Russo & Anor v Aiello S240/2001 [2002] HCATrans 377 (9 August 2002)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S240 of 2001

B e t w e e n -

LIDO RUSSO and ZUCCHINI PTY LTD

Applicants

and

JOHN DOMINIC AIELLO

Respondent

Application for special leave to appeal

GLEESON CJ

KIRBY J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 9 AUGUST 2002, AT 9.58 AM

Copyright in the High Court of Australia

MR G.B. HALL, QC: May it please the Court, I appear with my learned friend, MR A.R. LAKEMAN, for the applicant. (instructed by Turner Whelan)

MR J.D. HISLOP, QC: May it please the Court, I appear with my learned friend, MR D.J. RUSSELL, for the respondent. (instructed by Mr Bhim Ramrakha)

GLEESON CJ: Yes, Mr Hall.

MR HALL: Your Honours, this application involves questions arising under section 43A of the Motor Accidents Act and we have filed, very recently, your Honours, an affidavit annexing some statistics. Does your Honour have that?

KIRBY J: Yes, this is the affidavit of Libby Moss?

MR HALL: Yes. Your Honours, on the issue of public importance, if I could draw your attention to the statistics annexed to that, your Honours will see that some 183,000 applications under the Motor Accidents Act for damages, of which 40,000 were notified more than six months after the accident, and if your Honours go to the - - -

GLEESON CJ: Does that mean 40,000 applications before a District Court judge, unless the insurer accepts the explanation?

MR HALL: Yes.

KIRBY J: The message has not got out to the community yet that Draco has visited this legislation.

MR HALL: A combination of the community and - - -

KIRBY J: .....lots of negligence actions on that.

MR HALL: Well, of course, a solicitor cannot respond until the client comes in.

KIRBY J: Yes.

MR HALL: And, typically, in this case, of course, the lay client went to a solicitor initially and was told that he did not have great prospects. He then went overseas, he says to recuperate. Then he came back and decided he was not getting better and was, in effect, getting worse and he goes to see a solicitor out of time. It is commonly not until a lay plaintiff feels that the injuries are more severe or that he is not getting better that he seeks legal advice and, based on my own experience and listening to other cases, your Honour, it is more than six months.

GLEESON CJ: You had a claim that has got out of time yourself, have you?

MR HALL: No, your Honour. Luckily for me, no.

KIRBY J: Mr Hall has seen plenty of clients whose claims got out of - even under the six-year rule.

MR HALL: Yes.

GLEESON CJ: Mr Hall, apart from what is either express or implicit in this decision, is there any decision of the Court of Appeal as to what constitutes and what does not constitute a satisfactory reason for delay?

MR HALL: No, but there has been a focus in - what is happening is defendants are tending to resist the application on the basis that the explanation offered is not "full" and, indeed, there is an element of that in this case.

KIRBY J: There certainly is. That was one of the complaints, that your client was very brief in his explanation, that he did not really lay it all out as to what he did over the whole of the time.

MR HALL: The suggestion I would make in relation to that, though, your Honour, of course, if this removed from the initial application - one would wish it had been better articulated and better supported, but that type of situation, which is not uncommonly a point of argument in relation to these applications, is essentially, if I may say so, a lawyer "full" rather than an applicant "full". When the applicant goes to see a solicitor, the solicitor and counsel draft the process and, to a very substantial extent, the layman, or laywoman, is at the mercy of his legal advisers.

GLEESON CJ: But except in a case where it appears that somebody is actually holding something back, I would have thought that the concepts of "fullness" and "satisfactory" are related because you have to have an idea of what it is that would be a satisfactory explanation before you can make a judgment as to whether or not there has been full account of the reasons for the delay. If you regarded an aspect of the reasons as irrelevant, then not dealing with that would not detract from the fullness of the explanation. If, on the other hand, you thought that the essence of a satisfactory explanation is, for example, an account of why it was you delayed in consulting a lawyer, then a failure to explain that would affect "fullness".

MR HALL: Yes, your Honour, but if I may say so, when your Honour, in a different capacity, gave judgment in a case called Salido 32 NSWLR 524 - and I am thinking of a passage at 532-3 - your Honour did not, it would seem to me, impose an onerous obligation in relation to the explanation of diligence, or lack of diligence. In the context of this statute, this statute provides a self-funded system which extends really a fully funded compensation to any member of the general public injured in a motor vehicle accident and the concept it brought in was that there should be co-operation between the defendant and the applicants generally, and, as it has provision for extending of time, we would say it should not be interpreted in a partisan way against an applicant.

