Barker v Gifford and Anor [2005] ACTSC 55 (15 July 2005)

Last Updated: 26 July 2005

COLLEEN MICHELLE BARKER v LANCE EDWARD GIFFORD and JOHN

W TAGELL [2005] ACTSC 55 (15 July 2005)

PROCEDURE - pleading - application to strike out portions of defence as inconsistent with earlier admission.

EVIDENCE - admission before action - admission by defendant's insurer - circumstances in which admission may be withdrawn.

Motor Accidents Compensation Act 1999 (NSW), s 81

Evidence Act 1995 (Cth), s 144

John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503

Reinicke v Neilson [2004] ACTSC 5 (Master Harper, 27 February 2004, unreported)

Wyer v Hunt [2005] ACTSC 15 (Master Harper, 11 March 2005, unreported)

Celestino v Celestino (Spender, Miles and von Doussa JJ, Federal Court of Australia,

16 August 1990, unreported)

Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541

Drabsch v Switzerland General Insurance Co Ltd (Santow J, Supreme Court of NSW,

16 October 1996, unreported)

Ness v Graffen (2003) 60 NSWLR 549

No. SC 514 of 2004

Judge: Master Harper

Supreme Court of the ACT

Date: 15 July 2005

IN THE SUPREME COURT OF THE )

) No. SC 514 of 2004

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: COLLEEN MICHELLE BARKER

Plaintiff

AND: LANCE EDWARD GIFFORD

1^st Defendant

AND: JOHN W TAGELL

2^nd Defendant

ORDER

Judge: Master Harper

Date: 15 July 2005

Place: Canberra

THE COURT ORDERS THAT:

1. The defence be struck out.

2. The defendants have 21 days to deliver an amended defence.

3. The defendants pay the plaintiff's costs of this application.

1. This is an application by the plaintiff in an action for damages for personal injury arising out of a motor vehicle collision, for an order that specified paragraphs of the defence be struck out. In essence, the orders, if made, would prevent the defendants from denying negligence or alleging contributory negligence on the part of the plaintiff. The basis of the application is that before action, the defendants through their insurer admitted liability. The plaintiff submits that they should not be permitted to withdraw that admission.

2. The collision occurred at about 8.20 am on 10 June 2000 on the Gundaroo Bridge on the Gundaroo-Sutton Road in New South Wales. The road runs generally north-south, but the bridge itself, a single-lane timber structure of some antiquity over the Yass River, runs east-west. The first defendant was driving a large truck owned by the second defendant, carrying a heavy load of sand, from Canberra to Gundaroo. He was thus travelling east at the time of the collision.

3. 10 June 2000 was the Saturday of the Queen's Birthday weekend, and the plaintiff, who lived at Cullerin, north of Gundaroo, had been called in to work with the statutory authority where she was employed in Canberra. At the time of the collision she was travelling west.

4. Police from Collector prepared a report in relation to the collision, a copy of which was sent to the plaintiff's solicitors in November 2000.

5. The entitlement of injured persons to damages arising out of motor vehicle collisions in New South Wales is governed by the Motor Accidents Compensation Act 1999 of that State. The Act contains restrictions in relation to various components of the damages that a plaintiff may recover. It also prescribes requirements as to notice of intention to claim damages, which must be given to potential defendants and their insurers. Most provisions of the Act, though perhaps not all, have application notwithstanding that action is brought outside New South Wales: John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503. The High Court in that decision made it plain that the law of the place where the cause of action arose governs all substantive matters to be determined. The law of the forum continues to govern procedural rules, that is to say rules that are directed to governing the mode or conduct of the proceedings.

6. There is no suggestion in this case that the plaintiff failed to comply with any of the procedural requirements of the NSW Act. The Act includes a provision imposing a duty on an insurer in the following terms:

81 Duty of Insurer with respect to admission or denial of liability

(i) 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.

(ii) 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.

(iii) 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.

