Discretionary CARS exemptions in claims where fraud is alleged
April 26, 2013
Section 92(1)(b): Certificates of Exemption Involving Allegations of Reliance upon False and Misleading Documents
On 1 March 2013, Rothman J of the NSW Supreme Court quashed the decision of a CARS Assessor refusing to exempt a claim from CARS where the insurer alleged that the claimant relied upon false or misleading documents.
The claimant, Mr Tarabay was injured in an accident. Allianz accepted its insured driver was at fault.
To support his claim for economic loss, the claimant relied upon a PAYG Payment Summary from an employer, which indicated that he earned $52,832 per annum. Allianz had obtained pay slips, and asserted they did not corroborate the PAYG Payment Summary and believed that he actually earned significantly less ($14,315). The claimant told the Assessor that he did not know how this PAYG Payment Summary had come into existence.
The claimant also relied upon a letter from another employer indicating that he had been employed for eight months, but the claimant’s tax returns showed no earnings from this employer at all. Additionally, a copy of the claimant’s resume represented that he had been working for this company for up to 22 months before it even commenced trading
Allianz received a letter from another employer indicating that the claimant had been a full time employee for four years, earning $1,150 per week. This employer also represented that a computer virus had wiped out all its records in relation to the claimant. Business searches showed that this company was owned by the claimant’s brother.
Allianz sought a s92(1)(b) discretionary exemption on the basis of a false and misleading statement.
Section 92(1)(b) of the Motor Accidents Compensation Act (MACA) provides:
(1) A claim is exempt from assessment under this part if:
(b) A claims assessor has made a preliminary assessment of the claim and has determined (with the approval of the principal claims assessor) that it is not suitable for assessment under this part.
Allianz relied upon Chapter 14 of the Claims Assessment Guidelines (the Guidelines):
14.16 In determining whether a claim is not suitable for assessment, an Assessor and the PCA shall have regard to the circumstances of the claim as at the time of the preliminary determination including, but not limited to:
14.16.11 Whether the insurer makes any allegation that a person has made a false or misleading statement in a material particular in relation to the injuries, loss or damage sustained by the claimant in the accident giving rise to the claim…’
The CARS Assessor was not satisfied that the claimant or any other person had made a statement knowing that it was false or misleading, and stated that issues of ‘inconsistency’ are easily resolved during cross examination at CARS and that such inconsistencies were a very common occurrence. She refused to recommend an exemption.
Allianz sought judicial review. It alleged (among other things), that in coming to her conclusion, the Assessor had asked herself the wrong question, identified the wrong issue and was relying on irrelevant material.
Rothman J adopted the approach taken by Hoeben J (as he was then known) in Zurich Australian Insurance Limited v MAA  NSWSC 845 who ruled that the scheme in relation to exemptions seemed to be ‘tolerably clear’. His Honour noted that there will be some claims which are exempt from assessment, but they will be in the minority. Strict requirements are imposed before a claim is exempt from assessment.
In considering whether the Assessor had committed jurisdictional error, his Honour cited the principles in Craig v South Australia (1995) 184 CLR 163 at 179:
‘If…an Administrative Tribunal falls into an error of law which causes it to identify a wrong issue, to ask itself a wrong question, to ignore relevant material, to rely on the relevant material or, at least in some circumstances, to make an erroneous finding or to reach a mistaken conclusion, and a Tribunal’s exercise or purported exercise of power is thereby affected, it exceeds its authority or powers. Such an error of law is jurisdictional error which will invalidate any order or decision of the Tribunal which reflects it.’
Rothman J accepted the opinion expressed by the Assessor that issues associated with inconsistencies in periods of employment, documents and statements are often resolved during CARS assessments, but his Honour concluded that Allianz was alleging the documents the claimant relied on were fraudulent. His Honour noted the significance of that distinction:
‘There is a significant difference between inconsistent evidence of earnings and evidence of potential forgery. The only conclusive means of determining the forgery, and its source, is by compelling production, compelling answers under oath, and cross examination of Mr Tarabay and third parties. That course is impossible in an assessment.’
Rothman J determined the issue before the Assessor was whether an exemption should be granted, and she had erred by asking herself the wrong question (whether or not Allianz had proved fraud). She reached a concluded view as to the substance of the matter alleged, without having heard the parties in full on the issue. In doing so, the Assessor’s decision was vitiated by jurisdictional error.
At paragraph 66 Rothman J ruled that the application under s92(1)(b) of the Act was an interlocutory proceeding in which it was the task of the insurer to satisfy the Assessor, on the basis of an allegation, reasonably put, that the matter was not one that should be heard in a CARS assessment.
Therefore, an insurer’s application for a discretionary exemption under this section involving an allegation that the claimant relies upon a false and misleading document or statement, should succeed where an insurer can show a prima facie need to test matters of inconsistency and test the veracity of inconsistent documents under oath where there is a proper opportunity to cross examine relevant witnesses.
His Honour drew a distinction between inconsistent evidence provided by a claimant during a CARS assessment and evidence upon which the claimant relies that is potentially forged or fraudulent. In circumstances of the latter, Rothman J ruled that CARS is not an appropriate forum to determine such allegations because it has no jurisdiction to compel the production of documents, or compel a claimant and / or any relevant third parties, to be cross examined under oath.
Allianz Australia Insurance Limited v Tarabay  NSWSC 141
Authored by Zacchary Carrigan, Lawyer, Newcastle.
April 30, 2020
Introduction The coronavirus (COVID-19) outbreak has caused an unprecedented crisis in a very short period of time. Like every other sector…Continue reading
May 25, 2016
The early investigation of claims is often critical to the preservation of evidence. However, of equal importance is ensuring that the…Continue reading