Keriakos v NRMA
[2022] NSWPIC 101
•10 March 2022
CERTIFICATE OF DETERMINATION OF MEMBER CITATION:
Keriakos v NRMA [2022] NSWPIC 101
CLAIMANT: Mervat Keriakos INSURER: NRMA MEMBER: Shana Radnan DATE OF DECISION: 10 March 2022 CATCHWORDS: MOTOR ACCIDENTS - Claims assessment matter; claim for damages submitted to insurer the claim was referred to the Personal Injury Commission under Division 7.6 of the Motor Accident Injuries Act 2017 (MAI Act) for assessment; no particulars or evidence provided when claim was lodged; insurer disputed genuine attempt to settle; whether the claimant had complied with section 7.32(3) of the MAI Act by requesting a settlement conference; meaning of “best endeavours”; whether proceedings should be dismissed; Held - for the purposes of section 7.32(3) of the MAI Act the claimant failed to use her best endeavours to settle the claim before referring it for assessment under Division 7.6 of the MAI Act; proceedings dismissed in accordance with section 54 of the Personal Injury Commission Act 2020.
DETERMINATIONS MADE: 1. For the purpose of s73.2(3) of the Motor Accident Injuries Act 2017 the claimant failed to use her best endeavours to settle the claim before referring it for assessment under Division 7.6 of the Motor Accidents Injuries Act 2017.
2. The proceedings are dismissed in accordance with s54 of the Personal Injury Commission Act 2020.
Reasons for Decision
Introduction
1.Mervat Keriakos (the claimant) alleges that she sustained injuries as a consequence of the insured’s vehicle crashing through the shop window of her business on 29 June 2018.
2.An application for common law benefits was lodged with the insurer on 8 April 2021.
3.An application for claims assessment was lodged at the Personal Injury Commission (the Commission) on 28 June 2021 (the proceedings) for assessment of damages.
4.The insurer’s reply was lodged on 20 July 2021. The claimant’s non-compliance with
s 7.32(3) was raised in submissions with an application by the insurer that the claimant’s application be dismissed.5.This determination relates to the insurer’s application for dismissal of the proceeding.
Teleconferences
6.A teleconference held on 29 November 2021 took place and parties were directed to provide further submissions. The claimant by 7 December 2021 and the insurer by 14 December 2021.
7.The claimant lodged submissions dated 6 October 2021 (document AD3) and further submissions dated 7 December 2021 (document AD4) and report of Dr Rastogi dated 27 July 2021 (document AD2).
8.On 15 December 2021 the insurer lodged further submissions (document AD5).
9.A second teleconference was held on 17 December 2021 wherein the claimant indicated the application may be withdrawn. The claimant was requested to provide her instructions by 11 February 2022. On 9 February 2022 the claimant advised her application was not withdrawn and sough additional time to provide further submissions as well as a further statement. Directions were made that the claimant upload material by 19 February 2022 and the insurer to provide submissions in reply by 4 March 2021.
10.On 23 February the claimant lodged further submissions (document AD6) statement of her lawyer (document AD7) and supplementary statements of the claimant (AD8 and AD9).
11.On 2 March 2022 the claimant lodged further submissions to the previous submissions (document AD10) and letter of insurer 12 August 2021 (document AD11). Statement of the claimant (document AD12). On 4 March 2021 the claimant’s statement in Arabic language was uploaded as document (AD14).
12.The insurer lodged final submissions as (document AD13) on 4 March 2021.
13.The insurer argues that the proceedings should be dismissed because of the claimant’s failure to comply with s 7.32(3) of the Motor Accident Injuries Act 2017 (the MAI Act). That provision requires parties to a claim to use their best endeavours to settle the claim before referring it for assessment under Division 7.6 of the MAI Act.
14.The claimant confirmed when lodging her application that the insurer had informed her that it would not be in a position to resolve the claim prior to the three-year limitation period and the application was lodged to preserve time.
15.In the event the claim was not dismissed, a further request was made that the matter be placed in the stood over list as an application was on foot with medical services as to whether injuries were minor which had been lodged on 19 August 2021 and also one relating to assessment of whole person impairment dispute..
16.The critical issue for determination is whether the claimant failed to comply with
s 7.32(3) and, if so, what flows from that failure.
On the papers
17.Having considered both s 52 of the Personal Injury Commission Act 2020 (the PIC Act) and Procedural Direction PIC2 I have concluded that the proceedings can be determined on the papers. I am satisfied that sufficient information is available in connection with the proceedings to allow me to determine the dispute without holding a formal hearing. Both parties were given opportunity to make further submissions before determination took place.
Legislative framework
18.Section 7.32 of the MAI Act is in the following terms:
“7.32 Reference of claim
(1) A claim for damages may be referred to the Commission by the claimant or the insurer, or both, for assessment under this Division.
