In the Matter of An Application Pursuant to S 73
[2006] ACTSC 93
IN THE MATTER OF AN APPLICATION PURSUANT TO S 73
OF THE CIVIL LAW (WRONGS) ACT 2002
[2006] ACTSC 93 (21 September 2006)
PRACTICE AND PROCEDURE – statutory disclosure requirement – documents may be withheld if fraud suspected – reasonable grounds to suspect fraud.
Civil Law (Wrongs) Act 2002, ss 72, 73, 74, 75
Motor Accident Insurance Act 1994 (Qld)
Cannane v J Cannane Pty Ltd [1998] HCA 26, (1988) 192 CLR 557
George v Rockett (1990) 170 CLR 104
Young v Nominal Defendant [2000] QCA 2
Hon J Spigelman, The principle of open justice: A comparative perspective (2006) 29 UNSWLJ 147
No SC 710 of 2006
Judge: Connolly J
Supreme Court of the ACT
Date: 21 September 2006
IN THE SUPREME COURT OF THE )
) No SC 710 of 2006
AUSTRALIAN CAPITAL TERRITORY )
IN THE MATTER OF AN APPLICATION PURSUANT TO S 73 OF THE CIVIL LAW (WRONGS) ACT 2002
REASONS FOR JUDGMENT
This is an application by Insurance Australia Limited trading as NRMA Insurance for an order pursuant to s 73(2) of the Civil Law (Wrongs) Act 2002 (the Act) that it be permitted to withhold from disclosure to a claimant certain documents or information. The matter was listed at short notice on 19 September 2006 and I granted the order together with a non-publication order concerning the identity of the claimant. Because this is the first such application to be heard in this Court, and because the application raises questions of importance to the practice of personal injury law, I am publishing these reasons.
The Act establishes a statutory regime for the conduct of personal injury litigation. Part 5 of the Act establishes certain pre-court proceedings, premised on the desirability of early notice of claims, and full and frank disclosure by both a claimant and a respondent. The present applicant is the compulsory third party insurer for motor vehicles registered in the Australian Capital Territory.
Part 5 imposes a broad obligation on both sides in a personal injury claim for early and ongoing disclosure of information and documents relevant to the claim. There are significant sanctions imposed for non-disclosure, including criminal penalties (s 74), or a prohibition from using the document in subsequent legal proceedings (s 75). The only exceptions to the requirement for ongoing disclosure are documents subject to client legal privilege (but not an investigative report, medical report or rehabilitation report) (s 72) or, pursuant to s 73, documents that may disclose that the respondent suspects a claimant of fraud.
Section 73 provides:
Non-disclosure of documents etc - suspected fraud
(1)If a respondent has reasonable grounds to suspect a claimant of fraud, the respondent may apply to the court for approval to withhold from disclosure under this chapter documents or information that -
(a) would alert the claimant to the suspicion; or
(b) could help further the fraud.
(2)The application may be made without notice to the claimant.
(3)If the court gives approval on application under subsection (1), the respondent may withhold from disclosure the documents or information in accordance with the approval.
In the present case the application was brought without notice to the claimant, and the applicant sought a non-publication order relating to the name of the claimant. Given that the clear statutory purpose of the section is to prevent a claimant from successfully perpetrating a fraud on the third party insurance scheme, it seemed to me that the statutory purpose would be thwarted if, despite obtaining the approval of the court to withhold information that would alert the claimant to the suspicion of fraud, the court proceedings themselves alerted the claimant to the suspicion. While generally proceedings of this Court should be conducted in open court, it seemed to me that this is an occasion where the public interest is appropriately advanced by departure from the principle of open justice and, accordingly, I made the appropriate non-publication order (see, generally, Hon J Spigelman, The principle of open justice: A comparative perspective (2006) 29 UNSWLJ 147).
The application was supported by an affidavit from a partner of the law firm acting for the applicant setting out the factual matrix of the claim and the investigations undertaken by the insurer. It is inappropriate to disclose details that would identify the claim, but it is sufficient to say that there were a number of inconsistencies and discrepancies in this material. There was also an affidavit from the applicant’s Claims Manager stating that, based on that information, the applicant suspects that the claim is fraudulent.
The Act provides that an application for a non-disclosure order can be made if a respondent “has reasonable grounds to suspect a claimant of fraud”. Fraud is not defined in the Act, but is a well-established legal term, defined in Butterworths Australian Legal Dictionary as “An intentional dishonest act or omission done with the purpose of deceiving”. In Cannane v J Cannane Pty Ltd [1998] HCA 26, (1988) 192 CLR 557, Gaudron J said at 571-572:
It is notoriously difficult to provide an exhaustive statement as to what is involved in the concepts of “fraud” and “intent to defraud”. “Fraud” involves the notion of detrimentally affecting or risking the property of others, their rights or interests in property, or an opportunity or advantage which the law accords them with respect to property.
