Dennis Denuto famously said, “it’s the Constitution, it’s Mabo, it’s justice, it’s law, it’s the vibe and aah no that’s it, it’s the vibe”. 

The Constitution establishes the composition of the Australian Parliament and outlines how the federal and state Parliaments share power.  It recognises some individual rights (such as freedom of religion) and implies others (such as freedom of speech). 

On its face, it has nothing whatsoever to do with motor accidents. 

Yet for a small but significant class of people, the Constitution has a fundamental impact on how motor accident claims are handled.

The recent Court of Appeal decision in Searle v McGregor [2022] NSWCA 213 has taken an important step in clarifying matters for this particular group of people.

By way of background, in 2017, New South Wales instituted a hybrid scheme providing statutory benefits for injured road users with soft tissue or minor psychological injuries, regardless of fault, while retaining the right to claim modified common law damages for those able to establish fault. 

In 2020, with the passage of the Personal Injury Commission Act 2020, a specialist tribunal was established for the determination of disputes arising out of such claims (and incorporating a similar role for work injuries).

However, the Constitution governs disputes between residents of different states, and between a resident of one state with a different state itself.  We call this “diversity jurisdiction”.  When they require the exercise of judicial power, such disputes can only be determined by a “Court of a State”, not a tribunal such as a NCAT[1] or the Personal Injury Commission (PIC).

Most commonly, this affects injured road users in the following situations:

1. Residents of states other than NSW, with claims against the NSW Nominal Defendant (e.g. for an unidentified vehicle) (see Matthew Ritchie v the Nominal Defendant District Court No 2021/117151).[2]
2. Residents of NSW, with damages claims against a state insurer*[3] such as the Transport Accident Commission of Victoria (the State of Victoria[4]) or the Insurance Commission of Western Australia.
3. Residents of states other than NSW, where the NSW Nominal Defendant is paying statutory benefits on behalf of one of the above state insurers.
   *Note that corporations such as Allianz, NRMA, QBE etc. are not “residents” of any state

To date, these injured road users have been required to apply to bring proceedings in the NSW District Court in order to have any dispute (however minor) determined.  This adds an extra level of complexity, increases both parties’ costs, and may indeed dissuade people from pursuing their claims at all.

Bringing focus back to Searle v McGregor: the Plaintiff, Mr McGregor, was injured in a motor vehicle collision with Mr Searle in Albury.  Mr McGregor resided in NSW, and Mr Searle in Victoria. Mr Searle was indemnified by the Transport Accident Commission of Victoria.

Mr McGregor wished to make a claim for common law damages against Mr Searle consistently with the Motor Accident Injuries Act 2017 (NSW). Certain preconditions for making such a claim had not yet been satisfied.  Specifically, he had not completed his medical evidence, provided particulars, or even lodged an Application for Damages.  The parties had not had the opportunity to use “their best endeavours” to resolve the claim.

As the Court noted, “Mr McGregor sought to ‘park’ his matter in the District Court”.

The trial judge granted leave for the Plaintiff to bring his matter in the District Court, and the Defendant appealed.  The Court (per Kirk JA, Bell CJ and Ward P agreeing) granted leave to appeal and upheld the appeal.

Key takeaways from the judgment
 

1. The Commission would fall into error if it were to follow a process of dismissing, as a matter of course, any application involving a potential issue of diversity jurisdiction. 

As the Court noted (at Paragraph 14):

“State tribunals are not forbidden from taking steps or resolving issues which do not involve the exercise of judicial power, even if the dispute might otherwise be seen to fall within the scope of what would have been federal jurisdiction (that is, if judicial power were to be exercised).”

And at Paragraph 20:

“…in Gaynor v Attorney General of New South Wales [2020] NSWCA 48, Basten JA and Leeming JA each discussed that preliminary steps under anti-discrimination legislation, such as attempting conciliation, could permissibly be undertaken by administrative bodies, even when a final determination of the complaint would involve judicial power...”
 

2. In order to apply to the District Court under section 26 of the Personal Injury Commission Act 2020, the Plaintiff must have a particular dispute on foot which, if it were determined, would require the exercise of judicial power. 

A “compensation matter application refers to applications made in respect of a particular dispute or issue that has arisen in the course of dealing with a claim, not a generic reference.” 

It is not enough that such a dispute may arise in the future.

In Searle v McGregor [2022] NSWCA 213, the Plaintiff was proceeding merely on a Summons seeking leave to commence proceedings.  There was no actual claim for damages on foot.

The Court was therefore not required to consider the Defendant’s argument that a Plaintiff applying under section 26 must comply with all the usual “pre-filing” steps that would be required of an equivalent Claimant in the PIC. 

However, parties may draw guidance on this issue from the following comments at Paragraphs 97-98:

“…TAC’s broader submissions about the importance of the process set out by the MAI Act being followed are pertinent. They reinforce the construction of s 26 adopted here. The MAI Act seeks to encourage interaction between the parties, facilitate settlement negotiations and promote the early resolution of disputes.

