Supreme Court of the ACT|2015-03-25|Before: Mossop M

Insurance Australia Limited and Habus v Albrecht [2015] ACTSC 68 (25 March 2015)

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

STATUTORY INTERPRETATION - provisions that limit recovery of costs - effect of Road Transport (Third-Party Insurance) Act 2008 (ACT) s 155 - whether the phrase "the court awards" includes judgment entered by consent - it does

Road Transport (Third-Party Insurance) Amendment Act 2012 (ACT)

Road Transport (Third-Party Insurance) Amendment Act 2012 (No 2) (ACT)

Alcan (NT) Alumina Pty Ltd v Territory Revenue [2009] HCA 41; (2009) 239 CLR 27

Allsop v Federal Commissioner of Taxation [1965] HCA 48; (1965) 113 CLR 341

Amos v Brisbane City Council [2005] QCA 433

CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384

Haureliuk v Furler [2012] ACTCA 11

Kinch v Walcott [1929] AC 482

McIntosh v Hikechukwu [2011] ACTSC 131

McLaurin v Federal Commissioner of Taxation [1961] HCA 9; (1961) 104 CLR 381

Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355

State of Western Australia v Fazeldean (No 2) [2013] FCAFC 58; (2013) 211 FCR 150

Zardo v Ivancic [2004] ACTCA 11

Insurance Australia Limited t/as NRMA Insurance ACN 000 016 722 (First Plaintiff)

1. By originating application filed 9 February 2015 the plaintiffs seek a declaration that s 155(3)(c) of the Road Transport (Third Party Insurance) Act 2008 (ACT) (RT Act) applies to the assessment of costs referred to in a consent judgment entered in proceedings in the ACT Magistrates Court. The first plaintiff is the compulsory third-party insurer of the second plaintiff.

2. The defendant was the plaintiff in the Magistrates Court proceedings and sought damages from the first and second plaintiff arising out of a motor vehicle accident.

3. I will refer to the plaintiffs in these proceedings as the NRMA and I will refer to the defendant as Mr Albrecht.

4. On 21 October 2010 Mr Albrecht and the second plaintiff were involved in a motor vehicle accident.

5. On 12 November 2010 documents giving notice of the claim were served by Mr Albrecht's solicitor on the NRMA.

6. On 26 July 2011 the NRMA admitted breach of duty of care by the second plaintiff. That admission had the effect of confirming Mr Albrecht's cause of action and hence extending the limitation period under s 16B of the Limitation Act 1985 (ACT) until 26 July 2014: Casey v Alcock (2009) 3 ACTLR 1.

7. On 8 July 2014 Mr Albrecht commenced proceedings in the ACT Magistrates Court. At the time of commencing those proceedings the parties had not participated in a compulsory conference as required by s 136(1) of the RT Act nor had the requirement for such a conference been dispensed with under s 137(1) of the RT Act. Similarly, the parties had not made mandatory final offers as required by s 143(1) of the RT Act and the obligation to do so had not been dispensed with under s 142 of the RT Act.

8. On 16 July 2014 the solicitors for Mr Albrecht wrote to the NRMA enclosing by way of service the originating claim and statement of claim that had been filed. The letter acknowledged that the parties had not yet participated in a compulsory conference or the exchanging of mandatory final offers. The letter continued:

As you would be aware, the limitation period is prima facie about to expire and it has become necessary for us to protect our client's position by commencing proceedings notwithstanding non-compliance with these procedures.

In McIntosh v Hikechukwu [2011] ACTSC 131, Master Harper expressed the view that Section 150 [of the RT Act], by virtue of a suspected drafting error, does not confer power of the Court to grant leave for the commencement of proceedings on the basis of urgency in these circumstances (see paras 11 and 12).

By adopting the current course, our client is not seeking to avoid compliance with the procedures set out in Chapter 4 and we readily acknowledge it would be appropriate for the proceedings to be stayed until a period of 14 days after mandatory final offers have been exchanged (as per Sections 143 and 145 of the [RT Act]).

We note that this is the approach adopted by Master Harper in Racic v Halitner [2010] ACTSC 63.

For the sake of clarity, we confirm we do not require you to file a Notice of Intention to Respond or a Defence until after mandatory final offers have been exchanged and will not take any steps adverse to your position in that regard without adequate prior notice.

Under these circumstances, we respectfully suggest that there is no need for an Application to the Court seeking an order that the proceedings be stayed pending compliance with the procedures set out in Chapter 4 of the [RT Act].

9. On 7 August 2014 the solicitors for the NRMA wrote to Mr Albrecht's solicitors noting that proceedings had been commenced despite the procedural obligations contained in the RT Act and the advice that Mr Albrecht intended to fully comply with the procedural requirements of the RT Act. On that basis the solicitors indicated that the matter was ready for a compulsory conference and proposed a particular date. By a letter dated 8 August 2014 a different date was suggested, namely, 5 September 2014.

