AMP General Insurance Ltd. v. Kull & Anor. [2005] NSWCA 442

JUDGMENT OF: Giles JA at 1; Hodgson JA at 17; Santow JA at 78

DECISION: 1. Appeal and cross-appeal allowed to the extent of substituting, for the verdict of $178,788.00 for Mr. Kull against Mr. Maloney, a verdict of $118,788.00 to take effect on 29 November 2004. 2. Appeal and cross-appeal otherwise dismissed. 3. Order that AMP pay one-half of Mr. Maloney's costs of the appeal and cross-appeal, and that otherwise each party bear its own costs of the appeal, with Mr. Kull to have a certificate under the Suitors Fund Act in respect of his own costs if otherwise eligible.

CATCHWORDS: TORT - Negligence - accident - Meaning of injury - Injury to plaintiff's hand when starter motor activated to test if plaintiff had fixed a problem - Whether injury a result of and caused during the driving of the vehicle or a collision with the vehicle - INSURANCE - Whether owner's liability covered by a public risk insurance policy.

Allianz Australian Ltd. v. GSF Australia Ltd. (2005) 215 ALR 385 AMP General Insurance Ltd. v. Maguire [2004] NSWCA 64, 59 NSWLR 580 Darlington Futures Ltd. v. Delco Australia Pty. Ltd. (1986) 161 CLR 500 Dickinson v. Motor Vehicle Insurance Trust (1987) 163 CLR 500 Giorginis v. Kastrati (1988) 48 SASR 371 Government Insurance of NSW v. King (1960) 104 CLR 93 Government Insurance Office (New South Wales) v. R.J. Green CASES CITED: HIH Casualty & General Insurance Ltd. v. Pluim Constructions Pty. Ltd. [2000] NSWCA 281 Insurance Commissioner of Western Australia v. Container Handlers Pty. Ltd. [2004] HCA 24, 218 CLR 89 Mercantile Mutual Insurance (Aust) Ltd. v. AAMI Ltd. [1999] NSWCA 200, 29 MVR 393 QBE Insurance (Aust) Ltd. v. Smith [2005] NSWCA 130 Ricketts v. Laws (1988) 14 NSWLR 311 Shortland County Council v. Government Insurance Office of NSW [1973] 2 NSWLR 257 Townsville Trade Waste Pty. Ltd. v. Commercial Union Insurance Co. of Australia Ltd. [1999] QCA 386, 29 MVR 503 Trajkovski v. Ken's Painting & Decorating Services Pty. Ltd. [2002] NSWSC 568

AMP General Insurance Limited - appellant PARTIES: Frederick Kull - 1st respondent Peter Maloney - 2nd respondent

Mr. D.J. Russell SC with Mr. S. McCarthy for appellant COUNSEL: Ms. S. Norton SC with Ms. M. Fraser for 1st respondent Mr. G. Watson SC with Mr. A. McInerney for 2nd respondent

Ebsworth & Ebsworth, Sydney for appellant SOLICITORS: Bryden's Law Office, Liverpool for 1st respondent Lee & Lyons, Sydney for 2nd respondent

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 41157/04 DC 7778/00

GILES JA HODGSON JA SANTOW JA

Monday 12 December 2005 AMP GENERAL INSURANCE LTD. V. KULL & ANOR. Judgment

1 GILES JA: For the reasons given by Hodgson JA, whose judgment I have had the advantage of reading in draft, the verdict for Mr Kull against Mr Maloney should stand but with the damages reduced to $118,788. I qualify my agreement in this respect to the extent that I do not think it necessary, if Giorginis v Kastrati (1988) 48 SASR 371 so suggests, that a plaintiff admit tax evasion before earnings greater than those disclosed to tax authorities can be taken into account in assessing his damages. The Court must decide on the evidence before it. The evidence may warrant, indeed require, the conclusion that the plaintiffs earnings exceeded his declared income even if the plaintiff has not admitted non-disclosure of income. That is so in the present case, on the evidence of Dr Mayman and Mr McMurray called in Mr Kull's case. 2 I respectfully differ from his Honour, however, as to Mr Maloney's entitlement to indemnity from AMP. In explaining why that is so, I take up without repetition the facts and statutory provisions found in his Honour's judgment.

Policy 8 3 In my opinion, the cover in Section A4 of the policy did not extend to the Landcruiser. 4 None of the Farm Vehicles in the Schedule was a motor vehicle of the nature of the Landcruiser. The reference to "the Vehicle" in Section A4 must be read as a reference to the Farm Vehicles in the Schedule, and the requirement that a motor vehicle other than the Farm Vehicles be used, and more particularly the description of that motor vehicle as a substitute motor vehicle, in my view indicates that the motor vehicle must be a functional substitute for one of the Farm Vehicles in the Schedule. A similar functional substitution is seen in Section A6 of the policy. The Landcruiser was not a functional substitute for a tractor, slasher etc. 5 It is most unlikely that the parties to the policy intended that the insured's domestic motor vehicle would be the subject of cover if, but only if, his tractor, slasher, etc happened to be in the shed. Rather, the natural intention was that there would be cover in respect of a tractor, slasher etc, used by the insured instead of the equivalent equipment in the Schedule. The words are entirely apt to express that intention. The contra proferentem rule of construction is of limited usefulness, only "where dictionaries alone and logic do not resolve an ambiguity" (per Kirby J in Insurance Commission of Western Australia v Container Handlers Pty Ltd (2004) 206 ALR 335 at [98]). I do not think there is occasion to resort to it. 6 Mr Maloney is therefore not entitled to indemnity under Policy 8.

