NEW SOUTH WALES INSURANCE MINISTERIAL CORPORATION v WALKOFF SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MASON P, POWELL and STEIN JJA 7 August 1997, 7 August 1997 [1997] NSWCA 221 Practice and Procedure — Process — Parties — Misdescription — Power to correct mistake in name of party — Statement of Claim joining insurer not owner/driver as party-defendant — Believed necessary as result of amendment to relevant legislation — Belief erroneous — Limitation period expires — Later application for leave to amend Statement of Claim by substituting owner/driver for insurer — Whether "mistake in name of party" — Whether leave might properly be granted — SCR (1970) Pt20 r4(3) Powell JA This is an appeal from a Judgment delivered, and Orders made, by Sully J on 4 July 1996, on which day his Honour upheld an appeal from a Judgment, and Orders, made by Greenwood M on 24 April 1996, and, in lieu thereof, ordered that the Respondent have leave to amend the proceedings by substituting one Colin Masson ("Mr Masson") as the party-Defendant in lieu of the original party-Defendant, the Government Insurance Office of New South Wales, as the Appellant was known at the time of the commencement of the proceedings. The factual background out of which the application to Greenwood M, and the later appeal to Sully J, arose is fairly simple, although, I regret to say that the relevant facts cast a less than favourable light upon the competence, or conduct, of the members of the legal profession who have acted for the present Respondent over a period of many years. The Respondent was, in January 1983, a passenger in a motor vehicle which was owned, and driven, by Mr Masson at a time when, as a result of what is alleged to have been the negligence of Mr Masson, that motor vehicle came into collision with another motor vehicle, so causing the Respondent injury - the extent of the injury is not something which need be a matter of any comment in this Judgment. It is quite clear that, from the outset, the Respondent was only too well aware that Mr Masson was the driver of the motor vehicle at the relevant time. It is equally clear that, by no later than January 1984, the Respondent's then solicitors were aware that Mr Masson was, in addition, the owner of the motor vehicle in question and that the motor vehicle was the subject of a statutory third party insurance policy issued by the Appellant pursuant to the provisions of the Motor Vehicles (Third Party Insurance) Act 1942 ("the Act'). Before passing on, it is to be recalled that, in January 1983, the law required that claims for personal injuries sustained in motor vehicle accidents be brought against the owners and/or drivers of the motor vehicle, or motor vehicles, said to have been involved in any relevant motor vehicle accident. That this was well understood by the Respondent's then solicitors is clearly demonstrated by the fact that, in July 1983, the Respondent's then solicitors wrote to Mr Masson informing him of the fact that they had been retained by the Respondent and the 2 UNREPORTED JUDGMENTS further fact that, in January 1984, the Respondent's then solicitors wrote again to Mr Masson advising him that they were instructed to proceed with a claim against him on behalf of the Respondent for damages said to have been sustained in the accident, at the same time suggesting to Mr Masson that he lodge with the Appellant a notification as to the accident and notification of the intended claim. Although, over the years, discussions appear to have been had with, or correspondence passed between, the Respondent's then solicitors and Mr Masson, or the Appellant, these proceedings were not commenced by those solicitors on behalf of the Respondent until 30 April 1987, the commencement, then, of these proceedings apparently having been precipitated by the announcement by the then Government of its intention to abolish the common law right to recover damages for injuries sustained in motor vehicle accidents and to substitute rights of the nature later provided by the Transcover scheme. Meantime, in 1984 the Act was amended by (inter alia) substituting for the existing s14 a new section which provided (inter alia) that, in the case of a claim for damages arising out of the use of an insured motor vehicle, proceedings to enforce such claim should be taken against the Appellant and not against the owner or driver of the vehicle concerned. The transitional provisions contained in the 1984 amending Act, however, provided that the Act as in force immediately prior to 1 July 1984 continued to apply to any cause of action which arose prior to that date whether or not proceedings in respect of any such cause of action had been commenced prior to that date. The Statement of Claim which was filed to commence these