Janssen v Janssen - [2005] SASC 52

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
JANSSEN v JANSSEN & ORS
Judgment of The Honourable Justice Besanko
17 February 2005
INSURANCE - THIRD-PARTY LIABILITY INSURANCE - MOTOR VEHICLES - COMPULSORY INSURANCE LEGISLATION - RIGHTS AND LIABILITIES OF INSURER IN RESPECT OF DEFENCE AND COMPROMISE
Application for leave to appeal from interlocutory judgment of Magistrate - whether s 125(3) of the Motor Vehicles Act 1959 prohibits the hearing of a counterclaim that involves both a claim in respect of bodily injury and a claim in respect of property damage - where applicant issued a claim against the respondent in respect of property damage - where respondent issued a counter claim in respect of both personal injury and property damage - where applicant sought to have respondent's counterclaim struck out - where in the alternative applicant sought an order that the insurer be joined as a defendant to the counterclaim under s 125A of the Motor Vehicles Act 1959 - where there was no actual or potential conflict of interest between the insurer and the insured in relation to the presentation of the defence - where in the further alternative applicant sought an order for separate trials of the claim for personal injury and the claim for property damage - where such an order was not considered by the Magistrate and there was no material to support such an order - leave to appeal granted but appeal dismissed.
Motor Vehicles Act 1959 ss 125, 125A, referred to.
In re the Will of F B Gilbert (dec) (1946) SR NSW 318; Adam P Brown Male Fashions Pty Ltd v Phillip Morris Inc (1981) 148 CLR 170, considered.

JANSSEN v JANSSEN & ORS
[2005] SASC 52
Magistrates Appeal

BESANKO J: This is an application for leave to appeal from an interlocutory judgment given by a Magistrate. After hearing argument the Magistrate made no order on the application before him other than an order for costs. No party before me argued that the Magistrate had not given an interlocutory judgment, and I propose to proceed on the basis that he has given an interlocutory judgment.
By reason of r 96B.02 of the Supreme Court Rules 1987 a party wishing to appeal against an interlocutory judgment of a magistrate is not required to obtain leave from this Court if the magistrate has certified that the proposed appeal involves a point of law of difficulty or importance, or a point of sufficient importance in the proceedings to warrant an interlocutory appeal being dealt with before final judgment in the action. The Magistrate has not given such a certificate in this case. In considering whether leave should be granted, it is appropriate for this Court to judge the matter by reference to the same criteria considered by a magistrate in deciding whether to grant a certificate. The undesirability of appeals from interlocutory judgments or orders involving matters of practice and procedure has long been recognised by the courts (In re the Will of F B Gilbert (dec) (1946) 46 SR NSW 318 per Jordan CJ at 323; Adam P Brown Male Fashions Pty Ltd v Phillip Morris Inc (1981) 148 CLR 170).
For reasons which I need not set out, all parties appeared and made submissions on the application for leave to appeal. The points raised by the applicant were relatively concise ones, and in those circumstances, I invited the parties to make submissions as if I was hearing the appeal.
Facts
On 8^th July 2003 a collision occurred between two vehicles at the intersection of Sixth Street and Ninth Street, Morgan, in the State of South Australia. One of the vehicles was being driven by Marjolein Janssen, and it was damaged in the collision. At the time of the collision, Ms Janssen had property damage insurance. The other vehicle was being driven by Mr Christopher Jaeger. The vehicle he was driving was also damaged, and in addition, he alleges that he sustained bodily injury as a result of the collision.
Ms Janssen is the applicant for leave and Mr Jaeger is a respondent.
On 29^th June 2004 the plaintiff Ms Janssen issued a claim in the Magistrates Court at Berri against Mr Jaeger seeking to recover damages in respect of the damage to her motor vehicle. It seems that she was represented by solicitors acting at the request of her property damage insurer. On 20^th July 2004, Mr Jaeger filed a defence to Ms Janssen’s claim and a counterclaim against her in which he sought to recover damages in respect of the damage to his motor vehicle and in respect of the bodily injuries allegedly suffered by him in the collision. As I understand it, Ms Janssen is represented by one firm of solicitors acting at the request of the property damage insurer in relation to her claim and in defence of the claim made by Mr Jaeger for damage to his motor vehicle, and she is represented by another firm of solicitors acting at the request of the insurer under Part 4 of the Motor Vehicles Act 1959 (“MVA”) in respect of Mr Jaeger’s claim for damages for bodily injury. It is not clear to me why she is shown as both an applicant and first respondent to this application.
