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[1999] NSWCA 12
Court of Appeal (NSW)
1999-02-12
Spigelman CJ, Mason P, Priestley JA, Meagher JA, Handley JA
Original judgment source is linked above.
New South Wales Court of Appeal CITATION : ROBERTS v WHITE [1999] NSWCA 12 FILE NUMBER(S) : CA 40780/97 HEARING DATE(S) : 18 November; 1998 JUDGMENT DATE : 12 February 1999
PARTIES : JAMES WILLIAM ROBERTS MARGARET WHITE JUDGMENT OF : Spigelman CJ at 1; Mason P at 2; Priestley JA at 52; Meagher JA at 53; Handley JA at 58
LOWER COURT JURISDICTION : District Court LOWER COURT FILE NUMBER(S) : DC 5543/91 LOWER COURT JUDICIAL OFFICER : Ainslie-Wallace DCJ
COUNSEL : A Shand QC/M T Vesper (Appellant) R Colquhoun/E Wood (Respondent) SOLICITORS : M J Raymond (Appellant) Colquhoun & Colquhoun (Respondent) CATCHWORDS : Damages; measure of damages in actions for tort; out of pocket expenses; damages for non-economic loss; prospective amendment of legislation; precedent; costs; Motor Accidents Act 1988 s79(1) ACTS CITED : Motor Accidents Act 1988 Motor Accidents (Amendment) Act 1993 DECISION : Appeal allowed in part
THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL
SPIGELMAN CJ MASON P PRIESTLEY JA MEAGHER JA HANDLEY JA
1 SPIGELMAN CJ: I agree with Mason P.
THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL
SPIGELMAN CJ MASON P PRIESTLEY JA MEAGHER JA HANDLEY JA
2 MASON P: The respondent was injured in a motor vehicle accident on 13 November 1989. She was in the course of her employment as a senior police officer when the vehicle which she was driving was struck from behind by the appellant's vehicle. Liability was not in issue. 3 Three actions were listed for hearing in the District Court before Ainslie-Wallace DCJ on 28 July 1997. There was the assessment of damages in the instant proceedings, and there were proceedings in relation to two later motor vehicle accidents involving the respondent that occurred on 28 March 1990 and 23 May 1990. These two cases were settled at the commencement of the hearing. The damages assessment in the respondent's action against the appellant proceeded over the next nine days. There was a verdict in the sum of $73,919.50. It had two components, out of pocket expenses of $15,729.50 and damages for non-economic loss awarded in accordance with s79 of the Motor Accidents Act 1988 on the basis of a 27% proportion of severity ($58,190). Each item of damages is challenged in this appeal, which is by leave. 4 The appeal raises one matter of detail and one point of principle. Out of pocket expenses 5 The matter of detail is a challenge to the assessment of out of pocket expenses. It is submitted that the evidence does not sustain an award exceeding $4,000 for expenses. This challenge should be rejected. The trial appears to have been conducted on the basis that the expenses claimed in an amended statement of particulars were in fact incurred. Not all of these expenses were allowed, and for some there was only a partial allowance. The reasoning, though sparse, contains a finding of a causal link between the expenses allowed and the accident for which the appellant was responsible. The learned trial judge indicated those items of the particulars she found "flowed from" the 1989 accident. 6 The appellant's submission that the period within which the expenses might be recoverable is the closed period prior to the respondent's return to full-time employment in May 1990 must also be rejected. The trial judge was aware that most of the expenses had been paid by the Police Department, but the trial was conducted on the basis that the respondent was required to reimburse her employer for these outlays. Motor Accidents Act 1988, s79: Matthews v Dean 7 The question of principle which led to the grant of leave involves the proper interpretation of s79 of the Act as it stood prior to 1 September 1994. The appellant was granted leave to appeal on condition that he submitted to such order as to costs as the Court hearing the appeal might decide is appropriate, bearing in mind the test case nature of the appeal and the various issues involved in it. 8 The Transcover scheme under the Transport Accidents Compensation Act 1987 was replaced from 1 July 1989 by the Motor Accidents Act 1988 ("the Act"). This purported to restore common law rights (cf s6), but in reality it substantially qualified the already significantly modified common law scheme that had existed for many years before 1987. (The common law did not provide plaintiffs with compulsorily