10. On 5 September 2014 a compulsory conference took place. Following the compulsory conference the NRMA's solicitors made a mandatory final offer in the following terms:

In accordance with s 141 of the [RT Act], we are instructed to offer the applicant the sum of $85,000, plus costs as agreed or assessed, inclusive of any statutory payback, in accordance with the [RT Act] and Regulations, broken down as follows:

1. $40,000 for pain and suffering (general damages).

2. $45,000 for the balance of the plaintiff's claim.

3. We confirm that NRMA Insurance Ltd has made $2688.50 in payments on behalf of the claimant.

We confirm that this offer may only be accepted in writing, within 14 days, in accordance with s 143(2) of the [RT Act].

11. Mr Albrecht also made a mandatory final offer on that date.

12. On 19 September 2014, the last day of the 14 day period specified in the NRMA's mandatory final offer, Mr Albrecht accepted the NRMA's mandatory final offer.

13. By letter dated 24 September 2014, received by the NRMA's solicitors on 25 September 2014, Mr Albrecht's solicitors indicated that Mr Albrecht's costs were assessed on a party and party basis as $27,800 and disbursements totalling $13,128.10 were claimed.

14. The NRMA's solicitors wrote by letter dated 25 September 2014 to Mr Albrecht's solicitors saying:

We refer to the settlement of this matter in the sum of $85,000 inclusive of payments made in the sum of $2688.50, plus costs to be agreed or assessed.

Please find enclosed:

1. General form of Consent Judgment;

2. Terms of Settlement;

...

Would you kindly arrange for the above documents to be executed and returned to our office, along with an authority to receive, at your earliest convenience.

Please forward your assessment of costs and disbursements in due course.

15. This last request suggests that the writer had not considered Mr Albrecht's solicitors' letter of the day before at the time of writing.

16. The "General form of Consent Judgment" and "Terms of Settlement" were ultimately signed by Mr Albrecht's solicitors on 4 November 2014 and by NRMA's solicitors on 10 November 2014. Relevantly, the consent judgment provided:

Judgment for the plaintiff in the sum of $85,000, inclusive of payments made and plus costs as agreed or assessed.

...

The judgment of the Court is that:

The plaintiff recover against the first defendant and second defendant $85,000, inclusive of payments made and plus costs as agreed or assessed.

17. That order was entered on 10 November 2014. The Terms of Settlement document contained a variety of other provisions relating to deductions from amounts paid and interest which would reflect commonly adopted terms of settlement in a matter such as this.

18. By letter dated 5 November 2014 the solicitors for the NRMA wrote to the solicitors for Mr Albrecht referring to the assessment of costs and disbursements communicated in the letter of 24 September 2014. The solicitors for the NRMA communicated the NRMA's position that s 155 of the RT Act applied and that the amount of legal costs recoverable by Mr Albrecht was, in the circumstances, nil. The letter then communicated an offer to pay Mr Albrecht's costs up to an amount of $2500.

19. By letter dated 10 November 2014 the solicitors for Mr Abrecht responded to NRMA's position contending that s 155 did not apply because the consent judgment was not an award of damages within the meaning of s 155 of the RT Act and, further, that because the consent judgment was for an undifferentiated amount it was not an award of damages capable of being "equal to" the mandatory final offer.

20. The issue between the parties is whether Mr Albrecht's entitlement to costs is limited by s 155(3)(c).

21. The most significant legislative provisions for the purposes of resolution of this issue are ss 144 and 155 of the RT Act. Those sections were amended by the Road Transport (Third-Party Insurance) Amendment Act 2012 (the Amendment Act). The Amendment Act was itself amended by the Road Transport (Third-Party Insurance) Amendment Act 2012 (No 2) so as to insert a transitional provision which provided that, where a motor accident happened prior to the commencement of the Amendment Act, any claim for personal injury must be dealt with as if the Amendment Act had not been enacted. The effect of s 291 of the RT Act, which has "expired" and therefore does not appear in the current reprint of the Act, is that in the present case the relevant provisions to be applied are those which appeared in reprint 12 of the RT Act, which reflects the RT Act as in force on 31 December 2012. Notwithstanding its expiry, s 291 continues to have effect: see Legislation Act 2001 (ACT) s 88.

22. Sections 144 and 155 therefore were, at the relevant time, in the following form:

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.

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.

damages does not include damages for pain and suffering.

23. In Haureliuk v Furler [2012] ACTCA 11 the Court of Appeal held that the reference to the amount of the mandatory final offer in s 144 was a reference to an amount that included any component of general damages. In other words, s 144 could not be read so as to give it an effect consistent with s 155, which expressly excluded from the amounts referred to any component of damages attributable to general damages. The effect of that decision in the present case is that, since the mandatory final offer made by the NRMA exceeds $50,000, upon the plain words of s 144 that section does not apply.

