Shire of Corangamite v Transport Accident Commission [1999] VSCA 220

7. I agree that the appeal should be dismissed, the cross-appeal allowed and orders made as proposed by Buchanan, J.A. for the reasons given by his Honour.

12. On 20 March 1990 at about 8.30 p.m. Jason Orr was riding his 250 c.c. single cylinder Honda motor cycle in Curdies Road, Timboon. As he was negotiating a sweeping bend, the rear wheel of the motor cycle slid. The rider corrected the slide by pulling the motor cycle upright. However the motor cycle was then beyond his control: it crossed the road to the gutter, slid along the gutter for some distance and struck a driveway, whereupon motor cycle and rider were catapulted into a lamp-post.

15. Mr. Orr was severely injured as a result of the accident. He brought proceedings against the appellant ("the Shire") as the local highway authority having statutory power to make and maintain roads in the town of Timboon. The respondent ("the Commission") made payments to Mr. Orr pursuant to the provisions of the Transport Accident Act 1986 ("the Act"). The Commission also sued the Shire to recover the amount of those payments pursuant to s.104 of the Act, which provided that if an injury in respect to which the Commission made payments arose under circumstances which, regardless of s.93 of the Act, would have created a liability in a person to pay damages in respect of any loss suffered by reason of the injury, the respondent was entitled to be indemnified by the wrongdoer for such proportion of the liability to make payments as was appropriate to the degree to which the injury was attributable to the act, default or negligence of the wrongdoer.

18. After the trial in the Orr proceedings commenced before a judge and jury, and before judgment, the proceedings were settled. The Shire and the Commission agreed that the evidence in the proceedings brought by Mr. Orr should be evidence in the proceedings brought by the Commission. The Commission's case proceeded before the judge who had conducted the earlier jury trial.

21. It was not argued that as a highway authority the Shire was liable other than for misfeasance. In 1970 or 1971 Curdies Road was sealed with bitumen in which stone aggregate was embedded. The Commission's case was that the Shire placed sand and gravel on the surface of Curdies Road to deal with the absence of the stone aggregate which should have been on the surface of the bitumen to provide grip to vehicles passing over the roadway. According to the Commission either the stones sank into the bitumen, a phenomenon called "flushing", or the bitumen melted in hot weather and rose to the surface, which was known as "bleeding". The Commission contended that the Shire was negligent in leaving sand and gravel on the road surface and in failing to erect signs to warn motorists of the slippery condition created by the sand and gravel.

24. The trial judge held that loose material in the nature of gravel had been placed on Curdies Road and spread by vehicles using the road so that it was on the surface of the roadway at the point where Mr. Orr lost control of his motor cycle. His Honour found that the cause of the accident was a combination of excessive speed, inexperience of the rider and the presence of gravel on the roadway. It was the negligence of the Shire in placing and leaving the gravel on the road that was a cause of the accident. The trial judge found that, although it was arguable that the Shire should have provided a warning sign, the absence of a sign was not a cause of the accident for he said Mr. Orr was travelling too fast in poor light to respond to a warning sign. His Honour apportioned 75% of the blame against Mr. Orr and 25% against the Shire.

27. The Shire has appealed against the conclusion that it was guilty of negligence that was a cause of the injuries sustained by Mr. Orr. The Shire contends that there was no acceptable or sufficient evidence to warrant the finding as to the spreading of gravel by the Shire at the point where the motor cycle's tyre slid and the finding that the sand and gravel was a cause of the accident. It was said that the finding that Mr. Orr lost control of his motor cycle because it slid on gravel was no more likely than that he lost control as a result of excessive speed and the motor cycle slid on a smooth, gravel-free surface.

30. Mr. Orr gave evidence that he saw some of his friends travelling in a car towards Curdies Road. He followed and overtook the car in Curdies Road before the bend at which he crashed. He said he was travelling at 60 k.p.h. when he passed the car. He felt the back wheel of his motor cycle "go out", but was unable to recall any more. The driver of the car corroborated Mr. Orr's account of his speed and said that he observed the motor cycle leaning over, straightening up and then drifting across the road to the gutter. A passenger in the car gave a description of the accident that was less sympathetic to Mr. Orr. The passenger said that the car was travelling at 80 k.p.h. when it was passed by the motor cycle. The car braked heavily before the corner. The motor cycle cut across the front of the car. The motor cycle

"went into the corner leaning, and within a split second the back started to fishtail ... and it just went directly into the gutter. It hit the gutter and just stuck to the gutter as tram to rails, and slid around the gutter until it reached where a driveway is moulded into the turn, and then it went up that point and straight into the telegraph pole."

