Nominal Defendant v Alex Kay Pty Ltd

The argument of the appellant that the judgment against it in favour of the plaintiff should be set aside was based upon the contention that the motor vehicle being driven by Wing was not uninsured because it was an exempt vehicle. The argument of the appellant that judgment against it in favour of the owner upon the third party proceedings which was directed by the Court of Appeal should be set aside was based upon the contention that Wing was driving with the authority of the owner.

The nominal defendant was liable only if the motor vehicle driven by Wing was an "uninsured motor vehicle": Motor Vehicles (Third Party Insurance) Act 1942 N.S.W., as amended, s. 30. A motor vehicle in respect of which persons are exempted from the provisions of s. 7 (1) of the Act is not an "uninsured motor vehicle". By reg. 17 of the Motor Vehicles (Third Party Insurance) Regulations it is provided that persons are exempted from the provisions of ss. 7 (1) and 8 (1) of the Act in respect of:

any motor vehicle which is owned by a person ordinarily resident outside the State of New South Wales and is temporarily in that State and in relation to which there is and remains in force -

(c) a contract of insurance complying with the Motor Vehicles Insurance Acts, 1936-1961, of the State of Queensland, or with any Act replacing or amending the same;

The owner is a company registered in Victoria and carrying on business in Victoria and in other parts of Australia as a hirer of motor vehicles. It hired a motor car registered in Queensland to Wing on 25th July 1963, in Brisbane for return to it at Brisbane on 29th July 1963, at 11.15 a.m. The agreement contained an undertaking to the effect that the hirer would not take the car into New South Wales without written consent. It was involved in the accident in which the plaintiff was injured somewhat to the south of Tarcutta near the border of New South Wales and Victoria on the afternoon of 29th July.

The appellant's case that the car was an exempt vehicle rested upon three propositions. The first was that the vehicle was owned by a person ordinarily resident outside New South Wales. This was established. It was found that the owner was resident in Victoria. The second was that in relation to the motor vehicle there was a contract of insurance complying with the provisions of the Motor Vehicles Insurance Acts 1936-1961 Q.. This was proved. The third - which was not so found - was that the motor vehicle was, at the time of the accident, temporarily in New South Wales. His Honour was not satisfied that the vehicle at the time of the accident was but temporarily in New South Wales. The Court of Appeal agreed that the nominal defendant had not proved that the vehicle was temporarily in New South Wales at that time.

With respect to the learned judges of the Supreme Court, I have reached a different conclusion as to this. I do not rest my decision upon the actual intention of the driver Wing, although it would seem that he was driving, perhaps as a thief, from Queensland to Victoria and did not intend to remain in New South Wales but simply to pass through the State.

In Dunstan v. Betteridge [1] , it was stated by Ferguson J. that: " a motor vehicle, removed from the owner's control in another State by theft and brought by the thief into New South Wales, is not, while it remains in the hands of the thief, a motor vehicle temporarily in New South Wales". This view of the law was accepted in the Supreme Court.

With respect, I cannot accept it. It is easy to envisage many cases, as a matter of fact, when a thief takes a motor car across a State border into New South Wales, it is only temporarily in New South Wales. Perhaps the simplest instance is where a stolen car is driven by the thief out of Queensland into New South Wales and back again. When, in such circumstances, the car was out of Queensland, why was it not temporarily in New South Wales? My decision in the circumstances of this case depends, however, upon the attitude of the owner, not upon that of Wing. The owner was using its car registered in Queensland for the purpose of its business there in which the car was hired upon the terms that it should be returned to the owner in Brisbane. It was, I think, quite certain that the owner wanted its car in Queensland and, as between the car remaining permanently in New South Wales after Wing had, in breach of contract, taken it across the border, and it being there but temporarily, I cannot but reject the former and accept the latter. It is, of course, possible that if the car had been stolen, the owner would never have recovered it; it is possible indeed that it would have remained permanently in New South Wales. However this may be, it seems clear to me that unless Wing had stolen the car, it would, after a temporary absence, be taken back to Queensland and it is my opinion that if Wing had stolen the vehicle, the likelihood still was that it would have been recovered and returned to Queensland. As it happened, the motor vehicle was eventually taken back to Queensland; surely during the whole time from its entry into New South Wales until its return to Queensland it was temporarily in New South Wales. If not, when did it cease to be permanently in New South Wales and become but temporarily there? I do not accept the dictum of Ferguson J. that if a car is stolen in one State and taken into another State, that car should not, simply because it is in the hands of a thief, be regarded as temporarily in the State to which the thief has taken it.

