MOTOR VEHICLES (THIRD PARTY INSURANCE) AMENDMENT BILL

Committee Stage

In committee.

(Continued from 23 February 2011.)

Clause 7.

The Hon. I.F. EVANS: The minister and his advisers will be pleased to know that we have broken the back of this bill, so this should not take much longer.

An honourable member: We were having so much fun!

The Hon. I.F. EVANS: It was fun, good fun. Clause 7 of the bill amends section 124 of the Motor Vehicles Act which has to do with the duty to cooperate with the insurer. This particular provision seeks to insert into section 124(1) of the current act the requirement that the name, date of birth and address of the driver of the motor vehicle at the time of the accident be inserted into a list of requirements that exist in the act where there is a duty to cooperate with the insurer.

I want to make some comments on behalf of the industry groups that we consulted with in regard to this. Their views are summarised by the Australian Lawyers Alliance who argue that the requirement for the name, date of birth and address of the driver being inserted into section 124 via clause 7 is, arguably, not necessary.

The circumstances of the accident in subsection (c) would incorporate such information. In the Australian Lawyers Alliance's view, no-one should be convicted of an offence against subsection 124(1)(ca) as it fails to delineate that each of the factors in subsection (1) unfortunately just talk of 'the accident'.

Regarding subsection (3a), it should be specified that the requirement relates only to the information known to the individual or that the section should be amended to provide a specific defence where certain information is not known to the defendant; that is, certain information requested in subsection (1). The penalty of $5,000 is too high, and the penalty in subsection (2) is only $1,250 and imprisonment for three months. There should be some consistency between the penalties and therefore subsections (2) and (3a) should be, at the most, $1,250 for the maximum penalty.

Treasurer, I wonder whether you wish to explain why there is an inconsistency in the penalties and why this is not already covered by the other aspects of the act as outlined by the Australian Lawyers Alliance.

The Hon. J.J. SNELLING: We respectfully disagree with the views put forward by the Australian Lawyers Alliance. Paragraph (ca) is a new provision because there is a difficulty obtaining the name, date of birth and address of the driver, particularly where family is involved and they do not want to get a family member into trouble. So this new provision has been put in there to overcome what is currently a problem in obtaining the details of the driver.

The new penalty of $5,000 applies to a breach of subsection (3a) which provides an onus on the person in charge or the driver of the motor vehicle to cooperate fully with the insurer in respect of a claim made. Currently, the penalty is $250. The penalty for not cooperating will be increased from $250 to $5,000. So the $5,000 penalty only applies to a breach of that subsection (3a) which already exists in the legislation.

The Hon. I.F. EVANS: Given that the government is proposing to increase the penalty significantly in relation to this particular provision and, in the existing act, as the minister has advised the committee, there are the words 'to cooperate fully with the insurer', I just want to pick up a point raised by the Law Society of South Australia and reinforced by the Australian Lawyers Alliance. That is, generally in the principle of this issue of 'to cooperate fully with the insurer' (which actually also comes later in the bill—inserted in section 127, if I recall), they make the point that the wording is far too wide and requires refinement as to what information can and cannot be relevant and reasonably sought by the insurer, and when such information is to be sought. They make the point that, by prescribing that the driver must cooperate fully, where is the boundary in that issue?

I will just make the point generally—and the minister might want to address the principal question—that once you start putting 'you must cooperate fully' into bills and acts, there is no reasonableness test in the provision, and so the insurer can ask you anything and demand of you anything. If you are not cooperating fully, you automatically breach the act and incur a $5,000 fine under this provision—I am not sure what the other provision is—so there is no reasonableness fence around that clause. I just wondered whether the minister wants to address that issue, and I will certainly be making a similar comment later in relation to the other amendments.

The Hon. J.J. SNELLING: The member for Davenport makes a pertinent point, but perhaps one that is not really relevant to this debate, because this is an existing provision in the bill about cooperating fully, and a provision which I presume has been operating for many years. What we are doing is ramping up the penalty from $250 to $5,000. It is an important provision. A person, who at the time of the accident was the owner, the person in charge or the driver of the motor vehicle, must cooperate fully. I think it is a section which is operated without any of the problems which the member for Davenport asserts, and I am confident that that will continue to be the case. It is important that there is full cooperation from those involved in the accident, particularly the person who is in charge of the vehicle, or driving the vehicle, at the time of the accident. I think it is a reasonable provision and it is reasonable that there be a fairly hefty fine for someone who does not cooperate.

Clause passed.

Clause 8.

