Motor Accidents Compensation Act 1999

The Act’s reach is broad. First, every owner of a motor vehicle registered in New South Wales must hold a third-party policy (s 8). “Owner” is expansively defined in s 4 to include registered operators, joint owners, persons entitled to immediate possession, and, for trader’s plates, the trader. Failure to insure is an offence punishable by 50 penalty units (s 8(1)).

Second, any person who suffers death or injury in a motor accident is a potential claimant (s 3). This includes drivers, passengers, pedestrians, cyclists and even, in limited circumstances, the at-fault driver (see the early payment scheme in Part 3.2 which extends to all injured persons). Children under 16 receive special no-fault protection (s 7J). The spouse of a deceased person may claim under the Compensation to Relatives Act 1897, but only for funeral expenses under the no-fault child provisions (s 7J(4)).

Third, licensed insurers are directly regulated. They must hold a licence under Part 7.1, file premiums in accordance with the Motor Accidents Premiums Determination Guidelines (s 25), comply with claims-handling guidelines (s 68), meet obligations of provisional liability (s 50), make hospital and medical payments (s 83), and participate in the risk-equalisation arrangements in s 29. Breach of licence conditions can lead to suspension, civil penalty or cancellation (ss 165–167).

Fourth, medical and allied health practitioners are affected by the Motor Accidents Medical Guidelines (s 44) which govern the appropriateness of treatment, the assessment of permanent impairment, and the certification of attendant-care needs. Their fees for medico-legal reports and court attendance are capped by regulation (s 150). Hospitals benefit from bulk-billing arrangements that apply regardless of fault (s 54).

Fifth, the State Insurance Regulatory Authority (the Authority) and the Personal Injury Commission exercise significant administrative and quasi-judicial functions. The Authority issues guidelines, determines market shares (s 172), manages the Nominal Defendant (s 32), oversees the Fund (s 212), and may audit insurers (s 177). The Commission assesses claims (s 94), resolves disputes about late claims or sufficiency of particulars (s 96), and conducts reviews of medical assessments (s 63).

Sixth, the Nominal Defendant, constituted by the Authority (s 32), is the insurer of last resort for uninsured, unidentified or out-of-state vehicles in defined circumstances (ss 33–35). It may recover from the actual tortfeasor (s 39) but cannot do so in blameless or child no-fault cases unless the owner or driver was actually at fault (ss 7H, 7N).

Finally, employers and workers compensation insurers are indirectly affected by the interaction provisions in s 3B and the indemnity rules in s 151Z of the Workers Compensation Act 1987. The Act does not apply to gradual injuries (s 3A(2)) or to injuries covered by Commonwealth or interstate compulsory schemes (s 33(4)).

The Act creates a dense web of duties and correlative rights.

Insurers’ duties include:

• accepting provisional liability for treatment and lost earnings up to the statutory cap (s 50(2));
• deciding liability within three months and making a reasonable offer of settlement once the claim can be quantified (ss 81, 82);
• paying hospital, medical, rehabilitation, respite and attendant-care expenses once liability is admitted or determined (s 83), provided the expenses are reasonable, necessary and verified;
• complying with the Motor Accidents Claims Handling Guidelines (s 68) and Premiums Determination Guidelines (s 24);
• participating in the risk-equalisation arrangements for high-risk policies (s 29);
• keeping accounting records and lodging returns (s 176); and
• cooperating with the Authority’s audits and information requests (ss 177, 178).

Claimants’ duties include:

• notifying the police and submitting an accident notification form within 28 days if seeking early payments (s 48);
• providing all relevant particulars of the claim expeditiously (s 85A);
• cooperating fully with the insurer, including attending medical examinations and supplying documents (ss 85, 86);
• mitigating loss (s 136); and
• refraining from fraudulent conduct (ss 117–119).