I see no reason for giving a limited effect to reg. 17. When a car is stolen within New South Wales and is driven on the public streets of New South Wales, the thief in so driving commits no breach of s. 7 (1) of the Act. It seems to me that one effect of reg. 17 is to achieve a like result with regard to motor vehicles being brought into New South Wales so that Wing, whether or not he was a thief, did not commit a breach of s. 7 (1) in driving in New South Wales as he did. This appears to me in full accord with the scheme of the Act which was, no doubt, intended to fit in with similar legislation in other States. Its general policy is surely that motor vehicles being driven on public streets in New South Wales should be insured vehicles rather than uninsured vehicles and reg. 17 is directed, inter alia, to carrying out the policy. I would not import into reg. 17 the limitation that it applies only when a motor vehicle is being driven in New South Wales with the consent of the out-of-State owner.

In my opinion, the nominal defendant did prove that the motor car was an exempt vehicle because at the time of the accident it was, on the balance of probabilities, temporarily in New South Wales. Accordingly, the judgment in favour of the plaintiff against the nominal defendant should be set aside.

On the other question which depends upon s. 32 (1) of the Act, there was a difference of opinion in the Supreme Court of New South Wales. The learned trial judge found that, at the time of the accident, Wing was driving with the authority of the owner, notwithstanding that he was driving in breach of the terms of his agreement with the owner. This finding was reversed by the Court of Appeal. If Wing had stolen the car, he was, of course, not driving it with the authority of the owner. His Honour, the learned trial judge's view was that the authority which Wing had to drive continued notwithstanding that he was acting contrary to the agreement in driving as he was when the accident happened. With respect, I share the opinion of the Court of Appeal that, in this, the learned trial judge was in error. When Wing's obligation to the owner was to return the car to it at Brisbane at 11.15 a.m. on 29th July, I do not see how Wing could be driving the car with the authority of the owner when he was driving the car in the southern part of New South Wales and towards Victoria on the afternoon of that day. I do not think this requires further elaboration. I agree with the Court of Appeal upon the matter and in view of my earlier conclusion, it is not necessary for me to say any more.

In my opinion, the appeal should be allowed and the judgment in favour of the plaintiff against the nominal defendant be set aside. Because I consider that the motor vehicle was an insured vehicle at the time of the accident, there ought to have been judgment against the owner instead of the nominal defendant for $29,000 damages.

An action was brought in the Supreme Court of New South Wales by John Egbert Taylor for damages for personal injury suffered by him on 29th July 1963 when he was a passenger in a car owned by the respondent Alex Kay Pty. Ltd., herein called the "owner". The owner and the appellant, the nominal defendant, were joined as defendants in the action. The nominal defendant gave a third-party notice to the owner claiming to recover from it, pursuant to the provisions of s. 32 of the Motor Vehicles (Third Party Insurance) Act, 1942 N.S.W., as amended (the Act), any amount that might be properly paid or payable by the nominal defendant in satisfaction of the plaintiff's claim.

The owner is a company incorporated in Victoria and it was found by the learned judge who tried the action to be "ordinarily resident outside the State of New South Wales". The car was registered in Queensland. The trial judge found that a contract of insurance in respect of the car was in force in Queensland, which complied with The Motor Vehicles Insurance Acts, 1936 to 1961 of that State. The accident occurred some miles south of Tarcutta in New South Wales, when the car was being driven by a man named Lew Fee Wing or Wang (herein called Wing). He had entered in Queensland into an agreement to hire the car from the owner. This agreement contained a provision in the following terms:

Renter agrees that he will return the said vehicle to Owner's station from which it was rented, in the same condition as he received it, ordinary wear and tear excepted, on the return date stated above or sooner upon demand of Owner. If the Renter shall fail within 7 days of the return date or of demand by the Owner to deliver up the vehicle the Owner shall be entitled to presume the vehicle to be stolen, and the Renter hereby releases and discharges the Owner from all actions claims and demands arising out of any charge laid or complaint made to the police in relation thereto.

