Maile v Rafiq - [2005] NSWCA 410

NEW SOUTH WALES COURT OF APPEAL

CITATION: Maile v Rafiq [2005] NSWCA 410

FILE NUMBER(S):
40084/05

HEARING DATE(S): 28 October 2005

JUDGMENT DATE: 24/11/2005

PARTIES:
Sione Tukuafu Maile
Evelyn Margaret Rafiq

JUDGMENT OF: Tobias JA Brownie AJA

LOWER COURT JURISDICTION: District Court

LOWER COURT FILE NUMBER(S): DC 3018/03

LOWER COURT JUDICIAL OFFICER: Sidis DCJ

COUNSEL:
A: B J Gross QC / H Bauer
R: E G Romaniuk

SOLICITORS:
A: McMahons National, Lawyers, Sydney
R: Keddies, Solicitors, Redfern

CATCHWORDS:
PROCEDURE – Leave to amend defence – Motor accident – Where defendant’s compulsory third party insurer admitted breach of duty – Where breach of duty admitted in defence – Where defendant unable to be interviewed until after defence filed – Leave sought to amend so as to deny liability and plead contributory negligence – Whether interests of justice required withdrawal of admission – Prejudice to plaintiff – Actual or presumptive – Whether adequate explanation for making of admission – Whether admission contrary to actual facts – Motor Accident’s Compensation Act 1999 s 81

LEGISLATION CITED:
Motor Accidents Act 1988
Motor Accidents Compensation Act 1999
Suitors' Fund Act 1951

DECISION:
(a) Grant leave to appeal upon condition that the claimant file a Notice of Appeal within 7 days of the date of these orders
(b) Appeal allowed
(c) Set aside the order made by Judge Sidis on 23 September 2004 dismissing the claimant's Notice of Motion filed on 5 August 2004
(d) Grant leave to the claimant to file amended Notice of Grounds of Defence in the form of the draft amended notice dated 19 August 2004
(e) The opponent to pay the claimant's costs of the summons for leave to appeal and of the appeal but to have a certificate under the Suitors' Fund Act 1951, if otherwise qualified

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40084/05
DC 3018/03
TOBIAS JA
BROWNIE AJA
Thursday 24 November 2005

