New South Wales Supreme Court CITATION : Australian Associated Motor Insurers Ltd v Cassidy & 2 Ors [2009] NSWSC 804 HEARING DATE(S) : 3 April 2009 JUDGMENT DATE : 31 July 2009 JUDGMENT OF : Fullerton J DECISION : 1. The plaintiff's summons is dismissed. 2. No order as to costs. CATCHWORDS : ADMINISTRATIVE LAW - Motor Accidents Compensation Act - claims resolution procedure - application for exemption - admission or denial of liability - withdrawal of an admission - amended notice - insurer's statutory duties - effect of s 81 notice - damages LEGISLATION CITED : Motor Accidents Compensation Act 1999 Uniform Civil Procedure Rules Paice v Hill [2009] NSWCA 156 CASES CITED : QBE Insurance v Motor Accidents Authority [2008] NSWSC 434 The Nominal Defendant v Gabriel & Anor [2007] NSWCA 52; 71 NSWLR 150 Australian Associated Motor Insurers Ltd (Plaintiff) PARTIES : Belinda Cassidy (1st Defendant) Motor Accidents Authority of New South Wales (2nd Defendant) Naeem Tariq Raja (3rd Defendant) FILE NUMBER(S) : SC 2008/30115 COUNSEL : B Gross QC (Plaintiff) A Mitchelmore (2nd Defendant) SOLICITORS : McCourts Solicitors (Plaintiff) Crown Solicitor (2nd Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ADMINISTRATIVE LAW LIST FULLERTON J 31 JULY 2009 2008/30115 AUSTRALIAN ASSOCIATED MOTOR INSURERS LIMITED v BELINDA CASSIDY & 2 ORS JUDGMENT 1 HER HONOUR: By summons filed 15 September 2008 the plaintiff insurer, Australian Associated Motor Insurers Limited ("AAMI"), challenges the decision of the PCA, the Principal Claims Assessor of the second defendant, the Motor Accidents Authority of New South Wales ("the Authority"), refusing an application to exempt the third defendant's claim for damages from assessment under Part 4.4 of the Motor Accidents Compensation Act 1999 ("the Act"). 2 The relief sought includes orders either quashing the decision or, in the alternative, setting it aside with a declaration that the claim be exempt from assessment under the Act and requiring the PCA to issue a certificate of exemption to that effect. Further in the alternative, the plaintiffs seek an order remitting the application for exemption to the PCA for determination according to law. 3 The PCA filed a submitting appearance. The second defendant also filed a submitting appearance. However, in discharge of its statutory responsibilities under the Act to monitor the operation of the Motor Accidents Scheme and to advise the Minister as to its administrative efficiency and effectiveness, the second defendant appeared at the hearing and sought leave pursuant to r 6.11(2) of the Uniform Civil Procedure Rules ("UCPR") to permit it to advance submissions concerning the construction and operation of those sections of the Act that are the subject of review in these proceedings. The plaintiff did not object to leave being granted. 4 There was no appearance by the third defendant. The plaintiff sought orders under r 10.1.4(3) of the UCPR that the summons and supporting affidavit be deemed to have been served on the third defendant to enable the summons to be heard in his absence. Upon examination of the court file I noted that the third defendant appeared in person when the proceedings commenced in this Court in September 2008. He has not however participated in the proceedings since 15 September 2008 despite concerted efforts to make contact with him. I also noted that although the effect of the relief the plaintiff seeks is that the third defendant's claim for damages will be diverted from the bureaucratic process of assessment, it was the third defendant who originally lodged the application for exemption with the Authority after lodging a claim for assessment of damages in accordance with the scheme provided for in Part 4.3 of the Act in August 2007. There is nothing on the file to indicate that the position of the third defendant has altered since the application for exemption was lodged. For this reason, together with the fact that the plaintiff does not seek an order for costs against the third defendant in these proceedings, I was satisfied that it was appropriate that the matter proceed in his absence and made orders accordingly. The history of the third defendant's claim for damages 5 By reference to a police report dated 12 January 2005 the accident giving rise to the third defendant's claim for damages occurred in the following circumstances: (a) On 8 November 2004 a Commodore station wagon driven by the third defendant collided with the rear of a Mazda sedan driven by Jacqueline Elizabeth Hutson (Ms Hutson) at which time a third driver, Mr Ye Li collided with the rear of the third defendant's car. (b) The collisions occurred in heavy traffic on a wet road surface on the Ryde Bridge at approximately 6.55am when the traffic in front of Ms Hutson Mazda stopped suddenly. 6 The "Crash Summary Details" in the police report described the two collisions separately. The details concerning the collision between the third defendant's vehicle and the rear of Ms Hutson's vehicle are as follows (I have made some modification to the original report to more readily identify the parties and their vehicles): (a) As Ms Hutson's Mazda stopped she heard the sound of a car skidding behind her and looked in the rear vision mirror and saw the third defendant's Commodore which then hit the rear of her Mazda. (b) There was minor damage to the rear of the Mazda and minor damage to the front of the third defendant's Commodore. Ms Hutson has seen her doctor and a physiotherapist as she has spasms to her back. 7 The details concerning the collision between Mr Li's vehicle and the third defendant's Commodore are as follows (some modification of the original report has also been made): (a) The third defendant was travelling in a north westerly direction on Church Street when his vehicle was involved in a collision with Ms Hutson's Mazda that was travelling in front of his vehicle. (b) Travelling behind the Commodore was Mr Li who was also travelling in a north westerly direction on Church Street. Mr Li was unable to avoid a collision with the third defendant's vehicle. (c) At the time of the collision it was raining and the road was wet. 8 On 13 March 2005 the third defendant completed a Personal Injury Claim in the prescribed form and forwarded it to the plaintiff. The claim contained a diagram of the accident in which all three vehicles were shown. Under the heading "Description of the accident including who you consider at fault and how the accident happened" is the following: "(Mr Li's Corolla) was driving very fast may be over speed limit & could not stop on time & hit behind on my car…" (sic) 9 The claim went on to nominate Mr Li (the insured driver) as the person the third defendant regarded as the party at fault. 10 On 29 April 2005 the plaintiff forwarded a letter to the third defendant under the hand of the Client Manager in the following terms: "Dear Mr Raja, Re : Your Motor Vehicle Accident – Section 81 Notice Claim Number : 27974/02/SS At AAMI we have looked at the circumstances surrounding the motor vehicle accident that occurred on 8 November 2004. As a result, we consider the accident occurred through the fault of our insured driver . This means that AAMI will pay for all your reasonable medical expenses in full. Please send in any original accounts or receipts that need reimbursement. If you would like to discuss anything mentioned in this letter or your claim in general, please do not hesitate to contact me." (emphasis added) 11 Consistent with its stated intentions in the correspondence of 29 April the plaintiff paid various medical expenses incurred by the third defendant and continued to manage the administrative aspects of his claim. 