(iv) Nothing in this section prevents an insurer from admitting liability after giving notice denying liability or after having failed to comply with this section.

(v) It is a condition of an insurer's licence under Part 7.1 that the insurer must comply with this section.

7. The insurer of the defendants' vehicle at the time of the collision was NRMA Insurance Limited. The plaintiff lodged a claim form, which is not in evidence, and the claim was allocated within NRMA to Mr Justin Mickan, an injury claims consultant. Mr Mickan arranged for instructions to be given to Lee, Kelly & Associates Pty Limited, a firm of investigators providing insurance and litigation support services, to investigate the circumstances of the collision. Mr Duncan of that firm conducted interviews with the plaintiff (at her solicitor's office in Canberra) and with the defendant. He also attended the scene of the collision, prepared a sketch plan and took photographs. He observed damage to the northern guard rail of the bridge and formed the view that the damage had been caused at the time of the collision. He noted that the speed limit applicable to the section of road including the bridge was 100 km/h. He prepared a five-page report accompanied by a four-page statement by the first defendant and a four-page statement by the plaintiff, which each of them signed, and eleven photographs. He also had each of them sign an authority to the police to release any statements, photographs or other documents relating to the collision. At the conclusion of his report, Mr Duncan recommended that the insurer obtain an opinion from an expert accident reconstruction consultant as to the likely speed of each of the vehicles prior to collision. The report was received by NRMA on 7 May 2001.

8. On 4 September 2001, Mr Mickan wrote to the plaintiff's solicitors a letter headed "Section 81 Notice" which included the following:

I confirm that we have completed our inquiries into the circumstances of the accident and admit liability. We make this submission on the basis that damages are still to be assessed. If you have any information in your possession that will assist us in resolving the claim and formulating a reasonable offer, please forward the material to us.

9. The claims officer presently responsible for the claim at NRMA, Ms Jenny Lam, says in an affidavit that Mr Mickan has left the NRMA. She says that, from her examination of the file, Mr Mickan at the time of the admission had on file the claim form, a note of a short telephone attendance on the first defendant, and the Lee, Kelly & Associates report. It appears from the file that he did not have a copy of the police report. On 30 August 2001, a few days before the letter making the admission was sent, Mr Mickan made a handwritten file note which reads:

Review file. We are in a position to admit BODOC. The claimant was ¾ of the way across the bridge. OC did not see any signs. It is clear from the photos that the signs are there. Admit BODOC.

10. OC is short for `our client'; BODOC is shorthand for `breach of duty of care'. I note in passing that it would have been open to Mr Mickan to admit breach of duty of care rather than liability. An admission in such terms is frequently made by NRMA, and it is reasonably clear that claims officers understand the distinction. An admission of breach of duty of care is not inconsistent with an allegation that the other party was guilty of some degree of contributory negligence. An admission of liability is inconsistent with any such allegation.

11. By the time the admission of liability arrived, the plaintiff's then solicitor had obtained advice from counsel. A copy of the advice is in evidence. Ms Gabriel of the Canberra Bar gave a written advice on 28 July 2001. She raised a number of issues about liability. She noted that the first defendant had been charged with negligent driving, and recommended that the solicitors find out what happened to those proceedings, and if necessary obtain access to Local Court records. She also referred to the possibility of a successful claim against either Gunning Shire Council or Yass Shire Council or both. It seems from her advice that the boundary between the two council areas is close to the bridge, and that one council was responsible for the bridge and the other for trees which might have obstructed the first defendant's line of sight. On balance Ms Gabriel thought that the position in relation to Gunning Shire Council should be further explored, but she did not think that the case against Yass Shire Council was strong enough to contemplate taking any further.

12. The then solicitor for the plaintiff, Mr Richards, now himself at the Bar, says that after he received the letter from NRMA admitting liability he did not make any further inquiries in relation to the issue of liability, including any potential claim against Gunning Shire Council, or the possibility that the plaintiff might have been guilty of contributory negligence.

