James Hills v Sam Raunio [1997] ACTSC 69 (16 September 1997)

SUPREME COURT OF THE ACT

JAMES HILLS v. SAM RAUNIO
No. SC 751 of 1996
Number of pages -
4
Practice and procedure

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

MASTER CONNOLLY

CATCHWORDS

Practice and procedure - Application by third party insurer to be joined as defendant - Personal injury claim - Motor vehicle accident - Plaintiff riding motorcycle - Serious injuries leaving plaintiff a paraplegic - Defendant owner of motorcycle - Registration & insurance on the motorcyle not transferred to defendant's name but still in force at time of accident - Defendant unable to be located - Degree to which third party insurer's rights and interests affected - Test to be applied - No Issue of Principle.

Motor Traffic Act 1936 (ACT), s.71

Supreme Court Rules (ACT), O.19 r.12; O.19 r.44

High Court Rules, O.16 r.4(2)

Federal Court Rules, O.6 r.7

News Ltd V Australian Rugby Football League Ltd (1996) 139 ALR 193

Penang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52

Foxe v Brown [1984] HCA 69; (1984) 58 ALR 542

Savaglia v MacLennan (1980) 24 SASR 314

Australian Tape Manufacturers Association Ltd v Commonwealth of Australia [1990] HCA 38; (1990) 94 ALR 641

HEARING

CANBERRA, 12 September 1997 (hearing), 16 September 1997 (decision)

16:9:1997

Counsel for the Applicant (NRMA Insurance Ltd): Mr M McDonogh

Instructing Solicitors: Abbott Tout Harper Blain

Counsel for the Plaintiff/Respondent: Mr R Lucas

Instructing Solicitors: Colquhoun Murphy

ORDER

THE COURT ORDERS THAT:

1. NRMA Insurance Limited be joined as the second defendant in the proceedings.

2. There be no order as to costs.

3. Liberty be granted to the parties to restore the matter on 2 days' notice.

DECISION

MASTER CONNOLLY

This application raises an unusual aspect of the procedure of this Court. The plaintiff brings a claim for personal injuries arising from a motor vehicle accident. He suffered most serious injuries, which have left him a paraplegic, in an accident involving a motorcycle which he was riding. He pleads that the owner of the motorcycle negligently failed to advise him of certain defects in the brakes before permitting him to ride the motorcycle. The defendant at the time was the owner of the motorcycle. The defendant was unable to be located, and an order was made permitting substituted service on the defendant by way of the NRMA, which at the time of the accident was the third party insurer of the motorcycle.

The NRMA seeks to be joined as a defendant, and indicated that, if this is permitted, it will make application before a Judge of this Court for a point of law to be determined prior to the hearing of the personal injuries claim, that point being whether the NRMA is, pursuant to s.71 of the Motor Traffic Act 1936, in fact liable to indemnify under the policy of insurance. The policy of insurance was taken out in the name of X, who was then the registered and proprietary owner of the motorcycle. X sold the motorcycle to Y. The registration and insurance was not transferred at the time. Y then sold the motorcycle to the defendant, and again the registration was not transferred, so that at the time of the accident, while the vehicle was proprietarily owned by the defendant, the registration and insurance (which were still in force, albeit about to expire on the day following the accident) were still in the name of the original owner.

The NRMA seeks to be joined as a defendant. It says that, if it is given leave, it will move immediately to have the question of law determined by a Judge of this Court. It has given certain undertakings in open court on the hearing of this application in relation to the costs of such a course, and I was advised that, if I were to grant leave, the parties would reach an agreement on this matter, and failing that could apply for an order.

The NRMA argues that there is considerable merit in the course of action which it proposes, as it will allow the issue of the eventual liability of the insurer to be resolved, if it be resolved against the insurer's interest, before the hearing of the substantive claim, thus allowing the NRMA to defend the claim in the ordinary way on liability and quantum. It says that being allowed in as a defendant at this time will avoid it bringing separate proceedings to try to resolve this issue, thus saving costs. It further says that it will lose an important right, that is the right to challenge the eventual liability, if it is not allowed in. In that case, as the plaintiff agreed, the likely course would be for the matter to proceed to a default judgment, and then an assessment of damages. An award, which being a claim for paraplegia, could well be most substantial, would then be enforceable against the defendant. It is highly likely that, this being unable to be satisfied, the plaintiff would then seek to enforce the judgment against the insurer. The NRMA would at this point have the opportunity to raise the issue of its liability under the policy of insurance, but at this point it would have lost its opportunity to defend the claim on its merits as to liability or quantum, and would be contesting the single issue of its liability to a judgment obtained on default on liability and with no appearance by a defendant on the question of quantum.

