Insurance Commissioner of State Motor Car Insurance Office v Denning

The Act, it seems to me, has room for the fixing of appropriate rates of premium varying with the extent of the risk to be assumed as well as with the class of vehicle, the use of which is to be covered. By the prescription of such rates, the choice of the owner as to the extent to which he will insure can be made exercisable by means of s. 42 (1) (a). If only one rate is fixed, it must, in my opinion, be taken as appropriate to the assumption of the unlimited risk in respect of liability against which the owner of the car is required to insure by s. 40 (1). With due respect to those of a contrary opinion, I cannot read the words "subject to and in accordance with this Division" in that sub-section as reducing that obligation. Section 46 (2), which is within the division and thus attracted by these words, by deeming a contract of insurance to a restricted extent a sufficient compliance with the requirements of the Act, does no more, in my opinion, than provide a means of satisfaction of the obligation which the Act elsewhere imposes. Neither in its terms nor in its operation does it reduce it.

On 6th October 1963 Basil Alfred Denning died as the result of injuries received in a motorcar accident on the previous day. At the time of the accident the deceased was a passenger in a motor car which was being driven by one Meikle and the respondent, who was the deceased's widow, subsequently obtained judgment against Meikle in an action under the Wrongs Act 1958 Vict. in the sum of £9,000. No part of this amount having been paid the respondent brought an action against the Insurance Commissioner, appointed pursuant to s. 72 of the Motor Car Act 1958 Vict., who was alleged in the statement of claim to be Meikle's authorized insurer in respect of his third-party liability arising out of the use of the motor vehicle. The action was brought pursuant to s. 47 of the last-mentioned Act. An alternative claim was made in the same action against the nominal defendant named by the Minister pursuant to s. 50 of the Act on the basis that Meikle's car was uninsured but the nominal defendant was dismissed from the suit during the course of the hearing and no question arises on this appeal with respect to his liability.

With respect to the primary claim of the respondent it was held, in effect, by the learned trial judge that the Commissioner was the authorized insurer of Meikle and that the respondent was entitled to recover against him the full amount claimed.

It is not suggested on this appeal that the Commissioner is not under any liability to the respondent as Meikle's authorized insurer but merely that his liability as such is limited to the sum of £2,000. The particular problem is somewhat obscure and its elucidation requires us to set out the relevant provisions of the Motor Car Act 1958 Vict.:

s. 40 (1) Every owner of a motor car shall subject to and in accordance with this Division -

(a) insure against any liability which may be incurred by him or any person who drives such motor car in respect of the death of or bodily injury to any person caused by or arising out of the use of such motor car; and

(b) for that purpose enter into a contract of insurance under this Division.

s. 42 (1) Insurance to comply with the requirements of this Division shall subject to this section be effected by owners of motor cars in one of the following ways: -

(a) The owner of any motor car may before or upon the registration or renewal of registration of the motor car or the granting of any permit under Part II. in respect of the motor car -

(i) pay to the Chief Commissioner the appropriate insurance premium in respect of that motor car; and

(ii) nominate the authorized insurer with which the contract of insurance under this Division is to be made; or

(b) The owner of any motor car may before or upon the registration or renewal of registration of the motor car or the granting of any permit as aforesaid in respect of the motor car pay to an authorized insurer the appropriate insurance premium in respect of that motor car and enter into a contract of insurance under this Division with that authorized insurer:

Provided that the procedure prescribed by paragraph (a) of this sub-section shall not apply in any case to which the provisions of sub-section (5) of section ten of this Act apply.

(2) Every nomination made under paragraph (a) of the last preceding sub-section shall -

(b) (in the case where the owner is licensed to drive a motor car under this Act) contain particulars as to the age and any physical disabilities of such owner and with respect to any convictions of the owner for any offence under this Act or any corresponding previous enactment and for any offence relating to drunkenness under the Police Offences Act 1958 or any corresponding previous enactment -

and a copy of every such nomination shall on the day it is received or as soon as practicable thereafter be sent by the Chief Commissioner by post addressed to the authorized insurer named therein.

(a) When an authorized insurer accepts the appropriate insurance premium paid by the owner in respect of a motor car under paragraph (b) of sub-section (1) of this section the authorized insurer shall -

(i) forthwith furnish the owner with a certificate of insurance in the prescribed form in relation to such motor car; and

(ii) as soon as may be issue to the owner a policy of insurance.