Policy 9 7 In my opinion, exclusion 1.b. applied. 8 It is understandable to see the policy as intended to cover the insured against claims arising from the use of a motor vehicle which are not covered by the compulsory third-party policy. But that must yield to the words of the policy, and I respectfully prefer the approach of Mason P in HIH Casualty & General Insurance Ltd v Pluim Constructions Pty Ltd [2000] NSWCA 201 at [25] to that of Handley JA and Foster AJA at [76]-[78]. 9 Further, the postulated intention is ephemeral. Even if "in respect of which insurance is required ... " qualifies "use", cover under insurance so required mayor may not turn only on use of the motor vehicle. In the present case, for example, the third party policy under s 10 of the Motor Accidents Compensation Act 1999 ("the Act") did not do so. Because it provided cover against "injury", meaning injury as defined in the Act, in addition to use (or operation) there had to be driving, a collision etc. Thus on any view there was a gap between the cover under the compulsory third party policy and the cover under Policy 9. 10 Clause ii. in exclusion 1.b., referring to the use of any Vehicle "which is otherwise insured by a person other than you in respect of the same liability", most naturally qualifies "Vehicle" rather than "use" (or "claims"). So also must clause i. If it then be asked whether the Landcruiser was a vehicle in respect of which insurance was required by legislation relating to the registration of motor vehicles, the answer is yes. The exclusion is thus enlivened. 11 For the exclusion to apply it is necessary also that Mr Kull's claim arose directly or indirectly out of or was caused by or in connection with "the use of' the Landcruiser. 12 The Government Insurance Office of New South Wales v King (1960) 104 CLR 93 was concerned with bodily injury "caused by or arising out of the use of an insured motor vehicle", and distinguished between using a motor vehicle and putting it in order for some subsequent use. The facts were different from those of the present case; work had been done on the engine, the defendant was trying to start it, and it was not established that he was trying to start it preparatory to driving the motor vehicle as distinct from testing the efficacy of the work. In the present case turning the ignition key was part of Mr Maloney's endeavours to start a motor vehicle which had broken down in the course of a journey, bringing into play the observation of Menzies J (at 101) in The Government Insurance Office of New South Wales v King that the case was - " ... quite different from one where a car breaks down in traffic and attempts are then made to get it going again. In such a case, the attempts to start it might well, on the view I have taken, be regarded as part of the use of the car." 13 The line between doing work on a motor vehicle and using it can be difficult to draw, but a narrow scope of "use" in the policy does not sit well with the exception to the exclusion, which indicates that loading or unloading is regarded as use of a vehicle. This reminds of Government Insurance Office (New South Wales) v R J Green v Lloyd Pty Ltd (1955) 114 CLR 437, in which it was so held. Windeyer J said in that case (at 446-7) that "[a]ny use that is not utterly foreign to its character as a motor vehicle is, I consider, covered by the words [use of a motor vehicle]". In Dickinson v Motor Vehicle Insurance Trust (1987) 163 CLR 500 the occupation of a motor vehicle by children as passengers while it was stationary was held to be a use of the vehicle, and it was said (at 505) that use for the purposes of the legislation "extends to everything that fairly falls within the conception of the use of a motor vehicle and may include a use that does not involve locomotion". The width of the conception caused the legislature to confine it by the Motor Accidents Amendment Act 1995, see Allianz Australia Insurance Ltd v GSF Australia Ltd (2005) 215 ALR 385 esp at [80]-[81]. It remains unconfined in the policy. 14 In my view, turning the ignition key as part of attempting to restart the broken down Landcruiser in the course of a journey was, while not driving it, using it within exclusion 1.b. Mr Kull's claim arose out of that use. 15 Mr Maloney is therefore not entitled to indemnity under Policy 9.

Orders 16 I propose the orders - 1. Appeal and cross-appeal allowed. 2. Set aside the verdict for the plaintiff against the defendant for $178,788 and in lieu thereof verdict for $118,788 to take effect on 29 November 2004. 3. Set aside the order that the cross-defendant indemnify the defendant and the order that it pay the defendant's costs and the costs payable by him to the plaintiff and in lieu thereof dismiss the cross-claim with costs. 4. Appellant and cross-appellant pay one half of the costs of the first respondent/first cross-respondent; second respondent pay the costs of the appellant and have a certificate under the Suitors Fund Act if otherwise eligible. 17 HODGSON JA: On 29 November 2004, Twigg ADCJ gave his decision in proceedings in which the first respondent (Mr. Kull) sued the second respondent (Mr. Maloney) for damages for personal injury, and Mr. Maloney cross-claimed against the appellant (AMP) seeking indemnity in respect of any verdict and costs recovered by Mr. Kull in the proceedings. The primary judge gave a verdict for Mr. Kull in the sum of $178,788.00, and ordered Mr. Maloney to pay Mr. Kull's costs; and found for Mr. Maloney on the cross-claim, ordering that AMP indemnify him for the sum of $178,788.00 and pay his costs of the proceedings, including costs payable by him to Mr. Kull. 18 AMP appeals to this Court from those orders; and Mr. Maloney has put on a cross-appeal challenging the orders made against him.

