AAI Limited t/as Suncorp Insurance v Patten and anor

By a summons filed on 19 October 2020 the plaintiff has sought a number of orders against the defendants. Pending the final hearing of the proceedings, the plaintiff seeks urgent relief in the following terms:

In support of the making of that order, the plaintiff read the following affidavits without objection:

The matter came before me as Duty Judge. At the conclusion of the hearing, I made an order restraining the second and third defendants from conducting the Assessment Conference and indicated that my reasons would be published at a later date. Those reasons now follow.

The first defendant was involved in a motor vehicle accident on 22 February 2012 and suffered a number of physical injuries, the most significant of which was a right brachial plexus injury which has resulted in the total loss of use of his right arm. In his claim for damages against the plaintiff, who is the Compulsory Third Party insurer of the vehicle at fault in the accident, the first defendant asserts that he has a significant need for ongoing care and assistance.

The Motor Accidents (Lifetime Care and Support) Act 2006 (NSW) (the LCS Act) creates the Lifetime Care and Support Scheme (the Scheme). The Scheme is applicable to all motor accidents occurring on or after 1 October 2007. One of its primary purposes is to provide for the care and treatment needs of persons who suffer catastrophic injury as a consequence of such accidents.

A person is eligible for participation in the Scheme if his or her injuries satisfy the criteria specified in the Lifetime Care and Support Guidelines. Pursuant to s 58 of the LCS Act, such Guidelines are issued from time to time by the Lifetime Care and Support Authority of NSW (the LCS Authority).

An application for participation in the Scheme may be made by the injured person, or by the insurer against which a claim has been made. The bringing of an application by an insurer does not require the injured person’s consent. If an injured person satisfies the eligibility criteria, the LCS Act mandates that he or she will become a participant. In other words, participation in the Scheme is not optional if the criteria for eligibility are met.

The present Guidelines commenced on 21 November 2018 (the 2018 Guidelines). Previous versions of the Guidelines included those published in 2012 and 2015. In neither of those earlier versions was there a specific reference to a brachial plexus injury, although provision was made in those versions for persons who had suffered an upper limb injury to be eligible for participation in the scheme if that injury necessitated a complete amputation of the upper limb, or gave rise to an “equivalent impairment" to an amputation.

In contrast, the 2018 Guidelines make specific reference to an injured person being eligible for participation in the scheme if that person has suffered a “brachial plexus avulsion or rupture resulting in partial or total paralysis". There is no dispute between the parties that the injury sustained by the first defendant falls within that description.

Pursuant to cl 9.1 of the 2018 Guidelines, an application for a person to become a participant in the Scheme must be made within three years after the date of the accident. This was also the position with the earlier versions of the Guidelines. The LCS Authority is given power, pursuant to cl 9.2 of the 2018 Guidelines, to extend the time for the making of an application providing the applicant furnishes a full and satisfactory explanation for the fact that such application has not been made within the three-year limitation period.

On 13 January 2015, the plaintiff’s solicitor received a report from Dr Brian Zeman, a rehabilitation specialist, in which Dr Zeman diagnosed the first defendant as having suffered a right brachial plexus injury complete with failed latissimus dorsi flap and nerve transfer. In expressing his opinion as to the first defendant's prognosis, Dr Zeman said:

The report of Dr Zeman was received by the plaintiff's solicitor approximately six weeks prior to the expiration of the three-year period within which an application for participation in the Scheme must be made. Having read Dr Zeman's report, the plaintiff’s solicitor concluded that on a proper construction of the Guidelines which were then in force, the first defendant was not eligible because he retained some (albeit minimal) use of his right arm, and had the cosmetic benefit of an arm that an amputee did not have.

Upon their commencement, the plaintiff’s solicitor became aware that the 2018 Guidelines made express reference to a brachial plexus injury as a basis for eligibility to participate in the Scheme. Accordingly, he went about obtaining evidence in support of an application being made to the LCS Authority and arranged for the first defendant to be further examined by Dr Zeman for that purpose. The first defendant initially refused to attend that appointment, rendering it necessary for the plaintiff’s solicitor to obtain an order from a Judge of the District Court directing the first defendant’s attendance.

Dr Zeman examined the first defendant on 10 September 2019 and provided a report of 20 September 2019, and an associated certificate on 23 September 2019. Dr Zeman confirmed his previous diagnosis of a right brachial plexus injury, and observed that the 2018 Guidelines included, as part of the eligibility criteria for participation in the Scheme, a brachial plexus avulsion or rupture resulting in partial or total paralysis.

Upon receipt of Dr Zeman's report and certificate, the plaintiff's solicitor lodged an application with the LCS Authority on 17 October 2019 for the first defendant to be accepted as a participant in the Scheme. By letter of 9 December 2019 the LCS Authority advised the plaintiff’s solicitor that the first defendant had not been accepted as a participant because the application had been brought by the plaintiff more than three years after the date of the accident.

The plaintiff’s solicitor then wrote to the LCS Authority on 10 January 2020 taking issue with that determination. The LCS Authority responded on 17 January 2020 maintaining its position. On 28 January 2020 the plaintiff's solicitor wrote to the LCS Authority expressing his disagreement with its stated position and indicating that the plaintiff wished to proceed with a dispute application.

