Motor Accident Commission v Leslie

[2018] SASCFC 50

SUPREME COURT OF SOUTH AUSTRALIA

(Full Court)

MOTOR ACCIDENT COMMISSION v LESLIE

[2018] SASCFC 50

Judgment of The Full Court

(The Honourable Chief Justice Kourakis, The Honourable Justice Kelly and The Honourable Justice Blue)

12 June 2018

APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA

STATUTES - ACTS OF PARLIAMENT - INTERPRETATION - SCHEDULES

TORTS - THE LAW OF TORTS GENERALLY - GENERAL PRINCIPLES - ACTIO PERSONALIS MORITUR CUM PERSONA AND SURVIVAL OF CAUSES OF ACTION - SURVIVAL OF CAUSE OF ACTION

LIMITATION OF ACTIONS - GENERAL

Appeal brought by the Motor Accident Commission against a decision of a Judge of the District Court, dismissing an appeal against the order of a Master of that Court, that it be joined as a second defendant to the personal injuries action in which the first respondent, Mr Leslie, was the plaintiff.

The plaintiff’s action was instituted in December 2011, for damages for personal injury against MAC’s insured, Mr Shore, the driver of the car in which the plaintiff was a passenger. On 13 October 2013 Mr Shore passed away. By s 2 of the Survival of Causes of Action Act 1940 (SA) the plaintiff’s action against Mr Shore survived as against Mr Shore’s estate because it was pending at the date of his death.

A Master of the District Court made both an order substituting the estate of Mr Shore and adding the Motor Accident Commission as the second defendant.  The Master gave permission to the plaintiff to file an amended statement of claim.  The proposed amended statement of claim which the plaintiff intends to prosecute was, by agreement, placed before this Court.

Held, per Kourakis CJ (Kelly and Blue JJ agreeing):

1. The Motor Vehicles (Third Party Insurance) Amendment Act 2011 (SA) does not apply to actions brought pursuant to s 113 of the Motor Vehicles Act 1959 (SA) with respect to injuries sustained before 10 July 2011. The Motor Accident Commission was properly joined (at [43]).

2..     Appeal dismissed.

Survival of Causes of Action Act 1940 (SA) s 2; Motor Vehicles (Third Party Insurance) Amendment Act 2011 (SA) Sch 1; Motor Vehicles Act 1959 (SA) s 99(3), s 112, s 113, Sch 4, s 124A; District Court Civil Rules (2006) R 76; Compensation to Relatives (Amendment) Act 1953 (NSW); Judiciary Act 1903 (Cth); Supreme Court Probate Rules 2015 r 11, r 34; Supreme Court (Civil) Rules 2006 r 83(4); Public Trustee Act 1995 (SA) s 9, referred to.
Carslake v Guardian Assurance Co (1977) 15 SASR 378; Maxwell v Murphy (1956-1957) 96 CLR 261; Yew Bon Tew v Kenderaan Bas Mara [1983] 1 AC 553; Re a Solicitor's Clerk [1957] 1 WLR 1219; Secretary of State for Social Security v Tunnicliffe [1991] 2 All ER 712; Re Butler [1969] Qd R 106; The Ydun [1899] P 236; Staska v General-Motors Holden's Pty Ltd [1972) 123 CLR 673 (Privy Council); General Motors-Holden's Pty Ltd v Staska (1969) 119 CLR 301 (High Court); Fisher v Hebburn Ltd (1960) 105 CLR 188; La Macchia v Minister for Primary Industry (1986) 72 ALR 23; Attorney-General (NSW) v World Holdings Ltd (2005) 63 NSWLR 557; In the Estate of Giovanni Antonio Tamburin (2014) 119 SASR 143, discussed.

MOTOR ACCIDENT COMMISSION v LESLIE
[2018] SASCFC 50

Full Court:  Kourakis CJ, Kelly and Blue JJ

1. KOURAKIS CJ:       This is an appeal brought by the Motor Accident Commission (MAC) against a decision of a Judge of the District Court, dismissing an appeal against the order of a Master of that Court, that it be joined as a second defendant to the personal injuries action in which the first respondent, Mr Leslie, was the plaintiff. I will refer to the respondent as the plaintiff.

