Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Dagg v Davis [2013] NSWCA 203 Hearing dates: 28 June 2013 Decision date: 28 June 2013 Before: Barrett JA at [1] Ward JA at [2] Sackville AJA at [41] Decision: Application for leave to appeal dismissed with costs. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: PROCEDURE - appeal from an interlocutory decision on practice and procedure - no substantial issue of principle - whether substantial injustice by reason of any prejudice as a result of delay in commencing proceedings if leave not granted Legislation Cited: Civil Liability Act 2002 Motor Accidents Compensation Act 1999 Road Transport (Drivers Licensing) Regulations 2008 Road Transport (Safety and Traffic Management) Act 1999 Cases Cited: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 BHP Petroleum Pty Ltd v Oil Basins Ltd [1985] VR 756 Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541 Darrell Lea (Vic) Pty Ltd v Union Assurance Society of Australia Ltd [1969] VR 401 Figliuzzi v Younan [2005] NSWCA 290 Holt v Wynter [2000] NSWCA 143; (2000) 49 NSWLR 128 Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 Johnson Tiles Pty Ltd v Esso Australia Ltd (2000) 104 FCR 564 Minogue v Williams [2000] FCA 125; (2000) 60 ALD 366 Niemann v Electronic Industries Ltd [1978] VR 431 Nominal Defendant v Harris [2011] NSWCA 70 Salido v Nominal Defendant (1993) 32 NSWLR 524 The Age Company Ltd v Liu [2013] NSWCA 26; (2013) 82 NSWLR 286 Thornton v Sweeney [2011] NSWCA 244 Zelden Sewell Henamast Pty Ltd [2011] NSWCA 56 Category: Interlocutory applications Parties: Samuel Dagg (First Applicant) Tracey Dagg (Second Applicant) Peter Francis Davis (Respondent) Representation: Counsel: P Cummings (Applicants) S Norton SC with S Dixon (Respondent) Solicitors: Moray & Agnew (Applicants) O'Brien & O'Brien (Respondent) File Number(s): CA 2012/222836 Decision under appeal Jurisdiction: 9101 Date of Decision: 2012-06-29 00:00:00 Before: Olsson DCJ File Number(s): DC 2012/067448 Judgment 1BARRETT JA: My reasons for joining in the orders of 28 June 2013 correspond with those of Ward JA. 2WARD JA: Before this Court on 28 June 2013 was an application for leave to appeal from a decision by Olsson DCJ on 29 June 2012 extending the time for the commencement of proceedings by the respondent (Mr Davis) against the applicants (Mr Samuel Dagg and his mother, Mrs Tracey Dagg) for damages for alleged breach of a duty of care arising out of a motor vehicle accident. Leave for the filing of the respondent's Statement of Claim out of time was granted pursuant to s 109 of the Motor Accidents Compensation Act 1999 (NSW). At the same time, the applicants' motion for the dismissal of the proceedings pursuant to s 73(5) of the Act was dismissed by her Honour. 3The application for leave to appeal from her Honour's decision was listed for hearing concurrently with the appeal. However, the Court directed that argument on the application for leave to appeal be heard first. At the conclusion of argument the Court made orders dismissing the application. Reasons for that decision were reserved. These are those reasons. Background 4The background to the proceedings may be shortly stated. Mr Davis and Mr Dagg were both seriously injured in a motor vehicle accident on 29 April 2007. The accident occurred at Branxton after both had attended the eighteenth birthday party of a mutual friend, at which both had consumed alcohol. Mr Davis was in the driver's seat; Mr Dagg in the passenger seat. It was Mrs Daggs' car. Neither Mr Davis nor Mr Dagg had any memory of the circumstances of the accident. There were no other witnesses to the accident. The subsequent police investigation concluded that the vehicle was probably being driven in excess of the speed limit in a westerly direction from East Branxton (towards the place where the party was being held) and that the driver lost control of the vehicle, which veered across the road and collided with a telegraph pole. 5It is not known what caused the car to veer across the road, although an accident investigation report suggested that the skid marks were indicative of the application of a hand brake while the vehicle was in forward motion. In Mrs Daggs' car there was a brake in the footwell of the driver's side of the vehicle. 6There was little evidence as to the circumstances in which Mr Davis and Mr Dagg came to be in the car, although there was evidence from which it might be inferred that they had left the party to buy food at a nearby service station at Greta and that the accident had happened when they were returning to the party. 