Moss v Insurance Australia Limited

[2004] FCA 1636

FEDERAL COURT OF AUSTRALIA

Moss v Insurance Australia Limited [2004] FCA 1636

TRADE PRACTICES– unconscionable conduct under general law – where liability arising from motor vehicle accident resolved by settlement – whether applicant suffered from special disadvantage in negotiating settlement – whether threats made in negotiation of settlement

Trade Practices Act 1974 (Cth) s 51AA

Social Security  Act 1991 (Cth) Parts 3.1, 5.1

Australian Competition and Consumer Commission v Berbatis (2003) 214 CLR 51 followed
Australian Competition and Consumer Commission v Samson Holdings Pty Limited (2002) 117 FCR 301 referred to
Henderson v Amadio Pty Limited (1995) 140 ALR 391 referred to
Louth v Diprose (1992) 175 CLR 621 referred to
Mann v Carnell (1999) 201 CLR 1 referred to

WILLIAM WAYNE MOSS v INSURANCE AUSTRALIA LIMITED (FORMERLY NRMA INSURANCE LIMITED)

N 664 OF 2003

JACOBSON J
14 DECEMBER 2004
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 664 OF 2003

BETWEEN:	WILLIAM WAYNE MOSS APPLICANT
AND:	INSURANCE AUSTRALIA LIMITED (FORMERLY NRMA INSURANCE LIMITED) RESPONDENT
JUDGE:	JACOBSON J
DATE OF ORDER:	14 DECEMBER 2004
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.        The application be dismissed.

2.        The applicant pay the respondent’s costs of the proceedings.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 664 of 2003

BETWEEN:	WILLIAM WAYNE MOSS APPLICANT
AND:	INSURANCE AUSTRALIA LIMITED (FORMERLY NRMA INSURANCE LIMITED) RESPONDENT

JUDGE:	JACOBSON J
DATE:	14 DECEMBER 2004
PLACE:	SYDNEY

REASONS FOR JUDGMENT

Introduction

1. The applicant (‘Mr Moss’) was involved in a motor vehicle accident on 17 February 1999.  After the accident he complained of injuries to the neck, shoulder and hip.  The respondent (‘NRMA’) was the compulsory third party insurer of the vehicle which was nominated as being at fault in the accident.

2. In July 1999 Mr Moss’s then solicitor served a claim on NRMA.  In September 1999, NRMA admitted liability.

3. Under the Motor Accidents Act 1988 (NSW), NRMA had a statutory duty to endeavour to resolve Mr Moss’s claim by settlement, or otherwise, as expeditiously as possible. The Motor Accidents Compensation Act 1999 (NSW), which contains similar provisions, did not apply because the accident occurred before it came into effect.

4. In January 2000, Mr Moss offered to settle his claim for $150,000.  Over the following months Mr Moss put a variety of settlement offers to NRMA.  The claim was eventually settled on 16 June 2000 for $10,943.00.

5. In these proceedings Mr Moss claims that the settlement was procured by unconscionable conduct in breach of s 51AA of the Trade Practices Act 1974 (Cth). Mr Moss appeared before me in person but his statement of claim was drafted by a barrister as a consequence of an order for legal representation made under O 80 of the Federal Court Rules on 20 November 2003. The order for legal representation was limited to the preparation and filing of the statement of claim.

6. The substance of the statement of claim is that Mr Moss’s will was overborne by threats made by NRMA on 5 June 2000 and 16 June 2000 to, respectively, Mr Moss and a solicitor who was, on 16 June 2000, representing Mr Moss for the limited purpose of seeking to improve on a settlement offer that had been made by NRMA.

7. The threats that are alleged to have been made were that NRMA would disclose in any court proceedings between the parties information said to have been obtained by the NRMA, illegally, from Centrelink.  The information was that Mr Moss owed the sum of approximately $32,000 to the Commonwealth under the Social Security  Act 1991 (Cth) (‘the Social Security  Act’) and that Centrelink was proposing to garnishee any settlement funds obtained by Mr Moss in partial satisfaction of the debt.

8. The threats are alleged to have been made by Mr Sean Burns (‘Mr Burns’), an Assistant Claims Manager of NRMA.  Mr Burns denies making the threats.  The solicitor to whom the threat is alleged to have been made on 16 June 2000 was not called by Mr Moss and there was no admissible evidence of any threat made to him.

9. The statement of claim also pleads that Mr Moss suffered from a special disadvantage by reason of, inter alia, his impecuniosity and lack of education and that NRMA took advantage of Mr Moss’s position by illegally obtaining information about his Social Security debt from Centrelink and using the information to overbear his will by illegitimate threats of disclosure of the information.

10. Mr Moss affirmed four affidavits and he was cross-examined by counsel for NRMA.

11. Mr Burns swore an affidavit.  So too did Mr Richard Najdzion (‘Mr Najdzion’) who is an Assistant Claims Manager with NRMA.  Mr Najdzion was responsible for the day to day management of Mr Moss’s insurance claim.  Mr Moss cross-examined Mr Burns and Mr Najdzion.

12. There was extensive documentary evidence of the processing and settlement of Mr Moss’s claim.  There was also documentary evidence of Mr Moss’s dealings with Centrelink and of his communications with solicitors who, from time to time, either represented him or were consulted by him about his claims against NRMA.  No claim of privilege was, or could have been made, in respect of these communications with the solicitors; see Mann v Carnell (1999) 201 CLR 1 at [28] - [29].

