Tanwar Enterprises Pty Limited v Bradshaw

THE PLEADINGS IN THE LOCAL COURT 3As outlined further below, various submissions were made in the course of the hearing of the appeal concerning the pleadings which were filed in the Local Court. In light of these submissions, it is necessary for me to set out some aspects of those pleadings. The statement of claim filed by Bradshaw 4Bradshaw filed a statement of claim against Tanwar and Muhamad Alam ("Alam") for the cost of repairs to her motor vehicle which had been damaged as the consequence of an accident with a taxi owned by Tanwar and driven by Alam. The statement of claim pleaded that the accident was caused by the negligence of Alam, that Bradshaw's vehicle sustained damage, and that the cost of repairing the damage was $12,067.33. Alam was not able to be served with the statement of claim and the proceedings against him were ultimately discontinued. 5Having pleaded a case in negligence against Alam, the Statement of Claim pleaded (at paragraph 14) the case against Tanwar in the following terms: "Further or in the alternative, (Tanwar) is vicariously liable for the acts and/or omissions of (Alam)". 6In an amended defence filed by the same solicitor acting on behalf of both Tanwar and Alam, the following was pleaded (at paragraph (2)): "The Defendants do not admit liability or negligence and does (sic) not admit quantum". The cross-claim brought by Tanwar 7Tanwar filed a cross-claim against Firma, paragraph (1) of which was in the following terms: (1)The cross-claimant pleads the Statement of Claim and Defence as if plead (sic) herein for the purposes of contribution and indemnity only not (sic) without admission as to the facts. 8The cross-claim went on to plead the existence of a contract of insurance between Tanwar and Firma pursuant to which it was alleged that Firma was required to indemnify Tanwar, firstly in respect of the cost of repairs to Tanwar's vehicle, and secondly in respect of any liability which might be imposed upon Tanwar as a consequence of Bradshaw's claim. 9The defence filed by Firma to Tanwar's cross-claim was a lengthy document encompassing some 23 separate paragraphs. However, at the commencement of the proceedings before the Magistrate Firma's counsel explained that the issues arising from the cross-claim had been considerably narrowed. Whilst I have made further reference to these matters below when dealing with various aspects of the proceedings before the Magistrate, it should be noted at this stage that Firma ultimately agreed that it was liable to Tanwar under the policy to meet the cost of repairs to Tanwar's vehicle. The practical effect of that concession was that Tanwar was entitled to a judgment in its favour on the cross-claim in a sum equivalent to the cost of repairs to its own vehicle. Despite this, the Magistrate entered judgment for Firma on the cross-claim. That was clearly an error and forms one of the grounds of appeal.

The proceedings before the Magistrate The evidence 10Two affidavits were read in Bradshaw's case without objection, and without the need for either deponent to be cross-examined. The first was an affidavit of Bradshaw herself in which she deposed to (inter alia) the circumstances of the accident. In short, she alleged that Alam had been driving the taxi in the opposite direction and made a right hand turn across her path, causing the front of her vehicle to collide with the passenger side of Alam's vehicle. The second affidavit was that of Bradshaw's husband which, in general terms, corroborated Bradshaw's account of the accident. 11One affidavit was relied upon in Tanwar's case, namely an affidavit of Ramesh Tanwar, a taxi operator. That affidavit was similarly read without objection and without cross-examination. 12Paragraphs (31) - (36) of that affidavit set out (inter alia) some aspects of the arrangement with Alam to drive the taxi: "31. I am aware of the Taxi Industry (Contract Driver's) Contracts Determination, 1984, which is the determination under which Taxi operators operate in New South Wales. A copy of the determination is attached, and marked "Annexure L". 32. I am also aware (sic) Passenger Transport Regulation 2007 (clause 131), where the taxi operator must maintain one or more policies that indemnify the taxi driver. A copy of Transport Regulation 2007 (clause 131), is attached, and marked "Annexure M". 33. It is my understanding that this reflects the taxi industry standard and practice in New South Wales. 34. I indemnify my drivers for any loss resulting from their actions. 35. Mr Alam paid me $110 for each morning shift (from 3:00am to 3:00pm) that he drove the taxi for from Monday to Friday and $90 for each weekend shift, that is 3:00am to 3:00pm Saturday or Sunday. It was also a requirement that he fill up the petrol tank and the end of each shift. 36. I have received no payment from Firma Insurance in relation to this claim." 13Annexed to that affidavit was a copy of the contract of insurance between Tanwar and Firma. Section 2 of the contract was headed "Third Party Property Damage Liability" and read (in part) as follows: "We will indemnify you against liability at law by way of damages arising out of the use of the Taxi in respect of damage to property." The hearing 14Given that none of the deponents of the affidavits relied upon were required for cross-examination, the hearing proceeded on the basis of each counsel making submissions to the Magistrate. However before those submissions actually commenced, there were a number of exchanges which took place between the respective counsel (who were the same counsel who appeared before me) and the Magistrate. Some of those exchanges are relevant to my determination of the grounds of appeal. 15At the outset of the hearing, counsel for Tanwar said the following (at T1 L17): "We've got various pieces of good news for your Honour, plus a possible complication. The good news is that a number of things, most things, are not in issue between the parties. First of all, as between (Bradshaw) and (Tanwar), nothing is in issue, now, now it isn't" (my emphasis). 16Having told the Magistrate that nothing was in issue between his client and Bradshaw, counsel for Tanwar (in the context of addressing the absence of Alam) said (at T1 L49): ".... (Tanwar) accepts that they (sic) are liable to the plaintiff and simply looks to the cross-defendant for an indemnity." 