Insurer Allowed to Join Proceedings Against Plaintiff

The insurer was allowed to join proceedings to argue it had no obligation to indemnify the defendant under a CTP policy, despite the plaintiff's attempts to keep options open. The court ruled in favour of the insurer, granting it costs.

New South Wales Supreme Court

CITATION : [NAME] v [NAME] [2004] NSWSC 814 HEARING DATE(S) : 5 August 2004 JUDGMENT DATE : 15 November 2004

JUDGMENT OF : Dunford J DECISION : Judgment and order for costs in favour of insurer

CATCHWORDS : Procedure - Costs - motor accidents legislation - plaintiff alleges insurer liable to idemnify defendant - insurer denies liability - insurer joined as party to proceedings - insurer not liable - whether entitled to costs LEGISLATION CITED : Motor Accidents Act 1988 ss 3 (injury), 43, 44, 47A, 50A Supreme Court Rules Pt 40 PARTIES : [NAME] v [NAME](S) : SC 20400/02 COUNSEL : [redacted] [NAME] - [NAME] Defendant SOLICITORS : [redacted] [NAME], Solicitors - [NAME] Defendant

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

DUNFORD J

MONDAY 15 NOVEMBER 2004

20400/02 [NAME] v [NAME] & ORS

JUDGMENT 1 HIS HONOUR: The substance of these proceedings were settled on 13 August last, the second day of the hearing, by agreement between the plaintiff on the one hand and the first, second and [NAME] defendants on the other, embodied in Terms of Settlement filed in court that day. The [NAME] defendant, [COMPANY] ([NAME]) was not a party to the Terms of Settlement and the plaintiff seeks no further relief against it, but the [NAME] defendant seeks a verdict in its favour against the plaintiff and also an order for costs including indemnity costs. 2 The proceedings brought by the plaintiff arose out of injuries he sustained on 14 September 1999. On that day, the plaintiff had attended the premises of the second defendant, [COMPANY] in the course of his employment with the [NAME], for the purposes of delivering and collecting mail. Upon his arrival at those premises the [NAME] defendant, [NAME] was in the process of loading his truck with a quantity of steel beams. The loading process was being undertaken with the assistance of a forklift which was being driven by the first defendant, [NAME] who was an employee of [COMPANY]. 3 The plaintiff alleged that in the course of the loading process, the first defendant lost control of a load of beams which were being lowered on to the [NAME] defendant's truck with the use of the forklift. This caused the beams to fall off the truck in the plaintiff's direction. As a consequence of either being struck by the steel beams, or as a consequence of attempting to avoid being struck, the plaintiff suffered injury. 4 There was no dispute that the truck operated by the [NAME] defendant, onto which the beams were being loaded, was insured with [NAME] under a [NAME] Party insurance policy. 5 On March 2000, the plaintiff's former solicitors served a Claim Form on [NAME] pursuant to s 43 of the Motor Accidents Act 1988 (the Act) and subsequently, the plaintiff's later solicitors served documents on it pursuant to s 50A of the Act. 6 The plaintiff's Statement of Claim was filed on 13 September 2002 and made no express reference to the Act, but the plaintiff's DCM document filed the same day contained the following paragraph: 1.4 Defendant's insurer To the best of the plaintiff's knowledge, the [NAME] defendant had a policy of insurance with [COMPANY] under the Motor Accidents Act 1988. The plaintiff is not aware of the insurer of the first and second defendants. 7 On 12 December 2002, the plaintiff's solicitors served a copy of the Statement of Claim directly on [NAME]. On the same day they forwarded a copy of the Statement of Claim to the [NAME] defendant under cover of a letter which stated (inter alia): "You should inform [NAME], the CTP insurer of the truck that you were driving at the time of the accident, of the claim and forward the relevant documents to them." 8 In response, the solicitors for [NAME] wrote to the plaintiff's solicitors on 30 January 2003 in the following terms: "We confirm that Mr [NAME] has been advised that the injuries suffered by the plaintiff do not come within the definition of injury covered by the CTP Policy of insurance taken out by him with [COMPANY]. [COMPANY] has denied liability in respect of the accident the subject of the above claim. We confirm that it is the intention of [COMPANY] to file an application pursuant to s 47A applying to the Court to be joined as a party to the proceedings." 9 On 13 March 2003, on application of [NAME] and with the consent of the plaintiff (and also with the consent of the first, second and [NAME] defendants), an order was made joining [NAME] as a party to the proceedings. That order was made pursuant to s 47A of the Act which provides as follows: "An insurer may apply to the court to be joined as a party to legal proceedings brought against a defendant who is insured under a [NAME] party policy with the insurer in order to argue that in the circumstances of the case it has no obligation under the policy to indemnity the defendant." 10 An Amended Statement of Claim was later filed by the plaintiff, naming the [NAME] defendant as a party. Paragraph 5 of that Amended Statement of Claim was in the following terms: "At all material times the [NAME] defendant was the licensed CTP insurer of the [NAME] defendant's vehicle." 11 On 19 May 2004, the solicitors for [NAME] made an offer of settlement to the plaintiff. The Terms upon which that original offer was made were subsequently amended, but were ultimately rejected by the solicitors for the plaintiff in a letter of 14 July. On the same date, which was a little over 2 weeks prior to the hearing date, the plaintiff's solicitors wrote to the solicitors for [NAME] in the following terms: "The Statement of Claim is pleaded such that it covers the negligence of the various defendants either within the motor accident legislative scheme (should it apply) as well as in common law negligence for the acts or omissions in negligence of the respective parties, in so far as they do not fall within the motor accidents legislative scheme. It will be the contention of the plaintiff at the hearing of the action that the accident was not one which fell (in respect of any of the defendants) under the Motor Accidents Act 1988 ." 12 The solicitors for [NAME] responded in the following terms: "We note your concession that the Statement of Claim is drafted in such a way that it covers the negligence of the various defendants at common law and also under the Motor Accidents legislative scheme, should it apply. In these circumstances we have seen no other option but to advise our client to be joined to the proceedings pursuant to s 47A of the Motor Accidents Act in order to protect their interests." 13 The CTP policy issued under the Act only covered the [NAME] defendant in respect of an "injury" as defined in s 3(1) of the Act as follows:

"injury"

(a) means personal or bodily injury caused by the fault of the owner or driver of a motor vehicle in the use or operation of the vehicle it, and only if, the injury is a result of, and is caused during: (i) the driving of the vehicle; or (ii) a collision, or action taken to avoid a collision, with the vehicle; (iii) the vehicle's running out of control; or (iv) such use or operation by a defect in the vehicle;

and

(b) includes: (i) pre-natal injury; and (ii) psychological or psychiatric injury; and (iii) damage to artificial members, eyes or teeth, crutches or other aids or spectacle glasses. 14 The plaintiff's case as pleaded in the Statement of Claim (and the Amended Statement of Claim), and his case as outlined to the Court at the commencement of the proceedings on 2 August 2004, did not in any way suggest: (i) that the [NAME] defendant's vehicle (which was the subject of the CTP policy) was being "driven" at the material time;

(ii) that there had been any "collision" between the plaintiff and the [NAME] defendant's vehicle;

(iii) that the [NAME] defendant's vehicle had run out of control; or

(iv) that the injuries had arisen by a "defect" in the [NAME] defendant's vehicle. 15 In these circumstances the plaintiff, to say the least, faced considerable difficulty in succeeding in any action pursuant to the Act against the [NAME] defendant. That much was effectively conceded by the plaintiff's solicitors in a letter of 14 July 2004 quoted above. 16 On the other hand, the plaintiff's previous actions in: (i) serving a Claim Form under the Act on [NAME]; (ii) providing particulars under s 50A of the Act to [NAME]; (iii) serving a copy of the Statement of Claim upon [NAME] under cover of a letter which advised him to "inform [NAME], the CTP insurer…..of the claim; (iv) serving a copy of the original Statement of Claim on [NAME]; and (v) the reference to [NAME] as the [NAME] defendant's insurer in the DCM document; (vi) pleading in the Amended Statement of Claim that [NAME] was the licensed CTP insurer of the [NAME] defendant's vehicle

