Haureliuk v Furler [2011] ACTSC 6 (31 January 2011)

Last Updated: 7 February 2011

MARK VICTOR HAURELIUK v BOEN JAMES FURLER

[2011] ACTSC 6 (31 January 2011)

STATUTORY INTERPRETATION – Road Transport (Third-Party Insurance) Act 2008 (ACT) – s 144 – costs following acceptance of mandatory final offer – whether portion of offer for pain and suffering to be deducted from accepted offer for purpose of calculating costs

Legislation Act 2001 (ACT)

Road Transport (Third-Party Insurance) Act 2008 (ACT)

Road Transport (Third-Party Insurance) Regulation 2008 (ACT)

Casey v Allcock (2009) 3 ACTLR 1

Furler v Haureliuk [2010] ACTSC 68

Griffiths v Kerkemeyer [1977] HCA 45; (1977) 139 CLR 161

Kingsley’s Chicken Pty Ltd v Queensland Investment Corporation & Canberra Centre Investments Pty Ltd [2006] ACTCA 9

Minister for Immigration and Ethnic Affairs v Tang Jia Xin [1994] HCA 31; (1994) 69 ALJR 8

Morro v Australian Capital Territory [2009] ACTSC 118

Paff v Speed [1961] HCA 14; (1961) 105 CLR 549

R v Young [1999] NSWCCA 166; (1999) 46 NSWLR 681

No. SC 691 of 2010

Judge: Master Harper

Supreme Court of the ACT

Date: 31 January 2011

IN THE SUPREME COURT OF THE )

) No. SC 691 of 2010

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: MARK VICTOR HAURELIUK

Plaintiff

AND: BOEN JAMES FURLER

Defendant

ORDER

Judge: Master Harper

Date: 31 January 2011

Place: Canberra

THE COURT ORDERS THAT:

1. this proceeding and proceeding SC 138 of 2010 between the same parties be consolidated.

2. the costs ordered to be paid in proceeding SC 138 of 2010 be costs in the consolidated proceeding.

3. the originating application in this proceeding be dismissed.

4. the plaintiff in this proceeding pay the defendant’s costs of the consolidated proceeding.

1. This is the second litigious dispute between the present parties, arising out of a motor vehicle collision. On 26 March 2009 the plaintiff drove his car into the rear of the defendant’s stationary vehicle, causing him personal injury.

2. The previous proceeding was brought by the present defendant against the present plaintiff seeking dispensation from compliance with certain of the pre-action requirements imposed upon the parties by the Road Transport (Third Party Insurance) Act 2008 (ACT). On 16 July 2010, I ordered that a compulsory conference between the parties be dispensed with, upon conditions as to the exchange of documents relevant to the claim. On the assumption that the applicant would proceed to file an originating claim for damages, I ordered that the costs of the application be costs in that cause. The applicant asked me to dispense with the requirement for exchange of “mandatory final offers” under the Act but I declined to do so: Furler v Haureliuk [2010] ACTSC 68.

3. On 30 July 2010 the present plaintiff delivered a mandatory final offer pursuant to section 141 of the Act. Subsection (5) of that section provides that a mandatory final offer must identify how much of the offer is for pain and suffering. The plaintiff’s offer was of $85,000.00 plus costs, of which $40,000.00 was identified as “for pain and suffering (general damages)”. The balance of $45,000.00 was described as for the balance of the defendant’s claim (inclusive of payments made on behalf of the claimant by NRMA in the sum of $2,787.60, and medicare payback in the sum of $242.45).

4. The defendant accepted the offer. A dispute has arisen between the parties about costs. The defendant’s solicitors have submitted an assessment of $32,566.91, which includes disbursements. The plaintiff seeks a declaration that the defendant is entitled to no more than $5,000.00 for costs. The declaration sought relates only to the plaintiff’s liability to the defendant for costs. I am not asked to adjudicate on costs as between the defendant and his solicitors.

5. NRMA, referred to above, is not formally identified in the evidence before me but can be taken to be the third-party insurer of the plaintiff’s vehicle, and the entity instructing the plaintiff’s solicitors. It can be assumed that the plaintiff personally has no involvement in, and probably no knowledge of, the present proceeding. On 9 September 2010, before commencing this proceeding, the plaintiff’s solicitors wrote to the defendant’s solicitors a letter including the following:

We should also add that our client regards this matter as involving an issue of general principle concerning the proper construction of regulation 27. If your client does not agree with the above construction of the relevant provisions concerning caps on legal costs, our client proposes to commence proceedings in the Supreme Court of the ACT seeking declaratory relief to establish the proper construction of the provisions. In those circumstances we advise we will not pursue the costs of our successful application.

6. It is clear that the client referred to in the paragraph is the insurer and not the named plaintiff. It is equally clear that the present proceeding is in the nature of a test case for the insurer, and that the defendant simply finds himself in the unhappy position of having provided the occasion for the insurer to have the question determined.

