Authorised report: 12 ACTLR 46
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
COURT OF APPEAL
Case Title: / Albrecht v Insurance Australia LimitedCitation: / [2016] ACTCA58
Hearing Date: / 5 November 2015
DecisionDate: / 10November 2016
Before: / Murrell CJ, Burns and Perry JJ
Decision: /
- Appeal Allowed with Costs
- The Declaration of the Master made on 25 March 2015 and the Orders as to Costs made by the Master on 24 April 2015 be set aside and substituted by an order that “The originating application dated 6 February 2015 is dismissed with costs”.
Catchwords: / STATUTORY INTERPRETATION - interrelationship between Part 4.8 and s155(3) of the Road Transport (Third-Party Insurance) Act 2008 (ACT) – where mandatory final offer (MFO) was accepted after institution of proceedings – where proceedings were instituted to protect appellant’s position before expiry of limitation period – where acceptance of offer in MFO was embodied in consent judgment –whether cap on assessment of appellant’s costs under s155(3) applies –where general words in statute were intended to bear a narrower meaning.
Legislation Cited: / Australian Human Rights Commission Act 1986 (Cth) s 46PO
Legislation Act 2001 (ACT) ss 139, 140
Limitation Act 1985 (ACT) ss 16B, 32
Road Transport (Third-Party Insurance) Amendment Act 2012 (ACT)
Road Transport (Third-Party Insurance) Act 2008 (ACT)ss 5A, 77, 84, 88, 90, 96, 97, 99 100, 101, 102, 104, 105, 112, 113, 115, 126, 128, 129, 136, 137, 139, 140, 141, 142, 143, 144, 150, 155
Cases Cited: / Alcan (NT) Alumina Pty Ltd v Territory Revenue [2009] HCA 41; (2009) 239 CLR 27
Bropho v Western Australia [1990] HCA 24;(1990) 171 CLR 1
CIC Insurance Ltd v Bankstown Football Club Ltd [1997]HCA 2;(1997) 187 CLR 384
Coco v The Queen[1994] HCA 15; (1994) 179 CLR 427
Haureliuk v Furler [2012]ACTCA 11; (2012) 6 ACTLR 151
McIntosh v Hikechukwu [2011] ACTSC 131; (2011) 5 ACTLR 284
Miwa Pty Ltd v Siantan Properties Pte Ltd (No2) [2011] NSWCA344
Momcilovic v The Queen [2011] HCA 34; (2011) 245 CLR 1
Picos v Australian Federal Police [2015] FCA 118
Potter v Minahan [1908] HCA 63; (1908) 7 CLR 277
Project Blue Sky Inc v Australian Broadcasting Authority [1998]HCA 28;(1998) 194 CLR 355
Racic v Haltiner [2010] ACTSC 63; (2010) 4 ACTLR 224
Re East; ex parte Nguyen[1998] HCA 73; (1998) 196 CLR 354
Tati v Stonewall Hotel Pty Ltd (No2) [2012] NSWCA124
Parties: / Jeffrey Albrecht (Appellant)
Insurance Australia Ltd t/as NRMA Insurance (First Respondent)
Ivan Habus (Second Respondent)
Representation: / Counsel
Mr R Crowe SC (Appellant)
Mr A BlackSC (Respondent)
Solicitors
Maliganis Edwards Johnson (Appellant)
Moray & Agnew (Respondent)
File Number: / ACTCA 15 of 2015
Decision under appeal: / Court:ACT Supreme Court
Before:Mossop M
Date of Decision:25 March 2015; 24 April 2015
Case Title:Insurance Australia Limited & Anor v Albrecht; Insurance Australia Limited & Anor v Albrecht (No 2)
Citation:[2015] ACTSC 68; [2015] ACTSC 94
THE COURT:
(1)INTRODUCTION
1.Chapter 4 of the Road Transport (Third-Party Insurance) Act 2008 (ACT) (the Act) prescribes a process whereby the parties are required to undertake certain steps intended to facilitate a settlement of a motor accident claim if at all possible. As a part of that process, s141 of the Act provides for the parties relevantly to exchange mandatory final offersbefore instituting proceedings in a court if the processes engaged under the Act to that point have failed to resolve the issues between the parties. Where a mandatory final offer (MFO)is not accepted, then depending upon the amount of any award of damages for personal injury by a court, s155(3) of the Act imposes a significant cap upon the amount of any costs order which may be made in favour of the successful party.
