AAI Limited v Feng

[2019] NSWSC 535

Supreme Court of NSW|2019-05-09|Before: Adamson J

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Source facts

Court

Supreme Court of NSW

Decision date

2019-05-09

Before

Adamson J

Catchwords

STATUTORY INTERPRETATION - definition - whether "fault" is synonymous with liability or means, in the context of the tort of negligence, breach of duty - whether fault includes causation

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Original judgment source is linked above.

Catchwords

STATUTORY INTERPRETATION - definition - whether "fault" is synonymous with liability or means, in the context of the tort of negligence, breach of duty - whether fault includes causation

Judgment (24 paragraphs)

[1]

Solicitors: Moray & Agnew Lawyers (Plaintiff) Alliance Compensation and Litigation Lawyers (First Defendant) Crown Solicitor's Office (Second, Third and Fourth Defendants) File Number(s): 2018/391937

[2]

Introduction

The plaintiff, AAI Limited trading as AAMI (the Insurer), seeks to have two decisions made by assessors appointed by the second defendant, State Insurance Regulatory Authority (SIRA), set aside on the basis of jurisdictional error or error of law on the face of the record. The effect of the two decisions was to decline the Insurer's application to have the claim for damages made by the first defendant, Natasha Feng (the Claimant), exempted from assessment by Claims Assessment and Resolution Service (CARS). Had exemption been granted to the Insurer, the Claimant's claim for damages would have been determined by a court.
The third defendant, Marie Johns, a Principal Claims Assessor appointed by SIRA (the Principal Claims Assessor), decided that the Insurer was not entitled to mandatory exemption from CARS assessment under s 92(1)(a) of the Motor Accidents Compensation Act 1999 (NSW) (the Act). The fourth defendant, Colin Stoten, a claims assessor appointed by SIRA (the Claims Assessor) decided not to grant the Insurer a discretionary exemption from CARS assessment under s 92(1)(b) of the Act.

[6]

Claims assessment and resolution

Part 4.4 is entitled "Claims Assessment and Resolution". Division 2 of Part 4.4 contains provisions relating to assessment of claims and includes s 92, which exempts certain claims from CARS assessment as follows: "92 Claims exempt from assessment (1) A claim is exempt from assessment under this Part if: (a) the claim is of a kind that is exempt under Motor Accidents Claims Assessment Guidelines or the regulations, or (b) a claims assessor has made a preliminary assessment of the claim and has determined (with the approval of the Principal Claims Assessor) that it is not suitable for assessment under this Part. (2) If a claim is exempt from assessment under this Part, the Principal Claims Assessor must, as soon as practicable, issue the insurer and claimant with a certificate to that effect (enabling court proceedings to be commenced in respect of the claim concerned)."
An application for an exemption under s 92(1)(a) is known as a mandatory exemption application (because the exemption is required to be granted). An application for exemption under s 92(1)(b) is known as a discretionary exemption application.
Section 94 relevantly provides: "94 Assessment of claims (1) The claims assessor is, in respect of a claim referred to the assessor for assessment, to make an assessment of: (a) the issue of liability for the claim (unless the insurer has accepted liability), and (b) the amount of damages for that liability (being the amount of damages that a court would be likely to award). . . ."
Part 4.5 provides for claims which are exempted from CARS assessment to be determined in court proceedings.
Section 116 provides that a licensed insurer must take all such steps as may be reasonable to deter and prevent the making of fraudulent claims. Section 117 makes it an offence for a person to make a statement knowing that it is false or misleading in connection with certain matters arising under the Act, including in a claim form. Section 118 provides that a claimant or an insurer has a right of recovery where money has been paid as a consequence of a fraudulent claim.
Section 122 provides: "122 Damages in respect of motor accidents (1) This Chapter [5] applies to and in respect of an award of damages which relates to the death of or injury to a person caused by the fault of the owner or driver of a motor vehicle in the use or operation of the vehicle."