KIRBY J: You say there are 40,000 potential cases and that they are increasing all the time - - -

MR HALL: Yes. There are several hundred in - - -

KIRBY J: - - - that you have dissent in the Court of Appeal, you have Justice Young saying that he thought that there was an error in the court below but he did not see that it was necessary to intervene and Justice Meagher simply agreed with Justice Young.

MR HALL: Yes.

KIRBY J: So you say that this is a very practical area where this Court should intervene, but the respondent says that Justice Hodgson's contention that there was a want of procedural fairness was visited on them by Justice Hodgson. What do you say to that, that the issue was not raised in the Court of Appeal and his Honour's reasons?

MR HALL: I think that is a point fairly made, your Honour.

GLEESON CJ: Well, if it is right, that means that there was a want of procedural fairness in relation to raising the matter of procedural fairness.

MR HALL: I would not concede that, your Honour. The court, in effect, or Mr Justice Hodgson, felt that the way the matter had been conducted in the court below was procedurally unfair, and that was a view the court came to, and if the court came to that view, in my submission, it would be bound to intervene.

GLEESON CJ: Mr Hall, in paragraph 53 on page 35, which is the key paragraph in Justice Young's reasons, as I understand it, he says:

I would still reach the conclusion -

I think there is a typographical error here -

that there was not a full and satisfactory reason given for the delay in this case.

MR HALL: Yes.

GLEESON CJ: Did he, anywhere in his judgment, state what he would regard as the criteria for satisfaction?

MR HALL: No, he did not, and we would say that the approach of the minority judge was to be preferred in that case. We would say that Mr Justice Young certainly did not, for example, approach it on the basis of whether the applicant had a full explanation and, in any event, your Honour, I would submit that this Court ought to look at what does constitute a full explanation.

GLEESON CJ: Full and satisfactory explanation.

MR HALL: Yes. Well, your Honour, where you have in this - - -

KIRBY J: Would not that be a factual question in each case? Of course, you have to have a concept or a criterion, but basically it is the question of whether the plaintiff fills in all the gaps, is it not?

MR HALL: And, I suppose, to an extent, how they are filled in, but the point I would make is that if, for example - it would be a common case that an injured plaintiff finally decides he should seek legal assistance. Now, I would submit, as a matter of general probability, it is most unlikely, first of all, that that would occur to him on 1 May, you know, on some specific date.

GLEESON CJ: You could give a very full explanation which was unsatisfactory. You could say, "The reason I didn't make a claim within six months is that I was on the run from the police. I was afraid that if I showed my head above the fence I was going to be arrested for offences in relation to this particular accident, and I'd also embezzled some money from my employer and, consequently, I spent those six months on the run." Now, that might be a very full explanation of why you did not make a claim, but many would regard it as unsatisfactory.

MR HALL: Yes, but in the context of this case, the material before the court explained what legal advice he received initially, why he went overseas, when he came back what his health was, and why, ultimately, he came to the decision to go and see another firm of solicitors, which led to these proceedings being brought. Now, those were the essential attributes and if I can come to a sore point that we want to agitate on appeal, in the absence of any evidence or notice on the part of the respondent that the information he had given was regarded as unsatisfactory because it was not too detailed, the explanation actually given, we would say, should be regarded as full.

KIRBY J: Surely that is a matter for the decision-maker. Surely the decision-maker has to be convinced you are seeking a benefit.

MR HALL: Your Honour, we would say that it was inadequately considered in the court below and the court below - it is common ground - - -

KIRBY J: I think your best point is the answer to the Chief Justice, that Justice Young, though saying that it was not full and satisfactory, did not really indicate what he took those words to mean.

MR HALL: Yes.

KIRBY J: Now, query whether you can elaborate them very much, but it certainly is a question of very considerable practicality to a lot of litigants. At least that is a good point in your favour. I mean, this Court, in the old days, when it had to receive appeals, spent an awful lot of time looking at the Nominal Defendant and what was required in cases involving the Nominal Defendant.

MR HALL: Yes.

