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Court of Appeal of the Australian Capital Territory

Date: 29 February 2012

IN THE SUPREME COURT OF THE ) No. ACTCA 4 of 2011

) No. SC 691 of 2010

AUSTRALIAN CAPITAL TERRITORY )

)

COURT OF APPEAL )

ON APPEAL FROM A MASTER OF THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

BETWEEN: Mark Haureliuk

Appellant

AND: Boen James Furler

Respondent

ORDER

Judges: Refshauge, Burns and Besanko JJ

Date: 29 February 2012

Place: Canberra

THE COURT ORDERS THAT:

1. The appeal be dismissed.

2. That the appellant pay the respondent’s costs of the appeal.

IN THE SUPREME COURT OF THE ) No. ACTCA 4 of 2011

) No. SC 691 of 2010

AUSTRALIAN CAPITAL TERRITORY )

)

COURT OF APPEAL )

ON APPEAL FROM A MASTER OF THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

BETWEEN: Mark Haureliuk

Appellant

AND: Boen James Furler

Respondent

Judges: Refshauge, Burns and Besanko JJ

Date: 29 February 2012

Place: Canberra

REASONS FOR JUDGMENT

THE COURT

1. This is an appeal from orders made by the Master of this Court. The appellant is Mr Mark Haureliuk and the respondent is Mr Boen James Furler. The appellant brought an originating application against the respondent in which he sought the following orders:

2. A declaration that, on the proper construction of the Road Transport (Third-Party Insurance) Act 2008 and, in particular, section 144(2) of the Road Transport (Third-Party Insurance) Act 2008 and clause 27 of the Road Transport (Third-Party) Regulation 2008, where a mandatory final offer is accepted and the amount of the mandatory final offer is more than $30,000 but not more than $50,000.00, excluding any amount of the offer that is identified as being for pain and suffering, costs (including disbursements) must not exceed $5,000.00.

3. Any other orders that the Court considers appropriate.

4. The Master heard the originating application and his Honour ordered that it be dismissed. The appellant claims that he erred in doing so and that he ought to have made the declaration which the appellant sought.

5. The appeal raises an issue as to the proper construction of a section in the Road Transport (Third-Party Insurance) Act 2008 (ACT) (“the Act”) and a regulation in the Road Transport (Third-Party Insurance) Regulation 2008 (ACT) (“the Regulation”). The Facts

6. The facts are straightforward and not in dispute.

7. The respondent was a claimant against the appellant in relation to a “motor accident claim” within s 77 of the Act. On 22 April 2009 the respondent served a notice of claim on the appellant pursuant to s 84 of the Act in relation to his motor accident claim. By letter dated 30 July 2010 the appellant, through his solicitors, served a “mandatory final offer” on the respondent. The offer was in the following terms: In accordance with s141 of the Road Transport (Third Party Insurance) Act 2008, and with orders made by His Honour the Master for the parties to exchange mandatory final orders by Friday, 30 July 2010, we are instructed to offer the plaintiff the sum of $85,000.00, plus costs in accordance with the Road Transport (Third Party Insurance) Act 2008 and Regulations, broken down as follows: 1. $40,000.00 for pain and suffering (general damages); 2. $45,000.00 for the balance of the plaintiff’s claim (inclusive of payments made on behalf of the claimant by NRMA in the sum of $2,787.60, and Medicare Payback in the sum of $242.45). We confirm that this offer may only be accepted in writing, within 14 days, in accordance with s143(2) of the Road Transport (Third Party Insurance) Act 2008.

8. The term “mandatory final offer” is defined in s 141 of the Act, which provides as follows: 141 Mandatory final offers (1) This section applies if, for a motor accident claim— (a) the compulsory conference has been dispensed with under section 137 (Compulsory conference may be dispensed with); or (b) the motor accident claim is not settled at the compulsory conference. (2) The claimant and the respondent for the motor accident claim must exchange written final offers (each of which is a mandatory final offer). (3) However, if a respondent denies liability altogether, the respondent must give the claimant a written notice of denial (a mandatory final notice). (4) If the respondent gives the claimant a mandatory final notice, for this Act, the respondent is taken to have given the claimant a mandatory final offer of $0. (5) A mandatory final offer must identify how much of the offer is for pain and suffering. Note 1 If a form is approved under s 276 for a mandatory final offer or a mandatory final notice, the form must be used. Note 2 A mandatory final offer for $50 000 or less must be exclusive of any amount for costs (see s 144(1)).