7Mr Davis and Mr Dagg knew each other, having been at school together and having played sport together. The nature of their relationship may permit an inference that the two knew each other's driving licence status. At the time of the accident, Mr Davis held a learner driver's permit and Mr Dagg held a red provisional driver's licence. 8Mr Davis was charged with a number of criminal offences arising out of the crash, including a charge of driving occasioning grievous bodily harm under s 42(1)(b) of the Road Transport (Safety and Traffic Management) Act 1999 (NSW) to which Mr Davis pleaded guilty. He was convicted on 18 June 2008 of various offences. 9A claim for compensation was not made by Mr Davis until November 2010 when a claim form was forwarded to GIO, the compulsory third party insurer. Liability was subsequently denied. The District Court proceedings were not commenced until February 2012. Decision by primary judge 10The questions before the primary judge on the application for an extension of time were, first, whether or not the conditions set out in s 109(3) of the Motor Accidents Compensation Act were satisfied (referred to in argument as the "gateway" requirements) and, second, whether as a matter of discretion the extension should be granted. 11Sub-section 109(3) operates such that leave to extend time for the commencement of proceedings is not to be granted unless, first, a "full and satisfactory explanation" for the delay in commencing proceedings has been provided to the court and, second, that the total damages of all kinds likely to be awarded to the claimant if the claim succeeds are not less than 25% of the maximum amount that may be awarded for non-economic loss under s 134 of the Act as at the date of the relevant motor accident. 12It was conceded on the application before her Honour (and on the present application) that the second requirement was met. Her Honour found that the first requirement was also satisfied. Her Honour then addressed discretionary considerations. Having considered the question of actual or presumptive prejudice that the defendants might experience by reason of the delay if an extension were granted, and the contention by the defendants that the grant of leave would be futile as there was no viable claim, her Honour determined that the extension should be granted. Leave to Appeal 13The decision to grant an extension of time for the commencement of the proceedings is an interlocutory decision from which leave to appeal is necessary. There are no exhaustive or rigid rules of practice or criteria governing the grant of leave to appeal (Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170). Nevertheless, it has been recognised that leave should be granted only where there are substantial reasons to allow an appellate review (Johnson Tiles Pty Ltd v Esso Australia Ltd (2000) 104 FCR 564), such as where there is an error of principle which, if uncorrected, will result in substantial injustice (Minogue v Williams (2000) 60 ALD 366; BHP Petroleum Pty Ltd v Oil Basins Ltd [1985] VR 756; Niemann v Electronic Industries Ltd [1978] VR 431; Darrell Lea (Vic) Pty Ltd v Union Assurance Society of Australia Ltd [1969] VR 401). Where there is no question of principle, leave to appeal will usually be refused (Jaycar Pty Ltd v Lombardo [2011] NSWCA 284; Zelden Sewell Henamast Pty Ltd [2011] NSWCA 56). 14Moreover, in The Age Company Ltd v Liu [2013] NSWCA 26; (2013) 82 NSWLR 286, Bathurst CJ said (at [13]) that: Generally speaking, it is only appropriate to grant leave in matters that involve issues of principle, questions of public importance or in circumstances where it is reasonably clear that an injustice has occurred by reason of error in the judgment, going beyond what is merely arguable. Proposed Appeal 15The grounds of appeal which leave is sought to bring, raise both the question whether there was a full and satisfactory explanation for the delay (as required by s 109(3)(a) and as defined in s 66(2) of the Act) and the question whether, even if a full and satisfactory explanation was provided, her Honour nevertheless erred in the exercise of her discretion to grant the extension. * Full and satisfactory explanation for delay? 16The applicants accept that a full explanation was provided for the delay and that the explanation was a satisfactory for the period from November 2010 onwards, during which time there was correspondence with the insurer's solicitors consistent with the processing of the application and Mr Davis was diagnosed and treated for thyroid cancer. 