Forbes v Australian Associated Motor Insurers Limited

[1990] TASSC 60

Serial No 58/1990
List "A"

COURT:  SUPREME COURT OF TASMANIA

CITATION:              Forbes v Australian Associated Motor Insurers Limited [1990] TASSC 60; A58/1990

PARTIES:  FORBES
  v
  AUSTRALIAN ASSOCIATED MOTOR INSURERS LIMITED
  PRICE

FILE NO/S:  34/1989
DELIVERED ON:              5 October 1990
JUDGMENT OF:                 Cox J

Judgment Number:  A58/1990
Number of paragraphs:  23

Serial No 58/1990
List "A"
File No 34/1989

FORBES v AUSTRALIAN ASSOCIATED MOTOR
INSURERS LIMITED and PRICE

REASONS FOR JUDGMENT  COX J

5 October 1990

1. This litigation arises out of a collision between a vehicle owned by the plaintiff but driven by her husband and a vehicle driven by the second–named defendant. The plaintiff seeks an award against that defendant for damage caused to her vehicle. It has been agreed that the quantum of the damages, if any are ordered, should be left for later determination. The first–named defendant is the plaintiff's comprehensive insurer. As against it, the plaintiff is seeking a declaration that she is entitled to be indemnified under the policy for any injury sustained by her as the result of the collision. The first–named defendant resists that claim, relying upon an exclusion clause in the contract of insurance which is based on the allegation that her driver was driving under the influence of intoxicating liquor at the material time.

1. The collision occurred at about 10.15pm on Acton Road a few yards from its junction with Seven Mile Beach Road. The plaintiff's husband had driven from the Shoreline Hotel at Howrah, through Rokeby and was travelling along Acton Road in a general northerly direction. The road extends along a general down hill gradient for a little over 200 metres before that junction. It is a straight bitumen road, unlit save for a light opposite the mouth of the junction. At this point, Acton Road describes a sharp bend to the left and continues towards the Tasman Highway. The plaintiff and her husband live to the north of the junction, and he was travelling home at the time. An open speed limit of 110 kilometres per hour obtains, but some distance to its south is a speed advisory sign recommending reduction to 55 kilometres per hour to negotiate the bend ahead.

1. Upon reaching the crest of the hill to the south of the bend and having an unimpeded view to the junction ahead, the plaintiff's husband, whose car head lights were on low beam, observed a vehicle parked on the eastern side of the road facing him about 200 metres away with its hazard lights flashing. His speed was about 90 kilometres per hour. He did not slacken speed, but continued down towards this vehicle and the corner beyond, his attention focused upon the parked car and surmising that it was in some difficulty, perhaps of a mechanical nature. Maintaining the same speed and without putting his lights on high beam, he drew almost level with the parked vehicle, which was on his right, and looked down Acton Road beyond it. There he saw a young girl standing on the roadway in front of him waving her arms. She was about 5 – 10 metres beyond the parked vehicle and about 20 metres from him when he first saw her. He braked heavily, skidded in a straight line and struck the girl (the second–named defendant) and the car she had been driving. This was a Commodore station wagon which was lying stationary across the north bound lane to the south of the corner at an angle of approximately 45 degrees, its front facing to the south–west. After the collisions, he observed that a rear tail light was illuminated as well as one of the front parking lights. He rendered assistance to the second–named defendant, and police officers arrived on the scene within a few minutes.

1. The second–named defendant, an 18 year old Reserve Army soldier returning to her home at Lauderdale after a home training parade, had been driving south on Acton Road and had overtaken, at a not immoderate speed, the van which later had displayed its hazard lights. As she approached the corner (for her a sharp right hand bend) she reduced her speed from 80 kilometres per hour and felt the car slide under her. She travelled into a bank on her left, spun around and ended up across the road in the position I have described. She was not hurt and alighted from the car after having tried unsuccessfully to start it. She said she pressed the hazard light switch on her car and that she believed her head lights had remained on. After the collision, she said she could see her tail lights on, but she could not recall seeing her hazard lights in operation. Prior to the collision with the plaintiff's car, the van she had overtaken came upon the scene of her single vehicle accident, stopping slightly to the south of it and the driver illuminated his hazard lights. She thought she was on the driver's side of her car, that is to the north of it, when she was struck; but I find she was, as the plaintiff's husband deposed, to the south of it and was struck first before his car struck hers.