9. On 13 August 2010, and before the respondent had instituted an action in the Court in relation to his motor accident claim, he (the respondent) accepted the appellant’s mandatory final offer.

10. A question then arose as to the respondent’s entitlement to costs. On 16 August 2010 the respondent, through his solicitors, wrote to the appellant’s solicitors claiming the sum of $26,950 for legal costs including GST and the sum of $5,616.91 for disbursements. The appellant considered that, by reason of the provisions of the Act and the Regulation, the respondent was entitled to no more than $5,000 for legal costs. Through his solicitors the appellant wrote to the respondent’s solicitors in the following terms: In our view, based on the proper construction of the relevant provisions of the Road Transport (Third Party Insurance) Act 2008 and Road Transport (Third Party Insurance) Regulation 2008 there is a cap of $5,000 on legal costs in circumstances where the Mandatory Final Offer is less than $50,000 and more than $30,000, when the component relating to pain and suffering is excluded. In particular, we consider that regulation 27 must be construed so as to exclude from the amount of the Mandatory Final Offer any amount relating to pain and suffering. Accordingly, we are instructed to offer your client the sum of $5,000.00 for legal costs. This offer remains open for 7 days, after which time it will be withdrawn.

11. The appellant considered that the matter was governed by s 144 of the Act and regulation 27 of the Regulation. Those legislative provisions are in the following terms: 144 Working out costs for mandatory final offers (1) A mandatory final offer for $50 000 or less must be exclusive of any amount for costs. (2) If a mandatory final offer is for $50 000 or less but for more than $30 000, and is accepted, costs must be worked out and paid in the way prescribed by regulation. (3) If a mandatory final offer is for $30 000 or less, and is accepted, costs must be $0. 27 Costs—mandatory final offer accepted—Act, s 144 (2) If a mandatory final offer for more than $30 000 but not more than $50 000 is accepted, costs (including disbursements) must not exceed $5 000.

12. The appellant considered that, in determining the amount which the mandatory final offer “is for” within s 144(2), the amount identified in the offer for pain and suffering is to be excluded. In those circumstances the amount which the mandatory final offer was for was $45,000 and within the terms of s 144(2).

13. The respondent considered that the appellant’s interpretation of s 144 of the Act was not correct and that the amount identified for pain and suffering was not to be excluded in determining the amount the mandatory final offer was for. The mandatory final offer which the respondent accepted was for $85,000 and therefore outside the terms of s 144(2). He advised the appellant’s solicitors to that effect and that led to the appellant’s originating application for the declaration set out above. The Master’s Reasons

14. The Master set out the facts and the relevant statutory provisions, before discussing the relevant principles and the extrinsic material. He dismissed the appellant’s application, saying that he was of the view that the words of s 144 “mean what they say and are to be applied accordingly”. The Master’s reasoning was as follows. His Honour said that he was not satisfied that there had been what he called an “inadvertent omission” by the legislature or the drafter of the legislation. He said that he did not see anything inconsistent with the purpose of the legislation that different costs provisions might be applied to settlements before action from those which applied following an award of damages by a court. He said that he was “reinforced” in this conclusion by the fact that, on the face of it, there was nothing unclear or ambiguous about either s 144 or regulation 27 and that [b]oth the section and the regulation are clearly expressed, intelligible and capable of clear application.

15. The Master said that the circumstances surrounding the making of amendments to the Act, including to s 144 itself, were such that it was reasonable to assume that if there had been an inadvertent omission it would have been picked up and corrected during the amendment process. Finally, his Honour said that the plaintiff was asking the Court to insert words into a section in circumstances in which that was impermissible and he referred to the reasons for judgment of Spigelman CJ in R v Young (1999) 46 NSWLR 681 and Harrison v Melhem (2008) 72 NSWLR 380. The Construction Advanced by the Appellant

16. The appellant’s basic contention is that the expression “mandatory final offer … for $50,000 or less but for more than $30,000” in s 144(2) of the Act means the amount identified in the offer excluding the amount identified for pain and suffering. We leave to one side for the present the question whether the appellant’s construction involves reading words into the section or reading words down.