(2) (Repealed)
(3) Parties to a claim must use their best endeavours to settle the claim before referring it for assessment under this Division.”
19.Section 7.33 states as follows:
“7.33 Time limits for referring claims and making assessment
A party to a claim cannot refer a claim for assessment under this Division more than 3 years after the motor accident concerned unless the party provides a full and satisfactory explanation for the delay to the Commission and the Commission grants leave for the claim to be referred for assessment in accordance with the Commission rules.”
20.The objects of the MAI Act are found in s 1.3(2) of that Act as follows:
“1.3 Objects of Act
(2) For that purpose, the objects of this Act are as follows—
(a) to encourage early and appropriate treatment and care to achieve optimum recovery of persons from injuries sustained in motor accidents and to maximise their return to work or other activities,
(b) to provide early and ongoing financial support for persons injured in motor accidents,….
(g) to encourage the early resolution of motor accident claims and the quick, cost effective and just resolution of disputes,…”
Insurer’s submissions
21.Submissions were lodged with the insurer’s reply dated 16 September 2021. In those submissions the insurer noted the following:
a. the claimant lodged her application for common law damages on 17 April 2021;
b. the claimant has not attached to the present application, or provided to the insurer any material which would support the proposition she sustained an injury which would fall outside the definition of a minor injury;
c. no concession had been made by either party in relation to whole person impairment nor has the claimant been assessed, or lodged an application, at the Commission in that regard;
d. the claimant did not attach to the present application, or provide to the insurer, any material which would support the proposition her whole person impairment as a result of the accident is greater than 10%;
e. the claimant has not attached to the present application, or provided to the insurer, any medical evidence including expert evidence;
f. the claimant had not provided particulars of her claim to the insurer notwithstanding her obligations under s 6.25 of the MAI Act;
g. the claimant made no offers of settlement which is consistent with the extent of preparation of her claim, and
h. the claimant lodged the present application one day prior to the three year anniversary of the accident and conceded in her submissions that occurred ‘to preserve time’. The Division Head would note there is nothing within the Act, Regulations, Rules or Guidelines which permits an application on that basis.
22.The insurer submitted that there had been no endeavour by the claimant to settle the claim, that the application does not comply with s 7.32(3) of the MAI Act and that the application should be dismissed.
23.The insurer also relies on written submissions uploaded to the Commission’s portal on 15 December 2021 (AD5) and AD13 uploaded on 3 March 2022.
24.The insurer notes that, as far as it is aware, the term “best endeavours” in s 7.32(3) is yet to be judicially considered in the context of the MAI Act. The legal concept, it is submitted, is not novel given that “best endeavours” obligations are well known to contract law. Such an obligation is also found in legislation including s 20 of the Health Care Complaints Act1993.
25.Whereas in Sheffield District Co v Great Central Railway[1], the Court found that a “best endeavours” obligation in a contract required “the (obliged party) … [to] leave no stone unturned”, subsequent cases have modified this approach. Australian cases such as Transfield Pty Ltd v Arlo International Ltd[2] and SVI Systems Pty Ltd v Best & Less Pty Ltd[3] [2001] suggest that “best endeavours” clauses are now judged by standards of reasonableness. Mason J in Transfield[4] stated that the obligation to use best endeavours is measured by what is reasonable in the circumstances, and in consideration of the nature, capacity, qualifications and responsibilities of the person who owes the obligation, in the context of the relevant contract.
[1] (1911) 27 T.L.R. 451.
[2] (1980) 144 CLR 83.
[3] [2001] FCA 279.
[4] Approved by Dawson J in Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41.
26.The insurer refers to Joseph Street Pty Ltd v Tan[5], where the Court (unanimously) considered that to use “best endeavours” requires a party to do all they reasonably can in the circumstances to achieve the purpose of the obligation. The Court (at 256) further considered a number of authorities and interpreted “best endeavours” as requiring a party to:
a. do all it can reasonably do to act in the same manner as a reasonable and prudent party would act if it was acting in its own interests to achieve a certain object;
b. do the acts required to achieve the object with the same vigour expected of a party attempting to secure its own interests until the party reasonably considers that further attempts to achieve the object of the obligation would have a remote chance of succeeding, and
c. within reason, act in a manner so as to leave no stone unturned to achieve the object.
[5] (2012) 38 VR 241.