insured defendants. But plaintiffs had to steer a course around doctrines of common employment, contributory negligence and actio personalis moritur cum persona. All of these "common law" principles had long been swept away by statute.) The Act imposes restrictions on the amounts which might be awarded for non-economic loss, coupled with threshold provisions designed to exclude small claims. Part 6 (ss68-82A) applies to an award of damages relating to death or injury caused by the fault of the owner or driver of a motor vehicle in the use or operation of the vehicle (s69(1)). Section 70 stipulates that "a court shall not award damages to a person in respect of a motor accident contrary to this Part." 9 Section 79 deals with non-economic loss. In its original form it provided: Determination of non-economic loss 79(1) No damages shall be awarded for the non-economic loss of an injured person as a consequence of a motor accident unless the injured person's ability to lead a normal life is significantly impaired by the injury suffered in the accident. (2) The amount of damages to be awarded for non-economic loss shall be a proportion, determined according to the severity of the non-economic loss, of the maximum amount which may be awarded. (3) The maximum amount which may be awarded for non-economic loss is $180,000 (or the maximum amount declared for the time being under section 80), but the maximum amount shall be awarded only in a most extreme case. (4) If the amount of non-economic loss is assessed to be $15,000 or less, no damages for non-economic loss shall be awarded. (5) If the amount of damages to be awarded for non-economic loss in accordance with subsections (1)-(3) is more than $15,000 but less than $55,000, the following deductions shall be made from that amount: (a) if the amount of damages is less than $40,000 - the amount to be deducted is $15,000; (b) if the amount of damages is not less than $40,000 - the amount to be deducted is $15,000 reduced by $1,000 for every $1,000 by which the amount of damages exceeds $40,000.
10 Section 80 requires the amounts payable under s79 to be varied from time to time by Ministerial Order. 11 In Matthews v Dean (1990) 11 MVR 455, [1990] Aust Tort Rep ¶81-037, Grove J addressed the interpretation of s79 in its original form. He observed the radical change effected by the section, noting (at 458) that "the method and accumulated wisdom of the common law" in relation to assessing general damages was no longer applicable. His Honour recognised that the section required a threshold determination of whether non-economic loss should be compensated at all. That threshold was stated in the proviso to s79(1), which required the plaintiff to establish that his or her "ability to lead a normal life is significantly impaired by the injury suffered in the accident". 12 Grove J construed the proviso in s79(1) in the following terms (at 458-9): I note the present tense of the verb in the proviso. I conclude that I should look at the current condition of the plaintiff in order to assess her qualification for NEL. The verbiage is not "has been" and thus, I apprehend, the litigant who has recovered from a state of significant impairment will be excluded. Nor is the language "will be" and Mr Jenkyn pointed to the hypothetical problem of a plaintiff enjoying asymptomatic existence at the time of judgment but with a definite prognosis of future disaster. The solution to that dilemma may be a construction that the existence of potential is itself a sufficient current impairment but there is no need for me to digress further on such an analysis in this case. The context suggests no esoteric meaning for the phrase "significantly impaired" and I take it to mean damaged or adversely affected to an extent of consequence or notability. It was submitted on behalf of the defendant that the proviso required the plaintiff to prove that her impairment possessed some degree of continuity before she could qualify for NEL. The submission did not go so far as to contend that projection into the future was demanded. It is difficult, in a practical sense, to contemplate an example where a plaintiff will not have a continuum of impairment between the manifestation of symptom induced by injury and the time of hearing, assuming that injuries have not fully resolved, but I do not perceive the statute as requiring more than my threshold assessment of whether the plaintiff is at present significantly impaired in her ability to lead a normal life.