2.The appellant, Mr Albrecht,accepted a MFO by the first respondent insurer, Insurance Australia Limited trading as NRMA Insurance (the NRMA),for damages for personal injuryas a result of a motor accident, being comprised of $40,000 for pain and sufferingand $45,000 for the balance of the claim.However, Mr Albrecht did so only after instituting proceedings in the ACT Magistrates Court shortly before the limitations period expired. Final consent orders were then entered at the request of and by the NRMAin the ACT Magistrates Court for the sum of $85,000.
3.This appeal lies in separate proceedings instituted in the Supreme Court by the NRMA for declaratory reliefthat s155(3) of the Act applies to the assessment of costs relating to the consent judgment. MrAlbrecht contends that the Mastererred in holding that, by reason of proceedings being on foot when the MFO was made and accepted, s155(3) of the Act imposed a cap upon the amount of the costs recoverable by him under the consent orders and granting declaratory relief to that effect. The appellant also appeals from the order made belowawarding the NRMA it’s costsof the originating application as agreed or assessed.
4.For the reasons explained below, the appeal must be allowed but on a substantive ground not argued before the Master. In our view, s155(3) of the Act has no application where, as here, a MFO has been accepted irrespective of whether or not it was accepted after litigation was instituted and its terms arelater embodied in consent orders made by a court. It follows that there is no cap upon the assessment of the appellant’s costs. The arguments for the parties were premised upon the assumption that in this event, the appellant’s costs are to be agreed or assessed on a party/party basis and include the appellant’s legal costs prior to the institution of proceedings.
(2)BACKGROUND
(a)The motor accident claim
5.Mr Albrecht and the second respondent were involved in a motor vehicle accident on 21October 2010. Mr Albrecht’s solicitors served documents on the NRMA, as the second respondent’s insurer,giving notice of a motor accident claim under the Act on 12November 2010. The NRMA admitted that the second respondent had been in breach of his duty of care on 26 July 2011. That admission had the effect of confirming Mr Albrecht’s cause of action and hence extending the limitation period under s16B of the Limitation Act 1985 (ACT) (Limitation Act) until 26 July 2014: see s32, Limitation Act, and reasons of the Master at [6].
(b)The institution of proceedings in the ACT Magistrates Court
6.On 8 July 2014, Mr Albrecht commenced proceedings urgently in the ACT Magistrates Court in order to preserve his rights, given the imminent expiry of the limitation period. At that time, the parties had neither engaged in a compulsory conference nor exchanged MFOs, as required by ss136(1) and 141(2) of the Act respectively. Nor had the parties sought dispensation from these requirements under ss137(1) and 142 of the Act respectively. Thesematterswere acknowledged by MrAlbrecht in the letter from his solicitors of 16 July 2014enclosing by way of service the originating claim and statement of claim. The letter further stated that:
As you would be aware, the limitation period isprima face about to expire and it has become necessary for us to protect our client’s position by commencing proceedings notwithstanding non-compliance with these procedures.
In McIntosh v Hikechukwu [2011] ACTSC 131, MasterHarperexpressed the view that Section 150 [of the Act], by virtue of a suspected drafting error, does not confer power on the Court to grant leave for the commencement of proceedings on the basis of urgency in these circumstances (see paras 11 and 12).
By adopting the current course, our client is not seeking to avoid compliance with the procedures set out in Chapter4 [of the Act] and we readily acknowledge it would be appropriate for the proceedings to be stayed until a period of 14 days after mandatory final offers have been exchanged (as per Sections 143 and 145 [of the Act]).
We note that this is the approach adopted by Master Harper in Racic v Haltiner [2010] ACTSC 63.
For the sake of clarity, we confirm we do not require you to file a Notice of Intention to Respond or a Defence until after mandatory final offers have been exchanged and will not take any steps adverse to your position in that regard without adequate prior notice.
Under these circumstances, we respectfully suggest that there is no need for an Application to the Court seeking an order that the proceedings be stayed pending compliance with the procedures set out in Chapter 4 of the Act.
7.The solicitors for the NRMA responded by letter on 7 August 2014 noting that the proceedings had been commenced despite the procedural obligations contained within the Act. On the basis of MrAlbrecht’s intention to fully comply with the procedural requirements, the NRMA advised that “we consider the matter is ready for compulsory conference and invite you to attend a conference at a mutually agreeable time.” Theletter proposed that the conference be held at 2.00pm on 2 September 2014, and enclosed the certificate of readiness in accordance with s 139(1)(d) of the Act.