(i) be in accordance with the contract of insurance under this Division and evidence thereof; and

(a) the receipt by the Chief Commissioner of a duly completed form of nomination of an authorized insurer together with the appropriate insurance premium; or

(b) the furnishing by an authorized insurer to the owner of a motor car of a certificate of insurance -

as provided in the foregoing provisions of this section that owner and that insurer shall be deemed to have entered into a contract of insurance under this Division.

(8) In order to comply with the requirements of this Division a contract of insurance under this Division shall remain in force -

(a) where the motor car is registered - during the period of registration or of renewal of registration (as the case may be);

s. 44 (1) From the amount of all premiums received by the Chief Commissioner under this Division there shall be deducted such proportion or amount as is from time to time prescribed in respect of administration expenses and the residue shall at prescribed intervals be paid to the respective authorized insurers nominated by owners in accordance with the foregoing provisions of this Division.

(2) With every payment made to an authorized insurer under this section the Chief Commissioner shall supply a schedule of particulars in the prescribed form sufficient to inform the authorized insurer in relation to every contract of insurance under this Division and represented in such payment of the following matters: -

(a) The separate identifying number assigned under this Act to and the class of the motor car to which the contract of insurance relates;

(c) The date of payment of such premium and the period for which such payment was made;

(a) The authorized insurer shall as soon asmay be after the receipt of such schedule of particulars issue to the owner of any motor car to which such contract of insurance relates a policy of insurance.

(i) be in accordance with the contract of insurance under this Division and evidence thereof; and

s. 46 (1) In order to comply with the requirements of this Division a contract of insurance under this Division in respect of any motor car shall, except as provided in this section, insure the owner of such motor car and any other person who at any time drives such motor car whether with or without the authority of the owner against any liability (including liability for costs) which may be incurred by that owner or other person in respect of the death of or bodily injury to any person caused by or arising out of the use of such motor car in Victoria and in any other State or any Territory of the Commonwealth.

(2) A contract of insurance shall be deemed to comply with this Division notwithstanding that -

(a) under such contract the liability of the authorized insurer is limited to Two thousand pounds in respect of any claim made by or in respect of any passenger in the motor car to which the contract of insurance relates and to Twenty thousand pounds for all claims made by or in respect of such passengers (and such limits shall be inclusive of all costs in relation to any such claim or claims); or

(b) such contract does not indemnify the owner or the driver of the motor car to which the contract of insurance relates against any liability which may be incurred in respect of the death of or bodily injury to the driver or the owner of such motor car; or

(c) such contract does not indemnify the owner or the driver of the motor car to which the contract of insurance relates against any liability which may be incurred by such owner or driver where such liability arises under an agreement unless the liability is one which would have arisen in the absence of such agreement.

It appears that on 8th February 1963 Meikle followed the course prescribed by s. 42 (1) (a). On that date he nominated the Commissioner as his authorized insurer and paid to the Chief Commissioner of Police the appropriate insurance premium. Presumably a copy of the nomination was sent to the Commissioner in accordance with s. 42 (2) but no policy of insurance was issued pursuant to s. 44 (3). No policy was issued because s. 44 (3) had been repealed by the Motor Car (Third Party Insurance) Act 1960 Vict.. By the same Act s. 42 (7) of the principal Act was amended by inserting at the end thereof the words "in the form prescribed". But no form had been prescribed by the 8th February 1963 or, for that matter, by the time of the trial. Until 1960 there had been a form prescribed for the purposes of s. 44 (3) but, as already mentioned, that sub-section was repealed in 1960. It may be observed in passing that the form prescribed for the purposes of s. 44 (3), and which was in use until 1960, purported to limit the liability of the insurer to £2,000.

The form of nomination, which had been provided by the Chief Commissioner, and which, after it had been filled in, was lodged with that officer, complied with the provisions of s. 44 (2) but it contained no reference to, and no provision for any reference to, the extent of the cover desired; it simply seems to have nominated the State Insurance Office of Victoria as "the authorized insurer with which I wish the insurance of motor car No. HSP-831 to be effected". This was the first occasion on which he had registered that car and there is no evidence to suggest that he had effected any insurance in this manner on any other occasion.

