Kaduthodil v NRMA Insurance

LEGISLATION CITED : Local Courts Act 1982 (NSW) - ss 73, 75

Allen v Kerr & Anor (1995) Aust Torts Reports 81-354 Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 CASES CITED : Devries v Australian National Railways Commission (1993) 177 CLR 472 R L & D Investments Pty Ltd v Bisby (2002) 37 MVR 479; [2002] NSWSC 1082 State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in Liq) (1999) 160 ALR 588

PARTIES : Jose Joseph Kaduthodil - Plaintiff NRMA Insurance Limited - Defendant

COUNSEL : Mr K Pierce - Plaintiff Mr A J Stone - Defendant

SOLICITORS : Stewart Cuddy & Mockler - Plaintiff Turner Whelan - Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

13217/2006 - JOSE JOSEPH KADUTHODIL v NRMA INSURANCE LIMITED

JUDGMENT (Appeal - Local Court - insurance policy) 1 HER HONOUR: By summons filed 6 July 2006 the plaintiff seeks firstly, an order in accordance with the Local Courts Act 1982 (NSW), s 73(1) that the judgment of Her Honour Haskett, LCM in proceedings No 9918/2005 be held or declared erroneous in point of law; secondly, that the grounds of appeal involve questions of mixed law and fact and that the judgment of the Local Court be held or declared erroneous in law and/or in fact, and the Court grant leave to appeal from the judgment of the Local Court; thirdly, that the appeal be allowed; fourthly, that the judgment be set aside; fifthly, that a judgment in favour of the plaintiff be substituted by the Court; sixthly, in the alternative that the judgment of the Local Court be varied by substituting a lesser judgment sum and interest on the judgment sum be reduced accordingly; seventhly, such further relief as the Court deems fit; and finally an order for costs. 2 The plaintiff is Jose Joseph Kaduthodil (Mr Kaduthodil). The defendant is NRMA Insurance Limited (NRMA). Mr Kaduthodil was the defendant in the Local Court and the NRMA was the plaintiff. For convenience, I shall refer to the parties by name.

The law 3 At the outset, it may be helpful to make some brief comments concerning the remedy pursued by the plaintiff. Section 73 of the Local Courts Act 1982 (NSW) (the Act) permits a party who is dissatisfied with a judgment as being erroneous in point of law to appeal to this Court. The onus lies on the plaintiff to demonstrate that there has been an error of law. What is a question of law (as opposed to a question of fact) was considered, inter alia, in Allen v Kerr & Anor (1995) Aust Torts Reports 81-354; Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 155-156; Carr v Neill [1999] NSWSC 1263 and R L & D Investments Pty Ltd v Bisby (2002) 37 MVR 479; [2002] NSWSC 1082. It cannot be said that the judicial officer acted on evidence inconsistent with facts incontrovertibly established by the evidence - see Devries v Australian National Railways Commission (1993) 177 CLR 472 per Brennan, Gaudron and McHugh JJ at 479 and State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in Liq) (1999) 160 ALR 588. 4 Section 75 of the Act provides that the Court may determine an appeal by either (a) by varying the terms of the judgment or order or (b) setting the judgment or order aside or (c) by setting the judgment or order aside and remitting the matter for determination in accordance with the Court's directions or (d) by dismissing the appeal.

