Benjamin Mitchell v Australian Capital Territory

[2015] ACTMC 1

MAGISTRATES COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:

Benjamin Mitchell v Australian Capital Territory

Citation:

[2015] ACTMC 1

Hearing Date(s):

5 May 2015

DecisionDate:

23 June 2015

Before:

Magistrate Morrison

Decision:

The plaintiff’s application is dismissed.

Category:

Interlocutory application

Catchwords:

CIVIL LAW – application for judgment under Road Transport (Third Party Insurance) Act 2008 – scope of s159 – whether respondent who denies liability at compulsory conference can make mandatory final offer or obliged to give mandatory final notice – meaning of “denies liability altogether” in s141(3) – purpose of Act – mandatory final offer allowable despite denial of liability – application dismissed.

Legislation Cited:

Cases Cited:

Parties:

Road Transport (Third Party Insurance) Act 2008 (ACT)

Legislation Act 2001 (ACT)

Racic v Haltiner (2010) 4 ACTLR 224

Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355
CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384
Alcan (NT) Alumina Pty Ltd v Territory Revenue (2009) 239 CLR 27
Barker v Gifford and Anor [2005] ACTSC 55

Insurance Australia Limited v Albrecht [2015] ACTSC 68

Benjamin Mitchell (applicant/plaintiff)

Australian Capital Territory (respondent/defendant)

Representation:

Counsel

Mr S Hausfeld (applicant/plaintiff)

Mr D Crowe (respondent/defendant)

Solicitors

Mr J Treloar (applicant/plaintiff)

Mr D Harrington (respondent/defendant)

File Number(s):

CS 853 of 2012

MAGISTRATE MORRISON:

1By application filed 22 April 2015, the applicant/plaintiff seeks judgment against the respondent/defendant. The basis of the application is the failure of the respondent to comply with what the applicant says is its obligation to file a mandatory final notice as required by section 141(3) of the Road Transport (Third Party Insurance) Act 2008 (ACT) (“the Act”).

2Section 141 forms part of chapter 4 of the Act dealing with motor accident claims. It sets up procedures requiring the early notification of claims and early disclosure of relevant information. It requires parties to a claim to attend what is described as a compulsory conference and at that conference to actively attempt to settle the claim. Section 136 of the Act requires the holding of the compulsory conference before the commencement of court proceedings. That was not done in this case but nothing turns on that for present purposes and the proceedings are not invalid as a result - see Racic v Haltiner (2010) 4 ACTLR 224.

3The legislation goes on in section 141 to impose certain obligations if a claim is not settled at the compulsory conference, relevantly, in the following terms:

(2)The claimant and the respondent must exchange written final offers (each of which is a mandatory final offer).

(3)However, if a respondent denies liability altogether, the respondent must give the claimant a written notice of denial (a mandatory final notice).

(4)If the respondent gives the claimant a mandatory final notice, for this Act, the respondent is taken to have given the claimant a mandatory final offer of $0.

4The contest can be shortly stated. It was accepted in submissions that the effect of the respondent’s defence was to deny liability and that no admission otherwise had been made at the time of the compulsory conference. Some short time after the conference the respondent purported to make a written settlement offer which it says is a mandatory final offer for the purposes of section 141(2). The amount of the offer is not relevant for present purposes. It is sufficient to say that the offer is not $0.

5The applicant says that section 141(3) applies because the respondent has denied liability altogether within the meaning of the subsection, such that the respondent is obliged to give a mandatory final notice as defined in the subsection, and will therefore be taken to have made a mandatory final offer of $0.

6To put the contest into context, there are significant costs consequences which flow from the relationship between a claimant’s ultimate award of damages and the amount of mandatory final offers which are made. See for example the terms of section 155(2)(d) and 156A(3) of the Act.

7In response to the attitude which the applicant has taken to what he says is required of the respondent under section 141(3), but without conceding the point, the respondent has by letter to the applicant (which is in evidence as an exhibit to the affidavit of James Treloar) purported to make what was described in submissions as a limited admission of liability, and which it says puts it outside the terms of section 141(3). Given the conclusion I have reached nothing turns on the terms in which that limited admission of liability is expressed.

