FAI General Insurance Co Ltd v Spannagle
[2000] QSC 2
•14 January 2000
SUPREME COURT OF QUEENSLAND
CITATION: FAI General Insurance Co Ltd v Spannagle & Anor [2000]
QSC 002PARTIES: FAI GENERAL INSURANCE COMPANY LIMITED
ACN 000 327 855
(Applicant/Second Defendant)
v
DALE GEOFFREY SPANNAGLE
(First Respondent/First Defendant)
and
NOMINAL DEFENDANT
(Second Respondent/Third Defendant)CARL JOSEPH KAZMAIER
(Plaintiff)FILE NO: 8953 of 1999 DIVISION: Trial Division DELIVERED ON: 14 January 2000 DELIVERED AT: Brisbane HEARING DATE: 9 December 1999 JUDGE: Chesterman J ORDER: It is declared that on 2 April 1997 the Toyota utility registered number 775-BQT owned by the first defendant was insured under and pursuant to a policy of insurance issued by the second defendant in accordance with the provisions of the Motor Accident Insurance Act 1994. The second defendant to pay the costs of the first defendant and the third defendant of and incidental to the determination of the separate question, to be assessed on the standard basis. CATCHWORDS: INSURANCE – THIRD-PARTY LIABILITY INSURANCE – MOTOR VEHICLES – COMPULSORY INSURANCE LEGISLATION – QUEENSLAND – whether Transport Administration may renew registration of motor vehicle retrospectively and with effect from date of expiration – whether Transport Administration authorised to renew compulsory third party insurance retrospectively – whether FAI, in renewing lapsed policy, bound by Transport Administration’s intention that insurance commence retrospectively. Motor Accident Insurance Act 1994
Transport Infrastructure (Roads) Regulations 1991Ahmat v Anderson [1971] Qd R 100
Australian Associated Motor Insurers Ltd v Goss [1983] 1
VR 725
Handler v Mutual Reserve Fund Life Association (1904) 90
LT 192
Kirkpatrick v South Australian Insurance Company (1886) 11
App Cas 177
Maguire v AMP Fire and General Insurance Company (NZ)
Limited (1982) 2 ANZ Insurance Cases 60-470
Richards v Harrison & The Club Motor Insurance Agency
Pty Ltd [1948] St R Qd 172COUNSEL: Mr J J Clifford QC for the applicant/second defendant
Mr R J Douglas SC for the first respondent/first defendant
Mr S C Williams QC for the second respondent/third
defendantSOLICITORS: Clayton Utz for the applicant/second defendant
S R Wallace & Wallace for the first respondent/first
defendant
Walsh Halligan Douglas for the second respondent/third
defendant
CHESTERMAN J: On 2 April 1997 the plaintiff, who was riding a motorcycle, was injured when it collided with a Toyota utility ("the Toyota") owned and driven by the first defendant ("the owner"). The Toyota had been registered and insured as required by the Motor Accident Insurance Act 1994 ("the Act") for the period 20 February 1996 until 20 February 1997. The amount due to effect registration and insurance for that period was of $437.70. The second defendant ("FAI") was the compulsory third party insurer of the Toyota for the year which expired on 20 February 1997.
The amount required to insure and register the Toyota for the period 20 February 1997 to 20 February 1998 was $516.60, an increase on the previous year's fees and premium.
On 6 March 1997, after the expiration of the period of registration and insurance but before the effluxion of the days of grace allowed by s 23(2)(b) of the Act, the owner posted a cheque drawn in the sum of $437.70 to the Department of Transport intending the proceeds to effect a renewal of the Toyota's registration and insurance. The owner apparently mistook the amount required for the renewal.
The Chief Executive of the Department of Transport ("Transport Administration" as he is called in the Act) might have renewed the registration and insurance notwithstanding that the amount proffered was less than the amount due, and pursuant to s 23(5) of the Act, sued for the deficiency in premium as a debt. Instead Transport Administration returned the cheque to the owner's bank on 20 March 1997, eight days after it had been received. On 9 April 1997, after the plaintiff had been injured, the owner's bank advised him that his cheque had been returned. The owner instructed his bank to resubmit the cheque to the Department of Transport. He supplemented it with another cheque for the balance of $78.90 on 12 April 1997. The two cheques were received by Transport Administration, and subsequently banked on 23 April 1997.
On 13 May 1997 Transport Administration issued a receipt for payment of the amount constituted by the two cheques, and a certificate of registration for the Toyota which, by its terms, evidences that the vehicle was registered from 20 February 1997 to 20 February 1998 and that FAI was its compulsory third party insurer.
