Supreme Court allows appeal dismissing personal injury claim where defendant's conduct estopped raising statute of limitations defense.

THE SUPREME COURT

Appeal No. 79/2006

Geoghegan J.

Kearns J.

Macken J.

BETWEEN/

DAVID MURPHY

Plaintiff/Respondent

and

MICHAEL GREALISH

Defendant/Appellant

JUDGMENT of Mr. Justice Geoghegan delivered the 10th day of February 2009

This is an appeal brought by the defendant/appellant from an order of the High Court (MacMenamin J.) refusing to dismiss

a personal injuries action instituted by the plaintiff/respondent. Technically, the motion sought two alternative reliefs which

were:

“A. An order dismissing the plaintiff’s proceedings herein pursuant to the provisions of section 11(1)(2) of the

Limitation of Actions Act, 1957 as amended by section 3(1)(2) of the Statute of Limitations (Amendment) Act,

1991;

B. Further or in the alternative an order directing the trial of a preliminary issue namely whether the

proceedings herein are statute barred pursuant to the provisions of section 11(1)(2) of the Limitation of

Actions Act, 1957 as amended by section 3(1)(2) of the Statute of Limitations (Amendment) Act, 1991.”

The Statute of Limitations contains no provisions whereby a defendant who has pleaded it may follow up that plea with a

motion to have the action dismissed. It may well be that such a motion can be brought pursuant to the well-known inherent

jurisdiction of the court to strike out proceedings certain to fail but given the plea of estoppel in the Reply to which I will be

referring, it would seem inconceivable that such an order could be granted.

It would be open, of course, to seek the second relief at paragraph (B) but what happened in practice was that

MacMenamin J. decided the issue himself rather than set it down for a separate trial and I assume that this was by consent

of both parties in that no point has ever been taken about it.

This was an action brought outside of the three year period. The statute was duly pleaded. A Reply, however, was delivered

which contained the following plea.

“The plaintiff denies that the claim herein is statute barred and pleads that the defendant by his

actions and those of his servants or agents and representatives is estopped from raising the

statutory period in order to evade liability in these proceedings.”

In a nutshell, the case made by the respondent is that from an early stage the appellant admitted liability and that thereafter

negotiations proceeded surrounding the medical condition of the appellant with a view to establishing quantum. These

discussions continued even after the three year period had expired and the appellant’s solicitor was taken by surprise by the

plea of the statute. He, effectively, maintains that he was lulled into a false sense of security by the appellant’s insurers. I am

deliberately using non-legal terminology at this stage. I will discuss the legal position when I have set out the factual history

in full.

The chronology is as follows. The motor accident giving rise to the action occurred on the 12th May, 2000. The first letter

of any importance is a letter from the appellant’s insurers, Quinn Direct, dated 1st August, 2000 and addressed to the

respondent personally. It reads as follows:

“Dear Mr. Murphy

We write to advise that an independent motor assessor has agreed repairs on your vehicle at IR

£1,849.53.

Please complete the enclosed acceptance form and return it to us. On receipt of same we will issue

a cheque in the amount of IR £1,849.53 in your favour in full and final settlement of this claim.

We trust this meets with your approval. We look forward to your early reply.

Yours faithfully

Deborah O’Reilly

Claims Department.”

Even this first letter contained a clear admission of liability though either consciously or unconsciously it ignored altogether a

possible legitimate claim by the respondent for general damages for personal injuries and, indeed, any special damages in

connection therewith. Interestingly, and perhaps significantly, that particular letter was omitted from the correspondence

exhibited in the affidavit grounding the appellant’s motion. However, a letter sent by the respondent’s solicitors, O’Dea and

Company in reply and dated 17th August, 2000 was exhibited. That letter read as follows:

“Dear Sirs

We confirm we act on behalf of Mr. Murphy. We refer to your letter of the 1st inst. You might

confirm that the figures were agreed with McCormack Car Sales Limited.

