Pertzel v Allianz Australia Insurance Limited
[2024] NSWPIC 725
•16 December 2024
| CERTIFICATE OF DETERMINATION OF MEMBER | |
| CITATION: | Pertzel v Allianz Australia Insurance Limited [2024] NSWPIC 725 |
| CLAIMANT: | Charlie Pertzel |
| INSURER: | Allianz Australia Insurance Limited |
| MEMBER: | Susan McTegg |
| DATE OF DECISION: | 16 December 2024 |
| CATCHWORDS: | MOTOR ACCIDENTS - Motor Accident Injuries Act 2017 (MAI Act); Personal Injury Commission Act 2022; application for damages; dismissal; best endeavours; guiding principle; claimant sustained injury in a motor vehicle accident on 4 June 2022; application for assessment of damages filed in Personal Injury Commission (Commission) on 22 October 2024; insurer sought dismissal of claim on basis claimant did not use “best endeavours” to settle claim before referred for assessment; claimant served evidence and on 23 August 2024 and 3 September 2024 invited insurer to participate in informal settlement ; insurer served section 6.22 offer under the MAI Act on 14 October 2024; claimant did not respond to section 6.22 offer before commencing proceedings; insurer sought dismissal of claim under section 7.32 of the MAI Act; Held – in circumstances claimant used “best endeavours” to settle claim; Commission required to give effect to guiding principle to facilitate the just, quick and cost effective resolution of the real issues in the proceedings; decline to dismiss claim; listed for teleconference. |
INTERIM DECISION
INTRODUCTION
The claim sustained injury in a motor vehicle accident on 4 June 2022.
The claimant lodged an application for common law damages on 7 August 2023.
An application for an assessment of damages was filed in the Personal Injury Commission (Commission) on 22 October 2024.
Liability has been admitted.
INSURER’S SUBMISSIONS
The insurer uploaded submissions dated 8 November 2024 with the Reply.
The insurer submits the application is premature and should be dismissed until there has been compliance with s 7.32 of the Motor Accident Injuries Act 2017 (MAI Act).
Section 7.32 of the MAI Act provides that parties to a claim must use their best endeavours to settle a claim before referring it for assessment.
The insurer agrees the claimant is entitled to recover damages for non-economic loss.
In a report dated 26 February 2024 Dr Bisht psychiatrist diagnosed post-traumatic stress disorder and major depressive disorder but concluded treatment options had not been sufficiently exhausted and the claimant’s condition had not stabilised.
In a report dated 8 July 2024 Dr Todd Gothelf, orthopaedic surgeon diagnosed the following:
· abdominal injury – where the claimant underwent emergency surgery for laparotomy with evacuation of haematoma and small bowel resection;
· left clavicle fracture requiring surgery;
· right ulna fracture requiring surgery;
· L2 spinous process fracture, and
· L3 three-column fracture.
The insurer states Ms Pertzel was more or less in constant employment from late 2022 until May 2024, with variable hours, job losses and some physical difficulties. In May 2024 she was certified as unfit for work.
The insurer notes the claimant purported to commence commenced counselling and pain management in June 2024. The insurer submitted that treatment had not been optimal due to:
(a) the apparent lack of a specialist pain psychologist and pain physiotherapist in her home town of Wagga;
(b) the claimant’s reluctance to travel to Canberra or to consider an inpatient program as recommended by her treating psychologist Martin Finnegan, and
(c) the claimant’s recent move to Brisbane with her partner.
The insurer submitted it hoped, having settled in Brisbane, the claimant would connect to a local rehabilitation provider and undergo focused treatment for her psychological condition and her pain. The insurer submits with treatment the claimant will increase her earning capacity.
On 23 August 2024 the claimant asked the insurer for an informal settlement conference (ISC) and provided some dates.
On 3 September 2024 the insurer advised that they were still investigating the claimant’s future earning potential and were not in a position to attend an ISC.
On 26 September 2024 the claimant provided particulars and an accountant’s report based on a total loss of earning capacity to age 67.
On 14 October 2024 the insurer made a s 6.22 offer.
The claimant did not respond to the offer but on 22 October 2024 lodged the present Application for Assessment.
The insurer submits there should either be an ISC or the claimant should otherwise exhaust negotiations with the insurer before seeking a determination from the Commission.
Power to dismiss
The insurer submits the dismissal power is found in s 54(b) of the Personal Injury Commission Act 2020 (PIC Act) which provides the Commission may at any state dismiss proceedings if it is satisfied that the proceedings are “frivolous or vexatious or otherwise misconceived or lacking in substance”.
The insurer submits the Commission has the power to dismiss claims on the basis that the term “lacking in substance” encompasses the situation where a claimant has commenced proceedings prematurely.
The insurer refers to a decision of Assessor Broomfield (as he was then) in AQM v NRMA[1] where he dismissed an application on the basis it was incompetent and there was no dispute before him. The insurer also referred to a number of decisions of Member Williams which establish that there is a power to dismiss.
