PARTIES:	TERRITORY INSURANCE OFFICE

		v

		PETER BAYNES, KEVIN ROSS BAYNES AND SUNCORP GENERAL INSURANCE PTY LIMITED

TITLE OF COURT:	SUPREME COURT OF THE 
		NORTHERN TERRITORY

JURISDICTION:	CIVIL

FILE NO:	197 OF 1997 (9718925)

DELIVERED:	19 JUNE 1998

HEARING DATES:	6 MARCH 1998

JUDGMENT OF:	MILDREN J

CATCHWORDS:

Insurance – Damages – accidental bodily injury resulting from motor vehicle accident – liability for damages at common law – ability of NT statutory insurer to recover contributions from interstate tortfeasor – monies recoverable limited to quantum of liability of tortfeasor

Insurance – Damages – personal injury – extent of indemnity under statutory insurer.

Insurance – Statutory Compensation Scheme – payments made by TIO under scheme to person injured in motor vehicle accident – right of recovery against interstate driver and owner – whether owner and driver entitled to indemnity under third party policy.

Legislation

Supreme Court Rules – r 47.04
Motor Accidents (Compensation) Act (NT) – s38; s5; s17
Motor Vehicle (Third Party Insurance) Act 1940 (NSW) – s32(1)
Workers’ Compensation Act (1958) Victoria – s62

Cases

1)	Johnson v Territory Insurance Office (1989) 69 NTR 9 referred
2)	Tickle Industries Pty Ltd v Hann and Richardson (1973-74) 2 ALR 281 referred
3)	Nominal Defendant v Butler (1976) 1 NSWLR 546 applied
4)	Ex Parte Tompkins, Shaw and Evans Pty. Ltd. (1984) 1 Qd.R 642 not followed
5)	State Government Insurance Office (Queensland) v Crittenden (1966) 117 CLR 412 followed
6)	State Government Insurance Office (Queensland) v Brisbane Stevedoring Pty Ltd (1969) 123 CLR 228 referred
7)	Hall Brothers Steamships Company, Limited v Young [1939] 1 KB 748 referred

REPRESENTATION:

Counsel:

	Plaintiff:	S Walsh QC
	Defendant:	W Sofronoff QC, and J Kelly

Solicitors:

	Plaintiff:	Hunt & Hunt
	Defendant:	Clayton Utz

Judgment category classification:	B
Judgment ID Number:	MIL98008
Number of pages:	16

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN

No. 197 of 1997
(9718625)

		BETWEEN:

		TERRITORY INSURANCE OFFICE
			Plaintiff

		AND:

		PETER BAYNES, KEVIN ROSS BAYNES AND SUNCORP GENERAL INSURANCE PTY LIMITED
			Defendant

CORAM:	MILDREN J 

REASONS FOR JUDGMENT

(Delivered 19 June 1998)

	MILDREN J:  On 16 December 1997, the Master ordered that an issue between the parties be tried before the trial of the proceedings, pursuant to r47.04 of the Supreme Court Rules.

	The issue to be determined is whether any liability of the defendant Kevin Ross Baynes to the plaintiff pursuant to s38 of the Motor Accidents (Compensation) Act is a liability “by way of damages” within the meaning of the policy in the third schedule of the Motor Vehicles Insurance Act (Qld).

	At the hearing, counsel appeared for the plaintiff and for Suncorp General Insurance Pty Limited.  The solicitors for the defendants Peter Baynes and Kevin Ross Baynes were excused from attending the hearing on the basis that counsel for the plaintiff would present their case against the third defendant, and they agreed to be bound by the result.

	The facts, as set out in the Agreed Statement of Facts, are as follows:

1.	At all material times the second defendant was the registered owner of a Toyota motor vehicle registered in Queensland, number OLF-358 (“the Queensland Vehicle”).
2.	At all material times the Queensland registration on the Queensland Vehicle was current.
3.	At all material times the first defendant was the driver of the Queensland Vehicle.
4.	At all material times the third defendant, Suncorp General Insurance Ltd (“Suncorp”), was the insurer of the Queensland Vehicle pursuant to section 3(1) of the Queensland Motor Vehicle Insurance Act and in accordance with the policy of insurance contained in the 3rd schedule to the Regulations under that Act.
5.	At all times Charlie Kathopoulis was the owner of a Ford Falcon registered in the Northern Territory registered number NT 213-075 (“the Territory Vehicle”).
6.	Mr Kathopoulis was a resident of the Northern Territory for the purposes of The Motor Accidents (“Compensation”) Act (NT).
7.	At all material times Stephen Billias was the driver of the Territory Vehicle.
8.	On 22 August 1980, while being driven by the first defendant, the Queensland Vehicle collided with the Territory Vehicle at the intersection of Rapid Creek Road and McMillians Road, Darwin in the Northern Territory (“the Collision”).
9.	Charlie Kathopoulis was injured as a result of the Collision (“the Injury”).
10.	The plaintiff, Territory Insurance Office (“TIO”), has made payments of benefits under the Northern Territory Motor Accidents (“Compensation”) Act to Charlie Kathopoulis in relation to the Injury pursuant to sections 13, 17, 18 of that Act.

	There is a mistake in the wording of the Question, in that the Question refers to “the policy in the third schedule of the Motor Vehicles Act (Qld)” whereas the fact is that policy is in the Third Schedule to the regulations under that Act.  The Question is therefore amended accordingly.

	The amount, which the plaintiff is seeking to recover, according to the Statement of Claim, is the sum of $261,617.97 made up as follows:

(a)	$62,026.46 paid by the plaintiff between 21/8/94 and 21/8/97;
(b)	$199,591.51 paid by the plaintiff between 20/1/83 and 21/8/94.
	The writ was issued on 21/8/97.

	Argument proceeded before me on the basis that the relevant provision of the Motor Accidents (Compensation) Act (NT) (hereinafter referred to as the MACA Act) was s38 as it stood prior to being amended in 1984.  I considered that this may be incorrect, and invited further submissions from the parties, particularly having regard to the judgment of Kearney J in Johnson v Territory Insurance Office (1989) 69 NTR 9.  It was submitted by the parties that Kearney J’s decision was consistent with that of the High Court in Tickle Industries Pty Ltd v Hann and Richardson (1973-74) 2 ALR 281, and that therefore s38 of the Act, as at the date of injury, was the relevant provision for the purpose of this matter.  Further, the parties informed me that they did not seek to raise the changes made to s38 in 1984, and submitted they were irrelevant.  I accept this submission.

	s38 of the MACA Act provided, as at the date of the accident:

s38.    OFFICE MAY RECOVER CERTAIN PAYMENTS

(1)    Subject to this section, the Office may, from time to time, sue for and recover as a debt from –

[(a)   not relevant]
(b)	the owner, or driver (other than a resident of the Territory), of a motor vehicle that was not, at the time of the accident, a Territory motor vehicle; or
[(c) to (f)    not relevant.]
who is, or but for Section 5 or 40A would be, liable to pay damages in respect of the death or injury of a person in or as a result of an accident, the amount that the Office has paid in respect of that death or injury.

	For the purposes of this case, I am asked to assume that the defendants Peter and Kevin Ross Baynes are, or but for s5 of the MACA Act, would be, liable to pay damages in respect of injuries to Charlie Kathopoulis in or as a result of an “accident” (as defined) which occurred in the circumstances described in the agreed facts, and that those defendants otherwise fit the description of an owner or driver as the case may be, who are not residents of the Territory, of a motor vehicle that was not, at the time of the accident, a Territory motor vehicle.  Thus for the purposes of this argument, it is to be assumed that the plaintiff may recover from those defendants the amounts that the plaintiff has paid to Charlie Kathopoulis as set out in the agreed facts pursuant to s38.

	The real point at issue is whether Suncorp General Insurance Pty Limited (hereafter called “Suncorp”) the compulsory insurer of the defendants Peter and Kevin Ross Baynes, is liable to indemnify those defendants under the terms of the statutory policy which it issued.

	As at the time of the accident, the relevant provisions of s3 of The Motor Vehicles Insurance Act of 1936 (Qld) (hereinafter referred to as the MVI Act) provided:

3.   (1)  Insurance by owners of motor cars.  Subject to this Act, the owner of any motor vehicle shall at all times during the registration, or as the case may be, any renewal of the registration of such motor vehicle indemnify himself and all other persons and keep himself and all other persons indemnified by a contract of insurance with the State Government Insurance Office (Queensland) or with some licensed insurer against all sums for which he or his estate or any such other person or his estate shall become legally liable by way of damages in respect of such motor vehicle for accidental bodily injury (fatal or non-fatal) to any person (including, in respect of such injury caused by any such other person, the owner himself) in any State or Territory of the Commonwealth of Australia where such injury is caused by, through, or in connection with such motor vehicle.

