Armstrong v Elder, Bird, Nominal Defendant & Suncorp Insurance & Finance [1996] QSC 85

2~3/6 il\i THE BUPREME COURT OF QUEENSLAND No 1417 of 1987 Before Mr Justice Dowsett BETWEEN: CLINTON WAYNE ARMSTRONG (an infant) BY HIS NEXT FRIEND THE PUBLIC TRUSTEE OF QUEENSLAND Plaintiff AND: ROBERT WAYNE ELDER First Defendant AND: CHRISTINA NINA VICTORIA BIRD Second Defendant AND: THE NOMINAL DEFENDANT Third Defendant AND: SUNCORP INSURANCE AND FINANCE Third Party REASONS FOR JUDGMENT - DOWSETT J. Judgment delivered 20/05/1996 CATCHWORDS: CIVIL LAW - Personal injuries - plaintiff injured in motor vehicle accident. LIABILITY - whether Third Party Insurer or Nominal Defendant is liable. Vehicle registered after accident. Certificate of Registration issued. Non-disclosure of accident to insurer. Main Roads Act 1920-1979 and Regulations (Regulation 13(6)) Motor Vehicles Insurance Act 1936-1979 and Regulations (Regulation 19(3)). Counsel: Mr Griffin QC and Mr Ambrose for plaintiff Mr Tait for First defendant Mr Williams QC for third defendant Mr Crowley QC and Mr Drysdale for third party Solicitors: McLaughlin Ivey Woodman for plaintiff Finnimores for first defendant Gadens Ridgeway for third defendant Quinlan Miller & Treston for third party Hearing Date: 14-15 May, 1996 -- 1 of 16 -- IN THE SUPREME COURT OF QUEENSLAND Before Mr Justice Dowsett BETWEEN: CLINTON WAYNE ARMSTRONG (an infant) No 1417 of 1987 BY HIS NEXT FRIEND THE PUBLIC TRUSTEE OF QUEENSLAND Plaintiff AND: ROBERT WAYNE ELDER First Defendant AND: CHRISTINA NINA VICTORIA BIRD Second Defendant AND: THE NOMINAL DEFENDANT Third Defendant AND: SUNCORP INSURANCE AND FINANCE Third Party .. REASONS FOR JUDGMENT - DOWSETT J. Judgment delivered 20/05/1996 The plaintiff was born on 20 January, 1982 and injured in a motor vehicle accident on 31 March, 1983 when a vehicle in which he was travelling left the road and capsized. The first defendant, the plaintiff's father, was driving at the time. His mother was one of the other passengers. She was the second defendant in this action, but proceedings against her have been discontinued. Prior to the accident, the vehicle was travelling west-bound on the Cunningham -- 2 of 16 -- 2 Highway, about 22 km east of Goondiwindi, when it left th,e bitumen surface, spun on to the other side of the road and rolled over. The first defendant denies that he fell asleep, and there is no suggestion of vehicle failure. He pleaded guilty to a charge of driving without due care and attention and was convicted of that offence. In the absence of any other explanation, it is reasonable to infer negligence in the first defendant, and I do not understand any of the parties to submit to the contrary. Quantum has been agreed at $1,750,000. I have indicated that I will sanction settlement of quantum at that figure. The matter remaining in dispute is, ultimately, whether the third defendant or the third party is responsible for meeting the plaintiff's claim, subject to whatever rights either may have against the first defendant. Prior to 22 February, 1983 the third party was the licensed insurer of the vehicle, but registration had not been renewed as at the date of the accident, although certain payments were made thereafter. The third party denies that it is obliged to indemnify. Section 4F of the Motor Vehicles Insurance Act (MVIA) provides that an injured party may sue the Nominal Defendant for damages in rnspect of accidental bodily injury caused in Queensland by, through or in connection with an uninsured motor vehicle for which the owner of such uninsured vehicle would be legally liable were it insured under MVIA at the material time. I should say that all references to statutes and regulations are to those in force at the relevant time as this is the basis upon which the case was conducted. 11 Uninsured motor vehicle II means:- " a motor vehicle -- 3 of 16 -- (i) (ii) 3 that is required by or under the Main Roads Act 1920-1972 to be registered in accordance with the regulations made pursuant to that Act; or • • • I and in respect whereof there is not in force at the material time a contract or policy of insurance under this Act, .. " The effect of this section is that if a vehicle was required to be registered, either a licensed insurer or the Nominal Defendant would be liable to meet any judgment for damages for personal injury suffered as a result of negligence in connection with that vehicle. There is no dispute that the first defendant's vehicle was required to be registered at the relevant time. The question, then, is whether or not there was in force, at the material time, a contract or policy of insurance under MVIA. The first defendant was registered as owner of the vehicle on 8 February, 1983. Registration expired on, or immediately before, 22 February, 1983 and had not been renewed as at the date of the accident. On 