Our client suffered personal injuries in relation to the accident. You might confirm that you are

prepared to deal with the material damage at this stage.

Yours faithfully”.

Quinn Direct, under a different signature, replied to that letter making it clear that it was not the company’s policy to deal

with claims on a “piecemeal basis”. The letter went on to request details of the nature and extent of the alleged injuries

with the names and addresses of the relevant doctors so that the insurers could arrange for their own medical examination, if

necessary. There was then a long gap with no correspondence with the result that the insurers wrote again on the 18th June,

2001 asking if the injury claim was still being pursued. It was confirmed in a reply that the claim was being pursued. On the

22nd October, 2001 Quinn Direct wrote still looking for particulars of the injuries and the medical attendance. They

followed this up with further letters of the 9th November and the 13th November, 2001. By a letter of the 20th November,

2001 the respondent’s solicitors explained that the respondent was awaiting an orthopaedic examination. In a letter of the

following day they gave particulars of the names of the relevant doctors. A letter of importance in considering the issues in

this case and dated the 5th December, 2002 was then written by Quinn Direct, it read as follows:

“Dear Donal

I refer to the above matter and to previous correspondence concerning same.

Could you let me know as soon as possible if

you would be prepared to share medicals with Quinn Direct in this case and if you are prepared to

discuss settlement of the claim. Liability is not an issue.

Trusting to hear from you at your earliest convenience.

Regards

Yours sincerely

Hugh McGrath

Regional Claims Manager”

That letter was replied to on the 5th February, 2003 in which it was stated that the respondent’s x-rays were being reviewed

by an orthopaedic surgeon at an appointment in March and that it would be anticipated that following on his latest report

there will be no difficulty about sharing it.

The orthopaedic surgeon retained on behalf of the respondent was Mr. Michael Gilmore of Galway and he reported on an

MRI scan on the 21st May, 2003. He did not recommend surgery but expressed the view that the respondent would have

ongoing disability in his back as a result of his injury which had led to the degeneration and bulging of discs. That report was

forwarded to the insurers on the 17th June, 2003.

Quinn Direct wrote on the 21st July, 2003 that they had arranged for a medical examination of the respondent by the

Galway surgeon, Mr. Wilson. An almost identical letter was written on the 21st August, 2003. Presumably, the examination

was, in the event, postponed from 20th August, 2003 to 13th October, 2003 which was the new date.

Apparently, the respondent missed his appointment and had to pay the medical fee. A new appointment was to be arranged.

By a letter of the 19th January, 2004 the respondent’s solicitors referred to a telephone call of the 16th January where

reference was made to High Court proceedings having been issued but that solicitors had not been nominated by the

appellant. Receipt of that letter was acknowledged by a letter of the 27th January, 2004 which read as follows:-

“Dear Sir

We acknowledge receipt of your letter dated 19th January, 2004 and note the contents.

We have forwarded a copy of your letter to our Regional Claims Manager, Hugh McGrath, who has

a copy of our file of papers in relation to the above incident. He will contact you in the forthcoming

days to discuss this matter further.

In the meantime if you have any outstanding queries, Hugh will be able to assist you and he can be

contacted directly on the number above.

Yours faithfully

Catriona McCaffrey

Claims Department”.

In a letter of 4th May 2004 for the first time, the issue of statute bar is raised. The letter reads as follows:

“Dear Sir

We refer to the above incident and to your facsimile dated the 4th May, 2004 enclosing a copy of

the plenary summons.

We note that the date the summons was issued was outside the three year period after the date of the

accident and is therefore statute barred.

Under the circumstances we will not be dealing with any claims from your client and we are

therefore closing our file of papers.

If you have any queries in relation to the above please do not hesitate to contact the undersigned.

Yours faithfully

PPL Galligan

Catriona McCaffrey

Claims Department”.

