Morseu v Robe River Mining Co Pty Ltd - [2007] WADC 96

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: MORSEU -v- ROBE RIVER MINING CO PTY LTD & ORS [2007] WADC 96

CORAM: PRINCIPAL REGISTRAR GETHING

HEARD: 6 JUNE 2007

DELIVERED : 13 JUNE 2007

FILE NO/S: CIV 3197 of 2002

BETWEEN: ROY MORSEU
Plaintiff
AND
ROBE RIVER MINING CO PTY LTD
First Defendant
YALLEEN PASTORAL CO PTY LTD
Second Defendant
BARCLAY MOWLEM CONSTRUCTION LTD
Third Party

Catchwords:

Third party proceedings - Leave to amend defence - Late application

Legislation:

Motor Vehicle (Third Party Insurance) Act 1943 (WA), s 3G
Workers' Compensation and Injury Management Act 1981, s 93B(3)(a)

Result:

Application allowed

Representation:

Counsel:

Plaintiff:     Not applicable
First Defendant             :     Not applicable
Second Defendant         :     Mr M LWilliams
Third Party                   :     Ms A M I Schoombee

Solicitors:

Plaintiff:     Chapmans
First Defendant             :     DLA Phillips Fox
Second Defendant         :     DLA Phillips Fox
Third Party                   :     Minter Ellison

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

Barclay Homes (Australia) Pty Ltd v Fair Trading Tribunal [2001] NSWSC 711
Barclays Bank v Tom [1923] 1 KB 221
Cayne v Global Natural Resources plc [1984] 1 All ER 225
Container Handlers Pty Ltd v Insurance Commission of Western Australia (2001) 25 WAR 42
Fookes v Slaytor [1979] 1 All ER 137
Hooker Corporation Ltd v Commonwealth of Australia (1986) 65 ACTR 32
Hospitals Contribution Fund of Australia v Hunt (1982) 44 ALR 365
JL Holdings Pty Ltd, 189 CLR 154-155
Kimberley Downs Pty Ltd & Ors v State of Western Australia & Anor, unreported; SCt WA; Library No 6414; 25 August 1986
Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533
Mathieson v Burton (1971) 124 CLR 1
Neilson v City of Swan [2006] WASCA 94
Nguyen v R (2003) 175 FLR 321
Sinclair v James [1894] 3 Ch 544
State Government Insurance Commission v CSR Ltd (1999) 29 MVR 29
Tony Sadler Pty Ltd v McLeod Nominees Pty Ltd (1994) 13 WAR 323
Western Metals Zinc NL v Wesfarmers Transport Ltd [2003] WASCA 152
Wiltrading (WA) Pty Ltd v Lumley General Insurance Ltd (2005) 30 WAR 290

PRINCIPAL REGISTRAR GETHING: By application dated 14 May 2007 the third party, Barclay Mowlem Construction Ltd, has sought leave to amend its defence in the third party proceedings. The third party proceedings were commenced by the second defendant, Yalleen Pastoral Co Pty Ltd. The second defendant opposes the grant of leave based on the lateness of the application and deficiencies in the proposed amended defence.
The application falls for determination in the context of the action having been listed for a 5 day trial commencing 20 August 2007. In the action, the plaintiff has claimed damages for injuries suffered by him in an accident on 18 January 2000. He alleges that whilst he was driving along an access road through the second defendant's pastoral station, a Brahmin bull came out from the side of the road and struck the truck on the front driver's side.
The third party was the plaintiff's employer at the time of the accident, and was also the owner of the truck.
In its statement of claim in the third party proceedings, the second defendant pleads that the truck was a registered vehicle and was the subject of a policy of insurance issued pursuant to the Motor Vehicle (Third Party) Insurance Act 1943 (WA) ("MVI Act"). The significance of this plea is that it founds an argument that the third party proceedings relate to "the awarding of damages to which the Motor Vehicle (Third Party Insurance) Act 1943 applies" as set out in Workers' Compensation and Injury Management Act 1981 (WA) ("WCIM Act") s 93B(3)(a). The constraints on awards of common law damages in WCIM Act Pt IV do not apply to an award of damages falling within WCIM Act s 93B(3)(a). Accordingly, the second defendant's position is that the fact that the third party was the plaintiff's employer is no barrier to the third party being liable by way of contribution or indemnity in the third party proceedings.
The third party has to date only filed what is tantamount to a bare denial by way of defence. It seeks to file a fuller defence which, among other things, founds an argument that the exception in WCIM Act s 93B(3)(a) does not apply. It is common ground that the plaintiff has not sought any determination that would allow him to fall within the constraints set out in WCIM Act Pt IV. Thus, the third party proposes to assert that the constraints in WCIM Act Pt IV prevent the third party from being liable by way of contribution or indemnity as the third party is not presently able to be directly liable to the plaintiff.