Grounds of Appeal 5 Seventeen appeal grounds were raised in the summons. They can be summarised as, firstly, that the decision of the Court was erroneous in point of law, and/or erroneous as to mixed questions of law and fact (the grounds being cumulative or alternative); secondly, it was submitted that an error was made in relying on the notion of "double dipping" and application of legal principles to the facts; thirdly, the court failed to properly construe the insurance policy as to whether, or what amount the defendant was entitled to recover from the plaintiff; fourthly, a failure to properly construe the reasons as to economic loss damages of the District Court Arbitrator as tendered into evidence; and fifthly, the court erred in the application of the correct legal principle to the facts. The remaining submissions related to the court overlooking legal principle, error as to material matters of fact, failure to analyse competing submissions and apply the facts, error by considering irrelevant matters or failing to consider relevant matters, failing to give sufficient reasons, denial of natural justice, errors in holding the plaintiff liable at all, or not for a lesser sum, and error in determining interest and costs. Local Court Proceedings 6 Mr Kaduthodil was involved in a car collision on 12 July 1998. Mr Kaduthodil held an income protection policy through the NRMA, and the NRMA were the insurers of the car that he drove. The policy provided that "If you or your family are hurt in an accident in a car, we will pay you the $50,000 over two years for lost wages and expenses". Mr Kaduthodil received $44, 206.40 and his wife received $5,793.60. Mr Kaduthodil then brought an action against FAI Insurance, who was the insurer of the other driver. He was successful in arbitration and was awarded $305,321.98. The proceedings were ultimately settled. On 21 August 2002 judgment was entered in favour of Mr Kaduthodil in the sum of $318,371.98. The NRMA claimed their $44,206.40 back from Mr Kaduthodil subject to a clause in their policy. 7 On 8 June 2006, Magistrate Haskett found in favour of NRMA, and ordered that Mr Kaduthodil pay $44,206.40, plus interest as calculated from 19 September 2002. 8 It was common ground that the NRMA had paid Mr Kaduthodil the sum of $44,206.40 which was for two years lost wages and expenses. 9 It is a general principle of contract law, applicable to insurance contracts, that ambiguity in a contract is to be interpreted against the party who drew it up, which is normally the insurer. (Western Australian Bank v Royal Insurance Co (1908) 5 CLR 533 at 559 per Barton J, at 567-8 per O'Connor J; Guardian Assurance Co Ltd v Condogianis (1919) 26 CLR 231 at 236-43; Manufacturers' Mutual Insurance Ltd v Stargift Pty Ltd (1984) 3 ANZ Ins Cas 60-615. 10 The relevant policy wording is: "If you also received damages or compensation. If we pay you, your spouse or family member additional living expenses or loss of earnings, and either you, your spouse or a family member also received damages or compensation, for those same additional living expenses or loss of earnings , whether under the Motor Accidents Act 1988, the Workers Compensation Act 1987, or any other statutory scheme arrangement, the person we have paid must immediately repay us the amount we have paid them or the amount of those damages or compensation, whichever is less ." [emphasis added] 11 Both parties submitted that it is only necessary to have reference to the wording of the policy. 12 Counsel for Mr Kaduthodil submitted that as the compensation was not for the same loss of earnings, the obligation to pay those moneys does not arise. 13 Mr Kaduthodil's Counsel submitted that while Her Honour recited the arguments of the parties, she did not proceed to resolve them, and her Honour merely and erroneously held that the relevant policy clause was clear in its wording. He further submitted that the Magistrate did not give sufficient reasons and that not giving sufficient reasons also constituted a denial of natural justice. 14 NRMA submitted that the Magistrate recounted in detail the evidence and argument before her. They further submitted that it is not surprising that the Magistrate did not make clear or definitive findings of fact as the primary issue before the Magistrate was the interpretation of an insurance policy, rather than any controversy as to factual circumstances. In my view, the duty to give reasons does not include an obligation to regurgitate every submission made. 15 The duty of a judicial officer to give reasons for his or her decision is uncontroversial (see Pettitt v Dunkley (1971) 1 NSWLR 376; Housing Commission (NSW) v Tatmar Pastoral Co Pty Ltd (1983) 3 NSWLR 378 at 385-6 per Mahoney JA; Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247). The duty does not require the judicial officer to spell out in minute detail every step in the reasoning process or refer to every single piece of evidence. It is sufficient if the reasons adequately reveal the basis of the decision, expressing the specific findings that are critical to the determination of the proceedings (see Stoker v Adecco Gemvale Constructions Pty Ltd & Anor [2004] NSWCA 449 per Mason P, Sheller and Santow JJA; Gorczynski v Beilby [2005] NSWSC 884 Kirby J at [96-97]). To paraphrase, reasons should include firstly, the what, where and when of the matter; secondly, the evidence that goes to liability; thirdly, the findings on the evidence; and fourthly, an indication, where there is conflict, why some rather than other evidence is preferred. 16 In Jung v Son, NSWCA 18 December 1998, Stein JA stated: "While a judge does not have to state reasons for every aspect of the case, his reasons must be sufficient to satisfy the requirements of Pettit v Dunkley [1971] 1 NSWLR 376. The reasons must be sufficient to enable an appellate tribunal to gain a proper understanding of the basis of the verdict. Not to do so is an error of law (Asprey JA at 382 and Moffitt JA at 388). Failure to give reasons also makes it impossible for an appellate tribunal to give effect to a plaintiff's right of appeal. Issues critical to the case, as these were, must be dealt with by reasons (Samuels JA in Mifsud v Campbell (1991) 21 NSWLR 725 at 728)." 17 In short, the judicial officer should make it clear what he or she is deciding and why. 18 Counsel for Mr Kaduthodil also drew this Court's attention to the Magistrate's references to National Insurance Co of NZ v Espagne (1961) 105 CLR 569 and Treloar v Wickham (1961) 105 CLR 102 and stated that they were misconstrued by her. Apparently, the point Counsel sought to make was that any obligation on Mr Kaduthodil to repay the NRMA by the relevant clause of the policy, conditional upon "receipt" of damage for the same loss of earnings was to be disregarded in that assessment of damages and that these general principles were not ousted, or clearly ousted, by the NRMA's policy wording. 19 NRMA submitted that, even if the Arbitrator's award was considered, the Arbitrator awarded the plaintiff $45,000 for past economic loss for a total period of four years, without attributing any amount to any portion of the four year period. On this basis, NRMA submitted that it should be entitled to claim the same loss of earnings which Mr Kaduthodil had received payments from NRMA for. Mr Kaduthodil submitted that a pro rata division of the $45,000 should occur so that only two years worth of the payments are refundable. NRMA described this approach as "artificial", as commonsense suggests that injuries and consequential economic loss would be acute in the period immediately post accident, and that if any weighting of economic loss took place the period immediately post accident would be when Mr Kaduthodil was most disabled. 20 The Magistrate in her oral reasons stated: "The plaintiff [NRMA] argued that this was a simple case. There was a policy in existence, the terms of such that damages would be repaid. The defendant as plaintiff in the District Court proceedings received moneys and the NRMA says we are entitled to the moneys to be paid back given the undertakings and the policy.