It is important at this stage to refer to paragraph 2 of a supplemental affidavit of Donal Downes the partner in O’Dea and

Company who was dealing with the case. I will cite the paragraph in full:

“I beg to refer to the said affidavit already sworn by me on the 3rd day of May 2005 in these

proceedings and in particular to paragraph 6 thereof wherein I have stated that the plaintiff’s

solicitors relied on the defendant’s insurers admission of liability. I say that the basis and extent of

my reliance upon the defendant’s admission of liability was as follows:

i. Quinn Direct, the defendant’s insurance company had stated (without prejudice), in writing

as early as 31st August 2000 that it was ‘satisfied that liability will not be an issue’.

ii. Quinn Direct had previously attempted to settle the plaintiff’s claim directly with the

plaintiff on or without prejudice basis.

iii. By letter dated 5th December 2002 Quinn Direct Regional Claims Manager, Mr. Hugh

McGrath, advised the plaintiff’s solicitors that ‘liability is not an issue’. Significantly, this

was an open admission of liability.

iv. Quinn Direct had, through the Regional Claims Manager, sought and received agreement

to share medical reports.

v. Mr. McGrath had contacted the plaintiff’s solicitors on several occasions and it was clear

that he was anxious and willing to settle the claim.

vi. In the light of the foregoing it never entered my consciousness that Quinn Direct would

subsequently attempt to rely on the Statute of Limitations for the purpose of resiling from its

open admission of liability, and the issue or non issue of proceedings within the time

provided by the statute was not something to which I gave consideration.”

It is worth citing paragraph 3 which was the final paragraph of the same affidavit:

“I say that it is obvious to me, your deponent, that Quinn Direct also attached significance and

relevance to its admission of liability by reason of the fact that it decided not to disclose

correspondence admitting liability (albeit marked ‘without prejudice’) in the affidavit sworn on its

behalf, and with its express authority, for the purpose of grounding the herein application to

dismiss the plaintiff’s claim.”

Although it is not appropriate to include legal arguments in an affidavit, Mr. Peter Kelly, solicitor of Erne, the firm acting for

the appellant, Mr. Kelly did just that in an affidavit affirmed on the 12th April 2005. Because what he says is at the heart of

the argument I find it useful to quote it as an introduction to my discussion of the law. He says in the middle of paragraph 3

the following:

“It is a daily occurrence that insurance companies admit liability, but I respectfully submit

that this does not indicate or mean that proceedings should not be instituted. The law is clear,

as laid down by the Supreme Court in Ryan v. Connolly [2001] 2 ILRM 174. The case held

that the mere fact that a defendant had expressly and unambiguously conceded the issue of

liability did not necessarily mean that it was reasonable for a plaintiff to assume that he could

defer the institution of proceedings beyond the limitation period. In the absence of a statement

from an insurance company from which it was reasonable to infer that, in the event of

proceedings not being instituted within the limitation period, they would refrain from relying

on a defence under the statute, the insurance company should not be precluded from relying

on such a defence. And, (fairly similar to the situation herein) the court held that no such

unambiguous representation had been made by the insurance company and the proceedings

were, accordingly statute barred’.”

I would respectfully suggest that that is a selective statement of the law and, indeed if the law was as simple as that, the

courts would have an easier task. The first point to be made is that although Ryan v. Connolly is the latest relevant

Supreme Court decision, an earlier decision of this court Doran v. Thomas Thompson and Sons Limited [1978] I.R. 223

is even more relevant particularly as it is perfectly clear from a reading of the single judgment of Keane C.J. in Ryan v.

Connolly that the former Chief Justice was intending to follow the principles laid down in Doran. There is the further

difficulty that although there were three reasoned concurring judgments in Doran i.e. those of Henchy J., Griffin J. and

Kenny J., they do not seem to me to be absolutely identical at least in so far as some aspects of the problem are

emphasized. This may be why Keane C.J. seemed almost exclusively to rely on the judgment of Griffin J. In my opinion,

when the judgments in both cases are carefully studied, two important factors emerge. The first is that an admission of

liability is all important in considering an issue of estoppel preventing reliance on the Statute of Limitations. Indeed on one

reading of the judgment of Henchy J., in particular, one might almost believe that it was a determining factor. I do not

believe, however, that he or either of the two other judges in that court would have intended to convey that. In that

particular case, there was in fact no admission of liability.

