Panel Beaters of Australia Inc v Insurance Australia Ltd & Anor [2006] HCATrans 620 (10 November 2006)

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Panel Beaters of Australia Inc v Insurance Australia Ltd & Anor [2006] HCATrans 620 (10 November 2006)

Last Updated: 21 November 2006

[2006] HCATrans 620

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S117 of 2006

B e t w e e n -

PANEL BEATERS OF AUSTRALIA INCORPORATED

Applicant

and

INSURANCE AUSTRALIA LIMITED (FORMERLY NRMA INSURANCE LIMITED)

First Respondent

AUSTRALIAN AUTOMOTIVE REPAIRERS ASSOCIATION (POLITICAL ACTION COMMISSION) (IN LIQUIDATION) INC

Second Respondent

Application for special leave to appeal

GLEESON CJ
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 10 NOVEMBER 2006, AT 11.43 AM

Copyright in the High Court of Australia

__________________

MR R.B. O’HAIR: If it please the Court, I appear for the applicant. (instructed by United Legal)

MR A.J.L. BANNON, SC: If it please the Court, I appear with MR I.S. WYLIE for the first respondent. (instructed by Blake Dawson Waldron)

GLEESON CJ: There is a certificate from the Deputy Registrar that he has been informed by the solicitor for the liquidator of the second respondent that he has been instructed not to appear in these proceedings. Yes, Mr O’Hair.

MR O’HAIR: Your Honour, there is a preliminary point because my solicitors were, unfortunately, because of dealings with the Registry, two days late in making - - -

GLEESON CJ: Do you oppose an extension of time, Mr Bannon?

MR BANNON: No.

GLEESON CJ: Yes, you have that extension.

MR O’HAIR: Thank you, your Honour. Your Honours, the special leave point in this matter, in our submission, can perhaps be well identified by turning to pages 142 and 143 of the book. It is in the submissions of my learned friends and I draw your Honours’ attention to paragraph 18, paragraph 19 and paragraph 20. In paragraph 18 what is indicated is that:

In those circumstances, s. 47(7) [of the Trade Practices Act] had no application because there was no question of the acquisition by the insured of services from “another person”.

In paragraph 19 it then proceeds on in the middle of the paragraph:

Where a corporation engages a contractor to fulfil its obligations to provide a service to a customer, unless the relationship between the corporation and the contractor is a sham or an artifice, the customer does not “indirectly acquire” services from that contractor.

At the end of paragraph 20:

In the present case, the repair services were not acquired by the insured but by the insurer, albeit the insured ultimately received from the insurer a benefit, namely, a repaired car including any parts.

Now, your Honours, if I take your Honours to section 47(7) itself - - -

GLEESON CJ: I have section 4 and section 106.

CALLINAN J: Yes, and so have I.

GLEESON CJ: Section 47 does not seem to be in the bundle you have given us.

MR O’HAIR: I apologise to your Honours.

GLEESON CJ: Just read it out.

MR O’HAIR: Certainly, your Honours.

GLEESON CJ: Or point us to the parts of the judgments where we can find it.

MR BANNON: Page 18 of the application book.

MR O’HAIR: I am indebted to my learned friend. Your Honours will see that what that is referring to is the words appearing at the very end of the section where it refers to “description directly or indirectly from another person”.

GLEESON CJ: Just by reference to the words of the section, please identify for us the parties and show us the way you say the section works.

MR O’HAIR: Certainly. It says:

A corporation –

in this case it would be the NRMA –

engages in the practice of exclusive dealing if the [NRMA] refuses:

(a) to supply goods or services to a person –

that could be a timely assessment of a repair or it could be repairing a car or performing any of a number of obligations under the contract of insurance –

for the reason that the [insured] . . . has not acquired . . . [repairs to his or her car] directly or indirectly from another person.

Now, the case that is made against us is that - - -

GLEESON CJ: I would like to understand your case. What is the case you make against NRMA Insurance stated by reference to the language of the section?

