Willment v Sellars - [2014] SADC 94

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Appeal Against a Master's Decision)
WILLMENT v SELLARS & ANOR
[2014] SADC 94
Judgment of His Honour Judge Tilmouth
2 June 2014
INSURANCE - MOTOR VEHICLES - COMPULSORY THIRD PARTY INSURANCE AND LIKE SCHEMES - DEFENCE CONDUCTED BY INSURER AND RELATED MATTERS - SOUTH AUSTRALIA
In an action for personal injury sustained in a motor vehicle accident, the Defence was certified as being in accordance with the defendant's insurers' instructions. DCR 6R98(1)(b)(i) required the defendant's solicitor to certify the pleading was prepared in accordance with the defendant party's instructions. A Master struck it out and directed that one be filed in accordance with the Rules. The defendant appealed.
Held 1: The Master erred in his reasoning process to the extent that the certificate should identify more than the Rule prescribes;
2: There is no basis upon which to suppose the plaintiffs capacity to cross-examine the defendant on the Defence is impinged by a certificate in this form.
3. As non-compliance is attributable to the process of subrogation, and compliance was impractical, there should be an order exempting the defendant from compliance with the certificate requirements.
Motor Vehicles Act 1959 (SA) s 125(1), s 125A(2)(a); District Court Civil Rules 2006 (SA) r 98(1), r98(1)(b)(i), r217; Banque Commerciale SA in Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279; Tsogas v AGC (Insurances) Ltd & McGee (1974) 6 SASR 590; Massalsky v Cropley (1973) 5 SASR 549; Groom v Crocker [1939] 1 KB 194; Jones v Nuske (2003) 227 LSJS 331; Supreme Court Rules 1987 (SA) r46A.02(e); Vocisano v Vocisano (1974) 130 CLR 267, referred to.
Boileau v Rutlin (1848) 154 ER 657; Pearce v Hall (1989) 52 SASR 568; Salena Estate Wines Pty Ltd v Devito (2005) 92 SASR 360, applied.

EVIDENCE - WITNESSES - CROSS-EXAMINATION - AS TO CREDIT
Examination of the capacity to cross-examine a party on that party's pleadings.
McNamara 'Cross-examination of a Party on Pleadings' (1989) 5 Aust Bar Rev 176; Civil Procedure South Australia DCR 6R 217; McCann v Parsons (1954) 93 CCR 418, referred to.
Salena Estate Wines Pty Ltd v Devito (2005) 92 SASR 360; Vocisano v Vocisano (1974) 130 CLR 267; Public Trustee as Litigation Guardian for Pinter v Newman (2012) 112 SASR 299, applied.

APPEAL AND NEW TRIAL
Nature of appeal from a decision of a Master referred to.
District Court Civil Rules 117(2)(a); Cook t/as Kissmyblackarts v Groove Is In The Park Pty Ltd [2010] SASC 289; Hillier v Lucas (2000) 81 SASR 451, referred to.
Commissioner of Police v Channel Seven Adelaide Pty Ltd [2008] SASC 164, applied.

WILLMENT v SELLARS & ANOR
[2014] SADC 94
The issues

This is an appeal from a judgment of a Master of this Court striking out a solicitor’s certificate contained in a defence, on account of non-compliance with the Rules of Court.[1] The certificate stated the defence was put forward in accordance with the instructions of Allianz Australia SA - CTP, the claims manager of the Motor Accident Commission. The Commission is the compulsory third party insurer of the defendant.[2] The question for resolution on appeal is whether this manner of certification is rule compliant.
[1] Decision No 48 of 2013, 21 August 2013 [96], Master Rice.
[2] AB 16.
Statutory and regulatory context
The underlying proceedings are actions for damages for personal injury following a motor vehicle accident in April 2011. The Motor Accident Commission of South Australia (the Commission) is a body corporate established by s 4(2) of the Motor Accident Commissions Act 1992 (SA). It has subrogated to the rights of the defendant pursuant to s 125(1) of the Motor Vehicles Act 1959 (SA) under which it is entitled to conduct these proceedings on his behalf. A statement of claim was filed in March 2013. The defence was filed in May that year by the solicitors engaged by the Commission.
Rule 98(1) of the District Court Civil Rules 2006 (SA) provides:
Division 2—General rules about pleadings
98—General rules of pleading
(1)     A pleading—
(a)     must be in an approved form; and
(b)     must—
(i)if the party is represented by a solicitor whose name appears on the Court's record as the solicitor representing the party—be endorsed with a certificate by the solicitor certifying that the pleading has been prepared in accordance with the party's instructions and conforms with these rules; or
(ii)if the party is not represented by a solicitor – be signed by the party.