By letter dated 26 May 1997, pursuant to s 34 of the Act, the plaintiff's solicitors notified FAI of the accident in which he had been injured. In following correspondence FAI initially confirmed but later denied that it was the insurer of the Toyota when the plaintiff was injured. The Nominal Defendant was advised of the claim on the basis that at the relevant time the Toyota was uninsured.
On 1 May 1997 Transport Administration remitted to FAI a cheque drawn in the amount of $1,938,721.21. Included in that amount was the sum of $235.50, the premium due in respect of the Toyota for the period 20 February 1997 to 20 February 1998. The cheque, which was banked by FAI on 2 May 1997, represented premiums collected on its behalf by Transport Administration on the issue or renewal of CTP insurance policies. The payment was made pursuant to s 21(4) of the Act and reg 8. FAI did not refund any part of the $235.50 to the owner.
On 25 January 1999 the plaintiff issued a writ out of the Supreme Court in Townsville claiming damages for personal injuries caused by the owner's negligence. He joined FAI and the Nominal Defendant as insurers alleging that one or both of them was or were the insurer of the Toyota on 2 April 1997. On 28 September 1999 the registrar in Townsville ordered that the question of whether FAI or the Nominal Defendant was the insurer of the Toyota should be determined separately from the other issues in the action.
The answer to the question depends upon what consequence, if any, the payment of the premium after 20 March 1997 had upon the policy of insurance that endured until 20 February 1997. The Act and regulations made under it, as well as the Transport Infrastructure (Roads) Regulations 1991 have made, in respect of compulsory third party policies of liability insurance, considerable changes to the general principles of insurance law. It is necessary to have regard to the legislative provisions to obtain a proper understanding of the cover offered by such a policy ("CTP policy") and of the respective rights and obligations of insured and insurer. However, the general law of insurance affords a convenient starting point for the inquiry. Having identified the appropriate principle one turns to consider whether, and if so, how it is affected by the legislation.
A policy of insurance lapses unless it is renewed before the expiration of the period of insurance and of any allowed days of grace. The topic is helpfully discussed in General Principles of Insurance Law, 6th edition by Ivamy, page 275-6. It appears from one of the cases cited, Handler v Mutual Reserve Fund Life Association (1904) 90 LT 192 that a policy which has lapsed may be reinstated or revived by agreement between insured and insurer and from another, Kirkpatrick v South Australian Insurance Company (1886) 11 App Cas 177, that such an agreement will be inferred from payment of the overdue premium by the insured and its acceptance by the insurer. The reinstatement of a lapsed policy does not renew the policy but creates a new contract of insurance. Handler shows that the new contract may include additional or different terms. In the case of a CTP policy the terms are fixed by statute and there can be no question of the insurer agreeing to reinstate the policy on condition that a fresh term is included.
Applying the principle discernible from Kirkpatrick, when FAI received and kept the cheque for an aggregate amount, included in which was the owner's premium, it must be taken to have agreed to revive the policy. FAI would, no doubt, be allowed some time to ascertain that part of the total was in respect of the Toyota, and some further time to refund the premium if it did not wish to keep the business (ignoring for the moment any statutory provisions), but with knowledge that the owner's premium had been paid late FAI chose to retain it.
The outstanding question, which is critical, is whether the policy when revived, took effect from the expiration of the previous period of insurance or only from 23 April, 1 May or 13 May 1997, dates all subsequent to the plaintiff's injury. When a policy is revived it is a question of intention whether it is to take effect from the date on which the parties agreed it should be reinstated, or from the expiration of the policy which lapsed. If the latter is intended claims arising between lapse and reinstatement will be covered. This is the view of Ivamy at p 276 and of Professor Sutton, Insurance Law in Australia, 2nd edition p 29. The opinion appears to be supported by the two cases cited by Sutton, Maguire v AMP Fire and General Insurance Company (NZ) Limited (1982) 2 ANZ Insurance Cases 60-470 and Australian Associated Motor Insurers Ltd v Goss [1983] 1 VR 725. Although the point is not expressly decided the discussion in both cases proceeds on the implicit assumption that whether a lapsed policy when reinstated operates prospectively from the date of reinstatement or retrospectively from the expiration of the previous policy is determined by what the parties intended.
[13] Intention is a question of fact to be found from an examination of the communications concerning the reinstatement of the policy occurring between insurer and insured. In the context of the statutory scheme of compulsory motor vehicle insurance there is not normally (and there was not in this case) any communication directly between the owner and insurer. Such communication as there was occurred between FAI and Transport Administration. There is no evidence of any contract of agency between FAI and Transport Administration that might affect in what respects and to what extent Transport Administration might bind FAI to a CTP policy. A striking feature of the compulsory insurance regime established by the Act is the extent to which Transport Administration may effect binding policies of CTP insurance on behalf of licensed insurers and the fact that insurance and registration are made necessarily interdependent. Registration of a motor vehicle may not occur unless it is insured and the act of registration will bring about the existence of a CTP policy.
