Helou v NRMA Insurance Australia Ltd

Insurance Australia Limited trading as NRMA Insurance v Helou Helou v NRMA Insurance Australia Ltd [2007] NSWSC 1451 CASES CITED : Insurance Australia Limited trading as NRMA Insurance v Helou [2008] NSWCA 240 Ruffino v Grace Bros Pty Ltd [1980] 1 NSWLR 732 Rippon v Chilcotin Pty Ltd & Ors (2001) 53 NSWLR 198 Spautz v Williams [1983] 2 NSWLR 506

PARTIES : Joseph Helou (Plaintiff) NRMA Insurance Australia Limited (Defendant)

COUNSEL : Mr J Jobson for the Plaintiff Mr W Fitzsimmons for the Defendant

• 1 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

15241/07 Joseph Helou v NRMA Insurance Australia Ltd

1 HIS HONOUR: By summons filed on 15 October 2007 the plaintiff claimed payment by the defendant of damages and costs which had been assessed and which were payable pursuant to s 95 of the Motor Accidents Compensation Act 1999 ("the MAC Act"). He also sought an order for the payment of interest. The defendant has since paid the damages and costs so all that remains is the question of interest. 2 The defendant, on the other hand, has moved on a Notice of Motion seeking the dismissal of the plaintiff's summons on the basis that it is an abuse of process.

3 The plaintiff was injured in a motor vehicle accident. The defendant was the compulsory third party insurer for the vehicle at fault. It admitted liability. The plaintiff's claim for damages came before Assessor Quickenden appointed by the Motor Accidents Authority's Claims Assessment and Resolution Service. An assessment was made on 5 September 2007 that the defendant should pay to the plaintiff $1,494,794.30 for damages and $90,879.50 inclusive of GST for costs. On 17 September 2007 the plaintiff accepted the assessment. By virtue of s 95(2) of the MAC Act that then made the assessment binding on the defendant who became liable to pay to the plaintiff the amount of damages and costs specified in the certificate of the assessment. The defendant did not pay. It's solicitors advised the plaintiff's solicitors by letter of 9 October 2007 that it was intending to commence proceedings for judicial review of the assessment. It offered to advance $500,000 on a "without prejudice" basis pending the outcome of the judicial review proceedings or the claim being reassessed. The plaintiff's solicitors replied the following day with a request to be advised, "the purported grounds for jurisdictional error and or quashing the determination of the Assessor your client relies on". The defendant's solicitors responded by writing that the basis for relief would be set out in the summons that was presently being drafted and would be filed and served in the near future. 4 The plaintiff filed his summons on 15 October 2007. The matter came before a Registrar on 23 October on which occasion it was noted that the defendant's proposed summons would be filed that day, which it was.

5 At the time of all of this the Act did not contain any provision imposing a time limit on an insurer to make payment following an assessment or any provision for the payment of interest on unpaid amounts. Subsequent amendments to the Act and Regulations, which took effect on 1 October 2008, make such provisions. They do not apply retrospectively.

6 The filing of the defendant's summons on 23 October 2007 did not operate to stay its liability under s 95 to pay the assessed damages and costs to the plaintiff. The defendant did not seek any order from the court for such a stay. 7 Both summonses came before Associate Justice Malpass on 13 December 2007 for hearing. The following day his Honour gave judgment dismissing the defendant's summons: Insurance Australia Limited trading as NRMA Insurance v Helou; Helou v NRMA Insurance Australia Ltd [2007] NSWSC 1451 His Honour said he found it unnecessary to make the orders sought in the plaintiff's summons because s 95 was binding upon the defendant and s 95(3) provides that compliance with the section was a condition of the defendant's licence to operate as a third party insurer.