13. I will refer to the documents in some detail.  The principal points which emerge from the documents are:-

    • Mr Burns’ file note of a conversation with Mr Moss of 31 May 2000 records that Mr Moss requested NRMA to do a search with Centrelink and that he would consider NRMA’s then current offer of $10,000 if he did not have to pay any money to Centrelink.
    • Mr Moss was represented by, or consulted, four different firms of solicitors.  All of them told him that his expectations of the value of his claim were unrealistic.
    • Mr Moss told all the solicitors of his Social Security  debt and at least two of them told him it could be used against him on credit by NRMA if the claim went to a hearing.
    • One of the solicitors, Mr Hall-Johnston, spoke to Mr Burns on 16 June 2000 in an unsuccessful attempt to negotiate a settlement in excess of $10,000.

14. The communications between NRMA and Centrelink must be understood in light of certain provisions of the Social Security Act. These provisions impose personal liability on the insurer for a Social Security debt owed by a claimant in the event that the insurer pays a claim without debiting the settlement funds and making payment to Centrelink. NRMA therefore has a practice of notifying Centrelink about settlements in order to protect itself against a possible double payment. I do not propose to set out the legislation. The relevant provisions are contained in Parts 3.14 and 5.1 of the Social Security Act.  The principal sections are ss 1182, 1184, 1184G, 1222, 1223(1), 1230C(1) and 1233.

    Background Facts

15. On 17 February 1999, Mr Moss was involved in a motor vehicle accident at the corner of St Mary’s Road and Richmond Road, Berkshire Park.  His claim form stated that he suffered injuries to the hip, elbow, shoulder and neck and that he suffered from erection problems from pain caused by the accident.  Mr Moss’s claim form was sent to NRMA on 6 July 1999 by his then solicitor, Mr Scott Hall-Johnston of Beilby Poulden Costello Solicitors (‘Beilby’).

16. On 14 September 1999, a claims officer of NRMA wrote to Beilby admitting that NRMA’s insured had breached its duty of care to Mr Moss.

17. On 21 January 2000, Mr Moss wrote to Mr Scott Hall-Johnston stating that he was now acting for himself in relation to the claim on NRMA.  The letter contains the word ‘sacked’ and Mr Moss acknowledged, under cross-examination that he had sacked Mr Scott Hall-Johnston.

18. On the same day, 21 January 2000, Mr Moss wrote to Ms Gabriella Scales, who was then the claims officer at NRMA who was handling the claim, advising that he was willing to settle the matter for $150,000.  About 10 days later, on 1 February 2000, Mr Moss telephoned Ms Scales and said that, to cut out the haggling, he would go down to $80,000.

19. On 6 March 2000, Dr Peter Nakhle provided a medical report to Ms Scales.  The report stated that Mr Moss was complaining of pain in his hip, elbow, neck and shoulder and sexual problems.  The report also stated that x-rays of Mr Moss’s shoulder and elbow were ‘normal’.

20. On the same day, 6 March 2000, Ms Scales received a telephone call from Mr Paul Henderson of Shanahan Tudhope, Solicitors.  Mr Henderson said that he had been instructed by Mr Moss to act on Mr Moss’s behalf and to arrange a settlement conference.  A conference was arranged for 21 March 2000.

21. Also on 6 March 2000, Mr Moss wrote to Shanahan Tudhope for the attention of Mr Henderson, instructing the solicitors to contact Centrelink to see if Mr Moss would have to repay Centrelink any amount of money for any reason upon settlement of his claim with NRMA.

22. On the next day, 7 March 2000, Mr Moss wrote to Centrelink stating that he was making an offer of $10,000 to clear his debt.  Thus, Mr Moss was offering to Centrelink to extinguish his debt of approximately $32,000 by a payment of $10,000.  He said in the letter that if the offer was not accepted, the debt would never be cleared.  He referred to the fact that he was going to prison for three to five years for his Social Security  fraud which had brought about his indebtedness.  He asked for six months to pay the sum of $10,000.

23. On 16 March 2000, Centrelink wrote to Mr Moss stating that his offer to pay $10,000 to finalise his debt by September 2000 had been accepted.

24. It is clear from the correspondence which preceded the settlement conference on 21 March 2000 that Mr Moss was endeavouring to extinguish his Social Security  debt for a reduced amount whilst at the same time negotiating a settlement with the NRMA which would, he hoped, produce a substantial surplus after payment out of the Social Security  debt.

25. At the settlement conference on 21 March 2000, Mr Moss put a number of offers to the NRMA.  The offers commenced at $150,000 but were reduced to $38,000.  NRMA made a ‘final’ offer of $8,000.  Mr Moss was accompanied by his solicitor, Mr Henderson, at the conference.

26. On 22 March 2000, the day after the conference, NRMA wrote to Mr Henderson making an offer to settle the claim for $8,000.

27. On 30 March 2000, Shanahan Tudhope wrote to Ms Scales confirming Mr Moss’s offer of $38,000 plus out-of-pocket expenses.  The offer was inclusive of costs.