13 Later in the judgment (at 459) Grove J construed subsections (2),(3) and (4), especially the reference to "a most extreme case" in s79(3). 14 In the case presently under appeal the trial judge found that the respondent's ability to lead a normal life was significantly impaired for a duration of only eight months. In other words, there was no significant impairment current at the date of trial. On the authority of Matthews this should have meant that there was no award for non-economic loss. However, such an award was made, calculated on the basis of 27% impairment. (I will refer to her Honour's reasons below.) 15 The appellant challenges this award (a) because it should not have been made, on the authority of Matthews and of later decisions of the Court of Appeal approving Matthews; and (b) because it was excessive in the circumstances. 16 The appellant defends the correctness of the reasoning in Matthews and submits, cumulatively and in the alternative, that the point was settled by this Court in Allen v Chown (1996) 24 MVR 255. The respondent contends that Grove J was in error in attributing a temporal rather than a narrative sense to "is" in s79(1). The respondent seeks leave, if necessary, to challenge Allen v Chown and invokes the authority and reasoning of another decision given by a differently constituted Court of Appeal 11 days later in Reinhardt v Huan (1996) 24 MVR 58. Judicial consideration of Matthews: amendment of s79(1) 17 Matthews v Dean was approved by this Court in Southgate v Waterford (1990) 21 NSWLR 427 in relation to the threshold requirement of s79(1) and the construction of the words "a most extreme case" in s79(3). The meaning of the word "is" in s79(1) was not at issue in Southgate. Nevertheless, the judgment of the Court constituted by Gleeson CJ, Kirby P and Meagher JA casts light on the matter now before this Court, for the following reasons:
20 The 1993 Act inserted into Schedule 4 of the Act a new Part 5 which stipulated savings and transitional provisions arising from the enactment of the 1993 Act. Clause 9 of that Schedule provides generally that an amendment made by the 1993 Act extends to motor accidents occurring before the commencement of the amendment and to claims made and proceedings brought before the commencement of the amendment that had not been finally determined before that commencement. But this general provision is subject to particular exceptions, one of them being stated in cl 15 as follows: Section 79, as amended by the Motor Accidents (Amendment) Act 1993, does not apply to a motor accident occurring before the commencement of Schedule 1(15) to that Act. Schedule 1(15) commenced on 1 September 1994. 21 There is an explanation of the amendment in the second reading speech of the Minister (the Hon C Hartcher) (see extract set out in England v Van Donk (1997) 26 MVR 289 at 294). But, unlike the Explanatory Memorandum, the Minister did not suggest that the former interpretation of s79 was in error. And, while he emphasised the benefits effected by that part of the amendment that expanded the scope of s79, he did not mention that the amendment was prospective only. However, the text of the transitional provision is crystal clear. Accordingly, it is irrelevant to enquire whether or not s79 should be characterised as a procedural provision (cf Stevens v Head (1992) 176 CLR 433) which would not be caught by the general presumption that statutes are not to be given retrospective operation. 22 In my view the appellant is correct in the submission that Parliament noted the problem with s79(1) as expounded in Matthews, but chose deliberately to overturn it prospectively. It does not follow that this Court is powerless to correct Matthews but the prospectivity of the 1993 amendment to s79(1) has relevance. It would appear that Parliament amended prospectively due, at least in part, to the fact that the new s79(1) did considerably more than overturn Matthews' attribution of a temporal connotation to the word "is". In amending the subsection, Parliament went further and mandated a "continuous period of not less than 6 months" of significant impairment. To have required or allowed the retrospective operation of such a significantly firmer threshold test would have created two further difficulties which would, at the very least, have caused Parliament to hesitate before doing so. First, it would necessarily have differentiated between those plaintiffs who had already had their rights determined according to Matthews and those lucky or unlucky enough to have their cases still pending. Secondly, it would have meant that (in the absence of a complex transitional provision) cases and appeals, some with reserved judgments, would arguably find the ground rules changed in midstream if the 1993 Act commenced during their pendency (cf Stevens). 23 These two problems were not insurmountable, but a line had to be drawn somewhere, and it is understandable why Parliament chose the date of the accident. For reasons discussed below, a Court does not have the same freedom as Parliament, and the inevitable retrospectivity of overturning Matthews would create the very difficulties which Parliament avoided. 24 There the matter rested until 1996. I am not aware of any court prior to 1996 declining to follow Grove J on his construction of the word "is" in s79(1), or even being asked to do so. In Melo v Nominal Defendant (Supreme Court, unreported, 11 July 1995) Spender AJ cited Matthews as stating a test of significant impairment that must be applied as at date of hearing or judgment. Judges of the District Court would have been bound to follow Matthews and I infer that they did so, at least until mid 1996 when Reinhardt was decided. It is true that Grove J's discussion of "is" in s79(1) was obiter, but it was part of what came to be seen as the authoritative exposition of the section as a whole. Of course, many cases would not have involved the temporal issue thrown up by this case, which requires the combination of a serious enough disablement to have passed over the threshold, coupled with a speedy enough recovery to mean that the serious disablement was not present at date of trial. 