The judgment from NSW Court of Appeal provides further assistance about what will be a "full and satisfactory explanation" in NSW CTP claims. The decision dealt with provisions in the Motor Accidents Compensation Act 1999 (NSW) (MAC Act) but applies equally to the same expression in the Motor Accidents Injuries Act 2017 (NSW) (MAI Act).

Background

On 18 April 2017, the applicant was involved in a motor vehicle accident caused by the negligence of the respondent. For the next few years the applicant claimed to have suffered from severe neck pain and stiffness, as well as radiating numbness to his hands. When his symptoms did not subside as he expected, the applicant informed his general practitioner of the accident on 24 October 2019, which was approximately 2.5 years after the accident had occurred.

He then lodged a personal injury claim form with the respondent’s insurer (‘GIO’) on 2 November 2019. The claim was late, having been lodged more than 2 years and 6 months after the accident (section 72 of the MAC Act).

GIO initially rejected the claim on the basis that the applicant had not provided a full and satisfactory explanation for the late lodgement of the application for personal injury benefits pursuant to sections 72 and 73 of the MAC Act (counterparts to sections 6.13 and 6.14 of the MAI Act). The applicant then provided information to explain the delay, and on 12 February 2020, GIO accepted liability for the accident. Following this decision, the applicant waited for GIO to complete its investigations with a view of making a reasonable offer of settlement in line with its statutory duty.

Only after having received a medical report commissioned by GIO, the applicant sought legal advice and retained his son, who, while a practising solicitor, was not a personal injury lawyer.

The applicant’s son rejected an offer of settlement GIO made in March 2021 on his father’s instructions, and the claim was the subject of an assessment of damages in the Personal Injury Commission (‘PIC’) in May 2022. The applicant similarly rejected the PIC award, and commenced proceedings in the NSW District Court on 2 June 2022.

District Court Proceedings

The applicant could not maintain proceedings without leave under s 109(3) of the MAC Act because the accident occurred more than 3 years before the statement of claim was filed. GIO opposed a grant of leave.

The Primary Judge refused to grant leave because in his view, the applicant had not provided a full and satisfactory explanation within meaning of s 66(2) of the MAC Act. The Primary Judge held that a reasonable person in the applicant’s position would not have been justified in experiencing the same delay, especially in circumstances where his son was a practising solicitor.

Court of Appeal Proceedings

Because the decision of the District Court was an interlocutory one, the application required leave to appeal, which was granted.

White JA for the Court, (Mitchelmore JA and Griffiths AJA agreeing), allowed the appeal, finding that:

• An explanation for delay in commencing proceedings will be “full” if it provides a complete account of actions, knowledge and belief or beliefs of the claimant from the date of the accident until the date of providing the explanation. Unchallenged accounts given by the applicant and his son as to their actions, knowledge and beliefs throughout the period amounted to a ‘full’ explanation.
• An explanation for delay in commencing proceedings will be “satisfactory” if at least one hypothetical person within a spectrum of reasonable persons would have experienced the same delay.

The Court held that after GIO had accepted the late claim under sections 72 and 73 of the MAC Act, and admitted liability under section 81, that the applicant, as many reasonable persons would have done, waited for GIO to make the foreshadowed offer of settlement. that the Court found he held the belief that no further steps were necessary other than to wait for the offer to arrive, notwithstanding the fact the applicant’s son was a practising solicitor.

There was a side skirmish about whether the applicant could maintain a claim for client legal privilege in respect of communications passing between him and his lawyer son, and yet still provide a full and satisfactory explanation. The Primary Judge held he could not, but the Court of Appeal disagreed, finding that nothing in those sections of the Act dealing with time limits, and the need to explain delay, expressly or impliedly does away with a client’s right to assert client legal privilege, and a refusal to waive privilege over confidential communications will not establish that an explanation is neither full nor satisfactory.

There was also some important guidance about how the damages threshold will be approached in leave applications.

Section 109(3)(b) of the MAC Act (and section 6.32(3)(b) of the MAI Act) provides that, where the applicant is not a person under a disability, leave will not be granted even if there is a full and satisfactory explanation for delay unless the total damages ‘likely to be awarded’ on success of the claim exceeds a prescribed threshold. The Court of Appeal clarified that ‘likely’ in that context does not mean a probability of more than 50%. It means that there is a ‘real or substantial chance’, A Court should be slow to resolve the damages threshold on a leave application adverse to an applicant on the basis of medical reports relied on by an insurer, where the applicant has conflicting medical evidence, and particularly where the authors of the reports are not cross examined.

Implications

Although the decision has direct relevance to the MAC Act, what amounts to "full and satisfactory" explanation is relevant when considering the following sections of the MAI Act including:

• Section 6.13 – time for making of claims for statutory benefits
• Section 6.14 – time for making of claims for damages
• Section 6.26 – consequences of failure to provide relevant particulars of claim for damages.
• Section 6.32 – time limitations on commencement of court proceedings.

Conclusion

The Court’s treatment of client legal privilege in the context of duties to provide full explanations is particularly interesting.

Often insurers argue if full access to legal advice provided before the relevant time period ran out is not provided, an explanation cannot be full or satisfactory, but the Court of Appeal’s decision will no doubt be invoke to resist wholesale disclose of legal advice.

This decision also may at first blush appear to wind the common law back somewhat from Figliuzzi v Yonan [2005] NSWCA 290, in which the claimant who was a clerk employed by the Legal Aid Commission, was held to have acted unreasonably in not seeking legal advice sooner than she did, where she had ready access to a lawyer. In this case, though, the fact that the insurer had initially accepted the applicant’s explanation for delay, and had also admitted liability for the claim, perhaps influenced the outcome.