Ahmed v Motor Accident Commission
[2009] SADC 3
•22 January 2009
DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Application)
AHMED v MOTOR ACCIDENT COMMISSION
[2009] SADC 3
Reasons for the Order of Her Honour Judge Simpson
22 January 2009
PROCEDURE - COSTS - DEPARTING FROM THE GENERAL RULE
On the first day of trial the plaintiff appeared without legal representation - he applied for and was granted leave to discontinue his claim for damages for personal injury arising from a motor vehicle collision - the defendant applied for an order for costs on an indemnity basis - the defendant had raised in its defence the allegation that the plaintiff and the driver of the other car had deliberately arranged the collision for the purpose of the claim for damages, and further alleged direct or indirect involvement of the plaintiff in five other motor vehicle accidents arranged for the purpose of defrauding the insurer - the plaintiff maintained the proceedings after his solicitors ceased to act - Held: the circumstances of the conduct of the litigation by the plaintiff in the face of allegations raised by the defence against him warrant an order for costs in favour of the defendant on an indemnity basis.
District Court Rules 1992 Rules 52.01, 52.03, 52.05, 101.07(6), referred to.
Kilpatrick Green Pty Ltd v Kockums Industries Pty Ltd 3 April 1998, SC (SA) S6611, unreported; Baulderstone Hornibrook Engineering Pty Ltd v Dare Sutton Clarke Pty Ltd and others [2002] SASC 342, unreported; Pentroth Pty Ltd v Kirschild Pty Ltd (2006) 96 SASR 129; O'Neill v Mann [2000] FCA 1680, unreported; Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248; Sea Wanderer Ltd v Nigel Burgess Ltd 9 May 1990, CA, unreported; Bir v Sharma The Times, 7 December 1988; Mercantile Mutual Insurance (Australia) Limited v Cornish 1994, FC SC (SA) S4583, unreported; Isotomic Pty Ltd and another v Adelaide International Raceway Pty Ltd (No 2) [2007] SASC 230, unreported; Naomi Marble & Granite Pty Ltd v FAI General Insurance Co Ltd (No 2) [1999] 1 Qd R 518; Citibank Savings Ltd v Pirrotta and others 1 April 1998, FC SC (SA) S6603, unreported; Hypec Electronics Pty Ltd (in liq) v Mead and others (2004) 61 NSWLR 169; Henderson v Amadio Pty Ltd FCA, 22 March 1996, unreported; NMFM Property Pty Ltd v Citibank Ltd (No 2) (2001) 109 FCR 77, applied.
AHMED v MOTOR ACCIDENT COMMISSION
[2009] SADC 3
This is an application by the defendant against the plaintiff for costs on an indemnity basis following the discontinuance of the plaintiff’s claim on 1 September 2008, the first day of trial. In particular, the application by the defendant is as follows:
The defendant applies for an award of indemnity costs, meaning payment by the plaintiff of all its costs which were reasonably incurred by the (defendant), both as to each item and the amount claimed, to be taxed on a solicitor and client basis.
I have had regard to the following documents:
1Copy documents filed by the defendant on 20 August 2008;
2Copy of Record of Action Number DCCIV-05-1578; and
3Affidavit of John Michael Ward sworn on 8 September 2008 and the documents exhibited to the affidavit.
It appears that the plaintiff was born on 6 July 1966 and he grew up in Iraq. He was tortured and gaoled at the hands of the Saddam Hussein regime during the 1980’s on account of his involvement with the Kurdish Democratic Party. The consequences of the injuries resulting from torture required the amputation of the plaintiff’s left arm in 1988. He migrated to Australia in the early 1990’s. He had spoken English for five years while living in Iraq and has been fairly fluent in written and spoken English since he arrived in Australia. He was involved in a rear end motor vehicle collision on 7 November 2003 as a result of which he sustained a whiplash injury to the neck, an injury to the left shoulder and emotional injury.
On 27 January 2004 at about 8.30 pm, the plaintiff was the driver of a car which was stationary at the traffic lights at the intersection of Main North Road and Kings Road, Salisbury South. A car collided with the rear of the plaintiff’s stationary vehicle. The plaintiff submitted an accident report form dated 19 February 2004 in which he reported that the other vehicle had collided with his car at an estimated speed of 80 kph and that he did not know the other driver.