1. The plaintiff claims that the second–named defendant was negligent in failing to keep her car under control and in sustaining the first accident. I think the clear inference is that lack of care and excessive speed led to her car ending up in the position it was when the plaintiff's driver began his descent towards it. Furthermore, the plaintiff claims she was negligent in failing to warn approaching motorists of the presence of the car in the north bound lane and of failing to take adequate steps to move it. I do not think it has been established that she failed to do anything that could reasonably have been done to remove the car from the roadway, but I am satisfied, notwithstanding her claim in evidence, that she failed to activate her hazard lights and that this negligent conduct contributed to the later collision.

1. The plaintiff's claim against her, therefore, succeeds but the plaintiff's driver, in my view, was also clearly negligent in failing to reduce his speed on the 200 metre approach to the position where the second–named defendant's car had become immobilised. He had clear warning from the hazard lights of the van parked on the eastern side of the road that something was amiss ahead and any reasonable person ought to have adverted to the possibility that the hazard lights indicated the existence of some hazard in the general vicinity of the van and would not have assumed that they indicated a problem confined to the van or its owner. Not only would a reasonable driver have reduced his speed in the circumstances, he would have raised his lights to high beam and would have directed his attention, not only to the parked van, but to the roadway in its vicinity which he was about to traverse. Had the plaintiff's husband done so, he ought to have observed some of the lights of the stationary car and, as he got closer, would have seen the car itself and the girl waving her arms. I am in no doubt that a reasonably prudent driver, in the circumstances faced by the plaintiff's driver, would have been able to avoid any collision. Accordingly, the second–named defendant's plea of contributory negligence succeeds.

1. I think in all the circumstances the greater degree of blame should attach to the plaintiff's agent. Although the second–named defendant carelessly created the situation of danger and should have taken further precautions to illuminate the scene, the other hazard lights were present in the vicinity and it was the obtuseness of the plaintiff's husband in ignoring them as an indication of danger actually present, combined with his speed and lack of a proper look out, which were the primary causes of the collision. I would regard a fair apportionment of responsibility as 75% against the plaintiff's agent and 25% against the second–named defendant. Accordingly, the plaintiff is entitled to judgment for 25% of her damages to be later assessed.

1. I turn now to the plaintiff's claim against the first–named defendant (the insurer). It is not disputed that the plaintiff sought and was given comprehensive cover in respect of a Mitsubishi motor car in October 1985 on the standard terms offered by the insurer at that time. It was common ground that the initial contract of insurance was in a form (exhibit P1) which included the following exclusion clauses:

"This Policy does not cover

...

4Loss damage liability and/or compensation for damage and/or injury or death caused whilst the Motor Vehicle –

(a)       Is being driven by or is in the charge of any person –

(i)under the influence of any drug or intoxicating liquor; or

(ii)in whose blood the percentage of alcohol is in excess of the legal limit prescribed by the law applicable in the State or Territory where the accident occurred, as indicated by analysis of the person's breath or blood provided that this exclusion shall not apply to indemnity and/or insurance provided on behalf of any other person or party if such other person or party proves that he did not consent to the Motor Vehicle being driven by or being in charge of the person under the influence of any drug or intoxicating liquor and provided further that this exclusion 4(a)(ii) shall not apply in respect of this Policy if this Policy is issued in Tasmania. "

1. Some time prior to the expiration of the above policy the plaintiff sold her car and purchased the Toyota involved in this action. The insurer and she agreed that the policy should be transferred and should apply to the Toyota. The plaintiff continued to pay the annual premiums.

1. In January 1986 the insurer decided to change its standard terms and conditions for policies of this type and to discontinue issuing policies on the terms contained in exhibit P1. The new policy, exhibit P2, contained the following exclusion clause:

"4.1You will not be entitled to claim under this policy if, at the time of the accident or event which results in the loss, damage or liability your car was:–

4.1.1Being driven by a person who was under the influence of intoxicating liquor or of a drug or whose blood alcohol level was in excess of the legal limit prescribed in the State or Territory where the accident or event took place or who refused or failed to submit a specimen for testing as required by law in that State or Territory. This exclusion shall not apply if it contravenes the law of the State in which this policy is issued or if your car was being driven without your consent."