The function of pleadings is directed to serve the ends of efficiency in litigation, to define what the issues are in dispute with clarity, and to avoid delays and expense: Banque Commerciale SA in Liquidation v Akhil Holdings Ltd.[3]
[3] (1990) 169 CLR 279, 286-287.
The entire certificate in the defence purporting to be given under DCR 6R 98(1)(b)(i) was as follows:
I certify that this pleading is put forward in accordance with the instructions of Allianz Australia SA – CTP, the claims manager of the Motor Accident Commission which is the compulsory third party insurer of the defendant Steven Willment and has the conduct of the Defence of this action pursuant to Section 125 of the Motor Vehicles Act, 1959 and complies with the Rules concerning pleadings.
(Solicitor for the defendant).
The decision of the Master
The Master held that an insurer conducting litigation on behalf of a defendant, must have regard to the insured’s instructions and should not be permitted to raise pleadings inconsistent with those instructions.[4] In that respect the Master was perfectly correct: Tsogas v AGC (Insurances) Ltd & McGee,[5] Massalsky v Cropley,[6] and Conlin v Springgay.[7] It may be further accepted that the insurer owes the insured an obligation of good faith to consider the common interest of themselves and their insured, and not to act in its own interests for an ulterior purpose: Groom v Crocker.[8]
[4] At [88].
[5] (1973) 6 SASR 590, 592-593.
[6] (1973) 5 SASR 549, 552.
[7] (1993) 18 MVR 257; [1993] SASC 413, [27-28].
[8] [1939] 1 KB 194, 202-203.
It is however contended that the Master fell into error by holding that an appropriately qualified solicitor’s certificate must either state it has been prepared on the insurer’s and not the defendant’s instructions, in accordance with the insurer’s instructions, or on the instructions of both. On these topics the Master reasoned:
89In my opinion, that means where a Rule requires that a solicitor certify that the ‘pleading has been prepared in accordance with the party’s instructions ...’ and where the party is a named individual and where the insurer is acting under its rights to conduct the litigation pursuant to section 125 of the Motor Vehicles Act, then the insurer:
1.    Cannot plead facts inconsistent with the defendant’s version of events, where they are known, save where the insurer does not accept that version of events for good reason;
2.    Can conduct the proceedings in accordance with its understanding of the facts if the defendant cannot be located or cannot give a version of events, for example because of injury;
3.    Conducts the proceedings and files a defence not inconsistent with the defendant’s instructions.
90In the first option, the solicitor’s certificate must state the defence is filed on the insurer’s instructions and not the defendant’s instructions, as the insurer cannot accept the accuracy of those instructions.
91In the second option, the solicitor’s certificate must state either that the pleading has been prepared in accordance with the insurer’s instructions (for the reasons stated) and that it conforms with the Rules.
92In the third option, the solicitor’s certificate must state the defence is filed on the instructions of the insurer and the defendant.
93The reason for this is because of Rule 98(1)(b)(i) and Rule 217. If the insurer does not state clearly that the defence is not prepared on the party’s instructions because it cannot give them for whatever reason, then this should be drawn to the attention of the other party. Otherwise, time and costs will be wasted and Rule 217 will have no effect of work to do.
Based on this line of reasoning the Master struck out the defence solicitor’s certificate and directed ‘that it be re-filed with an appropriate certificate that complies’.
Analysis – certificate issue
The prime purpose of DCR 6R 98(1)(b)(i) is evident enough. The position at common law always was that unverified pleadings were not evidence, so that the party did not vouch for their truth or accuracy: Boileau v Rutlin,[9] and Pearce v Hall.[10] Along with the advent of Rules of Court designed to allow the courts greater supervision and control over litigation, came rules designed to ensure the profession complied with them. One such obligation, effective from 3 June 2000, was the requirement to plead the factual basis of a claim:
[9] (1848) 154 ER 657, 663
[10] (1989) 52 SASR 568, 573.
98—General rules of pleading
…
(2) A pleading—
...
(d) must plead such facts as give fair notice of the party’s case at trial.
Another came initially by way of the former Rule 46A.02(e) of the Supreme Court Rules 1987 (SA):
All pleadings are to:
…
(e)bear the following certificate signed by a legal practitioner except where the party has no solicitor on the record:
Certificate:
This pleading is put forward in accordance with the instructions of the [nature of party/parties] [name(s)] by [name of file principal], who certifies that it complies with the Rules concerning pleadings.
