Lee v Allianz Australia Insurance Limited
[2024] NSWPIC 182
•5 April 2024
| CERTIFICATE OF DETERMINATION OF MEMBER | |
| CITATION: | Lee v Allianz Australia Insurance Limited [2024] NSWPIC 182 |
| CLAIMANT: | Hong Chul Lee |
| INSURER: | Allianz |
| MEMBER: | Terrence Broomfield |
| DATE OF DECISION: | 5 April 2024 |
| CATCHWORDS: | MOTOR ACCIDENTS - Motor Accident Injuries Act 2017; application for discretionary exemption pursuant to section 7.34(1)(b); general complexity; claimant entrepreneurial in various businesses involving various entities within which he traded; both parties retained forensic accountants to analyse various businesses and entities; Insurance Australia Ltd t/a NRMA Insurance v Banos, IAG Ltd t/a NRMA Insurance v Abiad, and IAG Limited t/a NRMA Insurance v Khaled applied; allegations of false and misleading statements, and complex economic loss issues that would involve the cross examination of the claimant, lay witnesses and forensic accountants some of whom may not be compellable to give evidence without the force of a subpoena; parties estimate if heard in the Commission the matter is likely to take two to three days; whether a court hearing is likely to result in the just, quick and cost effective resolution of the real issues in dispute and compel the calling of witnesses that may otherwise not be compellable to give evidence; Held – claim not suitable for assessment; recommendation that the claim be exempt from assessment; recommendation subsequently approved by the Division Head, as the President’s delegate. |
RECOMMENDATIONS – CLAIM NOT SUITABLE FOR ASSESSMENT
INTRODUCTION
The claimant was involved in a motor accident on 19 February 2020.
On 26 February 2020 the claimant made a claim against Allianz Australia Insurance Limited (the insurer).
The insurer has now filed a reply to the claimant’s application in the Personal Injury Commission (the Commission) seeking that I recommend to the President that the matter be exempt from assessment as a matter that is not suitable for assessment in the Commission.
I conducted an initial Preliminary Conference on 6 November 2023. The insurer some days prior to the Preliminary Conference had filed its reply which incorporated an application for a discretionary exemption.
I conducted a 2nd Preliminary Conference on 27 March 2024 at which time some additional oral submissions were made by the solicitors for the parties.
STATUTORY FRAMEWORK
The insurer’s application for exemption is made pursuant to s 7.34(1)(b) of the Motor Accident Injuries Act 2017 (‘MAI Act’) that provision is in the following terms:
“7.34 Claims exempt from assessment
(1) A claim is exempt from assessment under this Division if:
(a) the claim is of a kind specified in the regulations is a claim that is exempt from assessment under this Division, or
(b) the Commission has made a preliminary assessment of the claim and has determined (with the approval of the President) that the claim is not suitable for assessment under this Division.
(2) If a claim is exempt from assessment under this Division, the President must, as soon as practicable, arrange for the issue to the insurer and the claimant a certificate to that effect (enabling court proceedings to be commenced in respect of the claim concerned).”
As the claim is not of a kind specified in cl 14 of the Motor Accident Injuries Regulation, 2017, the application for discretionary exemption has been made pursuant to s7.34(1)(b).
Rule 99 of the Personal Injury Commission Rules 2021 (PIC Rules) applies to the application. The rule is in the following terms:
‘” 99 Consideration of discretionary exemption from claims assessment
(1) A claimant or insurer may apply for an exemption from assessment under section 92(1)(b) of the MAC Act or section 7.34(1)(b) of the MAI Act by lodging the application.
(2) In determining whether a claim is not suitable for assessment for the purposes of section 92(1)(b) of the MAC Act or section 7.34(1)(b) of the MAI Act, the Commission must consider the objects of the PIC Act in the circumstances of the claim.
(3) Without limiting the matters that may be considered, the Commission may consider the following –
(a) whether the claim involves complex legal or factual issues, or complex issues in the assessment of the amount of the claim,
(b) whether the claim involves issues of liability, including contributory negligence, fault or causation,
(c) whether a claimant or witness, considered by the Commission to be a material witness, resides outside the State,
(d) whether a claimant or insurer seeks to proceed against one or more non-CTP parties,
(e) whether the insurer alleges that a person has made a false or misleading statement in a material particular in relation to the injuries, loss or damage sustained by the claimant in the accident giving rise to the claim.”
The insurer alleges that there have been numerous false and misleading statements made that impact upon the assessment of damages and additionally submits that the claim involves complex issues particularly regarding the assessment of past and future economic loss.
The claimant was born in the Republic of Korea and came to Australia in 2000. Soon afterwards he commenced work as a swimming teacher as well as instructing Tae Kwon Do. The claimant was aged 42 of the time of the accident and he is now aged 46.