The question for our decision then is what legal relationship, if any, resulted from these events having regard to the legislative provisions which we have set out. First of all, it is clear enough that Meikle could not be "deemed to have entered into a contract of insurance under this Division in the prescribed form " for no form had been prescribed. The learned trial judge, however, saw little difficulty in the fact that no form had been prescribed and thought that this circumstance "did not really affect the application of the earlier part" of sub-s. (7) of s. 42. Indeed, he remarked that this proposition was conceded, and in his view, rightly conceded. Nevertheless it had been asserted by the appellant in his defence filed in the suit that he was not under any liability at all but at what stage of the trial the appellant departed from this attitude does not clearly appear. However, upon the appeal, liability to the extent of £2,000 was admitted on the basis that Meikle and the respondent must be deemed to have entered into a contract "in the form of the statutory requirements". But we regard this proposition as an unsatisfactory step in the solution of the problem with which the Court is faced. First of all, the problem is quite different from that which arose in Downey v. Pryor [1] - a case relied upon by the learned trial judge - and in a manner resembles those which were raised by the circumstances in Browne v. Commissioner for Railways [2] and in Cameron v. Deputy Federal Commissioner of Taxation (Tas.) [1] . The fiction introduced by the concluding part of s. 42 (7) is, it seems to us, incapable of operating unless and until a form has been prescribed pursuant to s. 93 (1) (o) of the Act. There is nothing ambiguous about the concluding words of s. 44 (7) as they have stood since 1960 - "shall be deemed to have entered into a contract of insurance under this Division in the prescribed form" - and, in the absence of such a form - which, of course, might have been prescribed before the amending Act of 1960 came into operation as being "necessary or expedient for bringing the Act into operation at the date of the commencement thereof" (Acts Interpretation Act 1958 Vict., s. 5) - the statutory provision cannot be converted into a provision deeming the owner and insurer to have entered into "a contract in the form of the statutory requirements". However, if we accept the respondent's contention there still remains the problem of what are the "statutory requirements". Section 40 of the Act requires every owner of a motor car to insure against any liability which may be incurred by him or any person who drives such motor car in respect of the death of or bodily injury to any person caused by or arising out of the use of such motor car. Then s. 46 provides that in order to comply with the requirements of this Division a contract of insurance under this Division in respect of any motor car shall, except as provided in the section, insure the owner of such motor car and any other person who at any time drives such motor car against any liability which may be incurred by that owner or other person in respect of the death of or bodily injury to any person caused by or arising out of the use of the motor car in Victoria and in any other State or Territory of the Commonwealth. However, sub-s. (2) of that section provides that a contract of insurance shall be deemed to comply with this Division notwithstanding that the liability of the authorized insurer is limited in the respects set out in the sub-section. The contention of the appellant is, of course, that the insurer must be deemed to have entered into a contract of insurance which expressed the permitted limitations with respect to the liability of the insurer and which was, pursuant to that sub-section, deemed to comply with the Division. But we find it impossible to give effect to the deeming provisions of s. 42 (7) in this manner. Nor, can we see any reason why, if we are to accept the proposition that Meikle must be deemed to have entered into a contract "in the form of statutory requirements", we should not hold that such deemed contract insured him, without limit, in respect of all liabilities for death or injury arising out of the use of his motor car. We can find nothing in the Act which would lead to a conclusion that the insurer's liability under such a deemed contract should be regarded as limited in all or in any of the respects permitted by s. 46 (2). Perhaps, having regard to the concession made at the trial and to the argument advanced on this appeal by the appellant we are entitled, and ought, to decide the appeal on the hypothesis that there was a deemed contract of insurance between Meikle and the appellant and that, since there is nothing to suggest that the amount of the indemnity recoverable thereunder is limited in any way, the respondent should hold the judgment which she has obtained. But holding the view, as we do, that the concluding provision of s. 42 (7) was, in the absence of a prescribed form, incapable of operating we regard this solution as unsatisfactory.

1. (1960) 103 C.L.R. 353. 2. (1935) 36 S.R. (N.S.W.) 21. 3. (1924) 34 C.L.R. 8.

To reject this solution would, of course, mean, in the absence of some alternative solution, that, as counsel for the respondent said, for a period of four years up to the date of trial owners of motor cars who had paid premiums pursuant to s. 42 (1) (a) were not covered by insurance. Further in spite of the fact that during this period an owner had done all he could do to comply with the provisions of the Act he would still be in breach of s. 40 and liable to the penalty prescribed by sub-s. (2) of that section. And in spite of the fact that the Chief Commissioner and, in turn, the authorized insurer, had received insurance premiums from him from year to year the so-called authorized insurer would be under no liability.

