Battaia v Battaia & Anor [1993] QSC 402

. , ,.':hit. • . . . .~· . :; . . 0 ,. ~ .• State Reporting Bureau . TRANSCRIPT OF PROCEEDINGS (Copyright in this transcript is vested In the Crown. Copies thereof must il~t be made or sold ' without the written authoritY of the Director, State Reporting Bureau.) . .......... : ·":··· .. : SUPREME COURT.OF QUEENSLAND CIVIL JURISDICTION DEMACK J No 109 of 1988 ·JOHN MICHAEL BATTAIA and· ISIDORA BATTAIA and FAI GENERAL INSURANCE COMPANY LIMITED MACKAY .. DATE 12/1.1/93 JUDGMENT 1 Plaintiff Defendant Defendant by Electio~. --------------------------------------------------------------------------------4th Floor, The L~w Courts, George Street, Brisbane, Q. 4000 Telephone: (07) 227 4360. Facsimile: (07) 227 -- 1 of 15 -- 121193 M/T MKY423/93 (Demack J) HIS HONOUR: In this matter there are two applications before me. The first in point of time is an application by the plaintiff for orders that the action be entered for trial notwithstanding that the third party has failed, neglected or refused to sign the certificate of readiness for trial, and for orders in respect of costs. 10 The second application is brought by the defendant by election/third party, FAI General Insurance Company Limited, which I will refer to as FAI, for orders that the company be permitted to withdraw its notice of election, that the second 20 defendant by election's claim against the third party be struck out or permanently stayed, or alternatively for orders for directions. Obviously, the second summons needs to be dealt with first, because if FAI is successful, then no orders will be required on the plaintiff's summons. In this action, the writ was issued on 5 October 1988. It was served on the Workers' Compensation Board on 12 October 1988 and on FAI on 21 October 1988. The solicitors for the plaintiff wrote to FAI on 7 November 1988 advising that the defendant had died on 12 October 1988. It appears subsequently in the statement of claim that the plaintiff is the son of the defendant and was working for the defendant. This explains the letter which came from the plaintiff's solicitors. That· letter asked whether FA! would elect to join as a defendant to obviate difficulties that would otherwise arise. There was then correspondence between FAI 2 JUDGMENT 30 40 50 60 -- 2 of 15 -- 121193 M/T MKY423/93 (Demack J) and the solicitors for the plaintiff, and between FAI's solicitors and the solicitors for the plaintiff. This correspondence is exhibited to the affidavit of Peter Williarn Searles filed in this application. It shows that during the period of November and early December 1988, FAI undertook investigations by an assessor in respect of the circumstances in which apparently the plaintiff sustained injury. On 6 December 1988, FAI filed a notice of election to defend. The statement of claim was 10 delivered on 26 July 1989. That alleged that the plaintiff 20 injured himself in the course of his employment lifting a drum onto a truck. This then obviously raised issues which are frequently litigated even today in the Courts. On 14 September 1989 the solicitors for FAI wrote to the then 30 solicitors for the Workers' Compensation Board, Messrs Ernest Barry & eo. It is necessary to quote that letter in full: "We refer to previous correspondence. We have now been served with the statement of claim, a copy of which is enclosed in the event that you have not been. The allegations contained therein make it plain that FAI should not be liable to indemnify the defendant, as it does not appear to us that the injury was by, through or in connection with a motor vehicle, nor was it inrespect of a motor vehicle. Rather, it would appear that the injury was in respect of a drum of rubbish and by, through or in connection with the drum of rubbish.In the Technical Products case, the motor vehicle insurer escaped liability and we consider the facts of this case to. be not materially distinguishable. Unlesswe receive your unequivocal acknowledgment that theWorkers' Compensation Board of Queensland is liable toindemnify the defendant to the extent the defendant is found liable, and to take over the conduct of the action entirely, we are instructed to bring an application towithdraw the notice of election and for an order that FAI should be given leave to withdraw as a party to thisaction." 3 JUDGMENT 40 50 60 -- 3 of 15 -- 121193 M/T MKY423/93 (Demack J) Ernest Barry and Company replied by letter dated 7 November 1989 which I quote: "Further to your letter of 14 September 1989 and subsequent correspondence on our office we advise that we have received instructions from our client to indicate that the Workers' Compensation Board of . ' Queensland will indemnify the defendant in this action 10 to the extent that the defendant is found liable and will also take over the future conduct of the action entirely. We will be attending to the filing of documentation in the near future and have written to the plaintiff's solicitors informing them of the position." The Workers' Compensation Board filed its notice of election on 10 November 1989 and became the second defendant by election. The Workers' Compensation Board filed a defence on 19 March 1990. It then proceeded to prepare the defence. Its affidavit of documents were sworn by Kevin Ketelhohn and shows that not only did it obtain medical reports at its own initiative, but also obtained statements, reports and financial material from the plaintiff. The statement of expert and economic evidence which was filed by the Workers' Compensation Board also gives details of the medical reports and other material which it has obtained. 