Insurance Australia Limited trading as NRMA Insurance v Motor Accidents Authority of New South Wales and Mahmoud Khateib

LEGISLATION CITED : Motor Accidents Compensation Act 1999 (NSW)

CASES CITED : Graham Kelly v Motor Accidents Authority of New South Wales & Anor [2006] NSWSC 1444

P: Insurance Australia Limited t/as NRMA Insurance PARTIES : D1:Motor Accidents Authority of New South Wales D2: Mahmoud Khateib

P: Mr J Griffiths SC, Mr GJ Bellew SC COUNSEL : D1: Mr MA Robinson D2: Mr JA Jobson

P: Mr Victor Kelly, Abbott Tout Lawyers SOLICITORS : D1: Mr B Yeng, Motor Accidents Authority D2: Ms Niki Milicevic, Milicevic Solicitors

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

Insurance Australia Limited t/as NRMA Insurance v Motor Accidents Authority of New South Wales and Mahmoud Khateib

JUDGMENT 1 HIS HONOUR: The plaintiff seeks orders in the nature of prerogative relief against the Motor Accidents Authority of New South Wales the effect of which orders would be that the Motor Accidents Authority of New South Wales (hereinafter "the Authority") would be restrained from proceeding with a Claims Assessment Resolution Service Assessment Hearing relating to a claim brought by the second defendant, Mahmoud Khateib, arising from a motor vehicle accident on 16 February 2002. 2 These proceedings were heard immediately after the proceedings in Graham Kelly v Motor Accidents Authority of New South Wales and submissions made on issues affecting both matters were heard together in the sense that the same Counsel appeared for both plaintiffs and the submissions were not repeated. 3 I have dealt with the general principles associated with these matters in the judgment in Graham Kelly v Motor Accidents Authority of New South Wales & Anor [2006] NSWSC 1444 and this judgment would not be able to be understood without reference to the earlier judgment. Facts 4 On 16 February 2002 the second defendant was involved in a motor vehicle accident. He subsequently lodged a claim form seeking damages pursuant to the provisions of the Motor Accidents Compensation Act 1999 (NSW) ("the Act"). The claim form was lodged on 11 March 2002 and an application for General Assessment under the Act was lodged on 11 October 2004. The assessment of the matter was referred to Assessor Patterson. 5 As in the judgment of Kelly, supra, the plaintiff in these proceedings sought that the matter be exempt from the assessment process pursuant to the terms of s92. 6 There were written submissions and at a preliminary conference held on 2 June 2006 the Assessor indicated that having considered all of the material that had been placed before him, he was not satisfied that the claim was not suitable for assessment. He further indicated that the reasons for his decision would be published the following week. 7 By email dated 16 June 2006 the Assessor published his reasons and, they were in the following terms: "Further to my Seventh Preliminary Conference Report in this matter, I now *publish my Reasons for declining to find that the claim is not suitable for Assessment, pursuant to Section 92(1)(b) of the Motor Accidents Compensation Act. I deal with the matters raised by Mr Kelly in his letter dated 3 May last, as follows: 1. Section 91 and; For the reasons suggested by Mr Kelly, I consider that the matters in relation to Section 91 time limits are not of any significance. 2. Requirement that the insurer advised that it has made an allegation in writing of a false or misleading claim. I am satisfied that the insurer has made a written allegation within the meaning of Section 117 of the Act. 3. Additional particulars of false or misleading claim. Having considered all of the material presented by the insurer, I am satisfied that the allegation falls within Section 117 of the Act. As to the substance of the allegation, it is only necessary for me to consider whether, having regard to the material that should be available to me, the claim is one that is suitable for assessment. 4. Complexity In addition to the allegation of a false or misleading claim , the insurer also says that the matter involves complex factual issues and that the matter involves complex issues in the assessment of the quantum or value of the claim. The material submitted by the insurer in support of the Exemption Application goes no further than establishing that the claimant has or had interests in various small businesses. The insurer's solicitor has been able to analyse those interests closely, as described in Annexure "A" to the Exemption Application. The claimant's solicitor has made a detailed response in Annexure "A" to her Reply. Ms Milicevic indicated at the Seventh Preliminary Conference that all relevant financial records will be provided to the insurer. Both parties will have the opportunity to obtain forensic accounting reports. There is nothing in the material before me to indicate that credit issues are likely to arise which cannot be addressed adequately at the Assessment Conference, especially having regard to the provisions of Chapter 14 of the Claims Assessment Guidelines, which provide that the way in which an Assessment is to proceed is a matter entirely within my discretion. For all these reasons, I am not satisfied that the claim is not suitable for Assessment."

