AAI Limited t/as Suncorp Insurance v Patten

[2020] NSWSC 1547

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

AAI Limited t/as Suncorp Insurance v Patten and anor [2020] NSWSC 1547

Hearing dates:

28 October 2020

Date of orders:

28 October 2020

Decision date:

28 October 2020

Jurisdiction:

Common Law

Before:

Bellew J

Decision:

(1) The second and third defendants are restrained from conducting a CARS Assessment Conference in proceedings involving the first defendant until further order of the court.

(2) The matter is adjourned for further directions before Bellew J on 5 November 2020.

Catchwords:

PRACTICE AND PROCEDURE – Application by the plaintiff for an interlocutory injunction restraining the second and third defendants from proceeding with an assessment conference for the purposes of assessing damages payable to the first defendant by the plaintiff – Where an application made by the plaintiff for the first defendant's participation in the Lifetime Care and Support Scheme was pending – Significant consequences to the plaintiff in the event that the first defendant was admitted to participate in the scheme - Arguable case that the third defendant’s determination to proceed with the assessment conference was unreasonable in the circumstances – Balance of convenience favouring the relief sought – Relief granted

Legislation Cited:

Motor Accidents Compensation Act 1999 (NSW)

Motor Accidents (Lifetime Care and Support) Act 2006 (NSW)

Cases Cited:

Associated Provincial Picture Houses v WednesburyCorporation [1948] 1 KB 223

Australian Broadcasting Corporation v Lenah Game Meats Pty Limited (2001) 208 CLR 199; [2001] HCA 63

Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57; [2006] HCA 46

Beecham Group Limited v Bristol Laboratories Pty Ltd (1968) 118 CLR 618; [1968] HCA 1

Bromley London Borough Council v Greater London Council [1983] 1 AC 768

Conyngham and ors v Minister for Immigration and Ethnic Affairs [1986] 68 ALR 423

Minister for Immigration and Citizenship v Li (2013) 249 CLR 332; [2013] HCA 18

Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597; [2002] HCA 11

Secretary of State for Education and Science v Tameside Metropolitan Borough Council [1977] AC 1014

Category:

Procedural and other rulings

Parties:

Plaintiff – AAI Limited t/as Suncorp Insurance
First defendant – Michael Patten
Second defendant – State Insurance Regulatory Insurance
Third defendant – Colin Stoten in his capacity as a Claims Assessor appointed by the State Insurer Regulatory Authority

Representation:

Counsel:
K P Rewell SC – Plaintiff
J de Greenlaw – First defendant

Solicitors:
Moray and Agnew Lawyers – Plaintiff
Gerard Malouf and Partners – First defendant
Submitting appearances for the Second and Third defendants

File Number(s):

2020/299848

Publication restriction:

Nil

Judgment

INTRODUCTION

1. By a summons filed on 19 October 2020 the plaintiff has sought a number of orders against the defendants. Pending the final hearing of the proceedings, the plaintiff seeks urgent relief in the following terms:

An order in the nature of prohibition, or alternatively an injunction, preventing the Second and Third defendants from conducting a CARS Assessment Conference in this matter until the final determination of these proceedings or until further order.

2. In support of the making of that order, the plaintiff read the following affidavits without objection:

1. Kathryn Burrows of 20 October 2020, together with two further affidavits of Ms Burrows each dated 28 October 2020; and

2. Peter Utiger dated 19 October 2020.

3. The matter came before me as Duty Judge. At the conclusion of the hearing, I made an order restraining the second and third defendants from conducting the Assessment Conference and indicated that my reasons would be published at a later date. Those reasons now follow.

THE FACTUAL BACKGROUND

The motor vehicle accident

4. The first defendant was involved in a motor vehicle accident on 22 February 2012 and suffered a number of physical injuries, the most significant of which was a right brachial plexus injury which has resulted in the total loss of use of his right arm. In his claim for damages against the plaintiff, who is the Compulsory Third Party insurer of the vehicle at fault in the accident, the first defendant asserts that he has a significant need for ongoing care and assistance.

The Lifetime Care and Support Scheme

5. The Motor Accidents (Lifetime Care and Support) Act 2006 (NSW) (the LCS Act) creates the Lifetime Care and Support Scheme (the Scheme). The Scheme is applicable to all motor accidents occurring on or after 1 October 2007. One of its primary purposes is to provide for the care and treatment needs of persons who suffer catastrophic injury as a consequence of such accidents.

6. A person is eligible for participation in the Scheme if his or her injuries satisfy the criteria specified in the Lifetime Care and Support Guidelines. Pursuant to s 58 of the LCS Act, such Guidelines are issued from time to time by the Lifetime Care and Support Authority of NSW (the LCS Authority).

