Insurance Australia Ltd t/as NRMA Insurance v Taylor

1. [1]

   The First Defendant was injured in a motor vehicle accident that occurred on 24 April 2013. He lodged a claim for compensation with the Compulsory Third Party Insurer of the vehicle at fault for the accident. That insurer was the present Plaintiff.

2. [2]

   The Third Defendant was the Claims Assessor who was to assess the First Defendant’s claim arising from the injuries he suffered in the accident.

3. [3]

   The Plaintiff made an application to the Second Defendant, the State Insurance Regulatory Authority of New South Wales (SIRA) seeking an exemption of the First Defendant’s personal injury damages claim from being assessed pursuant to Pt 4.4 of the Motor Accidents Compensation Act 1999 (NSW) (the Act). The First Defendant opposed the Plaintiff’s application. Submissions were made by each party to the Assessor.

4. [4]

   The basis for the Plaintiff’s application arose from cl 14.16.11 of the Guidelines established for the assessment of claims, and by reason of the power given in s 92 of the Act.

5. [5]

   Section 92(1) relevantly provides:

6. [6]

   Clause 8.11 of the Guidelines relevantly provides:

7. [7]

   Clause 14.11 of the Guidelines provides:

8. [8]

   Clause 14.16 of the Guidelines provides:

9. [9]

   The Assessor rejected the Plaintiff’s claim and found that the matter was suitable for a CARS assessment. Her Reasons are relatively brief and should be set out in full. They are as follows:

10. [10]

    There are three grounds of appeal as follows:

The injuries and medical history

1. [11]

   In the First Defendant’s submissions attached to his CARS 2A application dated 7 April 2016, the First Defendant identified the following physical injuries:

2. [12]

   Records of Shaheena Khan Physiotherapy produced in answer to an authority from the First Defendant disclosed that on 3 April 2013 (three weeks before the accident) the First Defendant injured his back. The records contained the following information provided by the First Defendant:

3. [13]

   The physiotherapist noted on the file:

4. [14]

   The physiotherapy records disclosed that the First Defendant had been treated by the physiotherapist since 2000. The records showed a number of consultations on the following dates referrable to the First Defendant’s back and shoulders:

5. [15]

   On 2 August 2016 the solicitors for the Plaintiff wrote to the solicitors for the First Defendant. They alleged false and misleading statements in the following ways:

6. [16]

   On the same day the solicitors for the Plaintiff wrote to the Assessor seeking to have the matter exempted on a discretionary basis pursuant to cl 14.6.11 of the Claims Handling Guidelines on the basis that the insurer had made an allegation that the claimant had made a false and misleading statement in a material particular in relation to the injuries, loss or damage sustained by the claimant in the accident. In that letter the solicitors summarised the basis of the false and misleading statements and also attached a copy of the letter to the First Defendant’s solicitors that detailed the statements made to the various doctors.

Submissions

1. [17]

   The Plaintiff submitted that the Assessor misunderstood or misconstrued the scope and nature of her power and incorrectly applied that power to the application. She approached the question to be determined on the basis of asking whether a claims assessment can in fact be conducted at all in the circumstances. The Plaintiff submitted that the correct question was whether the insurer, having notified the particulars of the false and misleading statements (that was tantamount to fraud), should be afforded an opportunity to have a fair hearing of the personal injury damages claim conducted in the District Court by reason of the attack on the credit of the claimant and the lack of utility of any of the medical reports and assessments thus far obtained.

2. [18]

   The Plaintiff submitted that the Assessor misunderstood s 92(1)(b) by saying that the insurer had not alleged any fraud surrounding the accident and that the issue was merely “inaccurate histories given to doctors”. The Plaintiff submitted that the Assessor failed to take into account relevant considerations in that she failed to respond to the Plaintiff’s substantial, clearly articulated argument relying upon established facts, namely that the Plaintiff’s application for exemption was based substantially on the adverse credit of the First Defendant and the unfairness to the Plaintiff of any oral hearing or assessment before CARS.

3. [19]

   The Plaintiff submitted that although the Claims Assessor said twice in her Reasons that the matter was suitable for assessment at CARS she failed to say why. She gave no reasons that would elucidate her decision-making process.

