Honey v Richardson - [2015] SASC 119

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
HONEY & ANOR v RICHARDSON
[2015] SASC 119
Judgment of The Honourable Justice Bampton
14 August 2015
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PROCEDURE UNDER RULES OF COURT - IN GENERAL AND PRELIMINARY MATTERS
PROCEDURE - MISCELLANEOUS PROCEDURAL MATTERS - DECLARATIONS
The first plaintiff sustained catastrophic injuries when a prime mover driven by the defendant collided with the rear of a grape tote bin he was towing behind a tractor – the first plaintiff was driving the tractor in convoy with two other vehicles on the Sturt Highway pursuant to a permit issued by the Department for Transport, Energy and Infrastructure – the defendant admits the collision occurred but alleges any injuries suffered by the first plaintiff were caused or contributed to by his negligence – defendant issued third party proceedings against the drivers of the lead and middle vehicles in the convoy, the employer of the drivers and the owners of the three vehicles – the Motor Accident Commission has denied the third parties are covered by the insurance provided for in Schedule 4 of the Motor Vehicles Act 1959 – Motor Accident Commission joined as a third party.
Defendant sought a declaration prior to trial that the Motor Accident Commission is liable to indemnify the third parties for their liability to him for contribution, if any, pursuant to the statutory policies of insurance – whether declaration can be made before liability is determined.
Held (Application dismissed):
1. Court cannot make a declaratory order on hypothetical facts not admitted or determined.
2. The appropriate time to determine whether the MAC is liable to indemnify the third parties is at, or after, the trial of the substantive proceeding and the third party proceedings once findings have been made that would allow the Court to determine the issue of liability.
Motor Vehicles Act 1959 (SA) s 99(3), s 104, s 113, Sch 4; Supreme Court Act 1935 (SA) s 31; Supreme Court Civil Rules 2006 (SA) r 233, referred to.
Allianz Australia Insurance Ltd v National Jet Systems Pty Ltd (2005) 238 LSJS 93; Insurance Commission of Western Australia v Container Handlers Pty Ltd (2004) 218 CLR 89; Motor Accident Commission v ANI Corporation & Garrett (1997) 195 LSJS 226; The Law of Liability Insurance Ashton, Ronald & Derrington, Desmond (Lexis Nexis Butterworths, 3rd edition, 2013), considered.

HONEY & ANOR v RICHARDSON
[2015] SASC 119
Civil: Application
BAMPTON J.

During the grape harvest season, around midnight on 12 March 2008, the plaintiff, David Honey (Mr Honey), sustained catastrophic injuries when a prime mover driven by the defendant collided with the rear of a grape tote bin he was towing behind a Massey Fergusson tractor.
Background
Mr Honey was driving the Massey Fergusson tractor in convoy with two other vehicles on the Sturt Highway near Kingston-on-Murray.
The lead vehicle in the convoy was a Case tractor, driven by Dominic Nobile (Mr Nobile). The Case tractor was also towing a grape tote bin. The middle vehicle in the convoy was a Gregoire G120 grape harvester vehicle (the harvester) driven by Kym Cluse (Mr Cluse).
The Massey Fergusson tractor was owned by Ambrosia Developments Pty Ltd (Ambrosia). Trevor McPhee (Mr McPhee) owned the Case tractor and the harvester.
Mr McPhee, who has since died, was also the employer of Mr Honey, Mr Nobile and Mr Cluse.
A permit issued by the Department for Transport, Energy and Infrastructure to Mr McPhee permitted the two tractors and the harvester (the vehicles) to travel in convoy in accordance with conditions specified in the permit (the permit).
The vehicles were all registered in South Australia and insured by the Motor Accident Commission (the MAC). The defendant’s vehicle was registered in Victoria and insured by the Transport Accident Commission.
The defendant was found guilty of driving without due care on 5 August 2011 and on 17 February 2012 his appeal against his conviction was dismissed.
Mr Honey’s claim for damages
Mr Honey and his wife issued proceedings against the defendant on 8 March 2011. In his defence filed on 18 October 2011, the defendant admits the collision occurred and alleges any injuries suffered by Mr Honey were caused or contributed to by his negligence.
On 25 June 2013, Mr Honey formulated his claim.
