Wood v Zurich Aust Insurance Ltd No. DCCIV-96-1651 Judgment No. D3604

[1997] SADC 3604

Court

DISTRICT COURT OF SOUTH AUSTRALIA

Judgment of His Honour Judge Lowrie

Hearing

05/05/97.

Catchwords

The plaintif alleged that the defendant was obliged to indemnify him under a policy of motor insurance for damage incurred by his negligent driving. The defendant claimed the accident occurred at a time when the plaintiff had a blood alcohol level of 0.104 and thus the plaintiff was in breach of specific provisions of the insurance policy, namely, "8.for claims resulting from an accident (c)when the driver of the Vehicle has a level of alcohol in the blood in excess of any statutory limit." Held provisions of s47 of the Road Traffic Act 1961 meant relevant provisions of insurance policy void and plaintiff entitled to be indenmified.

Materials Considered

• Road Traffic Act 1961s47, referred to.
• Annear v GRE Insurance Ltd (1988) 5 ANZ Insurance Cases 60-830;
• Mazur v Australian Associated Motor Insurers Ltd (1989) 5 ANZ Insurance Cases 60-919, discussed.

Representation

Plaintiff SAMUEL DAVID WOOD:
Counsel: MR G D McGEE - Solicitors: GREG McGEE

Defendant ZURICH AUSTRALIA INSURANCE LIMITED:
Counsel: DR P M SALU - Solicitors: LAWSON DOWNS

DCCIV-96-1651

Judgment No. D3604

21 May 1997

(Civil)

WOOD v ZURICH AUST INSURANCE LTD

Civil

Judge Lowrie

The plaintiff claims to be indemnified by the defendant company under a policy of vehicle insurance for damage to his own and other motor vehicles incurred during the course of his negligent driving.

The defendant insurer has pleaded that the plaintiff is in specific breach of the relevant policy, and, accordingly has refused to indemnify the plaintiff for the loss.

On 23 July, 1994, the plaintiff was travelling along Bowker Street, Somerton Park, and, negligently drove into a ranked stationary vehicle which impact caused that vehicle to catapult into another stationary vehicle. Much damage was sustained to the plaintiff's vehicle and to the two stationary vehicles.

The accident police attended the scene and the plaintiff underwent a number of blood alcohol breath analysis tests. He said there were various readings all above the statutory limit of .05. Subsequently, a police breath test van arrived and he then underwent a further test and the blood alcohol reading of that testing machine was 0.104 milligrams of alcohol level in his blood. The plaintiff was subsequently charged with driving his vehicle on this day with a blood alcohol level exceeding the statutory limit of .05. He pleaded guilty to that offence.

The plaintiff subsequently sought to be indemnified under his policy of vehicle insurance with the defendant company. The company declined to indemnify the plaintiff, and, relied on a specific provision of that policy. The provision in question is:

"ZURICH will NOT pay for loss or damage to the Vehicle

.....

8.for claims resulting from an accident

......

(c)when the driver of the Vehicle has a level of alcohol in the blood in excess of any statutory limit;"

The plaintiff, in his Statement of Claim, alleged that:

"11. The defendant was in breach of a contract in that it failed to indemnify the plaintiff for loss and damage occurring as a result of the subject accident as was required by virtue of the terms of its policy with the plaintiff numbered 54 0409560 GLG.

12. The defendant was in breach of its statutory obligations in that in rejecting the plaintiff's claim it purported to rely on terms of the policy which are made void as a result of Section 47C of the Road Traffic Act."

The defendant pleaded that, by reason of the factual matters, it had no obligation to indemnify the plaintiff.

The plaintiff gave evidence. He outlined on the day of the accident he was a lawn mowing contractor. It was a Saturday and he commenced work at about 11.00 in the morning and worked until 2.30pm. He then with a friend went to a hotel, had some drinks and a counter meal. Later in the day he left that hotel with his friend and attended at another hotel. The accident occurred at about 8.00pm when he was proceeding home after dropping his friend at his home. He said he thought he had had about seven drinks. He said it appeared there was a party in Bowker Street, a normal suburban street, as cars were ranked along both sides of the road and, consequently, there was a narrow course for vehicles to travel along the street.

He said at the time he was eating a hot dog which was in a paper bag. He glanced down at this hot dog and said his attention was momentarily distracted, and, as a result his course deviated and his vehicle, a Toyota land cruiser towing a trailer, came into collision with one stationary vehicle which then catapulted into the other vehicle. He said after he got out of his car many people arrived from the adjoining houses.

The police subsequently arrived and he said he voluntarily underwent a number of breath tests. He said he believed the result of each breath test revealed a result higher than the statutory limit of .05. He said there was some divergence in these tests, and eventually the police analyst van arrived. There was no evidence of the time when he was finally tested but the result of that test was a reading of 0.104. He said the police reported him as a result of this reading. However, he remained at the scene and arranged for his vehicle to be towed to a repairer. He said the police had said to him that he did not appear "too intoxicated".

