Peter Hunt
Principal
CTP Insurance, Insurance
Mental Harm and Statutory Benefits
15 January, 2024
In Brief
- Section 3.39 of the Motor Accident Injuries Act 2017 (MAIA) provides that the Mental Harm provisions in Part 3 of the Civil Liability Act (CLA) apply to claims for statutory benefits under Part 3 of MAIA.
- A Claimant is not entitled to statutory benefits for pure mental harm unless it is reasonably foreseeable that a person of normal fortitude, in their position, would have suffered a recognised psychiatric illness in the circumstances.
Facts
On 22 December 2023, the Personal Injury Commission (PIC) published its decision in Zhao v AAI Limited t/as GIO [2023] NSWPICMR 62.
The Claimant’s husband was injured in a motor accident on 19 October 2021. The Claimant subsequently made an application for statutory benefits based on a claim that she suffered PTSD, depression and anxiety as a result of her husband’s accident.
The Claimant’s husband’s vehicle was stationary at the time of the impact. Dashcam footage and other evidence suggested a minor impact. Neither police nor ambulance were called to the scene. The Claimant’s husband only experienced neck and lower back pain. He saw a doctor but did not receive any treatment.
The Claimant first learned of her husband’s accident when he telephoned her at 11am. She subsequently saw him, five hours later, when she attended the hospital at 4pm. The five hour delay was not explained by any evidence.
The Insurer denied liability on the grounds that it was not foreseeable that a person of normal fortitude would suffer a recognised psychiatric illness in the circumstances. That decision was affirmed on Internal Review. The Claimant sought Merit Review of the decision.
Merit Reviewer’s Reasons
The Merit Reviewer affirmed the Insurer’s decision to deny the Claimant statutory benefits for the following reasons:
- Section 3.39 of the MAIA provides that the “Mental Harm” provisions in Part 3 of the CLA applies to claims for statutory benefits in the same way they apply to claims common law damages, subject to “any necessary modifications”.
- Section 32 of the CLA provides that a defendant does not owe a duty of care to avoid mental harm unless it is foreseeable that a person of normal fortitude would suffer a recognised psychiatric illness in the circumstances.
- By virtue of s 3.39 of MAIA, s 32 of the CLA applies to the Insurer’s liability to pay the Claimant statutory benefits.
- The test is objective. Whether the Claimant, themselves, are of normal fortitude is not determinative. The test is whether it is foreseeable that a person of normal fortitude, in their position, would suffer a recognised psychiatric illness in the circumstances of the case.
- Section 32 of the CLA places the onus of proof on the Claimant.
- The evidence did not support the Claimant’s contention that she suffered from any “sudden shock” as a consequence of her husband’s accident.
- Given the minor nature of the impact and the minor nature of her husband’s injuries, it was not reasonably foreseeable that a person of normal fortitude would suffer a recognised psychiatric illness in the same circumstances.
Key Learnings
A claimant who suffers mental harm (aka nervous shock) may claim both damages and statutory benefits, provided they meet the requirements in Part 3 of the CLA.
In statutory benefit claims, applying both MAIA and the CLA, the issues typically are:
- Was the Claimant a close family member (as defined by s 30(5) of the CLA) or did they witness the primary victim being killed, injured or put in peril?
- Did the Claimant sustain a recognised, above-threshold, psychiatric injury.
- Was the primary victim wholly or mostly at fault.
Given the decision in Zhao v AAI Limited t/as GIO [2023] NSWPICMR 62, the parties must also consider whether a person of normal fortitude would have suffered a psychiatric injury in the circumstances.
More information about how s 3.39 of MAIA imports the Mental Harm provisions in Part 3 of the CLA into the statutory benefits scheme in Part 3 of MAIA, can be found in The McCabes Section 3.39 Guidelines.
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
Additional McCabes Resources
