Insurance Australia Limited v Mannall
[2017] ACTSC 368
•5 December 2017
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Insurance Australia Limited v Mannall |
Citation: | [2017] ACTSC 368 |
Hearing Date: | 5 December 2017 |
DecisionDate: | 5 December 2017 |
ReasonsDate: | 6 December 2017 |
Before: | McWilliam AsJ |
Decision: | See [46] |
Catchwords: | PRACTICE AND PROCEDURE – Application for leave to discontinue proceedings – where no disadvantage or irremediable injustice – whether indemnity costs appropriate |
Legislation Cited: | Court Procedures Act 2004 (ACT) s 5A Road Transport (General) Act 1999 (ACT) Court Procedures Rules 2006 (ACT) r 1160 |
Cases Cited: | Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 Council of the Municipality of Botany v Secretary, Department of the Arts, Sport, the Environment, tourism and the Territories (1992) 34 FCR 412 Trade Practices Commission v Manfal Pty Ltd & Ors (No 3) (1991) 33 FCR 382 |
Parties: | Insurance Australia Limited t/as NRMA Insurance ACN 000 016 722 (Plaintiff) David John Mannall (First Defendant) Malcolm David Howard (Second Defendant) |
Representation: | Counsel P Deakin QC with J Michie (Plaintiff) C Bridge SC (First Defendant) P Woulfe (Second Defendant) |
| Solicitors Moray & Agnew (Plaintiff) Snedden Hall & Gallop (First Defendant) ACT Government Solicitor (Second Defendant) | |
File Number: | SC 344 of 2017 |
On 5 December 2017, I granted an application pursuant to r 1160 of the Court Procedures Rules 2006 (Rules) for leave to discontinue proceedings brought by Insurance Australia Limited t/a NRMA Insurance (the Insurer), upon an undertaking by it, through its legal representative, not to commence proceedings agitating the same or substantially the same relief, and made a further order that the Insurer pay the defendants’ costs. These are my reasons for doing so.
Nature of the proceedings
The originating application sought declaratory relief that a particular motor vehicle accident did not fall within the definition of a motor accident as defined by s 7 of the Road Transport (Third Party Insurance) Act 2008 (ACT) (Act).
The accident occurred at approximately 5pm on 29 October 2014, along a footpath said to have been located within the ACTION Bus Depot in Belconnen. The first defendant was walking on the footpath and was injured in that accident. The second defendant was the driver of the vehicle that struck the first defendant as he reversed his company vehicle from where it was parked.
The particular location of the accident means that the Insurer has presently refused to indemnify the second defendant. The reason for that refusal is the Insurer’s construction and application of the definitions of ‘use’ of a motor vehicle, found in the Act, which incorporates the definitions of ‘road’ and ‘road related area’ contained in the Road Transport (General) Act 1999 (ACT).
In order for the incident to be characterised as a ‘motor vehicle accident’ under s 7 of the Act, it must involve the use or operation of a motor vehicle. Under s 8 of the Act, ‘use’ of a motor vehicle ‘includes…drive…a motor vehicle on a road or road related area’.
Notwithstanding that s 8 is a non-exhaustive definition, the Insurer’s position appears to rest on a view that because the area where the accident occurred was fenced-off, closed to the public and not used as a public thoroughfare (a disputed fact in the proceedings), it did not occur on a road or road related area as defined in the Road Transport (General) Act 1999.
The proceedings were listed for final hearing to determine that question on 5 December 2017 (when the application to discontinue was heard), including preparations for a view of the site of the accident on that day.
The application for leave to discontinue
The Insurer has reconsidered its position in having the question determined separately. It now wishes to have any question of indemnity heard as part of a defence to any proceedings brought by the first defendant seeking damages for personal injury. The intention to discontinue was first communicated to the defendants by email on 13 November 2017.
The desire to discontinue the proceedings was thus not a capitulation or the product of a supervening event, but an express reservation of the Insurer’s position until the complete factual matrix might properly be before the Court.
In circumstances where the matter has been set down for hearing, r 1160(2) of the Rules provides that the Insurer may only discontinue the proceedings with the agreement of the active parties to the proceedings or with the leave of the Court.
The first defendant consented to the discontinuance on the basis that the Insurer pay his costs on the ordinary basis up to 14 November 2017, when he first gave his consent to the discontinuance, and on an indemnity basis thereafter.
The second defendant did not consent to the proceedings being discontinued, for reasons set out below.