The claimant’s economic loss case is that prior to the accident he had become very entrepreneurial involving himself in various business activities for which he operated various corporate entities. He operated an education and training business specialising in leadership programs and support coaching programs with Aspex Australia Pty Limited. He conducted swimming classes for both students and instructors by harnessing the corporate entity More Sports Pty Ltd. The claimant also operated corporate entity Plus Life Clinic Pty Ltd that was involved in manufacturing and selling of health supplements to Asia. Prior to the accident the claimant asserts this company obtained a large warehouse to maximise the production of such health supplements.
The claimant further submits the corporate entity Aspex Australia Pty Ltd prior to the accident contracted with a training and assessment company that had necessitated him obtaining additional qualifications to permit him to teach certain courses.
The claimant submits that because of his injuries sustained in the accident he has been totally unfit for work for a period and subsequently has had very restricted residual earning capacity that has resulted in substantial loss. The claimant is seeking over $500,000 for past economic loss and almost $3 million for future economic loss.
The computation of the claimant’s claim for past and future economic loss is based on calculations by a forensic accountant instructed by his solicitors. The insurer instructed a forensic accountant Mr Smith, to investigate the claimant’s alleged losses and it is the findings of Mr Smith that grounds the insurer’s application for a discretionary exemption based both on complexity and false and misleading statements.
THE INSURER’S SUBMISSIONS
The false and misleading statements
Insurer alleges the false or misleading statements based on the insurers’ forensic accountant investigation, include;
(a) When initially seeking an assessment of his pre-accident weekly earning (PAWE) for his statutory benefits claim, the Claimant presented “fraudulent payslips that were false, misleading and inconsistent with the company’s banking records, his personal banking records and the tax return he subsequently lodged for the year ended 30 June 2020”;
(b) There were two inconsistent sets of financial reports provided to the insurer for the pre-accident year up until 18 February 2020;
(c) The claimant asserts that his company was forced to cease offering the purported 4 cancelled courses post-accident. According to Mr Smith this assertion is not supported by the company’s banking records;
(d) The claimant asserts he did not work at all from the date of the accident to 11 October 2020 and thereafter he worked one hour per week in the following 12½ months until 30 October 2021. According to Mr Smith these assertions are not supported by the company’s banking records;
(e) There is ‘Other Revenue” of $86,071 alleged for the year ended 30 June 2020. According to Mr Smith, the available company banking records do not support that as been legitimate business income;
(f) There is undeclared income purportedly found by Mr Smith.
General complexity
The insurer submits that the expert accounting evidence makes it clear that there are complex issues in the assessment of the claimant’s claim. Determination of the claimant’s entitlement to damages will inevitably involve voluminous documentary evidence and the calling of several witnesses including the forensic accounting experts. The insurer submits that any assessment of the claimant’s entitlement to damages likely to take 2 to 3 hearing days at least should the matter remain in the Commission.
The insurer submissions regarding the discretionary exemption
The insurer submits that the claimant’s credit is an issue in the matter ought to be determined at a hearing in open court where sworn evidence can be given and recorded with the claimant compelled to answer questions with the rules of evidence able to be applied and where the evidence can be properly tested.
The insurer anticipates it will be necessary for the claimant’s two private accountants who provided financial reports to the insurer to assist in assessing the claimant’s pre-accident income will be required to be subpoenaed. It is also likely there will be further witnesses will be either called by the claimant or subpoenaed by the insurer that include the various managers that the claimant was supervising in the various businesses both before and after the accident.
Given the restrictions in the Motor Accidents Division of the Commission to compel witnesses pursuant to section 51 of the PIC Act there is likely to be relevant witnesses that are unable to be compelled to attend any hearing unless the force of a subpoena is available in a court.
THE CLAIMANT’S SUBMISSIONS IN REPLY
Whilst at the Preliminary Conference on 6 November 2023 I directed that the claimant upload onto the Portal written submissions together with any material upon which he relies in response to the insurer’s application for a discretionary exemption no material was sought to be relied upon. Rather, the claimant advised the Dispute Officer prior to the Preliminary Conference on 27 March 2024 that whilst the claimant did not concede the insurer submissions, he did not oppose the discretionary exemption application. The claimant indicated he was proposing to address the evidentiary issues in the substantive proceedings.
At the Preliminary Conference on 27 March 2024 the claimant’s solicitor also conceded that any hearing in the Commission of this claim would likely involve at least 2 to 3 days with the need for the claimant to be questioned extensively in addition to the two retained forensic accountants and potentially the claimant’s own private accountants. Further there is likely to be a need for several lay witnesses to resolve the dispute between the parties in respect to the level of involvement the claimant had with the various businesses both before and after the accident.
DETERMINATION
Notwithstanding that the claimant does not oppose the insurer’s application for a discretionary exemption I must still be satisfied that this claim is not suitable for assessment before recommending to the President of the Commission that the matter be formally exempted.
My determination requires the exercise of an administrative discretion where there is an allegation that a person has made a false and misleading statement in a material particular in relation to the injuries, loss or damage sustained by the claimant in the accident giving rise the claim.