13. In October 2002, the Australian Government Solicitor's office, instructed by Comcare, took over the conduct of the action on behalf of the plaintiff. They too accepted and relied upon the admission of liability, which was confirmed in a document lodged by NRMA with the Claims Assessment and Resolution Service, a body established by the NSW Motor Accidents Authority under the Motor Accidents Compensation Act. The form required completion of a number of items about the claim, including one entitled Liability Information. NRMA ticked the first box ("admitted its insured driver was the sole cause of the accident"). Other boxes not ticked included one for an allegation of contributory negligence ("admitted its insured driver partly caused the accident and that the claimant / injured person / deceased was partly at fault"). This document was lodged by NRMA in July 2003.

14. By letter dated 23 December 2003, the solicitors for the defendants, Holman Webb, informed the plaintiff's solicitors that they had been instructed by NRMA to act on behalf of its insured. On 18 February 2004, Holman Webb wrote again saying, inter alia:

We have recommended to our client that it review the admission of breach of duty of care and the present lack of an allegation of contributory negligence of your client.

We have been instructed to make the relevant inquiries and put you on notice that an amended s.81 notice may be issued. We have informed CARS of these instructions and have requested they defer the allocation of the matter to an assessor until our inquiries are complete. They will be carried out with all due expedition.

We have requested from you under cover separate letter a copy of the police report. It would expedite matters if you could forward us a copy, assuming you have one, as soon as possible.

We thank you in anticipation.

15. On 31 May 2004, Holman Webb wrote to the plaintiff's solicitors a letter that included the heading `Amended Section 81 Notice'. The substance of the letter was as follows:

We have completed our liability enquiries into the circumstances of the accident and admit liability.

However, our inquiries also indicate that Ms Barker has contributed to the accident / injuries. This has been assessed at 50% and we advise that any damages will be reduced accordingly.

We make this admission on the basis that damages are still to be assessed. If you have any additional information that may assist us in reviewing our decision, please forward the material within 28 days. Otherwise, we will assume that you do not dispute our determination.

16. The admission of liability in the first paragraph is inconsistent with the assertion of contributory negligence in the second, and the letter is worded so as to give the impression that the solicitors are exercising some decision-making function, rather than simply representing the interests of their client and acting on instructions. As it happened, it probably suited the purposes of the solicitors of the plaintiff, because following receipt of it, the Claims Assessment and Resolution Service issued a certificate of exemption from assessment by that body, permitting the plaintiff to commence proceedings immediately within the framework of the Motor Accidents Compensation Act.

17. On 29 July 2004 the present proceedings were instituted. The plaintiff pleaded negligence on the part of the first defendant for which the second defendant was vicariously liable. The plaintiff did not plead the admission. The proceedings were properly instituted in this Court, both defendants residing within the jurisdiction, notwithstanding that the cause of action arose across the border.

18. On 29 November 2004, the defendants delivered a defence. They admitted that the first defendant was the driver and the second the owner of the truck but admitted nothing else. In particular they denied the following assertions in the statement accompanying the Originating Application:

(1)(c) At or about 8.20am on 10 June 2000, the first defendant's vehicle was travelling in a westerly direction along Gundaroo Road, approaching the Gundaroo Bridge, a single lane bridge, in Gundaroo, New South Wales.

(d) At or about the same time the plaintiff's vehicle was driving across the bridge in an easterly direction.

(e) As the plaintiff was about to exit the Gundaroo Bridge, the first defendant's vehicle entered the Gundaroo Bridge, colliding with the front of the plaintiff's vehicle (the collision).

(f) The collision was caused by the first defendant's negligence.

19. Particulars of the negligence were set out in the statement accompanying the originating application. The paragraph in which they were set out was denied.

20. The defence then contained a denial that the defendants were negligent as alleged or at all, and an allegation of contributory negligence, the particulars of which mirrored the particulars of negligence asserted by the plaintiff against the first defendant.

