N1101

PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]

TINANGE TAMASE

V

MOTOR VEHICLES INSURANCE (PNG) TRUST

Lae
Doherty J

1 November 1991
21 February 1992

LIMITATION OF ACTION - Negotiations - Agreement on quantum of damages arising from death but not on liability - Effect on running of limitation period - Whether estoppel applies.

WORDS AND PHRASES - "Without prejudice" - effect of.

Facts

The plaintiffs husband died from injuries sustained whilst a passenger in a car accident. She sought legal advice on a possible claim against the insurers of the car, but this was more than one and a half years outside the period required for lodging claims under s 54 of the Motor Vehicles (Third Party Insurance) Act, though less than the period provided by the Wrongs (Miscellaneous Provisions) Act for bringing actionable claims arising from death.

The plaintiffs lawyer successfully sought permission of the Insurance Commissioner to submit her claim outside the period prescribed in the former act, and negotiations proceeded between him and the defendants on the quantum of her entitlement. In the course of the negotiations, the period of 3 years expired and the right of action became statute barred by the latter Act. In this action of the plaintiff to effect the terms of the settlement, the defendant pleaded limitation of action.

The issues before the Court were:

1. Whether the correspondence between the plaintiffs lawyers and the defendant Trust constitute an agreement binding upon the parties and enforceable by this Court.

2. If there is no such binding agreement, on the facts, whether the defendant by its conduct is estopped from denying that it agreed to make payments to the plaintiff and her dependent children.

Held

1. If an agreement is reached between the parties making it clear that liability is agreed prior to the limitation period expiring, such an agreement is enforceable by the Courts.

2. On the facts of the case, there was no such agreement and, accordingly, the Court could not enter judgment for the plaintiff.

3. The plaintiff had not acted to her detriment on any promise by the defendant, and so the doctrine of estoppel did not apply.

Cases Cited

Papua New Guinea cases cited

Motor Vehicles Insurance (PNG) Trust v Salem (1991) unpublished N998
Wallace v Motor Vehicles Insurance (PNG) Trust (1991) unpublished N1037

Other cases cited

Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130
Lubovski v Snelling [1944] KB 44; [1943] 2 All ER 577
Newton, Bellamy & Wolfe v State Government Insurance Office (Qld.) [1986] 1 Qd R 431
Rendall v Hill's Dry Docks and Engineering Company Ltd [1900] 2 QB 245
The Sauria and The Trent [1957] 1 Lloyd's Rep 396
Tomlin v Standard Telephones and Cables Ltd [1969] 3 All ER 201
Wright v John Bagnall & Sons Ltd [1900] 2 QB 240

Counsel

R Barrell for the plaintiff
G Lay for the defendant

21 February 1992

DOHERTY J: The facts giving rise to this case are not greatly disputed, some facts and the law emanating from them are.

On 7 October 1984, Ivan Tamase was a passenger in a PMV vehicle P 7138, which was being driven along the Highlands Highway when another PMV vehicle, pulling out to avoid a stationary trailer, collided with P 7138. Ivan Tamase died on 8 October 1984 of head injuries sustained in the accident. He had been a subsistence farmer, married with two young sons.

The defendant Trust is a statutory corporation charged with the insurance of private motor vehicles against claims for death or injury arising from vehicle accidents on public roads. It is not disputed that the deceased died as a result of a vehicle accident on a public road, and the vehicle he was in was insured or insurable by the defendant.

The widow of the deceased did not seek legal advice on a claim for some time after the accident. It may have been because, as a villager she had no knowledge of or access to the procedures for making claims against the Trust. The Court is not informed of her reasons or if basic compensation was paid. In any event, by the time she sought advice it was over 2 years from the date of the accident; that is more than one and a half years from the 6-month limitation period for claims against the defendant provided in s 54 of Motor Vehicles (Third Party Insurance) Act Ch 295 but less than the period provided by the Wrongs (Miscellaneous Provisions) Act for the bringing of actionable claims arising from a death.

The lawyers for the widow wrote to Insurance Commissioner for permission to bring a claim outside the 6 month period. That was given in a letter dated 15 January 1987. A claim was lodged on 29 January 1987 with the defendant and, according to an affidavit of Mrs Milner, a partner in the plaintiffs lawyers' office, "a chain of correspondence then took place between (their) office and the Motor Vehicles Insurance (PNG) Trust."

