Lemon v Suncorp Metway Insurance Ltd
[2005] QDC 128
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- Unreported Judgment
- Lemon v Suncorp Metway Insurance Ltd[2005] QDC 128
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Lemon v Suncorp Metway Insurance Ltd[2005] QDC 128
Lemon v Suncorp Metway Insurance Ltd[2005] QDC 128
DISTRICT COURT OF QUEENSLAND
CITATION: | Lemon v Suncorp Metway Insurance Ltd [2005] QDC 128 |
PARTIES: | AMY VICTORIA LEMON Applicant v SUNCORP METWAY INSURANCE LIMITED Respondent |
FILE NO/S: | BD1249/05 |
DIVISION: |
|
PROCEEDING: | Originating application |
ORIGINATING COURT: | District Court, Brisbane |
DELIVERED ON: | 1 June 2005 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 17 May 2005 |
JUDGE: | McGill DCJ |
ORDER: | Application adjourned for further hearing fixed. |
CATCHWORDS: | MOTOR VEHICLES – Compulsory Insurance – pre-litigation procedures – effect of admission of liability on obligation to cooperate INSURANCE – Motor Vehicles – Licensed Insurer – obligation to cooperate with claimant – effect of admission of liability. Motor Accident Insurance Act 1994 s 47(1)(b). |
COUNSEL: | P L Feely for the applicant K F Holyoak for the respondent |
SOLICITORS: | McInnes Wilson for the applicant Suncorp Metway Legal Department for the respondent. |
- [1]This is an application for an order under s 50 of the Motor Accident Insurance Act 1994 (“the Act”) enforcing compliance with the respondent’s duties under that Act, specifically under s 47 of the Act to provide the applicant with certain information verified by statutory declaration. By s 4, in circumstances like the present where no proceeding based on the applicant’s claim has yet been brought, the power under s 50 is vested in a court with jurisdiction to hear the claim. Presumably this means a court which would have jurisdiction to hear a proceeding based on the claim if one were brought. The notice of claim form of the applicant, which is in evidence, does not claim any particular amount. The medical certificate attached to the claim form refers to a closed head injury, soft tissue cervical and lumbar spine injuries, possible fracture of left ribs not detected by x-rays. There was left chest pain, headaches and numbness in the left LC5-C6 neck pain, and decreased reflexes in the left arm. The claimant went to the Caloundra Hospital where a treatment plan of massage, stretches, and anti-inflammatory medication was proposed; she was said to be unfit for work for a period of three weeks after the accident, but then fit to resume normal duties. So far as I can tell from the present material (and that must be the basis upon which this is assessed at this stage), the claim is one proceedings in respect of which could be brought in this court, so that this court has jurisdiction.[1]
- [2]The substantial question raised by the application is whether, in circumstances where the respondent insurer has admitted liability for the purposes of the Act, the respondent is obliged under s 47(1)(b) to give the claimant information about the circumstances of the accident, where the information sought would be relevant only to issues going to liability; or, perhaps, whether any such obligation is one which the court will enforce under s 50.
Factual background
- [3]The claim arises out of a motor vehicle accident on 2 October 2003 when the applicant was riding as a passenger in a vehicle of which the respondent was insurer. The applicant’s claim alleged that the driver lost control of the vehicle as a result of which it skidded off the side of the road onto a footpath and into some trees, so that the applicant suffered injury. The applicant herself gave a notice of claim under the Act on or about 17 December 2003, and on 8 January 2004 the respondent accepted that the notice was compliant. On 2 June 2004 the respondent, by letter to the applicant personally, admitted liability in full for the circumstances of the accident, although it did not admit liability for personal injury. It pointed out the need for any proceeding to be commenced within the limitation period.[2]
- [4]Under s 41(1)(b) of the Act the respondent was required to give the applicant written notice stating whether liability was admitted or denied. Subsection (6) of that section provides: “An admission of liability by an insurer under this section – (a) is not binding on the insurer on another claim arising out of the same motor vehicle accident; and (b) is not binding on the insurer at all if it later appears the admission was induced by fraud.” Uninstructed by authority I would have been tempted to conclude that the admission was therefore otherwise binding on the insurer, but the Court of Appeal decided to the contrary in Till v Nominal Defendant [2000] 2 Qd R 676. It was there held that under the Act, as under the general law, an admission of liability will be binding only where the party to whom the admission was made has acted or omitted to act in reliance on it in circumstances where it would be unconscionable to permit departure from it. Furthermore, this is not just a theoretical possibility. It is common knowledge that in practice from time to time admissions of liability made under s 41 by an insurer are subsequently withdrawn.[3] Accordingly the fact that there has been an admission of this kind does not necessarily mean that the applicant can forget about the issue of liability.
