Jenkins v Territory Insurance Office
[2001] NTSC 92
•31 October 2001
Jenkins v Territory Insurance Office [2001] NTSC 92
PARTIES:EUROS PENNANT JENKINS by his litigation guardian DAVID LAURENCE JENKINS
v
TERRITORY INSURANCE OFFICE
TITLE OF COURT: SUPREME COURT OF THE NORTHERN TERRITORY
JURISDICTION: SUPREME COURT OF THE NORTHERN TERRITORY EXERCISING TERRITORY JURISDICTION
FILE NO:66 of 2000 (20008370)
DELIVERED: 31 October 2001
HEARING DATES: 22, 23, 24, and 25 October 2001
JUDGMENT OF: RILEY J
CATCHWORDS:
REPRESENTATION:
Counsel:
Plaintiff:R Meldrum QC with S Gearin
Defendant:S Southwood QC with P McNab
Solicitors:
Plaintiff:Hunt and Hunt
Defendant:Ward Keller
Judgment category classification: B
Judgment ID Number: ril0122
Number of pages: 14
ril0122
IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWINJenkins v Territory Insurance Office [2001] NTSC 92
No. 66 of 2000 (20008370)
BETWEEN:
EUROS PENNANT JENKINS by his litigation guardian DAVID LAURENCE JENKINS
Plaintiff
AND:
TERRITORY INSURANCE OFFICE
Defendant
CORAM: RILEY J
REASONS FOR DECISION
(Delivered 31 October 2001)
The plaintiff was injured in a motor vehicle accident which occurred in the Northern Territory on 30 June 1999. On 28 April 2000 he commenced proceedings against the defendant pursuant to the provisions of s 40A of the Motor Accidents (Compensation) Act. There is no dispute that he is entitled to damages pursuant to s 40A and, on 20 June 2001, judgment was entered in favour of the plaintiff against the defendant for damages to be assessed. The assessment of damages is now underway.
I have been asked to rule on an issue raised by the pleadings. The defendant asserts that the plaintiff’s claim for future economic loss or future loss of earning capacity is capped in accordance with an amendment to s 5 of the Act effected by amending Act 24 of 2000 which came into force on 1 September 2000 and after the date on which the plaintiff was injured. Following the amendment s 5(1) was in the following terms:
“5. ABOLITION OF CERTAIN COMMON LAW RIGHTS
(1) An action for damages shall not lie in the Territory -
(a) in respect of the death of or injury to a person who at the time of the accident was a resident of the Territory; or
(b) in respect of an injury to a person who, at the time of the accident, was not a resident of the Territory -
(i) for non-economic loss in excess of the amount from time to time prescribed for the purposes of section 17;
(ii) for future loss except at discounted present values; or
(iii) for future economic loss or future loss of earning capacity calculated on a weekly basis for any sum in excess of the amount from time to time prescribed for the purposes of section 13,
In or as the result of an accident that occurred in the Territory.”
The relevant amendment was the inclusion of the italicized words as subsection 5(1)(b)(iii). There were other alterations made to s 5 at that time but they are not of significance for present purposes.
The issue for determination in this matter is whether the amendment is invalid in relation to the plaintiff’s claim because it is a law with respect to the acquisition of property other than on just terms.
It was conceded by the plaintiff that the intention of the Legislature was to give retrospective effect to the amendment. That is made clear by s 8 of the amending Act which provided that the amendment applied “in relation to accidents whenever occurring”. The central issue debated before me was whether the amendment amounted to an acquisition of property.
The Northern Territory derives its legislative power from the Northern Territory (Self Government) Act of 1978 (Cth). Section 6 of that Act empowers the Legislative Assembly, with the assent of the Administrator or the Governor-General, to “make laws for the peace, order and good government of the Territory”. Included within the provisions of the Self Government Act is a limitation upon that power. Section 50 provides:
“Acquisition of property to be on just terms
50(1) The power of the Legislative Assembly conferred by section 6 in relation to the making of laws does not extend to the making of laws with respect to the acquisition of property otherwise than on just terms.
(2)Subject to section 70, the acquisition of any property in the Territory which, if the property were in a State, would be an acquisition to which paragraph 51(xxxi) of the Constitution would apply, shall not be made otherwise than on just terms.”
Section 50 is in similar form to the constitutional guarantee found in paragraph 51(xxxi) of the Constitution. It is “not to be narrowly confined” and it may have application in the context of legislation altering entitlements to compensation: Smith v ANL Limited (2001) 75 ALJR 95 per Gleeson CJ at 97. Questions of substance and of degree rather than merely form are involved. Further, the acquisition of property referred to in the section is not limited to an acquisition by the Territory or an agency of the Territory: Smith v ANL (per Gummow and Gaudron JJ at 100 and 101).