17Tanwar's acceptance of liability must be viewed in the context that Bradshaw's case against Tanwar was based solely upon the proposition that Tanwar was vicariously liable for the tortious act of Alam. 18The statements made to the Magistrate were consistent with paragraph (4) of a document entitled "Case Summary" which was signed by counsel for Tanwar and which was in the following terms: "Further, (Tanwar) concedes that he (sic) is liable for the tortious acts of (Alam) while driving the taxi on the basis of the nature of the relationship between operator and driver, and does not formally concede fault in order to protect his insurer's (Firma's) interest" (my emphasis). 19Counsel for Bradshaw then recorded his understanding (at T4 L43) that "(Tanwar) concedes vicarious liability". That prompted the following further statement from counsel for Tanwar (at T4 L46): "I've been - I'm sorry - the formal position on instruction from my client is - I'm sorry - is not to concede it but my submissions will be consistent with there being such a liability, can I put it that way your Honour?" (my emphasis). 20This statement represented some shift from the unequivocal position which was originally adopted. 21There followed yet another exchange concerning the issues, in the course of which counsel for Tanwar said (at T10 L31): "The facts, there's no real issue about them .... the argument is really - there does appear to be - there is an issue of vicarious liability where (Tanwar's) position is, if I could put it this way, on instruction, agnostic but the primary issue in the case is really the dispute between (Tanwar) and (Tanwar) and (Firma) and its really as to whether (Tanwar) is indemnified under the policy. There's no issue as to quantum. It is agreed that it is the amount admitted in the defence but that can also be put in writing. As (Firma) says, damage is not formally conceded in relation to the plaintiff but there's no evidence to the contrary." 22Counsel for Bradshaw then addressed the court. In doing so, he made lengthy submissions to the Magistrate in relation to the pleadings, and put to the Magistrate that the effect of the amended defence to the statement of claim which had been filed by Tanwar was that Tanwar was taken to have admitted liability. Those submissions were repeated before me and I have considered them in more detail below. 23In response to matters raised by counsel for Bradshaw, counsel for Tanwar then said to the Magistrate (at T13 L15): "As your Honour knows, I'm maintaining an agnostic position on the issue of vicarious liability but I would have to say this to your Honour. The amended defence maybe sparse and it may be lacking in particulars but it certainly doesn't contain any implied admissions. If there is a criticism to be made of it, it is that it traverses everything without particularising it." 24Counsel for Tanwar, having made a further reference to the case summary which had been handed to Magistrate, then said (commencing at T14 L5): "Well, certainly, I want to maintain a consistent position. I don't want to be seen to be conceding things that I shouldn't be conceding because of the interests of (Firma) but on the other hand whilst it is not essential to my argument there certainly is an argument that the relationship between the taxi operator and driver is one where the degree of control is sufficient for liability to attach to the driver...So the position in relation to the plaintiff is one of studied agnosticism and perhaps I could now turn to the case in relation to (Firma) (my emphasis)." 25Although Firma filed a lengthy defence to Tanwar's cross-claim it became apparent at an early stage of the proceedings that the issues between Tanwar and Firma were far narrower than the length and complexity of that defence might have indicated. Ultimately, Firma did not dispute that it was liable under the relevant policy for the cost of repairs to Tanwar's vehicle (at T16 L15-21). In practical terms, that meant that irrespective of how the issue of vicarious liability was ultimately determined, Tanwar was entitled to a judgment in its favour on the cross-claim. Ultimately, Tanwar's entitlement to judgment on the cross-claim in a sum of $10,460.35 was an agreed fact which was reduced to writing (see [34] below). Contrary to this agreed fact, and for reasons which are not clear, the Magistrate entered judgment on the cross-claim in Firma's favour. 26In the course of explaining his client's position, counsel for Firma said (commencing at T16 L1): "...... any admission between defendant and plaintiff does not flow through to the cross claim. Your Honour would still need to determine as a matter of fact, for example, whether the relationship of the driver was one of employment or one of agency or one of something else to determine the rights on the contract of insurance, which I will take your Honour to. It seems an odd result but it does happen where there are consent judgments or judgments on admissions that there might be an inconsistent result but it is not an inconsistent finding because the result in the primary matter is not based upon findings of fact. So we say that whatever the case is about admissions there, your Honour has to determine the relationship of the driver to the defendant to determine whether the policy effectively operates to indemnify". 27The following exchange then occurred between Mr Jackson (for Tanwar) and Mr Maybury (for Firma): JACKSON: So you are disputing liability on that basis? MAYBURY: Liability for the plaintiff's damages. JACKSON: But not for our damages? MAYBURY: Quite. Not your repair damages. ..... MAYBURY: As I was saying your Honour, the remaining issue is whether the defendant is liable to the plaintiff, such that there is anything for my client to indemnify qua the plaintiff's damages 28In developing Firma's position, and in taking the Magistrate to the relevant policy, Mr Maybury then said (at T17 L7): "Your Honour, it's trite, but just to be clear, to fall within that operative provision so there's anything for my client to do, the defendant has to be liable, as a matter of law, to the plaintiff. That's what we contest. There's no argument that there is no direct liability. The defendant is a company, it wasn't driving the car, it can only be vicariously liable by its servants or agents". 