However, we think there is another solution to the problem. It cannot be doubted that the companies who during this period were authorized insurers knew that no form had been prescribed for the purposes of s. 42 (7) and, therefore, that the extent of their liabilities, if any, fell to be determined apart from the operation of that sub-section. Further, it is apparent that since the making of a contract of insurance covering the owner's liability for death or personal injury arising out of the use of a motor car is a condition of registration and that an owner is prohibited from driving an unregistered car, it was contemplated that the insurance cover should, in cases where the procedure prescribed by s. 42 (1) (a) was employed, attach at the time when the owner furnished his form of nomination and paid his premium to the Chief Commissioner. By s. 72 of the Act the State Motor Car Insurance Office is deemed to be an authorized insurer for the purposes of that part of the Act under consideration. Further an authorized insurer is any body corporate or unincorporate carrying on the business of insurance in Victoria which is willing to undertake insurance business in terms of Division 1 and which has made an application to the Minister to be approved, and has been approved, as an authorized insurer. Notice of such approval is to be published in the Government Gazette and, thereafter, the authorized insurer may withdraw from insurance business in terms of the Division only by notice in writing which is not to take effect until a date specified by the Minister published in the Government Gazette. It seems to us that, in these circumstances, it is incontestable that the Chief Commissioner receives premiums with the authority of the nominated authorized insurer and with the intention that the cover shall attach upon the receipt of the premium. No difficulty, of course, can arise if a form has been prescribed for the purposes of s. 42 (7). But why in the absence of such a provision and with knowledge that no form has been prescribed should an authorized insurer - that is a body which is willing to undertake insurance business in terms of Div. 1 of Pt V of the Act, and has applied for and obtained the approval of the Minister as an authorized insurer and who must be taken to have consented to a public notification of the fact that he is willing to undertake insurance business of this character - not be understood to have intended that a contract should be made on its behalf the moment the premium is paid to the Chief Commissioner and the particular authorized insurer nominated. That is to say, that upon payment of the premium and upon the nomination of any particular authorized insurer a contract of insurance came into existence covering the owner's motor car against any liability which might be incurred by him or any person who might drive such motor car in respect of the death or bodily injury to any person caused by or arising out of the use of such motor car. It is true that it was unnecessary for the appellant to obtain the Minister's approval as an authorized insurer and, in this respect, he may be thought to be in a different position from any other authorized insurer. But the fact remains that, although no form had been prescribed, the Chief Commissioner had, for a period of three years after 1960, collected premiums on his behalf and they had been remitted to and accepted by him. All this, we do not doubt, was a matter of common knowledge and, undoubtedly, he must be taken to have allowed this practice to continue on the understanding that upon payment of a premium to the Chief Commissioner by an owner the latter should be entitled to the benefit of an insurance cover contemporaneously with the registration of his vehicle. In these circumstances it was, in our view, implicit that the Chief Commissioner was authorized by the appellant to accept premiums on the basis that an insurance cover should attach at once. It was, of course, not contemplated that where an owner paid his premium pursuant to s. 42 (1) (a) (i) a formal policy of insurance would issue. The Act did not provide for this to be done; rather it contemplated that the respective rights and liabilities of the parties would be governed by a prescribed form or forms. But in the circumstances as they existed it was for the insurer, having, in effect, held out the Chief Commissioner as his agent having authority to effect contracts of insurance, to take such steps as were necessary to bring to the notice of an owner that his liability under any such contract was limited. It is apparent in this case that no such steps were taken and the indemnity thereby afforded to Meikle was, therefore, without limit. In our view the appeal should be dismissed.

This appeal is from a judgment of the Supreme Court of Victoria (Gillard J.) [1] in an action under s. 47 of the Motor Car Act 1958 Vict. as amended prior to 5th October 1963. The judgment awarded the plaintiff, the present respondent, the sum of £9,660, being equivalent to the amount (including costs) which was unpaid in respect of a judgment she had recovered against a person who was the owner and driver of a motor car in respect of the death of her husband. The husband was a passenger in the car, and his death, resulting from an accident which occurred on the date above mentioned, was caused by or arose out of the use of the car. The parties are agreed that the car was one to which a contract of insurance under Div. 1 of Pt V of the Act related, that the owner was insured under that contract against liability in respect of the death of a passenger, and that the defendant (the present appellant) was the authorized insurer with whom the contract had been made.