Section 40A Motor Accidents (Compensation) Act
The proceedings commenced by the plaintiff against the defendant rely upon a right granted by s 40A of the Act. That section provides that a claim for damages in respect of the death of, or injury to, a person who is not at the time of the accident a resident of the Territory, and arising out of an accident in the Territory involving a motor vehicle that did not have relevant insurance cover, “shall lie, and may be enforced, against the Office and not against the owner or driver of the motor vehicle”. Section 40A had its origins in the Motor Vehicles Act and its predecessor the Motor Vehicles Ordinance. The effect of the provision in its various forms was to preclude a person who fell within the ambit of the section from pursuing a claim for damages against the owner or driver of the motor vehicle, as was their right under the pre-existing general law, and to substitute a right to seek damages from the Territory Insurance Office. That office administers a fund from which payments of compensation and of damages in respect of deaths and injuries arising out of motor vehicle accidents can be made.
It was the submission of the defendant that the action against the Territory Insurance Office has no existence apart from statute. It was said that s 40A is part of a beneficial scheme providing benefits for victims of motor accidents and is, by its nature, susceptible of modification or extinguishment. The amendment did not effect an acquisition of property. Reference was made to the judgment of Mason CJ, Deane and Gaudron JJ in Georgiadis v Australian and Overseas Telecommunications Corporation (1994) 179 CLR 297. In that case the Court held that an amendment to the Commonwealth Employees’ Rehabilitation and Compensation Act 1988 (Cth) imposing a limitation period upon the commencement of certain actions was invalid in relation to an employee whose cause of action was not statute-barred before the action was commenced. It did so on the ground that the amendment effected an acquisition of property, namely the right of the employee to bring an action for damages, other than on just terms as required by s 51(xxxi) of the Constitution. The following passage in the judgment of Mason CJ and Deane and Gaudron JJ (at 305) was relied upon by the defendant:
“The position maybe different in a case involving the extinguishment or modification of a right that has no existence apart from statute. That is because, prima facie at least and in the absence of a recognized legal relationship giving rise to some like right, a right which has no existence apart from statute is one that, of its nature, is susceptible of modification or extinguishment. There is no acquisition of property involved in the modification or extinguishment of a right which has no basis in the general law and which, of its nature, is susceptible to that course. A law which effected the modification or extinguishment of a right of that kind would not have the character of a law with respect to the acquisition of property …”
It was the submission of the defendant that the plaintiff in these proceedings did not ever have a right based in the general law in relation to proceedings against the Territory Insurance Office. The only right that existed in that regard was pursuant to s 40A of the Motor Accidents (Compensation) Act. It was said that what is available to the plaintiff is a specific statutory entitlement against a third party within an overall scheme of compensation relating to motor vehicle accidents. The Motor Accidents (Compensation) Act and its predecessors had abrogated the general law entitlement that previously existed long before the plaintiff suffered his injuries.
It was also submitted on behalf of the defendant that the provisions of s 40A are similar to those which were considered by the High Court in Health Insurance Commission v Peverill (1994) 179 CLR 226 and Commonwealth v WMC Resources Limited (1998) 194 CLR 1, and therefore, consistent with the decisions in those cases, susceptible of modification and extinguishment. If that submission be correct then s 5(1)(b)(iii) would be a law which effected the modification or extinguishment of a right of a kind that would not have the character of a law with respect to the acquisition of property.
In my opinion, contrary to the submissions of the defendant, the effect of s 40A and its predecessors was not to interfere with the right of the plaintiff to recover common law damages. That right was preserved. The effect of the section was to require that the existing right to common law damages “shall lie, and may be enforced, against the Office and not against the owner or driver of the motor vehicle”. The right to common law damages remained but the identity of the person against whom the right may be enforced was changed. At the time of his accident the plaintiff had a right to bring an action seeking common law damages against the Office for future economic loss and the only modification of that right was that contained in s 5(1)(b)(ii) that it be at discounted present values. After the plaintiff suffered his injury and consequent upon the amendment a cap was placed upon any entitlement for future economic loss or future loss of earning capacity. The effect of that amendment was to modify the pre-existing right of the plaintiff which derived from the common law. A corresponding benefit was provided to the defendant.
