Evans v Accident Insurance Mutual Holdings Ltd
[1997] QCA 243
•8/08/1997
| IN THE COURT OF APPEAL | [1997] QCA 243 |
| SUPREME COURT OF QUEENSLAND |
Appeal No. 249 of 1995
Brisbane
[Evans v. Accident Insurance Mutual Holdings Ltd]
BETWEEN:
LISA MICHELLE EVANS
(Plaintiff) Appellant
AND:
ACCIDENT INSURANCE MUTUAL HOLDINGS LIMITED
(Defendant by Election) Respondent
NIGEL HAUSLER
(Defendant)
Macrossan CJ
Pincus JAFryberg J
Judgment delivered 8 August 1997
Separate concurring reasons of Macrossan CJ and Fryberg J; Pincus JA dissenting.
APPEAL ALLOWED WITH COSTS
JUDGMENT ENTERED BELOW VARIED AS FOLLOWS:
1. THE STAY OF EXECUTION AGAINST THE PLAINTIFF/APPELLANT, THE FIRST DECLARATION IN FAVOUR OF THE DEFENDANT BY ELECTION/RESPONDENT, THE JUDGMENT FOR THE DEFENDANT BY ELECTION/RESPONDENT ON THE COUNTER CLAIM AND THE ORDER FOR PAYMENT BY THE PLAINTIFF/APPELLANT OF THE DEFENDANT BY ELECTION/RESPONDENT'S COSTS ON THE COUNTER CLAIM ARE SET ASIDE;
2. JUDGMENT IS ENTERED FOR THE PLAINTIFF/APPELLANT ON THE COUNTER CLAIM;
3. THE DEFENDANT BY ELECTION/RESPONDENT IS TO PAY THE PLAINTIFF/APPELLANT'S COSTS OF THE COUNTER CLAIM
CATCHWORDS: | INSURANCE - Third party liability insurance - Motor vehicles - Compulsory insurance legislation - Queensland - Statutory duty not to "permit or suffer" intoxicated person to drive vehicle - State of knowledge necessary in order to "permit or suffer" - Co-ownership - whether one co-owner can "permit or suffer" another to drive insured vehicle - Whether default "contributed in a material degree" to circumstances giving rise to liability - Whether entering and remaining in car could constitute such a default - Motor Vehicles Insurance Regulations 1968 reg 13(2), 17. | |||
| Counsel: | Mr J. W. Lee for the Appellant Mr R. B. Dickson for the Respondent | |||
| Solicitors: | Goodfellow & Scott for the Appellant Murrell Stephenson for the Respondent | |||
| Hearing Date: |
|
IN THE COURT OF APPEAL
SUPREME COURT OF QUEENSLAND
Appeal No. 249 of 1995
Brisbane
| Before | Macrossan CJ Pincus JA Fryberg J |
[Evans v. Accident Insurance Mutual Holdings Limited]
BETWEEN:
LISA MICHELLE EVANS
(Plaintiff) Appellant
AND:
ACCIDENT INSURANCE MUTUAL HOLDINGS LIMITED
(Defendant by Election) Respondent
NIGEL HAUSLER
(Defendant)
REASONS FOR JUDGMENT - THE CHIEF JUSTICE
Judgment delivered 8 August 1997
The appellant was the plaintiff in an action for damages for personal injuries against the
defendant and the respondent defendant by election. The appeal is brought against the trial judge's
finding that an amount assessed as recoverable by the appellant with costs was, in effect, to be balanced
by a judgment on the counter claim in favour of the respondent giving a right to recover from the
appellant whatever might be paid to her under the judgment entered on her claim.
The basis upon which the orders in favour of the respondent were made was found in the statutory motor vehicles insurance scheme contained in the Motor Vehicle Insurance Act 1936-1988, the Motor Vehicles Insurance Regulations 1968 and the standard form of insurance policy issued to the
appellant in respect of a motor vehicle registered in her name.
In particular the respondent's entitlement to recover was based upon the concluding words of
regulation 17. That regulation applies in a situation where there might, apart from the regulation, be an
entitlement in an insurer to avoid liability to indemnify an insured under a claim. That is, when there has
been a breach by an insured of one or other of the provisions of the contract of insurance, the issued
policy or the regulations, regulation 17 nevertheless deems the insurance cover to continue but gives a
consequential right of recovery by the insurer against the insured.
The following words are taken from regulation 17:
Liability of insurer
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) ...
(b) Shall be subject to the liabilities and obligations imposed upon him by ... these Regulations, the provisions whereof 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.If, in such a case, the insurer pays any sum ... to satisfy any judgment or order
made or entered against him then he may, by way of action in any court of
competent jurisdiction, recover that sum, as a debt due and owing but unpaid,
from the insured person whose default constitutes the circumstances by reason
whereof the insurer could, but for this regulation, have avoided his liability under
the contract of insurance but only if the default is such that the court in which the
proceeding for such recovery is taken is satisfied that it contributed in a material degree to the circumstances in which the insurer agreed to pay or otherwise
became liable to pay that sum.
The broad scheme for statutory motor vehicles insurance in Queensland is that motor vehicles
that are to be driven must be insured and in each case a policy of insurance in prescribed form obtained
by the insured owners. The owners are subject to obligations which they are required to observe. In
those circumstances persons who suffer personal injuries due to the negligent driving of motor vehicles
are assured of a right of recovery effective, ultimately, against the insurer but the insurer, for what it may
be worth, is given a right of recoupment against an owner who is in default in respect of his obligations
under the legislation or the issued policy.
One provision of the compulsory motor vehicle insurance scheme particularly relevant in this
case is regulation 13(2)(b). The regulation is in these terms:
Repugnancy regulation
13 ... (2) An insured person shall not -
(b) Permit or suffer another who is under the influence of intoxicating liquor or a drug to drive or be in charge of a motor vehicle in respect of which he is an insured person ...