The applicable legislative provisions

7. The provisions of the Act presently in force which apply include:

141 Mandatory final offers

(1) This section applies if, for a motor accident claim —

1. the compulsory conference has been dispensed with under section 137 (Compulsory conference may be dispensed with); or

2. the motor accident claim is not settled at the compulsory conference.

(2) The claimant and the respondent for the motor accident claim must exchange written final offers (each of which is a mandatory final offers [sic]).

(3) However, if a respondent denies liability altogether, the respondent must give the claimant a written notice of denial (a mandatory final notice).

(4) If the respondent gives the claimant a mandatory final notice, for this Act the respondent is taken to have given the claimant a mandatory final offer of $0.

(5) A mandatory final offer must identify how much of the offer is for pain and suffering.

Note 1 If a form is approved under s 276 for a mandatory final offer or a mandatory final notice, the form must be used.

Note 2 A mandatory final offer for $50 000 or less must be exclusive of any amount for costs (see s 144 (1)).

143 Timing of mandatory final offers

(1) If the court has not dispensed with the obligation to exchange mandatory final offers, mandatory final offers for a motor accident claim must be exchanged —

• (a) if the compulsory conference has been dispensed with—not later than 14 days after the day the conference was dispensed with; or

Note A compulsory conference may be dispensed with by agreement or by court order (see s 137).

(b) if the claim is not settled at the compulsory conference — at the end of the conference.

(2) A mandatory final offer remains open for 14 days.

144 Working out costs for mandatory final offers

(1) A mandatory final offer for $50 000 or less must be exclusive of any amount for costs.

(2) If a mandatory final offer is for $50 000 or less but for more than $30 000, and is accepted, costs must be worked out and paid in the way prescribed by regulation.

(3) If a mandatory final offer is for $30 000 or less, and is accepted, costs must be $0.

145 Court proceedings not to begin if mandatory final offer open

(1) A claimant for a motor accident claim must not begin a court proceeding based on the claim if a mandatory final offer for the claim remains open.

Note A mandatory final offer remains open for 14 days (see s 143).

(2) If a claimant brings a court proceeding based on a motor accident claim, the claimant must, at the beginning of the proceeding, file in the court a sealed envelope containing a copy of the claimant’s mandatory final offer.

(3) The respondent must, before or at the time of filing a defence, file in the court a sealed envelope containing a copy of the respondent’s mandatory final offer.

(4) The court must not read the mandatory final offers until the court has decided the claim.

(5) However, the court must have regard to the mandatory final offers if making a decision about costs.

155 Costs—small awards of damages—generally

(1) This section applies if a court awards $50 000 or less in damages in a proceeding (other than an appellate proceeding) based on a motor accident claim.

Note Damages does not include damages for pain and suffering (see s (5)).

(2) If the court awards $30 000 or less in damages, the court must apply the following principles:

• (a) if the amount awarded is less than the claimant’s mandatory final offer but more than the respondent’s mandatory final offer, no costs are to be awarded;

• (b) if the amount awarded is equal to, or more than, the claimant’s mandatory final offer, costs must be awarded to the claimant in the way prescribed by regulation as from the date on which the proceeding began (but no award is to be made for costs up to that date);

• (c) if the amount awarded is equal to, or less than, the respondent’s mandatory final offer, costs must be awarded to the respondent as prescribed by regulation.

(3) If the court awards more than $30 000 but not more than $50 000 in damages, the court must apply the following principles:

• (a) if the amount awarded is less than the claimant’s mandatory final offer but more than the respondent’s mandatory final offer, costs must be awarded to the claimant in accordance with the Civil Law (Wrongs) Act 2002, chapter 14, up to the maximum amount prescribed by regulation or, if no amount is prescribed, $2 500;

• (b) if the amount awarded is equal to, or more than, the claimant’s mandatory final offer, costs must be awarded to the claimant as follows:
  • (i) costs up to the date on which the proceeding began must be awarded in accordance with the Civil Law (Wrongs)

Act 2002, chapter 14, up to the maximum amount prescribed by regulation or, if no amount is prescribed,

$2 500;

(ii) costs on or after the date on which the proceeding began must be awarded on an indemnity basis;

(c) if the amount awarded is equal to, or less than, the respondent’s mandatory final offer, costs must be awarded as follows:

• (i) costs up to the date on which the proceeding began must be awarded to the claimant in accordance with the Civil

Law (Wrongs) Act 2002, chapter 14, up to the maximum amount prescribed by regulation or, if no amount is prescribed, $2 500;

(ii) costs on or after the date on which the proceeding began must be awarded to the respondent in accordance with the Civil Law (Wrongs) Act 2002, chapter 14.

(4) This section is subject to section 156.

(5) In this section:

damages does not include damages for pain and suffering.

156 Costs — small awards of damages — exceptions

(1) This section applies if a court awards $50 000 or less in damages in a proceeding (other than an appellate proceeding) based on a motor accident claim.