Section 21 of the Act provides:
" (1) On lodging an application for the registration of a motor vehicle … the applicant must select a licensed insurer … for the vehicle by exercising 1 of the following options –
(a) the applicant may lodge with the application a notice of nomination … nominating a particular licensed insurer … and pay … the appropriate … premium; (b) the applicant may lodge with the application a certificate … certifying that the appropriate … premium has been paid … to the licensed insurer on whose behalf the certificate is issued.
(2) On lodging an application for renewal of the registration of a motor vehicle … the applicant must exercise 1 of the following options –
(a) if a licensed insurer insured the vehicle … for the previous period of registration … the applicant may re- select the insurer for the period of renewed registration by paying … to transport administration the appropriate … premium … (b) the applicant may select a different licensed insurer … by –
(i)
lodging with the application payment … of the … premium together with a notice of nomination … nominating a different licensed insurer … or
(ii)
lodging … a certificate … certifying that the appropriate insurance premium has been paid … to the licensed insurer on whose behalf the certificate is issued.
…
(4) Transport Administration must pay to each licensed insurer …
the premiums collected … for CTP insurance policies for which the
licensed insurer has been selected … ".
Section 22 of the Act provides:
"A CTP insurance policy … is binding on the licensed insurer by force of this Act, and a licensed insurer cannot repudiate or decline to issue or renew, a CTP insurance policy."
Section 23 provides:
"When transport administration registers or renews the registration
of a motor vehicle –
(a)
a policy of insurance in terms of the schedule comes into force for the motor vehicle when the registration or renewal of registration takes effect; and
(b)
the licensed insurer selected under this part … is the insurer … ".
| [15] | Section 23(2) provides that the policy is to remain in force for the period of registration and for a further period of 30 days (days of grace). |
The effect of s 22 and s 23 is to make Transport Administration the agent of a licensed insurer for the purpose of effecting or renewing CTP policies. Moreover the insurer cannot revoke or limit the authority of the agent to write the business. The selection of an insurer by a vehicle owner and the payment of the premium effects insurance upon the vehicle being entered in the register.
The evident purpose of these provisions is to ensure that whenever a vehicle is registered it is insured. Transport Administration is authorised to bind the insurer selected by the vehicle owner to a policy of insurance for the period of registration.
Transport Administration renewed the registration of the Toyota and purported to do so retrospectively so that renewal took effect from 20 February 1997, the expiration of the previous period of registration. Registration cannot lawfully occur without insurance. In conformity with the legislative imperative, Transport Administration, FAI's agent for the purpose, must have intended that the revived insurance policy also inured in respect of the antecedent period. The legislation makes the agent's intention that of the insurer, its principal.
These considerations may be sufficient to dispose of the separate issue. However, a further point was argued. It was that Transport Administration could not lawfully renew the registration retrospectively after the effluxion of the days of grace allowed by s 23(2). All it could do was to effect a fresh registration which would operate only from the date on which a certificate of registration was issued. The argument is that Transport Administration's intention must have been to conform to the legislative scheme which makes registration and insurance co-extensive and co- terminus. An insurance policy which is reinstated may, as I have mentioned, if the parties so intend, operate retrospectively. If Transport Administration is authorised by the Act or associated legislation to renew registration retrospectively then, upon doing so, a reinstated CTP policy will have been intended to operate retrospectively. If registration cannot be renewed retrospectively it is unlikely that there will be an intention to reinstate insurance retrospectively. The question is whether registration can be renewed retrospectively.
Regulation 19 of the Transport Infrastructure (Roads) Regulation 1991 provides:
" (1) The registration or renewal of registration of a vehicle is
effective on the issue of the chief executive's receipt for payment.(2) The registration of a vehicle is effective up to and including the expiry date specified by the chief executive on the certificate of registration.
(3) Any payment for the renewal of registration of a vehicle relates to the period commencing on the expiry of the preceding period of registration."
Regulation 28 provides that, subject to reg 31, the owner of a registered vehicle must apply to renew its registration before the expiration of the period of registration. The regulation goes on to specify what material must be submitted with an application to renew and sub-regulation 3 provides:
"On receipt of the application, the chief executive must update the
records in the register … and issue to the owner –
(a) an updated certificate of registration … ".