Rights of injured persons include:

• the right to early payments for treatment and lost earnings even if at fault (Part 3.2);
• the right to have treatment and care needs met by the insurer once liability is admitted (s 83);
• the right to a medical assessment of whether treatment is reasonable and necessary, whether impairment exceeds 10 %, and the degree of permanent impairment (Part 3.4);
• the right to have non-economic loss damages assessed once the 10 % threshold is met (s 131), subject to the statutory cap (s 134);
• the special no-fault entitlements for children (Division 2 of Part 1.2) and for blameless accidents (Division 1 of Part 1.2); and
• the right to have a claim assessed by the Commission and, if not accepted, to commence court proceedings (ss 94, 108).

The Nominal Defendant’s rights and duties are set out in ss 32–39. It stands in the shoes of the uninsured or unidentified owner or driver, but its right of recovery from the actual tortfeasor is limited in no-fault cases (ss 7H, 7N). It may also bring contribution proceedings as a tortfeasor (s 36).

The Authority’s rights include the power to issue guidelines (ss 24, 44, 68), reject premiums (s 27), suspend or cancel licences (ss 165, 167), impose civil penalties (s 166), audit insurers (s 177), and manage the Fund (s 212). It may also require information from providers of passenger services or taxi licence holders for the purpose of setting premiums (s 225).

The Act contains both criminal and civil sanctions.

Criminal offences include:

• using or permitting the use of an uninsured vehicle on a road (s 8) – 50 penalty units;
• making a false or misleading statement in an accident notification form, claim form or in the course of a claim (s 117) – 50 penalty units or 12 months’ imprisonment or both;
• failing to cooperate with the insurer (owner/driver obligations under s 87(3)) – 20 penalty units;
• obstructing an authorised officer exercising audit or inspection powers (s 182) – 50 penalty units;
• failing to comply with a notice requiring information for premium-setting purposes (s 225) – 100 penalty units; and
• various breaches by licensed insurers of record-keeping, return-lodging and audit obligations (ss 176, 182, 214B, 214C) – 100 penalty units.

Civil enforcement mechanisms are extensive. Breach of a licence condition is an offence (s 161(4)) but may also attract a civil penalty of up to $50,000 (s 166). The Authority may suspend or cancel a licence (ss 165, 167). Insurers who fail to pay the Fund levy on time face a penalty of 100 penalty units plus interest at 15 % per annum compounded quarterly (s 214A(4)(b)). The Nominal Defendant may recover from the at-fault owner or driver amounts paid in respect of uninsured or unidentified vehicles (s 39), subject to the defences in that section.

Court proceedings for offences are brought summarily in the Local Court (s 227). The limitation period for the false-claim offence is two years (s 227(2)). The Act binds the Crown (s 218) and cannot be contracted out of (s 216).

The Act is not a self-contained code. Section 3 contains 47 defined terms, most of which incorporate definitions from other statutes. “Motor vehicle”, “road”, “registration” and “trader’s plate” all pick up meanings from the Road Transport Act 2013. “Spouse” includes a de facto partner within the meaning of s 21C of the Interpretation Act 1987. “Fault” means negligence or any other tort, thereby importing the general law of tort.

The Act sits alongside the Motor Accidents (Lifetime Care and Support) Act 2006. Once a person is accepted as a participant in the Lifetime Care and Support Scheme, no damages for treatment and care needs may be awarded under this Act (s 141A). Section 27A requires the cost of claims for premium-setting purposes to take account of that exclusion. Section 43A provides that the early-payment and treatment provisions of Chapter 3 do not apply to treatment and care needs covered by the Scheme.

Interaction with workers compensation is governed by s 3B. Chapters 3–6 apply only to work-injury claims that are not coal-miner claims. Section 15 excludes liability under the Workers Compensation Acts from the scope of a third-party policy. Section 130 requires damages for economic loss to be reduced by any workers compensation payments.

The Personal Injury Commission Act 2020 and the Commission rules govern the constitution and procedure of the Commission for both medical assessments (Part 3.4) and claims assessments (Part 4.4). Section 115A makes compliance with that legislation a condition of every insurer’s licence.

The Compensation to Relatives Act 1897 is preserved for funeral expenses in child no-fault cases (s 7J(4)) but otherwise excluded. The Law Reform (Miscellaneous Provisions) Act 1944 and the Law Reform (Miscellaneous Provisions) Act 1946 are expressly preserved in s 22 for survival of causes of action and contribution between tortfeasors.