28. On 28 April 2000, Mr Moss wrote to Ms Scales advising NRMA that he had sacked Shanahan Tudhope as his solicitors.

29. On 12 May 2000, Mr Moss wrote to NRMA for the attention of Ms Scales.  The letter stated that NRMA had not taken into consideration any of his health problems caused by the accident.  The letter offered to take $120,000 to close the matter within 21 days or otherwise he would be taking court action.

30. An NRMA file note of 17 May 2000 refers to a conversation with Mr Moss in which NRMA stated that it would make a once only settlement offer of $10,000.  The file note records that Mr Moss was informed that if he wanted more than $10,000 he should see a solicitor.

31. On 17 May 2000, an assistant claims manager of NRMA, Ms Jeanette Mesa, who was apparently the author of the file note of 17 May 2000, wrote to Mr Moss referring to the telephone conversation of that date.  The letter noted that Mr Moss would be consulting a solicitor in the near future.  The letter advised that Mr Najdzion would now be managing the claim.  Ms Mesa requested that Mr Moss forward to NRMA documents supporting his proof of lost income.

32. On 26 May 2000, Mr Moss wrote to Ms Mesa stating that with regard to her offer of $10,000 which was made on 17 May, she was not taking into account his pain and suffering and loss of enjoyment of life.  He offered to settle for $80,000 on that day.  Otherwise, he would go to court and claim $300,000.

33. On 27 May 2000, Mr Moss again wrote to NRMA, this time for the attention of Mr Najdzion stating that he had a solicitor’s appointment for 29 May 2000.  He said that if he had not heard from NRMA accepting his offer of $80,000, he would leave the matter to his solicitor.  The letter contained a breakdown of his claim, which was put at a total of $150,000.

34. On 29 May 2000, Mr Moss had a conference with Mr P D Banister, solicitor.  Mr Banister wrote to Mr Moss on 31 May 2000 confirming the advice that he had given in the conference.  The letter included the following statements:-

    ‘I confirm my advice to you that given your background, work history, and personal circumstances of such that in my view your prospects of recovering any significant amount for non-economic loss are remote, and it will be very difficult to settle your claim because of the likelihood of the significant repayment to the Department of Social Security .

    That being the case, I note that you were not prepared to accept my advice as to how your claim might be conducted, and what might be the most likely result for you if appropriate medical evidence were obtained to support your claims.

    I note that you wish to engage someone else to act on your behalf, and I wish you well with your claim.’

35. Mr Burns’ file note of 31 May 2000 is an important document. I referred to it at [13] above. I will set it out in full. The file note is as follows:-

    ‘31.5.00          Rang claimant Moss. He enquired if we would be doing a search with DSS.  I confirmed we would.

    He asked if we would go to $15,000.  I advised no and $10,000 was the top offer.

    He requested we do a search with DSS and he would consider our offer of $10,000 inclusive if DSS do not want any money.

    George (Poulos) please do an urgent DSS search.’

36. The instruction in the last sentence of the file note to ‘George’ was to Mr George Poulos of NRMA.  On the same day, 31 May 2000, Mr Poulos sent a ‘post settlement advice’ to the Compensation Recovery section of Centrelink.  The document set out Mr Moss’s name and, incorrectly, gave the date of settlement as 31 May 2000.  It stated the gross amount of the settlement as $10,000 all inclusive.

37. On 1 June 2000, Mr Moss had a telephone conversation with Mr Najdzion.  Mr Moss requested Mr Najdzion to put NRMA’s settlement offer in writing.  On 2 June 2000, Mr Najdzion wrote to Mr Moss confirming NRMA’s settlement offer of $10,000.  The letter stated that there would be deducted from the settlement amount the sum of $1,000 to the Health Insurance Commission and out-of-pocket expenses of $943.00 paid by NRMA.  The letter also stated that, should any amount be payable to Centrelink, this amount would also be deducted from the settlement amount of $10,000.  The letter enclosed a draft form of agreement for release and indemnity which provided for NRMA to pay the sum of $10,000 in full and final settlement of Mr Moss’s claim.  The draft agreement stated that NRMA would be entitled to deduct from payment all amounts payable for Social Security benefits and other moneys paid or payable for medical expenses or otherwise payable by law.

38. On 5 June 2000, at about 8:59 am, NRMA received a notice from Centrelink stating that there were no charges due to Centrelink under Part 3.14 of the Social Security Act. Part 3.14 deals with recovery of payments from compensation payers. However, other parts of the Social Security Act provide for debt recoveries.  The notice of 5 June 2000 went on to state that there was an outstanding debt owed by Mr Moss to Centrelink and that the debt management unit of Centrelink would issue a garnishee notice for it.  NRMA was asked not to release the compensation moneys until notification was received from the debt management unit. 

39. At approximately 9:30 am on 5 June 2000, NRMA received a garnishee notice from Centrelink. The notice was sent pursuant to s 1233 of the Social Security Act.  It stated that Mr Moss owed $32,595.70 to the Commonwealth of Australia and that the amount to be paid to Centrelink was $10,000.  The notice stated that a copy was being sent to Mr Moss.  The notice concluded with the following paragraph:-

    ‘Please note that it is unlawful for you to tell anyone else that Mr Moss has a debt to the Commonwealth, or for you to use this information (except to comply with this request).’

