Timing it right: Limitation periods in personal injury claims

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1 July 2011 page 72 Timing it right: Limitation periods in personal injury claims By SIMONE HERBERT-LOWE Simone Herbert-Lowe is a senior claims solicitor with LawCover and is an Accredited Specialist in personal injury law. 1 Lawyers need to keep in mind time limits for filing claims or face potential negligence actions. The impact of changes to limitation periods for personal injury claims 2 introduced in 2002 as part of the NSW tort law reform package has well and truly matured, though they were of less immediate effect than other reforms introduced at the time. Awareness of the changes has become essential, as failure to commence proceedings within time could be devastating to a client and result in a professional negligence claim that may be difficult for a solicitor to defend. Yet cases reaching LawCover indicate some practitioners are unfamiliar with the regime that now applies under Division 6 of the Limitation Act 1969 (the Act). In any actions for damages for personal injury or death where the alleged act of negligence took place on or after 6 December 2002, except for certain classes of accidents, 3 the limitation period is now three years from the date the cause of action is discoverable. It also applies to children and plaintiffs without legal capacity. Prior to the changes, claims for personal injury or death were generally required to be brought within three years from the date of the relevant injury or death. 4 However, the Act previously operated to suspend the limitation period for children and other plaintiffs without legal capacity, such as plaintiffs suffering serious brain injury, and it enabled the courts to grant an extension of time in many circumstances. The package of changes introduced by the NSW Parliament in 2002 adopted the recommendations of the Ipp Report, 5 which accepted that it was in the interests of the community that, as a general rule, the limitation period should run against minors and incapacitated persons, except when the minor or incapable person was not in the care of a parent or guardian. 6 As a result, in the vast majority of cases a three-year limitation period now applies, even for children. However, the limitation period now runs from the date a cause of action is discoverable, not from the date of injury. While more flexible criteria now apply to the commencement of the limitation period, the courts' power to extend time has largely been withdrawn, except in certain circumstances.

2 The provisions in s.60c-d and s.60g of the Limitation Act, which previously enabled courts to consider late claims, do not apply to actions governed by the new regime. Discoverability For claims governed by Division 6, the applicable limitation period is set out in s.50c of the Act. It provides that an action is not maintainable after the first to expire of either the threeyear post discoverability limitation period, which is the period of three years running from and including the date upon which the cause of action is discoverable by the plaintiff; 7 or the 12-year long-stop limitation period, which is the period of 12 years running from the time of the act or omission alleged to have resulted in the injury or death. 8 Section 50D(1) states that a cause of action is discoverable by a person on the first date the person knows or ought to know 9 of each of the following facts: (a) that the injury or death has occurred; (b) that the injury or death was caused by the fault of the defendant; and (c) that the injury was sufficiently serious to justify bringing an action. The NSW Court of Appeal has considered the effect of these provisions in a number of cases. Baker-Morrison v State of NSW Baker-Morrison 10 is the leading case on the interpretation of the new provisions. The plaintiff was less than two years old when she suffered injury at a police station on 26 May She had bent down to collect a lolly and her fingers were caught by glass doors which automatically opened when visitors entered the premises. Her injuries were immediately apparent and she was taken to hospital where amputation of part of two fingers was required. The plaintiff's mother consulted a solicitor on 1 June 2004 and on the same day he wrote to the defendant suggesting that a copy of his letter be forwarded to its public liability insurer. The solicitor arranged for a statement of claim to be filed on 21 June 2007, three years and 27 days after the date of the plaintiff's injury. The defendant filed a motion seeking an order that it be struck out on the grounds that it was out of time and in circumstances where no power to extend time was available. The defendant's motion was successful at first instance but the decision was overturned on appeal. The court found that the claim was brought within three years from the date the cause of action was discoverable, and accepted the solicitor's evidence that he had not informed the child's mother before March 2005 that her daughter had reasonable prospects of success in making a claim. The court's unanimous judgment included the following findings and observations: the "person" referred to in s.50d is not necessarily the plaintiff - in the case of a minor who has a capable parent, the person is the parent (s.50f); because the state had filed a motion seeking to strike out the statement of claim, it bore the onus of proving the relevant facts;