[7]

The Guidelines

It was common ground that the Guidelines comprise those which came into effect on 1 May 2014.
Clause 1.6 of the Guidelines contains definitions of various terms. It does not include a definition of "fault". Clause 1.8 of the Guidelines provides that to the extent that terms are not defined in cl 1.6, the definitions in, relevantly, s 3 apply.
Clauses 1.13 and 1.14 of the Guidelines relevantly provide: "Objects of CARS 1.13 The objects of CARS set out in clause 1.14 should be used as an aid to the interpretation of these Guidelines. 1.14 The objects of CARS in dealing with claims and disputes in connection with claims referred are: 1.14.1 to provide a timely, fair and cost effective system for the assessment of claims under the Motor Accidents Compensation Act 1999 that is accessible, transparent, independent and professional; 1.14.2 to assess claims and disputes fairly and according to the substantial merits of the application with as little formality and technicality as is practicable and minimising the cost to the parties; 1.14.3 to ensure the quality and consistency of CARS decision making; …"
Clauses 8.11 and 8.12 of the Guidelines provide in part: "8.11 For the purpose of section 92(1)(a), the PCA shall issue a certificate of exemption when, as at the time of the consideration of the application, and after a preliminary assessment of the claim, the PCA is satisfied that the claim involves one or more of the following circumstances: 8.11.1 liability is expressly denied by the insurer, in writing, but only in circumstances where liability is denied because the fault of the owner or driver of a motor vehicle in the use or operation of the vehicle is denied; (Note: Only denials of liability where fault is denied will satisfy this requirement. Denials of liability for any other reasons, but where the fault of the owner or driver of a motor vehicle in the use or operation of the vehicle is not denied, will not satisfy this requirement.) … 8.11.6 the insurer alleges that the claim is a fraudulent claim in terms of the circumstances of the accident giving rise to the claim. (Note: For example where it is alleged that the accident may have been staged or where a person claiming to have been a passenger in the vehicle is alleged to have been the driver of the vehicle.) Dismissal of exemption application 8.12 The PCA may dismiss an application for exemption made under section 92(1)(a) and clause 8.1 if the PCA is satisfied that: 8.12.1 that the claim may not be exempted in accordance with section 92(1)(a) and clause 8.11 of these Guidelines; …" [Emphasis added.]
Clause 8.11.6 of the Guidelines is included for completeness but it was not suggested that it had any relevance as the Insurer confirmed that it did not contend that it applied in the present case.
Chapter 14 of the Guidelines provides, of present relevance: "Unsuitable for assessment under section 92(1)(b) 14.11 For the purpose of section 92(1)(b), an Assessor may, in dealing with an application for general assessment and following a preliminary assessment of the claim, determine that the claim is not suitable for assessment. … 14.13 If the Assessor determines that the claim is not suitable for assessment, the matter must be returned within 5 days of making such a determination to the PCA for approval with a brief statement of reasons. … 14.16 In determining whether a claim is not suitable for assessment, an Assessor and the PCA shall have regard to the circumstances of the claim as at the time of consideration of the claim. This may include, but is not limited to: 14.16.1 whether the claim is exempt under section 92(1)(a) because the claim involves one or more of the circumstances set out in clause 8.11; 14.16.2 the heads of damage claimed by the claimant and the extent of any agreement by the insurer as to the entitlement to those heads of damage; 14.16.3 whether the claim involves complex legal issues; 14.16.4 whether the claim involves complex factual issues; 14.16.5 whether the claim involves complex issues of quantum or complex issues in the assessment of the amount of the claim including but not limited to major or catastrophic, spinal or brain injury claims; 14.16.6 whether the claimant has been medically assessed and is entitled to non-economic loss pursuant to section 131 and the claim involves other issues of complexity; 14.16.7 whether the claim involves issues of liability including issues of contributory negligence, fault and/or causation; … 14.16.9 whether the claimant or a witness, considered by the Assessor to be a material witness, resides outside New South Wales; 14.16.10 whether the claimant or insurer seeks to proceed against one or more non-CTP parties; and/or 14.16.11 whether the insurer makes an allegation that a person has made a false or misleading statement in a material particular in relation to the injuries, loss or damage sustained by the claimant in the accident giving rise to the claim. (Note: If an insurer makes an allegation of 'fraud' in terms of the circumstances of the accident, the matter will be exempt under section 92(1)(a) and clause 8.11.6. If an insurer makes an allegation that a person has made a false or misleading statement in a material particular in relation to the injuries, loss or damage sustained by the claimant in the accident, the insurer may be required to provide particulars in writing of the general nature of any such allegation under clause 17.13, and an Assessor may then consider whether a matter is not suitable for assessment under clause 14.11 to 14.16, particularly in light of clause 14.16.11.)"