12 On 15 January 2007, solicitors for the plaintiff wrote to the third defendant's solicitors as follows: "We note that our insurer client by letter of 29 April 2005 wrote to the claimant advising that: 'We consider that the accident occurred through the fault of our insured driver.' We have now received instructions in this matter. We have had made available to us a copy of the Police Report. The Police Report indicates quite clearly that your client's vehicle firstly collided with the rear of a vehicle driven by Ms Jacqueline Hutson. Our insured's vehicle then collided with the rear of your client's vehicle. That collision occurred by reason of your client's negligence in causing the first collision . We have advised our insurer client that liability should be denied . We do not presently have instructions but wish to give you as much notice as possible of the possibility of liability being denied in this matter. As soon as we have our client's instructions we shall let you know." (emphasis added) 13 Between January 2007 and June 2007 the plaintiff's solicitors continued to correspond with the solicitors for the third defendant concerning various aspects of his claim including an assessment of the degree to which he was permanently impaired. 14 On 20 June 2007 the plaintiff's solicitors forwarded a letter in the following terms: "…We confirm that we now have instructions from our client to withdraw any admission constituted by our client's correspondence dated 29 April 2005 and in particular it should be noted that it is now denied that the subject accident occurred through the fault of our client's insured driver, Mr Li." (emphasis added) 15 On 15 August 2007 the third defendant's solicitors filed an application for his claim to be exempt from assessment under the Act pursuant to s 92(1)(a) of the Act. On 17 September 2007 the plaintiff's solicitors consented to the application. 16 The PCA invited the parties to furnish submissions, in light of the decision of the Court of Appeal in The Nominal Defendant v Gabriel & Anor [2007] NSWCA 52; 71 NSWLR 150. The plaintiff furnished submissions. The third defendant did not. 17 On 29 December 2007 the PCA published her reasons for dismissing the application. Hereinafter she will be referred to as "the PCA". The Principal Claims Assessor's reasons for dismissing the application 18 In its written submissions the plaintiff identified four critical findings in the PCA's decision refusing the application for exemption. I have recast them slightly to reflect the need for some refinement of the issues that occurred in the course of the oral argument and my reading of the PCA's reasons for decision. Three findings are the subject of challenge in the proceedings. Finding (a) The letter dated 29 April 2005 and entitled "Section 81 Notice" was not a complete admission of liability under section 81(1) of the Act, as the letter admitted fault rather than breach of duty of care and did not admit that the claimant had suffered consequential loss and damage. This finding is not challenged. Finding (b) The letter of 29 April 2005 constituted a partial admission of liability under s 81(2) of the Act. Finding (c) Section 81 of the Act is a self-contained provision and operates according to its terms so that an admission of liability by an insurer, whether in whole or in part, cannot be withdrawn and cannot be amended. Finding (d) While a claim remains subject to assessment in the bureaucratic process under Part 4.4 of the Act the insurer is not permitted to deny fault and to seek mandatory exemption from assessment under s 92(1)(a) of the Act. 19 The plaintiff submitted that findings (b), (c) and (d) all involve errors of law. The issues raised by the proceedings in this Court 20 There are two primary issues raised by the challenge to the decision of the PCA. They both concern the construction of s 81 of the Act. " 81 Duty of insurer with respect to admission or denial of liability (1) It is the duty of an insurer to give written notice to the claimant as expeditiously as possible whether the insurer admits or denies liability for the claim, but in any event within 3 months after the claimant gave notice of the claim under section 72. (2) If the insurer admits liability for only part of the claim, the notice is to include details sufficient to ascertain the extent to which liability is admitted. (3) If the insurer fails to comply with this section, the insurer is taken to have given notice to the claimant wholly denying liability for the claim. (4) Nothing in this section prevents an insurer from admitting liability after having given notice denying liability or after having failed to comply with this section. (5) It is a condition of an insurer's licence under Part 7.1 that the insurer must comply with this section." 21 The primary issue raised concerns the extent to which an admission of liability made by an insurer in discharge of its statutory duty to state a position as to liability under s 81(1) of the Act binds that insurer whilst ever the claim for damages is being assessed by the Authority in accordance with the bureaucratic process provided for in Part 4.4 of the Act. This issue involves a consideration of what have been identified as findings (c) and (d) in [18]. The related issue raised by the proceedings concerns the adequacy of the s 81 notice. This involves a consideration of finding (b). 22 Were I persuaded that the PCA was in error in finding that the notice constituted a partial admission of liability, the plaintiff may have been be entitled to the part of relief it seeks on that basis alone without the need for me to consider what I have identified as the primary issue raised in the proceedings given that, were that the case the insurer would have been deemed to have denied liability pursuant to s 81(5) thereby grounding an application for exemption under s 92(1)(b). An order might then have been framed requiring a claims assessor to determine that question. I am not satisfied, however, that error of that kind has been made out. For that reason I propose to consider the primary issue raised in the proceedings first. That issue proceeds on the assumption that the s 81 notice was otherwise effective for statutory purposes, in particular to enable the claim to be referred for assessment under Part 4.4 of the Act. I will give reasons for rejecting the plaintiff's submissions going to the question of the adequacy of the notice later in the judgment. The legislative scheme 23 Where liability is admitted in whole or in part by the issue of a notice under ss 82(1) or (2), statutory duties are imposed on the insurer under ss 82, 83 and 84. Relevantly those sections are as follows: " 82 Duty of insurer to make offer of settlement (1) It is the duty of an insurer to make a reasonable offer of settlement to the claimant (unless the insurer wholly denies liability for the claim): (a) within 1 month after the injury is sufficiently recovered to enable the claim to be quantified, or (b) within 2 months after the claimant has provided to the insurer all relevant particulars about the claim as required by section 85A, whichever is the later. (2) - (5) … (6) The insurer is not entitled to delay the making of an offer of settlement under this section on the ground that any particulars about the claim are insufficient unless the insurer requested further relevant particulars within 2 weeks after the claimant provided particulars. (7) ... 