The Hon. I.F. EVANS: Clause 8 deals with section 124 of the existing act and inserts a new section 124AA. I had fun reading this clause, trying to work out what it meant, and I thank parliamentary counsel and the officers for explaining to me what it meant. My layman's understanding of what this means is this: if someone from overseas is involved in an accident and then they take action in an overseas court and they get a finding of a higher payout in that court than they would have received in a South Australian court, then this gives MAC the opportunity to recover the excess above the South Australian court payout from the person who receives it, as I understand it.

In layman's terms—which is the way I can understand things—if the person would have only received $100,000 in a South Australian court and happened to be awarded $150,000 in the overseas court, then MAC has the opportunity to try to recover the $50,000. I think it is a provision that is going to be very rarely used but, if it protects our scheme, then the opposition does not see much problem with this particular clause and I will not put the minister through the pain of any questions about this particular clause.

The CHAIR: Minister, did you want to say something anyway?

The Hon. J.J. SNELLING: Just to make it clear; I am not sure if this is what the member for Davenport was suggesting, but the excess—in the member for Davenport's example, the $50,000 difference—would be recovered from the person who has received the payment, not from the person who was insured. I am not sure if the member for Davenport understood that, but, essentially, what he said is correct and a good summation of the clause.

Clause passed.

Clause 9.

The Hon. J.J. SNELLING: I move:

Page 7—

Line 17 [clause 9(2), inserted paragraph (c)]—After 'insured person' insert:

is guilty of

Line 18 [clause 9(2), inserted paragraph (c)(i)]—Delete 'committed'

Line 20 [clause 9(2), inserted paragraph (c)(ii)]—Delete 'committed'

Lines 36 to 39 and page 8, lines 1 to 5 [clause 9(7), inserted subsection (2b)]—Delete subsection (2b) and substitute:

(2b) For the purposes of this section, a person will be taken to have committed—

(a) an offence against section 43 of the Road Traffic Act 1961; or

(b) a relevant offence against a heavy vehicle driver fatigue scheme,

if, and only if, the person has been found guilty of the offence.

Page 8, after line 39 [clause 9(8)]—After inserted subsection (6) insert:

(7) A court before which an action is brought for recovery from a person of a sum paid by an insurer to satisfy a liability incurred by an insured person must, if the court is to determine the amount that it is just and reasonable in the circumstances for the insurer to recover from the person, take into account—

(a) the extent to which the person contributed to or is otherwise responsible for the liability incurred; and

(b) any other matter that the court considers relevant.

Amendment No. 6 refers to a debate which we have already had about a chain of responsibility and a change that was made after consultation that, before there can be a recovery against a person, we are lifting the burden of proof to one of basically criminal burden of proof, so someone will have to be found guilty of an offence before recovery can be made against them. So, amendment No. 6 is consequential on the parliament having already made that change, and amendments Nos 7 and 8 relate to the same: 'committed' refers to 'committed an offence', so they have exactly the same effect.

Amendment No. 9 does the same; it refers to someone actually having to commit an offence before a recovery can be made against them, whether that be an offence against the Road Traffic Act or against the Heavy Vehicle Driver Fatigue scheme. Amendment No. 10 defines the definition of 'just and reasonable'. It seeks to tighten that up. Again, the amendments are being introduced after consultation.

The Hon. I.F. EVANS: In relation to the amendments just moved by the Treasurer, just to clarify it for those who are in their offices following this debate with great interest, section 124A deals with recovery by the insurer in relation to insured vehicles.

In the previous part of this debate a couple of weeks ago, we had a debate under the then appropriate clause of the bill and section of the act about the capacity to recover by the insurer for uninsured vehicles. It was at that point we had the debate regarding the issues raised by industry groups about the fact that, under the government's original bill, you did not have to be found guilty or it was not clear that you had to be found guilty of an offence before certain other elements of the bill kicked in. So, the Treasurer's amendments bring that element into the bill in both this provision and the previous provision. It also brings in the issue that the court can consider how the person who has committed these offences and has been involved in the accident contributed to the injury. So, it was the driver fatigue laws—I think there were three offences under the driver fatigue laws as an example.

The industry groups lobbied strongly that if you are going to make these offences have greater impact or a different recovery mechanism it should be limited to the contribution of that offence to the injury, the loss, or the liability of MAC. The Treasurer's amendments to this provision are exactly the same as those he moved in the previous provisions. The houses had the debate on them. The opposition has an amendment, but I will not move it because the government has already made its position clear on the principle.

The house has already made its position clear on the principle, and we lost it; that is, our provision was that, although the government has moved in its amendments to narrow what are just and reasonable circumstances for the purposes of the insurer to recover, the government included the words 'for any other matter that the court considers relevant' and also 'or is otherwise responsible for'. From memory, the opposition's amendment was to limit it to the words 'the extent to which the person contributed to the liability'.

