New South Wales Court of Appeal CITATION: AIELLO v MARRICKVILLE COUNCIL [2005] NSWCA 194 HEARING DATE(S): 24 May 2005 JUDGMENT DATE: 15 June 2005 JUDGMENT OF: Mason P at 1; Giles JA at 44; Bryson JA at 45 DECISION: Appeal dismissed with costs. CATCHWORDS: CATCHWORDS - NEGLIGENCE - council liability for negligent failure to maintain streets and footpaths - non feasance rule - limitation period- whether plaintiff was ignorant of limitation period - change in the state of the law - where plaintiff waits for a favourable change in the law before instituting proceedings - whether circumstances justify an extension of time - prejudice to right to a fair trial - s 60C, s 60E(1) Limitation Act 1969. - (D) LEGISLATION CITED: Limitation Act 1969 Brodie v Singleton Shire Council Ghantous v Hawkesbury City Council ((2001) 206 CLR 512) CASES CITED: Buckle v Bayswater Road Board (1936) 57 CLR 259 Eggins v Brooms Head Bowling and Recreational Club Ltd (1986) 5 NSWLR 521 Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 PARTIES: Kerryn Joy AIELLO v MARRICKVILLE COUNCIL FILE NUMBER(S): CA 40323/04 Appellant: P Webb QC/ M Murphy COUNSEL: Respondent: M Joseph Appellant: Shaw McDonald SOLICITORS: Respondent: Phillips Fox LOWER COURT JURISDICTION: District Court LOWER COURT FILE NUMBER(S): DC 1135/02 LOWER COURT JUDICIAL OFFICER: Cooper DCJ IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40323/2003 MASON P GILES JA BRYSON JA Wednesday 15 June 2005 Kerryn Joy AIELLO v MARRICKVILLE COUNCIL BACKGROUND The appellant was injured when she tripped on a broken stormwater pipe and gutter on 12 February 1995. She relied upon a solicitor in relation to a potential right of action in relation to the accident. Her solicitor corresponded with potential defendants over three years, threatening litigation and seeking a settlement. No legal proceedings were commenced. The statutory limitation period expired on 12 February 1998. In March 2002, the appellant filed an ordinary statement of claim in the District Court against the respondent. Being met with a limitation defence, she moved the District Court for an order pursuant to s60C of the Limitation Act 1969. The application was dismissed. The primary judge stated that the appellant was seeking to revive her right of action in light of the change in the law of immunity, as enunciated by the High Court in Brodie v Singleton Shire Council and Ghantous v Hawkesbury City Council ((2001) 206 CLR 512), and it was not just and reasonable to grant an extension of time to allow her to do so. In the Court of Appeal, the appellant challenged the finding that the decision not to sue due to the state of the old law of immunity contributed to the claim becoming statute-barred. She invited the Court to infer that she was left in ignorance as to the operation of the Limitation Act. A separate submission was made that the radical shift in the common law effected by Brodie/Ghantous after the limitation period had expired was itself a sufficient basis to justify an extension of time against a defendant that did not suggest any relevant prejudice to its right to a fair trial. HELD: Per Mason P (Giles and Bryson JJA agreeing) dismissing the appeal: 1. It cannot be inferred from the absence of evidence on the point that the appellant was ignorant of the operation of the Limitation Act. The finding that the institution of proceedings was held back because of the unlikely prospects of success under the old law of immunity was clearly open on the evidence. 2. A radical shift in the common law after the expiration of the limitation period is not itself sufficient basis to justify an extension of time against a defendant that suggests no prejudice to its right to a fair trial. 3. An unfavourable change in the state of the law is not relevant "prejudice" to be considered pursuant to s60E(1) Limitation Act. The error of the trial judge in considering this one prejudice factor requires the Court to re-exercise the discretion. However, the circumstances do not justify the grant of an extension. ORDERS: Appeal dismissed with costs. IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40323/2003 MASON P GILES JA BRYSON JA Wednesday 15 June 2005 Kerryn Joy AIELLO v MARRICKVILLE COUNCIL JUDGMENT 1 MASON P: The appellant appeals, by leave previously granted, against the order of Cooper DCJ dismissing her application for extension of time to bring proceedings for damages for personal injury. 2 On 12 February 1995 the appellant was injured when she tripped on the broken section of a stormwater pipe and gutter at the side of a street in Petersham. It was the middle of the night. The injuries to her ankle were significant, particularly in light of her calling as a ballet teacher. 3 On 7 September 1995 the appellant instructed a solicitor, Mr Patterson of the firm of Shaw McDonald. Thereafter, she relied upon him to investigate the issues of liability, assessment of damages and all other matters relating to her potential right of action. Over the next three years the solicitor corresponded with potential defendants including the respondent, putting them on notice of the appellant's claim, threatening litigation, seeking to encourage settlement offers and warning them to retain relevant documents. 