Borrow v Insurance Australia Limited t/as NRMA Insurance
[2024] NSWPICMR 67
•3 September 2024
| CERTIFICATE OF DETERMINATION OF MERIT REVIEWER | |
CITATION: | Borrow v Insurance Australia Limited t/as NRMA Insurance [2024] NSWPICMR 67 |
CLAIMANT: | Leonie Borrow |
INSURER: | Insurance Australia Limited t/as NRMA Insurance |
MERIT REVIEWER: | Belinda Cassidy |
DATE OF DECISION: | 3 September 2024 |
CATCHWORDS: | MOTOR ACCIDENTS - Motor Accidents Injuries Act 2017 (MAI Act); Civil Liability Act (CL Act); claimant’s husband killed in a motorbike accident; claimant sustained psychological or psychiatric injury as a result and made a claim for statutory benefits for pure mental harm; insurer refused to pay any statutory benefits on basis section 30(1) of the CL Act prevented it because there was no “defendant” or “tortfeasor” as the deceased did not owe a duty of care to his wife to avoid causing her injury; Homsi v Homsi relied on by insurer and discussed; claimant self-represented; consideration of section 3.39 of the MAI Act and how the mental harm provisions of the CL Act were to be “modified” to fit a statutory benefits scheme; principles of statutory interpretation and Commission of Taxation v Consolidated Media Holdings Ltd cited; objects of the MAI Act and modification of all of the mental harm provisions considered; Held – section 30(1) of the CL Act should be modified to adjust the terminology used and to allow close family members or witnesses to recover statutory benefits in circumstances where there was no fault on the part of an owner or driver of a motor vehicle or even if the motor accident was caused by the fault of the primary victim of the accident; insurer not entitled to refuse payment of statutory benefits. |
DETERMINATIONS MADE: | CERTIFICATE In accordance with Division 7.4 of the Motor Accident Injuries Act 2017, 1. The insurer’s decision of 24 May 2024 to deny Mrs Borrow statutory benefits is set aside. 2. In substitution for that decision, the insurer is not entitled to refuse payment of statutory benefits to Mrs Borrow. The date of effect of this decision is 24 May 2024. |
STATEMENT OF REASONS
INTRODUCTION
On 17 March 2024, Christopher Borrow was riding his motorcycle on the Lakes Way between Bulahdelah and Forster, when he lost control while negotiating a left-hand bend, slid across the road and was struck by a car coming in the opposite direction. He died at the scene.
On or about 13 May 2024, Mr Borrow’s widow, Leonie Borrow made a claim for statutory benefits under the Motor Accident Injuries Act 2017 (the MAI Act). The claim was made with NRMA, the third-party insurer of Mr Borrow’s motorcycle.
On 24 May 2024, NRMA denied the claim on the basis that the requirements of Part 3 of the Civil Liability Act 2002 (the CL Act) were not satisfied.
The claimant sought an internal review of that decision in accordance with Division 7.3 of the MAI Act. On 21 June 2024 the insurer affirmed that decision refusing to pay Mrs Borrow any statutory benefits under the MAI Act.
The claimant has referred the issue of whether she is entitled to statutory benefits to the Personal Injury Commission (the Commission) for merit review in accordance with Division 7.4 of the MAI Act.
The proceedings have been allocated to me. I held a preliminary conference with the claimant (who was assisted by her brother) and the insurer’s representative on 29 August 2024.
LEGISLATIVE FRAMEWORK
Statutory benefits generally
The claim that is before me is Mrs Borrow’s claim for statutory benefits under Part 3 of the MAI Act. Ms Borrow was not involved in the accident and she sustained no physical injury. She makes her claim on the basis that she has suffered a psychological or psychiatric injury as a result of the tragic loss of her husband in the accident.
Under s 3.1 of the MAI Act if a person is killed or sustains injury which “results from a motor accident”, statutory benefits are payable. Injury is defined in s 1.4 to include psychiatric or psychological injury. Statutory benefits under Part 3 are payable to a person regardless of whether there is fault on the part of the owner or driver of a motor vehicle in the use or operation of the vehicle[1] and even if the person claiming the benefits was at fault and caused the motor accident.[2]
[1] That is blameless or no-fault accidents – see s 3.1(2)(a).
[2] Section 3.1(2)(b).
Statutory benefits are payable by the relevant insurer which is ascertained by considering the provisions of s 3.2 of the MAI Act or as determined under s 3.3.
Statutory benefits include the reasonable funeral expenses of someone killed “as a result of” a motor accident[3]. Mrs Borrow informed me at the preliminary conference that NRMA had paid for her husband’s funeral.
[3] Section 3.4.
Statutory benefits for injured persons
If a person is injured “as a result of” a motor accident and is eligible for statutory benefits, they may be entitled to weekly income replacement type benefits pursuant to Division 3.3 of the MAI Act and treatment and care benefits pursuant to Division 3.4.
The scheme of statutory benefits however is not universal. There are three circumstances listed in Division 3.5 where someone is prevented from receiving any statutory benefits at all, a person with a workers compensation claim, a person whose vehicle is uninsured and whose fault (wholly or mostly) caused the accident, or a person who is charged with or convicted of a serious driving offence.[4]
[4] Sections 3.35, 3.36 and 3.37.
The scheme of statutory benefits does not pay all recipients for all times. Pursuant to ss 3.11(1)(a) and 3.28(1)(a), an injured person is not entitled to statutory benefits beyond the first 52 weeks after the accident if the injured person only has threshold injuries or if the injured person was wholly or mostly at fault for causing the accident.