The second factor which emerges from the two cases is the useful correction in this regard made by Keane C.J. and cited by

Mr. Kelly in his affidavit. It clearly could not be the law that merely because there was an admission of liability a plaintiff

could ignore the Statute of Limitations with impunity. It is in that context that Keane C.J. uses the word “necessarily” in

the passage cited. Indeed Keane C.J. develops this with an example. He postulates the case where an insurance company

within days of the accident accepts that no issue on liability arises but that for some reason the subsequent negotiations

become dormant. “The plaintiff may well find himself unable to rely on the principle under consideration if he permits

the limitation period to expire without instituting proceedings.”

That clearly correct cautionary note must be balanced against what Henchy J. said at p. 225 of Doran:

“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, the defendant will be held estopped from escaping

liability by pleading the statute. The reason is that it would be dishonest and 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 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 bears 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 to be heard to say that an

admission of liability was not intended.”

Another passage in the judgment of Henchy J. has indirect relevance to this case. It is at p. 226 and reads as follows:

“Secondly, it was held that it was reasonable for the solicitor to expect that an offer of settlement

would be made after the defendant’s 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 12 months; and it could have been renewed at the end of the twelve months.

However, such routine precautions never crossed the solicitor’s minds. The self-induced idée fixe

that 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.”

In neither Doran nor Ryan was there an admission of liability and that is the key point in both cases. Although in each case,

the decisions of the High Court (Costello J. in Doran and Kelly J. in Ryan) were reversed, this was largely on the basis that

the Supreme Court judges did not consider that the inferences in favour of the plaintiffs drawn by the High Court judges

were warranted but it does not seem to me that they had any criticism of the basic approach of the respective High Court

judges which was essentially to consider whether there was an equitable estoppel by reason of the general surrounding

circumstances, those circumstances constituting an implied representation rendering it unconscionable to allow the reliance

on the statute.

Before setting out my own conclusions, I will refer now to the judgment of the High Court by MacMenamin J. I am in

broad agreement with the learned High Court judge’s extensive review of the facts and the law in that judgment. It does not

differ in any material respect from my own approach. It think it useful however to pick out some salient points from the

judgment to which significance was either expressly or by inference attached.

First of all, there are the facts of the accident itself. MacMenamin J. points out that at the time of the accident the

appellant’s car was driven into the rear of the respondent’s stationary car thereby causing significant injuries to the

respondent. It is obvious from the facts of the accident itself that there could not be a liability issue. Whilst that of itself

would not be enough to raise an estoppel, the clear acknowledgments by the appellant’s insurers that there was in fact no

liability issue would be likely to lull the respondent and/or his solicitor into a sense of security that the issue of proceedings

within a particular time limit was not of importance. Again, some added facts would be necessary to create an estoppel but

not much addition would be required. The nature of the correspondence to which I have already referred and which is dealt

with even in more detail by the learned High Court judge and which revealed a situation of settlement negotiations given that

relevant correspondence was originally headed “without prejudice” and various arrangements made re sharing of medical

reports etc. The judge, in particular, refers to the supplemental affidavit of the respondent’s solicitor sworn on the 24th

November, 2005 with the permission of the court. The solicitor, Mr. Downes, made it clear in that affidavit that he relied on

the appellant’s insurers admission of liability. The details of the extent of that reliance as set out in the affidavit are already

cited in this judgment.

