Mulivai v Utaileio[2022] QCA 173

SUPREME COURT OF QUEENSLAND

1. [1]
   BOND JA:  The applicant is the plaintiff in a part heard trial, in which the plaintiff claims damages for personal injuries suffered when a car, in which the plaintiff alleges he was the passenger, crashed into a parked prime mover in the early morning of 14 March 2018.
2. [2]
   The first defendant in that proceeding is the person who the plaintiff alleges was driving the car at the time of the crash.  The second defendant is the compulsory third party insurer of the first defendant and, accordingly, the first defendant is an “insured person” within the meaning of the Motor Accident Insurance Act 1994 (the Act).^[1]  The second defendant is the second respondent to the application before this Court.
3. [3]
   It is convenient to refer to the applicant and the second respondent as the plaintiff and the second defendant respectively.
4. [4]
   The plaintiff seeks leave to appeal from a decision of the primary judge on the first day of the trial to allow an amendment to the defendants’ pleading.  For reasons which follow, leave to appeal must be granted; the appeal must be allowed; and the order giving leave to amend must be set aside.

Background

5. [5]
   In a claim and statement of claim filed 4 February 2021, the plaintiff asserted that he was a passenger in the car driven by the first defendant and that the crash and the plaintiff’s resulting injuries had occurred because of the first defendant’s negligence.  In compliance with s 52(1) of the Act, the plaintiff brought the proceeding against the first defendant and the second defendant jointly.
6. [6]
   The second defendant undertook the conduct of the defence of the legal proceeding on its own behalf and on behalf of the first defendant.  The power so to do was conferred on it by s 44 of the Act, which provides:

“44 Power of insurer to act for insured

3. (1)
   If a claim is made against an insured person, the insurer—

1. (a)
   must undertake the conduct and control of negotiations and legal proceedings related to the claim; and

2. (b)
   may compromise or settle the claim or legal proceedings related to the claim and act for the insured person in any other way in relation to the claim.

3. (2)
   The insured person must sign any documents necessary to give effect to this section and, if the insured person does not sign or is dead, absent or can not be found, the insurer may sign for the insured person.

3. (3)
   Nothing said or done by an insurer in connection with a claim, or legal proceedings related to a claim, is an admission of liability in, or otherwise prejudices or affects, another claim or proceedings arising out of the same circumstances.”

7. [7]
   The first and second defendant filed a joint notice of intention to defend and defence on 12 February 2021.  It is convenient to refer to that document as the joint defence.
8. [8]
   In response to the critical paragraph about who was driving the car, the joint defence pleaded:

“3. The Defendants say:-

1. (a)
   At all times material the First Defendant was not the driver of the Mitsubishi;

2. (b)
   At all times material the Plaintiff was the driver of the Mitsubishi;

3. (c)
   The Plaintiff caused the Mitsubishi to be driven into the prime mover, causing the collision;

4. (d)
   The Plaintiff was the only individual within the Mitsubishi;

5. (e)
   Following the collision, the Plaintiff alighted from the scene of the accident and was later discovered away from the accident scene;

6. (f)
   At all times material leading up to the collision the Plaintiff was intoxicated as defined under the Civil Liability Act 2003 (Qld) ("the CLA") pursuant to section 47;

7. (g)
   The Plaintiff was charged by the Queensland Police Services for the circumstances of the collision;

8. (h)
   The accident was caused by the negligence of the Plaintiff, particulars whereof are as follows:-

1. (i)
   Driving intoxicated;

2. (ii)
   Driving in excess of the speed limit and without heed to the road conditions;

3. (iii)
   Striking the prime mover with the Mitsubishi;

4. (iv)
   Failing to keep any or any proper lookout;

5. (v)
   Failing to stop, slow down or steer clear of the prime mover when a reasonable prudent driver would have done so;

6. (vi)
   Failing to maintain any or adequate control over the Mitsubishi;

7. (vii)
   Causing, permitting or allowing the Mitsubishi to leave the roadway, striking the prime mover, causing the collision to occur;

8. (viii)
   Driving without due care and attention”.

9. [9]
   The basis for the positive case there asserted was apparently to be found in a combination of:

   1. (a)
      a statement from a witness to the immediate aftermath of the crash which suggested that the plaintiff might have been the sole occupant of the car at the time of the crash;
   2. (b)
      the plaintiff having fled the scene of the accident; and
   3. (c)
      police evidence of his inebriated state when found shortly thereafter.
10. [10]
    The positive case was however inconsistent with a very brief affidavit that the first defendant gave to the second defendant’s investigator dated 20 March 2018, in which the first defendant swore that he was the person operating the vehicle concerned.  It is also inconsistent with a more detailed signed written statement dated 1 February 2019 also given to the second defendant’s investigator.  In that statement, the first defendant again confirmed that he had been the driver of the car.  Amongst other things that statement also contained material which suggested that the conduct of the plaintiff himself might have been at least partially causative of the crash and therefore his injuries.  The statement suggested that the first defendant had lost control of the vehicle when it seemed as though the plaintiff was going to vomit on him.
11. [11]
    The plaintiff’s pleaded reply was dated 23 September 2021 and relied on the latter statement.  Relevantly, it was in the following terms:

“2. As to paragraphs 2 and 3 of the Defence, the Plaintiff:

1. (a)
   admits paragraphs 3(e), 3(f) and 3(g) of the Defence;

2. (b)
   denies paragraph 3(a), 3(b), 3(c), 3(d) and 3(h) of the Defence;

Direct Explanation

The First Defendant was the driver of the Mitsubishi. The Plaintiff was the front passenger of the Mitsubishi.

