Foster v Shire of Harvey - [2003] WADC 199

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: FOSTER -v- SHIRE OF HARVEY [2003] WADC 199

CORAM: MACKNAY DCJ

HEARD: 23 JULY, 7 AUGUST 2003

DELIVERED : 16 SEPTEMBER 2003

FILE NO/S: CIV 4236 of 1999

BETWEEN: MATTHEW STEPHEN FOSTER
Plaintiff
AND
SHIRE OF HARVEY
Defendant
INSURANCE COMMISSION OF WESTERN AUSTRALIA
First Third Party
SGIO INSURANCE LIMITED
Second Third Party

Catchwords:

Practice - Western Australia - Practice under the Rules of the Supreme Court - Application by insurer to withdraw admission of liability to indemnify in third party defence - Whether good cause shown - Turns on own facts

Legislation:

Nil

Result:

Appeal dismissed

Representation:

Counsel:

Plaintiff:     No appearance
Defendant:     Mr W McDonald (2.7.03) Mr D G Price (7.8.03)
First Third Party           :     Mr P Sheavyn
Second Third Party       :     Mr M P Bruce

Solicitors:

Plaintiff:     Vertannes Georgiou
Defendant:     D G Price & Co
First Third Party           :     Talbot & Olivier
Second Third Party       :     Phillips Fox

Case(s) referred to in judgment(s):

Sangora Holdings Pty Ltd v Dunstan, unreported; FCt SCt of WA; Library No 990172; 13 April 1999
State of Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146
Surrey Insurance Co Ltd v Nagy and Nagy (1968) SASR 437
Wilson v Catering Concepts Australia Pty Ltd & Ors, unreported; DCt of WA; Library No D980170; 19 June 1998

Case(s) also cited:

Baume v Commonwealth (1906) 4 CLR 97
Celestino v Celestino, unreported; FedCt of Aust; 16 August 1990
Container Handlers Pty Ltd v Insurance Commission of Western Australia [2001] WASCA 304
Coopers Brewery Ltd v Panfida Foods Ltd (1992) 26 NSWLR 738
Divcon (Australia) Pty Ltd v Devine Shipping Ltd [1996] 2 VR 79
Hamilton v Australian Telecommunications Commission [1989] 2 Qd R 18
Hollis v Burton (1892) 3 Ch 226
Matland Holdings Pty Ltd v NTZ Pty Ltd (1999) 157 FLR 364
McKenzie v The Commonwealth [2001] VSC 361
Meston v Hutton [2003] WADC 51
Motor Vehicle Insurance Trust v Scarborough Bus Service Pty Ltd (in liq) (1968) WAR 10
Rooney v Australian Turf Industries Pty Ltd & Ors, unreported; DCt of WA; Library No 970359; 14 November 1997
State Government Insurance Commission v Drew; DCt of WA (1988) 5 SR 48
Tony Sadler Pty Ltd v McLeod Nominees Pty Ltd (1994) 13 WAR 323
Watkin v Bank of Western Australia Ltd, unreported; SCt of WA; Library No 980642; 4 November 1998

MACKNAY DCJ:

Introduction

In this action, commenced in November 1999, the plaintiff alleges that whilst an employee of the defendant he sustained two injuries, the first between May and September 1994 as a result of driving a defective "ride on mower" over that period (the first incident), and the second on 2 November 1994, when he says he strained his neck and left shoulder or upper arm whilst trying to unhitch a trailer from a motor vehicle owned by the defendant (the second incident).
Liability is denied by the defendant in relation to the first incident, and a third party notice has issued against the Insurance Commission of Western Australia (the first third party) in relation to that incident, it being said the mower was a motor vehicle and licensed, and that such insurer is liable to indemnify the defendant in respect of any award of damages in favour of the plaintiff.
Liability is also denied by the defendant for the second incident, and a third party notice has issued against SGIO Insurance Limited (the second third party), as the defendant's common law insurer.
As to the second incident, the defendant, in a defence filed in July 2000, raises an allegation that the plaintiff's injuries do not constitute a disability which would entitle him to an award of damages, given the relevant provision of the Workers' Compensation and Rehabilitation Act 1981 WA (the workers' compensation Act).
It is further alleged by the defendant that there was a failure by the plaintiff to give notice of any claim to the first third party, and the plaintiff is therefore disentitled to any award for that reason also.
The second third party, in a defence to the third party notice filed on 26 October 2000, admits "liability to indemnify the defendant for its liability to the plaintiff (if any) arising from the alleged accident on 2 November 1994 …", but does not admit a liability to indemnify in respect of "such sums as may be awarded to the plaintiff …".
The plaintiff's eventual response to the defendant's plea of the workers' compensation Act was to file a reply, on 14 November 2002, in which it is said that the second incident was a motor vehicle accident, so that that legislation has no application.
In that regard it is apparently common ground that both the vehicle and the trailer said to have been involved in the second incident were licensed.
The accident is not, however, said to have occurred on a road.
Following the plaintiff's reply, and on 24 February 2003, the second third party applied to amend its defence to the third party notice, by withdrawing the admissions of liability made, and by substituting (inter alia) the following:
"The second third party denies that it is liable to indemnify the defendant for its liability to the plaintiff (if any) arising from the alleged accident(s) as the accident(s) occurred in circumstances where the plaintiff's injuries were directly caused by or by the driving of a motor vehicle which is excluded under the second third party's employer's indemnity policy."
The defendant opposed that application, and on 6 May 2003 a deputy registrar of the Court refused it.
From that refusal the second third party brings this appeal.
The defendant opposes the amendment on a number of grounds.
It is pointed out that the second third party's admission of liability was first made by letter on 21 September 1998, and then in these proceedings, as stated, in the defence of July 2000, and that leave to withdraw an admission will not be granted where prejudice to the other party will result, particularly when the admission is one of longstanding.
That is the case here, the defendant says.
The defendant also says that nothing as to the making of the admission has been put forward which would indicate any mistake on the part of the second third party in originally making it.
In relation to the question of prejudice, it appears that the defendant gave notice to the first third party of the second incident only in October 1998, but later, following the second third party's admission of liability, informed the first third party that it no longer sought an indemnity from that body.
It also appears that in response to the second third party's application to amend, the first third party advised the defendant that in the event it is required to meet any award in favour of the plaintiff for the second incident then it can and may seek to recover any sums paid out from the defendant, pursuant to the Motor Vehicle (Third Party Insurance) Act 1943 WA (the motor vehicle Act), s 10 of which relevantly provides:
"(1)Upon the happening of any accident which results in the death of or causes bodily injury to any person and is directly caused by, or by the driving of, a motor vehicle, the driver and the person in charge thereof shall give written notice forthwith to the Commission and such notice (which notice shall not be subject to discovery or admissible in evidence in any proceedings except proceedings for an offence under this section) shall set forth the following information with as full particulars as the driver and the person in charge of the vehicle as aforesaid is or are able to give -
(a)the fact of the accident;
(b)the time and place at which it occurred;
(c)the circumstances of the accident;
(d)the name and address of any person killed or injured therein;
(e)the names and addresses of any witnesses of the accident.
(2)When neither the driver nor the person in charge of the motor vehicle is the owner of the motor vehicle concerned the owner thereof shall give a like notice immediately upon the accident coming to his knowledge … .
…
(6)The Commission shall be entitled to recover from any person who has failed to comply with any provision of this section, or, if 2 or more persons have so failed, from them jointly and severally, all moneys paid and costs incurred by the Commission in relation to any claim arising out of the accident in respect of which such failure has occurred."
The contention of the first third party is that a right of recovery can be exercised entirely at its own discretion, without any need to show prejudice or there being any power in a court to supervise the exercise of the right.
That argument did apparently find favour with French DCJ in Wilson v Catering Concepts Australia Pty Ltd & Ors, unreported; DCt of WA; Library No D980170; 19 June 1998.
Her Honour's views were, however, obiter, the plaintiff's claim there having failed.
The decision of the Supreme Court of South Australia in Surrey Insurance Co Ltd v Nagy and Nagy (1968) SASR 437 is also cited.
The defendant does not say that it complied with any obligation under the motor vehicle Act s 10, but rather that having given a late notice, and then having not pursued its claim on the second third party acknowledging liability, the likelihood of an arbitrary claim against it by the first third party for recovery has increased.
