Procedure - Courts and judges generally - Precedents - Precedents generally - General - Judicial comity - Decision of court or co-ordinate authority.

Peck v Attorney-General [1956] Tas SR 88; Undershaft (No 1) Ltd v Federal Commissioner of Taxation [2009] FCA 41; (2009) 175 FCR 150, referred to.

Procedure - Supreme Court procedure - Tasmania - Practice under Rules of Court - Default of appearance - Debt or liquidated demand - Claim by statutory authority to recover damages and benefits paid.

Motor Accidents Insurance Board v O'Neill [1981] Tas R 113, discussed.

Judgment Number: [2011] TASSC 26

1 The Motor Accidents Insurance Board ("the Board") has sued the defendant, Joyce Melissa Young, for $109,277.75, alleging that it has paid out that much money in respect of injuries resulting from her use of an uninsured motor vehicle, and that it was entitled to recover that amount from her pursuant to the Motor Accidents (Liabilities and Compensation) Act 1973, ss18 and 28B. The writ was served on her on 30 July 2010. She did not file a notice of appearance. The Board sought to enter default judgment against her in accordance with the Supreme Court Rules 2000, r347(1). The Registrar declined to sign judgment, referring to the judgment of Neasey J in Motor Accidents Insurance Board v O'Neill [1981] Tas R 113. The Board then made an application under the Supreme Court Rules, r38, for a direction to the effect that the Registrar enter default judgment for the sum claimed plus costs.

2 The defendant appeared at the hearing of this application, without legal representation. She said that she was not the owner of the car to which the claim related. It seemed to me that there was a chance that she might have at least a partial defence to the Board's claims, and that it was therefore in the interests of justice that I give her an opportunity to file a notice of appearance. I therefore made an order extending the time for her to do so until 5pm on 21 April 2011. No notice of appearance was filed within that time.

3 At the conclusion of the hearing of this application I also made an order that, if no appearance was filed within the time allowed, the Registrar was to enter default judgment for the Board for the sum claimed, and costs to be taxed. It subsequently occurred to me that that order might have been inappropriate. Since no formal order has been entered in the record, I had a discretion to recall (ie set aside) that order and make a different one. The relevant principles were discussed by Underwood J (as he then was) in Electrolytic Zinc Company of Australasia Ltd v Fisher 31/1989. On 29 April 2011, in the exercise of that discretion, I recalled the order for the entry of judgment, and adjourned the application to allow an opportunity for further submissions to be made. I am now in a position to determine the application.

4 The relevant provisions of the Motor Accidents (Liabilities and Compensation) Act can be summarised as follows:

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Under s14(1), subject to certain exceptions, "the Board is bound to indemnify an owner or user of a motor vehicle ... in respect of any liability (not being a contractual liability) incurred by him in respect of the personal injury to a person resulting directly from a motor accident involving that motor vehicle in this State." Thus the Board is liable to indemnify a driver for any damages payable in respect of personal injuries caused by his or her negligent driving.

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By virtue of s15(1), moneys required to be paid by the Board under s14(1) may only be paid in accordance with an agreement or "a determination of a competent tribunal", ie a judgment.

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Under s17(1), the Board is entitled to take over settlement negotiations or legal proceedings in respect of a liability to which s14(1) applies, and "at any stage of those negotiations or proceedings, may pay, compromise, or settle any claim in relation thereto". Thus the Board may pay damages directly to a person injured as a result of negligent driving.

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Under s18(1)(b), where the Board has made payments in or towards the discharge of its obligations under the above provisions in respect of a liability incurred by a person as a user of a motor vehicle, and no premium has been paid for the use of the vehicle at the time of the motor accident giving rise to the liability, the Board may recover the amount of those payments from the person by whom the liability was incurred if that person was not the owner of the vehicle.

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Under s23(1), the Board must pay "scheduled benefits", as prescribed by regulations made under the Act, if a resident of Tasmania suffers personal injury resulting directly from a motor accident that occurs in this State or involves a motor vehicle registered in this State.

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Under s28B(4), the Board may recover the scheduled benefits paid by it from a person who was using a motor vehicle at the time of the relevant accident, but was not the owner, if that person did not have the consent or acquiescence of the owner to so use the vehicle, and did not have reasonable grounds for believing that he or she had the consent or acquiescence of the owner to so use the vehicle.

5 The endorsement of claim on the writ in this action is not a masterpiece of legal drafting, but it is clear enough that the Board is seeking to recover (a) pursuant to s18, $70,500 paid out by way of damages and costs, and (b) pursuant to s28B, $38,777.75 paid out by way of scheduled benefits.

6 The Supreme Court Rules make provision for the entry of final judgment in default of appearance in r347(1) which, omitting its provisions in relation to interest, reads as follows:

"(1) If the plaintiff's claim is for a debt or liquidated demand only against a defaulting defendant, the plaintiff may enter final judgment against that defendant for the amount claimed, together with costs ...".