The context in which the parties dealt with each other

24. The unusual feature of the present case which has led to the dispute between the parties is the fact that the claim was resolved as a result of the acceptance of a mandatory final offer while there were court proceedings on foot. The RT Act does not contemplate that circumstance because mandatory final offers are, under the terms of the RT Act, made prior to the commencement of proceedings and proceedings must not commence so long as a mandatory final offer remains open: s 145. Rather, the RT Act proceeds on the basis that proceedings will only be commenced after a final offer has been made and expired or where the requirement for the making of such an offer has been dispensed with by the Court.

25. In order to appreciate the context in which Mr Albrecht commenced proceedings and the parties agreed to proceed in the manner that they did, it is necessary to set out some additional background relevant to the capacity of parties to commence proceedings which are subject to the RT Act where a compulsory conference and the exchange of mandatory final offers has not occurred and no order has been made dispensing with the requirement that they occur.

26. One of the most commonly occurring issues arising out of the requirement that, unless formally dispensed with, a compulsory conference occur and mandatory final offers be made is that which exists where there is an urgent need to commence proceedings by reason of the imminent expiry of the limitation period. In those circumstances the commencement of proceedings is prima facie prevented unless a compulsory conference has occurred and a mandatory final offer has been made: ss 136(1), 145. There is power to dispense with the requirements for a compulsory conference and mandatory final offer: ss 137 and 142, but where that occurs the parties and the court system are denied the benefit of those statutory processes.

27. This issue was dealt with in Racic v Haltiner (2010) 4 ACTLR 224. In that case proceedings were commenced even though a compulsory conference had not occurred and mandatory final offers had not been exchanged. Master Harper rejected the submission that the proceedings were a nullity because of non-compliance with the provisions of the RT Act. His Honour found that the jurisdiction of the Court was validly engaged and that the Court was not obliged to strike the action out but instead had a discretion to do so or make other orders in the light of the non-compliance with the legislation. He therefore considered that the interests of justice would adequately be met by imposing a stay until the plaintiff had complied with the pre-trial requirements contained in chapter 4 of the RT Act.

28. At the relevant time for the purposes of the present case, s 150 of the RT Act provided:

(1) The court, on application by a claimant, may give leave to the claimant to begin a proceeding in the court based on a motor accident claim despite noncompliance with this part if satisfied there is an urgent need to begin the proceeding.

(2) The order giving leave may be made on conditions the court considers appropriate having regard to the circumstances of the case.

(3) If leave is given, the proceeding started by leave is stayed until the claimant complies with this part or the proceeding is discontinued or otherwise ends.

(i) the claimant is suffering from a terminal condition; and

(ii) the trial of the proceeding should be expedited; and

(b) the court orders the proceeding be given priority in the allocation of a trial date.

(5) If, under subsection (4), the proceeding is not stayed, this part (other than this section) does not apply to the personal injury.

29. In McIntosh v Hikechukwu [2011] ACTSC 131 Harper M identified that the reference to "part" in s 150(1) confined the dispensation power in s 150 to non-compliance with part 4.9 of the RT Act rather than the provisions of chapter 4 more generally. His Honour said (at [12]):

The difficulty I perceive is the reference in sub-section 150(1) to non-compliance "with this part". Section 150 is included in part 4.9 of the Act, which deals with court proceedings. The non-compliance conceded by the claimant in seeking leave under the section is a non-compliance with the requirement to participate in a compulsory conference, a requirement imposed by part 4.7 of the Act. Both parts are contained within chapter 4, and I wonder whether the drafter intended s 150 to operate in circumstances of non-compliance with a provision of chapter 4, rather than limiting it to non-compliance with a provision contained within part 4.9. I invite the attention of the legislature to the issue.

30. For the reasons that follow, I am of the view that his Honour was undoubtedly correct to suggest that there was a drafting error in s 150.

31. The Explanatory Statement for the Road Transport (Third-Party Insurance) Bill 2007 (ACT) (RT Bill), which became the RT Act, gave an explanation of the intended operation of cl 144 (which ultimately became s 150) as follows:

Clauses 140 to 143 [ss 146-149] set out the time limits relating to commencing court proceedings. Timeframes have been shortened from the previous legislation in an effort to reduce the time to resolution of claims. However the court may grant leave from these time limits if the proceeding is urgent (Clause 144) [s 150].

32. Three points should be noted about this explanation of the operation of cl 144/s 150:

(a) the last sentence in the quoted passage does not make grammatical sense;

(b) the reference to cl 144 is consistent with an understanding that the clause only applied to the provisions of what is now part 4.9 because it refers to dispensing with time limits in the previous four clauses and not to a more general dispensation power; and

(c) the reference to cl 144 indicates that what was contemplated was dispensing with the requirement of the earlier four clauses and not those clauses in the part which followed cl 144.

