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Changes to the Motor Accidents Compensation Act (NSW)

Changes to the Motor Accidents Compensation Act (NSW)


by Andrew Stone, Barrister

Released July 2008

ABOUT THIS PROGRAM

Significant amendments to the NSW Motor Accidents Compensation Act 1999 will come into effect when the Motor Accidents Compensation Amendment (Claims and Dispute Resolution) Bill 2007 - which was passed on 5 December 2007 – is proclaimed.

The commencement date has not been announced but is likely to be 1 October 2008.

This program covers the following areas where amendments have been made by the Bill:

  • Provision of particulars

  • Exchange of documents

  • Settlement conferences

  • Document production

  • Special assessments

  • Costs penalties

The program also examines amendments referable to particular Court decisions, namely:

  • 1986 High Court decision regarding the standard of care expected of learner drivers compared to drivers in general

  • 2006 House of Lords decision awarding damages contrary to the Act in respect of an accident in NSW involving English residents

CHANGES TO THE MOTOR ACCIDENTS COMPENSATION ACT:

THE MOTOR ACCIDENTS COMPENSATION AMENDMENT (CLAIMS AND DISPUTE RESOLUTION) BILL 2007

AUTHORS:

Andrew Stone, Barrister, Sir James Martin Chambers

Mary Moloney, Director, Stacks/Goudkamp        

Jnana Gumbert, Solicitor, Stacks/Goudkamp

This paper has been compiled to outline the changes that will come into effect when the Motor Accidents Compensation Amendment (Claims and Dispute Resolution) Bill 2007 is proclaimed.  The bill will significantly amend the Motor Accidents Compensation Act 1999.

The bill was passed by both houses of Parliament on the 5th December 2007 but has not yet come into effect. The commencement date has not been announced but is likely to be 1 October 2008.

In his second reading speech, the Honourable John Della Bosca indicated that the purpose of the bill was to:

"... make further efficiency improvements in the motor accidents claims and dispute resolution process and procedures currently operating under the Motor Accidents Compensation Act 1999" (hereinafter referred to as MACA).”

This paper will cover the following areas which have been amended by the bill:

  1. Provision of particulars.

  2. Exchange of documents.

  3. Settlement conferences.

  4. Document production.

  5. Costs penalties.

  6. Special assessments.

  7. And other miscellaneous changes

Provision of particulars

Pursuant to MACA the claimant is obliged to co-operate fully, which includes providing particulars such as to enable the insurer to make an early assessment as to liability, or to make an offer of settlement or to determine if the claim or any part of the claim is fraudulent (Section 83).

The claimant must comply with the insurer’s reasonable request for information and specified documents or records.

If the claimant fails to provide particulars the claimant cannot commence court proceedings unless the claimant has a reasonable excuse for not providing the information or documentation in response to the insurer's request.

Until now the failure to provide particulars has not been a bar to the pursuit of the claim. The claim is simply stalled until the particulars are provided. Under the new provisions, failure to provide particulars may result in a claim being deemed to be withdrawn.

The Bill introduces Section 85A, which requires the claimant to provide to the insurer all relevant particulars of the claim as expeditiously as possible after the claim is made.

For the purposes of this section, relevant particulars about a claim are full details of:

  1. the injuries sustained by the claimant in the motor vehicle accident, and

  2. all disabilities and impairments arising from those injuries, and

  3. any economic losses and other losses that are being claimed as damages, sufficient to enable the insurer, as far as practical, to make a proper assessment of the claimant's full entitlement to damages

Pursuant to section 85B if all relevant particulars are not provided within two years and six months after the motor vehicle accident and the claimant has failed to provide a reasonable excuse as to why the particulars have not been provided, the insurer may direct the claimant in writing to provide the particulars within two months.

If the claimant does not provide the particulars within three months after the direction is given, the claimant is taken to have withdrawn the claim.

The claimant will then have to apply to either CARS (if the claim is not exempt) or to the Court to have the claim reinstated (Section 96).

 The claim will only be reinstated if the Court or the claims assessor is satisfied that the claimant has provided a full and satisfactory explanation for the failure to provide the required particulars.