In these circumstances s. 47 entitled the respondent to recover against the appellant the sum above mentioned "or the amount to which the liability of the authorized insurer is limited under the contract of insurance, whichever is the smaller amount". The appellant contends that the contract between it and the owner of the car was one which limited the appellant's liability in respect of the death of a passenger to £2,000, and it seeks in this appeal to have the judgment against it reduced accordingly.

The contract was not in writing. Its existence at the time of the accident must be attributed either to the ordinary law of contract as applied to the conduct of the appellant and the owner of the car or to a provision to be found in s. 42 (7) of the Act by which in certain circumstances the owner of a motor car and an authorized insurer are deemed to have entered into a contract of insurance under the Division. The parties to this appeal have joined in treating the contract as a deemed contract under s. 42 (7); and if that be right the question to be decided is simply one of statutory construction: does s. 42 (7) mean that the contract into which the owner and the authorized insurer are deemed to have entered is one which limits the insurer's liability in respect of the death of a passenger to £2,000?

I must first explain why I think, as I do, that the contract is rightly attributed to the operation of s. 42 (7) and not to the ordinary law as to the formation of contracts. On a day prior to the accident in which the respondent's husband received his fatal injury the owner of the car, upon effecting the registration which was current at the time of the accident, paid to a member of the police force who was a "registration officer" under the Act the appropriate insurance premium in respect of the car and the surcharge for which the Act provided in respect of that premium. At the same time he nominated the appellant as the authorized insurer with which the contract of insurance under Div. 1 was to be made. These steps together constituted one of the two ways by which the Act requires that "insurance to comply with the requirements of this Division" shall be effected: see s. 42 (1) (a). The only other way would have been to pay the premium to an authorized insurer and enter into an actual contract of insurance "under this Division" with that insurer: see s. 42 (1) (b). It was necessary for him by one way or the other to effect an "insurance to comply with the requirements of this Division", because unless there was in force in relation to his car a "contract of insurance under this Division" (which means, by definition, "a contract of insurance with an authorized insurer and complying with the requirements of this Division": see s. 38), he could not without committing an offence use his car or cause or permit any other person to use it: s. 40 (2). But more than that, he was under the positive obligation of s. 40 (1), which is the key provision in the compulsory third party insurance scheme enacted by Div. 1. This is an obligation which, "subject to and in accordance with the Act", is imposed upon every owner of a motor car. It is stated in the section in two paragraphs: the owner must (a) insure against any liability which may be incurred by him or any person who drives the motor car in respect of the death of or bodily injury to any person caused by or arising out of the use of the motor car; and (b) for that purpose enter into a "contract of insurance under this Division". As the owner in the present case did not enter into such a contract by dealing directly with an authorized insurer in accordance with par. (b) of s. 42 (1) but dealt with a registration officer in accordance with par. (a) of that sub-section, it seems clear that so far as his intention is concerned he relied upon the Act to give him the necessary "insurance to comply with the requirements of the Act".