33. Given that s 150 is confined to the operation of part 4.9, it is of negligible utility. When the provisions within part 4.9 are examined it is hard to imagine circumstances where the power in s 150 could be applied. Section 150 would be useful if there were particular things identified in part 4.9 which had to be done prior to the commencement of proceedings. In those circumstances s 150 would, where urgent circumstances justified it, permit proceedings to be commenced even where those things had not been done. However, the provisions of part 4.9 do not impose such requirements. Sections 146-149 specify the time limits following either a compulsory conference or the making of mandatory final offers in which proceedings must be commenced. Section 151 requires that the insurer be the joint or sole defendant in proceedings. Section 152 deals with the situation where there are two or more insurers. Section 153 precludes the giving of summary judgment on the basis of the defendant's admissions. Section 154 permits an insurer to call and cross-examine an insured person. Sections 155-156A provide rules in relation to costs. None of these provisions involve the kind of requirement where a grant of leave under s 150 would be useful.

34. In his presentation speech for the RT Bill the Chief Minister said, of the chapter of the RT Bill which contained cl 144:

Chapter 3 of the bill, derived from the equivalent Queensland provisions, coupled with provisions from the Civil Law (Wrongs) Act 2002, provides a new structure for dealing with CTP insurance claims.

35. The reference to "equivalent Queensland provisions" appears to be a reference to the terms of the Personal Injuries Proceedings Act 2002 (Qld) (Queensland Act). An examination of the terms of the Queensland Act make it clear that it formed the basis for a substantial number of the provisions in the RT Act. In 2007, when the RT Bill was introduced, s 43 of the Queensland Act provided:

(1) The court, on application by a claimant, may give leave to the claimant to start a proceeding in the court for damages based on a liability for personal injury despite noncompliance with this part if the court is satisfied there is an urgent need to start the proceeding.

(2) The order giving leave to start the proceeding may be made on conditions the court considers necessary or appropriate having regard to the particular circumstances of the case.

(3) However, if leave is given, the proceeding started by leave is stayed until the claimant complies with this part or the proceeding is discontinued.

(4) Despite subsection (3), the proceeding is not stayed if -

(i) the claimant is suffering from a terminal condition; and

(ii) the trial of the proceeding should be expedited; and

(b) the court orders the proceeding be given priority in the allocation of a trial date and certifies it for speedy trial.

(5) If, under subsection (4), the proceeding is not stayed, the following provisions do not apply in relation to the personal injury -

36. The similarity between the terms of s 43 of the Queensland Act and those of s 150 of the RT Act is apparent. However, in the Queensland Act the reference in s 43(1) to "this part" made perfect sense. That is because s 43 sat within part 1 of chapter 2 of the Queensland Act. Part 1 was headed "Pre-court procedures". It included provisions relating to the giving of notice of a claim, obligations of the parties to give documents and information as well as the requirement for compulsory conferences and mandatory final offers. Thus s 43 was of a scope that covered the obligations equivalent to those found in chapter 4 of the RT Act.

37. Unfortunately during the drafting and passage of the RT Bill the necessity to amend what became s 150 so as to accommodate the differences in the structure between the RT Bill and the Queensland Act was overlooked.

38. Notwithstanding the fact that Harper M invited the legislature's attention to the drafting of s 150 in 2011, nothing has happened. The provision remains in its original form which, as I have pointed out above, is a provision without any utility. The failure of the legislature to rectify the drafting error makes it difficult for parties to address the need to commence proceedings close to the expiry of an unextendable limitation period when no application has been made to dispense with the requirements for a compulsory conference or mandatory final offer.

39. The NRMA submitted that the judgment entered as a consequence of the consent orders brought the case within the scope of s 155(3). That is because the consent judgment was clearly giving effect to the terms of the NRMA's mandatory final offer, in which the component for pain and suffering was identified as $40,000 and hence for the purposes of s 155 the amount awarded by the Court was $45,000.

40. Mr Albrecht submitted that the reference to "awards" in s 155(3) was a reference to a judgment of the Court given after a hearing. As a consequence, in the present case the Magistrates Court had not "awarded" any amount to Mr Albrecht because the judgment in his favour had been entered by consent without a hearing.

41. In support of that position Mr Albrecht submitted that parts 4.8 and 4.9 of the RT Act deal with two separate situations. Part 4.8 deals with the position prior to the commencement of court proceedings. In that situation the terms of any settlement of the claim is entirely in the hands of the parties except where a mandatory final offer is accepted, in which case costs are governed by s 144. Part 4.9 deals with the circumstance where a claimant commences proceedings. Mr Albrecht submitted that was clear from the terms of ss 146-156 which contemplate the conduct of proceedings. He submitted that there was an almost complete absence of provisions dealing with settlements in this part and hence the reference to "awards" was quite deliberate. He submitted that consistently with a dictionary definition it meant "a decision after consideration". He submitted that the terms of s 156 were consistent with the term "award" being limited to an award following a hearing. That was based on s 156(4), which refers to costs related "to the introduction of evidence" and the reference in s 156(6) to an award of damages being affected by factors not reasonably foreseeable by a party at the time of the mandatory final offer. Both of these provisions were said to be consistent with the concept of an award being an award after a hearing.