There is no affidavit or direct evidence when, if ever, the defendant admitted liability or gave some indication that liability was not an issue. The only letter produced to court is dated 29 February 1988 from the defendant to the plaintiffs lawyer. It acknowledges a letter of 24 February 1988 and I will recite it in full in due course. There is a copy of an earlier letter dated 20 January 1987 from the plaintiffs lawyer to the defendant stating their instructions to claim and asking to "advise us whether or not liability will be in dispute."

In the absence of an averment of facts or in a pleading, I must take it that there was no statement, one way or the other, from the defendant stating if liability was denied or admitted.

The defendant's letter of 29 February 1988 is headed "without prejudice", and I consider it appropriate I quote it in full.

"We acknowledge your letter of 24 February 1988 and note your comments on quantum.

Without prejudice, we advise that we are prepared to accept settlement of all matters as computed by your goodselves with the exception of the matter of the widow. With her claim, we note you had not allowed for the usual life contingencies. Accordingly, we consider that a reduction by 30% with emphasis on the contingency for early remarriage, would be reasonable indeed.

We therefore note settlement of all matters thus:

1. Widow K3,227.63 
Plus estate claim  K1,500.00 
Total K4,727.63 
2. Wilson  K1,971.25 
3. Tea K2,212.77 

As for settlement we regret we are not prepared to dispose of the widow's claim by way of "Deed of Release" and insist that all matters be settled in Court. In this regard we advise that we are prepared to note your costs at the usual sum of K550.00.

We trust you will proceed to draw up the necessary draft documentation and forward same for our consent in the near future."

It will be noted that 29 February 1988 is some four and a half months after the expiration of the period provided for bringing an action arising from death under Wrongs (Miscellaneous Provisions) Act Ch 297.

Some of the facts relating to another letter averred to by Mrs Milner were objected to by the defendant and are not before this Court. Counsel for the defendant also objected to certain parts of the affidavit and applied to have them struck out. I agree that par 17 and par 18 constitute an opinion or are a submission on the law and parts of par 6 and par 7 related to conclusions of fact which must be reached by this Court.

Documents for filing in Court for approval by the Court were sent to the defendant on 6 September 1988 and, it appears from a letter acknowledging them and subsequent events, that they were referred to the defendant's legal advisers. The defendant's lawyers gave Notice of Intention to Defend and a sealed Defence was filed on 7 February 1989 and served. It pleads that the proceedings were not commenced within three years after the death of the deceased and so are statute barred.

One wonders, looking at a situation such as this, why the plaintiff receiving "without prejudice" correspondence and no apparent categorical acceptance of liability did not issue proceedings within the limitation period and, by the same token, why the defendant continued to negotiate and discuss quantum after the limitation period had expired.

In submission, Counsel for the plaintiff said there was correspondence in which the defendant said the payment of K5.00 per week for the widow and K3.00 per week per child was put forward, but no such correspondence is on the affidavit or in the evidence before this Court, and there has been no consent to such evidence by the defendant. Without such evidence, I can make no ruling on such a letter. A reference in submissions by counsel does not amount to evidence.

In these proceedings, the plaintiff seeks to have judgment entered against the defendants on the basis of admissions made and general relief provisions in the National Court Rules under O 12 r 1 and O 19 r 30. The defendant objects.

Plaintiffs submission is that liability was not in issue and that an agreement was made between the parties which is enforceable in this Court, there was offer and acceptance on behalf of the plaintiff and the 2 children. He refers to an affidavit from the lawyer who originally handled the matter in which the lawyer says "liability has not been an issue and in this (sic) circumstances negotiations have proceeded purely on the basis of quantum" and "it has been agreed that subject to the approval of the Honourable Court the sum of Three Thousand Three Hundred and Twenty Seven Kina Sixty Three Toea being for dependency..."(sic)

The defendant denies there has been such agreement and, certainly, no clear written enforceable contract or agreement has been presented to this Court reciting such terms.

The defendant says he made no admissions in the correspondence on the issue of liability and refers to the various cases in other jurisdiction concerning the enforcements of contracts in the course of negotiations for settlement of claims such as the claim before this Court. He goes further and says, if there is no contract, the behaviour of the defendant is not such that the defendant can be estopped from denying a contract, and it cannot enlarge the jurisdiction of the Courts.

