PIPA Claims – Withholding Material from Disclosure Before the Compulsory Conference

It is notable that this is a different requirement to the Workers’ Compensation and Rehabilitation Act 2003 (WCRA) and Motor Accidents Insurance Act 1994 (MAIA), which provide that documentation may simply be withheld on reasonable suspicion of fraud, without an order of the Court.

Absent a Court order, the withholding of information is an offence against the Act with a civil penalty (s31), and a withheld document cannot be used by the party in subsequent Court proceedings unless the Court orders otherwise (s32).

The combined effect of these sections is that a Court order must be obtained relieving a party of the obligation of disclosure, before the compulsory conference.

The preferable procedure for obtaining such an order is to contact the Associate to the Judge sitting in the applications list on the day it is desired to bring the application, asking for the application to be listed without appearing on the Court list.

An application and affidavit are then filed by leave on the day the application is sought, along with a draft Order making appropriate provision for the application material to be sealed, to not be listed on the e-Courts index or any other searchable index, and to seal any any Order made in the proceedings. In this manner, no search of the Registry ought reveal the existence of the application or the Order.

Leave ought to be sought pursuant to both section 30(3) of PIPA and UCPR Rules 224 and 393(2), so that another application is not necessary once proceedings are instituted.

Relevant principles on the application

Pursuant to section 28 of the Act, the Applicant has a duty to disclose documents to the Applicant, including reports about the claimant’s medical condition, personal injury and any consequent disabilities.

Section 30 of the Act provides that documents which are subject to legal professional privilege are not required to be disclosed, but s 30(2) provides that “investigative reports, medical reports and reports relevant to the claimant’s rehabilitation” must be disclosed despite that privilege.

Sections 30(3) and (4) provide as follows:

(3) If a respondent has reasonable grounds to suspect a claimant of fraud, the respondent may apply, ex parte, to the court for approval to withhold from disclosure under division 1 or this division information or documentary material, including a class of documents, that —

(4) If the court gives approval on application under subsection (3), the respondent may withhold from disclosure the information or documentary material in accordance with the approval.

In Re Hunter¹, it was held that it is sufficient to invoke the discretion in section 30 if either 30(3)(a) or (b) are established. It is not necessary to prove that disclosure of the material would alert the claimant to the suspicion and help further the fraud.

The phrase “reasonable suspicion of fraud” was discussed in Young v Nominal Defendant². The circumstances of that case involved a single vehicle accident, in which the plaintiff alleged that her vehicle had been run off the road by another vehicle. At first instance, Samios DCJ had refused to relieve the applicant of the duty of disclosure of certain material, including an ambulance report, containing references to a blown tyre, a single vehicle accident, and a level of intoxication of the plaintiff. It was said that this gave rise to a reasonable suspicion of fraud on the basis that the accident did not involve another vehicle at all. Samios DCJ noted a statement of an independent witness at the scene of the accident. That witness asked the plaintiff what had happened. She stated “another car”. On that basis, it was found at first instance that the applicant did not have a reasonable suspicion of fraud.

Leave to appeal was refused, the Court of Appeal finding that, on the available evidence, the references to other potential causes of the accident were either disproved or capable of other inferences. On that basis, it was found that in the circumstances of this case, there was no clear conflict of evidence between that to be relied upon by the applicant (appellant) and that of the plaintiff that another vehicle was involved.

In the absence of a conflict in the evidence, it was found that there could be no reasonable suspicion of fraud.

The circumstances in Re Hunter were somewhat similar. The claimant asserted that he fell because part of a stair tread fell away. The respondent (the applicant before Justice McMurdo) swore a statutory declaration to the effect that he installed the stair tread and the part that the claimant asserted fell away was never there. The respondent asserted on the basis of his statutory declaration, he had a reasonable suspicion that the claim was fraudulent.

Justice McMurdo did not decide whether there was a reasonable suspicion of fraud. He decided that the respondent’s basis for defending the claim would have to be disclosed to the claimant at the compulsory conference in order to comply with s 38(6), and if the claim were not then resolved, pleaded in the Defence. He held that it was in the interests of advancing the objects of the PIPA that the information be disclosed sooner rather than later.

His Honour therefore ordered the disclosure of the statutory declaration.

Young was referred to in Re an Application Pursuant to s 73 of the Civil Law (Wrongs) Act 2002³. Concerning matters of procedure, two aspects of that case are interesting. 

Firstly, the reasons for judgment were published but without reference to the claimant’s name on the basis of a non-publication order.This is a useful exercise to achieve the dual purpose of providing reasons to guide the exercise of the discretion without thwarting the objecting of not alerting the claimant to the suspicion of fraud.