4. [20]

   The First Defendant submitted that the law did not recognise an allegation which was tantamount to fraud. The First Defendant submitted that merely making an allegation that a claimant has made a false and misleading statement is not of itself sufficient to secure an exemption from a CARS assessment. It is simply one factor required to be taken into account.

5. [21]

   The First Defendant submitted that the Assessor’s characterisation of the Plaintiff’s submission that the issue was one of “inaccurate histories given to doctors” was both succinct and accurate. The First Defendant submitted that the Assessor correctly concluded that CARS had facilities where both the medico-legal and treating doctors could be made available to have questions put to them in respect of the First Defendant’s medical history and that the First Defendant would be available for cross-examination by the Plaintiff and to be asked questions by the Assessor herself.

6. [22]

   The First Defendant submitted that the manner in which Assessments were conducted under the CARS scheme was determined by Parliament to be the norm, and in prescribing the informality of the assessment process with no right to compel witnesses either to attend or answer questions, no sworn evidence and no right of cross-examination beyond the assessor’s agreement, the fact that credit would be in issue was not of itself a reason to exempt a matter from the CARS assessment process. Reference was made to Zurich Australian Insurance Ltd v MAA [2006] NSWSC 645 at [53].

7. [23]

   The First Defendant submitted that the Plaintiff was effectively arguing that the factual basis for the application for exemption was so egregious that the Assessor’s decision to refuse it bespeaks error. The First Defendant submitted that such an approach amounted to a merits review. Reference was made to Zahed v IAG Limited (t/as NRMA Insurance) [2016] NSWCA 55; (2016) 75 MVR 1 at [6] – [9] and [43].

Consideration

1. [24]

   The Guidelines deal with assessment conferences and how they are to be conducted. The Guidelines relevantly provide:

2. [25]

   The issue of a discretionary exemption on the basis of a false or misleading statement has been considered in two cases. The first was Allianz Australia Insurance Ltd v Tarabay (2013) 62 MVR 537; [2013] NSWSC 141. In that case the allegation concerned representations made by the claimant in relation to his employment and involved a document which might have been forged.

3. [26]

   Ultimately the Assessor determined the matter by forming a view about whether or not a false and misleading statement had been made. The Assessor concluded:

4. [27]

   Justice Rothman held that the Assessor asked herself the wrong question and answered it. Justice Rothman said:

5. [28]

   In Insurance Australia Limited t/as NRMA Insurance v Banos [2013] NSWSC 1519; (2013) 65 MVR 312 the claimant said that she had not previously had any other injuries, disability or illness before or since the accident to the same parts of the body that were said to have been injured in the accident. She also denied ever having made a claim for personal injury compensation, worker’s compensation or other damages previously. The insurer subsequently ascertained that she had suffered an injury in a previous motor vehicle accident in respect of which she was awarded damages. The claimant had also had a fall at home and had sustained injury to parts of her body injured in the index accident. The insurer sought to have the claim exempted from the CARS assessment under s 92(1)(b).

6. [29]

   The Assessor refused to exempt the claim and gave as her reasons for doing so the following:

7. [30]

   The Assessor also rejected a claim by the insurer that the claimant had failed to disclose relevant pre-accident medical history to doctors. In relation to the insurer’s claim that she had mis-stated her symptoms and capacity for domestic tasks when assessed by doctors and occupational therapists, the Assessor characterised that as “mis-statements” and went on to say:

8. [31]

   Justice Campbell upheld the insurer’s appeal and said:

9. [32]

   His Honour then went on to say this:

10. [33]

    I agree with the matters identified by Campbell J in Banos at [43]. Respectfully, I would add the following comments to supplement and expand on those matters.

11. [34]

    First, it is of significance that all that is necessary for the Assessor’s discretion to be triggered with regard to an exemption on this ground is an allegation by the insurer. Subject to the requirement by an assessor to provide particulars pursuant to cl 17.13 of the Guidelines that is all that the insurer needs to do for the Assessor to be required to determine whether the claim is not suitable for assessment. Indeed, cl 17.13 when dealing with a requirement that a party give particulars in writing of the general nature of any such allegation, the clause adds “but not necessarily the evidence or proof of same”.

