AAI Limited t/as Suncorp Insurance v Lifetime Care and Support Authority of New South Wales

Background

1. Michael Patten was seriously injured in a motor vehicle accident on 22 February 2012. He claims damages from AAI Ltd under the Motor Accidents Compensation Act 1999 in respect of his injuries. Among other things, Mr Patten sustained a right brachial plexus injury, resulting in the effective loss of the use of his arm. That injury has given rise to a significant need for attendant care and domestic assistance and associated medical treatment. None of these things is presently in dispute.
2. In February 2015, AAI Ltd's solicitor gave consideration to whether Mr Patten was eligible to participate in the Lifetime Care and Support Scheme. If accepted into that scheme, all of Mr Patten's expenses relating to his future care and medical treatment would be met by the Lifetime Care and Support Authority. However, AAI Ltd's solicitor advised Mr Patten that, on the basis of the Lifetime Care and Support Guidelines as they were at that time, Mr Patten was not eligible to participate in the scheme. Accordingly, no application was made by AAI Ltd for Mr Patten to become a participant in the scheme while the Guidelines in the then current terms were in force.
3. However, those Guidelines were replaced in 2018, effective from 21 November 2018. The new 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". Mr Patten's injury fits that description.
4. The previous Guidelines did not, on one available view, entitle an injured person with a brachial plexus injury to apply for acceptance as a participant in the scheme. However, when the new Guidelines came into effect, AAI Ltd was advised by its solicitor to make an application for Mr Patten to become a participant in the scheme. Such an application required a medical certificate from an appropriate medical specialist attesting to the person's injury and functional impairment. In this case, AAI Ltd requested Mr Patten to attend for examination by Dr Brian Zeman but Mr Patten declined to do so. He was ultimately ordered to do so by the District Court and was examined by Dr Zeman on 10 September 2019. Dr Zeman provided a report on 20 September 2019 and a medical certificate on 23 September 2019. AAI Ltd was obviously unable to lodge a complying application for Mr Patten to be accepted as a participant in the scheme before it had obtained Dr Zeman's certificate. AAI Ltd's solicitor made an application with the Authority for Mr Patten to be accepted as an interim participant promptly thereafter.
5. Clause 9.1 of the new Guidelines, as with the previous Guidelines, provides that an application for a person to become a participant in the scheme must be made within three years after the date of the motor accident.
6. AAI Ltd provided an explanation for the delay in making the application. In essence, it explained that under the previous Guidelines, which make no specific reference to brachial plexus injury, AAI Ltd's solicitor had advised it that Mr Patten was not eligible for participation in the scheme, but that under the new Guidelines, he was.
7. The Authority referred the question of Mr Patten's past and present eligibility to participate in the scheme to an Assessment Panel comprised of medical specialists. The Panel determined that Mr Patten was eligible for participation in the scheme under the previous Guidelines, and is eligible for participation in the scheme under the new Guidelines. It is uncontroversial that that assessment as to eligibility is binding.
8. Because of the Assessment Panel's determination that Mr Patten was eligible for participation in the scheme under the previous Guidelines, contrary to the advice of AAI Ltd's solicitor, the Assessment Panel recommended and the Authority determined, that AAI Ltd's explanation for the delay in making the application was not "full and satisfactory". Despite the Assessment Panel determining that Mr Patten was and had since 22 February 2012 been eligible for participation in the scheme, the Authority curiously refused to accept AAI Ltd's application for him to be a participant in the scheme.
9. When it became aware that an Assessment Panel had determined that Mr Patten was eligible for participation in the scheme before the new Guidelines came into effect, AAI Ltd lodged a further application for an extension of time, based on the fact that the legal advice given to it up to the time that the new Guidelines came into force in November 2018 was that Mr Patten was not eligible to participate and that there was no point in making an application for him to become a participant. However, the delay in making that application is explained by AAI Ltd acting in accordance with its solicitor's advice.
10. Clearly enough if, as the Assessment Panel determined, AAI Ltd's solicitor was in error in the advice he gave concerning Mr Patten's eligibility to participate in the scheme under the previous Guidelines, that error should not weigh against an exercise of discretion to extend the time for making an application, particularly when it was made as soon as the error was appreciated: Smith v Grant [2006] NSWCA 244 at [60]; Khoury v Linfox Australia Pty Ltd [2006] NSWCA 51 at [22].
11. On 27 October 2020, the Authority refused AAI Ltd's further application for an extension of time to make an application. That decision is the subject of these proceedings ["the decision under review"]. AAI Ltd contends that the decision under review is affected by jurisdictional error of law on the face of the record, and should be set aside.
12. The full reasons given by the Authority for refusing AAI Ltd's further application for an extension of time are as follows: Decision We do not accept the insurer has provided a full and satisfactory explanation as to why the application was not made within three years of the motor accident injury. Lifetime Care will not be accepting the application for interim participation in the Lifetime Care Scheme. We have come to this determination for the following reasons: 1. Whilst we note the insurer has accepted that it made an error in their application of the Lifetime Care and Support Guidelines 2012 (2012 Guidelines), it received a medical report from Dr Zeman, dated 13 January 2015 recommending "for medico-legal purposes it may be useful to determine whether he is eligible for the LTCS Scheme as he is analogous to a high upper limb amputee". The insurer had been provided this information prior to the three year limitation period for making an application to the Scheme had ended. 2. Mr Patten suffered his injuries from the motor vehicle accident 8 years ago. Mr Patten does not wish to be a part of the scheme and has had his expectation of having his claim settled delayed. We do not consider a satisfactory explanation has been provided why it is reasonable under the circumstances to apply the discretion to accept Mr Patten into the Scheme.

