Kazmaier v Spannagle[2000] QCA 457

SUPREME COURT OF QUEENSLAND

1. PINCUS JA:  I have had the advantage of reading the reasons of White J in which the issues in this appeal are explained.  The motor vehicle accident in question took place on 2 April 1997, but the receipt for payment of registration was not issued until 13 May 1997.  On that date – 13 May 1997 – the renewal of registration became "effective":  reg 19(1) of the Transport Infrastructure (Roads) Regulation 1991.

2. The question is whether reg 19 intends that on issue of the receipt for payment renewal of registration is retrospective to the date of expiration of the previous registration; that expired on 20 February 1997. The alternative view is that reg 19 intends that on issue of the receipt, registration of the vehicle is renewed only as from that date. I note that the provision for a "period of grace" in s 23(2) of the Act cannot help the respondent, in this case.

3. Under s 23(1)(a) of the Motor Accident Insurance Act 1994, when renewal of registration takes effect, a policy of insurance comes into force.  This is why it is important to determine whether issue of the receipt renews registration from the date of expiry of the last registration or only from the date of issue of the receipt.  The Act and Regulation provide no clear answer to this;  there are indications against retrospective operation of receipt.  One has just been mentioned:  the language of s 23(1)(a) is difficult to reconcile with an intention that renewal of registration can take effect retrospectively and the same must be said of the language of reg 19(1).

4. If, on issue of the receipt on 13 May, renewal of registration was effected only prospectively, then insurance was also prospective and so the vehicle was uninsured when the accident happened on 2 April. One would expect that if that were the situation, then the renewed registration would run for a year from 13 May, as would the insurance. But it is my opinion that the renewed registration and therefore the insurance ran from the date of expiry of the old registration, 20 February. The reason for this opinion is that reg 19(3) reads:

"Any payment for the renewal of registration of a vehicle relates to the period commencing on the expiry of the preceding period of registration".

This is a little unclear and could mean that although the payment covers the period from expiry of the old registration (20 February) to the issue of the receipt (13 May), no advantage is gained from that and the vehicle is deemed to be unregistered – and therefore uninsured – during that period;  as to that period, the person renewing registration pays, on this view, good money for nothing.

5. In my opinion, the proper interpretation of reg 19(3) is that, because the payment for renewal relates to the period commencing on 20 February, which must mean relates back to that date, the renewal is also backdated.  The vehicle is, if the chief executive elects to receive the late payment (under reg 28, he does not have to do so) deemed to be registered and therefore insured from the date to which the payment relates back – i.e. the date of expiry of the preceding registration.  A different position obtains if renewal is effected within 30 days of the expiry of the old registration;  but that was not so here.

6. For these reasons I am in respectful agreement with Chesterman J, who declared that the vehicle was insured on the date of the accident. I would dismiss the appeal, with costs to be assessed.

7. THOMAS JA:  The reasons of White J make it unnecessary for me to state the circumstances or to recite the relevant statutory provisions.

8. The question is whether, upon late payment of a compulsory third party premium, there is a relation back, that is to say, whether the premium is taken to be accepted and insurance to have come into force from the due date for renewal so that there is a continuity of insurance.

9. In my view, a satisfactory and internally consistent construction of these provisions is impossible. There are unsatisfactory features in each of the constructions contended for.

10. The statutory system causes registration and compulsory third party insurance to operate in tandem. Periods of registration and insurance run from year to year, based upon the date when registration is effected.

11. The contention on behalf of the appellant (FAI) is that it has no liability as insurer during the period when payment is overdue, even if full payment is later accepted. On its submission, upon receipt of late payment it only becomes prospectively liable for the balance of the year. If the appellant's submissions are correct, late payments will give an insurer the benefit of 12 months premium for cover over a lesser period. The insurer will obtain a windfall risk-free period at the expense of the nominal defendant during the hiatus period.