If the application for reinstatement is made three years or more after the date of the motor vehicle accident the claim is only to be reinstated if, as well as providing a full and satisfactory explanation, the claimant establishes that the total damages of all kinds likely to be awarded to the claimant are not less than 25% of the maximum amount that may be awarded for non-economic loss at the date of the motor accident.

Under the current system Section 82 does not apply to a claim made in respect of the death of a person, or a claim in respect of which the injury has not stabilised within three years after the motor vehicle accident.

The latter qualification has now been omitted and replaced so that Section 82 does not apply in respect of a claim where the injury is not sufficiently recovered within three years after the motor vehicle accident to enable the claim to be qualified, or is a claim in which a medical assessor has declined to make an assessment of the degree of permanent impairment because the injury has not become permanent.

The words “as expeditiously as possible" are open to interpretation and may lead to protracted disputes as to whether or not the particulars have been provided expeditiously. 

The wording of Section 85B is unclear. Insurers are entitled to demand “all relevant particulars” but there is no definition as to what this is to include. Further, there is no requirement in the Bill for the insurer to actually specify what information it requires. This uncertainty is likely to lead to many disputes about whether an insurer’s request for particulars was reasonable, and whether the response to that request was adequate for the purposes of s85B.

For guidance in relation to what constitutes a proper request for particulars, it is helpful to turn to the decision of Allianz Australia Insurance Ltd v Newcastle Formwork Constructions Pty Ltd [2007] NSWCA 144. In that case the Court of Appeal said (at 18):

“The purpose of particulars is to assist in defining the issues at the trial, whereby the opposite party knows the case it has to meet and will not be taken by surprise, so that the evidence to be led can be appropriately confined and costs can be limited by avoiding the expense of preparing to meet issues which will not arise. Giving particular of the case to be made out has been distinguished from disclosing the evidence by which the case is to be proved, but the distinction is not a clear one and the touchstone must be what is reasonably necessary to achieve the purposes last-mentioned.”

The Court then referred to a number of authorities and listed the following principles in relation to the provision of particulars:

  1. A party must be made aware of the nature of the case he or she is called upon to meet.

  2. The object of particulars is to save expense in preparing to meet a case which may never be put, and to make the party’s case plain so that each side may know what are the issues of fact to be investigated at the hearing.

  3. It is not a question of whether one party has adequate knowledge of the actual facts, it is a question of whether he has adequate knowledge of what the other party alleges are the facts, for that is the case which he must meet.

Although there is a distinction between particulars and evidence, the Court made it clear that in some circumstances it will be necessary to disclose some of the evidence, or at least an outline of it. In this regard the Court said “The starting point is what is necessary to guard the other party against surprise; the starting point is not what can be said without disclosing the evidence to be led.”

Exchange of documents

The initial draft of the bill sought to introduce compulsory exchange of all documents between the parties, similar to the open disclosure regime that is currently in operation in Queensland. 

In Queensland parties are required to exchange not only all reports received but also documents, which would normally be protected by privilege – for example file notes of conversations with experts, employers, doctors etc.

This suggested amendment to the NSW scheme was not included in the bill passed by parliament.

The bill does however require the parties to exchange all documents relied on for the purpose of assessing the claim before they participate in the compulsory settlement conference (Section 89B). Compulsory settlement conferences are another new feature introduced by the bill, which are discussed below.

If a party fails to provide such documents prior to the settlement conference and later attempts to rely on those documents a claims assessor cannot take the documents into account unless the claims assessor is satisfied that the probative value of the document substantially outweighs any prejudicial effect on the other party (Section 89B(2)).

There is an out clause for the insurer in that the insurer does not have to provide documents if the insurer suspects on reasonable grounds that the claim is fraudulent or otherwise not made in good faith.

No consideration appears to have been given to documents that become available after the settlement conference date (eg. new medical reports and current tax returns etc). It is assumed an assessor will exercise a discretion to let these documents in.

Compulsory settlement conferences

A new Section 89A requires the parties to participate in a settlement conference before an application can be lodged with CARS.

