Transport Accident Commission v Hermon

[2002] VSC 484

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. 8920 of 2001

TRANSPORT ACCIDENT COMMISSION	Appellant
v
WAYNE HERMON	Respondent

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JUDGE:	REDLICH J.
WHERE HELD:	MELBOURNE
DATE OF HEARING:	7 November 2002
DATE OF JUDGMENT:	13 November 2002
CASE MAY BE CITED AS:	Transport Accident Commission v Hermon
MEDIUM NEUTRAL CITATION:	[2002] VSC 484

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CIVIL JUDGMENT – S. 60(2)(a) Transport Accident Commission Act 1986 – Reasonable costs of transport for rehabilitation services – Family vehicle used to transport injured person.

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APPEARANCES:	Counsel	Solicitors
For the Appellant	Mr D. Beach S.C. with Mr D. Masel	TAC Law Pty Ltd
For the Respondent	Mr R. Gorton Q.C. with Mr J. Noonan	Holding Redlich

HIS HONOUR:

1. On 16 March 1989 the respondent sustained severe injury as a consequence of the occurrence of a transport accident and is unable to drive a motor vehicle.  Accordingly he is dependent upon family members for the purposes of providing him with transport in order to receive medical and rehabilitation services in respect of the injuries sustained by him in the transport accident.  The respondent made a claim for the payment of benefits pursuant to the provisions of the Transport Accident Act 1986 (the Act). The appellant has accepted liability for the respondent's reasonable medical and like expenses and for the reasonable costs incurred in travelling to and from rehabilitation and disability services. On a date uncertain the appellant determined that it would reimburse the respondent's transportation costs for such travel at the rate of 22 cents per kilometre. The parties agree that it is unnecessary that the precise date of the appellant's determination be established.

1. The respondent through his duly appointed administrator, Major Richard Hermon, instituted proceedings at the Victorian Civil and Administrative Tribunal on 25 May 2001 seeking to review the appellant's determination as to the manner in which transportation costs as referred to in s. 60(2)(a) of the Act were to be calculated and paid in circumstances where the respondent's family vehicle was used for the purposes of conveying the respondent to or from a rehabilitation or medical service.

1. The Victorian Civil and Administrative Tribunal on 30 November 2001 determined that the appellant should pay transportation costs at a rate which represents "the market cost" of those services.  The Tribunal concluded that the respondent was entitled to the full cost of transporting him to a rehabilitation service and that such costs should include both "running costs" such as fuel, maintenance and additional depreciation of the vehicle by reason of the additional kilometres travelled and "standing costs" such as registration and insurance.

1. The appellant, pursuant to leave granted on 26 March 2002 appealed to this Court pursuant to s. 148 of the Victorian Civil and Administration Tribunal Act 1998.  Although the notice of appeal contained numerous grounds the argument before me was confined to the question of whether the Tribunal was correct in construing the words "transportation costs" in s. 60(2)(a) of the Act as including a portion of the "standing costs" associated with the ownership and operation of a private motor vehicle.  Section 60(2)(a) provides –

"The Commission is liable to pay as compensation to a person who is injured or in respect of a person who dies as a result of a transport accident –

(a)the reasonable costs of road accident rescue services, medical services, hospital services, nursing services, disability services, rehabilitation services, transportation costs and ambulance services received in Australia because of the transport accident;"

1. Despite the less than felicitous language of the sub-section which speaks of "reasonable costs of "…."transportation costs"…."received", it is not disputed that the appellant is liable to pay compensation to a person injured in a transport accident for transportation costs incurred because of the transport accident.  "Transportation costs" is defined in s. 3 of the Act as –

"costs incurred travelling to or from –

(a)a rehabilitation service or

(b)      an approved program of disability services the provision of which is authorised in accordance with s. 23."

1. The appellant in making its initial determination of what constituted "transportation costs" adopted an understandable position which was found to be erroneous by the Tribunal.  It now seeks clarification from this Court as to what expenditure should be included as "transportation costs".  The appellant, given the general importance of this issue, has agreed to pay the respondent’s costs of this appeal, regardless of the outcome, thereby ensuring that argument is heard in contradiction to its preferred position.

1. The appellant contends that transportation costs within s. 60(2)(a) can only include "running costs" and not other costs associated with the ownership or operation of the vehicle, conveniently described by the parties as "standing costs".  The appellant describes the running costs as including fuel, maintenance and the additional depreciation of the vehicle by reason of the additional kilometres travelled.  It points to the fact that the benefit to be paid under s. 60 is "compensation" which is intended to recompense the beneficiary for costs incurred because of the accident.  Adopting the "but for" test in March v E&MH Stramare Pty Ltd[1] the appellant submitted that standing costs such as registration and insurance were not costs which could be attributed to the accident and reimbursement of such costs would not constitute compensation.

   [1](1991) 171 CLR 506.

1. The appellant accepted in the course of argument that nothing turned on the identity of the individual who owned the vehicle or who provided the relevant transportation service.  Rather the Act requires an assessment to be made of the reasonable costs of that service.  Obviously a cost incurred by the respondent travelling to or from a rehabilitation service for treatment will be a cost incurred because of the accident.  The appellant submitted that "standing costs" which do not increase or change when the vehicle is utilised by the respondent to attend at medical and like appointments is not a cost "incurred in travelling to or from" a rehabilitation or disability service.  The appellant's argument is that they are not "costs" nor are they incurred "because of the transport accident."  Those costs remain the same whether the vehicle is used for family purposes or for purposes associated with transportation of the respondent for treatment.  Consistent with this reasoning the appellant submitted that it is liable to pay compensation only for costs which are increased or generated because of the travel to or from a rehabilitation or disability service and which would not otherwise arise.