27.The insurer says that, whilst it is often argued that the obligation to use “reasonable endeavours” imposes a lesser standard than the obligation to use “best endeavours”, Bathurst CJ in Cypjayne Pty Ltd v Babcock & Brown International Pty Ltd[6] considered that the Courts regarded the terms to impose similar obligations. Rein AJ reached a similar conclusion in Waters Lane Pty Ltd v Sweeney[7]. Whether the “best endeavours” obligation is more onerous or not, in Centennial Coal Company Ltd v Xstrata Coal Pty Ltd[8], the NSW Court of Appeal held that reasonable endeavours may require the party under the obligation to take a step even where success was not guaranteed and or the chance of succeeding was equal to or less than 50%.
[6] [2011] NSWCA 173.
[7] [2006] NSWSC 222 at [47] to [60].
[8] [2009] NSWCA 341.
28.It is submitted that the obligation to use “best endeavours” in s 7.32(3) of the MAI Act requires a party to act honestly, reasonably and make a positive effort to perform the relevant obligation (i.e. to settle the claim before referring it to assessment) even where success is unlikely.
29.The insurer noted the requirement of s 7.32(3) for best endeavours must be made before the claim is referred for assessment.
30.The position of this matter immediately before proceedings were commenced was:
(a) contrary to the claimant’s submissions dated 6 October 2021, the claimant has not provided to the insurer (nor had she attached to her application any material that would support the proposition she sustained an injury which would fall outside the definition of a minor injury);
(b) whilst the claimant argues a diagnosis of her general practitioner dated 23 September 2019 constituted “ample material “in that regard, the insurer submits that:
(i)there was nothing to suggest Dr Girgis, a general practitioner, possessed the relevant expertise to make psychological/ psychiatric diagnosis under the DSM;
(ii)depressions is not a recognised psychiatric illness under the DSM, and
(iii)on 29 August 2019, Ms Naithani, the claimant’s treating psychologist who did have the necessary expertise, diagnosed a minor psychological injury.
No concession had been made by either party in relation to whole person impairment nor had the claimant been assessed at the Commission in that regard. The claimant had not provided to the insurer nor did she attach to the application any evidence which would support the proposition she had a greater than 10% whole person impairment as a result of the accident. This is frankly conceded by the claimant at paragraphs 1 and 3 of her submissions dated 7 December 2021 which confirmed the report of Dr Rastogi was served on 29 July 2021 and her Commission application for assessment of whole person impairment was lodged on 28 July 2021. Neither action was taken before proceedings were commenced.
The claimant had not provided any particulars of her claim to the insurer notwithstanding her obligations under s 6.25 of the MAI Act.
The claimant had not obtained the report of Dr Rastogi before proceeding were commenced. Noting the assessment was undertaken the day before her proceedings commenced. The claimant was clearly cognisant that evidence would be required to prosecute her common law damages claim and should have been served before any settlement negotiations were undertaken.
The claimant made no offers of settlement. Whilst at paragraph 16 of her submissions dated 6 October 2021, the claimant seeks to rely upon an approach made to the insurer on Tuesday 22 June 2021 at 2.41 pm inviting a settlement conference.The insurer submits such an approach did not satisfy “best endeavours” requirement within s 7.32(3) of the Act in circumstances where:
(a) the extent of the claimant’s preparation of her claim was at that stage manifestly insufficient for the insurer to determine the likely damages to which she may be entitled. In this regard, the insurer again refers to the status of minor injury and whole person impairment disputed, as well as the absence of particulars and evidence;
(b) whilst at paragraphs 2 to 10 of her submissions dated 6 October 2021 the claimant sought to criticise the insurer’s approach to the minor injury dispute (a propositions that is respectfully, without basis and strenuously denied), that was only one part of the preparation required by the claimant before three years after the accident. The claimant submits the insurer’s approach to the minor injury dispute prevented her from sufficiently preparing her claim within three years such that the parties could use their best endeavours to settle the claim, the insurer considered the issue a red herring and denied impropriety;
(c) the claimant’s approach to the insurer on 22 June 2021 occurred less than four business days before the proceedings were commenced. The insurer submits that was an untenable window of opportunity for settlement discussions to be both arranged and take place (even if the claim had been properly prepared by the claimant at that stage and settlement discussions could otherwise have occurred – a proposition the insurer disputes), and
(d) at paragraph 16 of her submissions dated 6 October 2021, the claimant has suggested that, if the insurer agreed to hold settlement discussions within four business days upon receipt of the approach on 22 June 2021, she would have “marshalled” urgent medico-legal evidence. The insurer submits there was insufficient time for that to occur.
35.The insurer submits that the overwhelming effect of the available evidence in these proceedings is that the claimant did not use her best endeavours to settle the claim before referring it for assessment under Division 7.6.
36.The fact that the three year anniversary of the accident was approaching did not expressly nor impliedly excuse her from compliance with s 7.32(3) of the Act.
