Leary v Allianz Australia Insurance Limited

[2022] NSWPIC 436

CERTIFICATE OF DETERMINATION OF MEMBER
CITATION:	Leary v Allianz Australia Insurance Limited [2022] NSWPIC 436
CLAIMANT:	Roslyn Leary
INSURER:	Allianz Australia Insurance Limited
MEMBER:	Brett Williams
DATE OF DECISION:	11 July 2022
CATCHWORDS:	MOTOR ACCIDENTS - Application by the insurer for the proceedings referring the damages claim to the Commission for the assessment to be dismissed; in accordance with section 54 of the Personal Injury Commission Act 2020 (2020 Act) for failure to comply with section 7.32(3) of the Motor Accident Injuries Act 2017 (2017 Act); duty, breach and injury admitted; insurer determined that the claimant’s only injuries caused by the accident were minor injuries and denied liability for the damages claim on that basis; where insurer disputed causation of an alleged lower back injury; where the claimant had sought the insurer’s position in relation to permanent impairment and non-economic loss; Held — taking into account the circumstances of the claim for the purposes of section 7.32(3) of the 2017 Act; the claimant had used her best endeavours to settle the claim before referring it for assessment; had it been found that the claimant had not satisfied section 7.32(3) of the MAI Act the proceedings would not have been dismissed; dismissing the proceedings would not have furthered or promoted the objects of the 2017 Act nor facilitated the just, quick and cost effective resolution of the real issues in the proceedings; to give effect to the guiding principle found in section 42 of the 2020 Act; Mammone v Insurance Australia Limited t/as NRMA and Golding v NRMA applied.

INTRODUCTION

1. Roslyn Leary (the claimant) was injured in a motor accident on 18 January 2019. At the time of the accident she was the passenger in a vehicle being driven by her son, who was found by the police to have been at fault for the accident. She subsequently made a claim for damages on Allianz Australia Insurance Limited (the insurer).

2. In a liability notice dated 2 March 2021 the insurer admitted duty, breach, and injury, but denied liability for the claim for damages on the basis that it had determined that the claimant’s only injuries resulting from the accident were minor injuries: s 4.4 Motor Accident Injuries Act 2017 (MAI Act). The claimant disputes the insurer’s decision in relation to minor injury (the medical dispute). The medical dispute is currently before the Personal Injury Commission (the Commission).

3. The claimant commenced these proceedings, by which she seeks to refer her claim for damages to the Commission for assessment, on 18 January 2022. An application for assessment of the medical dispute was lodged at the same time. The claimant’s position is that the proceedings were commenced to ensure compliance with s 7.33 of the MAI Act. The claim for damages is limited to non-economic loss.

4. In its reply, the insurer has raised non-compliance with s 7.32(3) of the MAI Act. That provision states that the parties to a claim must use their best endeavours to settle the claim before referring it for assessment under Division 7.6 of the MAI Act. The insurer argues that the proceedings should be dismissed on the basis that the parties have not used their best endeavours to settle the claim.

1. At the teleconference conducted on 13 May 2022 I made directions for the provision of evidence and submissions by the parties. The parties agreed that the s 7.32(3) dispute can be determined on the papers. Having considered both s 52 of the Personal Injury Commission Act 2020 and Procedural Direction PIC2 I have concluded that the s 7.32(3) dispute can be determined on the papers. I am satisfied that sufficient information is available to allow me to determine the issues without holding a formal hearing.

2. The parties agree that if the proceedings are not dismissed they should be referred to the stood over list.

1. The insurer’s submissions

1. The insurer submits that s 7.32(3) mandates that the parties to a claim must use their best endeavours to settle the claim before referring it for assessment under Division 7.6.

2. In the insurer’s submission, the fact that a three year anniversary is approaching does not excuse a claimant from compliance with s 7.32(3). Nor, the insurer argues, does the existence of Procedural Direction MA1 justify such a default.

3. The insurer argues that, considering the stance it took in its Internal Review, the only thing which could usefully have been done would have been for the claimant to refer the minor injury dispute to the Commission. It is submitted that such an application might, of itself, have induced the insurer to consider a compromise. The insurer posits that the issuing of a certificate with respect to the medical dispute would either have triggered an obligation for it to make an offer, or would have disposed of the claim entirely. In the insurer’s submission an application to the Commission with respect to the medical dispute could, and should, have been lodged shortly after it became apparent that this would be necessary in order to establish the claimant’s right to claim damages. Implicit in the insurer’s submission in this regard is that making such an application as soon as the insurer’s position in relation to minor injury had been communicated to her, would have been consistent with the claimant’s obligations under s 7.32(3).