40. Later on 5 June 2000, Mr Najdzion had a telephone conversation with Centrelink in which he said that settlement had not yet taken place.  Centrelink told Mr Najdzion to keep the garnishee notice in case of a future settlement.

41. Also on 5 June 2000, Mr Najdzion had a telephone conversation with Mr Moss.  Mr Najdzion told Mr Moss of the notice from Centrelink.  Mr Moss said that he knew and that he wanted $10,000 for himself.  Mr Najdzion rejected this saying that NRMA’s offer was $10,000 inclusive.  Mr Moss said that he wanted more and that he wanted to speak with a manager.  Mr Najdzion told Mr Moss that Mr Burns was his manager.

42. On 5 June 2000, Mr Moss wrote an important letter to Centrelink.  The letter stated that the offer from NRMA was $10,000 less $1,000 payable to the Health Insurance Commission and $943 for out-of-pocket expenses.  Mr Moss enclosed a copy of NRMA’s offer as proof of this.  He continued by saying that, as a result of this, he was now only offering $8,000 to Centrelink.  The letter conclude: ‘If this isn’t accepted I will take nothing from the NRMA and we all lose out.’

43. On 7 June 2000, Mr Moss wrote to NRMA offering to settle the matter for $20,400. 

44. On 7 June 2000, Mr Moss rang the NRMA and spoke to Mr Burns.  Mr Moss said, amongst other things, that he was not being put back in the position he was in before the accident because of his lost earnings and the Centrelink debt recovery.  Mr Burns advised Mr Moss that the Centrelink debt had nothing to do with NRMA or with the claim.

45. Also on 7 June 2000, Mr Moss faxed to NRMA a further offer.  The amount of the offer was $21,343. 

46. On 8 June 2000, Mr Burns assessed Mr Moss’s claim for economic loss.  He then rang Mr Moss and informed him that he was not prepared to increase the offer without seeing tax returns. 

47. On 9 June 2000, Mr Moss telephoned Mr Burns who stated that the offer was still $10,000.  Mr Moss said he would give Centrelink the authority to speak directly to NRMA. 

48. On 10 June 2000, Mr Moss again wrote to NRMA, this time offering to settle the claim for $30,000 plus money for solicitors’ costs.

49. On 13 June 2000, Mr Moss rang Mr Burns and said he wanted more money.  Mr Burns told Mr Moss that NRMA’s offer of $10,000 was open until Friday.  Mr Burns also advised Mr Moss to see a solicitor and get the court process started.

50. On 14 June 2000, Mr Moss wrote to Centrelink purporting to revoke his previous offer of $10,000.  He said that he would be receiving only $8,057 in full payment from NRMA and he was therefore offering that amount to Centrelink to clear his debt. 

51. On 15 June 2000, NRMA received a further garnishee notice from Centrelink. This notice replaced the original garnishee notice for $10,000 and now required an amount of $8,057 to be paid to Centrelink. The notice contained the same concluding paragraph as in the earlier notice. I set out the paragraph at [39] above. As with the earlier notice, the new garnishee notice stated that a copy was being sent to Mr Moss.

52. On 16 June 2000, Mr Burns made a file note of a conversation with Mr Hall-Johnston.  The file note states that Mr Hall-Johnston telephoned to see if there was any middle ground between NRMA’s offer of $10,000 and Mr Moss’s offer of $30,000.  Mr Burns told Mr Hall-Johnston that NRMA was not prepared to move from $10,000.  Mr Hall-Johnston stated that he would discuss with his client the matter of a statement of claim or settlement.

53. Later on the same day, 16 June 2000, Mr Moss attended the offices of NRMA at 388 George Street, Sydney.  Mr Najdzion was absent from work on that day and, accordingly, Mr Burns met with Mr Moss.  They had a conversation in the course of which Mr Moss said that he would agree to settle if NRMA added $943 to the amount of its offer in order to cover expenses.  Mr Burns’ evidence is that Mr Moss was persistent and, eventually, Mr Burns agreed to add the expenses to the amount of the settlement sum so that an agreement was reached between them for the payment of $10,943 in settlement of the claim.  Mr Moss signed an agreement for release and indemnity under which NRMA agreed to pay him the sum of $10,943 in full and final settlement of the claim.  The agreement was in the form previously submitted and provided that NRMA was entitled to deduct from the payment amounts due to Centrelink for Social Security  benefits and also medical expenses and other expenses payable in accordance with law.

1. Also on 16 June 2000, either before or after he had reached agreement with NRMA, Mr Moss wrote to Centrelink that even though he agreed on 15 June 2000 to pay $8,057 to settle the debt, he now wanted the Health Insurance Commission rebate given back to him.

2. On 21 June 2000, Mr Najdzion wrote to Mr Moss setting out details of the payments made in accordance with the settlement.  The letter states that $8,057 was paid to Centrelink, $1,094.30 to the Health Insurance Commission and $848.70 to Mr Moss.  The letter states that there was also deducted from the settlement amount the sum of $943 to cover medical accounts paid directly by NRMA.

3. On 25 July 2000, Ms Jennifer Fraser of Adams Lawyers wrote to Mr Moss confirming advice given by Ms Fraser to Mr Moss at a conference on 5 June 2000.  The letter stated, relevantly:-

   ‘I note that on that date I declined to accept your case as I do not believe I will be able to assist you.