proceedings was drafted by a Ms FC Smith, then a solicitor-clerk in the employ of the Respondent's then solicitors. It is quite clear that the fact that it was the Appellant, rather than Mr Masson, which was then joined as a party-Defendant to the proceedings was not due to any misapprehension or mistake, on the part of Ms Smith - or, for that matter, of her employer Mr LE Hopper - as to the identity, or name, of the owner, or driver, of the vehicle which the Respondent had been a passenger at the relevant time. Far from that having been so, it is quite clear that both Ms Smith, who had drafted, and Mr Hopper, who, as the intended solicitor on the record, signed, the Statement of Claim intended that the proceedings be brought against the Appellant as what might be called "the statutory defendant" rather than against the owner or driver of the vehicle in question, and that that intention was due to the fact that, being aware of the amendments to the Act made in 1984, but being unaware of the transitional provisions contained in the 1984 amending Act, they believed that that was what the law then required. Despite the fact that the Statement of Claim was filed on 30 April 1987, no attempt to serve it appears then to have been made; nor, indeed, does the fact that a Statement of Claim had been filed appear to have been brought to the attention of the Appellant until some time later and, even then, the Appellant was not informed that it had been joined as the party-Defendant to the proceedings. In January 1989, the limitation period within which proceedings could, without leave, have been brought by the Respondent against Mr Masson as a defendant had expired. The evidence which is before the Court does not reveal any action taken on the Respondent's behalf by his then solicitors between mid-1988 and March 1992, by which time, so it would seem "(the Appellant's) file (had) been finalised". Under FEW SOUTH WALES INSURANCE MINISTERIAL CORPORATION v WALKOFF (Powel JA) cover of a letter dated 18 March 1992, the Respondent's then solicitors finally forwarded to the Appellant, "by way of service", a copy of the Statement of Claim. Thereafter, on 28 September 1992, the Appellant's solicitor wrote to the Respondent's then solicitors a letter which, omitting formal parts, was as follows: "T acknowledge receipt of your letter of 20 July 1992 and advise this matter was statute barred on 20 January 1989. It appears that you issued a Statement of Claim incorrectly against the GIO as the accident was prior to 1 July 1984 when the owner or driver were required to be the named Defendants. On 8 April 1988 it appears you wrote to the GIO realising your error and advising a further Statement of Claim had been issued for $50,000, however, you held no instructions to serve the documents. Prior to 1989 we were prepared to negotiate on an unlitigated basis. However, you advised per telephone on 7 June 1988 that further medicals and particulars of Economic loss would be supplied. This was not supplied and indeed some four years have elapsed. We, therefore, feel we are justified in not entering into any further negotiations unless, of course, the District Court statement of claim issued for $50,000 was in fact served on our client." (The terms of the third, and final, paragraphs of that letter appear to have been based on a misunderstanding of the letter which had been written by the Respondent's then solicitors to the Appellant in April 1988, which misunderstanding was to the effect that there in fact had been filed a Statement of Claim naming Mr Masson as the party-Defendant). Despite the terms of this letter, no further step appears to have been taken on behalf of the Respondent in the proceedings until 23 February 1996, on which day there was filed the Notice of Motion which was later determined, first, by Greenwood M, and the, on appeal, by Sully J. I regret to say that that Notice of Motion, which was filed by the Respondent's present solicitors, appears to exhibit no greater understanding, on their part, of the law or of practice and procedure than did the Statement of Claim which had been filed by the Respondent's former solicitors for, although, in the Notice of Motion, there was sought (inter alia) an Order that leave be granted to the Respondent to amend the proceedings in the manner to which I have earlier referred, Mr Masson was not joined as a party-Respondent to that Notice of Motion. In the event, however, it seemed the Court that we ought to proceed on the basis of considering such merits as the application had, rather than dealing with the matter on the basis that the Order made by Sully J ought never to have been made against a person who was not a party to the application. The Judgment which Greenwood M delivered on 24 April 1996 makes it clear that the only power upon which the Respondent sought to rely as justifying the making of the Order sought was that contained in SCR Pt20 r4(3), and that no attempt was made on behalf of the Respondent to invoke the more general power contained in SCR Pt20 rl. SCR Pt20 r4(3) provides: "Where there has been a mistake in the name of the party and the court is satisfied that the mistake was not misleading nor such as to cause reasonable doubt as to the identity of the person intended to be made a party, the court may' make an order for leave to make an amendment to correct the mistake whether or not the effect of the amendment is to substitute a new party." 