Liability by way of damages referred to in the first paragraph of this subsection includes the liability (either joint or several) of an insured person‑
	(a)	to pay or to contribute to the payment of such damages;
	(b)	to make contribution to any other tortfeasor under the provisions of “The Law Reform (Tortfeasors Contribution, Contributory Negligence, and Division of Chattels) Act of 1952”;
	(c)	to pay damages for breach of his contract of employment evidenced by his causing such injury.
   (2)  For the purposes of any such contract of insurance and of every claim for accidental bodily injury (fatal or non-fatal) to any person caused by, through, or in connection with a motor vehicle insured thereunder, every person, other than the owner, who at any time is in charge of such motor vehicle, whether or not with the owner’s authority, shall be deemed to be the authorised agent of the owner, and to be acting in relation thereto within the scope of his authority as such agent:
Provided that if at the time when any such claim arose the motor vehicle was in charge of or being driven by any person for whose acts or omissions at such time the owner apart from the provisions of this subsection would not have been liable, the liability of the owner under this subsection shall be limited to the amount for which he shall be entitled to be indemnified against such claim under the said contract.
(2A)  If an insured person or his estate becomes legally liable by way of damages in respect of a motor vehicle in respect of which he is an insured person for accidental bodily injury (fatal or non-fatal) to a person (not being a person excepted by subsection one of this section) who is a worker within the meaning of “The Workers’ Compensation Acts, 1916 to 1939,” then any compensation under such lastmentioned Acts in respect of which the Office is entitled to be indemnified by such insured person or his estate shall be, and it is hereby declared always has been, damages within the meaning of this Act.

	Pursuant to s9(1) of the MVI Act, the Governor in Council was permitted to make regulations relating to the forms, terms, provisions, conditions of liability or indemnity issued by licensed insurers.  Regulation 3 of The Motor Vehicles Insurance Regulations of 1968 made pursuant to that power provides that a contract of insurance or a policy shall be in the form set forth in the Third Schedule and shall be subject to the provisions of the Act and of the regulations as amended from time to time.  The form of the indemnity provided by the statutory policy contained in the Third Schedule provides that the insurer shall-

Indemnify and keep indemnified the insured person…against all sums for which he…shall be legally liable by way of damages in respect of the motor vehicle described herein for accidental bodily injury (fatal or non-fatal) to any person in any State or Territory of the Commonwealth of Australia where such injury is caused by, through, or in connection with such motor vehicle…

This policy is issued subject to the provisions of The Motor Vehicles Insurance Acts, 1936 to 1968, and of all regulations thereunder, as amended from time to time, all of which provisions shall be deemed to be incorporated in and to form part of this policy...

	The critical question therefore is whether, on the assumptions made, Peter Baynes and Kevin Ross Baynes have “become legally liable by way of damages in respect of [their motor vehicle] for accidental bodily injury…to any person…in any State or Territory…where such injury is caused by, through, or in connection with such motor vehicle…”

