Reported Decision : 59 NSWLR 580 New South Wales Court of Appeal CITATION : AMP General Insurance Ltd v Maguire and Anor t/as MJM Automotive Mechanical Repairs & 2 Ors [2004] NSWCA 64 HEARING DATE(S) : 4 March 2004 JUDGMENT DATE : 4 March 2004 JUDGMENT OF : Handley JA at 1, 30; Santow JA at 28; Campbell J at 29 DECISION : 1. Appeal allowed.; 2. The judgments of the District Court on the cross-claims set aside.; 3. Verdict and judgment for the first cross-defendant on the first cross-claim.; 4. The defendants to pay the first cross-defendant's costs of the proceedings in the District Court.; 5. Verdict and judgment for the defendants for $108,205 against the second cross-defendant on the second cross-claim with effect from 15 July 2003.; 6. The second cross-defendant to pay the costs of the defendants of the proceedings in the District Court on an indemnity basis, including any costs ordered to be paid by the defendants to the plaintiff and to the first cross-defendant.; 7. The appellant's costs of the appeal to be paid by CIC. ; 8. The plaintiff is entitled to his costs of the appeal as a submitting respondent and the employers, the first respondents, are entitled to their costs of the appeal as submitting respondents together with the costs which would have been incurred in ensuring that an appropriate order for costs would be made in their favour in respect of the trial, if the appeal succeeded. CATCHWORDS : INSURANCE - compulsory third party - mechanic in charge of vehicle - driver as defined - requests person outside vehicle to start motor - starter also driver - starter injured - whether vehicle driven by mechanic - D LEGISLATION CITED : Motor Accidents Act 1988 s 3(1), s 9 CASES CITED : Ricketts v Laws (1988) 14 NSWLR 311 Shortland County Council v Government Insurance Office [1973] 2 NSWLR 257 AMP General Insurance Ltd (Appellant) PARTIES : Micheal James Maguire and Patricia Mary Maguire t/as MJM Automotive Mechanical Repairs (First Respondents) CIC Insurance Ltd (Second Respondent) Paul Deas (Third Respondent) FILE NUMBER(S) : CA 40678/03 D J Russell SC (Appellant) COUNSEL : J De Berg (First Respondents) K Pierce (Second Respondent) D J Hooke (Third Respondent) Henry Davis York (Appellant) SOLICITORS : Astley Thompson Cox (First Respondents) Stewart Cuddy & Mockler (Second Respondent) Beilby Poulden Costello (Third Respondent) LOWER COURT District Court JURISDICTION : LOWER COURT DC 6834/01 FILE NUMBER(S) : LOWER COURT O'Reilly DCJ JUDICIAL OFFICER : IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 40678/03 HANDLEY JA SANTOW JA CAMPBELL J 4 MARCH 2004 AMP GENERAL INSURANCE LTD v MICHAEL JAMES MAGUIRE and PATRICIA MARY MAGUIRE t/as MJM AUTOMOTIVE MECHANICAL REPAIRS & 2 ORS CATCHWORDS INSURANCE – compulsory third party – mechanic in charge of vehicle – driver as defined – requests person outside vehicle to start motor – starter also driver – starter injured – whether vehicle driven by mechanic FACTS The defendants who conducted a motor vehicle workshop instructed one of their tradesmen to work on a vehicle parked outside their premises on the footpath. The tradesman left the car in gear with the handbrake on. Later he asked a fellow employee to start the motor while he examined the engine. The fellow employee did so without getting into the driver's seat or checking whether the car was in gear. The car moved forward and the employee was injured while attempting to regain control. The employee recovered damages from his employers for the negligence of the tradesman subject to a deduction for his own contributory negligence. The trial judge found that the employee was a driver of the vehicle and that the tradesman was also a driver because the vehicle was in his charge. However he held that the tradesman was not driving the vehicle for the purposes of s 9 of the Motor Accidents Act when the fellow employee was injured and therefore his liability and that of his employers to his fellow employee were not covered by the compulsory policy. As a result the relevant exclusion in the employers' public liability policy did not apply and he held that this insurer was bound to indemnify the defendants. The public liability insurer appealed. HELD: The tradesman, as the person in charge of the vehicle, was a driver when the motor was negligently started by the other employee at his request and the vehicle was still being driven by him when it injured the employee although it was then out of control. ORDERS 1. Appeal allowed. 2. The judgments of the District Court on the cross-claims set aside. 3. Verdict and judgment for the first cross-defendant on the first cross-claim. 4. The defendants to pay the first cross-defendant's costs of the proceedings in the District Court. 5. Verdict and judgment for the defendants for $108,205 against the second cross-defendant on the second cross-claim with effect from 15 July 2003. 6. The second cross-defendant to pay the costs of the defendants of the proceedings in the District Court on an indemnity basis, including any costs ordered to be paid by the defendants to the plaintiff and to the first cross-defendant. 7. The appellant's costs of the appeal to be paid by CIC. 8. The plaintiff is entitled to his costs of the appeal as a submitting respondent and the employers, the first respondents, are entitled to their costs of the appeal as submitting respondents together with the costs which would have been incurred in ensuring that an appropriate order for costs would be made in their favour in respect of the trial, if the appeal succeeded. IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 40678/03 HANDLEY JA SANTOW JA CAMPBELL J 4 MARCH 2004 AMP GENERAL INSURANCE LTD v MICHAEL JAMES MAGUIRE and PATRICIA MARY MAGUIRE t/as MJM AUTOMOTIVE MECHANICAL REPAIRS & 2 ORS Judgment 1 HANDLEY JA: This is an appeal from the judgment of O'Reilly DCJ in disposing of two alternative cross-claims by the defendants against two insurance companies. 