8The result of the application turns upon the proper construction of section 141(3) and, in particular, what meaning is to be given to the expression “denies liability altogether”. Submissions were made on the basis that the expression has not been the subject of judicial consideration in this jurisdiction or elsewhere.

9As I understand the applicant’s argument it is that the respondent is required to either admit or deny liability and that, because it has not admitted liability it must be treated as having denied it absolutely. The applicant says that such a construction flows from the ordinary meaning of the language. In addition the applicant argues that the construction it presses for best achieves the purposes of the Act vide section 139 of the Legislation Act 2001 (ACT).

10In support of his submissions Mr Hausefeld points to the costs consequences I have already referred to.  He submits that it would be unconscionable for the respondent to be allowed to deny liability altogether but still make a mandatory final offer and thereby put the applicant to the expense of a fully contested hearing with the risk of those costs consequences.  He submits that the focus of the legislation is to reduce legal costs and save court time and that those aims are not advanced by the interpretation pressed in the respondent’s argument.

11As I understand the submissions of the respondent they are that the reference in section 141(3) to a respondent which “denies liability altogether” is to be read as meaning a respondent which is not prepared to make any offer of settlement whatsoever at (or after) a compulsory conference.

12Accordingly, (the respondent submits) the section simply requires that mandatory final offers be exchanged or, if a respondent does not make such an offer then it requires the respondent to give a mandatory final notice in which case the respondent is taken to have made a mandatory final offer of $0.

13The outcome of the application turns on precisely what is required of the respondent under section 141(3) of the Act, which in turn, calls for a determination of what is meant by the expression “denies liability altogether” in that subsection.

14The use of the expression “deny liability” and its variations is commonplace enough in general legal parlance although that does not necessarily equate with certainty and uniformity as to its meaning.  I do not include the composite expression “deny liability altogether” in my observation about use being commonplace.

15The expression “deny liability” is commonly used to convey that a defendant denies that there is a legal obligation to meet a claim for loss or damage made against it – with the expression “admission of liability” having a corresponding converse meaning.  Commonly references to admission or denial of liability are made on a basis intended to distinguish them from consideration of the quantum of any liability which is admitted or may be established.

16What is described as the modern approach to statutory construction emphasizes the importance of the language used, along with context including with “reference to the language of the instrument used as a whole” – see Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381; CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384; Alcan (NT) Alumina Pty Ltd v Territory Revenue (2009) 239 CLR 27.

17As part of considering context it is useful to look at how other relevant aspects of the Act deal with denial (or admission) of liability.

18Section 97 obliges a respondent when responding to a complying notice of claim to tell the claimant whether liability is admitted or denied.  Section 101 expresses the purpose of part 4.3 of the Act – that being a part requiring a range of disclosures by claimant and respondent – as being to put the parties in a position where they have enough information to assess liability and quantum for the motor accident claim.

19It is reasonably clear, in the parts of the Act just referred to, that the meaning to be given to references to liability being admitted, denied or assessed is consistent with what I have described as the commonplace use – that is a denial or admission by a party that there is a legal obligation to meet a claim for loss or damage made against it. I return to consider section 97 again later in these reasons.

20There are other references in the Act to liability which are relevant. In particular various provisions of the Act set up arrangements for things to be done by or on behalf of an insurer without the conduct of the insurer amounting to an admission of liability – see for example sections 75, 89, 90, and 127. 

21In those sections it is again clear that the meaning to be given to liability being admitted or denied is in accordance with the commonplace use. What is also noteworthy in relation to these last mentioned provisions is that they establish a basis for a respondent/insurer to take steps towards providing assistance to a claimant in the ways set out in the sections without necessarily tying a respondent to any formal admission of liability or exposing it to the risk that its conduct might be seen to constitute such an admission.

22I have already mentioned the reference in section 97 to liability being admitted or denied. I note that section 97 goes on to impose an obligation on a respondent to:

(d) make a fair and reasonable estimate of the damages to which the claimant would be entitled in a proceeding for the motor accident claim against the respondent; and

(e) either—

(i) make a written offer, or counteroffer, of settlement to the claimant setting out in detail the basis on which the offer, or counteroffer, is made; or

(ii) settle the motor accident claim by accepting an offer made by the claimant.

23Again there is no suggestion that the offer-making obligation in section 97(e) requires anything by way of the respondent tying itself to any formal admissions, although it must be said that the section 97 obligations are engaged at an earlier stage in the pre-proceeding processes than the compulsory conference.