If one party is ready and willing to participate in a settlement conference but the other party refuses to partake, although they’ve had a reasonable opportunity to do so, the claim can nonetheless be referred to CARS but only if the claims assessor is satisfied that the referring party were ready and willing to partake in the conference and the other party refused to do so.  There is likely to be argument as to whether the referring party was ready. The insurer may, for example, allege that the referring party was not ready to partake because they had not provided sufficient information about the claim

Section 98A requires the settlement conference to be held as soon as practicable after the insurer makes an offer pursuant to Section 82 of the Act. Remember that the insurer does not have to make the offer until particulars are supplied.

The bill defines a settlement conference as a conference in which the claimant, or the claimant’s guardian, or a person authorised on behalf of the claimant to settle the claim and a person authorised on behalf of the insurer takes part in.  Accordingly merely exchanging written offers will not satisfy this section as it seems to require an actual conference to take place. However, a telephone conference would seem to meet the requirements of the section.

Generally parties attempt to settle claims as early as possible.  Unfinished files do not generate fees and unduly prolonged claims lead to unhappy clients.  Although section 89B may be attempting to encourage the early resolution of claims there is a risk that it will result in some claims being rejected by CARS due to a technical breach.

It may also lead to time being wasted as parties will hold a compulsory conference simply to comply with the statutory provisions when they wish to progress the matter but are not ready to settle.

In Queensland the parties (by agreement) can dispense with the need for the compulsory conference, which seems a sensible provision to include in the legislation.

Exchanging of Offers

If the claim does not settle at the settlement conference each party must make an offer of settlement in writing within 14 days of the conference.  The offer must be accompanied by a schedule of damages sufficiently detailed to explain how the offer was calculated. (Section 89C)

A claim cannot be referred to the Authority for a CARS Assessment until the written offers of settlement are exchanged. 

If one party fails to make the written offer, the other party can, after 14 days have elapsed, refer the claim for assessment on satisfying the claims assessor that the other party has failed or refused to make the offer. This should be easy to prove as the correspondence should be self-evident.

As the cost regulations currently stand there is no extra costs allowed for the extra work in having a compulsory conference or sending the compulsory written exchange of offers. The costs regulations are to be redrafted prior to the bill taking effect.

A potential advantage to the provision is that it may help in those rare cases where plaintiffs refuse to give instructions to make an offer wanting instead their day in court.

There is a penalty for failure to comply with the above requirements (failure to partake in the settlement conference or to make a written offer or to exchange documents prior to the settlement conference). A costs penalty may be imposed by the claims assessor of up to 25% on top of or less than the costs allowable under the cost regulations.

The section also provides that it is a condition of the insurer's licence that the insurer complies with the division.

Powers of Claims Assessors to require information

There is no provision for the issue of subpoena under MACA or under the new bill.  Under MACA a claims assessor could direct a party to the claim to provide documents or information considered relevant to the claim. The bill introduces a new regime whereby claims assessors now have the power to direct not only a party to the claim but any person to produce any documents and information which the claims assessor believes are relevant to the assessment of the claim.

Failure to comply with the assessor’s direction is a criminal offence.

To facilitate the production of documents by non-parties, the assessor can direct a party to the claim to provide an authority. There is no limit on this power.

The MAA will pay the reasonable costs incurred by the person in complying with the assessor’s direction.

The documents are produced to the Assessor.

The section does not provide a mechanism for giving the parties to the claim access to the documents produced.  There is no indication as to how soon after obtaining the documents the assessor has to provide them to the parties and there is no provision for a party to seek first access to the documents and to claim privilege if appropriate.  Amendment to the Claims Assessment Guidelines may address some of these issues.

Under the current regime insurers are increasingly pressing claimants to provide authorities to enable them to obtain records, particularly GP records.  Some assessors rather than directing the claimant to provide the authorities instead direct the claimant to obtain the records and thereafter to provide those records to the other party.  This allows the claimant to review the records and claim privilege (as appropriate) before releasing the documents to the other party and the assessor.

There is no provision for the parties to provide supplementary submissions to the CARS Assessor which are likely to be required in some cases to address issues raised in light of the documents produced.