KIRBY J: But they were in days where there were appeals as of right. Now, it has to get through the barrier of special leave.

MR HALL: I appreciate that, your Honour, but where it is likely to affect a great many cases and where it is to do with the administration of an Act which is going to be ongoing and in which, as your Honour said, the number of applications were likely to increase, it is a matter of considerable importance and how it is dealt with by judges in the court below is a matter of considerable importance, and there is a procedural aspect. Your Honours, in recent times in the Court of Appeal there has been a reference to, in effect, a maintenance of a spirit of ambush in the lower court and, your Honour, that is dealt with in a case called Nowlan v Marson, which is actually reported, your Honour, but I could hand up copies of that judgment. I have noted the report on it and this case really represented an ambush, we would say. Do your Honours wish me to take you to that case?

KIRBY J: I have not the great benefit of knowing the case. If it is relevant. You say it is ambush. You look on it as an ambush and the defendant says it is simply the failure or incompetence of the solicitors who appeared for your client to set out in detail - to sit down with a client, as you and I would have done when we were solicitors and young barristers, sit down with a client and go through step by step explaining as best you can why it was not done in the six months. People are not as careful nowadays sometimes.

MR HALL: Yes, your Honour.

KIRBY J: This is the gateway. This is a very serious thing from a plaintiff's point of view and so you say it is an ambush. They say it is just not thoroughly done. It is not full and satisfactory, which is what Parliament has required.

MR HALL: If I can grapple with it. In this case, the defendant put on a notice of motion. It gave no reasons. It just annexed correspondence and then brought the application pursuant to section 43A. The affidavits were read. Nobody was required to attend for cross-examination. Mr Lakeman was called upon to address and it was only when his opponent addressed for the first time the real point relied upon by the defendant insurer emerged.

GLEESON CJ: Which was?

MR HALL: Well, that the explanation was not full and the reason why it was said to be not full was there was a gap of some months in 1997. In other words, it was claimed he had not adequately said, first of all, what happened for that period of months and, secondly, he had not said precisely when it was he realised that he made up his mind to seek advice and sue.

Now, when it came up to the Court of Appeal, it was common ground that the trial judge had misunderstood the onus and was in error, so the Court of Appeal, in effect, retried the matter on appeal, but by that time, as Mr Justice Hodgson had pointed out, there was material before the court which certainly explained what had happened to the plaintiff in the period that was challenged of about eight months, that he was obviously receiving treatment. He obviously had injuries. The point I would raise, and which Mr Justice Young said he did not have to consider but we would say he does have to consider, is the absence of prejudice.

GLEESON CJ: Can I just ask you a question about these statistics, Mr Hall, on the last sheet of the affidavit, the annexure to the affidavit?

MR HALL: Yes, your Honour.

GLEESON CJ: Am I right in thinking that those statistics show that there has been a great improvement over the period of three years in the promptness with which people notify claims, that in 1999/2000 21 per cent were, as it were, out of time; in 2000/2001 that figure dropped to 18 per cent and in 2001/2002 it dropped to 8 per cent.

MR HALL: Yes.

KIRBY J: Well, I suppose that cuts both ways. On the one hand, you could say Parliament's will is now being reflected and, on the other hand, you can say you fell in the earlier period.

MR HALL: Yes.

GLEESON CJ: It is an extraordinary change, though, is it not, because that figure of 21 per cent is fairly typical? If you look under the heading of "Old", they are all around the 20 per cent mark.

MR HALL: Yes, but, your Honour, may I point out that if you turn to the letter from Mr Alwis, the senior research analyst, he says, you will see underlined:

The stats are as at June 2002. Hence the recent accident years are underdeveloped.

What that means is, of course, that - - -

GLEESON CJ: Why would that affect percentage figures? You are not telling me that more people notify promptly in July than notify in June.

MR HALL: The point is that the figures for 2001/2002 are not yet fully developed. In other words there will be applications coming in which still relate to that period. That is the inference I would draw, your Honour.

GLEESON CJ: You mean the claims that will come in now will be, by hypothesis, late claims?

MR HALL: Yes. Well, a proportion of them will and they will fall within that period, but the motor accident authority which gets this - - -

GLEESON CJ: Yes, I follow. The way it works is that whenever you look at these statistics over a period of years, the most recent year you are looking at will always understate the amount of late claims because, by hypothesis, the claims that will be coming in will be later claims.