Liability for the negligent driving of the driver of the other car was admitted by Allianz Australia SA-CTP, the claims manager for the Motor Accident Commission, by letter to the plaintiff’s solicitors dated 1 October 2004. A formulated claim for damages for personal injury sustained in the motor vehicle collision in the sum of $135,750 was sent on behalf of the plaintiff to Allianz on 15 August 2005.
The plaintiff filed a statement of claim in this action on 21 September 2005. The plaintiff claimed damages against the original defendant, Kardo Sarzali, who was the driver of the motor vehicle which collided with the rear of the motor vehicle driven by the plaintiff at Salisbury North on 27 January 2004.
The admission of liability was withdrawn by letter from the defendant’s solicitors to the plaintiff’s solicitors on 22 February 2006. By order of a Master on 20 April 2006, on the application of the insurer, Motor Accident Commission, Kardo Sarzali ceased to be a party to the action and Motor Accident Commission was joined as a defendant pursuant to section 125A of the Motor Vehicles Act 1959.
Motor Accident Commission filed a defence in the action on 17 May 2006. There was no dispute that a collision occurred. There was a dispute about liability for it. The defendant alleged in paragraph 3 of the defence:
…that the collision did not occur as a result of the negligent driving of Sarzali but rather pursuant to a pre-arranged agreement between the plaintiff and Sarzali to produce an impact between their motor vehicles and to pretend falsely that an accidental motor vehicle collision had occurred for the purpose of obtaining compensation and/or defrauding the defendant…
The defendant further alleged that the plaintiff and Mr Sarzali had been knowingly involved in five other motor vehicle collisions which were deliberately caused for the purpose of obtaining compensation and/or defrauding the defendant or other insurers. The telephone records on which the allegations of the defendant were based were provided by the defendant to the plaintiff’s solicitors by letter dated 11 April 2006.
The plaintiff was represented by solicitors until 30 August 2007, when an order was made declaring that the plaintiff’s solicitors had ceased to act for him. The order was drawn up and filed on 3 September 2007 and a certificate of compliance with the requirements of rule 11(5)(a) of the District Court Rules 1992 was filed the following day.
The plaintiff attended the directions hearing on 27 November 2007 in person. In accordance with orders made by the Master, a Notice to Admit dated 18 December 2007 was filed and served on the plaintiff. Having regard to the potential disadvantage to the plaintiff on account of his first language not being English, instead of the plaintiff’s filing a written response to the Notice to Admit, the oral responses of the plaintiff were recorded on transcript before the Master on 19 February 2008.
On 13 March 2008, the action was listed for trial to commence on 1 September 2008. At a directions hearing on 18 August 2008 the plaintiff was amongst other things advised by the Master of his obligation to call evidence at the trial. Amended copy documents were filed on 20 August 2008 by the defendant in accordance with directions given by the Master. On 20 August 2008, the defendant’s solicitors wrote to the plaintiff enclosing copies of some relevant documents and advising the plaintiff that the defendant would not agree at trial to the tender of medical reports without the medical practitioner being called.
On 25 August 2008, the plaintiff confirmed that he was proceeding with his claim, but could not arrange for the attendance at trial of his medical practitioner witnesses. He was advised that if he were unable to afford fees for the attendance of any medical practitioner witnesses he wished to call at trial, he could make an application for the trial to proceed in the first instance on the issue of liability alone, with counsel for the defendant indicating that such an application would be supported.
When the plaintiff appeared on 1 September 2008 at trial, he was unrepresented. The plaintiff said that he did not wish to pursue his claim. Rule 52.01 of District Court Rules 1992 provides that a plaintiff may discontinue his claim against a defendant at any time before the commencement of the trial. After that time a plaintiff may discontinue only with the leave of the court, or with the written consent of all parties filed in the court. Rule 52.03 provides:
Unless the court otherwise orders, or the parties consent, the plaintiff as the party discontinuing or withdrawing shall pay the costs up until the date of delivery of the notice of the party against whom the claim or defence was discontinued or withdrawn. No further order shall be required to enable the party against whom the claim or defence was discontinued to tax his costs.
Pursuant to rule 101.07(6)(b), in any rule or order unless the contrary meaning is indicated by the context or other factors, the expression ‘costs’ means costs as between party and party.
The defendant submitted that in the circumstances of this litigation, outlined in detail for the benefit of the plaintiff, an order for costs should be made against the plaintiff on the basis of indemnity costs, rather than party and party costs.