   Firstly, I believe that you have somewhat unrealistic expectations about the value of your case.

   In particular, I note that you appeared to have complained of a number of residual problems but there appears to be no medical evidence to support the relationship of those problems to the injuries you sustained in the motor vehicle accident.

   I was also extremely concerned about your admission that you had previously been convicted of Social Security fraud and felt that this would effect (sic) your credibility as a witness of truth in a Court of law.

   Given your response to my opinion I felt that it would not be in your best interests for me to act on your behalf.’

4. In early September 2000, Mr Moss telephoned NRMA on numerous occasions and complained about his settlement.  He said he was unhappy with the management of the claim and the amount he received.  He wanted to know why NRMA requested information from Centrelink and why moneys were paid to it.  Mr Moss subsequently complained to the Office of the Ombudsman and to the Motor Accident Authority. 

5. On 12 March 2001, the Commonwealth Ombudsman wrote to Mr Moss stating that the Ombudsman was unable to conclude that the NRMA had inferred from its communications with Centrelink that Mr Moss had engaged in fraudulent activity against Centrelink.  The Ombudsman also concluded that the communications between NRMA and Centrelink did not lead to any refusal by NRMA to increase its settlement offer.  The Ombudsman also found that Centrelink’s actions were reasonable.

6. Dr Steve Clough, the Principal Compliance Officer with the Motor Accident Authority investigated Mr Moss’s complaint to that body.  By letter to Mr Moss on 30 May 2001, Dr Clough indicated that he was satisfied that the NRMA had erred in sending a post settlement advice to Centrelink on 31 May 2000.  Dr Clough informed Mr Moss that the Motor Accident Authority had requested NRMA to review its claims handling practice to ensure that this did not occur again.  Dr Clough attached a letter of apology from the NRMA for its error but he said that he regretted that he was unable to provide any further assistance.

7. On 31 May 2001, Dr Clough made a file note of a phone call he received from Mr Moss.  The file note records that Mr Moss said that his pressure to settle was due to the deadlines set by NRMA and Centrelink.  Dr Clough’s file note stated that NRMA’s post settlement advice to Centrelink on 31 May 2000 did not appear to prejudice the settlement.

   Cross-examination of Mr Moss

8. Mr Moss was asked how the debt for $32,000 came about.  He said that it was as a result of his receipt of unemployment benefits while working under an assumed name.  He admitted that he knew as at 6 March 2000 that he owed Centrelink an amount in the order of $32,000.  He also admitted that his then solicitor, Mr Henderson, advised him that it was possible that NRMA would have to pay some of the settlement moneys direct to Centrelink.  He also admitted that he rescinded the authorisation to Mr Henderson to contact Centrelink because he did not want to alert Centrelink to the possibility that they would request NRMA to withhold moneys from the settlement amount.  He also admitted that he was hoping to use the moneys he received from NRMA to clear his debt with Centrelink.

9. Mr Moss was questioned about the advice he received from all of the solicitors whom he retained or approached.  He admitted that all of them had advised that his prospects of substantial recovery were small, at least without medical evidence to support his claims being available.

10. Mr Moss was cross-examined about his meeting with Mr Burns of 31 May 2000.  It was put to Mr Moss that he hoped that the Centrelink records might not disclose the debt of $32,000 and that he hoped that Centrelink would not want to take the moneys out of the settlement sum.  The following exchange took place:-

    ‘What I am suggesting, Mr Moss, is that you were hoping that the DSS systems and records might be such that they would not disclose the $32,000 or the $10,000 amount.  That’s what you were hoping and that’s why you asked the NRMA whether they would be doing a search.  When you were told that they would you then asked them to conduct that search and then depending upon the result of that, that being if they didn’t want any money you would take their offer of $10,000.  Do you agree or not?---I didn’t ask any such thing.  That file note is bogus.

    It’s bogus, is it, Mr Moss?---Yes.

    You are suggesting that Mr Burns has concocted the file note, are you?---Yes.’

11. It was part of Mr Moss’s theory about the concoction of the diary note of 31 May 2000 that NRMA had received a tip off from Mr Henderson.  He was cross-examined about this.  The following exchange took place:-

    ‘And it is part of your theory, I take it, Mr Henderson of Shanahan Tudhope once he was no longer acting for you then contacted the NRMA and tipped them off to the Centrelink debt, is that what you are saying?---Somebody from that firm.  I don’t know whether it was Mr Hennessy [Mr Henderson], but I believe in my mind I do believe that is what happened and then the NRMA had to get proof so they went on a fishing trip with their post settlement advice to verify the theory.

    So in order to substantiate your theory in your mind you’ve come to the conclusion that a solicitor you had sacked subsequently spoke to the NRMA and tipped them off to something, is that your theory?---Yes.

    And you’ve got no evidence whatever to support that, do you, other than one thing.  It fits your theory, do you agree?---Well, it fits my offer of the $10,000 to Centrelink in March to clear my debt.  The only person that knew of that was Paul Hennessy [Paul Henderson] and other staff members of Chado Todo [Shanahan Tudhope].’