Alleged Error by Claims Assessor 8 The plaintiff alleges error in the determination by the Claims Assessor not to find that the claim was not suitable for assessment on the following basis:

(i) the failure by the Claims Assessor to refer to the provisions of Chapter 7 of the Guidelines and in particular Clause 7.11 is reflective of either a failure to have regard to those matters at all, or at the very least, a failure to treat them as fundamental and focal elements in the exercise of the Claims Assessor's discretion;

(ii) the reference by the Claims Assessor to "the material that should be available" is reviewable error because the Claims Assessor was required to determine the application for exemption having regard to the circumstances of the claim as at the time of the preliminary determination and not on the basis of some future set of circumstances;

(iii) this ground relates to the Assessor's statement being "whether, having regard to the material that should be available to [him], the claim is one that is suitable for assessment" which shows reviewable error on two bases: (a) the use of the word "should" shows an error in that it directs the mind to material that might be available rather than the circumstances as they stood; (b) the reference to "is suitable" is the reverse of the test required by the Act;

(iv) the Assessor's reference to Chapter 14 was an irrelevant consideration and showed a predisposition that all matters were prima facie suitable for assessment;

(v) the reference to false or misleading statement was in a form which displayed a failure to afford fundamental weight to the criterion. 9 A number of these grounds were raised and have been dealt with in the judgment in Kelly, supra. I do not repeat that analysis or those determinations. I do however reiterate that the Claims Assessment process is a form of non-binding arbitration, the procedures for which are therefore not required to be the same procedures as might otherwise apply to a court or Tribunal. The grounds that raise issues not addressed in Kelly are those summarised above at paragraph 8(i), (ii), (iii)(a) and (v).

