Rex v Koczwara

[1992] HCATrans 265

.::-

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Adelaide No A2 of 1992

B e t w e e n -

ALBERT EDWARD REX

Applicant

and

HELEN KOCZWARA AS MANAGER OF

THE ESTATE OF STANISLAW

KOCZWARA

Respondent

Application for special leave

to appeal

MASON CJ DAWSON J

McHUGH J

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TRANSCRIPT OF PROCEEDINGS

AT ADELAIDE ON WEDNESDAY, 2 SEPTEMBER 1992, AT 3.06 PM

Copyright in the High Court of Australia

MR w. WALSH, QC: If the Court pleases, I appear with my

learned friend, MS L.J. KING, for the applicant.

(instructed by Stratford & Co)

MR D.A. 'J!.RIM:  May it please the Court, I appear for the

respondent. (instructed by Andersons Barker

Gosling)

MR WALSH:  If the Court please, the issue which arises in

this case is the proper characterization of a

payment by the applicant to a hospital for

treatment to the respondent whether that payment in

law was a voluntary payment or a payment under

obligation such that it could be brought into

account in satisfaction, part or otherwise, of a

claim for damages by the respondent in negligence.

If the Court pleases, the applicant's position

is that it challenges the correctness of the

decision of the majority of the Full Court.	It
says that there is sufficient doubt as to the

correctness of that decision; secondly that they

are matters of general practical importance to the administration of justice in relation to claims of

this kind in South Australia because of the issue

that is raised.

MASON CJ:	Why do you say the decision was wrong?
MR WALSH:	If the Court pleases, the decision was wrong, in

our respectful submission, because it characterized

the payment aa one which was under an agreement

alone and not under an agreement and under an

obligation pursuant to an Act.

MASON CJ:  Why was it a payment under the Act? How do you

demonstrate that?

MR WALSH:  The payment was under the Act because of the

effect of the provision of not only section 111 of	the Motor Vehicles Act but also the clear wording,
in our respectful submission, of section 47(2) of
the South Australian Health Commission Act which
imposed obligations in relation to payment and also anticipated in the case of section 47(2) that there
would be an agreement for early payment.

MASON CJ:	Was a notice given under the Act?
MR WALSH:	In our respectful submission, there was and in

fact the learned majority said that there might
well, in effect- there may well be a notice and the

minority accepted that there was in fact a notice.

MASON CJ: What was the notice?

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MR WALSH:  The notice was a document which was referred to

within the judgments being a notification of the registration of vehicle, the name of the person who
information that would be required under the

~as injured and the like which would enable all the

parties including the hospital and the insurer to

determine what matter was being referred to and

identify the action and the incident involved.

MASON CJ: was there a notice under the relevant provision

of the Health Insurance Act?

MR WALSH:  In our respectful submission, it amounted to a

notice under that Act.	It does not have to be a
notice in writing.	It could be personally, under
section 47(2).	It was not prescribed to be in a

particular form. This was observed, in our

respectful submission, by Justice Matheson in the

minority, and we say that that is exactly what the

section provides.

MASON CJ: Where do we find the provisions of 47?

MR WALSH: Within the judgment itself - - -

MASON CJ: What page?

MR WALSH:  - - - of the majority, His Honour Justice Mohr.

Your Honours will see at page 21 of the book of application and Your Honours will see it commences

with section 44 and over the page at the foot of

page 22 it refers to section 46 and 47.

Can I say, before the Court considers that, that there was in fact a prior Act which was in

existence in 1976 at the time that the agreement

that is referred to in the body of the judgment was

entered into. It is in some ways similar, but

there are some differences.	I have enclosed in a
book of authorities which should be before the

Court, copies of the old Hospitals Act and I have

also enclosed copies of the then provision or '75

provision of the Motor Vehicles Act, section 111

which refers to the Fourth Schedule or, at least,

it refers to the Hospitals Act.

DAWSON J: You say the Hospitals Act, not the

Health Commission Act?

