K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd

157 CLR 309
60 ALR 509

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(Judgment by: Mason J)

K & S Lake City Freighters Pty Ltd
v Gordon & Gotch Ltd

Court:

Judges: Gibbs CJ

Mason JBrennan J
Deane J
Dawson J

Subject References:
Contract
Statutes

Hearing date: 26 March 1985
Judgment date: 1 August 1985

Canberra

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Judgment by:
Mason J

This is an appeal by special leave from a decision of the Full Court of the Supreme Court of South Australia on a case stated pursuant to s 49 of the Supreme Court Act 1935 (SA), as amended, in an action by the respondent against the appellant freight company for damages for the loss of certain goods committed by the respondent to the appellant's custody for carriage from Sydney to Adelaide. The question, which was answered in the affirmative by the Full Court, is whether s 133 of the Motor Vehicles Act 1959 (SA), as amended ("the Act"), applied to the contract for the carriage of the goods.

The contract was contained in a consignment note headed "Conditions of Carriage" which was signed by an employee of the respondent and given to the driver who collected the goods on the appellant's behalf from the respondent's premises in Sydney. The driver was employed by a sub-contractor of the appellant. The consignment note provided, inter alia, that the consignment was to be governed by the law of South Australia and that the appellant would not be liable, in tort, contract or otherwise, for any loss or damage to the goods or for any default in the delivery of them that might be caused by the negligence or wrongful act or default of the appellant or its sub-contractors or the servants or agents of either. The goods were lost in transit as a result of a collision which occurred in New South Wales and which appears to have been due to the negligence of the driver.

Section 133 is in the following terms:

"Any contract (whether under seal or not) by virtue of which a person contracts in advance out of any right to claim damages or any other remedy for the negligence of any other person in driving a motor vehicle shall to that extent be void."

The critical question is whether the section, on its proper construction, applies to all contracts by virtue of which a person contracts out of a right to claim damages or any other remedy in respect of a loss of any kind for the negligence of another in driving a motor vehicle so as to include damages for loss of property, as the Full Court found, or whether, as the appellant contends, it is limited to contracts by virtue of which a person contracts out of a right to claim in respect of death or bodily injury. It has not been suggested that s 133 is in any relevant way limited in its territorial application.

On its face s 133, which is expressed in general terms, contains no limitation on the nature of the claim to damages or other remedy to which it refers. However, to read the section in isolation from the enactment of which it forms a part is to offend against the cardinal rule of statutory interpretation that requires the words of a statute to be read in their context (Cooper Brookes (Wollongong) Pty. Ltd. v. Federal Commissioner of Taxation (1981) 147 CLR 297 , at pp 304, 319-320; Attorney-General v. Prince Ernest Augustus of Hanover [1957] AC 436 , at pp 461, 473). Problems of legal interpretation are not solved satisfactorily by ritual incantations which emphasize the clarity of meaning which words have when viewed in isolation, divorced from their context. The modern approach to interpretation insists that the context be considered in the first instance, especially in the case of general words, and not merely at some later stage when ambiguity might be thought to arise. In Prince Ernest Augustus of Hanover Viscount Simonds said (at p 461):

"... words, and particularly general words, cannot be read in isolation: their colour and content are derived from their context. So it is that I conceive it to be my right and duty to examine every word of a statute in its context, and I use 'context' in its widest sense ... as including not only other enacting provisions of the same statute, but its preamble, the existing state of the law, other statutes in pari materia, and the mischief which I can, by those and other legitimate means, discern the statute was intended to remedy."

In Re Bidie [1948] 2 All ER 995 , Lord Greene M.R. said (at p 998):

"In the present case, if I might respectfully make a criticism of the learned judge's method of approach, I think he attributed too much force to what I may call the abstract or unconditioned meaning of the word 'representation.' ... The real question which we have to decide is: What does the word mean in the context in which we find it here, both in the immediate context of the sub-section in which the word occurs and in the general context of the Act, having regard to the declared intention of the Act and the obvious evil that it is designed to remedy?"