Is Error of the Relevant Kind Disclosed? 10 The plaintiff's submission that Chapter 7 of the Guidelines has not been taken into account is, as I understand it, a counsel of perfection. The requirements on a court or Tribunal to give reasons are to disclose their thinking so as to point to a rational result. It is not the function of a court or Tribunal to pay lip service and/or repeat those matters which are not operative in the decision-making process. In the course of dealing with an appeal on a sentencing matter from the District Court, the Court of Criminal Appeal said: "This Court is, of course, aware of the pressures under which District Court Judges have to deliver their sentences and that it is easy not to state a fact that everybody knows is required to be taken into account." ( R v Lawrence [2005] NSWCCA 91, per Spigelman CJ at [15]. 11 The same can be said for Tribunals. Those aspects of Clause 7.11, upon which the plaintiff relied, were dealt with by the Claims Assessor. The plaintiff was represented below by legal practitioners who put ably the matters upon which they considered they could rely. Each of those matters was dealt with by the Claims Assessor. There is no substance to this complaint. 12 The complaint that the Claims Assessor took into account that which was not yet before him by the use of the word "should be available" is also misconceived. An application for exemption may be made at any stage after the claim has been lodged. It may be made a second or subsequent time even after it has been refused on earlier occasions. If the Claims Assessor were confined to dealing with the application only on the basis of the material that was before him at the time that the application for exemption was made, an application for exemption made immediately after the lodging of a claim would necessarily result (there being no other material before the Claims Assessor) in the grant of the exemption. That is not consistent with the purpose of the legislation; nor is it consistent with a proper construction of the Act or the Guidelines. 13 The Claims Assessor is entitled to take into account his knowledge and expertise in the hearing of claims and the material that is likely to come before him. In the same way that a Judge of a court takes into account that discovery has yet to occur and may disclose documents not presently in the possession of one or other parties, so too the Claims Assessor is entitled to take into account that, by the time the assessment commences hearing, in the usual course, certain material would be available that addresses the concerns raised by the plaintiff or any party before the Assessor. The reliance on that knowledge of what is likely to be before the Claims Assessor at the time of the hearing is not error. 14 Moreover, if the material produced and available to the Claims Assessor after the processes are concluded, is not of sufficient calibre to deal with all of the issues appropriately, the Claims Assessor may of her or his own motion, or on a further application by the plaintiff, reassess the exemption. No error is disclosed. Certainly no error that is reviewable in prerogative relief, and the ground fails. 15 I do not consider that the use of the word "should" refers to what "might" be available; I consider that it is a reference to what will be available in the ordinary course. 16 With one exception, all of the other matters are addressed in the judgment in Kelly and I do not repeat any of the comments made by me in those reasons. The one exception is the reference to the claim, which fits within the description of s117 of the Act. 17 There can be little doubt that an allegation of conduct in breach of s117 of the Act is a serious matter. There is also little doubt that the insurer has a duty to minimise fraudulent claims. There are, of course, remedies available in relation to any such false or misleading claim apart from the remedy of an unsuccessful claim. 18 As stated in Kelly and reiterated herein, if the insurer does not accept liability (either at all or the proportion fixed), the matter must be heard in a court of competent jurisdiction. The exercise of discretion that is reposed in the Claims Assessor on whether to refer a matter to the Court without prior assessment is an exercise of discretion which is informed by the criteria in Chapter 7 and in particular Clause 7.11. 19 The plaintiff refers to the criterion in clause 7.11.10 and submits, as I understand the submission, that this criterion is even more important than the "central elements" otherwise contained in clause 7.11. It has this status because it was previously a criterion by which the provisions of s92(1)(a) were invoked. However, on one view at least, the exact opposite is the situation. The Authority, by removing the equivalent of criterion 7.11.10 from that part of the Guidelines that previously mandated a reference, has made express the proposition that an allegation of a false or misleading statement within the meaning of s117 no longer necessitates the matter being referred to a court. 20 In this instance, the Claims Assessor has been addressed on the importance of the material and the allegation. The Claims Assessor has evaluated that claim and the material that is currently available and will, in the ordinary course, become available and has come to a conclusion that that material and that allegation are not such that the matter is not suitable for assessment. The reasoning of the Claims Assessor does not disclose relevant error or the failure to take account of a material consideration. Further there is no immaterial consideration that the Claims Assessor has considered and the result is neither unreasonable in the Wednesbury sense nor manifestly incorrect. 21 The purpose of the assessment process is for the Assessor to come to a view based on material that is conveniently available so that an independent person assesses, as best as is possible in that setting, the liability and damages that such person considers is appropriate. The parties then have the capacity to accept that liability and/or damage or not. If, as is addressed in the reasons for judgment in Kelly, the insurer does not accept liability in the proportion assessed or at all, the matter will go to court. If the claimant does not accept the damage as assessed, the matter will go to court. In court, no doubt, subpoenas may be served on third parties, if material other than that which was available to the Claims Assessor is considered to be relevant, or will lead to a relevant line of inquiry. The insurer is not prejudiced in the ultimate determination of the matter except in the sense that the insurer has the option of accepting a result on liability and thereby, consistent with the objects of the Act, resolving the matter before court. 22 All the other matters, as I have said, are matters identical with those raised in Kelly or so similar that the reasoning necessarily applies. I have come to the conclusion, as I did in Kelly, that the plaintiff's Summons seeks to portray errors of merit (if any) as jurisdictional or legal error and raises no matter which warrants the making of orders in the nature of prerogative relief. Such relief should not issue. 23 I make the following orders:

(ii) the plaintiff shall pay the defendants' costs of and incidental to the proceedings, as agreed or assessed. **********

02/02/2007 - (1). Paragraph 12, last sentence: 'legislation nor' has been replaced by the words 'legislation; nor is it consistent with' (2). Style preference. - Paragraph(s) (2). Paragraphs: 2, 10, 14, 15, 16 and 19.

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.