Beresford v Insurance Australia Ltd
[2006] NSWLC 52
•12/18/2006
Local Court of New South Wales
CITATION: Beresford v Insurance Australia Ltd [2006] NSWLC 52 JURISDICTION: Civil PARTIES: Stephen Beresford
Insurance Australia Ltd T/as NRMA Insurance
Child Support Registrar (Amicus curiae)FILE NUMBER: 503/06 PLACE OF HEARING: Downing Centre Local Court DATE OF DECISION:
12/18/2006MAGISTRATE: Magistrate H Dillon CATCHWORDS: Insurance - Whether notice issued under Child Support (Registration and Collection) Act valid - Whether Whether payment made by insurer to Child Support Registrar voluntary or made in compliance with notice - Whether payment made by insurer reversed proper order of priorities - Whether solicitor had fruits of the action lien at time of payment - Whether payment made under mistake of law - Whether insurer entitled to set off payment LEGISLATION CITED: Child Support (Registration and Collection) Act 1988 (Cth) s.72A.
Civil Procedure Act 2005 s.21.
Motor Accidents Compensation Act 1999 ss.80, 95.CASES CITED: David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353
Field v Collins (1992) 106 ALR 68
Firth v Centrelink [2002] NSWSC 564
Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221REPRESENTATION: Mr R. Goodridge instructed by Firths Solicitors
Mr J. Guihot instructed by Hunt & Hunt
Mr P. Rodionoff instructed by Australian Government Solicitor (for Amicus curiae)ORDERS: Verdict for the defendant and judgment accordingly. I propose the usual order that costs follow the event in a sum agreed or assessed.
JUDGMENT
1. On 1 March 2001, Mr Steven Beresford, the plaintiff in this matter, was injured in a car accident as a result of the negligence of another driver. Insurance Australian Ltd, trading as NRMA Insurance, was the licensed insurer for third party injury risks of the motor vehicle driven by the person held liable for the injury to Mr Beresford. In July 2001, he lodged a claim under the Motor Accident Compensation Act 1999 for compensation for his injuries.
2. In August 2001, a bit over a month after Mr Beresford lodged his claim, the Child Support Registrar served a notice under s.72A of the Child Support (Registration and Collection) Act 1988 upon NRMA. I will deal with the terms of the notice in more detail below but the effect of the notice was to notify NRMA that Mr Beresford was a debtor to the Registrar in the sum of approximately $17,800 and to require NRMA, from the moneys that may become due to or be held for him, pay the Registrar the specified sum or, if the amount of compensation was less than his debt to the Registrar, the sum due to or held for him. In May 2002, the Registrar issued an amended notice, this time claiming a sum of $11,350.59.
3. On 14 June 2005, an assessor awarded Mr Beresford a sum of $10,070.75 (plus costs). Instead of paying that sum to Mr Beresford, however, NRMA paid $334.80 to Medicare, $193.02 to Centrelink and $8234.32 to the Child Support Registrar. Mr Beresford received $1113.61. He now seeks to recover from NRMA the sum paid to the Child Support Registrar.
The Issues
4. The facts in the matter are not significantly contentious. The issues are primarily questions of law.
5. First, Mr Beresford raises the question whether the notices issued by the Registrar to NRMA pursuant to s.72A of the CSRC Act were valid. He contends on a number of grounds that they were not and that therefore the payment of $8234.32 to the Registrar was wrongful. The defendant disagrees.
6. Second, Mr Beresford asserts that, whether or not the notices were valid, the moneys paid to the Registrar were not paid in compliance with the amended notice under s.72A. NRMA also refutes this suggestion. The question, therefore, is whether the NRMA’s payment to the Registrar was in compliance with the notice.
7. Third, the plaintiff also raises a question of priorities. Did NRMA reverse the proper order of priorities over the award sum by paying the Registrar ahead of Mr Beresford’s solicitor? He asserts that NRMA acted wrongfully in giving the Child Support Registrar priority over his solicitor whose claim preceded those of Medicare, Centrelink and the Registrar. The Registrar (who appears as an amicus curiae in these proceedings) argues that the solicitor’s lien has not been properly asserted and that Mr Beresford therefore cannot rely upon it.