12. In my view, the intention of the statutory scheme was to make registration and insurance coterminous. The preceding somewhat similar legislative scheme was so interpreted in Fire & All Risks Insurance Co Limited v Nominal Defendant (Queensland).^[1]  It was also noted in that case that many of the general principles of insurance law are irrelevant in such a scheme.

13. It may be thought hard on a compulsory third party insurer that it has no right to refuse a late renewal. But equally it has no right to refuse a timely renewal even if it regards the client as a bad risk.^[2]  Participation in such a statutory scheme is of course at the choice of the insurer.

14. Section 19(3) of the Transport Infrastructure (Roads) Regulation 1991 provides:

"Any payment for the renewal of registration of a vehicle relates to the period commencing on the expiry of the preceding period of registration."

That in my view is a recognition of retrospective effect so that registration is deemed to have been renewed from the end of the preceding period, at least as between the owner and the Transport Department.  The certificate of registration that was issued after payment certifies registration for one year from the date of the previous expiry period. Section 19(1) of the Transport Infrastructure (Roads) Regulation provides that renewal of registration is effective on the issue of the Chief Executive's receipt for payment.   The fact that a person who drove such a vehicle when it was unregistered could not successfully defend such a prosecution^[3] creates a difficulty, but I do not think it falsifies the view just expressed.

15. The Transport Department is the agent of the compulsory third party insurer for receipt of money and acceptance of the registration to which the insurance policy is necessarily attached.^[4]  The insurance company's rights in relation to the insured are controlled in these respects by what happens between the client and the Transport Department.  In this instance, on 13 May 1997 a certificate of registration was issued for the period 20 February 1997 to 20 February 1998, and as already noted that registration became effective on the issue of the receipt for payment.  Section 23(1)(a) of the Motor Accident Insurance Act provides that when transport administration renews the registration of a motor vehicle, "a policy of insurance in terms of the schedule comes into force for the motor vehicle when the … renewal of registration takes effect."

16. It is also worthy of note that the construction advanced by the appellant exposes persons such as Mr Spannagle to recourse liability to the nominal defendant. Such persons may make understandable mistakes which lead to further bureaucratic delays resulting in a significant exposure period.

17. It is true as Mr Keane QC pointed out on behalf of FAI that under recent amendments the legislature has imposed a scheme which clearly relieves compulsory third party insurers from liability during what I have called the hiatus period. The reasons why the legislature chose to do so are not known. In any event, that is not the legislation we have to construe. Consistently with the approach taken in Fire & All Risks Insurance Co Limited v Nominal Defendant^[5] I think the better construction is that the registration and the insurance are coterminous and that upon a late renewal the insurance is deemed to continue for 12 months from the expiry of the preceding period.

18. I would therefore dismiss the appeal.

19. WHITE J:  The plaintiff sustained serious personal injury on 2 April 1997 when the motor cycle which he was riding collided with a Toyota utility owned and driven by the first defendant/first respondent (“the owner”).

20. The Toyota had been registered and insured as required by the Motor Accident Insurance Act 1994 (“the Act”) for the period 20 February 1996 to 20 February 1997.  The amount due and paid for that period for registration and compulsory third party insurance was $437.70.  The compulsory third party (“CTP”) insurer of the vehicle was the appellant/second defendant (“FAI”).

21. The amount required to register and insure the Toyota for the following period, that is, 20 February 1997 to 20 February 1998, was $516.60.  On 6 March 1997 after the expiration of the period of registration and insurance for 1996 1997 the owner posted a cheque drawn in favour of the Department of Transport for $437.70 apparently mistakenly believing that to be the amount required for renewal of registration and insurance for a further twelve months.  Section 23(2)(b) of the Act allows a period of grace of 30 days from the “end of the period of registration”, so the attempted renewal occurred within that period.

22. Transport Administration (the expression used for the chief executive of the Department of Transport in s 4 of the Act) returned the insufficient cheque to the owner’s bank on 20 March 1997 which was eight days after receipt.  Transport Administration might have renewed the registration and insurance despite the shortfall and the CTP insurer could have sued to recover the difference as a debt, s 23(5), but it did not.  It was not until 9 April 1997 that the owner’s bank notified him that the cheque had been returned.  The owner instructed his bank to re submit the cheque to the Department of Transport and provided a cheque for $78.90 on 12 April 1997 to make up the required amount.