CIRCUMSTANCES 19 Mr. Kull was born in 1943. At the time of the accident giving rise to the proceedings, he was living at Mittagong. Prior to 1980, he had conducted a transport and mechanical repair business with his brother. After 1980, Mr. Kull's brother continued to own and conduct the transport yard and Mr. Kull lived in a caravan on the site. Between 1980 and the date of the accident, Mr. Kull did some mechanical repairs, with some part-time driving and some selling of trucks. 20 On the evening of 15 February 2000, at about 10.00pm or 10.30pm, Mr. Kull was at home in his caravan, drinking a beer, when he heard a continuous clicking noise coming from outside his caravan. He walked through the transport yard to the front gate onto the road, where he saw two motor vehicles - a Toyota Land Cruiser belonging to Mr. Maloney, and a Nissan FW belonging to a Mr. Ireland - parked nose to nose with their bonnets open and jumper leads joining the two vehicles, apparently to re-charge a battery. Both men were known to Mr. Kull. 21 At some earlier time, Mr. Maloney's vehicle had broken down adjacent to the property where Mr. Kull's caravan stood. When Mr. Kull arrived, it still would not start. Mr. Kull told Mr. Maloney about a fault in Land Cruiser circuits and offered the advice that the fault could be fixed by moving the fan belt a millimetre. Mr. Maloney indicated acceptance of that advice. Mr. Kull then leant under the bonnet and put his right hand on the fan belt in order to make the adjustment. Mr. Kull was standing alongside the vehicle on the driver's side, and Mr. Maloney was also standing on the same side. To effect the operation proposed by Mr. Kull, it was not necessary to start up the engine, but only to re-position the fan belt. 22 While the bonnet was still up and the jumper leads still in place, Mr. Maloney turned the ignition key, located on the steering column, while he was still standing outside the Land Cruiser. He did this without warning, and without any request from Mr. Kull either to take or not to take that action. As a result, the fan belt moved and Mr. Kull's right hand became jammed in the fan belt mechanism. The first three fingers of Mr. Kull's right hand were seriously injured, requiring partial amputation of the index finger.

STATUTORY PROVISIONS 23 The case requires reference to certain provisions of the Motor Accidents Compensation Act 1999 (NSW) (the Act). 24 The definitions in s.3 of the Act include the following definitions of "driver", "injury", "motor accident" and "use or operation": driver means a person driving a motor vehicle, and includes: (a) a person riding and operating a motor cycle, and (b) a person for the time being in charge of a motor vehicle.

injury: (a) means personal or bodily injury caused by the fault of the owner or driver of a motor vehicle in the use or operation of the vehicle if, and only if, the injury is a result of and is caused during: (i) the driving of the vehicle, or (ii) a collision, or action taken to avoid a collision, with the vehicle, or (iii) the vehicle's running out of control, or (iv) such use or operation by a defect in the vehicle, and (b) includes: (i) pre-natal injury, and (ii) psychological or psychiatric injury, and (iii) damage to artificial members, eyes or teeth, crutches or other aids or spectacle glasses, and injured person means a person who suffers such an injury.

motor accident means an accident or incident caused by the fault of the owner or driver of a motor vehicle in the use or operation of the vehicle which causes the death of or injury to a person.

use or operation of a motor vehicle includes: (a) the maintenance or parking of the vehicle, or (b) in the case of a motor vehicle that is not a trailer - the use or operation of a trailer attached to the motor vehicle and a trailer running out of control having become detached from the motor vehicle towing it, or (c) in the case of a motor vehicle that is a tow truck - the use or operation of an uninsured motor vehicle that is being towed or carried by the tow truck. 25 Section 8 and 10 of the Act provide as follows: 8 Offence of using uninsured motor vehicle on road (1) A person who: (a) uses a motor vehicle that is not an insured motor vehicle on a road, or (b) causes or permits another person to use such a motor vehicle on a road, is guilty of an offence.

(2) It is a defence to proceedings for an offence against this section if the defendant establishes that at the time the motor vehicle was used on the road the defendant had reasonable grounds for believing and did in fact believe that the motor vehicle was an insured motor vehicle.

10 Third-party policies A third-party policy under this Act is a policy that is in the following terms: Third-party Policy The insurer insures the owner of the motor vehicle and any other person who at any time drives the vehicle (whether or not with the consent of the owner) against liability in respect of the death of or injury to a person caused by the fault of the owner or driver of the vehicle: (a) if the motor vehicle is not one to which paragraph (b) applies - in the use or operation of the vehicle in any part of the Commonwealth (whether or not on a road), or (b) if the motor vehicle is subject to an unregistered vehicle permit under the Road Transport (Vehicle Registration) Act 1997 - in the use or operation of the vehicle on any road in any part of the Commonwealth. In this policy, words and expressions have the same meanings as in the Motor Accidents Compensation Act 1999. 26 Mr. Maloney sought to place some reliance on s.45(1) of the Insurance Contracts Act 1984 (Cth) which provides as follows: 45(1) Where a provision included in a contract of general insurance has the effect of limiting or excluding the liability of the insurer under the contract by reason that the insured has entered into some other contract of insurance, not being a contract required to be effected by or under a law, including a law of a State or Territory, the provision is void.

