LB Taxi Management Pty Ltd v Markovich
[2011] QDC 263
•10 November 2011
DISTRICT COURT OF QUEENSLAND
CITATION:
LB Taxi Management Pty Ltd v Markovich [2011] QDC 263
PARTIES:
LB TAXI MANAGEMENT PTY LTD
(Appellant)V
MILINKO MARKOVICH
(Respondent)FILE NO/S:
3377/10
DIVISION:
Appellate
PROCEEDING:
Appeal by third party against judgement against it
ORIGINATING COURT:
District Court
DELIVERED ON:
10 November 2011
DELIVERED AT:
Brisbane
HEARING DATE:
26 October 2011
JUDGE:
Robin QC DCJ
ORDER:
(Made 26 October 2011) Appeal dismissed with costs
CATCHWORDS:
Third party appeal against Magistrate’s holding it liable to indemnify defendant driver of its taxi-cab whose careless driving led to damage to plaintiff’s vehicle - defendant paid contributions to third party to cover cost of insurance - cover not effected - whether case for liability was that the third party became the insurer or that it was liable in damages for failure to take out insurance - circumstances in which the distinction was held not to matter
COUNSEL:
Mr R. J. Anderson for Appellant
SOLICITORS:
Grasso Searles Romano Solicitors for Appellant
Respondent self represented
These are the court’s promised reasons for its rejection of an appeal against a Magistrate’s decision at the termination of the hearing on 26 October 2011. The appellant which apparently owns a number of taxi-cabs complains of being held liable in third party proceedings instituted by one of its drivers, Mr Markovich, who had been sued in a property damage claim by the owner of another vehicle damaged in consequence of Mr Markovich’s careless driving of one of the appellant’s cabs. He did not contest the plaintiff’s claim at trial, rather consented to a judgment in which interest and costs almost doubled the amount of the claim. In the third party proceedings, the Magistrate did not order a full indemnity, but a reduced amount in consideration of Mr Markovich’s obligation to pay an excess of $1,000 which was taken to have been appropriate had comprehensive insurance cover been available in respect of the relevant collision.
Essentially, the court’s view is that the appellant’s argument is inappropriately legalistic and subtle. It might be borne in mind that the plaintiff’s claim was rather modest, involving a principal amount of $10,800.
A good deal of mystery attends this matter. No transcript of the evidence in the Magistrates Court has been prepared, in which circumstances it must be taken that the oral evidence supports the findings that would have been dependent upon it. On matters of credit, the Magistrate preferred Mr Markovich to the appellant’s principal. One consequence of this is that, although the parties were clearly in contractual relations, which were found to have been at least partly (maybe entirely) in written form, it is not known what the agreement was. It must have been some standard form proffered by the appellant. Mr Markovich signed without reading; when he sought a copy he was told by the appellant’s principal that the documents had gone missing in a flood. In my opinion, in those circumstances, the appellant, as custodian of the missing contractual document, can hardly derive advantages from its disappearance.
The appellant sought to adduce as fresh evidence in the appeal as a likely example of what Mr Markovich would have signed a copy of a bailment agreement signed by another driver on 25 November 2010 (more than a month after the Magistrate’s decision) in which the driver was bailee. The conditions conclude:
“C.INSURANCES
(a)I agree to pay you the Bailor $ per shift / per day for work related accident/work related injury insurance taken out by the Bailor/Owner through an insurer of the Bailor/Owners choice.
See Clause 4 (Note: Cross out if not applicable and initial.)
(b)I agree to pay you the Bailor $ 11 [handwritten] per shift / per day towards the cost of Comprehensive Insurance cover on the bailment vehicle.
D. THIRD PARTIES
(Note: Fill in only those sections applicable i.e. 3 or 4 and cross out the whole of the other section, with the crossed out section to be initialled by both parties).
3.I shall not allow any other drivers to use the taxi-cab either to ply for hire or for any other reason unless otherwise specified in Part E Special Conditions.