SIONE TUKUAFU MAILE v EVELYN MARGARET RAFIQ

Judgment

TOBIAS JA: The issue at stake in the substantive appeal before this Court relates to whether the claimant, the defendant below, should be granted leave to amend his Notice of Grounds of Defence in which he admitted breach of his duty of care to the opponent, the plaintiff below, so as to deny any such breach in circumstances where the claimant's compulsory third party insurer had, pursuant to s 81(1) of the Motor Accidents Compensation Act 1999 (the Act), also admitted breach of duty in respect of the opponent's claim. The primary judge, Sidis DCJ, dismissed the claimant's Notice of Motion for leave to amend and it is against that decision that the claimant seeks this Court's leave to appeal. That application has been heard concurrently with the substantive appeal.
The relevant facts and the course of the proceedings
At approximately 3.30am on 3 March 2000 the opponent was driving alone in her motor vehicle west along Parramatta Road, Flemington in the third, or outside, lane next to the medium strip. She lived in Walker Street, Quakers Hill and at the time of the accident was employed as a receptionist with Inspirations Pty Limited. On the day in question she had commenced work at 6pm on Thursday 2 March 2000 at her employer's premises in Park Road, Homebush, finishing at about 3.20am.
According to a statement made by the opponent to Flemington police on 30 March 2000, she remembered leaving work and driving west along Parramatta Road towards its intersection with Richmond Road, Flemington. The intersection was controlled by traffic lights.
The claimant was travelling in an easterly direction along Parramatta Road intending to turn right into Richmond Road. A passenger, Mr Toni Vikilani, accompanied him. In a statement made to Auburn police on 16 March 2000, the claimant stated that he came to a stationary position in lane 4 eastbound (which was a dedicated right hand turn lane next to the median strip) at the traffic lights. The right turn arrow at the traffic lights was then red. When the arrow turned green he commenced his right hand turn into Richmond Road when the vehicle being driven by the opponent collided with the front of the claimant's vehicle in lane 3 westbound. All parties were conveyed to hospital and both vehicles were written off.
The claimant's third party insurer was Australian Associate Motor Insurers Limited (AAMI). On or about 6 September 2000 it received a Motor Accident Personal Injury Claim Form (the claim form) from the opponent dated 14 August 2000 in which she described the accident in the following terms:
"I was driving home along my usual route at 3.30am on 3.3.00. I slowed as is my usual practice in front of hotels (often drunks are crossing here). I continued to go slow as there is a ridge in the road in the outside lane not long before lights. I remember nothing more until waking in the RPAH."
The opponent provided a rough diagram of the scene of the accident which indicated that the collision occurred on the opponent's side of the median strip in Parramatta Road at a point along the prolongation of the western kerb of Richmond Road. I think it is fair to say that that diagram was intended to convey that the claimant's vehicle collided with the opponent's vehicle as the latter commenced to make its right hand turn across the lane in which the opponent was travelling.
In the claim form the opponent stated that the police officer who attended the scene was Probationary Constable Clyne of Flemington Police Station. Under [18] of the claim form, headed "Witnesses", she had written "NONE". With respect to the details of the claimant's vehicle, she set out its registration number, the driver's name and his address as 64 Eucalyptus Drive, Macquarie Fields, 2564. Having given details of her own vehicle, she stated under the heading "What damage was caused to this vehicle?" that she "never saw vehicle but it was written off".
The claim form then provided for the opponent to list her injuries, which she did, but relevantly she did not allege any head injury. Given her statement in the claim form when describing the accident that, after slowing down for the ridge in the road she remembered nothing more until waking up in hospital, such an omission appears odd. Furthermore, in the police report prepared by Constable Clyne in answer to the question "Did you sustain any injuries to your head?", she answered "No, just my neck". However, in her statement of particulars pursuant to Pt 9 r 27 filed on 4 July 2003, she alleged a closed head injury including loss of consciousness.
I have already referred to the opponent's statement to Flemington Police made on 30 March 2000 which was in practically identical terms to her description of the accident in the claim form. The police report also recited that the opponent remembered slowing for a ridge across the road in lane 3 but that she did not remember any more until the following day. It also records a number of questions the opponent was asked and her answers, of which the last was as follows:
"Q. Is there anything else you would like to add?
A.Whoever said I went through a red light, I don't believe that, until it is proven."
This answer may have been a response by the opponent to having become aware of the statement by the claimant to Auburn Police on 16 March 2000 that "he had a green arrow". If he did, then it was common ground that the opponent must have gone through a red light. Although in her own statement to the police she had stated that on the Thursday she got up at 7am but had had a nap from 12pm to 4pm before commencing work at 6pm, she denied that she was taking any medication or that at the time of the accident she was feeling at all drowsy.
Both the claim form and the police report recorded the claimant's address as 64 Eucalyptus Drive, Macquarie Fields together with a home telephone number. The letter also recorded the name an address of the claimant's passenger, Mr Vikilani, as 36 Burns Street, Campsie.
According to the evidence before the primary judge, the police report was received by AAMI on or about 18 September 2000. On or about 14 September 2000 AAMI had written a letter signed by Ms Madeleine Hibberd, whose title according to that letter was "Client Manager, CTP Claims", to the claimant at his address at Macquarie Fields referring to the accident on 3 March and requesting him to complete an enclosed Accident Report Form. As there was no response to that letter, a further letter was forwarded to the claimant at the same address on 6 November 2000 with a similar request and noting that the he was obliged to assist the insurer under the Motor Accidents Act 1988 (the MA Act) and that a penalty of up to $2000 could be imposed upon him for his failure to cooperate with his CTP insurer. Again, there was no response to that letter. However, there was no evidence to suggest that either letter had been returned to AAMI unclaimed.
It is to be noted that the evidence does not suggest that at this time any attempt was made by AAMI to telephone the claimant on the number he had provided to the police; to engage an investigator given the lack of response to both letters; to attend the address to which the letters had been sent; or to communicate either in writing or by telephone with Mr Vikilani.
The evidence then disclosed a letter from Ms Hibberd to Keddies, Solicitors, of 30 January 2001. It is apparent that by this date Ms Hibberd was aware that those solicitors acted for the opponent. The letter was headed "Re: Section 81 Notice". Relevantly, it was in the following terms:
"We have completed looking into the circumstances surrounding your client's motor vehicle accident.
As a result, we now wish to confirm that this accident occurred through the fault of the driver we insure. Under section 81 of the Motor Accident Compensation Act 1999, we admit that our insured driver has breached their duty of care to your client."
Relevantly, s 81 of the Act is in the following terms:
"(1)It is the duty of an insurer to give written notice to the claimant as expeditiously as possible whether the insurer admits or denies liability for the claim, but in any event within 3 months after the claimant gave notice of the claim under section 72.
(2) …
(3)If the insurer fails to comply with this section, the insurer is taken to have given notice to the claimant wholly denying liability for the claim.
(4)Nothing in this section prevents an insurer from admitting liability after having given notice denying liability or after having failed to comply with this section.
(5)It is a condition of an insurer's licence under Part 7.1 that the insurer must comply with this section."
It will be noted from the above provisions that, firstly, it is a condition of an insurer's licence that it must comply with the section by either admitting or denying liability within three months after receiving notice of the claim; but, secondly, if liability is denied there is nothing to prevent the insurer later admitting liability notwithstanding having given notice denying it. Thirdly, although in the event of the insurer failing to comply with s 81(1) it is taken by s 81(3) to have given notice to the claimant wholly denying liability for the claim, such a failure constitutes a breach of a condition of the insurer's licence to comply with s 81 which might result in the suspension of that licence under s 165(1) and s 165(3)(a) or to the imposition of a civil penalty or a letter of censure under s 166(1).