37.The insurer relied on the fact that the claimant had not served particulars or medico-legal evidence nor had she served any evidence which would support she sustained a non-minor injury or had greater than 10% whole person impairment as a result of the accident. The insurer submits the claimant made no genuine or reasonable attempt to settle the claim. She did not serve a settlement offer on the insurer. She had a mandatory obligation to make best endeavour to settle the claim prior to commencing the proceedings and did not do so.
38.By reference to the Joseph case, the insurer submits it could not be suggested the claimant did all she could reasonably do (as a reasonable and prudent party would do) to settle the claim before referring it for assessment. It certainly could not be said that the claimant, even within the qualification of “within reason”, left no stone unturned. The insurer submits, the claimant turned over barely any stones at all.
39.The insurer submits that the consequence of the claimant’s failure to comply with the mandatory obligation in s 7.32(3) of the MAI Act is dismissal of the proceedings for the following reasons:
(a) the obligation imposed by s 7.32(3) is mandatory in terms of both its substance and timing. There is no other provision within the MAI Act which relieves or excuses the claimant from non-compliance with her mandatory obligation. If the obligation was intended to be of no or modified consequence in circumstances where a three year anniversary was approaching, it can reasonably be expected that the legislature would have expressly stated as much. It did not do so;
(b) dismissal of the proceedings does not mean she is necessarily disentitled from lodging a further application in the Commission or commencing court proceedings in the future. Sections 7.33 and 6.32 of the MAI Act expressly permit the claimant to seek leave to apply to do so after the three year anniversary of the accident. This tells against s 7.32(3) being read down in the context of an approaching three year anniversary. Further,
ss 7.33 and 6.32 can be fairly viewed as protecting the claimant’s interest in such a scenario;(c) it cannot reasonably be expected that s 10(a) of the procedural direction MA1 or rule 101 of the Personal Injury Rules 2021 were intended to create some sort of holding yard for potential common law claims such as this (noting that on the available evidence the claimant has been certified as suffering from only a minor injury) that are approaching the three year anniversary. What is more, the likely delay associated with this damages claim is significant given that the claimant is yet to lodge any application for assessment of whole person impairment. The delay is likely to be significantly longer than six months as is contemplated by rule 101 and procedural direction MA1;
(d) while the terms of s 7.32(3) of the MAI Act are different to ss 89A to 89E and s 91 of the Motor Accidents Compensation Act1999 (MAC Act), such provisions in the MAC Act nevertheless remain instructive. In this respect, it is of some relevance that the claimant did not provide all relevant particulars and evidence on which she intended to rely, nor did she make any attempt to engage the insurer in settlement discussions prior to the commencement of the proceedings. Similarly, it is of some relevance that claims referred for assessment under Chapter 4 of the MAC Act in breach of ss 89A(2) and 89C(2) were regularly dismissed by Assessors in the then Claims Assessment and Resolution Service (and have also been dismissed by the Commission in the context of the MAC Act);
(e) dismissing the proceedings for breach of s 7.32(3) sits comfortably with the objects of the MAI Act set out at s 1.3. In particular, 1.3(2)(g) states that one of the objects of the Act is to “encourage the early resolution of motor accident claims and the quick, cost effective and just resolution of disputes”. Neither the claimant nor the insurer were afforded the opportunity of attempting to resolve the claim at an early point and prior to the commencement of the proceedings. In other words, the claimant commenced the proceedings in direct contrast to the object of s1.3(2)(g). Whether the settlement prospects were poor or otherwise, she ought to have made at least some endeavour to settle the claim before commencing the proceedings. The dismissal contended for by the insurer is consistent with the object contained at s 1.3(2)(g) in the sense that if the proceedings are dismissed, they may not be recommenced at all if the minor injury dispute is not resolved in favour of the claimant. Further, there is no reason why the claim would not be capable of informal resolution in any event once the parameters are better known to the parties without the recommencement of any proceedings;
(f) neither the objects set out in s3 of the PIC Act or the guiding principle in
s 42 expressly or impliedly excuse the claimant from complying with her obligations in s 7.32(3). Further, s 42(5) of the PIC Act expressly states that nothing in that section “requires or permits the Commission to exercise any functions that are conferred or imposed on it under enabling legislation and in a manner that is inconsistent with the objects or principles for which that legislation provides in relation to the exercise of those functions”, and(g) the specific power to dismiss the proceedings relied on by the insurer is found at s 54(b) of the PIC Act in that it is contended that the proceedings are otherwise misconceived or lacking in substance because they have been commenced in circumstances where there has been both substantive and temporal non-compliance with s 7.32(3) of the MAI Act. That being so, they cannot progress any further as the non-compliance cannot be cured by any other provisions. In the alternative, the insurer submits that the Commission does not have the requisite jurisdiction to determine the dispute because the claimant has not complied with s 7.32(3) and/or has commenced the proceedings for an improper purpose in the sense that she commenced proceedings ‘prematurely’ and to ‘protect her interest’ where a dispute may not exist at all given that there was no endeavour to settle the claim before commencing the proceedings.