14 October, 1983 the first defendant was convicted of the offence of driving an unlicensed motor vehicle, fined $50 and ordered to pay $192.10 'in "Main Roads Department fees". That sum was the total of fees, including the compulsory third party insurance premium, payable in connection with registration of the vehicle for the year expiring on 22 February, 1984. The order for payment of the fees was pursuant to either reg. 24 ( 1) or reg. 106 of the Main Roads Regulations {MRR). It is not clear that the fee referred to in reg.24 included the insurance premium, nor that there was a discretion to order payment of less than double the fee as contemplated by that regulation. However, if reg.24(1) did not justify the order, reg.106 would have done so. The validity of the order has not been disputed in this trial. During 1983 -- 4 of 16 -- 4 and 1984, the plaintiff paid numerous instalments pursuant to the order, and these amounts were passed on to the Main Roads Department. The final payment was made on 5 June, 1984. The records of the Department disclose substantial confusion in dealing with the various payments. The vehicle did not return to the road after the accident, and the plates were eventually surrendered. Nonetheless, whilst the fees in respect of the year. 1983-84 were being paid, a further charge for the 1984-85 year was debited to the relevant account. There was a departmental policy pursuant to which moneys received in part-payment of registration fees (including insurance premiums) were credited against outstanding insurance premiums rather than against any other amounts payable in connection with registration of the vehicle. As a result, after the premium for 1983-84 had been paid, the Department credited payments against the insurance premium for the 1984-85 year, leaving "unpaid" the other amounts payable for 1983-84. At some later stage, it was decided that this was inappropriate, but by that time, the accounting system was in something of a mess. The third party submits that the Department's application of funds to the insurance premium for 1984-85 was a binding appropriation of the amount in question. I do not accept this. The moneys were paid by the first defendant pursuant to the court order. Clearly, the order was that he pay the 1983-84 registration fees (including the insurance premium). The Department had no right to treat the payments as other than for that purpose. The payments were all made in respect of the 1983-84 year and should have been applied by the Department in reduction of the various amounts payable by the first defendant in connection -- 5 of 16 -- 5 therewith. This means that the first defendant had, after 5 June, 1984 paid all amounts owing in respect of registration of his vehicle for the 1983-84 year, including the compulsory third party insurance premium. On 14 June, 1984 the Department issued a document described as "Certificate of Registration", which is ex. 22. It disclosed that the vehicle in question held current registration, "up to but excluding 22 Feb 1984". There is no dispute that ex.22 was sent to the first defendant by the Department. Regulation 13 (MRR) provided as follows: "13. ( 1) Any person to whom a certificate has been issued or any person who has given notice of acquisition in accordance with these Regulations shall apply to the Commissioner not later than the expiration of the period for which such certificate has been issued for the renewal of such certificate and for the renewing of the contract of insurance in respect to such motor vehicle required by The Motor Vehicles Insurance Acts, 1936 to 1961. (2) Such application shall be accompanied by - (a) The fee prescribed by these Regulations for the issue of such a certificate; and (b) The.premium for the renewing of such contract of insurance; or, (c) If such contract of insuranc~ is not being renewed, a certificate as required by the provisions of The Motor Vehicles Insurance Acts, 1936 to 1959, in respect of such motor vehicle issued on behalf of the Insurance Commissioner or a licensed insurer or a premium paid pursuant to Regulation 19A of The Motor Vehicles Insurance Regulations of 1968; and (d) The annual amount payable under the provisions of sub-section (5) of section 4E of The Motor Vehicles Insurance Acts, 1936 to 1961. (3) No such application shall be deemed to be complete unless and until the provisions of clause (2) hereof have been complied with. (4) Generally, or in any particular case the Commissioner may direct that a motor vehicle in respect of which application for the issue of a certificate of renewal of registration is made shall be submitted to him or to an authorised person for inspection, and every -- 6 of 16 -- 6 person when so directed by the Commissioner ·shall submit such motor vehicle for inspection accordingly. (5) Upon receipt of an application