Note Damages does not include damages for pain and suffering (see s (7)).

(2) This section applies in addition to section 155.

(3) The court may make an award of costs to compensate a party for costs resulting from a failure by another party to comply with a procedural obligation under this part.

(4) The court must not award costs to a party related to the introduction of evidence by the party that is unnecessarily repetitive.

Example

If a claimant calls 2 or more expert witnesses from the same area of expertise to give evidence to substantially the same effect, and the claimant is entitled to costs under s 155, the court must only allow costs related to 1 of the expert witnesses.

Note An example is part of the Act, is not exhaustive and may extend, but does not limit, the meaning of the provision in which it appears (see Legislation Act, s 126 and s 132).

(5) Unless an award of damages is affected by factors that were not reasonably foreseeable at the time of the exchange of mandatory final offers, the court must not award costs to a party related to investigations or gathering of evidence by the party after —

• (a) the end of the compulsory conference; or

• (b) if the parties or the court dispenses with a compulsory conference—the date when the parties completed the exchange

of mandatory final offers.

Note A compulsory conference may be dispensed with by agreement or by court order (see s 137).

(6) If an award of damages is affected by factors that were not reasonably foreseeable by a party at the time of making the party’s mandatory final offer, the court may, if satisfied that it is just to do so, make an order for costs under section 155 (2) or (3) as if the reference to a mandatory final offer in the relevant subsection were a reference to a later offer made in the light of the factors that became apparent after the parties completed the exchange of mandatory final offers.

Example

If a claimant’s medical condition suddenly and unexpectedly deteriorates after the date of the mandatory final offers and the court makes a much higher award of damages than would have been reasonably expected at that date, the court may ignore the mandatory final offers and award costs on the basis of later offers of settlement.

(7) In this section:

damages does not include damages for pain and suffering.

8. Critical to the plaintiff’s argument is regulation 27 of the Road Transport (Third-Party Insurance) Regulation 2008 (ACT):

27 Costs – mandatory final offer accepted Act – s144(2)

If a mandatory final offer for more than $30 000 but not more than $50,000 is accepted, costs (including disbursements) must not exceed $5,000.

9. In the present case, damages were not awarded by a court. The claim was settled before court proceedings for damages were instituted. The settlement arose from the acceptance of a mandatory final offer before action.

10. For the purpose of sections 155 and 156, dealing with small awards of damages by a court, damages is defined so as not to include damages for pain and suffering. The definition, in identical terms, is for each section only, not for the Act generally. No such definition is found in section 141, notwithstanding that the drafter refers specifically to pain and suffering in subsection (5) of the section. Equally, there is no such definition for the purposes of section 144 (working out costs for mandatory final offers) or for regulation 27, which prescribes a ceiling for the purposes of section 144(2).

11. The plaintiff’s argument is that section 144 and regulation 27 should be read as though section 144 included the words “in this section, mandatory final offer does not include any amount of the offer that is for pain and suffering”.

The legislative history

12. Senior Counsel for the plaintiff submits that the Regulation was introduced at the same time as the Act, and that in those unusual circumstances reference can be made to the delegated legislation in construing the primary legislation: see Pearce and Geddes, Statutory Interpretation in Australia, 6th edition, para [3.41]. Senior Counsel for the defendant has provided material with a view to establishing that the Regulation did not come into effect until some time after the Act. The sequence of events may be important, and I shall summarise it.

13. The Road Transport (Third-Party Insurance) Bill was presented to the Legislative Assembly on 22 November 2007 by the Chief Minister, Mr Stanhope. The Bill was accompanied by an explanatory statement. The present sections 155 and 156 in the Act were then sections 149 and 150.

14. When the Bill was next brought before the Assembly on 26 February 2008, changes were made and a supplementary explanatory memorandum was provided. The relevant portion read:

Clauses 8 to 13 exclude compensation for pain and suffering from the definition of “damages”. This will help to curtail legal costs in small awards of damages by bringing more claims under the $30,000 and $50,000 thresholds in clauses 149 and 150 of the Bill.

Payments relating to pain and suffering will be itemised separately in the mandatory final offer so the claimant and respondent can fully assess the offer.

15. Sections 149 and 150 (now sections 155 and 156) related only to awards of damages by a court, not to settlements by acceptance of mandatory final offer before action.

16. It is apparent from Hansard reports of the debate that as late as 20 August 2008, regulations had still not been drafted, or at least were not publicly available. The Bill as amended was agreed to by the Assembly on 21 August 2008. The Regulation was made on 25 August 2008. The Regulation was accompanied by an explanatory statement including this paragraph:

Therefore, section 27 offers lawyers the opportunity to earn up to $5,000 in costs if their clients accept mandatory final offers in cases involving damages, other than general damages, between $30,000 and $50,000.

17. Senior Counsel for the defendant submits that this passage in the explanatory statement was simply misconceived and wrong.