34. Evidence as to the presence of sand or gravel on the roadway was given by Mr. Orr's father, who spoke of the Shire's practice of laying gravel or sand on melting tar in hot weather and produced photographs of the road, which he took a day or two after the accident. The photograph showed what looked to be loose material on the side of the roadway in the vicinity of the bend at which the motor cycle went out of control. A policeman who inspected the scene of the accident soon after it occurred said that the road looked as it appeared in the photographs. He said there was sand and gravel on each side of the road and "the Shire would have had to have put it there." Another witness who lived nearby spoke of the Shire placing sand on the road surface to counter bleeding in hot weather, as did Mr. Orr, the rider of the motor cycle, who said that every summer he saw gravel and sand being placed on the road where the accident occurred.

37. A Shire employee who inspected the scene of the accident the following day was asked whether there was gravel on the road and said: "[W]e couldn't see anything that was there, other than what's in that photo", speaking of one of the photographs taken by Mr. Orr's father. The employee also said that the Shire dealt with bleeding of road surfaces by spreading fine dust, never gravel or sand. The Shire records of roadworks did not disclose that any gravel, sand or other substance had been spread at or in the vicinity of the accident, although the Shire employee who produced the records conceded that if loose screenings had been strewn on a road surface which had bled or become flushed, he would not necessarily expect to see an entry on a time sheet in respect of that work.

40. It was contended on behalf of the Shire that, as there was little direct evidence of the Shire placing gravel or sand on the surface of Curdies Road at the point where Mr. Orr lost control of his motor cycle, and there was positive evidence of a Shire employee that the Shire never engaged in that practice, the skimpy evidence of the presence of loose material on the road surface did not permit the drawing of a conclusion of misfeasance by the Shire.

"Viewing the evidence as a whole, I find that at the time of the accident, there was gravelly material on the surface of the road at the intersection of Curdies Road at Macleod Street and extending around the curve to the north and my finding is based in part upon the photographs of the scene taken by Mr. Ian Orr and what can be seen in the photographs."

Counsel for the Shire submitted that the statement meant that his Honour's conclusion was based solely on the photographs, which counsel subjected to a detailed analysis designed to show that the presence of sand or gravel could not be detected with any assurance. I do not read his Honour's remarks as limiting his finding to the photographs. There was other evidence of sand and gravel being spread by the Shire in Curdies Road. His Honour recounted that evidence. In my opinion his Honour meant that his finding was one based on the evidence viewed as a whole and only in part based upon the photographs. There was evidence that the Shire did spread sand and gravel, and evidence that it never did so. The trial judge had the benefit of seeing and hearing the witnesses give evidence. As Brennan, Gaudron and McHugh, JJ. said in Devries v. Australian National Railways Commission (1993) 177 C.L.R. 472 at 479:

"More than once in recent years, this Court has pointed out that a finding of fact by a trial judge, based on the credibility of a witness, is not to be set aside because an appellate court thinks that the probabilities of the case are against - even strongly against - that finding of fact. If the trial judge's finding depends to any substantial degree on the credibility of the witness, the finding must stand unless it can be shown that the trial judge 'has failed to use or has palpably misused his advantage' or has acted on evidence which was 'inconsistent with facts incontrovertibly established by the evidence' or which was 'glaringly improbable'." [Footnotes omitted.]

See also State Rail Authority of N.S.W. v. Earthline Constructions Pty. Ltd. [1999] HCA 3; (1999) 160 A.L.R. 588. In the present case there was sufficient evidence to justify a finding of negligence on the part of the Shire which caused the accident. In my view the trial judge's finding was not glaringly improbable nor inconsistent with facts incontrovertibly established nor too fragile a base to support the finding in the light of other evidence.

50. The trial judge held that the Commission's right of indemnity did not extend to payments made by it to Mr. Orr for loss of earning capacity. The respondent has cross-appealed against that result.

53. At the time the accident occurred, s.104 of the Act limited the Commission's right of indemnity to payments made by it under ss.44, 45 and 60 of the Act. Those sections covered payments for partial and total loss of earnings and medical and like expenses. It was another provision, s.49, which dealt with the obligation of the Commission to make payments for loss of earning capacity. On 24 November 1994 the royal assent was given to the Transport Accident (General Amendment) Act 1994 ("the 1994 Act"). The 1994 Act amended s.104 to extend the Commission's right of indemnity to all payments made by it under the Act. The amendment was one of the provisions of Part 3 of the 1994 Act. Section 11, which was in Part 2 of the 1994 Act, provided:

(1) The Principal Act as amended by this Part applies to and in respect of a transport accident which occurs on or after 1 January 1995.

(2) The Principal Act as in force before 1 January 1995 continues to apply to and in respect of a transport accident which occurred before 1 January 1995."

The trial judge based his conclusion in part upon s.11(2) and in part upon the presumption against the retrospective operation of legislation. He said:

"In my opinion, Parliament did not expressly or by necessary implication evince an intention to make s.104, as amended, operate on transport accidents occurring before 1 January 1995. Courts lean against imposing an increased obligation upon a person by giving amending legislation retrospective operation unless Parliament makes such an intention clear."

