Sun v Hafeeza [2006] NSWSC 78

New South Wales Supreme Court

CITATION : Sun v Hafeeza [2006] NSWSC 78

HEARING DATE(S) : 21 February 2006

JUDGMENT DATE : 10 March 2006

JURISDICTION : Common Law Division

JUDGMENT OF : Associate Justice Malpass at 1

DECISION : The notice of motion filed by the plaintiff is dismissed; an order is made that the proceedings be transferred to the District Court; the plaintiff is to pay the costs of both notices of motion.

CATCHWORDS : Admission of liability for breach of duty of care - admission purportedly withdrawn - questions pertaining thereto - breach put in issue in pleadings - application to strike out denial of liability - relevant considerations - transfer of proceedings to District Court.

District Court Act 1973, s143 LEGISLATION CITED : Motor Accidents Compensation Act 1999, s81 Uniform Civil Procedure Rules 2005, rule 14.28

CASES CITED : Maile v Rafiq [2005] NSWCA 410 Ness v Graffen (2003) 60 NSWLR 549

PARTIES : Ling Juan Sun (Plaintiff) Michael Hafeeza (Defendant)

FILE NUMBER(S) : SC 20394/04

COUNSEL : Mr K Andrews (Plaintiff) Mr S E M McCarthy (Defendant)

SOLICITORS : Keddies (Plaintiff) McLachlan Chilton (Defendant)