Of this latter rule it was observed by Judge Lunn in Jones v Nuske:[11]
This certificate is an assurance to the Court by one of its officers that the rules of pleadings have been complied with including that all material facts needing to be pleaded under r 46A.03(a) and (b) have been so pleaded. Unless there is evidence to the contrary the Court is entitled to assume that such certificates are correct.
After quoting this passage with approval in Salena Estate Wines Pty Ltd v Devito,[12] Sulan J, with whom Doyle CJ and Perry J agreed, said this of a certificate filed pursuant to the former rule:
[52] In my view, the certificate contains no more than an assurance by the solicitor on record that the pleadings comply with the Rules, and that allegations pleaded therein are, to the solicitor’s belief, in accordance with the solicitor’s instructions. I do not agree with the appellant’s contention that the certificate has the effect of elevating the pleading to a statement verified on oath by a party. In my view, the Rule does no more than alert the solicitor to his or her obligations in respect of pleadings. A certificate without further evidence is no more than the solicitor’s statement that the solicitor has complied with the Rules and certifies that he has filed the pleading on instructions. In my view, the purpose of the certificate does no more than to bring home to solicitors their obligation to ensure that pleadings comply with the Rules. I do not agree with the contention that the effect of the certificates bind the party on whose behalf it is filed as if the pleading had been verified and personally adopted by that party.
I would add, if it is not implicit in the above statement, that the Rules of Court also serve to reinforce the ethical obligation to found pleadings on a proper factual basis. Otherwise the solicitor’s obligations are enforced by disciplinary proceedings and sometimes by adverse costs orders against them personally.
[11] (2003) 227 LSJS 331, [9].
[12] (2005) 92 SASR 360, [51].
There may be differences of form between the present DCR 6R 98 and Rule 46A.02(e), but there are no differences of substance. Perry J in the course of a short concurrence in Salena Estate,[13] considered the failed attempt in that case:
to elevate the somewhat ambiguous pleading in… the plaintiff’s statement of claim into some sort of evidentiary admission… was based on a strained interpretation of the words used.
[13] Above [8]-[9].
It must follow from this decision, that nothing in the current rule DCR 6R 198(1), lends itself to an interpretation that the requisite certificate must distribute the source of the factual basis for the pleadings in the tripartite manner postulated by the Master. To read it in such a far-reaching way would be to produce impracticable, cumbersome and at times, impossible compliance obligations. Subrogating insurers may derive the factual basis of their pleadings from many sources other than the defendant personally, such as from enquiries, investigations, independent witnesses, objective facts and expert accident reconstructions. Simply put, the construction of DCR 6R 98(1)(b)(i) proffered on behalf of the plaintiffs reads too much into it.
The capacity to cross-examine on pleadings
It was maintained on behalf of the plaintiff that the subject certificate unfairly serves to insulate the defendant himself from cross-examination, should the facts pleaded in the defence prove to be inconsistent with his evidence, thus depriving the court of the ability to draw inferences adverse to the defendant’s credit. On the present state of the pleadings it is difficult to imagine that situation could realistically arise. Nevertheless it was contended that DCR 6R 98(1)(b) serves to inform the proper interpretation of DCR 6R 217. This provides:
217—Cross-examination on pleadings
(1) If a party gives evidence at the trial of an action, the party may be cross-examined about the party's knowledge of or belief in the truth of the facts alleged in the party's pleadings.
(2) The Court may draw an inference adverse to the party's credit from a discrepancy between what it finds proved and the allegations of fact as stated in the party's pleadings.
Before the introduction of the 1987 Rules, it was accepted wisdom that although a party could be cross-examined on a pleading filed by that party, a contradiction could not be proven unless the pleading was signed, sworn or otherwise adopted by that party: McNamara ‘Cross-examination of a Party on Pleadings’.[14] No doubt DCR 6R 217 serves to indirectly facilitate the cross-examiner’s ability to persuade the trial court to draw an adverse inference, without necessarily requiring formal proof of the contradictory statement in the formal manner ordinarily required by s 29 of the Evidence Act 1929 (SA). Like reasoning seems to lay behind the cryptic, albeit unattributed assertion in Lunn’s Civil Procedure South Australia at [6R 217.5] that DCR 6R 217 is:
… intended to give an opposing party a basis to use the contents of the pleadings to discredit the party filing them where there are discrepancies which cannot be properly explained.
[14] (1989) 5 Aust Bar Rev 176.