THE INSURANCE POLICIES 27 Mr. Maloney claimed indemnity from AMP under two policies included in a Farm Insurance Contract which incorporated a number of different policies. The two relevant policies were Policy 8 (Motor Vehicles - Farm Vehicles) and Policy 9 (Public Liability). Policy 8 was expressed to cover "the Farm Vehicles in the Schedule", of which there were nine, namely three tractors, two bailers, two rakes, a slasher and a plough. Section A1 of the policy covered loss or damage to each Farm Vehicle. Section A2 covered property and accidental bodily injury liability, and Section A3 covered certain law costs. 28 In relation to accidental bodily injury, there was no insurance cover unless the injury was "caused by or through or arising out of the use of the Vehicle other than in circumstances for which insurance is required by law under a compulsory statutory insurance scheme". 29 Sections A4 and A6 of Policy 8 were in the following terms: SECTION A4 - USING OTHER MOTOR VEHICLES If you are using a motor vehicle other than the Vehicle and providing the Vehicle is NOT then in use, we will insure you against any or loss arising only under Sections A2 and A3 of this Policy to the limit only and in accordance with the provisions as set out in those Sections. The cover in this Section extends only to one substitute motor vehicle and is subject to the terms and conditions generally of this Policy.

SECTION A6 - REPLACEMENT VEHICLE COVER If you sell the Vehicle and replace it with another motor vehicle, we will extend cover to you as provided by Sections A1 and A2 of this Policy to the extent that the replacement motor vehicle will be and become the Vehicle provided that: a. you notify us in writing as to full details of the replacement motor vehicle within fourteen days of acquiring it; b. you pay to us any additional premium which we require within fourteen days of being notified as to the amount. 30 Policy 9 covered certain legal liability for bodily injury, with exclusions including exclusion 1, which was in the following terms: We shall NOT pay for any claims: 1. Arising directly or indirectly out of or caused by or in connection with: a. the use of any lift, elevators, escalator, aircraft or aerial device in your physical or legal control or used in work undertaken by you or on your behalf; b. the use of any Vehicle: i. in respect of which insurance is required by any legislation relating to the registration of motor vehicles; ii. which is otherwise insured by a person other than you in respect of the same liability; This Exclusion 1.b. shall not apply to any claim caused by or from the delivery or collection of goods to or from any Vehicle where the injury or damage occurs beyond the limits of any roadway or arises out of the loading or unloading of or the delivery or collection of goods to or from any Vehicle used in work undertaken by you or on your behalf but which is not in your physical or legal control; c. the ownership, possession or use by you or on your behalf of any watercraft while afloat, aircraft or aerial device. 31 In relation to these policies, there were the following agreed facts: RE POLICY 8 1. That Vehicle PMM-009 was, at the time of Mr. Kull's accident, being used in connection with the occupation or business of Mr. Maloney. 2. That the Vehicles listed on the Schedule to Policy 8 were not in use at the time of Mr. Kull's accident.

RE POLICY 9 3. Subject to the argument that there is no indemnity because Mr. Kull's accident is a motor accident, AMP concedes that, BUT FOR EXCLUSION 1b, the defendant is entitled to indemnity.

DECISION OF PRIMARY JUDGE 32 A central question before the primary judge was whether the injury in respect of which Mr. Kull claimed damages was an "injury " within the Act: if it was, then it was common ground that Mr. Kull had failed to comply with the requirements of that Act, so that the proceedings must fail. Then, there were the ordinary issues of whether Mr. Kull established that his injury was caused by the negligence of Mr. Maloney, whether he was guilty of contributory negligence, and the quantum of damages. Finally, there was the question of whether Mr. Maloney was entitled to an indemnity under either Policy 8 or Policy 9. 33 Neither Mr. Maloney nor Mr. Ireland gave evidence, although they were available to do so. 34 The primary judge was unable to determine what Mr. Maloney's intention was in turning the ignition on, that is, whether he was intending to drive or was testing the repair. The judge was left in doubt as to when the repairs to the vehicle had been completed, that is, whether the vehicle was in the process of being repaired at the time when Mr. Maloney turned the ignition on or whether repairs had been completed. He was unable to conclude that the engine started and "ran". When Mr. Kull's hand became jammed in the fan belt, Mr. Kull called to Mr. Maloney to turn the engine off. 35 As to whether there was an injury within the meaning of the Act, the primary judge held that, although Mr. Maloney was the owner and driver of the Land Cruiser, his actions did not amount to driving or attempting to drive it; and he held there was no collision. Accordingly, the injury did not fall within either par.(i) or par.(ii) of the definition of "injury" in s.3 of the Act; and accordingly the Act did not apply. 36 On the question of negligence, the primary judge found that Mr. Kull's injury was caused by the negligence of Mr. Maloney who, without warning Mr. Kull, turned the ignition key to test if the jamming of the fan belt had not been freed by Mr. Kull's actions. (Mr. Kull was not in fact freeing a jammed fan belt, but that does not matter.) He was unable to find any contributory negligence by Mr. Kull. He held it was not negligence not to have asked Mr. Maloney not to interfere with the mechanism of the vehicle: Mr. Kull was entitled to expect that Mr. Maloney would remain standing alongside the vehicle until he had completed the repair, and removed his body entirely from under the bonnet. 37 As regards the cross-claim against AMP, the primary judge held that Mr. Maloney was entitled to an indemnity under Policy 8. He held that because the injury was not an injury under the Act, the vehicle was being used other than in circumstances for which insurance was required by law under a compulsory insurance scheme. In circumstances where the vehicles in the Schedule were not being used, the judge held that the Land Cruiser was "a motor vehicle other than the Vehicle" within s.A4 of Policy 8. 38 Having found that Mr. Maloney was entitled to an indemnity under Policy 8, he made no findings in relation to Policy 9. 39 As regards damages, the primary judge found out-of-pocket expenses to be $135.00 and non-economic loss to be $78,653.00 including interest. No challenge is made to these elements. 40 In relation to economic loss, Mr. Kull gave no evidence in chief as to his pre-accident earnings. In cross-examination, he agreed that his taxable income, as shown in his tax returns for the years ended June 1998 and 1999, was $4,000.00: however, these tax returns were not put into evidence. Evidence was given in Mr. Kull's case by two witnesses concerning amounts paid to Mr. Kull for maintaining motor vehicles: a Dr. Mayman estimated that he paid Mr. Kull between $10,000.00 and $12,000.00 per year in the five years preceding the accident to service and repair large farm vehicles, such work costing him since the accident up to $20,000.00 per year; and a Mr. McMurray, a haulage contractor, estimated that in the five years preceding the accident he paid Mr. Kull an average of $20,000.00 per year. The primary judge estimated Mr. Kull's pre-accident earning capacity as: declared income $8,000.00; casual repairs (gross) $35,000.00; sub-total $43,000.00; less expenses, tax and penalties $25,000.00; giving $18,000.00 or about $320.00 net per week. He assessed Mr. Kull's past economic loss for 250 weeks at $320.00 per week, giving $80,000.00. 41 As for future economic loss, the judge considered Mr. Kull may have continued to do mechanical work on heavy vehicles of local citizens for many years beyond the age of 65; but that his willingness to overcome his injury meant that he might have some capacity to earn in other occupations. Using an earning capacity of $320.00 per week, mitigated by the possibility of other income, the judge awarded Mr. Kull a buffer of $20,000.00 for future economic loss.

