Australia: Insurers Under No Obligation To Issue A Section 81 Notice In Respect Of Late Claims

Curwoods Case Note
Last Updated: 20 May 2010
Article by Peter Hunt

Judgment date: 14 May 2010

Gudelj v Motor Accidents Authority of NSW [2010] NSWSC 436

Supreme Court1

In Brief

  • Section 73(3)(c) of the Motor Accidents Compensation Act 1999 allows a late claim to be "referred for exemption from assessment under Part 4.4" under either s 92(1)(a) or s 92(1)(b).
  • Where a claim is a late claim, there is no obligation on the insurer to serve a Section 81 Notice.


The Supreme Court of NSW delivered judgment in the matter of Gudelj v Motor Accident Authority of NSW on 14 May 2010.

The judgment dealt with two challenges by the claimant against decisions made by the Motor Accidents Authority.

Firstly, the claimant challenged a decision by a claims assessor to issue a special assessment certificate certifying that a late claim may not be made.

Secondly, the claimant challenged a decision by the Principal Claims Assessor (PCA) refusing an application for exemption by the claimant.

The principal issue for determination – other than whether there was any error by the claims assessor in respect of the late claim dispute – was the construction of s 73(3)(c). Specifically, the primary issue in dispute was whether s 72(3)(c) permitted a late claim to be referred for exemption when the only grounds for exemption were discretionary under s 92(1)(b). The PCA held that s 73(3)(c) only permitted a late claim to be referred for a mandatory exemption under s 92(1)(a).

Supreme Court Decision

Late Claim Dispute

Initially, McDougall J dealt with the challenge to the decision by a claims assessor certifying that the late claim could not be made.

It is unnecessary to review the merits of the late claim dispute. His Honour held that the claims assessor was given jurisdiction to assess the late claim dispute. Her findings were available to her on the evidence before her. She properly applied the legal principles to the evidence. As such, there was no error in the claims assessor's exercise of her jurisdiction to determine whether the late claim could be made.

Section 73(3)(c)

His Honour then moved on to the more interesting issue of whether or not s 73(3)(c) permitted a late claim to proceed to court on the basis of a discretionary exemption, in addition to a mandatory exception.

Section 73(3), as a whole, reads as follows:

"(3) If a late claim is made, the claim cannot be referred for assessment under Part 4.4 unless:

(a) the insurer has lost the right to reject the claim on the ground of delay, or

(b) a claims assessor has, on the assessment of a dispute as to whether a late claim may be made in accordance with this section, assessed that the claimant has a full and satisfactory explanation for the delay in making the claim, or

(c) the claim is referred only for a certificate of exemption from assessment under Part 4.4."

Read as a whole, s 73(3) prevents a late claim from proceeding to general assessment by a claims assessor unless the insurer has lost the right to reject the claim on the ground of delay or the late claim dispute has proceeded to special assessment and a claims assessor has found a full and satisfactory explanation for delay.

However, s 73(3)(c) permits a late claim to be referred "for assessment" when it is referred "only for a certificate of exemption from assessment under Part 4.4".

As indicated, the PCA interpreted s 73(3)(c) to apply only to applications for mandatory exemption under s 92(1)(a) and not to applications for discretionary exemption under s 92(1)(b). Her basic reasoning was that where a claim is referred for a discretionary exemption, a preliminary assessment must take place as to the suitability of the claim for assessment and this is a function of a general assessment not an exemption from assessment.

In the Supreme Court, McDougall J disagreed with the PCA's construction and found that s 73(3)(c) applies to both mandatory and discretionary exemption applications. His Honour explained his reasons in paragraphs 101 and 102 of his decision, as follows:

"The purpose of s 73(3)(c) is to ensure that claims that are not suitable for assessment under Part 4.4 are dealt with (if at all) in court. In doing so, the statutory scheme in effect gives the last say, as to whether there is a full and satisfactory explanation for delay, to the court. There is no reason why the opportunity to persuade a court that the explanation was full and satisfactory should have been preserved for a late claimant exempted under s 92(1)(a), but not for a late claimant exempted (or who qualifies to be exempted) under s 92(1)(b).

On that analysis, the words 'referred for assessment under Part 4.4' in the chapeau of s 73(3) refer to all kinds of assessment for which Part 4.4 provides. Those kinds of assessment include a claim for a certificate for exemption from assessment (because the words "under Part 4.4" engage s 82(2), and hence s 92), assessment under ss 94 and 94A and special assessments under s 96. Section 73(3)(c) makes an exception, from the general prohibition contained in the chapeau, for claims for a certificate of exemption. For the reasons that I have given, that applies to claims under s 92(1)(b) as much as it does to claims under s 92(1)(a)."

Deemed Denial of Liability

Having found that the PCA erred in her construction of s 73(3)(c), his Honour turned his attention to the merits of the application for exemption made by the claimant.

The only ground for discretionary exemption asserted by the claimant was that the insurer was deemed to have denied liability for the claim by operation of s 81(3). The insurer had not issued a Section 81 Notice and, it was argued, was therefore deemed to have denied liability.

However, at paragraph 104, McDougall J held that the insurer was not deemed to have denied liability because the obligation to issue a Section 81 Notice had not yet arisen.

His Honour reasoned as follows:

"Mr Romaniuk submitted that s 92(1)(b) applied because of paragraph 14.6.8 of the Guidelines. But, in my view, the insurer is not 'deemed to have denied liability under s 81(3)'. This is because s 81(3) only applies if the insurer is in default of the duty cast on it by, relevantly, s 81(1). Section 81(1) requires an insurer to give written notice to the claimant, whether the insurer admits or denies liability for the claim, no later than 'within three months after the claimant gave notice of the claim under s 71'. In this case, Mr Gudelj did not give notice of the claim under s 72. Section 72 refers to a claim made within six months after the relevant date, not to claims made, as was Mr Gudelj's claim, outside that time limit. Since there was no notice of the claim under s 72, there was no failure to comply with s 81(1) capable of activating s 81(3)."

In the circumstances, McDougall J found that there was no utility in referring the application for exemption back to the PCA for determination given that the sole ground for the application was hopeless.

As such, the summons was dismissed with costs.


The decision in Gudelj is important for two reasons.

Firstly, the decision makes it clear that in respect of late claims, the gateway to court which exists in s 73(3)(c) may be utilised both where the claimant has grounds for seeking an exemption on both a mandatory basis under s 92(1)(a) and on discretionary grounds under s 92(1)(b). Insurers may, therefore, expect applications for discretionary exemption even where a late claim dispute has proceeded to special assessment and a certificate issued certifying that a late claim may not be made.

Secondly, the decision confirms that there is no obligation on the insurer to issue a Section 81 Notice where there is a late claim dispute in which the quality of the explanation remains in dispute.

The Supreme Court held in Gudelj that a late claim is not a claim under s 72 and, as such, the obligation in s 81(1) to make a determination on liability does not arise.

1 McDougall

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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