40.In response to the claimant’s submission relating to the duty under s 6.20, the submissions that the timing of the insurer’s liability notice is relevant to the subject
s 7.32(3) should be rejected. Furthermore, the insurer submits that the fact the timeframe prescribed by s 6.20(1) was yet to expire when the proceedings were commenced provides additional support for its submissions regarding the extent of preparations of the claim.41.The insurer agrees with the claimant’s submission that it was not in a position to engage in settlement discussions prior to the three year anniversary. The basis for this position was the extent of the claimant’s preparation of her claim which effectively prevented the insurer from determining the likely damages to which the claimant may be entitled.
42.The further submissions of the claimant dated 7 December 2021 relate to matters occurring after the proceedings were commence and have no relevance to the subject dispute.
43.The claimant did not comply with s 7.32(3) of the Act and her application ought be dismissed.
Claimant’s submissions
44.The claimant’s submissions were as follows:
(a) that the objects of the Act would necessitate a finding the claimant used her best endeavours to settle the claim before referring for assessment in compliance with s 7.32(3) of the Act;
(b) the claimant relies on further submissions dated 6 October 2021. She argues that she was disadvantaged by the insurer’s management of the claim;
(c) a claim for statutory benefits was lodged on 23 August 2018. A liability decision would ordinarily be made by 23 November 2018 and was not received until 14 August 2019. On this occasion the insurer advised “investigations are continuing” as to whether the claimant’s injury is minor or non-minor;
(d) the Insurer on 9 September 2021 issued a liability notice asserting the claimant sustained a “minor” injury for both statutory benefits and common law damages;
(e) the insurer’s lax management of the statutory benefits claim is in direct breach of its obligations under the Act, has a direct and detrimental effect on the status of her common law damages claim;
(f) had the insurer issued a decision as to minor injury, this issue would have been adjudicated by the Commission enabling the claimant to advance her claim more expediently. It was not made clear to the claimant this issue was in dispute. Indeed, the inference arising from the acquiescence of the insurer, was that the nature of the claimant’s injuries were not in issue;
(g) the claimant’s application for common law damages was lodged on 8 April 2021. The insurer has an obligation to inform liability decision by 8 July 2021;
(h) communication was received 17 June 2021 that Moray & Agnew were briefed. This was more than two months after the application was lodged;
(i) the insurer’s solicitors advised that a medico-legal was arranged for 21 September 2021, well outside the three months for the insurer to determine the claim;
(j) the report of Dr Girgis dated 23 September 2019 was a certificate of capacity in it was a diagnosis of depression. The insurer had ample opportunity to make a liability decision. The claimant relied on this report to refute the proposition that no material was provided to support the proposition she sustained a non-minor injury;
(k) it is patent that the insurer was never going to be in a position to engage in settlement discussions in advance of the three year limitation date, a fact the claimant should not be penalised for;
(l) the claimant invited the insurer to urgent settlement discussions by way of communications dated 22 June 2021. It is conceded that at this stage the claimant was not in possession of a medico-legal report or other material, However, had the claimant received a response from the insurer, evidence could have been marshalled on an urgent basis;
(m) the insurer subsequently confirmed that it will not entertain settlement discussions until such time as the minor injury dispute presently before the Commission resolves. This underscores the claimant’s position that the insurer was never going to be in a position to engage in settlement discussions prior to the expiry of the three year limitation period, and
(n) the insurer’s breach of its obligations to make a determination as to the threshold issue of whether the claimant sustained a minor injury in respect of both the statutory benefits claim and the common law claim has prejudiced the claimant’s ability to prosecute such claims. The insurer now seeks to reap the benefits of its own misconduct by denying the claimant’s entitlement to common law claim. Rewarding such conduct is against the very object of the Act and ought not be entertained. The application ought to be maintained until minor injury dispute is determined.
45.The claimant submits that she has acted in accordance with s 7.32(3) and that she has done what is reasonably practicable in the pursuit of a just and cost effective resolution of the matter, despite delays that were beyond her control. Accordingly, she has not breached her obligations under s 7.32(3) of the MAI Act.
46.The claimant maintains the matter should be referred to the stood over list on the basis that there are two medical disputes on foot that must be determined before the matter can be ready for assessment.
47.It is submitted that the insurer’s position that the claim should be dismissed instead of being referred to the stood over list because the claimant “is not necessarily disentitled from re-lodging a further application with the Commissions or commencing Court proceedings in the future” is a position that is in contravention of the objects of the legislation and the very purpose of the stood over list as envisaged by the legislature; to allow matters to be stood over until they are ready for assessment and to relieve pressure from the Courts.
