Peterkovic v QBE Insurance (Australia) Limited (ABN 78 003 191 035)

[2023] QDC 220

DISTRICT COURT OF QUEENSLAND

CITATION:

Peterkovic v QBE Insurance (Australia) Limited (ABN 78 003 191 035) [2023] QDC 220

PARTIES:

CANDICE JANE PETERKOVIC

(applicant)

v
QBE INSURANCE (AUSTRALIA) LIMITED
(ABN 78 003 191 035)

(respondent)

FILE NO/S:

BD3189/2023

DIVISION:

Civil

PROCEEDING:

Application

ORIGINATING COURT:

District Court at Brisbane

DELIVERED ON:

29 November 2023

DELIVERED AT:

District Court at Brisbane

HEARING DATE:

15 and 27 November 2023

JUDGE:

Kent KC, DCJ

ORDER:

1. Pursuant to s 50(2) and s 47(1) of the Motor Accident Insurance Act 1994 (Qld) the Respondent is to provide to the Applicant a copy of 180 minutes of video surveillance footage referred to in the report of Procare dated 28 November 2022

2.   The Applicant is to file and serve an outline of submissions on the topic of costs not exceeding 2 pages by close of business on 6 December 2023, with the Respondent to file and serve an outline of submissions in response not exceeding 2 pages by close of business on 11 December 2023.

CATCHWORDS:

TORTS – STATUTES, REGULATIONS, ETC - APPLICABILITY AND EFFECT IN ACTIONS FOR NEGLIGENCE – RELATING TO VEHICLES AND TRAFFIC – GENERALLY – where the applicant claims compensation for personal injuries arising from a traffic collision – disclosure of documents pursuant to Motor Accident Insurance Act 1994 – where application is made for the disclosure of surveillance footage obtained by the insurer is pursuant to s 50(2) and 47(1) of the Act – where a surveillance report and selected still images of said surveillance footage have been disclosed – whether the insurer is entitled to withhold further disclosure pursuant to s 48(3) of the Act – whether the insurer has formed suspicion of fraud on reasonable grounds – whether the insurer has waived its right to withhold full disclosure by engaging in partial disclosure

LEGISLATION:

Motor Accident Insurance Act 1994 (Qld) ss 47(1) 47(2) 48(2) 48(3) 48(4) 50(2)

CASES:

Blackman v Milne [2007] 1 Qd. R. 198

Bonser v Melnacis [2002] 1 Qd. R. 1.

Day Ford Pty Ltd v Sciacca [1990] 2 Qd. R. 209

George v Rockett (1990) 93 ALR 483

Meridien AB Pty Ltd v Jackson [2012] QSC 260

Queensland Bacon Pty Ltd v Rees (1966) 115 CLR 266

Roberts v Australia and New Zealand Banking Group (2006) 1 Qd R 482

Schofield v Hopman & Anor [2017] QSC 297 (transcript thereof from 14 September 2017)

Sultana Investments Pty Ltd v Cellcom Pty Ltd (2009) 1 Qd R 589

Young v Nominal Defendant [2000] QCA 2

Zavodny v Couper & QBE [2018] QSC 238

COUNSEL:

C Donnan for the applicant

K Holyoak for the respondent

SOLICITORS:

Littles Lawyers for the applicant

McInnes Wilson for the respondent

Introduction

1. This is an application by Ms Peterkovic for orders pursuant to s 50(2) and s 47(1) of the Motor Accident Insurance Act 1994 (Qld) (“MAIA”) that the respondent provide to the applicant copies of surveillance footage in the respondent’s possession pursuant to its investigations of the applicant’s claim for damages for personal injuries arising from a motor vehicle accident.

Background

1. The applicant was injured in a motor vehicle accident on 26 August 2022, the other vehicle being insured by the respondent.  She is said to have suffered spinal injuries, an injury to her left hip and upper limbs, and psychological injury.  She has made a claim for damages and liability is presently admitted.