8. Fourth, NRMA says that if the notice was not valid, or if the payment was not compliant with the notice, or both, the payment was, nevertheless, made in the honest and reasonable belief that it was obliged to make it. The defendant says that even if the payment made to the Registrar was not in compliance with s.72A, the plaintiff received the benefit of the payment by having had his debt to the Registrar reduced and that it would therefore be entitled to rely on principles of unjust enrichment and to set off the debt pursuant to s.21 of the Civil Procedure Act. The plaintiff contests this.
Were the notices valid?
9. The plaintiff has raised a novel argument in relation to the validity of the notices issued by the Registrar. In Firth v Centrelink [2002] NSWSC 564 a similar issue was raised by the applicant before Campbell J in the Supreme Court. Unfortunately His Honour was precluded by lack of jurisdiction from deciding the issue and thus there is no authority upon which I can rely for guidance (or, at least, none to which I have been referred by counsel for any of the parties) in determining the question. I note also that the Registrar does not make an argument that this court has no jurisdiction to entertain the question. I proceed on the basis that I have.
10. The relevant provisions of s.72A provide:
(1) The Registrar may give written notice to a person:
(a) by whom money is due or accruing, or may become due, to a child support debtor; or
(b) who holds, or may subsequently hold, money for or on account of a child support debtor; or
(c) who holds, or may subsequently hold money on account of some other person for payment to a child support debtor; or
(d) who has authority from some other person to pay money to a child support debtor;
requiring that person to pay to the Registrar:(e) if the amount of money is more than the amount specified in the notice as the amount of the debtor's support debt—an amount equal to the amount of the support debt; or
(f) if the amount of money is equal to or less than the amount of the support debt—that amount of money; or
(g) if the notice specifies an amount of money that is to be paid out of each payment that the notified person becomes liable, from time to time, to make to the debtor—that amount until the support debt is satisfied.(2) A person who refuses or fails to comply with a notice under subsection (1) is guilty of an offence.
Penalty: $1,000.(2A) Subsection (2) does not apply if the person has a reasonable excuse.
(2B) Subsection (2) is an offence of strict liability.
(3) A notice:
(a) must specify a day, not being a day before the money becomes due or is held, on or before which the money is to be paid; and
(b) may be varied by the Registrar specifying a later day for making a payment under the notice…(5) If the Registrar gives a notice under subsection (1), the Registrar must provide a copy of the notice to the child support debtor.
(9) A person who makes a payment in compliance with a notice under subsection (1) is taken to have made the payment under the debtor's authority or the authority of any other person concerned and is indemnified in respect of that payment.(6) A notice is taken to be provided under subsection (5) if the Registrar sends the notice to the last address of the person known to the Registrar…
11. There is no issue as to whether NRMA was a “person” who falls within the scope of paragraphs (a) to (d) of sub-section (1). For the purposes of the argument it is accepted by the plaintiff that NRMA was such a person.
12. The notice issued by the Registrar was addressed to NRMA, being a person who fell within one of the relevant categories, nominated Mr Beresford as the person on whose behalf or account moneys may become due or be held, specified a debt of a certain amount and then placed a demand in the following terms upon NRMA:
I do by this notice require NRMA Insurance Limited… to pay to the Registrar [the sum of money] within seven days of the date of this notice and, where the debt remains unsatisfied, within seven days of the date on which the money becomes due or is held.
13. The plaintiff argues that the notice under s.72A(1) was invalid for a number of reasons. First, at the time the notice was issued to NRMA, he says that there was no debt owed by NRMA to him. While he had lodged a claim under the motor accident compensation scheme, the assessment did not take place until 2005. That is when the debt crystallised and NRMA, on the plaintiff’s case, became a person from whom moneys were due to, or were held on account of, Mr Beresford, but when the notice was issued, NRMA was not in debt to Mr Beresford. He says that the notice was only relevant to the extent that money was due to him or held on his behalf by NRMA. In short, the argument is that the notice was issued prematurely.