Regulation 31 allows an owner to apply for cancellation of registration where the vehicle is no longer used or has been stolen or destroyed. A sub-regulation allows Transport Administration:
"… by written notice to an owner cancel a vehicle's registration if application for renewal is … not made in accordance with [regulation] 28"
| [21] | An amendment to regulation 28 made in 1997 but after the events which give rise to this action added sub-reg 4: |
"Despite subsection (1), the chief executive may accept an
application for renewal of registration at any time."
Counsel for the first defendant submitted that the amendment merely made explicit what was the legislative intention evinced by the earlier form of the regulation. I think this is right. The Act and the regulations are in the modern style. No attempt has been made to articulate with any precision what the legislation intends. Different words are used to give expression to the one concept and any continuity in terminology is avoided as is any consistency in the treatment of the concept. Instead one finds disjointed platitudes set forth with almost banal generality. In this wilderness of words two factors appear to indicate that it is within the power of Transport Administration to renew registration retrospectively after the effluxion of a period of registration.
The first indication appears from the words of reg 19. The terms of sub-reg 1 are equivocal with respect to the point in present contention. Renewal of registration "is effective on the issue of the … receipt … ". This means that there is no registration until Transport Administration issues a receipt, but it does not answer directly the question whether, when the receipt is issued, registration takes effect from the end of a previous period of registration or only prospectively. Sub- regulation 2 is equally unhelpful. It provides that registration continues until the date which appears in the certificate of registration. It does not say when the period begins. The answer appears in sub-reg 3. A payment to effect the renewal of registration "relates to the period commencing on the expiry of the preceding period of registration." If payment relates to that period it must be for that period. The only point of making the payment is to obtain lawful authority to use a motor vehicle on a public road (reg 12 forbids the use of an unregistered vehicle) and the benefit of a CTP policy (s 20 of the Act forbids driving an uninsured vehicle on a road). Registration and insurance are co-terminus and co-extensive, as I have said. Payment of the amount prescribed as the price for periodic registration achieves for the vehicle owner the right to drive the vehicle on roads for a fixed period. Sub- regulation 2 determines the end date of that period. Sub-regulation 3 appoints the commencing date. Sub-regulation 1 provides that registration and its attendant rights to use the vehicle depends upon the issue of a receipt for payment. It would have been relatively straight forward to express the notion simply and clearly but any requirement of intellectual discipline is avoided by the modern parliamentary draftsmen for whom freedom of expression is to be prized above comprehension.
The second indication is found in reg 31. It is evident that non-payment of the registration fee and insurance premium by the expiry date (and days of grace) does not result in the complete cessation of registration. Transport Administration is empowered to cancel registration if an application for renewal is not made before that time, but unless and until a determination to cancel registration is made it continues to exist, at least for some purposes. If registration ceased automatically reg 31(2) would be unnecessary. The regulations are unhelpful in understanding the status of registration which has not been renewed before the expiry date but which has not been cancelled. It seems likely that one of the purposes for which registration continues is to allow it to become fully effective on payment of outstanding amounts. If this were not so, and registration became irredeemably defective unless renewed before the expiry date, one would not expect to find a provision such as reg 31(2) in which there is a termination of registration only if deliberate action is taken, and one would expect to find in regulations such as 19 and 28 some recognition of the proposition that after expiration registration cannot be renewed but can only be commenced afresh.
I therefore conclude that Transport Administration may renew registration of a motor vehicle after the expiration of the period for which it was registered and with effect from the date of expiration. There is no doubt that in the present case Transport Administration exercised that power on 13 May 1997 and renewed the registration of the Toyota for a year as and from 20 February 1997. He could not lawfully do so unless, for the same period, a policy of CTP insurance was effected. Given Transport Administration's authority to make such contracts binding on licensed insurers it must follow that when FAI agreed to revive the owner's lapsed policy it became bound by its agent's intention that the cover should commence retrospectively from 20 February 1997.
A similar result occurred in two earlier cases, Richards v Harrison & The Club Motor Insurance Agency Pty Ltd [1948] St R Qd 172 and Ahmat v Anderson [1971] Qd R 100. Both were decided under legislation repealed by the Act the terms of which are markedly different. There are some remarks in Richards which may appear helpful but because it was decided in the context of a very different legislative framework I have not relied upon either case in arriving at my decision.
I declare that on 2 April 1997 the Toyota utility registered number 775-BQT owned by the first defendant was insured under and pursuant to a policy of insurance issued by the second defendant in accordance with the provisions of the Motor Accident Insurance Act 1994.
The second defendant should pay the costs of the first defendant and the third defendant of and incidental to the determination of the separate question, to be assessed on the standard basis.
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