Section 1.6 provides a definition of threshold injury and, in terms of mental harm injuries, says that a psychological or psychiatric injury that is not a recognised psychiatric illness is a threshold injury. The Motor Accident Injuries Regulation 2017 (the Regulation) also provides that an adjustment disorder or acute stress disorder is a threshold injury.
Pure mental harm
As mentioned earlier, the definition of “injury” in the MAI Act includes those persons who sustain a psychological or psychiatric injury as well as those persons who sustain physical or bodily injury.
Section 3.39 is headed “limitation on statutory benefits in relation to certain mental harm” and says:
“Part 3 (Mental harm) of the Civil Liability Act 2002 applies to the payment of statutory benefits under this Part in connection with an injury in the same way as it applies to the award of damages in connection with an injury, subject to any necessary modifications and to any modifications prescribed by the regulations.”
The long title of the CL Act is “an Act to make provision in relation to the recovery of damages for death or personal injury caused by the fault of a person …” Section 3B(1) excludes the provisions of the CL Act from awards of damages under Part 6 of the Motor Accidents Act 1988, Chapter 5 of the Motor Accidents Compensation Act 1999 and Part 4 the MAI Act. Section 3B(2) applies some of the provisions of the CL Act “to motor accidents” including Part 3 the mental harm provisions.
The mental harm provisions include the following:
(a) at s 27 there are definitions of consequential mental harm, mental harm and pure mental harm as well as a definition of negligence;
(b) the claims for damages that the provisions apply to is explained in s 28;
(c) section 29 says that a “plaintiff” is not prevented from recovering damages merely because their injury arose in whole or in part from mental or nervous shock;
(d) limits on the recovery of damages are found in s 30 (see below);
(e) section 31 says that; “there is no liability to pay damages for pure mental harm resulting from negligence unless the harm consists of a recognised psychiatric illness;”, and
(f) section 32 modifies the duty of care and says that a defendant owes a duty of care to a plaintiff to prevent harm (the suffering of a recognised psychiatric illness) only if it was reasonably foreseeable that a person of normal fortitude would sustain psychological or psychiatric injury.
Section 30, which looms large in the current proceedings reads as follows:
“(1) this section applies to the liability of a person (the defendant) for pure mental harm to a person (the plaintiff) arising wholly or partly from mental or nervous shock in connection with another person (the victim) being killed, injured or put in peril by the act or omission of the defendant.
(2) The plaintiff is not entitled to recover damages for pure mental harm unless—
(a) the plaintiff witnessed, at the scene, the victim being killed, injured or put in peril, or
(b) the plaintiff is a close member of the family of the victim.
(3) Any damages to be awarded to the plaintiff for pure mental harm are to be reduced in the same proportion as any reduction in the damages that may be recovered from the defendant by or through the victim on the basis of the contributory negligence of the victim.
(4) No damages are to be awarded to the plaintiff for pure mental harm if the recovery of damages from the defendant by or through the victim in respect of the act or omission would be prevented by any provision of this Act or any other written or unwritten law.
(5) In this section close member of the family of a victim means—
(a) …
(b) the spouse or partner of the victim …”
Section 30 of the CL Act has been modified by clause 8 of the Regulation which reads as follows:
“(1) The application of Part 3 (Mental harm) of the Civil Liability Act 2002 to the payment of statutory benefits under Part 3 of the Act in connection with an injury is subject to the modification set out in this clause.
(2) The requirement in section 30 (3) of the Civil Liability Act 2002 (to reduce damages awarded to the plaintiff for pure mental harm in the same proportion as any reduction in the damages that may be recovered from the defendant by or through the victim on the basis of the contributory negligence of the victim) is to be read as a requirement to apply the at-fault statutory benefits limitations to the payment of statutory benefits to the claimant in the same way as they apply to the payment of statutory benefits to the victim.
(3) The at-fault statutory benefits limitations are the provisions of Part 3 of the Act that provide for the reduction of, or cessation of entitlement to, weekly payments of statutory benefits to injured persons wholly or mostly at fault in the motor accident from which the injury resulted.
(4) Words and expressions used in subclause (2) have the same meaning as they have in section 30 of the Civil Liability Act 2002.”
Dispute resolution
Disputes that arise in the course of a statutory benefits claim are classified in Schedule 2 of the MAI Act as either merit review matters (determined by Merit Reviewers), medical assessment matters (determined by Medical Assessors) or miscellaneous claims assessment matters (determined by General, Senior or Principal members of the Commission).
Schedule 2(1)(t) declares as a merit review matter a dispute as to:
“…whether the insurer is entitled to refuse payment of statutory benefits in accordance with Part 3 of the Civil Liability Act 2002 (as applied by section 3.39…) …”
INSURER’S DECISION MAKING AND SUBMISSIONS
Internal review
The claimant requested an internal review of the insurer’s original decision to reject the claim.[5] She expresses concern about NRMA’s decision making saying she was coached and encouraged to make a claim, was never advised about fault, and was told how to fill in the forms only to then have the claim denied.
[5] The document requesting it is not dated but is included at page 19 of the claimant’s bundle.
Mrs Borrow says she had never seen the police report before it was sent to her and had not known, until she read it, that her husband had been hit by another car. She was concerned that the police report provided her with the name, address and other details of the person driving the car that thit her husband. She says this has caused additional grief to her and her family.
