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.