Nothing further happened in the matter until 4 July 2003 when the solicitors for the opponent filed an ordinary statement of claim in the District Court. Paragraph 4 of the statement of claim recited the admission by AAMI that the claimant had breached his duty of care to the opponent. Paragraph 5 asserted that by reason of that admission the proceedings were brought only for the assessment of the opponent's damages pursuant to the Act. Nevertheless, as required by the Rules, [7], [8] and [9] set out the basic facts, the last alleging that the opponent's injuries, loss and damage were caused by the claimant's negligence particulars which were the admission on behalf of the claimant of his breach of duty of care contained in AAMI's letter of 30 January 2001.
On or about 16 July 2003 Ms Linda Charleston of McMahons National Lawyers received instructions to act in the matter on behalf of the claimant and to file Notice of Grounds of Defence which, according to [8] of her affidavit sworn 19 August 2004, was to admit a breach of duty of care. In [9] of that affidavit, she deposed as follows:
"Upon receipt of those instructions it appeared to me that it would be prudent to engage an investigator to locate and interview Mr Maile and the independent witness nominated in the police report, Mr Vikilani, as the Plaintiff's version of the accident was uncorroborated and no police action had been taken against the Defendant."
It would appear that Ms Charleston recommended accordingly to AAMI who, on or about 8 September 2003, informed her that it would engage an investigator to undertake the appropriate enquiries. By letter dated 9 September 2003 under the hand of Mr Craig Lightfoot, Client Manager, CTP Claims, AAMI wrote to ILA Consultants Pty Limited (ILA) providing a brief description of the accident and requesting them to interview the claimant and his passenger at the addresses or via the phone numbers provided to the police. No explanation was forthcoming explaining the change in the Client Manager, CTP Claims from Ms Hibberd to Mr Lightfoot.
By letter dated 8 October 2003, ILA wrote to AAMI indicating that their investigations had failed to locate the opponent or Mr Vikilani at the addresses or on the phone numbers provided to the police. Electoral roll searches conducted in respect of both also failed to yield a result. However, a perusal of the White Pages online revealed a listing for Maile, S at Maud Street, Lidcombe. A call was placed to this address but ILA was “informed the resident was a Solomon Maile and that he had no knowledge of Sione Maile".
ILA sent a further letter to AAMI dated 27 October 2003 which set out a number of addresses and phone numbers which had been furnished to it but which proved unsuccessful in revealing the whereabouts of the claimant and/or Mr Vikilani. Reference was again made in this letter to a listing in the White Pages of an S. Maile but who turned out to be a Mr Solomon Maile and not "your insured driver". It is to be noted that ILA did not at that point attend the Maud Street, Lidcombe address in order to investigate the coincidence resulting from an S Maile living at that address.
Ms Charleston then deposed that on or about 9 December 2003 she attempted to check the results of ILA's investigation by having an electoral roll search undertaken on Sione Maile and Antonio or Toni Vikilani. No relevant addresses were discovered. This was a little odd as Annexure "I" to Ms Charleston's affidavit (being a filenote in relation to those searches) refers to a
"S Maile
5 Maude Street
Lidcombe NSW 2141
9702-1612"
as well as to a Solomon Maile at an address at Narraweena and to an Audrey Vikilani in Guildford.
According to Ms Charleston's affidavit nothing further was done to follow up the addresses referred to in the file note including the Maude Street, Lidcombe address until 16 March 2004. In the meantime, the proceedings were listed for a directions hearing on 4 February 2004 when the claimant was ordered by Judge Bowden to file Notice of Grounds of Defence by 18 February 2004. Ms Charleston then deposed as follows:
"16.Due to our lack of success in locating either the Defendant or the witness, on or about 18 February 2004 I received instructions from AAMI to file a notice of grounds of defence which admitted a breach of duty of care."
Due to an oversight, the Notice of Grounds of Defence was not filed until 10 March 2004 when it was rejected by the District Court Registry as being out of time.
For reasons Ms Charleston has not explained, on or about 16 March 2004 she caused her secretary to telephone the property at 5 Maud Street, Lidcombe on 9702 1612. A filenote dated 9 December 2003 was made of this action. That phone call was successful in that the claimant's granddaughter answered the phone and informed Ms Charleston's secretary that he, the claimant, resided at that address.
Accordingly, on or about 18 March 2004 Ms Charleston advised AAMI to engage an investigator to attend upon those premises to interview the claimant and to renew its endeavours to locate Mr Vikilani. No doubt because of the failure of ILA successfully to ascertain the claimant's whereabouts, Mr Lightfoot on behalf of AAMI engaged Peter A Cox & Associates Pty Limited (Cox) to contact the Maile household at 5 Maud Street, Lidcombe and to obtain a statement from the claimant.
In a letter dated 27 May 2004 addressed to Mr Lightfoot at AAMI, Cox reported that the claimant did not reside at 5 Maud Street, Lidcombe. Accordingly, Cox indicated that it had made application to the Roads & Traffic Authority under freedom of information and privacy legislation for access to its records to establish the claimant's current address. Ultimately, Cox was provided with that address which was 4 Dangar Way, Airds at which they conducted a question and answer interview with the claimant on 19 July 2004. A copy of the interview and a report with respect thereto was forwarded by Cox to AAMI under cover of a letter dated 20 July 2004.
In the meantime the proceedings had been listed for directions on 11 May 2004 when the claimant was ordered by Judge Garling to file notice of grounds of defence by 4pm on 12 May 2004 and the matter was set down for arbitration to be held on 24 June 2004. Notice of Grounds of Defence was duly filed in compliance with the Court's order and which admitted breach of duty of care.
On 24 June 2004 the matter proceeded to arbitration as an assessment of damages only and an award was made in favour of the opponent. The award was forwarded to the parties on 8 July 2004. The last day for filing a rehearing application was 5 August 2004.
As I have observed, AAMI received Cox's report on or about 20 July 2004 wherein they indicated that the claimant had been located and interviewed. Cox summarised the result of that interview in the following terms:
"[The Insured Driver] … had worked until about 2.00am as a Security Guard at Pendle Hill Club and was driving a fellow worker, Tony Vikilani, to his Campsie home, then he intended proceeding to his own home.
By about 3.00am, the Insured Driver had progressed to the point where he was driving east along Parramatta Road, Flemington. He intended to make a right-hand turn into Richmond Road, thence to join Centenary Drive.
According to the Insured Driver, he stopped in Lane 4 (the right-hand lane turn lane) at the intersection of Richmond Road as traffic lights in his direction displayed a red arrow for drivers wishing to make the right turn.
When the red arrow changed to green, the Insured Driver saw a vehicle approaching the intersection from the opposite direction (travelling west) in Parramatta Road. This vehicle, of course, was driven by the Claimant!
The Insured Driver commenced to negotiate the right-hand turn, anticipating that the approaching vehicle driven by the Claimant would stop at the lights. However, he had travelled only a couple of metres when he realised that the driver of the oncoming vehicle was not intending to stop.
In order to avoid a collision, the Insured Driver states he braked heavily and brought his vehicle to a stop in the approximate centre of Lane 3. Following that, the front of the Claimant's vehicle collided with the front near-side mudguard of the insured vehicle.
Ambulances were summoned and after receiving treatment at the scene, the Insured Driver, together with his passenger, were taken to Concord General Hospital for further treatment and the Claimant was transported to Canterbury Hospital, where she was admitted.
Police attended but by the time they arrived, all parties had been conveyed to Hospital. They did not interview any of the parties involved until several days later. We have been informed that the insured vehicle and the Claimant's vehicle were both written off as a result of the incident." (original emphasis)