in compliance' with the provisions of clause (2) of this Regulation, the Commissioner may issue a certificate of renewal of registration and a certificate that compliance has been made with the provisions of The Motor Vehicles Insurance Acts, 1936 to 1959, in respect of the motor vehicle concerned. ( 6) Where the contract of insurance in respect of a motor vehicle under the provisions of The Motor Vehicles Insurance Acts, 1936 to 1959, is being renewed, the delivery or posting by the Commissioner to the owner or his agent of a certificate of renewal of registration of a motor vehicle and of compliance with the provisions of the abovementioned Acts with respect thereto, but no other act of the Commissioner or any person on his behalf shall constitute renewal of registration and contract of insurance of such motor vehicle. If with the application for renewal of the registration of a motor vehicle there is not lodged a premium for the renewing of the contract of insurance in respect of such motor vehicle, the Commissioner may nevertheless cause a certificate of renewal of registration to be prepa(ed and a receipt for any fees paid to be printed or written thereon but in such case the Commissioner shall cause an endorsement to be made on such certificate of renewal of registration that the registration of the motor vehicle will not be renewed until there has been lodged with the Commissioner the premium for the renewing of the contract of insurance in respect of such motor vehicle required by The Motor Vehicles Insurance Acts, 1936 to 1959, or, where the contract or. insurance aforesaid is not being renewed, until there has been lodged with the said Commissioner a certificate as required by the said Acts in respect of such motor vehicle issued on behalf of the Insurance Commissioner or a licensed insurer. When the said premium or certificate as required by the said Acts has been lodged the endorsement shall be cancelled before the registration of the motor vehicle is renewed. (7) Any person who fails to apply for the renewal of the registration of a motor vehicle shall be guilty of an offence. (8) Notwithstanding anything contained in these Regulations, the Commissioner may refuse to renew the registration of a motor vehicle and to issue a certificate of renewal of registration in respect of such motor vehicle if such motor vehicle does not comply with the -- 7 of 16 -- 7 requirements of the Regulations under The Traffic Acts, 1949 to 1959." Exhibit 22 certainly appears to have been a certificate of the kind contemplated by subregs. (5) and (6) although it is a little sparse in its content. The third party submits that ex.22 was not such a certificate. It led evidence from the witness, Woodbridge to the effect that the computer which was in use at the Main Roads Department at the relevant time would issue receipts in the general form of ex.22 for any payment received by the Department in connection with registration of a motor vehicle. Such receipts would include the words "Certificate of Registration" where they appear on the exhibit. Exhibit 23 is an example of a receipt on a similar form, but with the words "Extract of Record" instead of "Certificate of Registration". Apparently, the different wording reflected the fact that ex.23 did not acknowledge receipt of moneys paid in connection with registration. In effect, Woodbridge's evidence was that the Department would not have registered ~ vehicle for 1983-84 where the fees were received after the expiry of that period and that ex.22 was not a certificate of registration, but a mere receipt. I find this evidence a little difficult to accept at face value. It is unlikely that the Department would .issue a document in the:form of ex.22 unless it intended to certify that registration was current for the period shown. Pursuant to reg. 19(2) of the Motor Vehicle Insurance Regulations (MVIR) the Main Roads Department paid to the third party the moneys paid by the first defendant, after deducting small amounts for stamp duty. Notwithstanding receipt of those amounts, the third party denies that it is the licensed insurer of the relevant vehicle. -- 8 of 16 -- 8 Certain events which occurred in 1984 and 1985 cloud the issue to some extent. On 14 May, 1984 the third party advised the first defendant that the insurance policy over the vehicle had been cancelled. At this stage, both the Department and the third party were treating the vehicle as being insured for the 1984-85 year. The amount refunded was actually three-quarters of the premium for that year. On 3 December, 1984 the third party claimed the return of that amount and sent a further reminder to the first defendant on 3 January, 1985. The money was repaid on 9 January, 1985. I doubt that these events have any present significance. On 21 February, 1986 the third party sought to avoid the