Saul v Chaffey

1. [1]

   HER HONOUR:

2. [2]

   By notice of motion filed 1 November 2018, the defendant seeks an order that leave be granted to file and serve a proposed amended defence. The plaintiff objects to the filing of the proposed amended defence.

3. [3]

   The plaintiff is Cameron Peter Saul bhnf Alison Mary Saul. The defendant is Andrew James Chaffey. Both parties relied on the documents contained in the agreed court bundle (Ex 1) and (Ex “MM – 2”) to the affidavit of Mark Malley of Moray & Agnew, the defendant’s solicitor, dated 22 November 2018.

Background

1. [4]

   The plaintiff alleges he suffered a brain injury as the result of an accident that occurred on 9 November 2010, when he was 10 years of age. The plaintiff is now 18 years of age. It is expected that these proceedings will be ready for trial later this year.

The pleadings

1. [5]

   On 4 November 2013, the plaintiff filed a statement of claim seeking damages against the defendant, who was the driver of the vehicle that collided with the plaintiff.

2. [6]

   One of the allegations made by the plaintiff in his statement of claim is that the accident was a “blameless motor accident” as that phrase is defined in s 7A of the Motor Accidents Compensation Act 1999 (NSW). Alternatively, the plaintiff alleges that the defendant was negligent.

3. [7]

   Prior to the filing of the defence, the insurer had a copy of an accident notification form dated 23 November 2010 (Ex 2) completed by the plaintiff’s mother. It gives a brief description of the accident as follows:

Blameless accident

1. [8]

   Sections 7A and 7C of the Motor Accidents Compensation Act read:

2. [9]

   If the plaintiff alleges that an accident is blameless, in accordance with s 7C of the Motor Accidents Compensation Act, the onus shifts to the insurer to provide evidence to the contrary. In Axiak v Ingram (2012) 82 NSWLR 36; [2012] NSWCA 311 (“Axiak”), the Court of Appeal per Tobias AJA (with Beazley JA and Sackville AJA agreeing) stated at [66]-[68]:

3. [10]

   On 29 January 2014 (some four years ago), the defendant filed a defence. The defence specifically denied firstly, the allegation of blameless motor accident; and secondly, that the plaintiff was negligent, as referred to in [7] and [9] of the statement of claim. It is fair to say that in this defence, the defendant did not provide any particulars in support of the denial of the blameless motor accident.

The proposed amended defence

1. [11]

   Paragraphs 1 to 8 of the proposed amended defence read:

2. [12]

   In other words, the insurer now intends to plead that the accident is not a blameless one and that Kempsey Shire Council (“the Council”) was negligent. The defendant in this proposed amended defence does provide particulars that as to why he claims that it is not a blameless accident. It is common ground that the RTA had a contractual arrangement with the Council for the Council to maintain the roadway.

3. [13]

   On 11 October 2018, leave was granted to serve a cross claim against the Council.

4. [14]

   On 12 October 2018, the defendant filed a cross claim against the Council seeking contribution and indemnity in respect of all liability that the cross claimant may have to the plaintiff.

5. [15]

   On 4 February 2019, the cross defendant filed a defence against the cross claim.

The requirements of pleadings

1. [16]

   Section 64 of the Civil Procedure Act 2005 (NSW) reads:

2. [17]

   The insurer did not plead the defence as set out in UCPR 14.14. The proposed defence is a pleading that accords with the requirements of UCPR 14.14.

The defendant’s submissions

1. [18]

   In summary, the defendant makes the following submissions:

2. [19]

   The defendant submitted that in he should be allowed to amend his defence, as the asserted basis for prejudice arising therefrom is not made out.

The plaintiff’s submissions

1. [20]

   The plaintiff objects to the filing of the proposed amended defence for four main reasons: firstly, it is not fair and just; secondly, there is no satisfactory explanation for delay; thirdly, prejudice; and finally, futility. I shall deal with each reason in turn.

2. [21]

   The plaintiff was not required to guess or ask for the reasons behind the unparticularised denial of the blameless accident pleading. The plaintiff was entitled to rely on UCPR 14.14 and to assume that if there were specific factual matters on which the defendant relied to contest the application of the blameless accident provisions, then those matters would (as required by the Rules and any basic understanding of procedural fairness) be properly pleaded.