4 JUDGMENT 20 30 40 50 60 -- 4 of 15 -- 121193 M/T MKY423/93 (Demack J) That statement which was filed on the 30 June 1992 is described at its foot as: "The defendant's statement of expert and economic evidence is in the form of a joint statement of documents in the possession or power of the defendant and in the possession or power of the insurer defending in the name of the defendant. " 10 On the 1st December 1992, the Workers' Compensation Board served a third party notice on FA!. It also delivered a statement of claim on 1st December 1992. This produced a defence from FA!, which was delivered on the 8 March 1993. 20 In that defence, FA! pleads the correspondence which I have referred to, except that it appears that at the time when the solicitors for FA! wrote to Ernest Barry, they also wrote to the solicitors for the plaintiff in similar terms. That letter, rather than the letter to Ernest Barry is the one that is pleaded, but there does not seem to be any misunderstanding engendered by this, and it has not been suggested that there should be an amendment so that the proper letter is pleaded. In other words, both the representatives of FA! and the Workers' Compensation Board understand that the issue that is raised is whether or not those two letters which I have quoted constitute a contract between the Workers' Compensation Board and FAI, that the defendants damages would be met by the Board, or whether they constitute an estoppel, so that at this stage, the.Workers' Compensation Board cannot pursue a claim against FAI. 5 JUDGMENT 30 40 50 60 -- 5 of 15 -- 121193 M/T MKY423/93 (Demack J) ~ The defence of FAI further asserts that after the 7 November 1989, it closed its file, discontinued its inquiries~took no further part in the action by the plaintiff and instructed its solicitors no longer to take any part in the action and to close their file. 10 The issues then are first of all whether there is a contract. It seems to me that when the whole of the letter that was written by the solicitors for FAI is considered, it involves an offer by FAI to compromise the litigation between itself and the Workers' Compensation Board. 20 For many years the Courts have heard cases like this, where it has been a question whether the licensed insurer or the Workers' Compensation Board is liable for the damages recovered by an employee against the employer where a motor 30 vehicle has featured in the incident. The matter has been frequently the subject of reported decisions in the Full Court and Court of Appeal, and it has found its way to the High Court. The tests have all been 40 definitively stated and variously applied. It obviously is a matter where there is considerable expense for both insurers, if both are present, during the trial. Consequently it is a matter which one would expect is in the interest of the insurers to reach some agreement early in the piece if that is possible. It seems to me that the letter from the solicitors dated the 14 September 1989 is a bold assertion that the licensed insurer will not be found liable • 6 JUDGMENT 50 -- 6 of 15 -- 121193 M/T MKY423/93 (Demack J) to indemnify the defendant in the facts that are pleaded in this case. It consequently offers, in effect, to settle that issue by having the Workers' Compensation Board agree to indemnify the defendant and to conduct the action. It goes on to refer otherwise to applying to withdraw the notice of election. This would seem to me to be understood by persons familiar with this area of the law, to mean that it would make some application to have the issue of indemnity decided at an 10 early point. It could not be understood simply as a formal 20 matter because of its rather severe consequences. It seems to me that this set of facts is rather analogous to those in McDermott v. Black (1940) 63 Commonwealth Law Reports, 163. The effect of that decision is summarised in the fourth Australian edition of Cheshire and Fifott Law of Contract in paragraph 222. Particularly in that paragraph, some of the words of Mr Justice Dixon are quoted, and these seem to me to bear on this case. The facts of McDermott v. Black were that the plaintiff had been induced to contract with the defendant by the latter's fraudulent misrepresentation, but during negotiations, agreed to withdraw all allegations of fraud, provided that he was given an extension of time to complete the contract. The defendant granted the extension and when the plaintiff failed to complete on the new date, repudiated the contract. The plaintiff sued for the returp of the deposit on the ground that he had been induced to enter into the contract by fraud. 