12. Mr Moss was questioned about his letter of 7 June to Mr Najdzion in which he said that he was considering NRMA’s offer of $10,000.  The following exchange took place:-

    ‘So on 7 June you tell Mr Najdzion you’re considering the $10,000 offer?---Yes.

    On the same day you make an offer to Mr Burns of $21,000?---Yes.

    Then three days later you want a tow truck?---Yes.

    Mr Moss, the reality of the situation was this, wasn’t it, if Centrelink accepted the proposal for $8,000 as at 1 and 2 June you were going to accept the $10,000 offer, correct?---No.

    And these subsequent communications with Mr Burns where you asked for a tow truck was $21,000, were just further last ditch attempts to extract a little bit more, were they not?---Yes, virtually, yes, to get something for my pain and suffering and you know because of the actions of the NRMA I was getting nothing and because they had the bone as you say they didn’t want to share anything.

    But as of 1 June or 2 June you were prepared to settle for $10,000 if you couldn’t extract anything more from NRMA, do you agree?---Well really no but I suppose if you’re going to go back to that letter of – that’s probably a gesture what I was saying but really by what all the other ones that you’ve pointed out, the 10 June, 7 June, two letters on 7 June, one at $21,000, one accepting $10,000 and I was going to be out of pocket $943, it goes to show the frame of mind that I wasn’t in a proper frame of mind to be making any decisions to turn round and settle this case.’

13. Mr Moss was asked about the fact that he had returned to his former solicitor, Mr Hall-Johnston on 14 June 2000 and that he had asked Mr Hall-Johnston to try to negotiate a more favourable settlement.  Mr Moss conceded in the following exchange that Mr Hall-Johnston had advised Mr Moss to take the NRMA offer of $10,000:-

    ‘MR LOCKHART:      Did you discuss with Mr Hall-Johnston once he had informed you that Mr Burns had said there’s no further advance on the $10,000 did you discuss with Mr Hall-Johnston whether or not you would settle with the NRMA or whether you would commence court action?---Yes.

    And Mr Hall-Johnston said to you take the money – sorry, take the $10,000?--Yes.

    He advised you to take the $10,000, didn’t he?---That’s right.

    And you on this occasion agreed with him, did you not?---Sort of.

    Well, is that a yes or a no?---No, because I turned around and upped the offer to $10,943.’

14. Mr Moss then agreed that, on the afternoon of 16 June 2000, he went to NRMA’s offices and met with Mr Burns.  He agreed that he had eventually reached a settlement in the amount of $10,943.  He agreed that one of the motivating factors which led him to accept this figure was that it enabled him to extinguish his debt with Centrelink at a discount.  He also agreed that another motivating factor was the advice given to him by Mr Hall-Johnston on that day to take the sum of $10,000 and that he had been advised by three other lawyers that his expectations about his claim were unrealistic with no medical support.

15. Mr Moss was taken to the conversation which he alleged took place with Mr Burns on 5 June 2000.  It was put to him that no conversation took place with Mr Burns on 5 June 2000.  Mr Moss did not agree.  It was put to Mr Moss that no one from NRMA made any threat to him to use the Centrelink information but Mr Moss disagreed with that.  Mr Moss would not agree with the proposition that his allegations about the concoction of the file note of 31 May, the alleged threats or the allegation that Mr Henderson had notified NRMA of moneys owed to Centrelink were all figments of his imagination.

    Cross-examination of Mr Burns and Mr Najdzion

16. Mr Moss put to Mr Burns that the file note of 31 May 2000 had been ‘knocked up’ after Mr Moss lodged his complaint with the Motor Accident Authority.  Mr Burns said that this was incorrect.  Mr Moss also put to Mr Burns that he had made threats to Mr Moss in the telephone conversation of 5 June 2000 to use the information obtained from Centrelink.  Mr Burns said that this was incorrect. 

17. It was put to Mr Najdzion that there was no ‘meeting of the minds’ before the post settlement advice of 31 May 2000.  However, Mr Najdzion said that he did not do the post settlement advice and that he did not have a conversation with Mr Moss on that date.

18. It was not put to Mr Najdzion that he had a conversation with Mr Moss on 5 June 2000 or that he made threats to him on that day or on any other occasion.

    Evidence of Dr Clough

19. Mr Moss called Dr Clough to support his case.  The effect of the evidence he sought to obtain from Dr Clough was that the Motor Accident Authority’s investigation was flawed.  However, Dr Clough’s evidence was that the post settlement advice was a procedural mistake made by NRMA and that Mr Moss’s settlement was not prejudiced by NRMA’s actions.

20. Dr Clough did not agree with the proposition that his investigation of Mr Moss’s complaint was flawed. 

    Findings of Fact

21. I accept the evidence of Mr Burns and Mr Najdzion as witnesses of truth.  Their evidence was supported by substantial file notes and they were barely tested in cross-examination.

22. Dr Clough’s evidence added little to the issues in the case.  Insofar as it did, I accept Dr Clough as a truthful witness.

23. I cannot accept Mr Moss’s evidence, at least on the critical issues which arose, namely whether he consented to the enquiries made of Centrelink and whether Mr Burns made threats to him on 5 June 2000.