Issues for determination

Three main issues arise for determination. The first is whether, as a matter of discretion, the third party ought to be given leave to amend its defence at this stage.
If leave is granted, the pleading which the third party wishes to file and serve is set out in a minute of proposed amended defence faxed to the Court on 1 June 2007 ("the Minute"). The Court will not grant leave to a party to make an amendment which does not disclose a reasonable cause of action or defence: Sinclair v James [1894] 3 Ch 544 at 557. Neither will the Court grant leave to make an amendment which could be stuck out as defective on any of the grounds set out in RSC O 20 r 19(1)(b) to (d): see generally, Hooker Corporation Ltd v Commonwealth of Australia (1986) 65 ACTR 32 at 38.
The second and third issues for determination are the two deficiencies which the second defendant raised in relation to the Minute. Specifically, the second issue is whether MVI Act s 3G has a retrospective application. The third issue is whether it is open to a third party to raise issues about the contributory negligence of the plaintiff in its defence to the third party proceedings.
The authorities on the grant of leave to amend make it clear that justice is the paramount consideration in determining an application such as the one in question. Case management considerations need to be weighed against the potential injustice of shutting the applicant out from raising an arguable defence, thus precluding the determination of an issue between the parties: State of Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146 at 154. That being the case, it is appropriate to first consider the two substantive points of challenge that the defendant has raised before returning to the issue of the grant of leave.