Secondly, His Honour Justice Connolly noted that the evidence was at an early state such that further investigations would either confirm the fraud or satisfy the insurer that the claim was genuine. He therefore made the order on an interim basis and relisted the application to be heard in 3 months time.

His Honour referred to the decision in Young, as support for his view that a mere divergence in instructions between a claimant and those instructing an insurer will not amount to a reasonable suspicion of fraud. He considered that the test for reasonable suspicion was as described in George v Rockett⁴:

“Suspicion, as Lord Devlin said in Hussien v Chong Food Kam [1970] AC 942 at 948, “in its ordinary meaning is a state of conjecture or surmise where proof is lacking: ‘I suspect but I cannot prove’”. The facts which can reasonably ground a suspicion may be quite insufficient reasonably to ground a belief, yet some factual basis for the suspicion must be shown.” 

The test applicable to section 30(3) may therefore be seen as comparable to that applicable to UCPR 224 and 393.

UCPR 221 provides that a party must disclose all documents which are in his possession and directly relevant to an issue in the pleadings, subject to certain exceptions in UCPR 212. Further, pursuant to UCPR 393, all video evidence must be disclosed in advance of a trial.

Rule 224 provides as follows:

224 (1) The court may order a party be relieved, or relieved to a specified extent, of the duty of disclosure.

(2) Without limiting subrule (1), the court may, in deciding whether to make the order, have regard to the following —

(a) the likely time, cost and inconvenience involved in disclosing the documents or classes of documents compared with the amount involved in the proceeding;

(b) the relative importance of the question to which the documents or classes of documents relate;

(c) the probably effect on the outcome of the proceeding of disclosing or not disclosing the documents or classes of documents;

(d) other relevant considerations.

Rule 393 relevantly provides as follows:

(2) Unless the court orders otherwise, at least 7 days before the trial or hearing starts, the party must give all other parties an opportunity to … inspect anything mentioned in subrule(1) the party intends to tender…

(3) An application for an order under subrule (2) may be made without notice to another party and the court may direct that the application and any supporting evidence be placed in a sealed container, for example, an envelope;

(4) The container may be opened only if the court orders it to be opened.

The discretion conferred by UCPR 224 and 393 has been considered judicially. 

In Martin v Kennedy⁵ His Honour Justice Thomas noted “The detection of fraud and the exposure of exaggeration are important matters in the administration of this area of justice and I should be reluctant to conclude that evidence of this nature requires to be disclosed in advance.”

In Stephan v NRMA⁶, the District Court recognised that the power conferred by the Rules to order non-disclosure of certain material may be used in personal injuries matters to prevent tailoring of evidence.

The joint decision of the Court of Appeal in Coster v Bathgate⁷ considered the exercise of the discretion.

On an application to withhold surveillance material, it was found by the Judge in that case at first instance:

• The activities shown on surveillance were “not entirely consistent” ⁸ with the plaintiff’s asserted incapacity but did not demonstrate “significant exaggeration” ⁹.
• The plaintiff had already disclosed that he worked as a courier, which was the activity revealed on the surveillance footage.

The judgment of the Court of Appeal made the following observations about exercise of the discretion conferred by Rules 224 and 393:

“[20] The discretions to be exercised under UCPR r 224 and r 393 are unfettered except by the constraint that they be exercised judicially in the particular circumstances of each case. There are, however, a number of factors, some of which are competing, which will normally be thought relevant to the exercise of the discretion in cases such as this.

[21] On the one hand, there is a trend towards ensuring that interlocutory processes, and, ultimately, the trial of an action, take place against a background of full and timely disclosure by the parties of their respective cases and even of the evidence to be relied on in support of those cases. That trend is evidenced, inter alia, by: the disclosure requirements of UCPR r 212(2) and r 393; the requirements in UCPR r 547 concerning the provision of statements of loss and damage and by the increasingly more common requirement that evidence in chief be contained in statements or affidavits served before the trial. Conducting litigation in this way facilitates early settlements, promotes greater efficiencies in the conduct of hearings and assists in securing more just determinations. This is consistent with UCPR r 5 which provides that the purpose of the UCPR is to facilitation the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense.

[22] Those with experience of personal injuries trials will be aware that a great deal of time can be spent in dealing with the consequences of undisclosed video film of a plaintiff’s activities.  The tape has to be played for viewing by the plaintiff in court. Often it, or a copy of it, will need to be played for the benefit of the plaintiff’s medical experts. At times the defendant’s legal representatives will not have had the foresight to obtain a report based on the video film from the defendant’s own medical experts. Apart from the time consumed by these matters, arrangements made with medical practitioners for their attendance can be superseded and the making of alternative arrangements can prove troublesome. Such delays and inconveniences can, of course, be reduced significantly if appropriate precautions are taken.