ISSUES ON APPEAL 42 AMP contended that the Act applied, so that Mr. Kull's proceedings should have failed. AMP also contended that there should have been a reduction of damages for contributory negligence, and that the primary judge erred in assessment of economic loss. AMP was supported in these contentions by Mr. Maloney. 43 AMP also contended that the primary judge erred in finding for Mr. Maloney on Policy 8. Mr. Maloney contended that the primary judge was correct on this, and also submitted that he was entitled to an indemnity under Policy 9. 44 I will consider in turn the following issues: the application of the Act; contributory negligence; Policy 8; Policy 9; and economic loss.

APPLICATION OF THE ACT Submissions 45 Mr. Russell SC for AMP submitted that the fault of Mr. Maloney was "in the use or operation of the vehicle" within the definition of "injury" in the Act. The case of Government Insurance Office of NSW v. King (1960) 104 CLR 93, in which a distinction was drawn between use of a motor vehicle on the one hand, and putting a motor vehicle in order for subsequent use on the other, concerned different legislation: and even if activating the starter motor was not use of the motor vehicle, it was plainly operation of the motor vehicle, and in any event was within the extended definition of "use or operation" in the Act. 46 Mr. Russell also submitted that the injury was a result of and caused during the driving of the vehicle. One can be the driver of a motor vehicle even if one is not in the driver's seat of the vehicle (Ricketts v. Laws (1988) 14 NSWLR 311) and even if one merely activates the starter motor from outside the vehicle (Shortland County Council v. Government Insurance Office of NSW [1973] 2 NSWLR 257, Mercantile Mutual Insurance (Aust) Ltd. v. AAMI Ltd. [1999] NSWCA 200, 29 MVR 393 at [22], AMP General Insurance Ltd. v. Maguire [2004] NSWCA 64, 59 NSWLR 580). Mr. Russell submitted that the driving of a vehicle commences when one prepares to start the vehicle, even before activating the starter motor: Insurance Commissioner of Western Australia v. Container Handlers Pty. Ltd. [2004] HCA 24, 218 CLR 89 at [153]. He submitted it was not necessary that the vehicle be moving: QBE Insurance (Aust) Ltd. v. Smith [2005] NSWCA 130. In this case, if the accident had not occurred, Mr. Maloney could have proceeded immediately to drive away. 47 Alternatively, Mr. Russell submitted, the injury was a result of and caused during a collision with the vehicle, namely the collision between Mr. Kull's hand and the fan belt mechanism.