17. In support of this construction the appellant points to three matters. First he submits that the presence of s 141(5) – the need to identify how much of the offer is for pain or suffering – supports his construction.

18. Secondly, he submits that the operation of related sections in the Act supports the construction he advances. It is convenient to mention these sections at this point. Section 145 requires the parties to file their respective mandatory final offers in sealed envelopes with the court if a court proceeding is brought. The court must not read the offers until it has decided the claim, at which time it must have regard to the mandatory final offers if making a decision about costs. Sections 155 and 156 appear in pt 4.9 of the Act and those sections deal with the award of costs where a claim proceeds to hearing and the court awards an amount of damages below the amounts specified in the sections. The sections are in the following terms: 155 Costs—small awards of damages—generally (1) This section applies if a court awards $50 000 or less in damages in a proceeding (other than an appellate proceeding) based on a motor accident claim. Note Damages does not include damages for pain and suffering (see s (5)). (2) If the court awards $30 000 or less in damages, the court must apply the following principles: (a) if the amount awarded is less than the claimant’s mandatory final offer but more than the respondent’s mandatory final offer, no costs are to be awarded; (b) if the amount awarded is equal to, or more than, the claimant’s mandatory final offer, costs must be awarded to the claimant in the way prescribed by regulation as from the date on which the proceeding began (but no award is to be made for costs up to that date); (c) if the amount awarded is equal to, or less than, the respondent’s mandatory final offer, costs must be awarded to the respondent as prescribed by regulation. (3) If the court awards more than $30 000 but not more than $50 000 in damages, the court must apply the following principles: (a) if the amount awarded is less than the claimant’s mandatory final offer but more than the respondent’s mandatory final offer, costs must be awarded to the claimant in accordance with the Civil Law (Wrongs) Act 2002, chapter 14, up to the maximum amount prescribed by regulation or, if no amount is prescribed, $2 500; (b) if the amount awarded is equal to, or more than, the claimant’s mandatory final offer, costs must be awarded to the claimant as follows: (i) costs up to the date on which the proceeding began must be awarded in accordance with the Civil Law (Wrongs) Act 2002, chapter 14, up to the maximum amount prescribed by regulation or, if no amount is prescribed, $2 500; (ii) costs on or after the date on which the proceeding began must be awarded on an indemnity basis; (c) if the amount awarded is equal to, or less than, the respondent’s mandatory final offer, costs must be awarded as follows: (i) costs up to the date on which the proceeding began must be awarded to the claimant in accordance with the Civil Law (Wrongs) Act 2002, chapter 14, up to the maximum amount prescribed by regulation or, if no amount is prescribed, $2 500; (ii) costs on or after the date on which the proceeding began must be awarded to the respondent in accordance with the Civil Law (Wrongs) Act 2002, chapter 14. (4) This section is subject to section 156. (5) In this section: damages does not include damages for pain and suffering. 156 Costs—small awards of damages—exceptions (1) This section applies if a court awards $50 000 or less in damages in a proceeding (other than an appellate proceeding) based on a motor accident claim. Note Damages does not include damages for pain and suffering (see s (7)). (2) This section applies in addition to section 155. (3) The court may make an award of costs to compensate a party for costs resulting from a failure by another party to comply with a procedural obligation under this part. (4) The court must not award costs to a party related to the introduction of evidence by the party that is unnecessarily repetitive. Example If a claimant calls 2 or more expert witnesses from the same area of expertise to give evidence to substantially the same effect, and the claimant is entitled to costs under s 155, the court must only allow costs related to 1 of the expert witnesses. Note An example is part of the Act, is not exhaustive and may extend, but does not limit, the meaning of the provision in which it appears (see Legislation Act, s 126 and s 132). (5) 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 end 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. Note A compulsory conference may be dispensed with by agreement or by court order (see s 137). (6) If an award of damages is affected by factors that were not reasonably foreseeable by a party at the time of making the party’s mandatory final offer, the court may, if satisfied that it is just to do so, make an order for costs under section 155 (2) or (3) as if the reference to a mandatory final offer in the relevant subsection were a reference to a later offer made in the light of the factors that became apparent after the parties completed the exchange of mandatory final offers. Example If a claimant’s medical condition suddenly and unexpectedly deteriorates after the date of the mandatory final offers and the court makes a much higher award of damages than would have been reasonably expected at that date, the court may ignore the mandatory final offers and award costs on the basis of later offers of settlement. (7) In this section: damages does not include damages for pain and suffering.