3. [22]

   The enquiries by the defendant into the circumstances of the accident and the existence of the irrigation hose as a tripping hazard were underway before the defence was filed. The Moray & Agnew letter of 25 October 2012 making a GIPA application to the Council specifically sought records in relation to the “median strip or pipe”.

4. [23]

   Further, early in the life of the proceedings, the defendant issued two subpoenae to the Council and obtained documents in response. Mr Keramidas was retained for the specific purpose of providing comment about the potential liability of the Council.

5. [24]

   By early 2016, the defendant had whatever material was available from the Council in relation to the median strip and the irrigation pipe.

6. [25]

   On or about 27 September 2016, the defendant received the Keramidas report, which specifically addressed the circumstances of the accident and provided an opinion as to fault on the part of the Council. By this stage, there can have been no excuse for the defendant failing to seek to amend the defence and comply with UCPR 14.14.

7. [26]

   However, for reasons that are entirely unexplained, the defendant sat quiet. The Keramidas report was not served.

8. [27]

   For a period approaching two years between 27 September 2016 and 27 July 2018, the defendant failed to act to fix a gross breach in pleadings, even when fully seized with the information required in order to seek the appropriate amendments. The defendant did not even take as simple a step as writing to the plaintiff's legal representatives to advise of its intention to amend and run the s 7A argument based on fault on the part of the Council.

9. [28]

   It is against this background that the plaintiff says that the defendant has failed to discharge its onus to satisfy the court that it is “fair and just” to allow the pleadings to be amended.

10. [29]

    The starting point for any request for the exercise of judicial discretion is to fully and frankly explain why the exercise of the discretion is required. Across three affidavits of Mr Malley, as well as written submissions prepared by senior counsel, the defendant does not provide the Court with an explanation with respect to any of the following relevant issues:

11. [30]

    Absent any explanation for the defendant’s non-compliance with the Rules, the plaintiff has submitted that the belated amendment should not be permitted. The defendant is not exempt from the pleadings requirements in the Rules. The defendant's approach to this application, which assumes a right to amend without explanation, should not be endorsed or encouraged.

12. [31]

    The first and most significant prejudice to the plaintiff is that the amendment, if permitted, puts him on risk of losing his entitlement to substantial damages for non-economic loss and economic loss. This risk that did not exist from January 2014 to September 2018.

13. [32]

    Although the blameless accident allegation was denied in the defence, the effect of s 7C of the Motor Accidents Compensation Act is that the plaintiff’s averral of a blameless accident shifted the evidentiary onus onto the defendant to demonstrate that the circumstances were not blameless. The defendant never had any prospect of discharging that onus without adducing evidence that someone else was at fault. No such case was pleaded, and in accordance with UCPR 14.14, no such case could be run. The plaintiff had to win on all heads of damage, absent any alternate case from the defendant pleading fault on the part of some other person.

14. [33]

    No such alternate case was proffered on the pleadings or offered up in correspondence. The plaintiff, his tutor, and their legal advisers were therefore entitled to view the case as “unlosable” on all heads of damage for over four years from January 2014 to September 2018. The plaintiff (in accordance with Axiak) merely had to win a blameless accident claim.

15. [34]

    The proposed defence would allow the defendant to contest an issue that has not been the subject of direct notice and not been pleaded for the last four and a half years. The amendment puts the plaintiff at risk of losing significant damages, with possible adverse costs consequences. This is a massive potential prejudice to the plaintiff that cannot be cured, except by refusing the amendment. It is the defendant’s own conduct that has created the prejudice, and the defendant should bear responsibility for its failure to comply with the Rules.

16. [35]

    Secondly, if the amendment was allowed, the plaintiff would be prejudiced in meeting the now pleaded defence. As the correspondence from the Council of 2 December 2015 makes clear, there is a paucity of evidence with regards to when this section of irrigation pipe was installed, whether it was installed properly to begin with, when it first protruded above the ground, how long this occurred before the subject accident, and whether the protruding irrigation pipe ever came to the attention of the Council prior to the plaintiff’s accident.

17. [36]

    It would appear as if the answers to all of these questions are irretrievably lost. The defendant certainly adduces no evidence in answer to any of them.