- [5]Accordingly the solicitors for the applicant in February this year became concerned about this situation, and on 28 February 2005 wrote to the solicitors for the respondent pointing out that in the absence of a binding admission of liability the applicant will be in the position of having to prepare the claim on the basis that liability remains in issue. Accordingly the solicitors forwarded a series of questions concerning the circumstances of the accident which they required the respondent to obtain answers to from its insured driver, verified by statutory declaration. They pointed out that if the respondent would enter into a contract under which liability would become binding on it, it would be unnecessary for that to be pursued.
- [6]The questions are very detailed, but for present purposes it is unnecessary to consider whether, assuming that this process is in principle legitimate, the order under s 50 should be refused on the grounds that the questions or at least some of them are unreasonable or oppressive. Such questions are not subject to the constraints on interrogatories: Suncorp Metway Insurance Ltd v Hill [2004] 2 Qd R 681 at 690. However there must be some limits to what can properly be asked. This aspect has not yet been addressed by the respondent. The respondent resisted the application rather on the basis that it is not appropriate to be asking any questions about liability in circumstances where liability has been admitted, even though it has not been admitted irrevocably.
The Act
- [7]One of the objects of the Act[4] is to encourage the speedy resolution of personal injury claims resulting from motor vehicle accidents: s 3(c). The scheme of the Act is that this is to be done where possible by negotiation between the parties prior to the commencement of proceedings, and that for the purposes of these negotiations each of the parties should readily provide to the other relevant information available to that party. There is a certain amount of information required by regulation to be included in the notice of accident form[5] and there is a provision in s 37A requiring a claimant to provide additional information about the claim and the circumstances out of which it arises if asked by an insurer, subject to some time limitations.
- [8]In division 4 of Part 4, s 45(1) requires the claimant to cooperate with the insurer, and among other things requires the claimant to provide information reasonably requested by the insurer about the circumstances of the accident. The insurer can require the information to be verified by statutory declaration: s 45(7). There is a similar duty on the insurer to cooperate with the claimant in s 47(1), which provides that the insurer must in particular,[6] “at the claimant’s request, give the claimant information that is in the insurer’s possession, or can be found out from the insured person, about the circumstances of, or the reasons for, the accident.” Again the information is to be verified by statutory declaration if required by the claimant: s 47(3). Section 47(4) provides: “If an insurer fails, without proper reason, to comply fully with a request under this section, the insurer is liable for costs to the claimant resulting from the failure.”
- [9]There is provision in s 48 for material not to be disclosed in certain circumstances, not relevant to the matters presently in issue. Section 50 provides as follows:
“(1) If a claimant fails to comply with a duty imposed under division 2, 3 or 4, the court may, on the insurer’s application, order the claimant to take specified action to remedy the default within a time specified by the court.
- (2)If an insurer fails to comply with a duty imposed under division 3 or 4, the court may, on the claimant’s application, order the insurer to take specified action to remedy the default within a time specified by the court.
- (3)The court may make consequential or ancillary orders.”
