Carr v Needham
[2019] ACTSC 98
•18 April 2019
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Carr v Needham |
Citation: | [2019] ACTSC 98 |
Hearing Date: | 15 March 2019 |
| Submissions last received: Decision Date: | 25 March 2019 18 April 2019 |
Before: | McWilliam AsJ |
Decision: | See [60] |
Catchwords: | PRACTICE AND PROCEDURE – PLEADINGS – Admissions – application to amend defence to plead contributory negligence – whether admission during pre-litigation compulsory processes precludes an insurer from adopting a different position once proceedings have been commenced. STATUTORY INTERPRETATION – Road Transport (Third-Party Insurance) Act 2008 (ACT), Pt 4.2 – Whether statute precludes an insurer who does not raise contributory negligence before litigation commences from subsequently pleading contributory negligence in its defence |
Legislation Cited: | Court Procedures Act 2004 (ACT) s 5A Court Procedures Rules 2006 (ACT) rr 407, 507 Road Transport (Third-Party Insurance) Act 2008 (ACT) ss 5A, 84, 97, 104, 115, 116 |
Cases Cited: | Albrecht v Insurance Australia Limited [2016] ACTCA 58; 12 ACTLR 46 Barker v Gifford [2005] ACTSC 55; 192 FLR 347 Wyer v Hunt [2005] ACTSC 15 |
Parties: | Henry Carr (Plaintiff) Christopher Needham (First Defendant) Insurance Australia Limited (ACN 000 016 722) trading as NRMA Insurance (Second Defendant) |
Representation: | Counsel Mr J Pappas (Plaintiff) Mr B Jones (First and Second Defendant) |
| Solicitors Aulich Civil Law (Plaintiff) Moray & Agnew (First and Second Defendant) | |
File Number: | SCA 39 of 2018 |
McWilliam AsJ
On 25 March 2015, the plaintiff was injured in a motor vehicle accident while riding his motorcycle. He lodged a Notice of Claim with the second defendant (NRMA) as insurer of the first defendant, Mr Needham, pursuant to s 84 of the Road Transport (Third-Party Insurance) Act 2008 (ACT) (the Act).
Before proceedings in this Court were commenced, when the parties were communicating and attempting to resolve the claim under the process provided for by the Act, the NRMA admitted a breach of duty of care and did not raise a defence of contributory negligence. Once proceedings were commenced, the defence filed on 4 May 2018, also did not plead contributory negligence. However, as a result of further material that has come to light in the course of preparing the matter for hearing, the NRMA now seeks to amend its defence pursuant to r 507 of the Court Procedures Rules 2006 (ACT) (Rules) to raise contributory negligence against the plaintiff.
The plaintiff opposes the application. He relies on the provisions of the Act to assert that the admission of a breach of duty of care amounted to an admission of liability, and the scheme provided for by the Act precludes the admission from being withdrawn now.
For the reasons that follow, I have found that the legislature did not intend the Act to have such a result. Clear statutory language would be required in order to remove the common law right of a party to raise a relevant defence once proceedings are commenced, and such language is missing from the statute here.
Issues for resolution
The first issue is whether once an admission is made under the Act, a party is precluded from withdrawing the admission once proceedings are commenced.
The second issue is whether, if the Act does not prevent a party from withdrawing an admission, implied or otherwise, the Court should exercise its discretion to allow a change of position by the insurer in the circumstances of the present case, and in particular, once a defence has been filed which omits to plead contributory negligence.
The Court’s power to grant leave to amend the defence
After the pleadings have closed, a party may amend its pleadings only with the Court’s leave: r 507 of the Rules. The leave of the Court is discretionary and broad. Considerations such as the stage of the proceedings, the reasons for the amendment, the reasonableness of the amendment and s 5A of the Court Procedures Act 2004 (ACT) (the CP Act) are all relevant factors to be weighed in deciding whether to grant leave.
The Statutory Scheme
The statutory scheme was discussed in detail by the Court of Appeal in Albrecht v Insurance Australia Limited [2016] ACTCA 58; 12 ACTLR 46 at [19]-[42] and will not be set out in detail here. The following outlines what I consider to be the provisions most relevant to the arguments of the parties.