MR HALL: Yes, and they have to go to an administrative process of, first of all, the application being brought, the court furnishing the statistics and the department - - -

GLEESON CJ: Right. So 20 per cent sounds like a fair round figure as to the amount that will be affected by this.

MR HALL: Yes.

GLEESON CJ: Yes, thank you, Mr Hall. Yes, Mr Hislop.

MR HALL: Your Honour, I had not dealt with the question of prejudice. I do have something to say on that. If I need to, can I come back to it?

MR HISLOP: Your Honours, might I firstly say that there was nothing in the application before this Court to indicate there was to be any dispute on the basis that the Court of Appeal had not defined what is meant by full and satisfactory. One would assume the reason for that is because the Act itself contains a definition in section 40(2), which sets out at some length what is required to be established.

GLEESON CJ: Where can we see that?

MR HISLOP: That will be found at page 18 of the application book, your Honour, at about line 45.

GLEESON CJ: Line 45:

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 -

So the question is, what justifies delay?

MR HISLOP: Yes, and before that, the subsection requires the:

full account of the conduct, including the actions, knowledge and belief of the claimant - - -

GLEESON CJ: What sort of thing justifies delay, to use the language of the section?

MR HISLOP: Well, perhaps one example might be if a person was to only have an incapacity which arose many years after the event. That might be the sort of clear case.

GLEESON CJ: I suppose the most obvious thing which would justify delay would be if you were in a coma for six months.

MR HISLOP: Yes, well, that is a good example.

KIRBY J: Going overseas would seem to be at least a factor relevant to justifying the delay and it explained some of the period here.

MR HISLOP: Well, it may or may not, your Honour, but essentially then, what was before the Court of Appeal became a contest, really, as to whether the explanation was an adequate one, a factual issue in which there was a difference between the opinion of Mr Justice Hodgson on the one hand, the trial judge on the other and Justices Young and Meagher.

GLEESON CJ: Just before you pass from the concept of justifying delay, does ignorance of the existence of a time limit justify delay?

MR HISLOP: We would submit it probably would not, but it does not matter in this case because this man had consulted a solicitor within a matter of, I think it was a couple of weeks of the - - -

GLEESON CJ: Had the solicitor told him of the time limit?

MR HISLOP: He had. That was in his affidavit and, indeed, he had given him the appropriate forms to submit. So there was much in the evidence which justified the conclusion reached by the majority and, in our submission, no special leave point arises to require this Court to revisit what was essentially a factual finding.

There was a suggestion made of a failure to accord natural justice, but this was not raised by any notice of appeal in the Court of Appeal and, indeed, at the hearing in that court, that argument was disavowed by counsel for the applicant, as appears at page 25 of the application book at line 55, where, on the very last line on the page the Court will see that:

In submissions before this Court, Mr. Lakeman for the appellants said that he was not suggesting the appellants were denied natural justice.

KIRBY J: That is in the reasons of Justice Hodgson, is it not?

MR HISLOP: Yes, that is so, your Honour.

GLEESON CJ: But he just then went on to express an inclination without attaching any significance to it.

MR HISLOP: He did. He did not decide it on that basis. What he decided was, on his view of the facts, he thought that, at least arguably, there had been a full and satisfactory explanation given. The other judges took a different view of - - -

GLEESON CJ: Did Justice Hodgson's reasoning turn upon the distinction between having an explanation and giving an explanation?

MR HISLOP: Not in the end, save for this, that he did say in relation to what Justice Young said that the word "given" was not an appropriate word.

GLEESON CJ: What do you understand to be the point of departure between Justice Hodgson and the majority?

MR HISLOP: The point of departure appears to be in his view of the materials which he appears to have thought were sufficient and that - - -

KIRBY J: He italicises "had" on page 27 in paragraph 22, so he obviously is drawing some distinction based on that word, having the full and satisfactory explanation.

MR HISLOP: Yes, but Justice Young had had regard to the whole of the material in the matter, as appears from his judgment, and had reached the conclusion - - -

KIRBY J: But his Honour seems to have referred to what he thought as distinct from what the claimant - it may simply be that his Honour expressed it in a different way, but he seems to be indicating what his response is as distinct from whether the claimant had a full and satisfactory explanation.