OR
4.I may enter into a commercial arrangement with any other cab driver or drivers (a third party) who hold a current driver’s licence and a specific licence to drive taxi-cabs under the provisions of the Transport Operations (Passenger Transport) Act 1994 (or such other legislation which may from time to time regulate the driving of taxis) and who is registered or endorsed to drive under the banner of your Cab Company during the relevant bailment period or periods. Where this occurs, the relationship is agreed between the Bailee and the Third Party and no relationship shall exist or be deemed to exist between any such third party and you the Bailor.
I remain liable to you the Bailor for performance of all obligations cast upon me by this agreement notwithstanding the engagement by me of any third party.
E. SPECIAL $2000 excess fee of driver at fault [handwritten]
CONDITIONS
THIS BAILMENT AGREEMENT IS SUBJECT TO THE STANDARD QUEENSLAND TAXI-CAB BAILMENT AGREEMENT TERMS AND CONDITIONS OVERLEAF AND TO THE SPECIAL CONDITIONS (IF ANY) ABOVE.”
It was asserted that under the above there is no obligation on the bailor (the appellant) to arrange comprehensive insurance cover or to assume the position of insurer if cover is not arranged. This was said to be at variance with a document entitled Taxi Council of Queensland Standard Bailment Agreement Terms and Conditions (Issue 1 Revision 0 Date : May 2002) which was on the Magistrates Court’s file as an exhibit to an affidavit of Mr Markovich used in his application for joinder of the third party:
“4.1You shall during the currency of this agreement take out and keep with a reputable insurer work related accident/work related injury insurance to cover me for loss of earnings for the currency of this agreement. I will pay my estimated share of the cost of this insurance. You shall be entitled to use any reasonable method to provide a reasonable estimate of my estimated share of the cost.
For example, if your taxi on average does 11 shifts per week 52 weeks a year and I bail your taxi cab for 1 shift, then I shall pay for that shift my estimated share of the cost of the policy for 1 year by 11 x 52.
Cost for 1 shift = (Cost of Policy) ÷ (11 x 52)
4.2You shall also during the currency of this agreement take out and keep with a reputable insurer comprehensive insurance for your taxi-cab. I will pay my estimated share of the cost of this insurance policy for the period/s of bailment. You shall be entitled to use any reasonable method to provide a reasonable estimate of my estimated share of the cost.
For example, if your taxi on average does 11 shifts per week 52 weeks a year and I bail your taxi cab for 1 shift, then I shall pay for that shift my estimated share of the cost of the policy for 1 year by 11 x 52.
Cost for 1 shift = (Cost of Policy) ÷ (11 x 52)
4.3You will provide, on reasonable request, to me sufficient evidence of the insurances referred to above.
4.4Provided I make payments in clause 4.1 & 4.2, you indemnify me personally for any loss or damage I suffer if you fail to take out and keep the insurances referred to in Clauses 4.1 and 4.2.
4.5You shall be responsible for, and if required by the Insurer to, pay any excess (except for the under 25 years of age excess) on an insurance policy referred to in Clause 4.2.
4.6I shall be responsible for, and if required by you to pay, any under 25 years of age excess on an insurance policy required to in Clause 4.2.”
“You” in the “Terms and Conditions” refers to the appellant.
These standard form documents approach shift arrangements for cab drivers like Mr Markovich as bailments. It is not clear whether the Magistrate had regard to the document last quoted. It is not referred to in the apparently careful reasons which it is convenient to set out in full:
“BENCH: In this matter, the plaintiff and the defendant, Mr Markovich, reached a consent agreement where the defendant was liable to the plaintiff in the total amount of $20,633.44. The matter then proceeded to hearing in relation to the defendant and the third party on the basis that the third party should indemnify the defendant. The defendant gave evidence on his own behalf, and Mr Yassiry gave evidence for the third party.
There are two competing versions of events. The version of Mr Markovich is that he was a taxi driver and he approached Mr Yassiry who gave him a job as a taxi driver. Mr Markovich essentially stated that he provided copies of his licence as an authority for Mr Yassiry to photocopy, and then he was given a number of documents which he was told to sign. He said that he did not really know what he was signing and he just signed. He said that he signed the documents because he trusted the company as it was a big company. He said that he signed documents relating to "insurance stuff".