83 Duty of insurer to make hospital, medical and other payments (1) Once liability has been admitted (wholly or in part) or determined (wholly or in part) against the person against whom the claim is made, it is the duty of an insurer to make payments to or on behalf of the claimant in respect of: (a) hospital, medical and pharmaceutical expenses, and (b) rehabilitation expenses, and (c) respite care expenses in respect of a claimant who is seriously injured and in need of constant care over a long term, and (d) attendant care services expenses in respect of a claimant who is seriously injured and in need of constant care over a long term (being services provided by a person with appropriate training to provide those services, but not including services provided by a person who is related to the claimant or any services for which the claimant has not paid and is not liable to pay), as incurred. (2) The duty of an insurer under this section to make payments applies only to the extent to which those payments: (a) are reasonable and necessary in the circumstances, and (b) are properly verified, and (c) relate to the injury caused by the fault of the owner or driver of the motor vehicle to which the third-party policy taken to have been issued by the insurer relates. (2A) - (4) … (5) A payment made under this section to or on behalf of a claimant before the claimant obtains judgment for damages against the defendant is, to the extent of its amount, a defence to proceedings by the claimant against the defendant for damages. (6) …" 24 Section 84 obliges the insurer to meet the rehabilitation needs of the claimant and associated expenses essentially on the same basis as it is obliged to meet the expenses referred to in s 82. Compliance with all three sections is a stipulated condition of the insurer's licence under Part 7.1 of the Act. 25 Part 4.4 of the Act, headed "Claims Assessment and Resolution", prescribes the administrative or bureaucratic procedure for resolving claims. It applies whether the insurer admits or denies liability. The procedure has legislative precedence over curial process by operation of s 108 of the Act. That section precludes a claimant from commencing proceedings in any court of competent jurisdiction unless a certificate of exemption has issued under s 92 or a claims assessor has issued a certificate in respect of the claim under s 94. In the latter case, if liability is denied, the claims assessor is to make an assessment of the issue of liability and an assessment of the amount of damage for that liability. The status of that assessment is then governed by s 95, which provides, in short, that the issue of liability is not binding on either party but the assessment of damages is binding on the insurer if it accepts liability and the claimant accepts the damages in settlement of the claim. 26 The claim the subject of these proceedings has not been assessed under s 94 of the Act because application was made for it to be exempt from assessment under s 92. 27 Section 92 provides that a claim is exempt from assessment under Part 4.4 in one of only two ways: " 92 Claims exempt from assessment (1) A claim is exempt from assessment under this Part if: (a) the claim is of a kind that is exempt under MAA Claims Assessment Guidelines or the regulations, or (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. (2) If a claim is exempt from assessment under this Part, the Principal Claims Assessor must, as soon as practicable, issue the insurer and claimant with a certificate to that effect (enabling court proceedings to be commenced in respect of the claim concerned)." 28 The applicable Motor Accident Authority Claims Assessment Guidelines ("the Guidelines") for the purposes of these proceedings are dated March 2006. They operate to mandatorily exempt a claim from assessment under s 92(1)(a) if the claim involves one or more of the following circumstances: "7.1 For the purpose of section 92(1)(a) the PCA shall issue a certificate of exemption when satisfied that, as at the time of the assessment, the claim involves one or more of the following circumstances: 7.1.1 where the fault of the owner or driver of a motor vehicle in the use or operation of the vehicle is denied by the insurer of that vehicle. 7.1.2 where the fault of the owner or driver of a motor vehicle, in the use or operation of the vehicle, is not denied by the insurer of that vehicle, but the insurer of that vehicle makes an allegation that the claimant was at fault or party at fault and claims a reduction of damages of more than 25%. 7.1.3 the claimant lacks legal capacity. 7.1.4 the person against whom the claim is made is not a licensed or other CTP insurer." 29 Where a party is seeking a determination that a claim is not suitable for assessment under s 92(1)(b) of the Act the Guidelines provide as follows: "7.11 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: 7.11.1 the heads of damage claimed by the claimant and the extent of any agreement by the insurer as to the entitlement to those heads of damage. 7.11.2 whether the claim involves complex legal issues. 7.11.3 whether the claim involves complex factual issues. 7.11.4 whether the claim involves complex issues of quantum or complex issues in the assessment of the amount of the claim including but not limited to major or catastrophic, spinal or brain injury claims. 7.11.5 whether the claimant has been medically assessed and is entitled to noneconomic loss pursuant to section 131 and the claim involves other issues of complexity. 7.11.6 whether the claim involves complex issues of causation in respect of the relationship between the accident, the injuries sustained and disabilities arising from it including but not limited to multiple accidents or preexisting injuries or medical conditions. 7.11.7 whether the insurer is deemed to have denied liability under section 81(3). 7.11.8 whether the claimant or a witness, considered by the assessor to be a material witness, resides outside the jurisdiction. 7.11.9 whether the claimant seeks to proceed against one or more non-CTP parties. 7.11.10 whether the insurer makes an allegation that a person has made a false or misleading statement within the meaning of section 117." 30 Although the Act does not specify any statutory criterion against which a determination of the suitability of a claim for assessment at the preliminary stage under s 92(1)(b) is to be made, I note that s 106(1) of the Act operates to give the Guidelines the force of law as if they are delegated legislation. The Guidelines may not however be used for the purposes of construing the Act (see Paice v Hill [2009] NSWCA 156 per Ipp JA at [60] and Allsop P at [1]-[3]). 31 Clause 7.1 of the Guidelines provides that a certificate of exemption under s 92(1)(a) "shall" issue where the claim involves one or more of the specified circumstances without any assessment of the claim. This is to be contrasted with an application for a claim to be exempt because it is not suitable for assessment having regard to the circumstances of the claim which include those set out under s 92(1)(b) in cl 7.11. These circumstances are not exhaustive. The assessor's determination that a claim is not suitable for assessment (thereby enabling court proceedings to be commenced) is subject to the approval of the Principal Claims Assessor. 