48.It is argued that, should the claimant’s injuries be determined to be non-minor by the Commission, she would be forced to re-lodge a new application, file applications with the Commission and provide a full and satisfactory explanation for the delay. The claimant submits that this is contrary to the objectives of the legislation to provide a quick, cost effective and just resolution, particularly in circumstances where she has at all times acted in good faith and in a timely manner and where a clear, simple and effective alternative is to allow more time for the requirements to be satisfied.
49.The claimant argues that the insurer’s submission, that it cannot be reasonably expected that the stood over list provisions were intended to create some sort of holding yard for potential common law claims such as the current one, is erroneous. Procedural Direction MA1 expressly provides that proceedings may be referred to the stood over list where a medical dispute has not been finalised. Further, it is argued that the Procedural Direction clearly provides that an application may be made to the Commission to have the time on the stood over list extended if required.
50.In relation to the references made by the insurer to the objects and guiding principles set out in ss 3 and 42 of the PIC Act, and the submission that there is nothing in those sections that “can cure or ought to excuse the non-compliance [with the enabling legislation]”, the claimant submits that, in the circumstances of the matter, she has complied with the objects of the legislation and there is nothing in the insurer’s submission nor the sections referred to of the PIC Act which supports the dismissal of the proceedings on the basis alleged by the insurer. She submits that none of the grounds for dismissing an application, found in s 54 of the PIC Act and Rule 77, are applicable.
51.The claimant submits that while the meaning of misconceived or lacking in substance has yet to be defined in the context of the PIC Act or the PIC Rules, the terms are prefaced by “frivolous or vexatious” which are well established concepts relating to claims that are devoid of merit and reasonable prospects of success. The claimant submits that although the matter is presently not ready for assessment the application is by no means frivolous or vexatious or otherwise misconceived or lacking in substance.
52.The claimant submits that it was not possible for her to comply with s 7.32(3) in the circumstances and that she has sought to have the matter referred to the stood over list so that she may have an opportunity to comply with the section.
53.The claimant submits that the application was lodged in good faith, in accordance with the objects of the MAI Act and that it was not lodged for an improper purpose or as an abuse of process. She argues that the insurer has not provided any substantive evidence to support its submissions in this regard, apart from alleging that the claimant has not undertaken her best endeavours to settle the claim before referring it for assessment.
54.The claimant submits that she has acted honestly, reasonably and has made a positive effort to bring the matter to a resolution and that she should not be prejudiced by the dismissal of the proceedings.
55.It is patent that the insurer is seeking to profit from its own inaction on the claim by putting the claimant to the expense of filing an explanation for late lodgement with the Commission, thereby disentitling the claimant to an assessment of damages. The claimant will suffer a disadvantage if the application is dismissed.
56.To dismiss the application would be to reward the insurer for failing to make a determination as to minor injury and liability more that three years after the receipt of the claim. This is neither a just or cost effective way of dealing with the matter.
57.The insurer’s letter of 12 August 2021 demonstrated the proposition that the insurer would not have entertained any settlement attempts whilst minor injury dispute was on foot,
58.Having regard to the insurer’s conduct in this matter acceptance of the application will better promote the objects of the Act.
Determination
59.It is not in dispute that the claimant lodged her claim for common law damages with the insurer on 8 April 2021. The claimant lodged her application for assessment of damages with the Commission on 28 June 2021 one day before the third anniversary of the motor vehicle accident.
60.The claimant approached the insurer on 22 June 2021 four business days before proceedings were commenced to ascertain if the insurer would participate in a settlement conference. As the claimant did not provided sufficient information in relation to the claim the insurer rejected the request.
61.The issue before me is whether the approach by the claimant’s solicitor to the insurer’s solicitor inviting an informal settlement conference, is sufficient to establish that the claimant used her best endeavours to settle the claim before referring it for the assessment.
Best endeavours
62.Section 7.32 is set out in full earlier in these reasons. The provision is found in Subdivision 2 of Division 7.6 of the MAI Act. That Division deals with the assessment of claims for damages. It is found in Part 7 of the MAI Act, which contains provisions in relation to dispute resolution.
63.Section 7.32(3) is in clear and unambiguous terms and mandates certain action: parties to a claim must use their best endeavours to settle the claim before referring it for assessment under Division 7.6.