In looking at the submissions both from the plaintiff and the defence and the arguments that were marshalled by both sides, I am persuaded more by the arguments of the plaintiff. To my mind this is a simple case where, in terms of the policy, it is clear that where the NRMA has paid loss of earnings to the defendant here, he has also received damages or compensation for those same loss of earnings, that is for past economic loss and he is required to repay the NRMA the amount that he has been paid for the amount of those damages, or compensation, whichever is less.

To my mind, given the clear wording in the policy, the terms are such that the sum of $44,206 odd should be repaid. It is clear that the defendant has received moneys from the District Court and there was also the undertakings made as well that he would repay those moneys, so there will be verdict for the plaintiff". [p. 5 of 8 June 2006 Transcript of C Haskett, line 27-51]. 21 The Magistrate held that the NRMA had paid loss of earnings to Mr Kaduthodil and he had also received damages or compensation for those same earnings. 22 The Macquarie Dictionary defines "same" as "identical with what is about to be or has just been mentioned, being one or identical, though having different names, aspects, etc, agreeing in kind, amount, etc.; corresponding, unchanged in character, condition." The Oxford English Dictionary defines "same" as "with forward reference, identical with what was indicated in the following context; with backward reference, identical with what has been indicated; expressing the identity of an object designated by different names, standing in different relations, or related to different subjects or objects". The Collins Dictionary (5th Ed, Australian) defines "same" as "being the very one; being the one previously referred to, aforesaid; identical in kind, quantity; unchanged in character or nature". 23 "Same" does not mean "identical". On the definition of "same" which appears above, it was open to the Magistrate to interpret the policy in the manner that she did. It was open to the Magistrate to find that the earnings were the same and that they had to be repaid. It is my view that the Magistrate made it clear what she was deciding and why. While Mr Kaduthodil's Counsel's submissions covered about 50 pages, it is not incumbent for the Magistrate to reproduce all of those submissions in her judgment. In my view the Magistrate gave sufficient reasons. 24 The decision of Her Honour Haskett, LCM dated 8 June 2006 is affirmed. The appeal is dismissed. The summons filed 6 July 2006 is dismissed. 25 Costs are discretionary. Costs normally follow the event. The plaintiff is to pay the defendant's costs as agreed or assessed.

(1) The decision of Her Honour Haskett, LCM dated 8 June 2006 is affirmed.

(4) The plaintiff is to pay the defendant's costs as agreed or assessed. **********

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