1. It was common ground that for the new policy to be the basis of the contract of insurance between the parties it was incumbent on the insurer to give notice of its terms to the plaintiff. A failure to do so would result in the old contract of insurance being renewed on the payment by the plaintiff of her annual premium. The plaintiff denied that she was ever given a copy of the new policy or in any way advised of its contents, nor had brought to her attention the differences which existed between the exclusion clauses. The insurer's manager, Mr Brooks, gave evidence that after 1 January 1986 his company, on a national basis, adopted the procedure of sending a copy of the new policy with every renewal notice. There was no direct evidence that such a procedure had in fact been adopted in respect of the plaintiff. While it seems unlikely that the office system happened to break down in the case of the plaintiff, she has given sworn evidence that she retained correspondence and documentation from the insurer on a file, and that no such document as P2 was sent to her prior to this claim being made by her on the insurer. I have no reason to doubt her honesty in this claim, although that is not to say she may not be mistaken. I think it is up to the insurer to prove the substitution of new terms in the contract of insurance and I am not satisfied on the balance of probabilities that it has done so. Accordingly, I hold that the contract of insurance was one in accordance with exhibit P1 and that the relevant exclusion clauses are those set out therein.

1. In my view, the plaintiff's damage in respect of which she claims under this policy was caused whilst the motor vehicle was being driven by a person, namely her husband, under the influence of intoxicating liquor. I shall state my reasons for so holding in due course. That fact alone, were the relevant policy in accordance with P2, would justify the insurer in repudiating liability for the car was being driven with the insured's consent, and it is submitted by the insurer that it justifies a like course under a policy in accordance with exhibit P1. The plaintiff, however, submits that a proper reading of the exclusion clause in exhibit P1 requires the proviso as to the absence of consent to apply to the situation where the driver is under the influence of intoxicating liquor.

1. In McDermott v Australian Associated Motor Insurers Limited Serial 48/1983, Cosgrove J. had occasion to consider this exclusion clause and concluded that sub–paragraphs (i) and (ii) of Clause 4(a) should be read together, and that what he called the first proviso set out in clause 4(a)(ii) and which reads

"provided that this exclusion shall not apply to indemnity and/or insurance provided on behalf of any other person or party if such other person or party proves that he did not consent to the motor vehicle being driven by or being in charge of the person under the influence of any drug or intoxicating liquor"

applied to sub–paragraph (i). I respectfully agree with the reasons for so holding set out by his Honour in that decision. The two paragraphs should be read together, the first proviso relating to sub–paragraph (i) and the second proviso relating to sub–paragraph (ii). That second proviso is to this effect:

"provided further that this exclusion 4(a)(ii) shall not apply in respect of this Policy if this Policy is issued in Tasmania."

1. The next question to determine is whether the consent mentioned in the first proviso is to the identity of the driver or to his driving in a condition of being under the influence of any drug or intoxicating liquor. In McDermott v Australian Associated Motor Insurers Limited (supra), Cosgrove J. noted that the defendant insurer on that occasion did not contend that the first proviso required the plaintiff insured to prove that he did not consent at all to the third party driving the vehicle, but said that in any event he was satisfied that it would be sufficient for the insured to prove that he did not consent to the vehicle being driven by a person who was, to his knowledge, under the influence of intoxicating liquor. His Honour invited comparison with In re an Arbitration between the Standard Insurance Company Limited and McFarlan [1940] VR 74.

1. It is not without significance that by section 2 of the policy the defendant company agreed to "indemnify the Insured against liability at law by way of damages in respect of damage to property" with certain exemptions and provisos not presently relevant. The clause continued, "To the extent of the indemnity granted under this section the Company will treat as though he were the Insured, any person in charge of the Motor Vehicle with the Insured's permission ...".

1. In construing the exclusion clause and the provisos to it, this clause would seem to indicate that the consent referred to is something different from the permission an insured might grant to the actual driver. For the insured to incur legal liability in respect of the acts of another person, some form of agency would have to be established. I find it hard to envisage a situation in which an insured could claim indemnity from the insurer for such a liability while asserting that he did not consent to the driver who is said to have created that vicarious liability driving the vehicle. To my mind the only effective meaning the first proviso can have in a situation where indemnity for legal liability is sought is that the consent in question is not equivalent to permission for the actual driver to have driven, but that it is consent to that driver driving in the condition which attracts the exclusion. If the insured proves that he permitted the driver to drive the vehicle but did not consent to the motor vehicle being driven by that person whilst under the influence of intoxicating liquor, he would be entitled to indemnity for such legal liability. If the consent in the proviso has this meaning in respect of indemnity for legal liability, there is no reason to suppose it has any different meaning in respect of indemnity for loss or damage as is the case here.