[13]

The refusal of the application for discretionary exemption

On 3 December 2018 the Claims Assessor dismissed the Insurer's application for discretionary exemption and gave reasons for his decision. He accepted that the Insurer alleged that the Claimant had made false or misleading statements that she had suffered injury and recorded that it was not his function to determine whether the statements made by the Claimant were false or misleading, but rather whether the Claimant's claim was unsuitable for assessment because of those all allegations.
The Claims Assessor referred to the expert reports relied on by the Insurer: the report of Mr Griffiths, a biomedical engineer, and the report of Dr Pierides, an occupational physician. These experts opined that, having regard to their assessment of the speed of the driver's reversing vehicle, less than 5kph, and the evidence of impact on the Claimant's vehicle, there was no possible mechanism whereby the Claimant could have suffered personal injury as a consequence of the impact.
The Insurer contended before the Claims Assessor that the claims assessment process was unsuitable in circumstances where it would necessary to test the Claimant's credit and the opinion of any medical expert whose opinion supported her assertion that she had suffered an injury as a result of the impact caused by the accident.
The reasons of the Claims Assessor include the following: "5. I am accordingly asked to determine whether or not this claim ought be exempt from assessment pursuant to Section 92(1)(b), and the application of the assessment guidelines as set out in chapter 14 at paragraph 14.6. The Insurer in particular relies upon paragraphs 14.16.11, namely that the Claimant has made a false or misleading statement in her material, in particular in relation to the injuries, loss and damage sustained, and further that the claim is a complex one within the meaning of paragraph 14.16.5. . . . Determination 13. I am not required to determine whether the matters raised concerning the allegations of false and misleading statements are made out, but rather whether it is appropriate having regard to the claims made, the claim can be properly assessed within CARS. 14. I note that CARS is a specialist Tribunal dealing exclusively with motor vehicle accident claims. CARS Assessors are experienced practitioners in respect of personal injury claims made relating to motor vehicle accidents. Infrequently doctors give evidence and are subject to questioning in a CARS assessment as to medical issues. Indeed Mr Griffiths has given evidence before me and has been questioned by me in relation to a report and his evidence in respect of a biomechanical issue which arose in relation to whether or not a particular Claimant was wearing a seatbelt. Furthermore, credit issues commonly arise in respect of CARS assessments. Claimants are frequently challenged in a CARS assessment as to whether particular injuries have been caused or contributed to by the accident. 15. The issue which arises in respect of this particular claim is whether or not the Claimant was injured as a result of the accident. In order to determine that issue, the parties will rely upon the documentary material relied upon. Can that issue be properly determined in a CARS assessment? I am of the view that it can. I make that finding for the following reasons: (i) The issue is a discreet one. I am told that the Claimant's solicitor does not propose to obtain a report from a biomechanical expert in rebuttal to the opinion of Mr Griffiths. (ii) It is not said that any of the doctors or persons which the Insurer wishes to question are not available for a CARS assessment. Indeed it is not said which persons in particular are required for questioning. If a particular witness is required, and that witness will not attend or otherwise be available for questioning at a CARS assessment, then the issue of suitability might be revisited. . . . (iv) The Claimant, and any other liability witnesses relied upon, can be questioned in relation to the issue within the framework of a CARS assessment conference, and if considered necessary the Insurer can make available its witnesses such as Mr Griffiths and Dr Pierides to give evidence at the assessment conference and be questioned as is required. (v) I do not consider this claim to be particularly complex. There are few experts involved, and whether they are required to give evidence or not, should not require lengthy examination or cross examination noting the discreet issue concerned. (vi) CARS Assessors are frequently called upon to assess credit of witnesses in the course of an assessment conference. 16. In summary, I am not persuaded that the issue raised by the Insurer in respect of this claim requires exemption of the claim from assessment. Conclusion 17. I am not persuaded that the claim is sufficiently complex, or that the issues raised in respect of the alleged false and misleading statements made by the Claimant are such as to cause me to recommend this claim be exempt from assessment. This is not to say that the Application cannot be renewed once all of the evidence has been formally relied upon by the parties and a determination made in relation to the availability of witnesses, including medical witnesses. 18. I accordingly decline to recommend exemption of the claim based on the current material." [Emphasis added.]

