Moss v Insurance Australia Limited [2004] FCA 1636

FEDERAL COURT OF AUSTRALIA

Moss v Insurance Australia Limited [2004] FCA 1636

TRADE PRACTICES– unconscionable conduct under general law – where liability arising from motor vehicle accident resolved by settlement – whether applicant suffered from special disadvantage in negotiating settlement – whether threats made in negotiation of settlement Trade Practices Act 1974 (Cth) s 51AA Social Security Act 1991 (Cth) Parts 3.1, 5.1 Australian Competition and Consumer Commission v Berbatis (2003) 214 CLR 51 followed Australian Competition and Consumer Commission v Samson Holdings Pty Limited (2002) 117 FCR 301 referred to Henderson v Amadio Pty Limited (1995) 140 ALR 391 referred to Louth v Diprose (1992) 175 CLR 621 referred to Mann v Carnell (1999) 201 CLR 1 referred to WILLIAM WAYNE MOSS v INSURANCE AUSTRALIA LIMITED (FORMERLY NRMA INSURANCE LIMITED) N 664 OF 2003 JACOBSON J 14 DECEMBER 2004 SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N 664 OF 2003

BETWEEN: WILLIAM WAYNE MOSS

APPLICANT

AND: INSURANCE AUSTRALIA LIMITED

(FORMERLY NRMA INSURANCE LIMITED)

RESPONDENT

JUDGE: JACOBSON J

DATE OF ORDER: 14 DECEMBER 2004

WHERE MADE: SYDNEY

THE COURT ORDERS THAT: 1. The application be dismissed. 2. The applicant pay the respondent's costs of the proceedings. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N 664 of 2003

BETWEEN: WILLIAM WAYNE MOSS

APPLICANT

AND: INSURANCE AUSTRALIA LIMITED

(FORMERLY NRMA INSURANCE LIMITED)

RESPONDENT

JUDGE: JACOBSON J

DATE: 14 DECEMBER 2004

PLACE: SYDNEY

REASONS FOR JUDGMENT Introduction 1 The applicant ('Mr Moss') was involved in a motor vehicle accident on 17 February 1999. After the accident he complained of injuries to the neck, shoulder and hip. The respondent ('NRMA') was the compulsory third party insurer of the vehicle which was nominated as being at fault in the accident. 2 In July 1999 Mr Moss's then solicitor served a claim on NRMA. In September 1999, NRMA admitted liability. 3 Under the Motor Accidents Act 1988 (NSW),NRMA had a statutory duty to endeavour to resolve Mr Moss's claim by settlement, or otherwise, as expeditiously as possible. The Motor Accidents Compensation Act 1999 (NSW), which contains similar provisions, did not apply because the accident occurred before it came into effect. 4 In January 2000, Mr Moss offered to settle his claim for $150,000. Over the following months Mr Moss put a variety of settlement offers to NRMA. The claim was eventually settled on 16 June 2000 for $10,943.00. 5 In these proceedings Mr Moss claims that the settlement was procured by unconscionable conduct in breach of s 51AA of the Trade Practices Act 1974 (Cth). Mr Moss appeared before me in person but his statement of claim was drafted by a barrister as a consequence of an order for legal representation made under O 80 of the Federal Court Rules on 20 November 2003. The order for legal representation was limited to the preparation and filing of the statement of claim. 6 The substance of the statement of claim is that Mr Moss's will was overborne by threats made by NRMA on 5 June 2000 and 16 June 2000 to, respectively, Mr Moss and a solicitor who was, on 16 June 2000, representing Mr Moss for the limited purpose of seeking to improve on a settlement offer that had been made by NRMA. 7 The threats that are alleged to have been made were that NRMA would disclose in any court proceedings between the parties information said to have been obtained by the NRMA, illegally, from Centrelink. The information was that Mr Moss owed the sum of approximately $32,000 to the Commonwealth under the Social Security Act 1991 (Cth) ('the Social Security Act') and that Centrelink was proposing to garnishee any settlement funds obtained by Mr Moss in partial satisfaction of the debt. 8 The threats are alleged to have been made by Mr Sean Burns ('Mr Burns'), an Assistant Claims Manager of NRMA. Mr Burns denies making the threats. The solicitor to whom the threat is alleged to have been made on 16 June 2000 was not called by Mr Moss and there was no admissible evidence of any threat made to him. 9 The statement of claim also pleads that Mr Moss suffered from a special disadvantage by reason of, inter alia, his impecuniosity and lack of education and that NRMA took advantage of Mr Moss's position by illegally obtaining information about his Social Security debt from Centrelink and using the information to overbear his will by illegitimate threats of disclosure of the information. 10 Mr Moss affirmed four affidavits and he was cross-examined by counsel for NRMA. 11 Mr Burns swore an affidavit. So too did Mr Richard Najdzion ('Mr Najdzion') who is an Assistant Claims Manager with NRMA. Mr Najdzion was responsible for the day to day management of Mr Moss's insurance claim. Mr Moss cross-examined Mr Burns and Mr Najdzion. 12 There was extensive documentary evidence of the processing and settlement of Mr Moss's claim. There was also documentary evidence of Mr Moss's dealings with Centrelink and of his communications with solicitors who, from time to time, either represented him or were consulted by him about his claims against NRMA. No claim of privilege was, or could have been made, in respect of these communications with the solicitors; see Mann v Carnell (1999) 201 CLR 1 at [28] - [29]. 13 I will refer to the documents in some detail. The principal points which emerge from the documents are:- * Mr Burns' file note of a conversation with Mr Moss of 31 May 2000 records that Mr Moss requested NRMA to do a search with Centrelink and that he would consider NRMA's then current offer of $10,000 if he did not have to pay any money to Centrelink. * Mr Moss was represented by, or consulted, four different firms of solicitors. All of them told him that his expectations of the value of his claim were unrealistic. * Mr Moss told all the solicitors of his Social Security debt and at least two of them told him it could be used against him on credit by NRMA if the claim went to a hearing. * One of the solicitors, Mr Hall-Johnston, spoke to Mr Burns on 16 June 2000 in an unsuccessful attempt to negotiate a settlement in excess of $10,000. 14 The communications between NRMA and Centrelink must be understood in light of certain provisions of the Social Security Act. These provisions impose personal liability on the insurer for a Social Security debt owed by a claimant in the event that the insurer pays a claim without debiting the settlement funds and making payment to Centrelink. NRMA therefore has a practice of notifying Centrelink about settlements in order to protect itself against a possible double payment. I do not propose to set out the legislation. The relevant provisions are contained in Parts 3.14 and 5.1 of the Social Security Act. The principal sections are ss 1182, 1184, 1184G, 1222, 1223(1), 1230C(1) and 1233.