8 The defendant filed an appeal to the Court of Appeal on 18 December 2007. On 19 December 2007 it offered to pay to the plaintiff fifty percent of the assessment pending the determination of the appeal or any reassessment. The plaintiff's solicitors responded by reiterating a demand for payment in full or else a complaint would be made to the Motor Accidents Authority in relation to the apparent breach of the s 95 condition of the defendant's licence. 9 On 20 December 2007 the defendant's solicitors wrote that they had not received a response to the offer of payment of fifty percent and advised that they were proceeding to draw a cheque in favour of the plaintiff for $750,000. They said they would rely upon this letter with respect to "any claim for interest/complaint to the Motor Accidents Authority". A cheque in that amount was posted to the plaintiff's solicitors the same day. 10 On 21 December the defendant's solicitors again wrote, this time making an offer to pay the balance, less any statutory deductions, into the plaintiff's solicitors' trust account. The plaintiff's solicitor responded by returning the cheque because it was not for the full amount payable, indicating that the defendant's offer was unacceptable and that the plaintiff demanded payment in full.

11 The hearing of the plaintiff's summons was then re-listed, at the instigation of the plaintiff, and came before Rothman J on 14 February 2008. His Honour made orders that the defendant pay to the plaintiff $750,000 within 7 days and pay the net balance into court, with those monies to be invested. His Honour also stayed the assessment.

12 The defendant paid the plaintiff $750,000 on 18 February 2008. It paid the net balance of $727,692 into Court on 20 February 2008.

13 On 7 October 2008 the Court of Appeal dismissed the defendant's appeal against the decision of Associate Justice Malpass: Insurance Australia Limited trading as NRMA Insurance v Helou [2008] NSWCA 240.

14 On 27 October 2008 Associate Justice Harrison, by consent, ordered the payment out to the plaintiff of the $727,692 plus interest. An abuse of process? 15 Counsel for the defendant advanced two bases upon which he submitted I should find that the plaintiff's summons constituted an abuse of process and should be dismissed. The first was that it had the effect of seeking the determination of the very same issue that the defendant's summons would have resolved, that is the plaintiff's entitlement to the assessment made by Assessor Quickenden on 5 September 2007. Reference was made to Ruffino v Grace Bros Pty Ltd [1980] 1 NSWLR732 and Rippon v Chilcotin Pty Ltd & Ors (2001) 53 NSWLR 198 as examples of cases in which attempts to relitigate an issue already determined in earlier proceedings were held to be an abuse of process. 16 The second basis was that the plaintiff's proceedings were brought for a collateral purpose. Reference was made to Spautz v Williams [1983] 2 NSWLR 506 where Hunt J, as he then was, after referring to authority, said at 539: "The effect of these authorities may be summed up by saying that the legal process of a court is being abused when it is being used to exert pressure to effect an object not within the scope of the process, or where it is used for a purpose other than that for which the proceedings are properly designed and exist, or where the plaintiff (or the informant) in those proceedings is seeking some collateral advantage beyond what the law offers". (Citation of authorities omitted).

17 Counsel for the defendant drew my attention to s 137 of the MAC Act that places significant restrictions and limitations on the right of a plaintiff to interest on damages. He submitted that I should conclude that the plaintiff's purpose in filing and pursuing his summons was to achieve the collateral purpose of obtaining an order for the payment of interest that he would otherwise not be entitled to under the MAC Act. That this was the plaintiff's purpose was supported, he submitted, by the evidence as to the plaintiff rejecting the offers of part payment made in October and December 2007. 18 I reject both of these contentions. As to the first point, the two summonses were directed to achieving different purposes. The outcome of one would not have been the same as the outcome of the other. The defendant's summons raised issues as to the correctness of the approach taken by Assessor Quickenden to the assessment. The possible outcomes were the upholding of the correctness of the assessment or a finding that it was erroneous in some respect with the matter being remitted for reassessment. The plaintiff's summons was not brought to determine his entitlement, as counsel for the defendant contended, but rather to enforce it. 19 As to the second point, whilst the plaintiff's summons did include a claim for interest on the unpaid amount, it was not the sole relief sought. His primary claim was for payment of the money owing to him.

