Schaap v Shoobridge
[1999] TASSC 149
•20 December 1999
[1999] TASSC 149
CITATION: Schaap v Shoobridge & Ors [1999] TASSC 149
PARTIES: SCHAAP, Cynthia Diane
v
SHOOBRIDGE, Peter by his personal representative
SHOOBRIDGE, Wendy Ann
MOTOR ACCIDENTS INSURANCE BOARD
QBE INSURANCE LTD
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: ORIGINAL
FILE NO/S: 750/1995
DELIVERED ON: 20 December 1999
DELIVERED AT: Hobart
HEARING DATE: 13 October 1999
JUDGMENT OF: Cox CJ
CATCHWORDS:
Traffic Law - Statutory compensation in respect of motor vehicle accidents - Tasmania - Bodily injury arising out of use of horse float - Whether statutory insurer can recover from insurer with exclusion clause in respect of vehicle drawing horse float.
Motor Accidents (Liabilities and Compensation) Act 1974 (Tas), ss2(1) and 14(4A).
Albion Insurance Company Limited v Government Insurance Office of New South Wales (1969) 121 CLR 342, referred to.
Aust Dig Traffic Law [171]
REPRESENTATION:
Counsel:
1st & 2nd Defendants: A J Denehey
3rd Party: S J D Knight
Solicitors:
1st & 2nd Defendants: Murdoch Clarke
3rd Party: Dobson Mitchell & Allport
Judgment Number: [1999] TASSC 149
Number of paragraphs: 12
Serial No 149/1999
File No 750/1995
CYNTHIA DIANE SCHAAP v PETER SHOOBRIDGE
BY HIS PERSONAL REPRESENTATIVE WENDY ANN SHOOBRIDGE and
MOTOR ACCIDENTS INSURANCE BOARD and QBE INSURANCE LTD
REASONS FOR JUDGMENT COX CJ
20 December 1999
The issue I have to determine is whether the Motor Accidents Insurance Board ("the Board") is entitled, by virtue of the Motor Accidents (Liabilities and Compensation) Act 1974 ("the Act"), s14(4A), as it stood on 23 March 1995, to recover from the third party, QBE Insurance Ltd, the sum of $76,500, which sum represents the judgment debt and costs payable to the plaintiff by the first named defendant and in fact paid to her by the Board by virtue of its statutory obligation to indemnify the first named defendant.
The facts are not in dispute and can be stated shortly. On 23 March 1995, the plaintiff's thumb was amputated when it was caught up in a lead rope attaching the halter of a horse to an anchor in a float. It had been necessary to take the horse to a veterinary surgeon and the horse had been transported in a float which was drawn by a utility driven by the first named defendant. Both utility and float were motor vehicles within the meaning of the Act and the Board is liable to indemnify the first named defendant under the Act for any liability incurred by him or his estate arising out of the use of a motor vehicle. On arrival at the veterinary clinic, the utility was stopped, the plaintiff entered the float and placed her hand on the lead rope. The first named defendant undid the back door of the float and undid the safety bar, whereupon the horse fell out of the float and in doing so caused the plaintiff's thumb to be caught in the rope and injured. It is agreed between the parties that the plaintiff's injury was caused by the negligence of the first named defendant, that $76,500 is the reasonable measure of the plaintiff's entitlement to damages and costs in respect of her injury, that the Board agreed to indemnify the first named defendant in respect of his liability to the plaintiff on the basis that the horse float was a motor vehicle as defined by the Act, s2(1), that the horse float was not (a) fitted with any motor or other means of self-propulsion and was dependent for movement on either manual handling or towage by a motor vehicle or other vehicle equipped with a towbar and towball, or (b) a mechanically propelled vehicle for the purposes of the exclusion clause relied upon by the third party. It was further agreed that policy of insurance HO-0004914-HOM referred to in the pleadings and maintained by the first named defendant with the third party was current and in full force and effect as at the date of the plaintiff's injury.
The policy of insurance issued by the third party relevantly provided:
"QBE will pay all amounts You become LEGALLY LIABLE to pay as compensation:
Item 1
as a result of an accident anywhere in the World causing death or bodily injury or illness to any person or loss of or damage to property. Liability under this item for any one accident or series of accidents arising from one source or original cause is limited to $5,000,000 including all law costs and expenses incurred by you with the consent of QBE or recoverable from you by any claimant.
…
EXCLUSIONS
Item 1 of this Section does not cover liability:
…
5arising out of the ownership or use of a mechanically propelled vehicle (other than a garden appliance or golf buggy), power driven water craft or watercraft exceeding 3 metres in length, aircraft or aerial device."