Cox's report noted that at that point in time they had not had the opportunity of interviewing Mr Vikilani but that the claimant was extremely cooperative and willing to assist and, they suggested, would present as an honest and credible witness. However, they did inspect the scene of the accident in respect of which they reported that, although they had not examined or recorded the phasing cycle of the traffic lights installed at the intersection of Parramatta and Richmond Roads, they could confirm that traffic turning right from Parramatta Road into Richmond Road was controlled by an "arrow signal" and that when traffic was permitted to turn into Richmond Road in compliance with a green arrow, a red light was displayed to westbound traffic in Parramatta Road. I shall return to part of Cox's Record of Interview with the claimant later in these reasons.
As a result of receiving Cox's report of 20 July 2004, Ms Charleston received instructions from AAMI on 27 July 2004 to file an application for rehearing in relation to the issue of liability only. On 30 July 2004 she forwarded a letter to Cox requesting a further factual investigation be carried out to locate and interview Mr Vikilani. On 2 August 2004 Ms Charleston caused an application for a rehearing limited to liability to be filed. Two days later the opponent's solicitors also filed an application for a rehearing with respect to the issue of quantum of damages.
On the same day (4 August 2004) Ms Charleston forwarded a letter to the opponent's solicitors noting that the Notice of Grounds of Defence admitting breach of duty of care on the part of the claimant had been filed in conformity with the admission made by her client’s insurer in correspondence and that, because she had had no success in locating the claimant or Mr Vikilani, she had no basis upon which to contradict the opponent's version of the accident. The letter went on to note that since the arbitrator's award was handed down, investigators retained by the insurer had located the claimant and the witness who had been interviewed and confirmed that the accident did not occur in the manner alleged by the opponent. Specifically, it was alleged that the opponent entered the relevant intersection against the red traffic light.
Accordingly, Ms Charleston indicated that she had been instructed to file a Notice of Motion seeking to amend the Notice of Grounds of Defence to deny liability and, in the alternative, to plead contributory negligence on the basis that the opponent, inter alia, had
(a)          proceeded at an excessive speed in the circumstances ;
               (b)          entered an intersection contrary to a red traffic light;
               (c)          failed to keep a proper lookout;
               (d)          failed to take evasive action when danger threatened.
On or about 16 August 2004, AAMI received a further report from Cox dated 11 August 2004 in which it indicated that it had located and interviewed Mr Vikilani at 145 Croydon Avenue, Croydon Park. His statement was summarised in that report in the following terms:
"According to Mr Vikilani, about 3.30am, the Insured Driver was travelling east along Parramatta Road, intending to make a right-hand turn into Richmond Road to join Centenary Drive. Traffic conditions were light at the time and the weather was fine and dry.
The vehicle stopped in Lane 4 (the right-hand turn lane) at the intersection as the traffic lights displayed a red arrow, preventing completion of their intended turn.
When the red arrow changed to green and as the vehicle moved forward, Mr Vikilani saw a vehicle approaching the intersection from the opposite direction along Parramatta Road. The insured vehicle had travelled only a couple of metres when he realised that the oncoming vehicle (driven by the Claimant) was not going to stop. Immediately after that, the front of the vehicle driven by the Claimant struck the front nearside mudguard of the insured vehicle.
…
After the collision, both Vikilani and the Insured Driver alighted from their vehicle. Mr Vikilani sat in the gutter nearby, recovering from his injury, and he observed the Insured Driver having a heated discussion with the Claimant.
Just prior to this heated discussion, the Claimant had also alighted from her vehicle. He was unable to hear what was said but Mr Vikilani is definite that the Claimant disobeyed the red light."
It is apparent that Mr Vikilani corroborated the version of the accident provided to the investigators by the claimant.
On 5 August 2004, Ms Charleston on behalf of the claimant filed a Notice of Motion for leave to file and serve an amended Notice of Grounds of Defence denying liability and, alternatively, pleading contributory negligence based on the same particulars to which I have referred in [33] above. In [32] of her affidavit she submitted that with the recent corroboration provided by the independent witness, Mr Vikilani, the claimant now had a strong case in defending liability.
The primary judge heard the Notice of Motion on 23 September 2004. Ms Charleston's affidavit was read without objection. She was not required for cross-examination. No evidence was filed on behalf of the opponent. On the other hand, it is to be noted that no evidence was called by the claimant from Madeleine Hibberd, AAMI's Client Manager CTP Claims, who had admitted breach of duty of care pursuant to s 81(1) of the Act on 30 January 2001, to explain or justify the making of that admission notwithstanding that she had not received a response to her letters to the claimant of 14 September 2000 and 6 November 2000 – there being no evidence that those letters had been returned unclaimed. It was only after the proceedings were commenced and Ms Charleston was instructed on 16 July 2003 to appear on behalf of the claimant that, as she deposed in [9] of her affidavit, she considered it prudent to engage an investigator to locate and interview the claimant and Mr Vikilani. It then took until 8 September 2003 for AAMI to agree to that recommendation.
The reasoning and the decision of the primary judge
After rejecting a submission on behalf of the opponent that it was not open to a defendant to withdraw an admission made by his or her third party insurer under s 81 of the Act, the primary judge stated that the application to amend the Notice of Grounds of Defence was to be dealt with
"under the general principle of the law, namely that there is a discretion in the Court and that all of the issues involving the parties should be before the Court if the circumstances are such that the justice of the situation demands it."
A little later in her judgment, her Honour stated the relevant principles in more expansive terms, namely,
"In my view, in this case, those principles require the defendant to place before the Court material not only to explain the circumstances which have led to the situation in which the defendant finds itself, but also to satisfy the Court that were the relief to be granted, the plaintiff would be in a position to have a fair trial on the issues now raised."
Although the opponent submitted that the claimant had been silent in the sense that his solicitors had not informed her or her solicitors of the investigations which were being undertaken on an ongoing basis from September 2003 to August 2004 and had proceeded with the arbitration in June 2004 on the basis that breach of duty was admitted notwithstanding those ongoing enquiries, her Honour considered that such conduct, although warranting some criticism, did not militate against the grant of the leave sought. Rather,
"[t]he question is whether as a consequence of that conduct the plaintiff has suffered any material detriment or, going to the plaintiff's third point, any material prejudice."
The primary judge noted that the opponent had placed no evidence of actual prejudice before her. However, she did not think that the matter of prejudice rested solely with the opponent.
After stating the principles referred to in [38] above, her Honour continued in these terms:
"Since January 2001 the plaintiff has proceeded on the basis that liability was not in issue. It was argued by the defendant that by January 2001 evidence concerning the damage to the motor vehicles would have been lost in any event. I do not know that this was the case. I do have material that suggests that both vehicles were written off but I have no material as to when and in what circumstances they were no longer available for investigation.
It was argued further for the defendant that there was no evidence that there were any witnesses who might have been located at that early state. I have already pointed to material in the records of interview with the defendant and his passenger to suggest that that is not the case and that in fact there may have been other vehicles in the immediate vicinity at the time of the accident or within a very short time after the accident. It is not possible for either of the parties, I would suggest, at this stage to obtain evidence from any independent witness."
It is to be noted that her Honour made no reference to the alternative amendment sought by the claimant to allege contributory negligence on the part of the opponent.
The relevant principles stated
The parties generally accepted that the primary judge had correctly stated the principles to be applied when she held that the claimant was required to place material before the Court not only to explain the circumstances which led to the situation in which he found himself, but also to satisfy the Court that, if the relief sought were granted, the opponent would be in a position to have a fair trial on the issue of liability and/or contributory negligence.
Although not referred to by her Honour, those principles reflect the observations of McLoughlin DCJ in Ness v Graffen (2003) 60 NSWLR 549. In that case the third party insurer, pursuant to s 81 of the Act, admitted liability for the accident and assessed contributory negligence at 10%. It then sought to withdraw that admission. The plaintiff filed a statement of claim and the defendant filed a defence which, inter alia, denied negligence. His Honour held that a defendant's third party insurer had no entitlement to withdraw an admission of liability and/or any assessment of contributory negligence made by it pursuant to s 81 of the Act. Rather, such an admission could only be withdrawn in the interests of justice for good reason shown by evidence demonstrating mistake by the insurer's claim manager, change of circumstances, the ascertainment of further information or establishment of misrepresentation.