64.An issue arises as to what the term “best endeavours” means in the context of
s 7.32(3). As noted in the insurer’s submissions, the term has not been judicially considered in this context. The legal concept of “best endeavours” is not novel given that “best endeavours” obligations are well known to contract law. The insurer has referred to a number of authorities that address the meaning of the term in that context. Those authorities, in my view, should be treated with a degree of caution as they deal with the term as used in a commercial context, and not in the context in which the term arises in the MAI Act. Those authorities do not consider the term by reference to the objects of the MAI Act. In this regard, s 1.3(4) states that in the interpretation of a provision of the MAI Act or the Regulations, a construction that would promote the objects of the Act or the provision is to be preferred to a construction that would not promote those objects.65.Acknowledging these limitations, the Australian authorities referred to by the insurer suggest that “best endeavours” clauses are now judged by standards of reasonableness[9] and the obligation to use best endeavours is measured by what is reasonable in the circumstances, and in consideration of the nature, capacity, qualifications and responsibilities of the person who owes the obligation[10]. Notions of reasonableness and context are, in my view, the critical considerations that emerge from these authorities. They are considerations that should be applied when determining what the term “best endeavours” means for the purposes of s 7.32(3).
[9] See Transfield Pty Ltd v Arlo International Ltd and SVI Systems Pty Ltd v Best & Less Pty Ltd.
[10] Per Mason J in Transfield.
66.The insurer submits that the overwhelming effect of the available evidence in these proceedings is that the claimant did not use her best endeavours at all to settle the claim before referring it for assessment. I agree with the insurer that the approach to the insurer four business days prior to the expiration of a limitation period with a paucity of evidence is not a what I would consider as best endeavour to settle the matter.
67.The approach taken by the claimant to request a settlement conference is not sufficient to establish best endeavours. The claimant should have provided full particulars of her claim, medical evidence to support her alleged injuries and evidence to support claimed economic loss sufficient to enable a genuine attempt at settlement.
68.To expect the insurer to dealt with an offer to participate in settlement negotiation without supporting material is not considered a reasonable endeavour to satisfy an obligation.
69.I have regard to the issues raised by the claimant as to the insurer’s delay in addressing minor injury and whole person impairment. These issues do not negate the claimant’s responsibility to comply with provisions of the Act.
70.The claimant submitted had the insurer agreed to participate in an informal settlement conference, they would have been able to provide a medico-legal opinion within the four days before the limitation period expired. The claimant should have provided the material to support her claim and made an offer of settlement. There was no offer or particulars provided to enable a settlement.
71.The mere enquiry is not sufficient to extinguish the claimant’s obligation under
s 7.32(3). The claimant had not provided sufficient material which would support the proposition that she was genuinely attempting to resolve the matters in dispute. The lack of particulars and evidence to establish injury and loss was significant.72.I agree with the insurer’s submission that the fact the three year anniversary of the accident was approaching when she commenced the proceedings did not expressly nor impliedly excuse her from compliance with s 7.32(3).
73.The claimant acknowledges that s 7.32(3) clearly imposes an obligation on both parties to attempt to resolve the matter before it is referred for assessment. It is argued that the insurer did not make any endeavours to resolve the claim before it was referred for assessment. The claimant submits that the insurer had no intention of resolving the matter before the minor injury dispute was determined. This last point may be correct. However, given the insurer received the claim for damages on 8 April 2021 with no further particulars and no documents supporting the claim, it is difficult to identify what, if anything, the insurer could reasonably have done to further its obligations under
s 7.32(3).74.The claimant submits that the requirements of s 7.32(3) could not have been satisfied in any meaningful way before the minor injury dispute had been resolved. I don’t agree. The claimant should have marshalled sufficient medical evidence and other evidence to support the heads of damage being claimed.
75.I consider that what constitutes “best endeavours”, for the purposes of s 7.32(3), is dependent on the circumstances of each claim. The provision may not require an offer of settlement to be made in every case. It can be envisaged that, in some circumstances, the provision of particulars and evidence in support of a claim for damages may be found to satisfy the “best endeavours” requirement. Different considerations may also arise in claims that cannot be made before the expiration of 20 months after the accident, in accordance with s 6.14(1). In this matter the claimant had legal representation and the parties were aware of time limitations. The claimant failed to prepare her matter with the sufficient evidence to enable the insurer the ability to engage in any settlement negotiations.
76.The insurer contends for a construction of s 7.32(3) on the basis that the obligation to use “best endeavours” requires a party to act honestly, reasonably and make a positive effort to settle the claim before referring it for assessment even where success is unlikely.
77.I agree with the construction of s 7.32(3) contended for by the insurer. In my view, it allows the flexible application of the provision on a case by case basis and in a manner that is consistent with the objects of the MAI Act. In particular, I consider that this construction furthers the stated object of encouraging the early resolution of motor accident claims and the quick, cost effective and just resolution of disputes. It does this by requiring the parties to take reasonable steps to settle the claim before referring it for assessment.