We have had that debate; the opposition amendment lost. There was a similar amendment for this particular provision; we will not move it, but for the sake of clarity that is the debate we are having here. Because it is a repeat of the previous argument, the opposition is not going to ask any questions about this particular provision.

Amendments carried; clause as amended passed.

Clause 10.

The Hon. I.F. EVANS: Clause 10 deals with amendment of section 124AB of the act, which deals with recovery of excess in certain circumstances. As I understand it, when someone is involved in an accident not only may there be an excess paid to their private insurer for repair of the vehicle but MAC also charges an excess in the process.

The Lawyers Alliance makes some comments in regard to this particular issue. For the completeness of the record, I will just put them on the record. In regard to excess recoveries, the Lawyers Alliance states:

The [government] amendments attempt to increase the excess amount payable where you are more than 25% at fault in a collision to a maximum of $460, to be indexed annually [after that]. Superficially [this may be] attractive, the question really is whether or not a statutory scheme such as this, which is or was originally described as a social insurer, whether [in fact] any excess should be payable.

The real problem is that you are imposing a right of recovery in a compulsory insurance scheme. People do not have a choice of moving to another scheme which may not have an excess component.

So, Treasurer, the questions are: what is the current excess, when was it last put up and how big is the increase? There is also confusion in the marketplace. My understanding from the Law Society and the Lawyers Alliance is that a lot of people get very confused about the fact that they are paying two excesses and they would like to know whether there can be clarification of that when they are dealing with the claims because their clients get a lot of complaints about it.

The Hon. J.J. SNELLING: I am informed that an excess has existed since 1987. Whether there should be an excess or not has been debated and resolved. The issue that the member for Davenport raises about having—

The Hon. I.F. Evans interjecting:

The Hon. J.J. SNELLING: Yes, I will get to that. The issue that the member for Davenport raises is about people being subjected to two excesses and I presume he is talking about third party property damage and personal injury where you are being insured for two different things. They are two different insurance policies: one is for personal injury and the other is for property. They are two different insurance policies and each would be subject to their own excess. I do not see a problem with someone being charged for an excess under each individual policy. I am informed that the excess at the moment is $300 and that that was last set in 1993—when I think the member for Davenport first became a member of this place. So, it has been a frightfully long time and I think it is a reasonable increase and to have it indexed, as well, is a reasonable thing to do.

The Hon. I.F. EVANS: Let me understand this. In 1987 a Labor government introduced the excess for this social insurance scheme. From 1993 to 2002 the Liberal Party in good conscious did not increase the excess. Now the Labor Party has come in and is increasing it by 50 per cent in one go, from $300 to $460. How is that social and just, Treasurer?

The Hon. J.J. SNELLING: You could buy a lot more in 1993 for $300 than you can now.

The Hon. I.F. EVANS: What is the total amount collected from the excesses currently and what is the estimated amount to be collected by this increase in excess?

The Hon. J.J. SNELLING: In 2010, $944,087 was collected from this excess. I am advised that no projections have been made as to what might be the effect of the increase in this excess. I guess, in a very crude way, you could add 50 per cent to that to get an idea of how much it might increase, but it will depend on any number of different factors.

The Hon. I.F. EVANS: The MAC kindly provided some figures. How much does MAC recover through receiving excesses each year? We were told that in 2006-07 it was $930,000; 2007-08, $960,000; 2008-09, $889,000; and in 2009-10, $944,000. What is MAC's annual premium income? In 2006-07, it was $389 million basically, and that year it recovered $930,000 through excesses; last year premiums were about $476 million and it recovered $1 million. So increasing it by 50 per cent is really very minor to MAC in the scheme of things, but it has a bigger impact on the public who are paying it. I wonder if it is really worth the effort to make this recovery.

If you take the broad calculation used by the Treasurer, half of $930,000 is $450,000, and $450,000 recovery will not have a significant amount of impact on premiums or the viability of the scheme. Has the Treasurer actually thought through whether it is worth the pain on the families concerned with regard to the actual collect, given the huge premium collect? Of course, there is also all the income MAC makes off its investments. It is hardly key to your income stream.

The Hon. J.J. SNELLING: We have arrived at the $460 through the CPI increases over time since 1993, and then rounded down. The circumstances in which someone is liable to pay an excess is where they have contributed more than 25 per cent to the accident.

The Hon. I.F. Evans interjecting:

The Hon. J.J. SNELLING: No, that is not the case. I certainly have no difficulty with the principle of there being an excess and of people who contribute to a road accident having to make some financial contribution, albeit a token one, potentially, towards the cost of the injuries that have been incurred as a result of their driving. I think, in principle, it is not a problem.