The plaintiff maintained his application for leave to discontinue the proceedings. He said that he did not wish to go on with a trial. He implied that he had been forced by lawyers to go on with the litigation against his will. He understood that discontinuing his claim at trial was likely to attract a penalty in the form of an order for costs against him.
On the plaintiff’s application, leave was granted to the plaintiff pursuant to rule 52.01 to discontinue his claim. An order was made dispensing with the need for the plaintiff to file a notice of discontinuance. Pursuant to rule 52.05, a direction was given that the discontinuance of the action was to have the effect of a final judgment.
Leave was given to the defendant to file an affidavit in support of its application for costs on a basis other than party and party costs and to the plaintiff to file an answering affidavit before submissions were made on the costs application.
At the hearing of the application for costs on 10 October 2008, the affidavit of Mr John Ward, the solicitor acting on behalf of the defendant, sworn on 8 September 2008, was tendered together with exhibits. The plaintiff raised no objection to the tender of the affidavit or the material contained in it, but during the course of the hearing, the plaintiff said that he did not agree with the factual matters relied on by the defendant – that eighty percent of the material was not true. The plaintiff did not file any answering affidavit, nor did he give or call oral evidence although he was given the opportunity to do so.
The affidavit of Mr Ward sets out the matters which came to the defendant’s attention in relation to motor vehicle collisions with which the plaintiff appeared to be associated directly or indirectly, in addition to that of 27 January 2004, the event which gave rise to the subject claim for damages for personal injury by the plaintiff, as follows:
26 September 2003 Motor vehicle collision between a car driven by the plaintiff and a car driven by Osman Eliassi
The plaintiff denied knowing Mr Eliassi
Telephone records obtained by the defendant show calls from the plaintiff’s mobile phone to the mobile phone of Mr Eliassi between 3 August 2003 and 11 November 2004
27 January 2004 Subject motor vehicle collision between a car driven by the plaintiff and a car driven by Kardo Sarzali
The plaintiff denied knowing Mr Sarzali
Telephone records obtained by the defendant show calls between the plaintiff’s mobile phone and the mobile phone of Mr Sarzali on the day of the collision and between 24 October 2003 and 11 November 2004
26 February 2004 Motor vehicle collision between a car driven by Osman Eliassi and a car owned by the plaintiff and driven by the plaintiff’s wife, Sohaila Ahmed Telephone records obtained by the defendant show calls from the plaintiff’s mobile phone to the mobile phone of Mr Eliassi on 26 February 2004 shortly after the collision and between 3 August 2003 and 11 November 2004
30 April 2004 Motor vehicle collision between a car driven by Adnan Talibani and a car driven by Kardo Sarzali Telephone records obtained by the defendant show calls between the plaintiff’s mobile phone and the mobile phones of both Mr Talibani and Mr Sarzali on the day of the collision and between 19 August 2003 and 11 November 2004
10 May 2004 Motor vehicle collision between a car registered in the name of the plaintiff and driven by Adnan Talibani and a car driven by Osman Eliassi Telephone records obtained by the defendant show eight calls from the plaintiff’s mobile phone to the mobile phone of Mr Eliassi on the day of the collision and between the mobile phones of the plaintiff and Mr Talibani and Mr Eliassi between August 2003 and 11 November 2004
19 July 2004 Motor vehicle collision between a car driven by Adnan Talibani and a car driven by Kardo Sarzali The plaintiff collected Mr Sarzali from the collision scene after receiving a call from Mr Sarzali asking him to do so.
Telephone records obtained by the defendant show calls between the plaintiff’s mobile phone and the mobile phones of both Mr Talibani and Mr Sarzali between 19 August 2003 and 11 November 200428 August 2004 Motor vehicle collision between a car driven by the plaintiff and a car driven by Mohammad Hashemi
The plaintiff denied knowing Mr Hashemi
Telephone records obtained by the defendant show calls between the plaintiff’s mobile phone and the mobile phone of Mr Hashemi and calls between the mobile phones of Mr Hashemi and Mr Eliassi and Mr Sarzali’s brother between 24 August 2003 and 28 August 2004
The evidence tendered by the defendant on the application is uncontradicted by any evidence produced or called by the plaintiff. There was no evidence to support an assertion that the plaintiff had been persuaded, obliged or pressured by any other person to make the claim or maintain the litigation against his will.