4 There is no suggestion that the solicitor did anything contrary to instructions or that he failed to keep his client apprised as to her legal rights or the steps being taken on her behalf. Neither the appellant nor her solicitor tendered any evidence as to what did or did not pass between them prior to February 1998. If there was anything of relevance it was clearly the appellant's onus to place it before the court in support of her application. I cannot therefore accept the submission inviting this Court to infer that the appellant was left ignorant about the general operation of the Limitation Act 1969 prior to the time when her claim became statute-barred. The solicitor did not suggest his own ignorance on the matter. 5 The three year limitation period stipulated by s18A of the Act expired on 12 February 1998. When, on 1 March 2002, the appellant filed an ordinary statement of claim in the District Court joining the respondent and the neighbouring land-owner it was promptly met by defences taking the limitation point. The appellant then moved the District Court for an order pursuant to s60C of the Act as regards the respondent. Her claim against the other defendant was discontinued. 6 The claim pleaded against the respondent was that liability in negligence stemmed from its responsibility for the "construction, proper maintenance and repair" of the damaged stormwater pipe and gutter. 7 Brodie v Singleton Shire Council and Ghantous v Hawkesbury City Council were argued in the High Court in August-September 2000 and judgment was given on 31 May 2001 (see (2001) 206 CLR 512). The common law highway authority non-feasance immunity rule was abrogated. In particular, Ghantous established that a council could in certain circumstances be liable for its negligent failure to maintain streets and footpaths suitable for pedestrian use. 8 The appellant accepts that the whole period preceding the commencement of her statute-barred action needs to be considered in order to determine whether it is just and reasonable to extend time pursuant to s60C of the Act. She is also correct to submit that particular attention should be focussed on the reasons why her claim became statute-barred. However, part of her difficulty lies in the dim evidentiary light that has been cast on the circumstances that led to the claim becoming statute-barred. Such illumination as was offered suggests inferences negative to the justice of the claim for extension. It certainly does little to persuade the Court that the power to extend should be exercised in the appellant's favour. 9 The appellant instructed her solicitor on 7 September 1995. Information, photographs and medical reports were gathered, with the result that the factual material supporting a claim against the respondent was as good as it was ever going to get by about mid-1996 at the latest. 10 The solicitor wrote a confidently worded letter of demand to the respondent on 7 May 1996. It adverted to the eyewitness testimony of the appellant and her father-in-law, referred to photographs in the solicitor's possession, and contended that "it is clear that the broken pipe and broken section of gutter constituted an obvious trap". The letter stated that the incident had been reported to the Council's engineer about six months after the fall and that the gutter was repaired approximately six weeks thereafter. The respondent was notified that it should preserve its records "in case they are required for production in legal proceedings" (CB 33). 11 This was the first of several letters in 1996-97 to the respondent or its agents that invited negotiation "on an unlitigated basis". 12 The respondent referred the matter to Alexander & Alexander, Risk Management Consultants. The consultants sought and obtained detailed particulars. Photographs and sketch plans were exchanged between them and the solicitor. 13 On 4 September 1996 the consultants indicated to the solicitor that their enquiries were complete. Their response "without prejudice" was: It is advised that an inspection of the location revealed some defect with the gutter due to reasons unknown. Further, Council were not aware, nor were there any previous complaints in respect of the condition of the footpath/gutter prior to your clients alleged fall. Also, Council have no records of any prior work in the area. Council as a roads maintenance authority has legal immunity under the doctrine of Non-Feasance under such circumstances. Accordingly, as Council have not been negligent in causing your client's most unfortunate accident we regret we have no option other than to deny liability on behalf of Marrickville Council. 14 The solicitor replied with a letter of 15 November 1996 contending that the non-feasance doctrine did not apply in respect of water and drainage matters. The letter cited Buckle v Bayswater Road Board (1936) 57 CLR 259. Cooper DCJ observed that this letter was to some extent a bluff. Certainly, more evidence than was at hand would have been required to bring the case within the misfeasance principles expounded in Buckle. The unwillingness of the appellant to press home the point by commencing proceedings indicates that she and her solicitor always perceived real difficulties of a legal nature before Brodie/Ghantous was decided. 15 Faced with the continuing intransigence of the respondent, the appellant's solicitor investigated alternative claims. There was an exchange of correspondence with Sydney Water, but nothing came of it beyond a denial of responsibility in December 1996. The respondent's consultants pointed the finger at the adjacent land-owner, but its insurer denied liability in November 1997 and nothing further eventuated until 2002 when it was joined for a short time as the second defendant. Energy Australia failed to rise to the bait of a request made in August 2000 inviting it to supply evidence of its own negligence. 