[1] AQM v NRMA [2020] NSWSIRADRS 238
The insurer argues the decision of Member Castagnet in Milla v Transport Accident Commission[2] where he determined he had no power to dismiss an application for non-compliance with s 7.32(3) is incorrect. The insurer argues the power to dismiss is found in s 54(b) of the PIC Act and the determination of Member Castagnet would make s 7.32(3) unenforceable.
[2] Milla v Transport Accident Commission [2022] NSWPIC 127
Best endeavours
The insurer submits that s 7.32(3) mandates that parties to a claim must use their best endeavours to settle the claim before referring it for assessment under Division 7.6.
The insurer submits that the obligation to use best endeavours is measured by what is reasonable in the context and refers to the summary provided by Member Williams in Mammone v Insurance Australia Limited trading as NRMA[3] and again in Leary v Allianz Australia Insurance Limited[4] as follows:
“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.
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.”
[3] Mammone v Insurance Australia Limited t/as NRMA [2021] NSWPIC 501.
[4] Leary v Allianz Australia Insurance Limited [2022] NSWPIC436.
The insurer referred to Joseph Street Pty Ltd v Tan[5] where the court 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] Joseph Street Pty Ltd v Tan [2012] VSCA 113; (2012) 38 VR 241.
In Golding v NRMA[6] I formulated the test as follows:
“It seems that 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.”
[6] Golding v NRMA [2021] NSWPIC 98.
Objects of the MAI Act and the PIC Act
The insurer submits that s 42(5) of the PIC Act 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.”
Given the word “must” in s 7.32(3) the insurer submits the legislature clearly considered the requirement to use best endeavours to resolve a claim prior to lodgement to be integral to the scheme.
The insurer notes under s 1.3(2)(g) of the MAI Act one of the objects of the scheme is “to encourage the early resolution of motor accident claims and the quick, cost effective and just resolution of disputes”. Further under s 1.3(3)(a);
“it must be acknowledged … that participants in the third-party insurance scheme have shared and integrated roles with the overall aim of benefiting all members of the motoring public by keeping the overall costs of the scheme within reasonable bounds so as to keep premiums affordable and of promoting the recovery and return to work or other activities of those injured in motor accidents…”
PRELIMINARY CONFERENCE ON 18 NOVEMBER 2024
Ms Miller stated the insurer pressed the application for dismissal of the application on the basis it was premature having regard to the requirement of the scheme for the parties to use their best endeavours to settle the claim before commencing proceedings.
In this matter there is no limitation issue where the accident occurred on 4 June 2022.
Ms O’Regan stated the claimant attempted to participate in an informal settlement conference twice before the insurer was represented. In response Ms Miller stated the insurer made an offer to which no response was received, although this application was filed.
I was informed the claimant is to attend a joint medical examination with a psychiatrist on
21 November 2024. Ms Miller said she hoped to get some recommendations as to treatment which could be implemented.
I directed the claimant to provide submissions in response to the insurer’s application for dismissal of the proceedings currently before the Commission on or before
2 December 2024.
CLAIMANT’S SUBMISSIONS
The claimant provided submissions dated 2 December 2024.
It is asserted the matter is ready to proceed to assessment given the following:
(a) on 15 November 2023 the claimant served on the insurer Payment Summaries, Income Tax Returns and Notice of Assessments from 2020 – 2023;
(b) on 27 November 2023 the claimant served on the insurer the IGA Employee file and the clinical notes of Glenrock Country Practice;
(c) on 5 December 2023 the claimant served on the insurer the McDonalds Employee file;
(d) on 12 December 2023 the claimant served on the insurer the clinical notes of Alfred Hospital and the clinical notes of Albury Wodonga Health;
(e) on 21 December 2023 the claimant served on the insurer the clinical notes of Imed Radiology;
(f) on 10 January 2024 the claimant served on the insurer the ambulance report;
(g) on 7 March 2024 the claimant responded to the insurer’s request for further and better particulars;
(h) on 3 April 2024 the parties agreed to joint independent medical examinations with Dr Gothelf and Associate Professor Robertson;
(i) on 8 April 2024 the claimant served the following reports and requested the insurer to concede the 10% whole person impairment (WPI) threshold:
(i)report of Dr Neil Berry dated 12 March 2024;
(ii)report of Dr Loretta Reiter dated 5 March 2024;
(iii)report of Dr Howard de Torres dated 15 March 2024;
(iv)report of Dr Nigel Ackroyd dated 12 March 2024, and
(v)report of Dr Andrew Porteous dated 28 March 2024.