policy and tendered to the first defendant the amount of the premium for the 1983-84 year, with interest. That cheque was returned by the first defendant. The central core of this problem is whether the insurance cover was renewed for 1983-84 and if so, whether the third party was entitled to revoke that cover. The relevant procedure for renewal was prescribed by reg.19 (MVIR) as follows:- " 19. ( 1) Every premium payable in respect of the renewal of a contract of insurance shall be paid by the owner of the motor vehicle concerned to the Secretary of the Department of Main Roads or other person authorized in that behalf by the Commissioner of Main Roads. The Secretary or other authorised perpon may issue on behalf of the insurer concerned a certificate that the provisions of the Act have been complied with in respect of the motor vehicle concerned. (2) At least once in each week the Commissioner of Main Roads shall account to the Office or the Licensed Insurer concerned for the rnceipt of premiums received during the last preceding week pursuant to sub regulation ( 1) of this regulation on behalf of the Office, or as the c.ase may be, such Licensed Insurer and shall pay to the Office or the Licensed Insurer concerned the amount so received on behalf of the Office or, as the case may be, such Licensed Insurer less stamp duty attracted by payment thereof or acknowledgment of such payment and less an amount (to be agreed upon by the -- 9 of 16 -- 9 Commissioner of Main Roads and the Office and a representative of the Licensed Insurers duly authorized to act on their behalf) by way of an all-inclusive administration charge in respect of the collection and payment of each premium so received. A person to whom payment is made pursuant to this subregulation on account of premium paid in respect of the renewal . for any period of a contract of insurance shall, (a) for the purposes of a claim for damages in respect of accidental bodily injury caused by, through, or in connection with a motor vehicle in respect of which the contract of insurance is renewed, and so caused during the period for which the contract is so renewed and, subject to subregulation (3) of this regulation, is deemed to exist; and (b) for the purposes of a claim by The Nominal Defendant (Queensland) or any other person to recover an amount paid in respect of a claim referred to in subparagraph (a) of this subregulation or an amount of costs and expenses connected with such a claim, be deemed to be the insurer in relation to that motor vehicle, notwithstanding that he is not a party to the contract of insurance in respect of that motor vehicle, unless (not being such a party), within a period of forty-five days commencing on the date on which the payment is made to him by the Commissioner of Main Roads, he repays to the Commissioner of Main Roads the amount so paid to him. A reference in the Act or in~these Regulations to 'insurer' shall be construed to include reference to a person deemed to be an insurer pursuant to this subregulation so far as it is material to a claim referred to in subparagraph (a) or (b) of this subregulation. (3) Where a premium is received by the Secretary or other authorized person after the expiration of a period of thirty · days commencing on the due date for renewal of the contract of insurance in question, the insurer may, within a period of forty-five days commencing on the date on which the amount of the premium {less any deductions allowed by this regulation) is paid to the insurer by the Commissioner of Main Roads, refund to the owner of the motor vehicle concerned the prescribed portion of the premium paid by the owner and, in the event of the insurer making such refund the contract of insurance shall be deemed not to exist for the interim period but, save in that event; the contract of insurance shall be deemed to be renewed from and including the due date for its renewal. -- 10 of 16 -- 10 In this subregulation, the expression 'prescribed portion' means that portion which bears to the whole of the premium in question the proportion which the number of complete months in the interim period bears to twelve and the expression 'interim period' means the period commencing on the due date for the renewal of the contract of insurance in question to and including the date immediately preceding the date on which the premium in question is received by the Secretary or, as the case may be, other authorized person. For the purpose of this subregulation a month is the period from and including the material date in one calendar month to and including the date immediately preceding the same date in the next succeeding calendar month. (4) The Department was to receive the premium and issue, on behalf of the insurer, a certificate of compliance with the terms of the MVIA. Renewal of the contract of insurance was