Whitfield v Melenewycz

Solicitors: Curwoods Lawyers (Appellants) Burgan Lawyers (Respondent) File Number(s): 2015/376815 Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Common Law Division Citation: [2015] NSWSC 1482 Date of Decision: 04 December 2015 Before: Hamill J File Number(s): 2014/00233733

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] HEADNOTE [This headnote should not be read as part of the judgment] On 12 August 2011 the respondent driver was injured when the motorcycle he was riding collided with a kangaroo on an unsealed road in rural New South Wales. He brought proceedings in the Supreme Court against the first appellant as owner of the vehicle and second appellant as third-party insurer. There was no suggestion that the appellant owner had caused or contributed to the accident by any relevant use or operation of the vehicle. The respondent claimed damages on the basis that the accident was a "blameless motor accident" and that the injury was deemed, by s 7B(1) of the Motor Accidents Compensation Act 1999 (NSW) (MAC Act) to have been caused by the fault of the first appellant owner in the use or operation of the vehicle. The primary judge found that the accident was "blameless", that the deeming provision was engaged, and that s 7E did not operate to deny the respondent's entitlement to recover damages. Accordingly he found that the appellants were liable to the respondent for damages to be assessed. Because the decision was interlocutory, the appellants required leave to appeal. The issues in the proposed appeal were: Whether s 7B of the MAC Act deems injury to have been caused by "fault of the owner … in the use or operation of the vehicle" where the "incident or accident involving the use or operation" causing the injury does not involve any use or operation by the owner; If s 7B applied as contended by the respondent, whether the primary judge erred in finding that s 7E did not apply to deny the respondent any entitlement to recover damages. The Court held (per Meagher JA, Simpson JA and Sackville AJA agreeing), granting leave to appeal and allowing the appeal: In relation to (i) Section 7B(1) deems fault on the part of the owner or driver (or both) only if their use or operation was use or operation involved in the motor accident that caused the injury or death. As there was no causally related use or operation of the motorcycle by the first appellant owner, s 7B did not deem him to have been at fault: [37]-[40], [58]-[59]. Allianz Australian Insurance Ltd v GSF Australia Pty Ltd [2005] HCA 26; 221 CLR 568. In relation to (ii) Although this issue does not arise, s 7E is capable of applying where there is only one or more than one motor vehicle involved in the motor accident which is said to be "blameless": [43], [51], [60]. The respondent driver did not cause the accident by any "act or omission" so as to be disentitled from recovering damages (s7E(1)): [44]-[47].

Judgment

1. MEAGHER JA: The issue in this appeal is whether the respondent driver was entitled to recover damages under the Motor Accidents Compensation Act 1999 (NSW) (MAC Act) for injuries sustained when the motorcycle he was riding collided with a kangaroo on an unsealed red dirt road near Bourke. The respondent was not the owner of the motorcycle and no other motor vehicle was involved in the accident. He claimed damages from the first appellant on the basis that the accident was a "blameless motor accident" with the claimed outcome being that his injury was deemed, by s 7B(1) of the MAC Act, to have been caused by the fault of the first appellant as owner in the use or operation of the motorcycle. (The relevant provisions of the MAC Act are set out at [11], [12] and [14] below.)
2. The second appellant is the third-party insurer of the first appellant. Under that insurance, the former is liable to indemnify the owner against liability in respect of "injury to a person caused by the fault of the owner or driver of the vehicle": MAC Act, s 10.
3. Before the primary judge (Hamill J), the appellants maintained, addressing the circumstances of the accident, that it was not a "blameless motor accident". They also contended that if it was, so that the deeming provision was engaged, the respondent was not entitled to recover because of the application of s 7E. Four arguments were advanced in support of that proposition (see [42] below).
4. The primary judge held that the accident was a "blameless motor accident" on the basis that the respondent was not negligent in his driving of the motorcycle and there was no negligence of any other person. That conclusion is not challenged. His Honour also held that s 7E did not apply to deny any entitlement to recover damages: Melenewycz v Whitfield [2015] NSWSC 1482. That conclusion is challenged.
5. In the course of oral argument in this Court, the appellants also submitted that in the circumstances of this motor accident s 7B did not deem any fault on the part of the owner, as distinct from the driver, in "the use or operation" of the motorcycle. That argument, which focusses on the construction and application of s 7B, was not made to the primary judge. It was not suggested that it could not be put for the first time on appeal.
6. The primary judge described the question raised by the respondent's reliance on the blameless accident provisions as "moderately interesting". It arises in circumstances where no use or operation of the vehicle by the owner was causally or temporally related to the happening of the accident and injury. Formulated by reference to the language of s 7B, and the definition of "motor accident", the question is whether s 7B deems "fault of the owner … in the use or operation of the vehicle" where the "incident or accident involving the use or operation" that caused the injury does not include any use or operation of the owner.