42. He also pointed to the provisions of part 4.10 of the RT Act, which relates to judgments entered as a result of non-compliance with time limits. In that situation the RT Act does not refer to an "award" of damages: see s 162. He submitted that is because none of the provisions require the Court to make its own determination of the damages suffered by the injured person.

43. He also pointed to the description of the scheme in the decision of the Court of Appeal in Haureliuk at [39]:

Secondly, there will be a difference between the operation of the costs 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.

44. He emphasised the words "heard and determined by a court".

45. Mr Albrecht also referred to the decision of the Queensland Court of Appeal in Amos v Brisbane City Council [2005] QCA 433, which discussed the Queensland equivalent of s 155, namely, s 56 of the Queensland Act. Although the issue for decision was not related to that arising in the present case, he referred to the following passages from the decision of Muir J (with whom Keane and Jerrard JJA agreed), particularly the portions that I have bolded:

The words of s 56(1) are clear and unambiguous. "Award" is defined, relevantly, in the Shorter Oxford English Dictionary as "that which is awarded or assigned as payment, penalty, etc." An award of damages in so far as courts are concerned, is an order of the court in favour of a successful plaintiff ordering the defendant to pay the sum determined by the court to be the damages for the wrong suffered by the plaintiff. The words of the subsection are quite incapable of accommodating an order dismissing a proceeding, with or without an assessment of damages to assist in the final disposition of the matter by an appellate court. In those circumstances, there are no damages and it follows that there can be no award of damages. Section 56, literally construed, is not inconsistent or in disharmony with any other provision of the Act.

The argument that the section provides a complete code governing awards of costs is unsustainable. The fact that Parliament has chosen to prescribe the way in which costs must be disposed of in proceedings in which there are awards of damages for $50,000 or less hardly gives rise to the implication that the courts' long-standing statutorily conferred powers to award costs is otherwise removed.

46. He also pointed to the difference between the terms, and hence operation, of s 56(3) of the Queensland Act and s 155(3) of the RT Act. Unlike the Queensland Act, the RT Act excluded from "damages" any amount paid for "pain and suffering": s 155(5). This reference has now been amended to "non-economic loss" and hence makes some sense. He pointed out that the effect of the exclusion of a class of damages from the threshold figure in s 155 is to increase the potential sphere of operation of the limitation on costs as compared to the provision in the Queensland Act.

47. The relevant principles to be applied to the interpretation of the RT Act are summarised in Haureliuk at [19]-[30]. In this case the following statements of principle are of particular significance as they explain the role of the text of the provisions, the context in which they appear and the purpose of the provisions of the statute.

48. In Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 at 381 the majority emphasised that the interpretation of a statute is not merely a linguistic or semantic exercise and that the context of the words used and the purpose of the statutory provisions must be borne in mind:

The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The meaning of the provision must be determined 'by reference to the language of the instrument viewed as a whole'. In Commissioner for Railways (NSW) v Agalianos, Dixon CJ pointed out that 'the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed'. Thus, the process of construction must always begin by examining the context of the provision that is being construed.

(footnotes omitted)

49. In CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408 Brennan CJ, Dawson, Toohey and Gummow JJ said:

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. Instances of general words in a statute being so constrained by their context are numerous. In particular, as McHugh JA pointed out in Isherwood v Butler Pollnow Pty Ltd, if the apparently plain words of a provision are read in the light of the mischief which the statute was designed to overcome and of the objects of the legislation, they may wear a very different appearance. Further, inconvenience or improbability of result may assist the court in preferring to the literal meaning an alternative construction which, by the steps identified above, is reasonably open and more closely conforms to the legislative intent.

(footnotes omitted)

50. In Alcan (NT) Alumina Pty Ltd v Territory Revenue [2009] HCA 41; (2009) 239 CLR 27 at [47], Hayne, Heydon, Crennan and Kiefel JJ said:

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.

(a) There was no explanation as to why Mr Albrecht did not arrange for a compulsory conference and the making of mandatory final offers prior to the imminent expiry of the limitation period.

(b) The arrangement reached between the parties for the conduct of a compulsory conference and the making of mandatory final offers was a sensible one having regard to the terms of the statute, the necessity to commence proceedings and the desirability of minimising legal costs.

(c) Each party accepted that the NRMA's offer purporting to be a mandatory final offer should be treated as such notwithstanding that under the statute a mandatory final offer is something which must occur before proceedings are commenced.

(d) It was not essential for the proceedings to be ended by the entry of judgment. The benefit of entry of judgment was that it provided a means for assessing costs if there was no agreement as to their quantum.