2. The plaintiff’s action was instituted in December 2011, for damages for personal injury against MAC’s insured, Mr Shore, the driver of the car in which the plaintiff was a passenger.  The plaintiff was injured when he was assaulted by a group of pedestrians outside the Olympic Dam Football Club in mid-December 2008.  The plaintiff claimed that Mr Shore recklessly drove the car in a way which endangered the safety of the pedestrians.  Mr Shore stopped the car a little later and fled the scene, but the pedestrians whose safety had been endangered dragged the passengers, including the plaintiff, out of the car and assaulted them (the assault).  The plaintiff claimed that it was a foreseeable consequence of Mr Shore’s reckless driving that it might so enrage the group of pedestrians that they would take out their anger by assaulting the occupants of the car.

3. On 13 October 2013 Mr Shore passed away. By s 2 of the Survival of Causes of Action Act 1940 (SA) (the Survival of Causes of Action Act) the plaintiff’s action against Mr Shore survived as against Mr Shore’s estate because it was pending at the date of his death.

4. On 17 July 2014 the plaintiff applied to substitute the executrix of Mr Shore’s estate as the first defendant and MAC as the second defendant.  The application was made pursuant to Rule 76 of the District Court Civil Rules (2006) (DCR 76) which relevantly provides that in the event of the death of a party to an action, the Court may substitute that party’s personal representative, or, if provision is made by statute for the action to be continued by or against an insurer, the party’s insurer. 

5. Insofar as DCR 76 applies to the substitution of the executrix, it is a procedural rule which facilitates s 2 of the Survival of Causes of Action Act in its application to an existing action.

6. In its application to a statutory cause of action against an insurer, DCR 76 allows the joinder or substitution to the existing action, not just of another party, but of a different cause of action to the one in which the deceased was a party. A note within DCR 76 specifically refers to s 113 of the Motor Vehicles Act 1959 (SA) (the MVA) which provides that a person injured by the driving of an insured motorist who is dead or cannot be found may bring an action against the insurer.

7. In this respect DCR 76 allows the joinder of MAC and the statutory cause of action conferred by s 113 of the MVA without the need to institute separate proceedings. Of course, DCR 76 does not preclude a plaintiff from instituting a separate action if he or she so chooses. No permission to do so is required. If properly pleaded, the new action against the insurer would proceed to trial subject only to an application for its summary dismissal. The long and protracted history of the application to join MAC pursuant to DCR 76 is the very antithesis of the facilitative purpose of that rule.

8. Section 113 of the MVA provides:

   113—Liability of insurer where the insured is dead or cannot be found

   (1)     Where—

   (a)death or bodily injury has been caused by, or has arisen out of the use of, an insured motor vehicle, but any person insured under a policy of insurance in respect of the vehicle who is wholly or partly liable for the death or bodily injury is dead or cannot be served with process; and

   (b)a person who could have obtained a judgment in respect of that death or bodily injury against the insured person if he or she were living or had been served with process, has given notice of a claim under this section and a short statement of the grounds of the claim as soon as possible after ascertaining that the insured person was dead or could not be found, or within such time as would prevent the possibility of the insurer being prejudiced by want of such notice,

   the person who could have so recovered judgment against the insured person may recover the amount of that judgment by action against the insurer.

   (2)Without limiting the scope of subsection (1), it is declared that a right of action against the insurer under that subsection in a case where the insured person is dead exists and has existed since the enactment of that subsection notwithstanding that the claimant has or had a right of action against the estate of the deceased person under the Survival of Causes of Action Act 1940 or any other law.

9. It is common ground that the cause of action provided by s 113 of the MVA is separate and distinct from the action against the driver. So much was authoritatively decided in Carslake v Guardian Assurance Co.[1]I will refer to the action against the insurer, in this case MAC, as the statutory cause of action.

   [1]    Carslake v Guardian Assurance Co (1977) 15 SASR 378.