In 1993, the parliament decided that $300 was a reasonable excess to expect of people. We are simply continuing what has already been established by the parliament, and applied an index according to CPI. That is how we have come at the figure of $460 and, so that we do not have to continually revisit this going into the future, when the parliament wants to make changes, simply attached CPI increases. We think it is perfectly reasonable.

Clause passed.

Clause 11.

The Hon. I.F. EVANS: Clause 11 relates to amendment to section 127 of the act, which deals with medical examination of claimants. Under this particular provision, if the claimant fails to comply with subsections (2)(a) and (2)(b), which provide that the claimant must submit himself or herself to a medical examination by a qualified medical practitioner nominated by the insurer, and, within 21 days of consulting a legally qualified medical practitioner in relation to the injury, do certain things. Then, within 21 days, a written report from a legally qualified medical practitioner has to be sent through to the insurer, in broad terms.

If the claimant fails to do that, amongst other things, the current act says that the claimant is not entitled to damages or compensation for any period during which the failure occurs. In this provision the government wishes to insert the words 'interest or costs' after the words 'damages or compensation'. So, if the claimant does not perform those matters set out in section 127(2) of the act, then they will not be able to claim damages, compensation and then interest or costs.

Can the Treasurer advise why they are inserting 'interest or costs' into this provision? There obviously must be some huge cost to MAC, because we are trying to cap it. So, what has been the cost of interest and costs in the last 12 months and, if you cannot give me the last 12 months, for any period that MAC has available? There must be someone in MAC who has looked at this and said, 'Gee, this is costing us money; we had better narrow it.' How much are we saving the scheme by putting in the words 'interest or costs' in this particular provision?

The Hon. J.J. SNELLING: Essentially, this is just a tidy up of the legislation. There is no huge liability associated with this provision. It is simply a tidy up of the legislation for the purposes of clarifying it.

The Hon. I.F. Evans: There is no calculation?

The Hon. J.J. SNELLING: There is no calculation. It may not even save a cent. It is simply for the purposes of making the legislation clear. If we have accepted the principle that compensation and damages are not payable, then it simply makes sense that interest and costs not be payable either. This is simply for the purposes of tidying the legislation up and not much else.

The Hon. I.F. EVANS: Under that provision, if MAC and the insured (or their representatives) are in dispute, who resolves whether MAC has acted unfairly in the dispute? If MAC wants certain information out of my client, I say, 'Get nicked,' and we sit there and have an argument and it goes on for months, who is to judge whether MAC has acted unreasonably and driven my costs up, which I cannot recover? To a point, I can understand interest and damages, but costs are a slightly different question, because either party can act unreasonably and drive costs up. It is a great tactic of lawyers to not get you in the courts but get you in the banks by making you spend lots of money. On the question of costs, where is the protection, that MAC, knowing that you cannot recover costs, then drives up your costs?

The Hon. J.J. SNELLING: Ultimately, if the court decides, there is nothing in this provision that would in any way hinder the discretion of the court when it makes a decision on awarding costs.

The Hon. I.F. EVANS: How can the court have a discretion about costs when the legislation says that under no circumstances can you claim them?

The Hon. J.J. SNELLING: This subsection hinges on whether the court has decided there has or has not been a failure. Before this comes into play, the court will have to make a decision on whether or not there has been a failure. If the court decides that there has been a failure, then this comes into play and the court will make a reduction in costs accordingly. That cannot happen unless the court has made a finding that there has been a failure. In the circumstances which the member for Davenport describes, where essentially through vexatiousness the insurer is making a claim or there is an allegation of failure, then the court will make a decision accordingly, and presumably it would make a decision that failure has not occurred and make an award of costs accordingly.

The Hon. I.F. EVANS: I will read the minister's answer between the houses but, for the sake of the record, I note that under this provision, if the proceedings have been commenced the court may award costs against the claimant, and that would be on the basis there might have been a failure, as the Treasurer says. Then it goes on to say that the claimant is not entitled to damages, compensation, interest or costs, full stop.

The Hon. J.J. SNELLING: Only for the period of the failure.

The Hon. I.F. EVANS: Only for the period in which the failure continues.

The Hon. J.J. SNELLING: Yes, that is right.

The Hon. I.F. EVANS: So, the reality is, on the question of costs for the period during which the failure continues, the court has a very clear instruction from the house: they can't issue costs. But I will read the answer between the houses.

Clause passed.

Progress reported; committee to sit again.

[Sitting suspended from 12:57 to 14:00]