The circumstances giving rise to the judgment in favour of the appellant against the defendant
and the respondent should now be set out.
The appellant, who lived at the same address as the defendant, was the registered owner of a
motor vehicle in respect of which a statutory policy was issued. On 10 January 1992 the appellant
drove that vehicle to a hotel for an intended interval of drinking and enjoyment. The defendant travelled
in the car as a passenger. Altogether the appellant and the defendant spent some five hours at the hotel
but not much of it was spent in one another's company. The appellant gave evidence that she noticed from time to time that the defendant was drinking a particular reduced alcohol beer. She herself had
a great deal to drink. She said she had some 10 whisky based drinks called Baileys taken with milk,
and she became very drunk. She did not, throughout the evening, notice that the defendant was affected
by alcohol. She did not have much recall of the final events of the evening.
At about 1am the defendant and the appellant left the hotel to go home in the car. On this
occasion the appellant was a passenger and the defendant drove. On the way, due to the defendant's
negligent driving, the car ran off the road, hit a tree and as a result the appellant sustained personal
injuries. This happened at about 1.15 am.
In respect of the injuries sustained by the appellant the judge made a total assessment of
$56,149.50 which, for purposes of giving judgment he reduced to $37,433 because of the appellant's
contributory negligence in travelling in a car driven by the defendant when his capacity to exercise
proper control was affected by alcohol and also because she was, as he found, travelling without her
seat belt secured.
Amongst the evidence of intoxication of the appellant and the defendant, there were a number
of matters to which the judge referred in his findings. The appellant, on being conveyed to hospital for
treatment, was given a blood alcohol test which showed that at some time that did not exactly appear
but which followed her admission to hospital at 2.41am, she had a reading of .06 per cent. The
defendant had a test which was taken at 3.07 am and it showed a reading of .178 per cent which, on
other available evidence, indicated that his blood alcohol level at the time of the accident would have
been about .218 per cent.
There is no appeal against the judge's finding of contributory negligence by the appellant and
no cross appeal by the defendant by election against the judge's dismissal of a defence of volenti raised
below.
A key finding of the trial judge is that the appellant, within the meaning of regulation 13,
permitted or suffered the defendant who was under the influence of intoxicating liquor, to drive the
motor vehicle in respect of which she had a policy of insurance. At the hearing a considerable volume
of evidence was introduced but understandably enough the findings the judge made did not respond to
all of it. There are, however, certain findings that do not sit well together.
The judge has found that the appellant was the owner of the vehicle "in law" and also "the
registered owner of it within the meaning of the term `owner'" under the Act. There is no doubt about
the second of those two propositions. One question which might fairly arise, however, is whether under
the arrangements in place between the two, the defendant although not registered as such might also
have been an owner of the vehicle. If he was the owner, that might be relevant to the question whether
the appellant could be said to have "permitted" or "suffered" him to drive when he drove home from the
hotel. The relevant evidence on the ownership issue apart from the objectively established fact of the
appellant's registration as owner, came from the appellant herself. Unchallenged facts were that the
appellant and the defendant lived in the same house, the vehicle had been purchased by a joint
contribution of funds with the defendant contributing a greater amount than the appellant, the car was
put in her name by agreement between them at the time of acquisition, each kept separate possession
of a key to the car and the defendant would drive it from time to time. She also said in answer to an
interrogatory that she and the defendant "owned the vehicle jointly" and that the agreement between
them was "that at the end of the joint ownership, whoever wanted it would buy out the other person's ownership". The judge dealt with some of this evidence in summary fashion. He said that it could
not "affect the circumstance that she was the agreed purchaser of the vehicle". Without rejecting her
evidence of the details of the arrangement between them, he seems to have proceeded upon the basis
that since by agreement it was to be registered in her name, the question of ownership was unarguably
determined "at law". It should be mentioned that there seems to have been a practical reason why the
matter of registration was arranged as it had been. The defendant was disqualified from holding a
licence.
The weight of the unrejected evidence seems to support the conclusion that the two were co-
owners. The question of the appellant's credit as a matter possibly affecting her testimony does not
complicate an assessment of her version of the arrangement. The trial judge stated that he accepted her
testimony other than in areas where he rejected it specifically. His conclusion on the ownership point
was one of mixed fact and law. He had no particular advantage over this court in coming to a
conclusion in respect of it. Notwithstanding the relatively formal issue that is involved in coming to a
decision on ownership, the important practical aspect is the effect that the arrangement between the
parties had on the scope it left for the appellant to assert that it was for her to determine whether the
defendant should be permitted or suffered to drive. The judge seems to have determined this question
formally and by extension, as it were, from his earlier finding that the appellant was the "owner".
Whether or not the appellant in breach of regulation 13(2)(b) permitted or suffered the defendant to
drive was a matter to be determined on the evidence which would take into account not only the
arrangement between the parties in respect of the vehicle but also the events of the evening. This will
require some wider attention to be given to the facts which appear from the judge's findings.
As already mentioned the appellant did not have much recall of events at the end of the evening
at the hotel and she had none at all of the drive from the hotel except for a few brief moments just before
the collision with the tree. When the two had driven to the hotel there was no arrangement that the
defendant would drive them home. The appellant was unaware of the amount the defendant drank
during the evening and she did not notice signs of intoxication upon him in the brief contacts they had
throughout the evening. While she was aware that the defendant was not abstaining, her own
consumption of liquor as the evening progressed deprived her of capacity to make a reasonable
assessment of the defendant's sobriety. Nothing compelled the appellant to travel home in a car driven
by the defendant. She could, for example, have taken a cab.