10. The elements of the statutory cause of action are those prescribed by s 113(1) of the MVA, namely:

    1A person has suffered death or bodily injury (s 113(1)(a));

    2The death or bodily injury has arisen out of the use of an insured motor vehicle (s 113(1)(a));

    3The insured, who is wholly or partly liable for that death or bodily injury, is, himself, dead or cannot be served with process (s 113(1)(b));

    4The plaintiff would have recovered a judgment for damages for bodily injury to himself or herself or for the death of another but for the death or disappearance of the insured (s 113(1));

    5The person who could have obtained judgment in respect of the death or bodily injury has given notice within the prescribed time (s 113(a)(b));  and

    6The measure of damages is the amount of the monetary judgment referred to in element 4 (final clause of s 113(1)).

11. At the time of the assault Schedule 4 of the MVA provided a statutory indemnity by which the insurer insured the owner and any driver of the insured vehicle:

    …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…

    By virtue of cl 3 of Schedule 4, that indemnity was subject to the insurer’s right to recover back the damages paid from an insured person who had driven with a prescribed concentration of alcohol in his or her blood and in certain other circumstances of reckless or intentionally bad driving. I will refer to that clause as the insured’s warranty.

12. At the time of the assault, s 99(3) of the MVA provided that:

    (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 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.

13. The purpose of s 113 of the MVA is ancillary to the provision of the indemnity. It allows direct recovery against the insurer, thus obviating the need for complex or protracted litigation against the person who has died or disappeared.

14. The Motor Vehicles (Third Party Insurance) Amendment Act 2011 (SA) (the Amendment Act), which came into effect on 10 July 2011, added the word ‘direct’ immediately before the word ‘consequence’ in s 99(3) of the MVA.[2] The controversy over the joinder of MAC arose out of the change to the second element of the statutory cause of action by the Amendment Act in redefining the phrase ‘arising out of or in the course of the use of an insured motor vehicle’.

    [2] Subsequent amendments have repealed Schedule 4 and enacted a new section, being s 104 of the MVA, which provides, by way of a minimum requirement for policies of insurance offered under the MVA, that the owner and drivers of vehicles are insured in respect of all liability that may be incurred by the owner or other person in respect of death of, or bodily injury, to any person caused by, or arising out of the use of, the vehicle. The phrase ‘caused by or arising out of the use of the motor vehicle’ continues to be confined by s 99(3) to a direct consequence of the driving of the vehicle, its running out of control, or its involvement in a collision whilst stationary.

15. A Master of the District Court made both an order substituting the estate of Mr Shore and adding MAC as the second defendant.  The Master gave permission to the plaintiff to file an amended statement of claim.  The proposed amended statement of claim which the plaintiff intends to prosecute was, by agreement, placed before this Court.  In it, the plaintiff pleads that his injuries were within the scope of the statutory policy of insurance then in force, in that they were ‘a consequence direct or indirect’ of Mr Shore’s driving.  The statement of claim does not aver positively that the plaintiff’s injuries were a direct consequence.

16. It follows that the plaintiff’s proposed statement of claim, by so pleading, only discloses a good cause of action if the second element of the statutory cause of action is not affected by the amendment to s 99(3) of the MVA made by the Amendment Act. The question of the temporal operation of the Amendment Act is, therefore, determinative of this appeal. For the reasons which follow, I would hold that the amendment does not apply to the plaintiff’s action against MAC and that, therefore, it is not a necessary element of the plaintiff’s statutory cause of action that his injuries were a direct cause of Mr Shore’s driving of the vehicle.

    The Presumption Against Retrospective Effect

17. Schedule 1 of clause 1 of the Amendment Act (Schedule 1) relevantly provides:

    Schedule 1—Transitional provisions

    1—Transitional provisions

    (1)    Subject to this clause, an amendment made to the Motor Vehicles Act 1959 by this Act does not affect a cause of action, right or liability that arose before the commencement of the amendment.

18. The transitional provision is consistent with the common law rule of construction against giving statutes which change the law a retrospective operation.  The common law rule was stated thus by Dixon CJ in Maxwell v Murphy:[3]

    [3] (1956-1957) 96 CLR 261 at 267.

    The general rule of the common law is that a statute changing the law ought not, unless the intention appears with reasonable certainty, to be understood as applying to facts or events that have already occurred in such a way as to confer or impose or otherwise affect rights or liabilities which the law had defined by reference to the past events.