Retrospective operation of MVI Act s 3G

The second defendant has not challenged a number of aspects of the Minute, including:
(a)a plea that the third party did not owe, or did not breach, a duty of care to the plaintiff (Minute, par 4);
(b)a plea that WCIM Act s 93B(3)(a) only applies to common law damages and not to "hybrid" damages that fall under MVI Act s 3C and s 3D, in reliance on the decision in Western Metals Zinc NL v Wesfarmers Transport Ltd [2003] WASCA 152 (par 5(g));
(c)a plea that the third party would not have been liable for the same damages to the plaintiff for which the second defendant is liable, the third part's liability arising in respect of a motor vehicle accident and the second defendant's arising under the principles of occupier's liability (par 6).
The first paragraph challenged is par 5(f) which provides:
"the exclusion of Part IV Division 2 provided for in section 93B(3)(a) of the Workers Compensation Act does not apply to the plaintiff's notional claim for damages against the third party because of the provisions of section 3G of the Motor Vehicle (Third party Insurance) Act 1943 …"
MVI Act s 3G provides:
"3G. Liability of employers
(1)This section has effect if the death of or bodily injury to a person is directly caused by, or by the driving of, a motor vehicle in circumstances giving rise to the owner of the motor vehicle being liable to pay compensation under the Workers' Compensation and Injury Management Act 1981 in respect of that death or bodily injury or which would have given rise to liability of that kind but for section 22 of that Act.
(2) If this section has effect, neither this Act nor a contract of insurance under this Act apply in respect of liability for negligence which may be incurred by the owner in respect of the death or bodily injury other than liability for the negligent driving of the motor vehicle.
(3)In subsection (2):
Owner - includes any person for whose negligence the owner is legally responsible."
MVI Act s 3G was inserted by Motor Vehicle (Third Party Insurance) Amendment Act 2006 (WA) and came into operation on 1 July 2006. The plaintiff's accident occurred on 18 January 2000. MVI Act s 3G can only apply if it has retrospective application. The second defendant submits that it can have no retrospective application, and thus that the proposed amendment should be disallowed.
For present purposes, it is not necessary for me to determine whether s 3G has a retrospective application. Rather, the issue is whether the Court should decline leave to amend on the basis that the plea that s 3G has retrospective operation discloses no reasonable ground of defence. This rule is intended to apply only to cases which are "really not arguable", or where the point is "so clearly untenable that it cannot possibly succeed" or where "there is no basis for the legal conclusion contended": Kimberley Downs Pty Ltd & Ors v State of Western Australia & Anor, unreported; SCt WA; Library No 6414; 25 August 1986, Master Staples; Neilson v City of Swan [2006] WASCA 94 at par 18.
The third party submits that it is at least arguable that s 3G has a retrospective operation for the following reasons:
(a)as a matter of law it is possible for s 3G to have a retrospective operation;
(b)prior to the insertion of s 3G it was uncertain whether the phrase "all liability for negligence" in MVI Act s 6(1)(b) also covered a claim made against an owner of a vehicle who was the employer of the plaintiff and was sued for a failure to provide a safe system of work;
(c)the consideration of MVI Act s 6 in Container Handlers Pty Ltd v Insurance Commission of Western Australia (2001) 25 WAR 42 and State Government Insurance Commission v CSR Ltd (1999) 29 MVR 29 did not constitute direct consideration nor binding authority on the issue in par (b);
(d)section 3G can be characterised as a provision which declares or interprets the meaning of an earlier Act, bringing it within an exception to the presumption against retrospectivity: Pearce, Statutory Interpretation in Australia, 6^th ed [10.13];
(e)in the second reading speech to the relevant amending Act, the Honourable Mr E S Ripper, Minister for Government Enterprises, stated that"
"it was never the intent of this Act to have the Third Party Insurance Fund provide compensation for what clearly falls within the responsibility of worker's compensation – employer's indemnity insurance" (Hansard, 18 May 2005, 1865-1866);
(a)section 3G can be contrasted with MVI Act s 3F which was inserted in the same amending Act, and which contains an express provision negating any possible retrospective effect:
"(2) Subsection (4) does not apply to causes of action arising before the commencement of section 4 of the Motor Vehicle (Third Party Insurance) Amendment Act 2006."
The second defendant submits that s 3G cannot have retrospective operation, as follows:
(a)legislative amendments which are substantive rather than procedural in nature and which are not expressed to be retrospective are subject to the presumption against retrospectivity: Nguyen v R (2003) 175 FLR 321;
(b)if the enactment is expressed in language which is fairly capable of either interpretation – prospective or retrospective – it ought to be construed as prospective only: Mathieson v Burton (1971) 124 CLR 1, at 22-23;
(c)retrospective application can be inferred only where there is no other reasonable interpretation: Nguyen v R (supra); Barclay Homes (Australia) Pty Ltd v Fair Trading Tribunal [2001] NSWSC 711;
(d)there is nothing in the MVI Act nor the amending Act by which s 3G was inserted nor the second reading speech to suggest retrospectivity was intended;
(e)in relation to the second reading speech, the comment by the Minister about the intended operation of the MVI Act set out above is more appropriately characterised as reflecting an intent to close a loophole which ran counter to the stated intent – meaning that s 3G was intended to change the then applicable operation of MVI Act s 6(1)(b);
(f)if s 3G had a retrospective operation, the consequent uncertainty would have a significance adverse practical impact.
Whilst there is considerable merit in the second defendant's submission, and it may well prove persuasive before a trial Judge, it remains the case that:
(a)as a matter of law it is possible for s 3G to have a retrospective operation;
(b)no Court has yet determined whether or not s 3G has a retrospective operation; and
(c)there is at least one line of argument – being the submissions of the third party set out above - that could be accepted by a Court to give s 3G a retrospective effect.
I am not persuaded that the argument that s 3G has retrospective effect is so clearly untenable that it cannot possibly succeed.
As set out above, the second defendant has not challenged a number of other paragraphs of the Minute. To these can be added the legal question of whether WCIM Act s 6(1)(b) would, prior to the commencement of s 3G in July 2006, have been construed to a similar effect as if s 3G had applied. Thus, even without the question of the retrospective application of MVI Act s 3G, the trial Judge will have to give close consideration to the interaction between the MVI Act and the WCIM Act. The consideration of s 3G will only add some additional time to the submissions of counsel.
The authorities establish that a Court at first instance should be particularly astute not to risk stifling the development of the law by summarily terminating actions in respect of which there is a reasonable possibility that it will be found, in the development of the law, still embryonic, that a cause of action does lie: Hospitals Contribution Fund of Australia v Hunt (1982) 44 ALR 365 at 373. This comment applies with greater force in the present case as the challenge is to one of a number of legal arguments that the third party proposes to make, and not to the third party's defence in its entirety.
In this context, and given the fact that as a matter of law it is possible for s 3G to have a retrospective operation, as a matter of pleadings principles, the amendment ought to be allowed. If the retrospective application of s 3G will have the extensive practical impact submitted by the second defendant, then it seems to be in the interests of justice to allow the point to be fully argued and conclusively determined. There is then the question of the lateness of the application, to which I will return shortly.