McLoughlin DCJ relied in particular upon an unreported decision of Dunford J in Hannaford v Cochrane (14 September 1995, unreported) who had concluded that an admission of liability in whole or in part made under s 45(2) of the MA Act could only be withdrawn or disregarded if the interests of justice so required and that that meant some good reason needed to be shown for so doing. McLoughlin DCJ then concluded (at 556 [29]) that an admission under s 81 of the Act by the insurer required adequate reasons to be established for its withdrawal. In this respect his Honour considered (at 556 [30]) that s 81 was in far stronger terms and placed a greater onus and responsibility upon the insurer than had s 45 of the MA Act.
His Honour then observed (at [30] that there must
"…be evidence which sets out mistake by the claims manager, change of circumstances, further information being ascertained, or misrepresentation being established to enable the court to properly review an attempt to withdraw such admission …"
He then continued (at [31]):
"…The Motor Accidents Compensation Act came to be in part because of increasing court costs, the need for expedition and further, for there to be less legal formality. All of these matters require any insurer to give proper reasons and obtain the court's approval to withdraw an admission once made, in my view, under s 81 of the Motor Accidents Compensation Act."
In the circumstances of that case, McLoughlin DCJ found that there had been no reason put forward by the insurer to justify the withdrawal by the defendant of the admission under s 81 which had been made deliberately after the insurer had assessed all material information. Accordingly, not only could the admission not be withdrawn but also the paragraphs of the Notice of Grounds of Defence which denied negligence were held by his Honour to disclose no reasonable defence, to have a tendency to cause embarrassment and to be contrary to the admission required to be made by s 81. He therefore found that they should be struck out.
The Court was referred to two recent decisions of Master Harper of the Supreme Court of the Australian Capital Territory, neither of which was available to the primary judge having been decided on 11 March 2005 and 15 July 2005 respectively. The first was Wyer v Hunt [2005] ACTSC 15. Before the Master was a Notice of Motion by the defendant for leave to amend his defence by amending the existing paragraphs which admitted a breach of duty of care to deny any such breach and to add a new paragraph alleging contributory negligence.
Although there was no equivalent legislation in the Australian Capital Territory to the Act, nevertheless motor vehicle accidents were processed by the third party insurer in a manner which mirrored the statutory process in New South Wales. Thus, the solicitors acting for the plaintiff notified the defendant's third party insurer, NRMA Insurance Limited (NRMA), of his claim and attached a claim form duly verified by statutory declaration. The plaintiff described the circumstances of the accident in the claim form and illustrated that description with a diagram which, on its face and if accepted, indicated that the defendant was at fault. The claim was assigned by the NRMA to one of its senior injury claims consultants who made application for a police report which was received in December 2003. The report contained a description of the accident provided by the plaintiff which reflected the description made by him in the claim form.
Although the plaintiff was able to give the police the registration number of the defendant's vehicle and to provide a description of him, the police were unable to locate him as he had apparently moved from the address given at the time of registration of his vehicle. The report noted that the police proposed no further action until the defendant was located.
In January 2004 the claims consultant wrote to the plaintiff's solicitors stating, inter alia,
"The enquiries into the circumstances of the accident are now complete and we admit our insured has breached their duty of care to your client."
The plaintiff's solicitors then commenced proceedings by originating application in the ACT Supreme Court in March 2004.
Solicitors were instructed on behalf of the NRMA in July 2004 who prepared a defence admitting breach of duty of care. In November 2004 there was a change of solicitors on behalf of the defendant to another firm on the NRMA's panel. The solicitor who then had the carriage of the matter was concerned that liability had been admitted without a statement having been taken from the defendant. She recommended to the NRMA that such a statement be obtained. In December 2004 an officer of the NRMA conducted an oral question and answer session with the defendant who gave an address different from those available to the police from the motor registry records. The effect of the defendant's statement as to the manner in which the accident occurred was at significant variance to that of the plaintiff. If accepted, it would have exonerated the defendant or, at the very least, resulted in the plaintiff being guilty of contributory negligence.
Accordingly, in February 2005 the solicitor filed a Notice of Motion to amend the defence supported, inter alia, by an affidavit by the defendant's original solicitor who deposed that, on the basis of the admissions made in the NRMA letter and the subsequent defence, she had formed the view that it was not necessary to make any further enquiries as to the defendant's breach of duty. As in the present case, there was no evidence from the NRMA's senior injury claims consultant who had originally written to the plaintiff's solicitors in January 2004 admitting that the insured had breached his duty of care to the plaintiff, explaining why such an admission had been made given that no effort was then made to locate the defendant to ascertain his side of the story. In other words, no explanation was forthcoming as to the nature of "the enquiries into the circumstances of the accident" which the claims consultant asserted were "now complete" and which resulted in the admission of breach of duty of care.
The Master noted that to grant the defendant's application would have the effect of permitting him to withdraw the admission of breach of duty of care made by his insurer. It is not entirely clear whether what he was referring to was the admission of breach contained in the claims consultant's letter to the plaintiff's solicitors or to the same admission contained in the filed defence. In this respect, it is to be noted that in the present case there has been no application by the claimant to withdraw the admission contained in AAMI's letter to the opponent's solicitors dated 30 January 2001 but only an application for leave to amend the Notice of Grounds of Defence by deleting the admission of breach of duty of care and by substituting a denial of any such breach and alleging contributory negligence.
The Master then referred to his decision in Reinicke v Neilson [2004] ACTSC 5 where he had set out the principles governing the question of withdrawal of an admission of liability by a defendant in respect of a motor vehicle accident. He noted that he had referred in that decision to that of the Full Court of the Federal Court of Australia in Celestino v Celestino (16 August 1990, unreported), a decision to which I shall return. The Master then referred to the well-known statement of principle in relation to amendments expressed by Bowen LJ in Cropper v Smith (1884) 26 ChD 700 at 710 approved by the High Court in Clough and Rogers v Frog (1974) 48 ALJR 481 at 482.
The Master then continued in these terms (at [19]) (omitting citations):
"Their Honours [in Frog] also drew attention to the proposition that, in the absence of clear evidence to the contrary, a court is entitled to assume that counsel who makes an admission in the course of the conduct of a trial has satisfied himself or herself that the admission was, on the client's version of the facts, a proper admission to make. Their Honours extended this assumption to admissions made by solicitors in the course of litigation whether in pleadings or correspondence. Where leave is sought to withdraw an admission, a court will require explanation for the making of an admission which must be a sensible one based on evidence of a solid and substantial character …".
He then continued (at [20]):
"Their Honours said that even where there was a satisfactory explanation for the making of an admission in error, the admission could be withdrawn only where no injustice would be occasioned to the other party. If the other party had relied on the admission in good faith to his or her detriment, the Court would not permit it to be withdrawn. The longer the lapse of time between admission and withdrawal, the more likely it was that the Court would infer prejudice. It is to be expected that memories of witnesses and parties will fade over time, and that lines of enquiry will become cold. Although prejudice in particular respects might not be apparent on the information before the Court, the probability of unidentified prejudice, depending upon the length of the delay, can be assumed."
The Master then referred to the principles governing the exercise of the discretion whether or not to approve the withdrawal of the permission articulated by Santow J (as he then was) in Drabsch v Switzerland General Insurance Co Ltd (16 October 1996, unreported). His Honour in that case was dealing with a commercial dispute in the Equity Division of this Court and the Master acknowledged that the principle stated by his Honour would not necessarily translate precisely to an action for damages for personal injury. Nevertheless, he summarised the principles insofar as they were relevant to the application before him in the following terms (at [21]):
"(a)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.
(b)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.
(c)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.
(d)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."