7 The Board contends that its claim in this case is a claim for a "debt or liquidated demand only" within the meaning of r347(1). However Neasey J held in Motor Accidents Insurance Board v O'Neill (above) that a very similar claim by the Board for the recovery of money paid by way of damages did not amount to a claim for a "debt or liquidated demand only" within the meaning of the Rules of the Supreme Court 1965, O30, r2. That rule was the predecessor of the present r347(1). There is no basis for distinguishing that case. Counsel for the Board submitted that it was wrongly decided.

8 As a general rule, judges of first instance should follow the decisions of other judges of first instance, particularly decisions that have been followed for a long time: Peck v Attorney-General [1956] Tas SR 88 at 90. The authorities relating to judicial comity were reviewed by Lindgren J in Undershaft (No 1) Ltd v Federal Commissioner of Taxation [2009] FCA 41; (2009) 175 FCR 150 at pars[68] - [88]. In the light of that analysis, I think I should apply the principles set out by his Honour in pars[70] - [74] of his judgment, which read as follows:

"70 First, I must embark on my own independent consideration of the issues for decision with a view to reaching my own independent conclusion on them. The oath of judicial office requires me to do no less. If my own conclusion, independently reached, is consistent with his Honour's, there is no scope for his decision to influence me beyond 'fortifying' me in my conclusion.

71 Second, I must not follow his Honour should I reach the view that his Honour was 'clearly' or 'plainly' wrong.

72 Third, I may (not must) follow his Honour's (supposedly inconsistent) decision once it is clear that that decision is not 'plainly' or 'clearly' wrong.

73 Fourth, accepting the strong desirability of certainty and stability in judicial decision-making in the administration of justice, I will in fact follow his Honour's inconsistent decision unless I conclude that it was clearly or plainly wrong, or that for some other reason those same interests of justice demand that I adhere to my own conclusion in preference to his Honour's supposedly erroneous one.

74 While the expression 'clearly wrong' and 'plainly wrong' may be open to criticism, they usefully remind the later judge of the interests of justice in consistency of decision-making in a system of which the individual judge is but a part. The 'choice' to follow an earlier inconsistent decision of co-ordinate authority is, however, as a matter of law, discretionary and depends on the circumstances of a particular case. These will properly include considerations of the length of the period during which the earlier decision has stood, and whether it has been relied upon in the arrangement of human affairs."

9 In Motor Accidents Insurance Board v O'Neill, Mr O'Neill had been driving a motor vehicle which collided with another vehicle, resulting in injuries to two people. The Board made payments of damages in or towards the discharge of its obligations under ss14, 15 and 17 of the 1973 Act. Mr O'Neill was convicted of an offence under the Traffic Act 1925, s32(1), which relates to reckless and dangerous driving. By virtue of s18(3)(b) of the 1973 Act, that entitled the Board to recover the amount of its payments from him. In an action to recover the amount paid, the Board sought to enter judgment in default of appearance pursuant to O30, r2. Neasey J held that the Board's claim was not for "a debt or liquidated demand only" within the meaning of that rule.

10 There are certainly forceful arguments for regarding a claim by the Board for the recovery of amounts paid out by way of damages and/or scheduled benefits as a claim for a "debt or liquidated demand". They can be summarised as follows:

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The task of interpreting r347(1) should begin with a consideration of the text itself: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; (2009) 239 CLR 27 per Hayne, Heydon, Crennan and Kiefel JJ at par[47]. According to the Shorter Oxford Dictionary, the word "liquidated" means "ascertained and fixed in amount". The amounts paid out by the Board are fixed and ascertainable. No value judgment is involved in determining how much the Board has paid out.

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An interpretation of r347(1) that promotes its purposes or objects should be preferred to one that does not: Acts Interpretation Act 1931, s8A. The purposes of a default judgment procedure are to provide creditors with cheap, fast and effective remedies in undefended cases, and to avoid the need for undefended trials. The purposes or objects of r347(1) would therefore be promoted by treating the words "debt or liquidated demand" as applying to every demand for the reimbursement of a fixed or ascertainable sum.

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In Spain v Union Steamship Co of New Zealand (1923) 32 CLR 238, the High Court was concerned with a claim by the captain of a ship for the reimbursement of "reasonable expenses" pursuant to an industrial award. It was held unanimously that the claim was for a "debt or liquidated demand" for the purposes of the District Courts Act 1912 (NSW). That Act permitted proceedings to be instituted by a default summons only if the plaintiff's claim was for a "debt or liquidated demand". It is arguable that that case establishes that a claim pursuant to a statute for the reimbursement of a sum of money is a claim for a "debt or liquidated demand".

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In Crisp & Gunn Co-operative Ltd v Hobart Corporation [1963] HCA 55; (1963) 110 CLR 538, the High Court was concerned with an action brought under a Tasmanian statute to recover compensation for the compulsory acquisition of some land. The High Court held that, for the purpose of a rule relating to payments into court, an action to recover money payable under a statute was "an action to recover a debt or damages". That case can be viewed as authority for the proposition that an action to recover money payable under a statute is "an action to recover a debt".