18. On 2 April 2009, a Road Transport (Third-Party Insurance) Amendment Bill 2009 was presented, with the intention of making a number of amendments to the Act. The only amendment relevant to the present dispute was clause 36, in relation to which the explanatory statement said:

This clause amends section 144 of the CTP Act to clarify the intention of the Act around lawyer’s fees in relation to claims that are settled prior to litigation by the acceptance of a mandatory final offer of $50,000 or less. To resolve any confusion that might exist around the calculation of lawyer’s fees in cases where the mandatory final offer that is accepted is $30,000 or less, this clause makes it clear that lawyer’s fees are to be zero [sic].

19. The amendments were duly passed. Neither the Bill nor the explanatory statement made any reference to the definition of damages in sections 155 and 156.

20. Senior Counsel for the plaintiff also relies on the Regulatory Impact Statement published by the ACT Department of Treasury on 20 August 2008 in relation to the prescription of maximum legal costs in the Regulation. The statement noted that the objective of the Regulation was to relieve upward pressure on ACT CTP insurance premiums which were the second-highest in Australia. The statement included the following passage:

Part 6, sections 27-30 of the Regulation stipulates the maximum legal costs allowed in cases of small awards of damages. The provision which stipulate these maximum legal costs are divided into two types, based on out-of-court settlements and court-ordered outcomes: costs for mandatory final offers of $50,000 or less, and costs for small court-ordered awards of damages of $50,000 or less.

For a mandatory final offer accepted as a substitute for subsequent court action, costs, including disbursements, must not exceed $5000.00 if a mandatory final offer for more than $30,000.00 but not more than $50,000.00 is accepted.

. . .

The introduction of these costs restrictions is designed to moderate the legal costs associated with small insurance claims involving minor injuries, consistent with the objectives of the Road Transport (Third-Party Insurance) Act 2008. The incremental increase in the maximum amounts provide incentives for lawyers to advise clients to claim or defend feasible damages amounts that can be dealt with efficiently between the parties, or if necessary, by the court.

21. The author of the Statement seems to me to have misunderstood the distinction between an award of damages by a court and a settlement of a claim by way of acceptance of a mandatory final offer. The latter does not involve an award of damages at all. The author also fails, I think, to appreciate that many claims can be expected to be settled well after the mandatory final offer stage and after commencement of court proceedings but before hearing. The reference to the provision of incentives for lawyers to advise clients in a particular way represents either a misconception of the professional responsibility of a solicitor to a client to provide advice in the client’s interests without regard to of the interests of the solicitor, or is extraordinarily cynical as to compliance by solicitors with their ethical duties.

General damages for pain and suffering

22. Whilst it will make no difference to the determination of the present dispute, it is worth pointing out that the expressions “general damages” and ”damages for pain and suffering” have been used as though they were synonymous, both in the course of the debates in the Assembly about the legislation, and by the plaintiff’s solicitors in the letter conveying their mandatory final offer. The expression used in the legislation is “damages for pain and suffering”. Professor Luntz devotes a chapter to the distinction between special and general damages in Assessment of Damages For Personal Injury and Death: General Principles, LexisNexis Butterworths, 2006 (Chapter 6). He notes at [6.1] the lack of consistency in distinguishing the terms “special damages” and “general damages” in different areas of the law, at different times and even in different jurisdictions in Australia. He notes the observation of Stephen J in Griffiths v Kerkemeyer [1977] HCA 45; (1977) 139 CLR 161 at 179 as to the award of damages for nursing care on the basis of the plaintiff’s needs rather than the expenditure of money, as depriving the distinction between special and general damages of all substantive significance. Fullagar J in Paff v Speed [1961] HCA 14; (1961) 105 CLR 549 at 558-9 explained the distinction as one between monetary loss actually suffered and expenditure actually incurred (special damages) and damages not capable of precise mathematical calculation but having a wide discretionary element (general damages) which his Honour put under three heads: economic loss, loss of amenities or enjoyment of life, and pain and suffering. There has been disagreement between appellate courts within Australia as to whether damages for loss of earning capacity up to judgment should be seen as special damages or general damages. The better view seems to be that damages for future economic loss are general damages. Damages for loss of expectation of life are universally accepted as general damages, as are damages for disfigurement in scarring cases.

23. It is generally accepted that the typical award of general damages in a personal injury action covers pain and suffering, loss of enjoyment of life or amenities, and in the cases where these considerations apply, damages for disfigurement and damages for shortening of life.

24. The Act requires the mandatory final offer to identify a specific figure for damages for pain and suffering, as opposed to general damages covering the various areas conventionally covered by that expression. A judicial officer assessing damages for personal injury will invariably award a specific amount by way of general damages for pain and suffering, loss of enjoyment of life and the other heads where they are applicable, without breaking that figure down into an amount for pain and suffering and amounts for the other components. There will be cases where there has been minimal pain but significant interference with enjoyment of life, and cases where there has been minimal pain but facial scarring causing severe disfigurement. Where a court awards $50,000.00 or less for the components of a claim other than general damages, it may be necessary for the court to apportion general damages between pain and suffering and their other components, for the purpose of considering the applications of sections 155 and 156 on the question of costs.