Provided that this presumption shall not apply if the Owner has given the Renter a written or telegraphed extension of the return date.

The "return date" was indicated in the agreement by the words and figures "Will Return 29.7. 63 Time 11.15 a.m." The agreement contained, also, the following provisions: Renter agrees not to use said vehicle for the transportation of persons or property for hire, express or implied; not to use the vehicle while it is in an unsafe condition; not to use it in violation of any Federal, State or Municipal law, ordinance, rule, regulation or by-law governing the use or return thereof; not to remove it from the State or Territory in which this agreement was signed without the written consent thereto of Owner (cl. 3).

The Renter shall not operate and shall not permit, suffer or allow the vehicle to be operated -

(a) In violation of any of the terms in the Rental Agreement (cl. 9 (a)).

The Act makes it an offence to use or to cause, permit or suffer any other person to use an uninsured motor vehicle upon a public street: see s. 7 (1). The material part of the definition in s. 5 of "Uninsured motor vehicle" is in these terms:

(a) a motor vehicle (not being a motor vehicle in respect of which persons are exempted by or under this Act from the provisions of subsection one of section seven of this Act) which is not an insured motor vehicle

"Insured motor vehicle" is defined as meaning "a motor vehicle in relation to which there is in force at all material times a third-party policy", that is, a policy of insurance which complies with the requirements of the Act.

Every claim for damages in respect of the death of or bodily injury to any person caused by or arising out of the use of an uninsured motor vehicle upon a public street shall be made to the nominal defendant and any proceedings to enforce such claim shall be taken against the nominal defendant and not against the owner or driver: see s. 30 (1). By s. 45 (2) of the Act, the Governor is empowered to make regulations with respect to the exemption from the operation of any of the provisions of the Act of -

(i) motor vehicles or specified classes of motor vehicles which are owned by persons ordinarily resident outside New South Wales and which are temporarily in New South Wales;

(iii) persons in respect of a specified class or specified classes of motor vehicles (including motor vehicles or specified classes of motor vehicles which are owned by persons ordinarily resident outside New South Wales and which are temporarily in New South Wales);

By reg. 17 of the Motor Vehicles (Third Party Insurance) Regulations it is provided, inter alia, that persons are exempted from the provisions of s. 7 (1) of the Act in respect of "any motor vehicle which is owned by a person ordinarily resident outside the State of New South Wales and is temporarily in that State and in relation to which there is and remains in force (c) a contract of insurance complying with The Motor Vehicles Insurance Acts, 1936 to 1961, of the State of Queensland, or with any Act replacing or amending the same".

It is not in dispute that the plaintiff's injuries were caused by the negligence of Wing. But there is a dispute as to whether the liability to pay damages should fall upon the appellant or upon the owner.

The first question which arises in this appeal is whether the Court of Appeal of the Supreme Court of New South Wales was in error in affirming the decision of the learned trial judge that, within the meaning of reg. 17, it had not been established that the car was, at the time of the accident, temporarily in the State of New South Wales. If it had been found that the car was temporarily in that State, the result would have followed that, being within the exemption provided by the regulation, it was not an "uninsured motor vehicle" and consequently damages could not be recovered from the appellant.

The evidence which might be relevant to the question whether or not the vehicle was temporarily in New South Wales was somewhat scanty. It was hired in Brisbane under an agreement which provided that it was not to be removed from that State without the written consent of the owner and no such consent was obtained. On the afternoon of the day on which it should have been returned to the owner in Brisbane, not later than 11.15 a.m., it was being driven south at a place not far from the border between New South Wales and Victoria. There was no direct evidence as to where the vehicle had been between the time of its hiring and the occurrence of the accident, as to when it had entered New South Wales or as to the driver's intention either at that time or when the accident occurred. There was evidence from a police officer that Wing said he had "gambling problems" in Queensland and was leaving Queensland because of that. The police officer said that Wing had some criminal conviction or convictions. He had been employed at a motel in Queensland.

