The NSW Court of Appeal handed down its decision in QBE Insurance (Australia) Ltd v Smith  NSWCA 130 on 26 April 2005
The principle issue in the case was whether the circumstances of the accident fell within the definition of `injury’ in section 3 of the Motor Accidents Compensation Act 1999 and, in particular, whether the injury was `a result of’ or `caused during’ the `driving of the vehicle’.
On 21 January 2000 the Claimant, a nine year old boy, was riding in a truck with his father, Smith. The truck was brought to a halt on the southern side of the road. Smith instructed his son to get out of the car and open a gate to some premises. The Claimant had to cross the road to do so.
As the Claimant was getting out of the truck, Smith looked into his rear-vision mirror and noticed Jennings heading towards the position of Smith’s parked vehicle. Smith yelled out to his son, but the Claimant proceeded across the road and was run down by Jennings.
The Claimant sued both Smith and Jennings. The claim against Jennings was settled.
In the claim against Smith, the Phegan DCJ found Smith negligent in placing the Claimant in a position of danger and failing to give him proper instructions. Smith was also found negligent for failing to properly observe the approach of Jennings’ vehicle.
Smith’s claim for indemnity against the CTP insurer was upheld by the trial judge. The Insurer appealed.
On appeal, the Insurer contended that:
“His Honour erred in finding that the injury which the plaintiff suffered was caused by the respondent in the use or operation of his vehicle and was a result of and was caused during the driving of the respondent’s vehicle within the meaning of sections 3 and 10 of the Act.”
In particular, the Insurer argued that “the driving of the vehicle” in s 3 was limited to “actual control and management of the motor vehicle while it is in motion” and that, as such, the Claimant’s injury was not caused during the driving of the motor vehicle.
The leading Judgment in the Court of Appeal was delivered by Hodgson JA.
In holding that Smith’s fault was `in the use or operation’ of the vehicle, his Honour, at paragraph 35 reasoned that:
“Dealing first with the question of whether the fault of Mr. Smith was in the use or operation of the vehicle, in my opinion it was part of the use or operation of the vehicle for Mr. Smith to cause the vehicle to pause and to arrange for the opening of a gate through which the vehicle was to drive, in the same way as it is part of the use or operation of a vehicle for the driver to cause the vehicle to pause and to put a coin in an automatic toll system to open a toll gate to proceed. Accordingly, Mr. Smith’s fault in making arrangements to cause the gate to be opened can be regarded as fault in the use or operation of the motor vehicle.”
His Honour also held that Smith was still driving the vehicle when the injury occurred. His Honour held, at para 36, that:
“In my opinion also, Mr. Smith was still in the course of driving the vehicle when the injury occurred, so that the injury was caused during the driving of the vehicle. Just as a driver does not cease driving when a vehicle pauses at a toll gate, in my opinion Mr. Smith did not cease driving when he caused the vehicle to pause, with its engine running, so as to enable the gate to be opened in order that he could proceed with the vehicle through it.”
Having made these findings, Hodgson JA identified the more difficult issue to be whether the Claimant’s injury was `a result’ of `the driving of the vehicle’.
In finding that the Claimant’s injury was a result of Smith’s driving of the vehicle, Hodgson JA held, at para 39, that:
“In my opinion, the fault of Mr. Smith was in substance in the whole process of placing the vehicle where it was placed and not taking proper steps to ensure that the plaintiff was safe in carrying out the steps devised by Mr. Smith, as driver of the vehicle, for the opening of the gate to enable the passage of the vehicle. In my opinion, on this basis, it was a feature of the driving that resulted in the injury, so that the injury was a result of the driving of the vehicle.”
As such Hodgson JA agreed with Phegan DCJ that the Claimant’s injury fell within the definition of `injury’ and that the Insurer was liable to indemnify Smith pursuant to the statutory policy in section 10.
Both Young CJ in Eq and Campbell AJA delivered Judgments agreeing with Hodgson JA, although the former added comments supporting his Honour’s view that the Act should be interpreted broadly so that, within reason, an insurance fund should be available to meet a large number of claims.
The Court of Appeal has clearly signalled an intention to interpret the definition of `injury’ in section 3 in such a way as to expand the liability of CTP insurers. The submission that the 1995 amendments to the Motor Accidents Act 1988 (which introduced the current definition of `injury’) was designed to place severe limits on the scope of the indemnity was considered and rejected.
It is doubtful that the average man in the street would regard an injury suffered by a boy running across the road to open a gate as being caused by the `driving’ of the person who asked him to do so, just because that person giving instructions was sitting in the driver’s seat of a motor vehicle. Query whether the injury would still be caused by `the driving of the vehicle’ if Smith had been approaching a parked vehicle on foot and had instructed his son to cross the road and open a gate with a view towards Smith entering the vehicle and driving through the gate. If not, the distinction appears to be an artificial one.
In any event, the Court of Appeal’s logic appears to be that any negligent conduct of the driver of a vehicle, which has some bearing upon the operation of the vehicle, may be considered fault `in the driving of the vehicle’.
Given this logic, and the underlying policy of expanding the scope of a CTP insurer’s liability to indemnify, we anticipate that Claimants now feel some encouragement to be creative in their attempts to characterise their injury as being the result of `the driving of the vehicle’ in order to bring themselves within the scope of the Act.
Having said that, the High Court’s decision in Allianz v GSF remains outstanding. It will be interesting to see what the High Court has to say about the legislative intention behind the 1995 amendments to the definition of `injury’ and whether the High Court agrees with the Court of Appeal that a broad construction should be adopted.