32 Clearly enough the Guidelines oblige the claims assessor engaged in the preliminary assessment (and if appropriate the Principal Claims Assessor) to have regard to the circumstances of the claim specified in cl 7.11, and any other circumstances of relevance in a particular case. I am not persuaded however that should a particular circumstance (or more than one circumstance) be present the claims assessor is obliged to find that a claim is unsuitable for assessment. The discretion that responses in the assessor is not so confined. The plaintiff submitted that in circumstances where an insurer is deemed to have denied liability, either because the s 81 notice was defective or the insurer had otherwise failed to comply with its duty to state a position on liability, the discretion to exempt under cl 7.11.7 converts into a mandatory exemption because of what is said to be the parallel operation of cl 7.1.1 of the Guidelines. This construction is not only in conflict with the insurer's statutory duty under s 81 to issue a notice in a timely fashion, which is itself a reflection of the insurer's general duty in s 80 to endeavour to resolve a claim by settlement or otherwise as justly and expeditiously as possible, but the fact that a deemed denial of liability is specified as a circumstance that may warrant the claim being exempt from assessment would seem to be contrary to the legislative intention that only a denial of liability in compliance with the insurer's duty to state a position at the outset, necessitates that the claim be exempt. In any event, because I am not satisfied that the notice in this case was defective such as to invoke the deeming provision, or that it should be construed as a denial of liability, the question does not need to be resolved. 33 In the present case the application for exemption made by the third defendant was for mandatory exemption under s 92(1)(a), on the basis that his claim was wholly denied by the insurer following notification in its letter of June 2007 that its previous admission of liability was withdrawn. It is not clear from the evidence whether from that date payments to the third defendant ceased or, for that matter what attitude the plaintiff insurer took to the fact that payments had apparently been made under the claim over a number of years. 34 Despite the fact that the insurer consented to the application being granted the PCA refused the application. She was satisfied that the issue of the s 81 notice admitting liability effectively locked the plaintiff into a fixed position on the issue of liability such that neither its subsequent withdrawal of the notice nor its retraction of its admission were effective to recast the issue as a denial, the claim being at that time subject to assessment in the bureaucratic process under Part 4.4 of the Act. She also determined that because she was considering the application to exempt the claim from assessment under s 92(1)(a) of the Act, and not after the process of preliminary assessment required under s 92(1)(b), she had no power to consider the adequacy of the insurer's explanation for its amended position. 35 The plaintiff submitted that no particular importance attaches to the fact that the application for exemption was made to the PCA under s 92(1)(a), because she was obliged to consider the application as an application for exemption under s 92(1)(b), or more precisely, refer it for preliminary assessment by a claims officer under that section in any event. I was invited not to discriminate between any presumed seniority of the Principal Claims Assessor and other claims assessors or their differing obligations under the Act or to approach an analysis of the operation of s 92 mechanistically in circumstances where it is simply serendipitous whether a claims assessor or the Principal Claims Assessor is the officer considering an application for exemption. For that submission to have any force the administrative functioning of the Authority pursuant to Part 4.4 would need to be amply demonstrated by evidence in the usual way. There was no evidence of this kind relied on in the proceedings. I regard the application for exemption as confined to an application brought under s 92(1)(a) only. 36 In ultimately disposing of the proceedings before me I regard it is as significant that in her reasons for decision the PCA expressly reserved the question whether to the extent that a claim may involve false or misleading information it might be exempt under s 92(1)(b) on the grounds that it is not suitable for assessment under the Act for that reason. I can readily see that where, for example, an insurer contends that liability was admitted on the basis of deliberately false information being included in the claim that would likely be a matter best resolved by litigation and a certificate of exemption would issue. If on the other hand the information upon which liability was admitted by an insurer is revealed later to have been simply misleading, whether as a result of error or inadvertence on the part of the claimant or because the insurer's investigations were inadequate (as seems to be the case here), the claims assessor may nevertheless take the view that the claim is suitable for assessment under the Act either because the misleading information is thought unlikely to be material to the issue of liability, assuming it to be disputed or, because for other reasons the claim is considered appropriate for assessment despite the misleading information. These are matters the Parliament has left for the discretion of officers charged with the statutory duties of administering the Act under Division 3 of Part 4.4. It is also consistent with the legislative scheme embodied in the Act that, by its structure and operation, gives precedence to a non-curial approach to claims resolution. The decision of the Court of Appeal in The Nominal Defendant v Gabriel 37 In her reasons for decision the PCA referred to the majority judgment of the Court of Appeal in The Nominal Defendant v Gabriel as providing some guidance on the effect of an admission of liability under s 81 when a claim is being assessed in the bureaucratic process, a question which was referred to but which the majority judgments of Campbell and Hodgson JJA left unresolved. In the proceedings before me both the plaintiff and the Authority rely on the decision in The Nominal Defendant v Gabriel in support of the construction of the Act for which they each contend. The Court of Appeal's decision has also been the subject of consideration in QBE Insurance v Motor Accidents Authority [2008] NSWSC 434. 38 In The Nominal Defendant v Gabriel the Court was concerned with whether an admission of liability in a s 81 notice prevented an insurer from denying liability in court proceedings brought to litigate a claim after the claim has been granted exemption from the bureaucratic process. Campbell and Hodgson JJA were satisfied that it did not. Basten JA was of the contrary view and published a dissenting judgment. The circumstances in which the claim in The Nominal Defendant v Gabriel had been granted exemption from the operation of the Act were apparently uncontroversial. Campbell JA simply noted that the Principal Claims Assessor in that case found that the claim was unsuitable for assessment under s 92(1)(b) without detailing the reason for that decision. It was clear however that it was only after a claims assessor had determined that the claim was unsuitable for assessment that the insurer's solicitor forwarded to the claimant a document headed "Amended Section 81 Notice" in which breach of duty was denied. Accordingly, while one of the questions raised on the appeal concerned the legal or evidential effect of the "amended notice" in proceedings brought to litigate the claim, the effect of a so-called "amended notice" where a claim is subject to administrative assessment under the Act did not arise. At [167] Campbell JA was at pains to make it clear that the question whether an admission of liability made by an insurer can ever be departed from by withdrawal or amendment while the claim is subject to the bureaucratic process of assessment and, in particular, whether an admission made in error could be grounds for the issue of a certificate of exemption under s 92, did not arise for determination on the appeal. 