Just as I have done, MacMenamin J., relied heavily on Doran and Ryan cited above. He rightly attached significance to a

passage in the judgment of Kenny J. in Doran which reads as follows:

“The other argument was that it would be inequitable to allow the defendants to rely on the Statute

of Limitations. If the defendants had accepted liability and had entered into negotiations to arrive

at an agreed sum, and if the plaintiff’s solicitors had refrained from bringing proceedings because

they relied on the admission of liability or the negotiations being conducted, it would be

inequitable to allow the defendants to rely on the time bar. But they never accepted or admitted

liability and never represented that they did, nor did they carry on any negotiations for the purpose

of settling the case. They did nothing which could give the plaintiff’s solicitors the impression that

they need not issue proceedings nor did they mislead them in any way. I cannot see how the conduct

of the insurers was dishonourable in any respect and I do not think that anything they did makes it

inequitable for them to plead and rely on the Statute of Limitations. If the plaintiff’s solicitors

thought that liability was being admitted, the defendants and the insurers did nothing to cause or

contribute to that belief.”

That passage is important because it brings into focus a case wholly different on its facts from this case and for all practical

purposes contrasts it with a case more or less on the lines of this case.

Finally, the learned High Court judge refers to a much earlier Supreme Court decision in O’Reilly v. Granville [1971] I.R.

90 where Walsh J. made the following observation at p. 100 of the report:

“The Statute of Limitations does not exist for the purpose of aiding unconscionable and dishonest

conduct and I fully agree with the view expressed by the Chief Justice that in the circumstances of

this case if the Statute of Limitations were to be invoked it would be for the purpose of sustaining

and maintaining unconscionable and dishonest conduct”.

Although that was a minority judgment there is no indication that the other judges disagreed with that statement of principle.

On the contrary it was endorsed in the judgment of Ó Dálaigh C.J. when he stated:

“A plea of the Statute of Limitations in the circumstances, would be not wholly unmeritorious but, I

feel it my duty to add unconscionable and plainly dishonest.”

As the learned High Court judge acknowledges, the facts of that case were totally different and indeed the issue was

different but the two quotations do seem to invoke the concept that a plea of the statute may not be effective if such plea

was unconscionable. In concluding his judgment, that is precisely what MacMenamin J. held in this case. He said the

following:

“It is sufficient to observe that in my view on the facts the plea of the Statute is unconscionable.”

I think that a caveat has to be entered here. It is not clear that there is any principle independent of estoppel that

unconscionable behaviour may prevent a plea of the statute being effective. In this particular case, the plea in the Reply is

confined to estoppel. As is well known, there are, of course, different kinds of estoppel. The classic legal estoppel involving

a clear statement made by one party on which the other party relied does not seem to be relevant here. This case history

involves a combination of conduct which can reasonably be construed as an implied representation combined with a

consequence that in all the circumstances it would be unconscionable to resile from the implied representation arising from

the conduct. I think that it is in that context that the learned High Court judge in the concluding part of his judgment uses the

word “unconscionable”. This seems to me to become doubly clear given that in his opening few sentences under the

heading

“Legal principles” the judge asked the rhetorical question “does an equitable estoppel arise?”

For the reasons indicated, I am satisfied that the learned High Court judge concluded that an equitable estoppel did arise in

the circumstances set out in this judgment and I am in agreement with him.

I would leave open the question till it arises in some appropriate case as to whether a plea of statute bar can be defeated in

some situations by unconscionable conduct but which could not be said to give rise to an estoppel. Quite apart from the

judgments of Ó Dálaigh C.J. and Walsh J. referred to above, the High Court judgments of Costello J. and Kelly J., though

reversed on the particular facts, might give some credence to a wider principle of unconscionability rather than the much

narrower concept of estoppel with its stricter rules.

On the other hand, it is important to reiterate that there is nothing unjust about the Statute of Limitations. Far from it, it

prevents stale claims difficult to defend from being pursued. In the absence of substantial unfairness a court will not allow a

defence of statute bar

properly raised to be defeated.

I would dismiss the appeal.

Murphy v. Grealish