The Act relevantly provided at the time of the injury:
"14 ¾ (1) By virtue of this Act, but subject to and in accordance with the provisions thereof, the Board is bound to indemnify a person owning or using a motor vehicle, or his legal personal representatives, in respect of any liability (not being a contractual liability) incurred by him in respect of the death of, or bodily injury to, any person caused by or arising out of the use of that motor vehicle in this State on or after the appointed day.
(4A) Where the Board is under this section bound to indemnify a person in respect of a liability, it has, to the exclusion of that person, the like rights of contribution or indemnity in respect of that liability as were vested in that person."
Counsel for the Board submits that as the liability of the first named defendant was incurred by him in respect of injury to the plaintiff arising out of the use of the float (which, being a trailer within the meaning of the Traffic Act, 1925 falls, within the definition of motor vehicle in the Act, s2(1)) and as the Board was accordingly obliged to indemnify him, the Board has the like rights of indemnity in respect of that liability as were vested in him and that the first named defendant's rights under the policy gave him a full indemnity in respect of the judgment debt and costs. Counsel for the third party submits:
(1)s14(2A) does no more than entitle the Board to make a recovery claim against a concurrent tortfeasor whom the Board is not obliged to indemnify;
(2)the Board can receive no greater entitlement than the first named defendant has and that as he has already been indemnified by the Board and cannot recover twice, he has no right to recover which the Board could enforce;
(3)in any event, the third party is not bound to indemnify the first named defendant as the exclusion clause is applicable, the liability of the first named defendant arising out of the use of the utility rather than the float; and
(4)if the third party is bound to indemnify the first named defendant under the policy and if the Board may enforce that right, the principles of double insurance apply so that the Board and the third party should bear the loss rateably.
I do not consider that the first submission has any merit and it was not strongly pressed. There are no words expressly or impliedly limiting the scope of the subsection to recovery against joint tortfeasors. It is expressed in very broad terms so as to give to the Board, to the exclusion of the person indemnified by the Board, all rights of contribution and indemnity as were vested in that person. A right of indemnity from an insurer is not beyond the scope of the subsection.
As to the second submission, reliance was placed on certain dicta in Albion Insurance Company Limited v Government Insurance Office of New South Wales (1969) 121 CLR 342. That case reaffirmed the common law doctrine that where two insurers cover the same risk which gives rise to a claim, there is a right of contribution between them. In the course of explaining how the doctrine of contribution between insurers evolved, Barwick CJ, McTiernan and Menzies JJ said at 345:
"There is double insurance when an assured is insured against the same risk with two independent insurers. To insure doubly is lawful but the assured cannot recover more than the loss suffered and for which there is indemnity under each of the policies. The insured may claim indemnity from either insurer. However, as both insurers are liable, the doctrine of contribution between insurers has been evolved."
At 346 they said:
"It seems to us that each policy did cover the very risk against which the policy holder did seek indemnity from one of the insurers. The matter can, we think, be decided simply enough by inquiring whether payment by one insurer of the policy holder's claim for indemnity would provide the other insurer with a defence to a like claim against it. It clearly would, and it would simply because the policy holder had by the payment made been indemnified against the risk insured against. He had received all that he was entitled to receive under both policies so the payment by one insurer would discharge both. Thus, payment by one is made for the benefit of both, and, contribution is equity."
In GRE Insurance Ltd v QBE Insurance Ltd and Others [1985] VR 83, McGarvie J adverted to the analysis of the right of one insurer to obtain contribution from another undertaken in Albion's case and said, at 99 - 100:
"Underlying the right is a recognition that where each insurer is liable to indemnify the insured against the happening that caused the insured's loss, then, at least in the absence of complications from rateable proportion clauses in the contracts, the payment by one insurer of the indemnity frees the other insurer from liability to the insured. The other insurer is freed from liability because the insured has, by the payment, been indemnified for the risk insured against."
While these cases clearly establish that the insured cannot recover twice and that payment by one extinguishes the insured's right to seek recovery from the other, it does not follow that the Board, by virtue of the authority given it by the Act, does not acquire the insured's rights against the third party before any such payment is made and cannot maintain them against the third party notwithstanding the discharge of the first defendant's liability to the plaintiff. Section 14(4A) vests in the Board the first defendant's rights against the third party "where the Board is under this section bound to indemnify a person in respect of a liability". The Board came under that obligation as soon as the first named defendant incurred the liability to the plaintiff, not when it discharged its obligation by payment to the plaintiff. Having acquired the first defendant's right while it was still in existence, the fact that subsequent to payment the first named defendant cannot himself enforce it against the third party does not involve any extinguishment of the right now vested in the Board. Subject to the terms of the policy, I hold that the Board may enforce the right to indemnity previously vested in the first named defendant.