In connection with his consideration of the question of contributory negligence which was
relevant below, the judge made these further findings: She "could and should" have observed effects
of alcohol upon the defendant and amongst other signs "a strong beery odour ought to have been
obvious" to the appellant who had lived with the defendant for some time. Notwithstanding the way
these findings are expressed and the references to "could", "should" and "ought" it is obvious in context
that the judge was saying the appellant would have been in a position to make these observations if she
had not by her own consumption of alcohol deprived herself of the capacity to do so. The judge has
not at this point in his reasons pronounced something equivalent to a moral judgment upon her behaviour
or in any direct fashion made a statement of his opinion upon the level of prudence she exhibited. He
has not gone so far as to assert that it would have been the reasonable course in the circumstances for
her to have refrained from drinking so that she could retain capacity to estimate the defendant's state
of sobriety. It has to be remembered that the judge has made no finding either that there was an arrangement that the defendant would be driving home or that at relevant times earlier in the evening she
should reasonably have appreciated this as a possibility.
Having considered the appellant's injuries and disabilities and assessed her damages, the judge
turned to deal with the counter claim that is the central point of the appeal taking into account for that
purpose the provisions of regulation 13(2)(b). He made findings that the appellant "permitted or
suffered the defendant who was then under the influence of intoxicating liquor to drive the motor vehicle"
and also permitted and suffered him to drive when he was not "duly authorised" to be driving. In the
end, nothing was made to turn on the defendant's lack of a licence since it was not suggested that it
contributed to the accident and the appellant's injuries. However, because of his other findings, the
judge concluded that the appellant breached the conditions of her insurance policy.
By regulation 3, policies are required to be in standard form as exhibited in the Third Schedule
to the Regulations, and are thus made subject to the Act and Regulations and any otherwise consistent
endorsements. Each policy that is issued contains a provision in these terms:
This policy is issued subject to the provisions of The Motor Vehicles Insurance Acts 1936-1968, and of all regulations thereunder, as amended from time to time, all of which provisions shall be deemed to be incorporated in and to form part of this policy and it is expressly declared that the indemnities contracted for under this policy are subject to the due and proper observance and fulfilment by the insured person concerned of the provisions of the said Acts and Regulations and all endorsements hereon which Acts, regulations and endorsements shall be deemed to be the essence of the contract and to the extent that they require anything to be done or to be not done by the insured person concerned that requirement shall (and, in the case of an endorsement, subject to the said Acts and regulations) the condition precedent to the right to recover hereunder.
A breach of regulation 13 of the kind already identified would thus, under ordinary principles,
entitle an insurer to avoid its obligations under the policy but, as already pointed out, the statutory
scheme prevents this outcome and provides instead for some right of recovery against the insured by the insurer. The relevant default which is found to have occurred on the part of the appellant under the
terms of her policy and the statutory scheme is her having permitted or suffered the defendant to drive
notwithstanding his intoxication. Regulation 13(2)(b) apart, no other default is relied on. The onus thus
lay on the defendant by election under its counter claim to establish that this "default" occurred and in
that case to show also under regulation 17 that it "contributed in a material degree to the circumstances
in which the insurer ... became liable to pay" the sum for which judgment in favour of the appellant was
given. If the first branch of entitlement under the counter claim is to be regarded as properly found (that
is, a breach of regulation 13(2)(b)) a further matter for consideration in terms of regulation 17 would
be whether that default contributed "in a material degree" to the insurer's liability.
Should it be accepted that the appellant did permit or suffer the defendant to drive there is no
doubt of his intoxicated condition as the Judge has sufficiently found. It is also clear that the accident,
the injury and the judgment in the appellant's favour for damages were all contributed to in a material
degree by the defendant's act of driving. The further action of the appellant in entering the car at the
hotel and remaining in it when it was to be driven by the defendant was also a matter which would be
regarded as contributing to her injury and thus to the insurer's liability to pay under the judgment in her
favour. But for the purposes of this appeal the position is not as clear as it would have been if it had
been established that without her acquiescence the defendant would not have driven.
Two questions must be examined. First, whether it can be said the appellant permitted or
suffered the defendant to drive when he was intoxicated and second, whether if that acquiescence on
the appellant's part occurred, it contributed in a "material degree" to the fact that the defendant drove
with the appellant as passenger with the consequences that then followed.
The judge, in making his declaration against the appellant on the counter claim has proceeded
on a basis not fully justified by the state of the evidence and it may be that if certain of his assumptions
and findings cannot stand, there will be a situation where this court would have to consider whether it
should send the matter back or make any necessary further findings itself or decide the matter simply
on the basis that findings needed by the counter claiming defendant by election are absent. Perhaps,
as a further possibility, this Court might have to deal with the matter by some combination of the last two
possibilities. One consideration weighing against sending the matter back is that the judge has made
reasonably full findings on facts where the appellant's credit was involved and the defendant did not give
evidence at the trial. Any necessary supplementary findings to be made, whoever makes them, will have
to be made by implication and inference from the facts as already found with the trial judge having no
obvious advantage in this process.
The first question which has been identified, namely whether the appellant permitted or suffered
the intoxicated defendant to drive might yield more readily to review under the rehearing powers which
this court possesses and it should be considered first.
It should not be assumed that the intention behind regulation 13(2)(b) is to require the
conclusion that an insured person is in breach or default if he permits or suffers another to drive his
vehicle when he does not know and has no reason to conclude that he is under the influence of liquor.