A copy of the relevant policy of insurance with the defendant company has been tendered. The policy is a policy numbered 54 0409560 GLG and classed as "Allguard Business" Commercial Motor policy. The policy noted that the plaintiff's occupation was a "lawn mowing contractor", he was a contractor.

The policy says as follows:

"ZURICH will pay for the cost of repairing or replacing the Vehicle following loss or damage by any cause not excluded by this Section. ZURICH will NOT pay more than the market value or the Sum Insured stated in the Schedule. If the market value is lower than the Sum Insured at the time of the loss the market value is the maximum amount payable.

ZURICH will NOT pay for loss or damage to the Vehicle:

..

8 for claims resulting from an accident

(a) when the driver of the Vehicle is unlicensed;

(b) when the driver of the Vehicle is convicted of an offence relating to the driving of the Vehicle while under the influence of a drug;

(c) when the driver of the Vehicle has a level of alcohol in the blood in excess of nay statutory limited;

(d) following which the driver refused to undergo a breath test or blood sample after legally being requested to do so.

This exclusion does not apply when the Vehicle is not being driven by the Insured if the Insured can prove that no consent was given to the driver to act in the manner described above."

I assume that the plaintiff's allegations are that by reason of section 47C of the Road Traffic Act 1961, subsection (c) of clause 8 of the policy is void.

Part III of the Road Traffic Act sets out the various offences where a person drives a vehicle under the influence of alcohol or a drug, and, the penalties.

It is necessary to set out those provisions to see how section 47C fits into the legislative code.

Section 47(1) is the offence of driving a vehicle under the influence of alcohol or a drug as to be incapable of exercising effective control, and, thereafter sets out the penalties for first and subsequent offences.

Section 47A is the definition section of all relevant terms that are necessary to interpret the subsequent sections which create offences for driving a vehicle with an excessive blood alcohol level.

Section 47B contains the various offences for driving a vehicle with an excessive blood alcohol level. It deals with first and subsequent offences, penalties and disqualification periods.

The section in dispute raised in this matter is section 47C and is couched in the following terms:

"Relation of conviction under s. 47B to contracts of insurance, etc.

(1) A person is not, by reason only of having been convicted or found guilty of an offence against section 47B(1) or having expiated such an offence, to be taken, for the purposes of any law, or of any contract, agreement, policy of insurance or other document, to have been under the influence of, or in any way affected by, intoxicating liquor, or incapable of driving, or of exercising effective control of, a motor vehicle, at the time of the commission of that offence or alleged offence.

(2) The provisions of subsection (1) have effect notwithstanding anything contained in any law, or any covenant, term, condition or provision of, or contained in, any contract, agreement, policy of insurance or other document, and a covenant, term, condition or provision purporting to exclude, limit, modify or restrict the operation of that subsection is void.

(3) Any covenant, term, condition or provision contained in a contract, policy of insurance or other document purporting to exclude or limit the liability of an insurer in the event of the owner or driver of a motor vehicle being convicted or found guilty of, or expiating, an offence against section 47B(1) is void."

As mentioned, the plaintiff was convicted of an offence under section 47B of the Road Traffic Act.

Section 47C was enacted so as not to prejudice a person's rights under a policy of insurance if such person was convicted of a blood alcohol offence.

As the learned author of Bollen's Motor Traffic Law noted, 47C offences relate only to a blood alcohol content of the driver's blood and not the driving, or, effects of alcohol on that person. That is apparent by the heading of the section, namely:

"Relation of conviction under s.47B to contracts of insurance, etc."

The section clarifies that a blood alcohol offence does not mean "driving under the influence of ... liquor" and then by subsection (2) specifically that any policy document cannot be interpreted and if it attempts to so construe then the provision is void.

The difficulty in matters such as the present facts, is the interpretation to be placed on subsection (3). Is it confined to an interpretation to the thrust of placita (1) and (2) thus related to the relationship between blood alcohol offending and driving under the influence, or, is it a provision to the effect that any provision which seeks to exclude liability on the sole ground of a blood alcohol reading is void? It cannot be the former as this is simply a restatement of (2).

As is apparent from the express terms of his policy, the plaintiff breached the same by driving a vehicle with a level of alcohol in his blood in excess of the statutory limit.

Two matters have been raised by plaintiff's counsel in aid of relief for the plaintiff. Firstly, reliance on section 47C to render, in effect, clause 8(c) void, and, secondly, at the hearing a wider suggestion that the relevant policy provision is void for uncertainty or ambiguity.