3 although there was no issue that the child's mother was well aware from the time of the incident that the injury was serious, it did not follow that she knew that the injury was sufficiently serious to justify bringing an action, until she had received legal advice; the "fact" contemplated by s.50d(1)(b) is the relationship between the injury or death on the one hand and the fault of the defendant on the other - the relevant connection is one of causation; 11 section 50D(2) identifies where a person ought to know a fact on an assumption that the person had "taken all reasonable steps before that time to ascertain the fact", which includes, in appropriate circumstances, obtaining medical and legal advice and information; and the concept of "fault" is to be ascertained by reference to legal concepts, rather than a broader generic meaning. 12 The court unanimously held that the state had failed to prove that the mother had commenced proceedings more than three years after the date her child's cause of action was discoverable or ought to have been discoverable. In considering s.50d(1)(c), Basten JA said: "The construction of para (c) which would involve the person obtaining medical and legal advice gains support from the fact that a number of statutory regimes contain floors or caps on recovery of damages, or both... No proper view could be formed about the justification for bringing an action, absent information of that kind." 13 His Honour added: "To the extent that para (c) requires an assessment of the seriousness of injury sufficient to justify the bringing of proceedings, coherence with the broader statutory framework requires that the person have available to him or her relevant legal and medical information to allow an informed professional judgment to be made." 14 The effect of the decision in Baker-Morrison appears to be that, in many instances, time will not commence to run until the plaintiff has obtained legal advice, 15 and possibly goes towards indicating that the cause of action does not start to run until the plaintiff (or a tutor) has been informed the claim has reasonable prospects of success. 16 Therefore, in many cases defendants will not be able to assume that the limitation period expired three years after the date of the accident. Bostik Australia Pty Limited v Warren Liddiard & Anor In Bostik, 17 the plaintiff's employer occupied part of the main factory building at a work site owned by Bostik. The employer also had access to a small shed where the plaintiff was injured on 30 January 2003, when he lifted a 44-gallon drum without mechanical or other assistance. The trial judge was satisfied that the plaintiff had no knowledge of the work arrangements between his employer and Bostik, or any understanding for whose benefit his various tasks was intended. The plaintiff filed his statement of claim on 13 June 2007, and the court was asked to consider whether his cause of action was discoverable before 13 June There was no dispute that the plaintiff was immediately aware of his injury, although the injury was initially diagnosed as relatively minor and likely to substantially resolve following surgery. Justices Beazley and Ipp accepted that it was only after he underwent an operation, which

4 failed to provide the expected relief, that the plaintiff knew the injury was sufficiently serious to justify bringing proceedings. 18 The court agreed with the trial judge that the plaintiff did not know that his injury was caused by the fault of Bostik until November 2006, when his solicitor received a witness statement from the employer's principal which described the plaintiff's work as being "on a labour hire basis for Bostik". 19 The court further agreed the plaintiff's cause of action was not discoverable until he knew or ought to have known there was a reasonably arguable connection between his injury and the fault of the appellant; and that the contractual and practical relationship between the employer and occupier was relevant to this issue. 20 Justice Beazley, with whom Ipp and Basten JJA agreed, reaffirmed the decision in Baker- Morrison that it is not sufficient for the purposes of s.50d that a person merely knows the facts necessary to establish the fault of the defendant. The person must also know that the defendant is, as a matter of law, liable to pay damages. 21 Frizelle v Bauer In Frizelle, 22 the Court of Appeal refused the plaintiff's application for leave to appeal from the District Court's finding that her proceedings were out of time. The court observed that it was due in part to the dilatoriness of the plaintiff in maintaining contact with her solicitors and partly the delay of the solicitors. 23 The court accepted that while the plaintiff was still gathering evidence in relation to the quantum of her economic loss, it was nevertheless clear at an early stage that her injury was sufficiently serious to justify bringing an action. 24 In refusing the application, Basten JA (with whom McColl JA agreed), observed that: "There may be a case in which the applicant has taken all reasonable steps to ascertain facts depending upon the advice of professional persons, but, having been given the wrong advice, does not have the necessary state of mind. According to Baker-Morrison, the terms of s.50d(1) may not be engaged... That, however, is not the present case and the correctness of that view does not arise." 25 Other cases In Harris v Woolworths Pty Ltd, 26 Hulme J held that the plaintiff's proceedings were not commenced until after the expiration of the three-year discoverability period. His Honour rejected the propositions that the discoverability period did not commence to run until after the plaintiff knew whether her action might include a claim for non-economic loss 27 or until the plaintiff's lawyer was satisfied the claim had reasonable prospects of success. 28 In Doherty v State of New South Wales, 29 the plaintiff had suffered psychological injury during the course of his work as a crime scene investigation officer. He experienced nightmares and flashbacks in 2003 that he knew were work-related, although it was not until May 2004 that he was diagnosed as suffering from post traumatic stress disorder (PTSD). Price J accepted that the plaintiff knew at the latest by May 2004 that the injury had occurred. However, he was not aware (nor ought he have been aware) that his PTSD was caused by the defendant's breaches of duty until he obtained legal advice and his solicitors had provided him with an expert's report on the issue of breach of duty in February Operation of the 12-year long-stop limitation period