(j) on 29 April 2024 the claimant responded to a further request from the insurer for further and better particulars;
(k) on 4 June 2024 the claimant served on the insurer the clinical notes of Annie Woodhouse;
(l) on 5 June 2024 the insurer advised they were unable to concede the 10% WPI threshold;
(m) on 11 June 2024 the claimant forwarded correspondence to the insurer pressing for the insurer to reconsider their position given the insurmountable medical evidence, placing the claimant above 10% WPI;
(n) on 26 June 2024 the claimant served on the insurer the report of Irinah Jurkowski dated 13 June 2024;
(o) on 1 July 2024 the insurer maintained the claimant’s injuries did not exceed the 10% WPI threshold;
(p) on 10 July 2024 the parties received the joint report of Dr Gothelf who assessed 12% WPI;
(q) on 10 July 2024 the claimant requested the insurer concede the claimant’s injuries exceeded the 10% WPI based on Dr Gothelf’s report;
(r) on 15 July 2024 the claimant followed up a response from the insurer to concede the threshold;
(s) on 2 August 2024 the claimant further pressed the insurer to concede the threshold and relied upon cl 4.129 of the Guidelines;
(t) on 5 August 2024 the insurer conceded that the claimant’s injuries exceeded the 10% WPI threshold;
(u) on 23 August 2024 the claimant invited the insurer to participate in an informal settlement conference;
(v) on 3 September 2024 the insurer declined the claimant’s invitation to participate in an informal settlement conference and advised they were still investigating the claimant’s future earning potential, and
(w) on 26 September 2024, the claimant served the Vincents Forensic Accountant’s report and again invited the insurer to participate in an informal settlement conference.
The claimant submits it invited the insurer to participate in an informal settlement conference on several occasions. It is submitted the claimant has complied with s 7.32(3) of the MAI Act and has used her best endeavours to settle the claim before referring it for assessment.
The claimant submits the matter is ready to proceed to assessment where there is no dispute as to liability, there is a concession as to the entitlement to non-economic loss and the claimant particularised her claim for economic loss in the s 6.25 particulars dated
26 September 2024. The claimant submits the insurers application for dismissal of the proceedings is without merit and the proceedings should remain on foot.
INSURER’S SUBMISSIONS IN REPLY
In submissions dated 2 December 2024 the insurer submitted the s 6.22 offer made by the insurer on 14 October 2024 ought to have been the precursor to negotiations, but instead it was ignored.
REASONS
I am satisfied s 54(b) of the PIC Act provides the power to dismiss claims for failure to comply with s 7.32(3) of the MAI Act on the basis the proceedings “are otherwise misconceived or lacking in substance”. To conclude otherwise would make s 7.32(3) futile. That is clearly not the intention of the legislature.
The MAI Act requires the parties to use their best endeavours to settle the claim before referring it for assessment and this presupposes the claim is ready and capable of assessment before referring it for assessment.
It is clear from the claimant’s submissions that active steps were taken to prepare the claim for assessment including serving taxation records on 15 November 2023, replying to the insurer’s request for particulars on 7 March 2023, serving medical reports on various dates, serving evidence in support of the claim for economic loss and in particularising the claim for economic loss on 26 September 2024.
The claimant actively sought to enter into settlement negotiations by inviting the insurer on 23 August 2024 and again on 3 September 2024 to participate in informal settlement conferences.
The question is whether the failure to respond to the insurer’s s 6.22 offer of
14 October 2024 means the claimant did not use her best endeavours to settle the claim before referring it for assessment. I do not think it does in the circumstances.
I am satisfied, having regard to the construction of s 7.32(3) adopted by Member Williams and referred to in Mammone and Leary that the claimant acted honestly, reasonably and made a positive effort to settle her claim before referring it for assessment.
Whilst there was no imperative to file the application for assessment of damages given the three year limitation period does not expire until June 2025 it would be unfair to suggest the claimant, who is undoubtedly, keen to prosecute her claim, is required to wait until after she has responded to an offer made by the insurer where the insurer has not engaged with earlier attempts to settle the claim.
If the claimant had not made any endeavour to settle the claim and failed to respond to a s 6.22 offer made by the insurer prior to the commencement of proceedings I would have no hesitation in concluding the claimant was in breach of s 7.32(3) in failing to use her best endeavours to settle her claim before referring it for assessment.
In the circumstances where the claimant has been proactive in the preparation of her claim including inviting the insurer to engage in settlement discussions I am satisfied the claimant has taken steps which a prudent, determined and reasonable person acting in her own interests and desiring to achieve a settlement would take.
I find the claimant has used her “best endeavours” to settle the claim before referring it to the Commission.
In any event the guiding principle for the Commission is to facilitate the just, quick and cost effective resolution of the real issues in the proceedings. It seems to me the just, quick and cost effective resolution of the proceedings would not be facilitated by dismissal of these proceedings where both parties would incur the additional cost and associated delay in being required to upload fresh documents to the Commission.
I note the claimant only served her forensic accounting report on 26 September 2024 but subject to allowing the insurer an opportunity to obtain a report in reply, if required, I would be hopeful the matter can be listed for assessment early next year.
I also note that there is no barrier to the parties participating in settlement discussions at any time and I encourage them to do so.
CONCLUSION
I decline to dismiss the claim under s 54(b) of the PIC Act.
I list the matter for a further teleconference on Friday 24 January 2025 at 9.00am.
In furtherance of the guiding principle of the Commission set out in s 42 of the PIC Act, if any party seeks a variation of these directions, the party seeking the variation is, in the first instance, to contact the other party to ascertain their attitude to the variation and obtain their consent if possible. The party seeking the variation is to then advise the Commission, through the portal of the variation sought and the attitude of the other party.
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