The Master then noted that the admission in the case before him was not made initially by the defendant's solicitor or counsel, but by his insurer through a claims officer employed in its compulsory third party claims department. He then continued (at [22]):
"An admission made by letter over the hand of the claims officer is in a different category to an admission which might be made by an unrepresented litigant. It is clear from the correspondence that the admission was made after consideration of the police report on the plaintiff's claim form. The admission was stated to be made following insurer's enquiries into the circumstances of the accident. It was carefully worded as an admission of breach of the defendant's duty of care to the plaintiff, rather than being framed as an admission of liability. … The admission was a clear and distinct one and was accepted by the plaintiff. I am satisfied that it was made by the insurer after due deliberation by an experienced claims officer aware of the matters which ought to be taken into account in arriving at such a decision, and after a full opportunity to consider the insurer's case and whether the admission should be made. The claims officer was aware from the police report that the police had been unable to find a defendant. In the absence of any contrary evidence, she must be taken to have turned her mind to the question of whether effort should be made by the insurer to find a defendant and take a statement from him. The admission was made, to use the words of Santow J in Drabsch, with deliberateness and formality. It was not made inadvertently or without due consideration of any material matters. The admission has not been shown to be contrary to the actual facts: it remains consistent with acceptance of the plaintiff's case." (emphasis added)
So far as the issue of prejudice was concerned, the Master (at [24]) was not satisfied that there had been any actual prejudice to the plaintiff arising from reliance on the admission. He thus considered (at [25]) that in the circumstances it was extremely unlikely that the plaintiff's solicitors would have advertised seeking witnesses to the accident or undertaken other investigations directed to identify witnesses. However, although he was not satisfied that there had been any actual prejudice to the plaintiff arising from reliance on the admission, he noted that he was required to take into account the possibility of some unidentifiable prejudice arising from the delay.
The Master noted that in a different context, McHugh J spoke in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 551 of the deterioration in the quality of justice arising from delay. As his Honour remarked, sometimes deterioration is not recognisable even by the parties: prejudice may exist without the parties or anybody else realising that it exists. The longer the delay, McHugh J said, the more likely it is that the case will be decided on less evidence than was available to the parties at the time the cause of action arose.
In the present case, the Master was thus of the view (at [26]) that
"the admission by letter was made three months after the accident, and the plaintiff's solicitors became aware that it was sought to be withdrawn thirteen months later. In the scheme of things, this cannot be seen as an inordinate delay, and the inference of potential prejudice is not particularly strong."
The Master then referred (at [27]) to the decision of McLoughlin DCJ in Ness noting that the Act contained a specific provision imposing obligations on insurers in relation to admissions which he therefore considered to be of limited assistance when dealing with an action for damages at common law. It is not entirely clear what the Master intended to convey by that observation given that the principles which he articulated in the case before him did not differ significantly from those applied by Judge McLoughlin in Ness.
The Master then noted (at [30]) that the lapse of time was not so lengthy as to give rise to a strong presumption of probable unidentified prejudice. Nevertheless, the defendant had not established that the admission was made in error but, on the contrary, the inference from the evidence was that the second solicitor retained by the NRMA simply took a different view to the claims officer as to whether efforts to locate the defendant and obtain a statement from him were justified. The Master then observed (at [31]) that no evidence had been adduced on behalf of the defendant either from the claims officer or from the solicitor who had the carriage of the matter at the first firm of solicitors retained on behalf of the defendant. He therefore inferred that their evidence would not have assisted the defendant to establish that the admission was made by reason of some mistake.
Having referred (in [32]) to the fact that the onus was on the party seeking to withdraw an admission to satisfy the court that it was in the interests of justice that it be permitted, there being no onus on the other party to establish actual prejudice, the Master concluded that the admission in question was made after a detailed consideration of all the information then available to the NRMA and in circumstances where it clearly intended the plaintiff to act upon it. Accordingly, the present was not a case where the admission could be seen to be contrary to the facts which would inevitably be found. He therefore concluded (at [34]) that the application to amend did not satisfy the criteria necessary to be established before an admission would be permitted to be withdrawn. He therefore refused leave to amend the defence.
Barker v Gifford [2005] ACTSC 55 involved a similar application but in circumstances where the entitlement of the plaintiff to damages arising out of the relevant motor vehicle accident had occurred in New South Wales and was therefore governed by the Act. In that case, after the plaintiff had lodged a claim form, it was allocated to an injury claims consultant in the NRMA who arranged for instructions to be given to a firm of investigators to check the circumstances of the collision. The investigators conducted interviews with both the plaintiff and the defendant driver. After receiving a report from the investigators, the claims consultant wrote to the plaintiff's solicitor by letter headed "Section 81 Notice" in which he confirmed that the NRMA had completed its enquiries into the circumstances of the accident and admitted liability. There was evidence that the particular claims consultant had left the NRMA, the matter having been taken over by a different officer.
There was also evidence that the solicitor for the plaintiff, after receiving the letter admitting liability, made no further enquiries in relation to that issue including any potential claim against the shire council of the area within which the road was located upon which the accident occurred. Nor had he looked at the possibility that the plaintiff might have been guilty of contributory negligence.
The NRMA then placed the matter in the hands of solicitors who wrote to the plaintiff's solicitors indicating that they had recommended that the admission of breach of duty of care and the lack of an allegation of contributory negligence be reviewed and putting the plaintiff's solicitors on notice that an amended s 81 notice might by issued. Thereafter such an amended notice was issued which maintained the admission of liability but now asserted contributory negligence.
In due course proceedings were instituted in the ACT Supreme Court. The plaintiff pleaded that the first defendant was negligent and that the second defendant was vicariously liable for that negligence but did not plead the admission of liability contained in the amended s 81 notice. (In this respect the statement of claim differed from that filed in the present case where the admission of a breach of the claimant's duty of care to the opponent is pleaded in [4] thereof.) Thereafter a defence was filed which denied that the first defendant was negligent as alleged or at all and alleged contributory negligence.
On the hearing before the Master of an application by the plaintiff to strike out the defence, it was conceded by the defendants that the defence delivered could not stand with the NRMA's letter to the plaintiff's solicitors admitting liability under s 81. The defendants were therefore prepared to amend the defence so as to admit negligence but submitted that they should be permitted to depart from the original admission of liability to the extent of alleging contributory negligence.
The Master then referred to his decision in Wyer and the principles expounded therein, based in particular upon the decision of the Full Court of the Federal Court of Australia in Celestino. He repeated those principles in [24], [25] and [26] of his judgment. The Master inferred that the NRMA claims officer must have decided that he had enough information to make a decision about liability and that it was unnecessary to obtain a copy the police report or the opinion of an accident reconstruction expert. The admission was made following the completion of the insurer's enquiries into the circumstances of the accident. (Ms Hibberd's letter of 30 January 2001 makes the same statement.)
The Master then continued in these terms (at [27]):
"The admission was a clear and distinct one which was accepted by the plaintiffs. I am satisfied that it was made by the insurer after due deliberation by a claims officer with responsibility for the matter and authority to make it, who was aware of the matters that ought to be taken into account in arriving at such a decision. To use the words of Santow J in Drabsch, the admission was made with deliberateness and formality."
The Master then noted that he had been referred to the decision of McLoughlin DCJ in Ness and observed (at [29]) that it did
"not appear to me that any of those cases give rise to any issue of principle which departs from the general principles applying in this Court to the withdrawal of an admission, to which I have already referred. In particular, it does not appear to me that any different consideration is applied to withdraw the admission under s 81 of the Motor Accidents Compensation Act, from those which apply to withdrawal of an admission under the general law. It has not been suggested that the admission was made hurriedly because of a need to comply with a time limit laid down by the legislation."