On 21 June 2024, NRMA completed the internal review and wrote to the claimant affirming the original decision. In it, NRMA:
(a) refers to section 3.1 and s 3.39 of the MAI Act and s 30 of the CL Act;
(b) refers to the claimant’s description of injury in the claim form and that she has nominated her husband to be the driver at fault;
(c) relies on the police report and that the police found her husband to be “the unit responsible”, and
(d) cites the whole of s 30 and also cites Regulation 8(3).
NRMA says:
“Applying the Act and Regulations, as your husband was the at fault party in the subject MVA, you are not entitled to statutory benefits for the first 52 weeks from the date of the subject MVA.”
Claimant’s submissions
Mrs Borrow says[6] that the process of making the claims she has made has been overwhelming and distressing citing the following:
(a) NRMA sent her a compensation to relatives claim form requesting she complete it, which she did and which they then denied;
(b) NRMA sent her a statutory benefits clam form telling her this claim would cover her for up to 12 months off work. She completed the form, obtained a certificate from her doctor, was asked for additional information which she provided and then this claim was denied;
(c) she says she has had to deal with four different departments at NRMA;
(d) she complains about errors including emails being sent to her late husband’s email address and that the police report was sent to her containing details which she had never known – that is that he was hit by the oncoming car;
(e) she was unable to work for 12 weeks. She took leave and exhausted her leave entitlements and seeks financial assistance to help cover future leave;
(f) the claim was rejected on the basis her husband was “at fault” despite the accident being “an unfortunate event without any negligence or intentional action” on the part of her husband, and
(g) her husband was riding responsibly, within the speed limit, obeying the laws and that “the accident and subsequent tragedy were caused by adverse environmental conditions, including rain, wet roads, oil on the road and severe potholes”.
[6] The document in support of her application is at page1 of her bundle.
Insurer’s submissions
The insurer notes that Part 3 of the MAI Act includes two relevant provisions, ss 3.1 and 3.39. Section 3.1 is cited in full, and the insurer says that s 3.39 imports the pure mental harm provisions of the CL Act into the statutory benefits scheme.
The insurer notes clause 8 of the Regulation applies s 30(3) of the CL Act and modifies the “at-fault statutory benefits limitations” for statutory benefits payable to a claimant in the same way as they would affect the benefits of the victim.
The insurer says cl 8 of the Regulation does not apply to the current dispute, and s 30 of the CL Act is then cited in full. The insurer notes s 30(5) of the CL Act and concedes that Mrs Borrow is a “close family member of the victim”.
The insurer submits:
(a) in claims for psychiatric injury there is a distinction between the primary or immediate victim of an accident and secondary victims [19];
(b) the primary victim is the person killed or injured and the secondary victim is the person who sustains the mental harm. The duty of care owed to primary and secondary victims are separate and different [20];
(c) section 30 codifies the common law in respect of secondary victims and operates to restrict and limit their common law rights [21];
(d) there is a requirement for there to be someone else other than the primary and secondary victim involved in the claim and that is the defendant [22];
(e) the claimant is not an immediate or primary victim as she was not involved in the accident and the only way she can be entitled to statutory benefits is if she satisfies s 30 of the CL Act and she does not [23], and
(f) the insurer cites several cases concerning the common law and duty of care in mental harm cases. The insurer cites in particular the case of Homsi v Homsi[7] where Forrest J, “referred to the powerful policy considerations which count against the common law expanding the duty as contended for by the Plaintiff” [36] and “concluded that the Defendant owed no duty of care to the Plaintiff and the proceedings were dismissed” [37].
[7] [2016] VSC 354 referred to as “Homsi” in these reasons.
The insurer summarises its position as follows:
(a) the claimant is not a primary victim;
(b) she is not a secondary victim because there is no duty of care owed by her husband to himself or to her;
(c) section 30 is not satisfied, and
(d) pursuant to s 3.39 she has no entitlement to damages.
REVIEW OF THE EVIDENCE
Documentary evidence
Mrs Borrow is 57 years of age.
Her claim form was dated 13 May 2024. In it she says:
“The loss of my husband in the motorbike accident has caused significant mental trauma and distress. I’m overwhelmed with grief, sadness and a deep sense of loss. His passing has left me struggling with anxiety, insomnia and difficulty concentrating. These challenges have made it impossible for me to return to work.”
The claimant acknowledges that her claim form is late and says:
“Due to the overwhelming emotional turmoil and distress caused by my husband’s passing in the motorbike accident, it has taken me longer than 28 days to gather the strength and composure to lodge this form. It’s been really tough dealing with my husband’s loss and handling everyday stuff while I am still grieving.”
Mrs Borrow says in her form that she is a Teachers’ Aide with Autism Spectrum Australia earning $1,910 fortnightly and that she has been away from work for eight weeks and continuing.
Dr Frostis of the Appletree Family Practice in Charlestown completed a Certificate of Fitness dated 21 May 2024. She diagnosed “bereavement post husband passing away in motor bike accident.” She identifies no pre-existing factors which might be relevant and notes the management plan is for a grief counsellor “via SIRA / CTP”. She certified the claimant unfit for work from 18 March 2024 to 31 May 2024. Dr Frostis was to review the claimant on 31 May 2024.