Something of the apparent intention emerges from the use of the phrase "permit or suffer". People
permit or suffer actions only if they are aware of the actions in which they are acquiescing. There is thus
no impossibly high level of vigilance thrust upon insured persons as would be the case if the regulation
said that the insured's right of indemnity would not extend to any case where his vehicle was driven by
an intoxicated driver. The regulation does not oblige an insured to withhold permission or refrain from suffering the action because there is a possibility that the driver thus authorised may be intoxicated at
a time when he might be driving.
The trial judge's approach on analysis is seen to concede a mental element to the phrase "permit
or suffer" and it accepted the need for there to be some relationship between the appellant's state of
knowledge and the driver's intoxication if it was to be held that a breach of the regulation has occurred,
but it added to what the insured actually knew that which she ought to have known. In this way, the
judge has reasoned that if the appellant had not herself drunk to excess the intoxicated condition of the
defendant would have been apparent to her before he commenced to drive the car. Therefore, the
judge said, the appellant ought to have known of the intoxication and was herself in breach of regulation
13(2)(b). In this last step the judge has moved from what she would have known if the circumstances
had been different to a hypothetical state of knowledge which she did not have but with which she
should be regarded as fixed.
Counsel for the respondent did not go so far as to assert that a breach of the regulation occurs
if, say, permission is given and the driver then, without there being given any prior indication that it would
occur, becomes intoxicated during the period covered by the permission, but he did endeavour to
support what might be described as the middle course adopted by the judge. Counsel attempted to do
this by referring to decided cases including certain Canadian cases turning on rather similar provisions.
Before looking at some authorities which might be thought relevant to the question, it might be observed
by way of preliminary that the trial judge's approach here, while purporting to offer a construction of the
phrase "permit or suffer", reads a great deal into the regulation. Nothing on the face of the regulation
attributes to an insured a knowledge which he does not have. If it were otherwise, it might be said that
an insured could not safely let a permittee out of his sight for the whole period of the bailment. In Storrie v. Newman (No. 1) (1982) 139 D.L.R. (3d) 461 the judge applied what he
apparently regarded as an objective test to determine what an owner should be regarded as knowing,
doing this by including knowledge of facts which a reasonable person would have contemplated at the
time. In the earlier case of Bitz v. Northwestern Mutual Insurance Co. (1966) 58 D.L.R. (2d) 344 the
same principle was applied to impute to the owner knowledge of the fact that the driver was incapable
on the basis that the owner would have been aware of this if his own judgment had not been impaired
by drinking. In Grays Haulage v. Arnold [1966] 1 All E.R. 896 it was alleged that an employee had
been "permitted" to drive without a break in excess of a prescribed period but the court's decision was
that for there to be a "permitting" of that circumstance there had to be knowledge. While in that case
it was accepted that circumstances known to the employer could show that it had shut its eyes to the
obvious, the case does not support the respondent's argument here where it is sought to attribute to the
appellant knowledge which she is not shown to have. In a recent case involving town planning in the
South Australian Full Court it was suggested in passing that in some contexts knowledge refers to what
is known or ought to have been known so that a person who is careless or who connives in the act may
be found to have suffered or permitted: Wright and Romeyko v. The Corporation of the City of West
Torrens 8 May 1996, unreported. However the decision which is called for in the present case is one
that will be arrived at by construing the words of a particular Queensland regulation. In Grays Haulage
(supra) Lord Parker commented adversely on what he saw as a tendency to import a test of "ought to
have known" in cases where knowledge had to be established.
In the regulations here there is no context which suggests that for the purpose of deciding
whether the appellant permitted or suffered as alleged there should be imputed to her facts of which she
was not aware but of which she ought to have been aware. To do this would read words into the regulation in a manner for which there is no justification and would transform the proper meanings of the
words "permit" and "suffer". A further consequence is that it would introduce a vague test based upon
a notion of morally or socially correct behaviour for the purpose of deciding upon the extent of imputed
knowledge. It might involve calling for pronouncements in circumstances where it might be asserted not
only that persons cannot be permitted to diminish the scope of their imputed knowledge by reducing
their level of awareness through drinking intoxicating liquor but also by sleeping or even by simply being
absent from the scene where relevant observations might otherwise have been made. The "ought to
have known" test applied below and argued for on appeal by the respondent is unjustified by the words
of the regulation.
The respondent in argument also drew attention to certain provisions in the regulations
structured upon the basis of what was known to the person on whom a duty was placed and did this
to emphasise, by contrast, the fact that regulation 13(2)(b) contains no such element. The best example
of the contrast on which this argument is based can be seen by looking at regulations 13(2)(a), (b), (c),
and (d) together. Regulation 13(2)(b) has been quoted above but it will assist to set it out again in one
context with the other three regulations.
(2) An insured person shall not -
(a) Drive or be in charge of a motor vehicle in respect of which he is an insured person while he is under the influence of intoxicating liquor or a drug;
(b) Permit or suffer another who is under the influence of intoxicating liquor or a drug to drive or be in charge of a motor vehicle in respect of which he is an insured person;
(c) Drive a motor vehicle in respect of which he is an insured person which, to his knowledge, is in a damaged or unsafe condition;
(d) Permit or suffer another to drive a motor vehicle in respect of which he
is an insured person which, to his knowledge, is in a damaged or unsafe
condition.
One answer that may be given is that (2)(c) and (d) are in a wholly expected form. In imposing
an important duty upon an insured it would be totally unreasonable to base it upon an assumption that
an insured person would always be aware of a damaged or unsafe condition of his vehicle. In the case
of regulation (2)(a) when rather than permitting or suffering the activity the insured himself drives, it has
obviously been thought reasonable to impose the duty on the basis that his own condition is a matter in
respect of which he will be aware and the addition of the words "to his knowledge" is not in that case
justified. Regulation 13(2)(b) probably also follows that same plan out of conformity with (a). However
the strongest argument is that the words "permit" and "suffer" cannot be deprived of their proper
meaning and it is of their essence that there should be knowledge.
