Lavrick v Lease Auto Pty Ltd [2002] FCA 599 (10 May 2002)

TRANSPORT – INSURANCE – third party motor vehicle insurance – interpretation of Transport Accident Act 1986 (Vic) – whether Transport Accident Commission required by the Act to indemnify the owner of a vehicle for liability arising solely under contract for personal injury sustained to a third party in a transport accident.

Commercial Union Assurance Co of Australia Ltd v Insurance Commissioner [1985] VR 811 – discussed
Commercial Union Assurance Co. of Australia Ltd v Insurance Commission [1980] VR 443 – discussed

Jennings Constructions Pty Ltd v Workers Rehabilitation & Compensation Corporation (1998) 71 SASR 465 – referred to

Norwich Winterthur Insurance (Australia) Ltd v State Government Insurance Commission (1991) 6 ANZ Ins Cas 61-044 - discussed

Wilson v Nattrass (1995) 21 MVR 41 – discussed

ROBERT LAVRICK V LEASE AUTO PTY LTD & BUDGET RENTACAR AUSTRALIA PTY LTD AND BETWEEN BUDGET RENTACAR AUSTRALIA PTY LTD & LEASE AUTO PTY LTD AND BETWEEN LEASE AUTO PTY LTD & TRANSPORT ACCIDENT COMMISSION & FAI GENERAL INSURANCE CO. LTD

S 12 of 1999

MANSFIELD J
10 MAY 2002
ADELAIDE

BETWEEN:	ROBERT LAVRICK APPLICANT
AND:	LEASE AUTO PTY LTD (ACN 007 163 975) FIRST RESPONDENT
	BUDGET RENTACAR AUSTRALIA PTY LTD (ACN 007 348 021) SECOND RESPONDENT
AND BETWEEN:	BUDGET RENTACAR AUSTRALIA PTY LTD (ACN 007 348 021) FIRST CROSS-CLAIMANT
AND:	LEASE AUTO PTY LTD (ACN 007 163 975) FIRST CROSS-RESPONDENT
AND BETWEEN:	LEASE AUTO PTY LTD (ACN 007 163 975) SECOND CROSS-CLAIMANT
AND:	TRANSPORT ACCIDENT COMMISSION SECOND CROSS-RESPONDENT
	FAI GENERAL INSURANCE COMPANY LIMITED (ACN 000 327 855) THIRD CROSS-RESPONDENT
JUDGE:	MANSFIELD J
DATE OF ORDER:	10 MAY 2002
WHERE MADE:	ADELAIDE

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

BETWEEN:	ROBERT LAVRICK APPLICANT
AND:	LEASE AUTO PTY LTD (ACN 007 163 975) FIRST RESPONDENT BUDGET RENTACAR AUSTRALIA PTY LTD (ACN 007 348 021) SECOND RESPONDENT
AND BETWEEN:	BUDGET RENTACAR AUSTRALIA PTY LTD (ACN 007 348 021) FIRST CROSS-CLAIMANT
AND:	LEASE AUTO PTY LTD (ACN 007 163 975) FIRST CROSS-RESPONDENT
AND BETWEEN:	LEASE AUTO PTY LTD (ACN 007 163 975) SECOND CROSS-CLAIMANT
AND	TRANSPORT ACCIDENT COMMISSION SECOND CROSS-RESPONDENT
	FAI GENERAL INSURANCE COMPANY LIMITED (ACN 000 327 855) THIRD CROSS-RESPONDENT
JUDGE:	MANSFIELD J
DATE:	10 MAY 2002
PLACE:	ADELAIDE

1 There is now only one issue which falls to be decided in this matter. To explain its context, it is necessary to refer to some facts which are largely undisputed.

2 The applicant Robert Lavrick (Mr Lavrick) is 57. He was born in Kalgoorlie in Western Australia. He has worked variously throughout Australia in activities generally associated with the mining industry. In 1980, he first went to work at Olympic Dam in South Australia. In 1988, he and his family settled at Olympic Dam. He ran a mechanical repair and maintenance business there, often employing in excess of five tradesmen as well as office staff. By 1996, he and his wife were operating a service station under the name Olympic Way Garage as well as the workshop under the name Lavrick Engineering. The operating entity was Robert Lavrick Nominees Pty Ltd as trustee of the Robert Lavrick Family Trust. In addition, by 1996, he and his wife had been operating for some years a travel agency business under the mantle of Roxby Travel Pty Ltd, later called Jan Lavrick Pty Ltd. That business was sold in about November 1998. Mr Lavrick’s wife Jan Lavrick principally managed that business.

3 The events to which the present claim relates occurred on 23 February 1996. Mr Lavrick on that day flew to Victoria. He landed at Tullamarine Airport about 7.30 p.m. He had arranged in advance to rent a car from "Budget Rentacar" at Tullamarine Airport. The Budget Rentacar franchise there was operated by the first respondent Lease Auto Pty Ltd (Lease Auto). He planned to travel to the Bendigo area to investigate certain potential business investments that he was contemplating.