4. It is submitted that, given the use of the word “must” in s 7.32(3), the legislature clearly considered that the requirement to use best endeavours to resolve a claim prior to lodgement was integral to the scheme. Moreover, having regard to the interplay between ss 7.32(3) and 7.33, there was an intention that this whole process ought to occur prior to the three year anniversary of the accident.

5. In the insurer’s submission, the claimant’s failure to comply with s 7.32(3) should result in the proceedings being dismissed under s 54(b) of the Personal Injury Commission Act 2020 (PIC Act).

1. The claimant’s submissions

1. The claimant’s submissions include the following timeline of relevant events:

   (a)18 January 2019 – date of accident;

   (b)2 December 2020 – claim for damages made;

   (c)22 December 2020 – claimant underwent lumbar discectomy;

   (d)2 March 2021 – liability for the damages claim denied as the claimant’s injury was a minor injury;

   (e)25 March 2021 – claimant underwent a lumbar fusion;

   (f)30 September 2021 – claimant’s solicitors wrote to the insurer seeking confirmation as to its position in relation to non-economic loss;

   (g)13 October 2021 – claimant’s solicitor wrote a follow up letter to the insurer in relation to non-economic loss, and

   (h)20 October 2021 – the insurer wrote to the claimant’s solicitor acknowledging request for insurer’s position in relation to non-economic loss.

2. I note that the insurer’s letter to the claimant in which it acknowledged her request that it confirm its position in relation to the permanent impairment threshold (and thus the non-economic loss claim) is dated 7 October 2021, not 20 October 2021 as stated in the claimant’s submissions.

3. The submissions confirm that the damages claim is confined to non-economic loss. It is observed that the claim for damages was lodged well prior to the expiration of the three year time limit. It is noted that the claimant underwent a full lumbar fusion shortly after the insurer made its liability decision. There was an extended recovery period from that surgery. Given the surgery, the claimant’s geographic location (she lives in Hallsville, NSW, a satellite town near Tamworth), unrelated health issues and the Covid pandemic, the delay in lodging an application for assessment of the minor injury dispute was understandable.

4. It is submitted that when the individual circumstances in this matter are considered the claimant has made best endeavours to resolve the matter prior to the institution of proceedings.

REASONS

1. The focus of the dispute is s 7.32(3) of the MAI Act, which is in the following terms:

19.  “7.32 Reference of claim

20.(1) A claim for damages may be referred to the Commission by the claimant or the insurer, or both, for assessment under this Division.

21.(2) (Repealed)

22.(3) Parties to a claim must use their best endeavours to settle the claim before referring it for assessment under this Division.”

1. No damages may be awarded to an injured person if the person’s only injuries resulting from the motor accident were minor injuries: s 4.4 MAI Act. No damages for non- economic loss may be awarded in respect of injury unless the degree of permanent impairment of the injured person as a result of the injury caused by a motor accident is greater than 10%: s 4.11 MAI Act.

2. The claimant’s statement dated 18 January 2022 records that she felt the rapid onset of lower back pain following the accident. She also experienced neck pain. She states that over time her lower back pain became unbearable, and radiated into both legs. She underwent a discectomy at the hands of Dr Hanson on 22 December 2020. She states that the discectomy failed and “if anything made [her] symptoms worse”. In March 2021 the pain became excruciating, requiring her to be airlifted to John Hunter Hospital. A disc removal along with a spinal fusion and insertion of rods was recommended. This surgery ultimately occurred on 25 March 2021 at the hands of Dr Hall. The claimant states that she continues to suffer a range of disabilities associated with her back injury. She provides a history of a prior lower back injury, low back symptoms and surgery. She states that following a discectomy in June 2018 she made an excellent recovery. The statement records that the claimant suffers from diabetes, gastro-oesophageal reflux disease, hyperthyroidism and has had her gall bladder removed. She states that at the time of the accident she was a full-time carer for her paraplegic adult son, who is dependent on her. While she continued to care for her son, she states that she struggles to do so.

3. It appears that the claimant’s damages entitlements hinge on the alleged low back injury, although a neck injury is also alleged. There is a history of low back symptoms prior to the accident.

4. It is evident that the insurer disputes causation of the low back injury. In this regard, the insurer’s liability notice dated 2 March 2021 states that the insurer admitted the insured driver owed the claimant a duty of care, breached the duty of care, and that the claimant suffered an injury, loss or damage as a result of the insured driver’s negligence. The insurer denied liability for the damages claim because it determined that the claimant had suffered a minor injury within the meaning of the MAI Act. Among other matters, the insurer stated that the claimant had a longstanding history of chronic lower back pain with previous L5/S1 surgery being performed in 2018. While it accepted that she sustained an exacerbation to the back pain following the motor accident, the insurer determined that the exacerbation had ceased. The insurer informed the claimant that it had determined she had no entitlement to common law damages.