The Fines Act 1996 interacts with the cancellation of registration and policies (s 14(3), (8)). The Insurance Act 1973 (Cth) is relevant to the grant of licences (s 158) and to the Minister’s power to declare an insurer insolvent (s 185). The Victims Compensation Act 1996 (now repealed but still referenced in s 130) required reduction of damages for payments received under that Act.

The Act is expressed to prevail over any contract to the contrary (s 216) and binds the Crown in all capacities (s 218). Section 6 requires that the Act and regulations be interpreted, and discretions exercised, to promote the objects in s 5. Those objects include early rehabilitation, affordable premiums, full funding, fraud deterrence and stable application of the law so that insurers can set fully funded premiums.

The text records a long series of amendments. The most significant for present purposes are:

• 2006 No 17, which inserted the no-fault scheme for children and blameless accidents (Part 1.2, ss 7A–7P), added s 3A and s 3B to clarify the Act’s scope, repealed the repealed s 5A, and made consequential changes to the objects and interpretation provisions;
• 2006 No 16, which introduced the interaction with the Lifetime Care and Support Scheme (ss 27A, 43A, 141A) and the combined certificate procedure for impairment (s 61(10));
• 2007 No 95, which substantially rewrote the claims and dispute-resolution provisions, inserting ss 85A, 85B, 89A–89E, replacing the claims assessment procedure, and making extensive changes to medical assessment (Part 3.4) and costs provisions;
• 2009 No 26, which extended the early-payment scheme to at-fault drivers and made bulk-billing arrangements apply regardless of fault (amendments to ss 3A, 46A, 47A, 48, 54);
• 2010 No 98, which clarified the definition of “motor accident” and the application provision in s 3A following judicial decisions that had narrowed the scope of cover;
• 2012 No 48, which substituted s 43A and inserted s 141A to give full effect to the Lifetime Care and Support Scheme’s exclusivity for treatment and care needs; and
• 2017 No 10, which inserted s 3AA to provide that the Act does not apply to motor accidents occurring after the commencement of the Motor Accident Injuries Act 2017, except for Chapter 5 damages in railway and public transport accidents under the Transport Administration Act 1988.

These changes were driven by the objects in s 5: to encourage early rehabilitation, to keep premiums affordable by limiting minor-injury compensation while preserving full compensation for severe injuries, to ensure full funding, and to deter fraud. The 2006 no-fault amendments responded to community concern about children and “blameless” victims left without compensation. The Lifetime Care amendments prevented double-dipping between the statutory scheme and common-law damages. The 2007 procedural amendments aimed to reduce legal costs, speed up dispute resolution and give the Authority greater oversight. The 2010 clarification of “motor accident” restored the original legislative intention after court decisions had narrowed cover for injuries occurring during the driving of the vehicle. Later amendments aligned the 1999 Act with the new 2017 scheme while preserving its operation for pre-2017 accidents and for public-transport cases.

The source text does not record specific case citations. It does, however, contain several provisions that were clearly enacted in response to judicial decisions or to forestall them.

Section 3A was inserted in 2006 and amended in 2009 and 2010 to make clear that the Act applies only where injury is caused during the driving of the vehicle, a collision or action to avoid a collision, the vehicle running out of control, or a dangerous situation caused by any of those events. The note to s 3A and the amendments recorded in the table to s 3 show that the legislature was concerned to confine the expansive interpretation that had been given to “use or operation” in earlier cases.

The 10 % permanent impairment threshold in s 131 and the conclusive-evidence rule in s 61(2) were designed to limit the volume of minor-injury claims reaching the courts. Section 61(4)–(6) gives the court a limited power to reject a certificate on denial-of-procedural-fairness grounds but otherwise prevents the court from substituting its own view on medical questions. The combined-certificate procedure in s 61(10) was added to deal with multiple injuries.

The objects in s 5(2) expressly require the law to be interpreted recognising the legislative intention to restrict non-economic loss for minor injuries and to ensure stability and predictability for premium setting. Section 6 reinforces that constructional preference.