This the Act does by provisions in sub-s. (1) of s. 42 and sub-s. (7) (a) of the same section, the first providing that the steps described in par. (a) of sub-s. (1) shall constitute a way of effecting such an insurance, and the second providing that upon the receipt by the registration officer of the form of nomination together with the appropriate insurance premium the owner and the insurer shall be deemed to have entered into a contract of insurance under the Division "in the form prescribed". There is a difficulty at this point because at the time the owner of the car here in question paid the appropriate insurance premium to the registration officer and nominated the appellant as the authorized insurer with whom the contract of insurance under the Division was to be made no form of contract of insurance under the Division had been prescribed. A literal reading of sub-s. (7) (a) would favour the view that the operation of that provision at any given time is conditional upon there being in force at that time a prescription of such a form of contract. There are, however, considerations the other way which seem to me to be overwhelming. The intended legal consequence of doing what is described in s. 42 (1) (a) is implicit in that provision. The plain intention is that if a car owner follows the course set out in par. (a) the insurance will thereby and without more be effected just as surely as it would have been if he had followed instead the way set out in par. (b), entering into an actual contract of insurance with the authorized insurer. For twenty years, from the commencement of s. 7 of the Motor Car (Third Party Insurance) Act 1939 Vict. until the words, "in the prescribed form", were inserted, as they were for the first time by s. 4 of the amending Act (No. 6650) of 1960, sub-s. (7) gave express effect to the intention so plainly appearing in sub-s. (1). Car owners were thus enabled to effect their third party insurances by taking the steps now set out in sub-s. (1) (a) of s. 42 without there being any question of a prescribed form. That without any amendment of sub-s. (a) the intention of that sub-section should be defeated during any interval there might be between the commencement of the 1960 Act and the prescription of a form of contract seems to me a result which the Legislature would be most unlikely to contemplate. In Inland Revenue Commissioners v. Joicey [No. 1] [1] , where a not dissimilar question arose under a statute conferring a right to appeal against a tax decision "within the time and in the manner and on the conditions directed by Rules of Court", Hamilton L.J. (who became Lord Sumner) used forceful words which I paraphrase with necessary adaptations in the next three sentences. The result I have mentioned would mean that the Legislature declared its opinion that the owner should have a right to effect an insurance in a particular way and gave its consent thereto, and yet deputed to another body the function of determining whether, if at all, that right should veritably exist. Till that other body should act, the right (which, as I have said, had been absolute for twenty years) should be inchoate only. It would rest with the Executive to say when, if ever, the right should again be enjoyed; and no machinery would have been provided for constraining that body to perform this delegated function. Thus the amendment would have set a pretty trap for car owners so long as no form was prescribed: they would still have the promise of s. 42 (1) that by following the course described in par. (a) they would obtain the requisite third party insurance, but nevertheless no third party insurance would result from their doing so, and they would be guilty of an offence if, relying upon the promise, they should use their cars or cause or permit other persons to use them. In my opinion the words which the amendment added to s. 42 (7) are elliptical and would read, if expanded to express their true meaning at length: "and if there is a form prescribed at the material time the contract shall be deemed to be in that form".

Even if there had been a form prescribed, I doubt whether it could validly have included more than machinery clauses. In particular I doubt whether anything in it could have operated of its own force to limit the liability of the insurer. But however that may be, the question now to be considered is whether the words in s. 42 (7) describing the deemed contract as one "complying with the requirements" of the Division make that contract one which limits the insurer's liability in respect of the death of a passenger to £2,000.

This is not a question to be answered simply by saying that s. 40 requires every owner of a motor car to insure against "any liability" which he may incur in respect of the death of or bodily injury to any person caused by or arising out of the use of such motor car; for the section does not require him to do so except subject to and in accordance with the Division. The answer must, I think, depend upon the meaning of s. 46, which contains two important provisions. The first, so far as material, is that in order to comply with the requirements of the Division a contract of insurance under the Division in respect of any motor car shall, "except as provided in this section", insure the owner against any liability which may be incurred by him in respect of the death of any person caused by or arising out of the use of such motor car: sub-s. (1). The words of exception evidently refer to sub-s. (2), which provides that a contract of insurance shall be deemed to comply with the Division notwithstanding any of three things. One is that the liability of the authorized insurer is limited to £2,000 in respect of any claim made by or in respect of any passenger in the motor car to which the contract of insurance relates, and to £20,000 for all claims made by or in respect of such passengers. (There follows a curiously worded parenthesis: "and such limits shall be inclusive of all costs in relation to any such claim or claims". These words may tend to support the view I shall express, but I do no more than draw attention to them.) The second thing that sub-s. (2) mentions is that the contract does not indemnify the owner or the driver against any liability in respect of the death of or bodily injury to the driver or owner. And the third is that the contract does not indemnify the owner or driver against any liability arising under an agreement unless the liability would have arisen in the absence of such agreement.

The view of the learned primary judge that sub-s. (2) refers only to a contract actually entered into, as distinguished from one which is deemed by s. 42 (7) to have been entered into, is no doubt correct; but to find that an actual contract of insurance satisfies the requirements of the Act notwithstanding that it contains any or all of certain limitations and exclusions of liability is surely to find something relevant to the requirements of the Act for contracts of insurance.

The words of exception in s. 46 (1) show that the two sub-sections must be fitted together in order that it may be seen what, in the end, are "the requirements of this Division". To the simple question, what amount of cover is required by the Division in respect of a passenger in the motor car, the section as a whole answers: a cover to the extent of £2,000 only. A cover of a larger amount would be greater than the Division requires. I am unable to see how a Division can be said to contain a requirement that a contract shall create an unlimited liability where the Division provides that a contract shall be deemed to comply with its requirements notwithstanding that the liability is limited.