19. The appellant referred to s 155(5) and s 156(7). The effect of those subsections is that for the purpose of performing the comparison required by, for example, s 155(2) or (3), that part of the award of damages for pain and suffering is to be excluded. The appellant submits that although s 155(3) does not expressly say that the mandatory final offer excludes the amount allowed for pain and suffering that must be so, otherwise the Court would not be comparing “like with like”. The appellant submits that not to exclude the amount allowed for pain and suffering from the mandatory final offer would give a distorted operation to ss 155 and 156. That seems to us to be clearly correct and we did not understand the respondent to dispute the proposition that, for the purposes of those sections, the amount offered for pain and suffering in the mandatory final offer is excluded. That conclusion means in turn that unless the appellant’s construction of s 144 is adopted, the mandatory final offer provisions operate differently depending on whether the issue arises at the pre-action stage or at the post-judgment stage. At the pre-action stage, the costs restrictions operate by reference to the whole amount in the offer whereas at the post-judgment stage they operate on the basis that the amount identified for pain and suffering is excluded. The appellant submits that the sections (that is, s 144 on the one hand and ss 155 or 156 on the other) were intended to operate in a similar fashion and will do so if his construction is adopted.

20. Thirdly, the appellant relies on the extrinsic material and contends that it strongly supports his construction of the section. Principles of Construction and Use of Extrinsic Material

21. The starting point is the Legislation Act 2001 (ACT). That Act provides that in working out the meaning of an Act, the Court is to prefer to any other interpretation, “the interpretation that would best achieve the purpose of the Act” and that is the case whether or not there is an express statement of the Act’s purpose (s 139). The exercise of “working out the meaning of an Act” means resolving an ambiguity, confirming or displacing the apparent meaning of the Act, finding the meaning of the Act when its apparent meaning leads to a result that is manifestly absurd or is unreasonable or finding the meaning of the Act in any other case (s 138). In performing the exercise of working out the meaning of an Act, the provisions of the Act must be read in the context of the Act as a whole (s 140). Section 141 provides that in working out the meaning of an Act, material not forming part of the Act may be considered in certain circumstances, and it provides for the matters to be taken into account in deciding if these circumstances exist, and the weight that material should be given. Section 142 provides a non-exhaustive list of the material which may be considered in working out the meaning of an Act or statutory instrument.

22. In Chugg v Pacific Dunlop Ltd (1990) 170 CLR 249 Dawson, Toohey and Gaudron JJ (at 261-262) noted the difference between an interpretation provision that said “a construction that would promote that purpose or object [of the Act] … shall be preferred to a construction that would not promote that purpose or object” (in that case the Interpretation of Legislation Act 1984 (Vic) s 35(a), see also Acts Interpretation Act 1901 (Cth) s 15AA) and a provision which was in terms of a construction which will “best achieve” the object of the Act. Their Honours said (at 262): The choice directed by s. 35(a) of the Interpretation of Legislation Act is not as to the construction which ‘will best achieve’ the object of the Act. Rather, it is a limited choice between ‘a construction that would promote that purpose or object [of the Act]’ and one ‘that would not promote that purpose or object’.