25. In the present matter, the mandatory final offer clearly identified $40,000.00 as for pain and suffering. If section 144 is to be read as Senior Counsel for the plaintiff submits it should be read, then the mandatory final offer for the purpose of regulation 27 was $45,000.00, between $30,000.00 and $50,000.00, so that costs (including disbursements) as between party and party are limited to $5,000.00. If section 144 is read as Senior Counsel for the defendant submits it should be read, the mandatory final offer was $85,000.00, and regulation 27 does not apply.

Plaintiff’s submissions

26. Senior counsel for the plaintiff submits that it is apparent that the intention of the legislature was that the ceiling on recoverable legal costs was to apply to settlements before action as well as to court awards of damages. He relies on the second reading speech of the Treasurer, Ms Gallagher, by then the Minister responsible for the Bill before the Assembly, on 18 June 2009 when presenting the Road Transport (Third-Party Insurance) Amendment Act 2009. In the course of that speech, the Minister said:

A clear objective of this Government, and a cornerstone of the new scheme, is to focus on establishing an efficient system that allows those injured in a motor accident timely rehabilitation and improved health outcomes. One aspect of this was to place restrictions on the fees payable to lawyers under the CTP scheme, in particular, under parts 4.8 and 4.9 of the CTP legislation. Part 4.8 of the CTP legislation deals with cases that are settled prior to litigation under the final mandatory offer procedures; part 4.9 of the CTP legislation deals with cases which are decided through litigation in the courts. Under the legislation, minor injury cases – where damages other than pain and suffering are settled at $50,000 or below – are subject to legal fee restrictions, as are court-awarded damages of the same magnitude.

It was the intention of the new CTP legislation which came into effect on 1 October 2008 to deal with both settlements and damages up to this level in a similar manner. Since then, it has become evident that a drafting inconsistency may exist in part 4.8 of the legislation which leaves open the issue of lawyers’ costs in relation to settlements reached at $30,000 or less. In fact, the provisions may be interpreted such that lawyers have free reign over the fees they charge in a personal injury case where final mandatory offers are of the zero dollars to $30,000 range. This is clearly contrary to the objectives of the new CTP scheme which concentrate on encouraging accident victims and obliging insurers to focus on return to health strategies for motor accident victims as opposed to lump sum damages.

This amendment will make provision for the treatment of lawyers’ fees in relation to settlements in the amount of $30,000 or less under part 4.8 similar to damages under part 4.9 by making fees in this category zero. As a result, there will be a clear and consistent message in the new CTP legislation with regard to legal fees.

27. He relies also on the explanatory statement to the Regulation of August 2008 and in particular the sentence “therefore, section 27 offers lawyers the opportunity to earn up to $5,000 in costs if their clients accept mandatory final offers in cases involving damages, other than general damages, between $30,000 and $50,000”.

28. Senior counsel for the plaintiff submits that the court should have regard to these items of extrinsic material in construing the legislation because the ordinary meaning of section 144 and of regulation 27 is not clear. There is an ambiguity as to whether the phrase “mandatory final offer” in section 144 and regulation 27 refers to the total amount of the offer or only that part that is not for pain and suffering. If it refers to the total amount of the offer, it is unclear what purpose is served by subsection 141(5) of the Act, which requires that the amount of a mandatory final offer that is for pain and suffering be expressly identified.

29. It is submitted on behalf of the plaintiff that the mischief sought to be remedied by the Act was the effect of excessively high legal costs on CTP insurance premiums in the Australian Capital Territory. A response to that mischief was to subject smaller claims to a cost-ceiling regime. Presumably by inadvertence, the drafter failed to make express the intention that any amount of a final mandatory offer which was for pain and suffering was not to be taken into account, so that the costs-ceiling regime in part 3.8 would operate in the same manner as the regime in part 3.9. Not to take account of this inadvertent omission would be to undermine the regime. The omission could be rectified by reading into section 144 the words previously set out. This interpretation would best achieve the purpose of the Act and should be preferred.

Defendant’s submissions

30. Senior counsel for the defendant submits that it is impermissible to take account of the wording of the Regulation in construing the Act, having regard to the fact that the Act was passed by the Assembly before the content of the Regulation was known.

31. There is no ambiguity on the face of the Act. The expression of the definition of damages in sections 155 and 156 emphasises the exclusion of the definition in section 144, dealing with acceptance of a mandatory final offer before action.

32. The requirement to identify the amount of an offer representing damages for pain and suffering imposed by section 141 is not otiose, in that it may be required when the court becomes aware of the terms of the mandatory final offer following judgment, in dealing with the question of costs under sections 155 and 156.