Third party proceedings
On 25 March 2014, the defendant issued third party proceedings against Mr McPhee, Mr Nobile, Mr Cluse and Ambrosia (the third parties). The defendant alleges that any injuries or loss suffered by Mr Honey and his wife were caused or contributed to by the third parties’ negligence in the driving and the state of illumination of the vehicles.
Hunt & Hunt Lawyers, acting on instructions from the MAC, filed notices of solicitor acting on behalf of all third parties. On 11 December 2014, Hunt & Hunt made application[1] that they no longer appear as solicitors for the third parties on the grounds the MAC had received advice to the effect that the allegations made against the third parties by the defendant do not give rise to an obligation to indemnity under the policies of insurance provided for in Schedule 4 of the Motor Vehicles Act 1959 (SA) (the MVA).[2]
[1] FDN 18.
[2] Schedule 4 provides:
The insurer insures the owner of the motor vehicle and any other person who at any time drives or is a passenger in or on the vehicle, whether with or without the consent of the owner, in respect of all liability that may be incurred by the owner or other person in respect of the death of, or bodily injury to, any person caused by, or arising out of the use of, the vehicle in any part of the Commonwealth.
MAC joined as fifth third party
On 20 February 2015, the defendant joined the MAC to the proceedings as the fifth third party seeking:
·a declaration pursuant to s 31 of the Supreme Court Act 1935 (SA) that the MAC is liable to indemnify each of the third parties “as each of them has to indemnify, or make contribution to, the defendant in respect of the matters pleaded against them in the first third party statement of claim”; and
·an order that the MAC pay to the third parties “such amount as each is found liable to pay the defendant by way of indemnity or contribution and for such costs as may be awarded to the defendant against each third party”.
For convenience, I will refer to Mr McPhee, Mr Nobile, Mr Cluse and Ambrosia as the third parties and continue to refer to the MAC as the MAC.
Hunt & Hunt no longer appear as solicitors for the third parties
An order was made on 3 March 2015 that Hunt & Hunt no longer act for the third parties. The third parties have not filed notices of address for service nor have they attended or been represented at any hearing since this order.
Finlaysons filed a notice of solicitor acting on behalf of the MAC on 18 March 2015.
The MAC has filed a defence and responded to the proposed statement of agreed facts prepared by the defendant.
Interlocutory Application FDN 26
The defendant made application (FDN 26), seeking orders that there be a separate trial of the issues between the defendant and the MAC prior to the trial of the action between the plaintiffs, defendant and the third parties.
The declaration sought
At the hearing of FDN 26 the defendant abandoned his application for a separate trial. The defendant seeks, on the basis of the statement of agreed facts, a declaration prior to trial that the MAC is liable to indemnify the third parties for their liability to him for contribution, if any, pursuant to the Third Party Notice as their insurer.
In the statement of agreed facts the MAC has admitted:
·that it is the insurer of each of the vehicles;[3] and
·that the collision occurred on the Sturt Highway to the west of the Kingston Bridge at Kingston-on-Murray.
[3] Agreed facts 8, 17 and 22.
Defendant’s submissions
The defendant submits that the terms of the Compulsory Third Party (CTP) insurance for each of the vehicles are that the MAC insures both the owner and driver of each vehicle. Therefore, the MAC insures Mr McPhee as the owner of the Case tractor and the harvester, Mr Nobile and Mr Cluse as drivers of the Case tractor and the harvester, and Ambrosia as the owner of the tractor driven by Mr Honey. Pursuant to Schedule 4 to the MVA, that insurance is for all liability for bodily injury caused by or arising out of the use of the vehicle.
The defendant argues that as the MAC has admitted the fact of the collision it is obliged to indemnify the third parties in accordance with the terms of the statutory policies of CTP insurance.
The defendant points out that the declaration sought only seeks indemnity in respect of the third parties’ liability to him for contribution, if any, pursuant to the claim. It is submitted that it is not necessary at this point for there to be any admissions tending to show actual liability on the part of the third parties.
The defendant asserts that he would be entitled to seek judgment by default against the third parties as none of them have filed a notice of address for service.
