Club Motor Insurance Agency Pty Ltd v Sargent

[1969] HCA 21

HIGH COURT OF AUSTRALIA

Taylor, Windeyer and Owen JJ.

CLUB MOTOR INSURANCE AGENCY PTY. LTD. v. SARGENT

(1969) 118 CLR 658

27 May 1969

Insurance

Insurance—Third party insurance—Motor vehicle accident in Australian Capital Territory—Third party policy issued in Victoria—Judgment against nominal defendant in forum delicti—Statutory right of nominal defendant to be indemnified by owner or driver—Whether insurer liable to indemnify insured owner—Policy—Whether judgment "in respect of . . . bodily injury"—Motor Traffic Ordinance 1936-1962 (A.C.T.), cll. 41AO (1), 41AQ (1).

Decisions

May 27.
The following written judgments were delivered:-
TAYLOR J. I have had the advantage of reading the reasons prepared by my brother Owen in these appeals and I agree with him that both appeals should be dismissed. I shall, however, add a few words for myself. (at p660)

2. The first point which arises in the appeals is whether the judgment which was entered against the respondent Sargent at the instance of the nominal defendant can be said to be, in the language of the policy of insurance, "in respect of . . . bodily injury to" the respondent Strang. The appellant in the first appeal, Club Motor Insurance Agency Pty. Limited (hereinafter referred to as the insurance company), contends that it cannot, asserting that the judgment is merely in respect of the liability imposed upon Sargent by cl. 41AQ of the Motor Traffic Ordinance 1936-1962 (A.C.T.) to indemnify the nominal defendant in respect of the judgment suffered by him in respect of bodily injury to Strang. (at p660)

3. The insurance policy issued by the insurance company in Victoria in accordance with the Motor Car Act of that State purported to cover Sargent, as the insured, against all liability incurred by him as the owner or driver of the motor car described in a specified certificate, "in respect of the death or bodily injury to any person caused by or arising out of the use of such motor car in Victoria and in any other State or any Territory of the Commonwealth". But in the Australian Capital Territory, where the accident in which Strang suffered his injuries occurred, the car was an uninsured motor car because it was not a "visiting motor vehicle" within the meaning of the Ordinance and also because the insurance company was not an authorized insurer in the Territory. Accordingly, cl. 41AO (1) of the Ordinance required that Strang's claim should, in the first instance, be enforced against the nominal defendant. I say "in the first instance" because cl. 41AQ (1) provides that any amount paid by the nominal defendant in satisfaction of such a claim or in satisfaction of a judgment recovered against him in relation to any such claim "may be recovered by the nominal defendant as a debt from the person who, at the time of the occurrence out of which such claim arose or in respect of which such judgment was obtained, was the owner of the motor vehicle or, where at the time of that occurrence some other person was driving the vehicle, from the owner and the driver jointly or from either of them severally". It was pursuant to this clause that judgment was entered against Sargent in favour of the nominal defendant. (at p661)

4. It is clear enough that if Sargent had returned to Victoria he might there have been successfully sued by Strang and that Sargent, in turn, might have enforced his claim to an indemnity against the insurance company. But because cl. 41AO (1) of the Motor Traffic Ordinance required Strang to proceed against the nominal defendant and the claim of the latter against Sargent arises under cl. 41 AQ (1) the contention is that this claim cannot be said to be in respect of bodily injury to Strang. In my view the contention ought to be rejected as being based upon far too narrow a view. It may be said, of course, that because of the provisions of the Ordinance in the Territory Sargent could not be made directly liable to Strang in respect of his injuries, but there can be no doubt that he was liable indirectly in respect of those injuries. I see no reason to depart from the general views which I expressed in State Government Insurance Office (Q.) v. Crittenden (1966) 117 CLR 412 , concerning the width of the expression in question and which, I think, are in conflict with the insurance company's submissions. I point out, also, that in the circumstances as they existed, the only manner in which Sargent could have been made liable in the Australian Capital Territory in respect of or as a consequence of Strang's injuries was pursuant to cl. 41AQ (1) of the Ordinance and the policy expressly covered Sargent against any liability for bodily injuries arising out of the use of the vehicle "in any other State or any Territory of the Commonwealth". (at p661)