23. In Casey v Alcock (2009) 3 ACTLR 1 at 20–21 [103] Besanko J said: Subject to one qualification, s 139 of the Legislation Act can be described as the Territory’s equivalent of s 15AA of the Acts Interpretation Act 1901 (Cth). It is clear enough that under s 139 a Court can have regard to the purpose of a provision to determine if more than one construction of the provision is open, even though on its face the provision is not ambiguous. That follows from the definition of ‘working out the meaning of an Act’ (which is the exercise referred to in the section), which includes as part of the definition in s 138 ‘(b) confirming or displacing the apparent meaning of the Act’ and from the reasons for judgment of Dawson J in Mills v Meeking (1990) 169 CLR 214 at 235. Neither s 139 nor s 15AA of the Commonwealth Act authorises a court to rewrite legislation and the construction adopted must be one which is open having regard to the words of the legislation. The qualification referred to earlier is that the words in s 139 differ from those in s 15AA. Section 139 refers to an interpretation which would ‘best achieve’ the purpose of the provision, whereas s 15AA refers to preferring a construction that would promote the purpose or object underlying the provision to a construction that would not promote that purpose or object. It is not clear on the authorities whether the difference in the words used means that the sections have different effects: see Chugg v Pacific Dunlop Ltd (1990) 170 CLR 249 at 262 per Dawson, Toohey and Gaudron JJ; Pearce DC and Geddes RS, Statutory Interpretation in Australia (6thed, LexisNexis Butterworths, 2006) at 37–38 [2.15]. The important point is that the Court is not authorised to rewrite legislation.

24. We do not think the issue presented by this case is answered by deciding whether the Court is being asked to read down words in s 144(2) or to read the subsection as if there were additional words in it. Either way, we think the Court is being asked to proceed on the basis that there has been a legislative oversight or, as the Master called it, an inadvertent omission.

25. In Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297, Gibbs CJ (at 304–5) said that words in a statute were to be given their ordinary meaning unless that led to an irrational result, such that it could be concluded that the draftsman had made a mistake. The position was different, the Chief Justice said, in a case where there is an ambiguity; in such a case the Court could prefer the construction which avoids inconvenience or injustice. Stephen J (at 310–11) said the Court would be very slow to depart from the literal meaning. It would do so, however, if satisfied that the relevant provision was the result of a drafting error or, by analogy, the relevant provision was an anachronism. Mason and Wilson JJ (at 321) said that a Court may depart from the literal meaning of a statutory provision in: any situation in which for good reason the operation of the statute on a literal reading does not conform to the legislative intent as ascertained from the provisions of the statute, including the policy which may be discerned from the provisions of the statute, including the policy which may be discerned from those provisions. Those observations are made in a context where there are at least two competing interpretations reasonably open.

26. In Minister for Immigration and Citizenship v SZJGV (2009) 238 CLR 642, French CJ and Bell J adopted a construction of s 91R(3) of the Migration Act 1958 (Cth) which overcame an obvious drafting error and avoided an absurd result (at 653 [12]).

27. In R v Young (1999) 46 NSWLR 681, Spigelman CJ considered the circumstances in which a court might read words into a statutory provision. Spigelman CJ (at 686) said that it was not permissible to do so, although that did not prevent a court from reading a statutory provision as if it contained additional words. The Chief Justice referred with approval to the approach taken by Lord Diplock in Wentworth Securities v Jones [1980] AC 74 at 105–106 as follows: My Lords, I am not reluctant to adopt a purposive construction where to apply the literal meaning of the legislative language used would lead to results which would clearly defeat the purposes of the Act. But in doing so the task on which a court of justice is engaged remains one of construction; even where this involves reading into the Act words which are not expressly included in it. Kammins Ballrooms Co. Ltd. v. Zenith Investments (Torquay) Ltd. [1971] A.C. 850 provides an instance of this; but in that case the three conditions that must be fulfilled in order to justify this course were satisfied. First, it was possible to determine from a consideration of the provisions of the Act read as a whole precisely what the mischief was that it was the purpose of the Act to remedy; secondly, it was apparent that the draftsman and Parliament had by inadvertence overlooked, and so omitted to deal with, an eventuality that required to be dealt with if the purpose of the Act was to be achieved; and thirdly, it was possible to state with certainty what were the additional words that would have been inserted by the draftsman and approved by Parliament had their attention been drawn to the omission before the Bill passed into law. Unless this third condition is fulfilled any attempt by a court of justice to repair the omission in the Act cannot be justified as an exercise of its jurisdiction to determine what is the meaning of a written law which Parliament has passed. Such an attempt crosses the boundary between construction and legislation. It becomes a usurpation of a function which under the constitution of this country is vested in the legislature to the exclusion of the courts. (See also Minister for Immigration and Citizenship v SZJGV 238 CLR at 651–652 [9] per French CJ and Bell J.)

