The Claimant was involved in a motor vehicle accident on 1 December 2012 during the course of a motor car rally in the Coopernook State Forest. The Claimant was a passenger in a vehicle driven by his son which had an unregistered vehicle permit. In accordance with that permit, a third party insurance policy under s 10 of the Act was issued by QBE subject to the condition that the vehicle was only covered for liability in respect of the death of or injury to a person caused by the fault of the owner or driver of the vehicle – in the use or operation of the vehicle on a ‘road’. ‘Road’ is defined in s 3 of the Act and includes a road related area but is unlikely to cover a rally track in a State Forest.
A claim was made on 27 December 2012 and in a s 81 notice issued on 14 February 2013, QBE admitted liability for the claim. On 5 June 2013, QBE issued an ‘amended s 81 notice’ alleging 100% contributory negligence and asserting the Claimant had voluntarily assumed the risk of injury as provided for in s 140 of the Act. In a further letter dated 3 March 2014, QBE purported to deny liability for the claim and also on that date QBE wrote to its insured advising that QBE were declining indemnity for the claim on the grounds that the vehicle was not being operated on a road at the time of the accident.
QBE lodged a CARS 1A Application for Exemption on the basis that they had declined indemnity for the claim. The exemption was granted by the PCA on 20 May 2014 not because liability and fault had been denied but because indemnity had been declined.
The Claimant brought proceedings, arguing that the PCA could not, as a matter of law, have had regard to QBE’s purported withdrawal of liability or purported denial of indemnity for the purposes of issuing a certificate of exemption under s 92(1)(a). The Claimant argued that an admission of liability necessarily implied an acceptance that the claim had been accepted and the insured was indemnified in respect of the claimant’s claim. The Claimant also argue that the insurer had made payments in accordance with s 83 both before and after liability had been denied which inferred that the insurer had accepted its obligation to indemnify the insured under the policy.
Adams J determined that QBE was bound by its admission of liability contained in the first s 81 notice. Adams J found that while s 81(4) permits an insurer to later admit liability after it has denied it, the reverse is not permitted.
Consequently, it can be inferred that an admission of liability under s 81 cannot subsequently be withdrawn. Adams J further held that QBE’s admission of liability included an admission that indemnity had been extended to the Insured (see paragraph 18). He then said [at 20]:
QBE’s argument relies on the point that the Notice [under s 81] was an admission made to the claimant and not to its insured. Thus there was no obstacle to its taking a different stance so far as its insured was concerned. Were it not for the statutory scheme this argument might well be correct. However the admission to the claimant was made for a statutory purpose and has statutory effects, the consequence of which necessarily binds QBE so far as its liability to the claimant is concerned. Since it cannot withdraw its admission to the claimant, its relationship with the insurer is, though perhaps interesting, immaterial.
His Honour quashed the decision made by the PCA on 20 May 2014, prohibited the MAA from issuing a certificate of exemption (under mandatory or discretionary grounds) and found that the Claimant’s claim should be determined by the Service in accordance with the Motor Accidents Compensation Act 1999 (NSW). The Claimant is yet to refer his claim for assessment.
A notice of intention to appeal has been lodged by the insurer.
Aaron Mordue v QBE Insurance (Australia) Limited [2015] NSWSC 98
Taken from MAAS Bulletin March 2015