In Dunstan v. Betteridge [1] , a car registered and insured in Victoria and owned by a company which was held to be "a person ordinarily resident outside New South Wales" was stolen in Victoria and taken into New South Wales. Ferguson J. held that it had not been established that the car was temporarily in New South Wales. In his judgment he said [2] :

In my opinion a motor vehicle, removed from the owner's control in another State by theft and brought by the thief into New South Wales, is not, while it remains in the hands of the thief, a motor vehicle temporarily in New South Wales within the meaning of the Act and Regulations, whatever the thief's intention in regard to it may be. In an appeal from the decision of Ferguson J., who held the nominal defendant liable, it was decided that the onus of proof of the conditions required to establish an exemption under reg. 17 lay on the nominal defendant. The appeal was dismissed: see Nominal Defendant v. Dunstan [3] . This Court did not expressly approve or disapprove the statement which I have quoted from the judgment of Ferguson J. In my opinion, the reference made [4] to the absence of evidence of what had happened to the vehicle between the date of the theft and the date of the accident or of what were the thief's intentions should not be taken as an expression of the opinion of the Court that the intentions of a thief with respect to a stolen vehicle are important in deciding whether it was temporarily in New South Wales. It was not necessary for the Court to come to any conclusion on that point. In my opinion, the passage quoted from the judgment of Ferguson J. is a correct statement, so far as it goes, as to the meaning and operation of reg. 17. It is to be noticed that his Honour's statement relates only to the time during which the vehicle remains in the hands of the thief. If a stolen car is abandoned or recovered, subsequent actions, taken or authorized by the owner after becoming aware of what has happened, may well affect the question whether reg. 17 comes into operation with respect to the vehicle. But that is a matter which need not be pursued in this case. 1. (1962) 80 W.N. (N.S.W.) 421. 2. (1962) 80 W.N. (N.S.W.), at p. 424. 3. (1963) 109 C.L.R. 143. 4. (1963) 109 C.L.R., at p. 147.

The renter, Wing, obtained the possession of the car lawfully. But when the accident occurred it had become impossible for him to return it to the owner in Queensland on that day, as he had agreed to do. It had been taken, contrary to the agreement, out of the State of Queensland. The learned trial judge said that he was not prepared to find on the evidence that the driver had stolen or was illegally using the vehicle when it entered that State, but his Honour was not satisfied by the evidence that the car was temporarily in New South Wales. In my opinion, the evidence provided ample ground for a strong suspicion that the car had been stolen or was being illegally used. Even if the learned judge was correct in thinking that the evidence was insufficient to justify an affirmative finding that this was so, it was clearly open to him to refuse to find that it was not so. But it was necessary, in my opinion, for the appellant to establish that it was not so. The foregoing considerations lead to the conclusion that there was no valid ground upon which the Court of Appeal should have interfered with the decision of the trial judge on this question.

I am also of opinion for a different reason that the decision of his Honour on this question was correct. Ferguson J. thought that reg. 17 was inapplicable when a vehicle is taken to New South Wales from another State by a thief. In my opinion, it is inapplicable, not only in that event, but also in other cases in which the taking of the vehicle into New South Wales occurs without the consent of the owner and in which it continues to be in New South Wales, without the owner's consent, up to the point of time which becomes the material one for the determination of the question whether the vehicle is temporarily in New South Wales.

Regulation 17 exempts persons from the provisions of s. 7 (1) of the Act. Persons who if not exempted may become guilty of an offence against s. 7 (1) are persons who use an uninsured motor vehicle on a public street in New South Wales and persons who cause, permit or suffer another person so to use it. An owner whose vehicle is taken into New South Wales by some other person could not be guilty himself of using it on a public street in that State, and if it were taken there without his consent and used there by another person the owner could not be said to cause, permit or suffer the other person to use it there. It seems, therefore, that in such a case the owner needs no exemption from the provisions of s. 7 (1). The person who takes the vehicle into New South Wales and uses it there does, if not exempted, commit an offence against s. 7 (1). But it is difficult to suppose that it was intended that the regulation should operate to exempt him from that liability. In my opinion, reg. 17 should be interpreted as applying only in relation to a vehicle brought into New South Wales by its owner or by some person authorized by its owner, for use for a relatively short period in that State.

