Lyu v Jeon  NSWCA 446
|Judgment date:||21 December 2012|
|Jurisdiction:||New South Wales Court of Appeal1|
- It is not relevant to question whether a delay was prejudicial to an insurer when determining whether an explanation is "full and satisfactory" in applications seeking leave to make a late claim and/or commence proceedings out of time under the Motor Accidents Compensation Act (the Act).
- Behaviour "calculated to mislead or known to involve falsehood" would not constitute conduct of a "reasonable person", as is required for an explanation to be found satisfactory pursuant to s 66(2) of the Act.
The claimant was seriously injured when the insured, whilst intoxicated, drove a motor vehicle over her right foot. The claimant and the insured were South Korean compatriots studying physiotherapy in Australia.
The insured was fearful that the claimant's accident could lead to her being charged by the police. It was therefore agreed that the claimant would tell the hospital that she was injured as a result of falling down stairs. Although the hospital staff told the claimant that they doubted that she had been injured in that way, the claimant, with the encouragement of the insured, persisted with the version that she fell down the stairs. The insured also agreed to meet the claimant's medical expenses.
The claimant required surgery and was hospitalised for 3 weeks. The claimant asserted that she failed to arrange for a claim to be made due to her being heavily sedated and in pain.
Further, the claimant gave evidence that whilst she was in hospital she had been in contact with her mother in South Korea who had encouraged her to make a claim against the motor accident insurer. The claimant also gave evidence that, on 2 occasions, she had spoken to the insured about making a claim on her motor accident insurance. It was not contested that the insured told the claimant she could not claim because she had already told the hospital and her own insurer that the accident happened as a result of a fall. The insured continued to make intermittent payments to the claimant to cover her medical expenses.
The claimant did, however, around October 2007, make a claim on her overseas health care insurer (OSHC), on the basis that she had been injured as a result of a fall. The claimant was aware at the time she made the claim on OSHC that, if she stated she had been injured as a result of a motor vehicle accident, she would have been required to make a claim on the vehicle's insurer and would not have been eligible to overseas health care insurance.
In September 2008, the claimant sought legal advice from a Korean-speaking solicitor. The claimant was advised to talk to the insurer direct if she did not want her friend to be prosecuted. Instead, the claimant spoke to the insured again who repeated the earlier assertion that the CTP insurer had already denied the claim.
In November 2009, the insured told the claimant that she could no longer pay all the claimant's continuing medical expenses. The claimant sought further legal advice and thereafter lodged a claim.
Her Honour Judge Sidis of the District Court granted the claimant an extension of time to make a late claim and to commence proceedings out of time, being satisfied, inter alia, that the explanation was full and satisfactory. The judge's justification was as follows:
"I considered [sic] that a reasonable person who was a young person of 24, living at a distance from her native country and family, unfamiliar with the language and the law relating to personal injury compensation in a foreign country, would agree and would be justified in agreeing to protect a close friend who was also in a foreign environment from potential criminal conviction, deportation and exclusion from her field of study. A reasonable person in this position would, in my view, be fortified by the [applicant's] agreement to meet all medical expenses and would be affected by the shock and pain of the serious injuries suffered.
 The [respondent's] continuing delay in seeking independent legal advice from lawyers specialising in personal injury law was the result of misinformation provided by the [applicant].
 Ultimately the period of delay was not excessive. As already noted, there was no suggestion of prejudice to the [applicant], nor was it suggested that the [applicant] could not secure a fair trial of the issues. The [respondent] suffered serious injuries to her foot with potential ongoing consequences to her career in physiotherapy."
The insurer sought leave to appeal on the basis that her Honour did not take into account the conversation between the claimant and her mother that she should make a claim whilst she was in hospital; that she erroneously concluded the claimant failed to seek legal advice as a result of being provided with misinformation by the insured; that she erroneously concluded the claimant did not deliberately deceive her overseas health care insurer; and that she wrongly focused upon whether the delay ought to be excused because there was no suggestion of prejudice.
Court of Appeal
The Court of Appeal allowed the appeal and ordered the claimant to pay the insurer's costs of the appeal.
Meagher JA, with whom Macfarlan JA and Davis J agreed, found that a reasonable person in the claimant's position would not have delayed notifying the CTP insurer of a claim beyond late 2007.
It was found that, given the serious nature of the claimant's injuries and the absence of any payment from an insurer (prior to the OSHC claim that is), the "overwhelming likelihood is that a reasonable person in her position would then have been advised to and would have notified the insurer".
His Honour stated this would have led to the claimant making a claim within 6 months following the accident, but there was a delay for a further 2 years. It was found the delay occurred because the claimant was in receipt of payments from OSHC and had an arrangement with the insured in relation to payment of the balance of the medical expenses.
He found a reasonable person in the position of the claimant would not have joined in the making of a false claim.
In relation to the question of prejudice, the Court of Appeal referred to the judgment of Gleeson CJ in the decision of Russo v Aiello2:
"... what the Act requires is justification for delay; not demonstration that the delay caused no harm ... The focus of the statutory concept of a satisfactory explanation is upon justifying delay, rather than excusing it. It is one thing to say that conduct is justified by reference to the way in which a reasonable person in the position of a claimant could have been expected to behave. It is another thing to say that delay ought to be excused because it caused no identifiable harm to an insurer."
Meagher JA stated it was not relevant for her Honour Judge Sidis to take into account there was no prejudice to the insurer when determining whether the explanation was satisfactory.
- When considering whether an explanation for delay is "full and satisfactory", as is required by s 66(2) of the Act, it is not relevant to consider any lack of prejudice to an insurer if the late claim or late proceedings were to be allowed. The test remains whether the delay was "justified", as determined by the High Court in Russo v Aiello.
- If there is an attempt to make a late claim or commence proceedings out of time in a situation where the claimant has previously made a false allegation as to the circumstances of the accident, it will be difficult for that claimant to prove his or her conduct was "reasonable" when considering whether a satisfactory explanation has been provided.
1 Macfarlan and Meagher JJA; Davies J, 
2  HCA 53; 215 CLR 643 at , 
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