FAI General Insurance Company Limited, Re [1995] QSC 299 [1996] 2 Qd R 230

IN THE SUPREME COURT OF QUEENSLAND MOT No. 449 of 1995 Counsel: Solicitors: Hearing Date: IN THE MATTER OF the Motor Vehicles Insurance Act 1994 - and - IN THE MATTER OF Supreme Court Action 678 of 1995 between O'ROURKE & ANOR v. PETER J McCALL PTY LTD - and - IN THE MATTER OF a dispute between V ACC Insurance and F AI Insurance under Section 7(1) of the Industry Deed being Schedule 2 to Motor Accident Insurance Regulation 1994 - and - IN THE MATTER OF an appeal by FAI GENERAL INSURANCE COMPANY LIMITED against the referees' decision JUDGMENT - MOYNIHAN J C. Hampson QC and G. Newton for the Applicants J. Clifford QC and A. Wilson for the First Respondent Bradley & Co for the Applicants Carter Newell for the First Respondent Quinlan Miller and Treston for the Second Respondent 21 July 1995 -- 1 of 10 -- -·, CATCHWORDS Delivered Date: TORTS - Application for leave to appeal against referees' decision as to the appointment of claim costs between insurers - whether the applicant as insurer is liable to indemnify in respect of the plaintiff's claim by virtue of the interpretation of the relevant statutes - ss, 4, 5, 65 Motor Accidents Insurance Act 1994 - s. 19 Motor Accident Insurance Regulations 1994; Albion Insurance Co Ltd v. GIO (NSW) (1969) 121 CLR 342 - Fire and All Risks Insurance Co v. Turner (1976) 50 ALJR 767 - McEwan v. Gold Coast Council [1987] 1 Qd.R. 337 - Tonga v. John Holland Construction Pty Ltd [1988] 3 Qd.R. 587 - Technical Products Pty Ltd v. State Government Insurance Office (1989) 167 CLR 45 - Gesler & Anor v. Rea & Ors (unreported CA 84/1994, judgment delivered 25 July 1995) 11 December 1995 -- 2 of 10 -- IN THE SUPREME COURT OF QUEENSLAND MOT No. 449 of 1995 IN THE MATTER OF the Motor Vehicles Insurance Act 1994 - and - IN THE MATTER OF Supreme Court Action 678 of 1995 between O'ROURKE & ANOR v. PETER J McCALL PTY LTD - and - IN THE MATTER OF a dispute between V ACC Insurance and F AI Insurance under Section 7(1) of the Industry Deed being Schedule 2 to Motor Accident Insurance Regulation 1994 - and - IN THE MATTER OF an appeal by FAI GENERAL INSURANCE COMPANY LIMITED against the referees' decision JUDGMENT - MOYNIHAN J Judgment delivered 11 December 1995 This is an application for leave to appeal against an award made by referees under the Motor Accidents Insurance Act 1994 (the Act). The applicant seeks to have the decision set aside in part and to substitute a fresh decision to the effect that it is not bound to indemnify in respect of a particular motor accident claim or if it is as to the share of the claim it must bear. The combined effect of s.65 of the Act and s.19 of the Motor Accident Insurance -- 3 of 10 -- 2 Regulation 1994 (the Regulations) is to provide for an "approved form of Industry Deed" contained in schedule 2 of the Regulations. By cl.5 of the Deed if insurers who are potentially liable on a claim cannot resolve which is to be the claim manager and the basis on which claim costs are to be shared between them the Motor Accident Insurance Commission (the Commission) may refer the matter to a referee. By cl. 7(3) of the Deed a referee is taken to be an arbitrator appointed under the Commercial Arbitration Act 1990 (the Commercial Arbitration Act). By the combined effect of s.38(2) and (4) of that Act in the circumstances of the present case, an appeal lies to this Court on a question of law arising out of an award. Leave to appeal is necessary and is not to be granted unless the Court considers that:- (a) having regard to all the circumstances, the determination of the question of law concerned could substantially effect the rights of one or more parties to the arbitration agreement; and (b) there is - (i) a manifest error of law on the face of the award; or (ii) strong evidence that the arbitrator or umpire made an error of law and that the determination of the question may add, or may be likely to add substantially to the certainty of commercial law. The applicant (F AI General Insurance Company Limited - F AI) seeks leave to appeal from a referees decision that the costs of a particular claim be shared equally between VACC Insurance Co Ltd - V ACC and F AI. There is no complaint about a determination that VACC be the claim manager. The claim giving rise to the reference arose out of the following circumstances. On 11 January 1995 a Holden Commodore was travelling west on the Eumundi road at -- 4 of 10 -- -·J 3 Noosaville. A Nissan tow truck insured under the Act with VACC was being driven in the opposite direction. The Nissan was carrying a Toyota 4WD insured under the Act with F AI. The Toyota came off the tray of the Nissan tow truck by reason of the negligence of the owner and driver of the Nissan - the arrangements to secure it on the tow truck were not adequate