4 He entered into a car rental agreement with Lease Auto on that day. It is Rental Agreement 338029990. It comprises a one page document, printed on both sides of the page. The front page has a number of spaces to insert details of the hirer and of the vehicle, and of the variable terms of hire including the rental rate and other charges, the excess, and the term of the hire. There is a section to be completed with the typed entry: Area Where Vehicle will be Used. In the space provided is hand printed the word "Remote". The Rental Agreement identifies that the rented car was a Falcon Sedan NQB-399 (the car) and that the car was taken by Mr Lavrick at 1750 on 23 February 1996. The back or reverse side of the Rental Agreement contains a series of finely printed Terms and Conditions. In this matter, none of those terms and conditions have particular significance.

5 The Rental Agreement was provided in a Rental Folder. Its front cover had sections to be completed to reflect the arrangement for the hire of the car, including that Mr Lavrick required a hands-free mobile phone to be available in the car. It also contained a series of printed instructions regarding driving safely, mobile phone usage, what to do in the case of an accident, and the like.

6 When Mr Lavrick set off for Bendigo he had trouble finding the main Bendigo Highway. After dark had fallen, he was able to find the highway. At about 9.00 pm, as he was travelling along the highway, after a little time, he noticed a vibration in the steering wheel. The road was smooth bitumen, and was dry. He was travelling about 90 km/h, slightly under the speed limit At about the time that he noticed the vibration, Mr Lavrick also heard a noise apparently coming from the front of the car. He reached out with his left hand to turn down the radio so that he could better hear what he thought was an abnormal noise coming from the engine. He applied the brakes. At that point, the steering wheel began to shudder violently. He stopped braking. Then the front left hand side of the car dropped and the steering wheel was jerked from his grip. He feared the car was about to roll over. The car was jarring along the road, veering to the left. Mr Lavrick feared it would hit a fence or some trees on the left hand side of the road, so he pulled the steering wheel hard right. By that time, the car had left the bitumen carriageway. As he pulled the steering wheel to the right, the rear of the car swung out to the left. It came to rest off the bitumen carriageway, to its left, and more or less facing the carriageway.

7 After some time, Mr Lavrick received assistance. He saw that the left side front wheel had come off from the car, and was some distance away from it. The car was towed away for repairs. Mr Lavrick was injured in the accident. He was able to arrange transport back to Melbourne, and the following day returned to South Australia. It is not necessary to refer to the injuries he received in the accident, nor to the treatment he underwent or his ongoing disabilities. That is because the quantum of his claim against Lease Auto has been agreed. It is agreed that he is to receive damages of $370,000 including interest, when judgment is entered.

8 Mr Lavrick’s unchallenged description about how the accident happened clearly indicates that its cause was the front left wheel of the car somehow becoming loose and falling off. The only evidence about why that happened is that of Christopher Hall (Mr Hall), a consultant engineer well experienced in addressing the causes of vehicular accidents and motor vehicle failures, and the documentary evidence of Hoover Ford, the entity which examined and repaired the car. That evidence also was unchallenged.

9 On the basis of that evidence, I find that the front left wheel came off the car because the wheel nuts holding the wheel to the axle had failed. The axle studs were still in place after the accident. The studs had the appearance of being "stripped". The wheel came off because four of the five wheel nuts holding the wheel to the axle studs separated from the axle studs. It is unclear whether that occurred because the nuts holding the wheel to the axle studs had been unduly overtightened, or because the nuts holding the wheel to the axle studs had been inadequately tightened. If the former had occurred, that would have resulted from the threads of the studs shearing away inside the wheel nuts because the nut torque or stud tension was too great. If the latter had occurred, that would have resulted from prolonged use of the car whilst the wheel nuts were loose. The continual working of the wheel rim after the wheel nuts had worked loose would have "hammered" down the threads on the axle studs so that they appeared to be flattened or "stripped". In either event, the accident happened through incorrect tightening during wheel fitment.

10 I accept Mr Hall’s evidence that because the accident happened on a bitumen road, and that the tyre itself was not damaged, and that the bodywork of the car was not otherwise damaged, other causes of the wheel separating from the car can be excluded. Mr Lavrick confirmed that the car was not otherwise damaged, and the observations of the repairing mechanic confirm that the tyre itself was not damaged.

11 Lease Auto, in the light of those findings, in my view delivered and supplied to Mr Lavrick the car when it was not in fact fit for the purpose of country driving and was not in a roadworthy condition. The car had not been properly presented (whether it had been "serviced" at all is unclear) in a safe and roadworthy condition. There is no reason to think that Lease Auto knew, or had reason to know, of the vulnerability of the car to the sort of accident which occurred. But the causes of action relied upon by Mr Lavrick did not require any such knowledge on its part, and they do not involve any allegation of negligence on its part.

12 Mr Lavrick claims that the accident occurred through breaches by Lease Auto of ss 52 and 53 of the Trade Practices Act 1974 (Cth) (the TPA). It is asserted in his statement of claim that Lease Auto, in trade or commerce, engaged in conduct that was misleading or deceptive or was likely to mislead or deceive in that it provided the car to Mr Lavrick so representing that it was fit, and in a roadworthy condition, for his proposed journey when it was not fit for that journey nor in a roadworthy condition. Mr Lavrick claims that he inferred, as he was entitled to in the circumstances, that the car had been properly and adequately maintained and serviced to a safe and roadworthy standard, and was safe for use in country driving. He said that those matters arose from Lease Auto, being in the business of leasing motor vehicles for hire to the public, supplying the car to him and by the express assertion on the Rental Folder that the car had been professionally serviced and maintained. In fact, he contends the car had not been properly and adequately maintained and serviced to a safe and roadworthy condition and was not in a condition safe for its use in country driving. It is also asserted that Lease Auto, in connection with the supply of the car, falsely represented that the car was of a particular standard, namely that it was roadworthy and fit for his proposed journey, when it was not. That representation is alleged to have been made in the "Drive Safely" section of the Rental Folder, set out in the next paragraph of these reasons. It is claimed to be false because the car was not properly or adequately maintained and serviced to a safe and roadworthy standard and was not in a safe condition fit for country driving.