24The references I have made to the language of liability being admitted or denied elsewhere in the Act are limited to expressions in the simple terms of either admission or denial of liability.     

25But what appears in section 141(3) is the expression “denies liability altogether”. I refer to those words as the combined expression for convenience.

26In his submissions, Mr Hausefeld presses that an admission or denial of liability is “essentially binary” – that is that liability is either admitted or it is denied. 

27That submission is a technically correct one in the case of a claim against a single defendant.  That only adds to the complexity of the interpretation exercise.  If the usual meaning of the bare expression “deny liability” means a complete denial of liability, what is the effect of the addition of the word “absolutely”?

28The draftsman (and therefore the legislature) has clearly intentionally chosen to use the words “denies liability altogether” in section 141(3). That combined expression appears nowhere else in the Act. Some meaning must be given to it. Self evidently the meaning to be given to the combined expression must be something different to the meaning which would otherwise attach to a simple reference to “denies liability”.

29“Altogether” when used as an adverb has an ordinary meaning of “in all respects; wholly” – see the Shorter Oxford English Dictionary. 

30At first blush the use of the word “altogether” might suggest that some greater reach or expanded coverage (beyond a bare denial of liability) is intended by the combined expression but that suggestion lacks logic when a bare denial means in effect a  denial of liability in all respects.

31Mr Hausfeld’s submissions on what may be intended by the composite expression referred me to section 97 of the Act. That section is headed “Respondent to try to resolve motor accident claim” and imposes an obligation on a respondent to provide certain information to a claimant, including:

(i) whether liability is admitted or denied; and

(ii) if contributory negligence is claimed – the degree of the contributory negligence expressed as a percentage.

32Mr Hausefeld’s submission is in these terms – “... denying liability altogether may be a reference to a simple denial under section 97(1)(b(i) as opposed to a reduction in liability under section 97(1)(b)(ii) in which the respondent’s/defendant’s liability is reduced because of contributory negligence by the claimant/plaintiff”.

33As I understand the submission, it points to the difference between on the one hand a bare denial of liability and on the other hand an admission of breach of duty of care accompanied by a claim of contributory negligence – with the suggestion that the use of the composite expression “denies liability altogether” captures only the former.

34The distinction between admitting breach of duty of care and admitting liability is referred to by his Honour Master Harper in Barker v Gifford and Anor [2005] ACTSC 55 (“Barker”).  His Honour there made the observation that, as a matter of legal principle, an admission of liability is inconsistent with an assertion of contributory negligence.  In doing so his Honour is giving a precise and technically correct meaning to the expressions to which he refers.

35In section 141 the word “altogether” is used as an adverb modifying the action of denying liability. If the applicant’s submissions about possible reference to contributory negligence are accepted, then that modifier to a denial of liability is applied to distinguish it from what must be in any event a complete denial of liability (albeit with an admission of breach of duty). Such a drafting approach appears incongruous and suggests the use of language in the section in a way which is not technically precise.

36There are other such suggestions – that is of a lack of technical precision – elsewhere in the Act also.

37Section 269 of the Act also makes reference to admission or denial of liability. The section imposes a reporting obligation on insurers, requiring them to provide certain information to the Compulsory Third Party regulator established by the Act.

38The example following the section notes that, in accordance with the section, an insurer may be required to provide “information about whether liability was admitted by the insurer, when liability was admitted or denied and, if liability was admitted, the extent to which liability was admitted.”

39The reference in the example to the extent of to which liability was admitted is curious.  Section 101 of the Act makes reference to both “liability” and “quantum” making it unlikely that use of the words “the extent to which liability admitted” is intended as some reference to some level of admitted quantum – something which is probably unlikely in any event.

40It is possible that the example is intended to deal with claims where there are multiple insured respondents and some agreement is reached between them as to the shares of liability for a claim, although such an interpretation again seems unlikely in the absence of any mention elsewhere in a section dealing with mandated disclosure to the regulator of any reference to other respondents.

41Against that background the use of the expression “the extent to which liability was admitted” in the example is, for the reasons given in Barker also incongruous, and also supports a conclusion that the draftsman (and therefore the legislature) has not intended references to admission of liability to have the precise and technically correct meaning referred to by his Honour Master Harper in Barker. 

