Using an allegation of false or misleading statements as a vehicle to drive home an application for exemption: Davies J takes the wheel – Insurance Australia Ltd t/as NRMA Insurance v Taylor [2017] NSWSC 507

The claimant was injured in a motor vehicle accident on 24 April 2013. In his personal injury claim form lodged with the compulsory third party insurer he did not disclose any pre‑existing injuries, disability, or illness. The insurer sought exemption of the claim from assessment under s 92(1)(b) of the Motor Accidents Compensation Act 1999 (NSW) (the MACA). This was on the ground that the claimant had made false or misleading statements in relation to his injuries, loss, and damage. Clause 14.16 of the Claims Assessment Guidelines (the Guidelines) provided that a claims assessor is to have regard to such grounds in determining whether a claim is suitable for assessment.
The allegedly false or misleading statements related to the claimant's denial, in his claim form, his signed statement, and to a number of medical practitioners, of relevant pre‑existing injuries. The occurrence of those injuries was said to be evident from medical records obtained by the insurer.
The Claims Assessor rejected the insurer's application for a discretionary exemption and found that the claim was suitable for assessment by the Claims Assessment and Resolution Service (CARS). According to her, the issue was simply one of "… apparent inaccurate histories given to doctors which may impact on their opinions and conclusions." The Claims Assessor saw "… no reason why the histories provided to (her) cannot be sent to all these doctors and asked to consider whether their conclusions alter."
The insurer sought judicial review of the Claims Assessor's determination in the Supreme Court of New South Wales (Supreme Court). The main question put before Davies J was whether the insurer:
"… having notified the particulars of the false and misleading statements (that was tantamount to fraud), should be afforded an opportunity to have a fair hearing of the personal injury damages claim conducted in the District Court by reason of the attack on the credit of the claimant and the lack of utility of any of the medical reports and assessments thus far obtained." ²

Davies J upheld the insurer's challenge, finding that the Claims Assessor had not correctly dealt with the question she ought to have asked, namely whether the claim was suitable for assessment on the basis that there was an allegation of a false or misleading statement. Something more than an allegation was required for a finding that it was not. However, this did not require the Claims Assessor to make a determination about whether in fact false or misleading statements had been made. The seriousness of the allegation is a consideration. She had erroneously referred to the absence of any allegation of fraud surrounding the accident in circumstances where this was not a relevant consideration. Her characterisation of the complaint as "inaccurate histories" was an inadequate acknowledgement that what was alleged was false and misleading rather than being inaccurate.
His Honour went on to observe:
"The particularisation … of what was said to be false or misleading statements was sufficiently extensive as to require the Assessor to consider whether it would in the circumstance be more appropriate for the credit of (the claimant) to be properly tested under oath, heard in open court and subject to proper cross-examination, none of which was available in the CARS assessment process …" ³
His Honour concluded that the Claims Assessor had failed to appropriately exercise her discretion. An order was made requiring remission of the application to a different claims assessor for determination.

It is important not to confuse the purpose of s 92(1)(a) of the MACA, which, in the context of cl 8.11.6 of the Guidelines is concerned with mandatory exemptions where fraud is alleged, with s 92(1)(b) of the MACA, which, in the context of cl 14.16.11, concerns discretionary exemptions where false or misleading statements are alleged. In the latter scenario, once an insurer particularises the allegation, a claims assessor must determine whether the claim is suitable for assessment.
However, for the application to succeed, the insurer will need to establish the seriousness of the allegations. This case supports the view that where the allegations, if proven, may result in the claimant's credit being seriously impugned, access to the mechanisms associated with court proceedings will be appropriate.