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You can’t unring a bell but you can un-know a fact December 6, 2019

Murgolo v AAI Ltd t/as AAMI [2019] NSWCA 295

In 2012 Mr Murgolo was a sub-contractor working on a building site at Miranda Public School. On 19 January 2012, Mr Murgolo was injured when two workers were allegedly negligent in failing to secure an acrow prop, which fell and caused an injury to Mr Murgolo’s arm. Mr Murgolo understood that the workers were employed by a business known as “Class Welding”. He consulted solicitors, who commenced proceedings against Class Welding Pty Ltd in February 2013. On 26 June 2013, solicitors for the insurer of Class Welding Pty Ltd wrote to the plaintiff’s solicitors to advise them that it was likely that another company with the same directors, Class Welding (NSW) Pty Ltd, had employed the workers. Several documents indicating that Class Welding (NSW) Pty Ltd was the contractor on the building site were attached. On 27 August 2013, the plaintiff’s solicitors substituted Class Welding (NSW) Pty Ltd as the defendant in the statement of claim. A default judgment was obtained in February 2014, but the amount was not paid. At a creditor’s meeting of Class Welding (NSW) Pty Ltd in March 2016, a director asserted that the relevant entity was in fact Class Welding Pty Ltd. Documents were obtained which supported that view.

The plaintiff commenced proceedings against Class Welding Pty Ltd on 25 May 2018. The respondent insurer sought to have the proceedings struck out on the basis that the three-year limitation period prescribed by ss 50C and 50D of the Limitation Act 1969 (NSW), which commenced when the cause of action was “discoverable”, had begun by February 2013, when proceedings were initially commenced. The plaintiff’s claim was summarily dismissed on 18 April 2019. The plaintiff appealed against the summary dismissal.

The appeal raised two issues, namely whether:

(i)   a belief once formed answered the test of knowledge for the purposes of s 50D(1); and

(ii)   this case should have been disposed of summarily.

The Court (Basten JA, Macfarlan JA and Leeming JA) allowed the appeal and held:

(i)   as to the first issue:

(by Basten JA, Macfarlan JA and Leeming JA):

1.    Numerous difficulties arise when considering the operation of s 50D(1), including the determination of when a person ought to know a fact, the significance of a person’s reliance on the beliefs of others, the context in which facts must be understood and the point in time at which knowledge is assessed: [40]-[47], [72]-[73], [96]-[102].

2.   There was no evidence that the plaintiff knew of the two possible employers of the allegedly negligent workmen in 2013, and, once the existence of the second company was known, the documents provided supported a belief that it was the employer. Accordingly, the belief formed in 2013, based on incomplete information did not satisfy the test in s 50D(1).

3.   Whether the information available to the claimant in 2013 was sufficient to establish knowledge of the identity of the employer was to be determined on the evidence available to the court when the issue was tried:

4.   The plaintiff did not have knowledge that the proper defendant was Class Welding Pty Ltd until after the creditor’s meeting in 2016: [60]-[61], [71], [125]. Accordingly the proceedings were not out of time.

(per Leeming JA):

5.    Given that “facts” may be reasonably held beliefs for the purposes of s 50D, the discovery of contrary information allows for a belief to change: [120]-[124].

(ii)   as to the second issue

(Per Basten JA, Macfarlan JA agreeing, and Leeming JA):

6.    Given that limitation questions should generally not be decided in interlocutory proceedings, and there was a real question of fact or law to be decided, the primary judge erred in summarily dismissing the proceedings: [62], [71], [126].


Per Basten JA

[66] Because of the variable factors affecting the commencement date of the period, some of which require evaluative judgment, the provisions have been aptly described as giving rise to a “floating limitation period”, with varying degrees of uncertainty as to its commencement date. Accepting that these factors may undermine the element of certainty and predictability which were hoped to flow from the reforms, it is nevertheless not appropriate to adopt simplistic concepts of “knowing” and “unknowing”.

Per Leeming JA

Facts can be “un-known” for the purposes of s 50D

[120] Secondly, contrary to the second aspect of the respondent’s submissions, “facts” can be “un-known” for the purposes of s 50D.

[121] It must be borne in mind that a “fact” in s 50D is something very different from a fact in the real world. It must also be borne in mind that “knows or ought to know” in s 50D is very different from “knowledge” in the real world. In order to make sense of the provision, in a context in which the “facts” involve issues of causation, fault and identity which are themselves contestable conclusions from primary facts, it is necessary to recall that the “fact” is a conclusion and “knowledge” is accordingly something falling short of what as a matter of ordinary parlance might be described as knowledge. The facts are conclusions which are drawn from primary facts which will themselves become known from time to time and which may be disputed. I see no difficulty in construing the ordinary English word “know” in the context of s 50D to involve a question of opinion or belief.

[122] But that dilution of the legal meaning of “know” carries with it consequences. It is entirely possible that one may have a reasonably held belief on one day, but when new primary facts come to light, that belief may no longer be tenable.

[123] This happens in litigation all the time. One expert’s opinion may be refuted by another’s, until a further report in reply explains a new basis for holding the original view.

[124] Another way of explaining why I do not accept the respondent’s submission is this. On the one hand, the respondent’s construction dilutes the statutory requirement of knowledge to something like a reasonably held belief. I agree that knowledge in s 50D does not involve the certainty which is associated with knowledge of facts in the real world; here, as in Vines v Djordjevitch, complete assurance is unnecessary. On the other hand, the respondent’s submission then seeks to return to the statutory language of “know” and “fact” to rely on an aphorism about the impossibility of un-knowing a “fact” in the real world. The respondent cannot have it both ways.

[125] Once it is appreciated that knowledge of the “facts” in s 50D is satisfied by a reasonably held belief in the conclusions identified in that section, it is clear that when further information is provided, a belief that might formerly have been reasonably held may cease to be. It follows that the critical reasoning of the primary judge at [81]-[82] reproduced above cannot be sustained. The issue is not whether Mr Murgolo “un-knew” the identity of the defendant in 2013 and then in 2016 “knew” it again after the creditors’ meeting. The question turns instead on Mr Murgolo’s belief from time to time in light of the additional primary facts which became available. The material summarised above comfortably sustains the possibility that there was an insufficiently certain belief from mid-2013 until 2016 to proceed against CW, which altered when further material was provided in 2016.

[126] That suffices to identify material error in the dispositive reasoning of the primary judge. It also demonstrates that this was not a sufficiently clear-cut case to warrant determination on an interlocutory basis in advance of trial.

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Recovery of compensation payments

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Class actions: principles relating to settlement




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