Zardo v Ivancic [2001] ACTSC 40

Supreme Court of the ACT|2001-05-07|Before: Miles CJ, Crispin JJ

2. The order striking out the originating application be set aside.

3. Leave be given for the appellant to file an amended statement of claim.

4. The matter be relisted before the Master for further directions.

2. On 10 November 2000 the appellant instituted proceedings to set aside a consent judgment obtained in earlier proceedings in which the respondent had claimed damages for injuries sustained in a motor vehicle accident in New South Wales. That claim had been settled for the sum of $425,000.00 plus costs agreed at $30,000.00 and judgment reflecting that agreement had been entered on 16 August 2000.

3. The statement of claim alleged, in essence, that:

* the respondent was a person to whom the provisions of s 66 of the Motor Accidents Act 1988 (NSW) applied;

* in propounding his claim the respondent had made a number of statements to medical practitioners;

* they were made for the purpose of obtaining a financial benefit;

* they concerned a claim relating to a motor vehicle accident; and

* the respondent had made the statements with knowledge that "the propounding of the claim in the way in which he did, and/or the making of the statements to the effect described was false or misleading."

4. The appellant sought orders setting aside the judgment, the order for costs made in the previous proceedings and an order that those proceedings be dismissed. In the alternative, the appellant sought to have the respondent restrained from taking any further steps in or further prosecuting his claim "other than by way of consenting to its dismissal".

5. On 6 December 2000 the respondent filed a notice of motion seeking to have the statement of claim dismissed as an abuse of process. The respondent also sought a declaration to the effect that s 66 of the Motor Accidents Act 1988 (NSW_)_ had no application to the judgment entered on 16 August 2000, but apparently this was not pursued.

6. The Master noted at [8] that the appellant had argued that, as the law to be applied to the substantive claim arising from the New South Wales accident was governed by the provisions of the Motor Accidents Act, "section 66 of that Act, which creates a statutory cause of action to impugn a judgment obtained by fraud, also applies." The appellant had also argued that the section provided a power "to get in and set aside a judgment obtained in a superior court in any other Australian jurisdiction where the circumstances of section 66(1) are established": at [10]. The Master acknowledged at [11] that, at least since the enactment of the Australia Act 1986 (Cth), it had been clear that States have plenary power to legislate with extra-territorial effect but referred to a presumption against such an effect, citing the judgment of O'Connor J in Jumbunna Coal Mine, No Liability v Victorian Coal Miners' Association (1908) 6 CLR 309 at 363 and s 12 of the Interpretation Act 1987 (NSW).

7. The primary argument advanced on behalf of the respondent had been that the action should be struck out because s 66 did not give rise to a statutory cause of action maintainable within this jurisdiction to set aside a judgment of this Court. The Master accepted this argument. In doing so he observed that the Motor Accidents Act 1988 contained no indication that s 66 was intended to operate so as to create a statutory cause of action to set aside a judgment of a superior court outside New South Wales. The Master also mentioned that this conclusion would not leave the appellant's insurer without remedy since superior courts have inherent jurisdiction to set aside judgments obtained by fraud, though it had been common ground that the legal test in such a case was more onerous than the "statutory action created by s 66 of the Act": at [16].

8. Mr Garling SC, who appeared for the appellant, submitted that the principal issue arising on the appeal was the choice of applicable law. At least since John Pfeiffer Pty Ltd v Rogerson [2000] HCA 36; (2000) 172 ALR 625 it has been clear that tortious claims such as the one made by the respondent are to be determined by reference to the lex loci delicti. Since the accident had occurred in NSW, the Master had been bound to approach all issues of substance by reference to the law of that state and only purely procedural issues fell to be determined by reference to the law of this territory. He argued that once a claimant had chosen to litigate a claim arising from an accident in NSW he or she must be taken to have embraced all of the relevant causes of action in the statutory scheme provided by the New South Wales Act. The Act enables such claims to be litigated in other jurisdictions but provides an overall statutory scheme which includes the remedies provided by s 66 and, in the circumstances posited, the remedies could be invoked in relation to any judgment obtained in proceedings concerning a claim to which the Act applied. Any entitlement to seek relief pursuant to s 66 should be regarded as "adjectival" to the original action in tort. The relevant law was that of New South Wales and no issue as to extra-territoriality arose.

