Mazur v Australian Associated Motor Insurers Limited

[1989] TASSC 22

Serial No 15/1989
List “A”

CITATION:              Mazur v Australian Associated Motor Insurers Limited [1989] TASSC 22; A15/1989

PARTIES:  MAZUR
  v
  AUSTRALIAN ASSOCIATED MOTOR INSURERS LIMITED

TITLE OF COURT:           SUPREME COURT OF TASMANIA
JURISDICTION:                  ORIGINAL
FILE NO/S:  885/1988
DELIVERED ON:              23 March 1989
JUDGMENT OF:                 Crawford J

Judgment Number:  A15/1989
Number of paragraphs:  15

Serial No 15/1989

List "A"

File No 885/1988

MAZUR v AUSTRALIAN ASSOCIATED MOTOR INSURERS LIMITED

REASONS FOR JUDGMENT  CRAWFORD J

23 March 1989

1. The comprehensive car insurance policy issued by the applicant, which is the defendant in this action, insured the respondent‘s Subaru motor vehicle for accidental loss or damage. Under the heading "What your policy does not cover", it was worded in the policy, inter alia as follows:–

"4.1  You 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:–

4.1.1.Being 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 is provided by s21 of the Road Safety (Alcohol and Drugs) Act 1970:–

"21   Any covenant, term, condition, or other provision of a contract or other agreement to the extent that it purports to exclude or limit the liability of an insurer under any contract of insurance in the event of the owner or driver of a motor vehicle –

(a)being convicted of an offence under this Act (not being an offence under section 4); or

(b)having more than a specified percentage of alcohol present in his blood as indicated by an analysis of his breath, blood, or urine,

is void."

1. By s6(1) it is an offence to drive a motor vehicle while alcohol is present in the blood of the driver in a concentration greater than the "prescribed concentration". s2(1) defines "prescribed concentration" as "a concentration of 0.05 of a gram of alcohol in 100 millilitres of blood."

1. In this action the applicant insurer has been sued by the respondent for indemnity under the policy in regard to alleged damage to the motor vehicle caused in an accident on 25 October 1987. Following service of the writ, the applicant failed to enter an appearance, as a result of which the respondent obtained interlocutory judgment for damages to be assessed. Application has been made for orders that the judgment be set aside and that the applicant have liberty to defend. The respondent has taken no issue concerning delay, nor has he raised any specific prejudice which would be occasioned if the judgment is set aside, apart from the obvious prejudice in delaying the time when he may recover his entitlement under the policy, assuming that the action will ultimately be successful.

1. The applicant seeks to defend the action, raising as its defence that at the time of the alleged accident the vehicle was being driven by the respondent when he was under the influence of intoxicating liquor. Counsel for the respondent conceded that it is arguable that such was the case, but he submitted that to succeed with the defence, the applicant will need to be able to rely on sub–clause 4.1.1. and that, he submitted, in part contravenes s21 and therefore wholly does not apply because of the second sentence of the sub–clause.

1. On first reading, sub–clause 4.1.1. does not come into conflict with s21, for it does not provide that the excessive blood alcohol concentration should be indicated by an analysis of breath, blood or urine. As was pointed out by Underwood J in Annear v GRE Insurance Limited 68/1987, driving with an excessive level of alcohol in the blood might be established by other means such as an admission, or by evidence of consumption together with expert opinion concerning the likely concentration of alcohol in the blood resulting from such consumption. In the context of the terms of the insurance policy being considered by him in that case, Underwood J resolved the problem in the following way, at p6:–

"In so far as the clause purports to exclude liability in the event of the driver's concentration of alcohol in the blood exceeding the legal limit as indicated by analysis of breath, blood or urine, it is void. In so far as it purports to exclude liability in the event of the driver‘s concentration of alcohol in the blood exceeding the legal limit as indicated by means other than analysis of breath, blood or urine, it is not void."

1. It is conceivable that the facts of a particular case might fit both of the circumstances postulated, that is to say there might be evidence establishing an excessive concentration based on an analysis of breath (or blood or urine) and also based on other evidence.

1. Whether the reasoning adopted by Underwood J should be applied by me was not argued. I find it unnecessary to decide the question, because even if the reasoning does apply, I find in favour of the applicant for other reasons.

