Newsletter - June 2004

Welcome to the second edition of the Flint Forensics Pty Ltd semi-annual newsletter. This newsletter is to help keep you informed of the latest developments relevant to Life Policies and personal and commercial litigation support. It is a free service provided by Flint Forensics Pty Ltd.

Index

• Life Insurance
• FICS
• High Court Judgements
• Federal Court Judgements
• Litigation Matters
• Personal Injury
• New Additons to FlintForensics.com.au
• Administrative Changes

Life Insurance

What is the Financial Transactions Reports Act got to do with running a Life Insurance Business?

The Financial Transactions Reports Act 1988 - http://scaleplus.law.gov.au/cgi-bin/download.pl?/scale/data/pasteact/0/59

There is a mandatory requirement for Insurance Companies to report to the Director of AUSTRAC cash transactions that they are a party too over $10,000 as well as any suspect transactions, which may pertain to tax evasion, breaches in commonwealth and territory law, or the Proceeds of Crimes Act. There are also provisions on document retention and the structuring of transactions that should be considered.

There are significant penalties for breaches of the FTR Act, firstly for non-compliance and secondly for advising other parties. However, there are also significant secrecy provisions in place to cover the concerns of organisations providing information to the Director of AUSTRAC.

From a commercial point of view, the obligations under the FTR Act go to lengths to eliminate any information regarding a person's compliance with the Act to be disseminated to the persons reported on. In essence preserving the commercial reputation of the business and position in the marketplace. However, there is also an onus on Insurance Companies to ensure that internally there is no dissemination of information reported under the FTR Act to affected parties to which there are severe penalties that may be enforced.

It is also important to note that since September 11, there have been other changes that effect the reporting requirements under commonwealth and state laws. These include the 40 recommendations made by Financial Action Task Force on Money Laundering, which may be yet legislated, and the regulation regarding the suppression of financing terrorism, which applied from January 2003.

The Financial Reports Act 1998 does apply to insurance companies and should be seriously considered by management. Bruce Flint will be presenting at the ALUCA NSW seminar later this year to provide further details of your requirements. If you would like to know more about your obligations please contact Bruce Flint immediately.

FICS

Hot Items for an Issued Focus

This edition's important rule and objective;

Practice Note 3 (PN3) Surveillance Evidence - http://www.fics.asn.au/docs/PracticeNote/PracticeNote3294563391.pdf - is in draft form only at this stage. It was set out in FICS Bulletin (30 April 2004) http://www.fics.asn.au/docs/Bulletin/Bulletin3292414363.pdf. FICS has invited members and others to make comment on this practice note.

Review of FICS rules

FICS has announced that it is conducting a major review of its Rules. An issues paper has been developed and incorporates issues raised as a result of the independent review of FICS in 2002.

The views of interested parties are sought on the rules and on any other issue relating to the effective operation of the Rules. Submissions should be forwarded to FICS by 25 June 2004.

High Court Judgements

No matters of note.

Federal Court Judgements

No matters of note.

Litigation Matters

Guidelines for Expert Witnesses in proceedings in the Federal Court of Australia

On 19 March 2004 the Federal Court of Australia issued new guidelines for Expert Witnesses in proceedings in the Federal Court of Australia. http://www.fedcourt.gov.au/pracproc/practice_direct.html

The Trial Process

Flint Forensics Pty Ltd staff are well versed with the trial process and can be called upon to give expert witness testimony as required. The following information provides you with insight into the trial process and what an expert witness is required and not required to do.

In any trial, the judge has the overall control of the trial and may at their discretion adapt some of the procedures or the flow of the hearing in the interests of justice. In a civil case Liability may be admitted by a defendant and require a hearing solely on the issue of the amount of damages or the appropriate remedy.

In contested hearings, the trial or hearing will proceed as follows:

• Jury trials,
• Voir Dire,
• Case splitting,
• Witness exclusion,
• Opening address,
• Examination in chief,
• Cross-examination,
• Re-examination,
• No case submissions and defence opening,
• Production of documents,
• Final submissions,
• Verdict/judgement.

Jury Trials

Forensic Accountants are most likely to be involved in civil litigation and it is unusual that they are heard by jury. A jury will most likely be encountered in criminal trials where forensic accounting evidence may be important, such as fraud trials in the higher courts.

Voir Dire

This is a preliminary debate as to the admissibility of evidence and also may be used to examine the admissibility of expert evidence.