[17]

Consideration

The tort of negligence has three elements: duty of care owed by the alleged wrong-doer to the alleged injured party, breach of duty and damage caused by the breach of duty. The elements are commonly referred to in summary form as duty, breach and causation. In court proceedings these matters must be separately pleaded. Although liability in the tort of negligence depends on proof of all three matters, the second element is commonly also referred to as "negligence". Thus a party who is negligent will not be liable in negligence if its negligence caused no loss.
The lawfulness of the refusal of the application for mandatory exemption turns on whether the word "fault" in cl 8.11.1 requires all three of these elements (duty, breach and damage) or whether it is confined to the second (breach). Fault is defined in s 3 as meaning "negligence or any other tort". "Tort" is a particular legal wrong and includes the tort of negligence. Fault is not defined to include tortious liability. Indeed, there is no reference to liability in the definition of "fault" in s 3.
The wording of cl 8.11.1 makes it clear that it is not any fault that is relevant: it is only "fault of the owner or driver of the motor vehicle in the use or operation of the vehicle". These qualifying words tend to suggest that the word fault is used in the sense of "negligence" (or other wrong) rather than "liability in negligence" or "tortious liability".
There is scant material to indicate the legislative purpose for the exemption of claims where an insurer denies liability on the basis of a denial of fault on the part of the owner or driver in the use and operation of a motor vehicle. However, it can be inferred that the legislative intent was to exempt from CARS assessments disputes about whether the conduct of the owner or driver was wrongful, either because the owner or driver was negligent or because the owner or driver was guilty of a deliberate act, such as intentionally colliding with another car.
It is necessary to read the Act as a whole. I accept Mr Free's submission that s 3A distinguishes between "fault" and "causation" in a way which indicates that the draftsperson intended to confine the word to the element of breach of duty (in the case of the tort of negligence) or other wrong (in the case of another tort) and did not intend fault to include the causal element.
I do not regard Axiak v Ingram as advancing the construction for which the Insurer contended. In that case, the question was whether the words "fault of any other person" in the definition of "blameless accident" in s 7A included fault on the part of the plaintiff who was a child pedestrian. The Court held that "fault" in that context meant "tortious negligence" and did not mean "non-tortious negligence". Thus, although it was alleged that the plaintiff was guilty of contributory negligence, this did not amount to "fault" for the purposes of the definition of "blameless accident" in s 7A. Tobias JA said at [58]: "In its context and given that the definition of 'fault' has been in the Act since its inception, there can be no doubt that the legislation was directed to fault giving rise to a cause of action for damages."
The reference to "fault giving rise to a cause of action for damages" in this passage does not make fault synonymous with liability. Rather, Tobias JA was drawing a distinction between fault as an element of liability for damages in negligence and fault as a matter relevant to contributory negligence which operates defensively to reduce the plaintiff's damages but which does not give rise to a cause of action for damages. The distinction between fault and liability is fundamental. It is illustrated by the principle that, if a defendant admits liability, it is erroneous for a judge to enter judgment for the defendant: Sivas v Government Insurance Office (1990) 12 MVR 272 (Kirby P, Samuels and Mahoney JJA). As Samuels JA said at 276, a defendant who wants to maintain that no damage was caused by admitted negligence ought admit duty and breach of duty but deny liability: see also Smalley v Motor Accidents Authority of New South Wales (2013) 85 NSWLR 580; [2013] NSWCA 318 at [54] (Leeming JA, Meagher and Barrett JJA agreeing).
In Smalley v Motor Accidents Authority of New South Wales, which was decided after Axiak v Ingram, Leeming JA, at [60], set out the four elements of a compulsory third party insurer's liability to indemnify which included, relevantly: "(c) "fault": whether the insured driver breached a duty owed to theclaimant; (d) causation: whether the insured's fault caused the death or injury;"
This extract from the reasons in Smalley v Motor Accidents Authority of New South Wales indicates not only that the statute differentiates between fault and causation but that the passages in Axiak v Ingram relied on by the Insurer did not alter the principles expressed in Sivas v Government Insurance Office: that fault is not synonymous with liability, but is merely one integer which is required to be established before the Insurer is liable. Although the wording of cl 8.11.1 of the Guidelines was amended after Smalley v Motor Accidents Authority of New South Wales, nothing turns on the amendment in the present case.
In my view, "fault" in cl 8.11.1 is, when the relevant tort is the tort of negligence, synonymous with breach of duty simpliciter. Fault in this context does not include the element of damage caused by the breach of duty. The definition is s 3 is consistent with this construction since "negligence" means breach of duty and "any other tort" is a reference to any other wrong which can form the basis for liability for an intentional tort, such as when a driver deliberately collides with another vehicle or pedestrian. This construction is consistent with the intent of cl 8.11.1 being to exempt claims where an insurer denies liability on the basis that the owner or driver is at fault in the use or operation of the vehicle, but not to exempt claims where liability is denied, as here, because the Insurer contends that the breach of duty did not cause any injury.
Thus, the effect of cl 8.11.1 is: 1. to exempt from CARS assessment those cases where fault by the owner or driver in the use or operation of a motor vehicle (breach of duty, in the case of negligence, or other wrong, in the case of another tort) is expressly denied by the insurer in writing; and 2. to leave as amenable to CARS assessment, subject to a discretionary exemption under s 92(1)(b), those cases where the question is what, if any, injury or damage has been suffered as a result of such admitted fault.
Liability will necessarily be in issue in all cases in (1) above and will only be in issue in those cases in (2) above where the insurer contends that the claimant has not suffered any injury as a result of the fault of the owner or driver. The cases in category (1) are subject to mandatory exemption under cl 8.11.1 of the Guidelines: s 92(1)(a). The cases in category (2) may be the subject of application for discretionary exemption under cll 14.11-14.16: s 92(1)(b).
Mr Rewell contended that it was only if I accepted the Principal Claims Assessor's reasoning process in full that I ought dismiss the summons. He submitted that if I disagreed with any part of the reasons then I ought set aside her decision and remit the matter to be determined in accordance with law. I reject this submission. As Mr Free submitted, the question whether the Insurer denied liability on the basis that the fault of the owner or driver of a motor vehicle in the use or operation of the vehicle was denied was a pure question of construction. There was no factual question involved as the Insurer admitted duty and breach and denied liability on the basis that it denied that the Claimant had suffered any injury as a consequence of the driver's breach of duty.
For the reasons given above, the Principal Claims Assessor was correct in her construction of cl 8.11.1 and therefore no error of law on the face of the record or jurisdictional error has been established with respect to her decision that the Claimant's claim was not exempt under s 92(1)(a) or cl 8.11.1.