MR O’HAIR: The case that we make against NRMA Insurance, your Honour, is this, that NRMA Insurance engages in the practice of exclusive dealing because it refuses to supply timely assessment of repairs because, as your Honour would appreciate, when a car has been involved in a smash it needs to be assessed by the insurance company to know - - -

GLEESON CJ: Appraisal.

MR O’HAIR: Appraisal, certainly. So the timely appraisal for the reason that the insured has not acquired repairs from an NRMA approved repairer.

CALLINAN J: When you say “appraisal”, do you mean a quote?

MR O’HAIR: Yes, your Honour, there would be an - - -

CALLINAN J: Is a quote a service?

MR O’HAIR: That is part of our case and that was dealt with by his Honour Justice Lindgren in his reasons and his Honour was prepared to accept that we were correct in saying that there were services. I draw your Honour’s attention to page 49 of the application book:

(i) timely assessment of the insured’s claim,

(ii) timely authorisation to proceed with repairs, and

(iii) the opportunity to secure the benefit of an early release of the insured’s motor vehicle as a result of (i) or (ii) above.

GLEESON CJ: Who is the other person being referred to?

MR O’HAIR: On our case the other person is a PSR or an ASR which is a preferred smash repairer - - -

GLEESON CJ: Very well. So your case depends upon the proposition that having the repairs done involves the acquisition by the insured directly or indirectly of services from the approved panel beater or whatever?

MR O’HAIR: Exactly, your Honour, with respect. So the case that is put against us is that essentially where one employs a subcontractor that has solidified into a proposition of law, in our submission – that is the case that is put against us – that if one employs a subcontractor, that that is not another person.

GLEESON CJ: I understand the proposition to be put against you to be that the repairs that are carried out to the cars by the approved repairers do not involve the acquisition of any services from the repairers by the insured. They involve the acquisition of services by the NRMA from the approved service providers.

MR O’HAIR: Certainly, your Honour, that is the case that is put against us and the case that is put in answer to that is, first, that the concept of “directly or indirectly” is a wide one, that it is not one simply resolved by a consideration of the contractual arrangements, but also involves a consideration of the factual matrix, that in this case, as his Honour Justice Lindgren indicated, there was evidence that people drove their cars to the repair shop, that they submitted the car to the repair shop and at the end of the period they were in a position to – and unfortunately this is a word in the statute but I will still nonetheless use it – accept or reject the repair and, in our submission, it was sufficient that there be an acceptance in that respect for there to be within the section, even if that did not respond to a contractual arrangement. So the section, for instance, is to be applied in relation to the factual matrix that arises.

So, to give another example, if there were a legal expenses insurance policy and there were a panel of solicitors, then it may be said that whilst the contract may well be that the legal expenses insurer is providing the legal services in a sense, that nevertheless, viewed on a statute that uses a discrimen of directly or indirectly, that a judge or a court would be fairly able to hold that indirectly the services have been provided by that person even though they have not been provided pursuant to a contract.

GLEESON CJ: Does this involve the idea that if you get the benefit of services you indirectly acquire the services?

MR O’HAIR: It need not go as far as that, your Honour, because that matter would appear to be concluded by the decision of the court in Castlemaine Perkins, although, if the matter is put in, with respect, a slightly narrower way, when one looks at a case such as Castlemaine Perkins and there is delivered beer in a CIF contract, there is very little involvement even in the nature of acceptance in the factual matrix. There is just beer turns up at one’s premises, there is a carrier, presumably one signs for the beer that arrives and one has one’s beer. Here there is a situation where the vehicle is delivered – not only is the vehicle delivered, but the vehicle is quoted upon – and when a person returns they have the opportunity to complain about the repairs directly to the - - -

GLEESON CJ: They would never know how much the repairs cost, would they?

MR O’HAIR: May I take instructions, your Honour? Your Honour, where the person who is on the NRMA’s list, I do not believe that they would. So we say rather than it being a cemented question of law, it is a question of fact.

GLEESON CJ: Does the evidence reveal whether the NRMA has a shareholding interest in some of these approved repairers?

MR O’HAIR: Not that I am aware of, your Honour, no.

GLEESON CJ: I see.