The parties concede, to some extent, that the issue comes down to a basic question as to whether the process of correspondence between the plaintiffs lawyers and the defendant's effected an agreement binding upon the parties enforceable by the Court or, in the alternative, if the defendant is estopped from denying such an agreement.
It appears to me also from the evidence and the arguments that the issues before the Court are:

1. Whether the correspondence between the plaintiffs lawyers and the defendant Trust constitute an agreement binding upon the parties and enforceable by this Court.

2. If there is no such binding agreement on the facts, whether the defendant by its conduct is estopped from denying that it agreed to make payments to the plaintiff and her dependant children.

There is no direct case law to which I have been referred in this jurisdiction on the points in question.

Both Counsel have referred to the judgment of His Honour Woods J in the Motor Vehicles Insurance (PNG) Trust v Salem, unreported N998. In that case, the Trust reached an agreement to settle claims for injuries sustained by the defendant in a motor vehicle accident. A writ of summons had been issued and negotiations were proceeding after the issue of the writ. An amount of damages was put forward by the lawyer for the injured defendant, and the Trust's lawyers "wrote to J - P - accepting the offer of settlement at K10,000."

The Court found that this was a binding offer between the parties; one which was enforceable in Court. Much of the judgment deals with the status of an agreement made on behalf of a party by his lawyer. There is no indication in that case that the matter became statute barred, and it is clear that negotiations leading to an agreement arose after proceedings had been issued.

There is a decision from this Court, Wallace v Motor Vehicles Insurance (PNG) Trust unreported N1037, approving the ratio in Lubovski v Snelling [1944] KB 44 but limitation periods had not expired in that matter before a written agreement was reached, and it is presently, I understand, under an appeal.

I have been referred by both counsel to several overseas judgments relating to actions on enforcement of claims for damages for negligence after the action has become statute barred. All the cases in question relate to personal injuries sustained either in a motor vehicle accident or in a course of employment or such circumstance.

The history of many of these cases is set out in Newton, Bellamy & Wolfe v State Government Insurance Office (Qld) [1986] 1 QdR 431. This is a case dealing with claims on behalf of the estate of a deceased person. The deceased's parents had been killed in a motor vehicle accident in 1979.

A claim was lodged against the defendant insurance company, and in February 1981 (before the action became statute barred by limitation), a letter was written to the plaintiffs stating, inter alia, that "it is confirmed that liability is not in issue."

A writ claiming damages for negligence was not issued until after the limitation period, and the defendant filed the defence that it was statute barred. In determining the issues, the Queensland Court of Appeal considered the history of this type of claim. It considered that "the question that rises is the meaning of the expression "it is confirmed that liability is not an issue."

The Court commenced consideration with the English case of Wright v John Bagnall & Sons Ltd [1900] QB 240, where an agreement between the parties that the appellant was entitled to Workers Compensation (and payment of such compensation was made prior to the limitation period) amounted to an agreement that compensation was to be paid which was enforceable in the Court after the period of limitation had expired. The Court found that there was an agreement that compensation was to be paid, the only question being that of quantum. Accordingly, they considered that the defendants were "debarred" from raising limitations.

The next case they referred to was Rendall v Hill's Dry Docks and Engineering Company Ltd [1900] 2 QB 245, where Wright v Bagnall (supra) was approved but distinguished on the facts that no agreement as to liability was found.

The next case in sequence appears to be Cohen v Snelling (supra). This is the case referred to by Counsel for the plaintiff in the matter before me and which - I also referred to in Wallace v Motor Vehicles Insurance (PNG) Trust. That matter related to a claim arising from a death and injuries in the course of a motor vehicle accident, where the lawyers for the administratrix and next friend of the parties killed and injured had lodged a claim against the insurers. The insurers said that they had no defence, and negotiations should proceed "on the basis of admission of liability but that a writ would have to be issued in any event because, whether they agreed about the quantum of damages or not, the Court would have to approve an apportionment."

The lawyers for the deceased estate had issued proceedings within the statute of limitation period but withdrawn them for a purely technical reason that letters of administration had not been issued. When proceedings were lodged a second time, it was outside the statutory limitation period and the defendant's insurers denied liability on the basis that the action was now statute barred.