1. Section 21 does not create an offence, even with the assistance of the Contravention of Statutes Act 1889. It simply declares void, that is legally ineffective, a provision to the extent, and only to the extent, that it has the prescribed purport.

1. Sub–clause 4.1.1. is not void to the extent that it purports to exclude liability if the driver was under the influence of intoxicating liquor. But the respondent's case is that none of the exclusionary events contained in the first sentence of the sub–clause can apply, because the second sentence provides that "(t)his exclusion shall not apply if it contravenes the law of the State in which this policy is issued ..." and the term "(t)his exclusion" should be interpreted as referring to all of the first sentence. On the other hand the applicant‘s case is that the term "(t)his exclusion" should be interpreted as referring severally to each of the events which would, ignoring the affect of s21, give rise to the exclusion, and not to them all collectively. The exclusion expressed to be based on driving under the influence of intoxicating liquor does not contravene s21 and is not void, and therefore is not prevented from applying.

1. A contract must be interpreted from the language used in it. The mutual intention of the parties depends on the language. In my mind there is no doubt that the insurer intended, when it framed sub–clause 4.1.1., that if the law declared void part of the purport of one part of it, the valid parts would still be capable of being relied on. I also have no doubt that an insured person would expect the sub–clause to mean that. There is no sensible reason why the insurer would have wanted or intended an interpretation so much against its interests, and contrary to the general intention expressed in the sub–clause, when read without regard to s21.

1. The respondent's counsel submitted that if there is an ambiguity in the language used, it should be resolved in accordance with the maxim verba chartarum fortius accipiuntur contra proferentem, that is to say in favour of the insured in a case where the insurer has drafted the document (which obviously is the case here). But I do not see the ambiguity in the words used, applying what I consider to be common sense and reasonableness when interpreting the sub–clause. This is not, in my view, a case where the words used are "fairly susceptible of the construction attributed to it by the respondent" (Fullagar J in Halford v Price (1960) 105 CLR 23 at p34). "This maxim, however, only becomes operative where the words are truly ambiguous, that is speak with two voices; it is a rule for resolving ambiguity for example, where two different meanings are equally possible and it is otherwise impossible to determine what is intended; it cannot be invoked with a view to creating a doubt. Therefore, where the words used are free from ambiguity in the sense that, fairly and reasonably construed, they admit of only one meaning, the maxim has no application". (25 Halsbury‘s Laws of England 4th ed 231, cited with approval in British Traders Insurance Company Limited v James [1968] NZLR 1157 at p1162). It would be unfair and unreasonable to construe the sub–clause in the way submitted for the respondent. "The maxim is to be applied and the words of the policy, being the words of the insurers, are to be construed in the sense in which a prudent and reasonable assured would understand them. This principle, however, ought to be applied only for the purpose of removing a doubt, not for creating a doubt or magnifying an ambiguity where the circumstances of the case raise no difficulty." (AF & G Robinson v Evans Bros Pty Ltd [1969] VR 885 per Starke J at p895. No prudent and reasonable assured would interpret sub–clause 4.1.1. so as to believe that he might drive under the influence of intoxicating liquor or of a drug, without concern that the sub–clause would operate to exclude the insurer's liability in the event of an accident. One "should not be astute to find an ambiguity in order to work all presumptions against the insurers" (Wilson v Harvey Trinder (NSW) Pty Ltd [1973] 2 NSWLR 870 per Samuels J at p 878).

1. I am mindful that, so far as Tasmanian law is concerned, my interpretation of the relevant part of the second sentence of sub–clause 4.1.1. may result in it having no effect on the meaning and scope of the first sentence. Be that as it may, I am not persuaded that the words should be interpreted in the manner submitted for the respondent.

1. In any event, no evidence has been presented establishing that the insurance policy was issued in Tasmania, and without that evidence I cannot hold that the exclusion "contravenes the law of the State in which this policy is issued".

1. In the circumstances I find that the applicant has established that it has an arguable defence based on the first of the exclusionary events contained in sub–clause 4.1.1. There being no other aspects which should persuade me otherwise, this is a proper case for an order that the interlocutory judgment dated 25 October 1988 be set aside, and that the applicant have liberty to defend the action.