39 In resolving the questions that did present for determination Campbell JA was satisfied that despite there being no provision in the Act for a notice under s 81 to be withdrawn (whether for the purposes of the law of evidence or otherwise) nothing in the Act restricted or limited the insurer's common law right to deny liability if the claim was litigated as contemplated in accordance with Part 4.5 of the Act. Hodgson JA was of the same view. 40 At [167] Campbell JA said: "The "amended section 81 notice" served in the present case does not have any effect pursuant to the MAC Act , for the simple reason that the MAC Act has no provision for any amended section 81 notice that retracts an admission of liability previously made in a section 81 notice. For reasons already given, it is not open to an insurer to "withdraw" a section 81 notice in the sense that it ceases to be an admission for the purposes of the law of evidence. Because it is not made in court proceedings, in my respectful view, no question arises of whether, if an adequate explanation was forthcoming, an admission in a section 81 notice could be withdrawn in the same way that a formal admission made in court proceedings can sometimes be withdrawn." 41 His Honour also observed at [142] that the Act does not confer on a s 81 notice any consequences other than those provided for in the Act itself and that this also weighed in favour of an admission of liability in a s 81 notice not binding an insurer in curial proceedings. 42 His Honour went on to observe at [143] that there is no provision in either s 81 or elsewhere in the Act for an insurer to withdraw or even to amend an admission whereas, by contrast, s 81(4) contemplates that an insurer can convert a denial of liability into an admission of liability. Despite the fact that his Honour was concerned with the effect of the purported withdrawal of a notice issued by the insurers in circumstances where the proceedings had already been exempt from assessment under the Act, I am of the view that the fact that the Act does not make express provision for withdrawal or amendment of a notice is in keeping with the significant and ongoing statutory consequence of liability being admitted. As Campbell JA observed at [173], s 83 imposes an obligation on an insurer to pay medical and other expenses that is purely of statutory origin since it does not depend upon the fault of the person against whom the claim is made, a fundamental feature of liability at common law. 43 As I have earlier identified, the primary issue in the proceedings before me concerned the question of what was intended to be the effect of an admission as to liability before curial proceedings were commenced and, in that connection, what is the effect of a purported withdrawal at that time. 44 The plaintiff submitted that the PCA's stated reliance upon the observations of Campbell JA at [167] extracted above in support of her decision that a s 81 notice cannot be withdrawn and that an admission once made is irrevocable, exposes a misunderstanding of his Honour's reasoning, and that on closer analysis, his Honour was not stating that s 81 has the effect of rendering a notice issued under the section irrevocable or irreversible for all purposes. Rather his Honour was concerned to point out that if a s 81 notice contains an admission of liability, that admission continues to have effect as an out of court admission for the law of evidence (and in that way provides some proof for the claimant's case on liability in court proceedings) subject to the insurer calling evidence as to the circumstances in which the admission was made and establishing, by that means, the true position. I accept that his Honour's remarks should be read in that way. It does not follow however that the PCA's decision was vitiated by error if her conclusion as to the intended effect of an admission of liability in a s 81 notice is otherwise correct. 45 The Authority submitted the fact that there is no provision to withdraw or amend a notice is consistent with the underlying statutory objectives of the scheme as they are both expressly stated in s 5(1) and inherent in the scheme itself. " 5 Objects of Act (1) The objects of this Act are as follows: (a) to encourage early and appropriate treatment and rehabilitation to achieve optimum recovery from injuries sustained in motor accidents, and to provide appropriately for the future needs of those with ongoing disabilities, (b) to provide compensation for compensable injuries sustained in motor accidents, and to encourage the early resolution of compensation claims, (c) to promote competition in the setting of premiums for third-party policies, and to provide the Authority with a prudential role to ensure against market failure, (d) to keep premiums affordable, recognising that third-party bodily insurance is compulsory for all owners of motor vehicles registered in New South Wales, (e) to keep premiums affordable, in particular, by limiting the amount of compensation payable for non-economic loss in cases of relatively minor injuries, while preserving principles of full compensation for those with severe injuries involving ongoing impairment and disabilities, (f) to ensure that insurers charge premiums that fully fund their anticipated liability, (g) to deter fraud in connection with compulsory third-party insurance." 46 In this same connection, the Authority also emphasised the significance of an insurer's admission of liability in the assessment process under Part 4.4 given that, by operation of s 89(1), the process applies to any claim whether or not the insurer admits or denies liability. Where an insurer denies liability a claim may be referred for assessment at any time, whereas if an insurer admits liability the claim can only be referred if two months have elapsed since the insurer made an offer of settlement, or the period within which the insurer was required to make an offer has expired and no offer was made. It was submitted that this legislated approach to resolving claims provides additional support for the irrevocability of an admission of liability in a s 81 notice, endorsing as it does the underlying operation and objects of the scheme, without detracting in any way from the potential weight of a reviewed or revised position on liability being a discretionary consideration where an issuer seeks exemption under s 92(1)(b). The decision in QBE Insurance v Motor Accidents Authority 47 In QBE Insurance v Motor Accidents Authority Associate Justice Harrison was confronted with the same primary issue that I have identified is raised by the present proceedings. (I note that the decision maker in that case is the PCA in the proceedings before me.) Although the circumstances giving rise to the review of her decision by Harrison AsJ were different from this case, the plaintiff did not submit that her Honour's decision should be distinguished for that reason. The plaintiff submitted that her Honour's decision was wrong as a matter of law and should not be followed. 