(c)Acceptance of the NRMA’s mandatory final offer
8.The parties attended a compulsory conference in accordance with s140 of the Act on 5September 2014 but failed to reach agreement. As a result, the parties exchanged MFOs by letters dated 5 September 2014. The NRMA’s offer was in the following terms:
In accordance with s141 of the [Act], we are instructed to offer [Mr Albrecht] the sum of $85,000, plus costs as agreed or assessed, inclusive of any statutory payback, in accordance with the [Act] and Regulations, broken down as follows:
- $40,000.00 for pain and suffering (general damages)
- $45,000.00 for the balance of the plaintiff’s claim.
…
We confirm that this offer may only be accepted in writing, within 14 days, in accordance with s143(2) of the [Act].
(Emphasis added.)
9.Mr Albrecht accepted the NRMA’s MFO on the last day of the 14 day period on 19 September 2014. Upon accepting the offer, Mr Albrecht had an enforceable right to recover his legal costs, albeit that the quantum of costs to which he was entitled was yet to be agreed or assessedon a party/party basis. It was not in issue that at this point in time, Mr Albrecht’s right to costs was not subject to any cap under the Act.
(d)The finalisation of settlement, including orders as to costs
10.By letter dated 24 September 2014 and received by the NRMA’s solicitors on 25September 2014, Mr Albrecht’s solicitors indicated that Mr Albrecht’s costs were assessed on a party/party basis as $27,800 together with a claim for disbursements totalling $13,128.10.
11.Also on 25 September 2014, the NRMA wrote to Mr Albrecht’s solicitors enclosing a “General Form of Consent Judgment” and terms of settlement, together with other documents, and requested that these documents be executed and returned. Theletter concluded by stating “[p]lease forward your assessment of costs and disbursements in due course.” In line with the terms of the MFO accepted by Mr Albrecht, the enclosed terms of settlement stated relevantly that by consent and without admission “Judgment be entered for the plaintiff against the first defendant and second defendant for [sic] $$85,000.00, inclusive of payments made and plus costs as agreed or assessed” (emphasis added). The general form of consent judgment was in the same terms, providing that:
The Court orders by consent that:
1. Judgment for the plaintiff in the sum of $85,000.00, inclusive of payments made and plus costs as agreed or assessed.
…
The judgment of the Court is that:
- The plaintiff recover against the first defendant and second defendant $85,000.00, inclusive of payments made and plus costs as agreed or assessed.
12.Mr Albrecht’s solicitors duly signed the documents on 4 November 2014. The solicitors for the NRMA signed the terms of settlement and consent judgment on 10 November 2014 and they were entered by the ACT Magistrates Court on that day in the terms proffered.
(e)Disclosure by the NRMA of its view that s155(3) of the Act applied to the appellant’s costs
13.Despite receiving the assessment of costs and disbursements and accompanying letter from Mr Albrecht’s solicitors on 25 September 2014, it was only on Wednesday 5November 2014 that the solicitors for the NRMA responded taking issue with the basis on which Mr Albrecht’s solicitors were proceeding in this regard. In their response, the solicitors for the NRMA wrote that:
The defendant submits that section 155 of the [Act] applies to these proceedings, and that your client has been awarded an amount equal to the defendant’s mandatory final offer, such that section 155(3)(c) applies to the assessment of costs.
We note that we were only instructed to act in this matter after the commencement of court proceedings, and accordingly the only legal costs incurred by our client in this matter have been subsequent to the court action.
It is the defendant’s submission that the amount of legal costs actually recoverable by the plaintiff is Nil.
14.Nonetheless, the NRMA indicated that it was prepared to agree to payment of the appellant’s costs up to a total amount of $2,500 pursuant to s155(3)(c) of the Act.
15.This was the first time that the NRMA had advised of its position on this issue. On10 November 2014, MrAlbrecht’s solicitors responded denying that position. Nonetheless on 10 November 2014, the NRMA signed the consent orders and filed them in the ACT Magistrates Court.