MR O’HAIR: The further point then that I would make to your Honours would be this, that so far as the statutory, as your Honours saw – in that connection the extended definition of “acquire” includes a definition “accept” so far as services are concerned and, in our submission, your Honour, the words “directly or indirectly” are such that it is a factual question, not a question that is hardened into appeal question of law as to whether one proves that there is a contract and that essentially is the end of it, a subcontract arrangement. In that regard, your Honour, I draw your attention to page 14 of the application book where his Honour Justice Lindgren indicated that:

The question for decision is one of law, the resolution of which will not be aided by the availability –

and he was referring to some evidence –

of the recordings of further telephone conversations.

GLEESON CJ: Just before you leave this point – I know you have some other matters you want to get on to – was there evidence about what was the contractual obligation undertaken by NRMA to the insured in relation to these repairs?

MR O’HAIR: There was, your Honour, and there was evidence that they – and I think that appears in his Honour’s - - -

GLEESON CJ: Just give me a reference to it without taking your time on it.

MR O’HAIR: My understanding is that it is in the judgment of his Honour Justice Lindgren and essentially the policy is written in supposedly plain English and says that the insurer is able to arrange the repair of the car or to pay for the repairs.

GLEESON CJ: So the insurer has the choice. The insurer can either repair your car or pay you the cost of the repairs?

MR O’HAIR: Certainly, your Honour.

GLEESON CJ: That is all I needed to understand, thank you.

MR O’HAIR: The further point that we made in connection with there being a supply – and it is referred to in our submissions on page 119, around about line 30 – was that the evidence disclosed that there were spare parts that were purchased by repairers and that they were put into the cars and that therefore on the car being returned that the property in those parts passed. Certainly the understanding of the law was that the property in those parts was not vested in the NRMA.

Your Honour, referring to the other point – I have only recently received this brief at this level – there is no desire to persist in relation to an application that his Honour Justice Lindgren was biased. So far as the question of procedural fairness is concerned, I think the simplest way that I can put it as a special leave point so far as my client’s case is concerned is this. We have nothing to say about appellate courts, we have nothing to say about courts other than where there is evidence taken, so it is appropriate to look at a position of a juryman rather than look at the position of a person who is dealing with questions of law.

A juryman is perfectly entitled to have regard to the demeanour of the parties and to their witnesses in the court at all times and that is real evidence in the case. If, on the other hand, the jurymen were to seek the advice of what had gone on in the case from a court officer such as a tipstaff or a sheriff’s officer, then that would be something that ought to be the
subject of evidence. The days are long gone when a jury was selected theoretically on the basis of its knowledge of the persons in the country and has to rely on what evidence is provided.

In those circumstances, your Honour, the problem that arose in the circumstances was, in our submission, that his Honour had before him evidence that ought to have been, if it was to be received at all or to have been received in the regular way and subject to the tests that are available in a court at nisi prius in those circumstances and that as a result of that lines of inquiry – one can never say in a natural justice audi alteram partem sense what would have been the result of an inquiry and where that might have led. It may, indeed, be that if a person were seeking to suborn witnesses in the course of a trial, that if that person were identified with one of the parties, that might have a very serious impact in respect of how the court viewed other lapses in relation to evidence of that party. Your Honour, unless there is some way that I can be of assistance - - -

GLEESON CJ: Thank you, Mr O’Hair. Mr Bannon, could you just let us know what is your answer to Mr O’Hair’s argument concerning the concept of indirect acquisition of goods or services from these approved suppliers.

MR BANNON: The terms of the policy provided that the insured had a right to have the vehicle repaired. The policy reserved to the NRMA the right to either repair that vehicle itself using one of its approved repairers with which it had contracts or assess the amount of the value of the repairs, give the money to the insured, who could go and have the vehicle repaired by any other insurer. Justice Lindgren found and the Full Court found that what was involved was there was an existing contract between NRMA and the approved repairer under which they were obliged to repair vehicles which NRMA sent to it and that that was a repair exercise engaged in by the NRMA using that repairer in fulfilment of its obligation to the insured which the NRMA had to repair the vehicle.

