These proceedings were commenced in respect of property damage to the plaintiff's vehicle, said to have occurred in a motor vehicle accident on 11 January 2013.
The accident was one of a series of end to end collisions involving eight vehicles. The plaintiff was the owner of vehicle number five in the collision. The first defendant is the owner of vehicle number six in the collision, and the second defendant is the owner of vehicle number eight. One Louise Leamore ("Leamore") was the owner of vehicle number seven.
The proceedings were commenced on 10 January 2019, that is to say, one day prior to the expiry of the statutory limitation period. Leamore was not a party to the proceedings. On 11 October 2019, a motion seeking leave to join Leamore as a defendant out of time came for hearing before Curtis DCJ. His Honour refused the grant of leave.
The plaintiff now seeks leave to file an amended statement of claim in which it seeks to allege that the insurers of the first and second defendant, as agents of the first and second defendant, are in practical effect liable to the plaintiff in the same manner as Leamore would have been liable to the plaintiff, had she been joined to the proceedings at their commencement.
The proposed amended statement of claim initially pleaded a case in negligence, and breach of section 18 of the Australian Consumer Law for misleading and deceptive conduct, but at the hearing of the motion those causes of action were not pressed. The sole remaining cause of action sought to be agitated by the proposed amendments is a cause of action based in promissory estoppel, as explained by the High Court in Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR ("Walton Stores v Maher").
The proposed pleading in fact describes the cause of action as being an action in relation to unconscionable conduct (see paragraphs 40 and 41), but it was made clear that the case which the plaintiff seeks to agitate is a cause of action in promissory estoppel.
The defendants made clear that their opposition to the amendments was not put on the basis of pleading deficiencies which might be cured by re-pleading, but rather was founded on the more fundamental basis that the cause of action sought to be agitated was hopeless, and that if leave were to be granted to amend as sought, an application to strike out that pleading as not disclosing reasonable cause of action would inevitably succeed.
It was put by the defendants, therefore, that the plaintiff's motion should be dismissed because to allow it would be to allow a futility to continue. That this was a basis for refusing leave was not in doubt (Alamdo Holdings Pty Ltd v Australian Window Furnishing (NSW) Pty Ltd [2006] NSWSC 1073 at [10] per Barrett J).
I agree with the defendants' submissions.
The proposed cause of action is fundamentally flawed, and, as such, leave should not be granted to permit the amendments. The following are my reasons, briefly stated, for reaching that conclusion.
[2]
Agency
The plaintiff alleges that the first and second defendants' insurers were the agents of the first and second defendants. The particulars of this agency were in each case identical, and set out in the particulars of paragraph 11 of the statement of claim in the following terms:
a. The agency relationship arose ostensibly, arising out of correspondence exchanged between the Plaintiff and his solicitors on the one hand, and Youi on the other hand.
b. Furthermore, the agency relationship arose expressly or impliedly as a result of the rights of subrogation conferred under the First Defendant's contract of insurance and authority conferred upon Youi to both conduct negotiations and make representations in furtherance of those negotiations.
The fact of the insurers conducting correspondence with the plaintiff and his solicitors (correspondence that was instigated by the plaintiff and his solicitors), could not, in and of itself, constitute the insurers to be the first or second defendant's agents.
Part of the reason why the insurers were corresponding with the plaintiff and his solicitors was because of the fact that they were subrogated to the rights of the insureds from the time at which they accepted their obligation to indemnify them. This is what the plaintiff particularises in subparagraph (b) of the particulars of agency.
The plaintiff erroneously then equates subrogation with agency. It is quite incorrect to do so. The insurer, exercising its rights under the equitable principle of subrogation, does not do so as the agent of the insured, but rather, having indemnified the insured, the insurer exercises its rights acquired by subrogation for its own benefit.
This flaw in the legal logic underlying the plaintiff's proposed cause of action is sufficient in and of itself to resolve the motion. I shall nonetheless deal with certain other fundamental difficulties evident in the plaintiff's proposed cause of action.
