Facts

On November 6 2006 the claimant filed a claim under the Motor Liability Insurance Act (replaced with a new act on January 1 2017) pertaining to a traffic accident that had occurred in September 2006, in which the claimant had fallen 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 a new insurance claim was filed. The insurer rejected the claim 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 claim.

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 did not start a new period for a claim once it had 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.

District court decision

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 the precedent of the Supreme Court (KKO 2011:90) which determined what information must be known by the injured party for the three-year period to begin. In this decision, the Supreme Court held that a traffic accident can cause a variety of injuries and losses which manifest in different ways and that therefore the time-bar issue must be considered separately for each injury or loss.

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 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.

Appeal

The insurer appealed on the grounds 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 appeal court rejected the appeal.

Supreme Court

The insurer was granted leave to appeal. The Supreme Court held first that when the traffic accident had occurred in 2006 when the Motor Liability Insurance Act was in effect, that act was applied instead of the new act which became effective from January 1 2017.

The Supreme Court referred to its precedent KKO 2011:90, where it held that a traffic accident can cause a variety of injuries and losses which manifest in different ways and at different times. According to the Supreme Court, there are no possibilities for presenting a due claim if the injured party has insufficient knowledge of the essential facts necessary to file such a claim. In regards to personal injury, this knowledge includes not only awareness of the accident, but also any injuries and their causal relationship with the accident and the grounds for compensation. Thus the time-bar issue must be considered separately for each injury caused by the traffic accident.

The Supreme Court found that the insurer's decision on June 7 2007 had not decided the claim based on the claimant's permanent incapacity, manifested only afterwards, although the decision rejected the claimant's right to the insurer compensation on the whole. The Supreme Court held that the claim was not time barred and that the claimant has a right to have a decision on the new claim.

For further information on this topic please contact Matti Komonen at HPP Attorneys Ltd by telephone (+358 9 474 2207) or email (matti.komonen@hpp.fi). The HPP Attorneys Ltd website can be accessed at www.hpp.fi.

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