Suitability vs capability – is there a difference?

In the recent case of NRMA v Gurbuz Aslan [2019] NSWSC 1587, the Court dealt with the considerations that a Claims Assessor must engage with when determining discretionary exemption applications pursuant to Section 92(1)(b) of the Motor Accidents Compensation Act 1999 (NSW). The judicial review findings from this case speak volumes regarding discretionary exemptions where the Insurer alleges false or misleading statements pursuant to 14.16.11 of the Guidelines and the lack of enforcement that S 100 directions have.

 

Author: Renée Reddy
Judgment date: 14 November 2019
Citation: Insurance Australia Ltd t/as NRMA Insurance v Gurbuz Aslan [2019] NSWSC 1587
Jurisdiction: Common Law - Administrative Law

Principles

  1. When a Claims Assessor is determining an application for exemption, he or she must ask whether the claim is suitable for assessment not whether it is capable of assessment within CARS. Suitability and capability are two different things.
  2. S100 directions are not enforceable.

Background

The Insurer, NRMA, sought judicial review of a Claims Assessor's decision to reject the Insurer's application for a discretionary exemption. The Insurer sought orders setting side or declaring the decision of a Claims Assessor to be invalid and for the matter to be remitted to the State Insurance Regulatory Authority for determination of the Plaintiff's application for discretionary exemption according to law.

The first defendant was involved in a motor vehicle accident on 2 January 2015. At the time of the accident, the first defendant was employed at Westpac as a 'Local Business Banker'. The first defendant was on Christmas leave at the time of the accident but returned to work as scheduled in mid-January 2015.

Upon his return to work, the first defendant alleged that he had significant physical difficulties which caused his work performance to suffer. The first defendant alleged that Westpac placed him under additional stress and increased his performance measures to unreasonable levels. The first defendant was dismissed in May 2016, he alleged due to his physical difficulties from the motor vehicle accident.

The Insurer made an application for discretionary exemption of the first defendant's (Guzbuz Aslan) claim under s 92(1)(b) of Motor Accidents Compensation Act 1999 (NSW). The basis of the Insurer's application was that the first defendant made false or misleading statements pursuant to 14.16.11 of the Guidelines.  The Insurer relied upon the fact that the first defendant failed to disclose that he suffered anxiety and depression as a result of work performance and disciplinary issues at Westpac before the motor vehicle accident. The Insurer asserted that it was these pre-existing conditions and issues which ultimately led to the first defendant's dismissal from Westpac that was unrelated to the motor vehicle accident.

The Insurer asserted in its application for discretionary exemption that the claim could not be assessed at CARS unless the insurer had access to certain documents which had the potential of defeating the first defendant's claim for a loss of earnings. The Insurer asserted that it required access to the first defendant’s employment records at Westpac and to documents in connection with unfair dismissal proceedings brought by the first defendant against Westpac in the Fair Work Commission.

The Claims Assessor dismissed the Insurer's discretionary exemption application and decided that the matter was suitable to be assessed at CARS as the necessary documents could be obtained via s 100 directions and that the CARS process provided the Insurer with the opportunity to test the Claimant's credit.

Decision

Ground 1

During the proceedings, the Insurer referred to IAG Limited t/as NRMA v Khaled [2019] NSWSC 320 regarding the proper interpretation of s 92(1)(b) of the Motor Accidents Compensation Act.

" [28] …There is an obvious, and indeed material, difference between whether or not a matter can be dealt with in the CARS process (in the sense of being capable of being dealt with in that way), and whether it is not suitable to be dealt with in that way. In that sense, capability is not the same as suitability. The terms of section 92(1)(b) required the Assessor to consider and focus upon the latter question… (emphasis added)"

Harrison AsJ found that the Claims Assessor applied the wrong test. The question that the Claims Assessor was required to ask herself was "whether the claim was not suitable for assessment in CARS".

However, the Claims Assessor misdirected herself and incorrectly asked "whether she was satisfied that this claim was capable of assessment in CARS".

Harrison AsJ found:

'The Claims Assessor applied the wrong test. In doing so, the Claims Assessor misunderstood or misconstrued the scope and nature of her power pursuant to s 92(1)(b) of the Motor Accidents Compensation Act, and incorrectly exercised that power in determining the insurer's application.'

Harrison AsJ confirmed that the Claims Assessor decision constituted a constructive failure to exercise jurisdiction and it was an error on the face of the record.

Ground 2

The Claims Assessor refused the Insurers application for exemption upon an assumption of fact that Westpac would comply the s 100 direction and produce the relevant documents.

The Insurer submitted that Westpac had not produced the documents and the Claims Assessor had no power to enforce compliance with the s 100 direction to Westpac.

The Insurer asserted that the Claims Assessor refused the Insurer's application on the basis of a wrong assumption as to a critical fact which caused her to fall into an error of law, IAG Ltd t/as NRMA Insurance v Qianxia Lou [2019] NSWSC 382. The Court agreed. The claims assessor had no power to enforce compliance with the s100 direction.

Final Result

Harrison AsJ found that the Claims Assessor made two jurisdictional errors. The Claims Assessor's decision which refused the Insurer's application for exemption pursuant to s 92(1)(b) of the Motor Accidents Compensation Act was quashed. The matter was remitted to the State Insurance Regulatory Authority to be dealt with according to law.

Why this case is important

This case is important as it demonstrates that a Claims Assessor needs to consider whether a matter is suitable for assessment and not whether it is capable of assessment as they are two different considerations.

This decision affirms the considerations that the Claims Assessor has to take into account when arriving at a conclusion regarding discretionary exemption applications dealing with false and misleading statements.

This case expands on the principle of suitability which was also discussed in Insurance Australia Ltd t/as NRMA Insurance v Taylor [2017] NSWSC 507.

The Court's reasoning in relation to the s100 direction is not entirely clear. No distinction is drawn between a direction made under s100 and a subpoena. Possibly, one distinction is the power of arrest, which CARS does not have. The decision supports an argument that the availability of an s100 direction to procure critical information is insufficient to defeat an application for exemption.

Contributors

Renée Reddy Associate