The conclusion should be reached that for an insured person to be in a position where it can be
said he has permitted or suffered "another who is under the influence of intoxicating liquor" to drive his
vehicle, he must either know that the time at which or the period for which acquiescence is given is a
time or period when the permittee is or will be under the influence or he must know facts from which
it must be concluded that he knew the permittee was or would be under the influence.
It is true that a question of fact will be involved in resolving this issue and the stronger the
possibility of intoxication of the driver at a relevant time, the more the circumstances will be open to an
assertion that an insured was in breach in allowing the activity. However, any allegation of non-
conformity with the regulation will be judged in the ultimate in the terms set out by the words of the provision itself which should be understood in the sense just stated with the requirement of actual
knowledge of facts as indicated.
This conclusion means that the decision of the judge below cannot stand and the appeal must
be allowed. Accordingly it may not be strictly necessary in disposing of the appeal to give a final answer
on the further question that is reserved, namely whether, if the appellant was in breach of regulation
13(2)(b), her default contributed "in a material degree" to the situation whereby the insurer has become
liable to pay damages to her. The basis for the trial judge's finding on this issue was insufficient because
he did not precisely determine whether it was the giving of permission or the suffering which resulted in
the judgment in the appellant's favour. A view should be given on this wider aspect.
The defendant should be regarded as a co-owner in fact although not registered as such and
more importantly should be regarded as one who, under an arrangement in place between the two
parties, had a right equal to that of the appellant to have the vehicle when he desired it retaining
possession of his own key for that purpose. There is no reason to conclude that if the appellant had not,
as is being assumed for present purposes, permitted or suffered the defendant to drive on the night of
10 January 1992, it followed that the defendant would not have driven. As between the two of them
her permission given or withheld had no obvious bearing upon his determining to drive. It is of course
true that the appellant's action in travelling in the car when it was driven by the defendant materially
contributed to her injuries and her entitlement to damages, but that is not the default in question. No
provision of the Act, regulations or policy was breached by her action in travelling in a car driven by an
intoxicated driver. Regardless of the correctness of the conclusion reached upon regulation 13(2)(b)
it should be concluded that no right of recovery by the insurer against the appellant arose under
regulation 17.
The appeal should be allowed with costs and the judgment entered below varied so that the stay
of execution against the plaintiff/appellant, the declaration No.1 in favour of the defendant by election,
the judgment for the defendant by election on the counter claim and the order for payment by the
appellant of the defendant by election’s costs on the counter claim are set aside. Judgment is to be
entered for the appellant on the counter claim and for payment by the defendant by election of the
appellant’s costs of the counter claim. In other respects the judgment entered below to stand.
IN THE COURT OF APPEAL
SUPREME COURT OF QUEENSLAND
Appeal No. 249 of 1995.
Brisbane
Before Macrossan C.J.
Pincus J.A. Fryberg J.
[Evans v. Accident Insurance Mutual Holdings Ltd]
BETWEEN:
LISA MICHELLE EVANS
(Plaintiff) Appellant
AND:
ACCIDENT INSURANCE MUTUAL HOLDINGS LIMITED
(Defendant by Election) Respondent
NIGEL HAUSLER
(Defendant)
REASONS FOR JUDGMENT - PINCUS J.A.
Judgment delivered 8 August 1997
This is an appeal by a plaintiff who sued for damages for personal injuries sustained in a motor vehicle accident. Judgment was given for the plaintiff against one Hausler, who was at the relevant time the driver of a vehicle in which the plaintiff rode as a passenger, and against the respondent insurance company which had elected to be joined as a defendant. The trial judge also ordered that upon payment to the plaintiff, by the defendant by election, of the amount due by it under the judgment and costs, the amount so paid should be a debt due and owing by the plaintiff to the defendant by election; his Honour made other orders which it is not necessary to explain.
In this appeal there is no challenge to the judgment insofar as it adjudged that the plaintiff recover against the defendant and defendant by election; the only question is whether the judge was right to make the order last mentioned - i.e. that upon payment to the plaintiff by the defendant by election of the amount of the judgment that sum should become a debt due and owing by the plaintiff to the defendant by election. Regulation 17 of the Motor Vehicles’ Insurance Regulations 1968 was relied on by the primary judge as justifying that order; it reads as follows:
"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 whereof 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.If, in such a case, the insurer pays any sum by way of settlement of any proceeding or to satisfy any judgment or order made or entered against him then he may, by way of action in any court of competent jurisdiction, recover that sum, as a debt due and owing but unpaid, from the insured person whose default constitutes the circumstances by reason whereof the insurer could, but for this regulation, have avoided his liability under the contract of insurance but only if the default is such that the court in which the proceeding for such recovery is taken is satisfied that it contributed in a material degree to the circumstances in which the insurer agreed to pay or otherwise became liable to pay that sum."
The judge found that there was such a default, on the part of the plaintiff, as is mentioned in the second paragraph of regulation 17, in that the plaintiff had breached regulation 13(2)(b), set out and discussed below; the breach consisted in permitting or suffering the driver of the vehicle, the defendant Hausler, to be in charge of it while under the influence of intoxicating liquor. The judge proceeded on the basis that the plaintiff was at the relevant time the owner of the vehicle and so entitled to permit Hausler to drive.