Case splitting

Normally, a party claiming or accusing, that is the Plaintiff or the Prosecution, presents their case first. However the judge in a civil case has a discretion to effectively reverse this, and split the trial. A common example is proceedings, which follow the rejection of an insurance claim, where the insurance company alleges fraud. The case can be split because it is more convenient and fair that the party which makes the claim (breach of an insurance contract) does not need to put their case first, as the defendant makes the main allegation of fraud. Please note that this does not happen in a criminal trial because the prosecution always alleges the fraud.

Witness exclusion

It is common for a judge to order all witnesses out of court before any one witness starts giving evidence. However, an advocate (i.e. expert witness) must seek leave of the court to remain within the body of the court.

Opening address

The opening address normally occurs in courts higher than Magistrates Courts. The address is a short outline of the case, told as a simple, persuasive story, painting a picture of events and people.

Examination in chief

Examination in chief is to allow the witness to tell their story and in the case of an expert to explain their opinion to the court. This is organised and controlled by legal counsel (the advocate), but told by the witness in answers to questions, which cannot be leading.

In addition, evidence from experts may be adduced by way of their report, with any additional evidence that counsel wish to seek from them.

Cross Examination

Each witness can be cross-examined by the advocate for the other party. The main purpose would be to undermine the expert witness opinion. The difference in cross-examination is that leading questions may be asked of the expert witness.

Re-examination

The purpose of re-examination is to clarify anything mentioned in cross-examination. Leading questions are not allowed and questions may only be asked on matters that are either unclear, or which arose from cross-examination and have not yet been covered in evidence.

No case submissions and defence opening

Once the last witness for the plaintiff or prosecution has been called, the defence has an opportunity to make an application that there is no case to answer. Otherwise, the defendant will simply open their case and call their first witness.

Production of documents

While giving evidence, a witness may be shown a document for a number of reasons. For instance, a witness may be shown a document to verify their authorship of it or authenticate it, or they may wish to refresh their memory from notes they have brought into the witness box. These documents may already be evidence, or they may in some circumstances become evidence by being "tendered" by legal counsel.

Final submissions

After all evidence has been adduced, a party will be entitled to deliver a closing address or final submission.

Verdict/judgement

Following the jury charge, the jury retires to consider its verdict. In a civil case, that may involve a verdict first as to liability and second as to quantum of damages. In a criminal trial, it is a verdict of guilty or not guilty, and it is simple verdict on the charges, which the judge finally leaves to the jury to consider. Once a verdict is agreed upon, it is delivered by the foreperson.

Where the trial or hearing is by judge alone, then the judge will deliver the judgement or decision. However, in more complicated cases, the judge may reserve their decision either until a particular time, or on a date to be later fixed.

Personal Injury

Interstate Claims

Each state has its own scheme for handling personal injury claims arising out of motor vehicle accidents.

The decision of John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503; (2000) 172 ALR 625 has clarified the law for torts committed in Australia which have interstate component. The law governing the place of commission of the tort will determine all questions of substance.

The decision in Pfeiffer now makes a prospective plaintiff to apply the law of the state where the accident occurred.

I have summarised the major components of motor vehicle accident law for the Australian Capital Territory, Western Australia, Tasmania, South Australia and the Northern Territory.

Australian Capital Territory

Like the state that surrounds it, injuries in motor vehicle accidents in the Australian Capital Territory are regulated by a common law fault based scheme. The relevant legislation is the Road Transport Act 1999 (ACT) and the new Civil Law Wrongs Act (2002) ACT. There is a six-year limitation period for the issue of proceedings.

There is no scheme for the payment of no fault benefits.

Consultation between the sole third party insurer and practitioners has led to a set of guidelines that are to be followed in matters, which are not litigated. This presumably applies generally to straightforward and relatively minor matters, although the guidelines are not limited to the relatively minor matters.

The guidelines have had the effect of containing the costs of the system. They make provision for early notification of claims by way of a notification form and there are obligations on both the insurer and plaintiffs to exchange details in a timely and efficient fashion. For matters that are to be issued and litigated there is a pre-issuing process but a hearing follows quickly once the pre-issue process has been completed.

There are no caps or thresholds on damages although for injuries after 1 January 2003, costs are limited for smaller claims. It sounds like heaven for plaintiff's practitioners but there is talk of further changes.

Western Australia

There is a six-year limitation period for common law claims arising from motor vehicle accidents in Western Australia. However, notification of a claim must be lodged with the relevant compulsory third party insurer within one year of the accident. That one-year timeframe can be extended with a satisfactory explanation.