Whilst it is not necessary for me to determine whether or not the defendant is entitled to default judgment, a Court cannot enter default judgment against a third party prior to admission or determination of a defendant’s liability to a plaintiff. The Court would have to determine the nature and extent of a defendant’s entitlement to contribution or indemnity once the defendant’s liability to the plaintiff has been determined. Unless a defendant admits liability or a court determines a defendant’s liability to a plaintiff, the defendant has no liability against which third party liability can be determined.
In this matter one of the remedies sought by the defendant is the declaration. The Court cannot make a declaration in entering default judgment without determining the defendant’s entitlement to the declaration sought. In the circumstances of this case, that must involve determination of Mr Honey’s claim.
The issue in dispute between the defendant and the MAC is whether the first plaintiff’s injuries were suffered as a consequence of the driving of one or all three of the vehicles.
The defendant argues that the agreed facts establish that the first plaintiff’s injuries in this case were a consequence of the driving of the vehicles. In agreed fact 29, the MAC admits that by its then solicitors Hunt & Hunt, it advised each of the third parties that indemnity is denied on the grounds that the injuries suffered by Mr Honey were not as a consequence of the driving of the vehicles by Mr Cluse and Mr Nobile. The defendant asserts that little or no evidence needs to be called on this issue and that the agreed facts constitute admissions by the MAC with respect to the existence of the insurance. He contends that the injuries were a consequence of the collision with the tractor owned by Ambrosia and driven by Mr Honey. He says it is not to the point that liability has not yet been established.
The defendant argues that the injuries were also a consequence of the driving of vehicles driven by Mr Nobile and Mr Cluse. He says the three vehicles were being driven in convoy at night time pursuant to the permit in circumstances where the vehicles were permitted to be driven on the Sturt Highway at night but only in convoy. As the vehicles had to be driven in convoy, the tractor driven by Mr Honey had to be on the road with the vehicles driven by Mr Nobile and Mr Cluse. Therefore, the defendant argues that the first plaintiff’s injuries were as a consequence of the driving of all three vehicles at night pursuant to the permit. He says whilst he declines to admit any of the facts associated with the accident and the circumstances of the convoy immediately prior to the accident, the fact remains that the plaintiff was driving his tractor in convoy. He says the proof of allegations of breach of the permit as to lighting and remaining within required distance are not issues to be proven to establish application of the CTP insurances.
The defendant says that the accident occurred because of the collision between the defendant and the rear vehicle of the convoy and therefore occurred as a consequence of the convoy being on the road.
MAC’s submissions
The MAC maintains that there can be no finding in the third party proceedings that the third parties are liable to pay contribution to the defendant. The MAC contends that the third parties have no relevant “liability” for the purposes of s 104 of the MVA[4] and therefore it is not obliged and, in the absence of a finding that the third parties are liable to pay contribution to the defendant, the MAC will never be obliged to indemnify the third parties.
[4] As at 12 March 2008 s 104 provided:
In order to comply with this Part a policy of insurance must insure the owner of the motor vehicle to which the policy relates, and any other person who at any time drives or is a passenger in or on the vehicle, whether with or without the consent of the owner, in respect of all liability that may be incurred by the owner or other person in respect of the death of, or bodily injury to, any person caused by, or arising out of the use of, the vehicle in any part of the Commonwealth.
Further, the MAC contends that as there is no finding of liability against the third parties “in respect of the death of, or bodily injury to, any person caused by, or arising out of, the use of” a motor vehicle, any declaration that the MAC is liable to indemnify the third parties pursuant to the statutory policies of insurance would be hypothetical.
The MAC rejects the defendant’s assertion that simply because the vehicles were on the road and in convoy pursuant to the permit, it follows that Mr Honey’s injuries were a consequence of the driving of all three vehicles in a convoy and the statutory policies apply. The MAC argues that a finding of temporal connection between an act of driving and the sustaining of personal injury does not lead to the conclusion that the allegations pleaded against the third parties fit within the meaning of driving in s 99(3)[5] and s 104 of the MVA.
[5] As at 12 March 2008 s 99(3) of the MVA provided:
(3) Subject to subsection (3a), for the purposes of this Part and Schedule 4, death or bodily injury will be regarded as being caused by or as arising out of the use of a motor vehicle only if it is a consequence of—
(a)the driving of the vehicle; or
(b)the vehicle running out of control; or
(c)a person travelling on a road colliding with the vehicle when the vehicle is stationary, or action taken to avoid such a collision.
