Facts
On November 6 2006 the claimant filed a claim under the Motor Liability Insurance Act (to be replaced with a new act on January 1 2017) pertaining to a traffic accident that had occurred in September 2006, in which the claimant fell off a moped and suffered a severe brain injury. The insurer rejected the claim on June 7 2007 because the claimant had been drunk and had used the moped without permission.
In 2011 the claimant discovered that the brain injury had caused permanent incapacity and hence filed two new insurance claims. The insurer rejected the claims in 2011 and 2012 on the basis that its basic liability to pay compensation for the accident had been resolved in 2007 and it therefore did not have to handle the new claims.
The claimant sought a declaratory judgment before the district court, claiming that the right to insurance compensation is not time barred and that the insurer had to handle the new claim based on the fact that the claimant's permanent incapacity occurred after the first insurance decision. The insurer disputed the claim on the basis that it was time barred. The insurer argued that it was not a new claim and that the exacerbation of damage does not start a new period for a claim once it has become time barred. The insurer also pointed out that the brain injury was known to be severe at the time of the first insurance decision on June 7 2007.
On April 17 2015 the district court found in favour of the claimant. Pursuant to Section 11 of the Motor Liability Insurance Act, a compensation suit must be filed with an insurer within three years of the date on which the injured party learns of the injury. The right to compensation under the act will be lost if no suit has been filed within this period. Reporting the traffic accident to the insurer within the same period has the same effect as filing a suit in court.
The court stated that not all consequences of a traffic accident may manifest immediately afterwards and that the three-year period can thus begin significantly after the accident. The court referred to a precedential Supreme Court decision (KKO 2011:90) which determined what information must be known by the injured party for the three-year period to begin.
In its decision, the Supreme Court held that a traffic accident can cause a variety of injuries and losses which manifest in different ways. The Supreme Court held that the information referred to in Section 11 of the Motor Liability Insurance Act, which must be known by the injured party for the three-year period to begin, must relate to the injured party's right to compensation. In regards to personal injury, this includes awareness of:
- the accident;
- any injuries and their causal relationship with the accident; and
- the grounds for compensation.
According to the Supreme Court, the time-bar issue must be considered separately for each injury or loss caused by the accident.
According to the district court, the Supreme Court's decision coincides with the legislature's statements in drafting the Act on Statutory Limitation of Debt and the Insurance Contracts Act. Further, the district court emphasised that – in general – jurisprudence has accepted that one accident can cause a variety of harmful consequences of which the injured party can become aware of at various times, and that each claim can become time barred separately.
The district court also held that the res judicata (ie, matter already judged) rule had no effect. The court stated that res judicata does not prevent the filing of a new claim based on new grounds which were not referred to in the first trial (on the condition that it was impossible to refer to the new grounds in the first trial). Further, the insurer's decision was not a judgment and hence res judicata did not apply.
The district court acknowledged the difficulty for the insurer in having to respond to claims that were made significantly after the accident. However, the court concluded that the traffic accident had already been resolved and that the insurer now had to consider only the effect of the claimant's permanent incapacity.
Having also considered the European Convention on Human Rights and the effectiveness principle under EU law, the district court ruled that the claim was not time barred and that the insurer had to handle the claim.
The insurer appealed on the ground that the disputed issue was not whether the claim had been made within the three-year period required by Section 11 of the Motor Liability Insurance Act, but rather whether the claimant had appealed the June 7 2007 insurance decision within the three-year period required by Section 74 of the Insurance Contracts Act. The insurer claimed that the exacerbation of damage does not start a new period for a claim if it has already become time barred. On May 11 2016 the court rejected the appeal.
The appeal court decision is appealable and subject to leave to appeal from the Supreme Court.
For further information on this topic please contact Matti Komonen at Hammarström Puhakka Partners, Attorneys Ltd by telephone (+358 9 474 2207) or email ([email protected]). The Hammarström Puhakka Partners, Attorneys Ltd website can be accessed at www.hpplaw.fi.
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