But that is all the rule does. So much must inherently depend on the circumstances of each case. For instance, it may emerge in the course of a trial that the only source of a fact or facts pleaded, could have been from that party, so the court might be prepared to draw an inference under the rule more readily. If on the other hand a witness gives evidence on behalf of a Corporation or a partnership for example, the situation could well prove to be otherwise.
As pointed out in McCann v Parsons,[15] even though an insurer cannot leave an insured’s knowledge out of account, it is entitled to gather the facts from all other relevant sources. There is no difference in principle for the present purpose between this case and the circumstances in Salena Estate, a decision premised on the capacity to cross-examine on pleadings. The question for resolution was whether the witness concerned was relevantly cross-examined in the first place.[16]
[15] (1954) 93 CLR 418, 431.
[16] Above at [40]-[41].
Principles applied to the facts
On the application of Salena Estate, DCR 6R 98(1) does no more than to serve the end of ensuring practitioners comply with the Rules of Court when drafting pleadings and they only do so upon a proper factual foundation. Likewise DCR 6R 217 serves to facilitate the making of adverse inferences by reason of demonstrable contradictions between the evidence and pleading of a party, without necessarily having to prove the contradiction formally. However that is as far as it goes. More particularly, DCR 6R 217 is not intended to reinforce the obligation to plead facts already imposed by DCR 6R 98. Moreover DCR 6R 98 does not require the certifying solicitor to identify the source of the facts pleaded or to discriminate between the options posited by the Master in his reasons, quoted above. In each of these three respects the decision of the Master proceeded on an erroneous reading of the rules.
That returns the inquiry to DCR 6R 98(1)(b)(i). It is to be noted the single obligation it imposes is to certify the pleading prepared in accordance with the defendant party’s instructions. The subject certificate patently does not do that. The Commission is not a party to the action and is therefore separate and distinct from the defendant of record, to whom it has subrogated: Vocisano v Vocisano,[17] Public Trustee as Litigation Guardian for Pinter v Newman.[18]The subrogating insurer only becomes a party to the proceedings if and when it is joined by an order of the court upon being satisfied that there is an actual or potential conflict of interest between insurer and insured: s 125A(2)(a) of the Motor Vehicles Act.
[17] (1974) 130 CLR 267, 272.
[18] (2012) 112 SASR 299, [27].
There is no ambiguity in the rule. It is to be contrasted with DCR 6R 33(4), which expressly accommodates an insurer’s position when it comes to offers of settlement before action. As DCR 6R 98(1)(b)(i) is expressed in intractable language, the certificate can only be seen as non-compliant. Accordingly the Master was entirely correct in reaching that conclusion.
Disposition
Ordinarily the appeal would therefore stand to be dismissed in light of this conclusion. An appeal from a decision of a Master lies to a Judge of this Court, pursuant to DCR 6R 17 by way of re-hearing: Commissioner of Police v Channel Seven Adelaide Pty Ltd.[19] Appealable error has been identified as indicated above, but not in the result. This enables the court to consider the appropriate orders afresh: Cook t/as Kissmyblackarts v Groove Is In The Park Pty Ltd.[20]
[19] [2008] SASC 164.
[20] [2010] SASC 289.
Counsel for the appellant urged that even if the decision of the Master was correct in point of principle, the circumstances were such that an exemption from compliance with the Rules ought to be given. DCR 6R 117(2)(a) enables such dispensations to be made. This Rule confers a wide discretion of dispensation, particularly where it is in the interests of justice to grant one: Hillier v Lucas.[21]
[21] (2000) 81 SASR 451, [220] - [221].
In this particular case it has been demonstrated that non-compliance with the Rule derives from circumstance inherent in the exercise of the statutory right of subrogation. In that situation compliance might often be impractical. The capacity to cross-examine the defendant is not otherwise impinged, compromised or frustrated. On the defence as it currently stands, the supposed forensic disadvantage is more imagined than real. In those combined circumstances it is therefore appropriate to dispense with compliance with the Rule requiring the certificate in the terms ordered by the Master.
Orders
For the above reasons I propose that the appeal from the decision of the learned Master given on 21 August 2013 striking out the solicitor’s certificate in the defence be allowed, and the plaintiffs’ application filed on 3 June 2013 to strike out the defence be dismissed. There should be an order dispensing with the obligation of the solicitor for the defendant from compliance with DCR 6R 98(1)(b)(i). However as the precise orders on this contingency were not debated, it is appropriate to hear the parties before entering final orders in accordance with these reasons.