not said to be dependent upon renewal of registration, although pursuant t0 reg.13 (MRR), renewal of the insurance contract and of registration would occur simultaneously. Subregulation 19(3) (MVJR) dealt specifically with late renewal. If the premium was paid after the expiration of 30 days from the due date, the insurer might, within 45 days of receiving the premium, refund that part attributable to.the period between the due date and the day before the date of payment. The third party submits that as reg.13 (MRR) prescribed how the Department was to exercise its power and duty to renew both registration and the insurance cover, failure to so proceed meant that neither was renewed. To the extent that ex.22 might suggest that both were renewed, the third party points to the evidence of Woodbridge as establishing the contrary. Woodbridge's opinion as to the effect of ex.22- cannot be determinative of that issue. If the.first defendant was entitled to re-registration and/or renewal of the insurance cover for the 1983-84 year, and if the Department apparently -- 11 of 16 -- 1 1 recognized this, it would be a curious result if the effect of the certificate were to depend upon the opinion of an official as to the purpose for which it was issued. Of course, for present purposes, it is the renewal of the insurance cover which is important, but the third party submits that such renewal could only occur if the registration were also renewed. It submits that there has been no renewal of either for a number of reasons. Firstly, the third party submits that the procedure for renewal of the insurance contract pursuant to reg.19(3) (MVIR) was available only if the premium were paid within 12 months of the due date for renewal. It is submitted that this was implicit in the regulation because the basis for calculation of the refund depended upon the temporal relationship between the due date for renewal and the date of receipt of the premium. If applied to a situation in which the premium was received more than 12 months after the due date, the refund would exceed the premium. No doubt, a refund pursuant to reg.19(3) could not have exceeded the amount of the premium. A refund could only be of an amount previously paid. This does not lead me to conclude that:reg.19(3) permitted late payment of the premium, and therefore renewal of the policy, only within the period of one year following the due date for renewal. If such were intended, it would surely have been said expressly. It seems that about $10.00 of the premium still remained unpaid as at 22 February, 1984. It is common ground that the third party did not take advantage of its entitlement to return the premium within 45 days. Secondly, the third party argues that it was. not possible to renew the insurance cover without also renewing the registration. Unlike reg.19 (MVIR), reg. 13 (MRR) did not contemplate an application for renewal of registration after -- 12 of 16 -- 12 the time prescribed by reg.13(1). It may have been necessary, in that case, to re-register, and not merely renew. Nevertheless, reg. 19 (MVIR) did provide for renewal of the insurance cover out of time and did not provide that such renewal was dependent upon renewal of the registration. If the third party's interpretation of reg. 13 is correct, there was a conflict between the duty conferred by the MVJR and that imposed by the MRR. If so, the conflict should be resolved by reference to the status of MVIR conferred by s.10 (MVJA), pursuant to which the regulations had statutory effect. Regulations made under s.39 (MRA) did not have that status. To the extent that reg. 13 (MRR) is inconsistent with reg. 19 (MVJR), the former must give way to the latter. The effect is that the Department may renew the insurance cover even if it cannot renew registration. As the first defendant had, by 5 June, 1984, paid the insurance premium as contemplated by reg.19 (MVJR), he was entitled to renewal of the cover, subject to the third party's right to decline cover for the interim period within 45 days of receipt of the premium, which it did not do. The third party submits that the repewal of registration and/or the insurance cover could only be effected by issue of a certificate pursuant to reg. 13 (MRR). It then submits that by virtue of Woodbridge' s evidence, there was no such certificate. In my view, this highlights the fallacy of Mr Woodbridge's opinion as to the certificate. The first defendant paid the registration fee, including the premium, .in an unusual way, but in a way contemplated by the relevant legislation. The moneys so paid were received by the Department and the third party as contemplated by the legislation. Exhibit 22 is a certificate apparently issued in accordance with reg.13 (MRR). The third party complied with the requirements for -- 13 of 16 -- 13 renewal of the registration