Relevant facts as agreed or found

1. The following facts were agreed. In the early afternoon of 12 August 2011 the respondent was riding the first appellant's motorcycle along Hungerford Road near Bourke, at approximately 90 to 100 km/h. The road was dirt, gravel and unsealed without any visible road markings or bitumen. It was about 20 m wide with a clearing on either side before the growth of foliage. The speed limit was 100 km/h. When the respondent first saw the kangaroo, it was approximately 20 m ahead of him and approximately 6 m to the right of the graded surface of the roadway. It bounded onto the roadway and collided with the respondent and his motorcycle. As a result he was knocked off the motorcycle and injured.
2. The primary judge made the following additional findings as to the facts in issue. None of these findings is challenged on appeal:

• Although the agreed facts included that the respondent first saw the kangaroo when it was only around 20 m ahead of him and about 6 m to the right side of the roadway, the agreement was that this was the respondent's own estimate, to which he adhered at the trial. The distance of 20 m ahead of the respondent may well have been and probably was an underestimation: Judgment at [56].
• The respondent did not notice the kangaroo earlier, because the kangaroo blended with its surroundings: Judgment at [59].
• The respondent was maintaining focus on the road well ahead of him and was scanning the roadway: Judgment at [58].
• The speed at which the respondent was travelling at the time of the accident was not excessive or unreasonable in the circumstances: Judgment at [70].

1. His Honour made no finding that suggested that anything done or not done by the first appellant owner with respect to the use or operation of the motor vehicle caused or contributed to the accident and injuries suffered by the respondent. Nor was any such allegation made by the respondent. His case was that the accident was caused by the unfortunate kangaroo.

Relevant legislative provisions

1. The applicability of the MAC Act and access to its scheme of compensation is governed by s 3A, which provides: (1) This Act (including any third-party policy under this Act) applies only in respect of the death of or injury to a person that is caused by the fault of the owner or driver of a motor vehicle in the use or operation of the vehicle and only if the death or injury is a result of and is caused (whether or not as a result of a defect in the vehicle) during: (a) the driving of the vehicle, or (b) a collision, or action taken to avoid a collision, with the vehicle, or (c) the vehicle's running out of control, or (d) a dangerous situation caused by the driving of the vehicle, a collision or action taken to avoid a collision with the vehicle, or the vehicle's running out of control. (2) This Act (including any third-party policy under this Act) does not apply in respect of an injury that arises gradually from a series of incidents.
2. The key terms of the Act are defined in s 3 as follows: claim means a claim for damages in respect of the death of or injury to a person caused by the fault of the owner or driver of a motor vehicle in the use or operation of the vehicle … driver means a person driving a motor vehicle, and includes: (a) a person riding and operating a motor cycle, and (b) a person for the time being in charge of a motor vehicle. … fault means negligence or any other tort. … injury means personal or bodily injury and includes: (a) pre-natal injury, and (b) psychological or psychiatric injury, and (c) damage to artificial members, eyes or teeth, crutches or other aids or spectacle glasses. … motor accident means an incident or accident involving the use or operation of a motor vehicle that causes the death of or injury to a person where the death or injury is a result of and is caused (whether or not as a result of a defect in the vehicle) during: (a) the driving of the vehicle, or (b) a collision, or action taken to avoid a collision, with the vehicle, or (c) the vehicle's running out of control, or (d) a dangerous situation caused by the driving of the vehicle, a collision or action taken to avoid a collision with the vehicle, or the vehicle's running out of control. … use or operation of a motor vehicle includes: (a) the maintenance or parking of the vehicle, or (b) in the case of a motor vehicle that is not a trailer - the use or operation of a trailer attached to the motor vehicle … (c) in the case of a motor vehicle that is a tow truck …

The grounds of appeal

1. The appellants challenge the primary judge's conclusion that the respondent was entitled to damages by the operation of Pt 1.2, Div 1 of the MAC Act (grounds 1 and 2). The submissions made in support of ground 2 include those as to the construction and operation of s 7B. The appellants also challenge the primary judge's rejection of their arguments as to the application of s 7E (grounds 3, 4, 5 and 6).
2. Finally, the appellants contend that in one respect Axiak v Ingram [2012] NSWCA 311; 82 NSWLR 36 was wrongly decided (ground 7). In Axiak it was held that in accordance with its defined meaning in s 3, as used in the definition of "blameless motor accident", "fault" means "negligence or any other tort". The appellants accept that this question does not directly arise. The primary judge's conclusion that the accident was "blameless" did not depend on "fault" referring only to negligence or any other tort. Nor do they contend that it is necessary to consider this question in order to address their arguments as to the construction of s 7E. That being the position, ground 7 does not arise and I do not address it.