25 On 16 May 1996 the Court of Appeal constituted by Gleeson CJ, Meagher JA and Beazley JA heard Reinhardt v Huan. The appeal involved a 1990 motor vehicle accident that came to trial in the District Court in 1995. The respondent had sued the appellant for damages for nervous shock following the death of his son in a motor vehicle accident for which the appellant was found to be responsible. The appellant challenged the award of general damages, which had erroneously been made on the basis of s79(1) in its form as amended by the 1993 Act. The appellant relied on findings made by the trial judge to the effect that the plaintiff (the respondent in the appeal) had recovered from the nervous shock by the time of the hearing. This submission threw up the correctness of Matthews, a matter which (as Gleeson CJ observed at 58) had been assumed by the appellant up to the time of the hearing of the appeal. The Chief Justice also commented that it was unfortunate that the respondent was unrepresented in the appeal. (The report in MVR is in error in reversing the parties.) Judgment was reserved. It was handed down on 12 July 1996, without the attention of the Court being drawn to the fact that Allen v Chown came to be argued and decided in the meantime, on 1 July 1996. 26 In Reinhardt the Court (by majority) allowed the appeal. Meagher JA, who dissented, would have dismissed the appeal on the basis that the findings of fact permitted an award of damages under s79(1) even in its earlier form. Rejecting the appellant's invocation of Matthews, his Honour said (at 64): I cannot accept this argument. There must be some doubt as to the correctness of Grove J's decision in Matthews v Dean; it is not immediately apparent to me that the use of the present tense "is" is temporal in its connotation. Indeed, the whole purpose of the section is simply to ensure that any impairment of normal life is significant, not trifling. In my view, it should be read as if it said "No damages shall be awarded for non-economic loss of an insignificant character", whether it was past or present.
27 The Chief Justice responded to Meagher JA's judgment, which he had read in draft form. He observed (at 59) that Matthews was: …a decision which has stood for several years, and has no doubt been acted upon in many cases. While I understand the force of the views expressed by Meagher JA, I would be most reluctant to form a concluded opinion as to whether the decision should be followed or overruled in a case where we have not had the benefit of full argument and where the resolution of that question may be unnecessary.
28 Later in his judgment the Chief Justice said (at 60): In Matthews v Dean Grove J held that s79(1), in the form it took prior to the 1993 amendments, required a plaintiff to demonstrate significant impairment existing at the time of the award of damages. As Meagher JA has indicated, there is a cogent argument that can be put to the contrary of that construction of the section. The argument turns upon giving the word "is" a narrative, rather than a temporal, connotation. If correct, the argument would avoid the surprising result that a plaintiff's rights can depend upon the length of delays in the court lists. However, I regard it as unnecessary and inappropriate to resolve that argument on this appeal.
29 The reason why it was unnecessary for the Chief Justice to determine the correctness of Matthews was that his Honour disagreed with Meagher JA in his understanding of the evidence given at trial. The Chief Justice read the psychiatrists' reports as capable of indicating that significant impairment continued to the date of trial. In these circumstances the Chief Justice decided that a new trial was warranted. 30 Beazley JA expressed her agreement with the construction given to s79 by Meagher JA. However, she agreed with the reasons of the Chief Justice which led to the allowing of the appeal, and the ordering of a new trial. 31 The headnote in the MVR report of Reinhardt states that Matthews was disapproved. This is a debatable proposition. I prefer the analysis of Priestley and Powell JJA in England v Van Donk (1997) 26 MVR 289: see at 290 per Priestley JA, 295 per Powell JA. The view there expressed is that the reasoning that was dispositive of the outcome of the appeal in Reinhardt, according to the majority judgments in that case, was obiter in its critical discussion of Matthews. See Federation Insurance Ltd v Wasson (1987) 163 CLR 303 at 314. 32 Between the hearing and disposition of Reinhardt came the hearing and decision of Allen on 1 July 1996 by a court comprised of Clarke, Handley and Cole JJA. In Allen, Matthews was approved in circumstances where the issue was clearly central to the reasoning of the Court. Allen involved a 1991 motor vehicle accident that came to trial in 1995 in the District Court. There was a finding of negligence and damages were assessed, but these did not include damages for non-economic loss because the trial judge had held that the plaintiff had not established within the meaning of s79 that his ability to lead a normal life was, at the date of trial, significantly impaired by the injuries suffered in the accident. Matthews was applied. I have had the opportunity of reading the transcript of argument in the appeal. Counsel for the appellant squarely challenged the correctness of Matthews. Unfortunately, he had given no notice of his intention to do so in his written outline of submissions. Nevertheless, the transcript reveals a full canvassing of the issues surrounding the correctness of Grove J's interpretation of s79(1). The Court was referred to the apparent endorsement of Matthews in Southgate at 440-1; to the 1993 Act with its explanatory note and non-retrospective transitional provision; and to textual and purposive arguments challenging the correctness of Matthews. 