13 In addition to his claim for damages under s 82 of the TPA for breach of provisions of the TPA, Mr Lavrick pursues a claim for damages for breach of the Rental Agreement. It is claimed that the Rental Agreement expressly warrants that the car had been "professionally serviced and maintained". That express term is said to exist because, in the Rental Folder, under the section headed "Drive Safely" appears the following:

Mr Lavrick did not give evidence that he read that part of the Rental Folder. He said that he may have glanced at it, but if he did so I think it was clear that he did not take it in. He said that he had become generally familiar with its terms by reason of his involvement over a number of years with documents available to Roxby Travel Pty Ltd, that business having also held a Budget Rentacar franchise from the second respondent Budget Rentacar Australia Pty Ltd (Budget) for some time, and by having rented "Budget" cars some 50-60 times over a period of 15 years or so from the time when he first went to Olympic Dam. In view of the attitude of Lease Auto referred to below, it is not strictly necessary to make findings about his awareness of those matters. However, I think it may be helpful later if I record my findings about them. When he signed the Rental Agreement, I find that he looked only cursorily over its contents, to ensure that the sections to be completed were accurately completed, including checking that the entry in the section dealing with where the car was to be used contained the word "remote" as he intended to do some country driving. I further find that he did not read the contents of the Rental Folder, other than glancing cursorily over the front section containing the details of his booking. He did not then read the section headed "Drive Safely", although I infer from his evidence that he was aware of its contents in general terms. Those findings are consistent with his evidence.

14 The other basis of the claim for damages for breach of contract is that the Rental Agreement contained the implied term that the car was fit for the purpose of his journey. That term is said to be implied by s 71 of the TPA, because the car was rented to Mr Lavrick by Lease Auto in the course of its business and Lease Auto knew that it was to be used for country travel. Lease Auto does not dispute that that term was implied by s 71 of the TPA into the Rental Agreement. Contravention of the term implied by s 71 of the TPA into the Rental Agreement does not give rise to a claim for damages under s 82 of the TPA, but enables Mr Lavrick to pursue a claim for damages for breach of contract: Arturi v Zupps Motors Pty Ltd (1980) 49 FLR 283 (Arturi).

15 The pleaded defence of Lease Auto to those claims was in essence founded upon provisions of the Transport Accident Act 1986 (Vic) (the TAA). Because the accident happened in Victoria, and amounted to a "transport accident" as defined in s 3 of the TAA, Lease Auto claims that s 93 of the TAA precluded Mr Lavrick from pursuing his claim. Section 93(1) of the TAA provides:

The balance of s 93 then identifies particular circumstances in which a person injured as a result of a transport accident may recover damages in respect of the injury. It is not suggested that those circumstances apply to Mr Lavrick. It also controls the nature and the extent of damages at common law that may be awarded. Independently of s 93, under Part 3 of the TAA, a person injured as a result of a transport accident may be entitled to statutory compensation as provided for in that part.

16 Mr Lavrick did not file a reply to the defence of Lease Auto. His counsel, in opening, contended that:

That latter issue emerged explicitly only at the opening of the hearing. Notices under s 78B of the Judiciary Act 1903 (Cth) were duly served upon the Attorneys-General of the Commonwealth of the States and Territories. I proceeded with the hearing of evidence about Mr Lavrick’s claim generally, but not on any aspect which might have touched upon that issue: see s 78B(2)(c) of the Judiciary Act. The evidence was not expected to, and did not, touch upon that question. The submissions generally, including as to the alleged inconsistency between provisions of the TPA and of the TAA, then took place only after the Attorneys-General had had an opportunity to intervene in the proceedings. None of the Attorneys-General sought to intervene in the proceedings, or to have them removed to the High Court.

17 Ultimately, Lease Auto did not contend that s 93 of the TAA operates to preclude a claim by Mr Lavrick for damages for breach of contract. It also accepted that s 71 of the TPA implied the condition to which it refers into the Rental Agreement, and that in the circumstances that implied term of the Rental Agreement had been breached so that Mr Lavrick is entitled to recover the agreed quantum of damages from Lease Auto as damages for breach of contract. It took the view that the decision of the High Court in Wallis v Downard – Pickford (North Queensland) Pty Ltd [1994] HCA 17; (1994) 179 CLR 388 prevented it from maintaining that s 93 of the TAA could operate to prevent it from being liable for damages for breach of contract in the circumstances.

18 Consequently, I will enter judgment for Mr Lavrick against Lease Auto for $370,000 including interest, based upon Mr Lavrick’s claim for damages for breach of contract. That liability is a liability at common law, even though the particular breach of contract is a breach of a term implied into the Rental Agreement by s 71 of the TPA: see per Brennan J in Arturi; E v Australian Red Cross Society (1991) 27 FCR 310.