In Smith v ANL Ltd (supra) the High Court considered the Seafarers Rehabilitation and Compensation Act 1992 (Cth). That legislation provided for the payment of compensation for such people as the appellant in that case. Subsequent to his injury in 1988 the Act was amended to deny actions for damages against employers (s 54) but to allow such causes of action as had accrued before 24 June 1993 to be brought within six months of that date (s 13). The appellant sued in November 1994, alleging that the employer was liable in damages for breach of contract for failing to provide a safe system of work and for negligence. By a majority the High Court held that s 54 was invalid in its application to choses in action in respect of injury, loss or damage which occurred before 24 June 1993 and which were subsisting at common law at that date. It was held that s 54 operated to bring about an acquisition of property that was not upon just terms. In that case Gleeson CJ adopted what was said by Brennan J in Georgiadis v Australian and Overseas Telecommunications Corporation (supra at 310):
“If a worker is entitled at common law to a lump sum award in damages, it is not within the power of the Commonwealth under s 51(xxxi) to limit the amount which it or a statutory authority may have to pay the worker or to delay the worker’s entitlement to payment. In determining the issue of just terms, the Court does not attempt a balancing of the interests of the dispossessed owner against the interest of the community at large. The purpose of the guarantee of just terms is to ensure that the owners of property compulsorily acquired by government presumably in the interests of the community at large are not required to sacrifice their property for less than its worth. Unless it be shown that what is gained is full compensation for what is lost, the terms cannot be found to be just.”
Gleeson CJ went on to observe that the guarantee was intended to protect private property and to prevent expropriation of the property of individual citizens without adequate compensation even where expropriation may be intended to serve a wider public interest.
Gaudron and Gummow JJ noted that the claims of the appellant were choses in action and hence “property” for the purposes of s 51(xxxi) of the Constitution. They held that there was an acquisition of property because the right to bring an action which had previously been unlimited in time became a right to bring an action within 6 months of 24 June 1993. They observed that the right to bring an action without the defendant being able to plead a time bar “is a significant and integral element of the cause of action itself". The imposition of a time bar impeached the substance of the cause of action and a correlative and significant benefit was conferred on the defendant. They also held that the legislation did not provide just terms.
Kirby J pointed out that a broad view has been taken of what is meant by “property” in such a provision. A chose in action is a form of property and to extinguish or modify such a right when it has arisen and vested in an identifiable person and is otherwise enforceable “is plainly to deprive that person of something valuable”.
Kirby J held that the rights of the appellant were not “the fragile kind of statutory interest, short of ‘property’ considered in other cases that have come before the court”. He referred to Peverill’s case and WMC Resources. He went on to say (at 111):
“The appellant’s right of action against the respondent, before the respondent was reconstituted by legislation as a public company in 1988, arose under the common law. All that the Federal legislation providing for its enforcement against a statutory body of the Commonwealth and later reconstituting that body as the respondent did …. was to ensure that that right, that is, the original common law right, lay and survived against the respondent in its reconstituted form. Specifically, the essential character of that right was not then altered by the operation upon it of the impugned legislation. That legislation did not purport to convert the right into a mere creature of federal legislation. It recognised the existence of the common law right prior to and independent of the provisions. It purported to impose restrictions on the appellant’s right to bring an action in respect of an injury for which, apart from the legislation, the employer would have been liable for damages at common law.”
In the present case the legislation directing that the common law rights of the plaintiff be pursued against the defendant rather than the driver or owner of the vehicle did not seek to alter the essential character of those rights. The right of action was not converted into “a mere creature” of Territory legislation.
Even if the rights with which we are concerned in this matter were not based in the general law but were, rather, purely statutory rights, any modification or extinguishment of those rights may nevertheless be subject to the application of s 50 of the Self Government Act. In Commonwealth v WMC Resources Limited Brennan CJ observed (at 16):
“… it does not follow that a law of the Commonwealth which extinguishes purely statutory rights having no basis in the general law can never effect an ‘acquisition of property’ within s 51(xxxi). If statutory rights were conferred on A and a reciprocal liability were imposed on B and the rights were proprietary in nature, a law extinguishing A’s rights could effect an acquisition of property by B.”
Similarly, Gaudron J observed (at 36):
“However, the questions which, ultimately, have to be answered are whether the law effects an acquisition of property and, if so, whether it is properly characterised as law with respect to the acquisition of property.
If a law modifies or extinguishes a statutory right which has no basis in the general law in circumstances in which some person obtains some consequential advantage or benefit in relation to property, that law may and, ordinarily, will effect an acquisition. And there may and, ordinarily, will be an acquisition if a law operates to transfer a right to some other person, even though the right has no basis in the general law and is inherently susceptible of modification or extinguishment. So, too, there may and, ordinarily, will be an acquisition if a law extinguishes a right of that kind (particularly a monopoly right) and vests a similar right or a right with respect to the same subject matter in some other person. In cases of that kind, there is something more than the mere modification or extinguishment of a right that is inherently susceptible to that course; the law also operates to confer a benefit.”
Gummow J (at 70) said that the submission that “the contingency of subsequent legislative abrogation or extinguishment denied the protection of s 51(xxxi) to any right created solely by a law of the Commonwealth” was “too broad”. Kirby J (at 91) expressed similar views. He said of a suggestion that “a right which has no existence apart from statute is one which, of its nature, is always susceptible to modification or extinguishment by later legislation without an entitlement to ‘just terms’, a rule so stated would be much too broad”. McHugh J adopted a different approach (see at 47 to 55).