20 Counsel for the defendant submitted that the "the Motor Accidents Compensation Act provides an express statutory prohibition in respect to the claim for interest made by the Plaintiff". It is said that this prohibition is to be found in s 137, which is in these terms: 137 Payment of interest (1) Limited statutory entitlement A plaintiff has only such right to interest on damages payable in relation to a motor accident as is conferred by this section. (2) Attendant care services No interest is payable on damages comprising compensation under section 128. A court cannot order the payment of interest on such damages. (3) Non-economic loss No interest is payable on damages awarded for non-economic loss. A court cannot order the payment of interest on such damages. (4) Other heads of damages The following provisions apply to damages, other than damages to which subsection (2) or (3) applies, payable in relation to a motor accident: (a) Interest is not payable (and a court cannot order the payment of interest) on such damages unless: (i) information that would enable a proper assessment of the plaintiff's claim has been given to the defendant and the defendant has had a reasonable opportunity to make an offer of settlement (where it would be appropriate to do so) in respect of the plaintiff's full entitlement to all damages of any kind but has not made such an offer, or (ii) the defendant has had a reasonable opportunity to make a revised offer of settlement (where it would be appropriate to do so) in the light of further information given by the plaintiff that would enable a proper assessment of the plaintiff's full entitlement to all damages of any kind but has not made such an offer, or (iii) if the defendant is insured under a third-party policy or is the Nominal Defendant, the insurer has failed to comply with its duty under section 83, or (iv) if the defendant has made an offer of settlement, the amount of all damages of any kind awarded by the court (without the addition of any interest) is more than 20% higher than the highest amount offered by the defendant and the highest amount is unreasonable having regard to the information available to the defendant when the offer was made. (b) The highest amount offered by the defendant is not unreasonable if, when the offer was made, the defendant was not able to make a reasonable assessment of the plaintiff's full entitlement to all damages of any kind. (c) For the purposes of this subsection, an offer of settlement must be in writing. (5) Calculation of interest If a court is satisfied that interest is payable under subsection (4) on damages: (a) the amount of interest is to be calculated for the period from when the loss to which the damages relate was first incurred until the date on which the court determines the damages, and (b) the amount of interest is to be calculated in accordance with the principles ordinarily applied by the court for that purpose, subject to this section. (6) Rate of interest The rate of interest to be used in any such calculation is three-quarters of the rate prescribed for the purposes of section 101 of the Civil Procedure Act 2005 for the period concerned. (7) Judgment debts Nothing in this section affects the payment of interest on a debt under a judgment or order of a court.

21 I reject this submission. It misconceives the nature of the plaintiff's claim. S 137 is within Chapter 5 of the MAC Act. S 122 in that chapter provides: 122 Damages in respect of motor accidents (1) This Chapter applies to and in respect of an award of damages which relates to the death of or injury to a person caused by the fault of the owner or driver of a motor vehicle in the use or operation of the vehicle. (2) This Chapter does not apply to or in respect of a motor accident occurring before the commencement of this Act. (3) This Chapter applies to and in respect of the assessment of damages by a claims assessor under Part 4.4 in the same way as it applies to and in respect of an award of damages by a court.

22 Chapter 5 makes various provisions governing the determination of awards for damages. S 137 is clearly directed to the question of whether interest can be a part of such a determination. The present proceedings are not concerned with any attempt by the plaintiff to obtain an award for damages. He already has that. What the plaintiff is doing in this case is seeking the payment of a debt owed to him by the defendant. S 137(7) specifically leaves open the possibility of a court ordering the payment of interest on such a debt. 23 The defendant also contends that the rejection by the plaintiff of offers of part payment in October and December 2007 supports the proposition that in bringing these proceedings the plaintiff was motivated to obtain the maximum amount of interest at the rate prescribed in the Rules. I do not accept this contention. My reasons will become apparent when I discuss this aspect a little later. 24 In any event, to the extent that the plaintiff was motivated to obtain interest, one might ask rhetorically: What is wrong with that? He had acquired a statutory entitlement to be paid the money but the defendant refused to pay. The MAC Act at the time made no provision for the payment of interest on unpaid amounts. I do not see anything at all unfair or inappropriate in the plaintiff wanting to be paid interest whilst the defendant held on to money that was rightfully the plaintiff's. 25 I am not satisfied of either of the bases advanced in support of the contention that the plaintiff's summons is an abuse of process. Before departing this issue there is an observation that should be made. If that summons was an abuse of process, it has always been so. The summons was filed on 15 October 2007. It was not until the defendant filed its notice of motion 17 months later, that is last week, that this issue was first raised.