The author of the prior commentary of this section noted:

"There was some opposition to the introduction of the section and the scheme contemplated by it. One ground of opposition was that it might increase the occasions on which insurers sought to avoid the granting of indemnity under motor vehicle policies or seek release for breach of a provision in a Third Party Policy. Motor Vehicle Policies contain provisions which give the insurer the right to avoid the policy and refuse indemnity, if the driver was under the influence of alcohol. Avoidance of the insurer's obligation under a Third Party Policy is not possible. But the insurer can seek recourse against the insured if the insured or the driver was under the influence of alcohol contrary to a condition or provision in the policy.

Section 47c means that an insurer can avoid granting indemnity or seek recourse only if it proves that the insured or driver (if they were not the same person) was, in fact, under the influence of alcohol. In other words, the exact condition contemplated by the term in the policy must be proved. Section 47b is of no help to the insurer."

Counsel for the insurer pointed out that the contractual terms of the policy are to be given their ordinary meaning. This policy specifically provided that the insurer can refuse to indemnify the insured if the insured is in breach of section 47B as was apparent from his plea of guilty to this offence. Consequently, the insurer acted correctly and in terms of the policy when refusing to indemnify the plaintiff for the damage.

I have not had the assistance of any cited authorities, in fact, none.

I note that Tasmania has similar legislation, namely, section 21 of the Road Safety (Alcohol and Drugs) Act 1979. That section provides:

"Any covenant, term condition or other prevision of a contract or other agreement to the extent that it purports to exclude or limit the liability for an insurer in the event of the owner or driver of a motor vehicle -

(a)..

(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."

This section was discussed in the Tasmanian case Annear v GRE Insurance Ltd . In that policy there was a specific provision that the defendant company would not pay for destruction or damage caused while the vehicle was being driven by a person who was under the influence of intoxicating liquor and a deeming provision that for the purpose of that exclusion unless contrary to an applicable law a driver would be deemed to have been under the influence of intoxicating liquor if at the time of the accident the percentage of alcohol in the driver's blood was in excess of the legal limit.

The relevant legal limit at that time was .05. The driver of the vehicle in question had a reading of .08.

The court held that the exclusion clause was intended to be read in conjunction with the provisions of section 21. However, the policy clause amplified by the addendum "Note" purported to exclude the insurer's liability in the event of the driver's concentration of alcohol in his blood exceeding the legal limit, and, to that extent was void under section 21. Accordingly, the defendant could not rely on that event to escape liability.

The section was further discussed in the decision of Mazur v Australian Associated Motor Insurers Ltd . This case concerned a late application by the insurance company to file a defence. It appeared that the driver had driven a car under the influence of liquor. The plaintiff commenced his proceedings for indemnity, and, the insurer failed to file a defence. Judgment had been entered and the insurer sought leave to set aside the default judgment.

The insurer claimed that as the driver had been driving under the influence of liquor it was entitled to file a defence. The plaintiff submitted that the relevant clause of the insurance policy meant that if the driver was driving under the influence of liquor, or, had a blood alcohol level in excess of the legal limit it was of no effect because of the statute.

Comment was also made on the clause which stated that

"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."

The learned judge held that clause 4.1.1 of the policy was not void to the extent that it purported to exclude liability if a driver was under the influence of intoxicating liquor, and, the company was given leave to defend the action. The judge held that the insurance contract must be interpreted from its language and if the law purported to declare void part of the contract, the remaining part would still be capable of being enforced and applying commonsense and reasonableness when interpreting the clause it would be unfair and unreasonable to construe the policy as saying than an insured person might drive under the influence of liquor.

Clearly, not all of clause 8 of the Zurich policy is effected by section 47B as this section can have no effect on subclause (a) and (b). If an insurer can show that the plaintiff was driving under the influence of liquor or drug despite any blood alcohol reading then it can refuse to indemnify.

The acts of the plaintiff here mean that because of this conviction under section 47B it is alleged that his policy provisions mean that he has no right of indemnity.

It is my view such a term is in conflict with the provisions of section 47C(3) and such term cannot be enforced and is void.

I view the statutory provision as stating that liability cannot be denied on the sole criteria of a blood alcohol conviction, and, if it does such provision is void.

The effect of the provision of paragraph 8(c) is that if the insured has a level of alcohol in the blood in excess of the statutory limit then indemnity is not available. 47C(3) is directed to that type of provision and in my view is void.

Consequently, I direct that the plaintiff is entitled to be indemnified under this particular policy for the damage which occurred on the day of this driving on 23 July, 1994.

An argument was suggested as to the ambiguity of the insurance clause bearing in mind the levels of blood alcohol as related to various drivers. I do not consider such a suggestion has any merit.

For these reasons I find that the plaintiff is entitled to the relief as sought.

LATER IN COURT

HIS HONOUR DELIVERS HIS REASONS FOR JUDGMENT.

The plaintiff is entitled to be indemnified.

Defendant to pay the plaintiff's costs of the action to be taxed or agreed.