9. In our view, both the claim pleaded by the appellant and the arguments advanced in support of it involved some misapprehension as to the effect of s 66. That section is in the following terms:

(1) This section applies to a claimant if it is established that, for the purpose of obtaining a financial benefit, the claimant did or omitted to do anything (including the making of a statement) concerning a motor accident or any claim relating to a motor accident with knowledge that the doing of the thing or the omission to do the thing was false or misleading.

(2) If this section applies to a claimant:

(a) a person who has a liability in respect of a payment, settlement, compromise or judgment relating to the claim is relieved from that liability to the extent of the financial benefit so obtained by the claimant; and

(b) a person who has paid an amount to the claimant in connection with the claim (whether under a settlement, compromise or judgment, or otherwise) is entitled to recover from the claimant the amount of the financial benefit so obtained by the claimant and any costs incurred in connection with the claims.

10. No money has been paid in satisfaction of the judgment and Mr Garling confirmed that the appellant relied upon paragraph 2(a) of s 66. Despite the manner in which the appellant's case was pleaded and put to the Master, it is clear that the provision contained in this paragraph does not provide any entitlement to have judgment set aside. Nor does it provide any statutory cause of action. It provides rather that the relevant party shall be relieved of any liability created by the judgment, and/or any compromise or settlement upon which it may have been founded, to the extent to which the financial benefit was obtained as a consequence of the false or misleading statements or omissions. Relief from liability is effected by the direct operation of the section.

11. It is true, of course, that a party who claims to have been thereby relieved from some liability may need to assert that claim, whether by raising it as a defence in an action, as grounds for resisting enforcement of a judgment or as grounds for declaratory relief. In each case, the party asserting relief from liability will need to establish the relevant false statement or omissions, the fact that the relevant payment, settlement, compromise or judgment was based at least in part upon such statements or omissions and the extent of the benefit thereby obtained. However, such pragmatic considerations should not be permitted to obscure the effect of the section.

12. In the present case, after pleading the factual allegations to which we have referred, the statement of claim alleged that:

In the premises, and in accordance with the provisions of s 66 of the Motor Accidents Act 1988 (NSW), Zardo is entitled to be relieved from the consequences of the settlement and to be relieved of any liability to comply with the judgment and order as to costs of this Court as entered on 16 August 2000.

13. There are at least three problems with this approach.

14. First, the statement of claim did not disclose a cause of action. It contained sufficient allegations of fact to raise an arguable case that the conduct of the respondent fell within the description contained in subs 66(1) and that the section therefore applied. However, relief from liability under para 66(2)(a) is provided only "to the extent of the financial benefit so obtained by the claimant". Whilst the pleading alleged mis-statements to various medical practitioners, it did not contain any allegations of a causal link between these statements and any part of the financial benefit provided by the judgment or the extent of any such benefit. Hence, it could not be said that all of the material facts upon which the appellant's claim was dependent had been pleaded.

15. Second, the mere assertion of deliberate mis-statements to medical practitioners could not give rise to the entitlement claimed. The appellant had sought to be relieved of "any liability to comply with the judgment . . .". However, liability for the respondent's injuries had been conceded in the terms of settlement and all of the misstatements alleged in the later statement of claim related to the extent of the respondent's disabilities. Even if the appellant had pleaded and proved that the statements in question had been conveyed to his legal representatives and that they settled the case in reliance upon them, that would have entitled him to have been relieved of liability on the judgment only to the extent of the financial benefit obtained by the respondent by means of such mis-statements.

16. Third, the allegations pleaded contained no basis for the relief sought. Section 66 does not provide any entitlement for a party to have judgment set aside and place the injured person in the position of having to prove his or her claim. There may be some cases in which the entire benefit of the judgment could be found to have been obtained by means of false statements or omissions. For example, the finding of liability might have been dependent upon a false statement. In such cases, it may be open to a party to seek to have the judgment set aside, but such an application would involve invoking the inherent power of the court rather than the assertion of some statutory cause of action purportedly creating an entitlement to such relief. In effect, the court would be asked to set aside the judgment because the provisions of para 66(2)(a) had relieved the relevant party of all liability and it was appropriate for the court to amend its own record. Mr Garling did submit that the whole of the financial benefit provided by the judgment had been obtained by means of the false statements. However, such an allegation was not pleaded and he did not refer in his address to any facts which might have justified such a conclusion.