AAI Ltd's submissions

1. In the proceedings before me, the Authority and Mr Patten entered submitting appearances in all respects except as to costs. It is therefore not inappropriate to set out the uncontested submissions in support of the application upon which AAI Ltd relies.

Ground 1: The Authority asked itself the wrong question(s)

1. The question the Authority had to determine is drawn from clause 9.2 of Part I of the new Guidelines: Clause 9 - Time limit on applications 9.1 An interim application to the Scheme must be made within three years of the date of the motor accident injury. 9.2 Lifetime Care may extend this time limit if there is a full and satisfactory explanation for why the application was not made within three years of the date of the motor accident injury. An applicant who submits an application more than three years after the date of the motor accident injury must advise Lifetime Care, in writing, of the circumstances the applicant says provide a full and satisfactory explanation as to why the application was not made within three years.
2. That question was whether AAI Ltd had provided a "full and satisfactory explanation" why its application for Mr Patten to become an interim participant in the scheme was not made within three years after the motor accident in which he was injured.
3. As to the first of the two reasons given for refusing the application for an extension of time, it is evident that the Authority only considered whether AAI Ltd (and its solicitor) should have known that Mr Patten was eligible for participation in the scheme under the previous Guidelines (and in particular the Guidelines in 2012), because AAI Ltd had in its possession a report from Dr Zeman dated 13 January 2015 referring to that issue.
4. That reason ignores the explanation provided with AAI Ltd's further application dated 11 September 2020, which was supplemented by a letter dated 23 October 2020 explaining the delay. The Authority's first reason focused solely on whether AAI Ltd, or more accurately its solicitor, was correct or incorrect in his interpretation of the eligibility criteria in the 2012 Guidelines. That was not the correct question.
5. In written submissions attached to AAI Ltd's further application, the correct question for the first defendant to determine was carefully explained: "The provision of a 'full and satisfactory explanation' does not require the insurer, in the circumstances as they have transpired, to establish that it was correct in its original interpretation, but rather that there are genuine and plausible reasons why the application for admission to the Scheme was not made within the time prescribed. The explanation now provided is not nullified because the view previously held by the insurer and its lawyers was erroneous. To make such an approach would be to introduce a hindsight assessment focused on questions of legal construction, as opposed to the relevant issue, namely whether the explanation is satisfactory."
6. Despite having the correct question spelt out, the Authority did not consider, much less determine, it. Instead, the Authority simply noted AAI Ltd's acceptance that its interpretation of the 2012 Guidelines was erroneous and that Dr Zeman had made a comment in a report to its solicitor within "the three-year limitation period". The interpretation of the 2012 Guidelines is at least in part a question of law on which Dr Zeman was not qualified to provide an opinion. In fact, the comment by Dr Zeman caused AAI Ltd's solicitor to consider and advise it on the interpretation of the eligibility criteria in the 2012 Guidelines.
7. Put simply, the question the Authority had to determine was whether the explanation that was provided, namely that AAI Ltd did not make its application until the Guidelines changed and it was advised that Mr Patten satisfied the new eligibility criteria, was a "satisfactory" explanation for the delay in making the application. Instead of determining that question, the Authority simply found that AAI Ltd's interpretation of the 2012 Guidelines was wrong.
8. AAI Ltd accepts that clause 9.2 of the new Guidelines gives the Authority a discretion in determining whether an extension of time should be granted. In that respect, the question it should have asked was whether, having regard to the beneficial purpose of the Motor Accidents (Lifetime Care and Support) Act 2006 which created the scheme, it was reasonable to exercise its discretion to extend the time for AAI Ltd to make its application.
9. That question was not asked. Instead, in its second reason, the Authority simply commented on the length of time since Mr Patten's accident, his disinclination to be a part of the Scheme and his expectation of having his claim for damages settled.
10. Had the Authority asked itself the correct question, it may have been entitled to consider whether the exercise of its discretion to grant an extension of time would cause significant or irreparable prejudice to Mr Patten. However, that question was neither asked nor answered. Nor was any basis provided for finding that accepting Mr Patten into the scheme would somehow be prejudicial to him, which is unclear.
11. The Authority's failure to ask itself the correct questions is an error of law, and its decision made on 27 October 2020 is therefore invalid. It also amounts to jurisdictional error, in the sense of a constructive failure to exercise jurisdiction: Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323; [2001] HCA 30 at [41]-[42].