Mr Markovich also said that he completed an envelope-type document at the end of each shift, and that at the end of each shift each day an amount was taken from him for the purposes of insurances. He was not sure specifically what it covered, but he believed it was for all insurances, including comprehensive motor vehicle insurance. Mr Markovich gave evidence that he knew he had to pay the excess before he could be indemnified by the company. Mr Markovich stated that he was never asked to pay the excess, and that he would've paid it had he been asked. Indeed, he said that when he received the letter of demand, that Mr Yassiry told him not to worry, and if they recovered from him that he could just pay them off at a few dollars a week.
Mr Markovich stated that it was an agreement between himself and the third party, but he did not know exactly what it was, and when he asked for a copy, that Mr Yassiry said it had been lost in the flood. Mr Markovich said that the amount he was paying at the end of each shift was for some insurance and he believed it to cover him in the event of an accident, and therefore he should not be liable.
Mr Yassiry gave evidence of his usual practice and said that he explained things thoroughly to Mr Markovich as to what he would have to sign, and that Mr Markovich took the agreement away to consider it more, and never returned it. Mr Yassiry stated that the amounts paid at the end of each shift were for insurances, but only for personal insurance matters, and very minor accidents that did not involve a lot of money.
The third party position is that the agreement was not enforced between the parties because it was never returned, and the defendant was essentially on his own. The fallback position was that even if the agreement was in place, the defendant could not be indemnified because the terms of the agreement had not been placed in evidence. Moreover, Mr Markovich had not paid the excess as was his obligation, and therefore could not be entitled to the indemnity.
I make the following findings of fact on the evidence before me:
That Mr Markovich was an independent operator who had his own ABN and was not employed by the third party in the usual sense;
That in payment for his services, Mr Markovich received a 50/50 split of the profits after fuel and costs were deducted;Even though Mr Markovich was an independent contractor, I find that he signed an agreement with the third party. In this regard, I do not accept the evidence of Mr Yassiry. I find it inherently improbable that he would've allowed Mr Markovich to work if the agreement had not been signed and/or returned. Indeed, in his evidence, Mr Yassiry explained the procedure he usually adopted with respect to drivers, and gave an example of where he took a photocopy of a prospective driver's licence and had the person sign an agreement when the application for work was made. This was done in a case where that person's services were never even utilised. Even if Mr Markovich had taken the agreement home with him, which is not what I find, I am of the view that Mr Yassiry would have required him to have signed and returned it before he allocated him any work;
That while the agreement was not produced in evidence, it may well have been lost in the flood that destroyed a number of documents on the evidence of Mr Yassiry;That while Mr Markovich could not express the terms of the agreement, he said he signed what was placed in front of him without looking. I accept his version of events that it included "insurance stuff";
That Mr Markovich paid an amount at the end of each shift for insurances, including comprehensive motor insurance. On this point, and in relation to my earlier findings, I note that in paragraph 2 of the defence of the third party, it is stated, "As the allegations of paragraph 7 of the statement of claim, the third party admits that it required the defendant to pay a contribution fee per shift for the purpose of comprehensive motor vehicle insurance, but says that at no time did Mr Markovich A. execute any agreements to give effect to this; B. agree to this; and C. pay any such monies to the third party as alleged or at all." This is somewhat inconsistent with the evidence of Mr Yassiry. He said that Mr Markovich did pay an amount after each driving shift but said it was for insurance payments for personal injury and minor vehicle damage, but not cover more than minor damage arising out of a motor vehicle accident. I do not accept this evidence, and I prefer the evidence of Mr Markovich. I find that Mr Markovich not only believed he was paying for comprehensive motor vehicle insurance, but he was, in fact, paying for it. If Mr Markovich had been totally independent without the contract, then there would've been no basis to charge the fees for other insurances that Mr Markovich was paying;
As I have found Mr Markovich had entered into the agreement, then pleading 2 of the defence of the third party is consistent with the fact that the amounts he paid at the end of each driving shift were for comprehensive motor vehicle insurance;
Mr Yassiry also gave evidence that he told Mr Markovich to complete the claim forms and to pay the excess, but that Mr Markovich refused to pay the excess because he said he had been paying the contribution amounts and that should cover the excess as well. This is inconsistent with the third party having no liability. If there was no liability then there was no reason to offer the claim forms to the defendant or ask him to pay the excess;
That Mr Markovich admitted on his own evidence that he knew he had to pay the excess in relation to the insurance, but was never asked to do so;
That Mr Markovich, on his own evidence, has not paid the excess. Despite this, as the defendant has been paying for comprehensive insurance to the third party, I find the third party is liable to the defendant and must indemnify him accordingly.