	It was not contended by counsel for the plaintiff, Mr Walsh QC, that the payments made by the plaintiff to Mr Kathopoulis were damages.  His principle submission was that the focus of the indemnity was not on the character of the payment being recovered, but on the liability of the driver or owner.  He submitted that the draftsman had indicated this by the use of the expression “become legally liable by way of damages” rather than “incurred liability for damages”.  Thus if there had been a settlement reached and the liability had been merged into an amount due under contract of settlement or into a judgment debt, the insured would still be entitled to indemnity.  He submitted that the provisions of s3 of the MVI Act, which apparently extend the meaning of “liability by way of damages” to include, for example, the liability of an insured person to contribute towards the payment of such damages, are not limiting of the intent of the words ‘liability by way of damages” but illustrate that the intention of Parliament was to focus on the nature of the underlying liability, rather than the character of the payment sought to be recovered.  Mr Walsh QC contended that on the true construction of s38 of the MACA Act, the underlying liability of the driver and owner was a “liability by way of damages” because, in order for the plaintiff to recover against them, the plaintiff had to establish that they were, or but for s5 would have been, liable to pay damages to Mr Kathopoulis:  see the wording of s38.  Mr Walsh QC went further and submitted that it was implicit that the amount recoverable could not exceed the amount of damages which Mr Kathopoulis could have recovered, but for s5.  At this time s5 of the MACA Act precluded actions for damages by residents of the Territory, except for the right to bring an action for pain and suffering or loss of amenities of life, but even that action could not be brought if the injured person had, as here, elected to receive a benefit under s17.  I understood Mr Walsh QC to be submitting that the maximum amount of the plaintiff’s recovery could not exceed that sum which would have been payable by way of damages had s5 not been enacted.  In support of his argument he relied heavily on the judgment of Yeldham J in Nominal Defendant v Butler; V Hartford Fire Insurance Co (Cross-Defendant) (1976) 1 NSWLR 546.

	The argument advanced on behalf of the insurer by Mr Sofronoff QC is that the benefits payable under the Act are not damages; that s3(2A) of the MVI Act would be unnecessary if the plaintiff’s argument were sound and makes it clear that benefits payable under statutory no-fault schemes are not contemplated by the term “damages”; and that the word “damages” defines the scope of the risk covered.  In support of his contention, Mr Sofronoff QC relied upon the decision of McPherson J in Ex parte Tompkins, Shaw and Evans Pty. Ltd. (1984) 1 Qd.R 642.

	Neither Nominal Defendant v Butler, nor in Ex parte Tompkins, Shaw and Evans Pty. Ltd.,  are precisely on point, but there are strong analogies to be drawn with both of those cases, and it is difficult in my opinion to reconcile all that was said in both of those decisions.

	In Nominal Defendant v Butler, the facts were that Butler was the owner of a motor vehicle insured against third party liability under s3 of the MVI Act.  Butler, whilst driving his vehicle in New South Wales, collided with a 
vehicle driven by one Williamson.  Two passengers in Williamson’s vehicle and one in Butler’s vehicle successfully sued the nominal defendant appointed under the Motor Vehicle (Third Party Insurance) Act, 1942 (NSW), alleging that their injuries were caused by Butler’s negligence.  The nominal defendant sued Butler’s administrator pursuant to s32(1) of the latter Act which provided in effect that he might recover “as a debt” from Butler or his estate.  The question was whether the Queensland policy which is in identical terms to the present policy extended to indemnify Butler’s administrator. Yeldham J held that it did because the substance of the personal representative’s liability to the nominal defendant was a liability “by way of damages” within the meaning of the policy, and the words “recovered…as a debt” related merely to the procedural method of recovery.

	In Ex parte Tompkins, Shaw & Evans Pty. Ltd, supra, Fisher, who was insured under a third party policy under s3 of the MVI Act, was driving his motor cycle in Victoria when he collided with a person called Jodell causing him injuries.  At the time, Jodell was employed by Tompkins, Shaw & Evans Pty. Ltd. which paid to him some $46,000 pursuant to the Workers’ Compensation Act 1958 (Victoria).  S62 of that Act provided that where the injury for which compensation is payable was caused under circumstances creating a legal liability in some person other than the employer to pay damages, if the worker recovers compensation, the employer is entitled to be indemnified by the person so liable to pay the damages.  The employer sued Fisher and recovered judgment against him for the money which was unsatisfied.  Under the regulations made under the MVI Act, there is a procedure for enforcing a judgment against the insurer direct, which requires the court to enter judgment against the insurer “for the amount which the court finds to be the liability of the insurer upon the judgment” given against the insured.  McPherson J distinguished Nominal Defendant v Butler, supra, (at 645):

…because it concerned a claim to be indemnified against liability for a sum which, although in a procedural sense recoverable as a debt, nevertheless represented in substance an amount for which the motorist or his estate was legally liable “by way of damages” to the injured person.  Expressed more simply, the source of the claim by the Nominal Defendant was a legal liability “by way of damages” on the part of the motorist or his estate which had been satisfied by the Nominal Defendant.