33. It is also submitted on behalf of the defendant that the recipient of a mandatory final offer, whether claimant or insurer, must decide whether or not to accept the totality of the offer. The party receiving the offer may disagree with the apportionment by the offeror between damages for pain and suffering and the other components of the claim. The Act provides no mechanism for determination of any dispute between the parties about this apportionment following acceptance of a mandatory final offer. There will be considerable room for argument between parties about apportionment, which will not arise where the court awards damages.

Statutory construction – applicable principles

34. The applicable general principles of statutory interpretation have been stated by Spigelman CJ in R v Young [1999] NSWCCA 166; (1999) 46 NSWLR 681:

[3] The basic issue is what, if anything, should the courts do when it appears that Parliament has failed, apparently by inadvertence, to deal with an eventuality required to be dealt with if the purpose of a statue is to be achieved?

. . .

[5] The proposition that a court can introduce words into an Act of Parliament offends a fundamental principle of our constitutional law. It is no part of the function of any judge to amend legislation. The task of the courts is to determine what Parliament meant by the words it used, not to determine what Parliament intended to say.

. . .

[6] In order to construe the words actually used by Parliament, it is sometimes necessary to give them an effect as if they contained additional words. This is not, however, to introduce words into the Act. This involves the construction of the words actually used. Judicial statements which appear to have been prepared to countenance something more than this should be so understood.

[7] The most frequently cited formulations are:

. . . it is a strong thing to read into an Act of Parliament words which are not there, and in the absence of clear necessity it is a wrong thing to do: Thompson v Goold [1910] AC 409 at 420 per Lord Mersey; and

. . . we are not entitled to read words in to an Act of Parliament unless clear reason for it is to be found within the four corners of the Act itself: Vickers, Sons and Maxim Ltd v Evans [1910] AC 444 at 445 per Lord Loreburn LC.

To similar effect is the following formulation:

Addtional words ought not to be read into a statute unless they are required to make the provision intelligible: Wills v Bowley [1983] 1 AC 57 at 78B.

[8] The process by which words omitted by inadvertence on behalf of the draftsperson may be supplied by the court must remain capable of characterisation as a process of construction of the words actually used.

[9] The contemporary approach is as set out by Lord Diplock in Wentworth Securities v Jones [1980] AC 74 at 105-107:

My Lords, I am not reluctant to adopt a purposive construction where to apply the literal meaning of the legislative language used would lead to results which would clearly defeat the purposes of the Act. But in doing so, the task on which a court of justice is engaged remains one of construction; even where this involves reading into the Act words which are not expressly included in it. Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd [1971] AC 850 provides an instance of this; but in that case the three conditions which must be fulfilled in order to justify this course were satisfied. First, it was possible to determine from a consideration of the provisions of the Act read as a whole precisely what the mischief was that it was the purpose of the Act to remedy; secondly, it was apparent that the draftsman and the Parliament had by inadvertence overlooked, and so omitted to deal with, an eventuality that required to be dealt with if the purpose of the Act was to be achieved; and thirdly, it was possible to state with certainty what were the additional words that would have been inserted by the draftsman and been approved by Parliament had their attention been drawn to the omission before the Bill passed into law. Unless this third condition is fulfilled any attempt by a court of justice to repair the omission in the Act cannot be justified as an exercise of its jurisdiction to determine what is the meaning of a written law which Parliament has passed. Such an attempt crosses the boundary between construction and legislation. It becomes a usurpation of a function which under the constitution of this country is vested in the legislature to the exclusion of the courts.

. . .

[11] The three conditions set out by Lord Diplock should not be misunderstood. His Lordship did not say, nor do I take any of their Honours who have adopted the passage to suggest, that whenever the three conditions are satisfied, a court is at liberty to supply the omission of the legislature. Rather, his Lordship was saying that in the absence of any one the three conditions, the court cannot construe a statute with the effect that certain words appear in the statute.

[12] As I understand the recent cases, they are not authority for the proposition that a court is entitled, upon satisfaction of the three conditions postulated by Lord Diplock, to perfect that Parliamentary intention by inserting words in a statute. The court may construe words in the statute to apply to a particular situation or to operate in a particular way, even if the words used would not, on a literal construction, so apply or operate. However, the words which actually appear in the statute must be reasonably open to such a construction. Construction must be text-based.

. . .

[14] Putting to one side obvious typographical errors . . . the court supplies words “omitted’ by the draftsperson only in the sense that the words so included reflect in express, and therefore more readily observable, form, the true construction of the words actually used. In my opinion, the authorities do not warrant the courts supplying words “omitted” by inadvertence per se.

[15] Where the words actually used are not reasonably capable of being construed in the manner contended for, they will not be so construed . . . if a court can construe the words actually used by the Parliament to carry into effect the Parliamentary intention, it will do so notwithstanding that the specific construction is not the literal construction and even if it is a strained construction. The process of construction will, for example, sometimes cause the court to read down general words, or to give the words used an ambulatory operation. So long as the court confines itself to the range of possible meanings or of operation of the text – using consequences to determine which meanings should be selected – then the process remains one of construction.