- 10 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

Associate Justice Malpass

10 March 2006

20394 of 2004 Ling Juan Sun v Michael Hafeeza

JUDGMENT 1 His Honour: The plaintiff was injured in a motor vehicle accident that took place on 21 July 2001. She was walking across Macquarie Road, Auburn. A collision took place between the plaintiff and a motor vehicle driven by the defendant. The conditions were dark (it was about 6.30pm). The defendant had his headlights on. There was street lighting, but it is a badly lit road with large trees (which blocked lighting). 2 There is issue as to how the accident occurred. The plaintiff may have walked across the road without looking to her left. One area of contest is the location and extent of the damage to the vehicle. The point of contact may have been the offside of the vehicle near the driver's door. On the defendant's version, the damage may have been minor (mirror and windscreen). 3 One aspect of the injuries suffered by the plaintiff is an allegation that she has little recall of what took place in the accident. There is evidence that people were seen attending the plaintiff following the accident (including a doctor and his relative who had come from a nearby church). 4 In September 2001, the plaintiff submitted a claim form to the insurer. A police report was obtained. The insurer engaged the services of an investigator (Gary Cox Investigations Pty Limited). In March 2002, the investigator reported back to the insurer. It had, inter alia, obtained a statement from the defendant. It had also interviewed a witness (Kyong-Bin Park), whose name had been provided by the insurer. 5 The insurer failed to make the requisite determination within the prescribed three months. As a consequence, a deemed denial of liability flowed from that failure. 6 Subsequent thereto, by letter dated 16 April 2002, the insurer made an admission of breach of duty of care, but also alleged contributory negligence to the extent of 25 per cent (notice pursuant to s81 of the Motor Accidents Compensation Act 1999). 7 By letter dated 7 March 2003, the solicitors for the plaintiff sought information as to the basis upon which the allegation of contributory negligence was founded. The insurer has not furnished a reply to that letter. 8 In July 2004, advice was sought from solicitors (McLachlan Chilton) by the defendant. The letter seeking the advice was dated 13 July 2004. It forwarded the file of the insurers. It is admitted by the insurer that no further evidence concerning the accident was received by it between the time of the making of the admission of breach of duty and the forwarding of the file to the solicitors. 9 On 26 July 2004, the insurer received a letter of advice from the solicitors. The advice was to the effect that the admission of breach of duty of care should be withdrawn and liability put in issue. It accepted that advice and purported to issue an amended s81 notice (it purported to withdraw the earlier admission). 10 On 9 February 2005, the defendant filed a notice of grounds of defence. It contained the following:- 3. The Defendant denies negligence and particulars of negligence pleaded in paragraphs 4 and 5 of the Statement of Claim. … … … 5. Further, and in the alternative, any injury sustained by the Plaintiff (liability for which is not admitted) was either directly caused or materially contributed to by the contributory negligence of the Plaintiff. 11 On 1 March 2005, the defendant filed a notice of motion. It sought, inter alia, an order that the proceedings (being proceedings 20394 of 2004) be transferred from the Supreme Court to the District Court pursuant to s143 of the District Court Act 1973. 12 On 4 March 2005, the plaintiff filed a notice of motion. It sought the striking out of paragraph 3 of the notice of grounds of defence and the words "liability for which is not admitted" which appear in paragraph 5 thereof. 13 The notices of motion were set down for hearing together. The hearing took place on 21 February 2006. There was no real issue concerning the transfer application. The real contest between the parties concerned the plaintiff's notice of motion. Accordingly, the court first proceeded to hear that application. 14 The plaintiff is seeking relief pursuant to rule 14.28 of the Uniform Civil Procedure Rules 2005 (the Rules). The relevant provisions are as follows:- 14.28 Circumstances in which court may strike out pleadings (1) The court may at any stage of the proceedings order that the whole or any part of a pleading be struck out if the pleading: (a) discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading, or (b) has a tendency to cause prejudice, embarrassment or delay in the proceedings, or (c) is otherwise an abuse of the process of the court. 15 The court has a discretionary power to strike out pleadings. It is exercised having regard to the relevant circumstance of the particular case before it and so that the dictates of justice are best served. 16 The plaintiff bears the onus of demonstrating an entitlement to relief. A threshold requirement is to satisfy the provisions of (a), (b) or (c). It is not said that the notice of grounds of defence suffers from any pleading deficiency. The contention is that it has the tendency to cause, inter alia, embarrassment. 17 The thrust of the plaintiff's contention in respect of the notice of grounds of defence is that paragraphs 3 and 5 thereof contain material which is seen as an attempt to resile from the admission of liability made pursuant to s81 of the Motor Accidents Compensation Act. The section is in the following terms:- 81 Duty of insurer with respect to admission or denial of liability (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) If the insurer admits liability for only part of the claim, the notice is to include details sufficient to ascertain the extent to which liability is admitted. (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. 18 It is a provision that imposes a duty on an insurer. It makes compliance with it a condition of the insurer's licence. It is said to be a provision which serves the object of early resolution of claims. 19 It has been observed that whilst the section enables an insurer to make an admission of liability after earlier having denied liability, it is said that it does not contemplate an insurer being able to move to a position of denying liability after having admitted it. 20 The court has been taken to a number of cases in which, inter alia, the question of withdrawal of an admission of liability by an insurer has been considered. The relevant circumstances vary from case to case. Many of the decisions concern the withdrawal of admissions made during the conduct of proceedings. There are decisions upon which the plaintiff relies (inter alia, Ness v Graffen (2003) 60 NSWLR 549). The most recent of the cases is the Court of Appeal decision in Maile v Rafiq [2005] NSWCA 410. 21 Uninstructed by authority, the view could be taken that any such admission, once made, stands and may be used by the plaintiff as a piece of evidence against the defendant in the proceedings. This is a consideration that does not need to be followed in this case. For present purposes, the real question is, whether or not having made such an admission, the defendant should be allowed to maintain a defence which denies liability. 