The Insurer agreed to paying the parties’ costs and to giving an undertaking not to commence proceedings agitating the same, or substantially the same, relief. The Insurer did not agree to pay any part of those costs on an indemnity basis.
Accordingly, the issue was whether the Court ought grant leave to the Insurer to discontinue the entire proceedings, and if so, on what terms.
Guiding principles
Although the Court’s discretion is unfettered, Mr Woulfe, who appeared for the second defendant, helpfully drew the Court’s attention to some of the established guiding authorities relevant to the grant of leave. They include Covell Matthews & Partners v French Wools Ltd [1977] 1 WLR 876 (Covell), where Graham J said at 879:
The Court should therefore grant leave, if it can without injustice to the defendant, but in doing so should be careful to see that the defendant is not deprived of some advantage which he has already gained in the litigation and should be ready to grant him adequate protection to ensure that any advantage he has gained is preserved.
The second defendant also relied upon SCI Operations Pty Ltd v Trade Practices Commission(1984) 2 FCR 113 (SCI Operations) where the decision of Graham J in Covell was referred to by Sheppard J at 184. His Honour had earlier stated at 182:
It seems to me that the court in deciding whether to grant leave and, if so, upon what terms that leave should be granted, has a wide discretion to do justice between the parties ... if a party seeks to discontinue proceedings, a court should, in my opinion, lean towards giving him leave unless to do so will cause manifest injustice to his opponent ... but the starting point for the discussion of it is the court’s greater ability to do justice to both parties if the central question is upon what terms leave to discontinue should be granted.
The equivalent Federal Court rule at that time was expressed in somewhat different terms, but attracts the application of the same principles.
Similarly, in Trade Practices Commission v Manfal Pty Ltd & Ors (No 3) (1991) 33 FCR 382, Lee J referred to the unfettered discretion of the Court, and to Covell before stating at 383:
The Court will give consideration to the need to refrain from compelling a party to litigate against its will but will also consider the extent to which the proceedings have developed and whether discontinuance against one respondent may impose injustice on another respondent by removing an advantage that respondent may otherwise enjoy in the proceedings or by imposing a disadvantage. In considering the undesirability of an applicant being forced to continue litigation unwillingly, it is relevant to have regard to whether the discontinuance would make any difference to the burden of litigation undertaken by the applicant and whether the application to discontinue results from a conclusion that the litigation cannot succeed against the respondent or is inspired by other reasons.
Reliance was also placed on Ritz Hotel v Charles of the Ritz Ltd [No 8] (1987) 12 IPR 75, which itself refers to both Covell and SCI Operations. That case is ultimately of limited assistance here, because the discretion was exercised by McLelland J in the NSW Supreme Court in the context of differently worded rules, which limited the circumstances in which an application to discontinue could be made, and in different procedural circumstances. There, the application to discontinue was made after the hearing of the trial had commenced. Under the procedural rules applying in that jurisdiction at the time McLelland J held that the application was made too late..
More recently in the NSW Supreme Court, Brereton J cited the authorities extracted above in describing the current principle applicable when a matter has proceeded to a contested hearing and the plaintiff seeks to discontinue, in the decision of In the matter of Mempoll Pty Ltd, Anankin Pty Ltd and Gold Kings Pty Ltd [2013] NSWSC 301 at [10]:
It is a general principle that, although there may be exceptions, rarely will it be appropriate to grant leave to discontinue once the proceedings have proceeded to a contested hearing: see Stahlschmidt v Walford[1879] 4 QB 217; Re Alpha Company Limited[1903] 1 Ch 203; Stevens v Theatres Limited[1903] 1 Ch 860. This is because once the parties have defined their positions, prepared their cases and proceeded to a hearing it is ordinarily regarded as unfair to deprive a party who has obtained a forensic advantage of that advantage. For example, even where leave to discontinue is granted, where a defendant has gained some advantage leave to discontinue is usually granted on terms that preserve the advantage [citations omitted].
Consideration
Applying these principles, consideration was given to whether the defendants, and the second defendant in particular (given his opposition), would be deprived of any forensic advantage or whether some other injustice would be occasioned by the discontinuance that warranted the Court refusing to grant leave to the plaintiff to discontinue proceedings, either on terms or at all.
Although during oral argument the parties canvassed interesting matters beyond what is set out below, such as whether a res judicata or issue estoppel would operate if the proceedings were dismissed instead of discontinued, it is only necessary to set out the operative considerations on which the exercise of the Court’s discretion ultimately turned.