Decision 48 It is common ground that the injury to Mr. Kull was caused by the fault of the owner of the relevant motor vehicle, that is, Mr. Maloney. In my opinion, the relevant fault was in the operation of the motor vehicle, because activation of the starter motor did involve operation of the motor vehicle. It is unnecessary to decide whether this would also amount to use of the motor vehicle, or whether it falls within the definition of "use or operation" because it was part of maintenance of the vehicle. 49 However, in my opinion the injury was plainly not a result of and caused during the driving of the motor vehicle. The motor vehicle was parked nose to nose with another motor vehicle, both with bonnets open, and attached by jumper leads. Activation of the starter motor occurred after Mr. Kull told Mr. Maloney that the fault in his motor vehicle could be fixed by moving the fan belt, and placed his hand on the fan belt to make the adjustment. Mr. Maloney was standing beside the door of the vehicle. In the absence of evidence from Mr. Maloney, it would have been wrong to infer in those circumstances that Mr. Maloney activated the motor as part of a process of setting off in the vehicle, and the primary judge did not do so. 50 The case is different from Shortland County Council and Maguire because in those cases the activation of the starter motor caused the motor vehicle to move, and in those circumstances it was reasonable to hold that the motor vehicle was driven. It is also different from QBE v. Smith, because in that case the motor vehicle was stationary because of a pause in the course of a continuous process of driving. 51 It may be, as suggested in Container Handlers at [153], that activating a starter motor with a view to setting off in a vehicle can be considered driving, or at least the commencement of driving. However, this is not what happened in this case. Although the primary judge could not draw a definite conclusion as to what Mr. Maloney's intention was, it seems clear that at least part of his intention was to check if the motor would now start. Even if he had in mind getting into the driver's seat and setting off, this could not happen until the jumper leads had been removed and the bonnet shut. It is not clear whether or not the jumper leads could have been safely removed with the engine running, but it does not matter. In my opinion, in the circumstances of this case, the operation of the starter motor was too far removed from actually driving off in the vehicle to count as being part of the driving of the vehicle. 52 The other question is whether the injury was the result of and caused during a collision with the vehicle. In my opinion, to call the contact of Mr. Kull's hand with the fan belt mechanism "a collision with the vehicle" would be a significant departure from the natural meaning of the phrase: cf. Townsville Trade Waste Pty. Ltd. v. Commercial Union Insurance Co. of Australia Ltd. [1999] QCA 386, 29 MVR 503. The contact of a pedestrian with a stationary vehicle could possibly fall within that expression; and such a collision could be with an appendage to the vehicle, such as a wing mirror. But there at least has to be injury caused by an impact that can fairly be described as a collision with the vehicle, that is, an impact due to the mutual motion of whatever collides with the vehicle and the vehicle itself. A hand being drawn into a fan belt mechanism does not in my opinion amount to a collision of the hand, or the person whose hand it is, with the vehicle.

CONTRIBUTORY NEGLIGENCE Submissions 53 Mr. Russell submitted that, in cross-examination, Mr. Kull said he had found he had to be careful to make sure that an unqualified person did not turn on a motor when he had his hands on the motor working on it; and that on the night in question, he did not know where Mr. Maloney was when he had his hands in the engine bay. Mr. Russell submitted that a reasonable man in the position of Mr. Kull would have made sure that he either warned Mr. Maloney that he was about the put his hands inside the engine bay, or would have made sure that no-one was in a position to turn the engine on when Mr. Kull was working on it. Accordingly, Mr. Kull's damages should be reduced, Mr. Russell submitting that 50% was an appropriate figure.

Decision 54 In circumstances where Mr. Kull had said that the fault could be fixed by moving the fan belt and Mr. Maloney assented to this, and where Mr. Kull then set about doing this with Mr. Maloney standing nearby outside the vehicle, in my opinion Mr. Kull could reasonably expect that Mr. Maloney would not activate the starter motor, at least not without clear warning. Accordingly, I do not think the primary judge was in error in not finding contributory negligence.

POLICY 8 Submissions 55 Mr. Russell submitted that Policy 8 disclosed an intention that farm vehicles be covered; and the purpose of Section A4 of the policy was to provide for the situation where a farm vehicle specified in the Schedule was not in use, and a vehicle of a similar kind was being used in its place; for example, where a tractor had broken down and another tractor was borrowed. This was confirmed by the use of the expression "substitute vehicle". None of the vehicles in the Schedule was a road vehicle; and the Land Cruiser was not being used in place of any of the vehicles in the Schedule. 56 Mr. Russell also submitted that the Land Cruiser was not being used "other than in circumstances for which insurance was required by law under a compulsory statutory insurance scheme". The Land Cruiser was being used on a road, and s.8 of the Act made it an offence to use a motor vehicle that was not insured on a road.

Decision 57 Although Policy 8 is expressed to be for farm vehicles, and although the vehicles in the schedule did not include road vehicles, Section A4 in its terms simply refers to "using a motor vehicle other than the Vehicle", providing that the Vehicle is not then in use; the Vehicle meaning one of the vehicles in the Schedule. In my opinion, the use of the word "substitute vehicle" is insufficient to carry the requirement that the vehicle "other than" the Vehicle in the Schedule be of the same kind or used for the same purpose as the vehicle that is not in use. Such a requirement would raise difficult questions of degree which are not addressed in the provisions. The wording of Section A4 is quite different from that of Section A6, where an intention is disclosed that a vehicle be replaced; and even there, the replacing vehicle does not have to be the same kind. 58 At worst for Mr. Maloney, there is ambiguity here; and in circumstances of ambiguity, the contra proferentem principle can apply: Darlington Futures Ltd. v. Delco Australia Pty. Ltd. (1986) 161 CLR 500. 59 In my opinion also, Mr. Maloney's Land Cruiser was not being used in circumstances for which insurance was required under a compulsory insurance scheme. Insurance is required for use of a motor vehicle on a road; and in my opinion repair of a motor vehicle, and activation of its starter motor in the course of repair and not as the commencement of driving of the motor vehicle, is not use of a motor vehicle on a road within s.8 of the Motor Accidents Compensation Act. In that Act, "use", as distinct from "use or operation", is not defined; and in relation to use, the distinction drawn in King between use of a motor vehicle and preparation for use is apposite. 60 Accordingly, in my opinion Mr. Maloney is entitled to indemnity under Policy 8.