The instances of general words in a statute being so held to be constrained by their context are legion (e.g. Ross v. The Queen (1979) 141 CLR 432 , at p 440 and the cases collected in Cross, Statutory Interpretation (1976), pp 44-56).

The long title of the Act is "An Act to consolidate and amend certain enactments relating to the registration of motor vehicles, drivers licences and third party motor insurance, and for other purposes." It is divided into Parts which, on the whole, deal with discrete and largely homogenous subjects. Section 133 is contained in Pt IV of the Act which is headed "THIRD PARTY INSURANCE". The purpose and effect of Pt IV is to provide for a scheme for the compulsory insurance of the owners and drivers of motor vehicles in respect of liability for the death of, or bodily injury to, any person arising out of the use of those vehicles in any part of Australia. The scheme is part of a nationally integrated system by which provision is made for the compensation of the victims of motor vehicle accidents .

Section 99a(8) of the Act requires that a policy of insurance in terms of the fourth schedule to the Act be in force in respect of all motor vehicles registered in South Australia or in respect of which an exemption from registration or a permit is granted. Under such a policy, and in order for a policy of insurance to comply with Pt IV, the insurer insures the owner of the motor vehicle and any other person who at any time drives the vehicle, whether with or without the consent of the owner, in respect of all liability "in respect of the death of, or bodily injury to, any person caused by, or arising out of the use of, the vehicle in any part of the Commonwealth" (The Fourth Schedule, Policy of Insurance, cl.1; s 104). Subject to certain immaterial exceptions, s 102(1) prohibits a person from driving a motor vehicle on a road or on a wharf, that is on a road or on a wharf in South Australia, unless a policy of insurance complying with Pt IV is in force in relation to the vehicle. However, by virtue of s 102(4) and the proclamations made under s 102(5), this prohibition does not apply to a person who drives a motor vehicle on a road if the vehicle is registered in another state or in the Northern Territory or the Australian Capital Territory and if there is in force in that State or Territory in respect of the vehicle a policy of insurance which complies with the law of the State or Territory and under which the owner and driver are insured against liability in respect of the death of, or bodily injury to, any person caused by or arising out of the use of the vehicle in South Australia. In conformity with equivalent legislation in the other States and Territories, provision is also made in the case of death or bodily injury for recovery against the insurer where the insured is dead or cannot be found (s 113) and against the nominal defendant where the motor vehicle causing the death or injury cannot be identified (s 115) or was uninsured (s 116).

Section 133 aside, and with the possible exception of s 107, the remaining provisions of Pt IV are concerned with the establishment of the general scheme which it enacts or are ancillary to that general scheme. The argument of the respondent that s 134 constitutes an exception to the general scheme cannot be supported. That section prohibits persons other than those with specified qualifications from acting, accepting instructions to act or holding themselves out as being willing to act, for reward on behalf of others in respect of claims or actions for damages arising out of the use of motor vehicles. Claims or actions for damages for injury to property are specifically included within the prohibition. However, the function of this aspect of s 134 in a scheme relating to claims in respect of death and bodily injury is readily discernible. By minimising the likelihood of unqualified persons acting in relation to claims or actions for damages for injury to property, it serves, along with other provisions of the Act (see, for example, ss 125(3), 126), to avoid conduct which might otherwise jeopardize claims in respect of death or bodily injury.

The respondent's next argument, based on s 107, presents more complexity. The section provides:

"Notwithstanding any enactment, an insurer in relation to a policy of insurance whether under this Part or otherwise in relation to a motor vehicle shall, as from the date of the policy, be liable to indemnify the persons or classes of persons specified in the policy in respect of any liability which the policy purports to cover."

The term "policy of insurance" is defined in s 99(1), unless otherwise required by the context, to mean a policy of insurance that complies with Pt IV. The problem is to determine what is meant by the words "whether under this Part or otherwise". The legislative history of the section makes it difficult to accept the appellant's submission that those words are directed simply towards interstate policies.