19 Mr Lavrick also brought a claim against Budget. Budget in turn cross-claimed against Lease Auto. Both the claim against Budget, and Budget’s cross-claim against Lease Auto were dismissed by consent at the commencement of the trial.

20 The remaining issue is Lease Auto’s cross-claim for indemnity from the Transport Accident Commission (the TAC). The TAC is established under the TAA.

21 Lease Auto also cross-claimed against FAI General Insurance Company Ltd (In Liquidation) (FAI). As FAI is now in liquidation, Lease Auto requires leave to enable it to proceed with its cross-claim against FAI. No such leave has presently been sought. Consequently, the cross-claim against FAI has not been pursued at present.

22 The facts concerning Lease Auto’s cross-claim against the TAC are also largely not in contest. Upon receipt of Mr Lavrick’s claim against it, Lease Auto duly informed TAC as its insurer. On 30 June 1999, TAC by its agent TAC Law Pty Ltd (TAC Law) confirmed that it would indemnify Lease Auto in respect of liability for personal injury arising from the accident, and would assume the conduct of these proceedings on its behalf. At that time, Mr Lavrick had not identified as an issue that the accident was not a "transport accident" as defined in the TAA Act. On 30 December 1999, TAC Law on behalf of TAC informed Lease Auto that it had by then formed the view that the TAA did not require it to indemnify Lease Auto in respect of liability for personal injury which arises by reason of a contravention of ss 52 or 53 of the TPA. That letter did not, apparently, refer to the claimed basis of liability upon breach of a contract, in particular of the express term pleaded or the parallel term implied into the Rental Agreement by s 71 of the TPA. However, on 31 March 2000, TAC Law on behalf of TAC informed Lease Auto of its view that the TAA did not require it to indemnify Lease Auto in respect of liability of the type alleged by Mr Lavrick, and withdrew the agreement to indemnify previously given.

23 As between Lease Auto and TAC, there is agreement that the car was a "registered motor vehicle" as defined in s 3 of the TAA and that Lease Auto was the "owner" of the car as that term is defined. They further agree that the accident was a "transport accident" within the meaning of that term as defined in s 3. Consequently Lease Auto claims to be entitled to indemnity from TAC in respect of any liability to Mr Lavrick under s 94(1)(a) of the TAA.

25 Lease Auto’s contention is a straightforward one. Its liability to Mr Lavrick is a liability in respect of an injury caused by or arising out of the use of a motor vehicle in Victoria. It is the owner of the car. Its liability is not liability to pay compensation under the Accident Compensation Act 1985 (Vic.) or an Act or law referred to in s 37 of the TAA. Section 37 refers to particular enactments that may entitle an injured person to compensation for death or injury in a transport accident. Hence, in the terms of s 94(1), the TAC is obliged to indemnify it in respect of its liability to Mr Lavrick.

26 The TAC accepts that the liability of Lease Auto to Mr Lavrick is not liability to pay compensation under the Accident Compensation Act or under an Act or law referred to in s 37 of the TAA.

27 It contends that, in their legislative context, the apparently wide words of s 94(1) to encompass "any liability in respect of an injury ... of a person ...", do not extend to the obligation to indemnify Lease Auto in respect of its liability to pay damages to Mr Lavrick for breach of contract.

28 It is convenient to deal with one contention put on behalf of Lease Auto at this point. I do not think that the absence of any reference to the TPA, or to liability to pay damages at common law, from s 37 of the TAA has any special significance. I note Lease Auto contends that, if s 94 were intended not to encompass such liability, those potential sources of liability would have been expressly referred to in s 37. My reason is that s 37 deals with a different kind of liability altogether. It is in Part 3 of the TAA dealing with "Compensation". Section 35 entitles persons injured as a result of a transport accident to compensation in certain circumstances. The TAC is to pay the compensation. There are a series of provisions, including s 37, indicating circumstances in which the TAC is not liable to pay compensation. They include where the injured person is entitled to compensation under the Accident Compensation Act 1985 (Vic), in very broad terms where the injury arises from a transport accident in the course of employment (s 38A) or under corresponding interstate or territorial legislation (s 37(g)). The nature and level of the "compensation" is specified in Div 3 of Part 3: a weekly payment during disability to partly compensate for actual loss of earnings but only for a period of up to 18 months, and a "degree of impairment" lump sum payment or periodic payment, and reasonable costs of medical services. That is a much over-simplified description of the nature of compensation benefits payable by the TAC. But it is sufficient to indicate that the nature of compensation is different from the nature of, and basis of assessing, damages at common law.

29 It is not of significance, in that context, that the reference to the liability to pay compensation under the Accident Compensation Act or the Acts referred to in s 37, as being excluded from the liability of the TAC to indemnify, does not refer to common law liability to pay damages or to liability to pay damages under s 82 of the TPA. Those exclusions deal with a different kind of liability. They also deal with that different kind of liability in circumstances where there is some separate statutory scheme or entity that provides the indemnity. It does, however, indicate an awareness on the part of the legislator of the desirability of expressing exemptions from the indemnity otherwise granted by s 94.

