The High Court handed down its long awaited decision in Allianz Australia Insurance Ltd v GSF Australia Pty Ltd on 19 May 2005.
GSF successfully sought indemnity from Allianz for its liability to a worker who suffered injury whilst in GSF’s employ.
The worker was required to work with a truck owned by GSF. The truck was used to transport airline containers and was specifically modified for that purpose. However, on the day prior to the worker’s injury, the mechanism used for shifting containers within the truck broke down. Rather than repair the problem, the worker’s supervisor directed him and his fellow workers to unload the truck manually with a crowbar. Whilst attempting to move the containers, which weighed more than one tonne, the worker injured his back.
The NSW Court of Appeal held that the injury sustained by the worker fell within the definition of “injury” in s 3 of the Motor Accidents Compensation Act 1999 and, accordingly, that Allianz was liable to indemnify GSF.
Allianz appealed to the High Court.
Section 3 defines “injury” as follows:
(a) means personal or bodily injury caused by the fault of the owner or driver of a motor vehicle in the use or operation of the vehicle if, and only if, the injury is a result of and is caused during:
(i) the driving of the vehicle, or
(ii) a collision, or action taken to avoid a collision, with the vehicle, or
(iii) the vehicle’s running out of control, or
(iv) such use or operation by a defect in the vehicle..”
In the High Court a Joint Judgment was delivered by Gummow, Hayne and Heydon JJ. Justices McHugh and Callinan each delivered separate, individual Judgments.
However, each Judge found that the worker’s injury was not an “injury” for the purpose of MACA and therefore allowed the appeal.
Gummow, Hayne and Heydon JJ
As the Joint Judgment constituted a majority of the five member bench, the reasons given by Gummow, Hayne and Heydon JJ may be considered authoritative as to the construction of the definition of “injury” in s 3.
Their Honours summarised the issue in the case to be whether the worker’s injury, which was conceded to be by the use or operation of the vehicle, was “a result of and caused during such use or operation by a defect in the vehicle”.
At paragraphs 93 and 94, their Honours interpreted the relevant parts of the definition as follows:
“In argument, some suggestion was conveyed that the terms “result” and “cause” have different meanings and, in particular, that “cause” narrows “result”. That is not so. The drafting in this second part of par (a) of the definition seeks to accommodate two cumulative criteria and does so by telescoping them into a grammatical contortion.
“One criterion is that the injury be sustained during certain events, including the driving of the vehicle or a collision with the vehicle or its running out of control. The other criterion is that the injury be sustained as a consequence of those events. The phrase “a result of” is linked to the first or temporal criterion; the phrase “is caused” is linked to the second criterion. For sub-par (iv), the temporal criterion is that the injury be a result of the use or operation of the vehicle because it was sustained during that activity. The other criterion is that the injury be caused by a defect in the vehicle.”
Ultimately, their Honours concluded that the defect in the vehicle did not cause the worker’s injury, in the relevant sense. Rather, it was the system of work adopted by GSF which was the proximate cause of the injury.
At paragraph 103, their Honours held that:
“It was the system of work adopted by GSF to deal with the problem of unloading presented by the failure in operation of the motorised T-bar and, in particular, the direction to use the crowbar to lever the containers which had a predominant quality for, and an immediacy to, Mr Oliver’s injury. The defect in the T-bar was not a defect by which the accident was caused in the necessary statutory sense.”
Justice McHugh summarised his opinion at paragraph 65 as follows:
“In my opinion, therefore, the majority of the Court of Appeal erred in finding that, although the negligent direction of the employer was the major reason for Mr Oliver’s injury, the involvement of the defect in the vehicle was sufficient to satisfy the definition of the term “injury” in the Act. Mason P erred by conflating the separate concepts of “cause” and “result” in the definition, giving the expression “caused … by” no independent work to do. His Honour used the words “a cause” interchangeably with the words “a result of”. He considered only the words “a result of” and failed to consider the words “caused … by”. In so doing, he failed both to give the expressions different meanings as required by the Act and to give them cumulative effect. Davies AJA erred because he appeared to hold that the causation requirements of the Act were satisfied if the defect was a link in the causal chain and an element without which the injury would not have occurred.”
Justice Callinan’s interpretation of the definition of “injury” was even more constrained than the other Judges.