21. Ms Lam says that when she took the file over in April 2002 she saw that liability had been admitted and did not thereafter direct her mind to the issue of liability. In November 2003, she instructed Holman Webb. She says that this was due to the complexity of the assessment of damages and the fact that the Australian Government Solicitor had become involved. In December 2003 Holman Webb advised that they thought that there were grounds for alleging contributory negligence. They recommended that a further statement be obtained from the first defendant, and also a police report, and she arranged for these steps to be taken. In May 2004, Holman Webb, having considered the police report, a fresh statement by the first defendant and some photographs, advised the insurer to instruct them to amend the section 81 notice to allege contributory negligence of 50%. Ms Lam swears that as a result of the investigations and that advice she "became of the view that contributory negligence of 50% should be alleged and I instructed Holman Webb accordingly".

22. In June 2004 Holman Webb obtained a certified extract of records from the Commonwealth Bureau of Meteorology as to rainfall at Gundaroo and Collector and at Canberra Airport for a period including the date of the collision. They engaged Mr Mark George, a former police sergeant with extensive experience in accident investigation, to conduct an investigation into the circumstances of the collision and to prepare a report. His report, dated 9 August 2004, is some sixty or seventy pages in length. The report includes detailed specifications in relation to both the truck and the plaintiff's car, a number of photographs taken by Mr George at the scene of the collision, and complex mathematical formulae as to reaction and braking times and distances. Mr George concluded in his report that neither driver could reasonably have avoided the collision; the first defendant's reported speed was in theory a reasonable one, whilst the plaintiff's reported speed of 60 km/h was excessive and potentially hazardous in the circumstances, and was likely to have contributed to the collision. He acknowledged that the plaintiff had driven on to the bridge first and had prima facie right of way. The speed limit at the time of his inspection was 100 km/h although according to the police report, it had been 80 km/h at the time of the collision. Holman Webb served the plaintiff's solicitors with a copy of Mr George's report in September 2004.

23. On the hearing of the application, counsel for the defendants conceded that the defence delivered could not stand with the letter from the plaintiff's solicitors of 31 May 2004. The defendants were prepared to amend the defence so as to admit negligence, but submitted that they should be permitted to depart form the original admission of liability to the extent of alleging contributory negligence.

24. I had occasion to consider the circumstances in which the Court will permit a party to withdraw an admission in Reinicke v Neilson [2004] ACTSC 5 (27 February 2004, unreported) and also in Wyer v Hunt [2005] ACTSC 15 (11 March 2005, unreported). In the former case the defendant's insurer (coincidentally also NRMA) had admitted breach of duty of care but asserted contributory negligence of 50%, prior to the institution of proceedings. Subsequently, a defence was filed denying negligence and denying the assertions of fact in the Statement of Claim upon which the allegations of negligence by the defendant were based. I ordered that the offending paragraph of the defence be struck out. This permitted the defendant to maintain her allegation of contributory negligence by the plaintiff. I referred in my reasons to the decision of the Federal Court of Australia in Celestino v Celestino (Spender, Miles and von Doussa JJ, 16 August 1990, unreported) on appeal from this Court. Liability in that case had been admitted some five years before trial, and the admission was sought to be withdrawn on the sixth day of the hearing. The trial judge refused leave and the Court dismissed an appeal by the defendant. Their Honours noted that where leave is sought to withdraw an admission, a court will require an explanation for the making of the admission, which must be a sensible one based on evidence of a solid and substantial character, as well as an explanation for the later decision to seek to withdraw it. Their Honours also said that such an admission may be withdrawn only where no injustice will be occasioned to the other party. If the other party has relied on the admission in good faith to his or her detriment, the Court will not permit it to be withdrawn. In the case in question, the plaintiff's solicitors had relied on the admission and not pursued answers to interrogatories, or taken any steps to marshal evidence to prove the plaintiff's case on liability. The Court was entitled to assume that the plaintiff would suffer prejudice in the proof of his case if after an extended period an admission of liability were permitted to be withdrawn. It could be expected that memories of witnesses and the parties would have faded, and lines of inquiry would have become cold. Although prejudice in particular respects might not be apparent on the information before the Court, the probability of prejudice due to delay, although unidentified, could be assumed.

