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Case summary: Allianz Australia Insurance Limited v Yu [2024] NSWSC 31 – Insurer recovers compensation after false & misleading representations

Published on April 19, 2024 by Hayley AldrichHayley Aldrich

Allianz Insurance Australia Limited (Allianz) has been successful in the recovery of compensation money paid to a claimant for false and misleading representations made by the claimant for the purpose of his motor vehicle claim.

Background

Mr Yu, the defendant, was injured in a motor vehicle accident on 31 July 2013.

As a result of the motor vehicle accident, he alleged that he suffered a severe psychological injury. Allianz’s own medical experts assessed Mr Yu’s whole person impairment above the non-economic loss threshold and in March 2015, the claim settled for $750,000 inclusive of costs.

Following the settlement of his claim, Mr Yu’s wife, Ms Chung, commenced her own claim for damages for an alleged psychological injury arising from the motor vehicle accident.

Ms Chung, when assessed on 11 October 2017 by a PIC Assessor for the purpose of her claim, reported a history that significantly contradicted Mr Yu’s evidence in his own claim. This caused Allianz to undertake further investigations revealing the following evidence:

i. That between February 2014 to April 2014, Mr Yu worked as a teacher at a Korean school which he did not disclose;

ii. That in April 2014, Mr Yu completed an application form with the Department of Family and Community Services for public housing requiring him to confirm his understanding of the questions asked;

iii. That in January 2015, Mr Yu approached an architect to design a house for him and dealt with him directly on a number of occasions which included discussions about money;

iv. That in early 2015, Mr Yu was listed as a primary borrower on a mortgage for a property in Terrigal;

v. That in March 2015, following settlement of his claim, Mr Yu applied for a loan from a bank to purchase a property in Thornleigh which as part of his loan application, listed him as having been employed as a Marketing Director in a full time capacity since January 2012;

vi. That on 15 May 2015, Mr Yu completed a rent subsidy application form and did not disclose any assets even though he had received his settlement money;

vii. That in August 2015, five months following the settlement of his claim, Mr Yu engaged a contractor to build a new home and was actively involved in all aspects of the construction process.

Allianz subsequently alleged that Mr Yu made false and misleading representations with respect to his psychological condition for the purpose of achieving a financial gain. Allianz commenced proceedings against Mr Yu in the tort of deceit and pursuant to section 118 of the Motor Accidents Compensation Act 1999 (NSW) (MACA).

Judgment

Justice Weinstein accepted that Mr Yu breached section 118 of MACA for the following reasons:

i. That for approximately one year, from April 2014 until the settlement on 9 March 2015, Mr Yu, assisted by Ms Chung, knowingly and falsely misrepresented his psychiatric condition to Allianz and medical practitioners pursing a claim for damages to which he knew he was not entitled.

ii. That the totality of the documentary and oral evidence adduced by Allianz, which dated back to 2014, demonstrated that Mr Yu 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 Mr Yu and Ms Chung 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 Mr Yu’s conduct in the Courtroom, but rather, based on the documentary evidence which could not be satisfactorily explained by either Mr Yu or Ms Chung. It was further noted that several witnesses gave evidence that Allianz relied heavily on the medical assessments made by doctors, which were based on Mr Yu’s misrepresentations.

Dr McClure, psychiatrist, prepared a report dated 26 August 2021 and concluded that with the new information obtained by Allianz he would not have regarded Mr Yu a credible historian and would not have accepted that Mr Yu had a diminished cognitive ability or that his depression was dysfunctional. He would have assessed whole person impairment (WPI) at 5%.  This is in comparison to Assessor Cassidy who assessed Mr Yu at 28% WPI during Mr Yu’s initial proceedings. The result being that Mr Yu would not be entitled to damages for non-economic loss.

Justice Weinstein ordered Mr Yu to pay Allianz $670,000 with interest plus costs.

This decision confirms that section 118 of MACA requires consideration of not only a claimant’s own credibility based on their oral evidence but the totality of the evidence as a whole.

It furthermore confirms that in circumstances where section 118 of MACA is satisfied, an insurer is entitled to recover the difference between the damages a claimant received and the true value of the claim had they not engaged in false and misleading conduct.

It is important to note that this decision analyses the requirements for fraudulent claims under section 118 of MACA, however the principles apply equally to claims under the Motor Accident Injuries Act 2017 (NSW) (MAIA) with an identical provision namely section 6.42. You can read the full Judgment here.

Please note that this article does not constitute legal advice. If you are seeking professional advice on any legal matters, you can contact Carroll & O’Dea Lawyers on 1800 059 278 or via our Contact Page and one of our lawyers will be able to assist you.