29It is clear from these passages that as far as Firma was concerned, there remained an issue as to whether it was liable under the terms of the relevant policy to indemnify Tanwar in respect of the damages sought by Bradshaw. Clearly, it was Firma's position that such liability could only arise if it were found that the relationship between Tanwar and Alam was such as to give rise to vicarious liability. Counsel for Tanwar did not express any surprise when this position was put. On the contrary, he acknowledged his understanding of it (at T16 L15 to 36). 30Consistent with the position which he had outlined, counsel for Firma proceeded to submit to the Magistrate that the relevant relationship was not one which imposed vicarious liability on Tanwar for the tortious acts of Alam. Counsel submitted (inter alia) that the relationship between Tanwar and Alam was one of bailor and bailee and that in the circumstances, Firma was not liable to indemnify Tanwar in respect of any damages Tanwar might be adjudged as being liable to pay Bradshaw. 31At the conclusion of the submissions on behalf of Firma, and notwithstanding his earlier acknowledgement and understanding of Firma's position, counsel for Tanwar addressed the Magistrate expressing some surprise at Firma's position. He said (commencing at T21 L26): "Your Honour, I had started to think, when I listened to my learned friend, that there must be, actually something wrong with me and I must be a bit silly, and that's because I just couldn't come to grips with the fact that it appears that our claim is basically accepted and that the real issue all along, as it turns out, is really an argument between (Bradshaw) and (Firma). .... If we had known .... that in fact our entitlement to indemnity was not in fact in question under the policy, then this would've been no more than an argument between insurers, which it what it should always have been as it turns out, because as it turns out what should've happened is the insurer should've honoured their obligation to us under the contract, as they now say they do, and they should've, if they felt there was any issue as to whether the second defendant was liable to indemnify the first defendant or to pay the plaintiff, if there was any issue in relation to that, we would have subrogated our rights and I wouldn't have to be here. .... I am surprised at the course that the proceedings have taken, and it may have implications for costs, but just to make it very clear, just so there's no doubt, the position that (Firma) takes is that (Firma) is liable to (Tanwar) for any loss suffered as a result of this accident, or any property damage occasioned as a result of this accident, and the real issue, as far as (Firma) is concerned now, revealed for the first time today, it's not apparent from the pleadings, but the real issue is that (Firma) says that (Tanwar) is not liable to (Bradshaw). Now in those circumstances (counsel for Bradshaw) is more than capable of sticking up for himself but it's really my learned friend that has, in those circumstances, that effectively has to persuade your Honour that (Tanwar) is liable to (Bradshaw) and therefore to look to (Firma) for indemnity". 32Counsel's expressed surprise is difficult to reconcile with his earlier acceptance, and apparent understanding, of Firma's position. I am left to conclude that the significance of Firma's position may not have been immediately apparent to counsel for Tanwar when it was initially articulated. 33At the conclusion of submissions, and essentially at the suggestion of counsel for Tanwar, two handwritten documents were prepared by counsel for the respective parties. 34The first of those documents was headed "Agreed Facts between (Tanwar) and (Firma)" and was in the following terms: (1)(Tanwar) is entitled, from (Firma) the sum of $10,460.35 in damages representing: (a)cost of repair; and (b)assessment fee and interest. (2)That if there is a finding that (Tanwar) is vicariously liable for the negligence of (Alam) on the cross-claim, the cross-defendant is liable to indemnify the second defendant. 35The second document was headed "Agreed facts between (Bradshaw) and (Tanwar)" and was in the following terms: (1)Agree that quantum is in the amount of $12,067.33. (2)Agree that the plaintiff owns motor vehicle registered CB-069. 36Two matters in particular should be noted about these documents. 37Firstly, paragraph (2) of the agreement between Tanwar and Firma contemplated that in the event of a finding that Tanwar was vicariously liable in respect of the damages claimed by Bradshaw there would, consistent with such a conclusion, be a finding that Firma was liable to indemnify Tanwar. In other words, the agreement contemplated that there would be consistent verdicts in relation to the statement of claim and the cross-claim. Secondly, the agreement between Bradshaw and Tanwar made no reference at all to the issue of vicarious liability having being agreed between them, or having been conceded by Tanwar. 38Although neither document was signed by counsel for any party, it is evident that both were provided to the Magistrate by counsel for Tanwar. As he was doing so, counsel was recorded as saying the following (at T24 L32): "Your Honour will be aware that there were also other matters where the parties were clearly agreed that the evidence was fairly straightforward, for instance on the issue of negligence, but that's not formally admitted but the parties would all concede the state of the evidence in relation to fault". 39Following the conclusion of the hearing, but before judgment was delivered, an amended version of the document (in [34] above) was filed with the court. That document did no more than clarify that the amounts in the first document were not inclusive of interest. Importantly, the amended document confirmed the agreement reached between Tanwar and Firma, the effect of which was that Tanwar was at least entitled to judgment on the cross-claim for the cost of repairs to its own vehicle, this no longer being a matter in dispute. THE MAGISTRATE'S REASONS 40The Magistrate delivered a reserved judgment on 14 February 2013 in which he: (i)entered a verdict for Bradshaw against Tanwar; and (ii)entered a verdict for Firma on the cross-claim. 41I have considered the Magistrate's reasons when considering the individual grounds of appeal.

Ground 1 - The court erred on a question of law when it found for (Bradshaw) against (Tanwar) on the basis first, that there was no issue between Bradshaw and Tanwar, and second, that Tanwar admitted that it was liable to Bradshaw.

