ROBERT ALFRED ACOTT v. MICHAEL JOHN O'NEIL No. 797 of 1985 Practice and Procedure (1988) 55 NTR 29

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ROBERT ALFRED ACOTT v. MICHAEL JOHN O'NEIL      
No. 797 of 1985
Practice and Procedure
(1988) 55 NTR 29
COURT
IN THE SUPREME COURT OF THE NORTHERN TERRITORY OF AUSTRALIA
MARTIN, J

CWDS
  Practice and Procedure - Motor Vehicle Accident - Application to set order
of the Master aside - Insurer empowered to make an application on behalf of
defendant - Motor Accident (Compensation) Act 1979 (NT) s. 40, Supreme Court
Rules 46.08.
  Practice and Procedure - Service of process - Motor Vehicle Accident -
Defendant's whereabouts unknown - Substituted service upon insurer - Supreme
Court Rules r. 6.09(1)
  Cases followed:
    Porter v Freudenberg (1915) 1 KB 857
    Lawford v Hosth (1974-75) 5 ALR 57
    Hunt v Molk (1976) 11 ALR 288
    Briggs v Sands unreported O'Leary J., 11 November 1982
    Nicholls v Thiel (1983-84) 25 NTR 11
  Cases distinguished:
    Chappell v Coyle (1985) 2 NSWLR 73

HRNG
DARWIN
#DATE 12:8:1988
  Counsel for Applicant:     Mr J Stewart
  Solicitors for Applicant:  Ward Keller
  Counsel for Respondent:    Mr D Trigg
  Solicitors for Respondent: ALAO

ORDER
  Application dismissed.