[3]
The Elements of Promissory Estoppel
The elements of promissory estoppel were explained by Brennan J in Walton Stores v Maher as being:
1. The plaintiff assumed a particular legal relationship would exist between itself and the defendant;
2. The defendant had induced the plaintiff to adopt that assumption;
3. The plaintiff acts or abstains from acting in reliance on the assumption;
4. The defendant knew or intended the plaintiff to do so;
5. The plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and
6. The defendant has failed to act to avoid detriment.
It is clear that a representation can be the cause of the expectation or assumption, to which his Honour referred.
It is also clearly established that in order for a representation to found an estoppel, that the representation must be clear and unequivocal (Legione v Hately (1983) 152 CLR 406 at [435] - [437]). Further, it is also clearly established that a representation can only support a promissory estoppel if it is reasonable for the representee to interpret the representation in the manner for which the representee contends (Australian Crime Commission v Gray (2003) NSWCA 318 at [183] - [206]).
The plaintiff pleads a lengthy series of interactions between it and the insurers of the first defendant (and on one occasion by the first defendant, by his solicitor and the plaintiff), which he seeks to draw together in respect of the first defendant in the following way:
38. …the First Defendant and Youi as agent had made the following representations on behalf of the First Defendant:
a. The First Defendant did not allege Leamore was at fault;
b. The First Defendant had no knowledge of, and had no possession, custody or control of any material containing any admissions by Leamore at to fault;
c. That the collision was "a series of end to end collisions which were caused by a truck hitting a vehicle and pushing it into the other vehicles to the next vehicle which pushed it into the next vehicle etc" …
Similarly, against the second defendant the plaintiff alleges:
39. …the Second Defendant and GIO / Vero as agent made the following representations on behalf of the Second Defendant:
a. The Second Defendant hit the car in front of him in the rear;
b. The Second Defendant did not allege Leamore was at fault;
c. The Second Defendant [had] no knowledge of, and had no possession, custody or control of any material containing any admissions by Leamore as to fault.
Taken at its highest, the alleged representations could never be said to be of such a clear and unequivocal nature as to found the asserted estoppel. This is made clear by reference to paragraphs 40 and 41 of the proposed amended statement of claim, which appear to be a pleading of the plaintiff's detrimental act(s) of reliance. This detrimental act was said to be that the first and second defendants' representations "induced the plaintiff into failing to sue Leamore within time". On no view of it could the representations as pleaded constitute a clear and unequivocal representation by the representor to the effect that it was unnecessary to commence proceedings against Leamore.
In addition, it could not possibly be said that it was reasonable for the plaintiff to interpret anything which the insurers told him as pleaded, as being an inducement to the plaintiff to not commence proceedings against Leamore at the time.
A further matter should be mentioned concerning the alleged representations. A number of the alleged representations are in the nature of representations by silence. As is well known, in order for a representation by silence to be actionable, there must be circumstances which "give rise to a reasonable expectation that if some relevant fact exists, it would be disclosed" (Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at [41] per Gummow J).
In the present case there was no basis for a reasonable expectation that the insurers of the first and second defendants would disclose to the plaintiff any information in relation to the proceedings. Far from it, the plaintiff is suing the first and second defendants, to whose rights the insurers are subrogated. The plaintiff and the insurers thus have interests which are entirely opposed to each other in the litigation. As such the insurers have no duty to the plaintiff. They are, and can be expected to advance their own interest in the litigation, without any regard to the interests of the plaintiff. As such, the insurers are fully entitled to remain silent about any matter relevant to their interest in the litigation.
Accordingly, to the extent to which representations by silence are sought to be relied upon by the plaintiff, they are not available to him.
[4]
Conclusion
It follows that I am in agreement with the contentions of the first and second defendants that the problems with the proposed cause of action, upon which the plaintiff seeks to rely in the proposed amended statement of claim, are so profound as to be incapable of correction by re-pleading. Thus, to permit the amendment as proposed, or any variation of it, would be to permit a futility to continue. As such, leave to amend should be refused.
[5]
Orders
1. That the plaintiff's notice of motion filed on 13 January 2020 be dismissed; and
2. That the costs of the plaintiff's motion be reserved.
[6]
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Decision last updated: 16 June 2020