14. Second, he contends that s.72A(3) requires that the notice specify a day (not being a day before the money becomes due or is held, on or before which the money is to be paid to the Registrar and did not do so. Instead, it purported to specify two days: a day “within seven days of the date of this notice” and a day “within seven days on which the money becomes due or held”.
15. The plaintiff argues that specificity in relation to “the day” on which a payment is to be made is a critical feature of a valid notice under s.72A(1). In support of that argument, he relies on a decision of the Federal Court in VHAF v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCA 1243. In that case, the applicant sought an injunction restraining the Minister from detaining the him at the Baxter immigration detention centre. The Migration Act gave the Minister a power to suspend processing visa applications. Gray J, at [67], held that the specification of a day for the resumption of processing in such cases was an “important safeguard, not to be put aside lightly”. The plaintiff argues that this principle is of general application in relation to administrative notices issued by Commonwealth authorities.
16. Third, Mr Beresford also argues that no notice under s.72A(5) was provided to him of the issuing of the second notice to NRMA.
17. The defendant and the Registrar, as amicus, both contend that the notices were validly issued.
18. The defendant noted that s.80 of the Motor Accidents Compensation Act requires an insurer “ to endeavour to resolve a claim, by settlement or otherwise, as justly and expeditiously as possible” and compliance with that section is a condition of an insurer’s licence.” NRMA says that in 2001 it considered that any ultimate payout was likely to be a relatively minor sum because its information was that Mr Beresford was fit for work. As at 24 June 2003, well prior to the final assessment, its own assessment of Mr Beresford’s economic loss alone was the sum of $8234.32. It knew that it would have to pay Mr Beresford at least that amount with various others to be added in due course.
19. The argument therefore runs that, having complied with s.80 in attempting to settle the matter in negotiation with the plaintiff’s solicitors, and having come to the conclusion that a debt would ultimately crystallize in Mr Beresford’s favour, for the purposes of s.72A, it became “a person by whom money [was] due or accruing, or [might] become due, to a child support debtor” and that it was therefore obliged to comply with the notice issued by the Registrar. (It is to be noted that failure to comply with a valid notice is a criminal offence of strict liability.)
20. In support of that argument NRMA says that there is no statutory definition of “hold” or the other terms such as “due” in the Child Support Act and that therefore the ordinary English meaning found in the Macquarie Dictionary (4th ed) ought be applied The Macquarie Dictionary online edition offers 28 definitions of “hold”. Most useful are the following: “1. to have or keep in the hand; keep fast; grasp; 2. to reserve; retain; set aside;.5. to keep in custody; detain.” In respect of “due” it offers 10 definitions of which the relevant two are: “1. immediately payable; 2. owing, irrespective of whether the time of payment has arrived.” viewed 12 December 2006.. It argues that there is an important distinction to be made between persons by whom moneys may become due and persons who may hold moneys on account.
21. Moreover, it says that moneys may be due without being payable. As I understand that proposition, NRMA says that a real liability may exist without moneys having to be paid until some future time. Those moneys, although not immediately payable, are, nevertheless, due. Therefore, NRMA contends, once it became clear on its own assessment in 2003 that whenever the official, independent under the motor accident legislation took place it would have to pay at least $8234.32 that future liability crystallised for the purposes of s.72A and it was obliged to comply with the Registrar’s notice.
22. It says that this interpretation of s.72A is bolstered by a purposive reading of the legislation and its objects.
23. The Registrar submits that there is no prescribed form in which a notice under s.72A is given and that, by virtue of s.25C of the Acts Interpretation Act (Cth) 1901 a notice under s.72A need only substantially comply with the requirements of the section. In short, a pedantic, strictly legalistic interpretation is to be rejected. The Registrar says that the notices did substantially comply with the terms of the section and are therefore valid in their terms.