23. The cheques were banked by Transport Administration on 23 April 1997.  On 13 May 1997 Transport Administration issued a certificate of registration and receipt for the two cheques.  The certificate noted the currency of the registration from 20 February 1997 to 20 February 1998 and the CTP insurer.  On 1 May 1997 FAI received a cheque from Queensland Transport which included an amount for the CTP insurance of the Toyota.  The cheque was banked the following day and FAI retained the full amount of the $235.50 CTP insurance premium.

24. An order was made that the separate question of whether FAI or the Nominal Defendant was the CTP insurer of the Toyota on 2 April 1997 be heard and determined before the trial of the plaintiff’s action.  Chesterman J declared that on 2 April 1997 the Toyota was insured under and pursuant to a policy of insurance issued by FAI in accordance with the provisions of the Act.  FAI appeals from that decision submitting that the Toyota was uninsured on the relevant date.

25. The question falls to be considered by construction of the Motor Accident Insurance Act 1994 and the Transport Infrastructure (Roads) Regulation 1991 as they were in force at the time of the motor vehicle accident on 2 April 1997.  Considerations of the general law of insurance do not intrude.  As Williams J observed of the Motor Vehicles Insurance Act 1936, the predecessor to the present legislation,

“The legislative scheme is made clear by those [ss 3, 9 and 10] provisions.  During all times the vehicle is registered it shall be insured, and the insurance must be in accordance with the form of policy detailed in the legislation.  It is immediately obvious that many of the accepted general principles of insurance law do not apply to insurance pursuant to the Act.  For example, the terms of the policy are not dependent upon the mutual intention of the parties, and the terms of the policy may be varied during the currency thereof by amendment of the Act or Regulations without regard to the wishes of either or both of the parties to the so called contract of insurance.  Another departure from the general law of insurance is effected by s 4 of the Act which provides that the policy shall inure in favour of a transferee upon change in ownership of the vehicles regardless of the wishes of the licensed insurer” Fire and All Risks Insurance Co Limited v The Nominal Defendant (Queensland) [1988] 101 Qd R 113 at 115.

The scheme of the present Act is similar to the repealed legislation with important differences.  It continues (and is said to improve, s 3(a)) the system of CTP motor vehicle insurance and the scheme of statutory insurance for uninsured and unidentified vehicles operating in Queensland.  Two immediately apparent differences from the previous legislative scheme are that a CTP insurer cannot decline to insure or renew a CTP insurance policy and registration and insurance are not expressed to be co terminous.

26. The Act provides that if an action is brought in a court for damages for personal injury arising out of a motor vehicle accident, in the usual case, the action must be brought against the insured person and the insurer as joint defendants, s 52.  Who is the insurer for the statutory insurance scheme is decided in accordance with the provisions of s 31.  So far as is relevant to these proceedings, if the motor vehicle is an insured motor vehicle the insurer is the “insurer under the CTP insurance policy”.  If the motor vehicle is not insured and a self insurer is not the registered owner, the Nominal Defendant is the insurer.  The issue for this appeal is whether the Toyota was “insured” for the purposes of the Act on 2 April 1997.

27. The compulsory insurance scheme is set out in Part 3 of the Act.  It is an offence to drive an uninsured motor vehicle on a road or in a public place, s 20.  (Neither may a person use on a road a motor vehicle that is not registered, Transport Infrastructure (Roads) Regulation 1991, s 12).  Section 21 provides that on lodging an application for the registration of a motor vehicle with Transport Administration, the applicant must select a licensed insurer to be the insurer under the CTP policy of insurance.  If the application is one for renewal of the registration of a motor vehicle the applicant may either reselect that insurer for the period of renewed registration by paying in full the appropriate insurance premium, or select a different licensed insurer.  The machinery for so doing is set out and need not be further considered.  However an applicant for the renewal of registration may only select a different insurer for the period of the renewed registration if the application and the necessary documentation is lodged “before the end of the previous period of registration”, s 21(3).  By s 28 of the Transport Infrastructure (Roads) Regulation 1991 (“TIRR”) the application for renewal of registration must be made before the expiration of the period of registration.

