We are pleased to note that we were recently successful in an important decision before the Court of Appeal.
On 09 August 2013 the Court of Appeal delivered Judgment in Smalley –v- Motor Accidents Authority of NSW1 which will have a significant impact upon the way that motor accident claims are administered in New South Wales.
The scheme for compensation for personal injuries in New South Wales is governed by the Motor Accident Compensation Act (1999). That Act provides for two ‘streams’ of claims. Where liability (that is the insurer’s obligation to pay for a claim) is admitted, then an insurer is obligated to pay for medical expenses, make an offer of settlement and attend a settlement conference in a timely manner. If those obligations do not lead to a conclusion of the claim then the entitlement to compensation is to be determined by an Assessor appointed by the Motor Accidents Authority of NSW.
In the event that liability is declined, that is the insurer disputes its obligation to pay for a claim, then the claim is to be dealt with by the District Court of NSW.
It has been our more recent experience that some insurers have failed in their obligation to determine liability within three months as required by the legislation which results in the injured Claimant unable to effectively enforce their rights.
Mr Smalley’s Claim:
Mr Smalley was injured in a motor vehicle accident on 16 December 2005. He lodged a claim for compensation with the third party insurer on 14 January 2010, well outside the six month limit. The insurer requested an explanation for the late claim which was provided by Mr Smalley. The insurer rejected the explanation and denied liability for his claim. That issue was referred to the Motor Accidents Authority for determination, who decided that Mr Smalley had in fact provided a full and satisfactory explanation and that the claim should proceed. Notwithstanding the decision of the Motor Accidents Authority, the insurer continued to deny liability while accepting that its insured driver was at fault in the accident.
Mr Smalley made three applications to have his claim exempted from CARS and the administrative process so that he could proceed to Court and seek a final determination. The difficulty facing Mr Smalley was that he was being asked to proceed firstly through CARS, notwithstanding that the insurer steadfastly refused to accept any determination that was made by CARS, thereby causing him unjust cost and delay.
Judgment of the Court of Appeal:
In a unanimous decision, the Court determined that ‘liability’ means the acceptance by an insurer of its obligation to pay a claim, even though the amount that is required to be paid may be in dispute. As a result, it is now clear that where an insurer disputes its obligation to pay on a claim, a person injured in a motor vehicle accident is entitled to proceed directly to Court.
The administrative scheme (“CARS”) is intended to be a quick, cheap and efficient means to resolve claims. The bargain for the insurer is that if it wishes to take advantage of this scheme, it is obliged to act quickly and comply with the obligations set out in the legislation. As a result of this judgment, an injured party who is aggrieved by an insurer’s failure to comply with its obligations will be able to proceed directly to Court and enjoy the benefits of the Court’s greater and binding authority.