The argument turned on the question whether the judge was right in his application of regulation 13(2)(b). Before dealing with that question, I propose to say something about the form of the judgment. It is on the face of it odd for a court to order that A recover a certain sum against B, but to order that on B paying that sum A shall be immediately obliged to repay it. The drafter of regulation 17 appears to have had in mind the case in which the insured person mentioned in that regulation is not the same as the injured person making a claim; in that situation providing for the giving of a judgment for the injured plaintiff against the insurance company, which has elected to be joined under regulation 10 with (by the same judgment or later) an order that the insured person reimburse the company would seem a not unnatural way to carry out the apparent policy of the regulation. The difficulty about applying the language to a case of the present kind, in which it is the insured person who is the injured plaintiff, is that it would appear that, if the regulation applies, the insurer has a defence by way of set-off; see Hanak v. Green [1958] 2 Q.B. 9 at 16; S R Derham "Set Off" 2nd Ed., at p. 11; District Court Rules 1968, r. 96. If the "debt due and owing" to the insurer mentioned in Reg. 17 is properly set-off against the amount to which the plaintiff would otherwise have been entitled, then there is no sum which the insurer has become liable to pay, within the meaning of the last few words of regulation 17. It has occurred to me that on this basis the regulation may be thought inapplicable to a case of this sort, because if it were to apply the result would be that there would be no liability in the insurer. But my view is that, although perhaps awkwardly, the regulation sufficiently evinces an intention to catch the case in which the injured plaintiff is also the insured person.
I turn now to regulation 13(2); that provision reads as follows:
"An insured person shall not -(a) Drive or be in charge of a motor vehicle in respect of which he is an insured person while he is under the influence of intoxicating liquor or a drug;
(b) Permit or suffer another who is under the influence of intoxicating liquor or a drug to drive or be in charge of a motor vehicle in respect of which he is an insured person;
(c) Drive a motor vehicle in respect of which he is an insured person which, to his knowledge, is in a damaged or unsafe condition;
(d) Permit or suffer another to drive a motor vehicle in respect of which he is an insured person which, to his knowledge, is in a damaged or unsafe condition." (emphasis added)
Here the plaintiff and the defendant driver Hausler drank for some hours at the same hotel before the two travelled away together on the journey which led to the plaintiff’s injury. The primary judge found that the plaintiff by her own consumption of liquor deprived herself of the opportunity to make a proper assessment of the defendant’s sobriety and capacity to drive and that the defendant would have at least exhibited signs of intoxication which ought to have been obvious to one such as the plaintiff. His Honour also found that the plaintiff permitted or suffered the defendant Hausler to drive while under the influence of intoxicating liquor and that this was a breach of regulation 13(2)(b), bringing regulation 17 into operation against the plaintiff.
The first problem arising under regulation 13(2)(b) is whether it applies to a case of the present kind, where the insured person said to be in breach has not been found to have known at the relevant time that the driver was under the influence of intoxicating liquor. The judge was of the view that the plaintiff should have known this and would have done so but for her own condition. It was argued for the plaintiff, in effect, that the proper reading of regulation 13(2)(b) is to read it as if after the words "who is" there appeared "to the knowledge of the insured person". One policy consideration in favour of such an emendation is that regulation 17 might be thought to apply in a particularly draconian way, in conjunction with regulation 13(2)(b), where the vehicle owner hands the keys of a vehicle over to a sober person, permitting that person to drive, but the driver later becomes intoxicated and causes injury; more generally, an insured person who is innocent of any knowledge that the driver is or may become intoxicated should not (it may be argued) be caught by regulation 13(2)(b).
One answer to this contention is that the better view of regulation 13(2)(b) is that it applies only where the permission to drive is given at a time when the person permitted "is under the influence of intoxicating liquor" - i.e. that one does not read the word "is" as meaning "is or later becomes". A second answer, pressed by Mr Dickson on behalf of the respondent insurer, is that paras. (c) and (d) of regulation 13(2) expressly require knowledge of the condition there referred to; the omission of any such requirement in para. (b) is said to be significant.
If one reads para. (2)(b) as in my opinion one should, that is, as applying only where the permitting or suffering referred to takes place at a time when the driver is under the influence, there will still be cases in which the literal operation of the paragraph may seem to be harsh; for example, the request for permission to use the vehicle may be made on the phone, or in some other circumstances such that the owner has no good opportunity of assessing the prospective driver’s sobriety. But it cannot be said that reading paragraph (b) as not requiring the knowledge expressly required by the next two paragraphs produces such unreasonable results that they cannot have been intended. To take the instant case, it is not fanciful to treat as within the regulation-maker’s intention that para. (b) should apply where the insured person’s own intoxication was the reason why she did not know of the driver’s intoxication.
It appears to me that, in some contexts, a statutory reference to permitting or suffering another to do an act while in a certain condition would properly be read as contemplating that the person permitting or suffering the act is aware of the condition. But the word "permit" does not necessarily have this implication. The decision of the House of Lords in McLeod v. Buchanan [1940] 2 All E.R. 179, which has been referred to with approval in the High Court, is an example of the reading of the word "permit" in a similar context in a way which is favourable to the respondent’s argument. What was in issue there was the meaning of a provision imposing a duty not to "use or to cause or permit any other person to use" a vehicle not insured in accordance with the provisions of the Road Traffic Act 1930. The point was that there was insurance but it did not cover use for private purposes. Buchanan allowed his brother to use a vehicle without restriction as to the purpose of use; Buchanan did not actually know (although he had reason to think) that the vehicle the subject of the permission was being used for private purposes, but this was not thought to save him from a finding of breach of the statute. The case was referred to with approval by the High Court in Proudman v. Dayman (1941) 67 C.L.R. 536, where the question was whether there had been an offence under a statutory provision which forbade permitting an unlicensed person to drive a motor vehicle on a road. One question in the case was whether there was an honest belief on reasonable grounds that the driver was licensed. Rich ACJ referred to a statement in McLeod v. Buchanan that:
"The section is imperative, and precisely specifies the act or default constituting
the offence, which is sufficiently established by proof of the matters specified.