I therefore find in favour of the defendant and against the third party. I order that the third party indemnify the defendant in the amount of $20,633.44, less $1,000 for the excess. That is, I order the third party to indemnify the defendant in the amount of $19,633.44, and the third party pay the defendant's cost as agreed, or if agreement cannot be reached, it is assessed on the standard basis. I do note, however, that the defendant was not legally represented in these proceedings, and that would significantly affect the cost component between the parties.”
Mr Markovich’s third party statement of claim was as follows:
“This claim in this proceeding is made in reliance on the following facts:
1. At all material times in this action:
a. The Plaintiff was the owner of the vehicle described in paragraph 3 herein.
b. The Defendant was the driver of vehicle T46 232.
c. The Third Party, L B Taxi Management Pty Ltd was the Taxi Operator for vehicle T46 232 (“the Vehicle”).2. On 17 April 2008 and at approximately 8.14 am, a collision between the Plaintiff’s vehicle and that driven by the Defendant occurred at Gympie Road, Strathpine.
3. Plaintiff’s vehicle: Toyota Registered number 769 IQX
4. Third Party’s vehicle (driven by Defendant): Ford, Registered number T46 243/
5. The collision was caused by the Defendant’s offence of “Follow another vehicle too closely” as stated on Traffic Infringement Notice A382092-0/
6. On 3 March 2007 the Defendant commenced driving for
the Third party.7. The Third Party required the Defendant to pay a contribution fee per shift for the purpose of comprehensive motor vehicle insurance.
8. The defendant paid the Third party a contribution fee each shift and the Third Party routinely accepted such payments.
9. It was the firm understanding and belief of the Defendant that he was fully covered by comprehensive motor vehicle insurance while driving any vehicle operated by the Third Party at any time.
10. It was the Defendant’s understanding and belief that as per industry standard, provided the Defendant paid the contribution fee per shift the Third Party would indemnify the Defendant for any loss or damage the Defendant may suffer if the Third party failed to take out nad keep comprehensive insurance with a reputable insurer.
11. The Third Party has not made any provisions for insuring the Vehicle and as Bailor, is liable to indemnify the Defendant for this and other claims related in the accident referred to in paragraph 2.
12. For the reasons stated the Defendant is entitled to be indemnified for this amount.”
He has been self represented all along.
The defence (prepared by a different firm from the one acting for the appellant in the appeal) was:
“The Third Party relies on the following facts in defence of the claim:-
1. The Third Party admits the allegations at paragraphs 1,2,3, 4,5,6 of the Statement of Claim.
2. As to the allegations of paragraph 7 of the Statement of Claim the Third Party admits that it required the Defendant to pay a contribution fee per shift for the purpose of comprehensive motor vehicle insurance but says that at no time did Markovich:-
(a) Execute any agreement to give effect to this
(b) Agree to this
(c) Pay any such incomes to the Third Party as alleged or at all.
3. As to the allegation at paragraph 8 of the Third Party notice the Third party denies same for reasons pleaded above in paragraph 2 hereof.
4. As to the allegations at paragraph 9 and 10 the Third Parity does not know and cannot therefore admit the allegations contained therein as these are the matters solely within the knowledge of the Defendant.
5. The allegations at paragraph 11 of the Statement of Claim the Third Party says that it has insured the vehicle but is not as bailor liable to indemnify the Defendant as pleaded or at all.