5. The further submission was made that there should be implied in the policy a qualification relating to the ambit of the use of the vehicle during which the cover would attach. This qualification, it was suggested could appropriately be expressed by reading into the policy, after the words "arising out of the use of such motor car in Victoria and in any other State or any Territory of the Commonwealth" the words other than a use which necessitates the obtaining of a local policy of insurance against such liability or the words other than a liability required to be covered by a local policy of insurance. The argument in support of this contention was, to say the least, conspicuously unconvincing and, indeed, would not avail the insurance company unless a similar implication were also made in s. 46 (1) of the Motor Car Act (Vict.) (see s. 46 (3)). The difficulties in the way of doing this are, it seems to me, not made any the less by the reflection that the contention, if accepted, would lead to the rather startling result, not only that Sargent was not covered against a liability incurred in the Territory under cl. 41AQ (1), but also that he would have been without cover in Victoria if he had returned to that State and if Strang had commenced an action against him there. (at p662)

6. As for the nominal defendant's appeal I have nothing to add to my brother Owen's observations. (at p662)

WINDEYER J. I consider that both these appeals should be dismissed. I do not wish to add anything to what has been said by my brothers Taylor and Owen. (at p662)

OWEN J. These two appeals, one brought by the Club Motor Insurance Agency Pty. Limited (which I will call the insurance company) and the other by the nominal defendant, arise out of an action heard by Joske J. in the Supreme Court of the Australian Capital Territory. (at p662)

2. The plaintiff Strang, a young boy, was injured when he was struck by a motor car which was owned and being driven by a man named Sargent at Canberra. The accident was due to Sargent's negligent driving. Sargent was, at all relevant times, insured under a policy issued in Victoria by the insurance company insuring him against any liability (including liability for costs) which might be incurred by him "in respect of the death or bodily injury to any person caused by or arising out of the use of" the car in Victoria and any other State or any Territory of the Commonwealth. Notwithstanding the existence of this policy, the car was an "uninsured motor vehicle" for the purposes of s. 41AO (1) of the Motor Traffic Ordinance 1936-1959 of the Australian Capital Territory since it was not a "visiting motor vehicle" within the definition of those words in s. 4 of the Ordinance nor was the insurance company an "authorised insurer" in the Territory. (at p662)

3. Section 41AO (1) provides that:

"Every claim for damages in respect of the death of, or bodily injury to, any person caused by or arising out of the use of an uninsured motor vehicle shall be made to the nominal defendant and not to the owner or driver of the uninsured motor vehicle and any proceedings to enforce any such claim for damages shall be taken against the nominal defendant and not against the owner or driver of the uninsured motor vehicle."

By s. 41AQ (1) of the Ordinance any amount paid by the nominal defendant in satisfaction of a judgment recovered against him under s. 41AO (1) may be recovered from the person who, at the time of the occurrence out of which the claim arose, was the owner of the motor vehicle. (at p663)

4. The facts are that Strang brought an action against Sargent claiming to recover damages in respect of his bodily injuries and, finding after commencing the action that the car was an "uninsured motor vehicle", he joined the nominal defendant as a co-defendant with Sargent. The nominal defendant thereupon joined Sargent as a third party claiming that if the plaintiff recovered damages and costs against him (the nominal defendant), he was in turn entitled to recover from Sargent the amount of any judgment and costs which he had to pay to the plaintiff. Sargent then joined the insurance company as a fourth party claiming that, if he should be found liable to indemnify the nominal defendant, he was in turn entitled to recover from the insurance company the amount which he was liable to pay to the nominal defendant. (at p663)

5. In the result Joske J. gave judgment for Sargent on the claim made against him by the plaintiff ; gave judgment for the plaintiff for $12,000 on the plaintiff's claim against the nominal defendant; gave judgment for the nominal defendant against Sargent for the amount ordered to be paid by the nominal defendant to the plaintiff; and gave judgment for Sargent against the insurance company for the amount which Sargent was ordered to pay to the nominal defendant. (at p663)

6. The insurance company appeals on the ground that, under the policy issued by it, it is not liable to pay Sargent the amount which he has been ordered to pay to the nominal defendant because it is not a liability incurred by Sargent "in respect of the death or bodily injury to any person caused by or arising out of the use of the motor car in Victoria and in any other State or any Territory of the Commonwealth". (at p663)