(e) Had the proceedings instead been resolved by a deed then there would be no possible operation of s 155(3). The situation in the present case would not have arisen if, instead of acquiescing in the NRMA's suggestion that judgment be entered, a deed was entered which required the payment of money and appropriate releases.

52. The starting point is that either of the courts which resolve proceedings under the RT Act (the Magistrates Court or the Supreme Court) do so by entry of a " judgment" rather than by an "award". Therefore the reference to the verb "award" must be a reference not to the giving effect to a particular legal means by which proceedings are finalised - the making of an award - but rather to a more general concept. In the context in which it appears it must be a reference to the entry of judgment in favour of a claimant.

53. In the absence of a statutory provision which says otherwise, there is no difference in law between a final judgment entered by consent of the parties and a final judgment entered after a hearing. Both kinds of judgment finally determine the rights of the parties, lead to a merger of the cause of action and give rise to a res judicata: Kinch v Walcott [1929] AC 482 at 493; State of Western Australia v Fazeldean (No 2) [2013] FCAFC 58; (2013) 211 FCR 150 at [21]- [23]. Therefore, there is nothing in the concept of the entry of a judgment which provides a basis for drawing a distinction between the "awarding" of damages by a consent judgment as opposed to a judgment after a final hearing.

54. In order to succeed in his argument Mr Albrecht must establish from the language of the section, its statutory context or the purpose of the legislation an implication that the references to the court awarding a particular amount is confined to an award made by the entry of a judgment after a hearing and does not include an award made by the entry of a consent judgment.

55. The fact that in the present case it was a mandatory final offer, which partitioned the damages, that led to the entry of the judgment should not affect the interpretation of the provision because the circumstances that arose in this case were contrary to the terms of the RT Act. The more general question that arises is whether consent orders entered to resolve proceedings under the Act are caught by the terms of s 155.

56. Considerations in favour of an implication limiting the scope of the term "awards" are as follows.

57. Connotation of the verb: The use of the verb "award" can carry with it the connotation of some activity on the part of the court which is consistent with the implication that the concept is limited to cases where the court has to actively determine the damages rather than simply give effect to some agreement of the parties.

58. Context within part 4.9: The sections within part 4.9 cover a variety of different aspects of court proceedings and those provisions operate against the background of other legislation and rules which govern those proceedings. The part does not purport to specifically regulate settlements of proceedings which have been commenced. The fact that the part deals with a range of disparate aspects of court proceedings leaves open Mr Albrecht's argument that "awards" does not necessarily comprehensively capture all judgments entered in court proceedings.

59. Drafting of part 4.10: It is correct that part 4.10 refers not to "awards" but to the giving of judgment: see ss 159(2), 160(2), 161(1), 162(1) and makes reference damages being "worked out" or assessed by the court in s 162(2). However, I do not place much significance on the difference in language between parts 4.9 and 4.10 in that this is more likely the result of the RT Act being a composite of locally drafted provisions and provisions copied from other jurisdictions.

60. Practical consequences: In the usual case, there will be no necessity for parties who are settling a matter to partition the damages payable between economic and non-economic loss. The situation which arose in the present case only arose because, contrary to the terms of the RT Act, a mandatory final offer was made and accepted after the commencement of proceedings. Therefore, unless the parties explicitly apportion the damages or they are, as a whole, under $50,000 (or $30,000 as the case may be), it will not be possible to readily determine whether or not the conditions for the operation of s 155 have been met. The effect of Mr Albrecht's submission would be that, except where a judgment is entered after a contested hearing, the restraints on costs in ss 155 and 156 would not apply. However, if applicable, the limitations in part 14 of the Civil Law (Wrongs) Act 2002 (ACT) may apply. The NRMA's submission would mean that the provisions of ss 155 and 156 of the RT Act apply to costs orders associated with all judgments entered. Unless the parties agreed on a particular apportionment of damages then any assessment of costs would potentially raise contested legal and factual issues as to how the damages were arrived at and what amount, if any could be apportioned to damages other than damages for non-economic loss: McLaurin v Federal Commissioner of Taxation [1961] HCA 9; (1961) 104 CLR 381; Allsop v Federal Commissioner of Taxation [1965] HCA 48; (1965) 113 CLR 341; Zardo v Ivancic [2004] ACTCA 11 at [30]. The potential complexity associated with such a situation is a factor which, in my view, favours Mr Albrecht's contentions.

61. Matters that tell against the making of an implication are as follows.

62. Title of part: Part 4.9 of the RT Act is entitled "Court proceedings". The generality of the title to the part is consistent with its provisions applying in all circumstances where proceedings are commenced and hence to all judgments entered in such proceedings.