3. (c)
   says that the First Defendant has admitted that he was the driver of the Mitsubishi at the time of the collision;

Particulars

The sworn statement of the First Defendant dated 1 February 2019.

4. (d)
   says that such admission by the First Defendant is inconsistent with the allegations pleaded at paragraph 3(a), 3(b), 3(c) and 3(d) of the Defence;

5. (e)
   repeats and relies on those matters and facts alleged in paragraphs 2, 3, 4 and 5 of the Statement of Claim;

6. (f)
   otherwise denies the allegations therein because of the facts and matters alleged in the preceding subparagraphs hereof.”

12. [12]
    The result was that by the close of pleadings, the plaintiff’s pleaded case was that he was a passenger in a car driven by the first defendant; the pleaded case of the first and second defendants as expressed in the joint defence was that it was the plaintiff and not the defendant who was the driver; and the plaintiff had flagged an intention to rely on sworn evidence by the first defendant produced well before the joint defence which was inconsistent with the case pleaded by the first and second defendants.
13. [13]
    At the commencement of the trial on 3 May 2022, counsel announced an appearance on behalf of the plaintiff, but, on the defendants’ side of the record, counsel announced an appearance only on behalf of the second defendant.  The same course was adopted at the commencement of the application before this Court.  How that could be is a curiosity because counsel’s instructing solicitors were and still are solicitors on the record for both the first and the second defendants.  The propriety of the course adopted is not a question before this Court, but one might at least question whether it is consistent with the duty imposed on the second defendant by s 44 of the Act to undertake the conduct of legal proceedings in relation to the claim against the first defendant.
14. [14]
    Counsel opened the case on behalf of the plaintiff by indicating that the plaintiff would give evidence but that the plaintiff also intended to call the first defendant.
15. [15]
    Later that day, counsel on behalf of the second defendant sought leave to amend to introduce a new paragraph in the joint defence which was obviously founded on the version of events stated by the first defendant in the sworn statement referred to in the reply.  The new paragraph was to the following effect:

“4. Further, and in the alternative, if the First Defendant is found to be negligent in the driving of the Mitsubishi then the Plaintiff caused or contributed to the accident by: -

1. (a)
   Interfering with the First Defendants driving of the Mitsubishi by: -

1. (i)
   Intimating that he was going to vomit on the First Defendant;

2. (ii)
   Placing his hand on the First Defendants arm;

3. (iii)
   Striking the First Defendant whilst saying he was 'going to spew';

4. (iv)
   Such contributory negligence is the effective cause of the accident, or in the alternative, to defeat the damages and / or reduce the damages pursuant to section 23 of the Civil Liability Act 2003”.

16. [16]
    The plaintiff opposed the amendment on two bases.  First, that it would involve the impermissible assertion of factually mutually exclusive cases.  Second, that the plaintiff would be prejudiced by allowing the alternative case to be asserted for the first time during the trial.
17. [17]
    The primary judge allowed the amendment.^[2]  However, the plaintiff having intimated an intention to appeal, the primary judge adjourned the trial until 21 November 2022.
18. [18]
    Before this Court, Senior Counsel for the plaintiff accepted that the adjournment defused the plaintiff’s previous complaints about prejudice caused by the lateness of the amendment and based the plaintiff’s objection to the amendment solely on the contention that the amendment involved the impermissible assertion of factually mutually exclusive cases.

Consideration

19. [19]
    The relevant rule of pleading is not in doubt.  Pursuant to UCPR r 154, a party can plead inconsistent sets of facts, but only if they are pleaded in the alternative.  However, it has long been recognised that even if advanced in the alternative, a pleading of inconsistent sets of facts will be regarded as embarrassing and liable to be struck out if it can be demonstrated that the falsity of one of the pleaded alternatives must be known by the party asserting it.  What needs to be shown here is not merely that the pleading party knows that one of the alternative sets of facts must be false, because that will always be true where the two sets of facts are logically inconsistent, such that only one of them could be true.  What needs to be shown is that because the pleading party must know the true position, the pleading party must know which set of facts is false.
20. [20]
    In this regard it suffices to cite Issitch v Worrell (2000) 172 ALR 586 at [32] where Drummond J, with whom Spender and Katz JJ agreed, observed:

“A party can as a general rule plead inconsistent sets of facts in the alternative …, but not where one of those sets must be known to the party to be false. It has long been recognised that such a pleading is embarrassing and will be struck out. In Brailsford v Tobie (1888) 10 ALT 194 at 195, the defendant pleaded two factually inconsistent accounts in justification for not having paid the moneys claimed by the plaintiff. Holroyd J ordered that the defendant elect which one of these two cases she would maintain, saying:

. . . I think it would be most improper to allow the defendant to plead as she has done. The actual facts must be within her own knowledge, and that being so she has set up two sets of facts inconsistent with one another. If this were allowed it would be permitting a party knowing the facts to deliberately place on the record statements, one or other of which must be known to be a lie. This, in my opinion, ought not to be allowed.”