16 The consultants repeated their stance of firm denial in a letter dated 31 January 1997. Mr Patterson accepted in cross-examination that the respondent made it crystal clear in 1996 that it was not interested in an un-litigated settlement (CB 15). 17 As indicated, any cause of action against the respondent became statute-barred by 12 February 1998. There was evidence from the solicitor that he did not appreciate the significance of the date, due to a record-keeping error within his office that sometimes showed the accident date as 12 December 1995 (CB 13, 31). It is, however, clear that by December 1998 the solicitor and client had effectively put the claim on the backburner because of perceived difficulties in litigating it. Those perceived difficulties may have been partially factual. They certainly included the belief that the highway authority immunity rule that was then part of the common law would probably defeat any proceedings that were commenced. 18 Both what the appellant said, and what she did not say, in her affidavit supporting the application for extension are significant. She refers to a miscarried pregnancy in July 1995 which she believed was caused or contributed to by the stress and pain of her injuries. There was an ectopic pregnancy during the New Year period of 1996/97. In August 1997 she and her husband embarked on the travails of "the IVF Program". There was treatment for depression. A daughter was born in March 2000. 19 This was undoubtedly a difficult and distracting period in the appellant's life. The appellant herself summed up its relevance to her application in the following terms: I say and it is the fact that I have been pre-occupied with the various life events since my accident, such as I have described, as well as the difficulties faced by my dance academy due to my inability to participate fully as a teacher, due to my physical restrictions. I did receive correspondence from my solicitor from time to time but I was distracted with other matters, being content to leave the claim in his hands. I was disappointed when I was advised by my barrister and solicitor of the difficulties arising from the legal immunity hitherto enjoyed by road maintenance authorities. 20 There is uncertainty as to the date of the advice referred to in the final sentence. The appellant said in her oral evidence that she believed it was "about '98. I'm not sure exactly". She confirmed that she received advice from Mr Patterson, followed later (in August 2000, according to other evidence) by "further advice [from a barrister when] I was told the same thing" (CB 9). 21 What is, however, significant about the whole of the appellant's evidence is that she and her solicitor nowhere suggest that the claim was allowed to become statute-barred because the appellant lacked legal assistance or proper advice. She undoubtedly relied upon her lawyers. It is clear that they always perceived real difficulties stemming from their understanding of the pre-Brodie/Ghantous law, and perhaps also evidentiary problems (see the consultant's response in the letter of 4 September 1996, set out above). They are not suggested to have been ignorant of the Limitation Act. 22 What may clearly be inferred from the silence of the evidence led by the appellant is that there was no instruction to sue until shortly before proceedings were commenced in March 2002. I would also infer that the institution of proceedings was held back because of the solicitor's (correct) perception that they were of unlikely prospects while the old law remained in place. 23 The application to extend time was heard by Cooper DCJ. Evidence was given on affidavit and orally by the appellant and Mr Patterson. 24 It was common ground that the appellant had suffered a considerable injury to her ankle with significant economic impact given her calling as a ballet teacher. The matter also proceeded on the basis that, at least in light of Brodie/Ghantous, the applicant had an arguable case against the respondent. The primary judge remarked that photographs showed a significant break at the edge of the footpath capable of creating a hazard to pedestrians particularly at night time. (I am not implying that this alone established a case of negligence.) 25 The respondent advanced no argument about delay prejudicing its right to a fair trial. It could hardly have contended otherwise, given the early warning of threatened litigation by the appellant's solicitor and the early involvement of its engineer and its risk management consultants. I read the concession made at the outset of the hearing below (CB 6) as abjuring any reliance upon prejudice, whether actual or "presumptive". Counsel stated emphatically that "the opposition to the notice of motion is not in relation to prejudice". 26 The focus of attention was upon the justice of extending time in favour of a legally-represented applicant who chose to wait until well after Brodie/Ghantous was decided in the High Court before suing. 