The submissions and analysis
- [10]The submissions on behalf of the applicant were that, in the absence of a binding admission, it would be open to the insurer to put liability in issue at some time in the future, and the applicant had to be prepared for that. Although the provisions of s 47 are not limited to the period prior to the holding of the compulsory conference,[7] prior to the time the compulsory conference is held it is necessary for the applicant to certify that the matter is in all respects ready for trial.[8] At the compulsory conference the applicant needs to be able to negotiate with a realistic appreciation of the true situation in relation to liability, and after the compulsory conference if the matter is not settled, each party has to make a mandatory final offer, which requires very careful consideration because of its impact on costs if the claim proceeds to trial. In circumstances where liability is potentially in issue, the potential for a dispute on liability has to be taken into account by a claimant at all of these stages.
- [11]Furthermore, in cases where s 55F of the Act applies, subsection (6) provides: “Unless an award of damages is affected by factors that were not reasonably foreseeable at the time of the exchange of mandatory final offers, the court must not award costs to a party related to investigations or gathering of evidence by the party after – (a) the conclusion of the compulsory conference; or (b) if the parties or the court dispenses with a compulsory conference – the date when the parties completed the exchange of mandatory final offers.” Accordingly the applicant invited me to consider a situation where at the compulsory conference the respondent indicated that it would be contesting liability at trial. Any investigations as to liability undertaken by the applicant then would fall within the terms of subsection (6), since by the time the mandatory final offers were exchanged the denial of liability and the factors relevant to it which were disclosed at the conference would not merely be reasonably foreseeable but would be actually known.
- [12]There is also a provision in subsection (7), which I need not quote, but which is also subject to the award being affected by factors that were not reasonably foreseeable at the time of the making of the mandatory final offer. If a denial of liability is brought up by the respondent at the compulsory conference that would not apply, and in any event, given that it is recognised that an insurer is not necessarily bound by the admission of liability even if the denial was not foreshadowed at or prior to the compulsory conference, the possibility that there would be such a denial in the action could hardly be said not to be reasonably foreseeable.[9]
- [13]It was submitted on behalf of the respondent that these provisions were an answer to concerns about the need to investigate the question of liability later if the admission of liability came to be withdrawn. But I do not think that that is true. Plainly the provisions would not operate if the admission of liability were withdrawn at or prior to the compulsory conference, and even at the stage when mandatory final offers are exchanged it could hardly be said that a withdrawal of the admission at some time in the future was not reasonably foreseeable. Rather they emphasise the need for all investigations to be undertaken prior to the compulsory conference.
- [14]A compulsory conference is an important feature of the pre-litigation procedures required by the Act.[10] Section 51B(5)(d) requires a party who is legally represented to sign and give to the other party at least seven days before the compulsory conference a certificate to the effect that the party is ready for trial, that is, not just ready to hold a compulsory conference, but actually ready to have a trial: see subsection (6). I have always thought that that requirement was absurd. Apart from anything else, before a party can be said to be ready for trial it is necessary for that party to start a proceeding in which to have a trial, and the Act contemplates that a compulsory conference will be held before any proceeding is commenced, and therefore necessarily before there are any pleadings, disclosure in the action, and any particulars or interrogatories finalised. A party could not possibly claim prior to the commencement of an action that it was ready for trial for the purposes of r 469. However, the Court of Appeal in Gitcham quoted the requirements of s 51B(5) and (6) at p. 255, and at p. 256 after referring to s 55F(6) and (7) continued: “This emphasises the intention of the legislature that the parties be as fully prepared as if commencing a trial of the action when participating in a compulsory conference.” No criticism was expressed of that concept.
- [15]The real difficulty is that the provisions for the pre-litigation procedures in the Act are too superficial and too rigid to accommodate the multitude of possible situations which can arise in practice. They have been insufficiently thought through, and inevitably therefore throw up all sorts of difficulties when something out of the ordinary happens. The sections make no express provision for what is to happen if an admission of liability is subsequently withdrawn, and apart from s 41(6) do not make any allowance even for the possibility that an admission of liability could be withdrawn. That is all very unhelpful.
- [16]It was submitted on behalf of the respondent that an admission, although it can be withdrawn, continues to operate unless and until it is withdrawn. This is true, but unhelpful; the practical issue is whether an applicant is entitled to proceed on the basis that liability will not be in issue, which does not depend on whether the admission has not (yet) been withdrawn, but whether the claimant can rely on its not being withdrawn in the future. I accept that there may be all sorts of good reasons why an insurer might want to be able to withdraw an admission of liability. But that simply emphasises the fact that an admission of liability is not something on which a claimant can rely.