The police report has been provided confirming the date, time, location and circumstances of the accident. It says under the crash summary details:
“The Deceased was travelling at an estimated speed of about 50 – 60 kph when he has begun to negotiate a tight left bend. The deceased has lost traction with the front tyre, the motor-cycle has dropped on the roadway and slid across into the oncoming lane. It was at this point that a white Ford … was … negotiating a tight right-hand bend. Both the deceased and [the white Ford] collided …”
According to the police report the speed limit was 80 kms per hour, the weather was “raining”, the surface of the road was wet, and it was daylight. The accident occurred on a curved road with a grade. The claimant was said to have had 34 years of driving experience.
Evidence at the preliminary conference
Mrs Borrow said she was not sure but thought she returned to work on or about 4 June 2024. She said she had to return to work because she had run out of leave, and she could not afford to have further time off work. She had three weeks away from work without any leave entitlements and has lost three weeks wages. She also said she wanted to be paid for the leave she took, so her leave could be restored in case she needed it in future.
She said she had one counselling session provided by the insurer, which she said was “great”, but she had difficulty getting further sessions because she had returned to work and the counsellor did not work outside Mrs Borrow’s work hours. Mrs Borrow said she had returned to her doctor a couple of time and her doctor had provided her with other certificates and she thought she had been diagnosed with a trauma related mental health issue.
I asked Mrs Borrow if she knew what had caused her husband to lose control of his motorbike. She said he was participating in a charity ride and riding with a group of others, and he was the only one who came to grief. She said she had not seen the police records, other than the police report, and had not spoken to the police. She was aware the police had investigated the accident and were preparing (or had prepared) a report to the Coroner, but she did not know what was in it. She said she had been told it was raining and the road was wet, and her husband’s front wheel lost traction. She said the accident happened on the Lakes Way between Bulahdelah and Forster and that it was a very windy road where accidents happened regularly. She said the road was full of pot-holes. She said her husband was riding below the speed limit and that the police told her at the time that the road conditions were to blame for the accident.
Insurer’s submissions at the preliminary conference
Mr Galvin explained that in the insurer’s view, s 30(1) of the CL Act applies and that it does not require modification. He says it codifies the common law and requires there to be three protagonists, a primary victim (in this case Mr Borrow), a secondary victim (in this case Mrs Borrow) and a negligent defendant or tortfeasor who owes a duty of care to both victims. He says as there is no third protagonist in this accident, Mrs Borrow does not have a claim.
Mr Galvin also said that as Mr Borrow does not owe himself a duty of care and he cannot be both the primary victim and the tortfeasor. Finally, Mr Galvin relies on the case of Homsi that says a primary victim does not owe a secondary victim a duty of care which can be breached and which can therefore form the legal basis of a claim for pure mental harm.
When I queried whether there could be modifications to s 30(1) that would allow Mrs Borrow to recover benefits aligned with her husband’s benefits had he survived the accident (52 weeks at least), Mr Galvin said that would open up a category of secondary victims not recognised by the common law. I observed that Part 3 of the MAI Act appeared to recognise a whole category of primary victims not recognised by the common law, that is persons who were wholly or mostly at fault and who were entitled to 52 weeks of statutory benefits. Mr Galvin reiterated that it was his client’s view that secondary victims are an entirely different category of victim whose rights and entitlements are limited to cases where there is someone who owed a duty of care and who breached that duty and was negligent or at fault.
CONSIDERATION OF THE ISSUES
What is the relationship between the MAI Act and the Civil Liability Act 2002?
The insurer says that s 3.39 applies s 30(1) of the CL Act which codifies the common law limiting and restricting access to damages for secondary victims (such as Mrs Borrow) and that these limits and restrictions should similarly restrict access to statutory benefits for secondary victims and should not be modified.
The words of s 3.39 of the MAI Act are clear. The mental harm provisions of the CL Act relevant to an award of damages in connection with a psychiatric or psychological injury arising from mental or nervous shock apply to the payment of statutory benefits.
The mental harm provisions of the CL Act are also clear in so far as they apply to a civil claim for damages under that Act. The CL Act has been in force since 2002 and there are many decisions from the courts providing guidance as to what they mean, and how they apply in particular circumstances.
The insurer’s submissions refer at [19] to claims involving psychiatric injury and the differentiation between primary and secondary victims. The insurer’s submissions at [20] refer to the duty of care owed by road users and says at [22] that in a secondary victim’s mental harm clam there must be a victim who is not the primary victim or the tortfeasor. The insurer refers to case law including the case of Homsi where Mrs Homsi sustained pure mental harm following the death of her son in circumstances where the accident that killed her son was caused “solely due to his own negligence” (see [33]). Mrs Homsi commenced court proceedings and her deceased son was the defendant in those proceedings[8]. The judge in that case determined that Mr Homsi owned no duty of care to his mother to not cause her psychiatric injury as a result of fatally injuring himself.
[8] It was the claimant’s son’s compulsory third party (CTP) insurer that was to pay any damages that she may have been awarded.
The insurer’s submissions are accurate in terms of civil claims for damages where there are plaintiffs and defendants (tortfeasors), and the law of negligence (duty, breach and foreseeability of damage) applies. But the CL Act provisions are required in this case to apply in a motor accident scheme of statutory benefits where there are no plaintiffs, defendants or tortfeasors and the law of negligence does not create or determine the right or entitlement to those benefits.
How the CL Act mental harm provisions are to be applied to the statutory benefits scheme is the real issue in the current proceedings.
What are the principles of statutory interpretation?