POLICY 9 Submissions 61 Mr. Russell submitted that the words "in respect of which insurance is required by any legislation relating to the registration of motor vehicles" applied to the word "Vehicle", not "use" or "any claims": it is not a normal use of language to refer to "use" or "any claims" being insured, and this was confirmed by the reference to "otherwise insured" in the following paragraph. The Land Cruiser, being a vehicle used on the road, was a vehicle in respect of which insurance was required by legislation relating to the registration of motor vehicles. 62 Mr. Watson SC for Mr. Maloney submitted that the clear intention of Policy 9, like Policy 8, was to provide cover against claims not covered by compulsory motor vehicle insurance: cf. HIH Casualty & General Insurance Ltd. v. Pluim Constructions Pty. Ltd. [2000] NSWCA 281 at [75]-[78]. Mr. Watson also submitted that s.45 of the Insurance Contracts Act prevented liability being excluded.

Decision 63 In my opinion, s.45 of the Insurance Contracts Act can have no application: Policy 9 contains no provision having the effect of limiting or excluding liability by reason of the insured having entered into some other contract of insurance. 64 I agree that it is reasonable to think the intention of the policy was to cover the insured against claims arising from the use of a motor vehicle which claims were not covered by compulsory motor vehicle insurance. I agree also, as suggested by Pluim, that the construction of such a clause should not be governed by the terms of the legislation dealing with compulsory insurance that happens to be in force in New South Wales at any particular time. However, it is necessary to construe the words actually used, and I do not think that the terms of the applicable legislation are irrelevant. 65 Registration is required for a vehicle used on a road or road-related area, with certain exceptions: Road Traffic (Vehicle Registration) Act 1997, s.18. Insurance in terms of the Motor Accidents Compensation Act is required to obtain registration: Road Transport (Vehicle Registration) Regulation 1998, reg.11. As we have seen, compulsory insurance is required in respect of vehicles used on roads: s.8 of the Act. 66 I do not think the wording of Policy 9 is such that one can apply "in respect of" to claims. However, those words could apply either to "use" or "Vehicle". It is closer to the inferred intention of the provision that it apply to "use"; and there being some ambiguity here also, this conclusion is supported by the contra proferentem approach. 67 In my opinion, the claim in this case does not arise directly out of the use of the Land Cruiser in respect of which insurance is required for registration, nor do I think it was caused by such use: this follows from what I said in relation to Policy 8. There may be some question whether it arises "indirectly" from such use, or is caused "in connection with" such use. The relevant use would be the use by Mr. Maloney of the Land Cruiser before it broke down. However, even if the claim can be considered as arising indirectly from, or in connection with, the breaking down of the vehicle, in my opinion it did not arise indirectly from the use preceding the breaking down, nor was it caused in connection with that prior use. Again, in so far as there is any ambiguity, the contra proferentem principle would support this result. 68 Accordingly, Mr. Maloney is entitled to a indemnity under Policy 9 as well as Policy 8.

DAMAGES Submissions 69 Mr. Russell submitted there was a number of errors in the judgment of the primary judge concerning economic loss. The income declared in the tax returns was $4,000.00, not $8,000.00. The other income totalled $30,000.00 or $32,000.00, not $35,000.00. The primary judge did not justify adding this amount to the declared amount. Furthermore, Mr. Russell submitted, Mr. Kull had said in evidence that the $4,000.00 shown in his tax return was correct; and there was no evidence as to how much of $30,000.00 or $32,000.00 was covered by parts or other matters in respect of Mr. Kull incurred expense. Furthemore, there was evidence that Mr. Kull had a residual capacity, and was earning money from helping in his son's business, this not being allowed for at all in respect of past economic loss. 70 Mr. Watson supported these submissions. He referred to what was said in Giorginis v. Kastrati (1988) 48 SASR 371 at 375-6, per von Doussa J: But cases where the damages are, by the nature of the loss, difficult to calculate, are to be distinguished from cases, like the present, where precise calculation is rendered impossible, and even broad assessment difficult, not by the nature of the loss, but by a paucity of evidence where it is clear that it lies within the power of the plaintiff to produce business and taxation records usually maintained by people in employment or business or other evidence which could clarify the extent of his income.

Where the plaintiff gives evidence that his income tax returns do not disclose the full extent of his earnings, a court will scrutinise the plaintiff's evidence with special care. The want of honest compliance with the taxation laws is a matter that will reflect adversely on the plaintiffs credit and may lead to the rejection of his evidence as untrustworthy, at least about his earnings. In such a case the plaintiff has only himself to blame if damages are assessed in line with the pre-accident income actually disclosed to the revenue authority. However, where the fact of the receipt of other income is proved, then, in my view, the plaintiff is entitled to have that exercise of his earning capacity brought to account, although subject to reduction for the income tax which should have been paid, and subject to the question whether the plaintiff would have continued to exercise that capacity had he been required to pay tax on the additional income: see McIntosh v Williams [1976] 2 NSWLR 237 at 244, 252. Melino v Ken Eustice Motors (North Road) Pty Ltd (1984) 111 LSJS 296 at 308-310 is an example of a case where undisclosed income was proved and brought to account.

