Stewart James Conlin and Eileen May Conlin v Rodney George Springgay No. 4153 Judgment No. SCGRG 92/2744 Number of Pages 6 Vehicles and Traffic

[1993] SASC 4153

COURT IN THE SUPREME COURT OF SOUTH AUSTRALIA OLSSON J

CWDS
Vehicles and traffic - statutory compensation in respect of motor vehicle accidents - Appeal from order refusing to declare appellant's solicitors as the solicitors of record - respondents claimed damages for personal injuries suffered - appellant employed solicitors to defend action - compulsory third party insurer instructed its solicitors to take over defence of action - appellant expressed intention not to seek indemnity from insurer as insurer might have right to recover pursuant to Motor Vehicles Acts112 - consideration of Motor Vehicles Acts125 - possibility that claim may arise against insurer - Motor Vehicles Actss 112, 124a, 125.

HRNG ADELAIDE, 25 August 1993 #DATE 6:9:1993
Counsel for appellant:         Mr D Willson
Solicitors for appellant:        Lee and Partners
Counsel for respondent:         Ms J Hughes
Solicitors for respondent:     Stanley and
   Partners
Counsel for other party SGIO:    Mr M Newell
Solicitor for other party SGIO: Phillips Fox

ORDER
Appeal dismissed.

JUDGE1 OLSSON J This is an appeal from a refusal by a Master to declare that a firm of solicitors are the solicitors of record for the defendant and to remove another firm as solicitors of record for that party. 2. On 16 December 1992 the plaintiffs issued the summons in this action against the defendant. In it they claimed damages in respect of very serious injuries sustained by the male plaintiff on 18 December 1989, when a motor vehicle driven by the defendant collided with a bicycle ridden by him. Inter alia it was pleaded by the plaintiffs that, at the time of the collision, the defendant had a blood alcohol concentration of 0.190 per cent. 3. The defendant duly appeared to the summons by his solicitors, Messrs Lee and Partners, who initiated certain interlocutory steps in the proceedings. 4. On 19 February 1993 Messrs Ross and McCarthy filed and served a notice that they then acted for the defendant, in lieu of Messrs Lee and Partners. It is common ground that they were instructed so to do by the State Government Insurance Commission ("SGIC") as compulsory third party insurer of the defendant. A defence was thereafter filed by Messrs Ross and McCarthy on 19 February 1993. That sequence of events prompted the filing, on 12 March 1993, of a formal application on behalf of the defendant which, inter alia, sought:-
    "(1) a declaration that Messrs Lee and Partners are the
     solicitors of record for the defendant;
     (2) an order that Messrs Ross and McCarthy be removed as
    solicitors of record for the defendant;
     (3) an order that Messrs Lee and Partners be reinstated as
    solicitors of record for the defendant; and (4) an order that
    all documents filed at Court by Messrs Ross and McCarthy be
removed from the Court file." 5. In a supporting affidavit the defendant acknowledged that SGIC was his third party insurer, but deposed that he did not make and did not intend to make a claim against it, in the event that he be held liable in damages to the plaintiffs. He deposed to having substantial assets (of which he supplied details) and said that he believed that he was of sufficient substance to meet any likely reasonable claim. 6. The defendant further deposed that, in view of the allegation of his intoxication at the time of the accident, it seemed likely that SGIC would seek to recover any damages paid from him in any event. He expressed concern that the defence might not be pursued with as much vigour as he desired and that it could possibly be settled against his interest. He objected to other than his personal solicitors having the conduct of the matter. 7. It was made to appear to the Master that SGIC was not content to have the matter handled in the manner proposed and desired to protect its own interests. It pointed out that it could become directly liable to pay in various circumstances, including the sudden death or bankruptcy of the defendant. An undertaking was given to take appropriate steps to restrict quantum in the interest of the appellant. 8. On 19 April 1993 SGIC made application to be joined as a defendant and for other ancillary relief. By order dated 10 May 1993 the Master rejected the SGIC application, ordered that Messrs Lee and Partners were the solicitors on the record and gave consequential directions as to the ongoing conduct of the action. 9. By letter dated 5 May 1993 sent to the defendant the solicitors for SGIC purported to require him to sign an authority pursuant to section 125(2) of the Motor Vehicles Act ("the Act") authorising Messrs Ross and McCarthy to act for him as solicitors on the record. In an affidavit testifying to that action it was stated that, in the event that the defendant failed to sign the authority, it was proposed that an officer of SGIC would complete the authority by virtue of the section. 10. It is common ground that the appellant did not sign the authority and that an appropriate officer of SGIC did, thereafter, duly sign the document in purported exercise of its statutory powers. 11. By further notice filed on 19 May 1993 Messrs Ross and McCarthy again asserted that they were the solicitors of record for the appellant. On the same day they again purported to file a defence. 12. Those actions prompted a further application by the defendant dated 25 May 1993 in terms similar to that of 12 March 1993. This was designed, once more, to remove Messrs Ross and McCarthy from the record. A supporting affidavit complained of certain of the content of the defence filed by Messrs Ross and McCarthy, whose name subsequently changed to Messrs Phillips Fox. 13. The matter came before the Master on 25 June 1993, at which time he made a pronouncement and orders in the following terms:
"This matter falls squarely within Section 125 of the
    Motor Vehicles Act. Although Section 125(1) is expressed in
    terms that an insurer 'may' do certain things when one looks at
    Section 125(2) the 'may' should be interpreted as 'shall if it
    so chooses'. In this case the insurer has chosen to assume the
    conduct of the legal proceedings. The insured person has
    declined to sign the authority submitted by the insurer. The
insurer has therefore, exercised its right under Section 125(2)
    and has authorised Ross and McCarthy to act on behalf of the
    defendant in the conduct of the action. In these circumstances,
    I decline make the orders sought in paragraphs 1, 2, 3 and 4 of
    the defendant's application filed on 25th May, 1993. I indicate
    that my inclination would be to make an order that subject to
    Mr. Springgay's giving an undertaking not to waive the privilege
    in relation to any document released save and except for his own
    personal solicitor and legal advice in relation to this matter.
    I make an order in terms of paragraph 5. I adjourn this matter
    to 2nd July, 1993 at 9.30 a.m. I direct that the defendant file
    and deliver a list of documents within 7 days. The plaintiff to
    file and deliver Rule 46.15 particulars within 21 days of
    today's date. I adjourn the application for directions to 5th
    August, 1993. I order that the defendant Rodney George
    Springgay pay the costs of the plaintiff and S.G.I.C. in
    relation to this application and the attendance on 9th June,
    1993. I excuse the plaintiff from attendance on 2nd July,
    1993." 14. The defendant now appeals against those orders on grounds expressed as under:-
     "(a) The learned Master erred in fact and in law in
    declining to make the orders sought in the said application.
     (b) The learned Master erred in finding that 'this matter
falls squarely within Section 125 of the Motor Vehicles Act 1959
    as amended (hereinafter referred to as 'the Act').
     (c) The learned Master erred in finding that the expression
'may' in section 125 of the Act should be interpreted to mean
'shall' contrary to section 34 of the Acts Interpretation Act.
     (d) The learned Master erred in failing to give effect to the
distinction which exists in section 125(1) of the Act between
    paragraph (a) and paragraphs (b) and (c), and in particular that
    the insurer only obtains a right to conduct legal proceedings in
    respect of the motor vehicle accident when a claim against the
    insurer 'has, or may, arise', as opposed to 'in respect of any
    claim against the insured person'.
     (e) The learned Master erred insofar as he found (by
    inference) that a claim had been made against the 5 State
    Government Insurance Commission or that such a claim 'may
arise'." 15. Against that background it is necessary first to direct attention to the provisions of section 125 of the Act. It stipulates as follows:-
    "Power of insurer to deal with claims against insured.
     (1) An insurer may, on behalf of an insured person -
     (a) conduct any legal proceedings in respect of circumstances
    out of which a claim against the insurer has arisen, or may
    arise;
     (b) conduct and control negotiations in respect of any claim
    against the insured person; and
     (c) at any stage of those negotiations or proceedings pay,
    compromise or settle any claim against the insured person.
     (2) The insured person must sign and execute all such
    warrants, authorities, and other documents as are necessary to
    give effect to this section and, if he or she makes default in
    doing so or is absent or cannot be found, the insurer may sign
    or execute the warrants, authorities, or other documents on
    behalf of the insured person.
     (3) Where -
     (a) as the result of the use of a motor vehicle an accident
    happens which results in the death of or bodily injury to any
    person, as well as damage to property; and
     (b) claims are made in respect of the death or bodily injury
    and also in respect of the damage to property, then nothing said
    or done in any negotiations for settlement of either claim, and
    no judgment given in legal proceedings in respect of either
    claim, can be evidence in legal proceedings in respect of the
    other claim." 16. It is beyond argument that the capacity of an insurer to sign requisite authorities pursuant to subsection (2) is directly linked to the mandate conferred by subsection (1). In the context of the present case the authority, upon the basis of which Messrs Phillips Fox claim to be the present solicitors of record for the appellant, is only valid if it can be demonstrated that SGIC is entitled, on behalf of the appellant, "to conduct any legal proceedings in respect of circumstances out of which a claim against ... (SGIC)... has arisen, or may arise". 17. The appellant contends that the use of the word "may" in subsection (1) implies that SGIC must be able to demonstrate that, in the case at bar, there is a real, present possibility that a claim will arise against it as a consequence of the plaintiff's claim. Mr Willson, of counsel for the appellant, contended that, on the material before the court, it was unable to do so. 18. He based that submission on these asserted factors:-
     . the male plaintiff is a man now 79 years of age who,
    in a relevant medical report, is described as a retired