The Act has among its objects keeping the costs of insurance at an affordable level (s 5A(c) of the Act) and encouraging the speedy resolution of personal injury claims resulting from motor accidents (s 5A(e) of the Act).
With those objectives in mind, Part 4.2 of the Act creates a procedural scheme for the timely notification, investigation and attempted resolution of claims arising from motor vehicle accidents. Before a claimant in a motor accident matter brings a court proceeding based on the claim against a respondent (here, the insurer), the claimant must give the respondent written notice of the claim: s 84(1) of the Act.
There is then an obligation on the insurer to take any reasonable steps necessary to find out about the relevant motor accident (s 97(1)(a) of the Act) and under s 97(1)(b) of the Act to tell the claimant in writing:
(i)whether liability is admitted or denied; and
(ii)if contributory negligence is claimed – the degree of the contributory negligence expressed as a percentage.
The remainder of s 97 of the Act is directed to the exchanging of offers of settlement, save as for s 97(4) of the Act, which provides:
(4) An admission of liability by a respondent under this section is not binding on the respondent—
(a) in relation to another claim; and
(b) at all if it later appears the admission was induced by fraud.
There is no suggestion of fraud in the present case, however claimants do have an obligation under the Act to give an insurer copies of documents required by the insurer and information about the circumstances of, or reasons for, the motor accident and relevant claim information, if the insurer asks for it: s 104(1) of the Act. The provision of false or misleading statements and documents is a criminal offence: s 116 of the Act.
A court also has power to enforce compliance with Part 4.2 of the Act under s 115 of the Act. The court may order the non-complying party to remedy the noncompliance by a particular day, and may make consequential or ancillary orders, including orders about costs.
Does the statutory scheme create an implied admission binding on the insurer in subsequent court proceedings?
One of the key arguments relied upon by the plaintiff was that because the insurer had admitted a breach of duty of care and had not raised any issue of contributory negligence during the pre-trial compulsory procedures as set out in the Act, this amounted to an admission of liability, and the insurer was now bound by that admission during the proceeding in this Court.
The plaintiff relied on the fact that a defence had been filed which was consistent with the admission of liability in the pre-litigation stage and accordingly, the insurer would require leave to withdraw what he now asserts is the admission. This includes what the plaintiff characterises as an implied admission that contributory negligence will not be alleged.
The issue does not appear to have been directly considered in respect of the ACT statutory scheme. However, the plaintiff relies on the links between the pre-action scheme and when proceedings are subsequently commenced, including costs consequences, criminal sanctions for claimants who provide false and misleading information, and the ability for the Court to enforce compliance with the scheme.
The plaintiff submits that an admission of liability and the articulation of any claim relating to contributory negligence have important ramifications and cannot merely be ignored by insurers in favour of a last minute application to amend pleadings.
The plaintiff relied on cases from other jurisdictions such as Till v Nominal Defendant [1999] QCA 490; [2000] 2 Qd R 676 (Till), Nominal Defendant v Gabriel and Anor [2007] NSWCA 52; 71 NSWLR 150 (Gabriel), and Pertzel v QLD Paulownia Forests Ltd and Anor [2008] QCA 287; 2 Qd R 526 (Pertzel).
In Till, an insurer made an admission of liability during the pre-litigation procedural stage, but when proceedings were commenced, the insurer denied liability in its defence.
The Queensland statute, the Motor Accident Insurance Act 1994 (Qld) (MAI Act), had similar underlying statutory objectives: of encouraging the speedy resolution of personal injury claims resulting from motor vehicle accidents, and provisions requiring pre-litigation disclosure and negotiation aimed at resolution of the claim by agreement, before litigation commenced: Till at [2]-[3].
The Court of Appeal in Till found (at [9]) that it could not be inferred from any of the provisions in the MAI Act that there is an intention where, if an insurer chooses to make an admission, that admission will be irrevocable even after litigation has commenced.