30 Part 6 of the TAA is entitled "Legal Rights outside this Act". As noted, Part 3 entitles persons injured as a result of a transport accident in Victoria to recover compensation. Section 93 in part prohibits such persons from recovering "any damages in any proceedings" except in accordance with the section. In essence, the right to recover damages is preserved only if the TAC has determined the degree of impairment of the injured person under Part 3 and "the injury is a serious injury": s 93(2). The expression "serious injury" is defined in s 93(17) and is explained in s 93(3) and (4). Section 93(7) then imposes some limits upon the amounts of damages which may be recovered for pecuniary loss and for pain and suffering, including to ensure account is taken of the compensation paid under Part 3.

31 The TAC contention is, in effect, that the extent of its obligation to indemnify under s 94(1) is co-terminous with the extent of the permitted entitlement to recover damages by or for a person injured or killed arising out of or in the course of a transport accident, at least in respect of transport accidents occurring in Victoria. The TAC accepts also that s 94 obliges it to indemnify owners or drivers of vehicles registered in Victoria and who incur liability to pay damages arising out of or in the course of a transport accident occurring outside Victoria or where the adjudication of such a liability is made outside Victoria.

32 The construction of s 94(1) of the TAA is to be determined in the context of the Act as a whole: see e.g. per Mason J in K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 60 ALR 509 at 514. The Court is also directed by s 35(a) of the Interpretation of Legislation Act 1984 (Vic.), to the same general effect as s 15AA of the Acts Interpretation Act 1901 (Cth), to prefer a construction which promotes the purpose or object underlying the TAA.

33 The words of s 94(1) are clearly in terms wide enough to oblige the TAC to indemnify Lease Auto in the circumstances. The expression "any liability" is apparently of wide scope. In The Victorian Chamber of Manufacturers v Commonwealth [1943] HCA 19; (1943) 67 CLR 335, the High Court upheld certain provisions of the National Security (Prices) Regulations which empowered the Minister to "declare any goods to be declared goods". Williams J at 346 said that:

His Honour found no limitation intended from the subject matter or context of the Regulations. The question whether the indemnity which s 94(1) is intended to provide is more limited than the words "any liability" might suggest is not much enlightened by the purpose of the TAA as expressed in s 3: to establish a scheme of compensation in respect of persons who are injured or die as a result of transport accidents. Nor do the objects of the TAA, as expressed in s 8, provide any real insight into the legislative intention underlying the obligation to indemnify under s 94. The objects include reducing the cost to the Victorian community of compensation for traffic accidents, and providing suitable and just compensation in respect of persons who are injured or who die as a result of transport accidents.

34 Section 11 identifies the objectives of the TAC. They include managing the transport accident compensation scheme as effectively and efficiently as possible. It is required to establish and maintain a fund called the Transport Accident Fund (the Fund): s 27(1). The monies received into the Fund include transport accident charges: s 27(2). The functions of the TAC include administering the Fund, and determining and collecting transport accident charges: s 12(1)(a), (e) and (f). Section 109 obliges the owners of motor vehicles registered in Victoria to pay the transport accident charge fixed by the TAC. If the transport accident charge applicable to a motor vehicle is not paid, the entitlement to indemnity under s 94(1) of the TAA does not apply: see s 94(2)(a). The TAC is authorised to pay out of the Fund, inter alia, payments of compensation under Part 3: s 27(3)(a), and also under s 27(3)(b):

That subsection was addressed by Ashley J in Bentley v Furlan [1999] VSC 481; [1999] 3 VR 63 (Bentley).

35 Senior counsel for the TAC submitted that Bentley is an instance where the expression "any liability" was construed in context as having a narrower meaning than the apparent width of those words. Ashley J held, inter alia, that the liability of a person to pay compensation under s 86(1) of the Sentencing Act 1991 (Vic.) to a victim of crime who was injured in a transport accident which occurred in the course of the crime could exist notwithstanding s 93(1) of the TAA. Section 93(1) prohibits the recovery of "any damages" in proceedings, rather than damages or compensation. His Honour’s conclusion about the availability of the compensation order under s 86(1) notwithstanding s 93(1) of the TAA was because in essence s 93 of the TAA deals with "traditional common law proceedings": see at 82-83 [145-150] and not with compensation under the Sentencing Act. His Honour further held that the person so liable for compensation under s 86(1) of the Sentencing Act was not entitled to indemnity from the TAC under s 94(1) of the TAA. His Honour’s reasons why s 94(1) did not operate to impose on the TAC the obligation to indemnify the delictual motor vehicle driver in respect of such a liability were expressed in the following passage, at 84 [151-152]:

I respectfully agree with Ashley J that s 27(3)(b) authorises payment of indemnity amounts in respect of the liability of a motor vehicle owner or driver to pay damages at common law. There is no other subparagraph of s 27(3) which is apt to cover such obligations on the part of the TAC.

36 I note that s 94(7) concerns the liability of the TAC to pay the damages awarded where the owner or driver of a motor vehicle is liable under s 94 but cannot be identified or is dead or cannot be found. The liability reflects the liability which used to be prescribed against the nominal defendant.

37 I accept the submission of senior counsel for the TAC that the words "any liability" in s 94(1) do not extend to any liability to pay compensation under any statute. Bentley provides an illustration of circumstances where that is the case. Counsel for Lease Auto did not contend that Bentley was wrongly decided in that respect, or that I should not follow it. But it does not follow from that decision that the liability of Lease Auto at common law for damages for breach of contract does not fall within the terms of s 94(1).