Contributory negligence

By par 7 of the Minute, the third party pleads that if it would have been liable to the plaintiff in a notional claim for damages (which is denied), the plaintiff would have been liable for contributory negligence. Six specific acts of contributory negligence are pleaded. The second defendant has already raised contributory negligence in defence in the primary action. The proposed plea by the third party adds a number of additional acts of contributory negligence to those relied on by the second defendant.
The third party has not been granted leave to defend the action. Rather, it has been given liberty to appear at the trial of the action and take such part as the Judge shall direct, and is to be bound by the result of the action. An order has also been made that the question of the liability of the third party to indemnify the second defendant be tried at or immediately after the trial of the action, as the Judge shall direct. Thus the third party has two roles in this litigation: to take such part as the Judge may allow in challenging the plaintiff's claim against the second defendant in the action and to defend the claim made against it by the second defendant: see generally Barclays Bank v Tom [1923] 1 KB 221 at 223-224.
The third party submits that in defending the existence and extent of the notional claim by the plaintiff against it, the third party is entitled to raise any defence that it would have had against such a notional claim, including contributory negligence. It further says that contributory negligence needs to be pleaded in order to comply with the surprise rule: Fookes v Slaytor [1979] 1 All ER 137, at 140.
The second defendant submits that the issue of whether the plaintiff is contributorily negligent is one only between the plaintiff and the second defendant. The possibility of the third party being liable only arises once there is a finding of liability against the defendant. Any such finding of liability will encompass the findings of the trial Judge on contributory negligence.
Law Reform (Contributory Negligence and Tortfeasors' Contribution) Act 1947 (WA) s 7(1)(c) ("Contribution Act") relevantly provides that:
"any tortfeasor liable in respect of that damage may recover contribution from any other tortfeasor who is or would if sued have been liable in respect of the same damage whether as a joint tortfeasor or otherwise."
In par 4 of the Minute, which is unchallenged, the third party asserts that it would not have been liable in respect of the same damage for which the second defendant is liable as it did not owe a duty of care, and if it did, the duty was not breached.
The effect a claim for contributory negligence is that: "the Court shall reduce the damages which would be recoverable by the plaintiff if the happening of the event which caused the damage had been solely due to the negligence of the defendant to such extent as the Court thinks just in accordance with the degree of negligence attributable to the plaintiff": Contribution Act s 4(1).
The third party's plea in par 7 is in effect that it would not have been liable in respect of the same damage for which the second defendant is liable as its liability would have been reduced by virtue of the plaintiff's contributory negligence. It is possible for a defendant not to raise contributory negligence against a plaintiff, but for a third party to raise it in the context of a claim for contribution. The plea in par 7 is thus of the same effect as the plea in par 4 and ought to be allowed.

Discretionary considerations

In considering the exercise of the discretion to grant leave to amend, the following factors are relevant:
(a) the prejudice to the plaintiff if leave is not granted;
(b) the prejudice to the defendant if leave is granted;
(c) prejudice to the public interest, for example the vacation of trial dates at such a late stage that they cannot be allocated to other litigants;
(d) the reasons for delay in the making of any applications;
(e) case management considerations more generally.
Tony Sadler Pty Ltd v McLeod Nominees Pty Ltd (1994) 13 WAR 323 at 335‑336; Wiltrading (WA) Pty Ltd v Lumley General Insurance Ltd (2005) 30 WAR 290 at 315-316; and JL Holdings Pty Ltd, 189 CLR 154‑155.
In other contexts, the considerations governing the exercise of a judicial discretion are referred to as the balance of the risk of doing an injustice: Cayne v Global Natural Resources plc [1984] 1 All ER 225 at 237; Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 at 536.
The following considerations give weight to a conclusion that the amendments ought to be allowed:
(a)the amendments do not give rise to the need for extensive factual inquiries;
(b)the amendments would not give rise to significant discovery issues;
(c)the second defendant conceded that if the amendments were allowed, this would not give rise to a need to vacate the trial listed to commence on 20 August 2007;
(d)the majority of the amendments sought are not challenged on principles of pleadings;
(e)neither of the two challenges to the Minute on pleadings grounds has been upheld.

The reason for the delay given is the almost traditional reason that counsel had been briefed to review the action following an unsuccessful pre-trial conference. This is an unsatisfactory explanation, and generally weighs against the grant of leave to amend.
The main argument relied on by the second defendant against the grant of leave is that if the amendment had been sought earlier, there is a prospect that the second defendant and the third party would have sought to have a number of the issues between them determined on a preliminary basis. There is some material in the affidavits filed in relation to the present application to the effect that this course was being contemplated. The desirable result of a preliminary issue is that it may have fully resolved the issues as between the second defendant and third party, obviating the need for the third party to attend the trial. It is by no means certain that orders would have been made that certain key issues in the third party proceedings be determined by way of preliminary issue. At the very least, the plaintiff would have wanted to have been heard on the question of any consequential delay in the listing of the trial.
In the course of submissions before me, it was opined that the third party proceedings will add a day to what would otherwise have been a 4 day trial. Whether or not the third party proceedings had been determined at a preliminary stage, the second defendant would have had to participate in a 4 day trial. At best, the preliminary determination of the third party proceedings would have pruned a day off the trial and obviated the risk of the second defendant being liable for the third party's trial costs. These elements of prejudice are adequately able to be compensated for by costs orders at the trial of the action.
Balancing the risk of doing an injustice, I am of the view that the third party should have leave to amend its defence in terms of the Minute.
I will hear counsel on the precise form of the orders and costs.