- [17]There is also the consideration that the position of the applicant is a difficult one, because, if the applicant has to rely on estoppel as a basis for preventing the withdrawal of the admissions of liability, there is likely to be uncertainty as to just when an estoppel can be safely relied on.[11] If the applicant could rely on a contract then, as long as something was done which amounted to consideration for the promise not to withdraw the admission of liability, it would be binding on the respondent. Although consideration has to be something, it does not have to be much;[12] refraining from enforcing a right under s 47 to obtain answers to questions in relation to liability (if there is such a right) would clearly amount to sufficient consideration to support a promise not to withdraw the admission of liability. But it is by no means clear that merely refraining at a particular point in time from requiring under s 47 answers to questions about liability would amount to circumstances which would make it unconscionable for the respondent to withdraw the admission, so as to give rise to an estoppel.
- [18]It would certainly be something which could provoke dispute and factual issues, which would make the claim more complicated and more expensive to run. The mere fact that liability had not for a time been investigated would not necessarily render the withdrawal of the admission unconscionable. Furthermore, it would be difficult to predict in advance whether any particular thing would render it unconscionable. Even the making of a mandatory final offer on the basis that liability had been admitted would not necessarily make it unconscionable for that admission to be withdrawn thereafter; it would be at least arguable that the knowledge that the admission was able to be withdrawn later meant that it could not have been relied upon in relation to the making of the mandatory final offer, so it would not be unconscionable for the respondent subsequently to withdraw it.
- [19]There is also the consideration that there would appear to be no particular reason to think that an admission of liability would prevent an insurer from requesting information about the circumstances of the accident, relevant to liability, under s 45, which the claimant would be required to provide. If the admission of liability is able to be withdrawn, it remains open to an insurer at any time to consider withdrawing the admission, and therefore to investigate the question of liability for the purpose of assisting it in its consideration of that issue. In the absence of an agreement or estoppel which necessarily prevents liability from being raised as an issue by the insurer it does not seem to me that there would be anything unreasonable in an insurer seeking information from a claimant in relation to liability merely because there had been an admission of liability. That that is so I think strengthens the argument that s 47 should also not be limited in that way.
- [20]There is also a consideration that there is nothing in the actual words used in s 47, or s 50, to indicate that the duty on an insurer under s 47 is in any way modified by the fact that there has been an admission of liability. If the legislative intention had been that an admission of liability by an insurer would modify the operation of s 47, it would have been easy enough to say so. I appreciate that it does not necessarily follow that the courts’ power under s 50 should be exercised in such circumstances, but it makes it more difficult to adopt the approach that as a general proposition if liability has been admitted information as to liability should not be sought under s 47. I am really being asked to imply a limitation on the operation of s 47, although counsel for the respondent was careful not to put his case in that way.
- [21]It was submitted for the respondent that the word “must” in s 47(1), although mandatory, did not mean mandatory irrespective of the circumstances, and that the obligation to cooperate was one the scope of which depended upon those matters which were in issue from time to time. This followed from the fact that the purpose of cooperation was to facilitate the settlement of the claim, and that, so long as an admission of liability was in operation, there was no need for any further cooperation in relation to the question of liability. But the Act does not confine s 47(1) in this way. Although s 47(4) contemplates that there may be a proper reason for failing to comply fully with a request under the section, that does not modify the duty in subsection (1), but merely provides a potential method of avoidance of the cost consequences which otherwise flow under that subsection. I do not think that the terms of subsection (4) mean that the obligation in subsection (1) only operates where there is a proper reason for the insured to cooperate in that way. That is just not the structure of the section. It is not for present purposes necessary to consider how the section would operate in circumstances where there was an admission of liability on the pleadings, something which can after all be withdrawn by leave.[13] The fact that in those circumstances the leave of the court is required before the admission can be withdrawn may well make a difference in terms of the scope of operation of s 47 or, more probably, the approach to the exercise of the power in s 50.