63. Legislative history: The legislative history of s 155 is a factor which weighs against an implication limiting the scope of the term "awards". As originally presented to the Assembly, the clauses of the RT Bill relating to mandatory final offers and those clauses that became ss 155 and 156 did not include any division of damages into different components. The costs provisions reflected the terms of the Queensland Act, which provided the thresholds for the operation of the costs limitation provisions as awards of damages of $50,000 or $30,000. However, prior to the resumption of the presentation debate and the debate on the detail of the bill in the Legislative Assembly, amendments to the bill were drafted which introduced the division of damages into damages for "pain and suffering" and other damages. The changes were explained in the Supplementary Explanatory Statement for the RT Bill (pp 2-3) as follows:

Since the Bill was introduced and through discussions with Members of the Assembly, insurance companies and government agencies, a number of Assembly Amendments became necessary to refine and/or clarify certain sections of the Bill.

...

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.

Payments relating to pain and suffering will be itemised separately in the mandatory final offer so the claimant and respondent can fully assess the offer.

64. The points that need to be noted about this explanation are:

(a) the purpose of the amendments is identified as being to bring a larger number of cases within the costs limitation provisions;

(b) there is no explanation as to why this was done by splitting the concept of damages into damages for "pain and suffering" and other damages; and

(c) there is no explanation why the more limited concept of "pain and suffering" was used as opposed to "general damages" or "damages for non-economic loss".

65. When debate resumed on the RT Bill in the Assembly the Chief Minister said:

I went to some length in my presentation speech to outline the structure of the claims provisions in the bill. Rather than repeat the analysis, I want to focus on a series of additional provisions, some of them by way of finetuning, in government amendments already made available to members. 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.

...

It is the obligation of every lawyer who represents a client in a compulsory statutory compensation scheme to shepherd their client towards recovery, to maximise their opportunity to engage in treatment, rehabilitation and therapy and to protect their rights in relation to fair compensation for their injuries. The bill is structured to provide these pathways and that opportunity but not to permit current antediluvian practices to continue unabated.

(Parliamentary Debates 12 February 2008 pp 29-30)

66. The points to note about this explanation of the purposes of the amendments are:

(a) they were intended to provide "some bite" to the costs limitation provisions by excluding some types of damages that are counted towards the amounts that trigger release from the costs limitation provisions;

(b) there is no explanation as to why this was done by reference to "pain and suffering" rather than by a simple amendment to the threshold figure; and

(c) consistently with the balance of the Chief Minister's speech, there was a demonstrated concern with the level of legal fees involved in the motor accident compensation process and a desire to change the manner in which claims were dealt with.

67. For the purpose of the present issue what is significant about the legislative history of the RT Act is that, so far as can be discerned from the extrinsic materials, the confinement of the damages that form the basis of the threshold to particular categories was done for the purpose of increasing the number of cases caught by the costs limitations. The reason for doing it in that manner, rather than by simply increasing the dollar thresholds in s 155, is not clear.

68. It is also tolerably clear that by interpreting s 155 in a manner that gives broader, rather than narrower, scope to the limitations on costs orders where court proceedings have been commenced would give the best effect to the purpose of the legislation. Given that the majority of cases governed by the RT Act in fact settle prior to a hearing, it would be more consistent with the legislative purpose to give an interpretation which favoured coverage of cases which are resolved by consent orders rather than excluding them from the scope of s 155. The Court must prefer an interpretation of the Act which best achieves its purpose: Legislation Act 2001 (ACT), s 139.

69. Finally, the legislative history tends to undermine the interpretive significance of the departures from the Queensland Act, in particular, the confinement of the concept of "damages". The legislative history reveals that the confinement of damages was an amendment late in the legislative process designed to increase the scope of s 155 rather than the implementation of some coherent policy of broader significance indicating a considered departure from the overall scheme of the Queensland Act. As a result it would appear more appropriate to give an interpretation to the term "awards" the same interpretation as it would receive in the Queensland Act.

70. In my view the question is relatively finely balanced. Each interpretation is reasonably open. Neither interpretation involves an illogical or unreasonable outcome. While the legislative regulation by the RT Act of costs recovery in small motor accident claims is intricate, it is not finely crafted. It involves the picking up of legislative provisions drafted elsewhere and modifying them in ways which do not reflect carefully considered, or at least carefully articulated, policy goals. The starting point was the regime established in the Queensland Act. If the RT Act reflected those provisions then in my view there would not be a basis for an implication that awards of damages were limited to awards after a hearing. That is because of the generality of the provisions and the fact that in all cases it would be readily determinable by the terms of the order of the Court whether or not the threshold for the application of the costs limitation provisions applies.

71. The complicating factor in the Territory has arisen because of the modification of the Queensland provisions late in the legislative process so as to confine the damages used for determining whether the threshold is met to only those damages which were for matters other than "pain and suffering". Because in most cases where proceedings have settled it would be unnecessary to partition damages in the manner referred to in the statute, and it is only after a hearing that it is necessary for the Court to identify the various components of its award, the late amendments to the RT Bill have had the effect of bolstering the argument for the making of the implication confining the concept of "award" to awards after a hearing.