6. The Third Party does not plead to paragraph 12 as this contains a prayer for relief.”
It might be noted that the appellant failed to make good any of its assertions in paragraph 2. Indeed, its principal’s evidence acknowledged that contributions were taken from Mr Markovich in respect of every shift he drove, supported by the rather unconvincing explanation that this was only for insurance payments for personal injury and minor vehicle damage and no more. One would expect the parties to be more concerned with more major events involving more dollars. I am unconvinced by the appellant’s argument that, Mr Markovich being an independent contractor, it would be inappropriate to imply a term for provision of insurance cover to protect him of the kind that might readily be implied in respect of an employee. The interest of a taxi cab owner and the driver working shifts in having protection against third party property claims or indeed repair costs at a high level in respect of the relevant tax cab seems obvious. As Mr Markovich suggested in his oral submissions on the appeal, it is unlikely that there would be any practical means open to him of effecting the insurance himself.
The appellant’s counsel contended that the significance of the 25 November 2010 pro forma is that “it demonstrates that in the agreement that did exist between the appellant and the respondent there was no positive obligation of the kind advanced by the respondent … the respondent’s case below appears to have been that, in the event of there being no comprehensive insurance, on condition that the payments were made, in the event of there being no insurance, that the appellant would stand in the shoes of the insurer.” It was contended that Mr Markovich in his written outline for the appeal “says that the case really was one for breach of contract – that is, the bail agreement said that ‘you were to provide comprehensive insurance cover and you didn’t and I’m suing you for breach of that obligation’”. On this analysis, it was said to become incumbent upon Mr Markovich to demonstrate that had comprehensive insurance been arranged, it would have covered the relevant situation. I suppose it is technically correct to say that it would have to be shown that comprehensive insurance would have been available in the market if sought, and that there was nothing to exclude cover, such as Mr Markovich as driver not holding a driver’s licence or being intoxicated.
In the absence of a trial transcript, it is impossible to know what matters were ventilated. I do not think there is much room for the appellant to be claiming surprise in respects such as this. The contract strikes me as a fairly ‘everyday’ one, in which, if there were features that might enable an insurer to avoid liability, those could easily have been raised. See UCPR rule 149(1)(c). It may be significant that, while adducing fresh evidence in this appeal in another respect, the appellant did not see fit to do so in respect of this one. There is nothing to suggest that any issues to do with cover being unavailable for any reason were ventilated at the trial.
I am unable to accept the appellant’s submission (transcript 1/13) following examination of the Magistrate’s reasons that acceptance of Mr Markovich’s evidence that what he signed included “insurance stuff”, that it was the foundation of “the Magistrate’s decision ‘insurance stuff’ should be understood to mean that the appellant would stand in the shoes of the insurer if he hadn’t arranged himself appropriate and reasonable comprehensive insurance coverage. In my submission, a finding of fact of that kind cannot reasonably support the conclusion that the Magistrate reached”. It is not clear to me that the Magistrate’s analysis was as contended.
The findings in respect of Mr Markovich’s in fact paying for comprehensive motor vehicle insurance are said to be appropriate to a damages claim (for failure to take out insurance) rather than collecting an amount payable under a contract. The assertion that Mr Markovich is now in his appeal outline changing tack and pursuing a damages claim is based on paragraph 11c, responding to paragraph 10 of the appellant’s outline of submissions which read:
“10. With respect to the learned Magistrate the respondent was not proposing a contract of indemnity but a contract of insurance. An indemnity is a promise to cover losses caused by a third party. The respondent’s contention was that the appellant would protect him against his own loss caused by his own negligence: a form of liability insurance (see Prudential Insurance Co v IRC [2004] 2 KB 658).”
The respondent countered:
“cParagraph 10: What the respondent was proposing was that the appellant actually take out the insurance that he promised to take out if the respondent paid the contribution fee per shift. The respondent complied with the contract and did pay the money. The appellant did not comply with the contract, and accepted the money without taking out the insurance. The damage that flows from the appellant’s breach of contract is that he should therefore pay for that breach and put the respondent in the same position he would have been in if the appellant had performed the contract and obtained the insurance. This is the basis for the order that the appellant indemnity the respondent. There is nothing erroneous about the Magistrates findings. The trial was conducted on this basis, and there was no objection taken to that course throughout the trial. Had the appellant wished to raise this argument, it should have been done before the Magistrate, and not on an appeal for the first time.”