The third party relies on the exclusion clause, saying that the first defendant's liability arose out of the use of a mechanically propelled vehicle, namely the utility. There is a line of cases where liability has been said to have arisen out of the use of a vehicle, notwithstanding that the vehicle was not in motion nor being used in the performance of the primary function for which it was designed (Fawcett v BHP By-Products Pty Ltd (1960) 104 CLR 80, SGIO v Stevens Brothers Pty Ltd (1984) 154 CLR 552, May v Transport Accident Commission [1989] VR 981). Had the float itself not been a motor vehicle for the purposes of the Act, a sound argument exists for saying that, it being still attached to the utility which had drawn it there and was intended to draw it back in due course, the injury caused to the plaintiff when unloading the horse from the float was one arising out of the use of the utility as a composite whole. Such an argument succeeded in Transport Accident Commission v Road Construction Authority [1990] VR 989 where a line-marking machine was conveyed from place to place on a uninsured trailer attached to a truck. After the machine was driven onto the trailer on a ramp which was then raised as a tailgate, a worker was injured while raising the tailgate. The Full Court of Victoria held that the injury arose out of the use of the truck and also out of the use of the machine, both of them being insured. At 992, the Court (Kaye, McGarvie and Ormiston JJ) said:
"In the present case the truck could not be used to transport the machine by trailer to the road-marking site unless the machine was first loaded on the trailer. Loading the machine on to the trailer was as much an incident of using the truck to transport the machine by trailer as, in another case, loading an item on to the tray of a truck would be an incident of using the truck to transport the item upon its tray.
At the time of his injury Mason was engaged in the operation of loading which could not be regarded as completed until the ramp which had been let down to enable the machine to be loaded had been replaced in its normal position.
The Act is not concerned with fine distinctions and its reference to the use of a motor car should be taken as including everything that falls fairly within the conception of the use of a motor car: cf Fawcett v BHP By-Products Pty Ltd (1960) 104 CLR 80, at p 87, per Menzies J. It would be a departure from that approach to hold that the loading of the machine on to the trailer was not incidental to the use of the truck to transport the machine to the site because the machine was placed on the trailer not the truck, or because the trailer could be regarded as, and is treated in the Act as, being itself a vehicle. See the definition of 'Private trailer' in s 3(1)."
As to the machine, they said at 993 - 994:
"Mason [the worker] was here injured through lifting the tailgate ramp. The ramp was specifically designed to enable the machine to be loaded and unloaded. It was lowered before and raised after loading or unloading. Lifting the ramp to replace it in its normal position after loading was incidental to the use made of the machine as a road-marking machine when it was driven up the ramp as part of its movement to the site.
Further, the injury may be regarded as arising out of the past use which had been made of the machine when it was driven up the ramp. It was because of that past use that the ramp had to be lifted. The injury was a consequence of that past use or, in other words, there was a non-coincidental nexus between that use and the injury: Transport Accident Commission v Hoffman [1989] VR 197, at pp 200-2."
In this case, the plaintiff's injury undoubtedly arose out of the use of the float, but I think it could also be said, as it was in Transport Accident Commission v Road Construction Authority (supra), that it likewise arose out of the use of the utility. In other words, there were two bases for the Board's liability, although it chose to confine itself to acceptance of liability in respect of the float. The third party is entitled to rely on the exclusion clause to avoid liability on the basis that the injury arose out of the use of the utility, but once it is established that the insured was also liable on the basis that the plaintiff's injury arose out of the use of the float, it cannot, in my view, rely on the exclusion clause to avoid its obligation to indemnify the insured and the Board is entitled to recover from it.
As to the final submission that any contribution should be awarded on a double insurance basis, I am of the view that the words of s14(4A) give a right of recovery to the full extent of the indemnity given by the third party's policy. As between the first named defendant and the third party, that was the case. The former could have recovered fully from it (Albion Insurance Company Limited v Government Insurance Office of New South Wales (supra) at 345). The Board has a statutory right to recover this amount from the third party, a right which over-rides the common law right to contribution as between insurers of the same risk. Were there not such a statutory provision, the Board, in any event, in my view, would be entitled to a pro rata contribution from the third party on the principle adverted to by Kitto J in the Albion case (supra) at 349 - 350 as "a principle applicable at law no less than in equity … that persons who are under co-ordinate liabilities to make good the one loss (eg sureties liable to make good a failure to pay the one debt) must share the burden pro rata." Section 14(4A) extends this right of contribution so as to give the Board a preferred position to other insurers in this respect. That was a policy choice of Parliament.
There will be judgment for the Board against the third party in the sum of $76,500.