The present case is distinguishable from those referred to.  It is not simply that the applicant’s action to recover the sum paid to Jodell was, as asserted by paragraph 10 of the statement of claim against Fisher, a claim founded on statute.  It is that the origin of that claim is not a legal liability by way of damages.  Fisher can no doubt be said to have incurred in favour of Jodell a legal liability “by way of damages,” but it is a liability that has never been enforced by Jodell…Fisher was never legally liable to Jodell in respect of workers’ compensation.  Even if he had been, workers’ compensation is not damages.

	Mr Wash QC submitted that the decision in Ex parte Tompkins, Shaw & Evans Pty. Ltd., supra, was unsound and that I should follow the reasoning of Yeldham J in Nominal Defendant v Butler, supra, because McPherson J focused too closely on the source of the claims rather than on the manifest intention of the scheme of the MVI Act and what indemnity it was intended that it provide.  Mr Walsh QC also drew attention to the obvious fact that the consequence of following McPherson J’s reasoning is that the first and second named defendants would be uninsured.

	In my opinion the plaintiff’s contentions are correct for the following reasons.  First, the High Court has already held that the indemnity conferred by s3 of the MVI Act is not confined to an action for damages brought against the insured for personal injuries suffered by the plaintiff personally:  see State Government Insurance Office (Queensland) v Crittenden (1966) 117 CLR 412.  In that case, it was held that the policy covered the insured’s liability to a husband or parent for loss of consortium or loss of servitium as a result of bodily injuries caused by the operation of the insured’s motor vehicle.  The Court held that the expression “for accidental bodily injury” was broadly equivalent to “in respect of” accidental bodily injury, and that the husband’s action was “in respect of” accidental bodily injury, albeit to his wife.  Taylor J, with whom Windeyer J agreed, concluded (notwithstanding what McPherson J said in Ex parte Tompkins, Shaw & Evans Pty Ltd, supra, at 746) that a claim by one tortfeasor for contribution by another is a liability to pay damages “for” or “in respect of” accidental bodily injury:  see State Government Insurance Office (Queensland) v Crittenden, supra, at 418-419.  Further, the class of remedy is not confined to actions which are actions for damages.  As Taylor J pointed out at 417,

…the presence of the word “fatal” clearly indicates that it was the intention that the cover should extend to damages recoverable in an action under s12 of The Common Law Practice Acts, 1867 to 1940 by the dependants of a person whose death had resulted from accidental bodily injury arising out of the use of a motor vehicle.  Such an action is not “an action to recover damages or compensation in respect of personal injury” (see cases referred to in Unsworth v Commissioner for Railways (1958) 101 CLR 73 at 90) but it is clear that damages recoverable in such an action are, within the meaning which must be assigned to the policy, damages for accidental bodily injury resulting in death.

	Consequently, an action which is not an action to recover damages or compensation for personal injury caused to a person injured or killed in an accident which is brought against the insured may be “in respect of” accidental bodily injury and within the scope of the indemnity whether the action is founded upon the common law or upon a statute, and whether or not the action is brought against the insured by the injured party or by someone else.  Indeed, the form of the action against the insured even if based on debt, or on indebitatus assumpsit, does not necessarily preclude a finding that the insured had become legally liable by way of damages;  see State Government Insurance Office (Queensland) v Brisbane Stevedoring Pty Ltd (1969) 123 CLR 228.  The fundamental question is not the form of the action or who brings the action, but whether the liability of the insured is a liability by way of damages in respect of accidental bodily injury.  In deciding this question it is necessary to bear in mind that the MVI Act is remedial legislation and should be given a beneficial construction having regard to the evident policy of the Act:  see State Government Insurance Office (Queensland) v Crittenden, supra, at 421, 422.  In that case, McTiernan J, at 414 observed that, although not part of the Act, the title to the Act is an aid to its construction.  The title, or preamble reads that it is

An Act to Require the Owners of Motor Vehicles to Insure against their Liability to Pay Compensation on Account of Injuries to Persons caused by, through, or in connection with such Motor Vehicles, and for other purposes.