24. My findings about Mr Moss are based in part on my observations of him and, in part, on my assessment of his evidence.  I have borne in mind, in particular, his evidence that the file note of 31 May 2000 was a concoction and that Mr Henderson ‘tipped-off’ the NRMA.  This evidence was fanciful.  There was nothing whatsoever to support it or give any suggestion of credibility to either of Mr Moss’s allegations.

25. In my view, Mr Moss’s claims of ‘concoction’ and ‘tip-off’ constituted no more than wild speculation put forward to meet a critical piece of evidence, namely the file note of 31 May 2000, which ran directly counter to the substance of his claim.  There were other instances where Mr Moss resorted to extraordinary speculation to answer facts which did not support his case.

26. Accordingly, I do not accept any of Mr Moss’s evidence where it is contradicted by the evidence of other witnesses.  Nor do I accept any of his evidence unless it is supported by contemporaneous documents.

27. I find that Mr Burns’ file note of his conversation with Mr Moss of 31 May 2000 is accurate.  It is not a concoction and I reject any suggestion that it is in any way invented.  It follows that I find that Mr Moss specifically requested NRMA to ‘do a search’ with Centrelink and that he said that he would consider the offer of $10,000 if Centrelink did not want any money.

28. Mr Moss asked, rhetorically, why would he accept $10,000 when the evidence showed that he wanted much more.  It is true that the evidence established Mr Moss’ persistent efforts to extract a far larger sum from NRMA but it seems to me that the documents and Mr Moss’s oral evidence reveal the true explanation for his consent to the enquiry made by NRMA of Centrelink.

29. First, the file note of 31 May 2000 makes it plain that Mr Moss would only consider NRMA’s offer of $10,000 if he did not have to pay any money to Centrelink.

30. It seems to me to be a reasonable inference from the conversation recorded in the 31 May 2000 file note that Mr Moss was hoping that Centrelink’s records would not record the amount of his indebtedness and, accordingly, that he would receive the whole of the settlement moneys free of any liability to account for his debt.

31. Indeed, there is one aspect of his evidence which suggests that his hopes of avoiding liability to Centrelink were present well in advance of 31 May 2000.  This is to be found in the retraction of his authorisation to Mr Henderson in March 2000 to enquire of Centrelink.  He agreed with the proposition that he rescinded the instruction because he did not want to alert Centrelink to the possibility that they would request NRMA to withhold monies.  He also agreed with the reason that was put to him:-

    ‘…[b]ecause you wanted any monies you received from NRMA to go into your pocket 100% and that you would deal with Centrelink by that means, correct?  Virtually, yes.’

32. It is true that Mr Moss reached an agreement with Centrelink in March 2000 for his debt to be extinguished by payment of $10,000.  Whether or not this should have brought home to Mr Moss that Centrelink had a record of his debt is not to the point.  It is plain from the history of his dealings with NRMA and Centrelink that Mr Moss was a man who often had unrealistic expectations.

33. The second reason why, in my view, Mr Moss was prepared to consider an offer of $10,000 was the overwhelming advice from four solicitors that, absent medical evidence, the value of his claim was nowhere near the figures that Mr Moss was hoping to extract from NRMA.  It is a fair inference that, by 31 May 2000, Mr Moss’s boundless optimism had given way to the weight of contrary advice.

34. It is also a fair inference that Mr Moss believed that, by his sheer persistence, he could coax NRMA up to a figure over $10,000.  His last ditch efforts in June 2000 to push NRMA over the figure of $10,000 support this inference.

35. The deadline of 16 June 2000 imposed by NRMA for acceptance of its offer is a further reason why Mr Moss was prepared to consider the offer of $10,000.

36. I also find that no threats were made to Mr Moss by NRMA.  I make this finding not only because I prefer Mr Burns’ evidence to that of Mr Moss.  I also make it because the comprehensive documentary record of Mr Moss’s dealings with NRMA, Centrelink and his solicitors, points overwhelmingly against any such suggestion.

37. Mr Burns was a meticulous keeper of file notes.  There was no file note of a conversation on 5 June 2000.  But even more importantly there is not the slightest hint of any pressure applied by NRMA to Mr Moss during the critical period from 31 May 2000 to 16 June 2000.  Indeed, there is no hint of any pressure being applied at any time.

38. Instead, the documentary record makes it plain that the settlement was freely negotiated.  Mr Moss was well aware from his own solicitors of the weaknesses of his case.  This included advice that NRMA may be able to cross-examine Mr Moss on credit about the reasons for the Centrelink debt.  His actions throughout the history of the matter show that he was endeavouring to use the proceeds of the claim on the NRMA to extricate himself from his Centrelink debt, whilst at the same time, if possible, obtaining some moneys for his own use.

39. Moreover, on the very day of the settlement he had advice from his own solicitor to accept the sum of $10,000.  Nothing could more plainly indicate the absence of duress.  There was not the slightest suggestion that Mr Moss told Mr Hall-Johnston of any threats made by NRMA.  Nor was there any suggestion that the other solicitors were so informed.  Indeed, no such complaint was made to NRMA or Centrelink.  If there had been such a suggestion I have no doubt Mr Moss would have complained about it before the settlement was reached.

40. Although Mr Hall-Johnston was not called by Mr Moss, I should state that it is plain from the NRMA’s documentary record that there is no suggestion of any threat made by NRMA to the solicitor.