33 However, the appellant's attack on Matthews was rejected. The leading judgment was given by Clarke JA. His Honour did not regard the 1993 Act as relevant to the correctness of Matthews, because the amendment of s79(1) was prospective. He then addressed the textual arguments in the following terms (at 257): Certainly the Court may and, perhaps, should adopt a purposive approach, but that does not justify the Court substituting words for the words actually used in the statute except in particular well known circumstances. There is nothing in s79 which would justify, in my opinion, interpreting "is" as meaning "has been, is or will be". To give it that interpretation would be to rewrite the section which is a power that the Court does not enjoy. In my opinion there is no substance in the argument that what has occurred since 1991 justifies a review of Matthews v Dean. The second argument was based upon the word "injury" in the latter part of s79. It was pointed out that the concept was not of significant impairment by disability, but by injury, and, as this must have occurred at the time of the accident, the section must have contemplated past impairment. The difficulty with the submission is that the section prohibits a Court from awarding damages unless the injured person's ability to lead a normal life IS significantly impaired. (my emphasis) In my opinion Grove J was correct to place emphasis on the tense of the verb and to conclude that the enquiry posed by the section was whether there was significant impairment at the date of trial. No doubt there is an arbitrary element in the application of that test but the Court is bound to apply the test which flows from the proper construction of the section and cannot decline to do so simply because the results may not always be thought to be just. In my view Grove J was right and this Court should continue to approach the old s79 on the basis that his interpretation is a correct one. Accordingly the new ground which was added during the oral hearing is rejected. Handley and Cole JJA agreed. 34 The reserved judgment in Reinhardt was handed down 11 days later. It is apparent that the ex tempore judgment in Allen had not by then been corrected and circulated. 35 The matter returned to the Court of Appeal in England v Van Donk which was heard on 14 November 1997 and decided on 5 December 1997. England concerned a 1993 motor vehicle accident which came to trial in the District Court in June 1997. The trial judge had found that the plaintiff's disability had ceased some time prior to the trial and accordingly declined to make any award in respect of non-economic loss. The appeal was allowed, but (according to the majority) on a basis that did not involve any overturning of Matthews or revisiting of Allen. 36 It is convenient to refer first to the judgment of Stein JA, whose views on the presently critical point were in the minority. It is not clear whether his Honour regarded the remarks in Reinhardt as obiter. But what is clear is that Stein JA endorsed them, and in firm tones which encapsulate the argument against the correctness of Matthews. He said (at 301-302): It is clear that a literal construction of s79(1) has the capacity to cause manifest injustice to a large number of people injured in motor vehicle accidents. In particular, those people whose ability to lead a normal life is significantly impaired by the injury suffered in an accident, but by the time of the trial are not suffering significant impairment, will be excluded from compensation for non-economic loss. This, of course, is relevant to accidents which occurred prior to 26 September 1995. As Gleeson CJ observed, the temporal construction would produce the surprising result that a plaintiff's rights can depend on the length of delays in court lists. This is something which is totally out of the control of a plaintiff. In addition, a plaintiff through illness, or unavailability of a witness, may obtain an adjournment of a trial thereby possibly depriving herself (or himself) of damages. Moreover, a defendant could seek to delay the trial in the hope or belief that by the time the hearing ultimately occurs, the plaintiff will have ceased to be significantly impaired. To my mind, the literal construction has the capacity to lead to absurdity and overwhelming unfairness. It could not have been the intention of the legislature. In my opinion, the alternative construction, afforded by a purposive approach, is to be preferred. I agree with Meagher JA in Reinhardt that 'is' in s79(1) should be given a narrative and not a temporal connotation. Such an approach is more likely to accord with Parliament's intention. To receive any damages for non-economic loss, there has to be proven that the injury suffered in the accident has significantly impaired the plaintiff's ability to lead a normal life, whether that impairment was past or present. It follows from my conclusion that I believe that Matthews v Dean was incorrectly decided on this point and the correct construction is that opined by Meagher JA (Beazley JA agreeing) in Reinhardt.