12. [35]

    Secondly, it is significant that there is a corresponding provision for an allegation by the insurer in cl 8.11.6 in relation to a fraudulent claim. Such an allegation results in a mandatory exemption of the matter from an assessment. The matter referred to in cl 14.16.11 can on one level be seen as the corresponding provision to cl 8.11.6 in respect of damages, although without the mandatory exclusion when such an allegation is made. Although the use of the phrase “tantamount to fraud” by the insurer in the present case might be thought to deflect the proper enquiry, what might be being alleged in any given case under cl 14.16.11 could be as serious as a fraudulent claim: e.g. Tarabay at [57] and [66].

13. [36]

    It can be reasonably inferred from the mandatory exemption in relation to a fraudulent claim that the absence of sworn compellable evidence with a right of cross-examination in the CARS process meant that neither truth nor fairness to the parties was likely to be achieved other than in a court hearing where, additionally, the rules of evidence apply. That is a relevant consideration where it is alleged a false or misleading statement has been made.

14. [37]

    That matter is emphasised by the provisions of ss 117 and 118 of the Act which provide:

15. [38]

    Thirdly, although, as Tarabay and Banos make clear, it is an error for the Assessor to make a determination about whether a statement is false or misleading, it is difficult to see how an assessor would be in error in forming some sort of preliminary view, and it is difficult to see how the assessor would not have to form such a preliminary view, about the allegation to determine whether the claim is not suitable for assessment: Insurance Australia Limited t/as NRMA Insurance Limited v Milton [2016] NSWSC 1521 at [26]-[27]. As Campbell J makes clear at [43](f) it is not sufficient that an allegation alone has been made for the discretion to be exercised that a claim is not suitable for assessment. Something more will be needed. Clause 17.3 also points to the view that the seriousness of what has been alleged must be a consideration. Justice Campbell allowed for the rare position at [39] and [42] that the Assessor could determine that a person clearly had not made such a false or misleading statement. That points also to the forming of a preliminary view.

16. [39]

    Fourthly, in Tarabay Rothman J drew attention to some of the limitations on an assessment conference and on an assessor. His Honour said:

17. [40]

    In my opinion, error is established in the present case either because there has been a constructive failure on the part of the Assessor to exercise her jurisdiction or because she has not correctly dealt with the question that she ought to have asked. The question she was required to answer was whether the claim was not suitable for assessment on the basis that there was an allegation that the First Defendant had made a false or misleading statement in a material particular in relation to his injuries.

18. [41]

    The Plaintiff specifically directed the Assessor’s attention to a specific and significant matter, namely, whether the matter should be exempted so that the claimant’s claims could be tested under oath. The Plaintiff did that in its letter to the Assessor of 2 August 2016 making the application and again in its submissions in reply to the Assessor dated 22 September 2016. In that letter the Plaintiff said this:

19. [42]

    The Assessor made no reference to the significance of evidence being given under oath in the circumstances. She merely said that the insurer had not alleged any fraud surrounding the accident (an irrelevant matter for this particular application) but failed to note that what was alleged was a false and misleading statement that, like fraud, might require a consideration of whether the more appropriate venue would be one of where evidence is given under oath. Her characterisation of the complaint as “inaccurate histories” was an inadequate acknowledgement that what was alleged was “false” and misleading rather than being inaccurate.

20. [43]

    In Tarabay Rothman J said:

21. [44]

    I accept that forgery was not alleged in the present case but the remarks made by Rothman J are relevant when another form of false or misleading statement is alleged.

22. [45]

    There is no indication in the Reasons of the Assessor (effectively paragraphs 8 – 12 of her Reasons) of the significance of testing evidence alleged to be false and misleading under oath as discussed by Rothman J in Tarabay at [57] – [58] or by Campbell J in Banos at [37] – [43].