7 JUDGMENT 30 40 50 -- 7 of 15 -- • 121193 M/T MKY423/93 (Demack J) The High Court rejected the claim on the basis that the withdrawal of the allegations of fraud had amounted to a promise not to sue in respect of the misrepresentation and, as such, was good consideration for the defendant's promise to give an extension of time. Mr Justice Dixon's words were: "In these circumstances it would be natural for the appellant McDermott to suppose the proposal was that the contract should be completed on the footing that Black waived all claims based on the alleged misrepresentation. It would be futile for Black to withdraw allegations which he was at liberty to revive. ' ' 10 The purpose of the withdrawal was not that of social 20 amenity, but to complete and close a business transaction." It seems to me that this quotation applies by analogy to the present circumstances. What FAI is offering to do is to avoid the cost of litigation on this issue and to take no further part in the action and to leave the whole of the conduct of the action in the hands of the Workers' Compensation Board. It might seem to be an unusual kind of contract, but in view of the frequency of this kind of litigation with which the Board and licensed insurers were familiar, it seems to me that this is something which can be the subject of contract. Mr Baulch, who appeared for the Workers' Compensation Board, 30 40 50 ·submitted that all that the Board agreed to do, in the letter from its then solicitor, was to indemnify the defendant. It did not agree that it would not pursue a future claim against FAI. It seems to me that that is not so. The offer that FAI made is contained in a letter which refers to this well 8 JUDGMENT -- 8 of 15 -- 121193 M/T MKY423/93 (Demack J) litigated issue about which both FA! and the Workers' Compensation Board were well aware. The question that would ultimately have to be decided at considerable expense would be which insurer would bear the burden of a judgment arising out of a work related incident 10 involving a motor vehicle. The offer is to allow the Workers' Compensation Board at that point to accept liability because FA! at that time was confident of success. In other words, it meant that the Workers' Compensation Board would bear the cost of meeting the judgment, if any, that the 20 plaintiff obtained without having to bear the burden of the costs that FA! would incur by being involved in the action. The offer may seem to have been a bold one in the light of subsequent decisions that have been reported from the Full 30 Court and Court of Appeal, but nonetheless, it was an offer made, and it seems to me it was an offer that was accepted. The solicitors for the Workers' Compensation Board agreed to meet any judgment and consequently avoided the prospect of paying a substantial sum of costs to FA!. That was the judgment made at that time, and it seemsto me that it is not open at this point to question the wisdom of it. It was made, as Mr Justice Dixon, as he. then was, said, "To complete and. close a business transaction." So I am satisfied that the two letters constitute a binding agreement between the Workers' Compensation Board and FA! that as from the time of the completion of that agreement, FAI would be released from the action and the burden of any damages • 9 JUDGMENT 40 50 60 -- 9 of 15 -- 121193 M/T MKY423/93 (Demack J) assessed against the defendant would be borne solely by the Workers' Compensation Board. Even if that were not so, it seems to me that from the point of view of estoppel the answer is the same. The facts here, it seems to me, show that Workers' Compensation Board made a 10 promise that it would meet the damages assessed against the defendant. Whether one looks at estoppel by promise or estoppel by deeds or actions, it seems to me there is evidence all to the same effect. Not only did the Workers' Compensation Board say that it would indemnify the defendant 20 in the action to the extent that the defendant is found liable, but it also said that it would take over the future conduct of the action entirely. Consequently, from November 1989 onwards, up until the 30 service of the third party notice, all of the steps in the action were taken between the plaintiff and the Workers' Compensation Board. That was clear evidence of performance of the promise. On the other hand, FA! has suffered detriment. It did not apply to withdraw its notice of 4 0 election. This means that, on the papers, it has remained a party to the action, and its solicitors remain liable-to service with documents in the action. In other words, it remains liable to incur costs in an action 50 in respect of which it thought it had been released. It suffered further detriment in that the Workers' Compensation Board was able to issue what it called a third party notice without seeking leave of the Court. That was because FA! was 60 10 JUDGMENT -- 10 of 15 -- 121193 M/T MKY423/93 (Demack J) still a party to the action and a claim between defendants could be made without leave. This again has meant the incurring of costs in a matter where FAI thought it had been relieved of that burden. More significantly, since November 1989, FAI and its 10 solicitor had closed the file and have not prepared in any way for the action. It submitted on behalf of the Workers' Compensation Board that this is no detriment because all of the work that has been done in preparation of the defence by the Workers' Compensation Board can be made available. However, that does not seem to me to be an answer to the suggestion that FAI has suffered a detriment. The conduct of litigation is an art as well as a science. If 20 it were only a science, then obviously each practitioner 30 would prepare for trial in exactly the same way and following well established scientific principles would produce exactly the same material and