18. [37]

    Had the plaintiff been on notice of the defence to the blameless accident claim when the defence was filed on 29 January 2014, there were investigations the plaintiff could have undertaken that may have revealed the answers to these questions. The delay is a consequence of the defendant’s failure to properly plead the case, and the responsibility for the resulting prejudice to the plaintiff rests squarely with the defendant.

19. [38]

    It is acknowledged that the answers to these questions may have already been lost prior to the filing of the defence. However, the situation is akin to an application by a plaintiff to extend time. Prejudice to a defendant inside the limitation period is the defendant's problem. However, when a plaintiff needs an extension of time, all prejudice to the putative defendant is taken into account, not just that occurring after the expiry of the limitation period.

20. [39]

    In this case, if the proposed amended defence had been filed in January 2014, the plaintiff could have had no objection. Where instead the defence is being sought to be filed four years later, the totality of the prejudice is relevant to a discretion to grant leave to amend.

21. [40]

    Thirdly, and finally, the plaintiff is prejudiced in terms of now seeking to commence proceedings as against the Council. If the plaintiff sought to join the Council to proceedings as defendant, then it would seem inevitable that the Council would plead a limitations defence. That in turn would raise the issue as to when the cause of action was “discoverable”. There would be at least a reasonable argument that the cause of action might have been discoverable with the production of documents by the Council back in February 2014. The documents produced in packet S-7 included the email from Mr Tony Green of 9 November 2010 and the attached picture of the extruding pipe taken on the day of the accident.

22. [41]

    It is difficult to criticise the legal representatives of the plaintiff for not exploring liability on the part of the council and possible joinder of the council as a defendant back in 2014. At that stage, on the pleadings and applying Axiak, the plaintiff had to win his case as against the CTP defendant, on all heads of damage. A pedestrian had to win a blameless accident case and there was no case being put forward by the defendant identifying fault on the part of any other party.

23. [42]

    The defendant may have been exploring the cross claim for contribution that it ultimately filed in 2018, but there was no reason for the plaintiff to be concerned with finding another party to add. However, although the plaintiff had no good reason to consider an additional defendant, the cause of action was arguably discoverable with the evidence in Mr Green’s email and the attached photo, as both were available in documents produced under subpoena in 2014. The plaintiff would now be out of time to sue the Council.

24. [43]

    If the defendant was allowed to amend and the plaintiff sought to join the Council as a defendant to proceedings there is a significant prospect that a limitations defence would succeed. The late notice of the defendant’s full grounds of defence has prejudiced the plaintiff’s prospects of successfully suing another defendant.

25. [44]

    The plaintiff should not be put in this position as a consequence of the defendant’s failure to comply with the Rules.

26. [45]

    It is acknowledged that courts should be very slow to reject amendments to pleadings on the basis of futility arguments. The General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 (“General Steel”) test requires little more than an arguable case.

27. [46]

    In General Steel, Barwick CJ at 129 stated:

28. [47]

    Having said that, establishing “fault” on the part of the Council (such as to engage s 7A) requires the defendant to prove (they bearing the onus by virtue of s 7C) that there is fault on the part of the Council. That in turn will engage the provisions of s 45 of the Civil Liability Act 2005 (NSW), the special non-feasance protection for roads authorities.

29. [48]

    Section 45(1) of the Civil Liability Act relevantly provides:

30. [49]

    It is submitted that the Court would not entertain permitting the amended defence unless there was some evidence that the defendant could overcome s 45 by establishing the requisite knowledge. There is no evidence before the Court that the Council had actual knowledge of the particular risk.

31. [50]

    As addressed by the Court of Appeal in North Sydney Council v Roman (2007) 69 NSWLR 240; [2007] NSWCA 27, it is necessary that the specific council officer responsible for directing repairs be on notice of the specific alleged hazard. In this case, there is no evidence of any Council official being on notice of the exposed irrigation pipe, let alone the responsible officer (who has not been identified).

32. [51]

    On the available evidence, the defendant could not discharge the onus it bears in establishing fault on the part of any other person under s 7A of the Motor Accidents Compensation Act, as the defendant has adduced no evidence to overcome the effect of s 45 of the Civil Liability Act. It is emphasised that s 45(1) provides that the Council (relevantly a “road authority”) is not liable for a failure to carry out road work, absent actual knowledge.

33. [52]

    Section 45(3) relevantly defines “road work” to include “maintenance”. Maintenance of the median strip would therefore relevantly constitute road work in this case.