The plaintiff says that the NRMA could of course come in now and exercise its rights of subrogation under the NRMA policy in force. This of course it could do, and so have a role in the determination of liability and the assessment of damages, but in so doing it would of course be acknowledging its liability under the policy, which is the legal question it wants determined.

This application is brought pursuant to Order 19 of the Rules. The applicant says that the power to join it as a second defendant is to be found in Order 19 Rule 12 or alternatively in Order 19 Rule 44. Rule 44 confers a wide discretion on the court to require any person to be made a party to an action, but it is contained in Part 4 of Order 19 dealing with administration and execution of trusts, and from its context I do not think that it is an appropriate basis for the orders here sought. The power to make the order sought is, in my opinion, to be found in Order 19 Rule 12.

This rule relevantly provides that the Court may, at any stage of the proceedings, either upon or without the application of any party, and upon such terms as appear to the Court to be just, join any plaintiffs or defendants

"...who ought to have been joined, or whose presence before the Court is necessary in order to enable the Court effectually and completely to adjudicate upon and settle all the questions involved in the cause or matter."

The applicant conceded, properly, that the NRMA is clearly not a person who "ought to have been joined". But it argues that it is a party whose presence is necessary to enable the Court effectually and completely to adjudicate upon and settle all the questions involved in the matter, for the reasons set out above. The form of Order 19 Rule 12 follows closely the equivalent provisions in the Rules of the High Court O.16 r.4(2) and of the Federal Court O.6 r.7. In News Ltd V Australian Rugby Football League Ltd (1996) 139 ALR 193 the Full Court of the Federal Court said (at 297) that these forms of Rule

"...reflect an intention, which now receives more emphasis than in the past, to avoid where reasonably practicable a multiplicity of proceedings."

The test frequently cited in relation to the exercise of this discretion is that set out by Lord Diplock, delivering the opinion of the Judicial Committee of the Privy Council in Penang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52 at 55-56:

"The cases illustrate the great variety of circumstances in which it may be sought to join an additional party to an existing action. In their Lordships' view one of the principal objects of the rule is to enable the court to prevent injustice being done to a person whose rights will be affected by its judgment by proceeding to adjudicate upon the matter in dispute in the action without his being given an opportunity of being heard."

Counsel for the plaintiff, who resisted this application, urged that the rule is premised on a finding, not that it is convenient or appropriate that a party be added, but that it is necessary. He argues that, as the dispute between the plaintiff and the defendant could proceed to judgment without the NRMA being added as a defendant, it cannot be said that it is necessary that they be joined. Counsel for the applicant conceded that the matter could proceed in this way, but that then the plaintiff would seek to enforce the judgment against the insurer, and that for this reason it is necessary that the NRMA be let in at this stage. Counsel says that the test of necessary should be taken to be that set down by Lord Diplock in the passage cited above, that is, to prevent injustice being done to a person whose rights will be affected.

There is old authority to the effect that a party may be added if his or her legal interests will be affected by the judgment in the action but not if his commercial interests only would be affected. This distinction was questioned by Lord Diplock, and seems also to have been questioned by Mason J in Foxe v Brown [1984] HCA 69; (1984) 58 ALR 542 at 545, but in any event Mason J in that case took the view that in circumstances where an insurer would eventually become liable under the judgment that amounted to a legal interest being affected. In that case a third party insurer was permitted to enter as a defendant.

Mason J in that case referred to a decision of Mitchell J in Savaglia v MacLennan (1980) 24 SASR 314 where an application by an insurer to be joined as a defendant was refused because the questions involved in the action could be as well resolved by the insurer exercising a statutory right to conduct the action on behalf of the defendant. In this case that option, while open to the NRMA, would deprive the NRMA of seeking to have the threshold issue, of whether it is as a matter of law liable under the policy of insurance, resolved.

I am satisfied that the applicant has made out sufficient grounds to be permitted in as a second defendant in this matter. While I note the plaintiff's argument, correctly made, that prima facie a plaintiff is entitled to choose his defendants so that an application that a plaintiff should be compelled to add a litigant will not normally be granted, I am satisfied that in the unusual circumstances of this case it would be unjust to deny the applicant the opportunity to enter the action so as to resolve the question of its liability to indemnify the defendant before the personal injuries claim is resolved. This is a far higher interest than that sought to be relied on, unsuccessfully, in Australian Tape Manufacturers Association Ltd v Commonwealth of Australia [1990] HCA 38; (1990) 94 ALR 641 where Dawson J held that the mere fact that another person might have standing to challenge the validity of legislation does not make them a necessary party in an existing action challenging that provision.

I order that the applicant be joined as the second defendant in these proceedings.

Counsel made certain undertakings and indicated that agreement would be reached on costs depending on the outcome of this application, and I note that. It is unnecessary for me to make orders on that matter, other than to grant liberty to apply if necessary.