- [22]The accident in question was a single vehicle accident, where the driver lost control of the vehicle in which the applicant was a passenger. There is a tendency to assume that in a case like that liability will not be a problem for the applicant, but the evidence suggests that in this case the driver was not travelling at an excessive speed, but rather came suddenly and unexpectedly on an unusual hazard, a sheet of water left on the road by a thunderstorm, which might not in the circumstances have been reasonably foreseeable.[14] I can understand that the applicant’s solicitor would be concerned about the risk of the claim failing, not on the basis of any contributory negligence on the part of the applicant, but simply on the basis that a court might not be persuaded that the driving of the respondent’s insured was actually negligent.[15] For present purposes I think that all that matters in relation to this is that this is not the sort of case where I could say that the question was really academic, because even if the respondent was sufficiently misguided as not to admit liability, there would be no prospect of the applicant’s failing if the matter went to trial. In such a case, it may well be open to refuse to make an order under s 50 on the basis that liability is so clear that it just could not be in issue, or at least the applicant could not be at risk in relation to it.
- [23]There is no doubt that, had it not been for the admission of liability, it would have been appropriate for the applicant to seek from the respondent answers by the respondent’s driver to questions about the circumstances of and the reasons for the accident. The answers may be of assistance as admissions which can be tendered at the trial in proof of the applicant’s case on liability, or as providing a version in respect of which the driver could be cross-examined if he gave evidence at the trial. In addition, knowledge of what the driver would say in relation to liability would be an important part of the preparation for the compulsory conference, in ascertaining just what the respondent’s actual case would be at the trial in relation to liability; it must be remembered that there are no pleadings at this stage, or any provision in the Act for a formal statement from the insurer as to its case on liability.[16]
- [24]This is needed so that the applicant can properly consider, with the benefit of legal advice, what approach should be adopted to the settlement of the claim at the compulsory conference. In a case such as the present, that means, what sort of discount would be reasonable for the applicant to allow to accommodate the risk of failing if the matter went to trial. At the present time the applicant and her solicitors do not know what evidence the respondent would be in a position to call in relation to liability if the matter went to trial and if liability were then put in issue. Unless of course the respondent changes its mind about liability before the conference, or at the conference, the position at the conference will be that liability is admitted, but the respondent will apparently retain the right to change its mind about liability and put liability in issue at a trial. In those circumstances, it seems to me inevitable that some consideration ought to be given by the applicant and her advisers to the risk of liability being put in issue, and, if it were put in issue, an unfavourable outcome on liability at a trial. If in these circumstances the applicant is going to be able to take the compulsory conference as seriously as the Court of Appeal considers the legislature intended it be taken, it seems to me to follow that the applicant and her advisers should be entitled to investigate this question using the mechanisms provided by the legislature for that purpose prior to the conference. That in essence is what the applicant is trying to do in the present case.
Discretion
- [25]It was further submitted that s 50 involves a discretion, in that the court is not bound to enforce the obligation, and that as a matter of discretion the order sought should be refused. I accept that the wording of s 50 indicates that the court has a discretion, but the discretion must of course be exercised with a view to furthering the objects of the Act, and giving effect to the general scheme of the legislation as expounded in the Court of Appeal. The importance of the obligations in division 4 has been emphasised by that court.[17] In these circumstances, the discretion should be exercised in favour of enforcing compliance with the relevant provision unless there is some good reason, consistent with the objectives of the Act, for not doing so.
- [26]In my opinion, for the reasons given earlier, it remains reasonable for the applicant to be concerned to investigate further the question of liability in this matter, notwithstanding that liability has been admitted. Essentially the reason for that is that the applicant cannot rely on that admission. It is not to the point that, as the respondent submitted, the prospect of withdrawal of the admission is sheer conjecture. The point is that the respondent can withdraw the admission, and therefore the applicant cannot safely rely on that admission. In those circumstances it is in my opinion not unreasonable for an applicant to be concerned to investigate further the issue of liability. Once that is recognised, it seems to me that there is no reason why the obligation in s 47 should not extend to questions about liability.