38 The other illustrations referred to on behalf of the TAC of the words "any liability" or "all liability" being construed as having a narrower meaning than their literal meaning in the context of the particular statutes in which they appear do not, in my view, really advance the proper construction of s 94(1). They are merely illustrations of construing the terms of a statutory provision in the context of the whole enactment and its purpose: see e.g. Jennings Constructions Pty Ltd v Workers Rehabilitation and Compensation Corporation (1998) 71 SASR 457; Townley v Vadipile Drilling Pty Ltd (1996) 66 SASR 356. In Pritchard v Racecage Pty Ltd (1997) 72 FCR 203 at 214, Branson J (with whom Spender and Olney JJ agreed) concluded that the Motor Accidents (Compensation) Act 1979 (NT) did not intend to impose on the Territory Insurance Office (for present purposes, the equivalent of the TAC) the obligation to indemnify or compensate in respect of liability arising:

Section 5(1) of the Motor Accidents (Compensation) Act obliged the Territory Insurance Office to indemnify a person liable to pay damages in respect of death or injury as a result of certain motor vehicle accidents in the Northern Territory. As can be seen, her Honour was faced with a case quite different from the present circumstances. The claim was against the organiser of a motor vehicle race for misleading conduct about characteristics of its organisation, where the organiser was not a person who was alleged to have driven or owned any relevant motor vehicle.

39 Both Norwich Winterthur Insurance (Australia) Ltd v State Government Insurance Commission (1991) 6 ANZ Ins Cas 61-044 and Commercial Union Assurance Co. of Australia Ltd v Insurance Commission [1980] VR 443 decided that liability to pay worker’s compensation was not of the same character as the liability to pay damages at common law, so that there was no obligation upon the relevant compulsory motor vehicle insurer to contribute to the liability of an employer to pay worker’s compensation on the basis of double insurance. The result in the latter case was reversed on appeal: [1985] VR 811, but that decision was followed by an amendment to the Motor Car Act 1958 (Vic.) to restore the effect of the primary decision. In the former case, King CJ said at 77,032:

The distinction there drawn is not one directly applicable to the present matter. Indeed, the limitation upon the words "all liability" adopted by King CJ as being with respect to "damages or other pecuniary remedy" would encompass the claim of Lease Auto if applied to s 94(1) of the Act.

40 The TAA introduced into Victoria a two level scheme for the relief of persons injured or killed in transport accidents. It is convenient to use the expression "transport accident", a term defined in s 3(1) of the TAA, as Lease Auto and the TAA agree that the incident giving rise to the injuries to Mr Lavrick was a transport accident as defined. The scheme introduced, as noted above, provided for a no-fault based compensation scheme under Part 3 and in certain circumstances an entitlement to pursue a claim for common law damages, limited in certain respects and regulated as to how it may be exercised, under Part 6. It has been decided that s 93 of the TAA contingently extinguished the common law right to recover damages for injuries sustained in a transport accident through negligence: Wilson v Nattrass (1995) 21 MVR 41: Swannell v Farmer [1998] VSCA 104; [1999] 1 VR 299. But it can do so only to the extent of the legislative competence of the Victorian Parliament. Significantly, in my judgment, the legislative restriction upon the exercise of any rights to recover damages at common law cannot apply in all circumstances. In this matter, the TAC acknowledges that s 93 cannot operate so as to prevent Mr Lavrick from recovering damages at common law for breach of contract, where the relevant clause of the contract is implied by s 71 of the TPA, even though the contract was made in Victoria and the transport accident occurred in Victoria. The TAC also acknowledges that the restriction imposed by s 93 cannot operate generally outside Victoria.

41 Once it is accepted that persons owning or driving motor vehicles in Victoria may incur common law liability to persons injured in transport accidents in circumstances beyond those provided for by s 93 of the TAA, the issue in the present proceedings becomes more stark. Is it intended that the use of the words "any liability" in s 94 should entitle such persons to indemnity against such liability from the TAC? Or is it intended that such persons should not be entitled to indemnity from the TAC on the basis that the words "any liability" should be read down to include only a liability arising under s 93 of the TAA and a liability incurred, or arising from a judgment given, outside Victoria?

42 The TAA is the present expression of a long history of compulsory third party insurance legislation in Victoria and in the other States and Territories in relation to the use of motor cars. In Victoria, that history begins with the Motor Car (Third Party Insurance) Act 1939 (Vic.). It was succeeded by the Motor Car Act 1951 (Vic.) and then the Motor Car Act 1958 (Vic.). The Motor Accidents Act 1973 (Vic.) first introduced a no-fault scheme in respect of motor vehicle caused injuries, operating in conjunction with existing common law rights to recovery. Ashely J in Bentley described it at 71 as "in some respects the predecessor of the TAA". From 1939 until the enactment of the TAA, compulsory third party insurance was required for any motor vehicle registered in Victoria to insure the owner or driver against "any liability" which may be incurred in respect of death or bodily injury caused by or arising out of the use of a motor vehicle. Section 10(2)(c) of the Motor Car (Third Party Insurance) Act 1939 provided:

That provision was replicated in s 44(2)(c) of the Motor Car Act 1951, and in slightly different terms in s 46(2)(c) of the Motor Car Act 1958.