[20]

Consideration

Claims assessors are required to give "a brief statement of reasons" if an exemption pursuant to s 92(1)(b) is granted: cl 14.13 of the Guidelines. They are also required to give reasons for assessment: Chapter 18 of the Guidelines. There is no express requirement that reasons be given where an application for a discretionary exemption is declined. In the present case, the Claims Assessor gave reasons for declining the exemption which, accordingly, form part of the record: s 69(4) of the Supreme Court Act 1970 (NSW).
The Claims Assessor's reasons should be read fairly as a whole. In the introductory paragraphs, he posed the correct question: namely, whether "this claim ought be exempt from assessment pursuant to s 92(1)(b)" and referred to the applicable provisions of the Guidelines. The words "ought to" are apt to refer to a discretion and do not connote any automatic process to be determined by reference to capacity rather than suitability. The Claims Assessor's recitation of the submissions of the parties has not been shown to be inadequate or erroneous.
In paragraph [13] of the reasons, the Claims Assessor posed the question whether it was "appropriate having regard to the claims made, the claim can be properly assessed within CARS". The word "appropriate" suggests a discretionary consideration of relevant factors and is consistent with the application of a test of suitability. Although the word "can" implies capacity, the addition of the qualifying adverb "properly" is sufficient, in my view, to indicate that the Claims Assessor realised that he was making a qualitative assessment of suitability rather than determining whether CARS had the capacity to hear and determine the dispute.
In paragraph [14] the Claims Assessor outlined the jurisdiction and experience of CARS as a "specialist Tribunal" and what, in his experience, had occurred in such assessments. Although this paragraph was relied upon by the Insurer as an indication that the Claims Assessor had fallen into the same error as the claims assessors in Khaled and Lou, I do not consider this paragraph to have that effect in the present case. Although the ultimate question turns on suitability (or lack thereof), capacity will commonly, if not invariably, be a relevant factor in determining suitability. In paragraph [15], the Claims Assessor again used the words "properly determined", which, in my view, is sufficient to indicate that he was addressing suitability rather than purely addressing capacity. The reference in paragraph [15(ii)] to the potential for the issue of suitability to be revisited implies that the question of suitability was being addressed in the reasons. The words "particularly complex" in paragraph [15(v)] also imply that an evaluative judgment is being made. The highlighted words in paragraph [17] in the passage from the reasons extracted above suggest that the Claims Assessor was not engaged in a rudimentary exercise of determining whether CARS had the capacity to determine the dispute but rather that the Claims Assessor had not been persuaded by the Insurer's arguments that the claim was unsuitable for CARS assessment.
For the reasons given above, the Insurer has not demonstrated any error of law on the face of the record or jurisdictional error in the Claims Assessor's reasons.

AAI Limited v Feng

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Judgment (24 paragraphs)

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Legislation Cited (5)

Cases Cited (11)

Cited By (4)