It is true that reg. 17 exempts persons from the provisions of s. 8 (1), as well as from those of s. 7 (1) of the Act. In the ordinary case of the driving of a vehicle into New South Wales by an owner resident in another State who is on a journey for holiday or business purposes, it would appear that he would be in any event exempt from the requirements of registration or renewal of registration of the vehicle in New South Wales: see s. 5B of the Motor Traffic Act, 1909 N.S.W., as amended, and reg. 33A of the Motor Traffic Regulations made thereunder. But whatever may be the extent of the operation of reg. 17 in so far as it grants exemption from the provisions of s. 8 (1), it is the exemption from the provisions of s. 7 (1) that operates to bring a vehicle to which that exemption relates within the definition of an "uninsured motor vehicle". The reference in reg. 17 to s. 8 (1) does not affect, in my opinion, the reasons I have given for treating it as being intended to grant exemption from the provisions of s. 7 (1) in respect of those vehicles only which are at the relevant time in New South Wales with the consent of the owner.

I am of opinion, therefore, that the decision that the appellant was liable to have proceedings taken against him under s. 30 (1) of the Act was correct.

The remaining question in the appeal concerns a claim made by the appellant against the owner, in accordance with s. 32 (1) of the Act, to recover the amount which the appellant might become liable to pay to the plaintiff. That claim succeeded at the trial but it was held by the Court of Appeal that the defence raised by the owner under par. (a) of the proviso to s. 32 (1) should succeed. This defence was that at the time of the accident the driver Wing was driving the motor vehicle without the authority of the owner.

In Andrews v. Nominal Defendant [1] , it was held that a claim by the nominal defendant against an owner, which was in that case a claim against the plaintiff in the action, may be made the subject of a third-party proceeding, in accordance with the Law Reform (Miscellaneous Provisions) Act 1946 N.S.W.. In Nominal Defendant v. Andrews [2] , further proceedings in the same action were before this Court, but no question was decided as to the propriety of the procedure that had been adopted. In the present case it has not been contended that the course adopted by the appellant was not open to it and in the circumstances I think it is unnecessary to examine the question of the appropriateness of that course.

1. (1962) 63 S.R. (N.S.W.) 110. 2. (1969) 121 C.L.R. 562.

The owner contends that at the relevant time the car was being driven without its authority, because it had been brought into New South Wales contrary to the agreement under which Wing had obtained possession of it and because the time of the hiring had already expired, at 11.15 in the morning, before the accident occurred. Much of the argument on this question has been directed to the relationship between the owner and Wing as bailor and bailee of the vehicle. It was contended on the one hand and denied on the other that the bailment of the vehicle to Wing had been determined. It was submitted for the appellant that the case was not one in which the acts of the driver were so repugnant to the holding of the vehicle as bailee that they determined the bailment and vested in the owner the immediate right of possession: see Penfolds Wines Pty. Ltd. v. Elliott [1] . It was submitted that there was evidence that it was the practice of the owner, when vehicles were returned later than the stipulated time, to make an additional charge and that this had occurred in the present case and that this was a recognition that the bailment had continued notwithstanding the breaches of the agreement committed by Wing. But, in my opinion, it is not by reference to those questions that the issue arising under the proviso to s. 32 (1) of the Act is to be determined. Whether or not the bailment was for some purposes still on foot at the time of the accident and whether or not the owner, on becoming aware of breaches of the agreement, would have been entitled to elect to treat the agreement as still subsisting or at an end are questions which need to be decided only if it is to be assumed that the existence of the relevant authority to drive is necessarily coterminous with a bailment, regarded as remaining in existence for all purposes until a definite point of time. In my opinion, no such assumption should be made. Nor is it necessary to decide whether it was the owner or the driver who had at the relevant time the immediate right to possession of the vehicle: see Nominal Defendant v. Andrews [2] . The question raised by the proviso to s. 32 (1) is a different question. It is the act of driving the vehicle at the time of the occurrence to which attention must be directed. I pause to observe that on the facts of this case I regard it as of no significance that the term "driver" is stated in s. 5 to include any person for the time being "in charge of" any vehicle. The fact that has to be proved in order to establish the defence is that at the time of the occurrence the driving of the vehicle was without the authority of the owner. I am of opinion that that fact was proved. The only authority to drive that was ever given to Wing was an authority which arose from the hiring to him for a term of a vehicle, the obvious purpose of this hiring being that the vehicle would be driven. The agreement said nothing in positive terms as to the extent of that authority to drive. But it provided that the vehicle was not to be removed from Queensland without the written consent of the owner. In my opinion, the consequence was that no authority to drive the vehicle in any place outside that State was ever granted to Wing. The agreement did not confer a general authority to drive anywhere, which must be deemed to continue unless some fundamental breach of the agreement occurred. The question is not one of distinguishing between different classes of breach some of which would and some of which would not put an end to the agreement. In my opinion, the driving of the vehicle in New South Wales was outside the scope of any authority that ever existed. It cannot be implied merely from the fact that Wing obtained possession of the vehicle, as a bailee.