61. Section 14(2) of the Interpretation of Legislation Act 1984 provides, so far as is presently relevant:

the ... amendment ... of that ... provision shall not, unless the contrary intention expressly appears -

(e) affect any right, privilege ... acquired ... under that Act or provision; ..."

70. In Tuckwood v. Mayor of Rotherham [1921] 1 K.B. 526, the Court of Appeal held that the time limit which applied to an action for anything done pursuant to an Act of Parliament did not apply to bar an action by an employer to recover an indemnity against workers compensation payments made by the employer to a worker injured as a result of the fault of another. The right of indemnity was contained in workers compensation legislation. The Court distinguished the right to an indemnity from the act or default which gave rise to the right. At 538 Atkin, L.J. said:

"It has been held that where a municipal authority, acting under statutory powers, orks a tramway, if an action is brought against it to recover damages for injuries sustained owing to the negligence of its servants in driving a tramcar, the action is brought in respect of an alleged neglect or default in the execution of an Act, duty or authority .... That is not the position here, because in this case the alleged neglect or default in not driving the tramcar with proper skill gave no cause of action to the plaintiff. He derives his right to make a claim against the defendants, not because of their act or default, but because the Act of 1906 has imposed a liability upon them to indemnify him if he has had to pay compensation to his injured workman by reason of that neglect or default."

In Tickle Industries Pty. Ltd. v. Hann [1974] HCA 5; (1974) 130 C.L.R. 321 Barwick, C.J. relied upon Atkin, L.J.'s statement that the cause of action was one created by statute and was not an action in negligence against the wrongdoer in deciding that a claim for indemnity by an employer against payments made by it to the dependants of a deceased worker was not barred because the employee's dependants had not brought an action within the limitation period. The same distinction between a right to indemnity and a right to damages in respect to bodily injury was made by the Full Court in Australian Safeway Stores Pty. Ltd. v. Incorporated Nominal Defendant [1980] VicRp 14; [1980] V.R. 118. See also ex parte Workers' Compensation Board of Queensland [1983] 1 Qd.R. 450; Accident Compensation v. Haynes [1992] VicRp 50; [1992] 1 V.R. 691; Borg Warner (Australia) Ltd. v. Zupan [1982] VicRp 44; [1982] V.R. 437.

75. In the present case the relevant liability was the liability of the Shire to indemnify the Commission, not the hypothetical liability of the Shire to Mr. Orr. The Shire's liability to the Commission did not exist until s.104 was enacted in 1994. Further, in my opinion the Shire had no existing right within the meaning of s.14(2)(e) of the Interpretation of Legislation Act before the amending Act to be free from an obligation to indemnify the Commission against payments for loss of earning capacity. The fact that there existed a limited liability to indemnify the Commission did not carry with it a right to be free in future from a more extensive liability to indemnify the Commission. As the Full Court said in Robertson v. City of Nunawading [1973] VicRp 81; [1973] V.R. 819 at 825:

"There cannot, in any relevant sense, or perhaps in any sense, be a 'right' to exemption or immunity from legislative action. The taking of legislative action in a field where previously there was none cannot be treated as an impairment of a right for the purpose of the principle. "

79. The events that occurred before the 1994 Act was passed had not brought into existence any rights. The 1994 Act does not have a retrospective operation because it operates on those past events. As Jordan, C.J. said in Coleman v. The Shell Company of Australia Ltd. (1943) 45 S.R.(N.S.W.) 27 at 31:

"Upon a consideration of the authorities, I think that, as regards any matter or transaction, if events have occurred prior to the passing of the Act which have brought into existence particular rights or liabilities in respect of that matter or transaction, it would be giving a retrospective operation to the Act to treat it as intended to alter those rights or liabilities, but it would not be giving it a retrospective operation to treat it as governing the future operation of the matter or transaction as regards the creation of further particular rights or liabilities."

The fact that elements of the Commission's cause of action involved proof of events that occurred before s.104 was amended did not give the 1994 Act a retrospective effect. The 1994 Act operates prospectively only, for its prospect begins, not with the accident or the injury, but with the payments made by the Commission. See Fisher v. Hebburn Ltd. [1960] HCA 80; (1960) 105 C.L.R. 188 at 194 per Fullagar, J. See also R. v. Secretary of State; ex parte Mundowa [1992] 3 All E.R. 606 at 613 per Staughton, L.J.