11 There are further arguments that would support a conclusion that Motor Accidents Insurance Board v O'Neill should not be followed. I would summarise them as follows:

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Neasey J distinguished Spain v Union Steamship Co of New Zealand Ltd on the basis that it was a claim for a quantum meruit, and that such a claim has always been considered to be for a liquidated demand. It is arguable that the words quantum meruit, which mean "that which he has earned", refer to a common law right to reasonable remuneration for services provided, but that the claim in Spain, for the reimbursement of reasonable expenses pursuant to an industrial award, whilst it was analogous to a quantum meruit claim, was not such a claim at all.

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Neasey J did not mention Crisp & Gunn Co-operative Ltd v Hobart Corporation (above), and might not have been referred to that case.

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Neasey J relied heavily on the decision of Sholl J in Alexander v Ajax Insurance Co Ltd [1956] VicLawRp 70; [1956] VLR 436. That case concerned a claim on a household contents insurance policy for the total sum insured. The policy did not contain a promise to pay an agreed sum in the event of a total loss. Sholl J held that, in such a situation, a claim for the total sum insured was not a "liquidated demand". His Honour traced the history of the use of that term, beginning with the introduction of specially endorsed writs, available only for a claim for "a debt or liquidated demand in money" in England in 1852. He considered it was necessary to discover what claims were regarded in 1851 as liquidated. The 1852 legislation was introduced as a result of a report in 1851, in which it was pointed out that over 98 per cent of writs issued in the English common law courts related to "well-known and admitted demands", and that in the vast majority of such cases "the writ merely operated to compel immediate payment from a necessitous or backward debtor of a known and admitted debt". In the light of the historical analysis in Alexander, Neasey J concluded, at 120, that an essential feature of a "debt or liquidated demand" was that it related to a sum certain which was known, or able to be calculated, by both parties before proceedings were commenced. His Honour held that the Board's claim in that case was not a debt or liquidated demand because the defendant was not able to know how much the Board had paid out pursuant to the 1973 Act unless and until the Board provided him with an explanation and justification of its payments. It is strongly arguable that, having regard to the meaning of the word "liquidated", the defendant's knowledge and means of knowledge are irrelevant.

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In Workman, Clark and Co Ltd v Lloyd Brazileño [1908] 1 KB 968, the English Court of Appeal took the view that the phrase "liquidated demand in money" should be given a contemporary meaning, and not take its meaning from the old system of pleading. Sholl J did not refer to that case in Alexander. Gleeson CJ, Gummow, Hayne and Callinan JJ commented adversely on that fact in Victorian WorkCover Authority v Esso Australia Ltd (2001) 207 CLR 520 at par[29]. That lessens the precedential value of Alexander.

12 On the other hand, it is significant that Neasey J and Sholl J were eminent judges, and that Motor Accidents Insurance Board v O'Neill has stood unchallenged for nearly 30 years. Spain can be distinguished on the basis that it related a claim analogous to one for a quantum meruit. Crisp & Gunn can be distinguished on the basis that it stands as authority only in relation to the interpretation of rules relating to payments into court.

13 If the Board's claim is not regarded as one for a "debt or liquidated demand", it will be able to rely upon the Supreme Court Rules, r353(1). That subrule reads as follows:

"(1) In an action not provided for under this Division, the Court or a judge, on the application of the plaintiff, may give any judgment on the statement of claim to which the plaintiff is entitled against a defaulting defendant."

14 If the Board were to file a statement of claim, and then file an interlocutory application seeking judgment pursuant to r353(1), it would not be necessary for the Board to prove any part of its case. All facts pleaded in the statement of claim would be taken as established: Perpetual Investment Building Society v Gillespie [1882] WN 4; Siegert v Lawrence [1885] VicLawRp 11; (1885) 11 VLR 47 at 52; Stewart v Coughlan [1885] VicLawRp 59; (1885) 11 VLR 279; Noden v Mason [1926] VicLawRp 6; [1926] VLR 41 at 43; Lombank Ltd v Cook [1962] 3 All ER 491 at 498. Thus, without the direction to the Registrar that the Board has applied for, it will still be in a position to proceed to judgment without proving its case, and will be in a position to do so reasonably quickly and cheaply. In my view its ability to proceed to judgment quickly and cheaply is a factor that weighs against holding that Motor Accidents Insurance Board v O'Neill was wrongly decided and giving the direction sought.

15 Another factor that weighs against giving the direction sought is that the endorsement of claim does not include an allegation that the defendant used the relevant motor vehicle without the consent or acquiescence of its owner and without reasonable grounds for believing that she had such consent or acquiescence. Such a state of affairs is essential for the Board to be able to recover, pursuant to s28B of the 1973 Act, the sum of $38,777.75 that it is claiming in respect of scheduled benefits. That factor weighs in favour of putting the Board in a position where it must plead its claims in a statement of claim before applying for judgment.

16 Taking all of the above matters into account, I do not think I am obliged to conclude that the decision of Neasey J in Motor Accidents Insurance Board v O'Neill was clearly or plainly wrong. In the interests of certainty and stability in judicial decision-making, I think the preferable course is to follow his Honour's decision. If it is thought appropriate to change the law, that could be done by inserting a wide definition of "debt" or "liquidated demand" in the Supreme Court Rules. I therefore dismiss the application.