JUDGE1
  MARTIN, J
  The defendant applies to have an order made by the Master, for substituted
service of the writ, set aside.
2.  Although the application is made in the name of the defendant, the real
applicant is Territory Insurance Office, ("the Office") upon whom the Master
ordered that the writ be served in substitution for service on the defendant.
The Office is empowered to make such an application under s. 40 of the Motor
Accident (Compensation) Act or r. 46.08 of the Supreme Court Rules or both.
3.  Section 40(1)(b) of the Act enables the Office to take over, during such
period as it thinks fit, the conduct on behalf of the defendant (being a
person referred to in s. 6(1) of that Act) of proceedings taken or had to
enforce a claim under that section. A "proceeding" includes a cause action
suit or matter, and an incidental proceeding in the course of or in connection
with, a cause, action, suit or matter, (Supreme Court Act s. 9).  Rule 46.08,
(as it was at the relevant time), empowered the Court to set aside or vary an
order made against a person where the application for the order was made on
notice to the person but he did not attend the hearing of the application, or
was not made on notice to the person. The application for the order for
substituted service was made ex parte.  The Office was given copies of the
application and affidavit in support, and arranged for its solicitor to attend
before the Master when the application came on for hearing, but he did not
appear in any way.  Of course, no notice was given to the defendant, and the
Office did not at that stage give any indication that it had taken over the
conduct of the proceedings on his behalf.  Having had extended to it the
courtesy of being informed of the application to be made, it arranged for an
observer to be present. It did not submit to the jurisdiction and it was not a
party, but I consider the Office was a person against whom an order was made,
whether in its own right or as representing, for the purpose of service, the
defendant.
4.  Furthermore, I consider that the Office in having taken over the conduct
of the proceedings, after service pursuant to the purported valid order of the
Master, was entitled to enter a conditional appearance, as it did, and to make
the application seeking to have service set aside, and to do so in the name of
the defendant.  Under the common law, and in accordance with Rules of Court,
variously formulated, a defendant could file a conditional appearance and make
such an application.  (See r 8.08 and the commentary upon the equivalent
Victorian rule in Williams "Civil Procedure in Victoria" 1987).
5.  In the circumstances, I see no reason why the Office could not do so and
it need not rely on r 46.08 in that regard.
6.  No reliance was placed upon the provisions for appeal from an order of the
Master under r 77.05.
7.  The substantive question is as to whether the order for substituted
service should be set aside.  There is authority, especially in the Territory,
but also elsewhere in Australia, which suggests that the order made was valid.
However, those authorities were based upon rules which the Office argues are
dissimilar to those applying in the Territory as from 1 November 1987.  It
relies upon a decision in New South Wales, based upon a rule similar to that
now operating in the Territory, which it is said is distinguishable from the
rules considered in those authorities.  It further argues that changes in the
law relating to the rights, and the protection of the rights, of persons
injured in motor vehicle accidents, render those earlier cases distinguishable
to such an extent that they ought no longer be followed.
8.  It is therefore necessary to examine the development of the law.
9.  The starting point is Porter v Freudenberg (1915) 1 KB 857.  The English
Supreme Court rule there under consideration was:
    "if it be made to appear to the Court or a Judge
    that the plaintiff is for any cause unable to effect
    prompt personal service the Court or Judge may make an
    order for substituted or other service ...."
10.  The previous rule of this Court, O. 10 r 3 was to the same effect.
11.  At p. 888 of the Court of Appeal judgment, appears the following general
statement of the law to be observed regarding substituted service, before the
exercise of the discretion as to the method to be adopted
    "In order that substituted service
    may be permitted, it must be clearly shown that the
    plaintiff is in fact unable to effect personal
    service, and that the writ is likely to reach the
    defendant or to come to his knowledge if the method of
    substituted service asked for by the plaintiff is
    adopted."
12.  Relevantly, that report involved two distinct appeals by plaintiffs who
had unsuccessfully sought orders for substituted service against alien enemies
in Germany, by way of service upon the German defendants' agents in England,
after the outbreak of the first World War.  The Court of Appeal, at p. 890,
ordered that leave be granted to make substituted service, and without
direction, indicated that an appropriate order in chambers would be by
effecting service upon the agents, plus advertisement of or other means of
communication.
13.  Notwithstanding its earlier injunction regarding the likelihood of
substituted service coming to the notice of the defendants, the Court was
prepared to order substituted service on agents without evidence that such
service would come to the notice of the defendants.  The likelihood of
advertisements coming to the notice of the German defendants seems to me to
have been remote and the Court of Appeal, no doubt considering the possible
futility of the orders which might be made, added
    "It should, however, be borne in mind that there is
    little, if any, value in obtaining judgment in our
    Courts in default of appearance of the defendant
    resident in an enemy State, unless there is property
    in this country which can be reached in execution of
    the judgment.  Where there is property in this country
    there is frequently some person upon whom an order for
    substituted service could be made supplemented by
    other provisions as to giving notice to the defendant
    of the proceedings to which we have already called
    attention."
The cause of action in each case arose from contract.
14.  In Lawford v Hosth (1974-1975) 5 ALR 57 Forster J. of this Court (later
Chief Justice), held that in an action for damages for personal injury, where
there is a third party insurer of the defendant, an order for substituted
service on the defendant by service on the insurer could be made "if a
judgment obtained against the defendant may ultimately be enforced against the
defendant's insurer". His Honour set out the passage from Porter v Freudenberg
cited above and described it as "the ordinary principle applicable" to
substituted service and referred to other judicial pronouncements in England
and decisions elsewhere in Australia (p 58).  In that case the third party
insurer was obliged by the written law of Queensland to pay the plaintiff if
he obtained judgment against the defendant, and provision was made for
enforcement of the judgment against the insurer. That decision was followed by
Muirhead and Ward JJ. (see the report of Hunt v Molk (1976) 11 ALR 288).
Gallop J. did not doubt the correctness of the decision in Lawford v Hosth,
although refusing an application for substituted service in the circumstances
of the case before him (Munkarra v Fischer (1980) 5 NTR 3).
15.  The compulsory third party insurance system, which provided the
background to the Territory cases referred to above, was abolished (save for
transitional provisions) by the Motor Accident (Compensation) Act which came
into operation on 1 July 1979.  Under that Act statutory benefits are payable
to persons injured in motor vehicle accidents and, as originally enacted, it
