Assured INSURANCE INDUSTRY NEWS | DECEMBER 2017 ISSUE 1 smarterlaw.com.au 2 100 years in the making smarterlaw.com.au H A L L & W I LC O X CELEBRATING 100 YEARS 100 Assured 3 Contents INSIDE Court of Appeal squashes grape finding in favour of Woolworths 4-5 Setting fire to Hammoud Brothers 5 Surgery resulting in battery and negligence – Who is at fault? 6-7 Mother awarded damages for nervous shock from Bankstown Hospital tragedy 8-9 False or Misleading Exemption – Decision to deny discretionary exemption set aside 10-11 Insurer must cover burnt out brothel with Comancheros affiliations 12-13 Air crash machination 13 An interview with Alex Lindros, Technical Services Officer, QBE 14-15 Beware the Kangaroos – the fate of the driver in single vehicle accidents in NSW 16-18 Crash for cash – the rise of inflated insurance claims 19 FEATURE ARTICLE Insurer must cover burnt out brothel with Comancheros affiliations page 12 Surgery resulting in battery and negligence – Who is at fault? page 6 DEC 2017 smarterlaw.com.au 4 Court of Appeal squashes grape finding in favour of Woolworths At first instance On 25 November 2012 Ms McQuillan (plaintiff) sustained injuries when she slipped and fell on a grape at Woolworths’ Leichardt store. The plaintiff subsequently commenced proceedings in the District Court of New South Wales against Woolworths, in its capacity as occupier and operator of the supermarket, seeking damages for her injuries. His Honour Judge Maiden found that the presence of the grape on the floor arose Woolworths has successfully appealed a lower court’s finding that its employees were negligent in leaving a single grape on the floor after the store had opened. RETAIL Written by Rachael Arnold – Partner, David Short – Partner, Ahranee Vijayaseelan – Special Counsel and Terri Hirbod-Bassi – Senior Associate Assured 5 from the activities of Woolworths’ staff in the produce area and that the staff simply ‘overlooked’ the grape ‘in the busy activity’ that occurred prior to the store opening. The plaintiff succeeded against Woolworths and was awarded the sum of $151,000 plus costs and interest. Court of Appeal Woolworths’ appeal to the Court of Appeal was allowed and the plaintiff was ordered to pay Woolworths’ costs. Woolworths challenged the primary judge’s findings of negligence on the basis of two errors in his Honour’s factual findings; firstly, that the grape was on the floor before the store opened; and secondly that no one from Woolworths was on duty in the produce section of the store between 10 am (store opening) and 10:06 am (when the plaintiff fell). The majority held that his Honour’s implicit finding of negligence by Woolworths’ staff in the produce area before 10 am could not stand. Furthermore, even if the grape was on the floor before 10 am, the Court of Appeal were not persuaded that there was a causal act of negligence by Woolworths’ staff in failing to observe a single grape on the floor when passing by that area to attend to other duties. On the other hand, assuming that the grape came onto the floor after 10 am, Justice Gleeson (with whom Justices Basten and Payne agreed) stated that ‘keeping a proper lookout in accordance with instructions to maintain vigilance for hazards on the floor, such as grapes, does not mean a perfect lookout’. Ultimately, the Court of Appeal held that the Woolworths’ staff’s failure to observe the grape on the floor did not constitute a causal act of negligence. Commentary This decision may reflect a fortuitous swing of the pendulum regarding the duty of occupiers to keep a proper lookout for hazards. The Court of Appeal’s decision demonstrates that an element of slight error or oversight will not necessarily vitiate reasonable care. Woolworths v McQuillan Setting fire to Hammoud Brothers T he NSW Court of Appeal has cast further doubt over the burden of proof in indemnity disputes including fraudulent claims. Since 2004 insurers have commonly relied on the decision of Hammoud Brothers Pty Ltd v Insurance Australia Limited in support of the principle that an insured bears the onus of proving the occurrence of an insured event. That case related to a claim made by an insured for the theft of a motor vehicle in circumstances where the directors of the insured had significant criminal records, their evidence was inconsistent and there were other anomalies that cast considerable doubt over their version of events. As the Court was not satisfied that the insured had proven on the balance of probabilities that the vehicle had been stolen, the insurer was entitled to deny indemnity. The application of Hammoud Brothers was narrowed in 2014 with the decision of McLennan v Insurance Australia Limited. That case related to a fire damage claim made by an insured in circumstances where the fire had been deliberately lit and there were a number of suspicious circumstances that cast doubt over the insured’s version of events. The insurer denied indemnity on the basis that the insured had failed to prove the occurrence of an insured event. However, the insured successfully argued that as the insured event was fire damage, she only needed to prove that her home had been damaged by fire and the onus then shifted to the insurer to prove that the fire had been deliberately lit by the insured or with her consent. In Sgro v AAMI in 2015, the NSW Court of Appeal reaffirmed Hammoud Brothers insofar as it related to theft claims. In a claim relating to the theft of a motor vehicle, the Court found that if the probability of a vehicle having been stolen was equal to the probability that it was not, an insured will not have discharged their onus of proving the occurrence of a theft. In such circumstances, an insurer is entitled to deny indemnity. In the recent case of