Section 141 (standard of care not affected by knowledge of driver’s skill and experience) was inserted to reverse the effect of earlier decisions that had reduced the standard of care owed by a learner driver to a passenger who knew of the learner’s inexperience.

Controversies around the blameless-accident and child no-fault provisions are reflected in the detailed exclusions in ss 7E–7H and 7K–7L. The legislature was careful to prevent the no-fault scheme from being used by at-fault drivers or by children engaged in serious criminal conduct.

The interaction with the Lifetime Care and Support Scheme (ss 43A, 141A) was tightened in 2012 to remove any residual common-law damages for treatment and care once a person is a participant. That change was designed to eliminate overlap and double compensation.

No specific court challenges are recited in the text, but the frequency of amending Acts (more than 20 sets of amendments noted in the tables to ss 3, 14, 44, 61, 63, 94, 96 and 109) indicates continuing legislative fine-tuning in response to practical and judicial experience.

Most practitioners are aware of the 10 % threshold, but few realise that the threshold applies only to the injury caused by the motor accident; if there are multiple injuries, the combined certificate procedure in s 61(10) must be followed and only the total degree of impairment is compared with 10 %. A certificate that certifies 9 % for the accident injury and 2 % for a pre-existing condition does not satisfy the threshold even though the overall impairment is 11 %.

Section 3A(1) looks straightforward, but the four limbs (driving, collision or avoiding collision, running out of control, dangerous situation) have generated extensive case law. The 2010 amendment to the definition of “motor accident” was a direct legislative response to decisions that had narrowed the concept of “during” the driving of the vehicle. The current definition requires the injury to be a result of and caused during one of the four events, and the note to s 3A warns that Part 1.2 extends the Act only for limited no-fault purposes.

The early-payment scheme in Part 3.2 is often overlooked. An insurer who accepts provisional liability is not admitting liability (s 50(8)), yet once it has accepted, it must pay treatment expenses even if the injured person is wholly at fault. The $5,000 cap is per injured person, not per accident (s 51(3)), and treatment expenses have priority over lost earnings (s 51(5)). Failure to comply with the police and accident-notification requirements can bar early payments (s 48), but the insurer loses the right to rely on that non-compliance if it does not reject the claim within two months (s 48 read with the analogous provisions in ss 70 and 73).

Section 85B is a trap for claimants. If, 2½ years after the accident, the claimant has not provided all relevant particulars, the insurer may direct the claimant to do so. Failure to comply within three months is taken to be a withdrawal of the claim. Reinstatement after three years requires both a full and satisfactory explanation and a showing that total damages will be at least 25 % of the current maximum for non-economic loss. Many practitioners assume the ordinary three-year limitation period applies; s 109 imposes a three-year limitation on court proceedings but the s 85B mechanism can effectively shorten it.

The combined certificate procedure in s 61(10) is mandatory where impairment from more than one injury must be aggregated. A single medical assessor cannot certify the total; two or more certificates are required and a third assessor then issues the combined certificate. Failure to follow this procedure renders the certificate a nullity for threshold purposes.

Insurers sometimes forget that s 83(2A) deems treatment that accords with the Motor Accidents Medical Guidelines to be reasonable and necessary. Conversely, treatment that does not accord with the guidelines is not automatically unreasonable; the insurer must still prove it is not reasonable and necessary in the circumstances (s 53).

The objects in s 5(2) are not mere aspirational statements. Section 6 requires that any construction that promotes the objects is to be preferred and that discretions must be exercised to best promote them. Courts and the Commission are therefore required to interpret the Act in a way that acknowledges the legislative intention to restrict non-economic loss for minor injuries and to ensure stability and predictability for premium setting.

Finally, the Act does not apply to motor accidents occurring after the commencement of the Motor Accident Injuries Act 2017 (s 3AA(1)), except for Chapter 5 damages in railway and public-transport accidents (s 3AA(2) and s 121 of the Transport Administration Act 1988). Practitioners still dealing with post-2017 accidents under the 1999 Act must be alert to the precise cut-off date.