43 Thus, the form of policies of insurance required under successive enactments did not necessarily involve owners of motor vehicles registered in Victoria being insured in respect of liability at common law which depended only on contract. A policy which did insure in respect of such liability, provided it insured generally at common law for negligence, would comply with the requirements of the respective legislation. That position obtained until the commencement of the TAA.

44 To the time of the TAA, therefore, the legislation discloses an intention on the part of the Victorian Parliament to require any motor vehicle registered in Victoria to be insured against "any liability" for injury or death arising from a transport accident. It also discloses an awareness that, at common law, such liability might arise in tort for negligence (or from breach of statutory duty), or in tort for negligence and under contract, and in some cases purely under contract. In the latter case, an insurance policy issued in compliance with the relevant enactment might, but need not necessarily, grant indemnity. The co-existence of claims in tort and contract arising out of the same general facts is illustrated in another context by Henderson v Merrett Syndicates Ltd [1994] UKHL 5; [1995] 2 AC 145.

45 Despite that awareness, the TAA does not expressly deal with the circumstance where liability for personal injury sustained in a transport accident arises solely under contract. That may be because s 93(1) contingently extinguishes all common law rights of action, at least so far as it is legislatively competent to do so, including any common law rights of action for damages for breach of contract in respect of personal injury sustained in a transport accident. That view would be consistent with the legislative intention that, to the extent to which s 93 does not contingently extinguish common law rights of action, the owner of a motor vehicle registered in Victoria should nevertheless be entitled to indemnity under s 94(1) from the Fund in respect of all liability at common law arising from a transport accident. Indeed, the TAC acknowledges that intention in respect of such liability incurred, or in respect of a judgment determined, outside Victoria. It is also consistent with that intention that the previously recognised distinction between common law liability in tort and in contract no longer needed to be addressed, because generally s 93 also contingently extinguished common law liability in contract where it applied.

46 It is correct, as senior counsel for the TAC contended, that the subject of s 93 is the traditional common law right of action in respect of injuries or death caused by a transport accident. That is recognised by the decisions in Wilson v Nattrass (1995) 21 MVR 41 (Wilson); Edwards v Jepson [1998] 1 VR 197 per Winneke P at 200; Swannell v Farmer [1998] VSCA 104; [1999] 1 VR 299 per Batt and Buchanan JJ at 306-307; and Bentley at 74-75 and 84. In Wilson, Brooking J at 42 said:

47 Ashley J at 55 described s 93(1) as contingently extinguishing "such rights of action for damages at common law as were hitherto enjoyed" in Victoria. See also the remarks of Ashley J in Bentley quoted above.

48 Although Wilson concerned a claim based on tortious liability only, both Brooking J and Ashley J appear to have been cautious not to confine s 93(1) to such claims. The reason, no doubt, is to reflect what their Honours perceived as the legislative intention to contingently extinguish a common law claim for damages based upon a breach of contract. Circumstances may not uncommonly arise where, because of the relationship between a negligent driver and the person injured, a common law claim might be made based on breach of contract, such as the present. For example, a person injured as the result of the negligent operation or maintenance of a bus or taxi, if that person is a fee-paying passenger, might well sue the operator of the bus or taxi in contract for breach of an implied condition to take reasonable care to maintain and operate that vehicle. It could not have been intended that where the person being sued is alleged to have breached the contract by negligent conduct or by breach of a statutory duty, the claim might proceed in the face of s 93. It could hardly be imagined that s 93 was not intended to contingently extinguish such a common law claim. The Second Reading Speech of the Treasurer (Hansard, House of Assembly, 8 May 1986, 2021) indicates the legislative intent to encompass all transport accidents. He said:

The Transport Accident Bill was subsequently amended to allow some common law claims for damages under the gateways provided in s 93 but the intention to have the TAA apply to all transport accidents clearly remained.

49 I thus conclude, in the light of those considerations, that s 93 of the TAA was intended to contingently extinguish common law liability arising from a transport accident, whether that common law liability arises from the cause of action in tort for negligence or from the cause of action in contract for breach of an implied term to take reasonable care. That context does not suggest that the wide expression "any liability" in s 94(1) should be read down so as to not to apply in cases where the liability of the owner or driver of a motor vehicle involved in a transport accident is sued at common law in contract rather than in tort. Nor is it consistent with a legislative intention that the entitlement to indemnity under s 94 should depend upon whether the injured person chooses to sue at common law in contract or in tort, in circumstances where such an option is available to the injured person and is not at all within the control of the person being sued.