restricted the common law remedy of a claim for damages.  The Office is
obliged to indemnify a person liable to pay such damages (s. 6).  No provision
is made in the Act for the plaintiff to enforce a judgment for such damages
against the Office.
16.  In an unreported decision, Briggs v Sands (O'Leary J. 11 November 1982),
equated the position of the Office with that of an insurer, and considered
whether, in the circumstances of that case, the Office was bound to indemnify
the defendant. Having found, only for the purposes of the application for
substituted service upon it, that it was so bound, he went on "I think the
case is one that comes within the principles laid down in Lawford v Hosth."
That decision was made on an ex parte application and a reading of His
Honour's reasons does not disclose whether the absence from the Act of a right
to enforce a judgment against the Office was brought to his attention.
17.  That issue was squarely raised by counsel for the Office in Nicholls v
Thiel (1983-1984) 25 NTR 11, who there sought to have an order for substituted
service upon the Office set aside, upon the basis that the earlier cases had
been decided upon the plaintiff's statutory right to enforce a judgment
against the third party insurer of the defendant. Nader J. dealt with that
argument as follows:
    "I believe this submission to be
    based on misunderstanding of the cases.  It is true
    that both Lawford v Hosth and Hunt v Molk involved
    legislation providing for enforcement of judgments
    against insurers.  Indeed, the Chief Justice used
    language that might be taken to mean that such
    enforceability is one of the criteria justifying
    substituted service upon an insurer.  Because such
    enforceability was part of the legislation with which
    the Chief Justice was concerned, there was no call for
    his Honour to consider whether the duty of indemnify
    was alone sufficient.  Briggs v Sands, supra, was a
    case concerned with s. 6 of the Act: enforceability
    was not expressed to be a basis of the decision of
    O'Leary J. His Honour noted merely the duty to
    indemnify.  It is the duty to indemnify that gives the
    Office (or an insurer in an appropriate case)
    sufficient interest in the outcome of proceedings to
    provide an incentive to locate and involve the
    defendant.  I can see nothing in the English cases
    referred to in Lawford v Hosth to lead to a different
    conclusion.
    If enforceability of a judgment is an essential
    criterion, there is authority that mandamus will be
    granted ordering that to be done which a statute
    requires to be done (Halsbury's Laws of England, 4th
    ed, vol 1, para 99).  There are many cases in support
    of the proposition that where a public body fails to
    perform any public duty with which it has
    been charged mandamus will lie to compel it to carry
    it out.  Mandamus will issue to government officials
    in their capacity as public officers exercising
    executive duties which affect the rights of private
    persons (ibid, para 100).
    If it were necessary, I would conclude that a
    successful plaintiff might ultimately force the Office
    to indemnify the unsuccessful defendant to the full
    extent of the defendant's liability and, in so doing,
    enforce the judgment against the Office.  Execution of
    the indemnity by the Office would involve payment of
    the judgment debt so as to protect the defendant from
    the consequences of his liability."
18.  With respect, I agree with His Honour and, I would add, secures to the
plaintiff the benefit of the judgment. The Office has no discretion.  It is
required by the Act to indemnify the defendant, and thus it is effectively in
the same position as a compulsory third party insurer whose obligations to
indemnify the insured defendant, under a contract of insurance, can be
enforced by a plaintiff under statute.  Notwithstanding the alteration to the
scheme, whereby people injured in motor vehicle accidents may obtain
compensation for their loss, the Office is "the real defendant".
19.  However, since that decision new Rules of Court have come into operation.
The present rule reads:
    "Where for any reason it is
    impracticable to serve a document in the manner
    required in this Chapter, the court may order that,
    instead of service, such steps be taken as it
    specifies for the purpose of bringing the document to
    the notice of the person to be served."
20.  It is common ground that it was impracticable for the plaintiff to serve
the writ upon the defendant personally.  The plaintiff had made extensive
enquiries as to his whereabouts without success.  The plaintiff does not
suggest that the Office is aware of the defendants whereabouts nor that it can
find him. The Office therefor says that the purpose of bringing the writ to
the notice of the person to be served can not be achieved by serving it upon
the Office.  It relies upon the decision of Yeldham J. in Chappell v Coyle
(1985) 2 NSWLR 73.  There is no distinction to be drawn between the Rule there
under consideration and r. 6.09(1) of the Rules of this Court.
21.  Notwithstanding the differences between the former and current rule, I do
not think that the latter relevantly says any more or less than the former.
In the former the Court or Judge had an apparently unfettered discretion to
make an order for substituted service.  That discretion was, however, fettered
by the common law requirement, as stated in Porter v Freudenberg, that the
writ was likely to reach the defendant, or come to his knowledge, if the
method of substituted service proposed by the plaintiff was adopted. The new
rule does no more than reinforce that precondition to the exercise of the
discretion as to method of substituted service, that is, that steps be taken,
by way of substituted service, for the purpose of bringing the document to the
notice of the person to be served.  The rule envisages a means, not a
predictable result.
22.  In my opinion, the new rule should not be interpreted and applied in any
way differently to that in which the former rule was interpreted and applied.
23.  Although the New South Wales and Territory rules are the same, I consider
that the Territory rule should be read in the light of Territory circumstances
and the long standing approach of this Court.  As to New South Wales, it does
not appear from the reasons for decision of Yeldham J., that the Supreme Court
of that State had ever allowed service by way of substituted service upon an
authorized insurer.  To the contrary, in the only case decided in that
jurisdiction referred to by His Honour, an option considered and rejected by
the Prothonotary was just such an order. His Honour, at p 76, observed that
under the statute law of that State the proceedings could have named the
authorized insurer as defendant, and asserting that Coyle could not be served
with process, could have been served on the Government Insurance Office.  The
proceedings would have been validly constituted, and service validly effected.
The Territory does not have similar provisions, and has not had, at least
since the cause of action arose in Lawford v Hosth.
24.  In Nicholls v Theil, Nader J. observed that
    "It is the duty to indemnify what gives the office
    .... sufficient interest in the outcome of proceedings
    to provide an incentive to locate and involve the
    defendant".
WIth respect, I think that is right.  The fact that the Office may not now
know where the defendant is does not deny that it could not now, by search and
inquiry, find him.  Service of the writ upon it may well serve the purpose of
bringing it to the notice of the defendant.
25.  None of this should be taken as in any way detracting from the obligation
on a plaintiff to first clearly show that it is, so far as the plaintiff can
determine, impracticable to serve a document as prescribed by the rules.
26.  The application is dismissed.