24 September 2018

IAG Ltd t/as NRMA Insurance v Abiad

Justice Harrison of the Supreme Court NSW handed down judgment in the matter of IAG Ltd t/as NRMA Insurance v Abiad [2018] NSWSC 1422 on 21 September 2018.

His Honour quashed the decision made by the claims assessor not to exempt the first and second defendants’ matters from Claims Assessment and Resolution Service (CARS) and ordered that the matters be remitted back to CARS for allocation to a different claims assessor to determine the insurer’s applications for exemption in accordance with law.

CARS

The first and second defendants are husband and wife and were injured in the same motor vehicle accident that occurred on 24 February 2014. It was agreed between the parties that evidence in one case was to be evidence in the other. The matters were therefore allocated to the same claims assessor to be heard together.

In the process of investigating the first and second defendants’ claims, the insurer became aware of material giving rise to a number of potential false or misleading statements in respect to injuries, loss or damage (the alleged false or misleading statements are outlined at paragraphs 52 and 53 of the decision). As a result, the insurer made a number of formal applications seeking the first and second defendants’ claims be exempted from being assessed by CARS pursuant to Part 4.4 and Chapter 5 of the Motor Accidents Compensation Act 1999 (Act).

Each of the applications for exemption on discretionary grounds were refused by the claims assessor. The claims assessor determined that the matters were suitable for assessment at CARS.

The summons

The insurer submitted that there were a number of jurisdictional errors and/or errors of law on the face of the record that had been made by the claims assessor. Alternatively, the insurer submitted that the claims assessor constructively failed to exercise his statutory power in making the decisions.

The errors identified by the insurer were:

  1. The claims assessor misunderstood or misconstrued the scope and nature of his power pursuant to s 92(1)(b) of the Act and incorrectly applied that power to the exemption applications made by the insurer which in turn made the claims assessor’s decisions invalid.
  2. The claims assessor evaluated the alleged false or misleading statements and made factual findings and determinations about their seriousness in his decisions which caused his decisions to be invalid.

In light of the errors identified, the insurer sought the Court’s judicial review/ supervisory jurisdiction (see s 69 of the Supreme Court Act) to review the decisions of the claims assessor.

Justice Harrison refined the main question in the matter to be [paragraph 66]:

‘….whether or not the claims assessor did more than merely express a preliminary view about or upon the plaintiff’s allegations that the first and second defendants provided false and misleading particulars in relation to their claims.’

It was the insurer’s positon that the claims assessor had proceeded to assess whether the allegations of false or misleading statements were in fact false or misleading – an approach that amounted to jurisdictional error.

On this point, his Honour found that [paragraph 76], our emphasis added:

It is not the role of a claims assessor to second guess an insurer’s allegations that a claimant has made a false or misleading claim.  Section 92(1)(b) and cl 14.16.11 implicitly recognise the fact that in an appropriate case an insurer’s claim ought to be tested in a courtroom and be exposed to the type of forensic examination that the assessment process, to some extent as least, cannot necessarily provide.  Much has been written about this already and it is unnecessary to expand upon it here.  The simple proposition is that a claims assessor’s task when an application has been made is to assess the allegation and whether it is not suitable for assessment under the relevant Part.  The assessor’s role is not to determine the truth or even the strength of the insurer’s allegations.’

Justice Harrison went on to find that [paragraph 77]:

‘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 his jurisdiction or because he has not correctly dealt with the question that he ought to have asked.  The question he was required to answer was whether the claims were not suitable for assessment on the basis that there was an allegation that the first and second defendants had made false or misleading statements in a material particular in relation to their injuries.’

The first and second defendants relied on abuse of process, delay and futility to submit that any relief to which the plaintiff might otherwise be found to be entitled should be refused on discretionary grounds.

In response, Justice Harrison held that there was [paragraph 86]:

‘…no basis upon which to refuse relief to the plaintiff on discretionary grounds.  It is not in my view correct to say that another assessor would necessarily or inevitably reach the same conclusion as Mr Buckley in the present case.  It is inappropriate to say more about that here.’

His Honour also found that the insurer had successfully highlighted to the Court the repeated errors made by the claims assessor in the course of the claims assessor’s review of the insurer’s exemption applications. Accordingly, his Honour accepted that it was prudent for the insurer to attempt to have the claims assessor reconsider his position [see paragraph 87].

Accordingly, Justice Harrison was not satisfied that the insurer had engaged in any abuse of process.

His Honour was satisfied that the claims assessor had fallen into error when determining the insurer’s exemption applications and ordered that the matters be remitted back to SIRA for allocation to a different claims assessor to determine the insurer’s exemption applications in accordance with law.

What is the take home message?

This decision clarifies the role of the claims assessor when considering discretionary exemption applications.

The Court has confirmed that a claims assessor’s task when considering a discretionary exemption application is to assess whether a matter was suitable for assessment at CARS given the nature of the allegations made; it is not the claims assessor’s role to attempt to determine the strength or otherwise of the allegations being made.

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Joe has more than 23 years' experience advising insurers on large and complex claims under CTP and statutory classes...

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Diana specialises in personal injury law and insurance litigation.

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