2. The applicant was placed under surveillance by the respondent following initiation of the claim on 25 September 2022 and prompt admission of liability on 25 October; the surveillance commenced on 3 November.  The respondent wrote to the applicant’s legal representatives on 23 November 2022 disclosing sixteen (16) still photographs from surveillance footage asserting that the surveillance footage held by the respondent contradicted her complaints to her medical providers; she was in fact in no way impaired by the injuries; and her claims for assistance at home and with her children (she has two young children) were not truthful. Referral for consideration of prosecution for false or misleading statements was mentioned.

3. The applicant’s solicitors requested a copy of the surveillance footage that had been partially disclosed together with the letter of instructions to the investigator and the investigation report pursuant to s 47(1) and (2) of the MAIA. In February 2023 the respondent disclosed a copy of the Procare surveillance report dated 28 November 2022. It outlines that Procare spent 60 hours observing the applicant between 3 and 18 November 2022 and recorded 180 minutes of video footage. The report included 189 still photographs from the footage.

4. There is also reference to material provided to a Dr Journeaux on behalf of the respondent referring to, apparently, other surveillance material not otherwise disclosed.  This part of the application is not pressed.

   The Statutory Scheme

5. Part 4 Division 4 of the Act provides for co-operation between the claimant and insurer, in a number of ways. Section 47 requires the respondent insurer to provide the applicant with copies of reports and other documentary material in its possession about, relevantly, the applicant’s medical condition and prospects of rehabilitation.  This creates the obligation to disclose, in the pre-court phase of the proceedings. One of the objects of the legislation, of course, is to encourage speedy resolution of claims, and cooperation including disclosure no doubt helps that process.

6. The contentious exemption is in s 48(3).  If an insurer has reasonable grounds to suspect a claimant of fraud, it may withhold from disclosure information or documents to the extent the disclosure would alert the complainant to the discovery of the grounds of suspicion or could help in the furtherance of fraud.  Pursuant to sub-section (4) such material must not be withheld without proper grounds.

7. The dispute in the application comes down to two broad concepts:  whether in the present case there are reasonable grounds (with the qualification of such grounds being “proper”) to suspect fraud, and secondly, if so, there has in any case been a waiver of the respondent’s right to withhold disclosure. 

8. The respondent also emphasises that, the reasonable suspicion having, on its case, been formed, it is relieved from further disclosure to the extent such disclosure (i.e. further disclosure) could help in the furtherance of fraud; that is, the further disclosure could help in the successful pursuit of a dishonest aspect of the claim at trial. In this context, the partial disclosure is argued to be (a) proper and (b) not fatal to the respondent’s resistance to further disclosure; the right of non-disclosure in s 48(3) persists, as the respondent argues.

   Reasonable grounds to suspect a claimant of fraud

9. The respondent argues that this introductory condition to the statutory right to withhold disclosure represents something of a low bar.  It is important to bear in mind that what is under consideration is the respondent insurer’s suspicion, formed on reasonable grounds; it is not the court’s or anyone else’s suspicion. However the court does have the jurisdiction in this application of considering, in an objective sense, the reasonableness of the grounds for formation of the suspicion.

   Nature of “suspicion”

10. Reference is made to Schofield v Hopman & Anor, an unreported decision of McMeekin J, being a ruling made during a continuing trial (it seems on 14 September 2017; the eventual judgement, [2017] QSC 297, was delivered 8 December 2017), in which reference was made to George v Rockett (1990) 93 ALR 483 describing “suspicion” as a state of conjecture or surmise where proof is lacking. The facts which can reasonably ground a suspicion may be quite insufficient, reasonably, to ground belief, yet some factual basis for the suspicion must be shown. There was also reference to a quote from Kitto J in Queensland Bacon Pty Ltd v Rees (1966) 115 CLR 266 at 303:

    “A suspicion that something exists is more than a mere idle wondering whether it exists or not;  it is a positive feeling of actual apprehension or mistrust amounting to a ‘slight opinion but without sufficient evidence’”.