This new power of CARS Assessors to require production of documents can potentially conflict with existing legislative provisions. Certain government agencies including the Health Insurance Commission, Centrelink, and the Tax Office have statutory immunity from subpoena. This immunity is designed to protect privacy. The powers given to CARS Assessors under s100 circumvent this by enabling CARS Assessors to direct a claimant to sign an authority for the release of information pursuant to freedom of information legislation.

The material which may be considered to be “relevant” to a motor accident claim is practically endless. All manner of sensitive and confidential records could be forced to be produced pursuant to a direction from a CARS Assessor. Further, parties will not have the opportunity to claim privilege over material as they would be able to do if the matter were litigated.

Costs

A new Section 94A gives the claims assessor the power in specifying damages under Section 94 in respect of a claim to include in the assessment an assessment of the claimant's costs, both professional costs and disbursements.  This seems to occur in any event.

Section 94A gives all parties to the proceedings the same right of appeal against an assessment as to costs as if the assessment was determined by a costs assessor pursuant to the Legal Profession Act 2004.

In making an assessment as to costs the claims assessor may have regard to any written offer of settlement made by either party to the matter, must take in to account the costs allowed under the regulations and must give effect to any requirement of a court pursuant to Section 151(3) of MACA and must also have regard to matters set out in Section 363 of the Legal Profession Act 2004.

A new Section 95(2A) requires that damages (including any costs assessed as payable by the insurer) must be paid within such a period as prescribed by the regulations and also notes that the regulations may require the payment of interest if the monies, or any part thereof, are not paid within a certain time period.  The rate of interest is not to exceed the rate prescribed for Section 101 of the Civil Procedure Act 2005.

New Special Assessments

Pursuant to Section 96 of MACA a claims assessor has the power to determine:

  • whether a late claim may be made;

  • whether the claimant has provided a full and satisfactory explanation for not reporting the incident to the Police;

  • whether the claimant has provided a full and satisfactory explanation for late lodgment of a claim form;

  • whether the insurer is entitled to delay the making of an offer of settlement on the grounds that the particulars provided were insufficient or

  • whether payment is required pursuant to Section 83, not being a medical dispute.

Section 96 notes that an assessment of a dispute under this section is binding on the parties to the dispute to the extent that it relates to the duties of the parties with respect to the claim under Part 4.3.

The bill will also give CARS assessors the power to determine whether there has been due search and inquiry in Nominal Defendant cases.  (Refer Section 91(1)(a)). This seems an unnecessary amendment as disputes about due search and enquiry are more appropriately dealt with by the trial judge who will hear the inevitable dispute about liability that arises in Nominal Defendant cases.

Changes to MAS Assessments

Section 58 of MACA is amended by the bill to remove earning capacity and stabilization disputes. Now, MAS Assessors will only consider stabilisation when it is relevant to a dispute about whole person impairment.

Section 58(1)(d) requires MAS Assessors to determine whether a claimant’s whole person impairment caused by the accident exceeds 10%. At present, s61(2) indicates that a MAS Assessor’s Certificate is only conclusive as to the degree of whole person impairment (in such a dispute). In Pham v Shui [2006] NSWCA 373 it was held that the wording of s61(2) means that the MAS Assessor’s opinion regarding causation is not binding.

The bill amends s61(2) of MACA. Section 61(2) will now read that an Assessor is required to issue a Certificate regarding the matters referred for Assessment, and any such Certificate is conclusive evidence as to the matters certified. This has the effect of overcoming the decision in Pham v Shui and making MAS Assessor’s decisions as to causation binding.

The bill also amends s62 of MACA, dealing with further medical assessments. Further assessments will now only be allowed where it is likely to lead to a material difference in the outcome of the assessment, that is changing the result from either above 10% to below 10% or vice versa. This standard was already being applied by MAS so the amendment does no more than formalize existing arrangements.

Further, the bill provides that a review of a MAS assessment will include a review of all of the assessor’s decisions not just the issues under review. Again, this policy was already being applied by MAS.

Section 60 has also been amended so that the consent of the insurer is no longer required before a claim can be referred to MAS when liability is denied.

These provisions are likely to apply to all applications lodged with MAS from 1 October 2008.