The Magistrate's reasons 42Having recounted, in short form, the circumstances of the collision which gave rise to the proceedings brought by Bradshaw, the Magistrate said (at [2]): "There is no issue between (Bradshaw) and (Tanwar). .... The issue concerns the liability of (Firma) to indemnify (Tanwar). The question to be answered is whether (Tanwar) is vicariously liable for the negligent acts of (Alam)." 43Later, under the heading "Conclusion", the Magistrate said: "[12] By its own admission, as a consequence of the collision between vehicles (Tanwar) is responsible for the damages sustained to the vehicle owned by (Bradshaw) in the collision ... the parties have agreed on quantum of $12,067.33. [13] (Firma) is not liable to indemnify (Tanwar) for the costs sustained as a consequence of the collision, because Tanwar is not liable for the negligent acts of (Alam) at the time of the collision. [14] The verdict of the court is for the plaintiff against the defendant. Judgment is in the sum of $12,067.33. [15] The verdict of the court is for the cross-defendant against the cross-claimant". THE SUBMISSIONS OF THE PARTIES The submissions on behalf of Tanwar 44Counsel for Tanwar advanced two fundamental submissions in support of this ground. 45Firstly, he submitted that his Honour's statement that there was no issue between Tanwar and Bradshaw was simply incorrect. He submitted that in the course of the hearing before the Magistrate, it had been made clear that vicarious liability was a live issue in respect of both the claim brought by Bradshaw against Tanwar, and the cross-claim brought by Tanwar against Firma. Counsel submitted that as it was an issue, the Magistrate was obliged to determine it and that his failure to do so constituted an error of law. 46Secondly, counsel relied upon what he submitted was a fundamental inconsistency in the Magistrate's findings. He pointed out that for the purposes of Bradshaw's claim, the Magistrate had apparently concluded that Tanwar was vicariously liable for the negligence of Alam (that being the only cause of action pleaded by Bradshaw against Tanwar). However, in respect of the cross-claim as between Tanwar and Firma, the Magistrate had reached the conclusion that Tanwar was not vicariously liable for the negligence of Alam. This, counsel submitted, exhibited a fundamental inconsistency in the Magistrate's reasoning which was reflective of error. The submissions on behalf of Bradshaw 47Counsel for Bradshaw made three principal submissions in support of the proposition that ground 1 was not made out. 48Firstly, counsel submitted that by virtue of the operation of rule 14.26 of the Uniform Civil Procedure Rules, Tanwar's vicarious liability was deemed to have been admitted in the amended defence to Bradshaw's statement of claim. This, it was submitted, provided a proper basis for the Magistrate's conclusions. In association with this submission, counsel pointed out that the amended defence had been filed by the one solicitor on behalf of both Tanwar and Alam. Counsel submitted that the solicitor had acted for two parties in circumstances where there was a clear conflict of interest and that in doing so he was in breach of rule 7.7. It was submitted that a rejection of the submission that vicarious liability was deemed to have been admitted would amount to the court accepting, and condoning, a serious breach of the rules on the part of the solicitor in question. 49Secondly, counsel submitted that the various statements made by counsel for Tanwar amounted, in effect, to a concession that there was no issue as between Tanwar and Bradshaw. It was submitted that in these circumstances, the Magistrate's finding (at [2] of his reasons) that there was no issue between Tanwar, along with his finding (at [12]) that Tanwar had admitted liability for the damage sustained to Bradshaw's vehicle, were correct findings, and were consistent with what counsel for Tanwar had said in the course of the hearing. In supplementary written submissions, counsel referred me to authorities relating to the effect of an admission by counsel. He also placed reliance upon the provisions of rule 17.4 which deals with voluntary admissions of fact. 50Thirdly, counsel for Bradshaw submitted that the proceedings commenced by Bradshaw's statement of claim, and the issues which arose in those proceedings, were independent of, and separate to, the proceedings commenced by the cross-claim and the issues which arose as a result. On this basis, he submitted that the proposition that there was an internal inconsistency in the Magistrate's findings was misconceived. The submissions on behalf of Firma 51Although ground 1 did not directly affect the position of Firma, counsel for Firma advanced three principal submissions in support of the conclusion that the ground had not been made out. 52Firstly, counsel for Firma submitted that in stating that there was no issue as to liability between Bradshaw and Tanwar, the Magistrate was doing no more than repeating the concession made by counsel for Tanwar in the course of the hearing. He submitted that in circumstances where leave was not sought to withdraw that concession, and where no express submission was ever made which contradicted it, it was open to the Magistrate to act upon it, and to reach the conclusion he did. 53Secondly, counsel submitted that there was no inconsistency in the Magistrate's reasons. He submitted that having reached the conclusion, consistent with the concessions made, that there was no issue between Bradshaw and Tanwar, it remained necessary for the Magistrate to determine the issue of vicarious liability for the purposes of the cross-claim. He submitted that in circumstances where the Magistrate's finding for the purposes of the statement of claim was the product of a concession, but where his finding for the purposes of the cross-claim was the product of a consideration of the evidence and the application of legal principle, there was no inconsistency. Implicit in this submission was an adoption of the submission by counsel for Bradshaw that although Bradshaw's claim against Tanwar was being heard simultaneously with Tanwar's claim against Firma, they should in fact be regarded as separate proceedings. In these various respects, counsel for Firma referred me to a decision of Adamson J in Ryan v AF Concrete Pumping Pty Limited (No 3) [2013] NSWSC 630. 54Thirdly, counsel for Firma submitted that even if the inconsistency about which Tanwar claimed was made out, no error of law, or of mixed law and fact, was made out and that accordingly, Tanwar had no avenue of appeal in view of the provisions of ss. 39 and 40 of the Local Court Act 2007 ("the LCA"). Counsel for Firma categorised the suggested inconsistency not as an error, but as "the unfortunate product" of the conduct, by counsel for Tanwar, of the proceedings before the Magistrate. CONSIDERATION AND CONCLUSION The pleadings 55I do not accept the submission advanced by counsel for Bradshaw that Tanwar's vicarious liability was taken to have been admitted on the pleadings by virtue of the operation of rule 14.26. That rule is in the following terms: "14.26 Admission and traverse from pleadings (1) An allegation of fact made by a party in a pleading is taken to be admitted by any opposite party required to plead in response unless: (a) in the pleading in response, the opposite party traverses the allegation, or (b) a joinder of issues under rule 14.27 operates as a denial of the allegation. (2) A traverse may be made by denial or by a statement of non-admission, either expressly or by necessary implication, and either generally or as to any particular allegation. 