Zhao v AAI Limited t/as GIO - [2023] NSWPICMR 62

CERTIFICATE OF DETERMINATION OF MERIT REVIEWER
CITATION:	Zhao v AAI Limited t/as GIO [2023] NSWPICMR 62
CLAIMANT:	Yanchun Zhao
INSURER:	GIO
MERIT REVIEWER:	Katherine Ruschen
DATE OF DECISION:	22 December 2023
CATCHWORDS:	MOTOR ACCIDENTS - Dispute about whether the insurer is entitled to refuse payment of statutory benefits in accordance with Part 3 of the Civil Liability Act 2002 (as applied by section 3.39 (limitation on statutory benefits in relation to certain mental harm)) of the Motor Accident Injuries Act 2017; whether it is foreseeable that a person of normal fortitude, in the circumstance of the case, might suffer a recognised psychiatric illness if reasonable care were not taken by the at fault driver; section 32 of the Civil Liability Act 2002; whether the claimant suffered a recognised psychiatric illness; section 31 of the Civil Liability Act 2002; whether the injury is the result of the motor accident; Held – the reviewable decision is affirmed.
DETERMINATIONS MADE:	CERTIFICATE Issued under s 7.13(4) of the Motor Accident Injuries Act2017 DETERMINATION The reviewable decision is about whether the insurer is entitled to refuse payment of statutory benefits in accordance with Part 3 of the Civil Liability Act 2002 (as applied by s 3.39 (Limitation on statutory benefits in relation to certain mental harm)) of the Motor Accident Injuries Act 2017 (MAI Act) and is therefore a merit review matter under Schedule 2(1)(t) of the MAI Act. 1. The reviewable decision is affirmed.

STATEMENT OF REASONS

INTRODUCTION

There is a dispute between Yanchun Zhao (the claimant) and the insurer about whether the insurer is entitled to refuse payment of statutory benefits in accordance with Part 3 of the Civil Liability Act 2002 (the CLA) (as applied by s 3.39 (Limitation on statutory benefits in relation to certain mental harm)) of the Motor Accident Injuries Act 2017 (the MAI Act).
The claimant’s husband was involved in a motor accident on 19 October 2021.
On 23 May 2022, the claimant made an application for personal injury benefits under the MAI Act. The claimant contended she suffered post-traumatic stress disorder, depression and anxiety as a result of her husband’s motor accident.
On 20 July 2022 the insurer denied liability to the claimant on the basis the requirements of s 3.39 of the MAI Act and in turn, Part 3 of the CLA have not been met.
The claimant requested an internal review of the insurer’s decision of 20 July 2023.
On 5 August 2022 the insurer issued their internal review decision in which the insurer affirmed their decision of 20 July 2022.

The claimant has made an application for a merit review of the reviewable decision dated 5 August 2023 (the Application).

SUBMISSIONS

Both parties have provided detailed written submissions which have been considered.
In short, the claimant submits she is a person of normal fortitude, and it was foreseeable to the driver at fault in relation to her husband’s accident that in the circumstances, the claimant would have suffered a recognised…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2023] NSWPICMR 62
Decision Date: 22 December 2023

CaseChat Overview and Summary

In the case of Zhao v AAI Limited t/as GIO, the claimant, who is the spouse of the victim, challenged the insurer’s decision to refuse payment of statutory benefits under the Motor Accident Injuries Act 2017. The claimant argued that she was a person of normal fortitude, and it was foreseeable that she would suffer a recognised psychiatric illness if reasonable care were not taken by the driver responsible for her husband’s accident. The insurer, however, contended that it was not foreseeable for a person of normal fortitude to suffer such an illness in the given circumstances. This dispute centred on the applicability of section 3.39 of the Motor Accident Injuries Act 2017, which incorporates the provisions of Part 3 of the Civil Liability Act 2002, specifically regarding the limitation on statutory benefits for mental harm.

The central legal issues for the court to decide were whether the claimant was entitled to statutory benefits under the Motor Accident Injuries Act 2017 and whether the insurer's duty to pay such benefits was subject to the foreseeability requirement outlined in section 32 of the Civil Liability Act 2002. The court needed to determine if it was foreseeable that a person of normal fortitude, in the circumstances of the case, would suffer a recognised psychiatric illness due to the accident and whether the claimant's injury was a recognised psychiatric illness. The court had to consider the interplay between sections 30, 31, and 32 of the Civil Liability Act 2002 and how these provisions applied to the claimant’s entitlement to statutory benefits under the Motor Accident Injuries Act 2017.

The court found that the claimant’s injury, which arose from mental or nervous shock due to her husband’s motor accident, did not meet the criteria for a recognised psychiatric illness. The court also determined that it was not foreseeable that a person of normal fortitude would suffer such an illness under the circumstances. As a result, the insurer’s decision to refuse payment of statutory benefits was affirmed. The court concluded that the insurer was not required to pay statutory benefits unless it was foreseeable that a person of normal fortitude would suffer a recognised psychiatric illness. Given these findings, the court upheld the insurer's decision.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

On 5 August 2022 the insurer issued their internal review decision in which the insurer affirmed their decision of 20 July 2022. The claimant has made an application for a merit review of the reviewable decision dated 5 August 2023 (the Application). Both parties have provided detailed written submissions which have been considered. In short, the claimant submits she is a person of normal fortitude, and it was foreseeable to the driver at fault in relation to her husband’s accident that in the circumstances, the claimant would have suffered a recognised psychiatric illness if care were not taken. The insurer submits it is not foreseeable that a person of normal fortitude would, in the circumstances, suffer a recognised psychiatric illness. The parties were given an opportunity to make submissions as to whether a hearing should be conducted in this matter. Both parties requested that the matter be determined on the papers. This dispute concerns the limitation on liability to pay statutory benefits under s 3.39 of the MAI Act, which provides:“Part 3 (Mental harm) of the Civil Liability Act 2002 applies to the payment of statutory benefits under this Part in connection with an injury in the same way as it applies to the award of damages in connection with an injury, subject to any necessary modifications and to any modifications prescribed by the regulations.” There does not appear to be any dispute that s 3.39 of the MAI Act and in turn, Part 3 of the CLA applies on the basis the claimant was not involved in the motor accident but contends her personal injury arose wholly or in part from mental or nervous shock in connection with her husband’s motor accident. Section 30 of the CLA limits the categories of persons entitled to recover damages (or in this case, statutory benefits). The claimant did not witness her husband’s motor accident. However, there does not appear to be any dispute that the claimant meets the requirements of s 30 as the spouse of the victim. Under s 31 of the CLA the insurer is not liable to pay statutory benefits to the claimant under the MAI Act unless the claimant’s injury “consists of a recognised psychiatric illness”. Relevantly, s 32 of the CLA provides:“(1) A person (‘the defendant’) does not owe a duty of care to another person (‘the plaintiff’) to take care not to cause the plaintiff mental harm unless the defendant ought to have foreseen that a person of normal fortitude might, in the circumstances of the case, suffer a recognised psychiatric illness if reasonable care were not taken.(2) For the purposes of the application of this section in respect of pure mental harm, the circumstances of the case include the following--(a) whether or not the mental harm was suffered as the result of a sudden shock, By virtue of s 3.39 of the MAI Act, s 32 of the CLA applies in relation to the insurer’s liability to pay statutory benefits to the claimant. Relevantly, the insurer is not required to pay statutory benefits to the claimant unless it is foreseeable that a person of normal fortitude might, in the circumstances of the case, suffer a recognised psychiatric illness.

Ratio Decidendi

Legal Principle Established

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