Nature of “Reasonable Grounds”

1. “Reasonable grounds” for the holding of such a suspicion is argued to be the existence of facts which are sufficient to induce the suspicion in a reasonable person and a mere conflict of evidence will be insufficient:  see Young v Nominal Defendant [2000] QCA 2. That was an appeal from the judgment of a District Court judge dealing with the same issue as the present case, namely, the judgment required the Nominal Defendant to fully comply with its duty of disclosure in circumstances where s 48(3) was concluded not to excuse such disclosure. The District Court judge had rejected the contention of reasonable grounds to suspect fraud. The appeal by the Nominal Defendant was unsuccessful; the conclusion of the District Court judge was not overturned. Davies JA observed that the facts did not support the contentions of the Nominal Defendant and that the insurer’s argument wrongly attributed to the judge a conclusion that where there is conflicting evidence on a factual issue, proof of which could ground a suspicion of fraud, an insurer could not have reasonable grounds to so suspect; the judge did not in fact so conclude.

   “Proper Grounds”

2. I am not aware of any authorities dealing with the apparent qualification in s 48(4) that the withholding of information must be on proper grounds; possibly it underlines the insurer’s duty of disclosure and that the conclusion in s 48(3) should not be reached lightly or on scant material; such would be consistent with Young v Nominal Defendant. This is particularly understandable given that the s 48(3) exercise would normally be an ex parte decision for the insurer; in such circumstances some care should be taken. This application is in that sense unusual, in that it is made possible by the partial disclosure, arming the applicant with knowledge of the information and stimulating this application; thus this application is inter partes rather than ex parte.

   The evidence

3. In the present case, the nature of the material under discussion is set out in a chronology provided by the respondent.  It seems likely that the surveillance was provoked, at least in part, by a substantial claim for care and assistance.  It took place between 3 and 18 November 2022.  There are various observations of the applicant wearing a back brace and conducting various activities, including attending a physiotherapist and shopping including with her son who was a toddler; she has two children, at the time 14 months and 3 years old.  The applicant is often seen wearing the back brace and occasionally not wearing it, around her lumbar spine.  She was seen doing some gardening on 16 November 2022 and 17 November 2022; importantly, on 17 November, loading a wheelbarrow with soil and moving it across a road an undisclosed number of times (where it was unloaded by another person). She is said to have shovelled vigorously, for long periods and to have pushed the shovel down with her foot more than 100 times. 

4. Reference is also made to a statutory declaration by the applicant of 13 February 2023, declaring inter alia that she had returned to part-time duties as an executive assistant; had returned to meal preparation; some pain had improved and some pain had worsened; she has to maintain a certain level of activity due to being a mum, but pushes through due to pain. There was also an earlier version to an Occupational Therapist on 4 November 2022 which seems, as summarised, broadly consistent and also refers to “pushes through to look after her children”. Later descriptions are given to examining doctors. These include complaints of cervical and lumbar spinal pain; difficulties with some physical tasks which she can nevertheless do with pain. She has anxiety with driving.

5. In this context, the respondent argues that there are reasonable grounds for the relevant suspicion. It chooses, no doubt for perfectly understandable reasons, not to put the full scope of the evidence under discussion before the court on this application. The result is that the examination of the issues falls to be determined in the context of the summary rather than the full evidence.

   Discussion

6. In Schofield, it was observed that the proof of fraud requires cogent evidence.  This evidence certainly does not rise to that level.  However the relevant test is much lower; does it provide reasonable grounds for the relevant suspicion as discussed above.  As observed in Schofield, “fraud” in the present context means that a claimant is claiming monies that she knows she is not entitled to; necessarily this includes the idea that the claim is dishonest.  In common with Schofield, it seems that the triggering event for the insurer’s suspicions is a large care claim component of the claim for damages.