5 Under s.50c(1)(b), the 12-year long-stop limitation period runs from the time of the act or omission alleged to have resulted in the injury or death, not the date of discoverability. The notes to the section indicate that the 12-year long-stop limitation period can be extended by a court under Division 4 of Part 3. Section 62A provides that a person claiming to have a cause of action may apply to the court for an extension of the 12-year limitation period. The court is to hear from the persons likely to be affected by the application as it sees fit and may, if it decides that it is just and reasonable to do so, extend the 12-year long-stop period but not beyond three years after the date upon which the cause of action is discoverable. There appears to be no power to extend the three-year period except in cases where there has been an irrational failure to bring an action on behalf of a minor. Therefore, the date of discoverability is still critical. The section is presumably intended to apply to cases where an action was not discoverable within the 12- year long-stop period, and could apply to latent injury claims. Section 62B outlines the matters courts need to consider in determining an application for an extension of the 12-year long-stop limitation period. 31 It is important to note that s.60c and s.60d, which previously empowered the courts to extend the limitation period in certain circumstances, do not apply to injuries governed by Division 6. However, the sections may apply to cases where the negligent act or omission occurred before 6 December 2002 but where injury was suffered after that date. Claims by children and plaintiffs without legal capacity The limitation period is no longer automatically suspended for children and plaintiffs without legal capacity. Although s.50f(1) states the limitation period is put on hold for the duration of a person's disability, s.50f(2) stipulates a minor is not under a disability while they have a capable parent or guardian or, in the case of an incapacitated plaintiff, while the person is a "protected person". Section 50F(3) states that any facts that are known or ought to be known by a capable parent or guardian are taken to be known by the minor or an incapacitated person. The terms "capable parent or guardian", "guardian", "incapacitated person" and "protected person" are defined in s.50f(4). Section 50F states that s.52 and s.53 do not apply to Division 6. Therefore, the provisions suspending a limitation period for a person under a disability, do not apply to claims governed by the Division. The usual position will be that a minor or person without legal capacity will nevertheless be required to comply with the three-year post-discoverability time limit unless they are not under the care of a capable parent or guardian. The Act does not specify whether the plaintiff must have been without a capable parent or guardian for the whole period, and no doubt the courts will be called upon to consider this issue in future cases. Extending the limitation period following an "irrational" failure A limited exception to the general discoverability principle applies in the case of plaintiffs who were minors at the time of the act or omission where the failure to bring an action is "attributable to an irrational decision by a parent or guardian of the person made after the cause of action is discoverable". 32 This limited exception is further restricted to cases where:

6 (a) the limitation period expired before or within one year after the applicant reached 18 years of age; (b) the failure to bring an action within the limitation period is attributable to an irrational decision by a parent or guardian of the applicant made while the applicant was a minor; and (c) there is evidence to establish the cause of action, apart from any limitation defence. In such cases, the court may order an extension so that the time to commence proceedings expires at the end of one year after its order. As noted in Parliament, the language suggests that the term "irrational" will be a harder test to meet than "unreasonable". 33 It remains to be seen whether a court will regard it as irrational, for example, for a parent to decide against risking their own assets, such as the family home, to pursue a child's cause of action that may not have a guarantee of success. Claims by children against their parents A special limitation period applies to minors who wish to bring actions against their parents, guardians, or close associates of their parents or guardians. These plaintiffs are described in the Act as "victims" rather than "plaintiffs". In the case of a death or injury to a person who was a minor at the time of the act or omission which resulted in the death or injury, and the cause of action is against a person who was at that time a parent or guardian of the victim, or a close associate of the parent or a guardian, s.50e(1)(a) provides that the cause of action is discoverable by the victim when the victim turns 25 years of age or when the cause of action is actually discoverable by the victim, whichever is the later. The 12-year long-stop limitation period runs for 12 years from the date when the victim turns 25 years of age. Accordingly, in cases of child abuse or child sexual assault by parents, guardians or their associates, a plaintiff may have until the age of 37 to commence proceedings. If, however, a wrongdoer is found not to be a parent, guardian or a close associate and where the minor is in the custody of a capable parent, he or she is deemed not to be under a disability. Therefore the limitation period is not suspended and the standard time limits will apply, subject to the possibility of obtaining an extension of time under s.62d. As a result of the greatly extended limitation period, it is likely that the definition of "close associate" will be vigorously contested by defendants seeking to resist a claim. Section 50E(2) defines a close associate to be a person whose relationship with the parent or guardian is such that the parent/guardian might be influenced by the person not to bring a claim on the victim's behalf, or where the victim might be unwilling to disclose that person's conduct to the parent or guardian. 34 Conclusion Under the new system for plaintiffs injured in circumstances that are governed by Division 6, the following principles now apply:

7 1. Proceedings must be commenced within three years of the discoverability of the cause of action. 2. In many cases, a cause of action will not be discoverable until legal and/or medical advice has been obtained. 3. Compared to the previous regime, the court's power to extend time has been greatly restricted. 4. Regardless of when a cause of action is discoverable, a 12-year long-stop period will apply in most cases. 5. The limitation periods outlined in 1 and 4 above also apply to children and incapable persons, except in cases where the plaintiff is not in the care of a capable parent or guardian. 6. Courts have limited powers to extend the 12-year long-stop limitation period, provided that this period does not extend beyond the period of three years after the date upon which the cause of action became discoverable The court may extend the limitation period where there has been an irrational failure by a parent or guardian to bring an action for a minor A special limitation period applies for minors injured by a parent, guardian, or close associate of the victim's parent or guardian. In such cases, the cause of action is not discoverable until the victim is aged 25, and the limitation period may potentially be extended until the victim is 37 years of age. The writer wishes to thank Bruce Yeldham for his assistance in preparing this article. ENDNOTES 1. The following references were used in writing this article: B. Matthews, "Post-Ipp special limitation periods for cases of injury to a child by a parent or close associate: New jurisdictional gulfs" (2004) 12, Torts Law Journal at 239; and B. Matthews, "Assessing the scope of the Post-Ipp 'close associate' special limitation period for child abuse cases" [2004] James Cook University Law Review 4 2. The 2002 tort law reform package introduced Division 6 of the Limitation Act 1969, which applies regardless of whether the plaintiff's claim for damages is brought in tort, contract, under statute or otherwise (s.50a(i)). The provisions extend to include actions under the Compensation to Relatives Act 1897 and causes of action that survive on the death of a person for the benefit of their estate under s.2 of the Law Reform (Miscellaneous Provisions) Act 1944 (s.50a(4)). However, Division 6 does not apply to claims under the Motor Accidents Compensation Action 1999 (s.50a(3)), or to claims brought under the Workers Compensation Act 1987 (s.151d). 3. Division 6 applies to general claims for damages for personal injury at common law, as modified by statutes such as the Civil Liability Act Some classes of accidents, such as motor accidents, work accidents, aviation and sporting accidents, and dust diseases claims, have different limitation regimes: see "Schedule of Limitation Periods in Civil Matters in New South Wales", published by LawCover, 4. The earlier six-year limitation period was abolished from 1 September See the Commonwealth of Australia, Review of the Law of Negligence Report (The Ipp Report), Canberra See the Ipp Report, at p Section 50C(1)(a).

8 8. Section 50C(1)(b). The 12-year long-stop limitation period can be extended by a court under Division 4 of Part 3 of the Act. 9. Section 50D(2) provides that "A person 'ought to know' of a fact at a particular time if the fact would have been ascertained by the person had the person taken all reasonable steps before that time to ascertain the fact". 10. [2009] NSWCA 35. The main judgment was given by Basten JA, with whom Ipp and Macfarlan JJA agreed. 11. Ibid at [28]. 12. Ibid at [28] and [37]. 13. Ibid at [42]. 14. Ibid at [44]. 15. Ibid at [41], Basten JA refers to a "legal evaluative judgment". 16. Note, however, that this interpretation does not appear to have been accepted by Hulme J in Harris v Woolworths Pty Ltd, [2010] NSWSC 25, at [181]. 17. [2009] NSWCA167 (26 June 2009). 18. Basten J did not comment on this aspect of the limitation issue. 19. Supra n.16, at [49]. 20. Per Basten J at paragraph See paras (per Beazley JA, with whom Ipp JA agreed) and 130 (per Basten J.) 22. [2009] NSWCA Ibid at [31]. 24. Ibid at [28]-[29]. 25. Ibid at [30]. These comments are clearly obiter dicta but may suggest that where a plaintiff receives incorrect or negligent legal advice, their cause of action may not be discoverable until appropriate advice is obtained. 26. [2010] NSWSC Ibid at [183]. 28. Ibid at [181]. 29. [2010] NSWSC The NSW District Court has also considered the terms of s.50d in Tolmie v Stockland Trust Management Limited [2009] NSWDC 283 and Hope v Hunter and New England Area Health Service [2009] NSWDC These include the length of and reasons for the delay, the extent to which the defendant may be prejudiced, the nature and extent of the plaintiff's injury or loss, any conduct of the defendant that induced the plaintiff to delay bringing the action, the steps (if any) taken by the plaintiff to obtain medical, legal or other expert advice and the time when the cause of action was discoverable by the plaintiff. 32. Section 62D. 33. See NSW Parliamentary Debates, Legislative Council, 19 November 2002 (Michael Egan), p The meaning of "close associate" in similar legislation was considered by Kaye J of the Supreme Court of Victoria in AM v KB [2007] VSC 429 (7 November 2007). After hearing evidence that the defendant was a close friend of the plaintiff's father, and that the plaintiff's family frequently socialised with the defendant, the court accepted that he was a close associate of the child's parents and that the plaintiff's claim for sexual assault while she was a child was not precluded by the usual threeyear limitation period. 35. Section 62A(2). 36. Section 62D.

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