3) Despite subrule (1), a pleading in response to a pleading that alleges the suffering of damage or an amount of damages is taken to traverse the allegation unless it specifically admits the allegation. (4) Subrule (1) does not apply to an opposite party who is a person under a legal incapacity." 56I have already set out (at [6] above) that part of Tanwar's amended defence which is relevant to this issue. The relevant paragraph in the amended defence did not admit liability, negligence or quantum. There may well be a number of criticisms which could be levelled at the pleading contained in paragraph (2) of the amended defence. Indeed, there are many criticisms which could be made in relation to the pleadings in this case as a whole. At the same time, no issue was raised about the terms of the amended defence by those acting for Bradshaw. Moreover, a sufficient traverse can be made either by a denial on the one hand, or a non-admission on the other. For these purposes, there is no effective line to be drawn between the two (see Warner v Sampson [1959] 1 QB 297 at 319). In my view, although it was hardly exemplary drafting, the contents of paragraph (2) of the amended defence constituted a traverse by an express non-admission. In these circumstances, rule 14.26 does not apply so as to render vicarious liability to have been admitted by Tanwar. 57Counsel for Bradshaw took me, at some length, to a number of authorities in support of the proposition that the traverse contained in paragraph (2) of the amended defence did not arise by necessary implication. Having reached the conclusion that there was a traverse by an express non-admission, the question of whether the traverse arises by implication need not be considered any further. 58Finally, whether or not the solicitor acting for Tanwar and Alam acted in breach of r 7.7 is not a matter I have to decide, although again it might be noted that the issue does not appear to have been raised, at any stage, by those acting for Bradshaw. In my view, the question of whether rule 14.26 applies so as to give rise to an admission is to be determined according to the application of the terms of that rule to the facts of this case, not according to whether the solicitor in question may have been acting in circumstances where he had a conflict of interest. 59In the course of argument before me, reference was made to the Magistrate's power to enter judgment against Tanwar based on the admissions said to have arisen from the pleadings. Although I have concluded that no such admission arises I should deal briefly with that issue. 60The power to enter judgment on admissions is contained in rule 17.7 which is in the following terms: 17.7 Judgment on admissions (1) If admissions are made by a party, whether by his or her pleadings or otherwise, the court may, on the application of any other party, give any judgment or make any order to which the other party is entitled on the admissions. (2) The court may exercise its powers under this rule even if the other questions in the proceedings have not been determined. 61In Moon v Mun [2013] NSWCA 217 Basten JA (commencing at [38]) considered the provisions of Rule 17.7 and made a number of observations regarding the power to enter judgment based on admissions contained in pleadings. In particular, his Honour said at [40]: "Two key points must be made about the court's power to order judgment on admissions contained in pleadings: first, the admissions must be clear and unambiguous; and, second, the power is discretionary." 62For the reasons I have previously outlined, the contents of paragraph (2) of the amended defence do not, in my view, amount to an admission at all, let alone one which is properly described as "clear and unambiguous". Moreover, as his Honour pointed out, the power to enter judgment based upon an admission is a discretionary one. His Honour observed (at [43]): "The power to award judgment on admissions on the pleadings is properly exercisable only where the court can see that a clear and unanswerable case is advanced on the pleadings, with the position so decisively depicted and the correct outcome so unambiguously obvious that there is simply no need for any issue to go to trial. The evaluative question relevant to exercise of the discretion is whether it is just to award judgment without regard to the merits of the parties' contentions". 63The same submissions which were put to me in relation to r. 14.26 were put to the Magistrate. The judgment does not make any reference to those submissions. It is not clear whether the Magistrate's entry of judgment in Bradshaw's favour reflected his acceptance of counsel's submissions in relation to the operation of r. 14.26, or whether it reflected a decision to act on what are said to have been admissions or concessions made by counsel for Tanwar (which are discussed further below). If the Magistrate did, in fact, conclude that an admission arose from the pleadings and entered judgment in Bradshaw's favour on that basis, he was, for the reasons I have already expressed, in error. This was not a "clear and unanswerable case" such that it was open to him to take that course. Moreover, if that is what the Magistrate in fact did, there is nothing contained within his reasons which would indicate the basis upon which he exercised his discretion to take that course. The statements made by counsel 64I am not able to accept the submission advanced by counsel for Tanwar that it had always been made clear that vicarious liability was a live issue, both in respect of the claim brought by Bradshaw and the cross-claim brought by Tanwar. That proposition is, in my view, completely at odds with the vast majority of the statements made to the Magistrate by counsel for Tanwar which I have set out. The statement made by counsel at the outset of the proceedings was clear and unequivocal. Whilst he subsequently moved from that position to some small degree, his subsequent statements, repeated to the same effect on several occasions, were not inconsistent with what he had originally said. At least until the point at which counsel for Firma addressed the Magistrate, his Honour could not help but have been left with the impression that from Tanwar's point of view, vicarious liability was not in issue. 65It is similarly difficult to accept the submission that it was not until the conclusion of Firma's submissions that Firma's position on the issue of vicarious liability was made clear. Firma's position was articulated by counsel at the outset of his submissions. Importantly, it was a position about which counsel for Tanwar expressed an understanding at the time. 66At the conclusion of the submissions made on behalf of Firma, counsel for Tanwar made a number of statements to the Magistrate regarding the issue of vicarious liability. Counsel did not expressly withdraw the statements he had previously made, but submitted to me that the effect of what he said amounted to putting vicarious liability in issue. 67The question which must be determined is that of the overall effect of the statements which were made by counsel and whether, in light of them, the Magistrate was in error in stating that there was no issue between Bradshaw and Tanwar, and that Tanwar had admitted liability to Bradshaw. 