CAN AN INSURER WITHDRAW OR AMEND AN ADMISSION AFTER COMMENCEMENT OF PROCEEDINGS IN THE ACT?

Motor Vehicle Directions

Carr v Needham [2019] ACTSC 98

Facts

On 25 March 2015, the plaintiff was riding a motorcycle on a street in the Australian Capital Territory (the ACT) when the defendant failed to yield at a stop sign and entered the roadway into the plaintiff’s path, causing a collision.

On 10 November 2015, breach of duty of care was admitted by the insurer pursuant to
s97 of the Road Transport (Third-Party Insurance) Act 2008 (ACT) (the Act).

In proceedings commenced on the claim, a defence was filed admitting a breach of duty of care but denying the nature and extent of injuries and disabilities alleged by the plaintiff. On the facts known, a defence of contributory negligence was not alleged, consistent with the insurer’s state of knowledge about the accident at that time.

Sometime later during the course of the plaintiff’s medico-legal assessments, information came to the defendant’s attention which indicated the plaintiff may have contributed to the occurrence of the accident. He disclosed for the first time a history suggesting that he had seen the defendant far earlier than previously asserted, which allowed scope for the defendant to allege that the plaintiff could have taken evasive action to avid the collision.

The defendant then administered interrogatories, and as a consequence of the plaintiff’s answers, the defendant sought to amend his defence to include an allegation of contributory negligence. This was opposed by the plaintiff.

Court’s decision

The defendant’s application to file an amended defence was heard before Her Honour Associate Justice McWilliam of the ACT Supreme Court on 15 March 2019.

The plaintiff argued that pursuant to the Act, an admission of breach of duty of care amounted to an admission of liability and, as such, an insurer was bound by its original admission, pursuant to s97, and could not withdraw that admission later.

The issues therefore to be determined by Her Honour were:

  1. Whether an insurer is precluded from withdrawing or altering its admission once proceedings are commenced, and
  2. If the Act did not preclude an insurer from withdrawing its admission, whether the Court should exercise its discretion to permit the defendant to plead contributory negligence.

In summary, Her Honour was not of the view that the legislature intended the Act to be construed in the manner submitted by the plaintiff.

Her Honour was of the view that in the absence of unequivocal language, the Act could not be construed as to exclude the common law right of a defendant to raise a defence of contributory negligence once litigation had been commenced, even where it had not been raised at any stage during pre-trial compulsory procedures.

The issue then to be turned by Her Honour was whether, in the particular circumstances, the defendants should be granted leave to withdraw the admission and file an amended defence.

In formulating her view, Her Honour considered the principles enunciated by
Master Harper in the case of Wyer v Hunt [2005] ACTSC 15 at [36], summarised as follows:

  1. Whether the party seeking to withdraw its admission provided ‘some good reason’ for why leave ought to be granted
  2. The intention of the party in seeking leave to withdraw the admission. In this regard, whether the original admission was made with deliberateness and formality and whether the application to withdraw was sought for tactical reasons.
  3. Whether the reason provided for withdrawing the admission was contrary to the actual facts of the case
  4. Whether the plaintiff suffers any prejudice.

In summary, Her Honour accepted that the defence filed by the defendants on
4 May 2018 had been filed with deliberateness, formality and on the information then available. Her Honour then considered the reasons provided by the defendants in seeking the grant of leave and the fairness to the parties, with latter having the most significance. Her Honour was clear that leave would not be granted in circumstances where an admission was sought to be withdrawn merely for tactical reasons.

Her Honour acknowledged that upon information suggesting contributory negligence may be relevant first emerging, the insurer promptly investigated the matter and acted in a timely manner.

Finally, as to the issue of fairness, Her Honour was of the view that proceedings would not be protracted nor would the plaintiff be prejudiced or deprived of the opportunity of a fair hearing on the question of contributory negligence. Thus no estoppel arose.

Taking into account all of the above considerations, Her Honour considered it appropriate that the defendants be granted leave to file an amended defence.

Conclusion

Her Honour’s decision is the first determination of this issue in the ACT. It provides guidance to parties seeking the indulgence of the Court as to the relevant and competing considerations likely to be taken into account by the Court when determining whether leave to amend a defence and/or withdraw an admission made under the Act should be granted.

Perhaps the most significant ramification of Her Honour’s decision is the finding that insurers may not be bound by their original admissions of breach of duty, which are required to be made within six months of receipt of complying notice of claim forms pursuant to s97, and are not precluded from withdrawing or amending that admission – despite proceedings having been commenced – even where the issue has not arisen during the course of pre-trial compulsory procedures.

Further information / assistance regarding the issues raised in this article is available from the author, John Solomon, Managing Partner Canberra, or your usual contact at Moray & Agnew.


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