The plaintiff’s lodgement of the dispute application was subsequently accepted by the LCS Authority who referred the matter to a panel comprising three medical specialists. The panel found that the first defendant was eligible to participate in the Scheme under previous versions of the Guidelines, as well as under the 2018 Guidelines, but concluded that the plaintiff's explanation for the delay in making the application was other than full and satisfactory. That recommendation was accepted by the LCS Authority.

Generally speaking, it is the plaintiff’s position that:

When informed of the panel’s determination, the plaintiff brought a further application to the LCS Authority for an extension of time. Having done so, the plaintiff applied to the third defendant, the appointed Claims Assessor, to defer the proposed assessment conference which had been set down to take place on 29 October 2020. In doing so, the plaintiff contended that the first defendant's damages could not reasonably be assessed until a final determination had been made by the LCS Authority in respect of the current application for an extension of time. On 18 September 2020 the third defendant refused the plaintiff's application. In doing so, he concluded (inter alia):

On 9 October 2020, a further application was made by the plaintiff to the third defendant to adjourn the assessment conference. In doing so the plaintiff drew the third defendant's attention to the decision in Minister for Immigration and Multicultural Affairs v Bhardwaj. [1] In refusing the application, the third defendant expressed the view that he did not consider that he was required to revisit his earlier determination, and that the application should be refused.

Senior counsel for the plaintiff submitted that it was more than arguable that the decision of the third defendant to refuse to adjourn the assessment conference was, in all of the circumstances, legally unreasonable, illogical and plainly unjust. In support of that submission, senior counsel emphasised that in the event that the assessment conference proceeded, and an award of damages was made, the first defendant would be rendered ineligible to participate in the Scheme by operation of s 7(3) of the LCS Act. This, it was submitted, would result in the plaintiff being exposed to a liability to pay considerable damages it would not otherwise have to pay.

It was submitted that having regard to all of these matters, the balance of convenience lay squarely in favour of granting injunctive relief. Senior counsel for the plaintiff also emphasised, lest it be suggested that financial hardship would be caused to the first defendant by deferring the assessment conference, that the plaintiff had made (and continued to make) an unsolicited offer to advance a sum of $100,000.00 to the first defendant, pursuant to s 84A the Motor Accidents Compensation Act 1999 (NSW) (the MACA), a circumstance of which the third defendant had been made aware prior to making his determination.

Counsel for the defendant emphasised the seriousness of the first defendant's injury along with the fact that the subject accident had occurred in 2012. It was submitted that these circumstances supported the dismissal of the application for urgent injunctive relief. Counsel further submitted that on the evidence before this Court, the likelihood was that the latest application brought by the plaintiff to the LCS Authority would meet with the same fate as that which immediately preceded it.

It was further submitted that in refusing to adjourn the assessment conference, the third defendant had properly balanced the interests of both parties, and that there was no triable issue arising from his determination. Counsel for the first defendant also pointed to the substantial (and unrecoverable costs) which the first defendant had already incurred in addressing the plaintiff’s various applications to the LCS authority.

In considering the present application, I am required to address two issues, namely:

A consideration of the apparent strength of the plaintiff's case requires that the plaintiff:

In order to obtain the relief sought, the plaintiff does not have to satisfy me of the likely outcome of the principal proceedings, [4] and it is not my function to make a final determination of any issue. What I am required to do is undertake an assessment of the probability of the plaintiff being successful in the proceedings. That assessment is an impressionistic one, which takes into account the apparent sufficiency of the plaintiff's evidence, and which is guided both by the nature of the proceedings and the nature of the order sought. [5] Ultimately, what the plaintiff must establish is the existence of a real question to be tried.

In assessing the balance of convenience, a number of factors may be relevant, including:

It is the plaintiff’s case that the decisions of the third defendant to reject its applications for an adjournment of the assessment conference were legally unreasonable. The concept of legal unreasonableness has been the subject of considerable judicial consideration. [6] In Minister for Immigration and Citizenship v Li [7] the plurality (Hayne J, Kiefel J (as her Honour then was) and Bell J) made a number of observations regarding the standard of legal unreasonableness, including the following:

The first defendant seeks substantial damages under a number of heads. If the assessment conference were to go ahead and conclude at this point, it would be incumbent upon the third defendant to issue a certificate assessing the first defendant's damages pursuant to s 94(4) of the MACA. That certificate would (inter alia) have a binding effect on the plaintiff under s 95 of the MACA, pursuant to which the plaintiff would be required to pay the entirety of the damages assessed. More significantly, the first defendant would at that point become automatically ineligible to be a participant in the Scheme because he had received damages for treatment and care needs relating to his injury. Conversely, if the first defendant is admitted as a participant in the scheme, the plaintiff will be relieved of liability to pay substantial damages.

It follows that if the assessment conference were to go ahead, and if an assessment certificate were to issue (as it must), the first defendant could not become a participant in the Scheme, resulting in the final determination of the plaintiff’s application to the LCS Authority being foreclosed. The consequences of those circumstances to the plaintiff will be self-evident.

I am satisfied in these circumstances that there is a real question to be tried, namely whether the decision of the third defendant was unreasonable in the sense that I have outlined.

Largely for the same reasons, I am satisfied that the balance of convenience lies squarely in favour of the plaintiff. The potential effect on the plaintiff of a refusal of the relief sought would be substantial, in circumstances where there is no other remedy which it can pursue. That is to be contrasted with position of the first defendant who has been offered an advance of $100,000.00 and who, whatever the outcome of the current dispute, will either:

It was for these reasons that I made the order referred to in [3] above.