Legislative Background

1. The MAC Act provides a scheme for the compulsory third party (CTP) insurance of motor vehicles and the payment of compensation under that insurance. CTP insurance was first introduced in New South Wales by the Motor Vehicles (Third Party Insurance) Act 1942 (NSW). Under the current scheme, motor vehicles used on roads are required to be the subject of a third party insurance policy, which by s 10 of the MAC Act, insures the owner and driver of the vehicle "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" in its use or operation. For the purposes of any claim brought in respect of that liability against the owner by a person other than the driver of the vehicle, that driver is presumed by s 112 to have been the agent of the owner acting within the scope of their authority to use or operate the vehicle.
2. The MAC Act does not provide "a universal, comprehensive scheme to award damages to every person who sustains an injury that was in some way connected to a motor vehicle": Allianz Australia Insurance Ltd v GSF Australia Pty Ltd [2005] HCA 26; 221 CLR 568 at [43] (McHugh J). Indeed, the scheme was, at least in part, designed to stabilise or reduce insurance premiums: Allianz Australia v GSF at [47], [53] (McHugh J), [80], [101] (Gummow, Hayne and Heydon JJ).

Approach to construction

1. The objects of the MAC Act are to be taken into account "not only when its provisions are capable of more than one construction but also in determining whether more than one construction is open": Nominal Defendant v Uele [2012] NSWCA 271; 82 NSWLR 308 at [18]; ss 5, 6. However, the words of the statute continue to have paramount significance in the determination of its meaning: see Nominal Defendant v GLG Australia Pty Ltd [2006] HCA 11; 228 CLR 529 at [22] (Gleeson CJ, Gummow, Hayne and Heydon JJ), [42], [81]-[82] (Kirby J). As Spigelman CJ observed in Zurich Australian Insurance Ltd v CSR Ltd [2001] NSWCA 261; 52 NSWLR 193 at [26], notwithstanding an evident legislative purpose being to confine the application of the Act, the "restriction adopted by Parliament was reflected in specific words which must be construed in the normal way".
2. There is a substantial body of authority in this Court and in the High Court considering the definition of "injury" and the application of the MAC Act prior to 2006. That authority remains relevant and continues to be applied when construing the Act as amended, particularly the definition of "motor accident" and s 3A: see Zotti v Australian Associated Motor Insurers Ltd [2009] NSWCA 323; 54 MVR 111 at [48] (Allsop P), [113]-[114] (Campbell JA); RG & KM Whitehead Pty Ltd v Lowe [2013] NSWCA 117; 63 MVR 375 at [41] (Tobias AJA); Leach v Nominal Defendant [2014] NSWCA 257; 67 MVR 494 at [40], [52] (McColl JA), [81] (Gleeson JA).
3. Prior to the 2006 amendments, the restriction on the recovery of compensation was principally affected through the narrow definition of "injury" in s 3. The first part of that definition provided: injury: (a) means personal or bodily injury caused by the fault of the owner or driver of a motor vehicle in the use or operation of the vehicle if, and only if, the injury is a result of and is caused during: (i) the driving of the vehicle, or (ii) a collision, or action taken to avoid a collision, with the vehicle, or (iii) the vehicle's running out of control, or (iv) such use or operation by a defect in the vehicle, and …
4. Following those amendments the content of that definition and accordingly the restriction on recovery is included in s 3A(1). As McHugh J observed in Allianz Australia v GSF at [17] this definition of "injury" emphasised the element of "cause" as the key factor governing the entitlement to compensation. A claimant had to establish that their injury was "caused by the fault of the owner or driver … in the use or operation of the vehicle". This required that the claimant establish as against the driver or owner (or both) that they were negligent or had committed another tort, that their relevant "fault" was "in the use or operation" of the vehicle and that the injury was caused "by" that fault: Allianz Australia v GSF at [16]. Thus there had to be fault, the fault had to be in the use or operation of the vehicle and had to cause the injury. That remains the position under s 3A(1).

