Doran v Thompson Ltd

Judgment Date01 January 1979
Neutral Citation1978 WJSC-SC 177
Date01 January 1979
Docket NumberNo. 784P/1976,[1976 No. 784P.]
CourtSupreme Court
Reversing High Court:15.7.77
Kevin Doran
Thomas Thompson & Sons Ltd.

1978 WJSC-SC 177

Henchy J.

Griffin J.

Kenny J.

No. 784P/1976



Judgment of Henchy J.delivered the 15 February 1978


To prevent the guillotine from falling on these proceedings it is necessary for the plaintiff to show that the defendants are estopped by representation from pleading the statute of limitations. Otherwise, the claim must stand dismissed; for, as the defendants have pleaded, the plaintiff's claim for damages for negligence was not commenced within three years after the cause of action arose, as is required by the Statute of Limitations, 1957.


Where in a claim for damages such as this, a defendant has engaged in words or conduct from which it was reasonable to infer, and from which it was in fact inferred, that liability would be admitted, and on foot of that representation the plaintiff has refrained from instituting proceedings within the period prescribed by the statute of limitations, the defendant will be held estopped fromescaping liability by pleading the statute. The reason is that it would be dishonest or unconscionable for the defendant, having misled the plaintiff into a feeling of security on the issue of liability, and thereby into a justifiable belief that the statute of limitations would not be used to defeat his claim, to escape liability by pleading the statute. The representation necessary to support this kind of estoppel need not be clear and unambiguous in the sense of being susceptible of only one interpretation. It is sufficient if, despite possible ambiguity or lack of certainty, on its true construction it bore the meaning that was drawn from it. Nor is it necessary to give evidence of an express intention to deceive the plaintiff. An intention to that effect will be read into the representation if the defendant has so conducted himself that, in the opinion of the Court, he ought not be heard to say that an admission of liability was not intended.


The first question therefore is, what representation did the insurers make as to the issue of liability? The answer is, None. Aside from the first letter written bythe plaintiff's solicitor in October 1973, in which a query was put as to what proposal the defendants had for compensating the plaintiff, and the insurers' neutral reply saying that the circumstances of the accident were being investigated, not a word was written or spoken during the three-year period of limitation on the question of liability. Other than those two opening letters, the only communications that passed were those between the solicitor and the insurers, and these consisted of five letters on each side and two telephone conversations. In none of them was any reference, direct or oblique, made to the question of liability. The solicitor, however, assumed at all stages that liability would not be in issue. But what lured him into that state of mind was the plaintiff's account of how the accident happened. There is nothing in what the insurers said or did that could reasonably be held to have nurtured his assumption that liability would be admitted. For reasons that are not obvious, he excluded the possibility that the plaintiff's explanation of the cause of the accident might prove wrong, or that, even if right, the defendantsmight still escape liability by pleading the statute. This fallacious thinking stemmed entirely from considerations subjective to the solicitor. I find nothing in the conduct of the defendants' insurers that could reasonably be said to have been causative of the impression that the issue of liability had disappeared out of the case.


In holding that there was estoppel by representation, the judge in the High Court saw three matters as supporting that inference.


Firstly, he held that it was reasonable for the solicitor to conclude from the account of the accident given by the plaintiff that liability would not be denied. It was certainly reasonable for the solicitor to hope or expect that liability would not be denied, but I do not think it was reasonable for a plaintiff's solicitor in such circumstances to risk the extinction of his client's claim by assuming that liability would not be contested. Because the defendants' version of how the accident happened might not tally with the plaintiff's, or for any one of a number of other reasons (such as that the ostensible negligence of thedefendants might turn out to be that of a third party), the issue of liability could not have been safely written off. At any rate, the solicitor's state of mind in this respect was formed and maintained without reference to any representation by the insurers.


Secondly, it was held that it was reasonable for the solicitor to expect that an offer of settlement would be made after the defendants' surgeon had carried out a medical examination. Doubtless it was reasonable for him to cherish that expectation, but not to the extent of ignoring the period of limitation. As the three-year period drew to its close, the insurers' silence on the issue of liability cried out for a direct question to be put to them asking whether liability was being admitted or not, and if a satisfactory reply were not received, for an originating summons to be issued. The issue of the summons would have cost little; it did not even have to be served to defeat the statute; it would have been valid for twelve months; and it could have been renewed at the end of the twelve months. However, such routine precautions never crossed the solicitor's mind.The self-induced idée fixe he had formed diverted his attention from the palpable and imminent disaster. His preoccupation with the quantum of damages to the exclusion of the issue of liability was the cause of his inactivity, and not anything in the nature of a representation by the insurers.


Thirdly, it was held that the insurers' willingness to make available a copy of their surgeon's medical report justified the solicitor's assumption that a reasonable and realistic approach to settlement would be taken by them, and that it was probable that the report would be treated as an agreed one. Assuming, without so holding, that to be so, I do not think it advances the plaintiff's claim that the defendants are estopped by representation from pleading the statute. The agreement to give the solicitor a copy of the medical report was a concession requested by the plaintiff's solicitor and agreed to by the insurers because the plaintiff would have no medical representative present at the medical examination. The solicitor had no reasonable grounds for assuming that the result would be an agreed medical report,or that the medical examination was but a prelude to a settlement. Looking at the matter without the benefit of hindsight, I consider that no reasonable legal adviser reading the plaintiff's solicitor's file at the stage when the end of the limitation period was approaching could have reasonably believed that the issue of liability had been or would be abandoned. At best he could have but hoped or expected that such would be the case, and the basis for that hope or expectation would have been the plaintiff's instructions and not anything said or done by the insurers. The insurers had exercised their right to remain silent on the issue of liability. There was no onus on them to deny the allegation of negligence that had been made in the opening letter. It was for the solicitor to pursue the matter in correspondence and in the absence of a satisfactory reply, to issue proceedings. His failure to do so was not supported by any causative representation by the insurers. As many a would-be plaintiff has learned, it is a fact of life in the world of insurance that a not unusual way for insurers to dispose of unprosecuted claims is to allow them to die of inanition. That is what happenedhere.


It is with regret that I differ from the conclusion reached in the full and careful judgment under review. I feel, however, that the plaintiff's case on this question was put fairly and at its highest by the solicitor himself when at the end of his evidence in the High Court he was asked a final question by the judge to explain why the necessity of issuing proceedings did not enter his mind. His reply was:


"My attitude to this case was that my opinion on the circumstances of the accident as explained to me by my client was that it was a pretty clear case on liability, and I had the correspondence and the telephone conversations with the insurance company relating to the carrying out of the examination, and my object was to facilitate them as far as I could in arranging that examination and, indeed, I was anxious to get medical evidence myself, and I was quite confident that when the medical evidence was available the claim would be settled without the necessity of proceedings".


There, frankly, fairly and at its full strength, stands the plaintiff's case for avoiding the closure applied by the statute. It shows that the solicitor misread the situation. He erred in good faith in thinking that the question ofdamages was all that was in issue. He failed to apprehend that the defendants could plead the statute of limitations. But the error was of his own making. It was not induced by any representation made by or on behalf of the defendants. The result is the sort of unfortunate situation that persuades prudent solicitors of the necessity to be adequately insured against the consequences of their negligence.


I would allow the appeal and rule that the plaintiff's claim isstatute-barred.


JUDGMENT delivered on the 15th day of February 1978by GRIFFIN J.:


The facts in this case are not in dispute. The plaintiff was, on the 20th of July 1972, employed by the defendants as a steel erector. On that date, whilst working for the defendants in erecting a steel structure...

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