19. The decision in Maxwell v Murphy concerned a limitation period. The Compensation to Relatives (Amendment) Act 1953 (NSW) provided that an action under that Act should be commenced within 12 months of the death of the deceased person. The limitation period was subsequently extended to six years. A claim, which had lapsed on the expiration of the 12 month limitation period, was brought within the period of six years allowed by the amendment. It was held in Maxwell v Murphy that the legislation did not operate retrospectively to remove the immunity from suit which had vested in the defendant after the expiry of the period of 12 months.

20. Dixon CJ explained:[4]

    [4]    Maxwell v Murphy (1956-1957) 96 CLR 261 at 268-269.

    To say that notionally the right to damages continued to exist and only the manner of enforcing the right had been destroyed appears to me to ignore the fact that the right to damages could not be separated from the right to recover them. There are rights in English law which have an existence and a purpose although the remedy be suspended or wanting. But the right here in question is not one of them. If the amending statute received the operation for which the appellant contends, it would impose anew a liability that had ceased to exist. The presumptive interpretation is against such an operation.

21. The same approach was taken by the Privy Council in Yew Bon Tew v Kenderaan Bas Mara.[5]The Privy Council held that a defendant was entitled to plead the 12 month limitation period operative at the time of a motor vehicle accident, in an action brought after that time but within the period of three years allowed by subsequent legislative amendment. The Court held that the entitlement to plead the time bar had accrued and that the longer limitation period later enacted was not to be construed retrospectively so as to deprive the defendant of his defence. 

    [5] [1983] 1 A.C 553.

22. In 1899 the Court of Appeal in The Ydun[6] considered the converse position of subsequent legislation reducing a limitation period.  The legislation considered in The Ydun reduced the limitation period from six years to six months and was enacted several months after a collision which damaged the vessel.  The Privy Council accepted that the application of the reduced limitation period to a cause of action arising before the amendment would give it retrospective operation.  However the Privy Council held that there was no presumption against such a construction because the legislation was merely procedural. I observe that different considerations may have applied if the plaintiff had commenced the action before the amendment was made, but outside of the shorter limitation period it prescribed.

    [6] [1899] P 236.

23. A more complex question arises in this case.  It is whether a right or interest arising out of past circumstances, but which will only vest on the occurrence of a future event or contingency, is a right or interest which is protected by the transitional provision or the common law presumption.

24. It is convenient here to consider the interrelationship between a cause of action on the one hand and a right, interest, privilege or power on the other.  A cause is a suit or action.  Before the Judicature Acts[7] were enacted, it was the generic term for ordinary civil proceedings, whether at law or in equity.  Since that time the word ‘cause’ has been superseded by the word ‘action’.  A ‘cause of action’, on the other hand, is the combination of circumstances which found a right to a judicial remedy to enforce, or give effect to, a legal right, interest, privilege or power. 

    [7]    Supreme Court of Judicature Act 1873 (36 & 37 Vict c.66) (UK);  Supreme Court of Judicature Act 1875 (38 & 39 Vict c.77) (UK).

25. Some causes of action are not complete until damage has been sustained.  For example, whereas the cause of action in trespass is complete on the commission of the wrongful act, the cause of action in negligence is not complete until damage is suffered.  When a cause of action is perfected is, of course, of considerable importance when applying a limitation period.

26. A cause of action may also include an element which can neither be classified as the wrongful act or the resulting damage.  For example, a cause of action may not be complete until a notice of one kind or another has been given, a demand made, or a period of time has elapsed.  In causes of action with an element of that kind, a right or interest may have been breached, affected or conferred before the cause of action is perfected.

27. A number of authorities have considered whether changes in workers compensation legislation, affecting the rates of weekly income maintenance, or limits on redemption sums, operate prospectively or retrospectively.  The question in such cases is whether the legislative intent is to fix future payments by reference to scales applicable at the time of injury or to allow an injured worker the benefit, and impose on employers the burden, of subsequent increases.  In Staska v General-Motors Holden’s Pty Ltd,[8]the Privy Council approved the following passage in the judgment of Fisher v Hebburn Ltd[9] in which Fullager J explained that the point in time which delineated the prospective from the retrospective may not be the time of the work injury, but may be the time at which the compensation is payable:

    [8] (1972) 123 CLR 673 (Privy Council); General Motors-Holden’s Pty Ltd v Staska (1969) 119 CLR 301 (High Court).