results. That would mean that the exchange of files would adequately meet the needs of FAI. 11 JUDGMENT 40 50 60 -- 11 of 15 -- 121193 M/T MKY423/93 (Demack J) However that is not so. Individual 'practitioners make individual choices and develop individual techniques in respect of preparation of litigation. Indeed, individual insurers have their own style of preparation which meets their policy and their requirements. One cannot ignore the fact that different insurers may have a different approach to pre-trial settlement, and this matter . . has proceeded a long way towards trial, and considerable expense has been incurred. It may be that at an earlier 10 time, FA! may have taken a different view of the action and 20 may have been able to settle satisfactorily a long time ago. These circumstances all constitute a detriment which I am satisfied is quite substantial. So whether the matter be viewed as one of contract or of estoppel, it seems to me that 30 the same answer is reached. At this point, the Workers' Compensation Board cannot now claim that FAI should indemnify the defendant. Counsel took the opportunity to refer me to a number of cases 40 that have been before the Court in recent times that litigate this kind of issue. All this shows is that it is very difficult to be exactly sure how any particular piece of litigation of these issues will be resolved. However, rather than be of any assistance to either side in this application, 50 it does show the good sense of one of the insurers trying to settle the question of which insurer will meet the bill early in the piece, so that costs of the defendants are kept to a minimum. 12 JUDGMENT -- 12 of 15 -- 121193 M/T MKY423/93 (Demack J) In other words, the offer that was made was a sound business offer back in 1989 and was clearly accepted. The question then arises whether at this point FAI can withdraw its notice of election. There has been debate in the cases about this, and I was referred to Wilson v. Austral Motors (Qld) Pty Ltd (1983) 2 Queensland Reports, 774, and to Boath v. Central 10 Queensland Meat Export Company (1986) 1 Queensland Reports, 139. It seems to me to be clear in the judgments in those cases that it is possible for an insurer that files a notice of 20 election to withdraw that notice. I refer to the reasons for judgment of Mr Justice McPherson in Wilson's case at pages 779 and 781 and to the judgment of Chief Justice Carnpbell at page 146 and Mr Justice Matthews at 148 in Boath's case. The essential question is whether proceedings have developed to the point where the other parties will suffer prejudice if an insurer who is elected to join is allowed to withdraw that election. This is noted both by Mr Justice McPherson and Mr Justice Matthews in the passages I have referred to. Here, the plaintiff will suffer no prejudice. The li~igation has been conducted by the plaintiff with the Workers' Compensation Board and that Board is firmly in the proceedings to indemnify the defendant in respect of any judgment. The defendant's estate will suffer no prejudice because the Workers' Compensation Board has conducted the litigation on its behalf. 13 JUDGMENT 30 40 50 -- 13 of 15 -- 121193 M/T MKY423/93 (Demack J) That is made very clear in the passage I quoted from the statement of expert in economic evidence. Certainly the Workers' Compensation Board will suffer a detriment, but that is a detriment that it agreed to meet in 1989, and allowing FAI to withdraw at this time will simply keep the Workers' Compensation Board to its bargain. I am satisfied also that it is appropriate in these circumstances to strike out the third party claim. So on the summons filed by FAI, I order that FAI General Insurance 10 Company Limited be permitted to withdraw its notice of 20 election. That the Workers' Compensation Board of Queensland's claim against FAI General Insurance Company Limited by way of a third party claim, be struck out. I order that the Workers' Compensation Board of Queensland 30 pay the costs of FAI General Insurance Company Limited in respect of and incidental to this application and to the action, to be taxed. I order that the Workers' Compensation Board of Queensland pay the plaintiff's costs of and incidental to this application, to be taxed. On the plaintiff's surnrnons7 the summons is struck out. I order that the Workers' Compensation Board of Queensland pay the plaintiff's costs of that summons, to be taxed. 14 JUDGMENT 40 50 -- 14 of 15 -- 121193 M/T MKY423-424/93 (Demack J) At the hearing of this summons both FA! and the plaintiff were represented by senior counsel who appeared without juniors. The solicitors who appeared to receive the judgment have each asked that I certify for senior counsel. I am not familiar with any practice that such certification is necessary. I understand this to be part of the taxing 10 officer's ordinary.responsibilities and I am not familiar with the practice that requires the Judge to certify. So I do not propose to make any certification. Each senior appeared without a junior and it would seem to me within the 2o taxing officer's ordinary competence to determine the appropriateness of the fee that is charged, if it goes to the taxing officer. I would have thought this was a matter that would be dealt with without taxation. So I will not make any such certification. 15 30 40 50 60 JUDGMENT -- 15 of 15 --