The basic approach to statutory interpretation or construction was stated by the High Court in Commissioner of Taxation v Consolidated Media Holdings Ltd[9] at [39], as follows:
"'This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the [statutory] text.' So must the task of statutory construction end. The statutory text must be considered in its context. That context includes legislative history and extrinsic materials. Understanding context has utility if, and in so far as, it assists in fixing the meaning of the statutory text. Legislative history and extrinsic materials cannot displace the meaning of the statutory text. Nor is their examination an end in itself."
[9] [2012] HCA 55.
To understand the context of an Act, the whole legislation must be considered rather than just the single provision or provisions in issue. In other words, a disputed provision should not be read in isolation but should be read in the context of the legislation as a whole.
If a legislative provision could have more than one meaning, then s 33 of the Interpretation Act 1987 and s1.3(4) of the MAI Act says that the meaning that promotes the objects or purpose of the Act should be preferred.
The purpose of the MAI Act is expressly stated in s 1.3(1) as follows:
[The MAI Act] “establishes a new scheme of compulsory third-party insurance and provision of benefits and support relating to the death of or injury to persons as a consequence of motor accidents.”
Specific objects of the Act are provided in s 1.3(2) and include relevantly:
(a) the provision of early and appropriate treatment and care, and early and ongoing financial support for persons injured in motor accidents;
(b) continuing to make insurance compulsory, keeping premiums affordable, promoting competition and deterring fraud, and
(c) the early resolution of claims and the “quick, cost effective and just” resolution of disputes that arise in claims.
The issue in Mrs Borrow’s claim is whether s 30(1) needs to be modified and if so, what the necessary modifications might be. In the light of the principles of statutory interpretation to consider the context and purpose of the MAI legislation, consideration should also be given to all of the mental harm provisions and what modifications might be necessary to all of them particularly in the light of what modifications have already been made to them.
What modifications have been made to the mental harm provisions by the Regulation?
While the intent of s 3.39 is to import the mental harm provisions under the CL Act into the motor accidents legislation they are not imported as they are, in a form of legislative cutting and pasting, but by cutting and pasting with editing that is “necessary” and in accordance with the Regulation. The modification of provisions relevant to damages claims are necessary so that they fit into a statutory benefits scheme.
Clause 8 of the Regulation modifies s 30(3) of the CL Act. Clause 8 changes the terminology of s 30(3) and talks of the “claimant” instead of the “plaintiff”. The phrase “damages recovered from the defendant” has also been changed to “payment of statutory benefits” and of course statutory benefits are paid by the relevant insurer not by or through the insured owner or driver.
Clause 8 however does not simply change the terminology. Significant changes are made to modify the availability of a lump sum of damages for all foreseeable past and future losses into the statutory benefits scheme of regulated entitlements. Clause 8 states that the at-fault statutory benefits limitations must be applied to a claim for pure mental harm (cl 8(2)). The at-fault limitations are stated in cl 8(3) to be the provisions of Part 3 of the MAI Act that reduce or terminate weekly payments of statutory benefits to injured persons wholly or mostly at fault in the motor accident from which their injury occurred. In other words, the provisions of ss 3.11(1)(a), 3.28(1)(a) and 3.38 would apply to Mrs Borrow’s claim just as they would to her husband’s claim had he survived the accident[10].
[10] On the current state of the evidence about how the accident happened, had he lived, Mr Borrow’s statutory benefits would likely have been terminated at 52 weeks on the basis the accident occurred due to his “fault” that is his loss of control of his motor bike. If evidence emerges that there was someone else (another driver or rider) or something else (the state of the road surface) that caused the accident, Mr Borrow might be considered contributorily negligent. If that contributory negligence was assessed at greater than 61% then any statutory benefits paid to him had he survived would be terminated after 52 weeks, or his weekly benefits might be reduced if his contributory negligence was less than 61%.
Are other modifications necessary to the mental harm provisions?
Section 30(1) is just one sub-section of many which are adopted into the MAI Act subject to modification. What those modifications might be has not yet been tested in the Courts. While there have been mental harm cases in the Commission, the majority of those concern the scope of the “close family member” test[11] and there has been one case about “reasonable fortitude”[12] and the application of s 32. In that case, there appeared to be no submissions made about what “necessary modifications” might need to be made to that section in a statutory benefits claim, and the decision does not speculate as to what “necessary modifications” should be made.
[11] For example, BFH v Allianz Australia Insurance Limited [2023] NSWPICMR 2
[12] Zhao v AAI Limited t.as GIO [2023] NSWPICMR 62.
I have not been taken to any case in the Courts or the Commission which have had to consider any necessary modifications to ss 27, 28 and 29 or s 30(1), (2), (4) or (5), 31 or 32.
Section 27 is a definition section which includes definitions of mental harm, pure mental harm and consequential mental harm. These definitions do not appear to require any modification. There is a definition of negligence which might tie into the definition of fault in s 1.4 of the MAI Act and therefore the issue of wholly or mostly at fault. There is also a definition of personal injury which is similar to, but not the same as, the definition of the MAI Act. A necessary modification to s 27 might be therefore the adoption of the definition of injury from the MAI Act.
Section 28 concerns the application of the CL Act to civil proceedings. As s 3.39 applies the mental harm provisions into the motor accidents legislation, the broader application of the CL Act to other types of accidents or claims is not relevant. The necessary “modification” to s 28 therefore might be to delete it.
Section 29 could necessarily be modified to recognise the pure mental harm type of injury in motor accident claims as follows:
“In any [claim for statutory benefits], the [claimant] is not prevented from recovering [benefits] merely because the personal injury arose wholly or in part from mental or nervous shock.”