There has of necessity been no finding on or final determination of the plaintiff’s claim against the defendant. It is inappropriate and in my opinion unnecessary for the court on this application, in circumstances where the plaintiff himself does not wish to proceed with the matter, to determine the issue raised on the pleadings of the deliberate staging of the collision by the plaintiff on 27 January 2004 pursuant to a pre-arranged agreement between the plaintiff and the driver of the other motor vehicle ‘for the purpose of obtaining compensation and/or defrauding the defendant’.
In my opinion, the evidence is however sufficient on an objective analysis for the purposes of this application to give rise to an inference that the plaintiff initiated and maintained to trial a claim against the defendant in the face of evidence that he knew the collision was not the result of negligent driving by an unknown and unrelated driver, but rather the result of an arrangement made between himself and the other driver in order to obtain a financial advantage at the expense of the defendant Motor Accident Commission. The plaintiff continued with the litigation to trial notwithstanding the disclosure of the proposed defence and the material supporting it at an early stage of the proceedings.
Rule 52.03, or its equivalent, has been said to reflect an underlying policy that the discontinuing party should be liable for the other party’s costs unless the court orders otherwise. The discretion with respect to costs is not confined by it and regard should be had to the course of the proceedings generally. (Pentroth Pty Ltd v Kirschild Pty Ltd (2006) 96 SASR 129 at 133–136) As Finn J said in O’Neill v Mann ([2000] FCA 1680, referred to in Pentroth Pty Ltd v Kirschild Pty Ltd, above:
It properly can be said that there is an "underlying policy" in the Rules that the discontinuing party should be liable for the other party's costs unless the court orders otherwise: Grundy v Lewis (Cooper J, 28 May 1998, unreported). But so various can be the reasons for, and circumstances of, discontinuance that that policy cannot safely be said to have hardened into a "usual rule" where leave is granted such as exists where there has been a determination of a claim on its merits: as to the latter see Re Wilcox; Ex Parte Venture Industries Pty Ltd (1996) 141 ALR 727. The conduct of the parties in the matter and the reasons for the discontinuance can bear heavily on the exercise of the discretion as to costs. As McHugh J observed in Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Qin (1997) 186 CLR 622 at 625 of one common category of case:
"[i]f it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases."
In applying this approach it is not the function of a court to make a prediction as to the outcome of a hypothetical case. And so in Mineralogy Pty Ltd v National Native Title Tribunal, above, no order as to costs was made where an appeal was discontinued in consequence of an amendment to the Native Title Act 1993 (Cth) that arguably altered the effect on the discontinuing appellant of the judgment appealed against: see also Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194. By way of contrast, where the discontinuance can be said to be an acknowledgment by an applicant of likely defeat or where no objective circumstance provides reason for the discontinuance, a costs order in favour of the other party will ordinarily be made.
It is well settled that an order for costs on a basis other than party and party costs may be made if the circumstances such as improper or fraudulent conduct on the part of a litigant, as litigant, warrant it. (Colgate-Palmolive Co v CussonsPty Ltd (1993) 118 ALR 248; Kilpatrick Green Pty Ltd v Kockums Industries Pty Ltd, above; Isotomic Pty Ltd and another v Adelaide International Raceway Pty Ltd (No 2) Anderson J, [2007] SASC 230 at [26], unreported)
It is not the case that improper or dishonest conduct on the part of a litigant inevitably warrants an award of costs on a basis other than party and party costs. (Hypec Electronics Pty Ltd (in liq) v Meadand others (2004) 61 NSWLR 169 at 179 and following) As Heery J said in Henderson v Amadio Pty Ltd (FCA, 22 March 1996, unreported):
…the authorities cited by Sheppard J in his summary in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233 suggest that the improper conduct of an unsuccessful party which will lead to an award of indemnity costs is usually related to the way the litigation is conducted, rather than the inherent badness of the conduct which gave rise to the litigation.