4 UNREPORTED JUDGMENTS In his judgment, the Master, after referring to the relevant authorities including, in particular, Evans Construction Co Ltd v Charrington & Co Ltd ({1983] QB 810,821 per Donaldson LJ (as his Lordship then was)), the later judgment of Clark J (when a judge in the Commercial Division) in Lloyd Steel Co (Aust) Pty Ltd v Jade Shipping SA ((1985) 1 NSWLR 213, 219) and Bridge Shipping Pty Ltd v Grand Shipping SA ((1991) 173 CLR 231, 260 per McHugh J) concluded that no relevant mistake on the part of the Respondent had been established and, that, that being so, it was not open to him, in reliance upon the provisions of SCR Pt20 r4, to make the Order sought. Just as it was clear that the only power of the Court which the Respondent sought to invoke on the hearing before Greenwood M was that contained in SCR Pt20 14(3), so also is it clear that the hearing of the appeal before Sully J proceeded upon the same basis. Contrary to the view which Greenwood M had taken, Sully J concluded that it had been established that there had been a relevant mistake, and, accordingly, as I have earlier indicated, ordered that the appeal be allowed, that the orders made by Greenwood M be set aside, and that leave to amend in terms of the Respondent's Notice of Motion, be granted. Regrettably the chapter of accidents, if such they can be described, on the part of the Respondent's legal representatives continued, as it appears no amendment pursuant to the leave granted has ever been made, so that, as a matter of law, the leave lapsed over twelve months ago (SCR Pt20 r5(1)). This notwithstanding, as I have earlier indicated, the Court has thought it proper to proceed, to examine the matter on the basis of such merits as the application may be shown to have. Where, as has been the case here, an application is made for leave to amend in reliance upon the provisions of SCR Pt20 r4(3), the applicant for leave bears the onus, in the first instance, of establishing what might be called the jurisdictional facts which enliven the discretion to grant the leave, and, then, if those jurisdictional facts be established, of establishing that, in all the circumstances, it is fair and just that the leave sought ought be granted. In the present case, the relevant jurisdictional facts are, first, that there had been a mistake in the name of the intended party-Defendant and, second, that the mistake was not such as to cause reasonable doubt as to the identity of the intended party-Defendant. With respect to those who may be of a different view, it seems to me that the Respondent failed to establish the first of these jurisdictional facts. As will be apparent from what I have already recorded, the Respondent, and his then solicitors, at all relevant times knew who it was who had been the driver of the motor vehicle in question and, for many years prior to the commencement of proceedings, the Respondent's then solicitors were aware of the facts that Mr Masson was not only the driver, but the owner, of the vehicle in question, and that the Appellant was the relevant authorised insurer of the motor vehicle. What led the Statement of Claim to be drafted in the form which it took, and what led to the proceedings having been brought against the Appellant is, as I have earlier indicated, clearly the result, not of any mistake as to the identity of the driver, or owner, of the relevant motor vehicle, but a mistake as to the state of the law at the time when the Statement of Claim was filed. Lest there be any doubt that this was so, I record that, in the Affidavit sworn by her, Ms Smith deposed (inter alia): WHEW SOUTH WALES INSURANCE MINISTERIAL CORPORATION v WALKOFF (MasoBi P) "9. At the time I drafted the Plaintiff's Statement of Claim I was aware that in 1984 the Motor Vehicles (Third Party Insurance) Act 1942 had been amended to provide, amongst other things, that the GIO was to be named as Defendant in claims made for injuries suffered in motor vehicle accidents. I was not aware that such provision only applied to accidents which took place after the Amending Act came into operation. I believed the