7. The applicant refers to observations in Zavodny v Couper & QBE [2018] QSC 238 in which Justice Henry (as the respondent emphasises) considered primarily s 48(2) – dealing with the concept of material being disclosable despite legal professional privilege - rather than 48(3). Nevertheless the applicant refers to observations at [16] that “… there is a difference in degree between information about reasonably suspected fraud and information which is of varying effect as to the true extent of a claimant’s rehabilitation”. This is in my respectful view, a correct statement as to the way in which evidence of the kind under discussion may be understood. There is a continuum on which such material falls: at the lowest end there could not possibly be a reasonable suspicion of fraud formed; at the highest end such a suspicion would be inevitable; and of course the troublesome cases fall somewhere in the middle. As the respondent points out, exaggerated claims are considered fraudulent if the insured clearly intended fraud, or where the overestimate of the claim is so excessive as to lead to a necessary inference of dishonesty.

   Conclusion re: suspicion

8. In my conclusion the material relied on by the respondent does not demonstrate reasonable grounds for the relevant belief.  The high point of the surveillance, it seems to me, is the digging in the garden on 16 and 17 November 2022.  The events of 17 November, as described, include significant physical work over about two hours. It is not yet known how much pain the applicant says this caused her, at the time, or later. It does not appear to me to be starkly at odds with the other observations of her or her descriptions of her symptoms, although no doubt will provide material for cross examination; no doubt the doctors will also be asked about it. In its present form it falls, in my view, at the lower or middle areas of the continuum described above, rather than the upper end where it would reasonably give rise to a positive feeling of actual apprehension or mistrust amounting to a ‘slight opinion but without sufficient evidence’.

9. The other recorded activities include many things required of mothers of young children, and, unsurprisingly, the applicant’s position seems to be that she maintains a certain level of activity due to her circumstances but necessarily pushing through obstacles despite the pain.  The surveillance does not seem to be in stark contrast with her reports of symptoms to Dr Beer or Dr Journeaux. 

10. The respondent points to the claim for assistance of 6.5 hours per week for the next 55 years (the applicant is 29 years old).  Clearly this is a large claim, but of itself, in the context outlined above, does not in my conclusion amount to reasonable grounds of suspicion of fraud. It is of course not unusual that claimants, through their lawyers, couch their claims at the higher end of what may be reasonably claimable, from the understandable – and not dishonest – perspective of maximising the claim and being able to commence negotiations from a position which allows for the conceding of some ground in the hope of reaching a reasonable compromise.

11. Reasonable grounds for suspicion of fraud would be easier to conclude if, for example, there was a more clear-cut, inexplicable disconnect between the applicant’s observable abilities – in particular, it seems to me, on 17 November – and her recorded symptoms, complaints and descriptions of her problems. However it seems to me that the evidence just does not go that far. On 4 November she describes back pain, which is triggered by some physical activities such as picking up children, emptying the dishwasher or using the washing machine; activities of daily living aggravate the pain and she was not at that stage improving, but pushes through to look after her children. The surveillance under discussion is on two occasions about two weeks later. There is no further version from the applicant until February, when her condition had somewhat improved.

12. The 4 November version and the 16 and 17 November surveillance simply do not impress me as being so starkly at odds as to form reasonable grounds for the relevant suspicion. Had there been, for example, a contemporaneous version from the applicant explicitly ruling out the possibility of any such activity, the surveillance would show this to be incorrect; i.e. suspicion on reasonable grounds of dishonesty. However the evidence here simply does not in my view rise to that level.

    Waiver

13. Secondly, and perhaps more importantly, the applicant submits that whatever the determination under s 48(3), the insurer has waived its right to keep the material confidential.  The partial disclosure of the material in the way outlined above is conduct by the insurer inconsistent with the continued existence of the right of non-disclosure; see Meridien AB Pty Ltd v Jackson [2012] QSC 260 at [42]. The respondent’s answer to this is to argue that the right of the insurer to resist disclosure in s 48(3) is one enacted for a broader public benefit, thus attracting the exemption from the principles of waiver as described in Sultana Investments Pty Ltd v Cellcom Pty Ltd (2009) 1 Qd R 589. The argument is that the insurer’s right forms part of a broader scheme to discourage fraud which imperils the viability of the scheme and the respondent embraces observations in Roberts v Australia and New Zealand Banking Group (2006) 1 Qd R 482 at [20] by de Jersey CJ.