Even in a proved case of fraud the presumption is that a costs order against the fraudulent party will be on a party and party basis. However, the conduct of a party that is relevant to the issue of indemnity costs is the party’s conduct as a litigant. The knowledge that a party has, including knowledge of his past conduct, may be relevant to an assessment of his conduct as litigant. (NMFM Property Pty Ltd v Citibank Ltd (No 2) (2001) 109 FCR 77, at 92)
Where the conduct of litigation itself has been associated with deliberate dishonesty, fraud or fabrication of evidence on the part of a litigant an order for indemnity costs has been made. (Sea Wanderer Ltd v Nigel Burgess Ltd, unreported, CA, 9 May 1990; Bir v Sharma, The Times, 17 December 1988; Mercantile Mutual Insurance (Australia) Limited v Cornish, SC (SA) FC, 1994, Judgment No S4583, unreported; Isotomic Pty Ltd and another v Adelaide International Raceway Pty Ltd (No 2) above; Naomi Marble & Granite Pty Ltd v FAIGeneral Insurance Co Ltd(No 2) [1999] 1 Qd R 518)
On this application I make no finding of deliberate dishonesty or fraud on the part of the plaintiff in instituting or maintaining his claim. The plaintiff must be taken in the present circumstances however to have acknowledged the strength of the defence by being unwilling to proceed and seeking leave to discontinue the action on the first day of trial or, put another way, to have acknowledged that his claim having been brought, and after a reasonable time for consideration, had no reasonable prospect of success and could not be maintained. (Kilpatrick Green Pty Ltd v Kockums Industries Pty Ltd SC (SA) per Lander J, 3 April 1998, Judgment No S6611, unreported; Baulderstone Hornibrook Engineering Pty Ltd v Dare Sutton Clarke Pty Ltd and others, per Perry J, [2002] SASC 342, unreported)
In my opinion, the evidence tendered by the defendant sufficiently establishes that:
1The defendant alerted the plaintiff of its intention to assert by way of defence to the claim made by the plaintiff that the plaintiff had deliberately staged the collision which was the basis for his claim;
2The defendant by its defence filed on 17 May 2006 and discovery of documents supporting its defence on 11 April 2006 gave the plaintiff an opportunity to consider his position as a litigant at an early stage in the proceedings;
3The plaintiff maintained his claim to the first day of trial notwithstanding that he must have known that allegations, substantiated by evidence he had had provided to him, would be raised at trial that he had dishonestly planned with another person to pretend falsely that an accidental collision had occurred for the purpose of obtaining money; and
4The plaintiff by discontinuing his action at trial acknowledged the strength of the defence and the weakness of his own case.
I am satisfied that the circumstances warrant an order for costs in favour of the defendant in respect of the proceedings, including this application for costs, on a basis other than party and party costs. I am satisfied that the plaintiff should pay the costs of the defendant on an indemnity basis.
As to the terms of the order which should be made, the defendant has sought an order for ‘indemnity costs, meaning payment by the plaintiff of all its costs which were reasonably incurred by the (defendant), both as to each item and the amount claimed, to be taxed on a solicitor and client basis’.
There has been some difference of opinion in the cases about the effect on taxation of an order expressed as ‘on a solicitor and client basis’. (Citibank Savings Ltd v Pirrotta and others, 1 April 1998 FC SC (SA) Judgment No S6603, unreported, and the cases referred to therein) In Citibank Savings Ltd v Pirrotta and others, above - a case where the term ‘solicitor and client costs’ was interpreted, in the context of the provisions of a mortgage, to equate to indemnity or ‘solicitor and own client costs’ - the definition applied by the court to the latter term was an entitlement to all costs, charges and expenses provided that it was reasonable to incur such items and provided that they were reasonable in amount, with the onus on the party liable for the costs to make good any objection as to unreasonableness. The expression used is similar to the terms of the order sought by the defendant in this case. An order for indemnity costs was made in similar terms in Kilpatrick Green Pty Ltd v Kockums Industries Pty Ltd, above.
The various expressions used in orders for costs have since been defined by the rules. In this case, the expression ‘indemnity costs’ in an order would, by virtue of the operation of rule 107(6)(e), mean the same as costs between solicitor and own client, as defined in rule 101.07(6)(d) as follows:
Costs as between solicitor and own client, or a like expression, means costs as a complete indemnity against the costs incurred by the party in respect of the litigation provided that they are not to include any amount shown by the party liable to pay them to have been incurred unreasonably in the interests of the party incurring them.
The application by the defendant for indemnity costs is granted.
The order is:
The plaintiff is to pay the defendant’s costs of action to be taxed on an indemnity basis.
0
13
1