Averkin v Insurance Australia Limited, the insured’s vehicle was allegedly stolen from outside his home and then set on fire. The insured made a claim for the theft of his vehicle under his policy of insurance. There were a number of anomalies including evidence from a forensic locksmith that the vehicle had last been driven with a correctly coded key. Accordingly the insurer denied indemnity on the basis that the insured had failed to discharge his onus of proving the occurrence of a theft. However, after issuing proceedings, the insured amended his statement of claim to plead that he was entitled to indemnity under the policy as the vehicle had sustained fire damage. The insured argued that as the relevant insured event was ‘fire damage,’ he only needed to prove that the vehicle had been damaged by fire in order to satisfy his burden of proof and the onus then shifted to the insurer to prove that he had been complicit in the fire. This proposition was accepted by the NSW Court of Appeal and the insurer was ordered to indemnify the insured. Commentary This decision could further dilute the application of Hammoud Brothers and the availability of the ‘no insured event’ defence for insurers. Ultimately insurers should be reviewing the wording of their policies to ensure that insured events are worded in such a way as to require insureds to discharge their burden of proving fortuitous insured events. Averkin v Insurance Australia Ltd Written by Liam Campion – Special Counsel 6 MEDICAL Surgery resulting in battery and negligence – Who is at fault? B y 16 July 2010, when the plaintiff was admitted to Calvary Hospital, she had developed a severe infection associated with the surgical mesh that had been placed over the hernia dissection. The plaintiff commenced proceedings against the defendant for personal injuries suffered as a result of complications of surgery, claiming battery and negligence. Battery claim The plaintiff alleged that she did not consent to surgical registrar Dr Gundara performing the first operation and that this amounted to battery. The court considered whether the plaintiff was mistaken in believing the operation would only be performed by Dr Payne, specialist general surgeon. The plaintiff had signed a consent form which stated that the procedure may be performed by another doctor, and this satisfied the judge that the plaintiff’s consent extended to the involvement of Dr Gundara. The court noted On 7 June 2010, the plaintiff underwent surgery at Wagga Wagga Base Hospital for the repair of an incisional hernia with placement of a surgical mesh. A seroma developed, which resulted in another surgery with application of a VAC dressing on 15 June 2010. A third surgery was carried out on 27 June 2010 to close the abdominal cavity which accommodated the VAC dressing. Written by David Short – Partner with the assistance of Stephanie Screnci – Law Graduate Assured 7 that the relevant consent is to the nature and character of the act (surgery) and that the identity of the surgeon may be relevant to the question but not in absolute terms. Rather, the real question concerned the requisite professional qualifications, which Dr Gundara held. Therefore, the performance of the surgery by Dr Gundara did not alter the nature and character of the surgery so that the plaintiff’s consent was confirmed and there was no battery. Negligence claim The plaintiff alleged that an ordinary specialist general surgeon would have taken the precaution of inserting negative pressure surgical drains to reduce the risk of developing a post-surgical infection. Further, she alleged that the surgeons should have diagnosed the presence of the infection and either removed the mesh or given her intravenous antibiotics for a prolonged period. The defendant argued that there was no established practice on the use of surgical drains. The risk of infection was enhanced by the fact that the plaintiff was a smoker, obese, and because mesh repairs involve placing a foreign body deep in the patient’s abdomen. The peer medical experts agreed that the development of a post-surgical infection was not of itself evidence that the surgery was performed in a manner falling short of competent professional practice. Further, Dr Gundara took precautions to reduce the risk of infection, such as prescribing antibiotics. However, there were mixed opinions among the medical experts as to whether a surgical drain was in this instance required for competent professional practice to be established. The judge held that although there was no universal practice that surgical drains should be employed, there was wide acceptance that a drain should be used, and therefore a reasonable surgeon in Dr Payne’s position would have taken the precaution of employing negative pressure surgical drains. Therefore, the judge was satisfied that the risk of harm to the plaintiff which materialised was both foreseeable and not insignificant, and the defendant had breached its duty of care to the plaintiff. The plaintiff also pressed claims in negligence regarding the second and third surgeries. The issue was whether Dr Payne should have diagnosed an infection and removed the mesh at the later surgeries, and if he had, would the plaintiff’s injuries have been less severe. The court reviewed medical notes, particularly of Dr Gamble who on examination found that the plaintiff had a mild wound infection six days postoperatively. The judge held on the balance of probabilities that a low grade infection was present and detectable on her first re-presentation, but as the modern day meshes are resistant to low grade infections, no breach of duty was established in the second surgery. The plaintiff was then readmitted to the hospital for the closure of her