7. The submission made on behalf of the insurance company is based upon the fact that in a case in which bodily injury is caused to a person by the use of an uninsured motor vehicle, s. 41AO (1) of the Motor Traffic Ordinance requires that any action for damages brought by the injured person shall be brought against the nominal defendant and not against the owner or driver of the vehicle. Thus, it is said, Sargent never became liable to pay damages to Strang in respect of the bodily injuries caused to him by or arising out of the use of the motor car. The only liability which he incurred was the liability for which s. 41AQ provides, namely to pay to the nominal defendant the amount paid by the latter in satisfaction of the judgment recovered against him by Strang and this, it is said, was not a liability incurred by Sargent in respect of the bodily injury to Strang caused by or arising out of Sargent's use of the motor car. (at p664)

8. I am unable to agree with this submission. It is true that s. 41AO (1) requires a person who claims damages in respect of bodily injury caused by or arising out of the use of an uninsured motor vehicle to bring his action against the nominal defendant and forbids him to sue the owner or driver of that vehicle. But the Ordinance does not stop at that point. It goes on in s. 41AQ (1) to enable the nominal defendant who has satisfied such a claim to recover the amount which he has paid to the injured person from the person who, by the negligent use of the motor vehicle, has caused those injuries. (at p664)

9. In my opinion, the line of reasoning which was adopted in the joint judgment in Genders v. Government Insurance Office of N.S.W. (1959) 102 CLR 363 , should be applied in the present case. The liability covered by the policy is not limited to a liability to pay damages to the person who is injured. The words "in respect of the death or bodily injury to any person" are, in my opinion, to be given a wide meaning, as Taylor J. pointed out in State Government Insurance Office (Q.) v. Crittenden (1966) 117 CLR, at pp 415-417 , and they are amply wide enough to cover a case such as the present one. The liability imposed upon Sargent by s. 40AQ (1), although it is a liability owed to the nominal defendant, is none the less a liability incurred by Sargent in respect of the bodily injury to Strang caused by or arising out of the use by Sargent of his motor car. It is a liability consequential upon the fact that Strang suffered bodily injury caused by or arising out of the negligent use by Sargent of his motor car. (at p664)

10. A further submission was made to the effect that a term should be implied in the policy that it is not to cover any liability incurred by Sargent whilst using the car in the Australian Capital Territory if, at the time of such use, the car was an "uninsured car" in that Territory. This, if I understood the argument correctly, is said to result from the terms of ss. 39 (2) and 46 of the Victorian Motor Car Act 1958. This contention does not appear to have been put at the trial and is not raised by the notice of appeal but, in any event, I can find no support for it in any of the provisions of the Victorian Motor Car Act. (at p665)

11. In my opinion the appeal by the insurance company should be dismissed. (at p665)

12. In the second appeal in which the nominal defendant is the appellant, counsel for the appellant told us that, if the appeal by the insurance company failed, his client was content that his appeal should be dismissed. In case, however, the appeal by the insurance company should succeed, counsel went on to submit that the amount of damages awarded to Strang was excessive. Since the appeal by the insurance company fails, the second appeal should also be dismissed. But it is, I think, right to add that, in my opinion, it cannot be said that the amount of $12,000 awarded by way of damages was excessive. There is no doubt that, in arriving at that figure, the learned trial judge considered that as a result of the accident Strang had suffered some damage to his brain resulting from a fracture of his skull. That his skull had been fractured was not questioned but it was submitted that there was no evidence of damage to the boy's brain. In my opinion, there was evidence which entitled his Honour to draw the inference that such damage had occurred. (at p665)

13. Before parting with the case I think I should mention that it was not contended either on behalf of Sargent or of the insurance company that the nominal defendant's claim against Sargent under s. 41AQ (1) was premature because no part of the judgment recovered by Strang against the nominal defendant had been paid either when the latter made his laim against Sargent or when he recovered judgment against him. Indeed it was expressly stated by counsel for the insurance company that his client did not wish to raise this contention and no doubt there was good reason for adopting this attitude. (at p665)

14. The appeal should be dismissed. (at p665)

Orders

Appeals dismissed with costs.