41. I also find that at all relevant times NRMA was not aware of the nature of the debt owed to Centrelink.  All that Mr Burns and Mr Najdzion knew was the amount of the debt.  It was not until after the commencement of these proceedings that NRMA became aware that the debt was incurred by reason of Mr Moss’s Social Security fraud.  This is a further reason for rejecting the claim that NRMA made threats to Mr Moss to use the information against him in court proceedings.

42. There is no substance in the proposition put by Mr Moss that NRMA improperly obtained the information about his Social Security debt by wrongly sending a post-settlement advice.  The search or inquiry made with Centrelink merely used the wrong form.  It was an error which had no effect on the eventual settlement.

43. There was evidence from Mr Burns, which I accept, that NRMA sometimes sent pre-settlement advices and, on other occasions, post-settlement advices were sent.  The information sought in each case was the same.  The only difference was that in a pre-settlement advice an indication was given to Centrelink of the potential payout.

44. It would have been open to, and quite proper for, NRMA to have sent a pre-settlement advice.  NRMA’s practice in all cases was to make enquiry of Centrelink.  It was essential for NRMA to do so for its own protection.

45. I find that the settlement that NRMA offered to Mr Moss was not calculated by reference to the amount owing to Centrelink.  I also find that NRMA reached a settlement with Mr Moss, which Mr Burns believes to be just, if not generous.  Mr Burns’ file notes, and the comprehensive records kept by other NRMA staff including Mr Najdzion, bears this out.

46. NRMA’s file also supports a finding that it acted properly in the steps which it took to negotiate and enter into a settlement with Mr Moss.  I find that neither Mr Burns nor Mr Najdzion disclosed or made use of the information which they obtained from Centrelink about Mr Moss’s Social Security debt.

1. I find that Mr Moss, with the benefit of advice he received from four solicitors at different stages of the negotiations, was able to, and did, understand the terms of settlement.  He suffered from no lack of ability to assess or protect his own interests.  Indeed, he consciously sought to maximise his ability to resolve his Centrelink debt by using the amount of his proposed NRMA settlement as a bargaining tool to extract a favourable outcome with Centrelink.  By these means, he was able to resolve a debt of over $32,000 for $8,057.

2. Moreover, when he realised the net figure he would receive from NRMA was $8,057, he was able to bargain Centrelink down from the sum of $10,000, which was a figure previously negotiated and agreed to between Mr Moss and Centrelink.

3. Indeed, Mr Moss showed an ability to negotiate Centrelink down while at the same time negotiating NRMA up slightly from its previous ‘final’ figure of $10,000.  This occurred on 16 June 2000 when Mr Moss extracted a further $943, which even Mr Hall-Johnston had not been able to achieve.

4. All this shows that Mr Moss may suffer from a lack of formal education and, as some medical evidence suggested, paranoia, but he is able to understand and protect his own commercial interests.  In current jargon, he is ‘streetwise’.

   Unconscionability

5. Mr Moss’s claim fails at the threshold because I find that the threats, which were central to his claim, were not made.

6. In any event, Mr Moss was not under any ‘special disadvantage’ as is required to establish a cause of action under s 51AA of the Trade Practices Act; see Australian Competition and Consumer Commission v Berbatis (2003) 214 CLR 51 (‘Berbatis’) at [12] – [15] per Gleeson CJ; at [55] per Gummow and Hayne JJ; at [98] – [99] per Kirby J; at [154] per Callinan J.

7. Mr Moss was under no disabling condition or disadvantage that seriously affected his ability to make a judgment about his own best interests.  He did not suffer from the disabling conditions referred to in the authorities; see Berbatis; see also Australian Competition and Consumer Commission v Samson Holdings Pty Limited (2002) 117 FCR 301 (Gray, French and Stone JJ).

8. Furthermore, Mr Moss was advised by solicitors about the value of his claim and he received legal advice on the day of settlement that he should accept the amount offered.  The claim therefore faces what Heerey J called in Henderson v Amadio Pty Limited (1995) 140 ALR 391 (‘Henderson’) at 550, an ‘insuperable problem’.

9. As Heerey J observed in Henderson, while lack of assistance is a well-recognised basis for a finding of special disadvantage, the existence of legal representation will usually be an answer to such a claim.  Here Mr Moss was not represented in the final negotiation that culminated in settlement but four solicitors advised him in the period from July 1999 to the date of settlement.  He received legal advice on the day of settlement and he improved on the figure which he was advised to accept.

10. This is not a case in which one party was unable to judge what was in his best interests or where there was any disability evident to the other party to make it prima facie unfair or unconscionable for the other party to retain the benefit of the disadvantaged party’s assent to the transaction; cf Louth v Diprose (1992) 175 CLR 621.

    ORDERS

11. It follows that I will order that the application be dismissed.  There is no reason why the ordinary rule, under which the unsuccessful party must pay the costs, should not apply.  Accordingly, I will order Mr Moss to pay the costs of the proceedings.

I certify that the preceding one hundred and ten (110) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson.

Associate:

Dated:             14 December 2004

Counsel for the Applicant:	The applicant appeared in person
Counsel for the Respondent:	J Lockhart
Solicitor for the Respondent:	Blake Dawson Waldron
Date of Hearing:	30 November and 1 December 2004
Date of Judgment:	14 December 2004