84. Counsel for the Shire did not seek to support the trial judge's conclusion that to render the Shire liable to indemnify the Commission against payments made for loss of earning capacity was to give the 1994 Act a retrospective operation. Instead, he submitted that s.11(2) required the Court to apply s.104 in its unamended form to the accident and its consequences as the accident took place before 1 January 1995. Counsel for the Commission, on the other hand, sought to limit the application of s.11(2) to the amendments contained in Part 2 of the 1994 Act. Counsel for the Shire responded by pointing out that s.11(1) dealt with the transport accidents to which all the amendments effected by Part 2 applied, and accordingly unless s.11(2) applied to the amendments made by Part 3, it had no area of operation.

87. Part 2 of the 1994 Act contains amendments to five sections of the Act and introduces two new sections. The part is headed "Amendments Applying to Transport Accidents on or after 1 January 1995". Part 3 of the 1994 Act contains amendments to 37 sections of the Act and introduces five new sections. Part 3 is entitled "General Amendments". Part 4 of the Act amends a number of provisions contained in other Acts. Unlike the provisions contained in Part 2, which either define transport accidents and associated concepts or are concerned with the consequences of transport accidents, a large number of the amendments effected by Part 3 of the Act are independent of the occurrence of particular transport accidents. For example, s.18 amends the objects of the Act, s.22 deals with the composition of the Board of management of the Commission, while s.24 is concerned with the conduct of proceedings of the Board. Other sections in Part 3 amend provisions of the Act dealing with the calculation of benefits payable by the Commission.

90. In my opinion there are a number of considerations which militate against the conclusion that s.11(2) requires that the consequences of accidents occurring before 1 January 1995 continue to be regulated by the Act in its unamended form.

93. In the first place, if it had been intended that s.11 was to determine to which transport accidents all the amending secitons of the 1994 Act were to apply, it is strange that the section was inserted at the conclusion of Part 2 and not in Part 1, which contains introductory provisions applying generally to the 1994 Act, including a section dealing with the commencement dates of different provisions of the 1994 Act. The position of s.11 indicates that it was intended to regulate the application of the amendments contained in Part 2. As Holroyd, J. said in delivering the judgment of the Court in Re the Commercial Bank of Australia Ltd. [1893] VicLawRp 56; (1893) 19 V.L.R. 333 at 375:

"When an Act is divided and cut into parts or heads, prima facie it is, we think, to be presumed that those heads were intended to indicate a certain group of clauses as relating to a particular subject ... The object is prima facie to enable everybody who reads to discriminate as to what clauses related to such and such a particular subject matter. It must be perfectly clear that a clause introduced into a part of an Act relating to one subject matter is meant to relate to other subject matters in another part of the Act before we can hold that it does so."

97. Secondly, the headings to Parts 2 and 3 suggest that only the amendments contained in Part 2 are tied to the date of a transport accident. Headings to parts into which an Act is divided form part of the Act: s.36(1) of the Interpretation of Legislation Act 1984.

100. Finally, and perhaps most importantly, while the Part 2 amendments are relatively few in number and are of a nature which makes it appear sensible that they should not apply to past transport accidents, the amendments contained in Parts 3 and 4 form a large, heterogenous collection of provisions in respect of many of which it is impossible to discern any reason for requiring their application to be confined to transport accidents occurring after a particular date. For example, it seems absurd that the Board of Management is to be constituted in one manner in dealing with transport accidents occurring before 1 January 1995 and in another form in dealing with transport accidents after that date. Again, in my view, it is difficult to justify calculating the amounts of benefits payable by the Commission in different ways according to the dates of the accidents in respect of which the payments are made.

103. The presumption is that words used by Parliament "have not been introduced merely for elegance or prosody or to provide meaningless padding. They have been introduced in order to affect the meaning": Customs and Excise Commissioners v. Mechanical Services (Trailer Engineers) Ltd. [1979] 1 W.L.R. 305 at 316 per Megaw, L.J. See also Beckwith v. R. [1976] HCA 55; (1976) 135 C.L.R. 569 at 574 per Gibbs, J. Nevertheless I consider that the consequences of applying s.11 to the 1994 Act as a whole would be irrational, and I would confine the operation of the section to Part 2, even though sub-s.(2) of s.11 thereby becomes no more than an echo of sub-s.(1). Perhaps sub-s.(2) is better described as emphasizing the intention set out in sub-s.(1). As Mahoney, J.A. said in Commissioner of Pay-roll Tax v. R.G. Elsegood & Co. Pty. Ltd. [1983] 1 N.S.W.L.R. 223 at 228:

"Whilst accepting of course that prima facie all words should be given some meaning and effect, the use of words which are not strictly necessary, to give emphasis to the intention of the draftsman, is not unknown."

107. Accordingly I would dismiss the appeal and allow the cross-appeal. I would set aside that part of the judgment given for the respondent in the sum of $15,752.40 and substitute a judgment in the sum of $37,428.72, which is 25 per cent of the sum which the parties agreed at trial was the entire amount paid by the Commission to Mr. Orr.