Judgment date: 11 May 2012
Kelly McCann v NSW Self Insurance Group [2012] NSWSC 488
Supreme Court of New South Wales1
In Brief
Where its provisions are open to interpretation a structured settlement will be interpreted in favour of the injured claimant.
Background
The claimant was an infant female who was catastrophically injured in a motor accident on 13 September 1985. As a result of her injuries she required constant intensive care. The claim was resolved in 1986 with a structured settlement which provided for an upfront lump sum payment and ongoing payment of medical expenses, attendant care services and equipment.
A dispute arose in 2011 regarding the extent of care that was required, partly because the claimant had a child. This dispute was resolved between the parties and a further deed was entered in 2011. A further dispute arose regarding the provision of care, particularly in relation to whether the insurer was obliged to pay for nursing care and carer's admission fees when the claimant was attending to leisure activities. The claimant commenced proceedings seeking damages for breach of the deeds.
The Court ultimately held that, given the deeds were entered for the purpose of providing for the ongoing medical, hospital and support needs of a catastrophically injured person in respect of their personal injury claim, the terms of the deeds should be interpreted beneficially towards the claimant. Furthermore, the Court noted that the deeds required the insurer to provide for the claimant's "reasonable" needs and that it should be expected that the reasonable needs would change over time. The Court made declarations confirming the insurer's obligations to provide for care under the deeds and awarded the claimant damages for the insurer's breach of the deeds.
Implications
This case demonstrates the difficulty insurers face when entering structured settlements. The Court has indicated it will take a beneficial approach in interpreting the terms of a settlement where such terms are left open to interpretation. Therefore, insurers can face costs years, if not decades, later which were beyond contemplation when a claim was settled.
The majority of such catastrophically injured claimants will now be participants in the Lifetime Care and Support Scheme. Nevertheless, this case remains relevant because, while damages in the original claim were awarded under the Motor Vehicles (Third Party Insurance) Act 1942, parties may still enter structured settlements pursuant to s 143 of the Motor Accidents Compensation Act 1999.
In general terms, this case illustrates the difficulties that the Lifetime Care and Support Scheme will face in the future when it must meet the ever changing needs of its participants. It also serves as a general deterrent to insurers to negotiate a structured settlement under s 143, a section that has to date attracted no judicial consideration and appears to be rarely used by insurers to resolve claims.
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