Justice Campbell in Insurance Australia Ltd t/a NRMA Insurance v Banos [2013] NSWSC 1519 (‘’Banos”) provided some helpful guidance by identifying relevant considerations when exercising such administrative discretion:
“[43] When deciding statutory question in the case that turns upon whether a person has made a false and misleading statement, the following considerations are likely to be relevant. I do not mean to be exhaustive:
(a) the Act contemplates that the great majority of disputes will be resolved by the assessment process, and not in court;
(b) however, the consideration that s.92 provides for both mandatory exemptions and discretionary exemption provides a clear legislative guidepost that appropriate cases should be” redirected” to the court system at an earlier time by way of preliminary determination;
(c) a primary question will be, having regard to the nature of the issue raised, whether both parties can be afforded a hearing (assessment conference) which is in a practical sense fair having regard to the nature of the allegation raised;
(d) a related question will be which mode of hearing will resolve the dispute more efficiently and effectively, bearing in mind the comparative limitations and advantages of an assessment conference on the one hand, and a court hearing on the other. Advantages of the latter may include a better opportunity for proper and fair cross- examination of witnesses whose credit is to be impugned and the greater availability of cross examination of medical experts on the material which may call a claimant’s reliability into question;
(e) as it is clear the claimant’s credit will be called into question, a consideration of whether it is in the public interest that such an examination occurs in open court;
(f) Finally, but by no means least, the consideration that it is not mandatory, when a credit issue is raised, to decide the claim is not suitable for assessment under part 4.4.”
25..Justice Campbell earlier in his judgement in Banos, confirmed that in exercising such administrative discretion jurisdictional error would occur if an attempt was made to decide whether the claimant had in fact made a false or misleading statement in a material particular in relation to the injuries, loss or damage sustained by the claimant[1]. Justice Harrison subsequently provided a further caveat when exercising such administrative discretion that no determination ought be made in respect to the ‘strength of the insurer’s allegations.”[2]
[1] Insurance Australia Limited t/a NRMA Insurance v Banos [2013] NSWSC 119 at [42] Campbell J
[2] IAG Ltd t/as NRMA Insurance v Abiad [2018] NSWSC 422 at [76] Harrison J
Subsequently, Justice Bellew relying upon the Banos decision held the relevant considerations include;
(a) whether both parties can be afforded a hearing (assessment conference) which is fair in a practical sense having regard to the nature of the allegations raised.
(b) which mode of hearing will resolve the dispute more efficiently, and effectively bearing in mind the comparative limitations and advantages of an assessment conference on the one hand, and a court hearing on the other. Advantages of the ladder may include a better opportunity for proper and fair cross-examination of witnesses this credit is to be impugned and the greater availability of cross-examination of experts on the material which may cause the claimant’s reliability to be put into question’”.[3]
[3] IAG Limited t/a NRMA Insurance v Khaled [2019] NSWSC 320 Bellew J
Whilst these cases deal with the former Motor Accidents Compensation Act 1999 and associated guidelines, they remain pertinent when assessing whether this claim is not suitable for assessment at the Commission due to the similarity of the provisions. I acknowledge that the Commission does have different powers, processes and procedures than its predecessor, the Claims Advisory and Resolution Service. When undertaking this preliminary assessment I must also be obedient to the objects of the PIC Act and the circumstances of the case. The objects of the PIC Act include resolving the ‘’ real issues in proceedings justly, quickly, cost effectively and with as little formality as possible’[4].
[4] Section 3(c) Personal Injury Commission Act 2020
In my assessment, a court hearing has the advantage of affording a better opportunity for proper and fair cross examination of witnesses, and the ability to compel the attendance of witnesses to attend the hearing by way of subpoena. Critical witnesses that may assist in resolving certain factual issues between the parties may not be compelled to attend if the matter remains in the Commission without the force of a subpoena.
I consider that a court hearing is more likely to result in the just, quick and cost-effective resolution of the real issues in dispute between the parties when compared to an assessment by the Commission pursuant to Division 7.6 of the MAI Act. This is primarily because of the nature of the matters in dispute and the limitations on the process and procedure applied by the Commission. The court is free of such limitations.
Having made a preliminary assessment of the claim, taking into consideration the objects of the PIC Act, the nature of the alleged false and misleading statements including the complexity of the likely assessment of damages in dissecting the various forensic economic loss reports I have determined that the claimant is not suitable for assessment.
CONCLUSION
Having made a preliminary assessment of the claim, I determine for the reasons set out above that this claim is not suitable for assessment pursuant to s 7.34(1)(b) of the Motor Accident Injuries Act 2017 and I recommend to the President that it be exempt from assessment.
In accordance with s 7.34(1)(b) of the Motor Accident Injuries Act 2017, the Division Head (Motor Accident Division) as Delegate of the President, on 9 April 2024, approved Member Terrence Broomfield’s recommendation that the claim is not suitable for assessment.
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