The MAC relies on the following statements of McHugh J in Insurance Commission of Western Australia v Container Handlers Pty Ltd,[6] where the Court considered a legislative provision similar in all material respects to s 99(3):[7]
It is necessary to establish a link between the driving of the vehicle and the death or bodily injury in question, not between the basis for liability and the death or injury.
And later:[8]
It is sufficient if the death or injury is a consequence of the driving. Whichever limb of the indemnity is invoked, however, the legislative history and purpose of the Act demonstrate that there must be a causal link between the death or injury and some feature of the driving of the vehicle. It is not enough that the death or injury is the result of the use of the vehicle.
[6] (2004) 218 CLR 89.
[7] (2004) 218 CLR 89 at [42].
[8] (2004) 218 CLR 89 at [64].
The MAC contends that when all of the evidence relating to the circumstances in which Mr Honey sustained his injuries is heard, there may be a finding that there was no untoward driving on the part of Mr Nobile and Mr Cluse that could lead to a finding that the MAC is liable to indemnify the third parties pursuant to its statutory policies.
The MAC asserts that none of the allegations pleaded against Ambrosia have anything to do with driving. It is submitted that whilst the pleadings against Mr Nobile and Mr Cluse are allegations of driving, the causal significance of the driving can only be determined following a full factual enquiry to determine whether Mr Honey’s injuries were caused by the driving of one or more of the vehicles.
As noted by Cox J in Motor Accident Commission v ANI Corporation & Garrett,[9] whether death or bodily injury was a consequence of the driving of a vehicle will be a question of fact and judgment in every case.
[9] (1997) 195 LSJS 226 at 225.
Conclusion
I agree with the MAC’s submission that it is premature for there to be a finding of an obligation to indemnify prior to a finding of liability against the third parties. The defendant has denied liability for Mr Honey’s injuries. Further, the defendant has alleged that Mr Honey is guilty of contributory negligence. It follows that if the defendant succeeds on the case he has pleaded; there can be no finding of liability against the third parties.
What the defendant seeks is a declaratory order based on facts not admitted or determined or, in other words, a hypothetical order. For the Court to make the declaration sought it would have to presume the defendant’s liability and then consider Mr McPhee’s, Mr Nobile’s, Mr Cluse’s and Ambrosia’s liability.
As stated in The Law of Liability Insurance:[10]
If there is a possibility that a claimant may use a facultative statute to proceed directly against the insurer and threatens to do so, it may seek a declaratory order as to the parties’ respective rights and interests, but not on hypothetical facts such as the presumed liability of the insured that is not admitted nor yet determined.
(Emphasis added)
[10] Ronald Ashton & Desmond Derrington, The Law of Liability Insurance (Lexis Nexis Butterworths, 3^rd edition, 2013) at 13-303.
Justice Anderson considered the futility in granting hypothetical declarations of entitlement to indemnity prior to trial in Allianz Australia Insurance Ltd v National Jet Systems Pty Ltd:[11]
… namely, their futility when all that the declarations really amount to is saying that the insurer will be liable if the claim falls within the policy. For that purpose, it is necessary to know where the injury was sustained, and to see whether there is an event which is covered by the policy. If, in due course, it is established there was an insured event, then the insured would be entitled to indemnity. That is something that everyone knows in any event and the declaration is not required for that purpose.
[11] (2005) 238 LSJS 93.
The appropriate time to determine whether the MAC is liable to indemnify the third parties is at, or after, the trial of the substantive proceeding and the third party proceedings once findings have been made that would allow the Court to determine the issue of liability.
In my view, there should be a trial at which all of the evidence relevant to the defendant’s liability to Mr Honey and the third parties’ liability to indemnify the defendant is heard. This would ensure that all issues are resolved without the plaintiff having to endure further delays in the finalisation of his claim. The MAC has indicated that it is ready to proceed to trial at short notice. A trial listed shortly would alleviate the plaintiffs’ legitimate concern about increased costs and delay and the prospect of duplication of appeals.
Just as the Court could not enter default judgment against the third parties without determining the defendant’s liability to Mr Honey, the Court cannot make the declaration sought prior to determination of the defendant’s liability following a full factual enquiry at trial.

I dismiss the application.