Al Shmaeri v AAI Limited

Motor Vehicle Directions

Sydney District Court – Judge Williams presiding

Judgement handed down on 29 October 2015

Background

Mr Al Shmeari, the plaintiff, alleged he had sustained an injury in a motor vehicle accident which occurred on 9 September 2010. He made a CTP claim against AAMI (AAI Ltd), the insurer of the vehicle allegedly at fault.

The insurer admitted breach of duty of care on behalf of its insured and the claim was settled for $120,000 (inclusive of costs) on 26 September 2012.

Shortly after the claim settled, AAMI was told by an informant that the accident had been staged for the purpose of enabling the plaintiff to make a claim for compensation for injuries that he sustained in an earlier motor vehicle accident, which occurred on 4 September 2010.

As a result, the insurer declined to pay the agreed settlement monies and the plaintiff commenced proceedings for recovery of the same. In its defence, the insurer pleaded reliance on section  118 of the Motor Accidents Compensation Act 1999 (NSW) (‘the Act’) and also filed a cross-claim seeking repayment of section 83 payments in the sum of $15,752 plus interest.

Section 118 provides a remedy where false and misleading conduct in a claim has led to a party obtaining a financial benefit. Insurers are entitled to recover from the claimant the financial benefit obtained on the claim by the claimant’s deception.

The decision

His Honour noted that it was ‘not disputed that an allegation of fraud must be properly particularised and proved clearly and unequivocally or with certainty.’ There was some controversy during the trial about whether the defendant had to establish all of the matters pleaded in its defence in order to have the benefit of section 118, however, His Honour held that it was sufficient in the present case for the defendant to prove that the accident of 9 September 2010 was staged.

Precisely when the defendant became aware of the potentially fraudulent nature of the claim was important in this matter, and the defendant asked the Court to infer that had AAMI been aware that the claim was fraudulent earlier, it would not have admitted liability, would not have made section 83 payments, nor would it have settled the claim.

The insurer relied on the evidence of the informant, whose identity was protected by a non-publication order made on an application from the Commissioner for Police and who was known only as ‘Michael’ throughout the proceedings. The plaintiff and the driver of his vehicle (Sami Moshe) gave evidence for the plaintiff. The judge observed that the case would turn on credit findings and the demeanour of the witnesses was a very significant factor in his deliberations.

His Honour concluded that ‘despite lengthy cross-examination, [the informant Michael] adhered to [his] line of evidence,’ and further noted that parts of Michael’s evidence were supported by documentary evidence obtained by the defendant such as immigration records.

His Honour concluded that Mr Moshe was an unimpressive witness and he accepted the defendant’s submissions that his evidence ‘…was implausible and indicative of a witness who is being deliberately deceitful’.

His Honour noted several inconsistencies between the plaintiff’s oral evidence and the available medical records. His Honour further noted ‘I gained the distinct impression that he was not prepared to volunteer anything until it became apparent that the cross-examiner had documents on a number of topics which required him to provide an answer.’

His Honour concluded that Michael’s evidence should be preferred to that of the plaintiff and his witness, Mr Moshe.

His Honour warned that ‘great caution’ must be afforded when considering any so-called objective evidence. He also made the point that, to a significant extent, the details and histories contained in the COPS police report were in large part provided by persons alleged by the defendant to be involved in the staged accident.

The defendant adduced evidence which outlined numerous accidents in which the plaintiff and his associates had been involved which His Honour held should be taken into account as circumstantial evidence in support of the inference that the plaintiff was in the business of staging ‘insurance jobs.’ However, His Honour remarked that ‘to say that there were a disproportionate number of motor accidents is of little persuasive value in the absence of evidence of a connection between some of the participants.’

It was noted by the plaintiff’s counsel that the plaintiff did not lodge a property damage claim following the subject accident, which counsel submitted the plaintiff would have done had the accident been staged. However, the defendant submitted, and the judge accepted, that whether Mr Al Shmeari also made a property damage claim was irrelevant to determining whether the personal injury claim was a fraudulent one. That he made one false and misleading representation in relation to the accident was enough to enliven section 118.

The plaintiff sought to make a Jones v Dunkel (1959) 101 CLR 298 submission on the basis that counsel for the defendant did not call Michael Meslemeny, the insured driver. The plaintiff submitted that it would have been ‘improper’ for his counsel to have approached Mr Meslemeny.

Noting that there was no litigation on foot involving Mr Meslemeny, His Honour held that ‘any suggestion of impropriety [on the part of the plaintiff’s counsel] would have little foundation.’ Nevertheless, His Honour concluded ‘in my view I can come to conclusions on the ultimate inferences contended for in this case without calling in aid the Jones v Dunkel inference.’

His Honour entered a verdict for the defendant and ordered that the cross-defendant pay the cross-claimant the sum of $15,752 with interest and costs.

His Honour also recommended that the Registrar forward the papers to the Attorney General.

Authored by Peter Utiger, Partner, Newcastle.


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