Kripintiris v The Nominal Defendant

Court of Appeal (Qld)|1998-03-20|Before: Before Fitzgerald P, Pincus J, Fryberg J, Fitzgerald P

The circumstances giving rise to this appeal are set out in the reasons for judgment of Pincus J.A. I agree with his Honour that this appeal should be dismissed.

The Chamber Judge who made the order under appeal was faced with a situation in which there was unexplained evidence which indicated that the appellant's claim against the respondent might be fraudulent and that the respondent might have been induced by mis-statements by the appellant to mistakenly admit in its Defence that the appellant had been injured in a collision caused by the negligence of the driver of an unidentified motor vehicle.

Because of concessions made before the Chamber Judge by the respondent, the matter proceeded before his Honour on the basis that, if the appellant was permitted to amend its Defence to deny what it might have been fraudulently induced to mistakenly admit, all issues, including whether the respondent is contractually bound to accept, or estopped from disputing, liability to the appellant, would be able to be litigated at trial. While the concession might present some difficulties, possible problems can be left to the decision of the Trial Judge. It is sufficient to note that the Chamber Judge did not intend to conclude any issue of fact in favour of, or against, either party.

That is of potential significance in relation to the appellant's principal argument, which was that the Chamber Judge should have refused to permit the respondent to withdraw its admissions because of the prejudice involved to the appellant and her solicitors. As his Honour pointed out, on the appellant's material before him, liabilities have been incurred "in the expectation that, liability being admitted, she had good prospects of recovering a substantial sum of money for her injuries". According to the respondent's concession, any prejudice to the appellant or her solicitors as a result of the respondent's initial admission of liability will be available for the Trial Judge's consideration.

The Chamber Judge recognised that he had "to carry out a balancing exercise, bearing in mind the important considerations which [affected] the exercise of [his] discretion,". His Honour "decided that in the interests of justice, notwithstanding the considerations of prejudice to which [he had] referred, [he] should permit the withdrawal of the admission".

In my opinion, no error which would justify the interference of this Court has been identified either in the order giving the respondent leave to amend its Defence or in the orders made with respect to costs; namely, that the respondent pay the appellant's taxed costs thrown away by reason of the amendment, and that the costs of the proceedings before the Chamber Judge and a case appraisal which had preceded the respondent's application to amend be the appellant's costs in the cause.

As I said earlier, I agree that the appeal should be dismissed. No submission was made that the ordinary consequence with respect to costs should not follow. The appellant must pay the respondent's taxed costs of and incidental to this appeal.

This is an appeal from an order giving leave to amend a pleading. The appellant is the plaintiff in an action in the Supreme Court against the respondent, The Nominal Defendant (Qld), in which she alleges that she was injured as a result of a collision between a rented moped which she was riding and an unidentified red motor vehicle. The statement of claim says that in the collision the appellant sustained fractures of the left shoulder, left hand, two ribs and left patella. The appellant having suffered injury on 23 December 1991, the respondent was promptly notified of her intention to claim damages. Proceedings were begun and liability was admitted in January 1994; subsequently that admission was pleaded.

The primary judge took the view, on application made in Chambers, that in the interests of justice withdrawal of the admission of liability should be allowed and the defence was amended accordingly. The basis of the application to amend was that, after making its admission of liability, the respondent found out that the appellant's case that she was knocked off the moped by a car is untrue, and that there was no car involved. Two pieces of evidence were relied on by the respondent before the primary judge. One is a note by a Dr Marneros of which a copy is in the record; he was the doctor who admitted the respondent to hospital at the Gold Coast, shortly after she was injured. Dr Marneros' note of the history taken indicates that there was a moped accident and includes the following -

This says nothing about another vehicle being involved and includes the statement "moped hit edge of road".

The second piece of evidence relied on by the respondent to throw doubt on the appellant's story is a statement said to have been taken from a man who returned the moped to the firm from whom it had been rented. It is said that he came on the scene of the accident by chance, saw the moped off the edge of the highway and a woman who was, it appears, the appellant, and who was later taken away by ambulance. The informant saw another man at the scene whom he understood to be the appellant's husband, who said he had been riding ahead of his wife and looking back at her and that she moved progressively towards the right side of the road and rode her motor cycle off the edge of the bitumen. The witness, it is asserted, had this conversation in the presence of the appellant and he saw no indication on the motor cycle that it had been damaged in a collision; it was merely scratched.