As with the Act, the Queensland statute also included consequences arising from admission or denial of liability, such as the payment of medical expenses and costs consequences. Section 41(6) of the Queensland statute was in terms substantially similar to s 97(4) of the Act. The Court of Appeal in Till found that this section did no more than restate the general law, going on to state at [15] and [17]:
[15] …to say that, in certain circumstances, an admission cannot be binding, even for the purposes of the pre-litigation regime, is not to imply that otherwise, contrary to clear principles of the general law, an admission will, for ever and in all circumstances, be binding. …
[17] In a statutory scheme such as we have outlined, aimed at encouraging the resolution by agreement of personal injury claims at an early stage and before litigation has commenced, and to that end encouraging insurers to make early admissions of liability, an intention, by implication only, to make such admissions irrevocable except where induced by fraud ought not, in our opinion, to be too readily drawn. And here, as we have indicated, those provisions relied on for that implication do not support it. We would therefore conclude that the legislature did not intend to alter the general law in this respect.
The plaintiff here seeks to distinguish Till on the basis that the case concerned the right to plead the first defence, which is different to the position here where a defence has already been filed. The same submission was put in respect of the case of Gabriel, to which I will return shortly.As I have endeavoured to demonstrate through the above extract, the question was, once an admission had been made pre-litigation, whether the Queensland statute precluded the withdrawal of the omission at any subsequent stage. The question of statutory construction did not depend on whether the change in position was made upon the filing of the first defence. Once a defence has been filed and a party has made an admission in their defence as part of Court proceedings, the issue then becomes whether leave should be granted to withdraw it. That is addressed in the second issue considered below.
Notwithstanding that the Queensland statute is not in identical terms, the provisions upon which this issue turns are the same in substance, or of sufficient similarity that I consider the Court’s decision in Till to be applicable to the present case. It is a unanimous decision of an intermediate appellate Court, and as such is a decision from which trial judges at first instance should not depart.
In Gabriel, the equivalent provision for the admission of liability was s 81 of the Motor Accidents Compensation Act 1999 (NSW) (the MAC Act). It placed a duty on the insurer to notify a claimant whether liability was admitted or denied within 3 months after receiving notice of a claim. If liability was admitted, the notice was to include details sufficient to ascertain the extent to which liability is admitted.
As with the Act, the MAC Act contained provisions for an insurer who admitted liability to pay medical expenses and to take certain steps concerning the rehabilitation of an injured person.
In Gabriel, Campbell JA (with whom Hodgson JA agreed) stated at [142] (emphasis added):
In my view, the provisions of the MAC Act do not confer on an admission of liability under section 81 any consequences other than those provided for by the Act itself. Thus, the making of such an admission of liability triggers an obligation to pay the medical and related expenses…[and] an assessor is not empowered to decide the issue of liability for the claim if the insurer has accepted liability. However, an admission of liability under section 81 has no greater status, once court proceedings are begun, than any other admission of liability made out of court has in those proceedings.
In QBE Insurance v Motor Accidents Authority [2008] NSWSC 434; 50 MVR 152, Harrison J cited Gabriel going on to state at [44]:
…to interpret a s 81 notice as irredeemably locking in an insurance company to a stated position would take away a common law right (that is the right of a party to raise a relevant defence), a course that should only be countenanced when it is mandated by unequivocal statutory language.
The plaintiff sought to rely on the comments and reasoning of Basten JA to suggest that an insurer was not entitled to file a defence inconsistent with the terms of its admission. Basten JA was in dissent on that issue. The reasoning which is applicable in the present case is that of the majority. The reasoning of the majority in Gabriel is also consistent with that of the Queensland Court of Appeal in Till.
The final case on which the plaintiff relied was Pertzel, a case where there was a mistake by the injured party as to a statutory policy of insurance applying, and the insurer later relied on an exclusionary clause under the policy to deny liability. It is of particular importance to the outcome of that decision that the injured party had pursued his claim at the expense of other potential avenues for compensation. There, s 41 of the MAI Act was under consideration. It is the statutory equivalent of s 97 of the Act and s 81 of the MAC Act.