24. Second, the Registrar also relies on a purposive construction of s.72A. He stressed the objects of the Child Support Act as outlined in s.3 and Parliament’s intentions as to the construction of provisions of the Act:
(1) The principal objects of this Act are to ensure:
(2) It is the intention of the Parliament that this Act shall be construed and administered, to the greatest extent consistent with the attainment of its objects, to limit interferences with the privacy of persons.
(a) that children receive from their parents the financial support that the parents are liable to provide; and
(b) that periodic amounts payable by parents towards the maintenance of their children are paid on a regular and timely basis; and
(c) that Australia is in a position to give effect to its obligations under international agreements or arrangements relating to maintenance obligations arising from family relationship, parentage or marriage.
25. Thus the Registrar contends that any notice issued in purported compliance with s.72A ought be construed in a way consistent with attainment of the objects of the Act and, if so construed, will be valid if it substantially complies with terms of s.72A. The second notice, he says, meets this test because, once NRMA knew that at least some money would have to be paid in respect of past economic loss it “earmarked” that sum and therefore, for the purposes of the Child Support Act, held it on behalf of the plaintiff. It is sufficient to bring it within the scope of s.72A, according to the Registrar, if an insurer makes a commercial assessment of its liability to a child support debtor and “earmarks” those moneys for payment to that child support debtor.
Conclusions on validity of notice
26. The plaintiff’s argument that the notice issued by the Registrar under s.72A seems to me to be fatally flawed. The argument, in essence, is that until the insurer becomes liable to the child support debtor specified in such a notice no moneys are “due” by the insurer or “held” by it and that therefore the notice is issued into a vacuum and can have no effect.
27. That argument, however, fails to address the terms of s.72A(1)(a) - (d). In my view it was clearly Parliament’s intention, when it drafted the legislation to enable the Registrar to given written notice to persons who “may become due” to a child support debtor or who “may subsequently hold” moneys for or on account of a child support debtor, that an anticipated debt or holding of moneys on account was sufficient to authorise the Registrar to issue a notice.
28. In this case, the anticipatory or conditional debt had not, of course, crystallised at the time the notice was issued, but a claim had been made upon NRMA by Mr Beresford. It was because he asserted that he was entitled to compensation by NRMA that the Registrar was able to anticipate that a debt may arise, that moneys may become due by NRMA to Mr Beresford. The claim would only crystallise into an actual debt upon certain conditions being met: Mr Beresford would have to satisfy the various requirements and tests set out in the motor accidents legislation before NRMA would become liable. He clearly hoped and anticipated that he would do so and, because of this, the Registrar was also entitled to anticipate it and issue a notice upon NRMA accordingly.
29. It appears to be the case that no notice was given by the Registrar to Mr Beresford pursuant to s.72A(5). Certainly, the Registrar was unable to produce any evidence of such a notice having been issued and NRMA was, naturally, not in a position to resolve the question whether it had been.
30. The different types of notice, however, were intended to serve two different purposes and the one was not dependent for its efficacy on the other. The notice under s.72A(1) served the principal objects of the Act, especially the ensuring of financial support of children by their parents, whereas a notice under s.72A(5) was meant, it seems, to serve the more general purpose of ensuring administrative fairness towards child support debtors.
31. Laudable as the latter purpose is, it is perhaps less significant in the overall scheme of the Act than the principal objects. If a s.72A(5) notice is not issued as required at the relevant time, this is a relatively minor oversight easily rectifiable at a later stage without great prejudice to a child support debtor who would remain in debt to the Registrar whether or not such a notice was issued. In my view, therefore, the fact that the Registrar more likely than not did not comply with his obligation to issue Mr Beresford with such a notice cannot be said to have invalidated the notice sent to NRMA. Substantial compliance with s.72A(1) was not, in my opinion, vitiated by substantial lack of compliance with s.72A(5).