From the point of view of special leave, Mr Hislop, the statistics tend to indicate that this is something that affects mass litigation, that the two judges, Justice Young and Justice Hodgson, have had a different intuitive or judgment response to the operation of the statute and the facts and, in that sense, the issue is tendered to us to clarify who got it right, whose principle is the correct principle, and if it affects thousands of citizens, why is it not worthy of half a day of the time of the High Court of Australia?

MR HISLOP: Because, firstly, we do not apprehend that there is a difference in principle between the judges. Justice Hodgson, in his judgment, made it clear that the onus or the obligation was upon the claimant to provide the explanation. He considered - and this is at page 19 from about lines 15 to 50. He points out that the obligation under the section is for the claimant to provide the full and satisfactory explanation for the delay. That is provided by subsection (2) and also by subsection (4) and that then the:

Court would have regard to the explanation . . . if the Court considered that the explanation provided to the insurer was not full and satisfactory, and if there was no relevant additional material before the Court, the inference that the claimant did not have a full and satisfactory explanation would readily be drawn.

There is no difference in principle between that approach and that taken by Justice Young. What occurred was that Justice Hodgson then set out a great deal of the evidential materials before the court.

KIRBY J: That was necessary because all judges agreed the primary judge had erred and so the question was, did the Court of Appeal send it back to retrial or did they exercise the power themselves, and they took the second course.

MR HISLOP: Yes.

KIRBY J: So Justice Hodgson felt it necessary to set out the facts for the purpose of that exercise.

MR HISLOP: To explain why he would have reached a different conclusion on the materials.

KIRBY J: Yes.

MR HISLOP: But the point we make is that there is no difference in approach, in our submission, by the judges. Where the difference arose was because Justice Young and Justice Meagher drew the inference that the claimant did not have a full and satisfactory explanation. Justice Hodgson was of a different view.

As to the statistical material, can we make these points, that the figures that are provided are not contested matters. They only deal with notifications more than six months. They do not indicate how late the explanation was. In this case it was something like over two years, I think, when the explanation was made. They do not indicate the number that were contested and, of course, one has the advent, since 5 October 1999, of the Motor Accidents Compensation Act, which is now applicable to cases of this nature which, by reason of the various checks, caps and other limitations, has resulted in a quite great reduction in matters of this nature.

KIRBY J: The question is whether the reduction should be pushed forward in this case to somebody who, after 300 years of it being six years, did not act with diligence and give a full and satisfactory explanation for not having pursued the claim in six months.

MR HISLOP: What the figures do not show is how many of those matters, where the application was notified late, result in any court proceedings.

KIRBY J: Your best point is the issue of procedural fairness goes out the window because it was just an inclination of Justice Hodgson, it was not determinative, and in so far as there is a difference in the meaning of the statute, these are ordinary words and they elicit facts, and on that point there was no difference between the majority and the minority in the Court of Appeal. It was just a matter of impression on the facts.

MR HISLOP: Yes. My friend has not said anything about the discretion or prejudice but, in our submission - - -

MR HALL: But I want to argue it.

KIRBY J: He did have a little time up his sleeve. You might have to respond to that if he is called on to deal with it.

MR HISLOP: The only thing I was going to say in that regard was it is clear from the terms of section 43A(7) there is no discretion. It is a mandatory provision and so questions of prejudice have no application.

GLEESON CJ: What do you mean there is no discretion?

MR HISLOP: Under section 43A(7).

GLEESON CJ: What page again?

KIRBY J: It says "(7)" on 18, line 30 that:

A court must dismiss proceedings commenced - - -

MR HISLOP: Yes.

KIRBY J: But the discretion, or the judgment, is incorporated in the words "if the court is satisfied" it did "not have a full and satisfactory explanation".

MR HISLOP: Yes, but having reached that conclusion, that was then determinative. If it please the Court, they are the submissions.

GLEESON CJ: If we were to grant special leave in this matter, Mr Hall, it would be a half-day case?

MR HALL: Yes, your Honour. The issue is quite narrow, your Honour, and we would undertake to do a fairly lengthy - not lengthy but we would comprehensively deal with it in our written submissions, so that it may well be that there would be very little oral argument.

GLEESON CJ: In this matter there will be a grant of special leave to appeal.

We will adjourn for a short time to reconstitute.

AT 10.33 AM THE MATTER WAS CONCLUDED