48 In QBE Insurance there was no issue as to the adequacy of the s 81 notice for the purposes of constituting an admission of liability. The claim for exemption in that case was sought because the insurer claimed an increase in the reduction of damages for contributory negligence from 25 per cent, as specified in the original s 81 notice, to 40 per cent after a review of all the available information had been undertaken. As is apparent from the Guidelines (extracted in full at [28] above), cl 7.1.2 provides that a certificate of exemption must issue where an insurer alleges that the claimant was at fault and claims a reduction in damages of more than 25 per cent. In QBE Insurance the Principal Claims Assessor refused to issue the certificate on the same basis as she refused to issue an exemption in the present case, namely that upon issue of a s 81 notice the insurer is irrevocably bound by its terms to the extent that the claim remains subject to the bureaucratic process. 49 After examining the operation of s 81, interpreted in the context of the statutory duties imposed on an insurer under ss 83 and 84, and after taking into account the statutory objectives in ss 5 and 6 of the Act, including, in particular encouraging the early resolution of compensation claims and the early and appropriate treatment and rehabilitation of those who suffer injuries in motor vehicle accidents, Harrison AsJ was persuaded that the decision maker was correct 50 Her Honour referred at some length to the judgment of Campbell JA in setting out the framework and operation of the legislative scheme under the Act but was ultimately persuaded that an admission in a s 81 notice is irrevocable whilst ever the claim remains subject to the bureaucratic process by the analysis given to the question by Basten JA including, in particular, the fact that his Honour was satisfied that s118 operates to avoid injustice where subsequent events disclose that an insurer's admission of liability was unwarranted because of fraud. 51 The plaintiff submitted that since Basten JA was in dissent the decision in QBE Insurance should not be followed. The plaintiff emphasised that his Honour's analysis of the question must be understood in the context of the fact that he was ultimately satisfied that a s 81 admission binds an insurer irrespective of whether the claim is being litigated in court proceedings or assessed in the bureaucratic process and, that since Campbell and Hodgson JJA came to a considered view that a s 81 notice admitting liability can be departed from in curial proceedings, and that this was the only question raised in the proceedings on appeal, that it was open to me to come to a different conclusion to that of Basten JA. While I am not of course bound by his Honour's views I regard his analysis as comprehensive and her Honour's reliance on that analysis, and its application to the question at issue in the proceedings before her, as persuasive. 52 As Harrison AsJ observed at [50] Basten JA provided three reasons why the binding effect of a s 81 notice was consistent with the provisions of the Act and the statutory scheme generally. His Honour pointed out that the first and most immediate reason is the insurer's statutory obligation under ss 83(1) and (2) and s 84 as to which I have already referred. In that regard his Honour was of the view that, subject to s 118, "29…there would appear to be no escape from that payment obligation, once the admission of liability is made. Furthermore, the payments to be made are the full amount of the reasonable and necessary payments and are not limited by the extent to which liability is denied, for example, on the basis of contributory negligence. However, the making of payments under s 83(1) gives rise to a defence, pursuant to s 83(5) which states: (5) A payment made under this section to or on behalf of a claimant before the claimant obtains judgment for damages against the defendant is, to the extent of its amount, a defence to proceedings by the claimant against the defendant for damages. 30 … On the other hand, there is no provision in the MAC Act which would allow the insurer to recover payments in the event that the plaintiff is unsuccessful, or brings no proceedings. In other words, payments of that kind become the responsibility of the insurer if it accepts that its insured is at least partly liable for the damages claimed. 31 Since the liability of the insurer is the most immediate and significant on-going consequence of an admission of liability, the limitation of the circumstances in which such an admission can be withdrawn is itself significant. A purported withdrawal of the admission will not excuse the insurer from continuing liability, nor allow it to recover past payments, absent satisfaction of the circumstances identified in s 118(1)." 53 A second consequence identified by his Honour concerns the impact of a s 81 notice on the bureaucratic process for claims assessment and resolution under Part 4.4 to which I have also referred. His Honour noted at [20] and [21]: "[20] Part 4.4, Div 2 of the MAC Act, headed "Assessment of claims" operates differentially, depending upon whether there has been an admission or denial of liability. Section 81(2) permits an insurer to admit liability "for only part of the claim" but requires it to specify in the notice "the extent to which liability is admitted". The duty of the claims assessor depends upon whether the insurer has "accepted liability", in which case the assessment is limited to the amount of damages, whereas, if the insurer has not accepted liability, the assessment must extend to the issue of liability for the claim: s 94(1). [21] Assuming there are no questions of liability in dispute, the assessment will be limited to the amount of damages payable. The binding effect of s 95 in relation to the result of the assessment is somewhat obscure, and not all ambiguities were resolved in Lee v Yang [2006] NSWCA 214. Nevertheless, a construction which allowed an insurer to limit the possible consequences of the assessment by withdrawing its admission of liability after the assessment was effected, would appear to be inconsistent with the legislative scheme. It would also raise a question as to whether an assessment which did not address issues of liability could give rise to the issue of a certificate under s 94 which would satisfy the requirements of s 108(1)." 54 His Honour went on to say at [37]-[39]: "37 Whilst again providing a negative inference from silence, an inference may also be derived from the terms of s 81(4). As already noted, s 81 imposes a duty on an insurer to make "as expeditiously as possible" an admission or denial of liability by written notice to the claimant. Subsection 81(3) provides that where the insurer fails to give notice in a timely manner, or with adequate detail, "the insurer is taken to have given notice to the claimant wholly denying liability for the claim". The section then provides: (4) Nothing in this section prevents an insurer from admitting liability after having given notice denying liability or after having failed to comply with this section. It is significant that the Parliament has conferred in this section an express power to abandon a denial of liability, but not to withdraw or revoke a notice admitting liability. The fact that the provision is itself directed to possible effects of other parts of the same section may give it a somewhat ambiguous operation. However, when read in combination with s 118, the negative inference forms part of a coherent scheme. 