(a) the legislative history of the provision set out above; and

(b) my lack of confidence in the coherence of the drafting instructions for the RT Bill arising from the matters I have referred to at [30]-[37], [60], and [66](b) above,

I am confident that those amendments were not intended to have the broader consequences that would arise from the making of the implication sought. Further, because of those matters I am less inclined to draw implications from the subtleties of meaning of the words and structure of the legislation then I would be if satisfied that the legislation reflected carefully worked out and coherent legislative scheme and carefully drawn legislative language. While, of course, the intention of the legislature must ultimately be determined by the actual words used in the legislation that has been passed, having regard to the legislative history of the matter I do not consider that the making of the implication contended for is warranted.

73. Therefore, I conclude the reference to "awards" is not confined to judgments entered after a hearing and includes judgments entered by consent.

74. Mr Albrecht contended in correspondence that it was not possible to determine how the amount of the settlement was apportioned and hence not possible to say that the award of damages within the meaning of s 155 was less than $50,000. This was not an argument developed in written or oral submissions by counsel for Mr Albrecht. In my view this is not a case where any problem with apportionment arises. The evidence clearly establishes the basis upon which both parties reached the settlement. That establishes that the amount of damages within the meaning of s 155 was $45,000 and hence that s 155(3)(c) could apply.

75. I repeat Master Harper's invitation to the legislature which he expressed in Macintosh (see [29] above) and extend that invitation to the costs provisions the subject of these proceedings.

76. The NRMA sought both a declaration that s 155(3)(c) of the RT Act applied as well as orders directing the payment of costs in accordance with the provisions of s 155(3)(c)(i)-(ii). I am satisfied that I should make the declaration sought.

77. The additional orders sought by the NRMA are in the following terms:

An order that the [NRMA] pay [Mr Albrecht's] costs of the claim up to the date of the commencement of these proceedings in accordance with s 155(3)(c)(i) of the Act.
An order that the [Mr Albrecht] pay the [NRMA's] costs from the date of the commencement of these proceedings in accordance with s 155(3)(c)(ii) of the Act.

78. I have interpreted the reference to "these proceedings" be a reference to the proceedings in the Magistrates Court.

79. I am not satisfied that I should make the further orders sought for two reasons.

80. First, the costs order has already been made in the Magistrates Court and the declaration that I make will clarify its operation. Second, the operation of s 155(3)(c) may have the effect that a net amount is owed to the NRMA. While it would not be open to an assessing officer to depart from the mandatory terms of that paragraph, the consent of judgment does not require Mr Albrecht to pay any amount to the NRMA. Therefore, if an assessment of costs in accordance with s 155(3)(c) resulted in a net balance in favour of NRMA then the effect of the costs order would be that no amount was payable to Mr Albrecht and the order would not compel Mr Albrecht to pay any amounts to NRMA. Proposed order 3 would be inconsistent with that outcome. As a consequence I am not satisfied that it is appropriate to make order two or three sought by the NRMA.

81. The parties agreed that costs of the Supreme Court proceedings should be dealt with by written submissions, the NRMA contending that costs should follow the event, Mr Albrecht submitting that there may be a basis to depart from that outcome in this case. I will reserve my decision in relation to costs until after those written submissions have been received.

1. The Court declares that s 155(3)(c) of the Road Transport (Third Party Insurance) Act 2008 (ACT) applies to the assessment of costs relating to the General form of consent judgment entered in the ACT Magistrates Court proceedings number CS 783 of 2014 dated 10 November 2014.

2. The parties are to file and serve written submissions in relation to costs of proceedings SC47 of 2015 as follows:

(a) the defendant by 30 March 2015, limited to not more than 4 pages;

(b) the plaintiffs by 7 April 2015 limited to not more than 4 pages; and

(c) the defendant in reply by 9 April 2015, limited to not more than 2 pages.

I certify that the preceding eighty-two [82] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Master Mossop.

Road Transport (Third Party Insurance) Act 2008(ACT)

Transport (Third-Party Insurance) Act 2008

Injuries Proceedings Act 2002

Transport (Third-Party Insurance) Amendment Act 2012

Road Transport (Third-Party Insurance) Amendment Act 2012

Law (Wrongs) Act 2002

Road Transport (Third Party Insurance) Act 2008(ACT)

Transport (Third-Party Insurance) Amendment Act 2012

Law (Wrongs) Act 2002

Transport (Third-Party Insurance) Act 2008

Injuries Proceedings Act 2002

Road Transport (Third-Party Insurance) Amendment Act 2012

Insurance Australia Limited and Habus v Albrecht [2015] ACTSC 68

At a glance

Court

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Judgment (162 paragraphs)

Insurance Australia Limited and Habus v Albrecht [2015] ACTSC 68 (25 March 2015)

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Legislation Cited (12)

Cases Cited (8)