Stubbs v NRMA Insurance Ltd S129/1997 [1998] HCATrans 171 (19 May 1998)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S129 of 1997

B e t w e e n -

JACKSON PAUL STUBBS by his Tutor JUDITH STEPHENS

Applicant

and

NRMA INSURANCE LIMITED

Respondent

Application for special leave to appeal

McHUGH J

HAYNE J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON TUESDAY, 19 MAY 1998, AT 10.48 AM

Copyright in the High Court of Australia

MR B.M.J. TOOMEY, QC: If it please your Honours, I appear with my learned friend, MR P.S. JONES, for the applicant. (instructed by Stacks - The Law Firm with Goudkamp Mahony)

MR D.F. ROFE, QC: If your Honours please, I appear with my learned friend, MR M.L. WILLIAMS, for the respondent. (instructed by Abbott Tout)

McHUGH J: Yes, Mr Toomey.

MR TOOMEY: May it please your Honours, this is an application from a decision in the Court of Appeal of New South Wales, turning essentially on the question of whether there was a power in the court to consider questions arising under section 45 of the Motor Accidents Act 1988 .

HAYNE J: Well, how do you get around 118A?

MR TOOMEY: Your Honour, we say that 118A is not applicable in a case which is not directed to the licence - - -

HAYNE J: How do you get around the words:

No proceedings may be taken against a licensed insurer for failure to comply with.....this Act.

MR TOOMEY: Because, your Honour, we would say it is not a failure to comply with the Act if the insurer fails to make a payment, having a bona fide belief that it has a right not to make it.

McHUGH J: It is a breach of duty, is it not?

MR TOOMEY: I am sorry, your Honour?

McHUGH J: It is a breach of duty if the insurer fails to comply.

MR TOOMEY: What the insurer is required to do by section 45(2), to make payments which are reasonable and necessary, properly verified and related to the injury.

McHUGH J: Yes, well that is an objective test. It has nothing to do with good faith.

MR TOOMEY: Your Honour, to seek a declaration that hospital expenses or rehabilitation expenses were "reasonable and necessary" and "properly verified", et cetera, in our respectful submission, would not fall within 118A.

McHUGH J: It is not that they fall within 118A, but that the insurer has failed to comply with its duty, which is to make payments in respect of the various matters set out in section 45. If it fails to do that, it has breached its duty, it has failed to comply with its duty under the Act, it has failed to comply with the terms of the Act. I have a great deal of sympathy for your argument, Mr Toomey, and if it was not for section 118A, I would be all the way with you, but I must say 118A seems to me to be an impenetrable bar.

MR TOOMEY: Well, your Honour, we can only advance the argument that 118A is intended to deal with actions against a licensed insurer in respect of its licence and that is, we would say, a respectable reading of the section.

McHUGH J: It is "failure to comply with the terms of the.....licence or this Act or the regulations", so there are three categories that are outside, Mr Toomey.

MR TOOMEY: Yes, but, your Honour, with great respect, that would surely have to be a proceeding directed against the insurer of a punitive nature. We would say that is what is contemplated by section 118A.

McHUGH J: It does not say "no prosecution", it says "no proceedings".

MR TOOMEY: No, it does not, your Honour, but we would say, falling where it does at the end of Division 2 of Part 8 - which Division 2 is headed "Supervision of licensed insurers", the division sets out the requirements of an insurer, the investment funds, the accounts, et cetera. It is plain that that section is directed to preventing anyone other than the Motor Accidents Authority from regulating the behaviour of insurers under the Act generally. But this is in the nature of an action in personam. This is, we would say, an action in which a declaration of right is sought which is not inimical to section 118A. It would not, perhaps, even be necessary that there be an order against the insurer. A declaration may well be enough and it would be our submission that proceedings such as these are not caught.

McHUGH J: The necessity for the declaration would arise by reason of the failure to comply with the terms of the Act.

MR TOOMEY: Well, I suppose it is a matter of semantics, but what you would be asking the court to say, not to punish, not to take action against, but to make a declaration as to whether or not the insurer has. Now, proceedings against for failure to comply, in our respectful submission, has a different character. I appreciate the difficulty, your Honour, but the situation would seem extraordinary if, as the judges of the Court of Appeal had found, there would be locus standi, either in the claimant as a member of the public with a special interest or on one reading of the President's judgment, perhaps a private right to bring action to enforce the provisions of section 45, and by a general section such as this, which is obviously aimed at the general governance and supervision of insurers by the authority, if that right were taken away.

McHUGH J: When you look at 118A the conclusions you are forced to is that section 45 is what, in another area of the law, is called a duty of imperfect obligation.

MR TOOMEY: Well, if your Honours take that view then that is the end of it.

McHUGH J: I think it is a very short point, Mr Toomey.

MR TOOMEY: Indeed, your Honour. As I say, if your Honours take that view there is nothing more I can say.

McHUGH J: Yes, thank you, Mr Toomey. The Court does not wish to hear you, Mr Rofe.

The question in this application is whether the applicant can enforce the duty imposed under section 45(2) of the Motor Accidents Act which requires an insurer who has admitted liability to make payments to or on behalf of an injured person in respect of hospital, medical, pharmaceutical and rehabilitation expenses incurred. We see no ground to doubt the correctness of the decision of the judges of the Court of Appeal of New South Wales. The duty is not enforceable by an injured person or anybody other than the authority. Accordingly, an appeal would have no prospects of success. Special leave to appeal is refused.

MR ROFE: Your Honour, we would ask for an order of costs.

McHUGH J: You cannot oppose that?

MR TOOMEY: Your Honour, the only thing I can say is this, liability is admitted and the only effect of an order for costs is that at some time in the future, presumably, the insurer would have a setoff against the infant, because there is certainly no funds from which an order for costs could be met. If it please, your Honour.

McHUGH J: The application is refused with costs.

AT 10.57 AM THE MATTER WAS CONCLUDED