Ground 2: Failing to engage with a clearly articulated argument(s)

1. In submissions attached to its further application on 11 September 2020, and in supplementary submissions on 23 October 2020, AAI Ltd advanced three clearly articulated arguments as to why the Authority should extend the time to make its application:
2. The delay in making the application until the new Guidelines came into effect was based on AAI Ltd's reasonable view, on the advice of its solicitor, that on a proper interpretation of the 2012 Guidelines, Mr Patten was ineligible for participation in the scheme, because an actual amputation appeared to be required, or even if actual amputation was not required, Mr Patten did not have an "equivalent impairment" to an amputation. That interpretation of the 2012 (and 2015) Guidelines was neither calculated nor capricious, but was a legal opinion reasonably held and acted upon. This amounts to a "satisfactory" explanation for the delay.
3. The Lifetime Care and Support Act is beneficial legislation designed to assist motor accident victims in New South Wales who have suffered catastrophic injuries, by enabling them to participate in the scheme. The fact that the Assessment Panel determined that Mr Patten is and always was eligible for participation in it supports an exercise of discretion by the Authority in favour of extending the time for AAI Ltd's application to be made.
4. AAI Ltd accepted the legal advice given to it by its solicitor within three years after the motor accident, that under the 2012 Guidelines Mr Patten was ineligible to participate in the scheme. That advice, although reasonably given, was found by the Assessment Panel to be erroneous. The fact that AAI Ltd acted in accordance with legal advice is a satisfactory explanation for the delay, despite that advice ultimately being determined to be erroneous.
5. The Authority's reasons for decision dated 27 October 2020 do not engage with any of these arguments. The closest the Authority's reasons come is to note that having regard to the decision of the Assessment Panel, AAI Ltd accepts that it was in error in its understanding (consistent with its solicitor's advice) that Mr Patten was ineligible to participate in the scheme under the 2012 Guidelines, and that AAI Ltd had a report from Dr Zeman in its possession commenting on Mr Patten's possible eligibility to participate.
6. Simply to note that AAI Ltd now accepts that its understanding of the 2012 Guidelines was erroneous does not respond to any of the arguments articulated in its further application. To the contrary, the first and second arguments were based on AAI Ltd's reasonably held but erroneous belief that Mr Patten was ineligible to participate in the scheme until the new Guidelines came into effect in November 2018. In his 13 January 2015 report, Dr Zeman did not state that Mr Patten was eligible to participate in the scheme: he suggested that "it may be useful to determine whether he is eligible" to participate. AAI Ltd's solicitor noted and acted upon Dr Zeman's comment by giving careful consideration to whether, on a proper interpretation of the Guidelines then in effect, Mr Patten was or was not eligible to participate in the scheme. Dr Zeman concluded that he was not.
7. The first of the two reasons given by the Authority for its decision appears to imply that Dr Zeman confirmed that Mr Patten was eligible, because of the nature of his injury. However, that is not what Dr Zeman said. Nor was he qualified to offer a legal interpretation of the Guidelines, which were at least unclear if not ambiguous. Nothing in the second reason given by the Authority addresses any of the three clearly articulated arguments advanced by AAI Ltd.
8. The Authority's failure to respond to any of the arguments clearly articulated by AAI Ltd fails at least to accord it natural justice, and is an error of law: Dranichnikov v Minister for Immigration and Multicultural Affairs (2003) 197 ALR 389; [2003] HCA 34 at [24]. The Authority's failure to respond to AAI Ltd's clearly articulated arguments may also be characterised as a constructive failure to exercise jurisdiction: Dranichnikov at [87]-[88].