A failure to disclose income as required by s 161 of the Income Tax Assessment Act 1936, constitutes an offence which may attract heavy penalties: see s 223 of the Income Tax Assessment Act and ss 8C, 8K and 8P of the Taxation Administration Act 1953. Where a tax fraud or evasion of this kind is disclosed in evidence, it is the court's duty to draw the evidence to the attention of the executive branch of government for such action as may be appropriate: Petera Pty Ltd v EAJ Pty Ltd (1984) 7 FCR 375. A court should not, generally speaking, make a finding favourable to the plaintiff in a personal injury case that his income is otherwise than he has disclosed to the revenue authority unless the plaintiff admits the non- disclosure. A fortiori, such a finding should not be made where the plaintiff denies that he has failed to properly disclose his income. Unless the plaintiff admits the falsity of his income tax returns the court should not speculate in his favour, for example that his pre-accident earnings were probably higher than he has disclosed. Rather, the court should adopt the income figures actually disclosed and base the assessment of damages on them. Again, if this results in a low assessment, that is the consequence of the plaintiff adhering to the accuracy of his income tax returns.

That passage was emphatically endorsed by King CJ and Legoe J at 379. 71 Mr. Watson also pointed out that the Counsel for Mr. Kull below had asked for past economic loss calculated at $100.00 per week, and later agreed with submissions for the other parties that it was appropriate to provide a buffer for past and future economic loss, submitting however that their suggested figure of $10,000.00 to $15,000.00 was at the bottom of the range. 72 Ms. Norton SC for Mr. Kull submitted that the admission made by Mr. Kull was in respect of a figure in his income tax return which was probably taxable income, and his acceptance of that figure in effect was a concession that his accountant had worked correctly from the papers given to him. It had to be understood along with his evidence that he was paid for much of his work in cash. Furthermore, there was no attempt in the cross-examination to link the figure of $4,000.00 to net income before deductions such as work-related deductions that were of value for living, superannuation, losses on investments, charitable donations, etc. Ms. Norton also referred to Trajkovski v. Ken's Painting & Decorating Services Pty. Ltd. [2002] NSWSC 568 (Dunford J) at [51]-[52], as follows: 51 … Giorginis v Kastrati was referred to with approval by the Court of Appeal in Brear v James Hardie & Coy Pty Ltd [2000] NSWCA 352, 50 NSWLR 388 at [52] but only to the extent that the trial judge was entitled to take into account the fact that the appellant had called no evidence about matters (relating to past income) upon which it might have been expected that he or witnesses called by him might cast light.

52 In these circumstances, where I consider it likely that the plaintiff had some income beyond that disclosed in his taxation returns, although he has not directly admitted submitting false returns, I assess the plaintiff's loss of income by reference to what has been disclosed together with something for the additional income discounted for the tax that should have been paid on it; but because of the paucity of the evidence, the assessment must be conservative and not over generous. As there has been no direct admission of the lodging of the false taxation returns no question arises about referring the matter to the relevant authorities. I reject the submission that in a case such as this it is appropriate to take Average Weekly Earnings or any similar table as a guide. 73 Ms. Norton also submitted that the primary judge was not incorrect in allowing for economic loss on the basis of evidence from customers as to what they had paid him.

Decision 74 In my opinion, the primary judge did make the errors identified by Mr. Russell. I agree with what was said in Giorginis v. Kastrati. I do not think the matters referred to by Ms. Norton could realistically indicate that Mr. Kull declared a net income substantially in excess of $4,000.00, which was reduced to that figure by deductions of the kind referred to. In my opinion also, error is indicated in that Mr. Kull asked for past economic loss at the rate of $100.00 per week: in those circumstances, the adoption of the figure of $320.00 by the primary judge, without any indication that he proposed to go well beyond the figure requested by Mr. Kull, indicates a denial of procedural fairness. 75 The onus is squarely on a plaintiff to prove economic loss, and the information concerning economic loss and documents relevant to it are within the knowledge and possession of the plaintiff, so the lack of clarity on such matters is primarily the responsibility of the plaintiff. In this case, however, the other parties had access to the income tax returns and chose not to tender them; so they too bear some responsibility for the circumstance that those documents were not in evidence. The lack of information about actual receipts by the plaintiff from his working for his son is entirely the responsibility of the plaintiff. 76 In those circumstances, in my opinion the award for economic loss must be set aside. Precision is not possible, and I would propose an award of $20,000.00 for past economic loss (an average of about $80.00 per week) and a $20,000.00 buffer for future economic loss, so that the judgment will be reduced by $60,000.00.

ORDERS 77 In my opinion, the following orders should be made: 1. Appeal and cross-appeal allowed to the extent of substituting, for the verdict of $178,788.00 for Mr. Kull against Mr. Maloney, a verdict of $118,788.00 to take effect on 29 November 2004. 2. Appeal and cross-appeal otherwise dismissed. 3. Order that AMP pay one-half of Mr. Maloney's costs of the appeal and cross-appeal, and that otherwise each party bear its own costs of the appeal, with Mr. Kull to have a certificate under the Suitors Fund Act in respect of his own costs if otherwise eligible. 78 SANTOW JA: I agree with Hodgson JA. This is save as to his conclusion that Mr Maloney is entitled to an indemnity under Policy 8 where I agree with Giles JA. 79 Policy 9, in my opinion, applies. The exclusion should in my opinion be construed to cover the composite expression "the use of any Vehicle". There was in my opinion no such use here, for the reasons stated by Hodgson JA. It follows that I agree with the orders he proposes. **********

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