The English Court of Appeal considered:

"The sole issue in the appeal is whether it was open to the respondent, in the circumstances of the case, to raise a plea that the appellant's claim was barred by the Fatal Accident's Act 1846 s 3, which limits the right of action under the Act to the period of one year from the date of the death." 

The Court went on to say:

"On the facts established at the trial, I have no doubt that the plea was not so open, and to take the point was, in my opinion, discreditable, if not dishonest, on the part of the insurance company whose policy covered the respondent driver".

The court considered that the case fell wholly within the decision in Wright v John Bagnall & Sons Ltd (supra).

Goddard J also said:

"There was clearly an agreement made by the representative of the defendant's insurance company with the plaintiffs solicitor that liability was admitted but that the amount of damages was to be fixed and apportioned by the court". He went on to say that the Fatal Accident Act "does not affect the cause of action but merely prescribes a period of limitation".

Mr Lay for the defendant said that Cohen v Snelling has been criticized. I must concede that I have read some criticism of it, but I have not been referred to any case overruling it and Newton, Bellamy & Wolfe v State Government Insurance Office (supra) approved and adopted the ratio in Cohen v Snelling. Newton, Bellamy & Wolfe v State Government Insurance Office also considered the cases of The Sauria and The Trent [1957] 1 Lloyd's Rep 396 (which I have been unable to find in our library), where liability was admitted subject to certain matters and it was stated that, if these items could not be agreed, they would be referred to arbitration. That case held that while there was an unqualified admission of liability there was nothing which amounted to a binding contract to waive the right to plea statute of limitations if the plaintiffs did not commence proceedings within the statutory period.

The Sauria case distinguished Lubovsky v Snelling [1944] KB 44 on the facts: it does not distinguish the ratio. As the Queensland Court of Appeal said, "It cannot be disregarded that in Lubovsky's case it was decided that the agreement had been reached notwithstanding that it contained a term that a writ would be issued in any event." They also noted that in the Sauria case they had some doubts as to whether there was an unequivocal admission of liability.

The fundamental issue, it appears to me from the case law, is that there must be an agreement and that agreement is to accept liability in clear categorical terms rather than to evince an intention to accept liability. The Queensland Court of Appeal considered that the saving of the parties of the expense of court proceedings could be looked upon as consideration in such an agreement.

The question that follows on is "whether what is said between them contains an implied undertaking not to plea the statute" (to quote Newton, Bellamy & Wolfe v State Government Insurance Office (supra) at 437). Clearly, the acceptance of liability is more than an admission. There must be acceptance of liability supported by consideration, normally the forbearing of taking court action, so avoiding costs and expense of proceedings. As I have already mentioned, there is no case law in our jurisdiction that I had been made aware of on this point. I consider that the underlying law permits consideration of the case law I have referred to above, and I consider this case law persuasive upon this Court.

Accordingly, I consider that this Court can enforce an agreement between the plaintiffs solicitors and the defendant Trust if such an agreement amounts to a contract between them and that, if it is a term or an implied term of the agreement, the limitation period in the Wrongs (Miscellaneous Provisions) Act will not be pleaded. Once such a contract is found to exist, a Court can enforce the agreement.

I now apply that law to the facts before me. As I have said at the outset, there is no clear categorical statement in the correspondence and facts before me to the effect that liability is admitted or is not an issue.

I note that the correspondence that has been presented to the Court is headed "without prejudice".

The status of "without prejudice" correspondence in negotiating settlement of claims for damages for injuries was considered at length in Tomlin v Standard Telephones & Cables Ltd [1969] 3 All ER 201 at 210.

The court in that matter found that there was an agreement to settle the claims between the parties on a "50/50 basis" and found, as a fact, that that correspondence amounted to an agreement. It was noted that all the correspondence was headed "without prejudice", but it found that there was in the correspondence a complete contract and that both parties intended to be bound by that contract, and so it was enforceable.

Hence, the words "without prejudice" do not always alleviate a party from liability. Much depends on the facts.

In applying the law to the case before me, I share what Sir Gordon Willmer in Tomlin v Standard Telephones (supra) said at page 207: "an uneasy suspicion that there was probably telephonic communication going on between the parties in the background behind this correspondence"; but since I have no evidence I can only proceed on the facts before me. The facts show that the letter of 29 February was written after the statutory limitation period expired. There is no statement of acceptance of liability on the part of the defendant Trust. Despite the affidavit before me stating "liability has not been an issue", I cannot find any categorical statement or clear inference that liability has been admitted or a statement that it is not denied.