27 The nub of the judge's reasons for dismissing the application were: So one now has to come back to the question: Has the Plaintiff satisfied the Court on the balance of probabilities that it is just and reasonable to extend the time? Now what the Plaintiff is seeking to do here is to revive the action in the light of the change of the law as enunciated by the High Court in Brodie's Case in May 2001. It is in a matter of public policy that actions and litigation should be brought to an end as quickly as possible. One can well understand a Plaintiff and his or her legal advisers wanting to take advantage of a change in the law as enunciated by the highest Court of this country. But, nonetheless, is it just and reasonable to grant an extension of something like four years merely because the law has changed or rather the declaration of what the law is has changed? In my view such a principle is not just and reasonable. It would leave the door open to people to bring actions out of time merely because there has been a change in the law following upon a claimant's decision made on the basis of accurate legal advice before that change. I do not regard it just and reasonable to allow an extension of time in those circumstances. Accordingly, the application is dismissed. 28 This passage finds implicitly that the reason for the entire delay was the conscious decision of the appellant and her legal advisers not to sue while the old law of immunity remained. In my opinion, this finding was clearly open from the totality of the evidence summarised above. 29 There is also strong evidence to this effect in letters of 23 August 2001 from the solicitors to the appellant and of 19 September 2001 from the solicitor to the respondent's consultants. The former letter notified the appellant: Further to previous correspondence in relation to this matter, we are pleased to confirm that the High Court of Australia now has reversed the Highway Authority Non Feasance Rule in Australia. That being the case, we are now in a position to prosecute your claim, should you wish to proceed. 30 The second letter informed the respondent that "our client has instructed us to revive her claim against Marrickville Council … in light of the recent decision of the High Court in Brodie's Case abolishing Council's immunity for failure to maintain and repair roadworks". 31 Part of the appellant's case in this Court was an attack on the judge's finding insofar as it addressed the reason why the claim was allowed to become statute-barred on 12 February 1998. It was contended that there was no proper basis for concluding that the decision not to sue due to the state of the old law contributed to the claim becoming statute-barred on 12 February 1998. As indicated above, this argument sought to use the silence of the evidence as the basis of a favourable but very contestable inference in the appellant's favour. I have already rejected that proposition. 32 The statement of claim and some of the solicitor's correspondence referred to the date of the accident as 12 December 1995. This error occurred in the record-keeping within the law practice some time before the cause of action became statute-barred. Cooper DCJ did not however regard it as particularly material, a conclusion with which I agree. The evidence from the appellant and her solicitor did not suggest that this record-keeping problem had contributed to the continuing decision not to sue. It certainly did not contribute to the delay following the time when the solicitor formed the view that there were "difficulties facing the plaintiff in proving a relevant breach of duty of care" (CB 31). The conduct of the appellant and her legal advisers demonstrates that any misunderstanding about the date of the accident did not cause the relevant delay nor contribute to the justice of the claim for a favorable exercise of the power to extend time. 33 In this Court and in the District Court some attention was paid to a letter of advice from the solicitor to the appellant on 17 February 1998. Relevantly, the letter stated: As we have previously informed you, the Water Board and Marrickville Council also have denied liability. The only course of action remaining open to you is to commence proceedings in the District Court, given that our attempts to resolve the matter on an unlitigated basis have proved futile. It will be appreciated if you can let us have detailed instructions in relation to the following matters: [the letter referred to information about the appellant's medical condition and financial loss] This will enable us to assess the extent of your claim for past and future loss of earnings/earning capacity. We look forward to your early response. Please do not hesitate to contact me by telephone if anything needs clarification. 34 This letter was written a few days after the claim had become statute-barred, albeit at a time when the solicitor was labouring under some misapprehension about the accident date. The letter (which incidentally) correctly recorded the date of the accident as 12 February 1995) did not advise commencement of proceedings, nor did it seek instructions to that end. In fact, the appellant did not respond to it. She did nothing until July 2000 when her husband contacted Mr Patterson. As indicated, the evidence is in my view quite clear in establishing that the perceived difficulty of the appellant's case under the old law was the main and sufficient reason why proceedings were not commenced until 2002. In making this observation, I am not suggesting that the understandable problems in the appellant's personal life did not contribute to the matter being put on the backburner, but this alone cannot generate a proper basis for an extension of time. 35 Senior counsel for the appellant pointed out that nothing in the letter of 17 February 1998, or the evidence generally indicated that the appellant turned her mind to prospects of success in light of the old law before time ran out. This strikes me as an attempt to reverse the onus of proof in relation to a relevant matter that, if it were true, was known to the appellant and should have been advanced by her in her evidence. The submission also fails to engage the impact of para 4 of the appellant's affidavit in which she states that she relied upon Mr Patterson to investigate the issues of liability, assessment of damages and all other matters relating to her potential right of action. The appellant and her solicitor knew that commencement of proceedings against a party that had investigated its liability and firmly denied it was fraught with financial risk. 36 Some time after December 1998 Mr Patterson transferred the file to one of his partners who was "well versed in insurance law". The file was transferred for the purpose of seeking a second opinion (CB 12). Nothing further is disclosed about this aspect of the matter. 