38 A third provision which should be taken into account in this context is the imposition of a duty on the claimant to co-operate with the defendant's insurer, in part to enable "an early assessment of liability" and in part to allow for the insurer to make "an informed offer of settlement": s 85(1). That duty terminates when court proceedings are commenced, but failure to comply with the duty, without reasonable excuse, provides a bar to the commencement of proceedings: s 85(4). Thus an admission of liability results not merely from a potentially uninformed decision of an insurer. It arises in circumstances where both parties are required to cooperate with the insurer. The claimant should not too readily be deprived of the benefit of her statutory duty to cooperate. 39 Overall, these provisions provide a general indication that, at least prior to the commencement of court proceedings, the procedures to be followed are closely regulated by the statute. The inference is readily available that an admission of liability pursuant to s 81(1) cannot be "withdrawn", otherwise than in the sense and in the circumstances provided by s 118." 55 The plaintiff submitted that although the decision in The Nominal Defendant v Gabriel does not dictate that the primary issue raised by the summons is answered in its favour, I would nevertheless find support for the construction of the Act for which it contends from the analysis of the Act and its operation in the judgments of Campbell and Hodgson JJA where their Honours emphasised the primary importance of the insurer's common law rights to defend itself against claims in negligence being protected save only where the Parliament has unambiguously declared otherwise. This, it was submitted, should apply equally where those same rights are engaged and at issue in the process of bureaucratic assessment under the Act. 56 In Paice v Hill [2009] NSWCA 156, a decision of the Court of Appeal published after the hearing before me, the Court was concerned with the operation of s 109 of the Act which prescribes time limitations for the commencement of Court proceedings relating to claims to which the Act applies. For the purpose of calculating the period that had expired since the accident the primary judge determined that time should be suspended to account for a dispute between the claimant and insurer being assessed as provided for in s 96 of the Act and while her application for exemption was being considered under s 92. It was common ground that the plaintiff's claim could not be litigated unless these periods in aggregate were deducted. 57 The Court determined that the primary judge was in error with the added consequence that the action brought by the plaintiff in the District Court was dismissed. 58 Ipp JA was satisfied that the construction of s 109 for which the insurer contended would encourage early resolution of claims with increased pressure on claimants to bring their claims timeously. His Honour also observed at [67] that: "The need to do the necessary investigations at an early stage (and not, as used to be the practice, shortly before the trial) is a basic feature of the scheme of the MACA. Underlying that feature is the belief that costs would be reduced if claims were to be resolved by settlement before the commencement of court proceedings, rather than thereafter. This approach is fundamentally inconsistent with Mr Stone's submission that it would be desirable (and fair) for applications under s 96 to have the effect of suspending the running of time under s 109 so as to avoid the need of claimants to make applications for assessments under s 94 (and to provide full details of their claims as required for s 94 assessments)." 59 His Honour's observations are significant so far as this present case is concerned since it is clear enough that the insurer's failure to properly interrogate the claim at an early stage resulted in an admission of liability it later sought to retract. 60 Finally, and again of significance here, his Honour rejected a submission that the Act should not be construed so as to detract from the claimant's common law rights. He said in that regard: "In my opinion, however, this argument carries little weight in regard to the MACA which is a specific code for dealing with claims arising out of motor accidents and which, by its very nature, involves fundamental changes to the common law rights of the parties involved." 61 The plaintiff also submitted that because the Act does not exhaustively state the circumstances in which liability can be denied by an insurer and, moreover, because on its proper construction the issue of a notice under s 81 is simply in discharge of the insurer's duty to state a position as to liability to enable the claimant to appreciate the insurer's position on the question and, if liability is admitted, to have the claim settled expeditiously and to provide for payment of the medical and other expenses in the meantime, the question of liability should be able to be revisited and restated by the insurer when an application for the claim to be exempt from the bureaucratic process under s 92 is under consideration. The plaintiff submitted that this approach is not in conflict with the objects of the Act encapsulated in s 5 to provide compensation for compensable injuries sustained in motor vehicle accidents and to encourage early resolution of compensation claims. For the reasons I have already discussed, I am not persuaded that the Act admits of this approach. Accordingly, I am not persuaded that the PCA's findings in (b) and (c) in paragraph [18] above disclose error. The related issue raised by the summons 62 On the application for exemption the plaintiff sought, unsuccessfully, to persuade the PCA that the s 81 notice issued in April 2005 was defective and, for that reason, liability was deemed to have been denied. The PCA was satisfied that although the notice was effective to admit liability in part it was nevertheless effective to trigger the operation of the Act locking the insurer into participation in the bureaucratic assessment process from which it could not resile. The plaintiff submitted that irrespective of whether the notice contained only a partial admission of liability unless the notice was effective to constitute an admission of liability for the purposes of the Act, liability was deemed to be denied under s 81(3). I have already considered and rejected the plaintiff's allied submission that were this the case mandatory exemption from the bureaucratic process of assessment as provided for under cl 7.1.1 of the Guidelines should follow. The form of a s 81 notice: the related issue comprehended by finding (d) 63 For reasons that are not apparent neither the Act nor the Regulations prescribe the form of a s 81 notice. This is surprising given that an admission of liability in the notice triggers significant statutory consequences. 64 The minimum requirements of a notice under s 81 was however the subject of discussion in The Nominal Defendant v Gabriel. In her reasons for decision the PCA expressly referred to the judgment of Campbell JA in deciding that the notice in the present case was valid and effective as a partial admission of liability under s 81(2). The plaintiff submitted that the PCA misinterpreted his Honour's remarks and that the notice was not effective as an admission of liability at all. 65 In The Nominal Defendant v Gabriel Campbell JA said at [85] – [86]: "85 The admission made by AAMI's letter of 3 June 2003 was of breach of duty of care. As the claim made by the plaintiff was that the driver of the unidentified vehicle had committed the tort of negligence, and as someone is liable for the tort of negligence only if that person owes a duty of care to the plaintiff, has breached that duty of care, and the plaintiff has thereby suffered damage, the admission made by AAMI was not, strictly, an admission of liability for the claim. The admission of breach of duty of care necessarily contained within it an admission of the existence of a duty of care, but no admission was made of any consequential suffering of damage. Thus it counts as an admission of liability for only part of the claim. An admission of liability for part of a claim, in this way, can fairly be described as a notice that includes "details sufficient to ascertain the extent to which liability is admitted" , and thus is expressly contemplated by section 81(2) MAC Act . 