The case law in cases such as Lubovski v Snelling, Wright v John Bagnall & Sons and Newton, Bellamy & Wolfe v State Government Insurance Office make it clear on the facts that liability was admitted in some unequivocal term and that is borne out by the Queensland Court of Appeal's consideration of The Sauria and The Trent. The case law also indicates that such agreement to accept liability must have been made before the limitation period has been reached. The cases do not say so but there is, to my mind, a very clear implication that the plaintiffs could have issued proceedings if the defendants had not admitted liability and did not issue proceedings because of the admission. I consider on the law before me that the admission of liability coupled with that admission being made before limitation expired is fundamental when considering whether an agreement has been reached that is binding upon the parties.

On the facts before me, I cannot find either such an agreement in clear and unequivocal terms or an agreement that was made within the limitation period.

In this regard, I must agree with Counsel for the defence that, in order for such an agreement to be binding, there must be consideration moving from both sides. If the defendant agrees to waive its statutory rights in order to have the binding agreement enforceable by a Court, there must be acceptance and consideration on the part of the plaintiff. What consideration forms the basis of that agreement in the case before me? I can find none. The limitation period expired. There was no consideration moving from the plaintiff family forming the basis of an agreement enforceable by this Court, and I must, therefore, find that in the light of the lack of such an agreement the court cannot find and enforce an agreement.

The second aspect is whether the defendant Trust is estopped from denying liability on the basis of the letter dated 29 February 1988?

Is the defendant estopped from denying there is an agreement or has it acted in such a way that estoppel can be raised against it by its behaviour. Counsel for plaintiff does not refer me to any case on estoppel, but counsel for defendant says for the defendant to be estopped, it must be shown the plaintiff has changed her position to her detriment because of the defendant's actions.

Estoppel is, as was said in Modern Equity by Hanbury 9th Edition at p 664:

"The common law and equitable doctrines are sometimes distinguished on the ground that common law estoppel is a mere rule of evidence, denying the right of a party to put forward an argument or claim inconsistent with the representation on which the other party relied to his detriment; while estoppel in equity gives rise to substantive rights in that it may operate to give the representee the right to claim title to land or goods.

The view that estoppel operates in equity to grant affirmative relief is also based upon the rule that a person who made a representation must in equity make it good; i.e., "the parties must be dealt with on the footing that the statement is true. But the pretence does not make it true, and it may be necessary to do something further in order to bring that about. That may be done by a conveyance; or, if that is not possible, by compensation. It will be seen that such a doctrine would lie uncomfortably with many other accepted principles. It would mean, in effect, that compensation could be obtained for loss in reliance upon certain non-fraudulent misrepresentations; and that a conveyance could be ordered in favour of a volunteer, even though there was no agreement to do so. It is submitted that the doctrine is too widely stated. Estoppel is essentially a doctrine which operates negatively, preventing a person from acting inconsistently with his representation."

The case of Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130 was considered the land mark case on waiver of rights under a contract. Denning J (as he then was) stated that the plaintiffs, though not technically bound in contract because of lack of consideration, knew and permitted the plaintiffs to act on their promise (to waive higher rents), and could not later enforce the original contract once the defendants had acted upon the promise in good faith.

I apply these principles to the situation before me. On the facts and evidence, the defendant did "not hold itself out" as waiving its rights to plead legal limitation. It appears clearly that Mr Lupalrea thought they did, if one is to accept his affidavit, but I have no such evidence before me.

Nor can I find a representation by the defendant to agree to liability and waive the legal bar to limitation on the basis of saving court costs on such an issue. I can find no such "holding out".

Hence, I must find the defendants are not estopped from pleading the limitation and, accordingly, I must refuse the orders sought in the notice of motion.

This is an interlocutory matter. It raises important issues of law concerning a statutory authority charged with certain statutory duties. Certain emotive issues are put forward and the answer, a claim against professional advisers, is a glib one. The parties are, of course, at liberty to appeal.

Costs are awarded to the defendant.

___________________

Lawyers for plaintiff: Henao Priestly
Lawyers for defendant: Young & Williams