Intention to commit a breach of the statute need not be shown. The breach in
fact is enough." (539)
Dixon J, on the other hand, used expressions which perhaps tend to favour the appellant’s argument here. His Honour referred to a contention that it had to be shown, in order to prove a breach "that the defendant knew it or at all events was indifferent to the question whether he was licensed or not". Dixon J said:
"This contention was based upon the ground that the very idea of permission connotes knowledge of or advertence to the act or thing permitted. In other words you cannot permit without consenting and consent involves a consciousness or understanding of the act or conduct to which it is directed. Be it so. Nevertheless the contention fails in its application to the actual terms of the provision." (541)
Dixon J then referred to considerations not here relevant. McTiernan J said:
"It need not be doubted that the word ‘permit’ is used in the ordinary meaning, but I cannot infer from the words of [the relevant section] that the offence, which is created, is to permit a person, whom the defendant knows is not the holder of a licence or has no reasonable ground for believing to be the holder of a licence, to drive a car." (542)
Proudman v. Dayman was usefully discussed in Peterson v. Curran [1950] Tas.S.R. 9, but I think it unnecessary to deal with the Tasmanian case. Whatever may be thought to be the proper outcome if the insured person has no possible means of knowing of the driver’s intoxicated state, it appears to me that, where the driver is manifestly intoxicated at the time the permission is given, that is properly described as permitting one who is under the influence of intoxicating liquor to drive, even if the person giving the permission for some reason fails to notice the prospective driver’s condition.
A second question raised, as to the effect of para. (2)(b) of regulation 13, is whether the judge was right in thinking that the plaintiff was in a position, as to title, such as to be able to permit or suffer the driving. His Honour took the view that on the evidence the insured person was the sole owner and therefore entitled to permit the driving by Hausler. It was argued, I shall assume correctly, that his Honour’s conclusion in this respect was erroneous and that both the plaintiff and Hausler were owners; there was co-ownership. From that it followed, as I understood the argument, that there was no occasion for the plaintiff to give permission to drive as Hausler, being a co-owner, had just as much right to drive as the plaintiff did.
In my opinion this contention is fallacious. Not only was the defendant therefore not lawfully entitled to drive because of his state of intoxication; he held no licence. It was suggested by Hart J in Kirth v. Tyrrell [1971] Qd.R. 453 at 459 that one co-owner of a vehicle has the right to require another co-owner "not to risk damage to the commonly owned chattel by driving dangerously or negligently". I respectfully agree with that suggestion; here, being intoxicated and unlicensed, the defendant Hausler had at the relevant time no present right, either as against the plaintiff or anyone else, to drive the vehicle.
There was no evidence that the plaintiff expressly agreed to the defendant driving;
however, she got into the passenger seat of the car and allowed herself to be driven off by the defendant. The proper inference is that by so doing she permitted or suffered him to drive. She was, for the reason I have mentioned, entitled to refuse that permission, although Hausler was a co-owner.
In summary, it is my opinion that the plaintiff permitted or suffered Hausler to drive at a time when he was plainly intoxicated; that the judge was right in so holding and in holding that this "contributed to a material degree to the circumstances in which" the insured became liable to pay the sum awarded to the plaintiff.
I would therefore dismiss the plaintiff’s appeal with costs.
IN THE COURT OF APPEAL
SUPREME COURT OF QUEENSLAND
Appeal No. 249 of 1995
Brisbane
| Before | Macrossan CJ. Pincus JA. Fryberg J. |
[Evans v. Accident Insurance Mutual Holdings Ltd]
BETWEEN:
LISA MICHELLE EVANS
(Plaintiff) Appellant
AND:
ACCIDENT INSURANCE MUTUAL HOLDINGS LIMITED
(Defendant by Election) Respondent
NIGEL HAUSLER
(Defendant)
REASONS FOR JUDGMENT - FRYBERG J.
Judgment delivered 8 August 1997
In her District Court plaint, the appellant alleged that she owned the vehicle being driven by the
defendant in which she was injured. It does not appear from the record whether the respondent filed
a notice in writing electing to be joined in the action pursuant to reg. 10(2) of the Motor Vehicles
Insurance Regulations 1968, but it did file an entry of appearance and defence in which it described
itself as the defendant by election. In that pleading it did not admit the plaintiff's ownership of the vehicle. It later amended its pleading by adding a counterclaim in which it asserted that at all material
times the appellant was the owner of the vehicle within the meaning of that term in the Motor Vehicles
Insurance Act 1936, a fact admitted by the appellant in her reply. The counterclaim raised the question
whether the respondent was entitled to recover the amount of any judgment against it from the appellant
pursuant to the Motor Vehicles Insurance Regulations. This is the question in this appeal. No point has
been taken about whether the counterclaim was premature or bad for circuity. The respondent also
claimed the same relief from the defendant, presumably by third party proceedings. The respondent did
not represent the defendant or control his defence.
At the trial, the question of the ownership of the car was raised in the respondent's cross-
examination of the appellant:
"At the time of the accident do you know who was the owner of your car - sorry, the owner of the Falcon in which you were situated and which was involved in the accident, do you know who was the owner at that time?-- yes.
Who was that?-- Nigel.
. . .
Is it your evidence to this Court on oath that at the time of the accident the car belonged
to Mr Hausler and not to you?--
Yes.I am suggesting that it didn't belong to him, it belonged to you?-- How do you suggest that?
I will ask the questions. I am suggesting that it belonged to you?-- It didn't belong to me.
Do you recall in this case having to answer a number of questions called interrogatories?-
- Vaguely."