42Such a conclusion, coupled with the fact that the expression is used nowhere else in the Act, indicates that the ordinary meaning of the words used is unlikely to be a determinative guide to interpretation.  

43The other argument raised by counsel for the applicant is that the construction pressed for by the applicant best achieves the purposes of the Act.

44What are described as the “main objects” of the Act are expressly set out in section 5A and include the following:

(c) to keep the costs of insurance at an affordable level;

.............................

(e) to encourage the speedy resolution of personal injury claims resulting from motor accidents…

45No detailed submissions were made directed to section 138 or 141 of the Legislation Act 2001 (ACT), and material not forming part of the Act was not tendered for consideration.

46The submissions on behalf of the applicant did include the following – “.... in practical terms, given the focus of this legislation was to try and reduce legal costs and to limit court time on these matters, this does nothing”. 

47I note that the submissions made on behalf of the respondent also refer to additional costs being “clearly inconsistent with stated object of the Act”, although it may be that comment was based on the conclusion that additional costs incurred by a respondent/insurer would be reflected in higher costs of insurance and therefore inconsistent with that object expressed in section 5A(c) above.

48The submissions did not canvass with any precision what are said to be the purposes of the Act beyond what appears in the section 5A main objects referred to above.  Having said that, the submissions on behalf of the applicant did refer me to the decision of Associate Justice Mossop in Insurance Australia Limited v Albrecht [2015] ACTSC 68 (“Albrecht”) and it is obvious that submissions proceeded on the basis that savings in legal costs are part of the legislative purpose.  

49In Albrecht his Honor Mossop AJ was dealing with the question of whether damages payable pursuant to a consent judgment were an award for the purposes of section 155 of the Act so as to attract the cost restrictions there imposed.

50In the course of deliberations his Honour considered extrinsic material relevant to the purpose of the Act, in particular the terms of a supplementary explanatory statement and the Chief Minister’s speech on presentation of amendments to the original bill. 

51His Honour made reference to statements in the supplementary explanatory memorandum to the effect that what was proposed would “help to curtail legal costs in small awards of damages by bringing more claims under the...thresholds...” and in the Chief Minister’s speech to an intention to “achieve efficiencies” and “restrict legal fees in small claims”.

52His Honour observed that there was a demonstrated concern with the level of legal fees involved in the motor accident compensation process and a desire to change the manner in which claims were dealt with. He concluded that interpreting that part of the Act he was considering (section 155) in a manner which gives broader rather than narrower scope to the limitations on costs orders where court proceedings have been commenced would give the best effect to the purposes of the legislation.

53As I have said there was no express reference before me to section 138 and 141 of the Legislation Act 2001 (ACT).  No non-legislative material was put before me. No precise statement of what was pressed as legislative purpose outside what appears in section 5A was referred to in the submissions. No submission was made as to the extent to which the conclusions reached by Mossop AJ about legislative purposes for the purpose of the construction of section 155 are relevant to consideration of the construction of section 141.

54Be that as it may, I am prepared to accept that the purposes of the Act generally extend to encouraging efficient use of resources in resolution of claims which would include encouraging speedy resolution of claims and savings in legal costs.  I reach that conclusion for a number of reasons.  First, it is a conclusion which can be seen to be a logical extension of what are the expressed objects in section 5A. Secondly, to proceed on the basis that a desire to encourage efficient use of resources and save time and cost is not part of the purpose in legislation dealing with personal injury claims is to ignore the obvious.          

55Having reached that conclusion I am not however persuaded that resort to what best achieves the purposes of the Act provides any meaningful support for the applicant’s argument.

56Section 144 appears in Part 4.8 of the Act. It is closely connected to and must be read in conjunction with Part 4.7. In many ways what is provided for in section 141 can be seen as the culmination of the pre-proceeding processes in the Act although those processes did not take place before the commencement of proceedings in this case.

57Part 4.7 of the Act is directed towards requiring the parties to come together at a conference and obliges them to actively take part in an attempt to settle the claim. By this time in the pre-proceedings processes a claim and response will have been exchanged as well as a range of other information, including medical reports and particulars of any claim for economic loss.