It should be kept clearly in mind that the purpose of Division 1 as a whole is to establish and regulate a system of compulsory third party insurance, insisting upon a minimum insurance against third party risks, enabling third parties to receive the advantage of the insurance, and enabling maximum rates of premium to be prescribed for the purposes of the Division. The maximum rates to be prescribed are, obviously I should have thought, the maximum rates to be chargeable for the insurance which the Division makes compulsory. Only one cover can be said to be compulsory, and that is the minimum cover which the Division permits. If a motor car owner wants greater insurance than that, he may make his own arrangements with the insurer: that is not the business of the Division. I should have thought it would hardly admit of doubt that the Premiums Committee, which under s. 69 (12) is to recommend the maximum rates that may be prescribed under s. 71 (1) (a), is intended to fix upon the rates it considers appropriate in respect of cars of various categories for contracts providing the compulsory cover, not rates based upon any other cover; and that must surely mean the appropriate rates for contracts which limit the insurer's liability and the owner's and driver's indemnity as far as s. 46 (2) allows. In respect of each car there is to be "the prescribed maximum rate of insurance premium applicable to the motor car concerned" (see the definition in s. 38); not several rates applicable to the one car and varying with the degree of cover that may be desired. It seems to me that to affirm the judgment below would be to interpret s. 42 (7) as meaning that, upon payment of the maximum premium applicable to a particular car for the compulsory amount of cover, there shall be deemed to be a contract of insurance giving more than the compulsory cover. I do not see how that can be right.

In my opinion the appeal should be allowed and the amount awarded by the judgment of the Supreme Court reduced to £2,000.

The husband of the respondent, who was a passenger in a motor car owned by one Meikle, was killed when that car overturned. It is now conceded that Meikle had entered into a contract of insurance with the appellant in conformity with the requirements of the Motor Car Act 1958 Vict. in relation to the car, and the only question for this Court is whether, under that contract, the liability of the appellant is limited to £2,000 in the case of a claim made in respect of a passenger in the car. Gillard J. decided that liability was not so limited [1] .

A study of the provisions of the Act has brought me to the conclusion that a contract of insurance entered into by reason of a nomination in accordance with s. 42 (1) (a) and (2) of the Act, and the receipt by the Chief Commissioner of Police of the form of nomination and the appropriate insurance premium (s. 42 (7)) is, in the absence of some express limitation in the form of contract, to be regarded as an insurance against any liability which may be incurred by the owner or the driver of the car in respect of the death of, or bodily injury to, any person arising out of the use of the motor car (ss. 40 (1) and 46 (1)) unless it appears that the premium which was paid was that appropriate for a contract of insurance containing some one or more of the limitations upon liability stated in s. 46 (2) of the Act.

The definition of "appropriate insurance premium" as "an amount calculated according to the prescribed maximum rate of insurance premium applicable to the motor car concerned" permits the prescription of different maximum rates according to the risks undertaken by the authorized insurer and it seems to me that s. 46 (2) - which in effect authorizes particular limitations of liability in a contract of insurance complying with the requirements of the Act - is directed, inter alia, towards giving a motor car owner who insures by nominating an authorized insurer and paying a premium, the opportunity to take limited protection at a lower premium once different rates have been prescribed. If, however, only one maximum rate has been prescribed, I would, in the absence of countervailing circumstances, feel compelled to regard a premium calculated in accordance with that rate as the premium appropriate for a contract of insurance providing unlimited protection rather than for a contract of insurance containing the maximum limitation of liability. The Act treats full third party insurance as the rule, and limited insurance - but only within limits strictly defined - as the exception, dependent upon the actual terms of the contract of insurance whether a contract arising from the nomination of an authorized insurer and the payment of the appropriate premium or made by bargain between the owner and the insurer. The express limitation of liability may extend to one or more of the three limitations permitted by s. 46 (2) - an ancilliary provision relating to the permissible limitations upon normal cover - and one would expect the premium to vary with the extent of the permissible limitations actually adopted.

It was not shown either that the appropriate premium received by the Chief Commissioner of Police from Meikle was not the premium appropriate for insurance against the full liability to which ss. 40 (1) (a) and 46 (1) - which I regard as the leading provisions of the Division - relate or that the terms of the contract adopted any one or more of the permitted limitations. Accordingly, I consider that the judgment appealed from was correct and that the appeal should be dismissed.