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Allianz Insurance Australia Ltd v Yu 2024 NSWSC | Judgment 2 February 2024

An insurer agreed to pay damages to a claimant in relation to a personal injury claim.  The insurer subsequently concluded that evidence served by the claimant and relied on by the insurer in settling the claim was fraudulent.  The insurer sued to recover the majority of damages paid, in addition to costs and interest.  The Supreme Court ordered the claimant to repay to the insurer the sum it sought.


The Defendant was involved in a motor vehicle accident on 31 July 2013. He alleged that the accident caused severe and debilitating psychiatric injury. He lodged a CTP claim for damages under the Motor Accidents Compensation Act 1999 (MAC Act). Allianz Australia Insurance Ltd (the Plaintiff) responded to the claim.  Breach of duty of care was admitted and the CTP claim proceeded as an assessment of damages.

The Defendant alleged via particulars, statements and histories to treating doctors and medico-legal experts that as a result of psychiatric injuries he was unable to work, drive, socialise, attend to personal hygiene and perform domestic tasks or activities of daily living.   He alleged that he had attempted suicide and he produced evidence of psychiatric hospital admissions in Korea and Sydney.

All treating and medicolegal experts, including psychiatrist Dr McClure who was retained by the Plaintiff, accepted the Defendant’s allegations.  There was no dissenting medical opinion.

In October 2014 a medical expert appointed by the Medical Assessment Service (MAS) diagnosed a Major Depressive Disorder and assessed the Defendant’s whole person impairment at 28%. The medical assessor accepted the Defendant’s allegations.

The Plaintiff perceived some concerns regarding the veracity of allegations and obtained surveillance that showed the claimant driving, thereby raising questions regarding the accuracy of the allegations. However, in the face of medical evidence and a MAS assessment that supported the Defendant, and while alert to allegations of suicidality, those concerns were not investigated by the Plaintiff.

An informal settlement conference was arranged.  The Plaintiff served a schedule of damages, which exceeded $1.6 million plus costs. The claim was settled in 2015 for $750,000 inclusive of costs and the parties executed a Deed of Release accordingly.

Subsequently, the Defendant’s wife and three children (who were not involved in the accident) lodged claims for pure mental harm, which purportedly arose as a consequence of the defendant’s injuries.  Those claims were litigated in the District Court.

Whilst investigating the four mental harm claims the Plaintiff obtained evidence that led it to conclude that the Defendant had provided fraudulent evidence. The Plaintiff’s decisions to settle the Defendant’s claim and pay damages had been made in reliance on that fraudulent evidence.

The Plaintiff commenced proceedings in the Supreme Court to recover a portion of damages paid.  Its pleadings relied on the tort of deceit and s 118 of the MAC Act.

The proceedings

The Plaintiff adduced documentary evidence from Westpac, Commonwealth Bank, NAB, the Department of Home Affairs, public housing providers and Transport for NSW.  These documents addressed applications for loans, purchases and renovations of residential properties, the Defendant’s work at a Korean language school, driver’s licence renewals, management of finances, residential leasing, and liaising with public housing providers.

The Plaintiff also adduced documentary and oral evidence from a builder and an architect who had direct commercial dealings with the Defendant proximate to the time of settlement.  

Dr McClure, who had provided medicolegal evidence to the Plaintiff prior to settlement of the claim and who had at that time accepted the Defendant’s allegation as to his illness and disabilities, concluded that the subsequently obtained documentary evidence demonstrated normal psychiatric and cognitive functions. He provided a report and oral evidence that concluded that the documentary evidence was inconsistent with the Defendant’s presentation in 2014.  

The Plaintiff adduced affidavit and oral evidence from its managers and a solicitor who had managed the claim when it was settled in in 2015.  Those witnesses explained that they relied on particular evidence when deciding to settle the claim and when assessing the quantum that was paid.  They provided evidence in relation to the insurer’s statutory duties.  They said that if the evidence that was identified subsequent to settlement of the claim had been available to them at the time of settlement, they would not have settled the claim without further investigations and they would not have paid the sum that was paid.  They offered evidence concerning the claim’s quantum when applying the newly received evidence.    

The Defendant and his wife provided affidavit and oral evidence.


Justice Weinstein presided. 

The parties agreed that the terms of the MAC Act s 118 and the elements of the tort of deceit were, for practical purposes in this instance, identical. Section 118 of MAC Act provided remedies additional to the tort of deceit.

His Honour rejected attempts by the Defendant and his wife to reconcile the evidence that was adduced prior to the settlement with the evidence obtained by the Plaintiff after the settlement. His Honour concluded that the Defendant knowingly misrepresented his psychiatric condition to the Plaintiff and medical practitioners and did so in order to obtain financial gain from the Plaintiff, comprising damages to which he was not entitled. His Honour concluded that the Plaintiff relied on the fraudulent representations, and that reliance affected the damages sum that was paid.

The Plaintiff submitted that it was not required to prove that it believed, at the time of settlement, that all the Defendant’s representations were true.  Rather, the Plaintiff was obliged to demonstrate genuine reliance on those representations.  The Plaintiff cited Hayward v Zurich Insurance Company plc [2017] AC 142; [2016] UKSC 46 (Zurich).  Zurich concerned a claimant who exaggerated the consequences of his injury, causing an insurer to pay more than the true value of the claim. During the claim the insurer possessed surveillance that indicated the claimant was exaggerating his injuries. Following finalisation of the claim, the insurer received evidence of the claimant’s dishonesty. The insurer successfully recovered monies paid. The issue before the UK Supreme Court was whether causation could be established given the insurer held surveillance of the claimant during the life of the claim. Causation was established notwithstanding the insurer’s suspicions about the claim.

Weinstein J adopted the principles in Zurich when concluding that the tort of deceit did not require consideration of whether further investigations could have addressed the truthfulness of representations by the claimant. Weinstein J said [22]:

I accept that it is not relevant in making out a claim in the tort of deceit to ask whether the plaintiff might have discovered that a defendant’s representation was false. That said, if the plaintiff knew the presentation to be false, it could not be said to have caused the plaintiff to suffer the loss. The causation issue will be determined as a question of fact and will depend on the circumstances of each individual case.

His Honour noted that the position in Zurich was consistent with public policy and statutory objectives because an insurer ought to be permitted to accept claimants at face value when determining the merits of claims.

His Honour accepted that the recovery rights in s 118 were activated, and the elements of the tort of deceit were satisfied.

The parties agreed (via oral submissions) that if allegations concerning false and misleading representations were accepted, and if Dr McClure’s revised opinion was accepted, the Defendant would have been entitled to damages of $80,000 inclusive of costs.

Judgment was entered for the Plaintiff in the amount of $670,000 plus costs.

Key takeaways

  • This decision relied on statutory and case law mechanisms operating towards recovery of sums obtained by an insurance claimant via a settlement that relied on fraudulent misrepresentations
  • In circumstances where legislation equivalent to MACA s 118 is not available, the judgment offers alternative mechanisms in tort.
  • A defendant cannot argue that an insurer was not induced by false representations simply because the insurer held suspicions about the integrity of a claim and chose not to investigate.  Whether an insurer’s further investigations might have discovered that a claimant’s representations were false might not be relevant to a finding of tortious deceit.  The insurer’s actual reliance on the fraudulent misrepresentation is a matter of key relevance.  Causation is a matter of fact in the circumstances.  

The judgment can be viewed here.

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