Maxwell v Highway Hauliers Pty Ltd [2014] HCATrans 51 (14 March 2014)

Last Updated: 27 March 2014

[2014] HCATrans 051

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Perth No P31 of 2013

B e t w e e n -

MATTHEW MAXWELL (THE AUTHORISED, NOMINATED REPRESENTATIVE ON BEHALF OF VARIOUS LLOYDS UNDERWRITERS)

Applicant

and

HIGHWAY HAULIERS PTY LTD (ACN 008 863 214)

Respondent

Application for special leave to appeal

HAYNE J
GAGELER J

TRANSCRIPT OF PROCEEDINGS

FROM CANBERRA BY VIDEO LINK TO PERTH

ON FRIDAY, 14 MARCH 2014, AT 1.01 PM

Copyright in the High Court of Australia

MR B.W. WALKER, QC: May it please the Court, I appear with my learned friend, MR P. KULEVSKI, for the applicant. (instructed by CLS Lawyers)

MR G.R. HANCY: May it please the Court, I appear for the respondent. (instructed by WHL Legal Pty Ltd)

HAYNE J: Yes, Mr Walker.

MR WALKER: Your Honours, at page 126 of the application book in paragraphs 37 to 40, the learned President, with respect, concisely states the way in which the present issue came to be fought below and will be presented in this Court were special leave granted.

HAYNE J: Now, do you say there is a difference between intermediate courts?

MR WALKER: Yes, and that is why I have drawn to attention those paragraphs. Paragraph 40, in its concluding two lines, puts a matter with which we wish to start, and which we submit represents the paradigm case for this Court apical in the judicature to step in by a special leave grant. Distinguishing, of course - - -

HAYNE J: If that were ultimately to prove a persuasive point, Mr Walker, on what terms?

MR WALKER: They would have to be on terms that we paid for the improvement of jurisprudence.

HAYNE J: So not disturb the orders below and pay the reasonable costs of the respondent in this Court? Is that what I understand?

MR WALKER: Yes, I submit your Honours should, not merely could, condition a grant that way, and in any event, I have instructions to offer so.

HAYNE J: Yes. We might be assisted by hearing from Mr Hancy. Mr Hancy, we would be assisted, I think, in particular, in what your answer would be to what seems to be a difference in opinion being expressed by intermediate courts. Is that not a paradigm case where we should step in?

MR HANCY: Your Honours know that that is one of the areas where you have that jurisdiction and can step in, but that does then ask the question, is there truly a difference? The difference that my friend could point to potentially is only a difference between her Honour Justice McLure and the decision of the Queensland Court of Appeal or the reasons given by Justice Chesterman on the question of what is an omission, because materially there would not be a difference of view between the two courts on that question of omission.

There was the test, or apparent test that his Honour Justice Chesterman stated of an omission being non-performance of an activity that the contract requires, allows or contemplates that may affect its operation. Her Honour Justice McLure did not agree if that was what he stated the test to be, that that was necessarily a test at all and what an omission was, but their Honours Justices Pullin and Murphy proceeded on the basis that if that is the test it was satisfied in the case before them because the conduct of driving a truck without the driver having been PAQS tested and obtaining a score of 36 was the performance of an activity that the contract required, allowed or contemplated and that may affect its operation.

I focused on omission, your Honours, because that seems to be the only area where my friend could identify a relevant difference. If you shift from that to an area of difference which is in terms of what is scope of cover, then you also go into the different territory of whether the appeal would have sufficient prospects of success, and I do not know whether your Honours wish me to say anything more about that but - - -

HAYNE J: I think, Mr Hancy, you should make whatever arguments you think appropriate against a grant of special leave.

MR HANCY: Yes. We start, first of all, with what the relevant test is under section 54(1), and the applicant appears to want to focus on whether there is some restriction or limitation that is inherent in a claim as being the relevant test, but the relevant test comes out of section 54(1) itself and that is, a test that focuses on the insurer’s reason for refusing to pay a claim and that is that it is by reason of some act of the insured or of some other person. So, that is the test. It is not whether there is some inherent restriction or limitation on a claim.