That process was described above. The objects of the Act, stated in s 1.3, include ‘to encourage the early resolution of motor accident claims and the quick, cost effective and just resolution of disputes’. Sections 6.15 and 6.25 are parts of that process. Similar points may be made about workers compensation claims.

This approach is reinforced by s 3 of the PIC Act, which provides that the objects of that Act include ‘to enable the Commission to resolve the real issues in proceedings justly, quickly, cost effectively and with as little formality as possible’.

Construing s 26 of the PIC Act as relating to specific applications, rather than effecting a generic transfer, is consistent with the process of dealing with motor accident and workers compensation claims in an orderly manner and consistently with the procedures carefully set out in the statutory schemes. If and when some Burns v Corbett hurdle comes up in the course of that process as regards the determination of any particular issue, then an application may be made to the District Court for determination of that issue under s 26.”

Finally, the Court considered what PIC tasks do in fact require the exercise of judicial power.  Their indications were that an application for exemption (either mandatory or discretionary) may not qualify (Paragraph 81), nor may a medical assessment (Paragraph 80)[5]. 

Justice Kirk mused that “it was open to substantial doubt” whether “determination of claims for statutory benefits under the MAI Act would be subject to the Burns v Corbett limitation” (Paragraph 21). 

As it was not necessary to determine any of these points, and the parties had not referred this matter to any of the relevant Attorneys General in relation to the constitutional issues, these comments are not rulings of the Court.

Further, in Paragraphs 36–38 and 44 there is an interesting discussion concerning the actual character of a damages assessment by the PIC, as follows:

“The assessment of the amount of damages may be binding on the insurer (including as to costs), but only if (a) the insurer has admitted liability, and (b) the claimant chooses to accept the sum assessed by PIC within 21 days of the assessment: s 7.38(2)-(3). Other than for that limited potential binding effect, the assessment of PIC is an advisory opinion.…

…It can be seen that, except for the limited type of case where liability is admitted and the claimant accepts the sum assessed by PIC, any claim for damages governed by the Act and which is not settled by the parties will fall to be determined under the statutory regime by an exercise of judicial power by a court.”

It is possible to read this as an indication that a damages assessment does not involve the exercise of judicial power, but instead is an exercise of administrative power.  This would be on the basis that because the insurer admits liability and the claimant accepts the amount of damages, the Commission's decision is not 'independent of the consent of those whose legal rights or obligations are being determined' (see Paragraph 28 of TCL Air Conditioner (Zhongshan) v Federal Court of Australia & Anor (2013) 251 CLR 533)[6].

In any event, these were the Justice’s preliminary thoughts without a full ventilation of the issues involved.  These issues will no doubt be clarified as time unfolds, and these cases make their way through the courts.

There is certainly a ‘vibe’ that parties should expect more input from the PIC and less from the District Court.

At this point, we know that parties in disputes potentially affected by “diversity jurisdiction” need to lodge their specific dispute applications in the Personal Injury Commission “in the form and manner required”.  These should not be dismissed out of hand, but consideration should be given as to whether there is actually a present need to exercise judicial power.  Watch this space.

December 2022 Update

As I predicted above, the District Court has now taken further steps to clarify this issue.  

In Rafiqul Islam v Transport Accident Commission of Victoria and Heather Worldon v Transport Accident Commission of Victoria [2022] NSWDC 582 His Honour Judge Weber determined that in assessing damages or undertaking a medical despite assessment, the Commission was not exercising judicial power.  

The judge identified the following factors which indicated that the Commission was exercising administrative power:

• The exercise of administrative powers may involve adjudication and the application of pre-existing standards and the formation of an opinion as to legal rights and obligations.
• The Commission’s assessment does not result in a “binding and authoritative decision”.   Liability is either admitted, or the insurer has a right of rehearing [s7.38(1) and (2) of MAIA].
• The nature of the Commission (including the fact its non-presidential members do not need to be legally qualified) and its procedures for hearings suggest that administrative power is being exercised.
• The fact that a Court has power to reject a medical certificate [s 7.23(3) of MAIA] does not lead to a conclusion that judicial power is being exercised by medical assessors.
• The claims assessment or medical assessment does not “determine” or “quell” the controversy in the matter.   Specifically, the capacity for a medical dispute to be referred for further assessment demonstrates that the medical assessor is not quelling the controversy.

We are unaware of whether the above decision is to be the subject of an Appeal.

In relation to motor accident matters which have already progressed to the District Court over the last year or so, there is a discretion for the Court to refer them back to the Commission for determination under s26(5) of the Personal Injury Commission Act 2020.  

We suggest that parties ought to consider on an individual basis whether to make such an application, depending on the facts, quantum and stage of preparation of any given matter. 

If you have a query relating to any of the information in this article, or would like to speak with somebody in relation to a diversity jurisdiction-related matter of your own, please don’t hesitate to get in touch with Natasha Miller, Special Counsel within Holman Webb’s Insurance Group today.