The New South Wales Supreme Court recently considered the complexities of limitation arguments in the context of a professional negligence claim against an insurance broker in Bogovic v Aon Hewitt Financial Advice Limited [2024] NSWSC 668.
Background
The decision concerns a notice of motion filed by the plaintiff for leave to file an amended statement of claim and by the defendants for summary dismissal of the proceedings on the basis the plaintiff’s claims were statute barred.
The plaintiff commenced the proceedings on 30 June 2023, alleging the defendants acted negligently on various dates between May 2008 and February 2016 by failing to exercise reasonable care in providing financial planning and insurance advice. In particular, the plaintiff alleged the defendant recommended he obtain total and permanent disability (TPD) cover of an inadequate amount.
From 1 April 2017, the plaintiff was unable to work due to various medical conditions. On 20 September 2023, his insurer formed the opinion he was totally and permanently disabled and paid him benefits of $44,896.40, stating the date of loss as 20 May 2020. The plaintiff alleges that had he been appropriately advised by the defendants, he would have maintained an appropriate (albeit unspecified) sum of TPD insurance and received a higher payout.
The parties’ positions
- September 2023, being when the insurer formed the opinion that the plaintiff was totally and permanently disabled; or
- At the earliest, May 2020, being the date of loss as ascribed to the claim under the policy.
- His existing superannuation entitlements were less advantageous than those that would have been available to him had he been correctly advised of his entitlement to join the extant scheme in 1965;
- The cause of action for economic loss for negligent advice accrued upon his retirement.That argument was accepted by the plurality of the High Court, holding it was only upon the plaintiff’s retirement that he became entitled to a benefit which was limited or diminished. Before that, the Court held the loss was only prospective until the happening of various statutory contingencies which had to be met for the respondent to be entitled to a statutory benefit.
The Court’s decision
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- The question is whether a maintainable claim is pleadable rather than pleaded. The Court therefore focused on the claim as pleaded in the proposed amended statement of claim;
- Identification of the date upon which a cause of action accrued is a question of fact, may be elusive and will vary from case to case;
- As outlined by the High Court in Wardley Australia Limited v Western Australia2, there must be actual damage, as opposed to only prospective or contingent loss. The Court also had regard to the High Court’s comments in Wardley regarding the undesirability of limitation questions being decided in interlocutory hearings, except in the clearest of cases, given there is generally insufficient information about the damages sustained by a plaintiff and the circumstances in which that damage was sustained;
- As outlined by the New South Wales Court of Appeal in Segal (t/as Segal Litton & Chilton) v Fleming,3 there is a significant difference between the loss of a chance and the chance of a loss. In that case, the Court held that:
a. Where a chance is lost, it will never be known how things would have turned out and therefore the only possible compensation a plaintiff can obtain is for the value of the chance itself. Accordingly, it is reasonable to require a plaintiff to commence proceedings within the limitation period once the chance has been lost;
b. On the other hand, where a person incurs a chance, even a substantial chance, of suffering a loss, they may ultimately suffer no loss. As such, so long as there is some appreciable chance that no loss will be suffered, it is unreasonable to require a plaintiff to commence proceedings and unreasonable to award damages against a defendant. However, once there is actual loss, even if there is also the chance of further loss, a plaintiff must commence proceedings within the applicable limitation period.
Having regard to the matters outlined above, the Court was not satisfied there was a clear case for summary dismissal. In this respect, the Court referred to the necessary high degree of certainty required for summary dismissal and held that upon a full examination of the facts it may be found that at the time the plaintiff stopped working there was still come appreciable chance that no loss would be suffered. If so, the cause of action would not be complete until measurable or actual loss was suffered. The Court went on to state that, “The prospective loss constituted by the TPD cover arranged for the plaintiff by the defendants, in the words of the plurality in Cornwell, at least arguably, “was only in prospect” and “matured into actual loss only” when he satisfied the necessary conditions of the policy arranged on his behalf by the defendants to qualify for the payment of the TPD benefit.” (our emphasis) In forming that view, the Court had regard to the New South Wales Court of Appeal’s description of TPD cover in Onepath Life Ltd v Standley [2020] NSWCA 321, being “a form of contingency insurance which provides no indemnity but instead a payment upon the happening of a contingent event”.Conclusion
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