In Pertzel, Keane JA (when a member of that court) stated at [36]:
The question which arises in this case though is whether s 41 of the Act indicates an intention on the part of the legislation that, as between claimant and insurer, the insurer is obliged to state a position in relation to its liability to the claimant from which it may not be free to resile.
Keane JA was prepared to infer (at [41]) that, because s 41(6) provided some instances of where a party will not be bound (being other claims and fraud – c.f. 97(4) of the Act), the MAI Act contemplated that in some circumstances, an insurer will be bound by an admission of liability. This led to a conclusion that an insurer may be held to an estoppel where the claimant acts upon the insurer’s statement of its position under s 41(1) of the MAI Act so that options which would otherwise have been available to the claimant are lost as a result: Pertzel at [41].
That is a very different situation to the circumstances in the present case. There can be no suggestion that the plaintiff here has lost the option of pursuing other remedies by virtue of the fact that the insurer did not initially plead contributory negligence or raise it during pre-litigation negotiations. Keane JA’s reasoning did not extend to an acceptance that the statute should be construed to preclude a change of position by the insurer in all circumstances other than those relating to other claims and fraud. The reasoning was simply that the language of the MAI Act permitted an estoppel to arise where a claimant had acted to his detriment.
Applying the reasoning of Till and Gabriel, in the absence of unequivocal language, I would not construe the Act as excluding the common law right of a defendant to raise a defence of contributory negligence once litigation is commenced, despite not having raised the issue at any stage prior to the litigation.
Should the insurer be granted leave to withdraw an implied admission?
That conclusion gives rise to the next issue, which is whether the insurer, having now filed a defence that does not plead contributory negligence, ought to be given leave to do so.
I have assumed in the plaintiff’s favour that an implied admission has been made that there was no contributory negligence, because it was omitted in the defence as first filed. That assumption arises from the obligation on a party to plead matters which may catch the opponent by surprise and because the defendant must plead contributory negligence in its defence if it intends to raise it: r 407(1)(m) of the Rules.
This is so notwithstanding the view expressed by Master Harper in Wyer v Hunt [2005] ACTSC 15 (Wyer) at [36] that the admission of a breach of duty of care was not inconsistent with an assertion by the defendant that the plaintiff was guilty of contributory negligence. I agree with that view, relied upon by the insurer here, but it does not follow that a failure to raise contributory negligence has no consequences. As the plaintiff submits, he was entitled to assume from the absence of reference to contributory negligence in the pleading that the defence was not being put against him, which I accept amounts to an implied admission that there was no contributory negligence.
The applicable principles were set out in this jurisdiction in Wyer at [21] and referred to again in Barker v Gifford [2005] ACTSC 55; 192 FLR 347 at [24], both decisions of Master Harper, who in turn relied upon Celestino v Celestino (Unreported, Federal Court of Australia, Spender, Miles and Von Doussa JJ, 16 August 1990), and Drabsch v Switzerland General Insurance Co Limited (Unreported, Supreme Court of New South Wales, Santow J, 16 October 1996) (Drabsch). They are as follows:
i. Where a party makes a clear and distinct admission which is accepted by the opponent and acted upon, an application to withdraw the admission should not be freely granted.
ii. The question is to be considered in the context of each individual matter, but the general guideline is that the party seeking to withdraw should provide some good reason why the court should disturb what was previously conceded.
iii. Where the court is satisfied that an admission has been made after consideration and advice such as from an expert and after a full opportunity to consider its case and whether the admission should be made, admissions made with deliberateness and formality would ordinarily not be permitted to be withdrawn. The court will not approve the withdrawal of an admission where the application to withdraw is actuated by purely tactical reasons.
iv. It will usually be appropriate to grant leave to withdraw an admission where it is shown that the admission is contrary to the actual facts. Leave may also be appropriate where the admission was made inadvertently or without due consideration of material matters. Leave may be refused if the other party has changed its position in reliance on the admission.