The appellant was shown an answer to an interrogatory and the cross-examiner tendered it. It
became Exhibit 18 and was in the following terms:
"13. In answer to interrogatory no. 13, I say that at the time and place of the incident referred to in paragraph 3 of the Plaint:-
(a) The Defendant and I owned the vehicle jointly. I paid $2,000.00 for same. He paid $3,000.00 for same. It was registered in my name. We needed a reliable car because we lived on a farm. The agreement was that at the end of the joint ownership, whoever wanted it would buy out the other person's ownership."
Thereafter the cross-examination continued as follows:
"MR DICKSON: You would agree now, having seen that answer to interrogatory, that at the time of the accident the car was not solely owned by Nigel?-- But I didn't own it.
Are you saying that ----- ?-- He owned it more than I did.
You had an interest in it?-- Yeah.
You were a joint owner of the vehicle at least?-- Yep."
In re-examination, counsel for the appellant tendered without objection a statement made by her
which predated the plaint. It was admitted to rebut a suggestion of recent fabrication in relation to other
issues, and on condition that counsel for the respondent have leave to cross-examine further. It was
apparently the only statement made by the appellant which dealt with the question of ownership. In it,
the appellant stated that the car was owned by her and the defendant. No explanation for the
discrepancy between the statement and the pleading (which was not settled by counsel) was advanced,
but in the further cross-examination which followed, the appellant was not questioned on that point.
Other evidence relating to the question of ownership of the vehicle is referred to in the judgment
of the Chief Justice.
The learned trial judge made the following finding:
"I find that, at the material time, the plaintiff was both the owner of that vehicle in law and also the registered owner of it within the meaning of the term "owner" for the purposes of the Motor Vehicles Insurance Act 1936. The fact that the plaintiff and the defendant each contributed money towards the purchase price of the vehicle and agreed between themselves as to a future right "to buy out the other person's ownership" (to quote the plaintiff) cannot affect the circumstance that she was the agreed purchaser of the vehicle."
On the appeal, the appellant argued that the car was jointly owned. That fact was advanced as
one of the considerations bearing upon the question whether the appellant permitted or suffered the
defendant drive the vehicle. One of the grounds of appeal was that the learned trial judge erred in law
in finding that the appellant "permitted or suffered the defendant who was then under the influence of
intoxicating liquor to drive the motor vehicle". There was however no ground of appeal challenging the
above finding or asserting error in the failure of the learned trial judge to find that the car was owned by
both the plaintiff and the defendant On this basis the respondent took objection to the appellant's
argument. In response, the appellant sought leave to amend the notice of appeal to add as a ground that
insofar as His Honour found that the plaintiff was the sole owner of the motor vehicle, he erred in fact
and/or in law, and sought leave to amend the plaint by limiting the assertion of ownership to ownership
within the meaning of that term in the Motor Vehicles Insurance Act 1936.
The respondent opposed the amendments both at the hearing of the appeal and subsequently
in further written submissions. The basis of the opposition was that the point was not taken by the
appellant at the trial. To support that assertion, counsel for the respondent pointed to the failure to amend the plaint at trial and to the failure of counsel for the appellant to address the trial judge on the
question.
In my judgment, these submissions have little weight. It is true that the appellant evidently failed
to appreciate the full significance of the question at trial; but the issue was squarely raised by the
respondent and was canvassed by it in evidence. The respondent has not suggested that it would suffer
any undue prejudice as a result of an amendment. In these circumstances, the appellant should in my
judgment have the leave which she seeks.
It might be thought surprising that a party would offer continued resistance to amendment in such
circumstances. There was, however, a reason for the respondent's attitude. The question of ownership
of the vehicle was central to the respondent's submission on the question of control. Counsel assured
us that it was an essential part of his submission to have the appellant as the owner to the exclusion of
the defendant, and that joint ownership was fatal to his argument. He was invited to reconsider whether
that was so, and to consider whether to include in his supplementary written submission an assertion that
one joint owner could be in a situation where he or she permitted or suffered another joint owner to
drive. The careful and helpful further submission filed on behalf of the respondent dealt with the position
should the court allow the amendments. No such assertion was made.
I am content to resolve this appeal on the basis adopted by counsel for the respondent. On that
basis, the only question which we have to decide is whether the learned trial judge ought to have found
that the appellant and the defendant were co-owners of the car. For the reasons given by the Chief
Justice, we should conclude that they were.
That is enough to dispose of the appeal. However in case the foregoing approach be too
narrow, I would also express my general agreement with the reasons for judgment of the Chief Justice.
My only reservation is the question of the construction of reg. 17. In my view, that issue should be left
for another day.
I would add that even were I of the view that reg. 13(2)(b) should be construed in accordance
with the respondent's submission, I would not dismiss this appeal. Although the respondent pleaded
in its counterclaim that the appellant "knew or ought to have known" that the defendant's capacity was
impaired by intoxicating liquor[1], it informed the appellant that it would not rely upon the words "or ought
to have known" by a letter sent well before the trial date[2]. The case was conducted on this basis. In
[2]
the absence of any application by the respondent to enlarge the ambit of its defence, it would in my
judgment be unjust to allow it to succeed without proof of actual knowledge of intoxication on the part
of the appellant. There was no such proof.
I would allow the applications to amend the notice of appeal and the plaint. I would allow the
appeal with costs. I would order that the first declaration made by the District Court be set aside; that
the order for costs made against the plaintiff in favour of the defendant by election be set aside and in
lieu thereof that the defendant by election pay the plaintiff's costs of and incidental to the counterclaim
to be taxed; and that the stay of execution of the plaintiff's judgment be lifted.
See paragraphs 9 and 5(a) of the defence and counterclaim.
Although this fact does not appear in the record, we were so informed by counsel for the appellant, without contradiction by counsel for the respondent either orally or in the further written submission.
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