MR WALSH:  This is the Hospitals Act which was the prior

Act.

The point that I am raising is this:

Your Honours will see at page 23 at about point 35

that what the learned majority assumed was that

what had happened was that both proceeded under the

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terms of agreement of June 1976 which antedated the

proclamation of the Act by some 12 months, and they

reiterated that point when they said at the foot of

page 25 of the application at about point 25 or 24:

If the hospital and S.G.I.C. saw fit to

conduct their affairs without regard to the

Statutory Section of the

South Australian Health Commission Act but
rather to proceed on the basis of an agreement

which preceded the Act and to which the

appellant was not a party -

and so forth. The point we make is that, with

respect, there was in fact an Act in 1976 which was

not identical but it was similar in its terms and

it gave rise to an obligation at that time to meet

a payment that was requested upon notice by the

hospital.

DAWSON J: But is not what was done pursuant to the notice

that was given indicative of whether the notice was

given under the agreement or the Act? And what was
done was that an amount less than the full amount

was offered and accepted by the hospital.

MR WALSH:  In our respectful submission, if one looks at the

agreement itself it refers to the liability. The

agreement must have been and highly likely to have

been entered into in the background of the then

Hospitals Act and no doubt, on the basis that there

was in fact at that time, namely July '76, a new

Act that was present, no doubt being debated and which was assented to in December 1976.

The background of the agreement and the very

wording of the agreement shows that it was entered

into on the basis that it would give efficacy to an

arrangement or payment to the hospital but because

of its obligation under the then Act, and no doubt

under the new Act as well, an simply because the

payment was made under the agreement, which we

accept because we had the benefit of the

20 per cent reduction, it was also, in our

respectful submission, made under the Act~ made

under the compulsion of law to meet the payment.

DAWSON J: That might not necessarily be so, might it? In

fact, payment under the agreement may be made by

the insurance company on its own behalf.

MR WALSH:	Quite so, yes, and indeed the Hospitals Act when it then came into force spoke of the insurer being
the person who must make the payment.

MASON CJ: But your real problem lies in the terms of 46 and

47, does it not? When you read those two

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provisions together, does it not appear that the

Act contemplates that the notice will be given in

respect of a claim that the hospital is making for

payment under the Act?

MR WALSH~ Yes, Your Honour, and indeed that is exactly what

is provided, that they then give notice of the full

payment, but because of the agreement they only

have to pay 80 per cent. That does not -mean, in

our respectful submission, that it is not a notice
and a payment pursuant to the notice and the

agreement as well. Indeed, if one looks at 47(1),

it says:

Where a notice has been given to an

insurer under this Division, the hospital

shall have first claim upon any money to be

paid by the insurer in respect of the bodily

injury -

Subsection (2) provides:

Where an insurer upon whom a notice has

been served under this Division proposes to

pay money -

it does not say when -

in respect of the bodily injury -

which this was -

to whom the notice relates (whether or not the

money is to be paid in pursuance of an order

of the Court or voluntarily by the insurer -

in this case a "voluntary" payment by the insurer.

or without an admission of liability), the

money shall be applied by the insurer first -

in the following manner.

What the insurer did was to receive the

notice. It had the benefit of the reduction which, of course, also the plaintiff had at the end of the

day.

DAWSON J: But it is not a payment in respect of bodily

injury at all, it is a payment in respect of the·

liability which the insurance company would

otherwise have to the plaintiff, to the injured

person to ensure that he does not make a claim in

respect of these moneys. It is the insurance

company to reduce its prospective liability and it

is a payment which it makes on its own behalf, not

in respect of bodily injury at all.

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MR WALSH: 

In our respectful submission, it is a payment in

respect to the liability that exists for the bodily
injury which has been suffered.

DAWSON J: 

It is a liability which exists in respect of hospital treatment. It would be in respect of

bodily injury if the plaintiff were claiming but

the plaintiff is not claiming this money. He is

not claiming it because it has already been paid.