On 20^th July 2004 Mr Jaeger also issued a third party claim against the Country Fire Service (“CFS”) seeking an indemnity against Ms Janssen’s claim on the ground that at the time of the collision Mr Jaeger was performing volunteer work with the CFS. On 9^th August 2004, the CFS filed a defence to the third party claim denying liability to indemnify Mr Jaeger. At that point the pleadings were closed, and the matter was listed for a directions hearing on 24^th August 2004.
On 23^rd August 2004 the solicitors acting for Ms Janssen in relation to the claim by Mr Jaeger for damages for bodily injury issued an application specially returnable seeking the following orders (relevantly):
“1. That the defendant’s counterclaim herein be struck out;
2.In the alternative that the Motor Accident Commission be joined to the proceedings pursuant to the provisions of s 125A of the Motor Vehicles Act 1959 as amended;
3. For such further or other orders as the Court deems fit.”
The Magistrate heard the application on 24^th August 2004. He made no order on the application except for an order for costs. He did not deliver reasons for his decision, but in a report to this Court he described the fact that he made no order as being “effectively an order dismissing paragraphs 1 and 2”.
It was asserted in the papers filed in support of the application for leave to appeal that the applicant had asked the Magistrate to list the application for special argument. There was a factual dispute on the application for leave to appeal as to whether the Magistrate had been asked to list the matter for special argument. It is not necessary for me to resolve that dispute because as the application proceeded it became clear that this was not the thrust of the argument advanced by the applicant, and in any event, the applicant was given the opportunity to fully develop his submissions on the hearing of the application for leave to appeal.
Issues on the appeal
Sections 125 and 125A of the MVA provide as follows:
“125 – Power of insurer to deal with claims against insured
(1)     An insurer may, on behalf of an insured person –
(a)     conduct any legal proceedings in respect of circumstances out of which a claim against the insurer has arisen, or may arise; and
(b)     conduct and control negotiations in respect of any claim against the insured person; and
(c)     at any stage of those negotiations or proceedings pay, compromise or settle any claim against the insured person.
(2)The insured person must sign and execute all such warrants, authorities, and other documents as are necessary to give effect to this section and, if he or she makes default in doing so or is absent or cannot be found, the insurer may sign or execute the warrants, authorities, or other documents on behalf of the insured person.
(3)     Where –
(a)     as the result of the use of a motor vehicle an accident happens which results in the death of or bodily injury to any person, as well as damage to property, and
(b)     claims are made in respect of the death or bodily injury and also in respect of the damage to property;
then nothing said or done in any negotiations for settlement of either claim, and no judgment given in legal proceedings in respect of either claim, can be evidence in legal proceedings in respect of the other claim.
125A – Joinder of insurer as defendant to an action
(1)Where an action for damages or other compensation has been commenced in a court against an insured person in respect of death or bodily injury resulting from the use of a motor vehicle, the court may, on the application of the insurer, join it as a defendant to the action.
(2)The court may not join an insurer as a defendant to an action under subsection (1) unless the court is of the opinion that—
(a)there is an actual or potential conflict of interest between the insurer and the insured in relation to the presentation of the defence; and
(b)the defence proposed by the insurer in relation to which the actual or potential conflict of interest arises is, in the circumstances of the case, not merely speculative.
