CTP Insurance, Insurance

When is a claim considered fraudulent? The impact of false and misleading statements on a claim for damages

12 February, 2024

Allianz Australia Insurance Limited v Yu [2024] NSWSC 31

Key principles

  • The totality of the evidence, rather than just the Claimant’s own statements, should be considered when assessing the Claimant’s credibility for the purposes of determining whether false and misleading statements have been made.
  • Where the requirements under section 118 of MACA or section 6.42 of MAIA are met, an Insurer will be entitled to the difference between the damages the Claimant received and the true value of the claim had the false and misleading statements not been made.


The Claimant was injured in a motor vehicle accident on 31 July 2013. As a result of this accident, the Claimant alleged he suffered a severe psychological injury resulting in ongoing disabilities which included a lack of motivation or confidence, an inability to read or follow complex instructions, a cognitive impairment, an inability to drive or work, minimal contact with people and the need for a carer to assist with activities of daily living.

The Insurer’s own experts assessed the Claimant’s impairment above the non-economic loss threshold. In March 2015, the claim settled for $750,000 all inclusive.

After settlement of his claim, the Claimant’s wife commenced her own claim for damages for an alleged psychological injury arising from the Claimant’s accident. The Claimant’s wife, when assessed by a PIC Assessor on 11 October 2017, reported a history that was at significant odds with the Claimant’s own reported abilities.

Given the account given by the Claimant’s wife, the Insurer commenced its own investigations and obtained evidence of the following:

  1. From February 2014 to April 2014, the Claimant worked as a teacher at a Korean school which he did not previously disclose.
  2. In April 2014, prior to settlement of the claim, the Claimant completed an application form with the Department of Family and Community Services for public housing which required him to confirm his understanding of the questions asked.
  3. In January 2015, three months prior to settlement of the claim, the Claimant approached an architect to design a house for him and dealt with him directly on multiple occasions which included discussions about money.
  4. In early 2015, the Claimant was listed as a primary borrower on a mortgage for a property in Terrigal.
  5. In March 2015, just after settlement, the Claimant applied for a loan from a bank to purchase a property in Thornleigh where, as part of his loan application, he was listed as having been employed full time as a Marketing Director since January 2012.
  6. On 15 May 2015, the Claimant completed a rent subsidy application form and did not disclose any assets despite having already received his settlement monies.
  7. In August 2015, five months after settlement, the Claimant engaged a contractor to build him a new home and was actively involved in every aspect of the construction process including engaging in discussions and firm negotiations, signing contracts and making decisions about the placement of fixtures and the size of the bathroom tiles.

The Insurer commenced proceedings under s 118 of the Motor Accident Compensation Act 1999 (NSW) (MACA) and sought to recover a portion of the settlement monies paid to the Claimant on the following grounds:

  1. The Claimant knowingly made false and misleading representations with respect to his psychiatric condition; and
  2. The Claimant entered into settlement for the purpose of achieving financial gain, with the intention to induce the Insurer to rely on his representations.

Supreme Court reasons

Justice Weinstein accepted the Claimant breached section 118 of MACA for the following reasons:

  1. For approximately one year, from April 2014 until the settlement on 9 March 2015, the Claimant, aided by his wife, knowingly and falsely misrepresented his psychiatric condition to the Insurer and medical practitioners in pursuance of a claim for damages to which he knew he was not entitled.
  2. The totality of the documentary and oral evidence adduced by the Insurer, which dated back to 2014, demonstrated that the Claimant was able to conduct himself in largely a normal fashion, without cognitive impairment or assistance, throughout 2014 and up to settlement in 2015. On this basis, Weinstein J made adverse credibility findings against the Claimant and his wife given their own oral evidence contradicted the documentary evidence and therefore could not be accepted. His Honour highlighted his findings relating to credibility were not based solely on the Claimant’s demeanour in the Courtroom, but, rather, they were based on the documentary evidence which could not be satisfactorily explained by either the Claimant or his wife.
  3. Several witnesses gave evidence that the Insurer relied heavily on the medical assessments made by doctors, which were based on the Claimant’s misrepresentations.

Justice Weinstein ordered the Claimant to pay the Insurer $670,000 with interest plus costs.

Key Learnings

The decision in Allianz Australia Insurance Limited v Yu  confirms that section 118 of MACA invokes consideration of not only the Claimant’s own credibility based on his oral evidence but the totality of the evidence as a whole.

Furthermore, it will not always be obvious, from the evidence, whether the Claimant made false and misleading representations for the explicit purpose of obtaining a financial benefit, as required by s 118. This intention, however, is capable of being inferred from the evidence as a whole.

When assessing a claim for damages, an Insurer is able to take the Claimant at face value. This means the Claimant cannot argue that an Insurer should have taken an opportunity to verify what may have been a fraudulent representation prior to the settlement.

Where s 118 is satisfied, the Insurer is entitled to recover the difference between the damages the Claimant received and the true value of the claim had they not engaged in false and misleading conduct.

Importantly, whilst the decision in Yu examines the requirements for fraudulent claims under section 118 of MACA, the principles apply equally to claims under the Motor Accident Injuries Act 2017 (MAIA). The identical provision under MAIA is section 6.42.


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 Associate Raissa Galang, or CTP Insurance Principal, Peter Hunt.

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