34. [53]

    The Court should not grant leave to amend where the argument raised by the amendment seems futile.

Conclusion

1. [54]

   The onus is upon the defendant to explain their delay and properly provide particulars in its defence as to why the accident is not blameless, in accordance with UCPR 14.14. The thrust of the defendant’s submissions is to attempt to shift the blame to the plaintiff for his own shortcoming. It appears that it was only when the plaintiff’s solicitor wrote to the defendant’s solicitor on 27 July 2018, pointing out that the defendant had no particulars and setting out no information as to the basis on which the blameless accident was denied, that the insurer’s solicitor turned his mind to the necessity to properly plead the defence.

2. [55]

   The defendant’s solicitor proffers no real explanation for the delay of over four years in seeking to amend the defence, despite relying on three affidavits and being cross examined. The explanation, or more accurately, the lack of explanation, is unsatisfactory.

3. [56]

   The most significant prejudice to the plaintiff is that allowing the amendments to the defence would put him on risk of losing his entitlement to substantial damages for non-economic loss and economic loss, which is a risk that did not exist from January 2014 until September 2018.

4. [57]

   If the amendment is allowed, the plaintiff would be further prejudiced in meeting the now-pleaded defence. Adequate evidence with regards to the circumstances surrounding the accident and the Council’s involvement in the irrigation pipe’s installation and maintenance has been irretrievably lost.

5. [58]

   What evidence remains includes photographs, one or more of which show the skid marks of the defendant’s car.

6. [59]

   I accept that there is also a copy of a statement by police officer John William Ferris on the date of the accident that records:

7. [60]

   There is also the accident notification form completed on 23 November 2010 (Ex 2) by the plaintiff’s mother (reproduced earlier). Both of these documents refer to the plaintiff tripping into the path of a northbound car. There is a photograph of the irrigation pipe, which was “13mm plastic and was buried at each end of the bare earth track where pedestrians cross through the garden, forming a loop above the ground” still in existence, together with a file note that reads “with permission from the Police, it [the irrigation pipe] has now been removed”. This photograph was taken on the day of the accident and the file note was created by Tony Green, an employee the Council.

8. [61]

   If the plaintiff is now obliged to join the Council as a defendant, his legal representative will need to conduct investigations in an attempt to establish that his solicitor has a viable cause of action against it. The plaintiff may be met by the Council alleging that the plaintiff’s claim against it is statute barred. It is far from clear whether that cause of action is statute barred, but if it is, the plaintiff will suffer severe prejudice caused by the defendant filing the proposed amended defence. Further, on the topic of prejudice, the police photographs of the accident site have been lost.

9. [62]

   A statement relating to the accident taken by a lay witness, Mr Fisher (or could be Fischer) has also now been lost. An attempt by the defendant to locate Mr Fisher in 2011 was not successful. Police Officer Ferris was interviewed by the defendant in 2016.

Futility

1. [63]

   There is a report by defendant’s traffic reconstruction expert William Keramidas, dated 27 September 2016 (“the report”). Under the heading “Conclusions” at [7] Mr Keramidas opined:

2. [64]

   The particular risk was that a person would trip on the plastic irrigation pipe on the median strip and into the path of an oncoming car. This report does not specifically address whether the Council had actual knowledge of this particular risk. The report may or may not be supplemented by witnesses from the Council as to their actual knowledge of this particular risk. I am not in a position to conclude that the defendant’s case against the Council is futile, although on the current evidence, it is weak.

3. [65]

   I accept that the defendant’s chances of success in its claim for contribution against the Council are not futile. However, it is my view that in circumstances where the defendant has not filed a defence that complies with UCPR 14.14 for four years, and does not provide any real explanation for a delay which results in actual prejudice to the plaintiff as outlined earlier, it is not fair and just to grant leave to the defendant to file the proposed amended defence. Leave to file the proposed amended defence is refused.

4. [66]

   It should be noted that for some inexplicable reason, the defendant’s solicitor, without leave, filed an amended defence in the registry on the day of hearing. That amended defence is the precursor to the proposed amended defence. The defendant cannot rely on the amended defence.

5. [67]

   Costs are discretionary. Costs usually follow the event. The defendant is to pay the plaintiff’s costs on an ordinary basis.