and or it had not been properly secured by the tow truck driver. The Commodore collided with the Toyota when it was on the road having left the Nissan. The driver and passenger in the Commodore (the plaintiffs) were injured and sued the owner and driver of the Nissan its insurer V ACC and F AI as insurer of the Toyota. VACC and FAI were unable to resolve the basis upon which the claim costs were to be shared among them (FAI contends it is not under any obligation) and who was to be the claim managers. The Commission, pursuant to the Industry Deed, referred the matter to a panel of referees. In their award the referees concluded V ACC was liable in respect of the claim and there is now no issue about that or the determination that V ACC be the claim manager. The referees also concluded:- • pursuant to s.S(l)(a)(ii) of the Act the plaintiffs' injuries were caused "by, through or in connection with" the Toyota and were "the result of a collision with that Toyota". • the negligence of the owner and driver of the Nissan was within the reference to "other person whose wrongful act" in cl.2 of the Statutory Form of Policy scheduled to the Act. The referees therefore concluded F AI was bound to indemnify the owner of the Toyota. They concluded that liability should be shared equally between F AI and V ACC by analogy to the principle in Albion Insurance Co Ltd v. GIO (NSW) (1969) 121 C.L.R. 342. -- 5 of 10 -- -; 4 The applicant contends that on a proper construction of the Act it is not bound to indemnify to the owner of the Toyota in circumstances in which the plaintiffs were injured by the negligence of the owner and driver of the Nissan, but that there was no negligence attributable to the Toyota. On the face of it FAI's posi~ion seems justifiable but the matter turns on the construction of specific provisions of the Act. Section 4 of the Act defines a motor vehicle accident to mean an incident in which personal injury was caused "by, through or in connection with" a motor vehicle and a motor vehicle accident claim to include a claim for damages for personal injury arising out of a motor vehicle accident. Section 5(1) of the Act provides:- "5.(1) This Act applies to personal injury caused by, through or in connection with a motor vehicle if, and only if, the injury- (a) is a result of- (i) the driving of the motor vehicle; or (ii) a collision, or action taken to avoid a collision, with the motor vehicle; or (iii) the motor vehicle running out of control; or (iv) a defect in the motor vehicle causing loss of control of the vehicle while it is being driven; and (b) is caused, wholly or partly, by the wrongful act or omission of a person other than the injured person." Once the Act applies there are obligations to insure. In the present case the statutory obligation to insure was satisfied by policies in the statutory form (s.23(1) and the Schedule to the Act) with F AI and V ACC. Clauses 1 and 2 of the Statutory Form of Policy relevantly provide:- "1.(1) This policy insures against liability for personal injury caused by, through or in connection with the insured motor vehicle anywhere in Australia. -- 6 of 10 -- 5 (2) This policy extends to liab11ity for personal injury caused by, through or in connection with a trailer attached to the insured motor vehicle or that results from the trailer running out of control after becoming accidentally detached from the insured motor vehicle. (3) The liability mentioned in subsection (1) or (2)- (a) is a liability for personal injury to which the Motor Accident Insurance Act 1994 applies2 ; and (b) includes the liability of a tortfeasor to make a contribution to another tortfeasor who is also liable for the personal injury. (4) This policy does not insure a person (the "injured person") against injury, damage or loss- (a) that arises independently or any wrongful act or omission; or (b) to the extent that the injury loss or damage is attributable to the injured person's own wrongful act or omission. 2. The person insured by this policy is the owner, driver, passenger or other person whose wrongful act or omission causes the injury to someone else and any person who is vicariously liable for the wrongful act or omission." FAI's submission in essence is that the present case is not within the Act (particularly s.5(1) or the policy (particularly cl.2) so as to render it liable to indemnify in respect of the plaintiff's claim. Section 5(1) of the Act may be contrasted with the much litigated s.3(1) of the Motor Vehicles Insurance Act 1936 (the old Act). That relevantly required insurance against:- ". . legal liability in respect of such motor vehicle through accidental bodily injury . . where such injury was caused by, through or in connection with such motor vehicle" . Section 3 (1) provided for two parameters to be satisfied. The first being "legal