32. As to the argument that a notice will be invalid unless a particular day for payment is specified in a notice under s.72A(1) I cannot see that the Federal Court decision in VHAF has any general application. In that case the court was dealing with a particular Act and a procedure or power peculiar to the Minister of Immigration. Moreover, the context was one in which the liberty of a person was the true subject matter. The principle upon which the plaintiff seeks to rely (and I note that Gray J’s comments appear, in any case, to have been obiter dicta and barely developed in the judgment) does not have general application in relation to notices of the type issued under s.72A(1). Once again the real issue is whether there was substantial compliance by the Registrar with the requirements of the provision. In my view, there was. The fact that alternatives were posed in the notice did not obscure the Registrar’s intentions or mislead the recipient as to the day upon which payment was required.
Was the payment made in compliance with the notice?
33. The plaintiff argues that, irrespective of the validity of the s.72A(1) notice issued to NRMA, it did not make the payment to the Registrar in compliance with the notice but did so voluntarily. He submits that, as there was no debt at the time of the payment, and the payment was not made on either of the days specified in the notice, there is no evidence that it was made in compliance with the notice.
34. Evidence was given for NRMA by Ms Suzanne Wootton that in August 2001 the company had discussed his claim with Mr Beresford and shortly afterwards received the first notice (claiming a sum of $17,815.63) from the Registrar. She said that in September she had made an offer of settlement to Mr Beresford but had not received word back from him. In December that year, however, she said that she had been told by the Child Support Agency that Mr Beresford intended to accept the offer. For the next 18 months or so the matter seems to have stalled. In June 2003, however, the Registrar issued another notice to NRMA requiring it to inform the Child Support Agency of the date of that anticipated date of settlement.
35. At this point, no other action having taken place on the claim, NRMA assessed Mr Beresford’s past economic loss in order to close the file on the claim. Ms Wootton gave evidence that she “honestly believed that having finally assessed Mr Beresford’s claim in accordance with [the motor accidents legislation] NRMA held the amount so assessed for or on account of Mr Beresford” and that, as the Registrar’s notice remained in force NRMA “was compelled to pay the assessed amount of the claim to the Child Support Agency”.
36. Some minor errors were found in her evidence in cross-examination but nothing, in my opinion, developed to show that Ms Wootton had anything other than an honest belief that NRMA was compelled to make payment in the assessed amount to the Registrar. Certainly from her point of view, as NRMA’s agent managing this particular file, the payment was intended to comply with the Registrar’s notice.
37. Once Ms Wootton had completed her assessment of Mr Beresford’s past economic loss, NRMA did not seek to resist his claim in that respect. It conceded that moneys would become due to Mr Beresford when the formalities under the motor accidents legislation were completed (but it was not to know in 2003 that it would take another two years or so for that to happen) and the moneys so assessed, from its point of view, were therefore held on his behalf. As far as Ms Wootton was concerned, NRMA was obliged by law to hand over moneys held for Mr Beresford. While she did not advert to this fact in her evidence, the notice with which she was familiar made it plain that a failure to comply was an offence. It seems likely that she would have been conscious of that warning and that it would have reinforced her sense that NRMA was compelled to comply with the notice. It was undoubtedly NRMA’s intention to act in compliance with the notice.
38. Of course, the question whether the payment was made in compliance with the notice is not merely subjective. While it is clear that, as far as NRMA was concerned, it was obliged to hand over the funds, from an objective perspective the payment would remain a voluntary one unless the moneys were “held” for Mr Beresford or were “due” to him.
39. The Macquarie Dictionary definitions are helpful in resolving the question whether that was actually so. If NRMA “kept in hand” or “reserved, retained or set aside” moneys or “detained” funds on account of Mr Beresford, it can be said to have been “holding” them for him or on his account. In those ways a person might hold funds for another even if those moneys were not yet due. In my view, the fact that shortly after NRMA had calculated Mr Beresford’s economic loss and conceded liability for them it paid moneys to various parties including the Registrar demonstrates that it had reserved or set aside moneys for payment on account of Mr Beresford. It is also arguable, from the Macquarie Dictionary definitions, that the moneys were “due”, although not payable, once NRMA conceded the liability to pay Mr Beresford’s economic losses. See Field v Collins (1992) 106 ALR 68 per Heerey J at 72-3 for the distinction between a sum “due” and a sum “due and payable”. Either way, when the payment was made on the basis that the moneys were “held” for or were “due” to Mr Beresford, it seems to me that the payment must have been made in compliance with the notice.