28. Unlike the repealed legislation, a CTP insurer cannot decline to issue or renew a CTP insurance policy in respect of a motor vehicle, s 22.

29. Section 23, which, together with s 19 of the TIRR is central to this appeal, sets out when the CTP policy of insurance comes into force and its duration.  It provides relevantly

“(1)When transport administration registers or renews the registration of a motor vehicle -

(a)a policy of insurance in terms of the schedule comes into force for the motor vehicle when the registration or renewal of registration takes effect; and

(b)the licensed insurer selected under this part in or in relation to the relevant application is the insurer under the policy.

(2)The policy remains in force for the period of registration and for a further period of grace ending -

(a)on the renewal of the registration … or

(b)on the expiry of 30 days from the end of the period of registration;

whichever happens first, … [italics added]

(3)However, if the registration is cancelled before the end of the period for which it was granted or renewed, the policy ceases to be in force when the cancellation takes effect.

(4)The validity of the policy is unaffected by -

(a)transport administration’s failure to collect the insurance premium in full; or

(b)another error of transport administration or an error of an insurer.

(5)If a CTP insurance policy comes into force under this Act and the insurance premium has not been collected, in full, by or for the insurer, the insurer may recover the premium, or as much of it as has not been paid, as a debt, from the person in whose name the motor vehicle is registered.”

30. Although CTP insurance and the registration of a motor vehicle are closely linked it is the TIRR made pursuant to the Transport Infrastructure (Roads) Act 1991 which governs matters relating to registration.  Section 19(1) provides that

“The registration or renewal of registration of a vehicle is effective on the issue of the chief executive’s receipt for payment.”

Section 23(1)(a) of the Act provides that the policy of insurance comes into force for the motor vehicle when the registration or renewal of registration takes effect.  The chief executive issued a receipt to the owner for payment of the renewal of registration on 13 May 1997.  Mr SC Williams QC and Mr R Douglas SC for the Nominal Defendant and the owner respectively submit that s 19(1) is inappropriately expressed and cannot mean what it appears to say, namely, that the CTP policy of insurance takes effect prospectively when the receipt is issued.  They submit, as his Honour below held, that s 19(3) of the TIRR provides the answer.  It provides that

“Any payment for the renewal of registration of a vehicle relates to the period commencing on the expiry of the preceding period of registration.”

This provision is said to have retrospective effect, so that the registration operates even after late payment in an unbroken period from the expired registration.  There are two reasons why this is not a compelling construction.  First, it is the payment which expressly relates back not the registration, that is, there is no free use of the roads.  The second concerns s 28(1) of the TIRR.  At the date of the accident s 28(1) provided that the owner of a registered vehicle must apply to renew its registration before the expiration of the period of registration.  There was no express or inferred power to renew registration retrospectively.  Subsection (4) was inserted in 1997 and it permits the chief executive, despite the obligation on an owner in subsection (1), to accept an application for renewal of registration at any time, but even this is not a power to renew with retrospective effect a registration which has expired.  If a renewal of registration were effected after expiration, for example six months late, if the renewal operated retrospectively it would mean that a person could never be convicted of driving an unregistered vehicle during that period, Armstrong v Elder No 1417 of 1987, unreported decision of Dowsett J 20 May 1996, a case which concerned the repealed legislation.

31. Mr Williams and Mr Douglas contend that this leads to the anomalous and administratively unworkable result that the motor vehicle registration period and the period of the CTP policy may not coincide.  There is no doubt that the legislative scheme presumes that registration and CTP insurance will coincide in the usual case, but it is not expressed, unlike s 3(1) of the repealed legislation, that they are to be co terminous.  Mr Keane QC for FAI submitted that the legislature must have had regard to this possible outcome when it amended the Act this year to the same effect as the construction contended for by FAI by s 13(3A) of the Motor Accident Insurance Act Amendment Act 2000, No 17 of 2000 which amends s 23 of the Act.