The Cook v Cook Amendment

In Cook v Cook (1986) 162 CLR 376 the High Court held that the relationship of driving instructor to learner driver gave rise to a special situation whereby the standard of care owed by the learner driver was different to the ordinary standard of care owed by drivers in general. The Court said (at p384):

“… the standard of care which arises from the relationship of pupil and instructor is that which is reasonably to be expected of an unqualified and inexperienced driver in the circumstances in which the pupil is placed. The standard of care remains an objective one. It is, however, adjusted to fit the special relationship under which it arises.”

The effect of this decision was that if a learner driver caused an accident and the driving instructor was injured, the driving instructor would have to prove that the learner driver had breached this much reduced standard of care. This issue was recently explored in McNeilly v Imbree [2007] NSWCA 156 where the Court upheld the findings of the trial judge that although Cook v Cook applied, the learner driver had nevertheless breached her duty to the instructor. Quoting the trial judge, Basten JA said (at 72):

“The appellant’s action in deliberately accelerating so as to avoid an object in the path of the vehicle she was driving involved, in the absence of any suggestion of skidding and in circumstances where she was deliberately steering the car off the roadway, an element of carelessness over and above what could be attributed merely to inexperience… Any such superimposed carelessness on the part of the appellant constituted a breach of duty of care which she owed to the respondent.”

The High Court has granted Special leave in McNeilly v Imbree, to hear the argument that Cook v Cook is no longer good law. The accident in question occurred in the Northern Territory.

Fortunately, regardless of what the High Court decides, Cook v Cook will be abolished in NSW when the bill commences. Section 141 provides that the standard of care required of the driver of a motor vehicle is not affected or diminished as a result of the actual or imputed knowledge of another person as to the skill or experience of the driver.

The decision of the High Court in McNeilly v Imbree will still be very important though, as it will have ramifications for all other States and Territories in Australia.

The attempt to overcome Harding v Wealands

The bill introduces further subsections to s123 of MACA, stating that the damages provisions of MACA are substantive and if the substantive law of NSW applies to a claim then the damages provisions are to be applied. Further, the bill states that if a court, including a court of another jurisdiction, awards damages contrary to the provisions of MACA, the insurer is not required to pay the damages to the extent that the award is contrary to the provisions of MACA. If the insurer does pay the damages that have been awarded contrary to MACA, the insurer is entitled to recover the excess from the plaintiff.

This section has been introduced in an attempt to overcome the situation that has arisen as a result of the House of Lords decision of Harding v Wealands [2006] UKHL 32. This case involved an English resident, Mr Harding, who was catastrophically injured whilst on holiday in NSW. Mr Harding returned to England after the accident and proceedings were commenced there. The Defendant, Ms Wealands, also resided in England.

The damages that Mr Harding was entitled to recover under English law were significantly higher than the damages that he would be entitled to recover under MACA. The issue for the court was whether the damages provisions of MACA are substantive (in which case the court would be bound to apply them) or procedural (in which case the court could ignore them and apply the law of the forum). It was held that the provisions of MACA that deal with damages are procedural, and therefore can be ignored by a court in a foreign jurisdiction.

Lord Rodger of Earlsferry acknowledged that treating damages as procedural may mean that the defendant will be liable to pay more damages than they would if the provisions of MACA applied. However, he said that this was not a compelling consideration as “the impact on the scheme of applying a different scale of damages in claims litigated in this country is unlikely to be anything other than marginal” (at 77).

The decision of Harding v Wealands prompted the NSW parliament to legislate in an attempt to prevent foreign courts awarding damages contrary to the provisions of MACA. The Hon John Della Bosca, apparently in emphatic disagreement with Lord Rodger of Earlsferry’s views, said in the Second Reading Speech:

“The New South Wales scheme is fully-funded from green slip premiums. If insurers are exposed to liability for awards in other jurisdictions which exceed entitlements provided by the New South Wales scheme, this will impact on green slip premiums for the motorists of this State.