37 [The reference to accidents occurring before 26 September 1995 suggests that his Honour's attention had been directed to the further amendment to s79 effected by the Motor Accidents Amendment Act 1995. I respectfully doubt the relevance of this provision, but nothing turns on this.] 38 The other two judges who decided England approached the matter differently. Powell JA demonstrated (in my respectful view, correctly) that the reasoning of Meagher and Beazley JJA in Reinhardt did not form part of the ratio decidendi of the case, albeit that Meagher JA's views on the present issue were an essential part of his Honour's reasoning. Earlier in his judgment, Powell JA indicated that he regarded the matter as having been put to rest in Allen, this being reinforced by the fact that Matthews had been applied by a number of courts between 1990 and 1996, and by the prospective amendment of s79(1) effected by the 1993 Act. Powell JA proposed the dismissal of the appeal, but on the basis that he found no appealable error with the trial judge's reasoning on the facts. 39 The third member of the Court in England, Priestley JA, agreed with the orders proposed by Stein JA, on the narrow ground that the trial judge had erred in law in not explaining his reasoning process on an essential issue. His Honour added (at 290): Although if the question of construction of s79 of the Motor Accidents Act 1988 (NSW) were free from authority, I would agree with Stein JA's view of it, it seems to me that a strict application of the doctrine of precedent requires this court to follow Allen v Chown (1996) 24 MVR 255 rather than the obiter dicta in Reinhardt v Huan (1996) 24 MVR 58. The construction approved in Allen has been followed at least since 1990, so that even if leave to reargue Allen had been sought (which it was not, at least formally) I would not have favoured granting it.
The decision of the trial judge in the present case 40 In the present case the learned trial judge found that the plaintiff's ability to lead a normal life was significantly impaired for about eight months following the 1989 motor vehicle accident. She assessed the level of disability at 27%. Having published her reasons she adjourned briefly to allow the parties to work out what orders stemmed from those reasons. Counsel for the respondent then submitted that the findings led to a nil award for non-economic loss. The matter was adjourned for a little over two weeks. 41 In further reasons for judgment delivered on 25 August 1997 Ainslie-Wallace DCJ reviewed the legislative and judicial history of the matter. She expressed agreement with the reasoning in Reinhardt, adding that she could not accept that the intention of the legislature was to deprive a plaintiff of rights in circumstances where a delay in bringing the matter before the Court meant an injury which had significantly impaired the plaintiff was not able to be compensated because, by the time of trial, it had resolved. Her Honour adverted to an additional argument based upon the construction of transitional provisions touching the further amendment to s79 effected by the Motor Accidents Amendment Act 1995. I have some difficulty in understanding her Honour's reasoning on this matter. But it is unnecessary to grapple with it, because she did not find it necessary to form a concluded view based on it, and because no argument based on the legislative history after the 1993 Act was repeated in this Court. Disposition of the appeal in relation to s79 42 Were the matter res integra and were this decision being made before the commencement of the 1993 Act, I would have preferred the interpretation of s79(1) indicated in the judgments in Reinhardt and in Stein JA's judgment in England. I need not repeat the reasoning. It is sufficient to add reference to Logan Park Investments Pty Ltd v Director of Public Prosecutions (Cth) (1994) 122 FLR 1 at 3 where there is citation of the authorities supporting a narrative as distinct from a temporal reading of "is" if context permits. Matthews also sits uneasily with the presumption that a statute will be construed so that it does not alter the rights of parties after the commencement of litigation (see Clarke v Bailey (1993) 30 NSWLR 556 at 564). 43 But the matter was not at large for the trial judge, nor is it for this Court. Allen stands as a decision of this Court approving Matthews on the relevant issue. The disapproving dicta in Reinhardt did not provide a judge of the District Court with the option of declining to follow Allen, which was a decision directly on point. Her Honour's duty in those circumstances was to follow Allen: see Minister Administering the Environmental Planning and Assessment Act, 1979 v San Sebastian Pty Ltd [1983] 2 NSWLR 268 at 315; Proctor v Jetway Aviation Pty Ltd [1984] 1 NSWLR 166; Meggitt Overseas Ltd v Grdovic (1998) 43 NSWLR 527 at 530. 