and insurance cover and received the only possible index of having done so. The better view is that the vehicle was insured. I do not consider that registration was necessary in order that the vehicle be insured. Therefore it is not necessary that I determine the status of the vehicle in that regard. The third defendant also submits that ex.22 was not valid because all amounts paid in connection with the 1983-84 year were not shown on the certificate and because no registration label was attached. I see no basis for holding ex.22 to have been invalid simply because of these alleged defects. Certainly, reg.1 OA (MRR) required the issue of such a label, but that does not mean that it was essential to the validity of the certificate of registration. I conclude that the insurance cover for 1983-84 was renewed and not declined pursuant to reg. 19(3) (MVIR). The first and third defendants submit that even if there were no renewed cover, reg.19(2)(MV/R) would have operated to deem the third party to be the licensed insurer. That provision appear~ to have been intended to deal with the situation in which the Department received the premium, renewed the policy, but accounted for the premium to the wrong insurer. The party receiving the premium was deemed to be the insurer unless the premium was returned within 45 days. However, the deeming provision seems only to have operated where there had been a renewal of the cover with the true insurer. It is not necessary to consider this matter further. The third party submits that even if the policy was renewed, it was entitled to revoke it ab initio for material non-disclosure. It relies upon general principles -- 14 of 16 -- 14 of insurance law and s.3(4) (MVIA) which prevents revocation ofa policy during the period of registration or renewed registration of the vehicle in question. The third party submits that the vehicle was not registered and that therefore, this prohibition did not apply. The defendants point to regs.10, 11, 12 and 17 (MV/R}. Regulation 17 provided that:- " 1 7. Notwithstanding that by reason of the provisions of a contract of insurance or policy or these Regulations and the circumstances of the case in question an insurer could, but for this regulation, avoid his liability under such contract to indemnify the insured person concerned upon a claim made thereunder by the insured person, the insurer - (a) May exercise the powers and authorities conferred upon him by regulations 10 and 11 of these Regulations; and (b) Shall be subject to the liabilities and obligations imposed upon him by regulations 11 and 12 of these Regulations, the provisions whernof may be enforced against him according to their terms, and for these purposes the insurer shall be deemed to be liable under the contract to indemnify the insured person concerned." Prima facie, reg.17 deprived an insurer of the right to avoid a policy for non-disclosure, substituting therefor, a right of indemnity against the insured .. person. This privative effect was not dependent upon registration. The third party submits that this regulation should be read so as not to extend its operation beyond the ambit of operation of s.3(4) (MVIA), but I see no reason for such a limitation. Pursuant to s.10 (MVIA), duly proclaimed regulations were to be, "of the same effect as if they were enacted in this Act ... and shall not be questioned in any proceedings whatsoever." The effect of reg.17 was wider than that of s.3(4), and perhaps the latter provision was otiose. However, to read reg.17 as not going beyond the area of operation of s.3(4) would merely render the regulation otiose. In the circumstances, it is better to give the wider provision its -- 15 of 16 -- 15 natural meaning, accepting that some overlap of operation is inevitable in legislation which has developed in a piecemeal fashion· over many years, particularly where the "as if enacted" formula is used. The third party also submits that if there was an insurance cover over the vehicle, it was not a contract of insurance effected under MV/A and therefore was not affected by reg.17(MV/R). 1 The argument is untenable. The contract was with the third party, a licensed insurer, was effected through the Department, and for the purposes of MVIA. The third party was not entitled to decline liability under the policy. There was a contract of insurance over the vehicle for the 1983-84 year. The claim against the third defendant must fail. Quantum has been agreed at $1 . 75 million, which agreement I now sanction. On the claim, there should be judgment for the plaintiff against the first defendant in that amount. I give judgment for the third defendant against the plaintiff. In the third party proceedings, I will make an appropriate declaration. will hear submissions as to the form of the declaration and as to costs . .. -- 16 of 16 --