68In considering that question I should say at the outset that I do not accept the submission advanced by counsel for Bradshaw in relation to the operation of rule 17.2. In my view, that submission was misconceived. It is clear that the provisions of that rule contemplate (inter alia) the service of a notice in which the relevant admission is contained. The rule has no application at all to the facts of this case. 69In Cross on Evidence (Australian Edition) the Hon. JD Heydon QC (at [3165]) states that an admission made by counsel to the court is binding. In support of that proposition, the author cites the decisions in Urquhart v Butterfield (1887) 37 Ch D 357 at 369 and Dunn v Brown (1911) 12 SR (NSW) 22 before observing that an admission so made maybe retracted if the court gives leave to do so. In the present case, no such retraction, at least in express terms, was made. 70Counsel for Tanwar referred me to the decision of Hope JA in Termijtelen v Van Arkel [1974] 1 NSWLR 525 at 530, where his Honour adopted the observations of Lord Loreburn LC in the House of Lords in Gramophone Co. Limited v Magazine Holder Co. (1911) 28 RPC 221 at 225: "It is the duty of a court to decide cases according to the truth and fact, not according to any assumed or artificial state of facts which the parties may find it convenient to present. No doubt Courts of Law allow, and indeed encourage parties to simplify litigation by making admissions and to assert and extend by waiving their rights, because, when there is a real controversy depending on real facts, everyone ought to facilitate its authoritative settlement. But that is a very different thing from allowing people to obtain an adjudication upon the footing that something exists or has happened which in truth does not exist, or has never happened...A Court of Justice can never be bound to accept as true any fact, merely because it is admitted between the parties." 71The general proposition that there are significant limitations upon the extent to which an admission can compel a court to decide a case in a particular way was confirmed by Heydon JA in Damberg v Damberg [2001] NSWCA 87 (commencing at [151]). 72In submissions before me, counsel for Tanwar placed particular reliance upon what he said to the Magistrate following the conclusion of submissions on behalf of Firma at T21 - T22 (part of which is set out at [31] above) in support of the proposition that it was made clear at that time that vicarious liability should be regarded as being an issue for the purposes of the entirety of the proceedings. Amongst the matters which were put to the Magistrate by counsel for Tanwar at that time (commencing at T22 L9) was the proposition that in light of the manner in which the proceedings had unfolded, it was now incumbent upon Bradshaw to prove that Tanwar was vicariously liable. Although counsel for Bradshaw made a further submission to the Magistrate, he did not expressly take issue with what had been said in that regard. 73In my view, Tanwar's position could, and should, have been stated with far greater simplicity, and with far greater precision. In some respects the language adopted by counsel in putting his position (at T21 - 22) was infelicitous, and in other respects it was unnecessarily prolix. However I am satisfied that when the transcript is read as a whole, particularly that passage commencing at T22 L9, it was apparent that contrary to the position he had originally adopted, counsel was again putting vicarious liability in issue as between Tanwar and Bradshaw. 74I am fortified in that view by the circumstances in which the agreement between Tanwar and Bradshaw (in [34] above) came into existence, and by its content. Counsel for Tanwar had said to the Magistrate (at T24 L19): "Does your Honour need us to create that list of what we're all agreed on?" (my emphasis). 75The Magistrate responded (inter alia): "It would be very helpful, just in case I make a wrong assumption". 76Significantly, the list of those matters which were agreed upon as between Bradshaw and Tanwar at the conclusion of the proceedings did not include the question of vicarious liability. 77In Craig v State of South Australia (1995) 184 CLR 163 the High Court observed (at 179): "...The ordinary jurisdiction of a court of law encompasses authority to decide questions of law, as well as questions of facts, involved in matters which it has jurisdiction to determine. The identification of relevant issues, the formulation of relevant questions and the determination of what is and what is not relevant evidence are all routine steps in the discharge of that ordinary jurisdiction. Demonstrable mistake in the identification of such issues or the formulation of such questions will commonly involve error of law which may, if an appeal is available and is pursued, be corrected by an appellate court and, depending on the circumstances found an order setting aside the order or decision of the inferior court." 78In my view, the Magistrate's statements at [2] and [12] reflected an error in the identification of the relevant issues and therefore amounted to an error of law. The inconsistency in the Magistrate's findings 79I have already observed that Bradshaw's case against Tanwar was based solely upon the proposition that Tanwar was vicariously liable for the tortious acts of Alam. The Magistrate's entry of judgment in favour of Bradshaw can only have been on the basis that there was such vicarious liability. However, in determining the cross-claim as between Tanwar and Firma, the Magistrate decided directly to the contrary and concluded that Tanwar was not vicariously liable. 80I am unable to accept the submissions advanced on behalf of Bradshaw and Firma, which were largely unsupported by authority, that the Magistrate's judgment does not exhibit an inconsistency which amounts to error. 81Section 22 of the Civil Procedure Act 2005 is in the following terms: 22 Defendant's right to cross-claim (1) Subject to subsection (2), the court may grant to the defendant in any proceedings ("the first proceedings" ) such relief against any person (whether or not a plaintiff in the proceedings) as the court might grant against that person in separate proceedings commenced by the defendant for that purpose. (2) Relief may not be granted under this section against a person who is not a plaintiff in the first proceedings unless the relief relates to, or is connected with, the subject of the first proceedings. (3) A person against whom a defendant makes a claim for relief under this section: (a) has the same rights in respect of his or her defence against the claim as he or she would have in separate proceedings commenced against the person by the defendant, and (b) if not already a party to the first proceedings: (i) becomes a party to the first proceedings, and (ii) unless the court otherwise orders, is bound by any judgment (including a judgment by consent or by default) or decision (including a decision by consent) on any claim for relief in the proceedings (including a claim for relief in any cross-claim in the proceedings). 82The provisions of s. 22(3)(b)(i) tend, in my view, against the proposition advanced by counsel for Bradshaw that the proceedings arising from the statement of claim, and those arising from the cross-claim, should be treated separately. Clearly, by virtue of those provisions, Firma became a party to the first proceedings brought by Bradshaw. 