    [9] (1960) 105 CLR 188.

    There can be no doubt that the general rule is that an amending enactment – or, for that matter, any enactment – is prima facie to be construed as having a prospective operation only. That is to say, it is prima facie to be construed as not attaching new legal consequences to facts or events which occurred before its commencement. The rule has been frequently applied to amending statutes relating to workers’ compensation, and it has often been held that such amendments apply only in respect of ‘accidents’ or ‘injuries’ occurring after their coming into force … But there is no rule of law that such statutes must be so construed, and it would not be true to say that a retrospective effect can only be avoided by confining the operation of such a statute to subsequently occurring ‘accidents’ or ‘injuries’. It may truly be said to operate prospectively only, although its prospect begins so to speak, with some other event than accident or injury.[10]

    [10] (1960) 105 CLR 188 at 194.

1. Nonetheless, the Privy Council in Staska expressly referred to the common law presumption as a reason to construe the amending provision before the Court in a way that preserved the compensatory regime as it stood at the time of injury.  It also observed that a presumption against retrospectivity was not limited to ‘a truly retrospective enactment … such as an Indemnity Act’.[11] 

   [11] Staska v General Motors Holden Pty Ltd (1972) 123 CLR 673 at 675.

2. Another example of the elusiveness of the distinction between the retrospective and prospective operation of legislation is presented by the circumstances considered in Re a Solicitor’s Clerk.[12]  In that case, at the time that a solicitor’s clerk was convicted of larceny, no order could be made, under the extant legislation regulating solicitors’ practices, prohibiting his future employment as a solicitor’s clerk. Following an amendment to allow such an order to be made on conviction for larceny, a prohibition order was made. The clerk contested the order on the ground that the legislation in question should not have been given retrospective operation. The Court held that even though the prohibition order was based on a pre-existing conviction, its effect on the clerk’s employment was prospective only. A similar situation arose with respect to a fishing licence in La Macchia v Minister for Primary Industry.[13] The decisions in both Re a Solicitor’s Clerk and La Macchia can be explained on the basis that neither the solicitor’s clerk nor the fisherman had, in any real sense, a right to continue in their vocations.  Their claims depended on a negative statutory implication, which could not be drawn, that the only legal consequence of their conduct was that which was provided for in the legislation extant at the time they engaged in that conduct.

   [12] [1957] 1 WLR 1219.

   [13] (1986) 72 ALR 23.

3. In cases in which the distinction between retrospective and prospective operation is problematic, recourse to the more fundamental principle from which the presumption against retrospectivity is derived may be appropriate.  In Maxwell on the Interpretation of Statutes,[14] that principle was identified as follows:

   [14] P St J Langan, Maxwell on the Interpretation of Statutes 12^th ed, Sweet & Maxwell, London (1969) at p 215.

   Upon the presumption that the legislature does not intend what is unjust rests the leaning against giving certain statutes a retrospective operation. They are constructed as operating only in cases or on facts which come into existence after the statutes were passed unless a retrospective effect is clearly intended. It is a fundamental rule of English law that no statute shall be constructed to have a retrospective operation unless such a construction appears very clearly in the terms of the Act, or arises by necessary and distinct implication.

4. In Secretary of State for Social Security v Tunnicliffe,[15] Staughton LJ adapted the presumption against retrospectivity to expressly incorporate the concept of fairness as follows:

   [15] [1991] 2 All ER 712 at 724.

   In my judgment the true principle is that Parliament is presumed not to have intended to alter the law applicable to past events and transactions in a manner which is unfair to those concerned in them, unless a contrary intention appears. It is not simply a question of classifying an enactment as retrospective or not retrospective. Rather it may well be a matter of degree – the greater the unfairness, the more it is to be expected that Parliament will make it clear if that is intended.

5. In Attorney-General (NSW) v World Holdings Ltd,[16] Spigelman CJ referred to those passages and concluded:

   [16] (2005) 63 NSWLR 557 at 572 and 573.