17. It may be extremely difficult to ascertain the extent of the financial benefit obtained by false statements, especially when the case has been settled, but that difficulty does not provide any basis for setting the judgment aside. The section does not authorise such a course and an order depriving a party of the entire benefit of a judgment without regard for the extent to which that benefit had been obtained by false or misleading statements of omissions would be inconsistent with its terms. It would also effectively reverse the onus of proof, enabling the party asserting an entitlement under para 66(2)(a) to avoid the burden of proving the extent to which it claims to have been relieved of liability.

18. Accordingly, there were grounds for contending that the statement of claim was demurrable. However, the notice of motion filed by the respondent did not challenge the pleading on that basis but sought to have it struck out as an abuse of the process of the Court.

19. The Master plainly dealt with that issue on the basis of the claim pleaded by the appellant and the contentions advanced in support of it; namely that s 66 provided a statutory cause of action to impugn a judgment and a power to set it aside. However, as we have mentioned, the relevant portion of the section provides neither the cause of action nor the power asserted. The provision in para 66(2)(a) which, in the circumstances posited, relieves a person of liability to the extent mentioned, is plainly substantive rather than procedural in character.

20. Mr Webb SC, who appeared for the respondent, argued that whilst the initial claim for damages had undoubtedly been an action in tort, that action had been completed upon the entry of judgment and the proceedings struck out by the Master had been neither adjectival to that action nor a new action in tort. It had been an action purportedly based upon a statutory cause of action said to have been provided by s 66. Paragraph 66(1)(a) did not provide such a cause of action and there was nothing in the Motor Accidents Act 1988 to suggest that the section had been intended to have any extra-territorial effect. In the absence of any such indication, it must be presumed to have been intended to apply only to judgments of NSW courts. In support of the latter contention he cited a number of authorities in which words such as such as "courts" had been given such a restrictive construction. See Pye v Butterfield Cheese Factors (1996) 39 NSWLR 425 at 432 per Waddell A-JA_; Woodlands v Permanent Trustee Company Ltd_ (1996) 139 ALR 127 at 151-3 per Wilcox; Burchett and Olney JJ_; Jones v TCN Channel 9 Pty Ltd_ (1992) 26 NSWLR 732 at 733-4 per Hunt CJ at CL; Re Carrion (1993) 69 A Crim R 239 at 233-4 per Cripps JA.

21. However, statutory provisions must be considered in their context. In the context of the statutory scheme reflected in the Motor Accidents Act 1988, we think it is clear that the words "payments, compromises, settlements and judgments" are not limited by reference to the geographical boundaries of NSW but rather by reference to their relationship to claims to which the Act applies.

22. It is true, as Mr Webb observed, that the provision does not create any statutory cause of action. However, that does not mean that relief from liability under the section may not be asserted in the same way as any other legal right or entitlement.

23. The respondent is resident in the Australian Capital Territory and there is nothing to suggest that the jurisdiction of this court was not validly invoked. Accordingly, there is nothing to prevent the appellant from asserting rights under para 66(2)(a) in this Court.

24. For these reasons we accept Mr Garling's submission that the proceedings should not have been dismissed as an abuse of process.

25. The order striking out the originating application will be set aside. As we have mentioned, the statement of claim is plainly defective and we think it is appropriate to grant leave for the appellant to file an amended statement of claim properly pleading his claim. The matter will be relisted before the Master for further directions in the light of the amended pleading.

I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of their Honours, Chief Justice Miles, Justice Higgins and Justice Crispin.

Counsel for the appellant: Mr P R Garling SC with Ms S E Pritchard

Counsel for the respondent Mr P Webb QC with Mr D Campbell

Solicitor for the respondent Blumers Personal Injury Lawyers

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