Cross-Claim
98 Although it was not argued in this way, it is not self evident that the failure of the appellants' claim by reason of non compliance with Pt 5 had the consequence that the event in which he was injured was not covered by the Statutory Policy issued by the cross respondent.
99 The language of the Motor Accidents Act 1988 and the associated Statutory Policy does not so provide. Section 41 tends to disassociate the policy and the Part. Mason P in Dunn would appear not to have accepted the submission that "Pt 5 should be construed having some regard to the extent of cover given by the compulsory third party insurance policy."
100 Argument was presented as to the entitlement of the state to the relief it sought if the policy applied. As I have come to the view that it is not entitled to the payment it seeks even if the policy applied, I think it is best not to deal with the issue of applicability.
101 It was not in dispute that at all relevant times the State held a valid third-party policy issued by the cross-appellant in respect of the prison van.
102 Section 9 of the Motor Accidents Act 1988 provided at the relevant date:
A third-party policy under this Act is a policy that:
(a) insures the owner of the motor vehicle to which the policy relates and any other person who at any time drives the vehicle (whether or not with the consent of the owner) against the liability in respect of the death or injury to a person caused by the fault of the owner or driver of the vehicle:
… … …
(b) is in the terms of Schedule 1
103 Schedule 1 at the relevant date provided:
Motor Accident Act 1988 Third Party Policy
1. The insurer insures the owner of the motor vehicle and any other person who at any time drives the vehicle (whether or not with the consent of the owner) against liability in respect of the death of or injury to a person caused by the fault of the owner or driver of the vehicle:
… … …
2. In this policy, words and expressions have the same meaning as in the Motor Accidents Act 1988.
104 Section 43(4) provides that a claim is made by giving notice to the person against whom the claim is made and the third party insurer.
105 Section 43A(6) and 44B give insurers, in effect, discretionary powers in respect of late or incomplete claims.
106 Section 45 provides that it is the duty of an insurer to endeavour to resolve a claim, by settlement or otherwise. It also provides for payments to be made once liability has been admitted or determined.
107 Section 46 prevents an insured, without written consent, entering into or incurring expense in litigation. There are related restrictions in respect of settlement or the making of admissions.
108 Section 47(1) provides:
When a claim is made against a person, the person's insurer may:
(a) conduct and control negotiations in respect of the claim, and
(b) conduct, or take over the conduct of, any legal proceedings in respect of the claim and may conduct those proceedings in the name and on behalf of the person, and
(c) at any stage of those negotiations or proceedings, compromise or settle the claim, and
(d) exercise any function conferred by this Part on the person in respect of the claim.
109 The cross respondent did not exercise the power given by section 47 and the State incurred costs in defending the applicants' claim in respect, inter alia, of the alleged injury of 17 January 1996.
110 Whilst Mr Tonner did refer in submissions to a suggested duty of the cross respondent to the take over the conduct of the matter the remedy he sought was that the cross respondent indemnify the State in respect of the costs of defending the claim. The cross appeal referred to a declaration, however, that was not pursued.
111 Mr Feller submitted that the third party policy was a liability based policy and that its terms did not cover the costs claimed by the State.
112 I agree with his submission that the matter is effectively so determined by the decision of the Full Court in Yellow Express Courier Ltd v Government Insurance Office of New South Wales (1959) 60 SR (NSW) 22. In that case an insured sought to recover the costs of defending a claim after the third party insurer had done so for a time and then in effect, handed the defence back to the insured.
113 The insured succeeded upon a contractual basis arising between the insured and the insurer from correspondence between them, however, he failed upon the alternative basis of reliance on the policy.
114 Owen J, with whom Street CJ agreed, held that the words "liability incurred… in respect of the bodily injury to any person caused or arising out of the use of a motor vehicle", being the language of s10(1)(b)(i) of the Motor Vehicles (Third Party Insurance) Act 1942, did not indemnify the insured against the costs of defending the claim. Herron J left that matter open.
115 A subsection of that Act did provide that the insurer indemnify the insured as to costs whilst exercising its right to take over the conduct of proceedings. However I do not think, and Mr Tonner did not put to me, that circumstance was material to the decision reached.
116 Commercial and General Insurance Company Ltd v Government Insurance Office of New South Wales (1973) 129 CLR 374 was an appeal from a decision of the Supreme Court of New South Wales which dismissed a claim for contribution between two insurance companies.
117 Yellow Express was referred to in submissions. The Court delivered one judgment which contained the following passage:
There is a further matter. The claim for contribution extended to one half of $30,283.41 (i.e. judgment of $28,000 with $925.20 costs, plus the employer's costs of defending the action $1358.21). For the respondent it was argued that no part of $1358.21, the costs of defending the action, was proper subject matter for contribution. With that we agree. The costs were incurred by the appellant in the exercise of its right to defend the action brought against the employer which it had insured. The indemnity granted to the employer, however, was against claims for which the employer should be liable for any injury to an employee. Accordingly, the policy of the appellant did not cover the costs which the appellant incurred in defending the action. Nor did the third party policy. The indemnity thereby granted was against liability "incurred by the owner and/or the driver in respect of the death of or bodily injury to any person caused by or arising
out of the use of the motor vehicle". Neither policy, therefore, covered the costs incurred by the employer or the appellant in
defending the rigger's action. Accordingly, in our opinion, the liability of the respondent is limited to one half of $28,925.20, i.e. $14,462.60.
118 This statement provides strong support for the view that the State was not indemnified in respect of the costs which it incurred.
119 Mr Tonner did put that the obligations imposed upon insurers and the powers given to them by sections such as section 43, 43A, 44B, 45 and 47 and the limitations imposed upon the insured by section 46 introduced an all embracing regime which should lead to a different construction of the terms of the statutory policy. It may be, as Mr Tonner put, that this would produce a fairer result but is not one that the terms of the legislation or the course of authority supports.
120 In my view the cross-defendant is not bound to indemnify the State as to the costs of defending the cost claim even if otherwise entitled to indemnity under the policy. I propose that the cross appeal be dismissed with costs.