These principles and Master Harper’s summary of them, were cited by Tobias JA in Maile v Rafiq [2005] NSWCA 410 (Maile) at [56]. It is a case of closer factual significance to the present, in that the application was for leave to amend a defence already filed.
Subsequent authorities have confirmed the ongoing application of the approach taken in Drabsch as part of the overall consideration of fairness to the parties and in the context of procedural considerations, which in this jurisdiction are set out in s 5A of the CP Act: see SLE Worldwide v WGB & Others [2005] NSWSC 816 (SLE Worldwide) at [56] per White J (as his Honour then was); The Owners – Strata Plan 72739 v Allianz Australia Insurance Limited [2017] NSWSC 1118 (SP 72739) at [26]-[27] per McDougall J.
Thus, fairness to the parties is the key consideration in the exercise of the Court’s broad discretion: Jeans v Commonwealth Bank of Australia at [2003] FCAFC 309; 204 ALR 327 at [18]; see also SLE Worldwide at [56] and SP 72739 at [27]. The applicant needs to demonstrate that its opponent will not be prejudiced in obtaining a fair trial on the relevant issue, here of contributory negligence: Maile at [42], [75].
Circumstances in which the admission was made
The evidence discloses that the insurer did undertake some preliminary investigations into the circumstances of the motor vehicle accident. At the time the defence was filed on 4 May 2018, the insurer had available to it a number of medical reports. One was prepared by Dr David Champion of St Vincent’s Clinic, on 19 July 2016. It contains the following summary of the accident (emphasis added):
You stated “On Wednesday, 31 (actually should have been 25) March 2015, at approximately 8.00pm, Mr Carr was travelling on his motorcycle along Gooreen Street in Reid in the Australian Capital Territory. The vehicle failed to yield at a stop sign at the intersection of Coranderrk Street and Gooreen Street and collided with the side of Mr Carr’s motorcycle. Mr Carr was travelling at a speed of approximately 50 km/h at the time of the collision.”
Mr Carr said that that statement was generally correct. The principal impact at collision was said in the right lateral foot and ankle region and he was ejected off the motorcycle some 17 paces forward onto the road landing on his hands and knees. He remembers yelling at the driver as the car approached. He described the experience as “shocking…terrible”…
That account was consistent with other statements made by Mr Carr in the evidence. The defence filed was a product of the insurer’s apparent acceptance of the circumstances as described.
Explanation for seeking to withdraw the admission
On 8 June 2018, a month after the defence was filed, the plaintiff finalised the service of his expert medical evidence. One of the reports served at that time was that of Dr Michael Diamond, consultant psychiatrist, dated 16 April 2018. It contained the following more detailed summary of the accident (emphasis added):
Mr Carr was travelling south on Gooreen Street at about 50km per hour coming to the end of his journey and within 150 metres of his home. The journey from work to home took about three minutes.
His recall is that he was aware of a nondescript light-coloured station wagon proceeding towards the intersection from his right hand side. He expected the vehicle to stop at the stop signs on Coranderrk Street. He recalls shouting “OI” progressively louder on three occasions when he realised that there was no sign of the driver of the station-wagon braking.Mr Carr said it was clear to him that the driver did not see him and there is no indicating that the driver braked at all.
Mr Carr was hit square on from the right hand side (T-boned). As the incident unfolded, he hoped that he could swerve and avoid the impact. His recall is of being in a state of shock. He was in a state of disbelief and emotional terror. His recall is that time seemed to slow as the incident occurred. At the time he hoped that he could get past the oncoming vehicle. He experienced the collision in a state of detachment and disbelief.
Upon reviewing this material, the solicitor for the defendants requested the plaintiff to provide his version of events, pursuant to s 104(4) of the Act and issued interrogatories, which, now that they have been answered, have given the insurer reason to believe that there may have been an element of contributory negligence involved.
On 14 November 2018, the answers to interrogatories were received and the application to amend the defence was foreshadowed to the plaintiff on 27 November 2018 and confirmation of the proposed amendment was notified in January 2019.On 25 January 2019, the plaintiff indicated it opposed the amendment with the present application in proceeding filed on 12 February 2019.
