by reasonable cause, having regard to the course of correspondence between the parties and the suggestion by the respondent of a possible solution to the problem.

As to the question of prejudice, the respondent's contention was that, due to the delay, it was faced with a claim which "ultimately involved testing the recollection of a Council officer as to an alleged conversation or conversations three years and seven months before". It was contended that, if the claim as to incorrect advice had been made shortly after that advice had been given, the officer's recollection of any alleged telephone conversation, albeit only a sentence or two, would necessarily have been much clearer. It was therefore contended that the respondent had been materially prejudiced in its investigation of the claim. But of course the discovery of the error, on the applicant's case, only emerged when the dwelling was nearly completed and that is, of course, the type of prejudice which any ordinary litigant must endure. More importantly, there is nothing before the court, other than the mere assertion, to indicate the state of the officer's recollection. There is no indication that the respondent had been unable to contact him if indeed it had attempted to do so. The facts in this case, which are not at all complicated, are far removed from those contemplated by McHugh J in Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541, at 551-553.

The respondent contended that it had suffered further prejudice by reason of the delay of the applicant having led to a problem in relation to its insurance cover. On 1 July 1995, it appears that the respondent had changed its insurer, having joined the Municipal Liability Scheme ("MLS"), and it had given up its cover with the State Government Insurance Office ("SGIO"). The MLS policy provides cover only for any claim or claims first made against the member and notified to the MLS during the period of protection. A specific exclusion in the policy provides that, in respect of liability for professional indemnity, MLS shall not be liable for any claim which is made or threatened or in any way intimated on or before the commencement of the period of protection. MLS had rightly pointed out that there was an indication in correspondence prior to 1 July 1995 that legal proceedings would be instituted and accordingly it was contended that the claim was not covered under the MLS policy. On the other hand, by letter dated 28 November 1996, SGIO had expressed its opinion that "policy coverage rests with Council's current insurer". The SGIO's policy, it was said, provided an indemnity against any claim or claims which might be made against the insured during the period of insurance.

The respondent contended that, if it had been informed prior to June 1995 that its officer had negligently given incorrect advice concerning planning restrictions - the claim in fact made by the applicant relates to the validity of the licence granted in 1990 and not to the planning restrictions as such, the failure to advert to the planning restrictions, on the applicant's case, being said to be the reason for the erroneous advice - it would immediately have notified the SGIO specifically of the allegation of incorrect advice and that the respondent would then have been covered by the policy. However, it was said, because the respondent "was not so informed until 20 May 1996 (sic)", the SGIO policy had expired and accordingly it was refusing to indemnify the respondent. It was further contended that even if one of the policies were held to apply, it would have to establish this through "complex and costly legal proceedings associated with the present proceedings" if leave were to be given to institute proceedings. It was claimed that the respondent was materially prejudiced by the delay in giving particulars of its course of action in that, as a consequence of that delay, it might be left uninsured.

The respondent's contention regarding prejudice cannot be accepted. Responsibility for any refusal by insurers to indemnify the respondent, if indeed the refusal be justified, must lie at the door of the respondent. It does not arise by reason of any delay on the part of the applicant. If there is any prejudice, it will have arisen from the failure of the respondent to keep its insurers advised as to the correspondence which was taking place. If this is not so, then the explanation for any problem which it now faces must reside in there being a gap in its cover arising from its changing insurers.

In the circumstances of this case, it appeared to me that leave to appeal should be granted and, it being just to grant leave to bring the action, the appeal allowed. For these reasons, I joined in making the orders on 20 February 1998. I should add that these reasons should not be regarded as expressing any view on the merits of the respondent's case, which can only be evaluated at the trial.

I have had the benefit of reading in draft the reasons published by Kennedy J. I am in agreement with those reasons and have nothing further to add.

Palamore Pty Ltd & Ors v Shire of Broome & Anor [1998] WASCA 32 (20 February 1998)

Australian Coal and Shale Employees' Federation v The Commonwealth [1953] HCA 25; (1953) 94 CLR 621

Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1

Masters v McCubbery [1995] VICSC 209; [1996] 1 VR 635

Quinlivan v Portland Harbour Trust [1963] VicRp 5; [1963] VR 25

Stevens v Motor Vehicle Insurance Trust [1978] WAR 232

Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418

Victorian Railways Commissioners v Casaccio [1961] VicRp 24; [1961] VR 157

Palamore Pty Ltd & Ors v Shire of Broome & Anor [1998] WASCA 32

At a glance

Court

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Before

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Judgment (18 paragraphs)

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Legislation Cited (1)

Cases Cited (16)

Palamore Pty Ltd & Ors v Shire of Broome & Anor [1998] WASCA 32 (20 February 1998)