Section 29 would then be the foundation stone upon which a statutory benefits pure mental harm claim is built. Any person who sustains psychological or psychiatric injury from mental or nervous shock (but no physical injury) can be paid statutory benefits under Part 3.
The modification of s 31 is not so clear. A straightforward modification (cutting and pasting but not editing) to s 31 might be:
“The relevant insurer has no liability to pay [statutory benefits] for pure mental harm [resulting from a motor accident] unless the harm consists of a recognised psychiatric illness.”
In the light of the threshold injury provision restricting benefits to 52 weeks, an alternative necessary editing or modification could be to harmonise s 31 with ss 3.11 and 3.28 so that a person who suffers injury from mental or nervous shock receives benefits regardless of the nature of the psychological or psychiatric injury for the first year after the accident, but there is no liability to pay statutory benefits for pure mental harm beyond the first 52 weeks if the harm is a threshold injury. This would support the object of the Act to provide early treatment and rehabilitation and encourage the early return to work and activities.[13] Bearing in mind a diagnosis under the Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition (DSM-5) of post-traumatic stress disorder requires symptoms to be present for one month[14] and a persistent complex bereavement disorder requires the presence of symptoms for 12 months[15], this might be the necessary and preferable modification.
[13] Section 1.3(2)(a).
[14] Criterion F, DSM-5-TR page 272 and the commentary at page 274 recognises that post-traumatic stress disorder symptoms usually begin within the first three months but meeting the relevant criteria can take months or years.
[15] DSM-5-TR page 789.
What other modifications are necessary to s 30(1)?
Section 30(1), (2) and (4) refers to the “plaintiff” and the “defendant”. Part 3 of the MAI Act refers to claimants and relevant insurers. In my view there needs to be some modification to the other subsections of s 30, at least in terms of the terminology used for the parties.
Adopting the change of terminology in cl 8 of the Regulation to modify the names of the roles in a mental harm claim, s 30(1) could therefore read as follows:
“This section applies to the liability of the [relevant insurer to pay statutory benefits] for pure mental harm to [the claimant] arising wholly or partly from mental or nervous shock in connection with [the victim] being killed, injured or put in peril [by the motor accident].”
The words “act or omission of the defendant” are not needed in a claim for benefits where the entitlement is established by the legislation, and which does not depend on satisfying the elements of the tort of negligence (duty and breach by the negligent act or omission of a defendant tortfeasor).
Those modifications would not prevent a claimant such as Mrs Borrow from recovering statutory benefits. The relevant insurer’s liability would be limited by s 30(2) because the claimant must have witnessed the accident or be a close member of the family of the victim and also the restrictions in s 30(3) as modified by cl 8 of the Regulation would also apply.
If the above modification was made, Mrs Borrow would be entitled to treatment and care benefits (including counselling) and weekly benefits whilst she was unable to work as a result of her psychological or psychiatric injury.
However, the terminology of s 30(1) could also be modified in this way:
“This section applies to the liability of the [insured driver/rider] for pure mental harm to [the claimant] arising wholly or partly from mental or nervous shock in connection with another person [the victim] being killed, injured or put in peril by the act or omission of the [insured driver/rider].”
That modification appears to align with the insurer’s interpretation and suggests a claimant such as Mrs Borrow could not recovery statutory benefits because that would require there to be three persons involved, the negligent at fault defendant, the injured person and “another person” (the victim).
There has been no guidance in s 3.39 as to how the modifications are to be made and therefore which of the above two modifications is the correct one?
What is the context and purpose of s 3.39?
In my view the “necessary modifications” to the CL Act provisions must be approached in the same way as interpreting a statute that, is by considering the context and purpose of the whole of the legislation that they are being imported into.
The following aspects of the legislative package around motor accidents are relevant to the first proposed modification of s 30(1) as set out in [70] above and which would benefit the claimant in these proceedings:
(a) the stated purpose in s 1.3(1) is a “new” scheme of benefits and support;
(b) the new benefits and support available following death or injury in motor accident include statutory benefits in accordance with Part 3;
(c) injury includes psychological or psychiatric injury;
(d) statutory benefits are provided to most injured people for at least 52 weeks on a no-fault or not-at-fault basis;
(e) statutory benefits are paid by the “relevant insurer”, and
(f) disputes about benefits are resolved in the Commission where claimants and insurers are the parties to the proceedings and where the insured is not named as a party.
However, the motor accidents legislative package also imposes the compulsory levying of insurance premiums on the motoring public of New South Wales and to achieve that, statutory benefits are limited in terms of the amount of benefits that can be paid, the length of time they can be paid and restricted by the provisions in Division 3.5 (which includes s 3.39). These objects and matters would support the second proposed modification set out in [74] above.
In my view the fundamental purpose of s 3.39 is to permit a claimant to recover statutory benefits where their only injury arises wholly or in part from mental or nervous shock as per the necessary amendment to s 29 of the CL Act. The purpose of s 30(1) then is to limit, not eliminate the ability of claimants to recover statutory benefits in a claim based on pure mental harm.