2 The plaintiff, Mr Paul Deas, who was an employee of the defendants, was injured in an accident at work. His fellow employee, Mr Gooch, who was working on the carburettor of a motor vehicle parked on the footpath outside the defendants' workshop asked Mr Deas to start the motor by turning the ignition switch. Mr Gooch had his head under the bonnet, looking at the carburettor. Mr Deas, who was standing outside the vehicle, reached in and turned on the ignition. Mr Gooch, who had left the vehicle in first gear with the handbrake on, did not warn Mr Deas and he in turn failed to check the gears and the handbrake. The vehicle started and moved ahead and although Mr Deas attempted to regain control, he was unable to do so and in the process was injured. He sued his employers and recovered damages which were reduced by 60 per cent because of his contributory negligence. 3 The defendants held a public liability policy with AMP General Insurance Ltd (AMP) which provided them with cover but only if the liability was not covered by a compulsory motor vehicle policy. The vehicle in question was owned by a customer of the defendants and was insured with the second respondent under a compulsory policy. Each insurer denied that it was liable to indemnify the defendants. 4 The trial judge found that the compulsory motor vehicle policy did not respond in respect of this accident and gave judgment on the first cross-claim against AMP Insurance and on the second cross-claim in favour of CIC. 5 AMP has appealed, seeking reversal of both judgments on the cross-claims on the ground that the claim was covered by the compulsory policy. 6 The case arose while the Motor Accidents Act 1988 was in force. 7 Mr Russell SC who appeared for AMP submitted that although Mr Deas was the actual driver of the vehicle at the relevant time, Mr Gooch was also a driver under the extended definition in the Act who had been negligent in the use or operation of the vehicle and as such was entitled to be indemnified under the comprehensive policy. 8 Mr Pierce, counsel for CIC, submitted that the trial judge had been correct and that the compulsory policy did not respond. 9 Driver is defined in s 3(1) of the Act as meaning "A person driving a motor vehicle, and includes: (a) … (b) a person for the time being in charge of a motor vehicle." 10 The trial judge found that since Mr Gooch received the vehicle for mechanical work, drove it to the position where he worked on it, and asked the plaintiff to turn on the ignition, he was in charge of the vehicle. That finding was not challenged. However, he later found: "… I think the fact that Mr Gooch comes within the extended meaning of the word driver in s 3(1) of the Motor Accidents Act is not sufficient to make the second cross-defendant's policy apply in respect of the injury to the plaintiff, since there was not at the relevant time an activity of driving by Mr Gooch. The complaint against him is not that he drove negligently but that he did not warn that the vehicle was in gear and that the handbrake was not adequately applied. There can be no complaint that he left the vehicle in gear on a down grade. As to the handbrake, it is part of human experience that handbrakes are not universally efficient." 11 These findings were challenged by Mr Russell. It is well established that there may be more than one driver of the one vehicle at the same time. The clearest example is the case of a learner driver and instructor. The learner is the actual driver while the instructor, who is in charge of the vehicle, is a driver within the extended definition. In such a case, either or both of the drivers may be negligent and if so the compulsory policy will respond. 12 Mr Deas of course was driving the vehicle, although he was not inside it and was not in control. If he was not the driver of the vehicle at the relevant time a parked vehicle which ran downhill because the brakes were inefficiently applied and injured someone would not be covered by the compulsory policy because there was no-one in the vehicle when this happened. This serves to point up the fact that if the negligence occurs while the vehicle is being driven, it does not matter that the injury occurs when the vehicle is not being driven in any ordinary sense of the word. 13 The judge found that Mr Deas was the driver of the vehicle within the Act, so that for example if Mr Gooch had been injured, he could have recovered under the policy because of the negligence of Mr Deas. Shortland County Council v Government Insurance Office [1973] 2 NSWLR 257 is adequate authority for that proposition. It established that a person in the position of Mr Deas is driving the vehicle if he initiated the process which caused the vehicle to move, although when it did, it was out of control. 