The 2006 Amending Act

1. This Act introduced the blameless accident provisions, as well as inserting s 3A and amending the definitions of "motor accident" and "injury". As earlier defined, a motor accident was an accident or incident "caused by the fault of the owner or driver of a motor vehicle in the use or operation of the vehicle which causes the death of or injury to a person". The definition of "injury" relevantly was as set out above. The 2006 amendments removed the references to the fault of the owner or driver from each of these definitions and included the new definition of a motor accident as an incident or accident involving the use or operation of a motor vehicle that causes death or injury where that injury also satisfies the causal and temporal requirements that were previously in the definition of "injury".
2. It is clear from the Second Reading Speech to the 2006 Amending Act (New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 9 March 2006) that the blameless accident provisions were intended to extend the scope of the existing CTP scheme to circumstances in which death or injury had been caused by the use or operation of a motor vehicle by its driver or owner (or both) where that use or operation could not be shown to have involved fault on the part of the owner or driver. They do so by deeming fault in the relevant use or operation, so as to give rise to a claim to which the CTP scheme responds.
3. Consistent with that being the position, the Minister for Transport stated: The Motor Accidents Compensation Amendment Bill introduces enhancements to the existing CTP motor accidents injury scheme …. Secondly, the bill extends the scope of the CTP scheme to provide compensation entitlements for injury or death resulting from a blameless or inevitable accident, which is a motor vehicle accident where no-one is considered to have been at fault - for example, when a person is injured because a driver experiences an unforeseen illness or medical condition, which results in a loss of control over the vehicle. Currently, under the common law, if a court finds that no-one was at fault in an accident the CTP compensation entitlements are not available to those injured in the accident. … The blanket application of legal rules and principles can on occasions have unfortunate and even undesirable consequences. The principal of fault is a case in point. For example, when a person injured in a motor accident is unable to access CTP assistance because no-one is found to have been at fault in causing their injury, or when children are penalised for behaving as children do. The enhancements to the motor accidents scheme proposed by the bill will provide greater support and security to injured people and their families Part 1.2 of the bill provides a right of recovery to people injured in motor vehicle accidents occurring in New South Wales when no-one is at fault. That is an "inevitable" or "blameless" motor accident. For the purpose of making this new claim for death or injury, the motor accident is deemed to have been caused by the fault of the owner or driver of the motor vehicle. The injury must also be caused by a motor vehicle accident of a kind recognised by the Act. A person who is injured in a blameless accident will be entitled to CTP scheme benefits. The one exception is that the driver of the motor vehicle causing the accident will not be entitled to make a claim under these provisions. However, if that driver is catastrophically injured an application for entry to the Lifetime Care and Support Scheme may be made. [emphasis added]

Discussion

1. The respondent driver claims damages for his injuries from the owner on the basis that they were caused by the owner's fault in the use or operation of the vehicle. In doing so he does not rely on the deeming of fault on his part as driver and the presumption of agency in s 112(1) as making the owner liable for his (deemed) fault as driver in the use or operation of the vehicle. Nor could he because the presumption in that subsection only operates where the injured person and driver are different persons. That is the effect of s 112(1)(a) which limits the application of the presumption to proceedings "against the owner of a motor vehicle, whether severally or jointly with the driver of the vehicle, for the recovery of damages for liability in respect of the death of or injury to a person caused by the fault of the driver of the vehicle in the use or operation of the vehicle".
2. Had the respondent owned the motorcycle he could not have had a claim for damages against himself as owner: cf Syed v Crumpton [2016] NSWSC 500 which decides otherwise. I respectfully disagree with the conclusion in that judgment. Section 7B deems fault for the purposes of a claim which depends on the claimant establishing liability under the common law. It does not deem liability. Under the common law a driver cannot have a claim in negligence against him or herself: see in the context of an asserted subrogated claim, Simpson & Co v Thomson (1877) 3 App Cas 279.
3. The respondent relies on the deeming provision in s 7B in circumstances where there was a motor accident which undoubtedly involved his use or operation of the vehicle but did not involve any use or operation of the vehicle on the part of the owner, either in a causal or temporal sense. In other words, there was nothing done or not done by the owner in relation to use or operation of the motorcycle that was of any causal significance in relation to the collision with the kangaroo; and the occurrence which constituted that incident or accident did not include any driving or other use or operation of the motorcycle by the owner.
4. It is instructive at this point to consider some of the circumstances in which the driver of a vehicle, who is not the owner, might claim damages from the owner in respect of injury caused by the owner's fault. To maintain such a claim, the injury must be caused by fault of the owner in the use or operation of the vehicle, and must satisfy the further causal and temporal requirements in s 3A(1). The use and operation of the vehicle includes its maintenance: s 3. In Huseyin v Container Terminals Australia Ltd [2006] NSWCA 382; 46 MVR 1, this Court upheld a claim for negligence in such use and operation, finding an owner who failed to exercise reasonable care in the maintenance of a vehicle's engine liable for injuries suffered by the driver as a result of the sudden failure of that engine: [36], [39]-[40] (Handley JA). See also Wagga Truck Towing Pty Ltd v O'Toole; IAG Ltd t/as NRMA Insurance v O'Toole [2011] NSWCA 191 at [46] (Hodgson JA).