    brickworks operator. It is also saldi, in that report, that at
    the time of the accident, he had a history of heavy smoking and
    drinking and exhibited evidence of some chronic obstructive
    airways disease. He only had some part time work at the Moonta
    Museum.
     . on the appellant's case there are circumstances which could
    lead to a finding of at least substantial contributory
    negligence on the part of the male plaintiff.
     . due to the operation of section 35a of the Wrongs Act and
    the age and pre-accident state of health of the male plaintiff,
    any realistic assessment of damages in his favour - despite grave
    injuries suffered by him - is likely to be modest.
     . it is well within the financial capacity of the appellant
    to meet any such damages, because he is half owner of a property
    valued at just over $130,000 and has moneys in a Commonwealth
    Rollover Fund to the value of about $150,000. (It is not clear
    whether he is entitled to immediate access to such moneys. His
    age does not readily appear and he is described as "Unemployed".
    He is said to be in good health.)
     . the appellant is anxious to minimise the quantum of any
    liability against him (including liability for costs) and,
because of the potential operation of section 124a of the Act
    against him, does not seek to claim indemnity from SGIC. He has
    fulfilled his statutory obligation to notify it of the accident,
    but has not claimed and will not claim against it.
     . he is concerned that SGIC may not fully protect his
    interests and may, without reference to him, negotiate a
    settlement of the plaintiffs' claim on a basis contrary to his
    interests. On that footing Mr Willson argues that it is patent
    that there is no real prospect of any claim arising against SGIC
    and that, accordingly, the precondition for signing the
    requisite authority pursuant to subsection (2) has never been
made out. 19. The validity of such a proposition falls to be determined having regard to several considerations. 20. The first is that Ms Hughes, of counsel for the plaintiffs, unequivocally rejects the proposition that any potential assessment of her clients' damages will be modest. She stresses that, despite her clients' age, any ultimate award could be far more substantial than possible figures canvassed by Mr Willson. She points out that, quite apart from damages for non economic loss and for direct economic loss, such have been the severity of the plaintiff's injuries that he has already been institutionalised for some three years and will continue in a nursing home for the indefinite future. The cost related to that care has been and will be very considerable. Moreover, his wife will, in her own right, have a not insubstantial claim for voluntary care services and loss of consortium. 21. There is, she submits, a very real question of the financial capacity of the appellant to meet any eventual award of damages. 22. Secondly, as counsel for SGIC points out, on the face of the situation, the potential for a claim against it is by no means ephemeral. It could arise in any one of a number of ways. 23. Quite apart from the possibility that the appellant may in fact not have the financial resources to meet any assessment of damages against him there is always the chance that, like all other human beings, the appellant might die. 24. Of even more direct concern to SGIC is the potential operation of section 112 of the Act. 25. As I construe that section it confers an absolute right upon a successful plaintiff, who has obtained a judgment against an insured driver, at the option of that plaintiff, to seek to recover the amount of it direct from SGIC - rather than attempt to levy execution or take other enforcement process against the appellant personally. It is a conclusion of plain commonsense and reality that the plaintiff, if successful, might well seek to do so as the simplest means of satisfying any judgment. 26. Interesting arguments have been advanced as to the meaning which ought to be attributed to the word "may" appearing in subsection (1) of section 125. Contrary to the contention of the appellant, SGIC argues that there is no warrant for construing that word as importing "may probably" or "is likely to" or some similar concept. The expression is, it is argued, clearly intended to be synonymous with the words "can" or "might". There are compelling reasons why this should be so, to give effect to the overall scheme of the statute. 27. At the end of the day I find it unnecessary to plumb this interesting semantic issue to the depths. I an abundantly satisfied (as obviously the Master was) that, having regard to the circumstances revealed by the documentary evidence in this case, there is necessarily a substantial basis for apprehending that, sooner or later, a claim may well arise direct against the SGIC, as the appellant's insurer, at the instance of the plaintiff. This is so both because I am by no means satisfied of the financial capacity of the appellant, on a worst case basis, readily to meet a possible award of damages in favour of the plaintiffs and also having regard to the practical potential for (if not likelihood of) the plaintiffs availing themselves of section 112 rights, rather than seeking to enforce any judgment against the appellant personally. 28. Whilst I appreciate the concerns of the appellant, those considerations cannot operate to deny SGIC recourse to its manifest statutory rights. 29. For those reasons I am compelled to the conclusion that the approach adopted by the Master was correct. 30. The appeal must be dismissed.