This statement is to be contrasted with the observation by the Master in Wyer which I noted in [61] above where, after referring to the decision of McLoughlin DCJ in Ness and to s 81 of the Act, he stated that the New South Wales Motor Accident legislation imposed obligations on insurers in relation to admissions and that therefore the cases relating thereto were of limited assistance when dealing with an action for damages at common law. In my view the later statement by the Master in Barker to which I have referred is more accurate.
The Master then held that there did not appear to be any evidence to support any mistake on that part of the NRMA's claims officer in the making of the admission in that case or any satisfactory explanation for the lack of that evidence. But even if the admission of liability had been made by mistake, the Master considered he would still exercise his discretion to permit the admission to be withdrawn only if he was satisfied that no prejudice would thereby be occasioned to the plaintiff. In the particular circumstances, and given that four years had elapsed since the admission and that the limitation period for bringing an action against the shire council had expired, he considered that it was probably inevitable that lines of enquiry had gone cold, memories had faded and therefore the plaintiff would suffer actual prejudice if the admission were now permitted to be withdrawn.
Celestino was the subject of a joint judgment by Spender, Miles and von Doussa JJ. The facts were quite different to the present case. Nevertheless, the Full Court set out the principles that would apply to an application made during a trial for leave to withdraw an admission of liability made prior to trial notwithstanding an earlier defence denying that liability. It is unnecessary to set out the principles to which the Full Court referred as they have been repeated verbatim in the judgment of Master Harper in Wyer, which I have recorded above. The same observation may be made with respect to the judgment of Santow J in Drabsch.
In my opinion, there is no essential difference between the principles articulated by Master Harper in Wyer on the one hand, which were sourced in the decision of the Full Court in Celestino and that of Santow J in Drabsch, and the statement of principle by the primary judge on the other that the onus lay upon the claimant to place before the Court material not only to explain the circumstances which led to the situation in which the claimant had now found itself but also to satisfy the Court that, were relief to be granted, the opponent would not be prejudiced in obtaining a fair trial on the issue of breach of duty of care.
I do not understand her Honour's reference to the requirement that the claimant explain the circumstances which led to the present situation to involve any relevant difference, except as a matter of emphasis, from the requirement referred to by Master Harper and sourced in the decision in Celestino that the Court would require an explanation for the making of the admission which must be a sensible one based on evidence of a solid and substantial character. Equally, her Honour's observation that the relief should not be granted unless the opponent would be in a position to obtain a fair trial on the issue of breach involved consideration not only of actual prejudice (of which there was no evidence) but also of presumptive prejudice based on the delay between the making of the admission and the application to withdraw it.
Furthermore, I do not understand her Honour to have been excluding from the Court's discretion the considerations referred to by Santow J in Drabsch that admissions made with deliberateness and formality would "ordinarily" not be permitted to be withdrawn on the one hand and, on the other, that it would "usually" be appropriate to grant leave to withdraw an admission where it was shown that it was contrary to the actual facts.
Did the primary judge misapply the correct principles?
It is clear from her Honour's judgment that she apparently did not find it necessary to deal with the first requirement that the claimant provide a sufficient explanation as to the circumstances which led to the making of the admission of breach of duty of care either in the s 81 notice or, many months later, in the Notice of Grounds of Defence. In this respect, it is to be noted that the s 81 notice was given on 30 January 2001 but the Notice of Grounds of Defence admitting breach of duty of care was not filed until 12 May 2004, more than three years later and only then because of an order of a judge of the Court that it be filed by that date.
The foregoing notwithstanding, it is apparent from the paragraphs in her judgment that I have recorded in [41] above, that her Honour refused relief upon the basis that to permit the defence to be amended to deny breach of duty of care would place the opponent in a position where it would not be possible for her to secure the material necessary to obtain a fair trial on that issue. Two bases were advanced by her Honour to support that conclusion. The first was the rejection of the claimant's argument that, by January 2001, when the s 81 notice was issued, evidence concerning the damage to the motor vehicles would have been lost in any event as they both had been written off. Her Honour's response to that argument was that she did not know that that was the case as at January 2001 and had no material before her as to when and in what circumstances the vehicles were no longer available for inspection after, presumably, they had been towed away.
The second basis upon which her Honour determined that the opponent would not obtain a fair trial if the amendment to the grounds of defence were permitted was her rejection of the claimant's argument that there was no evidence that there were any witnesses to the accident who might have been located at an earlier point of time had an admission of breach of duty not been made in January 2001. Her Honour pointed to material in the records of interview of the claimant and Mr Vikilani to suggest that there were such witnesses and that there may have been other vehicles in the immediate vicinity at the time of the accident or within a very short time thereafter, but that it was not possible for either party as at September 2004 to obtain evidence from any independent witness so identified.
The claimant submitted that each of the two bases relied upon by the primary judge to support her conclusion that the opponent could not obtain a fair trial of the issue of breach of duty if leave to amend was now granted was devoid of any supporting evidence or was irrelevant to the resolution of that issue. As to the first, as I have observed her Honour considered that there was no evidence before her as to when the vehicles were no longer available for inspection in order to determine the damage thereto which may have assisted, one assumes, in determining the issue of who collided with whom. No doubt her Honour had in mind that the opponent had no recollection of the accident and would therefore be unable to give evidence as to whether her vehicle came into collision with that of the claimant or vice versa.
However, it was common ground, and the opponent's claim form made it apparent, that the collision took place in the westbound lane 3 of Parramatta Road after the claimant had commenced to make a right hand turn across that lane in order to enter Richmond Road. The material in the police report, which was available to both parties as at March 2000, made it clear that the claimant was alleging that he made a right-hand turn with the benefit of a green arrow. If that was the case then there could be no doubt that the opponent had proceeded through a red light. The only issue in respect of breach of duty in these circumstances was: did the claimant have a green arrow when he turned across the lane in which the opponent was driving? It was obvious that the two vehicles had collided and that due to the extensive damage both were written off. Accordingly, an inspection of the vehicles would not have revealed any information as to whether the claimant turned across the lane in which the opponent was travelling with or without a green arrow.
In these circumstances, as the claimant submitted, the issue was the reasonableness of the conduct of each of the parties having regard (to a large extent, although not completely) to whether the opponent failed to stop for a red light and whether the claimant proceeded to turn right with a green arrow in his favour or continued to do so when the opponent showed signs of not stopping. As I have said, the determination of this issue could not possibly depend upon the nature of the damage caused to each vehicle. In my view, therefore, the first basis upon which her Honour found prejudice was in error.
The material relied upon by the primary judge in respect of the second ground upon which she based her decision of prejudice related to material in the records of interview between AAMI's investigators and the claimant and Mr Vikilani which, so her Honour said, indicated that there may have been witnesses to the accident whose identities had now been lost.
Apart from those references, the opponent in her claim form stated that there were no witnesses and no witnesses were referred to in the police report. In the record of interview between the investigator and the claimant, the only questions and answers which were identified by the parties as relating to her Honour's reliance thereon were as follows:
"Q83      And was there much traffic on the road that night?
A            No.
…
Q88And was there much traffic the other way, waiting or passing through the lights? I assume, when you were stopped, the traffic going toward Parramatta were still … They must've had a green light because they would still go. Was there much traffic coming the other way?
A            Not much.
…
Q115And did you then get out of your car?
AYeah, I get out. Actually, yeah, Tony get out too, and I ask him 'You alright?' He said 'Yes' and I come to the lady.
Q116      You went to the other car?
A            Yeah, I try to help.
Q117And so you…?…someone came along and you decided to leave her in the car?
A            Yeah.
…
Q121Yeah…yeah. Okay, now who called the Police? Did someone call Police and Ambulance?
A            I don't know.
Q122      But they both came? Police and Ambulance came?
A            Yeah…yeah."