[16] The construction reached in this way will often be more clearly expressed by way of the addition of words to the words actually used in the legislation. The references in the authorities to the court “supplying omitted words” should be understood as a means of the courts’ conclusion with clarity, rather than a description of the actual reasoning process which the court has conducted. In all cases, what the court has done is to construe the words actually used in their total context.

35. The traditional approach to statutory interpretation in this Territory must be considered in the light of the Legislation Act 2001 (ACT), and in particular section 139 of that Act:

139 Interpretation best achieving Act’s purpose

(1) In working out the meaning of an Act, the interpretation which would best achieve the purpose of the Act is to be preferred to any other interpretation.

(2) This section applies whether or not the Act’s purpose is expressly stated in the Act.

36. Section 138 of the same Act defines “working out the meaning of an Act” to mean:

(a) resolving an ambiguous or obscure provision of the Act; or

(b) confirming or displacing the apparent meaning of the Act; or

(c) finding the meaning of the Act when its apparent meaning leads to a result which is manifestly absurd or unreasonable; or

(d) finding the meaning of the Act in any other case.

37. Section 140 goes on to provide that in working out the meaning of an Act, the provisions of the Act must be read in the context of the Act as a whole. Section 141 provides that material not forming part of the Act may be considered in working out the meaning of an Act. Section 142 specifies particular material which may be considered for the purpose, including explanatory statements or other relevant documents presented to the Legislative Assembly before the Act was passed, the presentation speech to the Assembly, and Hansard reports of proceedings in the Aassembly in relation to the legislation at the Bill stage.

38. These provisions were considered and applied by the Court of Appeal (Higgins CJ, Connolly and Spender JJ) in interpreting commercial lease legislation, in Kingsley’s Chicken Pty Ltd v Queensland Investment Corporation & Canberra Centre Investments Pty Ltd [2006] ACTCA 9. Their Honours in that case gave certain words used in the legislation under consideration their ordinary meaning rather than their technical legal contractual meaning, this better achieving the purpose of the legislation.

39. However Gray J made it clear in Morro v Australian Capital Territory [2009] ACTSC 118, construing provisions of the Human Rights Act 2004 (ACT) in the context of a claim for unlawful detention, that notwithstanding the provisions of the Legislation Act, the use of extrinsic materials was not to be determinative, or a substitute for the text of the legislation, using the words of the High Court in Minister for Immigration and Ethnic Affairs v Tang Jia Xin [1994] HCA 31; (1994) 69 ALJR 8 at [11].

40. His Honour cited with approval observations made by Spigelman CJ in Harrison v Melhem [2008] NSWCA 67; (2008) 72 NSWLR 380 where his Honour said:

[12] . . . statements of intention as to the meaning of words by Ministers in a second reading speech, let alone other statements in parliamentary speeches, are virtually never useful. Relevantly, in my opinion, they are rarely, if ever, “capable of assisting in the ascertainment of the meaning of the provisions” within section 34(1) of the Interpreation Act 1937. I only refrain from using the word “never” to allow for a truly exceptional case, which I am not at present able to envisage.

[13] Of course, other statements in the course of a second reading speech by a Minister, bearing in mind the fact that s/he will almost always be speaking on behalf of, at least, the Lower House of Parliament by reason of the operation of our party system, will be of use on matter such as the purpose, which used to be referred to as mischief.

[14] However, the subjective intention of the Parliament, let alone of Ministers or Parliamentarians, is not relevant. What is involved is the search for an objective intention of Parliament, not the subjective intention of Ministers or Parliamentarians. Indeed, often there is no relevant subjective intention at all. The words used may represent a compromise, without consensus, so that, in substance, the decision has been left to the courts. Even more frequently, indeed almost always in cases of difficulty, the circumstances in which the statute falls to be applied were not actually contemplated by anybody. Even if they were contemplated, a statement of intention in a Ministerial second reading speech will not prevail over the words of the statute.

[15] The authoritative determination of the meaning of a statutory provision is an exercise of the judicial power, not of the legislative power, let alone of the executive power. In the Australian system of the separation of powers, it is the courts which determine what the legislative intention when enacting a particular provision was.

[16] The task of the court is to interpret the words used by Parliament. It is not to divine the intent of the Parliament. The courts must determine what Parliament meant by the words it used. The courts do not determine what Parliament intended to say.

41. In the same case Mason P said:

[168] On my understanding, the law is clear in Australia that a Minister’s understanding of the effect of a statute or the state of the common law cannot give the bill he or she is promoting an effect inconsistent with its terms as construed by the court. In Re Bolton; ex parte Beane [1987] HCA 12; (1987) 162 CLR 514 at 518, three justices of the High Court of Australia went further in refusing to give any weight to a Minister’s unambiguous second reading speech that contradicted the text. Mason CJ, Wilson J and Dawson J stated (at 518):

The words of a Minister must not be substituted for the text of the law . . . It is always possible that through oversight or through inadvertence the clear intention of the Parliament fails to be translated into the text of the law. However unfortunate it may be when that happens, the task of the court remains clear. The function of the court is to give effect to the will of Parliament as expressed in the law.