He has been paid by the insurance company because

it gets a 20 per cent reduction on the amount which

it would otherwise have to pay under the policy to

the plaintiff who would then be liable to the
hospital.

MR WALSH: 

I see what Your Honour puts to me.

DAWSON J: That is what they put, more or less, in the

Full Court, is is not?

MR WALSH: Well, in our respectful submission, if one looks

at the Motor Vehicle Act, one sees the obligation

to pay in accordance with the Act.	In fact, the
old Act - - -

DAWSON J: The obligation on whom to pay to whom?

MR WALSH: Upon the insurer

DAWSON J: To pay to - - -?

MR WALSH:  To the hospital an amount under the Act.

DAWSON J: Yes.

MR WALSH:  In fact, I have added to the documents which are

before the Court, the loose-leaf copy consisting of

two pages of what was, in 1975, the provision of

section 111 of the Motor Vehicles Act.

DAWSON J: Yes.
MR WALSH:	Do Your Honours have a copy of that?

DAWSON J: Yes.

MR WALSH:  There should be page 501 at the top right-hand

corner, it is loose, and at the foot of that page,

section 111:

When a payment is made (whether or not

with an admission of liability) by an insurer

under or in consequence of a policy of

insurance under this Part in respect of the

death of or bodily injury to any person caused

by or arising out of the use of a motor

vehicle, the insurer shall, in addition to

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making any other payments provided for this

Part -

and there is a scheme of payment -

=	such payments with respect to hospital
treatment as are payable pursuant to Part VI of the Hospitals Act.

DAWSON J: Which is a predecessor of the Health Commission

Act, yes.

MR WALSH: Quite so; and that was when the agreement was

entered into, in July 1976, and then the new Act

came into force and what the Motor Vehicles Act then read was - and that appears in the book of

authorities, it is the first document,

Motor Vehicles Act, and Your Honours will see page 92 and I will ask you to turn to page 94 on

the left-hand top corner. Your Honours will then see the current section 111 of the Motor Vehicles Act which prescribed that:

make such payments with respect to hospital

treatment as are payable pursuant to any Act.

Now, of course, that was appropriate because it
could have been paid in the past under the old

Hospitals Act and it could be paid under the

South Australian Health Commission Act which came

into force - was assented to in December 1976 but

did not come into force in so far as these

provisions are concerned until 1978.

So there was, in our respectful submission, if

one looks at the Motor Vehicles Act and even the

provisions that precede section 111, there was a

scheme in force whereby the insurer would be looked

to for payment - - -

DAWSON J:

Right, but was the payment made under or pursuant

or in consequence of a policy of insurance?

MR WALSH: Yes, indeed, with respect, because the agreement

even foreshadowed that. If one looks at the terms

of the agreement which are conveniently dealt with

within the body of the decision of, I think, the

majority, and it is referred to at page 18 and

Your Honours will see in (4)(iii):

it relates to death or bodily injury sustained

in an accident occurring on or after 1.7.76

and for which the 'approved insurer(s)'

would be liable.

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The approved insurer is the insurer under the

Motor Vehicles Act and for which would be liable

because of the negligence of the driver.

DAWSON J: And to avoid that liability it makes a payment to

~he hospital.

MR WALSH:  Yes, and it makes the payment because of its

obligation to do so.

DAWSON J: That may be its motive, but it does not make it

under or in consequence of the insurance policy.

It seeks to avoid a liability which it would otherwise incur under the policy.

MR WALSH:  Our answer can only be to that proposition, in

our respectful submission, that it is a payment

under that agreement but also under the Act. It is

payment under the Act because that agreement was
predicated on the basis of the obligation provided

for under the Act.

DAWSON J:	It comes back to what I was putting to you that, on your argument, it must be, in effect, a payment
on behalf of the plaintiff, the person liable to the hospital.

MR WALSH: Yes, indeed.