For insurers:

• File every proposed premium or set of premiums with the Authority and ensure they comply with the Motor Accidents Premiums Determination Guidelines (s 25). Do not charge any other premium unless the filed premium has been rejected and a provisional premium determined (s 27).
• Accept provisional liability for treatment and lost earnings within 10 days of receiving a completed accident notification form (s 50). Pay those expenses promptly up to the statutory cap.
• Decide liability within three months and make a reasonable offer of settlement once the claim can be quantified (ss 81, 82). Participate in a settlement conference and exchange all documents before the conference (ss 89A–89B).
• Comply with all guidelines (premiums, claims handling, medical) and with the Insurance Industry Deed. Keep accurate records and lodge all required returns (ss 176, 214B).
• Where liability is admitted or determined, pay hospital, medical, rehabilitation, respite and attendant-care expenses that are reasonable, necessary and verified (s 83). Use the bulk-billing arrangements where available (s 54).
• For high-risk policies, participate in the risk-equalisation arrangements (s 29). Disclose profit margins and actuarial assumptions (s 28).
• If an audit or information request is received, provide full cooperation (ss 177, 178). Do not obstruct authorised officers (s 182).

For claimants and their lawyers:

• Report the accident to police and submit a completed accident notification form within 28 days if early payments are required (s 48). Provide a full and satisfactory explanation for any delay (ss 70, 73).
• Give notice of the claim within six months (s 72). If late, provide a full and satisfactory explanation (s 73).
• Supply all relevant particulars expeditiously (s 85A). Authorise the insurer to obtain medical and other information (s 74).
• Attend all reasonable medical examinations and provide documents when requested (s 86). Mitigate loss (s 136).
• If the claim is not resolved, participate in a settlement conference and exchange all documents beforehand (ss 89A–89B). Make an offer of settlement within 14 days after the conference (s 89C).
• For medical disputes, ensure all relevant material is before the medical assessor. If a certificate is adverse, consider an application for review within 28 days on the ground that the assessment was incorrect in a material respect (s 63).
• Do not commence court proceedings until a certificate under s 92 or s 94 has issued (s 108). Comply with the three-year limitation period (s 109), noting that time stops while a claim is being assessed (s 109(2)).
• In any court proceedings, be prepared to justify any departure from the objects in s 5(2). Remember that the Act must be interpreted to promote those objects (s 6).

For medical practitioners:

• Familiarise yourself with the Motor Accidents Medical Guidelines (s 44). Treatment that accords with the guidelines is taken to be reasonable and necessary (s 83(2A)), but the converse is not automatically true.
• When preparing a certificate of permanent impairment, use the methodology prescribed by the guidelines or, in their absence, the AMA Guides 4th edition (s 133). Be aware that psychiatric impairment is assessed separately unless the assessment is solely for psychiatric injury.
• Fees for medico-legal reports and court attendance are capped (s 150). Ensure any report contains all information required by the guidelines or by the Commission.

For the Authority and the Commission:

• Issue and keep under review the three sets of guidelines (premiums, medical, claims handling). Consult stakeholders as required (ss 24, 44, 68).
• Ensure that medical assessors and claims assessors are appropriately qualified and that procedural fairness is observed. A certificate may be rejected by a court only on denial-of-procedural-fairness grounds (s 61(4)).
• Manage the Fund so that contributions exactly match expected liabilities plus a prudent margin (s 213). Use the risk-equalisation mechanisms in s 29 to spread high-risk policies.
• Audit insurers regularly (s 177) and enforce licence conditions (Part 7.1). Publish returns where appropriate (s 176(7)).

Compliance with the Act is not optional. Breach of a licence condition is both a criminal offence and a ground for civil penalty, suspension or cancellation. Claimants who fail to provide particulars or to comply with reasonable requests risk having their claim withdrawn or their damages reduced for failure to mitigate. Early, transparent and guideline-compliant conduct by all parties is the surest way to achieve the objects set out in s 5: early rehabilitation, affordable premiums, full funding, fraud deterrence and a stable, predictable scheme.