44 Individual judges of this Court are also bound to submit to the authority of the ratio decidendi of an earlier decision of the Court that is drawn to their attention, unless and until the Court both gives leave to reargue the correctness of the earlier decision and overrules it. I consider this to be an important aspect of the rule of law (see Keith Mason, "The Rule of Law" in Finn ed, Essays on Law and Government, 1995, vol 1 at pp135-9, and generally Proctor). 45 Should this Court accede to the invitation to overrule Allen and, in so doing, to disapprove Matthews? The principles are well settled, although not always easy of application (see Clutha Developments Pty Ltd v Barry (1989) 18 NSWLR 86, Thompson v Hill (1995) 38 NSWLR 714 at 726-7). I would decline the invitation to overrule Allen, for the following reasons: (a) Allen squarely addressed the arguments for and against overruling Matthews. It is a unanimous decision of this Court. (b) The matter in question is one of statutory construction involving a now-repealed provision. No wider or continuing matter of legal principle is involved. (c) Reinhardt and its reasoning confirms why it was appropriate to have allowed the respondent in the present appeal the leave necessary to challenge the correctness of Allen. Nevertheless, although I have disclosed my own preference, I do not have that strength of conviction as to the incorrectness of Allen that would justify departure from it (cf Clutha Developments at 100). (d) Too much water has flowed under the bridge since Matthews was decided. To overrule Matthews in 1998, after it has been endorsed in Southgate and in Allen and in circumstances where the Parliament held back from retrospective amendment in 1993, would create a very small class of litigants (indeed, the respondent may be its only member) whose rights would be determined in a manner contrary to the long-accepted interpretation expounded since 1990. It is to be observed that a three year limitation period has been in force for proceedings for damages arising out of motor vehicle accidents since 1 September 1990 (Limitation Act 1969, s18A). This means that, absent an extension of time, proceedings arising out of accidents prior to 1 September 1994 must have commenced by 1 September 1997. It is reasonable to infer that the vast majority of claims arising out of accidents occurring between 1990 and 1 September 1994 would have been heard and determined long before the end of 1998. Many would have settled on the basis of Matthews. (Motor accident cases have been case managed in the District Court since July 1992. According to the Annual Review of the District Court for 1997, 72% of case managed matters were finalised within 12 months, 24% within 12-18 months and the remaining 4% within 2 years (p22). It is possible that some motor accident cases might have been deliberately delayed while an injured plaintiff's condition stabilised, but these are not likely to throw up the present issue. England involved an accident in March 1993 where proceedings were commenced in March 1996 and came to trial, after an unsuccessful arbitration, in June 1997. I have not overlooked the fact that many older cases would have come more recently into the District Court, through transfers effected pursuant to s143 of the District Court Act 1973. However, I think it unlikely that these would be the type of smaller claim to throw up the Matthews issue.) (e) I do not see the 1993 amendment, with its prospective transitional provision, as creating any legal impediment to the Court giving the correct interpretation to s79 as it stood prior to 1 September 1994. But the two practical difficulties (referred to above) which lay behind the Parliament's decision not to make its amendment retrospective also operate as a restraint upon judicial boldness. For a differently constituted Court of Appeal to declare at this late stage that the law is not as it was generally perceived to be (and held to be by the Court of Appeal in 1990 (Southgate), 1996 (Allen) and 1997 (England)) would be capable of generating a genuine sense of grievance from the vast majority of litigants whose rights have been determined according to Matthews. There is a third difficulty, peculiar to judicial determination. A judicial decision is necessarily retrospective in effect, because it has now been determined authoritatively that prospective overruling is outside the judicial power (Ha v New South Wales (1997) 189 CLR 465; Kleinwort Benson Ltd v Lincoln City Council [1998] 3 WLR 1095). In Kleinwort Benson the House of Lords decided, by majority, that there is no principle of English law that payments made under a settled understanding of the law which is subsequently departed from by judicial decision shall not be recoverable in restitution on the ground of mistake of law. Lord Goff stated the corollary (at 1121): … it should not be forgotten that legislation which has an impact on previous transactions can be so drafted as to prevent unjust consequences flowing from it. That option is not, of course, open in the case of judicial decisions.