Section 107 derives from s 36(4) of the Road Traffic Act 1930 (UK) and was originally enacted in South Australia with the introduction of Pt IIA of the Road Traffic Act 1934 (SA), the predecessor of Pt IV of the present Act, by the Road Traffic Act Amendment Act 1936 (SA) in a form which restricted it to policies under that Part. It was re-enacted in its present form as part of a further amendment to the 1934 Act by the Road Traffic Act Amendment Act 1938 (SA). The mischief at which s 36(4) of the United Kingdom Act was aimed, as explained in Tattersall v. Drysdale [1935] 2 KB 174 , at pp 180-182, was: (a) the possibility of an insurance company raising the provisions of the Life Assurance Act 1774 (UK) against a driver of a vehicle seeking to obtain the benefit of a policy taken out by the vehicle's owner; and (b) the inability of a person not a party to a contract to bring an action on that contract unless there was an intention to create a trust for the benefit of that person or unless the assured was acting with the privity and consent of that person so as to be contracting on his behalf. The difficulty is that the mischief appears to have been capable of applying to a policy indemnifying a driver against claims arising from damage to the property of third parties. I make this comment subject to two qualifications. The first is that the Life Assurance Act applies in South Australia, a matter which was not explored in argument. The second is that, in any event, the Life Assurance Act may have no application to a policy indemnifying a driver against claims arising from damage to the property of third parties where the third party indemnity is incidental to the coverage of the vehicle (cf. Williams v. Baltic Insurance Association of London, Limited [1924] 2 KB 282 , at pp 289-290).

However, it is unnecessary to express a concluded view on these matters. If s 107 does apply to an insurance policy relating to property damage, it is because of the inclusion in the section of words indicating an intention that it should extend beyond Pt IV. And, although a section in terms materially identical to s 133 was first inserted into Pt IIA of the 1934 Act by the same amendment Act of 1938, it could not thereby be suggested that s 133 is intended to have the same width of operation as s 107.

Notwithstanding the general terms in which it is expressed, s 133 must therefore be considered in the context of a part of the Act which is devoted in its essential elements exclusively to the establishment of a compulsory insurance scheme to provide compensation for death and bodily injury. With due respect to those who think otherwise, that context demands that the section be read more narrowly than if it had stood alone so that it does not extend to include contracts relating to claims in respect of loss of property. After all, the object of a provision against contracting out is to secure to the class of persons intended to be protected the benefits which the statute seeks to make available. In view of the absence of any similar compulsory insurance requirements in relation to property damage, a natural reading of the section requires that it be confined to rights to damages in respect of death or bodily injury, these being the benefits which the statute is concerned to provide. It would be otherwise if any recognizable policy could be seen to be served by restricting contractual freedom in this area. But no such policy can be discerned. Quite apart from these considerations, there is the lack of congruity which the section, on the respondent's sweeping construction, would have with the other provisions of Pt IV and the unlikelihood of it being contained in a highly specialized part of the Act.

This conclusion is strengthened by the consideration that provisions designed to prevent the contracting out of liability for negligence in driving a motor vehicle form part of the legislative scheme for the compensation of the victims of motor vehicle accidents in each of the States and Territories. With the exception of s 26 of the Motor Vehicle (Third Party Insurance) Act 1943 (WA), as amended, which is in terms substantially identical to s 133, each of the provisions in the States and Territories other than South Australia is expressly limited to claims in respect of death and bodily injury. In the absence of a clearly expressed intention to the contrary, the more general words of s 133 should not lightly be thought to depart from this limitation. As Fullagar J. stated in Gale v. Federal Commissioner of Taxation (1960) 102 CLR 1 , at p 12, "nice distinctions ought not be drawn between different forms of words in statutes in pari materia." The statutes to which his Honour was referring in that case were Commonwealth and State (or colonial) Acts providing for the inclusion in the dutiable estate of a deceased person of property given or settled by him in his lifetime. His Honour's injunction applies with particular force here where the statutes are found in every State and Territory and enact schemes which are integrated nationally.

In the result I would allow the appeal, set aside the answer given by the Full Court to the case stated and order that the case stated be answered in the negative.