14. However Roberts did not involve fraud-related non-disclosure but rather mandatory statutory gateways to commencing the litigation process which had not been complied with; such lack of compliance was dispositive of the entire action. His Honour noted that if an entitlement to sue depends on compliance with statutorily prescribed conditions, non-compliance will not be excused on the basis of waiver or estoppel; see Day Ford Pty Ltd v Sciacca [1990] 2 Qd. R. 209, 216-7 and the other cases mentioned at [20]. The rights under discussion in Roberts thus did not lack the public dimension requiring the exclusion of estoppel and waiver and the objects of the legislation included public and private dimensions which could not be disentangled. They were bound up with the important issue of statutes of limitation, in a context where the entitlement to sue outside the statutory scheme had been abolished; Bonser v Melnacis [2002] 1 Qd. R. 1.

15. In my conclusion, the rights under discussion here are of a somewhat different character.  They do not involve statutorily prescribed mandatory pre-conditions to the entitlement to sue (here, the notice of claim is compliant and there is no limitation problem of the type which arose in Roberts); rather they regulate the way in which the parties are to conduct the inter partes disputes prior to and anticipatory of litigation; in the present case, at the stage prior to the issue of proceedings in the Court, as governed by the statutory provisions. The defendant is an insurer which is a commercial enterprise, no doubt conducting its business for profit, and as part of its business assesses and conducts claims consistent with, in this case, the MAIA; it is essentially a private citizen taking part in litigation, albeit pursuant to a statutory scheme. The right under discussion, namely of non-disclosure in the described circumstances (i.e. importantly, the partial disclosure having already occurred), does not appear to me to be, at least directly or in any significant degree, for the benefit of the community; it lacks the public dimension premising the exclusion of waiver. It seems to me to be a right (to respectfully adopt the analysis of Martin J in Meridien AB Pty Ltd & Anor v Jackson at [40]) which enures, in the present circumstances, to the benefit of the insurer as one part of the broader scheme; in the present focus it is closer to the right in Blackman v Milne [2007] 1 Qd. R. 198 (a purchaser’s right to have attention drawn to a warning statement) than the prohibition in Sultana Investments Pty Ltd v Cellcom Pty Ltd (an absolute restriction on recovery of reward for activities as a real estate agent unless licenced) or that in Roberts, described above and thus is capable of being waived.

1. It may be true that if this practice of partial disclosure of the surveillance material became widespread and a large number of plaintiffs (some, but not all of whom may be dishonestly inflating their claims) thus achieved access to such material to their forensic advantage, it could conceivably have some impact, as the respondent argues, on the conduct, and difficulties, of the claims and litigation process.  I do not, however, consider that the conclusion of a waiver, with its consequence of nothing more than erosion of the respondent’s right to avoid further disclosure in the present circumstances, would undermine to any significant degree the discouragement of fraud generally and, in the language of Roberts, “imperil the viability of the scheme”.  It is thus hard to see how there is a broader public benefit directly involved to any meaningful degree, and my conclusion is that there is not, so that the right under discussion was capable of waiver.

2. The respondent also argues that if the statutory right was capable of waiver, it has not been lost in the present circumstances by the partial disclosure.  In my conclusion this should be rejected.  The point that the text of s 48(3) continues that the further disclosure may be withheld to the extent it could help in furtherance of the fraud is of little assistance to the respondent where (a) I have found there not to be reasonable grounds for the founding suspicion; and (b) the applicant already has a lot of information; it is hard to see a decisive forensic advantage emerging from the greater volume of evidence, to further a fraud, given the existing state of the applicant’s knowledge.

3. The respondent chose, for whatever reason (in simple terms the idea seems to have been to tell the applicant she has evidentiary problems in the hope of a modest settlement), to disclose portions of the investigative material and to describe and summarise other portions.  This is, in my view, conduct inconsistent with the continued existence of the right of non-disclosure.  Accordingly, the rights of the respondent under s 48(3) have been waived. Thus if I am wrong as to the first conclusion above as to reasonable grounds for suspicion, the material is in any case liable to be disclosed.

4. In the circumstances the application is successful.