Making mandatory final offers where liability is denied

Motor Vehicle Directions

Benjamin Mitchell v Australian Capital Territory [2015] ACTMC 1

Date of Judgment: 23 June 2015

Before: Magistrate Morrison

Background

The defendant had denied liability. After participating in a compulsory conference, the defendant made an offer purporting to be a mandatory final offer under s141 of the Road Transport (Third-Party Insurance) Act 2008 (ACT) (‘the Act’). That offer was made despite s141 providing:

(2)          The claimant and the respondent must exchange written final offers (each of which is a mandatory final offer).

(3)          However, if a respondent denies liability altogether, the respondent must give the claimant a written notice of denial (a mandatory final notice).

(4)          If the respondent gives the claimant a mandatory final notice, for this Act, the respondent is taken to have given the claimant a mandatory final offer of $0…

The plaintiff filed an application seeking judgment against the defendant on the basis they failed to comply with their obligation under the Act to issue a mandatory final notice.

Although proceedings had been commenced before the parties participated in the compulsory conference nothing turned on it, as the proceedings were taken to have been stayed until the parties had participated in a compulsory conference and exchanged mandatory final offers, consistent with Racic v Haltiner [2010] ACT SC 63.

Decision

The defendant submitted that the phrase ‘denies liability altogether’ in s141 ought to be read as meaning that a defendant who is not prepared to make any offer of settlement whatsoever at, or after, a compulsory conference must issue a mandatory final notice. Where a defendant was prepared to make an offer, then they were also entitled to also make a mandatory final offer.

The defendant also argued that it had made a limited admission of liability such that it was permitted to make a mandatory final offer. Given the findings of Magistrate Morrison, nothing turned on whether the admission was full or partial. Instead, Magistrate Morrison focused on the implication of the inclusion of ‘altogether’ in s141(3) when considering the denial of liability.

The expression ‘denies liability’ was held to be used commonly in general legal discourse to mean that a defendant denies they are legally obliged to meet a claim for loss/damage made against them. It followed that an admission of liability had the opposite effect.

Magistrate Morrison looked at the other sections within the Act dealing with denials or admissions of liability. In all such sections the meaning given to a denial of liability was in accordance with common usage. It was only in s141(3) that ‘altogether’ was added to the expression. Because the word ‘altogether’ had been included,  Magistrate Morrison accepted it meant more than simply ‘denies liability’.

The distinction between admitting a breach of duty of care and admitting liability was noted to have been discussed by Master Harper in Barker v Gifford & Anor [2005] ACT SC 55 where His Honour made the observation that, as a matter of legal principle, the admission of liability (as opposed to admitting a breach of duty of care) was inconsistent with an allegation of contributory negligence. In that context it was held that the plaintiff’s submission about ‘absolutely’ being a reference to any allegation of contributory negligence was incongruous and would mean the language in s141(3) operated in a way which was not technically precise.

The plaintiff’s submission that the defendant’s interpretation of the section would offend the cost saving purpose of the Act was also rejected. Indeed Magistrate Morrison held that to say an admission of liability was a pre-condition to the making of a mandatory final offer was contrary to the purpose of the Act. It was also observed that, although the defendant could make a settlement offer, as distinct from a mandatory final offer, that would bypass the cost restrictions within the Act, which encouraged the early resolution of claims; and would be an undesirable result.

Magistrate Morrison was satisfied that admitting liability was not a prerequisite to the making of a mandatory final offer, as admitting liability was not a condition in the provisions compelling a respondent to provide initial assistance to a claimant or make an offer under s97.

Magistrate Morrison held that the proper construction of s141(3) to be that a respondent who refused to make any offers of settlement at a compulsory conference must issue a mandatory final notice. However, where a respondent was willing to try and resolve the claim, they were permitted to make a mandatory final offer.

Implications

The decision affords greater cost protection for respondent’s in matters where liability is denied. It also allows liability to remain in issue without trading off the benefits conferred by ss155 and 156 of the Act.

Authored by Brendan Jones, Senior Associate, Brisbane.


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