37 One way in which the appellant put her case, both at first instance and in this Court, was to argue that the radical shift in the common law effected by Brodie/Ghantous after time had run out was itself a sufficient basis to justify an extension of time against a defendant that did not suggest any relevant prejudice to its right to a fair trial. I agree with the trial judge that such a categorical proposition must be rejected categorically and on policy lines (see extract of Cooper DCJ's reasons set out above). The proposition is directly in conflict with the principles underpinning longstanding authority involving an application for a new trial where a recently established point of law was not raised at the trial itself (Eggins v Brooms Head Bowling and Recreational Club Ltd (1986) 5 NSWLR 521). The present is a stronger case because of the need of a favourable exercise of discretion to lift the time bar. It is really analogous to an application to extend the time for filing an appeal in favour of an appellant who waited until the law moved in his or her favour. The respondent is correct to draw attention to the interests of defendants and their insurers in closing their books on the basis that claims can no longer be made against them (at least as of right) (cf Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 552). 38 The situation might arguably be different if (while the plaintiff and/or the plaintiff's legal advisers may have adverted to problems with some aspect of the "old law" on a particular matter) the predominant reason for not commencing timely proceedings related to other matters entirely, being matters attracting a favourable exercise of the discretion. I wish to do no more than reserve the possibility that such a situation might fall outside my categorical rejection of the categorical proposition addressed in the preceding paragraph. 39 One aspect of so-called prejudice was nevertheless agitated in the District Court. Indeed, it appears to have been accepted as relevant by the primary judge (Red 25). The judge accepted that if the action had commenced before February 1998 it would probably have come on for hearing between late 1998 and 2000, ie before Brodie/Ghantous was decided. His Honour continued: In that event the case would have been determined by the law as it then stood and the Plaintiff, in all probability, would not have succeeded. So there is a prejudice to the Defendant because the Plaintiff now seeks to impose upon the Defendant liability which was then not available to the Plaintiff under the law as it stood when this action would have been heard if it had been brought in time. 40 With respect to the learned trial judge I do not consider this to be a relevant "prejudice" or even a relevant factor, at least in the way it was addressed by his Honour. Section 60E(1)(b) of the Limitation Act requires regard, when relevant, to "the extent to which, having regard to the delay, there is or may be prejudice to the defendant by reason that evidence that would have been available if the proceedings has been commenced within the limitation period is no longer available". The fact that the state of the common law appeared hostile to the appellant's prospects before the High Court decision in Brodie is not the evidentiary prejudice referred to in para (b). 41 It is true that the opening words of subs (1) require the Court to have regard to "all the circumstances of the case", but I do not think that this would permit the approach adopted by the primary judge either. It is unnecessary to expound the nature and particular application of the declaratory theory of judicial law-making. For a court viewing matters from this side of Brodie/Ghantous, "the common law" concerning highway authorities must be taken to have been at all times as subsequently declared by the High Court. The notion of prospective overruling is anathema in this country (see Ha v New South Wales (1997) 189 CLR 465). I could accept the relevance of delay having deprived the respondent and its insurers of the benefit of negotiating the settlement of this claim in an era of pre-Brodie/Ghantous uncertainty. But this is not the way that the primary judge dealt with the one "prejudice" factor that was taken into account. 42 The judge acknowledged this as a relevant prejudice, but still refused the application. Strictly speaking, his error requires this Court to re-exercise the discretion. For reasons already apparent I would not make the order sought. 43 Accordingly, the appeal should be dismissed with costs. 44 GILES JA: I agree with Mason P. 45 BRYSON JA: I agree with Mason P. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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