26 At the hearing of the matter counsel for the plaintiff specified what his client was claiming. Interest is sought on the amount assessed for damages, $1,494,794.30, for the period 15 October 2007 (the date the plaintiff's summons was filed) until 18 February 2008 (the date when the defendant paid part to the plaintiff and part into court), being 126 days at the prescribed rate of 10%. I was told this yields an amount of $51,600. He also seeks interest on the amount assessed for costs, $90,879.50, for the period 15 October 2007 until 5 November 2008 (the date the defendant paid this amount), being 385 days at the same rate. I was told this amounts to $9,582.65. I note that there was no dispute as to the accuracy of these calculations. The total amount claimed is $61,182.65. 27 As I alluded to earlier, the defendant disputes that there is a power to order the payment of interest. Alternatively, it submits that if there is a power, it is discretionary and that I should decline to exercise it.

28 The plaintiff relies upon the provisions of s 100 of the Civil Procedure Act 2005 ("the CP Act") which is in the following terms: 100 Interest up to judgment (1) In proceedings for the recovery of money (including any debt or damages or the value of any goods), the court may include interest in the amount for which judgment is given, the interest to be calculated at such rate as the court thinks fit: (a) on the whole or any part of the money, and (b) for the whole or any part of the period from the time the cause of action arose until the time the judgment takes effect. (2) In proceedings for the recovery of a debt or damages in which payment of the whole or a part of the debt or damages has been made after the proceedings commenced but before, or without, judgment being given, the court may include interest in the amount for which judgment is given, the interest to be calculated at such rate as the court thinks fit: (a) on the whole or any part of the money paid, and (b) for the whole or any part of the period from the time the cause of action arose until the time the money was paid. (3) This section: (a) does not authorise the giving of interest on any interest awarded under this section, and (b) does not authorise the giving of interest on a debt in respect of any period for which interest is payable as of right, whether by virtue of an agreement or otherwise, and (c) does not authorise the giving of interest in any proceedings for the recovery of money in which the amount claimed is less than such amount as may be prescribed by the uniform rules, and (d) does not affect the damages recoverable for the dishonour of a bill of exchange. (4) In any proceedings for damages, the court may not order the payment of interest under this section in respect of the period from when an appropriate settlement sum was offered (or first offered) by the defendant unless the special circumstances of the case warrant the making of such an order. (5) For the purposes of subsection (4), appropriate settlement sum means a sum offered in settlement of proceedings in which the amount for which judgment is given (including interest accrued up to and including the date of the offer) does not exceed the sum offered by more than 10 per cent.

29 The plaintiff's written submissions only make reference to s 100(1) but at the hearing reliance was placed upon s 100(2) which seems more apt. 30 The defendant's first submission was that there is the prohibition on the payment of interest provided in s 137 of the MAC Act. I have already dealt with that point.

31 The second submission was that s 100, whether sub-s (1) or (2), of the Civil Procedure Act 2005 does not apply because it operates only to allow the inclusion of "interest in the amount for which judgment is given" and in this case, there has been no "judgment". That is correct for the moment but there shortly will be.

32 Finally it is submitted on behalf of the defendant that even if I do have the power to make the order for the payment of interest sought by the plaintiff I would decline to do so in the exercise of my discretion because of the conduct of the plaintiff. I take this to bring into question the institution of proceedings by the plaintiff, which the defendant contends was unnecessary, and also the non-acceptance of offers of part payment.

33 As to the first of those matters it was contended that the institution of proceedings by the plaintiff was "superfluous" because the defendant instituted proceedings that would determine the plaintiff's entitlement as to the assessment of damages. It was submitted that the plaintiff had no separate entitlement to judgment in the proceedings he initiated after the issues were determined on the defendant's summons. I do not accept this for the reasons I have indicated earlier.