21. [21]
    If the defence had been a pleading on behalf of the second defendant only, it would have been permissible for it to plead the two positive cases in the alternative.  UCPR r 154 would authorise that course and it could not be demonstrated that the insurer must have known the true position.  All that could be demonstrated is that evidence in the insurer’s possession suggested that one of two inconsistent sets of facts must be true, but the insurer did not know which and wished to protect itself against both.  No embarrassment could be demonstrated.  (I observe that the use of the phrase “Further, and in the alternative” rather than “Alternatively” was defective as it contained both a cumulative and an alternative case.  But that could have been easily fixed.)
22. [22]
    The problem for the second defendant, however, arises because the amendments for which leave was sought and obtained were amendments to a joint defence, not amendments to a defence only on behalf of the second defendant.  This is no mere empty formality.  The heading of the amended joint defence identified it as the “Amended Defence of the First and Second Defendants as Joint Defendants”.  The chapeau to the entire pleading provided that “The First and Second Defendants as Joint Defendants rely on the following facts in defence of the Plaintiff's claim”.  The joint defence was explicitly filed “on behalf of the Defendants” and was signed by “Solicitors for the Defendants”.  Those solicitors were solicitors on the record for both defendants.
23. [23]
    The assertions advanced in the pleading were assertions which must be regarded as having been made on behalf of both the first defendant and the second defendant.  Yet given the nature of the alternative inconsistent sets of facts, the first defendant must know the true position.  He must know which one of the inconsistent sets of facts is false.  A pleading on behalf of two defendants who are advancing a joint response to allegations in a plaintiff’s pleading cannot be permitted jointly to advance inconsistent sets of facts if one of those sets of facts must be known to be false by one of those defendants.
24. [24]
    It remains to acknowledge that the application to this Court concerned an appeal on an interlocutory decision on a matter of practice and procedure.  The second defendant contended, relying on Adeva Home Solutions Pty Ltd v Queensland Motorways Management Pty Ltd [2021] QCA 198 at [12] to [14], that the order of the primary judge should not be set aside because even if error of principle could be demonstrated, the order would not work a substantial injustice to the plaintiff.  In the present circumstances, and in the particular context of this case, I think it is appropriate for the appellate court to interfere.  An important point of pleading principle is concerned, and it may be corrected without causing interference with the conduct of the trial.  The plaintiff should not have to meet allegations advanced in the joint defence which are embarrassing because of the way in which the second defendant has chosen to plead the case on behalf of it and the first defendant.
25. [25]
    If the second defendant continues to wish to defend on the alternative bases identified in the amended joint defence, the way forward is not entirely clear.  I observe as follows:

    1. (a)
       The insurer is by s 44 of the Act obliged to undertake the conduct of legal proceedings related to a claim against an insured person.  The insurer must comply with its statutory obligations.
    2. (b)
       Where, as here, one set of solicitors is on the record for both an insured and an insurer, and a pleading is being settled by a barrister for both an insured and an insurer, those legal practitioners must comply with their professional obligations to those who they represent.  Care must be taken to ensure that potential conflicts are properly managed.
    3. (c)
       One course might be that the insurer could continue to defend the proceeding by a single pleading, but that it would take care to ensure that the chapeau and the body of the pleading were amended to make clear which parts of the pleading were joint responses (or joint assertions of fact) and which parts of the pleading were separate responses (or separate assertions of fact).  That might enable the pleading to have separate responses to the critical paragraph about who was driving the car.  Another possibility, but perhaps more fraught with difficulty, is that there should be separate pleadings.
    4. (d)
       However, I express no concluded view as to the permissibility of either course.  Neither was the subject of detailed argument, and in any event it is not this Court’s function to give advisory opinions.
    5. (e)
       I do note, however, that although the rules of pleading are important rules governing the conduct of a proceeding, the primary judge is empowered by UCPR r 367 to make any order or direction about the conduct of a proceeding he considers appropriate, even though the order or direction may be inconsistent with other provisions of the UCPR.  Departures from procedural orthodoxy (even the orthodoxy of compliance with the rules of pleading) are capable of being authorised by direction of the Court, in the event that the departure is warranted having regard to the interests of justice, including the overriding obligations expressed in UCPR r 5.

Conclusion

26. [26]
    I would make the following orders:

1. Leave to appeal granted.
2. Appeal allowed.
3. Set aside the order of the District Court made 5 August 2022 granting leave to amend.
4. The second respondent must pay the applicant’s costs of the application and of the appeal.

27. [27]
    DALTON JA:  I agree with the reasons of Bond JA and with the orders he proposes.
28. [28]
    FLANAGAN JA:  I agree with Bond JA.