If the Australian common law is to the same effect, it would follow that the belated overturning of Matthews could lead to claims that might disturb transactions settled on the understanding that Matthews was good law. This possibility provides a further ground for caution. (f) I confess to a little concern that this Court has to go to the length of overturning the decision below in order to re-establish the equilibrium of stare decisis. However, the trial judge should not have disregarded Allen. The reasons lying behind the principles of stare decisis and of equality before the law offer a principled explanation. Remaining issues 46 If a majority of the other members of the Court share my views, it will be unnecessary to address the appellant's alternative argument that the assessment of 27% disability was excessive in the circumstances. I incline to the view that it was, given the short duration of the impairment, but it is unnecessary for me to say more on that account. 47 Accordingly, I propose that the appeal should be allowed in part; that the verdict of $73,919.50 should be set aside and a verdict of $15,729.50 substituted. 48 The appellant seeks a special order for the trial costs in accordance with Part 39A r25(6) of the District Court Rules, in consequence of the fact that the substituted verdict falls below the offer of compromise in the sum of $21,000 plus costs served by the appellant on 24 December 1993. The rule stipulates a prima facie outcome adverse to the party who rejects a settlement offer that is not bettered at trial, but it also permits the Court to displace the rule if it thinks fit. The principles relating to the application of this rule in the form pertinent to the present case are discussed in Morgan v Johnson (Court of Appeal, unreported, 8 September 1998). In the light of that discussion I see no reason for displacing the rule in the present case. At the time when the settlement offer was rejected Matthews and Southgate held unchallenged sway. The action was pending in the District Court which was bound by those standing decisions. The respondent should have been advised on this basis and there is no reason for assuming that she was not. The doubts raised in Reinhardt and England lay in the future. 49 In these circumstances I can see no proper reason for exercising the discretion under the Rule in favour of the respondent. The Rule, like its counterpart in the Supreme Court Rules, is intended to encourage settlement and introduce a measure of discipline in litigation by focusing the offeree's attention on the offer and the risks involved in rejecting it. 50 The costs of the appeal are another matter. Having regard to the difficult point of principle involved in the appeal and the appellant's undertaking to submit to such order as to costs as the Court hearing the appeal might decide, it is appropriate that the appellant pay the costs of the appeal. 51 The following orders should therefore be made:
SPIGELMAN CJ MASON P PRIESTLEY JA MEAGHER JA HANDLEY JA
THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL
CORAM SPIGELMAN CJ MASON P PRIESTLEY JA MEAGHER JA HANDLEY JA
53 MEAGHER JA: There are two questions which arise in this case. The first is whether in the expression " is significantly impaired" in the Motor Accident Act 1988 s.79 the word "is" should be accorded a shrivelled temporal meaning. The second is whether Ainslie -Wallace DCJ got it right. The answer to this first question is No. The answer to the second question is yes. 54 The facts are set out in the President's judgment. So is the relevant legislation 55 In Matthews v Dean (1990) ll MVR 455 Grove J decided, with a naivete which is almost touching, that "is" meant " is now, at the time of hearing." In Reinhardt v Huan (1996) 24 MVR 58 Beazley JA and I pointed out that this interpretation could not possibly be correct. If the section were interpreted literally, the words obviously mean " the injury resulted in a significant impairment in the injured person's ability to lead a normal life." If the section were interpreted purposively, one reaches the same result: the purpose of the legislation was to restrict damages to serious injuries and to disallow them in trivial matters. If the section were to be interpreted according to the results, the consequences of Grove J's interpretation would be to leave a plaintiff to the caprice of the lists. Gleeson CJ agreed with us, but exercised his habitual prudence in not saying so. Allen v Chown (1996) 24 MVR 255 was a decision of the Court of Appeal to the opposite effect, but that case was decided without the benefit of having Reinhardt v Huan cited to it. In another decision of the Court of Appeal, England v Van Donk (1997) 26 MVR 289, Stein J agreed with Reinhardt v Huan (1996) 24 MVR 58. 56 In these circumstances, how can it be said that Ainslie-Wallace DCJ came to the wrong result? 57 The appeal should be dismissed with costs.
SPIGELMAN CJ MASON P PRIESTLEY JA MEAGHER JA HANDLEY JA
58 HANDLEY JA: I agree with Mason P.
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ROBERTS
WHITE
(1990) 11 MVR 455
(1996) 24 MVR 255
(1996) 24 MVR 58
(1990) 21 NSWLR 427
(1991) 23 NSWLR 528
(1997) 26 MVR 289
(1992) 176 CLR 433
(1987) 163 CLR 303
(1994) 122 FLR 1
(1993) 30 NSWLR 556
(1998) 43 NSWLR 527
(1989) 18 NSWLR 86
(1995) 38 NSWLR 714
(1997) 189 CLR 465