16.It is, to say the least, unfortunate that the NRMA proceeded to file the draft consent orders despite being aware no later than 25 September 2015 that Mr Albrecht held a different view of the effect of the agreement insofar as it related to costs, and had apparently signed the settlement agreement and draft consent orders on the basis of that view. It is also, to say the least,unfortunate thattherehad been no mention in the NRMA’s MFO, settlement agreement, draft consent ordersor correspondence before 5November 2014 that it took this position with respect to the issue of costs. Yet in our view, the fact that the MFO was expressed in terms that costs would be as agreed or assessed plainly conveyed that the ordinary principles as to costs would apply on a party/party basis. We do not accept the NRMA’s submission that this should have been read as conveying that costs would be subject to a statutory cap and, indeed, that costs would be “nil”. We consider that if there was any intention by the insurer to rely upon s155(3)when the MFO was made, it should have been clearly stated, particularly given that the statutory cap, understandably described by the appellant’s counsel as “draconian”, would significantly erode the amount of damages which the insurer was offering to pay. MrAlbrecht was entitled to decide whether or not to accept that offer,and ultimately to execute the documentation to give effect to that acceptance, properly informed that the NRMA had in mind relying upon s155(3) of the Act and factoring that into his decision on whether or not the offer was acceptable.
17.Itmust also be borne in mind that it was the entry of the consent orders at NRMA’s instigation which was productive of the issue in this case. If, for example, Mr Albrecht had simply discontinued the proceedings consequential upon the parties executing a deed of settlement, this issue would not have arisen.
(f)The decision at first instance
18.Before the primary Judge, MrAlbrecht’s arguments focused upon whether the reference to an award of damages in s155(3) of the Act was a reference only to an award based on an adjudication of the merits of the claim by a court. However, for the reasons set out below, it is unnecessary in this case to consider the question of whether or not the reference to an award in the context of this Act is constrained in this way. Rather, the issues on appeal are resolved by the fact that MrAlbrecht accepted the NRMA’s MFO as a consequence of which s155(3) does not apply.
(3)CONSIDERATION
(a)The statutory scheme
19.As noted by the Master at [21] of his reasons, the relevant provisions of the Act to be applied are those which appeared in Reprint 12 of the Act, which predates the amendments to ss144 and 155 of the Act by the Road Transport (Third-Party Insurance) Amendment Act 2012 (ACT).
20.The objects are set out in s5A which relevantly reads that:
The main objects of this Act are—
(a)to continue and improve the system of compulsory third-party insurance, and the scheme of statutory insurance for uninsured and unidentified vehicles, operating in the ACT; and
…
(c)to keep the costs of insurance at an affordable level; and
….
(e)to encourage the speedy resolution of personal injury claims resulting from motor accidents; …
21.In furtherance of these objects, Chapter 4 of the Act sets out a process which is intended to facilitate the speedy settlement of disputes with a view to avoiding, if possible, the need to institute proceedings in a court. This regime applies with respect to motor accident claims, being claims for damages for personal injury caused by a motor accident(s77). We note that in the interim, while these processes are on foot, Part 4.6 of the Act provides for the payment of expenses and provision of services in certain circumstances. Thus, where the respondent admits liability and the motor accident was reported to the police, the respondent must pay the injured person’s medical expenses which are reasonably incurred by reason of the accident (ss121 and 122). The respondent may also make rehabilitation services available to the claimant, the costs of which may be taken into account in assessing damages where notice is given (ss126 and 128).
22.It is convenient to summarise key elements of the pre-action scheme prescribed by the Act (leaving aside complexities where multiple respondents may be involved which are not relevant here).
23.First,Part 4.2 entitled“Motor Accident Claims Procedures” sets out a number of steps which it is intended be undertaken before proceedings are instituted in a court as follows.
(a)Before instituting court proceedings for a motor accident claim, the claimant must give written notice of the claim to the respondent which contains certain information and authorises the respondent to have access to prescribed records and sources of information (s84).
(b)Unless the respondent considers that it is not properly a respondent for the claim, a respondent must respond within a month under s90 or seek further information if it cannot respond on the information provided (s88). Section 90 requires the respondent to state whether it is satisfied that the notice of claim complies with the requirements of s84 and if not, what more is required, and to state whether the insurer is prepared (without admitting liability) to meet the reasonable and appropriate costs of the claimant’s rehabilitation.
(c)Section 96 provides that a claimant “cannot proceedwith the motor accident claim” if the claimant has not given the respondent a complying notice of claim.
(d)Under s97, a respondent must within six months of receiving a complying notice of claim, take any reasonable steps to find out about the accident, tell the claimant if the liability is admitted or denied, respond to any written offer of settlement from the claimant (or invite the claimant to make an offer), make “a fair andreasonable estimate of the damages” to which the claimant would be entitled, and either make a written offer or counter-offer, or settle the claim by accepting the claimant’s offer. Any offer or counter-offer is to be accompanied by medical reports, assessments of capacity and other material, including documents relevant to assessing economic loss, in the offerer’s control or possession that may help the other person make a proper assessment of the offer.