Proposed changes to the Motor Accident Injuries Act – what you need to know

Following the recommendation of Justice Fagan in AAI Limited v Singh[1] the Motor Accidents and Workers Compensation Legislation Amendment Bill 2021 was tabled on 23 June 2021.

Key Points:

  • Statutory benefits - The proposed amendments make clear that Part 5 dealing with ‘no fault accidents’ does not apply to a statutory benefit claim. The changes confirm that an insurer cannot cease payment of statutory benefits unless the injured person is wholly or mostly at fault (and sustained a non-minor injury). 
  • Common Law Damages - The proposed amendments do not address the ambiguity inherent in the ‘no fault accident’ provisions. 
  • Recovery - The amendments bar insurers from recovering statutory benefits in response to a no-fault accident from the person/entity at fault.

Background

No fault accidents and statutory benefits

In Singh the Court was asked to consider the application of the no fault accident provisions to statutory benefit claims.

Mr Singh was injured when the prime mover he was driving, rolled over due to a third party failing to load the trailer properly.

The Insurer submitted that Part 5 of the Motor Accident Injuries Act 2017 (MAIA) deemed fault in the accident to the injured person, so that he was disentitled from statutory benefits beyond 26 weeks.

Justice Fagan did not accept that Part 5 deemed the injured person at fault for the purpose of Part 3

Justice Fagan determined that sections 3.11 and 3.28 allowed an Insurer to cease statutory benefit payments when, and only when:

  1. the motor accident was caused wholly or mostly by the fault of the injured person, or
  2. the injured person sustained only minor injuries.

As the injured person was not wholly or mostly at fault, the insurer could not cease statutory benefits after 26 weeks.

Justice Fagan explained that Part 3 was sufficient to provide for entitlement to statutory benefits and to identify the insurer responsible for them. There was no need for the provisions of Part 5 to deal with statutory benefits, at all.

In coming to this determination, Justice Fagan described the reasons as “a path through the labyrinth of Parts 3 and 5.”

He warned, “Amendment will be necessary if a spate of litigation generated by the obscurities of these provisions is to be avoided”.

Proposed amendments to Part 5

Statutory benefits

By removing references to ‘statutory benefits’ from Part 5 it is clear the no-fault accident provisions do not apply to statutory benefit claims.
 
Evidentiary onus
 
Currently, section 5.3(2) provides that a declaration from the injured person that the accident was a no-fault accident was evidence of the fact. This placed the evidentiary burden on the insurer to prove there was no other cause of the accident. This was difficult, especially in circumstances where the injured person was the only person at the scene.
 
The removal of the section is likely to mean that more injured persons will be proven to be disentitled to statutory benefits at 26 weeks.

Common Law Damages

The proposed amendments to 5.6 are reproduced below (from (2)):
 
“5.6 Recovery of contribution to damages from person actually at fault (cf s 7G MACA)
 
A person whose liability for damages in respect of the death of or injury to a person results from the person being deemed under this Part to be a person whose fault caused the death or injury is entitled to recover contribution in respect of that liability from a person (whether or not the driver of a motor vehicle) whose fault actually caused the death or injury.
 
(2) To avoid doubt, this section is intended to operate when a person is deemed to be the person at fault for causing a death or injury occasioned by a motor accident even though the accident itself is a no-fault motor accident.

Note - The definition of no-fault motor accident in section 5.1 is focused on the fault for causing a motor accident rather than the fault for causing death or injury occasioned by the accident”.

 
The first part is attempting to reconcile the conflict identified by Justice Fagan. At Paragraph 22 of his Judgement, Justice Fagan explained he could not reconcile the two sections, in particular:

  1. Section 5.1 provided the definition of a no fault accident,“ [a] no-fault motor accident means a motor accident in the State not caused by the fault of the owner or driver of any motor vehicle involved in the accident in the use or operation of the vehicle and not caused by the fault of any other person.”
  2. ​Section 5.6 however provides for the recovery from a person actually at fault.

Unfortunately, proposed section 5.6(2) does little to ‘avoid doubt’. Parliament has not resolved the ambiguity of when the no-fault provisions apply.

Recovery
 
The proposed amendments to part 5.2 and 5.6 prevent the recovery of statutory benefits.
 
Part 5.2 deems the injury to have been caused by the owner or driver of the motor vehicle in the use and operation of the vehicle.
 
Part 5.6, as it currently stands, provides for the right of recovery of both statutory benefits and damages from the person whose fault actually caused the death or injury.
 
By removing the reference to ‘statutory benefits’, recovery can only be made for common law damages.
 
Using Mr Singh’s case as an example;

  1. Mr Singh was injured when the truck he was driving overturned. This accident was caused by the unsafe loading of the container, not through any fault of Mr Singh.  ​
  2. As Mr Singh was not wholly or mostly at fault, his was entitled to receive statutory benefits beyond 26 weeks. Those payments continue.
  3. There is nothing then preventing Mr Singh from pursuing the persons who failed to properly load the truck. 

Notwithstanding, the Insurer must continue playing statutory benefits. The Insurer also has no avenue to seek recovery of the statutory benefits paid from the persons who failed to properly load the truck.  

Do the amendments clarify Parliament’s intention?

In short, partially.

By removing reference to statutory benefits from Part 5 there is now a clear distinction between Part 3 (relating to statutory benefits) and Part 5 (not addressing statutory benefits in any way).

The amendments make Parliament’s intentions clear, statutory benefits continue beyond 26 weeks in no fault accidents.

Unfortunately, Parliament did not address the ambiguity surrounding a plaintiff’s contribution to a no-fault accident, and how this affects an entitlement to damages. These have been grandfathered from the previous act.

The evidentiary burden of proving that an accident was a no-fault accident has moved from the insurer to the injured person.

Post by Hicksons Partner, Naomi Tancred, and Special Counsel, Laura D'Alessandri.


[1] [2019] NSWSC 1300 (27 September 2019)

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