28. Spigelman CJ went on to say in R v Young 46 NSWLR at 687 [11]–[14] the following: The three conditions set out by Lord Diplock should not be misunderstood. His Lordship did not say, nor do I take any of their Honours who have adopted the passage to suggest, that whenever the three conditions are satisfied, court is at liberty to supply the omission of the legislature. Rather, his Lordship was saying that in the absence of any one of the three conditions, the court cannot construe a statute with the effect that certain words appear in the statute. As I understand the recent cases, they are not authority for the proposition that a court is entitled, upon satisfaction of the three conditions postulated by Lord Diplock, to perfect the parliamentary intention by inserting words in a statute. The court may construe words in the statute to apply to a particular situation or to operate in a particular way, even if the words used would not, on a literal construction, so apply or operate. However, the words which actually appear in the statute must be reasonably open to such a construction. Construction must be text based. The contemporary approach to construction is well described as ‘literal in total context’ (E Dreidger, Construction of Statutes, 2nd ed at 2): see, eg, CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381 [69]. The courts no longer ‘make a fortress out of the dictionary’: Cabell v Markham 148 F 2d 737 (1945) at 739, per Learned Hand J. Putting to one side obvious typographical errors (see Bennion, Statutory Interpretation: A Code, 3rd ed (1997) Butterworths, London at 675–677), the court supplies words ‘omitted’ by the draftsperson only in the sense that the words so included reflect in express, and therefore more readily observable, form, the true construction of the words actually used. In my opinion, the authorities do not warrant the court supplying words ‘omitted’ by inadvertence per se.

29. Spigelman CJ expressed what he considered the relevant principle to be that words are not inserted to perfect the intention of Parliament; rather, the actual words are construed to conform with the intention, where they may reasonably be so construed.

30. As far as the principles governing the use of extrinsic material are concerned, we start with CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384. In a well-known passage, Brennan CJ, Dawson, Toohey and Gummow JJ said (at 408): It is well settled that at common law, apart from any reliance upon s 15AB of the Acts Interpretation Act 1901 (Cth), the court may have regard to reports of law reform bodies to ascertain the mischief which a statute is intended to cure. Moreover, the modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses ‘context’ in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned, one may discern the statute was intended to remedy. (See also Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355 at 381–382 per McHugh, Gummow, Kirby and Hayne JJ.)

31. In Alcan (NT) Alumina Pty Ltd v Territory Revenue (2009) 239 CLR 27, Hayne, Heydon, Crennan and Kiefel JJ said (at 46–47 [47]): This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of legislation is the surest guide to legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy.

32. A statement of intention in the extrinsic material cannot supply the omission by the draftsperson when the result cannot reasonably be deduced from the words actually used by a recognised technique of construction: Re Bolton; Ex parte Beane (1987) 162 CLR 514 at 517–518 per Mason CJ, Wilson and Dawson JJ; Newcastle City Council v GIO General Ltd (t/as GIO Australia) (1997) 191 CLR 85 at 113 per McHugh J; R v Young 46 NSWLR at 690–691 [33]–[35] per Spigelman CJ. Statements of intention in extrinsic material are rarely of any use other than as identifying the purpose of the Act or mischief it is designed to remedy: R v Abdulla (2005) 93 SASR 208 at 226 [75]; Harrison v Melhem (2008) 72 NSWLR 380 at 384 [12]–[14] per Spigelman CJ at 400 [168]–[170] per Mason P with whom Beazley JA and Giles JA at 403 [191]–[192] agreed.