78.The claimant submits that she has acted in accordance with s 7.32(3) and that she has done what is reasonably practicable in the pursuit of a just and cost effective resolution of the matter. She described in her statement that throughout 2019 and 2020 she would occasionally see Nathan Edwards Bonello and enquire as to the progress of her claim, and was advised that she would receive an update from the solicitor with carriage of the matter. In July 2020, she was consulting the solicitor Philip Ferraro who continues to have carriage of the matter. Clearly, the claimant intended to prosecute her claim, there appears to have been plenty of time to address what evidence was required to prosecute her claim.
79.There was no medical or quantum evidence or particulars provided to the insurer prior to these proceedings being commenced that would qualify as sufficient to enable the insurer to entertain settlement negotiations . Particulars of the claim were not provided by the claimant to the insurer until after the claim had been referred by her to the Commission for assessment. The claimant’s submission would require me to find in effect that by simply making an enquiry to the insurer as to whether they would be interested in participating in a settlement conference before commencing these proceedings was sufficient to satisfy the requirements of s 7.32(3). I am not persuaded that I should make that finding. The medico-legal report relied upon by the claimant of Dr Rastogi consultant psychiatrist was obtained by a telehealth session on 27 July 2021 and the report was served on the insurer on 29 July 2021, this was after proceeding had issued.
80.Compliance with s 7.32(3) is mandatory. I find that the claimant failed to use her best endeavours to settle the claim before referring it to the Commission for assessment under Division 7.6 of the MAI Act. She made no actual offer to the insurer supported by particulars and evidence and this failure establishes the failure to use best endeavours to settle the matter .
Consequences of the claimant’s failure to comply with s 7.32(3)
81.The insurer submits that the consequence of the claimant’s failure to comply with the mandatory obligation in s 7.32(3) is that the proceedings should be dismissed. The specific dismissal power relied on by the insurer is found in s 54(b) of the PIC Act. It is contended that the proceedings are otherwise misconceived or lacking in substance because they have been commenced in circumstances where there has been both substantive and temporal non-compliance with s 7.32(3). That being so, it is submitted that they cannot progress any further as the non-compliance cannot be cured by any other provisions.
82.The claimant submits that dismissal of the proceedings in the circumstances is contrary to the intentions and objects of the legislation. I agree that the objects of both the MAI Act and the PIC Act are relevant, particularly given that s 1.3(4) of the MAI Act states that in the interpretation of a provision of the MAI Act, a construction that would promote the objects of the Act or the provision is to be preferred to a construction that would not promote those objects. However, I do not agree that any of the objects operate so as to excuse the failure of a party to comply with a mandatory provision, such as s 7.32(3).
83.The claimant submits that none of the grounds for dismissing an application found in
s 54 of the PIC Act or Rule 77 of the PIC Rules are applicable to these proceedings. She submits that the proceedings should be referred to the stood over list until the medical disputes have been finalised and to enable the parties to meaningfully comply with s 7.32(3) before the matter is allocated for assessment. The problem with this submission is that the claimant has already referred the claim for assessment. Prior to doing so she had not used her best endeavours to settle the claim. As the insurer submits, she made no genuine endeavours at all to settle the claim before referring it for assessment. I do not consider that s 7.32(3) can be complied with retrospectively. I am not satisfied that the arguments put forward by the claimant in relation to the stood over list overcome non-compliance with s 7.32(3).84.If the claimant’s submission that the proceedings could not be dismissed were accepted, it would render s 7.32(3) an ineffective provision. Given the use of the mandatory “must” in the provision, the legislature clearly considered the requirement to use best endeavours to resolve a claim prior to referring it for assessment to be integral to the overall operation of the MAI Act, particularly the operation of Division 7.6. The requirement sits comfortably with the stated object of encouraging the early resolution of motor accident claims and the quick, cost effective and just resolution of disputes.
85.As the insurer submits, dismissal of the proceedings does not mean the claimant is necessarily disentitled from lodging a further application in the Commission in the future. Section 7.33 of the MAI Act expressly permits her to seek leave to apply to do so after the three year anniversary of the accident.
86.I find that the proceedings are misconceived and lacking in substance, for the purposes of s 54(b) of the PIC Act, because they have been commenced in circumstances where there has been both substantive and temporal non-compliance with s 7.32(3) of the MAI Act. As the insurer submits, that being so, they cannot progress any further as the non-compliance cannot be cured by any other provisions.
Orders
87.For the purposes of s 7.32(3) the claimant failed to use her best endeavours to settle the claim before referring it for assessment under Division 7.6 of the MAI Act.
88.The proceedings are dismissed in accordance with s 54 of the PIC Act.
Member Shana Radnan
Personal Injury Commission
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