The just resolution of disputes and the efficient disposal of the business of the Court
First, the second defendant rightly emphasised the obligation of the Court, pursuant to s 5A of the Court Procedures Act 2004 (ACT) (CP Act), to exercise powers under the Rules in a way that best promotes the main purpose of facilitating the just resolution of disputes as quickly, inexpensively and efficiently as possible.
The second defendant contended that by discontinuing now, the question of indemnity remains unresolved (which he submitted is critical to the conduct of the outstanding, yet to be litigated, dispute between the parties). This creates uncertainty until the determination of any substantive claim through subsequent litigation. Such delay in the resolution of that issue does not promote the main purpose under the CP Act.
The second defendant submitted that any delay in resolving the issue ought be avoided, and that where there is delay, the whole quality of justice deteriorates, relying on Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 551.
I take a different view of how to apply s 5A of the CP Act in the circumstances of this case. The discontinuance brings the entire proceedings presently before the Court to an end. That promotes the efficient resolution of the present litigation, and reduces the Court’s overall caseload (to use the words of the CP Act) by alleviating the need for a hearing of this case, or for the further investment of judicial resources in dealing with the matter.
It is true that there may be a wider dispute yet to be brought forward, but the parties may resolve or narrow the issue without reference to the Court, for example through early mediation or other informal settlement channels or admitted facts. It is yet unknown what shape any future proceedings will take.
Further, the factual matrix may be relatively uncontroversial, but to the extent that it is necessary to view the site and make findings about it relevant to both indemnity and liability, it is preferable that the Court’s resources only be utilised once, rather than potentially requiring the same task arising out of the same accident to be undertaken in two proceedings and potentially by two different judicial officers.
Subject to what is said below in relation to disadvantage and the terms of any discontinuance, I am not attracted to the idea that a Court would refuse leave to discontinue merely because the issue might remain live at a later date in subsequent proceedings, even accepting that such proceedings have been expressly foreshadowed in this application by the first defendant. It is not an abuse of process for a plaintiff to discontinue a proceeding merely in order to be able to bring the same proceeding later in circumstances in which the plaintiff believes there will be a greater prospect of success or a more substantial recovery: see Castanho v Brown & Root (UK) Ltd [1981] AC 557 at 576, cited in Running Pigmy Productions Pty Ltd v AMP General Insurance Co Ltd and Ors [2001] NSWSC 431 at [33]. As the authorities set out above make clear, the focus for the Court is on disadvantage or injustice to the other parties.
Weakness of the Insurer’s case
The second defendant contended that the construction point on which the refusal of indemnity turns was weak, having regard to the decision of Haider v Lane & Anor [2014] ACTSC 205 (Haider) at [32]-[40]. In that case, Master Mossop (as his Honour then was) referred to a concession made by the Insurer in the context of an accident which occurred as a car was reversing into a private garage. The concession was to the effect that if an accident occurred, it was a motor accident within the meaning of the the Act.His Honour stated at [40] that the submissions of the parties as to the proper interpretation of the Act (on which the concession in that case was based) were correct and that the accident was a motor accident within the meaning of that statute.
The Insurer contended that his Honour’s comments were obiter, that they do not bind the Court in the present case in any event, that the facts of the present case are different, and specifically that the concession made in Haider is not made in respect of the present accident giving rise to the dispute.
I accept the Insurer’s submissions, which establish that this is not a case where the Insurer has acknowledged likely defeat late in the day, or that the construction issue is clear and binding on the present state of the authorities, so that leave to discontinue ought be refused and instead judgment entered for the second defendant or the proceedings dismissed. In P H Glatfelter Co & Anor v Rothprint Pty Ltd (1991) 27 FCR 382, Foster J held (at 384) that it would be inappropriate for a court to simply dismiss the applications before that court in circumstances where there was no suggestion that the substantive proceedings which had been brought were not bona fide prosecuted, or that they were frivolous or vexatious in their conception or institution. The same may be said of the circumstances of the present case.
That reasoning also addresses the conditions that were sought by the second defendant, in the event that leave to discontinue were granted. They amounted to an application for judgment on the issue, but went further to include a condition that the Insurer agree to indemnify and represent the second defendant in any subsequent proceedings. That is not an order the Court could or would make in proceedings which only sought declaratory relief. The second defendant was essentially seeking relief better than that which he would have achieved had these proceedings run their course.