33. We were referred to the Explanatory Statement for the Road Transport (Third-Party Insurance) Bill 2007. It is sufficient for us to say that it does not advance the matter either way. We were also referred to the clauses in the Bill. Those clauses did not contain a provision dealing with pain and suffering or a provision dealing with costs where a mandatory final offer for $30,000 or less was accepted. The Presentation Speech of the Chief Minister on 22 November 2007 identifies the burden of high legal costs on the compulsory third party insurance system as a reason for the relevant provisions of the Bill. When debate on the Bill resumed on 12 February 2008 the Chief Minister said the following: Small CTP claims up to $50,000 represent 80 per cent of the administrative cost for insurers but 20 per cent of payouts. Large claims, say, above $250,000 represent around 20 per cent of administrative costs but 80 per cent of payouts. Various jurisdictions have taken action to eliminate small claims, as I mentioned, but we take a different view. To be sure, one could simply ban lower cost claims to reduce premiums, as other jurisdictions have done, to produce more innovative and, in my view, fair ways of achieving efficiencies. The government has chosen the latter course. That said, in the ACT the losers will be lawyers and inefficient service providers and the winners will be injured motor accident victims. I previously outlined the significant dislocation in legal costs in the ACT scheme when I introduced this bill in November, and I will not repeat myself. Rather, I will briefly outline the means by which the government intends to achieve efficiencies. The bill has provisions that restrict legal fees in small claims. The government has decided to add some bite to those provisions by restricting the damages components that can be counted toward the amounts that trigger release from the fees restrictions. Injured people will not suffer because the payouts referable to their injuries will not be compromised.

34. It was at this time (that is, 12 February 2008) that the provisions concerning pain and suffering were introduced (that is, those provisions which became ss 141(5), 155(5) and 155(7) of the Act).

35. These were Assembly Amendments to the Bill and the Explanatory Statement for these Amendments included the following statement: Clauses 8 to 13 exclude compensation for pain and suffering from the definition of ‘damages’. This will help to curtail legal costs in small awards of damages by bringing more claims under the $30,000 and $50,000 thresholds in Clauses 149 and 150 of the Bill.

36. In the Explanatory Statement for the Road Transport (Third-Party Insurance) Regulation 2008 the following statement appears: Therefore, section 27 offers lawyers the opportunity to earn up to $5,000 in costs if their clients accept mandatory final offers in cases involving damages, other than general damages, between $30,000 and $50,000.

37. The author of that Statement does not appear to have been aware of the difference between pain and suffering and general damages: Paff v Speed (1961) 105 CLR 549 at 559 per Fullagar J (see also Griffiths v Kirkemeyer (1977) 139 CLR 161 at 179 per Stephen J). In the Regulatory Impact Statement for the Regulation dated 20 August 2008 the following appears: The introduction of these costs restrictions is designed to moderate the legal costs associated with small insurance claims involving minor injuries, consistent with the objectives of the Road Transport (Third-Party Insurance) Act 2008. The incremental increase in the maximum amounts provide incentives for lawyers to advise clients to claim or defend feasible damages amounts that can be dealt with efficiently between the parties, or if necessary, by the court.

38. There was an Amendment Bill introduced in 2009. The Explanatory Statement for the Road Transport (Third-Party Insurance) Amendment Bill 2009 contains the following statement Clause 36 This clause amends section 144 of the CTP Act to clarify the intention of the Act around lawyer’s fees in relation to claims that are settled prior to litigation by the acceptance of a mandatory final offer of $50,000 or less. To resolve any confusion that might exist around the calculation of lawyer’s fees in cases where the mandatory final offer that is accepted is $30,000 or less, this clause makes it clear that lawyer’s fees are to be zero.