7. An application for participation in the Scheme may be made by the injured person, or by the insurer against which a claim has been made. The bringing of an application by an insurer does not require the injured person’s consent. If an injured person satisfies the eligibility criteria, the LCS Act mandates that he or she will become a participant. In other words, participation in the Scheme is not optional if the criteria for eligibility are met.

8. The present Guidelines commenced on 21 November 2018 (the 2018 Guidelines). Previous versions of the Guidelines included those published in 2012 and 2015. In neither of those earlier versions was there a specific reference to a brachial plexus injury, although provision was made in those versions for persons who had suffered an upper limb injury to be eligible for participation in the scheme if that injury necessitated a complete amputation of the upper limb, or gave rise to an “equivalent impairment" to an amputation.

9. In contrast, the 2018 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". There is no dispute between the parties that the injury sustained by the first defendant falls within that description.

10. Pursuant to cl 9.1 of the 2018 Guidelines, an application for a person to become a participant in the Scheme must be made within three years after the date of the accident. This was also the position with the earlier versions of the Guidelines. The LCS Authority is given power, pursuant to cl 9.2 of the 2018 Guidelines, to extend the time for the making of an application providing the applicant furnishes a full and satisfactory explanation for the fact that such application has not been made within the three-year limitation period.

The plaintiff’s application for the inclusion of the first defendant in the Scheme

11. On 13 January 2015, the plaintiff’s solicitor received a report from Dr Brian Zeman, a rehabilitation specialist, in which Dr Zeman diagnosed the first defendant as having suffered a right brachial plexus injury complete with failed latissimus dorsi flap and nerve transfer. In expressing his opinion as to the first defendant's prognosis, Dr Zeman said:

A complete brachial plexus injury is functionally analogous to an amputation of the arm. It may be worth considering whether he is eligible for the Lifetime Care and Support Scheme due to this injury.

12. The report of Dr Zeman was received by the plaintiff's solicitor approximately six weeks prior to the expiration of the three-year period within which an application for participation in the Scheme must be made. Having read Dr Zeman's report, the plaintiff’s solicitor concluded that on a proper construction of the Guidelines which were then in force, the first defendant was not eligible because he retained some (albeit minimal) use of his right arm, and had the cosmetic benefit of an arm that an amputee did not have.

13. Upon their commencement, the plaintiff’s solicitor became aware that the 2018 Guidelines made express reference to a brachial plexus injury as a basis for eligibility to participate in the Scheme. Accordingly, he went about obtaining evidence in support of an application being made to the LCS Authority and arranged for the first defendant to be further examined by Dr Zeman for that purpose. The first defendant initially refused to attend that appointment, rendering it necessary for the plaintiff’s solicitor to obtain an order from a Judge of the District Court directing the first defendant’s attendance.

14. Dr Zeman examined the first defendant on 10 September 2019 and provided a report of 20 September 2019, and an associated certificate on 23 September 2019. Dr Zeman confirmed his previous diagnosis of a right brachial plexus injury, and observed that the 2018 Guidelines included, as part of the eligibility criteria for participation in the Scheme, a brachial plexus avulsion or rupture resulting in partial or total paralysis.

15. Upon receipt of Dr Zeman's report and certificate, the plaintiff's solicitor lodged an application with the LCS Authority on 17 October 2019 for the first defendant to be accepted as a participant in the Scheme. By letter of 9 December 2019 the LCS Authority advised the plaintiff’s solicitor that the first defendant had not been accepted as a participant because the application had been brought by the plaintiff more than three years after the date of the accident.

16. The plaintiff’s solicitor then wrote to the LCS Authority on 10 January 2020 taking issue with that determination. The LCS Authority responded on 17 January 2020 maintaining its position. On 28 January 2020 the plaintiff's solicitor wrote to the LCS Authority expressing his disagreement with its stated position and indicating that the plaintiff wished to proceed with a dispute application.

17. The plaintiff’s lodgement of the dispute application was subsequently accepted by the LCS Authority who referred the matter to a panel comprising three medical specialists. The panel found that the first defendant was eligible to participate in the Scheme under previous versions of the Guidelines, as well as under the 2018 Guidelines, but concluded that the plaintiff's explanation for the delay in making the application was other than full and satisfactory. That recommendation was accepted by the LCS Authority.