Ground 3: Failure to provide adequate reasons

1. The Authority's reasons for decision dated 27 October 2020 are inadequate in that they do not address the correct question that it had to determine, nor do they address the arguments advanced by AAI Ltd that the explanation it provided for the delay in making its application was "full and satisfactory".
2. The provision of inadequate reasons is an error of law on the face of the record: Campbelltown City Council v Vegan & Ors [2006] NSWCA 284 at [130].

Ground 4: Legal unreasonableness

1. The Assessment Panel appointed by the Authority determined that Mr Patten is and always was eligible to participate in the scheme by reason of his brachial plexus injury sustained in the accident on 22 February 2012. The only obstacle to his participation in the scheme is the fact that AAI Ltd made its application for him to be accepted as an interim participant more than three years after the accident.
2. While the Authority has a discretion to grant an extension of time to AAI Ltd to make its application, it must be exercised reasonably and in accordance with the scope and purpose of the legislation under which the discretion is conferred: Swan Hill Corporation v Bradbury (1937) 56 CLR 746; [1937] HCA 15 at 758.
3. AAI Ltd pointed out in submissions attached to its further application that the Lifetime Care and Support Act is beneficial legislation designed to assist victims of motor accidents in New South Wales who suffer catastrophic injuries, by providing for their lifetime future medical treatment and care needs. Beneficial legislation, and guidelines made under such legislation, is to be given a "fair, large and liberal" interpretation rather than one that is "literal or technical": Norrie v NSW Registrar of Births, Deaths and Marriages [2013] NSWCA 145 at [73].
4. Having regard to the fact that Mr Patten satisfied the eligibility criteria for participation in the scheme, and that AAI Ltd has provided an explanation for the delay in making its application, the Authority's purported exercise of discretion refusing to accept its explanation for the delay does not accord with the evident purpose of the Act or the Guidelines, and is legally unreasonable.
5. In the circumstances, AAI Ltd contended that the Authority's decision to refuse to accept its explanation for the delay in making its application as being "full and satisfactory", was legally unreasonable and plainly unjust: Minister for Immigration and Citizenship v Li (2013) 249 CLR 332; [2013] HCA 18 at [63], [72] and [76].