In the primary judge's reasons, his Honour said that if the new material was true it would provide a powerful consideration for permitting withdrawal of the admission. The judge also regarded as relevant a concession made on behalf of the respondent that if the admission were withdrawn, substantive defences such as estoppel could be raised and determined by the trial judge. The primary judge considered the question of prejudice and in particular liabilities incurred by the solicitors for the appellant, and the appellant herself, in the expectation that a substantial sum would be recovered. His Honour noted that the admission of liability had been an inducement to the respondent's solicitors to keep up their involvement in the expectation of being reimbursed and that was a strong consideration to be taken into account. Carrying out what his Honour described as a balancing exercise, he decided to allow the amendment, as I have said.

An additional factual matter which, although not mentioned by the primary judge, appears to me to deserve attention is that, as stated above, the appellant alleged that she had suffered a number of fractures. This allegation is consistent with a statement she has supplied which is in the record, but inconsistent with a report from the Gold Coast Hospital as to what was found when the plaintiff went there after the accident and also inconsistent with a report from the Prince of Wales Hospital in Sydney, where the appellant was seen two days later. Each report says that X-rays were taken but revealed no fractures. This is not a point of central importance, but is an odd discrepancy, of such a kind as to encourage the thought that the respondent's account of what happened to her on the day in question may be suspect.

The appellant has made a number of criticisms of the result arrived at, one of which is that the respondent should reasonably have taken steps at an earlier stage than it did to obtain the hospital notes which seem to be of some importance. The respondent, so the appellant's outline says, failed to make basic inquiries and was incompetent, either itself or by its solicitor. It appears to me correct that the respondent's delay in obtaining the information I have mentioned was a relevant factor, but there is no reason to think it was overlooked by the primary judge; we have the advantage of having before us the submissions made to his Honour and this point is as one would expect, made there.

In Queensland v. J L Holdings Pty Ltd [1997] HCA 1; (1997) 71 A.L.J.R. 294, the High Court had occasion to consider, and in the result overturned, a refusal by a Federal Court judge to allow substantial amendments to be made to a defence. The judge's decision had been upheld by the Full Court of the Federal Court, which referred to a passage in Sali v. SPC Ltd [1993] HCA 47; (1993) 67 A.L.J.R. 841 at 849. In the principal High Court reasons, after quoting the passage from Sali v. SPC the judges said:

"It may be said at once that in the passage which we have cited from Sali v. SPC Ltd Toohey and Gaudron JJ are not to be taken as sanctioning any departure from the principles established in Cropper v. Smith and accepted in Clough and Rogers v. Frog". (296)

Those two cases are reported in (1884) 26 Ch.D. 700 and (1974) 48 A.L.J.R. 481 respectively. It seems unnecessary to set out the relevant passages from them and enough to give part of what was said in Cropper v. Smith and quoted with approval in Queensland v. J L Holdings Pty Ltd:

". . . I know of no kind of error or mistake which, if not fraudulent or intended to overreach, the Court ought not to correct, if it can be done without injustice to the other party. Courts do not exist for the sake of discipline, but for the sake of deciding matters in controversy, and I do not regard such amendment as a matter of favour or of grace".

This suggests a more generous attitude towards amendment of pleadings than that which is currently applied.

In the present case there was, as the primary judge said, a balancing exercise to be undertaken. On the one hand, there was the fact that the admission made in 1994 had caused or encouraged expenditure, and the incurring of liabilities, in amounts which would not otherwise have been expended or incurred; on the argument presented orally before us, this was the main point raised. Then there was the fact that it should have been possible for the respondent to obtain at least part of the material on which reliance was placed, at an earlier stage; I am referring to the notes of Dr Marneros. On the other hand, what was being set up was no ordinary defence, but a denial of the very basis of the appellant's case. The defence is that there was no collision, but the respondent simply drove off the road, and her moped was upset in the process.