17However, the applicants contend that there was not a satisfactory explanation for the delay from the date of the accident (29 April 2007) to the date of lodgement of the GIO claim. This is put on the basis that all the facts relied upon by Mr Davis for his claim were known (by him or his father, who was advising him) well before the expiry of the three year time limit for making the claim. 18Legal advice had been sought by Mr Davis Snr in October 2007 as to whether his son should bring a third party claim but this was apparently not the subject of any response at that time. Reliance is placed by the applicants on the fact that Mr Davis' father, when seeking advice from the solicitor then acting for Mr Davis, had expressed the belief that Mr Davis had a case. 19Mr Cummings, Counsel appearing for the applicants, refers to Figliuzzi v Younan [2005] NSWCA 290 in aid of the applicants' submission that there was not a satisfactory explanation for the delay. There, however, the claimant had simply assumed that there was no claim. Here, Mr Davis' father had sought legal advice as to a claim (which he believed his son had or may have) but did not pursue the matter when there was no response to his request for advice from the solicitor. A distinction is drawn by Senior Counsel appearing for Mr Davis (Ms Norton SC) between the present case and Figliuzzi v Younan on that basis. * Error in exercise of discretion 20It is contended that her Honour erred in her approach to the question of discretion in two ways: first, in considering the question of prejudice arising from delay by reference to the period from the expiry of the limitation period and not from the date of the accident; and, second, in failing to recognise that the claim was doomed to fail (referred to in submissions as the futility argument). 21As to the first matter raised in respect of her Honour's exercise of discretion, what the applicants maintain is that by reason of the delay they have lost the opportunity to make enquiries of persons at the party, at a time when they may have been able to recall the circumstances in which Mr Davis and Mr Dagg came to be in the car; and have lost the opportunity independently to inspect the car and the markings at the accident site. In this regard, Ms Norton points out that there was an investigation by GIO of the circumstances of the accident in 2007 when a claim for compensation was made by Mr Dagg and submits that it is relevant that no evidence as to actual prejudice was adduced for the applicants. 22Her Honour referred to Holt v Wynter [2000] NSWCA 143; (2000) 49 NSWLR 128 on the question of prejudice to the applicants. There, Sheller JA noted that there was no presumption that an application that was out of time would necessarily cause prejudice. The ultimate question is whether the chance of a fair trial was likely. 23The submissions by Mr Cummings in relation to prejudice by reason of the delay focus on the question as to the existence, and extent, of the alleged duty of care. Mr Cummings refers to what was said by McHugh J in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at [554] - [555] and by Toohey and Gummow JJ in that case at [548] - [549]. Reference is also made to Nominal Defendant v Harris [2011] NSWCA 70 at [58]. 24It is submitted by Mr Cummings that her Honour applied the wrong test when concluding (at [78]) that "[t]he prejudice suffered by the defendants now, should leave be granted, is not significantly greater in my view than the prejudice or difficulties that it faced in the three years after the accident". That submission assumes that the sentence there extracted is to be read as considering prejudice at the conclusion of the limitation period. 25It is by no means clear that [78] of her Honour's reasons is to be so read. What her Honour appears to have there been saying was that in her opinion the prejudice that would now be suffered is not significantly greater than would have been the case at any time during the three years from the time of the accident. This conclusion appears to be based on the lack of witnesses to the accident and the fact that neither Mr Davis nor Mr Dagg can remember what happened. At least in terms of the memory of the two persons involved in the accident, that was the position at all times from the accident. Unless it can be said that her Honour applied the wrong principle in assessing the impact of delay, the applicants face a difficult task in showing on appeal that her Honour's assessment was plainly wrong. 