Application of s 7E

1. This conclusion makes it unnecessary to consider the appellants' arguments in relation to the application of s 7E.
2. Four arguments were advanced. By the first and second it was submitted that the effect of s 7E was to exclude any claim for damages by the driver of a motor vehicle, or the driver of a vehicle in a single motor vehicle accident. The third argument was that in the circumstances of this case the accident was caused by an "act or omission" of the respondent driver within s 7E(1). The relevant acts were the act of travelling at a speed that involved a greater risk of collision, and the act of colliding with the kangaroo.
3. The first and second arguments should be rejected. Section 7E is capable of applying whether there is one or more than one motor vehicle involved in the motor accident which is said to have been blameless. Where one or more than one motor vehicle is involved, each driver is capable of formulating a claim for damages in respect of their injuries caused by something done or not done by any other driver or the owner of the vehicle, or of any other vehicle involved. Each driver may propound a claim and the entitlement of each, by operation of subs 7B(1) and (2), is subject to s 7E.
4. The difficulty for the appellants' third argument is the primary judge's finding at [71] which is not challenged: While it must be accepted as a matter of logic and common sense, that a slower speed creates a longer reaction time, the evidence does not lead to a conclusion on balance that a slower speed would have resulted in the collision not occurring.
5. The fourth argument of the appellants was that the kangaroo's movement onto the road and its collision with the motorcycle was a "supervening event" within the terms of s 7E(2)(d). While that is so, there is no finding as to any "act or omission" on the part of the respondent that "would not have caused the death or injury but for the occurrence of … [the] supervening event." The definition of driver in s 3 is the "person driving [the] motor vehicle", including one "riding and operating a motor cycle". Accordingly, s 7E(2)(d) describes an act or omission in the course of riding and operating the motorcycle. Travelling on a motorcycle at a particular speed which is found to be not excessive or unreasonable in the circumstances does not describe anything done or not done beyond the mere riding of the motorcycle.

Conclusion

1. The following orders should be made:
2. Grant leave to the appellants to appeal from the judgment and orders of the primary judge of 4 December 2015.
3. Direct the appellants to file their Notice of Appeal within 7 days.
4. Appeal allowed.
5. Set aside the judgment and orders made on 4 December 2015.
6. Judgment for the appellants as defendants in the proceedings.
7. Order the respondent pay the appellants' costs of the proceedings at first instance.
8. Order the respondent pay the appellants' costs of the application for leave to appeal and the appeal.
9. SIMPSON JA: I agree with Meagher JA.
10. SACKVILLE AJA: I have had the advantage of reading the judgment of Meagher JA in draft. I agree with the orders proposed by Meagher JA and with his Honour's reasons. I add the following observations.
11. The argument in this case, at least initially, concentrated on s 7E of the Motor Accidents Compensation Act 1999 (NSW) (MAC Act). Section 7E provides that there is no entitlement to recover damages in respect of the death of or injury to the driver of a motor vehicle if the motor accident concerned was caused by an act or omission of that driver. If the accident in the present case, which involved a motorcycle colliding with a kangaroo, was caused by an act or omission of the respondent (the motorcycle driver), he would be precluded by s 7E from claiming damages under s 7B of the MAC Act. This would be so even if the injuries were sustained by the respondent in a "blameless motor accident", as that term is defined in s 7A of the MAC Act.
12. If, however, the accident in the present case was not caused by an act or omission of the respondent (as he contends), this does not necessarily mean that he is entitled to claim damages under Part 1.2 of Chapter 1 of the MAC Act. Section 7E limits the entitlement of an injured person to damages; it does not create such an entitlement.
13. The driver in a single vehicle accident will often be the owner of the vehicle. If the accident is not caused by the "fault" of the owner/driver in the use or operation of the vehicle and is not caused by the fault of any other person, the definition of "blameless motor accident" in s 7A of the MAC Act is satisfied. Accordingly, the injury to the owner/driver, for the purposes of a claim for damages, is deemed to have been caused by the fault of the owner or driver of the motor vehicle in the use or operation of the vehicle (s 7B(1)).

Amendments 11 April 2017 - [45] Quotation marks removed DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 11 April 2017