50 There was no submission put on behalf of the TAC that ss 93(1) and 94(1) distinguish between liability for breach of contract in relation to proceedings in respect of injury or death as a result of a transport accident, depending upon the particular contractual term alleged to have been breached. That would be such a refined legislative intention, if it existed, as to expect it to appear in the provisions themselves or elsewhere in the TAA. It was pointed out that, by reason of the decision in Astley v Austrust Ltd [1999] HCA 6; (1999) 197 CLR 1 (Astley), damages awarded at common law for breach of contract may not be reduced for contributory negligence by applying apportionment legislation. That position had previously been decided in Victoria in Belous v Willets [1970] VR 45 and in AS James Pty Ltd v Duncan [1970] VR 705, although the approaches in other jurisdictions differed: see the decision by Gleeson CJ, McHugh, Gummow and Hayne JJ in Astley at [50]-[70]. Those issues, at least in Victoria, are unlikely to have been overlooked by the Legislature when enacting the TAA, or when amending it from time to time. I accept that it is possible to envisage circumstances in which contractual liability for damages for personal injuries sustained in a transport accident might arise because of some peculiar and personal contractual terms. That situation might have to be faced when and if it arises. This claim, however, arises from breach of a term implied by law in a contract, and a not uncommon term. Although the resolution of the claim has not required any determination of negligence on the part of Lease Auto, or the person who last placed the tyres onto the car, the cause of the transport accident prima facie would appear to involve negligence on the part of Lease Auto or the person who performed that work. But for the operation of s 71 of the TPA, so that s 93 of the TAA does not apply in circumstances where I have found that it otherwise would have applied, Mr Lavrick’s claim would have been addressed under Part 3 and s 93 of the TAA in a normal way.

51 The Legislature has expressly provided for circumstances in which the liability to indemnify will not apply in the concluding words of subs (1) and in subss (2) and (2A), including the circumstance where compensation has been ordered under s 86(1) of the Sentencing Act 1991: s 94(2)(c). That subclause was added following the decision in Bentley: Accident Compensation (Common Law and Benefits) Act 2000 (Vic). The Legislature could have, but has not, limited the entitlement to indemnity in other ways. As senior counsel for the TAC pointed out, it has also progressively limited the circumstances which fall within the definition of "transport accident" by the Transport Accident (Amendment) Act 1988 (Vic) and the Transport Accident (General Amendment) Act 1994 (Vic). It has chosen nevertheless to leave the general obligation on the part of the TAC in the wide words of s 94(1), subject to the expressed exemptions.

52 The extent of revenue to the Fund, as noted above, is under the control of the TAC. The TAC is empowered to determine and collect transport accident charges from owners of motor vehicles registered in Victoria, so that the Fund has sufficient resources to meet the liabilities of the TAC to make payments of compensation under Part 3 of the TAA and to make payments of damages that the TAA is liable to pay, including payments by way of indemnity under s 94(1) of the TAA. The TAC thus has the capacity to fix transport accident charges to ensure the Fund is available to satisfy its obligation to make payments under the TAA. Those obligations may include the obligation to indemnify under s 94. I do not consider that the nature of the funding through transport accident charges provides any contextual or other reason to read down the wide words of s 94(1) in the way the TAC contends. There is no evidence that the success of the cross-claim of Lease Auto in this matter would expose the fund to a vast number of unexpected claims. Its claim is made as an owner of a motor vehicle registered in Victoria, which has paid the transport accident charges, and which is liable to pay damages at common law in respect of a transport accident.

53 The Victorian Parliament, by enacting s 94(1) in its terms, has recognised the desirability of providing to such persons indemnity in respect of liabilities arising outside Victoria. It has recognised that its statutory powers extend only so far in restricting the entitlement of persons to recover against the owners or drivers of motor vehicles registered in Victoria damages for injuries sustained in a transport accident. This matter exposes another respect in which, it is accepted, its powers do not reach to achieve the restrictions intended by the TAA to apply generally in Victoria upon such claims. In my judgment, however, s 94(1) is nevertheless intended to provide indemnity to Lease Auto in the particular circumstances.

54 In National Mutual Fire Insurance Co. Ltd v Insurance Commission [1985] VR 811, Brooking J said at 818:

55 In my judgment, neither the subject matter of the TAA nor the context of s 94 in the TAA provide a reason to restrict the wide words "any liability" from applying to the liability of Lease Auto to Mr Lavrick in this matter. I do not consider that the consequences of it so applying are so absurd that they could not have been intended. Indeed, it is sensible that in the particular circumstances of this matter s 94 should respond to provide indemnity to Lease Auto, rather than to leave it (and others in similar circumstances) exposed to the detriment of being personally liable despite having paid the appropriate transport accident charge, unless other insurance against such liability has been privately procured.

56 I do not consider that the words "any liability" in s 94(1) of the TAA should be read down so as to exclude the liability of Lease Auto in the way the TAC contends.

57 There will be judgment for Mr Lavrick against Lease Auto in the agreed sum of $370,000 including interest. I declare that Lease Auto on its cross-claim is entitled to indemnity from the TAA under s 94(1)(a) of the TAA in respect of that liability. I will hear the parties as to the formal orders to be made, and as to costs.

I certify that the preceding fifty-seven (57) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield.

Counsel for the Applicant:	Mr PA Heywood Smith

Solicitor for the Applicant:	Johnson Withers

Counsel for the First Respondent & First Cross-Respondent & Second Cross-claimant:	Mr ST Lane

Solicitor for the First Respondent & First Cross-Respondent & Second Cross-claimant:	O’Loughlins

Counsel for the Second Respondent	Mr MAW Birchall

Solicitor for the Second Respondent	Lawson Downs

Counsel for the Second Cross-Respondent:	Mr R White QC with Mr P Solomon

Solicitor for the Second Cross-Respondent	Ward & Partners
	No appearance for Third Cross-respondent.

Dates of Hearing:	10, 13 & 14 December 2001

Date of Judgment:	10 May 2002

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	S 12 OF 1999

Federal Court of Australia

Lavrick v Lease Auto Pty Ltd [2002] FCA 599 (10 May 2002)