[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
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Judgment
THE COURT: Mr Sanjeev Khanna seeks leave to appeal from orders made in the District Court on 20 November 2020. The orders were made by consent and had the effect of finalising proceedings brought by Mr Khanna against Allianz Australia Insurance Limited arising out of a motor vehicle accident in 2009. Allianz was the third-party insurer of the driver alleged to have been at fault. Mr Khanna represented himself in the proceedings.
By notice of motion filed on 18 March 2021, Allianz sought, purportedly pursuant to UCPR 51.41, an order that the proceedings be dismissed as incompetent. The sole basis on which it was asserted that the application for leave to appeal was incompetent was that it had no prospect of success: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; [1964] HCA 69. We do not understand the lack of prospects of success in a proposed appeal (or application for leave to appeal) to denote incompetency. In any event, in the result, it has not been necessary to determine that motion.
The circumstances of the motor vehicle accident were somewhat unusual. Mr Khanna had purchased a Mercedes Benz with vendor finance. In late 2009, the finance company took steps to repossess the car on the basis of alleged breaches of the finance agreement. Mr Khanna contends that he was in fact up to date with his repayments at that time. The attempted repossession in those circumstances evidently gave rise to an altercation between Mr Khanna and the tow-truck driver. Mr Khanna claims he was run over by the tow-truck and suffered injuries when the driver was reversing into Mr Khanna's driveway to repossess the car. Apart from physical injuries suffered that day, Mr Khanna also attributes two heart attacks and other physical and psychiatric sequelae to those events.
Mr Khanna lodged a claim under the Motor Accidents Compensation Act 1999 (NSW). On 20 August 2013, Allianz gave notice under s 110 of the Act that it required Mr Khanna to commence court proceedings within 3 months of receipt of the notice. However, before that occurred, Mr Khanna accepted an offer from Allianz to compromise his claim on terms that would see him receive $10,000 clear of Medicare payments. Inexplicably, despite receiving Mr Khanna's signed release and indemnity, Allianz did not pay the settlement sum to Mr Khanna.
In 2019, Mr Khanna commenced proceedings in the District Court. Still, Allianz did not pay the settlement sum. Instead, it moved to have the proceedings dismissed on the basis that Mr Khanna had failed to comply with the procedures required under the Motor Accident Compensation Act. Extraordinarily, Allianz also pleaded a defence under the Limitation Act 1969 (NSW).
Allianz's dismissal motion came before Gibb DCJ on 20 November 2020. When her Honour identified the fact that the claim had been compromised almost seven years earlier and that the agreed sum had never been paid, Allianz made an open offer to pay the agreed sum plus interest. Her Honour explained to Mr Khanna that, whereas his claim under the Motor Accident Compensation Act faced a number of apparently insurmountable hurdles, he had a "much more simple case" in contract based on the settlement agreement, which the insurer had indicated it was prepared to renew.
After a short adjournment, the parties returned with consent orders signed by the solicitor for the insurer. In circumstances explained below, they were later also signed by Mr Khanna. The judge entered orders in the terms proposed by the parties. The orders included judgment in favour of Mr Khanna in the sum of $28,598.78, broken up as follows:
1. $10,000 to Mr Khanna;
2. $3,784 in interest from 6 December 2013 to 20 November 2020; and
3. $14,814.48 to Medicare up to 6 December 2019.
It may be noted that the sums are out by $0.30c. Allianz also agreed to pay Mr Khanna's disbursements agreed in the sum of $1,000.
It is from those orders that Mr Khanna seeks leave to appeal. Leave is required both because the judgment involves a matter at issue that does not exceed the value of $100,000 and because the orders were made by consent: s 101(2)(c), (r) of the Supreme Court Act 1970 (NSW).
We have concluded that leave should be refused for the following reasons.
The principles concerning the exercise of the Court's power to grant leave to appeal are well known. An applicant for leave must demonstrate something more than that the primary judge was arguably wrong in the conclusion reached. Leave is ordinarily appropriate only where the appeal involves issues of principle, questions of general public importance or an injustice which is reasonably clear, in the sense of going beyond being merely arguable: Carolan v AMF Bowling Pty Ltd [1995] NSWCA 69 as cited in Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 at [46].