The absence of disadvantage or other irremediable injustice
Disadvantage or injustice to the defendants is the consideration that carried the most weight in the exercise of the Court’s discretion. It was the lack of any actual disadvantage to the second defendant, including the loss of any forensic advantage obtained by the second defendant, that ought be preserved if the issue were litigated at a later date, which persuaded me of the appropriateness of granting leave to discontinue, and without the imposition of further conditions.
First, the parties have assured me that there is no forensic prejudice likely to be suffered. Photos of the site of the accident and witness statements that might be relevant have been taken and there is no suggestion that they will be lost or destroyed before any subsequent litigation.
Second, there was no suggestion (by either defendant) of any ulterior purpose underlying the Insurer’s change in position, or the bringing of these proceedings in the first place.
Third, consideration was given to the fact that the legal onus regarding the present issue would shift if it became part of wider proceedings subsequently brought by either defendant. However in this case, the issue that is being discontinued is really one of statutory construction and application to what is otherwise a straightforward car accident with an independent witness. I cannot see that in this case, on this issue, the change in legal onus has any significant impact for the defendants, and neither submitted to the contrary.
Fourth, the lateness of the application is relevant to injustice. That consideration is perhaps of less weight here, in circumstances where the proceedings were only commenced on 7 September 2017, and it may have been precipitated by a then approaching limitation period or other matters in the background, which it is unnecessary to traverse. It is also appreciated that the Insurer may have received a change in advice or that different considerations may have come to light which altered that decision as to the course to be taken in the litigation. Nevertheless, the present state of affairs, where the parties are dealing with an application to discontinue at the hearing itself, are entirely of the Insurer’s own making. The result is somewhat unsatisfactory and not to be encouraged.
In any event, the Insurer has properly accepted that lateness in this case sounds in costs. What is more important for the exercise of the grant of leave itself is the impact of such a late application to discontinue the proceedings. As there did not appear to be any additional impact here, the order for costs is able to remedy any injustice arising from lateness.
Fifth, the ongoing uncertainty, resulting in the second defendant’s potential inability to negotiate and to achieve an early resolution of any claim by the first defendant, is certainly regrettable. No doubt this is at the heart of the second defendant’s reluctance to agree to the discontinuance – he just wants to know whether the Insurer is going to step in.
However, it is the same position that the second defendant would be in if the present proceedings had never been commenced. I accept the position is both inconvenient and frustrating for the second defendant. It is not, however, an advantage that will be lost, or disadvantage that will be imposed. The second defendant contends that the discontinuance means there is a metaphorical sword of Damocles to be kept hanging over him, but that sword is also still hanging over the Insurer, notwithstanding that the commercial reality may be more significant for an individual than the Insurer. The second defendant did not file a cross-application or cross-claim in these proceedings which would have ensured that the second defendant was able to pursue the certainty he desires. There is no injustice of itself in a question that might have been decided through a hearing not yet being determined.
Finally, as submitted by Senior Counsel for the Insurer, there is no potential injustice to arise through the loss of the Insurer as a party in future proceedings: s 151(2) of the Act requires both the insured person and the insurer must be sued as joint defendants.
For these reasons, I do not see that there is any disadvantage, or lost advantage, to the second defendant such as to warrant a refusal of the grant of leave to discontinue or to warrant the imposition of further conditions.
Costs
The Insurer accepts it must pay the defendants’ costs. During the hearing, the parties canvassed whether there was any basis for indemnity costs being paid. I was mindful that costs on the ordinary basis may not truly restore the position for the defendants.
However, the award of costs on an indemnity basis is a special order. Such an order may be made not only against an ethically or morally delinquent party, but also in circumstances where the plaintiff should never have instituted the proceedings. The basis for it (while non-exhaustive) includes circumstances such as proceedings commenced for an ulterior motive or in wilful disregard of the known facts and clearly established law, or in circumstances where the plaintiff, if properly advised, should have known that the claim had no prospects of success: Council of the Municipality of Botany v Secretary, Department of the Arts, Sport, the Environment, tourism and the Territories (1992) 34 FCR 412 per Gummow J at 415. The parties (and the Court) ultimately came to a consensus during the hearing that none of those types of considerations exist here, such as to warrant the Court making a special order for indemnity costs.
Orders
The Orders of the Court are:
1. Upon the plaintiff, through its solicitor Phillip James Thomas, undertaking to the Court that it will not commence proceedings agitating the same or substantially the same relief, leave is granted to the plaintiff to discontinue the proceedings.
2. The plaintiff is to pay the defendants’ costs of the proceedings.
| I certify that the preceding forty-six [46] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Associate Justice McWilliam. Associate: Date: |
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