In the present context, I am of the view that none of these refinements matters much. It is the appellant introducing new notions into the whole controversy by raising speculation that, had it sought (even obtained) comprehensive cover, something might have gone wrong. Such matters ought to and could have been ventilated at the trial. I am not persuaded that it was any deficiency in Mr Markovich’s pleading or conduct of the trial that placed the appellant at a disadvantage. I am not impressed by arguments that the “imprecision” of Mr Markovich’s evidence at the trial (as revealed by the Magistrate’s descriptions of it) weakens his third party claim. I do not think that this matters, that pursuit of one legal analysis rather than another would, as a practical matter, lead to a different outcome. The court should not be a destroyer of people’s bargains or frustrate their reasonable expectations pursuant to them. The appellant’s contention that the outcome of the appeal should be judgement for it dismissing the third party claim would plainly be unjust. In argument the alternative of sending that claim back for a new trial was mentioned - another unattractive prospect in light of the limited amount of money at stake (ignoring costs). The appellant is in the situation of submitting that Mr Markovich may well have a good claim against it, but that the Magistrate erred in deciding the issue in the way and by the approach adopted.
Although not strictly necessary to deciding this appeal, some comments bearing on uncertainty (perhaps imprecision) in the Ninth Australian Edition of Cheshire and Fifoot’s Law of Contract provide helpful reminders in the present context:
“6.5Unclear agreements. Australian courts have been ambivalent about the natural human failing that brings about vague, ambiguous or imprecise expression of contractual promises. There are decisions in which undoubtedly vague phrases have been held to be sufficiently certain.
…
By contrast, there are decisions which have struck down contracts for uncertainty …
Because the courts have shown a marked tendency in more recent times to uphold agreements in which uncertainty is argued, some of the authorities just mentioned may not be a very reliable guide.
…
… , the court’s task is, so far as possible, to resolve the conflict by looking at the contract as a whole and ascertaining the parties’ evident intention.
…
… , the courts will prefer to interpret an ambiguous clause so that it provides for a sensible rather than an irrational meaning.
…
6.6… , the modern approach is, as pointed out above, generally to uphold contracts despite lack of clarity.
…[1]
[1]The passage omitted here is instructive in showing an example of a court striving to make workable contractual arrangements that are not clearly expressed:
“The same approach is used in relation to uncertainties relating to performance of the contract or satisfying a condition, such as giving a notice: a common sense interpretation is preferred.
However, it must be said that judges differ on this question. A case illustrating the differing approaches of judges is Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd Trading as ‘Uncle Bens of Australia’ [(1992) 27 NSWLR 326]. In that case a clause specifying the price to be paid for supplies of fish for the following year contained a formula ‘Price to UBA = Cost to TIA + percentage profit margin’. Not surprisingly the parties disagreed about the interpretation of this formula, specifically what was included in the ‘cost’ component. Of the members of the New South Wales Court of Appeal, Kirby P declared that this formula was illusory and that the contract was therefore void, Samuels JA said that it was neither uncertain nor incomplete and Clarke JA said that the word ‘cost’ in the formula was uncertain but that its meaning could be resolved by resort to extrinsic evidence. In the end, the majority assigned a meaning to the formula that was different from the two meanings put forward by the disputing parties.”
The devices available to a court to support the inclination to uphold contracts that have been poorly drafted are the objective test for interpreting and interpolating so as to give effect to the parties’ apparent intentions and the use of implied terms. … Barwick CJ in Upper Hunter County District Council v Australian Chilling and Freezing Co [(1968) 118 CLR 429 at 436-7] … said:
But a contract for which there can be more than one possible meaning or which when construed can produce in its application more than one result is not therefore void for uncertainty. As long as it is capable of a meaning … the court ... will decide its application … No narrow or pedantic approach is warranted …
…”
This readiness to uphold bargains is reinforced if the parties have acted on the agreement.”
I have also gained some assistance from Lord Denning’s famous test based on what an intelligent bystander would reasonably infer contracting parties had agreed upon: Oscar Chess Ltd v Williams [1957] 1 WLR 370, 375, Horneal v Neuberger Products Ltd [1957] 1 QB 247 at 257.
For the above reasons, the appeal was dismissed with costs.
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