1. It is, however, submitted that in any event the plaintiff insured has failed to prove that she did not consent to her husband driving in the condition which would bring the exclusion clause into play. The fact is that she did not know he had intended to go or had gone to the hotel on the way home from work, did not know how much intoxicating liquor, if any, he had consumed and had no actual knowledge of his condition at the time of the accident nor means of withdrawing her consent to any driving on his part. While she permitted him in advance to drive the car in the course of that day until he should return home and was aware that from time to time he might drive it after having consumed alcohol, I see no basis for supposing that she may have consented that day to his driving whilst under the influence of intoxicating liquor and am satisfied that she has proved positively that she did not consent to his doing so. That being the case, the plaintiff is entitled to the declarations sought. I will give counsel the opportunity to address on the appropriate form.

1. It remains for me to state my reasons for holding that the plaintiff's husband was driving under the influence of intoxicating liquor at the relevant time, although as I have held, the plaintiff is entitled to succeed notwithstanding that condition. In the circumstances, I propose to be brief.

1. A person is "under the influence of intoxicating liquor" if he has consumed such a quantity of intoxicating liquor as disturbs the balance of his mind for the quiet, calm, intelligent exercise of his faculties (Mair v Railway Passengers Assurance Company Limited [1877] 37 LT 356; Louden v British Merchants Insurance Company (1961) 1 WLR 798; Cassidy v State Government Insurance Office [1965] WAR 81; Cory v Club Motor Insurance [1969] VR 189). The onus of proving that the driver was under the influence of intoxicating liquor is on the defendant insurer. This condition is to be distinguished from the condition attracting penalty under the Road Safety (Alcohol and Drugs) Act 1970, s.4, which makes it an offence for a person to drive a motor vehicle while under the influence of intoxicating liquor "to such an extent as to be incapable of having proper control of the vehicle".

1. The plaintiff's husband, on his own evidence, had been at the Shoreline Hotel from approximately 7.50pm to a little after 10.00pm drinking stout. I find that he had consumed a minimum of seven 8 oz. glasses of stout. It may be that he had arrived considerably earlier, as his claim to have arrived at 7.50pm was to some extent reconstruction based on the erroneous assumption that the accident had occurred on a Thursday night when it was his practice to remain longer at his place of work and to drive a fellow worker home to the suburb of Howrah. However, when it was demonstrated that the accident had occurred on a Tuesday, a night when he normally finished work at about 6.30pm, he was unable to explain why he had not reached the hotel until 7.50pm, nor to account for his movements in the meantime. He was forced to resile from his evidence that he had consumed only six glasses of stout when confronted with an earlier statement to a loss assessor admitting to 7 such drinks.

1. After the accident occurred at about 10.15pm, police officers came upon the scene and he remained under their observation a considerable time before being subjected to a breath analysis at 1.14am on the following day. At that time the reading recorded was 0.091%. Although the police and other persons at the scene noticed the smell of alcohol on his breath, none of them observed what might be described as the classical signs of intoxication, nor was there any evidence to justify a charge of driving under the influence of intoxicating liquor under the Road Safety (Alcohol and Drugs) Act 1970. I accept, however, the thrust of Dr Collins' evidence that at or about the level of 0.10% the frequently encountered physiological effects upon drivers in general include reduction in visual acuity, concentration span, muscular co–ordination and in the ability to accurately perceive speed time and distance. Furthermore having regard to the lapse of time between his last drink and his analysis, I think it highly probably that the blood alcohol concentration of the plaintiff's husband was higher at the time of the accident than the 0.091% recorded by him approximately three hours later.

1. But I think the most telling evidence that he was physically affected by the alcohol he had taken to such an extent that the quiet, calm, intelligent exercise of his faculties was disturbed was his failure to appreciate the possibility that there might be some obstruction of or danger upon the roadway in the near vicinity of the vehicle on the side of the road with its hazard lights functioning. I have already described the obtuseness of the plaintiff's husband in proceeding into that area without slackening speed or raising his head lights. Judging by his demeanour in the witness box, he is not an unintelligent man and he has a position of responsibility with the company for which he works. Such a lack of response in the circumstances encountered by him was no momentary lapse of attention or misjudgment. Its most likely explanation, in my view, is a clouding of judgment, dullness in perception and slowness of response directly attributable to the alcohol consumed.

1. I record, for the sake of completeness, that in my view none of the provisions of the Insurance Contracts Act 1984, s54, would avail the plaintiff were my opinion incorrect that she is entitled to rely on the first proviso to exhibit P1.