	Consequently the initial focus should be upon whether the insured became legally liable by way of damages in respect of his motor vehicle for accidental bodily injury, rather than on the form of action brought against the insured.  The remedy granted by s38 of the MACA Act is predicated upon the insured being liable, or but for section 5 or s40A being liable, to pay damages in respect of the death or injury of a person in or as a result of an “accident”, which is confined to motor vehicle accidents.  Consequently, the assumptions made by the parties for the purposes of this case include an assumption that the defendants Peter and Kevin Ross Baynes were negligent and liable to Charlie Kathopoulis in damages at common law as at the date of the accident:  see Johnson v Territory Insurance Office, supra.

	In Tickle Industries Pty Ltd v Hann and Richardson, supra, at 288, when construing the phrase “liable to pay damages” in s22(1)(d) of the Workmen’s Compensation Ordinance 1949-1968 (NT), Barwick CJ said:

The use of the word ‘liable” can cause difficulty in construction because of the various senses in which the word is or has been from time to time employed.  The word takes its particular significance, however, from the context in which it appears and the subject matter and evident policy of the legislation in which it is found.  No doubt on occasions difficulty has been experienced in assigning its meaning.  But, in my opinion, if the evident policy of the present legislation is appreciated and allowed to take its proper place in the process of interpretation, much of the difficulty caused so often by undue literalism, can be avoided and in reality disappears.

In my opinion the policy of the MVI Act is to ensure that the owners and drivers of motor vehicles who incur legal liability by way of damages at common law for personal injuries or death suffered in respect of the motor vehicle, are to be indemnified against suits based upon that liability, regardless of the form of the suit, or who brings it.  In Ex parte Tompkins, Shaw & Evans Pty Ltd, supra, McPherson J distinguished Nominal Defendant v Butler, supra, on the basis that the source of the nominal defendant’s claim was a legal liability by way of damages, whereas in the case of an employer seeking to recover compensation paid to a workman in circumstances where the negligent driving of a motor vehicle caused the injury which gave rise to the compensation, his Honour held at pp 645-6 that the origin of that claim is not a legal liability by way of damages.

	In my respectful opinion, the reasoning of McPherson J in the passage cited above is unsound.  The question is not the character or the form of the remedy, but what is the character of the underlying liability in respect of which the action is brought.  True it is that workers’ compensation is not damages, but the underlying liability of Fisher was in damages, and no more could be recovered by the employer in respect of the compensation paid than Fisher could have been found liable to Jodell in damages.  In my opinion the same applies in this case.  Although s38 of the MACA Act does not expressly say so, it is implicit that the Territory Insurance Office cannot recover more than whatever amount of damages Peter and Kevin Ross Baynes would have been liable to pay to Charlie Kathopoulis:  c.f.  Tickle Industries Pty Ltd v Hann and Richardson, supra, at 291 per Barwick CJ.  Consequently in the action brought by the present plaintiff, the plaintiff must establish that Peter and Kevin Ross Baynes are not only liable to Charlie Kathopoulis in damages, but also the quantum of those damages, which may be reduced for any contributory negligence by Mr Kathopoulis.  The statutory right thus conferred upon the plaintiff to recover the benefits paid is dependent upon the defendants Baynes being found “legally liable in damages” and the compensation payments thus recoverable are “sums for which [they] shall become legally liable by way of damages in respect of such motor vehicle for accidental bodily injury” within the meaning of s3(1) of the MVI Act, and therefore of the policy.

	Finally, I agree with the submissions of Mr Walsh QC that the provisions of s3(1) of the MVI Act which specifically include such matters as the liability to pay or contribute to the payment of damages and the provisions of s3(2A) of the MVI Act are not to be read in any limiting way, but illustrate that the purpose of the provision was to provide indemnity wherever the character of the underlying liability was one of damages for personal injuries.  I do not accept the argument of Mr Sofronoff QC that s3(2A) supports the contention that benefits payable under a statutory no-fault scheme are not contemplated by the Act.  In State Government Insurance Office (Queesland) v Crittenden, supra, at 419, Taylor J describes s3(2A) as putting it beyond question that a liability of that character was within the meaning of s3(1), and although as McPherson J points out in Ex parte Tompkins, Shaw & Evans Pty Ltd, supra at 647, s3(2A) may have been prompted by Hall Brothers Steamship Company, Limited. v Young [1939] 1 KB 748, which decided that workmen’s compensation payments are not damages, that in my respectful opinion does not detract from what fell from Taylor J.

	The question is therefore answered in the affirmative, and I reserve the question of costs.