83Further, by virtue of s. 22(3)(b)(ii), in the absence of an order to the contrary, Firma is bound by any judgment on any claim for relief. That is so, whether the judgment is by consent, default or otherwise. This is consistent with the procedure explained by Scrutton LJ in Barclays Bank v Tom [1923] 1 KB 221 at 223: "Now I think it is important to keep clearly in mind what the third party procedure is. A plaintiff has a claim against a defendant. The defendant thinks if he is liable he has a claim over against a third party. With that matter between the defendant and the third party the plaintiff obviously has nothing to do. He is not concerned with the question whether the defendant has a remedy against somebody else. His remedy is against the defendant. But the defendant is much interested in getting the third party bound by the result of the trial between the plaintiff and himself, for otherwise he might be at a great disadvantage if, having fought the case against the plaintiff and lost, he had then to fight the case against the third party possibly on different materials, with the risk that a different result might be arrived at. The object of the third party procedure is then in the first place to get the third party bound by the decision between the plaintiff and the defendant. In the next place it is directed to getting the question between the defendant and the third party decided as soon as possible after the decision between the plaintiff and the defendant, so that the defendant may not be in the position of having to wait considerable time before he establishes his right of indemnity against the third party while all the time the plaintiff is enforcing his judgment against the defendant and thirdly, it is directed to saving the extra expense which would be involved by two independent actions." 84These observations were cited with approval by the Court of Appeal in Sandtara Pty Limited v Abigroup Limited and ors (1997) 42 NSWLR 5 at 8, and subsequently by the Court of Appeal in Insurance Exchange of Australasia v Dooley and anor (2000) 50 NSWLR 222; [2000] NSWCA 159 (per Handley JA at 226-227; [12]-[14], with whom Giles and Fitzgerald JJA agreed). 85The judgment in Ryan (No 3) (supra) to which I was referred by counsel for Firma does not stand as authority for the contrary proposition. Indeed, that particular judgment relates only to a question of costs following trial. Although I was not specifically referred to it, I have regard to the principal judgment of Adamson in those proceedings, namely Ryan v AF Concrete Pumping Pty Limited [2013] NSWSC 113. I can see nothing in her Honour's judgment which would support the proposition advanced by counsel for Firma. 86Finally, the submissions made by counsel for Firma in these various respects appear to be at odds with the tenor of paragraph (2) of the agreement reached between Firma and Tanwar (set out at [34] above). That paragraph clearly contemplated, in my view correctly, that the basis of the determination of Bradshaw's claim against Tanwar on the one hand, and the basis of the determination of Tanwar's cross-claim against Firma on the other, would be consistent. 87In my view, the inconsistent findings reached by the Magistrate in relation to the issue of vicarious liability reflect a failure to identify the issues between the parties. This constitutes error. 88For all of these reasons, ground 1 is made out.

Ground 2 - The court erred on a question of law when it entered a verdict for (Firma) against (Tanwar) on the cross-claim in circumstances where it was an agreed fact between the plaintiff and the second defendant that the second defendant was liable to indemnify the plaintiff for the damage to his taxi, and where there was an agreement about quantum. 89The agreement between Tanwar and Firma (at [34]) reflected a concession the part of Firma that Tanwar was entitled to judgment on the cross-claim, at least for an amount referable to the cost of repairs to its own vehicle. 90Despite this agreement, the Magistrate entered judgment for Firma on the cross-claim. That was clearly an error, and one which Counsel for Firma conceded. 91It follows that ground 2 is made out.

Ground 3 - The court erred on a question of law when determining the cross-claim, in that it asked the wrong question, misconstrued the contract, or failed to take into account a relevant consideration, by failing to apply the terms of the contract itself. 92This ground was not pressed.

Ground 4 - In the alternative to grounds 1 - 3, the court erred on a question of law, in that it erred in its application of the law to the facts, when it found that a taxi operator such as (Tanwar) was not vicariously liable for the acts of his driver, employed under the NSW Taxi Industry (Contract Drivers) Contract Determination 1984.

The Magistrate's reasons 93Having recounted aspects of the affidavit evidence and the relevant insurance policy, and under the heading "Vicarious Liability" the Magistrate said (at [6]): "Counsel for (Firma) that the relationship of Alam and (Tanwar) was that of bailee and bailor, and that if a bailee is negligent, the bailor is no (sic) liable, because the bailor has no control. Tanwar is not liable for their negligent acts of Alam and Firma is not liable to indemnify Tanwar for the damage caused to the vehicle owned by Ms Bradshaw due to the negligence of Alam. Further, Firma is not liable under any undertaking given or contracted by Tanwar to Bradshaw, because Firma did not give written authority to Tanwar and liability does not attach notwithstanding such expressed warranty or agreement." 94His Honour went on to observe (at [7]): "There can be no doubt that the relationship between (Tanwar) and (Alam) was that of bailment. The line of authority holding the relationship between taxi owner and driver to be one of bailment is described in Commissioner of Taxation v Deluxe Red and Yellow cabs Co-operative (trading) Society (1998) 82 FCR 507 at 516-17. It is the law that a bailor is not vicariously liable for the tortious acts of the bailee because the bailor has no control over the performance of the work of the bailee." The submissions on behalf of Tanwar 95Counsel for Tanwar submitted that the Magistrate's conclusion that a bailor was not vicariously liable for the tortious acts of the bailee was an incorrect statement of the law. Counsel further submitted that it was incumbent upon the Magistrate to consider the relationship between Tanwar and Alam, and then consider whether that relationship was, on the evidence, one giving rise to vicarious liability on the basis of agency (see Hollis v Vabu Pty Limited t/as Crisis Couriers (2001) 181 ALR 263). The submissions on behalf of Bradshaw 96Counsel for Bradshaw essentially relied on his earlier submissions in respect of this ground. The submissions on behalf of Firma 97Counsel for Firma submitted that ground 4 disclosed no question of law. He argued that, at its highest, the terms of the ground may disclose a question of mixed fact and law, in which case leave was required to be granted pursuant to s. 39 of the Local Court Act 2007 ("the LCA"). Counsel for Firma opposed a grant of leave for a number of reasons. 98Counsel submitted that the finding that Alam was a bailee, in the context in which the case had been conducted, was tantamount to a finding that Alam was neither an agent nor an employee. Counsel submitted that this finding was the only finding which was reasonably open on the evidence. 99It was further submitted that counsel for Tanwar was seeking to put arguments on appeal different to those which were put to the Magistrate at first instance. Counsel for Firma submitted that Tanwar should not, in effect, be permitted to conduct its case on appeal in a way which was different to that in which it conducted the proceedings at first instance.