18. Generally speaking, it is the plaintiff’s position that:

1. the LCS Authority did not ask itself the correct question, namely, whether it was reasonable for a party in the position of the plaintiff, having received the advice that it did from its solicitor, to delay in making an application for the first defendant's participation in the Scheme until after the 2018 Guidelines came into effect;

2. the LCS Authority wrongly considered that the question was whether the plaintiff’s solicitor was correct or incorrect in his view as to whether or not the first defendant satisfied of the relevant eligibility criteria;

3. the conclusion of the panel as to the adequacy or otherwise of the explanation provided was not within the ambit of its statutory function.

The pending assessment conference

19. When informed of the panel’s determination, the plaintiff brought a further application to the LCS Authority for an extension of time. Having done so, the plaintiff applied to the third defendant, the appointed Claims Assessor, to defer the proposed assessment conference which had been set down to take place on 29 October 2020. In doing so, the plaintiff contended that the first defendant's damages could not reasonably be assessed until a final determination had been made by the LCS Authority in respect of the current application for an extension of time. On 18 September 2020 the third defendant refused the plaintiff's application. In doing so, he concluded (inter alia):

I consider that the balance of competing interests, on the one hand the Insurer which wishes to explore further avenues of having the Claimant admitted to the LTCS and will be bound by my determination, and on the other hand the Claimant who will experience further delay in having his claim determined; to favour the Claimant who was injured some eight and a half years ago. There seems to have been a delay of perhaps 9 months in the Insurer making what now appears to have been an unsuccessful application to the LTCS and there will be further, perhaps considerable, delay in the current application.

The Claimant suffers a very serious injury which affects him in every aspect of his life and will continue to do so for the balance of his life expectancy. It is entirely my view to have his claim redetermined as expeditiously as possible noting the object of CARS is to provide a timely fair and cost-effective system for assessing claims. To again defer the assessment of the application to enable the Insurer to again make application to the LTCS would be contrary to those objects.

The Insurer has had ample opportunity to address the issue of delay noting that the LTCS Authority letter dated 09.12.2019 had indicated the first application was unsuccessful due to delay, and in any event the Insurer ought to have been aware of the possibility of such an outcome having regard to the report of Dr Zeman of 13.01.2015 and a reading of the relevant Guidelines.

20. On 9 October 2020, a further application was made by the plaintiff to the third defendant to adjourn the assessment conference. In doing so the plaintiff drew the third defendant's attention to the decision in Minister for Immigration and Multicultural Affairs v Bhardwaj. [1] In refusing the application, the third defendant expressed the view that he did not consider that he was required to revisit his earlier determination, and that the application should be refused.

SUBMISSIONS OF THE PARTIES

1. (2002) 209 CLR 597; [2002] HCA 11.

Submissions of the plaintiff

21. Senior counsel for the plaintiff submitted that it was more than arguable that the decision of the third defendant to refuse to adjourn the assessment conference was, in all of the circumstances, legally unreasonable, illogical and plainly unjust. In support of that submission, senior counsel emphasised that in the event that the assessment conference proceeded, and an award of damages was made, the first defendant would be rendered ineligible to participate in the Scheme by operation of s 7(3) of the LCS Act. This, it was submitted, would result in the plaintiff being exposed to a liability to pay considerable damages it would not otherwise have to pay.

22. It was submitted that having regard to all of these matters, the balance of convenience lay squarely in favour of granting injunctive relief. Senior counsel for the plaintiff also emphasised, lest it be suggested that financial hardship would be caused to the first defendant by deferring the assessment conference, that the plaintiff had made (and continued to make) an unsolicited offer to advance a sum of $100,000.00 to the first defendant, pursuant to s 84A the Motor Accidents Compensation Act 1999 (NSW) (the MACA), a circumstance of which the third defendant had been made aware prior to making his determination.

Submissions of the defendant

23. Counsel for the defendant emphasised the seriousness of the first defendant's injury along with the fact that the subject accident had occurred in 2012. It was submitted that these circumstances supported the dismissal of the application for urgent injunctive relief. Counsel further submitted that on the evidence before this Court, the likelihood was that the latest application brought by the plaintiff to the LCS Authority would meet with the same fate as that which immediately preceded it.

24. It was further submitted that in refusing to adjourn the assessment conference, the third defendant had properly balanced the interests of both parties, and that there was no triable issue arising from his determination. Counsel for the first defendant also pointed to the substantial (and unrecoverable costs) which the first defendant had already incurred in addressing the plaintiff’s various applications to the LCS authority.

CONSIDERATION

The issues

25. In considering the present application, I am required to address two issues, namely:

1. the apparent strength of the plaintiff's case in terms of the issue(s) to be tried; and

2. the balance of convenience.