It seems plain that there will, if the matter goes to trial, be a considerable dispute on the point whether the respondent suffered, as she says, disabling injuries, or was injured only rather slightly. The precise way in which the injuries were sustained will probably be relevant in determining that point. It would be an embarrassment for the system of justice if the conclusion were that the mode in which the injuries were sustained was not that alleged by the appellant, but because of the state of the pleading the judge could not give effect to that conclusion but must hold, erroneously, that the appellant's moped was hit by a car. That would seem an odd outcome.

There was some discussion before us about the concession, made below, that the appellant could, if the amendment were allowed, plead that the admission of liability had contractual force, or gave rise to an estoppel. As to the latter, it is not easy to understand how, the respondent having been permitted to amend, to deny that there was any collision, it could nevertheless be prevented by estoppel from pursuing that point at the trial. But I find it unnecessary to discuss that aspect, for the concession I have mentioned was no more than a minor consideration; the judge did not in my opinion place any substantial reliance on it in reaching his conclusion.

The judge has made no error of principle, nor has his Honour mis-stated the facts, nor is the conclusion one which is so plainly incorrect that there must be some error in the process by which it was reached; indeed I think the decision was right. According to the well-known principles applicable to discretionary judgments it appears to me that the appeal must fail.

There is also a ground challenging the judge's order about costs. A question arises whether in order to pursue that ground the applicant needs the leave of the primary judge under s. 253 of the Supreme Court Act 1995. That section requires that no order made by a judge of the Supreme Court "as to costs only" be "subject to any appeal except by leave of the judge making such order". The effect of inclusion of the word "only" is unclear; if the judge makes two orders, one relating to some substantive question and the other as to costs, then is the latter an order "as to costs only"? The English Court of Appeal has construed the corresponding section there as meaning that if there is an appeal in relation to costs and also other matters, then the court may deal with the appellant's complaint about costs, even if the appeal fails on the other matters. The contrary has been held in a number of Australian cases - amongst others, Road Chalets Pty Ltd v. Thornton Motors Pty Ltd (1986) 47 S.A.S.R. 532 at 538, Thorne v. Doug Wade Consultants Pty Ltd [1985] VicRp 48; [1985] V.R. 433 at 497, 498, and Schonnecht & Ors v. Golden Casket Art Union Office (C.A. No. 146, 147 and 149 of 1994, 11 November 1994). It is not clear to me why, where there is an appeal against two orders, the first relating to a substantive matter and the second as to costs, the latter becomes an "order as to costs only" because the primary judge's opinion on the former point is held to be correct. Looking at the matter more broadly, it would seem strange that a party's right to have a wrong order as to costs corrected should always depend on whether or not the judge made another mistaken order; the costs order may be wrong although the other is right. But in the present case, whether or not leave to appeal is necessary, it is my opinion that the judge's orders as to costs were not in error.

This application depended for its success upon issues of fact which were not susceptible of determination by a judge in chambers. Before the chamber judge, the respondent/defendant sought to overcome this problem by offering a concession that allowed the plaintiff, if the amendment were allowed, to plead the admission by way of estoppel. It seems to me that this is an unsatisfactory solution. It may create difficulties for the trial judge and it certainly gives rise to theoretical problems relating to the way the pleadings are formulated. In my view, it would have been preferable for the summons to have been adjourned to the trial judge. However, the problems which trouble me may never eventuate, and if they do, they can probably be dealt with by appropriate orders for costs. If any such orders are made against the respondent, it has only itself to blame.

On behalf of the appellant, considerable weight was placed on evidence that a third party, the appellant's solicitors, had been prejudiced by conducting the litigation on a speculative basis in reliance upon the admission. In my view, if lawyers choose to conduct litigation on such a basis, the risks which they assume ordinarily include all the incidents of litigation, including the possible withdrawal of admissions. It would be a rare case indeed where an interlocutory application was determined by the effect of an adverse outcome on the prospects of one side's solicitors being paid.

I do not think that the decision of the High Court in Queensland v J. L. Holdings Pty Ltd[1] requires any change in the attitude which judges of this Court have evinced toward amendment of pleadings. An amendment may be allowed "if it can be done without injustice to the other party". That factor was plainly relevant in this case. It was not ignored by the judge.

The appellant has not demonstrated any error in the exercise of the discretion to allow an amendment. Insofar as the appeal related to orders as to costs, I agree with the President.

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Judgment (29 paragraphs)

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