Indeed, the FAI v Australian Hospital Care decision, out of which the applicants extracted this as a test, was not one that applied it as a test. Certainly there was dicta saying that - in the plurality reasons there was dicta saying that section 54(1) does not relieve an insured of a restriction or limitation that is inherent in a claim, but that was not the basis for the decision. The basis for the decision was, again, that the insurer’s reason for refusing to pay the claim was an act or omission of the insured, that is, the failure to notify circumstances that it knew that may give rise to a claim.

So, this supposed test of inherent restriction or limitation has been extracted out of a judgment where it was not applied to lead to the decision in that case and then elevated to some special status that does not emerge from the words of section 54(1) itself.

HAYNE J: If that is right, and I have no idea whether it is, is that not itself reason to bring the case up if this sort of misunderstanding is occurring, or what you say is misunderstanding is occurring in the intermediate courts? Should we not put it to rest when the provision is as important as this one is?

MR HANCY: Well, there is no doubt that section 54 is an important provision in the Insurance Contracts Act and the submission I was making was directed to whether, if your Honours granted special leave to appeal, the appeal would have sufficient prospects of success. The next point I wish to address is that of whether Johnson v Triple C really is a comparable case. I have mentioned that his Honour - - -

GAGELER J: Do you mean is it distinguishable? Is it distinguishable on its facts?

MR HANCY: Yes, well, that is really the point I am trying to make, that it is distinguishable. First of all, it was not a case – on one view it was not a case on section 54(1) at all and the reason for that is that subsection (1) is subject to subsection (2) not being applicable. Subsection (2) applies where the Act was reasonably “capable of causing or contributing to a loss” of the kind provided by the policy.

Now, Justice Chesterman held that in Triple C the conduct that was there in issue fell within subsection (2) because it was conduct that was reasonably capable of causing or contributing to a loss of the kind provided by the policy. It was not a section 54(1) case at all, whereas the Maxwell v Highway Hauliers decision clearly was. It was accepted that failure to have a PAQS score of 36, whatever way you want to formulate that in terms of act or omission, was not an act or omission that was reasonably capable of causing or contributing to a loss of the kind provided under the policy, so subsection (2) did not apply.

But not only that, her Honour Justice McLure – and this has been picked up in the applicant’s submissions – said that the evidence at trial established that the failures of the insured that were given as reasons for denying indemnity did not cause the losses, so that took the case into subsection (3). In those respects – and in addition the respects that we deal with in the written submissions – Johnson v Triple C was a case that can be readily distinguished from the present one.

Just to remind your Honours, the points that we made in the submissions were that in this case the conduct that was identified was – and

identified by the insurer itself – the conduct of the vehicle being driven by an untested driver, so it was an act and not an omission. If your Honours accept that, then the issue of whether there is an omission that needs to satisfy Justice Chesterman’s test does not even arise.

I have made the point we made in the written submissions that his Honour’s test was, in any event, held to have been satisfied by the judges of the court below, in this case, and the general propositions also made that the applicants criticised that every insurance case is determined by contract wording and its particular facts. So, for the moment, your Honours, those are the submissions I would make on why your Honour should not grant special leave to appeal. Unless your Honours have further questions of me we do, of course, rely on the written submissions.

HAYNE J: Yes, thank you, Mr Hancy. Mr Walker, you may have leave on the terms that you have indicated. Do counsel agree that it is a case, what, a day?

MR WALKER: Or less.

HAYNE J: A day or less. Do you agree with that, Mr Hancy?

MR HANCY: I think that is a fair assessment, your Honour.

HAYNE J: Yes, very well. I need hardly remind counsel that the timetable that is fixed for submissions which will be provided – I suspect we have discovered the wonders of facsimile for you, Mr Hancy - - -

MR HANCY: And email, your Honour.

HAYNE J: - - - is a timetable that is to be adhered to. There will be, as I say, a grant.

The Court will adjourn to 10.15 on Tuesday, 1 April in Canberra.

AT 1.14 PM THE MATTER WAS CONCLUDED