23. [46]

    The particularisation by the Plaintiff of what was said to be the false and misleading statements was sufficiently extensive as to require the Assessor to consider whether it would in the circumstances be more appropriate for the credit of the First Defendant to be properly tested under oath, heard in open court and subject to proper cross-examination, none of which was available in the CARS assessment process. Moreover, if a false or misleading statement had been made by the First Defendant s 117, or indeed probably s 118 of the Act, would not be able to be availed of if the matter was not heard by a court.

24. [47]

    One appropriate consideration for the Assessor was the extent to which the First Defendant’s credit was capable of being impugned at any hearing, whether at a CARS assessment or in court. The records from the physiotherapist showed that the First Defendant had low back problems in 2000, 2008 and for a period of six weeks prior to the consultation on 3 April 2013, three weeks before the accident. During that six week period he had been medicated with Endone, a well-known strong opioid analgesic. By the consultation two days later he was on Mobic, an anti-inflammatory medication, although he was “much better”. He had also sought attention for his left shoulder in 2008HHhHe had also sought attention for his left shoulder in 2008.

25. [48]

    Although Senior Counsel for the First Defendant submitted that the references in most of the doctors’ reports was to no “significant” problems, about which there would need to be medical evidence to determine what was “significant”, an examination of the reports suggests a less nuanced denial of prior problems to a number of medical advisers:

26. [49]

    From the point of view of the First Defendant’s credit it may also be significant that to Dr Crocker and Dr Muratore he mentioned a fracture of the left fifth finger when playing football “in his youth”. As he did not sustain or complain of any injury to his left hand in the accident mentioning that matter suggests someone who was endeavouring to be scrupulous and yet, at the same time, he told Dr Crocker “[i]n relation to past medical history, Mr Taylor stated that he had been otherwise well”, and he told Dr Muratore he “had no previous injuries, illnesses, workers’ compensation claims or motor vehicle accidents prior to the subject motor vehicle accident”.

27. [50]

    Dr Crocker’s report is also of significance because he provided his report as a medical assessor under the Act with the result that his report was binding on the assessor as medical assessment matters.

28. [51]

    However, even as far as denials of “significant” problems go, an inference was available, in the light of what was reported to the physiotherapist three weeks before this accident, that the First Defendant’s credit was not an insignificant issue at any hearing. When considering all of the medical material identified by the Plaintiff in its application to the Assessor, the case did not simply involve “inaccurate histories which may impact on their opinions and conclusions”. Those opinions and conclusions were to some extent secondary to the issue of the First Defendant’s credit about which the Assessor said nothing.

29. [52]

    Further, the Assessor’s emphasis on the capability of the CARS process to obtain evidence including any modified opinions from the doctors demonstrates that she did not understand the argument that was being put to her, nor the significance of the argument for her decision in the light of what had been said in Tarabay and Banos.

30. [53]

    In my opinion, there was a failure in that regard by the Assessor to respond to a substantial, clearly articulated argument in reliance upon the particulars that formed the basis of the allegation: Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26; (2003) 77 ALJR 1088 at [24]. Alternatively, the Assessor failed to address the substance of the Plaintiff’s application and in that way was a clear case of constructive failure to exercise jurisdiction: Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 206 CLR 57; [2001] HCA 22 at [81]; AAMI Ltd v Ali [2012] NSWSC 969 at [48].

31. [54]

    In addition, although the assessor twice said that the matter was suitable for a CARS assessment her only reasons were that fraud concerning the accident was not alleged and that medical histories could be sent to the doctors for further comment. The former reason was irrelevant. The latter failed to engage with the issue and the test to be applied. The First Defendant’s submission that CARS assessments are to be regarded as the norm can be accepted but that does not fill any hole created by the Assessor’s failure to address adequately or at all this application for an exemption.

Conclusion

1. [55]

   Accordingly, I make the following orders:

   1. (1)

      An order in the nature of certiorari quashing the order of the Third Defendant made 31 October 2016.

   2. (2)

      An order in the nature of mandamus remitting the matter to the Second Defendant for allocation to a different claims assessor to determine the Plaintiff’s exemption application in accordance with law.

   3. (3)

      The First Defendant is to pay the Plaintiff’s costs of the proceedings.

   4. (4)

      The First Defendant is to have a certificate under the Suitors’ Fund Act 1951 (NSW) if otherwise so entitled.