1. (1946) 74 C.L.R. 204, at pp. 214, 227. 2. (1969) 121 C.L.R. 562.

In the second place, the agreement provided for the return of the vehicle by 11.15 a.m. on 29th July. If through accident or mischance beyond the renter's control or through his own carelessness or other fault, its return had been delayed, no doubt he could have been properly regarded as still having authority to drive the vehicle for the purpose of bringing it back to the owner. That would naturally be considered to have been within the contemplation of the parties. But, in my opinion, his driving of the vehicle, several hours after the period stipulated in the agreement had come to an end, at a time when its return to Brisbane by the end of that day had become impossible, and in the opposite direction to that which would have brought him to the agreed place for the return of the vehicle, could not properly be found to be a driving of the vehicle with the authority of the owner.

It was submitted in this Court that the appellant could rely upon the presumption of agency established by s. 16 (1) of the Act. It was argued that since that presumption is made applicable with respect to proceedings in which the nominal defendant was "involved" in any of the ways specified in sub-s. (2), it was applicable in this case in which the nominal defendant had been made an alternative defendant. According to the argument the consequence was that Wing must be deemed to have been at the relevant time the agent of the owner acting within the scope of his authority in relation to the vehicle and therefore it could not be maintained that he was driving it without the authority of the owner. In my opinion these submissions must be rejected. The authority to which s. 32 refers is an actual authority. The absence of such authority has to be established to the satisfaction of the Court, when an owner raises par. (a) of the proviso as a defence. When a driver invokes par. (b) of the proviso, the existence in fact of the owner's authority or the driver's belief on reasonable grounds in its existence is to be established to the satisfaction of the Court. Section 16 is concerned with removing difficulties confronting an injured person seeking to establish a right to damages. It is not concerned with a claim under s. 32. It was conceded that in a separate action brought by the nominal defendant under s. 32 against the owner or the driver, s. 16 would have no application. But it was said that when the nominal defendant has been joined as an alternative defendant and in that action has made a third-party claim based on s. 32 then s. 16 applies. Such a construction of s. 16 is inconsistent, in my opinion, with the provisions of s. 3 of the Law Reform (Miscellaneous Provisions) Act, 1946, which are so expressed that no greater right can be asserted against a person upon whom a third-party notice is served than could be asserted in a separate action brought against that person by the party by whom the third-party notice is given.

A separate argument that the driver Wing must be deemed to have been the authorized agent of the owner and to have been acting within the scope of the authority was founded upon the provisions of s. 3 (2) of The Motor Vehicles Insurance Acts, 1936 to 1961 Q.. It is sufficient to say that, in my opinion, it is plain that those provisions have no application to this case.

I have read and agree with the reasons for judgment of my brother Walsh and would dismiss this appeal for the reasons stated by him.