1. The appellant, to explain the inclusion of a portion of the maintenance costs or depreciation of the vehicle as "running costs" characterises them as an increased cost.  The fact that the family vehicle will in all probability be utilised for other purposes if it were not being used to transport the respondent for treatment exposes a difficulty in the appellant's definition of costs and its interpretation of the words "incurred in travelling" to which I shall return.

1. The appellant also submitted that if the respondent were to be compensated for standing costs of the vehicle it would in effect reduce the standing costs referrable to the non-compensable use of the vehicle thus providing a betterment to the owner of the vehicle rather than compensation to the respondent.  To so benefit the owner of the vehicle could not, so the appellant submits, have been the intention of Parliament.

1. I do not regard it as necessary to determine whether it is correct that the owner of a vehicle may obtain a benefit if the appellant were liable to pay for a proportion of the standing costs of a vehicle.  As I indicated in argument it appears to me that such a consideration, even if correct, is of little assistance in determining what costs have been incurred by the respondent.

1. The evidence before the Tribunal established that the appellant does pay for "standing costs" associated with the provision of a private motor vehicle used to transport an injured person where such transportation is provided by an attendant carer.  In such circumstances the rate paid by the appellant is 55 cents per kilometre.  It is this rate which the respondent contended before the Tribunal should have been applied in his circumstance rather than the rate of 22 cents per kilometre applied by the appellant for reimbursement of family members involved in transporting the respondent.

1. Both before the Tribunal and on this appeal the respondent argued that the appellant should evaluate the cost of provision of transport by family members to the respondent on the same basis as it evaluated the cost of such a service when provided by an attendant carer.  The fact that the appellant uses a different basis of evaluation for the private vehicle of family members and the private vehicle of an attendant carer suggests that in one or both circumstances the appellant is not correctly evaluating the compensation it should pay for the injured person.  The appellant submitted that the commercial rate paid for an attendant carer was irrelevant to the question of the proper construction of the Act.  I presume however the appellant would pay the amount in costs for the use of an attendant carer that it regarded itself as liable in law to pay by way of compensation pursuant to s. 60(2)(a).

1. The respondent submitted that the relevant cost of transporting the respondent to rehabilitation or disability services necessarily included the running costs associated with the use of the family vehicle being fuel used, pro rata maintenance and pro rata wear and tear on the vehicle.  The appellant did not dispute its liability to pay such running costs.  In addition the respondent submitted that pro rata standing costs including registration and insurance were compensable as the transport service could not be provided in the absence of the provision of a motor vehicle which satisfied legal requirements for travel on the road.  Hence the cost incurred, the respondent submitted, would necessarily include a proportion of the cost of registration and insurance and depreciation reflecting the distance travelled by the vehicle for the purpose of providing that transportation service.

1. I am of the view that costs incurred travelling to or from a rehabilitation or disability service include a pro rata portion of the standing costs of the family vehicle utilised to transport the respondent.  Although the standing costs are not generated or increased by virtue of such travel, they are costs attributable to the travel for which the respondent is to be compensated and are therefore costs incurred in travelling to or from a rehabilitation service.  See for example Maritime Services Board v PosidenNavigation Incorporated.[2]  Furthermore I can see no compelling basis to distinguish between compensation for pro rata depreciation or maintenance, and pro rata registration or insurance which are all necessary costs associated with the vehicle being used for travel.  Even if the expenditure on an item occurred at a much earlier time than the relevant travel, it is money paid for daily use of the vehicle for a future period of time.  When the travel thereafter occurs a portion of the expense is attributable to that travel.

   [2]Maritime Services Board v Posiden Navigation Incorporated [1982] 1 NSWLR 72 per Yeldham J at 90.

1. It follows that in my view the appellant is correct in the manner in which it calculates compensation to be paid to an injured person transported in like circumstances by an attendant carer.  That rate which has been variously described by the Tribunal and in this appeal as the "market cost", "commercial cost" or "business cost" has been recognised as the appropriate method of assessment of the cost of transportation provided by a family member of an injured person when assessing damages at common law.[3]  In my view the proper meaning of "transport costs" within s. 60(2)(a) of the Act gives rise to an obligation to compensate in a similar manner to that required at common law where a family member’s services are gratuitously provided.

   [3]Griffiths v Kerkmeyer (1977-78) 139 CLR 161 at 187, 188 and 193 per Mason J; Van Gervan v Fenton (1992) 175 CLR 327 at 333-4 per Mason CJ, Toohey and McHugh JJ.

1. The Tribunal's order of 30 November 2001 refers to s. 60(1)(b) of the Act when it was no doubt intended to refer to s. 60(2)(a).  Furthermore the term "market cost" referred to in the order is attended by some uncertainty and was not, as the Tribunal observed in paragraph 34 of its decision, the subject of any evidence.  The appellant complains about the use of this term.

1. The parties have agreed for the purpose of this appeal that if the compensation for which the appellant is liable is to include a pro rata amount of the standing costs of the vehicle, the appropriate rate at which compensation is to be paid is that calculated by the appellant for an attendant carer as at the date of the appellant's determination.  In those circumstances I propose to make a new order in substitution for the order pronounced by the Tribunal on 30 November 2001 requiring the appellant to compensate the respondent at a rate which shall include a pro rata amount of the vehicle's standing costs.  I will hear argument as to the form of the order.+