42. Besanko J, with whom Refshauge J concurred, considering a limitation provision, noted in Casey v Allcock (2009) 3 ACTLR 1 at [100] and following, a submission by counsel for the applicant that section 139 of the Legislation Act 2001 (ACT) authorised and required a court to take a very broad approach to the process of statutory interpretation, departing if necessary from the unambiguous meaning of the language used in a legislative provision to read in words which changed the meaning of the provision. His Honour rejected the submission, referring to Kingsley’s Chicken.

Resolution of the present dispute

43. The plaintiff insurer argues that section 144 of the Road Transport (Third-Party Insurance) Act 2008 (ACT) should be interpreted as though it had an additional subsection reading:

In this section, “mandatory final offer” does not include any amount of the offer that is for pain and suffering.

44. The plaintiff’s argument is that the legislature must be taken to have inadvertently omitted a subsection to that effect. Ultimately the argument is that the legislature cannot have intended that a different costs impact would flow from acceptance of a mandatory final offer, from that which would follow a court award of damages. Sections 155 and 156 of the Act deal with court awards, and define “damages”, for those sections only, as not including damages for pain and suffering.

45. It is unclear from the extrinsic materials what purpose the legislature was seeking to achieve in leaving damages for pain and suffering out of account in arriving at the lower limits of awards which would attract costs penalties. Notwithstanding references in Hansard to incentives for lawyers, the costs penalty provisions in the legislation seem to be applicable as between party and party but not between solicitor and client, so that, depending on the content of any costs agreement between solicitor and client, one would expect the penalty to be suffered by the injured claimant rather than the solicitor. For similar injuries, the penalty provisions will operate harshly upon lower income earners, pensioners and the unemployed, and upon stoic claimants who have incurred little by way of treatment expenses. By comparison, higher income earners and claimants who have incurred more substantial treatment expenses are more likely to recover awards of damages that exceed the thresholds, assuming identical awards for pain and suffering.

46. But one thing is clear. The legislation is designed to encourage early settlement, preferably prior to the commencement of court proceedings. This seems to be an important purpose of the legislation. Viewed from the perspective of this purpose, it is not surprising that the provisions might be drawn in such a way as to operate more harshly on those claimants who opt to take smaller damages claims to a court hearing, than upon those who settle early. It does not seem to me inconsistent with the purpose of the legislation that different cost provisions might be applied to settlements before action from those which apply following a award of damages by a court. It is thus far from apparent on the face of the legislation that there has been an inadvertent omission by the legislature or the drafter.

47. I am reinforced in this conclusion by the fact that there is, on the fact of it, nothing unclear or ambiguous about section 144, or for that matter about regulation 27. Both the section and the regulation are clearly expressed, intelligible and capable of practical application.

48. The point is worth making that the Act was the subject of extensive amendment, including considerable further consideration by the Legislative Assembly, during April and June 2009. The amendments included an amendment to section 144 itself. If there had been an inadvertent omission, by the drafter or by the legislature, it is reasonable to assume that it would have been picked up and corrected at that stage.

49. What the plaintiff asks the court to do on the hearing of this application is to insert words into a section in circumstances where this is impermissible for the reasons explained by Spigelman CJ in R v Young and in Harrison v Melhem.

50. The application for the declaration the plaintiff seeks must be dismissed. The words of section 144 mean what they say and are to be applied accordingly.

Costs

51. The plaintiff’s application has been unsuccessful, and the plaintiff must pay the defendant’s costs of the application. I referred earlier to the orders I made on 16 July 2010 in proceedings between the same parties arising out of the same motor vehicle collision. I said in those reasons that on the assumption that the applicant (the present defendant) would then file an originating claim, the costs of that application should be costs in that cause. In the event that has not happened. The substantive claim by the present defendant has been settled. In contrast to my expectation, the matter comes back before the court on an originating application made by the present plaintiff. The claim by the present defendant for damages from the present plaintiff has been successful and has been resolved. It has been settled in a manner which will entitle the present defendant to recover the costs of the claim for damages from the present plaintiff. As this has happened without the necessity for a cause being instituted in the court as to the claim for damages, it seems to me that the practical way to deal with the question of costs is to order that the two proceedings be consolidated, and that the costs the subject of my order of 16 July 2010 be costs in the consolidated proceeding. I so order.

I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Master.

Associate:

Date: 31 January 2011

Counsel for the plaintiff: Dr J E Griffiths SC & Ms C Spruce

Solicitors for the plaintiff: Moray & Agnew

Counsel for the defendant: Mr B A Meagher SC

Solicitors for the defendant: Blumers

Date of hearing: 29 October 2010

Date of judgment: 31 January 2011