The plaintiff submitted that the differing account and the answers to interrogatories were entirely consistent with him having very little time to act. That position may be borne out at hearing, but there are sufficient differences in the accounts now given to give rise to a reasonable argument that the plaintiff could have acted in a manner to either avoid the collision or reduce its impact when it occurred.
The plaintiff also submitted that the insurer had the opportunity to fully investigate the plaintiff’s version of events by the procedures under the Act and chose not to do so. It is to be noted that one of the objects of the Act is to encourage the speedy resolution of claims with specified timeframes for responses. As a consequence, the level of investigation conducted prior to litigation commencing is necessarily different to that which occurs during the preparation of a matter for hearing. It was not unreasonable for the insurer to rely on the plaintiff’s version of events as disclosed before the proceedings were instituted in making the decisions it did at the time.
However, the investigations a party makes under the Act before litigation cannot preclude further investigation once court proceedings are commenced, and if those investigations reveal further facts material to liability, then subject to the discretionary matters referred to above, a party should be permitted to conduct the litigation on the facts that have been revealed, not the factual position as it was known prior to the litigation.
In the way that this litigation has developed, it is not the case that there was a glaring issue that the insurer failed to investigate from the outset, or that the defendants should otherwise have been clearly on notice of the plaintiff’s conduct potentially making the defence of contributory negligence an available defence.
Whether the plaintiff suffers any prejudice
As stated in Gabriel at [9] per Hodgson JA, where a defence has been filed admitting liability and the defendant needs leave to amend the defence, then any prejudice caused by the belated amendment and any prior admission of liability should be raised when the amendment is sought: Wollongong Fabrications Pty Ltd v Ramsbottom [2006] NSWCA 279; 68 NSWLR 387 at [6].
This is not a case where the plaintiff raises any actual prejudice – not that it is for him to do so – but the lack of any real prejudice is relevant to the Court’s discretion. The delay in raising the issue was one of months, the matter is yet to be set down for hearing and the parties have not yet undertaken a formal mediation of the proceedings.
Balancing the competing considerations
I accept that the defence as filed was made with deliberateness and formality. However, it was based on information provided by the plaintiff that on one view, has varied. Such information was supplied only after the defence was filed and accordingly, the defendants have demonstrated that the circumstances since the admission was made have changed. The admission was not made on the basis of a tactical decision but rather on the basis of information that now may or may not be the true factual position.
Once the plaintiff’s more detailed description of the accident was provided, it was investigated promptly and a decision was made in a relatively timely manner, having regard to the Christmas holiday period.
I am not persuaded that the plaintiff would be deprived of the opportunity of a fair hearing on the question of contributory negligence. While the expert medical evidence has been served, the plaintiff’s evidence will be given viva voce apart from the verified answers to interrogatories and there was no submission that the plaintiff had altered his position on the basis of the defence already filed so as to cause the Court to have a concern in the nature of an estoppel arising.
Consideration has been given to the stage of the proceedings, but it is not a barrier to the grant of leave. The proceedings were commenced in February 2018 and have not been protracted. There is no basis for suggesting that adding the defence would have a material impact on the hearing of the proceeding such as requiring an adjournment, as the matter has not yet been set down for hearing. This also means that the Court’s resources and the interests of other litigants waiting for their matters to be heard carries little weight in the circumstances of this case.
Taking all these factors together, the result is that it is appropriate to permit the defendants to withdraw the implied admission, and this will be done through granting leave to the defendants to amend its defence.
Conclusion
The application is allowed. The defendants seek that the costs of and incidental to the application be costs in the cause. The usual order is that the defendants pay any costs thrown away by the amendment, pursuant to r 513 of the Rules, and I consider that is the appropriate order here.
The orders of the Court are as follows:
(1) The defendants have leave to file an amended defence substantially in the form exhibited to the affidavit of Ms Anna Louise Reynhout affirmed 12 February 2019.
(2) The defendants are to pay any costs thrown away by the amendment.
| I certify that the preceding sixty [60] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Associate Justice McWilliam. Associate: Date: 18 April 2019 |
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