There is also a possibility, the defendant says, that the first third party may allege a breach of warranty arising from the alleged condition of the motor vehicle, which if made out might negate the obligation of the first third party to indemnify it.
To lose the second third party's present acknowledgment of indemnity, and to necessarily substitute for it a revived claim against the first third party would therefore result in substantial prejudice, the defendant says.
The ability to plead an estoppel to a denial of the obligation to indemnify would not adequately ameliorate that, it is also said.
Finally, the defendant says that if any accident occurred off the road then the second third party is in any event liable to indemnify it, given the relevant provision of the policy:
"The Insurer shall not be liable under this Policy to indemnify the Employer in respect of a liability against which the Employer was required by any law in force at the date on which the event or events occurred giving rise to the liability to have indemnity under another policy or insurance except to the extent of the amount if any by which the liability exceeds the amount to which the indemnity under that other policy was permitted by the relevant law at the date aforesaid to be and where the Employer at the date aforesaid had obtained such another policy which was thereby limited."
The second third party says there are sufficient reasons for the amendment to be allowed, that the issue only recently arose when the plaintiff filed his reply, that it will suffer prejudice if the amendment is not allowed, in that it may be obliged to indemnify the defendant for a risk not the subject of the policy, and that the defendant can if it so desires plead estoppel.
As to the defendant's last point above, that any liability for the second incident was not one which it was required by law to have indemnity under another insurance policy, the second third party says the defendant's obligations were specific not to the time and place of the accident but rather to "the date on which the event … occurred", and if the vehicles travelled on a road on that date then the obligation existed and the second third party has no obligation to indemnify the defendant.
The strength of the argument as to the suggested construction is a relevant matter, although I was not asked by the parties to finally decide that question of construction and it would therefore not be appropriate that I do so.
As to it, the obligation to insure a motor vehicle arises under the motor vehicle Act s 4 which relevantly provides:
"(1)When any motor vehicle is on a road there is required to be in force in relation to the motor vehicle a contract of insurance entered into by the owner of the motor vehicle under which the owner has insured subject to and in accordance with this Act against any liability which may be incurred by the owner or any person who drives the motor vehicle in respect of the death of or bodily injury to any person directly caused by, or by the driving of, the motor vehicle."
Clearly, under that provision no contract of insurance is required for a vehicle not on a road.
Further, as appears from the policy provision above the "date" is relevant as fixing when a law was relevantly in force, and there is nothing in the provision which would assist the construction contended for.
Nor is there any reason why a court would be astute to adopt that construction.
The construction which the second third party wishes to contend for is one which in my view would have, at best, limited prospects of success.
Though counsel for the second third party did not wish to be confined to that suggested construction at trial, in the event that the issue came before the Court, no other construction favourable to the second third party is apparent.
The question of the effect of prejudice on a party on the withdrawal of an admission in a pleading was recently considered by the Full Court of Western Australia in Sangora Holdings Pty Ltd v Dunstan, unreported; FCt SCt of WA; Library No 990172; 13 April 1999 where Steytler J (with whom Scott J agreed) said (12‑13):
"It is a serious matter to make an admission in a pleading. From that point onwards the admitted fact or facts cease to be in issue and the action proceeds upon that assumption. It may often be the case that, absent the admission, the action would have proceeded upon a different basis. It has consequently been said on a number of occasions that, as a matter of principle, a party who has made an admission in a pleading should not be entitled to withdraw that admission without good cause (see, for example, Divcon (Australia)Pty Ltd v Devine Shipping Pty Ltd [1996] 2 VR 79 at 80). The withdrawal of an admission will often even less readily be allowed if it has stood for a long time (see Davey v Harrow Corporation [1958] 1 QB 60 at 69) or when the withdrawal will cause significant prejudice to the other party (see Hamilton v Australian Telecommunications Commission [1989] 2 Qd R 18 at 20 and Permanent Building Society v Wheeler, unreported; FCt SCt of WA; Library No 940115; 22 February 1994 and see, generally, Seaman: Civil Procedure Western Australia para 20.14.2)."
As was said by the High Court in
State of Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146, 155 justice is the "paramount consideration" determining whether leave ought be given to amend a pleading. However, in that case the Court, in finding that leave ought be granted, was of the view that costs were an adequate remedy for any prejudice caused by the amendment.
Here I have come to the conclusion that the defendant would be likely to suffer significant prejudice if the second third party was given leave to amend its defence to the third party notice, and that such prejudice could not be cured by any order made for costs in its favour.
In that regard the defendant was in the position where it had given late notice to one insurer, and then did not pursue that on the admission of liability being made. For the defendant to be required to look again to the first insurer at this remove is something which in my view necessarily involves not insignificant prejudice, in circumstances where it is possible that it would not become apparent until after the trial and judgment whether the first insurer intended to exercise any arbitrary right of recovery from the defendant.
In the light of that, and on a consideration of all the other circumstances, I do not consider the second third party ought be permitted to amend its defence to the third party notice in the manner sought.
The appeal must therefore be dismissed.