26As to the second basis on which her Honour is said to have erred in the exercise of her discretion to extend the time for the bringing of the claim, namely, the futility argument, this was in turn put on two bases: the absence of evidence as to the circumstances in which Mr Davis and Mr Dagg came to be in the car (going to the question whether there was any duty of care owed by Mr Dagg in relation to the supervision of Mr Davis as a learner driver and the extent of any such duty) and on the operation of s 54 of the Civil Liability Act 2002 (NSW). Reference is made to Salido v Nominal Defendant (1993) 32 NSWLR 524, where Gleeson CJ, in this Court, said, in obiter, at p 528, that a court would not grant leave under s 52(4) of the Motor Accidents Act 1988 (NSW) for proceedings to be commenced out of time if to do so would be futile because of "a certainty that the proceedings would fail on some other ground" (my emphasis). 27As to the first basis on which the futility argument was put, this requires, in effect, a finding that the claim was certain to fail (to adapt the terminology in Salido). The draft Statement of Claim contained allegations to the effect that: Mr Dagg had requested Mr Davis to drive him to a nearby food outlet to buy food and had handed him the keys to the car; that Mr Dagg was aware that Mr Davis held a learner driver's licence and had limited driving experience; that Mr Dagg was a person and driver in charge of the vehicle and supervising Mr Davis' driving; and that the "handbrake" was suddenly activated while the car was in motion. The particulars of negligence included that Mr Dagg had permitted Mr Davis to drive at unsafe speed; had interfered with Mr Davis' control of the vehicle by pulling on the handbrake when the vehicle was in motion; had requested Mr Davis to drive when he knew that Mr Davis was a learner driver and that he (Mr Dagg) did not have a full driver's licence and when he was aware that both he and Mr Davis were intoxicated; and had failed to instruct Mr Davis as to the safe operation of the controls of the car and of the handbrake. 28Mr Cummings submits that it is clear that there will be no evidence to support the majority of the allegations of fact and negligence sought to be made against Mr Dagg (and Mrs Dagg). He refers to the acceptance in cross-examination by Mr Davis' solicitor, Ms Baker, (at WB 603 line 23) that she had exhausted the avenue of making further investigations about witnesses. I note that insofar as this may be read as exhausting the avenue of identifying further witnesses, Ms Baker had earlier in the cross-examination not excluded the possibility of doing more investigations to support Mr Davis' claim (WB 603 at line 19), which might arguably include further enquiries of those witnesses already identified. 29It is submitted by Mr Cummings that a duty of care could only have arisen in the context of a learner/instructor relationship and that the evidence as it was at the hearing below on the application for extension of time could not be enough for Mr Davis to succeed on his claim. It is submitted that, at best, the evidence might support findings (whether directly or by inference) that: Mr Davis held a learner driver's licence and had completed about 30 hours of driver training; that Mr Dagg held a "red" provisional drivers' licence; that they probably knew of each other's licence status; that both were intoxicated to some degree at the time of the accident; that they probably knew of each other's intoxication; that Mr Davis was the driver of the car when it went out of control and hit the pole; and that a parking brake in the footwell of the driver's seat was probably applied before the collision and may have contributed to the loss of control. 30It is submitted that such evidence would not be sufficient to permit a conclusion that the circumstances in which Mr Davis came to drive the car gave rise to a supervisory relationship in which Mr Dagg owed statutory obligations and a duty of care. Mr Cummings accepts that there is a high test to be met when contending, as the applicants do, that a claim is doomed to failure. 31For Mr Davis, reliance is placed on what was said in Thornton v Sweeney [2011] NSWCA 244 as to the general principles of duty of care owed to a learner driver by a voluntary supervisor (and to Regulation 16 of the Road Transport (Drivers Licensing) Regulations 2008 (NSW)) for the proposition that there is an arguable case, based on inferences available to be drawn from the evidence, that Mr Dagg did owe a duty of care to Mr Davis. 