The relevant legislation in Western Australia is the Motor Vehicle (Third Party Insurance) Act 1943 WA as amended by the Motor Vehicle (Third Party Insurance) Act Amendment Act 1994 WA.

There are no thresholds or caps on economic loss claims, but again, change may be in the air. There is both a sliding threshold and a cap on general damage claims.

There is no scheme for the payment of no fault benefits.

Tasmania

Like it's immediate northern cousin, Tasmania does have a scheme for the provision of no fault benefits in motor vehicle accident cases. The no fault benefits include payment of medical and related treatment expenses together with loss of earnings for a limited period. There is no provision for a no fault lump sum in the case of injuries. There is a lump sum payable in the case of death. The relevant legislation is the Motor Accidents (Liabilities and Compensation) Act 1973.

There is no timeframe for the lodgement of a no fault claim and a no fault claim is not a prerequisite to making a common law claim. However, if a common law claim is to be made against an unidentified vehicle then notice must be provided within three months of the accident. This can be extended with leave.

The limitation period on common law claims is three years with the possibility of this being extended for a further three years with leave.

There are no threshold or caps on common law claims but like most other states, change is in the air. Damages are assessed by reference to similar examples of injury. The level of damages has been described as less than generous. The maximum award of general damages made in the state was $175,000 and this was for a severely brain damaged infant. There is no allowance for interest or Griffiths v Kerkmeyer (1977) 139 CLR 161 damages.

South Australia

No fault benefits are not available under the South Australian scheme. The scheme is regulated by the provisions of the Wrongs Act 1936 SA.

There is a three-year limitation period with the right to seek an extension of this period in certain prescribed circumstances.

At least 90 days before the issue of proceedings a plaintiff must submit a formulated claim. The formulated claim must include the amount the plaintiff is prepared to accept in resolution of the claim. It is an extremely sophisticated pre-trial process.

There are thresholds placed on the claiming of both economic and non-economic loss and non-economic loss is calculated as a portion of the worst case. There is also a cap on both economic and non-economic loss.

Northern Territory

If you are not a local up north then you are treated differently. A local is someone who has been a resident of the Northern Territory for more than three months or who has a contract for employment in the Northern Territory.

If you are a local then on the one hand you have no common law rights but on the other you have access to a no fault scheme.

That no fault scheme provides for the payment of medical and related treatment expenses, loss of earnings and a lump sum for permanent impairment. The claim must be lodged as soon as practicable but in any event within six months of the date of the accident. This can be extended to three years at the discretion of the Board of the Territory Insurance Office but there is an absolute cut-off at three years.

The relevant legislation is the Motor Accidents (Compensation) Act 1979 NT.

The Board has the power to deem someone a resident for the purposes of the Act. Where the person is not so deemed the injured person must lodge their notice of intention to claim, in the prescribed form, within three months of the date of accident. This period can be extended if adequate reasoning is demonstrated.

The limitation period for common law claims is three years with a right to seek an extension of this period. There are no thresholds on a common law claim but there are caps.

Source: O'Halloran "Interstate Claims:, LIV, October 2003 at 41-42

New Additions to Web Site

Reference Materials

Further information has been added in relation to the obligations and duties of an expert witness in each jurisdiction in the Court Directions section on the Reference Materials page.

Online calculators have also been included for time, currency and unit of measure.

Administrative Changes

Flint Forensics Pty Ltd Memberships

Flint Forensics Pty Ltd became a Corporate Member of the Australian and New Zealand Institute of Insurance and Finance.

Bruce Flint New Qualifications and Services

Bruce Flint now has a Private Inquiry License.

Bruce Flint is now providing briefs of evidence that are accepted by the police in matters under the various Crimes Act's in each jurisdiction.

Phone and Fax Numbers

Flint Forensics Pty Ltd phone number has changed from 02 9570 2484 to 02 9584 1474.

Flint Forensics Pty Ltd fax number has changed from 02 9570 2371 to 02 9584 1475.

However, don't be too concerned the old numbers will operate for the next twelve months.

In the next edition, look forward to an update of the topics already discussed, a summary as to the rules of evidence and precedent cases pertinent to the determination of income for income protection claims.

Talk to you soon,

Bruce Flint
Managing Director

FLINT FORENSICS PTY LIMITED - Assessment of Economic Loss, Expert Witness, Financial and Other Investigations, Income Protection Risk Management, Regulatory Investigation and Assessment, Training and Valuations

PH: 02 9584 1474 FAX: 02 9584 1475 MOBILE: 0409 18 4598

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