DAWSON J: What I am putting to you is, it was nothing of

the sort, the hospital was simply paid by the

insurer because the insurer knew it would become

liable if a claim were made and it was to reduce

the amount of the claim when and if made because it

got a 20 per cent reduction.

MR WALSH:  I will come back to that proposition but if I am

wrong, even in the argument that I put to you and

Your Honour Justice Dawson is correct in what is

put to me now, and therefore we must fail, then, in

our respectful submission, it is not a payment that can be said to be a voluntary payment within the concept of equity and unjust enrichment. In our

respectful submission, it satisfies every criteria

for something that this applicant ought to be

entitled to have taken into account to offset its

liability to the plaintiff, because there was a

benefit to the party, namely the respondent. The

benefit arose because under section 39, I think it

is, of the South Australian Health Commission Act,

the South Australian Health Commission Act was

entitled to payment for the services from the

person who received the services.

The benefit was, in our respectful submission,

something which was at our expense.

Rex	8	2/9/92·
DAWSON J: Yes.

MR WALSH:  And, finally, in our respectful submission, ought

therefore be something which we are entitled to

take into account - the applicant should have taken

...into account in relation to its assessment of

damages.

DAWSON J: Can I put it to you simply: if the payment was

made under the Act, if the insurance company just

relied on the provisions of the Act, it may be

liable, absent contributory negligence, for the

whole of the amount of the hospital bill

eventually.

MR WALSH:	Yes •..
DAWSON J:	Instead of doing that, what it did was enter into

an agreement with, in effect, the hospital, the

Minister for Health and said, "Well look, if we pay on a bulk billing basis pursuant to an arrangement,

can we have a reduction of 20 per cent?", and the arrangement was made on that basis and it got its

reduction of 20 per cent and it paid on its own

behalf to avoid the obligation to pay the whole
amount which it might be liable to pay if they

proceeded pursuant to the Act.

MR WALSH:  As an alternative, we say that it was a payment

that was made on behalf of the named defendant to

the proceedings, a person who would be liable in

negligence presumably and for damages, and having

done that then it is a payment that is not a

voluntary payment because there is an obligation to

be met, namely, ultimately to the plaintiff and it

has saved the plaintiff, in our respectful

submission, that which it would have been -

DAWSON J:	There was no obligation to be met because the obligation under the Act is to pay first out of
moneys to be paid to the plaintiff, the amount
which is owing to the hospital, but if you pay
pursuant to the arrangement there is nothing owing
to the hospital because of the arrangement.
MR WALSH:	I can only put the proposition that I have to

you, Your Honour, that we urge upon the Court that,

in fact, that payment was pursuant to an obligation and that we ought to be entitled to have that taken

into account.

DAWSON J: There is no obligation if no notice was given

pursuant to the Act is there.

MR WALSH:	There was under the old Hospitals Act - - -
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DAWSON J: And there is no obligation if in fact, no moneys

in respect of the hospital liability are to be

made, the Act apart, to the plaintiff.

MR WALSH:  Yes, I probably put it too high in saying that it

.Jlas been a current obligation, but what I do say

is, it is an obligation which is anticipated and

properly so, and in this case, in the sense of the

majority of the payment that was so, and the

payment was made in anticipation pursuant to the
provisions of section 47(2) which in fact envisages

such a payment.

If the Court pleases, I have put to the Court an outline of submission for the applicant.	I will
not take the Court through that outline.

MASON CJ: No, we have had the advantage of reading it.

MR WALSH: I presume the Court has it and will have had

regard to it. If the Court pleases.

MASON CJ: The Court need not trouble counsel for the

respondent. The decision of the

Full Court of the Supreme Court is not attended

with sufficient doubt to justify the grant of

special leave to appeal. The application is

therefore refused.

MR TRIM:  We seek an order for costs.

MASON CJ: You cannot oppose costs, Mr Walsh?

MR WALSH:	I cannot resist that, if the Court pleases.
MASON CJ:	The application is refused with costs •
AT 3.26 PM THE MATTER WAS ADJOURNED SINE DIE

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