abdominal wound. Dr Payne’s examination notes assessed her wound to be clean with no evidence of infection, however, she presented with swelling and pain around the wound, bleeding, nausea and fever. The judge held that on 3 July 2010 the plaintiff was suffering from obvious signs of wound infection, and in failing to identify the mesh infection and treat it more aggressively Dr Payne fell short of the standard of a surgeon of ordinary skill and competence, thereby breaching his duty to the plaintiff. In terms of causation, the judge held that the relevant acts were causative of the plaintiff’s injuries. Quantum The plaintiff claimed for the additional five surgeries she subsequently underwent, ongoing pain, discomfort and limitations due to her scar tissue, mechanical back pain and ongoing consequential psychological injury. She sought damages for non-economic loss, past and future out of pocket expenses, past and future domestic assistance and past and future economic loss. Judgment was entered for the plaintiff in the sum of $1,005,509 plus costs. Implications The case reinforces the importance of surgeons assessing factors personal to the patient, such as smoking and obesity, in determining the precautions that should be taken to minimise the risk of post-surgical infection. This has important implications for medical specialists’ regarding their duty of care. The case also highlights the importance of patients thoroughly reading and understanding consent forms before signing them. The plaintiff had signed a consent form which acknowledged that another surgeon may perform the surgery, and despite claiming that she did not actually read it in detail, she was bound by its terms. Further, the case clarifies authorities on battery. The court held that any mistake as to the identity of the surgeon did not alter the nature and character of the act (surgery) so as to vitiate the patient’s consent. This has significant implications in situations where, for example, a patient consents to Dr A, a surgeon of ordinary skill and competence, performing an operation, who at the last minute and after the patient is under a general anaesthetic becomes unavailable, so that Dr B, also a surgeon of ordinary skill and competence, steps in. In this scenario, it could not be said that the plaintiff’s consent has been vitiated, as the relevant consent given is to the nature and character of the act, not the identity of the surgeon. Therefore, if a patient only wants a specific person performing the surgery, they need to ensure this is specifically documented. Tinnock v Murrumbidgee Local Health District (No 6) The case also highlights the importance of patients thoroughly reading and understanding consent forms before signing them. 8 Mother awarded damages for nervous shock from Bankstown Hospital tragedy MEDICAL Ms Sorbello gave birth at the Bankstown Hospital to a son, Joseph, in 2008. Joseph suffered severe injury as the result of oxygen deprivation during his birth and as a result, he is profoundly disabled, has a significantly shortened life expectancy and requires lifetime care. Written by David Short – Partner with the assistance of Stephanie Screnci – Law Graduate Assured 9 P roceedings were brought in negligence on behalf of Joseph against the South Western Sydney Local Health Network, which settled on confidential terms. Ms Sorbello then claimed damages in the Supreme Court of New South Wales for personal injury, in the nature of mental harm (nervous shock) suffered by her as a result of the negligence of the hospital. The primary judge found that Ms Sorbello suffered from a debilitating psychiatric condition that rendered her fit only to work part-time, and even though she has some capacity for work, her prospects of exploiting that capacity were “essentially non-existent”. The hospital admitted liability and damages were awarded to Ms Sorbello under various heads including non-economic loss, past economic loss, and future economic loss, in the sum of $1,278,459. On appeal The hospital appealed the decision at first instance on two main bases. Firstly, the hospital challenged the primary judge’s acceptance of the expert opinion evidence of the doctors retained by the Ms Sorbello over the doctor retained by the hospital, as to causation of the respondent’s condition. On appeal, the court held that the hospital did not provide sufficient reasons to prefer it’s expert, and the primary judge was exercising her judicial function of assessing evidence which includes assessing the demeanour of expert witnesses. The hospital’s expert opinion was largely based upon the resilience shown by Ms Sorbello in overcoming other life “stressors” such as her marriage breakdown, and was not supported with sufficient evidence. The court held that “none of those stressors remotely approached the level or the permanence of stress imposed upon her by Joseph’s birth and disabilities”, and found that there was no error in preferring the other experts’ evidence. Secondly, the hospital asserted that the primary judge was in error in assessing Ms Sorbello’s residual earning capacity, by casting an onus on the hospital to prove that Ms Sorbello was capable of working and the types of work available to her. The Court of Appeal affirmed that once a loss of earning capacity has been established by a plaintiff, the onus of demonstrating a failure to exploit any residual earning capacity lies on the defendant: Mead v Kearney  NSWCA 215 : “…Once this onus is satisfied, it is not necessary for the plaintiff also to satisfy the court of the extent of the loss, in the sense of proving what employment the plaintiff is not incapacitated from performing; a defendant who contends that the plaintiff has a residual capacity has at least an