So that, albeit, it is true that the repaired vehicle came back to the insured and in a sense the repair work was something which the insured received the benefit of, there was in no sense, under section 47, a provision of any service by the NRMA on condition that the insured acquire a service from a particular repairer.

GLEESON CJ: Mr O’Hair says that at least in some cases, perhaps in most cases, the nature of these services is such that they involve, amongst other things, a supply of goods by the approved repairer pursuant to which title to the goods passes from the approved repairer to the insured.

MR BANNON: It still does not involve, in our submission, any acquisition of services under the Act, or even goods. I think it is put only as
a services claim, but even if it is wide enough to comprehend goods, because the same analysis applies, namely, it is what the repairer’s obligation is to provide a repaired vehicle to NRMA which in turn the NRMA can provide to the insured.

The difficulty with an alternative construction is that it would apply to practically every contract which operates in the commercial world. There is no logical distinction, for example, between a subcontractor, like a repairer here, and an employee. If a company said, “I will do certain work for you provided you use my man as an employee”, if one can construe section 47 to say because you are getting the benefit of services by that employee, 47 applies in every single contract case unless the contractor is going to do the work themselves.

It would also apply in every building contract because every subcontractor to the builder would be a contractor who is, on my learned friend’s interpretation, providing services to the proprietor, and the builder would say, “Well, I will do the work, but I am going to use my contractors”. So every building contract would be exposed to examination under section 47.

Castlemaine Tooheys’ reasoning insofar as it found that the provision of the combined service of delivery of beer plus the beer to Queensland as the alternative to picking up the beer in Brisbane, I think it was, although the recipient of the delivered beer got the benefit of the service in Northern Queensland and enabled the beer to be drunk, did not involve the question of an acceptance directly or indirectly of that service. That is referred to in Justice Lindgren’s judgment at the relevant passage at page 45 of the application book and at line 20 on that page the particular point is squarely addressed as being the question of “accept the benefit of” and “directly or indirectly”.

So we would say it would have remarkable consequences if that construction was correct. You have a situation where two courts – it is essentially a factual finding as to whether or not there is an acceptance of services. You have concurrent findings on an interpretation which, we say, is clearly correct.

GLEESON CJ: Thank you, Mr Bannon. Yes, Mr O’Hair.

MR O’HAIR: Your Honour, in our submission, what has happened, if one examines the submissions that are put against, is that what should be a question of fact is turned into a settled question of law and the use of the concept of “directly or indirectly” certainly to those of us who had a misspent youth looking at financial assistance to purchase shares in companies and so forth, means that that is a broader factual inquiry as to
whether there has been a direct or indirect acquisition from a person and that inquiry has been foreclosed by the idea that the moment one shows a contract that that is, as it were, a complete answer to the question.

I am instructed to say that I should make your Honours aware that under the scheme the consequences for a non-accredited repairer are essentially that NRMA and the insured pays out to the insured cash – cash settles the policy, pays out to the insured the amount that is required for the non-accredited repairer and essentially the insured has to go and find another insurer. So at a practical level for a significant section of the community it does have quite significant consequences.

GLEESON CJ: I suppose a NRMA insured might say to the NRMA, “My car has been damaged and I want to get my brother-in-law to repair it”.

MR O’HAIR: Yes, certainly, your Honours.

GLEESON CJ: And the NRMA may well say, “Well, we are not prepared to pay whatever your brother-in-law charges for this. We have got some system under which we seek to regulate the amount it is going to cost us to get things repaired.”

MR O’HAIR: Certainly, your Honour. Indeed, one of the submissions essentially in the course of the case was that if the panel were not selected in arbitrary rules that there would not be a case to be made. But following on from that, if we were to have prospects of success on that point, there are a number of interesting statutory constructional issues in the section that have been largely resolved in our favour by Justice Lindgren and certain other ones left open, but I do not know that I need to draw your Honours’ attention to those.

GLEESON CJ: Thank you.

In this matter we think that there are insufficient prospects of success of an appeal to warrant a grant of special leave. The application is dismissed with costs.

We will adjourn for a short time to reconstitute.

AT 12.09 PM THE MATTER WAS CONCLUDED