- [27]This does not mean the section is being used in a way that is oppressive to the respondent. Besides it is always open to the respondent to enter into an agreement with the applicant for the applicant not to investigate liability further in return for the respondent’s giving up or modifying its right to withdraw the admission. Assuming the respondent does not wish to do this, and it is certainly not obliged to, in my opinion it follows logically that liability remains a legitimate subject for investigation. It was not suggested that the applicant already has sufficient material available to be confident in relation to liability if liability comes to be an issue at a trial, and the approach adopted by the Court of Appeal in Hill at [26] suggests that a court should be wary about concluding that a party already has sufficient information on a particular subject and that further disclosure under division 4 is for that reason not justified. In my opinion there is no good reason in the present case to exercise the discretion so as not to require the respondent to comply with its obligation under the statute.
- [28]Accordingly I am prepared in principle to make an order that the respondent provide answers to the questions forwarded on behalf of the applicant, verified by statutory declaration, subject to argument about the content of the specific questions. That is not a matter which has been the subject of submissions so far, but it seems to me that there may well be an issue about that, notwithstanding that the scope of what may be sought under division 4 is wider than for example the scope of legitimate interrogatories.[18] Accordingly I will publish these reasons, and give the parties the opportunity to make further submissions in relation to the particular questions or any of them. The matter can be listed at a mutually convenient time for further hearing for that purpose.
- [29]In relation to the question of costs, there is no reason why the ordinary provisions in relation to costs in the UCPR should not apply to an application under s 50. The costs, so far at least, should follow the event, and in respect of the costs of the application and the hearing so far, I will order the respondent to pay the applicant’s costs to be assessed.
Footnotes
[1] The respondent did not submit to the contrary.
[2] As a result it did not amount to a representation that no proceeding need be commenced within time, nor an offer to pay damages if one were not commenced, which would appear to distinguish this case from Lindsay v Smith [2002] 1 Qd R 610.
[3] There have been such cases within the experience of the solicitor for the applicant: affidavit of McManus filed 11 April 2005, para 13.
[4] I have had reference to Reprint No 5, as at 16 May 2003.
[5] Section 37(1)(a), and see the Motor Accident Insurance Regulation 2004 s 18, which includes a three page list of things which the notice of claim form must disclose.
[6] Section 47(1)(b).
[7] Suncorp Metway Insurance Ltd v Hill [2004] QCA 202 at [22].
[8] The Act s 51B(5)(d).
[9] Particularly bearing in mind that to say that something is reasonably foreseeable says nothing about the likelihood of its actually occurring in a particular case: Wyong Shire Council v Shirt (1980) 146 CLR 40 at 47. For liability to come to be denied at a trial could hardly be described as far fetched or fanciful.
[10] Gitsham v Suncorp Metway Insurance Ltd [2003] 2 Qd R 251 at 255.
[11] The authorities on estoppel were cases where the potential detriment arose because the limitation period had run out without an action being commenced. They do not establish that the loss of timely investigation of liability is sufficient potential detriment to support an estoppel.
[12] Lindsay v Smith (supra) at [27].
[13] See for example, Cassie v Bogdan [2004] QSC 275.
[14] The sheet of water in that position on the road, that is, rather than the thunderstorm; presumably the driver knew about the latter.
[15] Several commentators have noted that in recent years there has been a movement away by the courts from what seemed to be previously a general practice of always finding for plaintiffs in actions for negligence. I am of course not at the moment concerned whether this is really correct, but it might be reasonable for the applicant to have this perception.
[16] Other than of course s 41(b), which provides no information as to the detailed case alleged by the insurer. The significance of the absence of pleadings was noted in Hill at [21].
[17] Gitcham (supra); Suncorp Metway Insurance Ltd v Hill [2004] 2 Qd R 681; Suncorp Metway Insurance Ltd v Brown [2004] QCA 325.
[18] Hill (supra) at [31].