evidentiary onus of adducing evidence of what the plaintiff is capable of performing and what jobs are open to a person with such a residual capacity” Therefore, the primary judge was not in error. The hospital also argued that the primary judge should have taken the approach in Malec v J C Hutton Pty Ltd  HCA 20, which involves considering the chance that the injury to the plaintiff could have eventuated despite the defendant’s The primary judge found that Ms Sorbello suffered from a debilitating psychiatric condition that rendered her fit only to work part-time, and even though she has some capacity for work, her prospects of exploiting that capacity were “essentially non-existent”. negligence. On appeal, the court dismissed this ground on the basis that it was not part of the hospital’s case at first instance or on appeal that there was a chance that Ms Sorbello would have suffered psychiatric injury despite the hospital’s negligence, and therefore the Malec principles were not appropriate. Further, the Court of Appeal noted that the possibility of another cause affecting Ms Sorbello’s earning capacity was, in any event, accounted for in the allowance made for vicissitudes. The hospital also claimed that damages should be reduced, due to the settlement reached on behalf of Joseph. This was also dismissed by the court, stating that the mere fact that an award of damages in favour of her son was made was insufficient to warrant any reduction in the award to be made to Ms Sorbello. Judgment The appeal was dismissed with the hospital to pay Ms Sorbello’s costs. 10 False or Misleading Exemption – Decision to deny discretionary exemption set aside T o those doctors, and also in his personal injury claim form and a statement prepared for the purposes of his Claims Assessment and Resolution Service (CARS) application, he indicated he had no previous injuries to similar parts of his body. In the process of investigating the claim, the insurer became aware that the first defendant had sought physiotherapy treatment just three weeks prior to the subject accident for back symptoms, for which he had also been prescribed the opioid Endone. The insurer made an allegation that the first defendant had made a false or misleading statement in a material particular to the injuries, loss or damage he had alleged pursuant to clause 14.16.11 of the Claims Assessment Guidelines. The insurer then sought an exemption from CARS on that basis. On 31 October 2016, the third defendant (the claims assessor) determined the claim was suitable for assessment by reason that no fraud had been alleged and that the issue of the ‘inaccurate histories’ given to doctors could be cured by distributing updated histories to the doctors and asking for updated medical conclusions. The insurer applied to the Supreme Court for review of the decision. Three grounds of the review were made: 1. that the claims assessor misunderstood her power under s 92(1)(b) of the MACA and incorrectly applied that power by incorrectly deciding the question of whether the claims assessment could be physically conducted in the circumstances 2. that the claims assessor denied the insurer procedural fairness by failing to address the nature and seriousness of the claims of false and misleading statements, the evidence of the adverse credit of the claimant, and the unfairness to the Insurer of any oral hearing or assessment before CARS and 3. that the claims assessor failed to provide adequate legal reasons for the suitability of the matter to be assessed at CARS. His Honour Justice Davies handed down his decision on 5 May 2017. The decision expands upon the previous guidance provided in respect of discretionary exemption applications for false or misleading allegations in the decisions of Allianz Australia Insurance Ltd v Tarabay (2013) 62 MVR 537 and Insurance Australia Limited t/as NRMA Insurance v Banos (2013) 65 MVR 312. The decision notes the serious nature of false or misleading statements and confirms that an allegation of a false or misleading statement could be as serious as a fraudulent claim (or as in the The first defendant alleged he sustained injuries in a motor vehicle accident on 24 April 2013 including a back injury. The first defendant was assessed by a number of medical professionals, including medico-legal doctors organised both by his lawyers and the insurer, treatment providers and independent medical assessors appointed by the Medical Assessment Service (MAS). Writen by Daniel Stoddart – Partner and Catherine Freeman – Senior Associate, with the assistance of Indigo Ryan – Paralegal INJURY Assured 11 circumstances of Banos an alleged forged document). An allegation of fraud is subject to a mandatory exemption from CARS. His Honour inferred from the mandatory exemption for allegations of fraud that the absence of ‘sworn compellable evidence with a right of cross examination’ under CARS proceedings meant that ‘neither truth nor fairness to the parties’ was likely to be achieved other than in a court hearing where the rules of evidence also applied (at paragraph 36). His Honour confirmed this was further emphasised by sections 117 and 118 of the Motor Accidents Compensation Act regarding false and fraudulent claims. His Honour further considered that a view about the seriousness of the false and misleading allegations made must be a consideration as to whether a mater was suitable for assessment. He accepted therefore that it was not sufficient for an assessor to just consider whether an allegation of false and misleading statements had been made – it was also appropriate for an assessor to form a preliminary view regarding whether the claim is suitable for assessment given the nature of the allegation. It was accepted that the