40. The fact that the payment was not made on one or other of the days specified in the notice is, in my opinion, of no consequence. It cannot be said that because a person does not meet a deadline set by another when making a payment on demand that the payment is not intended to comply with the demand. All that means is that one of the conditions of the demand is not met or that a collateral demand is not satisfied. If payment is made following a demand for payment, it is hard to see how it could be characterised as anything but compliance with the demand.
Conclusions
41. Assessing what NRMA did from both subjective and objective points of view it seems plain that it made payment because it held moneys on Mr Beresford’s account, that is, it had “reserved” or “earmarked” those moneys and, having done so, acted in compliance with the Registrar’s demand for payment of such moneys.
Did NRMA reverse the proper order of priorities?
42. The nub of the plaintiff’s argument is essentially in relation to this point. It is incontestable that, having done work that resulted in a settlement being arrived on behalf of Mr Beresford, his solicitor had a “fruits of the action” lien, that is, an equitable right to be paid from the sum ultimately settled upon Mr Beresford under the motor accidents compensation legislation: see Firth v Centrelink [2002] NSWSC 564 at [33]-[70].
43. It is also clear that, once the litigation had borne fruit in 2005, the lien had priority over the claims of others, including the Child Support Registrar: see Firth v Centrelink at [71]-[89]. The plaintiff’s solicitors asserted their lien in correspondence with NRMA in 2005, complaining that NRMA had acted prematurely in making payment to the Child Support Agency at a time when it was under no legal obligation to do so. They sought full payment to the claimant, Mr Beresford, and threatened legal action if such payment was not made. By letter of 2 August 2005, they also claimed that “by paying [the Child Support Agency] two years before any legal obligation arose NRMA engaged in conduct which has the effect of defeating our claim”.
44. One difficulty with the argument about priorities is that NRMA’s legal obligation to pay the moneys to the Registrar had arisen once NRMA was holding moneys on account of Mr Beresford. This had occurred when it had ‘earmarked’ the funds having conceded liability in respect (at the very least) of past economic loss. Thus, if I am correct in finding that the s.72A notice was valid and the payment made by NRMA was compliant with it, the payment was not gratuitous nor voluntary. It did, however, precede by about two years the lien which only arose once the award was made in 2005. In this way the case is distinguishable from that in Firth where an award had been made from which moneys were paid out of priority to Centrelink effectively depriving the solicitor of his equity in the award.
45. While the plaintiff contends that he is merely asserting that the payment made by NRMA was dispatched in the wrong direction and ought to have been made to him so that he could satisfy the solicitor’s equitable claim, this aspect of his argument is problematic. Even if it is correct to say that the solicitor’s lien took priority over the payment to the Child Support Agency, the solicitor is not a party to these proceedings.
46. In effect the argument seeks to assert an equitable right which is not the plaintiff’s in a court which has no jurisdiction to enforce such rights. If that analysis is correct this court is being invited by the plaintiff to go beyond its jurisdiction. Neither NRMA or the Registrar specifically argue this but I remained troubled by this point. If the real reason this claim is being brought is to assert the solicitor’s lien the action should have been commenced in the Equity division of the Supreme Court.
47. The defendant relies upon s.72A(9) which provides that a person who makes a payment compliant with a notice under s.72A(1) is deemed to have made the payment with the debtor’s authority or that of any other person concerned and is indemnified in respect of the payment.