26. A consideration of the apparent strength of the plaintiff's case requires that the plaintiff:

1. invoke a recognised principle; [2] and

2. have sufficient probability of success to justify the interlocutory order which is sought. [3]

   2. Australian Broadcasting Corporation v Lenah Game Meats Pty Limited (2001) 208 CLR 199; [2001] HCA 63 at [20].

   3. Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57; [2006] HCA 46.

27. In order to obtain the relief sought, the plaintiff does not have to satisfy me of the likely outcome of the principal proceedings,[4] and it is not my function to make a final determination of any issue. What I am required to do is undertake an assessment of the probability of the plaintiff being successful in the proceedings. That assessment is an impressionistic one, which takes into account the apparent sufficiency of the plaintiff's evidence, and which is guided both by the nature of the proceedings and the nature of the order sought. [5] Ultimately, what the plaintiff must establish is the existence of a real question to be tried.

    4. Beecham Group Limited v Bristol Laboratories Pty Ltd (1968) 118 CLR 618; [1968] HCA 1 at 622– 623.

    5. O’Neill at [71].

28. In assessing the balance of convenience, a number of factors may be relevant, including:

1. whether the relief sought would overturn, or merely maintain, the status quo;

2. the effect on the respective positions of the parties of the grant, on the one hand, or the refusal, on the other, of the relief sought; and

3. the existence and/or sufficiency of alternative ways in which the position might be addressed.

Is there a real question to be tried?

29. It is the plaintiff’s case that the decisions of the third defendant to reject its applications for an adjournment of the assessment conference were legally unreasonable. The concept of legal unreasonableness has been the subject of considerable judicial consideration. [6] In Minister for Immigration and Citizenship v Li [7] the plurality (Hayne J, Kiefel J (as her Honour then was) and Bell J) made a number of observations regarding the standard of legal unreasonableness, including the following:

    6. See for example Associated Provincial Picture Houses v Wednesbury Corporation [1948] 1 KB 223 at 230; Secretary of State for Education and Science v Tameside Metropolitan Borough Council [1977] AC 1014; Bromley London Borough Council v Greater London Council [1983] 1 AC 768; Conyngham and ors v Minister for Immigration and Ethnic Affairs [1986] 68 ALR 423.

    7. (2013) 249 CLR 332; [2013] HCA 18.

1. specific errors in decision-making may be seen as being encompassed by unreasonableness; [8]

2. a court may infer that in some way there has been a failure to properly exercise the relevant discretion if, upon the facts, the result is unreasonable or plainly unjust; [9]

3. the reasoning in (ii) above may apply to the review of the exercise of a statutory discretion, where unreasonableness is an inference drawn from the facts, and from the matters falling for consideration in the exercise of the statutory power; [10] and

4. even where reasons have been provided, it may nevertheless not be possible for a court to comprehend how the decision was made. Unreasonableness is a conclusion which may be applied to a decision which lacks an evident and intelligible justification.

   8. At [72].

   9. At [76].

   10. At [76].

30. The first defendant seeks substantial damages under a number of heads. If the assessment conference were to go ahead and conclude at this point, it would be incumbent upon the third defendant to issue a certificate assessing the first defendant's damages pursuant to s 94(4) of the MACA. That certificate would (inter alia) have a binding effect on the plaintiff under s 95 of the MACA, pursuant to which the plaintiff would be required to pay the entirety of the damages assessed. More significantly, the first defendant would at that point become automatically ineligible to be a participant in the Scheme because he had received damages for treatment and care needs relating to his injury. Conversely, if the first defendant is admitted as a participant in the scheme, the plaintiff will be relieved of liability to pay substantial damages.

30. It follows that if the assessment conference were to go ahead, and if an assessment certificate were to issue (as it must), the first defendant could not become a participant in the Scheme, resulting in the final determination of the plaintiff’s application to the LCS Authority being foreclosed. The consequences of those circumstances to the plaintiff will be self-evident.

31. I am satisfied in these circumstances that there is a real question to be tried, namely whether the decision of the third defendant was unreasonable in the sense that I have outlined.

Where does the balance of convenience lie?

33. Largely for the same reasons, I am satisfied that the balance of convenience lies squarely in favour of the plaintiff. The potential effect on the plaintiff of a refusal of the relief sought would be substantial, in circumstances where there is no other remedy which it can pursue. That is to be contrasted with position of the first defendant who has been offered an advance of $100,000.00 and who, whatever the outcome of the current dispute, will either:

1. be awarded substantial damages; or

2. have the entirety of the cost of his future care met by the Scheme.

34. It was for these reasons that I made the order referred to in [3] above.

**********

Endnotes

Amendments

25 November 2020 - Typographical corrections to coversheet, [1] and footnote 4.

Decision last updated: 25 November 2020