   This approach requires the court to determine the scope and degree of the unfairness or injustice that is applicable in the particular case. The greater the unfairness or injustice, the less likely it is that Parliament intended the Act to apply. Where Parliament has used general words, the courts will apply the well‑established technique of reading them down. (See R v Young (1999) 46 NSWLR 681 at 689 [23]-[31].) Referring to the presumption that Parliament did not intend to affect pending proceedings, Lord Rodger of Earlsferry said in Wilson v First County Trust (at 880 [198]): ‘… Since the potential injustice of interfering with the rights of parties to actual proceedings is particularly obvious, this … presumption will be that much harder to displace.’

   Analysis

6. It is convenient to start by testing the way in which the construction for which MAC contends would operate. 

7. First, it is clear, and is common ground, that an injured person who has instituted a statutory action against MAC before the Amendment Act came into operation can claim damages for the direct and indirect consequence of the use of the insured motor vehicle, without deduction for any breach of the insured’s warranty. Of course, whether or not a plaintiff’s cause of action against the insurer accrues before 10 July 2011 may depend on the happenstance, over which he or she has no control, of the timing of the death or disappearance of the defendant.

8. Secondly, it must also be accepted that the Amendment Act does not retrospectively curtail the rights of the insured against his or her insurer. Schedule 1 expressly so provides. If before 10 July 2011 an insured negligently injures another by his or her use of a motor vehicle, the injured person will recover against the insured damages for his or her injuries, whether or not the injuries are a direct or indirect consequence of that use. The insured, or on his or her death, the executor of his or her estate, may bring an action against the insurer to recover the damages payable for the direct or indirect consequences of the use of the motor vehicle, whether judgment was given before or after 10 July 2011. It would be surprising if the legislature, having expressly immunised the primary indemnity from retrospective curtailment, intended to limit, retrospectively, the liability of an insurer under the ancillary facilitative process provided by s 113 of the MVA to the direct consequence of the use of a motor vehicle.

9. It follows from the preservation of the indemnity for the injury occurring prior to 10 July 2011 that a person injured before that time will have his or her damages paid by the insurer, even for the indirect consequences of the use of a motor vehicle, albeit derivatively through an action brought by the insured or his or her personal representatives. However, the recovery of a judgment against an insurer derivatively through the executor of the estate of an insured, who has breached the insured’s warranty, is fraught. [17]   In an action against an insurer by the insured, or his or her personal representative, the insurer is entitled to plead by way of set-off any recovery to which it is entitled, by reason of the breach.[18]

   [17] If a grant of probate or letters of administration have not been granted, a testator ad litem may be appointed. However, a court will not appoint an administrator ad litem if there are no assets within the jurisdiction (see Re Butler [1969] Qd R 106 per Matthews J, cited in In the Estate of Giovanni Antonio Tamburin (2014) 119 SASR 143 at [14] and [15]; see also Rule 11 of the Supreme Court Probate Rules 2015 (Probate Rules), but that bar to almost anyone who has lived and died within a jurisdiction is likely to have at least some personal effects within the jurisdiction at the time of death. A bare chose in action for damages is not an asset. The Court has a discretion, pursuant to Rule 83(4) of the Supreme Court (Civil) Rules 2006 to appoint a person to represent the estate of a deceased person in an action. In the ordinary course, the priority for the making of a grant based on the rules as to intestacy must be satisfied (Probate Rules, r 34).

   In some cases, an order may be made pursuant to s 9 of the Public Trustee Act 1995 (SA) (PTA) appointing the Public Trustee to administer the estate of the deceased person. If judgment has been entered against an insured who has subsequently died, the injured person would be entitled to obtain administration of the estate as a creditor and, accordingly, the Public Trustee may be appointed; see s 9(1)(a)(ii) of the PTA.

   Alternatively, the Court has a broad discretion pursuant to s 9(1)(e) of the PTA to appoint the Public Trustee to administer an estate if no person entitled to obtain administration obtains it within three months after the death of the deceased. It follows that the effect of the construction contended for by MAC would, in the case of a deceased against whom MAC could make no recovery, simply force the injured person to considerable expense and delay in obtaining the appropriate orders for the administration of an estate that would allow the action to be brought against MAC.