were all inconsistent with the contention expressed in the correspondence. 17 In response, the plaintiff claims that, although it was likely on the facts, as he understood them, that the accident was not under the Motor Accidents Act that issue was not determined, and what the plaintiff could not account for was the evidence of witnesses for the defendants present at the scene who knew more about the accident than he did, which may well have given him a cause of action either inside or outside the Act. The first defendant, other officers of the second defendant or even the [NAME] defendant may have given evidence (even unintentionally, because minute differences of fact can determine the applicability of the Act), of a type that [NAME] sought leave under s 47A to oppose. 18 The plaintiff also submitted that s 47A is not a section intended to influence or affect the rights of a plaintiff, but that its purpose is to do with indemnity between insurers and defendants, and that the action of the insurer in entering proceedings of its own motion through s 47A is in the nature of a plaint or cross-claim, not a defence. 19 I disagree. Section 47A does not merely provide for disputes between defendants and their insurers, but rather it gives an insurer against whom a plaintiff has made a claim that he or she has a right to receive from such insurer any damages awarded against a defendant the right to defend its liability to provide such an indemnity. 20 In this case, although the evidence which was ultimately led from the plaintiff, and the summary of the facts set out in his DCM document, and the statement in the letter of 14 July 2004 indicated that the plaintiff's injuries did not come within the definition of "injury" in the Act, and therefore that [NAME] was not the insurer of the [NAME] defendant in respect of the plaintiff's injuries, his solicitors' conduct as detailed above made it clear that the plaintiff was keeping his options open and asserting an alternative right to receive from [NAME] any damages awarded to him against the [NAME] defendant; and in these circumstances, [NAME] was in my view, entitled to be joined and to remain in the proceedings, and to take part in the trial.

21 The plaintiff's claim against [NAME] is no longer pursued in the light of the Terms of Settlement which he reached with the first, second and [NAME] defendants and I am therefore satisfied that [NAME] is entitled to an order in its favour disposing of the proceedings and also an order for costs. The order specifically asked for was a verdict against the plaintiff but, having regard to the terms to SCR Pt 40, it seems to me that the appropriate order is an order directing an entry of judgment for [NAME] against the plaintiff, and also an order for its costs of the proceedings. 22 [NAME] seeks an order such costs should be on an indemnity basis after 19 May 2004 when it made its offer of settlement. Such order is opposed by the plaintiff on the grounds that the offer required it to abandon any rights it may have against [NAME] under the Act, and all other claims the plaintiff may have in respect of any other motor accident apart from the one being sued upon, and that at that stage, the other defendants had not signed any Terms of Settlement and the proceedings against them were still pending. 23 In my view, it was not reasonable in the circumstances of this case to require the plaintiff to release [NAME] from any claim with respect of any accident whether connected with the subject proceedings or not, although this was probably academic, as I am not aware of any other possible claim that the plaintiff may have had, but bearing in mind the desire of the plaintiff to keep his options open against [NAME], his refusal to sign until the other defendants had also agreed to a settlement was substantially a reiteration of the grounds on which the plaintiff's conduct justified [NAME] being a party in the first place; and those grounds are the basis for my finding that [NAME] is entitled to an order for costs. In the circumstances, I do not consider that they justify an order for indemnity costs against the plaintiff. 24 [NAME] has been generally successful on this application for costs (except in respect of indemnity costs) and in obtaining an order for judgment against the plaintiff, and for these reasons, it should have an order for its costs of this application. 25 I therefore make the following orders:

(1) Direct the entry of judgment for the [NAME] defendant against the plaintiff.

(2) Order the plaintiff to pay the [NAME] defendant's costs of the proceedings, including the costs of this application for costs.

(3) Dismiss the [NAME] defendant's application for indemnity costs.

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Last Modified: 11/18/2004 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.