22 The parties have embraced what was said in Maile as setting forth the relevant tests for the determination of the plaintiff's application. In particular, the court has been referred to what has been said in paragraphs 75 and 95 of the judgment of Tobias JA (with which Brownie AJA agreed). The paragraphs are as follows:- 75 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. … … … 95 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. 23 It seems to me that this approach misconceives the nature of the application now before the court. Maile was a case in which the defendant had made an admission of liability in the pleadings. The application then before the court was one for leave to file an amended defence, which would have had the effect of withdrawing that admission of liability. 24 In such a case, questions of the explanation offered by the defendant and prejudice were relevant considerations in the exercise of the discretionary power of amendment. 25 In this case, the defendant has filed a defence in accordance with the rules. It is the plaintiff who is now seeking to have that defence struck out. She bears the onus and must demonstrate an entitlement pursuant to rule 14.28. 26 When regard is had to the basis upon which the application is put, I am not satisfied that it should succeed. It seems to me to be erroneous. 27 As I understand the arguments that are put, it is not said that the defendant thereafter became permanently bound by the earlier admission and thereby disentitled from maintaining a defence which denies liability. Rather, it is said that, in the particular circumstances of this case, it should not be allowed to do so. 28 The approach seems to be that the defendant is seen to be in the position of a party that needs leave to withdraw the admission and that it is not entitled to maintain its present defence without such leave. In taking this approach, reliance is placed on earlier decisions (including Ness). 29 The question of whether or not the admission was binding was not argued and can be put to one side. It is a question which could perhaps be raised at a hearing. It may be that to do so would require an amendment of the pleadings. In this case, there is a complication (the admission was made outside the prescribed period and was thus preceded by a deemed denial of liability). 30 In the presentation of the arguments, it is said that the defendant has failed to satisfy the tests that are identified in Maile (that is, the explanation put forward is deficient and there is a prejudice that no longer allows a fair trial to take place). 31 The position adopted by the defendant needs to be emphasised. The defendant does not seek any relief in relation to the admission made pursuant to s81. It takes the stance that the court lacks power to grant leave to withdraw any such admission. To the extent that any such concept intrudes into this case and was argued, I observe that I have not been persuaded that there is any power under the Act or elsewhere to grant such relief. Whilst admissions made under the rules may be withdrawn by leave (see rule 17), an admission pursuant to s81 is made outside the court proceedings. 32 In the circumstances of this case, it is my view that the application could only succeed if the plaintiff had been able to satisfy the court that the denial of liability had a tendency to cause prejudice, embarrassment or delay in the proceedings or was otherwise an abuse of the process of the court in the sense required by the Rules. In my view, the plaintiff has failed to discharge that onus. 33 It has not been said that the denial of liability is hopeless and doomed to failure. Whilst the plaintiff may have the benefit of the admission of liability made pursuant to s81, there is real issue as to what brought about the collision between the plaintiff and the defendant's vehicle. The issue has relevance to both breach of duty by the defendant and contributory negligence. Accordingly, the defence cannot be regarded as either an abuse of process or having a tendency to cause prejudice, embarrassment or delay in the sense contemplated by the rule. 34 Because so much time during the hearing was taken up in dealing with the questions of explanation and prejudice, I should make brief observations in relation to both of those matters. 35 The evidence provides explanation of how the defendant came to make the admission. The only matter advanced to explain the change of stance taken by the defendant is the receipt of legal advice and the acceptance of it by the defendant. This is a matter which would normally be regarded as a relevant consideration in circumstances where a party is seeking to amend pleadings and, in particular, withdraw an admission of liability. 36 The plaintiff agitates a number of matters of prejudice. One area concerns loss of potential witnesses. Another area concerns loss of opportunity to examine the defendant's vehicle. It seems to me, that the defendant's belated change of stance has little to do with the present unavailability of both witnesses and the vehicle. 37 The plaintiff had legal representation at an early stage (at least prior to the lodgement of her claim). There was an early opportunity to investigate which may well have not been taken. The prospect of tracking down witnesses would probably have evaporated prior to the making of the admission. The defendant's vehicle had also been disposed of prior to that time (it appears that it was disposed of when its registration expired). It also could have been the subject of earlier investigation. 38 Whilst there was an admission of liability in respect of the plaintiff's allegation of breach of duty, there remained issues of contributory negligence (which concern failure to keep a proper lookout and the dark clothing worn by the plaintiff). These were issues on which the plaintiff may have been assisted by the location of other witnesses and an examination of the defendant's vehicle. 39 It could be that a fair trial may no longer be easy if and when the matter comes to a hearing. If that be the case, it is not, in my view, attributable to the change of stance adopted by the defendant. 40 Perhaps for completeness, I should make a further observation. If a different view were to be taken to the approach adopted by the plaintiff, it would seem to me that in the circumstances of this case, the defendant had offered a sufficient explanation and had demonstrated a lack of prejudice. 41 There remains the defendant's notice of motion. At best, this application could be said to be faintly resisted. 42 In addressing the notice of motion, counsel for the plaintiff referred to and read the affidavit sworn by his instructing solicitor (Stephen Morgan). Counsel did not seek to address on the notice of motion. 43 The proceedings are an action for damages in respect of personal injury or death. I am not satisfied that the amount to be awarded to the plaintiff in this case, if successful, would be likely to exceed $1m. Further, I am not satisfied that the case involves complex legal issues or issues of general public importance. In the circumstances, the statutory provisions require the court to transfer the proceedings to the District Court. 44 The notice of motion filed by the plaintiff is dismissed. An order is made that the proceedings be transferred to the District Court. The plaintiff is to pay the costs of both notices of motion. **********