48. The plaintiff argues, on the authority of Firth, that s.72A(9) does not defeat a solicitor’s fruits of the action lien. In that case, (at [76]-[77]), Campbell J held that if a notice under s.1233 of the Social Security Act in very similar terms to the notice issued in this case by the Registrar could override the solicitor’s lien and “if it meant that the Commonwealth received the whole of the amount… without any obligation to account for any part of it to Mr Firth, it would mean that the Commonwealth was confiscating Mr Firth’s proprietary interest in the settlement proceeds, to pay [Firth’s client’s] debt, without any just compensation to Mr Firth.” Without a clear intention being expressed in legislation that such a result was intended, His Honour held that ordinarily legislation would be construed on the basis that Parliament had not intended such a result.
49. Needless to say that there is no expression in this legislation of an intention to confiscate property without just compensation. In Firth, Campbell J held that the notice “on its correct construction, required the payment to the Commonwealth of so much of the amount… as was not subject to Mr Firth’s lien for costs and disbursements.” So far so good, but s.72A(9), which is in similar terms to s.1233(5), provides that the payment made is deemed to have been made with Mr Beresford’s authority. At the time of the payment, the solicitor did not have a lien because the award had not been made. Moreover, by the time the solicitor came into the picture, NRMA had already worked out that it would have to pay damages in respect of past economic loss in the sum of $8234.32, made an offer of settlement in that sum and ‘earmarked’ it without any work being done by Mr Firth. Whether he had an equity in that sum at all may be questioned.
50. In any event, how can Mr Beresford (as opposed to his solicitor) now assert a claim to recover the moneys payment of which he is deemed to have authorised? Even if NRMA overpaid the Registrar, Mr Beresford’s authority stands behind NRMA for the payment. It is for the solicitor, if he wishes to recover the moneys owed to him under his lien, effectively to trace them into the hands of the Registrar. (See Firth at [41]).
Reasonable and honest mistake: set-off
51. The defendant, as its alternative position, argues that even if the notice was invalid or that the payment was not compliant with it or that it had failed to adhere to the proper order of priorities, the payment was made under a mistake of law. If a mistake was made, it was that NRMA was obliged by the s.72A notice to make the payment to the Registrar.
52. It submits that if the payment was made under an invalid notice or in a manner not compliant with a proper notice, it was due to a mistake of law in that it believed that it was obliged to comply. To put this another way, the defendant submits that the money it paid to the Registrar was paid on behalf of the plaintiff and that it is entitled to credit for that sum and to set it off against the plaintiff’s claim against it for that sum. In short, this is a ‘zero sum game’ according to the defendant and it may be inferred that the real issue is the solicitor’s lien.
53. Section 21 of the Civil Procedure Act 2005 entitles a defendant to set off a mutual debt and the amended defence filed by NRMA does so.
54. The plaintiff submits that I should not accept the evidence of honest belief. In my view, however, the evidence of Ms Wootton concerning the way in which NRMA processed the payment to the Registrar was compelling and, although some minor errors of fact were admitted by her, it was abundantly clear that she, as agent for NRMA, believed that the Child Support Agency must be complied with and she sought to ‘clear the books’ as it were by making the payment. There was nothing to suggest that the payment was made with any other motivation than to meet what NRMA perceived to be its obligations under the notice.
55. For that reason, I am persuaded on the balance of probabilities that if I am incorrect in finding that the notice was valid and that the payment was made in compliance with it, there was nevertheless a mutual debt which the defendant is entitled to set off against Mr Beresford’s claim. It made a payment to the Child Support Agency which reduced his debt to that organisation. If the plaintiff is correct, the payment to the Registrar was made on the basis of a mistake of law. No relevant distinction arises between payments made under mistake of law or mistake of fact as a precondition for recovery. David Secutities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353. Were he allowed to recover that sum and the defendant was prevented from setting off the credit he had received he would obtain a windfall and be unjustly enriched as a result See Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221.. If all else fails, the defendant is entitled to set off its payment to the Registrar against Mr Beresford’s claim.
Verdict and judgment
56. There will be a verdict for the defendant and judgment accordingly.
57. I propose the usual order that costs follow the event in a sum agreed or assessed but will reserve the question with parties to have liberty to apply.
Hugh Dillon
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