34 The non-acceptance of the defendant's offers relates to the offer of an interim part payment of $500,000 in October 2007 and of the further offer to pay fifty per cent in December 2007. The return of the defendant's cheque for $750,000 is relevant to the latter. Counsel for the defendant submitted that the plaintiff would not have been compromised at all by accepting either of these offers and maintaining a demand for the payment of the balance. He submitted, in effect, that his client had acted responsibly and reasonably and that the plaintiff's refusal remained unexplained. The second offer included the balance of the outstanding amount being paid to the plaintiff's solicitor and being held by him on trust. Counsel submitted that the plaintiff could ultimately have received the interest that would have accrued by the investment of that amount but was now seeking interest at the higher rate prescribed in the rules. 35 In relation to that last aspect, counsel for the plaintiff drew my attention to the terms of the offer which was understandably interpreted as meaning the defendant was suggesting a deposit to the solicitor's trust account. Interest accruing on a deposit to such an account would not be available to be dispersed to the client but rather would go to the Law Society. 36 In relation to the offers generally, counsel for the plaintiff submitted that they were all conditional. The first was purportedly made "without prejudice" and on the basis that the balance of the money would not be paid until the final resolution of the defendant's summons or any reassessment ordered by the Court. The second offer was made on similar terms. He submitted that the plaintiff was quite entitled not to accept the offers in those terms and to maintain his insistence on payment in full.

37 I am of the view that the position taken by the plaintiff in rejecting offers of part payment was entirely open to him and not unreasonable. He was entitled to payment of the full amount and was not in a position in which he should have been expected to reach some compromise of the defendant's choosing. The defendant chose to contest the assessment by bringing its proceedings for judicial review that failed. The institution of those proceedings did not operate to stay the defendant's liability under s.95 of the MAC Act and the defendant's refusal to pay was in breach of its licence as a third party insurer. The MAC Act at the time did not contain any provision to meet a situation in which an insurer sought to challenge an assessment. Once the pre-conditions in s 95(2)(a) and (b) (insurer accepting liability and claimant accepting the amount assessed) were satisfied, the insurer was bound to pay the claimant and it was a condition of its licence to do so. If the defendant wanted to put off making payment so as to challenge the assessment then it was open to it to ask the Court for an order staying the assessment. Absent such a stay, the defendant had an immediate liability. No stay was sought until the orders made by Rothman J on 14 February 2008. 38 The defendant had the benefit of the entire amount of the assessment from October 2007 until it made the payments in February 2008. A final point raised was that the plaintiff could have had the benefit of some of the money at an earlier time and, if he had, he would have been unlikely to have achieved an interest rate as high as that provided in Schedule 5 of the Uniform Civil Procedure Rules 2005. S 100 of the CP Act provides for "interest to be calculated at such rate as the court thinks fit". One possibility is that some adjustment be made to the interest awarded to take this into account but it seemed to be agreed that this would either be extremely difficult to calculate accurately, or it would simply be a matter of guesswork. Counsel for the defendant submitted that in the all the circumstances it would be appropriate to deny any interest on $500,000 from the date that sum was offered in October 2007 and any interest on a further $250,000 from when a payment of $750,000 was offered in December 2007. However, having regard to the conclusion I have reached as to the reasonableness of the position taken by the plaintiff in relation to the interim payment offers I do not propose adopt this approach. The plaintiff was owed money that he was not paid in full, as he was entitled, for some time. Interest in the terms sought should be ordered.

1. Order that the defendant pay to the plaintiff the damages and costs assessed by Assessor Quickenden on 5 September 2007 less any statutory deductions and less amounts already paid.

The Court notes that the whole amount has been paid.

2. Order that within 7 days the defendant pay to the plaintiff interest in the sum of $61,182.65.

4. The defendant pay the plaintiff's costs in respect of the plaintiff's summons and the defendant's notice of motion as agreed or assessed.

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