In the record of interview between the investigator and Mr Vikilani, the following questions and answers were said to be relevant to the issue under consideration:
"Q118Yeah, you stopped? Right, and you sat there for a little minute. Was there much traffic coming the other way?
A            Yeah…wait for the lights…John wait for the lights.
Q119      Was there much traffic around?
A            No…no
Q120      Nothing?
A            Nothing?
…
Q151Yeah, you didn't hear, but they were talking to one another?
A            Yeah…yeah…yeah, and rang up the Police.
Q152      Who rang the Police?
A            John
Q153      He rang the Police?
AJohn, and another car come…another man come there. I don't know. That man sit down.
Q154Yes. Were there any other…? At the time of accident, were there any other cars around that you noticed, or any other people around that you noticed?
A            Yeah…yeah.
Q155      Where were they?
A            Other cars come from Parramatta. They park.
Q156But this was…this was immediately after the accident, was it, or shortly after the accident?
A.           Someone asked me what happened.
Q157So someone came after?…a stranger?….someone you didn't know?…parked their car and came over, did they?
A            Yeah, they parked."
From the above material no more can be inferred than that after the accident occurred some unidentified person parked their car and came over to the accident site. As at 30 January 2001, when the s 81 notice was issued, some 10 months had expired since the accident. There was nothing in the interviews that identified any particular person in any way, shape or form. There was nothing to indicate that the person who parked his or her car and then came over to the accident site had actually seen what happened. As the claimant submitted, the accident occurred in the early hours of the morning, very suddenly, in circumstances where the only reasonable inference was that either there were no independent witnesses to the accident or, if they were, they were not sufficiently concerned about how the accident happened to have provided their details to either the police or any of the parties. The only possible way any such witness or witnesses might have been ascertained would be by the placing of advertisements requesting any such witness to come forward, albeit 10 months after the event. In my opinion, the chance of any such action producing an independent witness of the accident itself was remote to the point of being non-existent.
Accordingly, her Honour's conclusion that
"there may have been other vehicles in the immediate vicinity at the time of the accident or within a very short time after the accident"
is so speculative as to be indicative of error.
In the foregoing circumstances, in my opinion the primary judge’s conclusion that the opponent would not, if breach of duty was now denied, obtain a fair trial on that issue because of her inability to secure any material relating thereto was in error and was supported by neither actual nor presumptive evidence of prejudice. I am mindful in the latter respect of the general proposition that an identifiable prejudice may arise from delay which is not recognisable even by the parties; that evidence can disappear without anyone ever being aware of its existence; that witnesses' and other parties' memories will fade over time and that lines of enquiry will become cold. In the present case, there had been a lengthy delay from January 2001 (when the s 81 notice was issued) to August 2004 when the claimant's solicitors filed an application for rehearing in relation to the issue of liability.
On the other hand, for the reasons I have indicated, the present is not a case in which in any relevant way the memories of the parties have faded, particularly as the opponent had no memory of the collision in the first place. The memories of the claimant and Mr Vikilani are recorded in their records of interview. Further, given the only relevant factual issue between the parties going to breach to which I have already referred, no line of enquiry relevant thereto has been identified which may have become cold as a consequence of the delay. The only two lines of enquiry relied upon by the primary judge have been demonstrated to have been without substance.
In these circumstances, in my opinion no relevant prejudice even of a presumptive nature had been shown possibly to exist to warrant a finding that the opponent may not be able to secure a fair hearing on the issue of breach of duty if the claimant were now permitted to deny any such breach.
Did the claimant place before the Court solid and substantial evidence which provided a sensible explanation for the making of the relevant admission?
As I have indicated, this was an issue that her Honour did not address. It therefore becomes necessary for this Court to do so. In so doing, it needs to be remembered that the claimant is not seeking to withdraw the admission made by AMMI in the s 81 notice but only to amend his defence by withdrawing the admission that he was negligent. In some future case in which it is sought to withdraw an admission of liability made under s 81, it may be necessary to consider whether the decisions in Hannaford and Ness concerning such admissions, are entirely compatible with those in Frog and Celestino.
I have already noted that in her statement of claim and in particular in [4] thereof, the opponent has pleaded that the claimant's insurer admitted, pursuant to s 81 of the Act, that the claimant breached his duty of care to the opponent. In the amended Notice of Grounds of Defence which the claimant seeks the Court's leave to file, [4] as well as [1], [2] and [3] of the ordinary statement of claim are still admitted and therefore available for tendering against the claimant at the trial.
The critical amendment sought by the claimant is leave to deny [9] of the statement of claim which alleges that the opponent's injuries were caused by the claimant's negligence.
In these circumstances, the evidence must establish an adequate reason based on evidence or a sensible explanation of a solid and substantial character explaining the admission of a breach of duty of care in the Notice of Grounds of Defence filed on 11 May 2004. In my opinion, the evidence establishes quite clearly an explanation as to why that admission was made at that point of time. There is no doubt that the evidence of Ms Charleston in her affidavit was evidence of a solid and substantial character and that it provided a sensible explanation as to how that defence came to be filed.
In essence, from the time Ms Charleston was instructed in July 2003 shortly after the opponent's solicitors instituted proceedings by way of ordinary statement of claim, she and AAMI took a number of steps between then and May 2004 (when the defence was filed) to ascertain the whereabouts of the claimant and Mr Vikilani for the purposes of interviewing them and otherwise obtaining a statement as to their evidence. It was obvious from the police report that the insurer was placed in a difficult position in terms of defending the proceedings without being able to call evidence from the claimant and his witness, Mr Vikilani.
It is true that it might have been appropriate for Ms Charleston to have informed her opposition that those enquiries were proceeding, but that notwithstanding, it is apparent that significant efforts were made to ascertain the whereabouts of the claimant and, when they were unsuccessful, on 10 May 2004 there was a change in investigator in order ultimately to achieve a result. A statement of the claimant was received from the investigator by the claimant's solicitor on or about 21 July 2004 and shortly thereafter the opponent's solicitor was put on notice that it was proposed to put breach of duty of care in issue when an application for a rehearing on the issue of liability only was filed on 2 August 2004.
As I have observed, it was not until on or about 21 July 2004 that AAMI received the report from Cox dated 20 July 2004 which revealed that they had located and interviewed the claimant. In the meantime, a judge of the Court had on 11 May 2004 ordered that Notice of Grounds of Defence be filed by 4pm on 12 May 2004. In these circumstances, as the investigator's efforts had not at that point in time produced a result, it is understandable that the grounds of defence filed in accordance with the Court's order at that point admitted breach of duty of care.
The same comment applies to the arbitration which was set down by the Court for hearing on 24 June 2004. It proceeded upon the issue of quantum only given that at that time the insurer had not received Cox's report. As I have already observed, on 2 August 2004 Ms Charleston caused to be filed an application for a rehearing on the issue of liability notwithstanding that at that point of time she had not received the further report from Cox relating to the locating and interview of Mr Vikilani which did not occur, and which was not the subject of a report received by the insurer, until on or about 16 August 2004.
Accordingly, the opponent's solicitor was put on notice of the proposed denial of breach of duty before AAMI obtained corroboration from Mr Vikilani of the description of the accident obtained from the claimant.
Had it been relevant, I would not have endorsed the withdrawal by the insurer of its admission of breach of duty on behalf of the claimant contained in the s 81 notice. As I have already observed, no explanation was forthcoming as to why that admission was made and, in particular, there was no evidence that the author of the letter constituting that notice, Ms Hibberd, was not available to provide that explanation. Notwithstanding that, as far as the evidence goes, the admission was made in circumstances where the opponent admitted that she had no relevant memory of the accident whereas the claimant did, and given that the only attempt to contact the claimant was by the letters from Ms Hibberd to him of 14 September 2006 and November 2000 in respect of which there was no evidence that they were returned unclaimed but merely not responded to, it is difficult to understand why in light of that material Ms Hibberd considered it appropriate or necessary to admit breach of duty of care.
An available explanation for the admission may have been that Ms Hibberd was influenced by the fact, which could be proved by Constable Clyne who attended the accident, that the collision clearly occurred in the lane in which the opponent was driving in circumstances where it could also be proved through Constable Clyne that the claimant's vehicle was turning across that lane in front of her. Prima facie, therefore, notwithstanding that the opponent had no memory of the collision, she may have been able to say that as far as she was aware she had not run a red light given that she had told the Constable that she did not feel drowsy at the time. In the absence of the claimant to prove that he only turned right on the green arrow, the opponent's evidence may, without evidence of contradiction, have been sufficient to obtain her a verdict. However, in the absence of evidence from Ms Hibberd, I am only speculating.
Notwithstanding the foregoing, it was clearly open to the insurer to deny liability: it was under no compulsion to admit liability in the circumstances. Further, had it denied liability, it was still open to it to later admit liability (see s 81(4)) if, for instance, efforts to locate and interview the claimant and Mr Vikilani ultimately proved unsuccessful. In those circumstances, like Master Harper in Wyer, there is no reason why this Court should not take at face value, difficult though it is to do so, the statement of Ms Hibberd in the s 81 notice that the insured had
"completed looking into the circumstances surrounding your client's motor vehicle accident."
There was no explanation to suggest that the admission of fault and breach of duty contained in that notice was other than made with deliberateness and formality. On the other hand, given the opponent's lack of memory of the collision and the evidence which would be elicited from the claimant and Mr Vikilani in accordance with their records of interview, any admission of breach of duty made by AAMI prior to locating the whereabouts of the claimant and Mr Vikilani and a statement of their version of events would, to adopt what Santow J said in Drabsch, be contrary to the actual facts. In this regard, there was nothing in the material to suggest that the claimant and Mr Vikilani would not make honest and reliable witnesses and, in fact, the investigator reported that they would.
It follows from the foregoing that in my opinion the primary judge's discretion miscarried and that, in the circumstances, the amendment to the Notice of Grounds of Defence sought by the claimant should have been granted.
Although her Honour did not deal with the matter, that amendment should extend to the allegation of contributory negligence. It was not suggested that, if the Court was of the view that the claimant was entitled to amend his defence to deny the allegation of negligence in [9] of the statement of claim, he ought not to be permitted to plead contributory negligence.
The position may have been different had that amendment not been allowed so that the withdrawal of the admission of breach of duty of care made in the Notice of Grounds of Defence filed on 11 May 2004 was refused. In this respect, Master Harper in Wyer (at [36]) expressed the view that the admission of breach of duty of care was not inconsistent with an assertion by the defendant that the plaintiff was guilty of contributory negligence. This was to be contrasted with an admission of liability generally which, in the Master's view, would have been inconsistent with a subsequent assertion of contributory negligence. However, in the present case, there was no admission or denial of liability (although that is what s 81(1) calls for), but only an admission both in the s 81 notice and the filed Notice of Grounds of Defence of an admission that the claimant had breached his duty of care to the opponent.
At the hearing of the appeal the claimant submitted that if the Court refused leave to amend the Notice of Grounds of Defence to withdraw the admission of breach of duty of care, nonetheless it should permit an amendment to plead contributory negligence. At the time the Court did not consider that it was necessary to hear the opponent on that issue. However, having further considered [36] of Master Harper's judgment in Wyer (which was not drawn specifically to our attention during the oral argument), we called upon the opponent's counsel to provide supplementary written submissions on the issue, which he has done. However, in the circumstances, it is unnecessary to consider the force of those submissions or otherwise to rule upon the correctness and applicability to the present case of the point made by Master Harper in [36] of his judgment in Wyer that an admission of breach of duty of care only was not inconsistent with an assertion of contributory negligence. The point becomes academic if otherwise the Court grants leave to amend the Notice of Grounds of Defence to deny negligence.
So far as the question of costs is concerned, the claimant should, of course, have his costs of the summons for leave to appeal and of the appeal. So far as the costs of the hearing of the Notice of Motion before the primary judge is concerned, in my view the claimant was seeking an indulgence and ought to bear the costs of that motion. I would therefore not disturb her Honour's order to that effect. It is unnecessary to deal with the costs of the arbitration as both parties have sought a rehearing, the claimant on the issue of liability and the opponent on the issue of quantum. Accordingly, the costs of the arbitration will abide the result of the ultimate trial of those issues and it is unnecessary to make any special costs order with respect thereto.
Conclusion
For the foregoing reasons I would propose the following orders:
(a)          Grant leave to appeal upon condition that the claimant file a Notice of Appeal within 7 days of t  he date of these orders;
(b)          Appeal allowed;
(c)          Set aside the order made by Judge Sidis on 23 September 2004 dismissing the claimant's Notice   of Motion filed on 5 August 2004;
(d)          Grant leave to the claimant to file amended Notice of Grounds of Defence in the form of the   draft amended notice dated 19 August 2004;
(e)          The opponent to pay the claimant's costs of the summons for leave to appeal and of the appeal   but to have a certificate under the Suitors' Fund Act 1951, if otherwise qualified.
BROWNIE AJA: I agree with Tobias JA.
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LAST UPDATED: 25/11/2005