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Federal Jurisdiction – Private CTP insurers not part of the State of NSW

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Judgment date: 11 April 2022

Citation: Stanton v Winning [2022] NSWDC 104

Jurisdiction: District Court

Introduction

The Personal Injury Commission has no power to exercise federal jurisdiction within the meaning of ss 75 and 76 of the Commonwealth Constitution. But when does federal jurisdiction arise? Does a dispute between an interstate resident and a NSW CTP insurer involve an exercise of federal jurisdiction? These questions were addressed by the District Court in Stanton v Winning.

Principles

  • Pursuant to Division 3.2 of the Personal Injury Commission Act 2020 (the PIC Act), the Personal Injury Commission (the PIC) does not have jurisdiction to determine disputes involving federal jurisdiction as defined by ss 75 and 76 of the Commonwealth Constitution. Relevantly, federal jurisdiction is invoked in disputes between residents of different States or between a State and a resident of a different State.
  • NRMA, as a public company owned by shareholders, is neither a resident of NSW or part of the State of NSW.
  • A medical dispute between an interstate claimant and NRMA does not involve any exercise of federal jurisdiction.

Background

Pursuant to Division 3.2 of the Personal Injury Commission Act 2020 (PIC Act), the Personal Injury Commission (PIC) does not have jurisdiction to resolve a dispute which falls within the original jurisdiction of the High Court, as defined by ss 75 and 76 of the Commonwealth Constitution (federal jurisdiction).

Most relevantly, the PIC does not have jurisdiction where the dispute is “between States, or between residents of different States, or between a State and a resident of another State” (s 75(iv)).

On 31 May 2014, the plaintiff was a passenger in a vehicle driven by the defendant which was involved in a motor accident in New South Wales. Both the plaintiff and the defendant were residents of Queensland at all material times. The plaintiff made a CTP claim against NRMA, as the CTP insurer of the at-fault vehicle.

A medical dispute subsequently arose in the claim. The PIC, however, dismissed the dispute on the grounds that it may invoke federal jurisdiction. The PIC reasoned that the plaintiff was a resident of Queensland and that “a Judge has not decided if NRMA is legally considered to be the State of New South Wales”.

The PIC was influenced by the prior District Court decision of Ritchie v Nominal Defendant where Gibb DCJ found that the Nominal Defendant – as part of the State Insurance Regulatory Authority (SIRA) – was part of the State of NSW.

The plaintiff made a “compensation matter” application to the District Court seeking an order under s 26(5) of the PIC Act remitting the medical dispute to the PIC on the grounds that the PIC had jurisdiction to assess the dispute.

Decision

The application was determined by Priestley SC, DCJ.

His Honour agreed that the medical dispute did not involve an exercise of federal jurisdiction for the following reasons:

  • Parties to Medical Dispute – the parties to the medical dispute are the plaintiff and NRMA. Section 78 of the Motor Accidents Compensation Act 1988 gives the insurer significant power to act on behalf of the insured akin to, if not actually, subrogating the rights of the insured to the insurer. Furthermore, the statutory scheme makes it clear that the insurer, rather than the insured, is a party to the medical dispute.
  • State of NSW – NRMA, as a company limited by shares, carrying out the commercial activity of insurance, was not part of the State of NSW. NRMA’s functions were not analogous to those of the Nominal Defendant / SIRA and, as such, the decision in Ritchie was not relevant.
  • Residence – it is well established that the words “residents” and “resident” in s 75(iv) of the Commonwealth Constitution refer only to natural persons and not to corporations (Crouch v Commissioner of Railways (Qld) (1985) 62 ALR 1). As such, NRMA is not a resident of NSW for the purpose of s 75(iv).

 

Given that NRMA was a party to the medical dispute and was neither part of the State of NSW or a resident of NSW, the terms of s 75(iv) of the Commonwealth Constitution were not met and federal jurisdiction was not invoked.

On this basis, his Honour made orders under s 26(5) of the PIC Act, remitting the dispute to the PIC on the grounds that it had jurisdiction to resolve the dispute all along.

Why this case is important

This decision confirms that NRMA – as public company engaging in the commercial activity of an insurer – is neither a resident of NSW nor part of the State of NSW.

For this reason, a dispute between NRMA and an interstate resident does not involve either:

  • a dispute between residents of different States; or
  • a dispute between the State of NSW and the resident of another State.

 

Given that the terms of s 75(iv) of the Commonwealth Constitution are not met, the dispute does not fall within the original jurisdiction of the High Court and federal jurisdiction is not invoked.

Whilst this decision related specifically to NRMA, each of the other licenced CTP insurers in NSW are also public companies engaging in the commercial activity of insurer. As such, this decision should represent a binding precedent in respect of any dispute between an interstate resident and a NSW CTP insurer.

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