proceedings commenced after the new Act came into operation were to name the GIO as a Defendant and that was why I did so in the Statement of Claim filed in these proceedings. I was not aware of the Transitional Provisions of the Amending Act which provided that the driver or owner should be named for accidents which happened before 1 July 1984." while, in the Affidavit sworn by him, Mr Hopper deposed (inter alia): "22. I recall that in early 1987 the New South Wales Government let it be known that it intended to abolish common law rights in respect of motor vehicle accidents. I can recall that there was a view abroad within the legal profession at that time that it was necessary to commence proceedings before the proposed new Act came into force to preserve those common law rights. This was also a view I held at the time. I also believed (although I cannot now remember the basis for this belief) that the cut-off date was 30 April 1987. 24. When Fiona Smith had drafted the Statement of Claim I signed it and arranged for its filing in this Honourable Court on 28 April 1987. I noted at the time that the Statement of Claim named the GIO as a defendant. 25. My belief at the time I signed and filed the Statement of Claim was that the name of the Defendant in all motor vehicle personal injury cases commenced after the 1984 Amended (sic) Act (referred to in paral6 above) came into force had to be the GIO. I did not look at schedule 6 of the Amending Act containing the Transitional Provisions." If my analysis of the nature of the mistake made by the Respondent's then solicitors be correct then, as I have earlier indicated, the necessary consequence is that the Respondent failed to establish the necessary jurisdictional facts and that the decision of Greenwood M to dismiss the application was correct. In these circumstances I propose the following orders: 1. ORDER that the appeal be upheld. 2. ORDER that the Orders made by Mr Justice Sully on 4 July 1996 be set aside and that in lieu thereof the Orders made by Greenwood M on 24 April 1996 be restored. 3. ORDER that the Respondent pay the Appellant's costs of the appeal but, that if qualified, the Respondent have a certificate under the provisions of the Suitors Fund Act 1951. Mason P This Court can only address the matter before it which, despite the present constitution of the proceedings, concerns respective legal rights of the Respondent and Mr Masson as much as those as between the Respondent and the Appellant. The distinction between insurer and insured is one with which the law has grappled in different ways at different times. As the law stood in 1987 that distinction was critical to the Respondent and the failure of the Respondent's then legal advisers to appreciate the distinction has, for the reasons given by Powell JA, been critically adverse to the Respondent's rights. The lapse of time between 1983 and 1989, coupled with the apparent neglect of the Respondent's 1987 solicitors, appears to have led to the loss of valuable rights against Mr Masson. 6 UNREPORTED JUDGMENTS Whether any rights to sue the 1987 solicitors consequent upon their neglect have themselves become lost by reason of the further lapse of time is not presently clear. I hope the effect of those apparent defaults does not leave the Respondent without some effective remedy. With regret I agree entirely with what Powell JA has said and with the orders which he proposes. Stein JA I agree with the judgment of the President and Powell JA. I would wish to add just this: that, whilst it must be acknowledged that r4(3) of Pt20 is to be given the widest possible operation consistent with its beneficial provisions and must not be narrowly construed, as Kirby P said in Archbishop of Perth v AA to JC inclusive ((1995) 18 ACSR 333 at 340) the facts and circumstances recounted by Powell JA make it plain that the Respondent does not get into the tule itself. In so far as rl Pt20 may be relevant, as per Clark J in Lloyd Steel Developments (Aust) Pty Ltd v Jade Shipping SA ((1985) 1 NSWLR 212 at 219), it must be noted that it was not raised before the Master or Sully J. In any event the circumstances described by Powell JA are such that do not make it appropriate to invoke rl, assuming it be available. I agree with the Orders proposed. Appeal upheld. Orders made by Mr Justice Sully on 4 July 1996 set aside and in lieu thereof the Orders made by Greenwood M on 24 April 1996 restored. The Respondent to pay the Appellant's costs of the appeal but, that if qualified, the Respondent to have a certificate under the provisions of the Suitors Fund Act 1951. Counsel for the appellant: J W Conomos Counsel for the respondent: D L Davies SC Solicitors for the appellant: Marsdens (Sydney) Solicitors for the respondent: Colin Biggers & Paisley