39. In her Presentation Speech on 2 April 2009 the Treasurer said: Part 4.9 of the Act is clear on the costs lawyers may receive in cases where small awards of damages are made by the court, the categories being split into awards of $30,000 or less, or awards between $30,000 and $50,000. Part 4.8 of the Act is also clear on the costs lawyers may receive in cases where a matter is resolved in its early stages prior to litigation, for between $30,000 and $50,000. The intention in part 4.8 of the Act was that claims of the same value as those in part 4.9 that were resolved prior to litigation ought to attract similar treatment in relation to legal costs. Nevertheless, an inconsistency may exist in part 4.8 of the Act that leaves the issue of lawyers’ costs potentially ambiguous in the case of claims that are resolved prior to litigation with final mandatory offers of $30,000 or less. The amendment bill seeks to make clear and consistent the intentions of parts 4.8 and 4.9 of the Act such that, if a matter is resolved at the early stages prior to the commencement of litigation for $30,000 or less, then under part 4.8 lawyers should not receive any fees. This is consistent with the new limits applied under part 4.9 to small claims that are litigated under the Act with court awarded damages being $30,000 or less. When debate resumed on 18 June 2009 the Treasurer said: A clear objective of this government, and a cornerstone of the new scheme, is to focus on establishing an efficient system that allows those injured in a motor accident timely rehabilitation and improved health outcomes. One aspect of this was to place restrictions on the fees payable to lawyers under the new CTP scheme, in particular, under parts 4.8 and 4.9 of the CTP legislation. Part 4.8 of the CTP legislation deals with cases that are settled prior to litigation under the final mandatory offer procedures; part 4.9 of the CTP legislation deals with cases that are decided through litigation in the courts. Under the legislation, minor injury cases—where damages other than pain and suffering are settled at $50,000 or below—are subject to legal fee restrictions, as are court-awarded damages of the same magnitude. It was the intention of the new CTP legislation which came into effect on 1 October 2008 to deal with both settlements and damages up to this level in a similar manner. Since then, it has become evident that a drafting inconsistency may exist in part 4.8 of the legislation that leaves open the issue of lawyers’ costs in relation to settlements reached at $30,000 or less. In fact, the provisions may be interpreted such that lawyers have free rein over the fees they charge in a personal injury case where final mandatory offers are of the zero dollars to $30,000 range. This is clearly contrary to the objectives of the new CTP scheme, which concentrate on encouraging accident victims and obliging insurers to focus on return to health strategies for motor accident victims as opposed to lump sum damages. This amendment will make provision for the treatment of lawyers’ fees in relation to settlements in the amount of $30,000 or less under part 4.8 similar to damages under part 4.9 by making fees in this category zero. As a result, there will be a clear and consistent message in the new CTP legislation with regard to legal fees. Disposition of the Appeal

40. In our opinion, the Master was correct largely for the reasons his Honour gave.

41. If it be assumed that the respondent’s construction is the correct one then the sections of the Act have the following consequences. First, s 141(5) still has work to do because it will enable the Court to assess the respective mandatory final offers of the claimant and the respondent for the purposes of ss 155 and 156. Secondly, there will be a difference between the operation of the cost restrictions where the claim is settled before action and the costs restrictions which operate after the action has been heard and determined by a court. The operation of s 144 would not produce results which are irrational or absurd, or results which are plainly unintended. Nor can the difference between the operation of the costs restrictions pre action and the operation of the cost restriction post judgment be described in those terms. It might be said that it would be logical for the sections to operate in a way which was consistent, but that does not mean that their operation under the respondent’s construction is irrational, absurd or plainly unintended.

42. The extrinsic material tends to support the appellant’s construction, although there are difficulties with it. The general description of the mischief – the burden of legal costs on the compulsory third party insurance scheme – and the remedy – restrictions on the amount or recoverable party and party costs in small claims – does not assist in any material way because both of the competing interpretations in this case result in costs restrictions. The Explanatory Statement for the Regulation also does not assist in any material way because it suggests a construction – general damages are excluded from consideration – that neither party advances, and one that is not reasonably open on any view of the statutory provision.

43. From the appellant’s point of view, the clearest statement in its favour is that made by the Treasurer on 18 June 2009: Under the legislation, minor injury cases – where damages other than pain and suffering are settled at $50,000 or below – are subject to legal fee restrictions, as are court-awarded damages of the same magnitude. (Emphasis added.)

44. The difficulty with placing reliance on this statement is that it was made after the particular subsection in issue in this case had been enacted (that is, s 144(2)), and, in any event, it is a statement by a minister of their view of how the legislation would operate. In our respectful opinion the words of Mason P in Harrison v Melham 72 NSWLR at 400 are apposite: … the law is clear in Australia that a minister’s understanding of the effect of a statute or the state of the common law cannot give the Bill he or she is promoting an effect inconsistent with its terms as construed by the court.

45. We can discern no ambiguity or uncertainty in the words of s 144(2) of the Act. The mandatory final offer is the total offer and is not to be reduced by the amount identified in the offer as the amount offered for pain and suffering. Conclusion

46. In our opinion the appeal should be dismissed and the appellant should pay the respondent’s costs of the appeal.

I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court.

Associate:

Date: 29 February 2012

Counsel for the Appellant: Dr J E Griffiths

Solicitor for the Appellant: Moray & Agnew

Counsel for the Respondent: Mr B A Meagher SC

Solicitor for the Respondent: Blumers

Date of hearing: 9 August 2011

Date of judgment: 29 February 2012

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