5. By letter dated 30 September 2021 the claimant’s solicitor sought confirmation about the insurer’s position regarding her entitlement to non-economic loss.

6. In correspondence dated 7 October 2021 the insurer stated that it was in the process of reviewing its position in relation to permanent impairment, and would be in a position to provide its response by 1 January 2022. Outstanding particulars, authorities and medical evidence were sought.

7. On 13 October 2021 the claimant’s solicitor again wrote to the insurer. It was noted that the three year time limit would expire on 18 January 2022, a reference to s 7.33. Reference was made to the 30 September 2021 correspondence to the insurer. The insurer was asked to urgently advise its position in respect to the claimant’s permanent impairment.

8. On 21 December 2021 the insurer wrote to the claimant and advised that it was not in a position to determine the extent of her whole person impairment as relevant information was outstanding. In that regard, the insurer had sought signed Medicare, PBS and Centrelink authorities, and medical evidence to support her claim. Additionally, a medico-legal assessment scheduled for 11 January 2022 was rescheduled to 22 February 2022. The insurer stated that until the outstanding medical information had been received, it was not in a position to consider the claimant’s permanent impairment.

9. These proceedings were commenced on 18 January 2022. On the same date the claimant lodged an application for the medical dispute in relation to whether her injuries caused by the accident were minor injuries for the purposes of the MAI Act.

10. While an application with respect to a medical dispute about “minor injury” has been lodged, an application in relation to the degree of the claimant’s permanent impairment that has resulted from the injury caused by the accident has not been lodge with the Commission. It seems implicit in the positions taken by the parties that if causation of the low back injury alleged by the claimant is established, her permanent impairment that has resulted from the accident will be greater than 10%. In those circumstances she would be entitled to damages for non-economic loss. This is because of the surgery that has occurred since the accident.

11. In this regard, the insurer submitted[1] that the dispute between the parties is about causation. The insurer acknowledged that:

    [1] Insurer’s submissions dated 24 May 2022 at [22].

    34.“[22]… the Claimant had a spinal fusion which is undoubtedly a non-minor injury if the Commission accepts that the motor accident made a material contribution…”

12. In Mammone v Insurance Australia Limited t/as NRMA [2021] NSWPIC 501, I found that what constitutes “best endeavours”, for the purposes of s 7.32(3), must depend on the circumstances of each claim. The provision may not require an offer of settlement to be made in every case.

13. In Golding v NRMA [2021] NSWPIC 98, Member McTegg determined at [37]:

37.“[37]… what is required of the claimant was to do all she reasonably could in the circumstances to attempt to achieve a settlement of her claim, or to take steps which a prudent, determined and reasonable person acting in her own interests and desiring to achieve a settlement would take.”

1. I respectfully agree with Member McTegg.

2. The only damages contended for by the claimant are for non-economic loss. She sought a concession from the insurer in relation to this head of damage.

3. I have taken in to consideration:

   (a)the surgery that the claimant has undergone to her lower back on two occasions since the accident and her need for recovery following the surgery;

   (b)her social circumstances, including that she is the full-time carer for her paraplegic adult son;

   (c)that she lives in regional NSW;

   (d)the impact of the Covid 19 pandemic and associated lockdowns and restrictions, and

   (e)that an application for assessment of the medical dispute has now been lodged.

4. I am satisfied that, in light of the matters referred to at [31], the claimant did all she reasonably could in the circumstances.

5. I also note that there was nothing to prevent the insurer from lodging an application for assessment of the medical dispute, particularly when it was clear that the claimant was pursuing a damages claim and that there was a dispute in relation to causation of her lower back injury. In this regard, I note the detailed reasons provided in the internal review decision dated 25 March 2021, in which the insurer’s internal reviewer conducted a detailed review of the medical evidence and determined, among other things, that the claimant’s lumbar spine complaints were not causally related to the accident.

6. Taking into account the circumstances of this claim, I find that, for the purposes of s 7.32(3) of the MAI Act, the claimant had used her best endeavours to settle the claim before referring it for assessment.

7. Had I found that the claimant was in breach of s 7.32(3), I would not have dismissed the proceedings. If the proceedings were dismissed, further time, effort and expense would be involved in connection with an application for leave under s 7.33 of the MAI Act. I do not consider that dismissing the proceedings would have encouraged the early resolution of the claim and the quick, cost effective and just resolution of disputes that arise in the claim and would otherwise have furthered or promoted the objects of the MAI Act. Further, I do not consider that dismissing the proceedings under s 54 of the Personal Injury Commission Act 2020 (PIC Act) would have facilitated the just, quick and cost effective resolution of the real issues in the proceedings, so as to give effect to the guiding principle found in s 42 of the PIC Act.

8. Having considered Procedural Direction MA1, and noting the outstanding medical dispute, I refer the proceedings to the stood over list.