Where the sum involved is small, it is also appropriate for the Court to have regard to the risk of disproportion between the likely costs involved in any appeal and the interest at stake: s 60 of the Civil Procedure Act 2005 (NSW). As Basten JA pointed out in Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164 at [39]:
"This direction has an important operation in respect of leave applications involving amounts below the statutory threshold. Where, as in the present case, the costs of the trial are disproportionate to the amount in dispute, the incurring of additional costs, for a potentially uncertain return, will be a factor weighing heavily against a grant of leave."
The draft notice of appeal provided by Mr Khanna at the time the summons seeking leave to appeal was filed (14 February 2021) is incomprehensible. Pursuant to directions made by the Court of Appeal Registrar, Mr Khanna has provided a proposed amended draft notice of appeal and an amended summary of argument. Those documents assist in crystallising the issue sought to be agitated by him, which is the contention that, for medical reasons, he did not understand the effect of the orders to which he consented in the District Court.
It is doubtful whether that affords a ground of appeal. The orders made in the District Court were final orders reflecting an agreement reached between Mr Khanna and Allianz. They could only be set aside on a ground on which the agreement to which they gave effect could be set aside: Harvey v Phillips (1956) 95 CLR 235; [1956] HCA 27 at 243-244. In that case, the plaintiff had been subjected to significant pressure by her legal representatives to compromise her claim in medical negligence against the defendant. As the High Court put it:
"in spite of her determination not to settle the action she was temporarily overborne by the extreme pressure exerted upon her by her counsel supported by her solicitor and perhaps others and was induced, when she understood that her counsel had refused to conduct her case and when [a friend] spoke gently to her, to express what proved to be a short-lived consent to accept £4000 by way of compromise."
The Court held that the power to set aside the compromise depended on "the existence of a ground which would suffice to render a simple contract void or voidable or to entitle the party to equitable relief against it."
Furthermore, any such application ought to have been brought by a separate action: Zeene v Zeene (No 2) [2015] NSWSC 1151 at [34] per White J. That is a consideration relevant to the question of leave.
In any event, even if it is open to Mr Khanna to seek to impugn the consent orders by way of appeal, there is no evidence before the Court that would support a finding that the settlement agreement is liable to be set aside on that basis. The material included in the appeal book by Mr Khanna includes various medical records of various dates but there is no evidence as to his condition on the date of the hearing before Gibb DCJ and no application before this Court to lead fresh evidence.
Further, as submitted by Allianz, the transcript of the hearing before Gibb DCJ suggests that Mr Khanna was well able to follow what was going on and gave his willing consent to the orders. After the short adjournment granted by the judge, counsel for Allianz stated that the parties had reached an agreement and handed up the proposed orders, at that stage signed only on behalf of Allianz. Mr Khanna asked the judge some questions about the operation of the orders, following which her Honour asked him to sign them. It is clear that he did so, as there is a signed copy before this Court. Counsel noted that Mr Khanna had provided his account details to Allianz's solicitor; Mr Khanna asked that the sum of $10,000 be paid to him within seven days and the judge added that order of her own accord. This Court was informed that the amount was paid as ordered.
Although the application for leave to appeal must accordingly be dismissed, we decline to make an order for costs in favour of Allianz. Allianz made no attempt, before Gibb DCJ or to this Court, to offer any explanation for its failure to pay the agreed settlement sum to Mr Khanna in 2013. Had the settlement agreement been honoured at that time, there would have been no need for Mr Khanna to resort to commencing legal proceedings in 2019. The proceedings having been commenced, Allianz still did not honour the agreement but instead sought to have the claim dismissed. In the circumstances, its attempt to rely on a Limitation Act defence was, to say the least, unmeritorious. It was the judge who identified the existence of the agreement; only then was the offer renewed for the benefit of Mr Khanna. In the circumstances, Allianz has brought the litigation on itself and should bear its own costs, including the costs of the application for leave to appeal. By s 80(1) of the Motor Accidents Compensation Act, it is the duty of an insurer to endeavour to resolve claims, by settlement or otherwise, as justly and expeditiously as possible; by subs (2), compliance with subs (1) is a condition of the insurer's licence.
Accordingly, the orders of the Court are:
1. Respondent's notice of motion dated 18 March 2021 dismissed;
2. Summons dismissed.
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Decision last updated: 29 September 2021