In my view, the first proposed modification needs to be made to s 30(1) as set out in [70] above for the following reasons:
(a) the CL Act is an Act regulating the recovery and award of damages. The MAI Act is an Act which in Part 3 provides a statutory entitlement to benefits;
(b) the scheme of statutory benefits is new. More persons and different persons are entitled to statutory benefits than those entitled to damages under this or the previous schemes. Damages could be claimed and recovered only on the basis of proving negligence or establishing the claim was a “blameless accident”. Considering which persons may or may not have recovered damages in a civil liability claim should not, in my view be determinative of their entitlement to statutory benefits;
(c) liability for statutory benefits is a liability of the relevant insurer not the liability of the insured user or operator of the motor vehicle that caused the accident;
(d) an injured person’s statutory entitlement to benefits is not dependent on there being a defendant or tortfeasor;
(e) statutory benefits are payable to persons physically or psychologically injured in the accident regardless of fault and it would be consistent and fair for the benefits of secondary victims to mirror the primary victim’s entitlements;
(f) clause 8 has modified s 30(3) to recognise not just the necessary change in terminology but also to make the necessary distinction between the two types of claims and fundamental changes limiting and terminating benefits in certain circumstances;
(g) the modification to s 30(3) made by cl 8 allows for the reduction or termination of benefits if there is no other person at fault (that is if the victim is the person who caused the accident) thereby limiting statutory benefits when compared to potential damages and the policy considerations taken into account by the Court in Homsi, and
(h) section 3.39 imposes a “limitation” on statutory benefits for pure mental harm and does not remove benefits entirely. The other provisions in Division 3.5 clearly provide no benefits in three specified situations (when the injured person has workers compensation entitlements, when they are at fault and the vehicle is unregistered and uninsured or if they are convicted of a serious driving offence). If the parliament intended persons such as Mrs Borrow to have no entitlement to any benefits at all then, in my view, parliament would have explicitly said so.
The insurer has argued that if s 30(1) is modified to permit claimants such as Mrs Borrow to recover statutory benefits, this would open up a category of secondary victims not currently recognised by the common law. Of course, Part 3 of the MAI Act establishes a “new” scheme of benefits and support that recognises and provides an entitlement to many persons not currently recognised by the common law at all. For example, the driver of a car who has a medical episode at the wheel and collides with a tree causing himself injury would be entitled to make a claim and recover benefits for at least 52 weeks after the accident. The funeral of that driver would be paid by the relevant insurer. It would, in my view, be achieving the objects of an Act that provides those benefits to persons killed or injured in a motor accident, to adopt the first suggested modification of s 30(1) in [70] above.
CONCLUSION
Section 3.39 of the MAI Act imports the provisions of the mental harm provisions of the CL Act subject to any necessary modifications and any modification prescribed by the Regulation.
Section 30(1) of the CL Act needs to be modified to adjust the terminology used and to allow persons with pure mental harm to recover statutory benefits in circumstances where there was no fault on the part of the owner or driver of a motor vehicle or even if the motor accident was caused by the fault of the primary victim of the accident.
Section 30(1) should therefore be modified to read as follows:
“This section applies to the liability of the relevant insurer to pay statutory benefits for pure mental harm to the claimant arising wholly or partly from mental or nervous shock in connection with a victim being killed, injured or put in peril in a motor accident.”
There is no dispute in this matter that the claimant, as Chris Borrow’s wife, is a close member of the family of the victim within the proposed modified version of s 30(2). The insurer has not raised an argument to suggest s 30(4) applies and NRMA has not disputed that the claimant has sustained a psychological or psychiatric illness as a result of the accident.
It follows therefore that the insurer is not entitled to refuse payment of statutory benefits to Mrs Borrow.
NRMA first told Mrs Borrow she had benefits then denied them. Mrs Borrow and her brother remarked at the preliminary conference how difficult it was for them to understand how provisions in the legislation work, when those provisions are not clearly stated but need to be “modified”.
The determination of what “necessary modifications” need to be made to s 30(1) is not clear and has required these lengthy reasons. As part of my consideration of the interpretation of the mental harm provisions I have had to consider what I believe would be the possible and necessary modifications to them. I have included as an attachment, the current provisions with what I have suggested in these reasons.
In my experience, mental harm claims are some of the most sensitive and distressing type of claim. It would, in my view, enhance consistent decision-making and minimise secondary trauma if consideration could be given to modifying all the provisions of the mental harm provisions of the CL Act or at least s 30(1).