   Plainly the bringing of an action through an executor for the enforcement of an insured’s indemnity is more cumbersome and expensive than a direct action against MAC.

   [18] See cl 3 of Schedule 4 to the MVA for claims before 10 July 2011 and s 124A of the MVA thereafter.

10. On the construction contended for by MAC, if an insured dies or disappears after 10 July 2011, a person injured as an indirect consequence of the use of an insured motor vehicle cannot proceed against the insurer directly but must bring a derivative action.  If the insurer’s warranty has been breached, the recovery will be reduced. On the other hand, an injured person who has instituted the statutory action, because of the death or disappearance of the insured before 10 July 2011, will not be subjected to such a set-off and will recover in full.

11. Parliament could not have intended that, of the persons injured as the result of the indirect consequence of the use of a motor vehicle before 10 July 2011, those who had instituted the statutory cause of action before that date, or who were injured by an insured who had not breached the warranty, would recover damages in full, but that those injured persons whose statutory cause of action was only perfected after 10 July 2011 against an insured who had breached the warranty would not. There is no rational reason to so distinguish between innocent victims in favour of the insurer of a wrongdoer.

12. A related issue arises in respect of the proper construction of s 112 of the MVA. Section 112 of the MVA is the provision which underpins the practice of insurers to discharge the judgments entered against their insured. If an insurer fails to do so, an action can be brought directly against the insurer pursuant to s 112 of the MVA. On MAC’s construction, that section too would produce arbitrary and unfair results giving further reason to reject it. Section 112 provides:

    112—Liability of insurer when judgment obtained against insured

    Where—

    (a)    a person has obtained judgment in an action against an insured person for death or bodily injury caused by, or arising out of the use of, an insured motor vehicle; and

    (b)    before the action came on for hearing the insurer knew that the action had been commenced,

    the judgment creditor may recover by action from the insurer such amount of the money (including costs or a proportionate part of those costs) payable pursuant to the judgment as relates to death or bodily injury and has not been paid.

    (emphasis added)

13. As can be seen from the underlined words of s 112(a), it is an element of the statutory cause of action created by s 112 of the MVA that the injured person holds a judgment for death or bodily injury arising out of the use of an insured motor vehicle. An action brought pursuant to s 112 is therefore susceptible to the narrowing of the definition of that phrase to the direct consequences of the use of the vehicle.

14. A judgment obtained against an insured before the 10 July 2011 for injury which was the indirect consequence of the use of the insured motor vehicle, vests a cause of action pursuant to s 112 against the insurer for the recovery in full of that judgment. However, on MAC’s construction, if judgment is given against the insured after 10 July 2011, the cause of action pursuant to s 112 of the MVA will only have arisen after that date, and only a plaintiff injured as a direct consequence of the use of the vehicle can recover against it. In the ordinary course, an insurer could be expected to pay out on the judgments entered against its insured drivers. If the insurer chose not to, and instead insisted on proceedings being brought pursuant to s 112 of the MVA, many arbitrary results would ensue. One example suffices. Two people may be injured as an indirect consequence of the use of a motor vehicle on the same day, some years before 10 July 2011. The person whose injury stabilises quickly, or for some other reason obtains a speedy judgment against the insured and against an insurer who has refused to pay, will recover in full. The other person who, through no fault of his or her own, secures judgment only after 10 July 2011 does not. Again, there is no reason for such an arbitrary denial of an injured person’s damages other than to favour the insurer’s financial interest.

15. On MAC’s construction, Parliament intended that the right to recover at all, or recover without deduction for breach of the insured’s warranty, for injuries indirectly sustained before 10 July 2011, would depend on matters over which the injured person had no control, such as the timing of the death or disappearance of the insured.  Whether or not the injured person’s right can properly be characterised as vested, and therefore protected by the common law presumption, such an arbitrary operation is unjust and should not be attributed to Parliament.

    Conclusion

16. The Amendment Act does not apply to actions brought pursuant to s 113 of the MVA with respect to injuries sustained before 10 July 2011. MAC was properly joined. I would dismiss the appeal.

17. KELLY J:            I agree with the Chief Justice.

18. BLUE J:                I agree with the Chief Justice.