assessor’s characterisation of the allegation by the assessor as it being a case of ‘inaccurate histories’ given to doctors failed to acknowledge the true nature of the allegation raised by the insurer. The assessor had failed to take into consideration the need for testing of the first defendant’s credit (which was not an insignificant matter in the proceedings) and the limitations of the CARS process in being able to undertake such testing. His Honour quashed the order of the claims assessor and remitted the matter to SIRA for allocation to a different claims assessor to determine the Insurer’s exemption application according to law. Commentary The decision is a useful one for insurers when allegations of false or misleading statements are raised. It confirms the serious nature of the allegation and the considerations that must be made by a claims assessor when determining whether the matter is suitable for assessment at CARS, particularly noting the ability to test a claimant’s credit given the limitations of the CARS process. Insurance Australia Ltd t/as NRMA Insurance v Taylor His Honour further considered that a view about the seriousness of the false and misleading allegations made must be a consideration as to whether a mater was suitable for assessment. 12 Insurer must cover burnt out brothel with Comancheros affiliations At first instance Calliden denied the insured’s claim on the basis that, at the time the policy was renewed, it failed to comply with its duty to disclose pursuant to section 21 of the Insurance Contracts Act (1984) (Act). Calliden’s denial was based on the fact that the insured failed to disclose that its director and brothel manager were both members of the Commancheros, an outlaw motorcycle gang (OMCG) and that it failed to disclose that the brothel’s registration had lapsed. Justice Schmidt found that the insured had failed to comply with its duty of disclosure in relation to the above matters and that, had they been disclosed, Calliden would not have renewed the policy and been at risk at the time of the fire. Accordingly, Her Honour held that Calliden was entitled to have its liability reduced to nil pursuant to section 28 of the Act. The insured company operated a brothel from premises in the ACT. The premises were insured against property damage and liability pursuant to the ‘Adult Industry Insurance Policy’ issued by Calliden. On 1 January 2012, the brothel was extensively damaged by fire. The insured made a claim for damage to contents and for business interruption with Calliden. FIRE Writen by Matt McDonald – Partner, David Short – Partner and Terri Hirbod-Bassi – Senior Associate Assured 13 Court of Appeal The insured appealed to the NSW Court of Appeal which allowed the appeal and ordered Calliden to pay the insured $500,000 on the claim plus interest and costs. Under section 21 of the Act, Calliden needed to prove that a reasonable person in the position of the insured company would have known that the insured’s association with the Comancheros was relevant to Calliden’s decision to accept the risk. The Court noted that the test is not satisfied if a reasonable person could be expected merely to have suspected that the information might be relevant to the insurer’s decision. The Court also noted that a reasonable person in the insured’s position would have known that Calliden had a specialised scheme for adult industry risks and that Calliden understood the use of the premises as a brothel would increase the risk of property damage and liability claims given the participation by people of ‘dubious repute’ in that industry. The Court unanimously found that a reasonable person (with this insight into Calliden’s risk appetite) could not be expected to know that the insured’s association with the Comancheros was a matter relevant to Calliden’s decision whether to renew the policy. The Court was also not satisfied that Calliden, had it been made aware of the insured’s ‘dubious’ associations, would have declined to renew the insured’s policy. In relation to the registration not being current it was held that, had that information been disclosed (as it ought to have been), the insured would have taken simple steps to have the brothel registered (by paying $160 and filling in a form). In those circumstances, it is likely that Calliden would still have been on risk on the date of the fire. Commentary This decision confirms that the bar is set high for insurers alleging non-disclosure under section 21 and invoking remedies under section 28 of the Act. However, outlaw bikies ought not to take too much comfort from this decision. It can be inferred from this judgment that an insured would ordinarily be obliged to disclose a close association with an OMCG when seeking cover for a mainstream commercial enterprise. The reasonable person test was resolved in the insured’s favour on this occasion mainly because Calliden was well aware of the heightened risks and dubious characters associated with brothels and because it failed to ask any specific questions about OMCG associations. Stealth Enterprises Pty Ltd t/as The Gentlemen’s Club v Calliden Insurance Ltd Written by Andrew Lyle – Partner In the last few years ‘other insurance’ clauses and section 45 of the Insurance Contracts Act (1984), have received a lot of judicial attention. The leading case is the High Court decision of Zurich Australia Insurance v Metals & Mineral Insurance. In the case below, the NSW Court of Appeal considered what happens when section 45 does not apply and both policies contain ‘other insurance’ clauses. Air crash machination Two companies sold a SAAB aircraft to a partnership, which leased the aircraft to an airline. Two years later the aircraft crashed and all 15 people on board