32. If the construction were to have the meaning contended for by the Nominal Defendant and the owner there would appear to be little or no purpose in providing for days of grace in the way set out in s 23(2).  Regulation 19(3) of the Motor Vehicle Insurance Regulations 1963 provided for a 30 day period of grace and where a premium was received after the expiration of that period the insurer could refund to the owner of the motor vehicle the portion of the premium attributable to the interim period between the end of the period of grace and the payment of the premium subject to doing so within 45 days of receipt of the premium.  Regulation 19(3) then deemed the contract of insurance not to exist for that interim period.  If the insurer did not take that course the contract of insurance was deemed to be renewed from and including its date for renewal.  There is no similar provision in the present legislation and although a CTP insurer cannot now repudiate or decline to issue or renew a CTP insurance policy there is nothing to suggest that the law changed the extent of requiring an insurer to cover risks that had already occurred.

33. Mr Douglas submitted that on the construction contended for by FAI a person in the position of his client, the owner, who had attempted to renew in the period of grace would be at risk of a claim against him pursuant to s 60 of the Act by the Nominal Defendant.  It is a defence that the owner believed on reasonable grounds that the motor vehicle was insured.  More generally, the respondents’ submissions appear to equate owners who apply to renew their motor vehicle registration in time with those who, contrary to the provisions of the law, do not.  There is no overriding policy consideration that I can discern in the Act why they should be treated equally.

34. I will mention some other provisions which Mr Williams and Mr Douglas submit lend support to their submissions.  Section 31 of the TIRR provides a regime for the cancellation of registration.  His Honour thought that it provided support for a construction of s 19 of the TIRR that registration could be renewed retrospectively.  It provides for cancellation on the application of the owner or by the chief executive.  The latter may do so, inter alia, if application for renewal is not made in accordance with s 28 of the TIRR or a notice under s 46 (the correct amount pursuant to Part 4 has not been paid) has been given and the correct amount not paid within 28 days.  His Honour seemed to conclude that if registration was not specifically cancelled “it continues to exist, at least for some purposes” without specifying for what purposes, R 57.  This approach does not take account of the definition of “registered” in s 2 of the TIRR which requires that in order to be “registered” the period of registration must not have expired and the registration must not have been cancelled.  Section 46 of the TIRR assumes that the registration has been effected and the CTP policy of insurance came into force.  The other submission concerns s 23(4) of the Act which provides that the validity of a CTP policy of insurance is unaffected by Transport Administration’s failure to collect the insurance premium in full or for some other error.  This provision also presumes that the policy of insurance has actually come into force.  Here that did not occur.

35. In summary, the period of registration for the Toyota had expired on the date that the plaintiff sustained his personal injury. The renewal of registration became effective on the issue of the receipt for payment on 13 May 1997.  It was only the payment which related back to the period beginning on the expiry of the preceding period of registration, not the registration.  The CTP policy of insurance came into force when the renewal of registration took effect on 13 May 1997.

36. It follows that in my view the owner’s motor vehicle was an uninsured motor vehicle on 2 April 1997 and in that circumstance the CTP insurer was the Nominal Defendant, s 31(1)(c).  The appeal should be allowed and the declaration made below set aside.  In lieu thereof a declaration should be made that on 2 April 1997 the Toyota utility registered no 775 BQT owned by Dale Geoffrey Spannagle was not insured under and pursuant to a policy of insurance issued by FAI General Insurance Company Limited in accordance with the provisions of the Motor Accident Insurance Act 1994, and was therefore an uninsured motor vehicle as defined in that Act.

37. It follows that Dale Geoffrey Spannagle and the Nominal Defendant should pay the appellant’s costs of and incidental to the appeal and of the hearing below on 9 December 1999 to be assessed on the standard basis.