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District Court 24 October 2017

Harrison v Barnett

[2017] NSWDC 288

Traffic & driving
MOTOR ACCIDENT CLAIM COST CONSEQUENCES DAMAGES ASSESSMENT NO ISSUE OF PRINCIPLE EXPERT EVIDENCE BASES OF OPINION

Citation: Harrison v Barnett [2017] NSWDC 288
Court: District Court of New South Wales
Date: 24 October 2017
Judge(s): Wilson SC DCJ

Background

The plaintiff was injured in a motor vehicle accident on 7 August 2002. Liability was not in dispute and contributory negligence was not alleged, leaving damages as the sole issue. The matter came before the District Court more than 15 years after the accident, following a prolonged procedural history that the court described as contrary to the underlying objectives of the Motor Accidents Compensation Act 1999 (MACA).

The claim had twice been assessed by the Claims Assessment and Resolution Service (CARS) of the Motor Accidents Authority, the proper forum for such claims under the MACA. Both determinations were successfully challenged by the insurer in the Supreme Court and remitted for reassessment. The insurer then obtained an exemption from CARS on the basis of serious fraud allegations, asserting that the plaintiff and others had knowingly created false invoices for care and a false employment contract to inflate the claim.

The exemption meant the plaintiff had to commence court proceedings out of time, requiring an extension of time under the MACA. The insurer opposed that extension, and then sought leave to appeal when it was granted. The Court of Appeal dismissed the application for leave. By the time the matter came to trial, the insurer did not plead fraud in its defence and, as the court observed, essentially ran dead on the fraud allegations entirely.

  • Whether the insurer's conduct in obtaining a CARS exemption on fraud grounds, then failing to plead or pursue fraud at trial, was consistent with its obligations under the MACA
  • How damages should be assessed across the heads of past out-of-pocket expenses, future out-of-pocket expenses, past gratuitous care, and future commercial care
  • Whether the plaintiff's receipt of a carer's pension should reduce the award for past gratuitous domestic assistance
  • Whether a reduction for vicissitudes (including a pre-existing vulnerability) was appropriate in calculating future commercial care
  • What costs consequences should flow from the insurer's conduct throughout the proceedings (reserved for further submissions)

Decision

On the fraud allegations: The court was highly critical of the insurer's conduct. Serious fraud allegations had formed the basis for removing the claim from CARS and forcing the plaintiff to commence court proceedings out of time. Yet when the matter came to trial, fraud was neither pleaded nor meaningfully pursued. Wilson SC DCJ noted that the UCPR requires fraud to be specifically pleaded if it is to be alleged, and no such pleading was made. The court found the insurer's complete reversal of position raised serious questions about its good faith in making the exemption application. The court also found that the insurer had failed its statutory duty under s 116 of the MACA to take all reasonable steps to deter and prevent fraudulent claims.

On past gratuitous care: The plaintiff abandoned her claim for gratuitous care from 2002 to 2009, restricting it to the period from 16 May 2009. The court allowed seven hours of assistance per week for that period but reduced the total by an amount reflecting the plaintiff's receipt of a carer's pension, which was treated as an offset. The court awarded $54,500 for past gratuitous assistance.

On future commercial care: The court accepted a claim for six hours per week at $40 per hour as reasonable. It noted that the plaintiff's brother Matthew, who had been providing care, would cease doing so upon the conclusion of proceedings, making a commercial calculation appropriate. The court applied a 25% reduction for vicissitudes, including the plaintiff's pre-existing psychological vulnerability identified in the expert evidence, following the approach in Metaxoulis v McDonalds Australia Limited [2015] NSWCA 95. Future commercial care was allowed at $175,000.

On costs: The defendant was ordered to pay the plaintiff's costs. However, the precise scope and basis of those costs was reserved, with both parties directed to file short written submissions. This reserved question appears connected to the court's concerns about the insurer's conduct throughout the proceedings.

Orders Made

  • Judgment for the plaintiff in the sum of $271,042.00
  • The defendant to pay the plaintiff's costs of the proceedings
  • The scope and basis upon which costs are to be paid is reserved
  • Plaintiff to file and serve written costs submissions (no more than five pages) by 30 October 2017
  • Defendant to file and serve reply submissions (no more than five pages) by 6 November 2017
  • Liberty to apply on three days' notice
  • Exhibits to be returned after 28 days

Key Takeaways

  • An insurer that obtains a CARS exemption on the basis of fraud allegations, then fails to plead or pursue those allegations at trial, risks an adverse finding on good faith and may face adverse costs consequences: the District Court found such conduct raised serious questions about the insurer's bona fides.
  • Under s 116 of the MACA, insurers carry a statutory duty to take all reasonable steps to deter and prevent fraudulent claims. Abandoning fraud allegations without explanation does not discharge that duty.
  • Where a plaintiff receives a carer's pension in connection with gratuitous care provided by a family member, that pension may operate as an offset reducing the damages recoverable for past gratuitous assistance.
  • A pre-existing psychological vulnerability, even one that had not yet manifested, can support a reduction for vicissitudes in calculating future care damages, consistent with the Court of Appeal's approach in Metaxoulis.
  • Delays of more than 15 years between a motor accident and final judgment are inconsistent with the objectives of the MACA and the Civil Procedure Act 2005; the judgment implicitly attributes much of that delay to the insurer's procedural conduct.

Legislation and Cases Referenced

Legislation:
- Motor Accidents Compensation Act 1999 (NSW), ss 66, 109, 116, 117
- Civil Liability Act 2002 (NSW)
- Civil Procedure Act 2005 (NSW), s 56
- Uniform Civil Procedure Rules 2005 (NSW), Part 14, r 14(3)

Cases:
- Barnett v Harrison [2016] NSWCA 184
- Metaxoulis v McDonalds Australia Limited [2015] NSWCA 95
- Boral Bricks Pty Ltd v Cosmidis [2013] NSWCA 443
- Container Terminals Australia Ltd v Huseyin [2008] NSWCA 320
- Gordon v Troung (No 2) [2014] NSWCA 164
- Mason v Demasi [2009] NSWCA 227
- Logar v Ambulance Service of New South Wales Sydney Region [2016] NSWDC 255
- Campton v Centennial Newstan Pty Ltd (No 3)
- Jones v Dunkel (1959) 101 CLR 298
- Mount Isa Mines Ltd v Pusey [1970] HCA 60; (1970) 125 CLR 383