died. Relatives of the deceased brought a proceeding in the USA against various parties including the vendors of the aircraft. The vendors were indemnified under a SAAB-group policy. Subsequently, the vendors learned that they fell within the description of ‘additional insureds’ under a QBE policy taken out by the lessors of the aircraft, and claimed indemnity under that policy as well. QBE refused indemnity on the basis that policy conditions about the provision of information concerning claims had not been complied with. The vendors sued QBE. Both the SAAB and QBE policies contained an ‘other insurance’ clause, each limiting the available cover when another policy also provided cover. Applying the Metals & Minerals decision, the Court concluded that section 45 of the Insurance Contracts Act didn’t apply to the clauses because the vendors had not ‘entered into’ they had not directly contracted for either policy. In each case, they were seeking the benefit of a policy taken out by other parties. The result was that the ‘other insurance’ clauses in each policy cancelled each other out, leaving the vendors free to seek indemnity under either policy. Having already sought and received indemnity, under the SAAB policy, they had no entitlement under the QBE policy, and so the vendors’ claim against QBE was dismissed. The Court noted that it was up to the underwriters of the SAAB policy to claim a contribution from QBE on the basis of double insurance. Commentary ‘Other insurance’ clauses still have life in them when the party seeking indemnity is not the party which took out the policy in the first place. In this case, because the party seeking indemnity under the two policies had not taken out either of them, neither ‘other insurance’ clause was neutralised by section 45, so the two clauses cancelled each other out. Lambert Leasing v QBE Insurance 14 An interview with Alex Lindros – Technical Services Officer, QBE B lue is QBE’s corporate colour. That suits Alex Lindros, being something of a blue-blood himself! Alex was born in Melbourne and raised in Kew, attending Carey Baptist Grammar School. His forebears were all professionals: his parents are both teachers and among his grandparents and uncles are dentists, an engineer and a pharmacist. Alex studied at Monash University, graduating in Arts/Law. After university he went on to complete his practical legal training at Australian National University so as to qualify as a lawyer. He also completed a Master of Laws at ANU. Alex’s first full time job was at QBE and he’s still there. That’s not quite what he expected when he was at university, being frequently told as a member of Generation Y that he should, or at least would, move around frequently in his employment. But Alex has come to learn that people tend to stay on at QBE because of the great culture. When he started at the company, it struck him how many people had worked there for 10, 20 or 30 years, and even 30+ years. Alex started at QBE in the graduate program in 2011. His first rotation was in liability claims. He was only there for three months but knew that he loved it and would return. His other rotations were through motor claims, property claims and underwriting. At the conclusion of the program he was delighted to be offered a position in the liability claims team. That was a formidable team in 2012: the legendary Bob McCormack, John Macdonell (who succeeded Bob as leader of the team), the very experienced trio of Jane Burt, Don Deans and Neil Messer, the up-and-coming Maureen Fielding and the lively Panayiota Anastopoulos. Alex remembers all of them fondly. He learnt a lot from all of them and enjoyed working with them. After all, Alex says, ‘claims service is the thing which the company sells. It is the core part of the business.’ Alex feels that his legal training gives him an edge in liability claims. It helps with his policy interpretation skills. It also helps him to debunk fallacious arguments which may be made by claimants’ lawyers. Importantly, his legal training assists Alex in carrying out his core responsibility at QBE, paying claims. Another interesting feature of claims is the variety. ‘No two claims are the same. And you learn about all sorts of things like building trades, manufacturing, engineering and medicine.’ After about four years in the liability claims team Alex moved to a ‘distribution and claims relationship’ role. The external focus was on relationships with brokers and the internal focus was on relationships between underwriters/sales staff and claims officers. Alex found that to be good experience. He witnessed firsthand the issues confronting brokers and underwriters on a daily basis, which he found made him a better claims operative when he returned to claims in 2017. When Maureen Fielding took a position in QBE’s Auckland office, Alex was presented with the opportunity to move into her role Alex Lindros is the Technical Services Officer in Long-tail Claims at QBE in Melbourne. He recently spoke with Andrew Lyle at Hall & Wilcox. PEOPLE Writen by Andrew Lyle – Partner Assured 15 as Technical Services Officer. They were big shoes to fill, but Alex jumped at the opportunity and has been surprised at how comfortable he feels in the role. His co-workers describe him as calm and level-headed. It has been a big year for Alex. In addition to being promoted in February 2017, he married his fiancée Rachel. As a practicing architect, Rachel is something of a blue blood herself! About his time at QBE so far, Alex notes: ‘When I started technology was starting to bite. There was a renewed focus in the company on efficiencies, on the “One QBE” program, and on closer co-operation between underwriting and claims. One of the benefits is that we are now better at communicating to underwriters the information and data which is actually useful to them. About the industry in general, Alex notes that smaller brokers have tended to give way to cluster groups like Steadfast. ‘You now have to build relationships with the claims people at the brokers, who you come across more frequently and more regularly. In that sense, the industry is becoming even smaller. Brokers have greater expectations about being informed about the progress of liability claims and that is now an important feature of our job.’ Outside of work, Alex is an accomplished rugby union player. He is a leading member of the Monash University Rugby team (where his former workmate Don Deans helps out as a trainer). Although he plays rugby, Alex has a passion for AFL, and the Geelong Football Club in particular. Although he defers to his sister as the more passionate supporter! Alex sees his future in claims, perhaps more in the direction of management and strategy. He is excited about the future of QBE: ‘I feel the company is becoming more innovative and I am feeling good about the direction of QBE. ‘You now have to build relationships with the claims people at the brokers, who you come across more frequently and more regularly. In that sense, the industry is becoming even smaller. Brokers have greater expectations about being informed about the progress of liability claims and that is now an important feature of our job.’ 16 Beware the Kangaroos – the fate of the driver in single vehicle accidents in NSW MOTOR In a much anticipated decision earlier this year the High Court dismissed an application for special leave1 by the injured party from the Court of Appeal decision in Whitfield v Melenewycz 2 . The injured party, Mr Melenewycz, sought to test the entitlement of a non-owner driver in a single vehicle accident to recover damages under the ‘blameless accident’ provisions of the Motor Accidents Compensation Act 1999. A s a result, the Court of Appeal’s decision remains the authority on this issue, providing that a driver in a single vehicle accident is not precluded from recovering damages from the vehicle’s owner under the ‘blameless accident’ provisions in certain circumstances, which, unfortunately for Mr Melenwycz, he did not satisfy. The take away points from the Court of Appeal’s decision are as follows: • Section 7B(1) deems fault on the part of the owner or driver (or both) only if their use or operation was use or operation involved in the motor accident that caused the injury or death. • As there was no causally related use or operation of the motorcycle by the owner in this case, section 7B did not deem him to have been at fault. • Although not arising in this case, the preclusions to the application of the ‘blameless accident’ provisions set out in section 7E are capable of applying where there is only one or more than one motor vehicle involved in the motor accident which is said to be ‘blameless’. • Where one or more than one motor vehicle is involved, each driver is capable of formulating a claim for damages in respect of their injuries caused by something done or not done by any other driver or the owner of the vehicle, or of any other vehicle involved. Each driver may propound a claim and the entitlement of each, by operation of subsections 7B(1) and (2), is subject to section 7E. • Contrary to the earlier interlocutory decision of the Supreme Court in Syed v Crumpton  NSWSC 500, an Writen by Carl Newton – Senior Associate On 12 August 2011 Mr Melenewycz was injured when the motorcycle he was riding collided with a kangaroo on an unsealed road in rural New South Wales. 1 Whitfield & Anor HCASL25 2 NSWCA235 Assured 17 There was no suggestion that the owner of the motorcycle (Mr Whitfield) had caused or contributed to the accident by any relevant use or operation of the vehicle. Rather, damages were claimed on the basis that the accident was blameless and that the injury was deemed, by section 7B(1) of the Motor Accidents Compensation Act 1999 (‘Act’) to have been caused by the fault of the owner of the motorcycle in the use or operation of the vehicle. At first instance, His Honour Justice Hamill found that the accident was ‘blameless’, that the deeming provision was engaged, and that section 7E did not operate to deny the plaintiff’s entitlement to recover damages. The defendants appealed and, on 31 August 2016, the Court of Appeal comprising Justices Meagher, Simpson and Sackville) found that: owner-driver in a single vehicle accident cannot rely on the ‘blameless accident’ provisions to recover damages from his CTP insurer. Section 7B deems fault for the purposes of a claim which depends on the injured party establishing liability under the common law. It does not deem liability. Under the common law a driver cannot have a claim in negligence against him or herself. Circumstances/Background On 12 August 2011 Mr Melenewycz was injured when the motorcycle he was riding collided with a kangaroo on an unsealed road in rural New South Wales. He brought proceedings in the Supreme Court of NSW against the owner of the motorcycle and the third-party insurer. • Section 7B(1) deems fault on the part of the owner or driver (or both) only if their use or operation was use or operation involved in the motor accident that caused the injury or death. As there was no causally related use or operation of the motorcycle by the owner, section 7B did not deem him to have been at fault. • Although not arising in this case, section 7E is capable of applying where there is only one, or more than one, motor vehicle involved in the motor accident which is said to be ‘blameless’ His Honour Justice Meagher (with whom Justice Simpson and Justice Sackville AJA agreed) noted the reasoning of