Consideration

1. AAI Ltd submitted that on these grounds, or any one of them, the decision of the Assessment Panel should be set aside. I agree.
2. It is apparent that the Assessment Panel conflated what it considered to be the incorrectness of the legal opinion that guided AAI Ltd, and upon which it proceeded, with the question of whether or not a full and satisfactory explanation for the delay had been provided. That error alone in my opinion vitiated the decision.
3. However, an examination of the legal opinion provided to AAI Ltd indicates that it was on any view one clearly open to it, and on another view, arguably the correct view. Under the 2012 Guidelines, clause 2.3 was in the following terms: "2.3 Amputations A person who as a result of the motor accident has had amputations as described below, or the equivalent impairment, is eligible to enter the Scheme if the following criteria are met. Criteria for amputations • The injury resulting in the amputations, or the equivalent impairment, was caused by the motor accident; and • There are multiple amputations of the upper and/or lower extremities, meaning that there is more than one of the following types of amputation at or above the level of: • a 'short' transtibial or standard transtibial amputation, as defined by the loss of 50% or more of the length of the tibia. This includes all other amputations of the lower extremity (such as knee disarticulation or transfemoral amputation) above this level; • a thumb and index finger of the same hand, at or above the first metacarpophalangeal joint. This includes all other amputations of the upper extremity (such as below-elbow or above-elbow amputation) above this level. Criteria for unilateral amputation • The injury resulting in the amputation, or the equivalent impairment, was caused by the motor accident; and • The injured person has had one of the following types of amputation: • forequarter amputation (complete amputation of the humerus, scapula and clavicle) or shoulder disarticulation; • hindquarter amputation (hemipelvectomy by trans-section at sacroiliac joint, or partial pelvectomy); • hip disarticulation (complete amputation of the femur); or • 'short' transfemoral amputation as defined by the loss of 65% or more of the length of the femur."
4. It will be obvious that the solicitor for AAI Ltd took the view that the use of the conjunction "and" where indicated in bold above operated so that an amputation in fact was a pre-condition to eligibility, even though the clause refers to an amputation or the equivalent impairment. The solicitor would appear to have concluded, not unreasonably in my opinion, that the literal meaning of the words "the injured person has had one of the following types of amputation" was not modified or qualified by the reference elsewhere in the clause to "the equivalent impairment". The 2018 Guidelines tacitly acknowledged and dealt with this difficulty by specifically referring to "brachial plexus avulsion or rupture resulting in partial or total paralysis" in the corresponding clause dealing with amputations, thereby removing any doubt that Mr Patten's injury qualified him for the scheme.
5. The Assessment Panel provided a summary of its decision. Part of that summary is as follows: "The reasons for the determination were that the Authority did not accept the Insurer's (GIO) reasons for the late application. The Authority did not consider that eligibility criteria for amputations changed following the introduction of the 2018 LTCSA Guidelines. The introduction of 'brachial plexus avulsion or rupture resulting in partial or total paralysis' in the 2018 Guidelines had not changed the underlying injury that is required to be present in order to meet the eligibility criteria. Whilst the 2018 Guidelines explicitly refer to a brachial plexus injury, the Authority said that this type of injury was covered by the 2012 LTCSA Guidelines, which refer to an 'equivalent impairment' of a 'forequarter amputation' (complete amputation of the humerus, scapula and clavicle) or shoulder disarticulation. The Authority's position is that the two definitions (2012 and 2018 Guidelines) are comparable, describing the same level of function regardless of which definition is considered. The Authority had accepted at least 11 participants based on brachial plexus injury prior to the introduction of the 2018 LTCSA Guidelines. The Authority does not consider Mr Patten would have been assessed differently under the 2012 and 2018 LTCSA Guidelines and was unable to accept GIO's reason for submission of a late application."
6. What might be referred to as the luxury of being able to take that view of the clause was one available to the Assessment Panel but not to AAI Ltd or its solicitor. However, in the final analysis it matters not. That is because the view of the meaning of the clause upon which AAI Ltd proceeded, even if wrong, could not legitimately have informed the answer to the question of whether a full and satisfactory explanation for the delay had been provided.

Conclusions and orders

1. In the circumstances, I consider that the following orders should be made: 1. Order that the decision of the first defendant made on 27 October 2020 refusing to extend the time for the making of an application by the plaintiff for the second defendant to be accepted as an interim participant in the Lifetime Care and Support Scheme be set aside. 2. Remit the matter of the plaintiff's application for the second defendant to be accepted as an interim participant in the Lifetime Care and Support Scheme to the first defendant for redetermination according to law.

Amendments 11 February 2021 - Cover page amendment DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 11 February 2021