The issue remains as to whether the additions to s123 will have the desired effect, or any effect at all. So called “self characterizing provisions” have been met with disdain from Courts in the past. In Hamilton v Merck and Co Inc; Hutchinson v Merck Sharp and Dohme (Australia) Pty Ltd [2006] NSWCA 55 the New South Wales Court of Appeal had to decide whether a similar provision in the Queensland Personal Injuries Proceedings Act 2002 (PIPA) was effective in stipulating that certain provisions of the Act were substantive. Spigelman CJ said (at 44):

“The Parliament of Queensland can, of course, modify the common law for purposes of the rules to be applied by the courts of that State. However, the Parliament of Queensland cannot vary the common law choice of the rule that is to be applied by the courts of this State.”

It was held that the provision of PIPA was ineffective at binding courts of other States.

Accordingly, it seems that despite the attempt to define damages as substantive rather than procedural, courts in other jurisdictions will be free to apply their own rules in determining this issue, and it is likely that the decision in Harding v Wealands will continue to be followed in the UK.

Subsection (3) of section 123 has clearly been introduced in anticipation that subsection (2) will be ineffective. Subsection (3) may be effective for cases commenced in other jurisdictions in Australia, where the plaintiff is likely to be resident in Australia and have assets here. It is unlikely to have practical effect in overseas jurisdictions where the insurer is likely to run into difficulties in effecting service and enforcing judgment.

Miscellaneous changes

Report of Accident to Police

Pursuant to section 70 of MACA a claimant is required to report a motor vehicle accident to a Police officer. MACA does not specify the time period within which the accident is to be reported, although it is generally accepted that the section requires accidents to be reported as soon as possible.

If a claimant commences proceedings in respect of a claim without reporting the accident to the police, the claimant must provide a full and satisfactory explanation to the court for not reporting the accident.  The court may allow the proceedings to continue if satisfied that sufficient cause existed to justify the delay in reporting the accident to the Police and that a report of the motor vehicle accident was made within a reasonable period.

The bill amends Section 70 to make it a requirement that the motor vehicle accident must be reported within 28 days. This may create problems in some cases where claimants do not realise that the accident needs to be reported to the Police, such as in cases of minor property damage or work accidents where the claimant is unaware that the claim falls under MACA.

Accident notification forms

The bill increases the payments that can be made pursuant to an accident notification form from $500 to $5,000.

Economic loss

Section 124 has been amended so that the insurer now has to pay for the first 5 days of economic loss.  Under MACA the insurer was not obliged to pay for the first 5 days of economic loss.

Payments to be reduced by contributory negligence

Section 83(5) states that payments made by insurers are to be included in the damages recoverable by the claimant for the purposes of any reduction of those damages by reason of contributory negligence. This simply legislates the existing position since Golden Eagle International Trading Pty Ltd v Zhang [2007] HCA 15.

Interim payments

Costs assessors pursuant to Section 84A now have the power to award interim payments to claimants where financial hardship is established.

Limitation periods

Section 109 has been amended to clarify that time stops running once a CARS Application is lodged with the Motor Accidents Authority rather than stopping on referral of the claim to a Claims Assessor for assessment.

Travel rates

The Motor Accidents Authority has been given the power under the bill to prescribe a rate for reimbursement of travel expenses. It is anticipated that the Motor Accidents Authority will regulate the ATO rate of $0.55 per kilometre.

Conclusion

According to the Honourable John Della Bosca, the amendments to MACA introduced by the bill will improve the efficiency of the processing of motor accident claims. Certainly some of the changes will have this effect. In particular, the amendment to Section 60 of MACA comes to mind. Other amendments however have the potential to slow the process by introducing more procedural steps to be taken before claims can proceed to assessment and by making failure to take those steps potentially fatal to a claim.

STUDY POINTS

  1. Explain the circumstances where, under the new provisions, failure to provide particulars may result in a claim being deemed to be withdrawn.

  2. The Bill introduces Section 85A. Explain its operation.

  3. What is the starting point and overall objective of the “provision of particulars” regime under the Act?

  4. A party to a claim fails to provide a document before a settlement conference and later attempts to rely on it.

  5. What are the consequences under the new provisions?

  6. Summarise the key differences between the NSW and Queensland disclosure regimes.

  7. Does a telephone conference count as a “settlement conference”?

  8. Explain the consequences of a party not attending a compulsory settlement conference or exchanging a compulsory settlement offer.

  9. Under the new arrangements, what powers does a claims assessor have to compel provision of information?