At paragraph 133, his Honour held that, in defect cases, an injury only falls within the definition where it was caused during the driving of the vehicle, a collision or the vehicle running out of control. His Honour reasoned:
“The expression “use or operation” is explained, qualified and further refined by sub-pars (i), (ii) and (iii). The word “such” is a reference to that expression as so refined or qualified. Sub-paragraph (iv) does have work to do. It is important to note that the introductory words of the definition speak of the fault of the owner or driver of a motor vehicle. An owner who is not driving the vehicle would not ordinarily be at fault and responsible for an injury within sub-pars (i) and (ii). An owner although he or she could conceivably be at fault when the vehicle ran out of control as contemplated by sub-par (iii), would generally be unlikely to be so. More probably such an event would result from a failure of the last driver to secure the vehicle properly after driving it, or to control it properly when driving it. A running out of control could also be of course a result of a failure by the owner to rectify a defect such as a malfunctioning brake or gearbox. On the other hand the “fault” of an owner would be more likely to be the failure say, of that owner to service the vehicle regularly in order to discover some defect in it, or to rectify a defect in it of which he or she should be aware. In other words the purpose of sub-par (iv) is to sheet home liability for an injury caused by the fault of the owner, if the injury is a result of a defect causing it, during such use or operation, that is, whilst it is being driven as contemplated by sub-pars (i) and (ii) or running out of control as contemplated by sub-par (iii) in circumstances in which the driver has not been at fault.”
However, it should be noted that Callinan J is in the minority on this point.
At paragraph 129, his Honour concluded that the worker’s injury was caused by the system of work rather than the defect in the vehicle:
“Before I turn to the construction of the definition of injury I should deal with the appellant’s submission that, if the failure of the T-bar was a defect in the vehicle, it did not cause the injury, or, to put it the other way that the definition does, the injury was not a result of the defect. I would accept this submission. The T-bar was inoperable. The first respondent well knew this. Nonetheless it chose to use the vehicle to carry containers and to give a negligent and dangerous direction as to the movement of the containers. Because the T-bar was inoperable it could not and did not play any part in the events leading up to the second respondent’s injury. That was a result of the negligently devised system of work and instructions that the first respondent elected to adopt. Any imperative to use the vehicle with its inoperable T-bar could only have been a self-imposed commercial one. There must come a time in relation to the occurrence of a known malfunction, when its capacity to cause a result should be regarded as spent. This, in light of the fact that the stoppage happened on the previous day, was what occurred in this case. In any event, even if the injury could be regarded as a result of a defect it could not, for the reasons I have given, be said to have been caused by it. Realistically and rationally this was an industrial accident in which, because it was not operable or operating at all, the T-bar played no part.”
It is notable that the High Court was critical of the NSW Court of Appeal’s decision in Gunter v State Transit Authority of NSW in which it was suggested that the legislative history of motor accident legislation in NSW suggested an intention of providing “a universal scheme to provide compensation for compensable injuries sustained in motor accidents to achieve optimum recovery for persons injured in motor accidents…”
At paragraph 91 of the Joint Judgment, their Honours state:
“Whatever may have been the policy manifested in the 1942 Act, there had been a pronounced shift against such “optimum recovery” by the time of the enactment of the 1995 Act.”
Justice McHugh was similarly critical of the NSW Court of Appeal. At paragraph 44 he held that:
“To the extent that Gunter v State Transit Authority of NSW suggests that the purpose of the Act is to provide a universal coverage scheme for all motor vehicle accidents, it should not be followed.”
Furthermore, at paragraph 101 of the Joint Judgment, the following observations are made:
“On the other hand, the subject, scope and purpose of the 1995 Act, and the changes it made to the Motor Accidents Act, point in the other direction. The text of the new definition of “injury” manifests that legislative policy of restricting previous overbroad interpretations of the CTP insurance legislation. A stated object of the changes made by the 1995 Act was (s 2A(1)(b)) the reinstatement of a common law based scheme but (s 2A(2)(a)) to keep premiums “affordable” by containing “the overall costs of the scheme within reasonable bounds”. A construction which promotes that object is to be preferred (s 2B(1)).”
The High Court has sent a clear signal to the NSW Court of Appeal that it has misinterpreted the legislative intention of the Motor Accidents Act 1988 and the Motor Accidents Compensation 1999.
In assessing whether an injury falls within the definition of “injury” an assessment must made as to not only whether the injury was caused “during” one of the four sub-categories of “use and operation” but also whether the injury was caused as a consequence of one of those activities.
Accordingly, in defect cases, not only must the injury be caused during the use and operation of a defective vehicle, but the injury must be caused by that defect.
Such a construction may render some loading cases to fall outside the definition, subject to the circumstances of the cases. However, it appears that not all unloading cases would be excluded. For example, if a lifting mechanism failed during the process of lifting a heavy object, causing injury to a worker, the injury may be considered both to have occurred during the use and operation of the vehicle in its intended use and to have been caused by the defect.
Accordingly, careful regard should be had as to whether the injury was a natural consequence of the defect or the system of work. If the natural cause was the system or work rather than the defect, then the injury does not fall within the definition in s 3 and MACA does not apply.