86 I recognise that the letter also indicates an intention to pay medical accounts in full. Section 83 imposes an obligation on an insurer to make such payments even if there has been a partial admission of liability, so it does not seem to me that the offer to pay medical accounts is an admission that there has been any consequential damage. It would still be open to AAMI to dispute whether any particular medical account related to the injury caused by the fault of the driver of the unidentified vehicle, or indeed, if there was a factual basis for doing so, whether there were any such medical accounts." 66 The plaintiff submitted that the PCA failed to appreciate material differences in the s 81 notice sent by the insurer in The Nominal Defendant v Gabriel compared with the notice the subject of the present proceedings. The notice sent by the insurer in The Nominal Defendant v Gabriel was set out in full in his Honour's judgment: "Re: Section 81 Notice We have examined the circumstances of your client's motor vehicle accident that occurred on 28 May 2002. As a result we consider the accident occurred through the fault of our insured driver. Accordingly, under Section 81 of the Motor Accidents Compensation Act, 1999 , we admit breach of duty of care in respect of your client's claim. Nevertheless, we believe the surrounding him circumstances indicate that your client contributed to the accident. We estimate contributory negligence at 25%. As a result we propose to make a 25% deduction from any final settlement. In the meantime we will pay all your client's reasonable medical accounts in full. We will make contact soon to discuss your client's claim. In the meantime please forward any original accounts or receipts for which your client claims reimbursement. Should you wish to discuss any of the matters raised in this letter please do not hesitate to contact me. We further advise that we shall be seeking a contribution from NRMA being the insurers of motor vehicle registration number WIX474." (emphasis added) 67 It is clear that the letter shared only one feature in common with the notice the subject of the present proceedings, namely an admission that the insured driver was at fault. Despite the fact that the letter in The Nominal Defendant v Gabriel also admitted breach of the duty of care the plaintiff accepted that its admission of fault in April 2005 equated with the failure on the part of its insured driver to take reasonable care commensurate with the duty of care he owed to the third defendant as another road user. (I note that s 3 of the Act defines "claim" as a claim for damages in respect of the death of or injury to a person caused by the fault of the owner or driver of a motor vehicle in the use or operation of the vehicle and defines fault as "negligence or any other tort".) 68 Importantly, so the plaintiff submitted, the letter in The Nominal Defendant v Gabriel also alleged contributory negligence, which it estimated at 25 per cent, and it was this that enabled Campbell JA to regard the letter as a partial admission of liability under s 81(2) because it "contained details sufficient to ascertain the extent to which liability is admitted". The following extract is said to make that clear: "84 As the claim form was received by the Nominal Defendant on 22 July 2002, and the Nominal Defendant had neither admitted nor denied liability within three months, it was deemed, under section 81(3), to have denied liability as from 23 October 2002. AAMI's letter of 3 June 2003 was the type of admission of liability, after an initial denial that is permitted by section 81(4). 85 The admission made by AAMI's letter of 3 June 2003 was of breach of duty of care. As the claim made by the plaintiff was that the driver of the unidentified vehicle had committed the tort of negligence, and as someone is liable for the tort of negligence only if that person owes a duty of care to the plaintiff, has breached that duty of care, and the plaintiff has thereby suffered damage, the admission made by AAMI was not, strictly, an admission of liability for the claim. The admission of breach of duty of care necessarily contained within it an admission of the existence of a duty of care, but no admission was made of any consequential suffering of damage. Thus it counts as an admission of liability for only part of the claim. An admission of liability for part of a claim, in this way, can fairly be described as a notice that includes "details sufficient to ascertain the extent to which liability is admitted" , and thus is expressly contemplated by section 81(2) MAC Act . 86 I recognise that the letter also indicates an intention to pay medical accounts in full. Section 83 imposes an obligation on an insurer to make such payments even if there has been a partial admission of liability, so it does not seem to me that the offer to pay medical accounts is an admission that there has been any consequential damage. It would still be open to AAMI to dispute whether any particular medical account related to the injury caused by the fault of the driver of the unidentified vehicle, or indeed, if there was a factual basis for doing so, whether there were any such medical accounts." 69 By contrast, the notice issued by the plaintiff in the present case did not address the issue of contributory negligence at all. This, so it was submitted by the plaintiff, together with the fact that there was nothing in its letter to justify the inference that it was making a partial admission of liability, rendered the notice inadequate for the purpose of the assessor ascertaining the extent to which liability is admitted as required by s 81(2), and that it is invalid as a notice for that reason. 70 Although, as Campbell JA observed in [85] above, the insurer's stated intention to pay for all reasonable medical expenses is not an admission that there has been damage suffered consequent upon breach, s 81 only imposes an obligation to meet such expenses where the insurer admits liability. Here the insurer clamed in its letter of 29 April 2005 that it had looked at the circumstances surrounding the accident and on that basis accepted that the insured driver was at fault and agreed to pay the third defendant's reasonable medical expenses. The fact that, the letter omitted to address the extent to which the third defendant should bear some responsibility for the accident, whether by error or oversight, in my view, does not diminish the force of its admission of liability, an admission which is open to be read in an unqualified way. Equally, the fact that in the absence of some specification of the extent of contributory negligence there may be insufficient details to ascertain the actual extent to which liability is admitted does not render the notice ineffective, even if the notice might be deficient from the insurer's perspective. 71 I am not satisfied that the PCA was in error in finding the notice was adequate to operate as an admission of partial liability under s 81(2). Orders 72 The orders are as follows: 1. The plaintiff's summons is dismissed. 2. No order as to costs. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.