(3)Where, in pursuance of this section, an insurer has been joined as a defendant to an action—
(a)the insurer will be taken to have directly assumed the liability (if any) of the insured person upon the claim in respect of death or bodily injury and, where such a liability is found to exist, judgment upon that claim will be given not against the insured person but against the insurer; and
(b)the insured person remains a party to the action only for the purposes of—
(i)defending a claim that is not a claim in respect of death or bodily injury; or
(ii)proceeding upon a counterclaim,
and where there is no such claim or counterclaim, the insured person ceases to be a party to the action; and
(c)the insured person may not be joined as a third party to the action; and
(d)the insured person is, notwithstanding paragraphs (b) and (c), entitled to be heard in the proceedings upon any question related to the claim in respect of death or bodily injury; and
(e)for the purpose referred to in paragraph (d), the insured person is entitled to be represented by counsel of his or her own choice, and the insured person's costs must be paid by the insurer unless, in the opinion of the court, there are special reasons for ordering otherwise; and
(f)the insurer may apply to call the insured person to give evidence and, in that event, the person will be called, or summoned to appear, as a witness and be liable to cross-examination by the insurer.
(4)No judgment or finding of a court in proceedings in which an insurer has been joined as a defendant under this section is binding in subsequent proceedings against the insured person under section 124A.”
The applicant submits that the Magistrate should have struck out the counterclaim. The respondent, Mr Jaeger, submits that leaving aside the merits of the applicant’s argument, that was not an order the Magistrate had the power to make. It is not necessary for me to resolve the question of power because I have reached the conclusion that the applicant’s argument must fail on the merits.
The applicant’s argument is that the provisions of s 125(3) of the MVA prohibit the hearing of a counterclaim which involves both a claim in respect of bodily injury and a claim in respect of damage to property. It was said that if Ms Janssen’s property damage insurer settled the property damage claims and the solicitors withdrew, the Magistrate would know that that aspect of the claim had been settled. I reject the applicant’s argument. The word “claim” is not defined in the MVA but I think in the context of s 125(3) it means a claim by separate action in respect of death or bodily injury and a claim by separate action in respect of damage to property. It could not mean two claims made by the same party in the one action because there would not be separate judgments in such a case. There would only be one judgment. In this case there is but one action by Mr Jaeger and if he is successful there will only be one judgment. Even if the first part of the prohibition (ie., “nothing said or done in any negotiations in respect of either claim”) applies in the case of one action in which there is a claim in respect of death or bodily injury and a claim in respect of damage to property, the prohibition does not rise to such a level as to require one of the claims to be struck out. It is simply a prohibition on matters said or done in negotiations for settlement of one claim being evidence in legal proceedings in respect of the other claim. That does not mean the claims cannot be joined in the same action. If there be any doubt about the matter, it seems to me that it is resolved against the applicant when regard is had to s 125A(3). That subsection envisages a case in which an insurer is joined as a defendant to an action and the insured remains a party to the action for the purpose of defending a claim that is not a claim in respect of death or bodily injury, for example, a claim in respect of damage to property, or for the purpose of proceeding upon a counterclaim. In this case Ms Janssen is defending, among other things, a counterclaim in respect of property damage and she is proceeding on a claim. In my opinion, for the purposes of s 125(3), a claim includes a counterclaim and a counterclaim includes a claim.
The applicant made an alternative submission and that was that the Magistrate should have made an order that the insurer be joined as a defendant to the counterclaim under s 125A of the MVA. At this stage, a defence to the counterclaim has not been filed. In his report to this Court, the Magistrate said that no one suggested there was any actual or potential conflict of interest between Ms Janssen and her insurer. No evidence was put before the Magistrate and no submissions were made to this Court which would lead to the conclusion that the Court should be of the opinion that there is an actual or potential conflict of interest between the insurer and the insured in relation to the presentation of the defence (s 125A(2)(a)). In those circumstances, the Magistrate was right to refuse to make an order that the insurer be joined as a defendant.
In the further alternative, the applicant submits that the Magistrate should have made an order for separate trials of the claim for personal injury and the claim for property damage. The application does not refer to an order in those terms, but the applicant says that an order in those terms falls within the request in the application for such further or other orders as the Court deems fit. The Magistrate appears not to have considered whether he should make an order for separate trials. I would be reluctant to make such an order in circumstances where it appears not to have been considered by the Magistrate. However, even if this difficulty is overcome there is no material before me which suggests that such an order should be made at this stage.
Conclusion
I think the proposed appeal involves a point of sufficient importance in the proceedings to warrant an interlocutory appeal being dealt with before final judgment in the action and I would grant leave to appeal. However, for the reasons I have given, I would dismiss the appeal.
I will hear the parties as to any other orders.