Necessary Modifications – Claims for Statutory Benefits Based on Mental Harm

In Brief

• Section 3.39 of the Motor Accident Injuries Act 2017 (MAIA) provides that Part 3 of the Civil Liability Act 2002 (CLA) applies to the payment of statutory benefits in the same way those provisions apply to an award of damages “subject to any necessary modifications“.
• In claims involving a primary victim and a secondary victim, Part 3 of the CLA should be “modified” to give the secondary victim the same entitlement to statutory benefits which the primary victim would have enjoyed.

Facts

The Personal Injury Commission published its decision in Borrow v Insurance Australia Limited t/as NRMA Insurance [2024] NSWPICMR 67 on 13 September 2024.

On 17 March 2024, the Deceased was riding his motorcycle in Bulahdelah when he lost control whilst negotiating a tight left-hand bend in the road. The Deceased was riding at 50 to 60 kph in an 80 zone. It was raining at the time of the accident and the road surface was wet. The Deceased’s motorcycle slid across the road and collided with a vehicle travelling in the opposite direction. He died at the scene.

The Deceased’s widow suffered a psychiatric injury as a consequence of her husband’s death and made a claim for statutory benefits under Part 3 of MAIA.

The Claimant’s symptoms included overwhelming grief, anxiety, insomnia and difficulty concentrating. She claimed that she was no longer able to return to work.

The Insurer denied that the Claimant was entitled to statutory benefits because her husband owed no duty of care to himself and, by extension, no duty of care to avoid causing her mental harm. That decision was affirmed on Internal Review.

The Claimant lodged an application for Miscellaneous Assessment.

The Insurer’s Argument

The Insurer relied upon s 30(1) of the CLA which provides:

This section applies to the liability of a person (the defendant) for pure mental harm to a person (the plaintiff) arising wholly or partly from mental or nervous shock in connection with another person (the victim) being killed, injured or put in peril by the act or omission of the defendant.

The Insurer argued that s 30(1) codifies the common law and required three protagonists:

• A primary victim,
• A secondary victim, and
• A negligent defendant.

In this dispute there was only the primary victim (the Deceased) and a secondary victim (the Claimant). Given that there was no negligent defendant, the requirements of s 30(1) were not met.

The Insurer further argued that the Deceased did not owe a duty of care to himself and cannot be both the primary victim and the tortfeasor.

The Member’s Reasons

The Member observed that:

• The Insurer’s submissions were accurate in terms of civil claims for damages where there are plaintiffs and defendants (tortfeasors) and the law of negligence applies.
• The statutory benefits regime in Part 3 of MAIA, however, does not involve plaintiffs, defendants or tortfeasors and the laws of negligence do not create or determine a Claimant’s right to those benefits.
• Section 3.39 of MAIA provides that the Mental Harm provisions in Part 3 of the CLA should be modified as necessary so that they fit into a statutory benefits scheme.
• Clause 8(3) of Motor Accident Injuries Regulation 2017 makes it clear that the “at-fault statutory benefit” provisions in ss s 3.11, 3.28 and 3.38 of MAIA apply to the Claimant’s claim for statutory benefits just as they would have applied to the Deceased’s claim for statutory benefits had he survived the accident.

The Member proceeded to note that:

• The task of making “necessary modifications” to the provisions in Part 3 of the CLA must be approached in the same way as interpreting a statute. That is, by looking at the context and the purpose of the whole of the legislation.
• “Relevant context” includes that the stated purpose in s 1.3(1) of MAIA is a new scheme for benefits and support, statutory benefits are available to most injured people for at least 52 weeks on a no-fault basis, statutory benefits are paid by the “relevant insurer” and the insurer (rather than the insured) is named as a party in any dispute before the Commission.

Given these considerations, the Member found that s 30(1) of the CLA should read, as follows, after the “necessary modifications” permitted by s 3.39 of MAIA:

This section applies to the liability of the relevant insurer to pay statutory benefits for pure mental harm to the claimant arising wholly or partly from mental or nervous shock in connection with a victim being killed, injured or put in peril in a motor accident.

The Member concluded that the Claimant was entitled to statutory benefits because she suffered mental harm in connection with a victim being killed, injured or put in peril in a motor accident.

Key Learnings

The passing of almost seven years notwithstanding, the decision in Borrow is the first decision by the Commission to consider what “necessary modifications” are required to shoehorn the Mental Harm provisions in Part 3 of the CLA into the statutory benefit provisions in Part 3 of MAIA.

Based on the context of the Act, the Member’s central point was that the “necessary modifications” permitted by s 3.39 of MAIA should place a secondary victim, such as the Claimant in this dispute, in the same place as a primary victim, such as the Deceased. In other words, the Claimant’s entitlement to statutory benefits should mirror whatever rights her husband would have enjoyed had he survived.

If the Deceased was wholly or mostly at fault for his accident, then the Claimant’s entitlement to statutory benefits would cease at 52 weeks. Otherwise, the Claimant would be entitled to weekly benefits for a maximum of 260 weeks (depending on whether she made a common law claim and whether her WPI exceeded 10%) and treatment and care for life (as her husband would have been had he survived the accident).

For readers who may want to know more about this issue, McCabes has published two relevant episodes of The Proper Lookout Podcast:

• #39 – Statutory benefits for pure mental harm by The Proper Lookout Podcast
• #49 – Square pegs and round holes – applying CLA mental harm provisions to MAIA by The Proper Lookout Podcast

McCabes has also published the following guidance material here.

If you have a query relating to any of the information in this case note, or would like to discuss a similar matter of your own, please don’t hesitate to get in touch with CTP Insurance Principal, Peter Hunt, today.

Additional McCabes Resources

• MC PIC Decision of the Week
• MC MAIA Toolkit
• The Proper Lookout Podcast
• MC Ready Reckoner