58To set the scene for meaningful settlement negotiations at the compulsory conference, the Act requires disclosure of any relevant documents not already disclosed between the parties before the conference and if a party is represented, delivery of a certificate of readiness.

59The certificate of readiness signed by a party’s lawyer includes a statement by the lawyer that he or she has provided their client with what the legislation calls a costs statement.  In that way the Act requires a legally represented party to have been told before the conference of their present and future costs liability – including their potential future costs liability having regard to a range of possible outcomes which turn on the relationship between any award of damages and a mandatory final offer.  That requirement would call for a lawyer to explain to the client the potential adverse costs consequences referred to by Mr Hausfeld in submissions and to which I referred earlier.

60That is the background against which the compulsory conference takes place, and against which mandatory final offers are made if a claim is not settled at the conference.

61It is apparent that the legislature sees full disclosure of liability for legal costs to both parties as an important ingredient in encouraging settlement of claims. No doubt a range of different factors work on the minds of different claimants and respondents in making compromise decisions but it is probably fair to observe that costs consequences are likely to feature in the considerations of all of them.  

62If the interpretation pressed for by the applicant is accepted, a respondent is precluded from making a mandatory final offer without some accompanying admission of breach of duty of care which may be (according to the basis upon which the applicant’s submissions are made) accompanied by a claim of contributory negligence.

63Any offer of compromise by a respondent would advance the cause of attempting to settle a claim as required by section 141. To the extent that requiring an admission of breach of duty of care as a pre-condition to making a mandatory final offer may discourage the making of that offer such a requirement cannot be what best achieves the purpose of the Act.

64As to the applicant’s submission that a settlement offer may still be made, but that it would not be regarded as a mandatory final offer so as to attract the costs consequences provided for in the Act, such a construction would appear to undermine the arrangements in place under the Act about costs disclosure and which set the scene to encourage the settlement of claims.  In addition such a construction appears at odds with the view expressed by his Honour Mossop AJ in Albrecht that giving a broader rather than narrower scope to the limitations on costs orders where court proceedings have been commenced would give the best effect to the purposes of the legislation (Albrecht at paragraph 68).

65Adverse costs consequences are a feature of almost all litigation. Under the Act the cost consequences are in sharp focus because of the removal of the decision-making discretion on costs orders in some areas.  The design and effect of the costs scheme was presumably chosen on the basis that the legislature believed that it formed part of what would best achieve the legislative purposes. The potential cost consequences in some cases may bring significant additional pressures to bear on parties in their settlement negotiations but that is a product of the express design of the scheme and is not properly described as unconscionable.

66An obligation on a respondent to make an admission of breach of duty, with the corresponding removal of the obligation on the applicant to prove such a breach, (even accepting that a contest may remain about contributory negligence) would no doubt operate to the considerable benefit of a plaintiff and their lawyers but that does not necessarily equate with what best achieves the purposes of the Act. 

67The legislature appears to have deliberately not imposed any requirement for any formal admission of liability as a pre-requisite to the provision of various benefits to a claimant or to the making of settlement offers for the purposes of section 97. The language of section 141 does not expressly impose such a condition as a pre-requisite for the making of a mandatory final offer and I am not persuaded that either the ordinary meaning of the words used nor recourse to what best achieves the purposes of the Act justifies such a conclusion.

68In the end result my conclusion is that the proper construction of section 141(3) is that pressed for by the respondent – that is that the reference to a respondent which “denies liability altogether” is intended to mean a respondent which declines to make any offer of settlement. It is only where no offer of settlement is forthcoming that a respondent is then obliged to give a mandatory final notice, and will be taken to have made a mandatory final offer of $0.

69It appears on the basis of the material before me that the respondent did not strictly comply with the terms of section 141 in that the offer made was not made at the conclusion of the compulsory conference. I note that the Act does not appear to impose any time limit on doing so. In any event as I understand the submissions made, the contest has been about whether the obligation to make/issue a mandatory final notice was triggered and nothing otherwise turns on the late delivery of the respondent’s offer.

70The application is dismissed. I propose to order that the costs of the application be reserved unless the parties wish to be heard otherwise.

I certify that the preceding seventy [70] numbered paragraphs are a true copy of the Reasons for Decision of his Honour Magistrate Morrison.

Associate: Anna Carlander

Date: 23 June 2015