liability" in respect of such motor vehicle" and secondly that "the injury" be "caused by, through or in connection with" the motor vehicle. -- 7 of 10 -- 6 Section 5 retains the latter requirement which was given a wide construction. In Fire & All-Risks Insurance Co. v. Turner (1976) 50 A.L.J.R. 767, a passenger injured by glass splinters from a car windscreen shattered by a bullet accidentally discharged from a rifle carried by someone getting out of the car was held to have suffered injury caused by, through, or in connection with a motor vehicle. So a~so a person on whom an insured vehicle fell while it was being repaired or lifted; McEwan v. Gold Coast Council [1987] 1 Qd.R. 337, Tonga v. John Holland Construction Pty Ltd [1988] 2 Qd.R. 587. In the present case the plaintiffs' injuries were "by, through or in connection with" the Toyota. In Technical Products Pty Ltd v. State Government Insurance Office (1989) 167 C.L.R. 45. The High Court construed the requirement for "a legal liability in respect of" a motor vehicle as requiring some "discernible and rational link" between "the basis of legal liability in the particular motor vehicle" to establish the required relationship between the vehicle and act or omission giving rise to liability. Thus in Gesler & Anor v. Rea & Ors (unreported C.A. 84/1994, judgment delivered 25 July 1995) the relevant liability was held to be in respect of breach of obligations as an occupier of land not in respect of a motor vehicle. The vehicle had been directed by the occupier to take up a position in which a metal rod being used in the unloading process by a person on it came into contact with overhead power lines. On the other hand in Patullo v. Grays Sawmills Pty Ltd (CA 226/93 17.6.94 21 Q.L.R. 474) the negligent handling of a fork lift in loading timber onto the tray of a truck on which the injured party was standing was held to satisfy the requirement. Various other cases, falling on one side or the other of the line, were cited and others could have been. Section 5 of the Act in my view applies a test different from that imposed by s.3 of the old Act. It requires, relevantly for present purposes "the injury" to be a"result of" .. . "a collision with .. " the Toyota. "Result" to my mind connotes "consequence", "a cause -- 8 of 10 -- 7 and effect relationship between injury and collision. The circumstances of the present case satisfy that requirement. Section 5 having been satisfied the Act applies and a policy in the form of the schedule was in force with F AI to insure the "owner driver, passenger or other person whose wrongful act or omission causes the injury to someone else .. " The appropriate connection with the vehicle having been established by the requirements of s.5 having been satisfied I can see no basis for construing the policy as not applying to the owner and driver of the Nissan as "other persons whose wrongful act" etc. in terms of cl.2 of the policy. In other words the referees do not appear to have erred in their construction of the Act. Having concluded that the owner and driver of the Nissan were entitled to indemnity under both the FAI and the VACC policies, the referees became obliged, since the insurers could not resolve it in those circumstances, to resolve the basis in which the claim costs should be shared. They concluded that the owner and driver of the Nissan were each entitled to be indemnified against their liability to the plaintiffs by both FAI and VACC. This, they concluded, constitutes a double insurance whereby the same parties were insured against the same risk with two independent insurers. This would seem to be so. Prima facie the situation comes within the well settled principles associated with Albion Insurance Co Ltd v. Government Insurance Office of New South Wales (1969) 121 C.L.R. 342, are at 345, 352. The crucial consideration is that the insured are to receive "not one satisfaction but two, (supra at 351/2) . It was submitted for the applicant that the Act required a different approach. It is true that cl.6(2) of the Industry Deed provides for the sharing of claim costs when all the vehicles -- 9 of 10 -- 8 involved in the accident are of the same class on the basis of the proportion of the number of vehicles insured by each insurer to the total number of vehicles involved in the accident. As I have said the vehicles in the present case are not of the same class and the provision does not apply. The Act and Regulations otherwise make no provision which is directly applicable and indirectly provides no basis for departing from the well established Albion principle. It follows that in my view it has not been demonstrated that there is a manifest error on the face of the referees' award on strong evidence of error of law. Leave to appeal from the decision of the referees should be refused. -- 10 of 10 --