32Her Honour's reasons on the futility argument are set out at [75]-[77]. Her Honour, while expressing concern as to the prospects of success of the claim sought to be brought by Mr Davis, was not prepared to conclude that it was futile or not arguable. Her Honour considered that the duty identified in Thornton v Sweeney might extend to a case where both parties were intoxicated, with appropriate allowance to be made for contributory negligence. 33At [77], her Honour gave, as a second main reason that she was not prepared to find that Mr Davis' case was futile or not arguable, that futility was not a condition for the grant of leave under s 109. Mr Cummings submits that this demonstrates an error of reasoning, indicating a confusion between the gateway requirements of s 109 and the discretionary considerations to be taken into account once those gateway requirements were satisfied. 34As to the second basis on which the futility argument is put, this relates to the operation of s 54 of the Civil Liability Act. Mr Cummings submits that this section provides a complete defence to the claim sought to be brought by Mr Davis. Section 54 of the Act prohibits the award of damages to a person who is injured at the time of or following conduct that, on the balance of probabilities, constitutes a serious offence where that conduct has contributed materially to the injury. Mr Cummings notes that "serious offence" is defined under s 54(3) as an offence punishable by imprisonment for six months or more and that the offence to which Mr Davis pleaded guilty carried a term of imprisonment of nine months. 35For Mr Davis, it is contended that s 54 does not provide a complete defence on the basis that if Mr Dagg's conduct itself constituted an offence then s 54(2) applies. 36Section 54(2) provides that s 54 does not apply to an award of damages against a defendant if the conduct of the defendant that caused the death, injury or damage concerned constitutes an offence (whether or not a serious offence). It is submitted by Ms Norton that Mr Dagg contravened Regulation 16 by supervising a learner driver when he did not have a full licence, allowing the learner driver to exceed the speed limit, allowing the learner driver to drive whilst intoxicated, and supervising the driving whilst intoxicated. Reference is also made to Regulation 19, which provides that the owner or person in charge of a motor vehicle is guilty of an offence if the person "causes, permits or allows", or fails to take reasonable precautions to prevent, a contravention of the relevant subdivision. 37Ms Norton submits that the application of s 54 was an issue appropriately to be dealt with by the trial judge at a hearing. Determination of application for leave to appeal 38It was, quite fairly, conceded by Mr Cummings during the course of oral submissions on the application for leave to appeal that no issue of principle is raised on the proposed appeal. On the authorities referred to above, appellate review of the decision will not ordinarily be warranted. It is submitted for the applicants that there will be substantial injustice if leave to appeal is not granted (and hence if the order for extension of time to bring the proceedings remains on foot). That injustice is identified largely by reference to the prejudice to the applicants by reason of the delay, as outlined above. 39While the apparent paucity of evidence of the circumstances in which the parties came to be in the motor vehicle in the first place is a matter that suggests that it may be difficult for Mr Davis to succeed in his claim, it does not demonstrate that there would be substantial injustice to the applicants if Mr Davis were permitted an extension of time to allow that claim to be brought. His claim is not so manifestly untenable as would warrant summary dismissal. 40Where the issues sought to be raised by way of appellate review of her Honour's decision to grant an extension of time for the bringing of this claim do not involve any substantial issue of principle and there is no substantial injustice in permitting the claim to proceed, it is not appropriate to grant leave for the appeal and the application should be dismissed with costs. It is not therefore necessary to come to any concluded view on the issues raised on the appeal, on which oral submissions were not sought. 41SACKVILLE AJA: I agree with the reasons of Ward JA. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 04 July 2013