14 Mr Pierce submitted that when the vehicle was moving and the liability arose, Mr Gooch was not in charge of it because he could not exercise any control over the vehicle or Mr Deas. He relied on the decision of this Court in Ricketts v Laws (1988) 14 NSWLR 311. That case involved a learner driver and an instructor. At the critical time both were looking for a lighted cigarette which had been flicked into the car from a passing vehicle. This Court held that the instructor remained in charge, even though she was not paying attention, because she could resume control at any moment. Nothing in the judgment of Kirby P in that case supports the conclusion that Mr Gooch was not in charge of this vehicle for present purposes. He was in charge when he asked Mr Deas to start the motor. This caused the vehicle to move forward with Mr Deas as its driver, although he was not in control of it. 15 Although Mr Gooch had no control over the vehicle and could not exercise control through Mr Deas, he remained the person in charge of it. He was in charge when the engine was switched on and had all gone according to plan he would have remained in charge and able to exercise effective control. The unintended consequences of the ignition being switched on did not change this situation, although it temporarily deprived Mr Gooch of capacity to exercise effective control. In this respect, the situation is analogous with that considered in Ricketts v Laws where during the period of inattention the instructor was not in a position to exercise effective control. 16 The policy cover as defined by s 9 of the Act insures: "Any person ... who at any time drives the vehicle ... against liability ... caused by the fault of the driver ... in the use or operation of the vehicle." 17 Thus the policy will cover Mr Gooch if he was driving the vehicle against liability caused by his fault in the use or operation of the vehicle. 18 There is no difficulty in treating Mr Gooch as the person who at a relevant time drove this vehicle because he gave instructions for its operation when he was in charge of it. There is also no difficulty in finding that the subsequent liability arose because of his fault in the use or operation of the vehicle. The apparent difficulty that the liability did not occur while the vehicle was being driven is in my judgment resolved by a purposive construction of the section, bearing in mind that runaway vehicles are capable of causing injury. No-one is actually driving such a vehicle but it is a runaway vehicle because of fault in its use or operation at some earlier point of time by a person who was then the driver. 19 For these reasons, I would allow the appeal and set aside the judgment of O'Reilly DCJ on the cross-claims and reverse the orders that he made so as to provide indemnity for the defendants against the second cross-defendant and to exonerate the first cross-defendant. 20 The case has been complicated by the presence in Court throughout the hearing of counsel for both the injured worker and the employers. The situation is one where the two insurers acknowledged during the trial that one or other would be liable to the defendants and there was no prospect that the defendants would find themselves without an effective indemnity. 21 In these circumstances, one would have thought that the matter would have been resolved on a common sense basis prior to the hearing with confirmation from the cross-defendants that they would not seek to disturb this state of affairs on appeal, thus allowing both the plaintiff and the defendants to be excused from attendance at the hearing. 22 The Court has been provided with correspondence from the solicitors for the defendants. The active parties, the two insurance companies, are not free from blame for the situation which has resulted where four counsel appear at the bar table when two of the four parties have no real interest in these proceedings. 23 Counsel for the injured plaintiff had a potential legitimate concern against the possibility that CIC, the compulsory insurer, would seek to revisit the question of damages, if it lost, on the ground that they should be computed in accordance with the Motor Accidents Act and not under the general law. However, CIC did not file any cross-appeal to keep such a point open and unless and until it did the plaintiff was not at risk. 24 The employers' only legitimate concern was the form of the costs order to be made on the cross-claims. The trial judge, appropriately in my view, made an order that AMP pay the defendants' costs of the proceedings on an indemnity basis, reflecting the fact that they should not be out of pocket as a result of a dispute between insurance companies when it was common ground that one or other was liable to indemnify them. 25 The orders sought by AMP's notice of appeal included an order that CIC pay the costs of the trial on the ordinary basis and not on an indemnity basis. This matter, which represented the only legitimate interest of the defendants in being represented in these proceedings, could and should have been sorted out before the hearing. CIC bears some responsibility for this situation but not one which should attract an order for the costs of these proceedings in favour of the defendants. 26 I would therefore propose that orders 1, 2 and 3 be made as set out in the amended notice of appeal, that order 4 be made amended to provide that the costs payable by the second cross-defendant to the defendants would be on an indemnity basis. The appellant is entitled to its costs of the appeal, to be paid by CIC. The plaintiff is entitled to his costs of the appeal as a submitting respondent and the employers, the first respondents, are entitled to their costs of the appeal as a submitting respondent together with the costs which would have been incurred in ensuring that an appropriate order for costs would be made in their favour in respect of the trial, if the appeal succeeded. 27 They are the orders I would propose. 28 SANTOW JA: I agree. 29 CAMPBELL J: I agree. 30 HANDLEY JA: They are the orders of the Court. ********** Last Modified: 03/12/2004 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.