I am satisfied that a suspicion of a dishonest insurance claim satisfies the requirements of the Act.
The real issue in this application is the ambit of the statutory provision “reasonable grounds to suspect a claimant of fraud”. It seems to me that this provision should be approached in a similar manner to similar provisions which permit a court to issue a search warrant if there are reasonable grounds for suspicion of the commission of an offence. In George v Rockett (1990) 170 CLR 104, the High Court (Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ) unanimously held (at 112) that:
When a statute prescribes that there must be “reasonable grounds” for a state of mind - including suspicion and belief - it requires the existence of facts which are sufficient to induce that state of mind in a reasonable person.
It is significant that in George v Rockett, as in many search warrant type cases, the statutory requirement is that there should be reasonable grounds for suspicion in the mind of the court, not merely the party seeking the order. In this case, the Act does not require the court itself to have the suspicion, and it seems to me that the real test must thus be, in the words of the High Court, whether the factual matrix is such that there can be shown “the existence of facts which are sufficient to induce that state of mind in a reasonable person”.
The High Court in George v Rockett described (at 115) the facts necessary to establish reasonable grounds for suspicion in the following terms:
Suspicion, as Lord Devlin said in Hussien v Chong Food Kam [1970] AC 942 at 948, “in its ordinary meaning is a state of conjecture or surmise where proof is lacking: ‘I suspect but I cannot prove’”. The facts which can reasonably ground a suspicion may be quite insufficient reasonably to ground a belief, yet some factual basis for the suspicion must be shown. In Queensland Bacon Pty Ltd v Rees (1966) 115 CLR 266, a question was raised as to whether a payee had reason to suspect that the payer, a debtor, “was unable to pay [its] debts as they became due” as that phrase was used in s 95(4) of the Bankruptcy Act 1924 (Cth). Kitto J said (at 303):
A suspicion that something exists is more than a mere idle wondering whether it exists or not; it is a positive feeling of actual apprehension or mistrust, amounting to a ‘slight opinion, but without sufficient evidence’ as Chamber’s Dictionary expresses it. Consequently, a reason to suspect that a fact exists is more than a reason to consider or look into the possibility of its existence. The notion which ‘reason to suspect’ expresses in sub-s (4) is, I think, of something which in all the circumstances would create in the mind of a reasonable person in the position of the payee an actual apprehension of fear that the situation of the payer is in actual fact that which the sub-section describes - a mistrust of the payer’s ability to pay his debts as they become due and of the effect which acceptance of the payment would have as between the payee and the other creditors.
In many personal injury claims, the plaintiff will assert a certain version of facts, going either to the circumstances of the accident said to give rise to liability, or to the extent of their injuries. The insurer may well have instructions going to a different version of facts, either to the circumstances of the accident or the extent of the injuries and consequent disabilities. This alone, however, would not amount to reasonable grounds for suspicion of fraud. Recollections and perceptions vary, and the work of these courts everyday involves resolving disputed questions of fact against a party’s interest in circumstances where it could not be said that the unsuccessful assertion of that fact by the party would give rise in the other party to a reasonable suspicion of fraud. It seems to me that this was the type of situation in Young v Nominal Defendant [2000] QCA 2, where the Queensland Court of Appeal held that the insurer did not have reasonable grounds to withhold documents pursuant to a similar provision in the Motor Accident Insurance Act 1994 (Qld) in circumstances where a plaintiff asserted that they had been forced off the road by an unidentified driver and the insurer for the nominal defendant had certain material suggesting that the accident had been caused by a faulty tyre.
In the present case, the matrix of factual material that was before me is, it seems to me, sufficient to give rise to reasonable grounds of suspicion in a reasonable person, and the claims manager for the insurer has deposed that they have done so. It seems to me that it is therefore appropriate that I make an order approving the withholding of documents or information that would alert the claimant to the suspicion or could help further the fraud. The order was made at the hearing on 19 September 2006.
The insurer’s investigations are at a stage where further investigations may either confirm them in their suspicion or satisfy them that there is no problem with the claim. It seemed to me that it was thus appropriate to make the order on an interim basis until further order, and to relist the matter for a date some three months hence to determine whether the non-disclosure order should remain in place.
I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Connolly.
Associate:
Date: 21 September 2006
Counsel for the applicant: Mr C Erskine
Solicitor for the applicant: Abbott Tout
Counsel for the respondent: -
Solicitor for the respondent: -
Date of hearing: 19 September 2006
Date of Order: 19 September 2006
Date of judgment: 21 September 2006
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