ATTACHMENT A
Possible necessary and regulated modifications to mental harm provisions
| Current CL Act provisions | Possible modification for part 3 MAI Act |
| Section 27 - definitions consequential mental harm means mental harm that is a consequence of a personal injury of any other kind. mental harm means impairment of a person’s mental condition. negligence means failure to exercise reasonable care and skill. personal injury includes— (a) pre-natal injury, and (b) impairment of a person’s physical or mental condition, and (c) disease. pure mental harm means mental harm other than consequential mental harm. | The CL Act definition of person injury is not to apply noting the definition of injury in the MAI Act includes psychological or psychiatric injury. |
| Section 28 - application (1) This Part (except section 29) applies to any claim for damages for mental harm resulting from negligence, regardless of whether the claim is brought in tort, in contract, under statute or otherwise. (2) Section 29 applies to a claim for damages in any civil proceedings. (3) This Part does not apply to civil liability that is excluded from the operation of this Part by section 3B. | Does not need to be applied to the MAI Act. |
| Section 29 - personal injury arising from mental or nervous shock In any action for personal injury, the plaintiff is not prevented from recovering damages merely because the personal injury arose wholly or in part from mental or nervous shock | In any claim for statutory benefits, the claimant is not prevented from recovering benefits merely because the personal injury arose wholly or in part from mental or nervous shock |
| 30 Limitation on recovery for pure mental harm arising from shock (1) This section applies to the liability of a person (the defendant) for pure mental harm to a person (the plaintiff) arising wholly or partly from mental or nervous shock in connection with another person (the victim) being killed, injured or put in peril by the act or omission of the defendant. (2) The plaintiff is not entitled to recover damages for pure mental harm unless— (a) the plaintiff witnessed, at the scene, the victim being killed, injured or put in peril, or (b) the plaintiff is a close member of the family of the victim. (3) Any damages to be awarded to the plaintiff for pure mental harm are to be reduced in the same proportion as any reduction in the damages that may be recovered from the defendant by or through the victim on the basis of the contributory negligence of the victim. (4) No damages are to be awarded to the plaintiff for pure mental harm if the recovery of damages from the defendant by or through the victim in respect of the act or omission would be prevented by any provision of this Act or any other written or unwritten law. (5) In this section— close member of the family of a victim means— (a) a parent of the victim or other person with parental responsibility for the victim, or (b) the spouse or partner of the victim, or (c) a child or stepchild of the victim or any other person for whom the victim has parental responsibility, or (d) a brother, sister, half-brother or half-sister, or stepbrother or stepsister of the victim. spouse or partner means— (a) the person to whom the victim is legally married (including the husband or wife of the victim), or (b) a de facto partner, but where more than one person would so qualify as a spouse or partner, means only the last person to so qualify. | (1) This section applies to the liability of the relevant insurer to pay statutory benefits for pure mental harm to the claimant arising wholly or partly from mental or nervous shock in connection with another person (the victim) being killed, injured or put in peril by the motor accident. (2) The claimant is not entitled to recover benefits for pure mental harm unless— (a) the claimant witnessed, at the scene, the victim being killed, injured or put in peril, or (b) the claimant is a close member of the family of the victim. (3) The requirement in section 30 (3) … (to reduce damages awarded to the plaintiff for pure mental harm in the same proportion as any reduction in the damages that may be recovered from the defendant by or through the victim on the basis of the contributory negligence of the victim) is to be read as a requirement to apply the at-fault statutory benefits limitations to the payment of statutory benefits to the claimant in the same way as they apply to the payment of statutory benefits to the victim. (4) No statutory benefits are to be paid to the claimant for pure mental harm if the payment of statutory benefits by or through the victim would be prevented by any provision of Part 3 of the MAI Act or any other written or unwritten law. (5) In this section— close member of the family of a victim means— (a) a parent of the victim or other person with parental responsibility for the victim, or (b) the spouse or partner of the victim, or (c) a child or stepchild of the victim or any other person for whom the victim has parental responsibility, or (d) a brother, sister, half-brother or half-sister, or stepbrother or stepsister of the victim. spouse or partner means— (a) the person to whom the victim is legally married (including the husband or wife of the victim), or (b) a de facto partner, but where more than one person would so qualify as a spouse or partner, means only the last person to so qualify. |
| 31 Pure mental harm—liability only for recognised psychiatric illness There is no liability to pay damages for pure mental harm resulting from negligence unless the harm consists of a recognised psychiatric illness. | The relevant insurer has no liability to pay statutory benefits for pure mental harm beyond the first 52 weeks unless the harm consists of a recognised psychiatric illness. |
| 32 Mental harm—duty of care (1) A person (the defendant) does not owe a duty of care to another person (the plaintiff) to take care not to cause the plaintiff mental harm unless the defendant ought to have foreseen that a person of normal fortitude might, in the circumstances of the case, suffer a recognised psychiatric illness if reasonable care were not taken. (2) For the purposes of the application of this section in respect of pure mental harm, the circumstances of the case include the following— (a) whether or not the mental harm was suffered as the result of a sudden shock, (b) whether the plaintiff witnessed, at the scene, a person being killed, injured or put in peril, (c) the nature of the relationship between the plaintiff and any person killed, injured or put in peril, (d) whether or not there was a pre-existing relationship between the plaintiff and the defendant. (3) For the purposes of the application of this section in respect of consequential mental harm, the circumstances of the case include the personal injury suffered by the plaintiff. (4) This section does not require the court to disregard what the defendant knew or ought to have known about the fortitude of the plaintiff. | (1) The relevant insurer has no liability to pay statutory benefits for pure mental harm if it is foreseeable, that a person of normal fortitude might, in the circumstances of the case, suffer a recognised psychiatric illness if reasonable care were not taken. (2) For the purposes of the application of this section in respect of pure mental harm, the circumstances of the case include the following— (a) whether or not the mental harm was suffered as the result of a sudden shock, (b) whether the claimant witnessed, at the scene, a person being killed, injured or put in peril, (c) the nature of the relationship between the claimant and any person killed, injured or put in peril, (d) whether or not there was a pre-existing relationship between the claimant and the insurer. (3) For the purposes of the application of this section in respect of consequential mental harm, the circumstances of the case include the personal injury suffered by the claimant. (4) This section does not require the court or the Commission to disregard what the defendant knew or ought to have known about the fortitude of the claimant. |
| 33 Liability for economic loss for consequential mental harm A court cannot make an award of damages for economic loss for consequential mental harm resulting from negligence unless the harm consists of a recognised psychiatric illness. | The relevant insurer has no liability to pay statutory benefits for consequential mental harm resulting from a motor accident injury unless the harm consists of a recognised psychiatric illness. |
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