25. In this context the observations of McHugh J in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 551 are of some assistance, although in that case his Honour was dealing with an application to extend a limitation period. His Honour referred to the fact that sometimes the deterioration in the quality of justice arising from delay is not recognisable even by the parties. Important evidence may have disappeared without anybody any longer realising that it ever existed. The significance of a known fact or circumstance may be diminished because its relationship to the cause of action is no longer as apparent as it was when the cause of action arose. The longer the delay, the more likely it is that the case will be decided on less evidence than was available to the parties at the time the cause of action arose.

26. I also set out in my reasons in Reinicke v Neilson a summary of the principles governing the exercise of the discretion to approve the withdrawal of admission by Santow J in Drabsch v Switzerland General Insurance Co Ltd (Supreme Court of NSW, 16 October 1996, unreported). His Honour was dealing with a commercial dispute in the Equity Division of the Court on appeal from a Master and the principles stated will not necessarily translate precisely to an action for damages for personal injury. One of the principles expressed by his Honour may be summarised as follows: Where the Court is satisfied that an admission has been made after consideration and advice such as from an expert and after a full opportunity to consider its case and whether the admission should be made, admissions made with deliberateness and formality would ordinarily not be permitted to be withdrawn. The Court will not approve the withdrawal of an admission where the application to withdraw is actuated by purely tactical reasons.

27. In the present case, the admission was not made by solicitor or counsel, but it was made by the defendants' insurer through a claims officer employed in its third party insurance claims department. It is common knowledge that NRMA is a major insurer of motor vehicles registered in New South Wales, and that is the sole authorised insurer in this Territory. It is common knowledge within the legal profession that the company manages claims through an experienced staff of claims officers, and generally does not instruct solicitors prior to the institution of proceedings, regularly settling claims involving large sums of money and complex issues as to liability and damages direct with solicitors representing claimants. These are matters of which I may take notice without proof by evidence in the normal way: Evidence Act 1995 (Cth), s 144. An admission made by letter over the hand of a claims officer is in a very different category to an admission which might be made by an unrepresented lay litigant. It is clear from the correspondence that the admission was made after consideration of a detailed investigation report which included signed statements by the plaintiff and by the first defendant, and photographs of the scene. The decision to admit liability was made notwithstanding the recommendation by the investigators to obtain an opinion from an expert accident reconstruction consultant. The investigators also provided NRMA with signed authorities addressed to the police, which would have enabled NRMA to obtain a copy of the police report. I must infer that the claims officer decided that he had enough information to make a decision about liability, and that it was unnecessary to obtain a copy of the police report or the opinion of an accident reconstruction expert. The admission was stated to be made following the completion of the company's inquiries into the circumstances of the accident. The admission was a clear and distinct one which was accepted by the plaintiff. I am satisfied that it was made by the insurer after due deliberation by a claims officer with responsibility for the matter and authority to make it, who was aware of the matters that ought to be taken into account in arriving at such a decision. To use the words of Santow J in Drabsch, the admission was made with deliberateness and formality.

28. After the admission was made, the question of liability was not considered again until it was raised by Holman Webb. It is to my mind a relevant factor that the original admission was made by an insurer to which at all times legal advice was readily available. It is common knowledge that NRMA regularly instructs a panel of solicitors in actions of this kind. The plaintiff was, to the insurer's knowledge, represented by solicitors. The insurer must be taken to have decided that the obtaining of legal advice prior to making the admission was unnecessary. This is hardly unusual. Insurers such as NRMA deal with numerous claims arising out of motor vehicle accidents. It would be impractical and probably prohibitively expensive for them to obtain outside legal advice before making decisions about liability and offers of settlement in every case. For the same reason, claims officers must be expected to exercise a considerable degree of discretion in deciding when it is necessary to obtain further information before making a decision about liability, such as a police report or a witness statement or the opinion of an expert. Mr Mickan must be taken to have decided that it was unnecessary for NRMA to obtain a police report or the opinion of an accident reconstruction expert.