CONSIDERATION AND CONCLUSION 100The effect of the Magistrate's conclusion was that the relationship of bailor and bailee is one which is incapable of giving rise to vicarious liability of the former for the tortuous acts of the latter. In my view, such a conclusion, in the terms expressed by the Magistrate, was incorrect and amounted to an error of law. 101In Palmer on Bailment (3rd edition) the author states (at paragraph 3-083): "...When inquiring whether the user of a chattel is a servant or agent of the owner, it is not enough to show that for the purpose of liability for damage to the chattel the law regards him as a bailee. This is particularly so in cases of casual delegation, where one person drives another's car in order to perform some task or duty imposed upon the owner. In such a case the owner may well be liable to a third party of the mandatary's misperformance of his mandate, but it seems beyond doubt that the mandatary will be regarded as his bailee." 102The author then turned to authorities involving the bailment of taxis as between owners and drivers. Having made reference to some of the customary features of such a relationship, he said: "...Liability depends upon whether the driver is his servant or agent under the various judicial and statutory tests which have been laid down as determining that relationship. These tests are not precisely synonymous with those that seek to establish whether the driver is a bailee." 103The question for the Magistrate was whether the relationship as between Tanwar and Alam was one giving rise to vicarious liability. In my view, his reasons can only be construed as expressing a conclusion that in each and every case, a relationship between driver and owner will necessarily be one of bailee and bailor and will therefore incapable of giving rise to vicarious liability. That, in my view, was an error. It may be the case that, as between themselves, an owner and driver are bailor and bailee. However, the relationship may also be one of agency giving rise to responsibility to the public, on the part of the principal, for the tortious acts of the agent (see Smith v General Motor Cab Company Limited [1911] AC 188 at 192 per Lord Shaw). 104It is apparent that a number of the submissions advanced by counsel for Tanwar on the hearing of the appeal were not advanced before the Magistrate. That was an unfortunate consequence of the manner in which the issues in the proceedings before the Magistrate evolved. 105The fact that a point may be conceded at trial may, in some circumstances, be a strong factor tending against allowing the same factor to be raised on appeal (see Robinson v Campbell (1992) 30 NSWLR 503). However, the fact that a submission was not put in the court below does not operate as an absolute prohibition upon the point being raised in the hearing of an appeal. Whether such a course is permitted to be taken is dependent upon whether it is in the interests of justice to do so having regard to all of the circumstances of the case (see Multicon Engineering Pty Limited v Federal Airports Corporation (1997) 47 NSWLR 631). 106In my view, the error on the part of the Magistrate which is the subject of this ground was a fundamental error of law. Quite apart from the fact that Tanwar has an appeal as of right pursuant to s. 39(1) of the LCA in such circumstances, I consider that it is otherwise in the interests of justice that Tanwar be given the opportunity to pursue the matter on appeal in the manner in which it has done so. 107For these reasons, ground 4 is made out.

Ground 5 - If ground 4 be said to raise a mixed question of fact and law, the plaintiff refers to the error alleged in that ground, and seeks leave to raise a question of mixed fact and law on the appeal. 108In light of my conclusion in respect of ground 4, ground 5 does not arise.

THE APPROPRIATE ORDERS 109Having found error, the question arises as to the appropriate orders which ought be made. In this regard, s. 41 of the LCA is in the following terms: 41 Determination of appeals (1) The Supreme Court may determine an appeal made under section 39 (1) or 40: (a) by varying the terms of the judgment or order, or (b) by setting aside the judgment or order, or (c) by setting aside the judgment or order and remitting the matter to the Local Court for determination in accordance with the Supreme Court's directions, or (d) by dismissing the appeal. (2) The District Court may determine an appeal made under section 39 (2): (a) by varying the terms of the judgment or order, or (b) by setting aside the judgment or order, or (c) by setting aside the judgment or order and remitting the matter to the Local Court for determination in accordance with the District Court's directions, or (d) by dismissing the appeal. 110In Getex v Reed Business Information Pty Limited and ors [2013] NSWSC 1161 I had occasion to consider the question (at [96] and following) of the appropriate orders to be made in a case where there was error on the part of the Magistrate. By reference to the decisions in Thaina Town (On Goulburn) Pty Limited v City of Sydney Council (2007) 71 NSWLR 230 and B and L Linings Pty Limited v Chief Commissioner of State Revenue (2008) 74 NSWLR 481, I concluded (at [100]) that the provisions of ss. 39 and 41 of the LCA could not be read as conferring a power to review the merits of a case, or to otherwise expand the scope of the appeal which is conferred by s. 39, so as to allow me to make a series of new findings of fact over and above those made by the Magistrate. 111Because of the manner in which the present matter evolved in the lower court, any determination of the matter by me may require reaching new findings of fact based on the evidence. In these circumstances, the appropriate order is to remit the matter to the Magistrate to be further dealt with according to law. The only exception would be the matter raised in ground 2 of the appeal which was conceded by Firma and which could seemingly be dealt with by the making of an order by consent. 112In the course of the hearing of the appeal, and in the event that I was to make an order remitting the matter (or part of it) to the Magistrate, counsel for Tanwar suggested that the matter should go before a different Magistrate on the next occasion. I can see no merit in, or justification for, that proposal. 113It follows from my reasons that I have come to the view that the appeal should be allowed and the matter remitted to the Magistrate to be further dealt with according to law. 114In light of the resolution of ground 2 I will ask the parties to bring in Short Minutes of Order to reflect the conclusions that I have reached. 115The order I make at this stage is as follows: 1.The matter is listed for further directions before me at 9:15am on Thursday 19 September 2013, at which time the parties are to bring in Short Minutes of Order reflecting the conclusions that I have reached. 116I will hear the parties on the question of costs when the matter is before me on 19 September 2013.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 13 September 2013