Justice McHugh in Allianz Australia Insurance Limited v GSF Australia Pty Ltd  HCA 26, His Honour noted that the definition of injury in section 3 (as it then was) 18 MOTOR emphasised ‘cause’ to be the key factor governing the entitlement to compensation. Following the 2006 amendments, the references to the fault of the owner or driver were removed from each of the definitions of ‘injury’ and ‘motor accident’. Fault was instead found within section 3A and the definition of ‘claim’ within section 3. His Honour noted that, ‘the deeming worked by section 7B(1) is expressed to apply ‘for the purposes of and in connection with any claim for damages in respect of the death or injury’. Such a ‘claim’ (section 3) might be made against the owner or driver or both, depending on whether it can be established against one or the other or both of them, that there was fault in their use or operation of the vehicle and that fault caused the death or injury’. His Honour went on to find that, as there was no causally related use or operation of the motorcycle by the owner, section 7B did not deem him to have been at fault. Mr Melenewycz applied for special leave to appeal however this was refused by the High Court of Australia on 9 February 2017, on the basis that there was no reason to doubt the correctness of the decision of the Court of Appeal. Implications The High Court’s dismissal of the special leave application confirms the restrictive approach on this issue adopted by the Court of Appeal. A non-owner driver in a single vehicle accident such as in this case must establish a causal relationship between the owner’s use or operation of the vehicle and the accident in order to rely on the ‘blameless accident’ provisions to deem fault on the part of the owner. We consider that it will be extremely rare for such circumstances to arise but these may theoretically involve a situation in which a driver is injured due to sudden mechanical failure in circumstances where the owner has properly maintained the vehicle and there is no negligence or other tort on behalf of any repairer or vehicle/parts manufacturer. As has been the case since the Court of Appeal’s decision in August 2016, CTP insurers should review liability decisions in all single vehicle blameless motor accident claims to ensure that appropriate decisions have been made, and issue such liability notices as are appropriate. Where claims have been made against the owner by the driver, particulars should be sought as to the basis on which it is alleged that the owner’s use or operation of the vehicle caused or contributed to the motor accident such as to engage the operation of section 7B(1) of the Act. A non-owner driver in a single vehicle accident such as in this case must establish a causal relationship between the owner’s use or operation of the vehicle and the accident in order to rely on the ‘blameless accident’ provisions to deem fault on the part of the owner. Assured 19 Crash for cash – the rise of inflated insurance claims S trike Force Raven’s continuing charges with respect to CTP insurance fraud are an important reminder to all insurers to remain vigilant in detecting bad faith claims. The simple rear end collision can provide significant rewards to lawyers, claimants and health providers and the recent charges in NSW suggest that fraud is alive and well. Strike Force Raven, the NSW Police CTP Fraud task force have so far laid 160 charges in relation to $11 million in claims. The Investigation is ongoing. Since 2013, there has been an explosion of claims in South West Sydney compared to the rest of NSW and many of those claims relate to psychiatric claims for children. Insurers should treat psychiatric claims for children under two with real caution as children generally can’t recall events before that age. Detectives from Strike Force Raven recently arrested a solicitor who allegedly gave advice to members of the syndicate. Sydney based solicitor, Mr Marcel Joukhador, was charged with five counts of fraud and directing a criminal group. Mr Joukhador is currently on bail and is no longer able to have any contact with his former practice. Two allied health professionals have also been arrested, faced with similar charges. It is alleged that Mr Mohammad Ali Mahmoud Sallam submitted fraudulent bills for physiotherapy consultations to a NSW CTP insurance company. Mr Sallam is also alleged to have trained Claimant’s in how to avoid ‘being caught out by Insurer’s Doctors’ and to have charged $2,000.00 for initial consultations. The experience in Australia seems to mirror the experience in the UK where Claims Management Companies (often referred to as Claim Farmers) have been regulated since 2007. In 2013, law firms in the UK were banned from paying referral fees to Claims Management Companies and it seems that this type of activity increased in Australia after that change. Two attorneys in South Florida recently pled guilty to auto insurance fraud. Media reports suggest the attorneys had paid tow truck drivers to refer accident victims to chiropractic clinics to facilitate injury claims. From 1 December 2017, a new motor accidents scheme that makes recovering compensation for minor soft tissue claims difficult will come into effect in NSW. CTP Insurers in other states should be vigilant as it is anticipated that fraudsters will focus on other states where it is still possible to recover compensation for minor injuries. Two attorneys in South Florida recently pled guilty to auto insurance fraud. Media reports suggest the attorneys had paid tow truck drivers to refer accident victims to chiropractic clinics to facilitate injury claims. Writen by Courtney Daunt – Lawyer smarterlaw.com.au If you want same old, same old – we are not your firm.