29. I was referred by counsel to a decision of a judge of the District Court of New South Wales, Judge McLoughlin, in Ness v Graffen (2003) 60 NSWLR 549, as a case dealing specifically with an application to withdraw an admission in an action governed by the provisions of the Motor Accidents Compensation Act. His Honour in that decision referred to a number of earlier, mostly unreported decisions. It does not appear to me that any of those cases give rise to any issue of principle which departs from the general principles applying in this Court to the withdrawal of an admission, to which I have already referred. In particular, it does not appear to me that any different considerations apply to the withdrawal of an admission under section 81 of the Motor Accidents Compensation Act, from those which apply to the withdrawal of an admission under the general law. It has not been suggested that the admission was made hurriedly because of a need to comply with a time limit laid down by the legislation.

30. Counsel for the defendant argues that the admission was made by mistake, the mistake being an error by Mr Mickan in interpreting the report of Lee, Kelly & Associates. This is said to be demonstrated by Mr Mickan's handwritten file note. I am not sure that this is so, and in any event I am not satisfied that such a mistake would justify the withdrawal of an admission. There is no evidence from Mr Mickan to support the contention that he made a mistake, nor is there any satisfactory explanation for this lack of evidence. It seems to me simply a case where Mr Mickan, no doubt less experienced than those from Holman Webb now advising the insurer, arrived at a decision on the material available to him, firstly that the claim did not justify the delay and expense of obtaining further information or advice, and secondly that liability should be admitted. Those at Holman Webb, when instructed in the matter, took a different view of the material then available and recommended that further investigations be undertaken.

31. Even if I were satisfied that the admission of liability had been made because of a mistake by Mr Mickan, I would still exercise my discretion to withdraw it only if satisfied that no prejudice would thereby be occasioned to the plaintiff. It is now approaching four years since the admission was made. The limitation period for bringing action against Gunning Shire Council has expired. The solicitors representing the plaintiff have taken no steps in relation to liability in the whole of that period. It is likely, probably inevitable, that lines of inquiry have gone cold, and that memories have faded.

32. If the admission were allowed to be withdrawn, the plaintiff would be placed in a position where she would have to meet the report by Mr George. There is no evidence as to what it cost to bring Mr George's report into existence, but it cannot have been insubstantial. I am satisfied that there are aspects in which the plaintiff would suffer actual prejudice if the admission were permitted to be withdrawn.

33. For these reasons, I am satisfied that the defence must be amended to remove any inconsistencies with the original admission of liability.

34. It does not seem to me that the defendants should be permitted to maintain their denial of the assertions of fact in paragraphs 1 and 2 of the statement accompanying the Originating Application (with the exception that the directions in which the vehicles are said to have been travelling at the time of the collision in paragraphs 1(c) and (d) seem to be incorrect, and should each be reversed). The defendants should not be permitted to maintain their allegation of contributory negligence by the plaintiff.

35. It seems to me that the most practical order to achieve this result is that the present defence be struck out, and that the defendants have twenty-one days to deliver an amended defence conforming with these reasons. The defendants should pay the plaintiff's costs of the application.

I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Master.

Associate:

Date: 15 July 2005

Counsel for the plaintiff: Mr AJ Black

Solicitor for the plaintiff: Australian Government Solicitor

Counsel for the defendant: Mr MA Elkaim SC

Solicitor for the defendant: Holman Webb

Date of hearing: 17 June 2005

Date of judgment: 15 July 2005