In Frank v Australian Capital Territory (Supreme Court of the Australian Capital Territory, SCA 3 of 2000) the Full Court of the Supreme Court of the Australian Capital Territory considered the effect of amendments to the criminal injury compensation legislation applicable in that Territory. An amendment had been made to the legislation to remove the entitlement to an award of compensation for pain and suffering. The majority in that case (Miles CJ and Gray J) noted that the cases establish that a right in the nature of a chose in action is “property” and that legislation which extinguishes or diminishes the value of that right is, or may be, an acquisition of such property under s 51(xxxi) of the Constitution. They noted that there is no “exact definition” of a “chose in action” and went on to observe (par 25) that “there appears to be no authority to the effect that a chose in action is confined to a right at common law or ‘general law’ including equity and does not extend to a right created by statute. It would be surprising if a right under fatal accidents legislation or a right to sue on a statutory cause of action was not a chose in action”. Their Honours went on to observe (par 27):
“Whilst there may be room for argument whether the interest of any of the appellants in receiving an award of compensation for pain and suffering was a chose in action, within the proper meaning of that term, that interest was a substantive right to have the application for an award of compensation, including such a component, heard and determined. Accordingly it must be recognised that the interest of each appellant was not merely a hope or expectation of receiving an award including a component for pain and suffering, but a right to have a decision made on the application for such an award, which application was pending before the Registrar at the time the amending Act came into force.”
Their Honours held that the interests of the appellants in that matter fell within the concept of “property” as recognised by the majority judgments in Smith v ANL Limited even though they were not common law rights. They held that the interests of the appellants were subject to acquisition by the Australian Capital Territory. The benefit was the saving to the Territory of the amount of compensation likely to have been forgone by the individual appellant in each case. It was therefore held there was an acquisition of property.
Turning to the present matter. The entitlement of Mr Jenkins prior to the amendment was to damages reflecting the full extent of his future economic loss or future loss of earning capacity calculated at discounted present values. Following the amendment that entitlement was subject to a cap calculated by reference to the amount from time to time prescribed for the purposes of s 13 of the Act. What the plaintiff lost was not an interest of “the fragile kind” referred to by Kirby J in Smith v ANL. It was not a matter of the level of benefits under some statutory scheme being raised or lowered and it was not the modification or extinguishment of a right “which of its nature, is susceptible to that course”. The assessment of damages for future economic loss or future loss of earning capacity is a substantive right vested in the plaintiff. It is based in the principles and concepts that apply at common law and which had been carried through to the date of the plaintiff’s accident and beyond in the various enactments applicable to motor accidents compensation. It was a chose in action or, at least, a substantive right to obtain damages of a kind which one would not expect in the ordinary course to be varied.
The defendant submitted that there would be no acquisition of property where the legislation concerned falls within a grant of legislative power and the provisions of the enactment are "appropriate and adapted to the fulfillment of any objective falling within the power". It was submitted that s 50(1) of the Self Government Act does not abstract the power to prescribe the means appropriate and adapted to the achievement of an objective falling within another head of power where the acquisition of property without just terms is a necessary or characteristic feature of the means prescribed. Reference was made to Airservices Australia v Canadian Airlines International Ltd (2000) 202 CLR 133 and in particular to observations made in the joint judgement of Gleeson CJ and Kirby J at 180 and the judgement of Gaudron J at 196. Reference was also made to the judgements of Brennan J and Gaudron and Gummow JJ in Mutual Pools & Staff Pty Ltd v The Commonwealth (1994) 179 CLR 155. In their observations in those cases their Honours were commenting upon laws providing for the imposition of taxes, the compulsory payment of provisional tax, the seizure of the property of enemy aliens, the sequestration of the property of bankrupt persons, the forfeiture of prohibited imports, the exaction of fines and penalties and the imposition of a statutory lien over aircraft for unpaid aviation services charges. In such circumstances the acquisition of property without just terms was necessary for the achievement of the objective of the head of power. It was a characteristic feature of such legislation. That is not the case with this legislation. The acquisition of property without just terms is neither necessary to, nor characteristic of, legislation dealing with the subject matter of the scheme established under the Motor Accidents (Compensation) Act.
In my view the amendment arising from the inclusion of s 5(1)(b)(iii) in the Motor Accidents (Compensation) Act effected an acquisition of property in the circumstances of the plaintiff. The defendant did not contend that just terms were provided in relation to that acquisition. The acquisition was an acquisition of property other than on just terms. It follows that the amendment does not apply to the case of the plaintiff and his entitlement to damages is not limited by reference to the amount from time to time prescribed for the purposes of s 13 of the Act.
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