Insurer wins on fraudulent claim

By Resolve Editor Kate Tilley

An insurer has successfully argued a man’s claims of suffering serious psychiatric injury after a motor vehicle accident were fraudulent.

NSW Supreme Court Justice Richard Weinstein found Allianz had proved Soo Yeon Yu’s representations to the insurer’s doctors about the nature and extent of his alleged psychiatric injury were:

knowingly false and misleading, and
intended to induce Allianz to give him a personal injury damages settlement greater than that to which he was entitled.

Justice Weinstein also agreed, on the balance of probabilities, that Allianz had made out its claim in the tort of deceit.

Mr Yu was ordered to pay $670,000, plus interest of $200,000 and $230,000 towards Allianz’s legal costs.

South Korean-born Mr Yu moved to Australia in 2005 and became an Australian citizen in 2015. He and his estranged wife Hyun Sook Chung had Korean interpreters at the trial.

Mr Yu had a vehicle accident in July 2013, after which he told doctors he suffered from severe and debilitating depression that included:

a lack of motivation, energy and confidence
a sense of powerlessness
inability to read or follow complex instructions
a cognitive impairment
inability to work or drive because of low levels of function and concentration
spending most of the time in his room unable to meet his basic needs
poor personal hygiene requiring a carer
requiring assistance with daily living activities, and
little contact with people, including family, other than his carer.

Mr Yu initially sought more than $1.6 million plus costs at a March 2015 settlement hearing but agreed on $750,000.

Wife’s psychiatric assessment

After the settlement, Mr Yu’s wife, Ms Chung, also claimed under the NSW Motor Accidents Compensation Act 1999 alleging she had a psychological injury because of her husband’s accident.

She was assessed by psychiatrist Dr John Baker in October 2017. After hearing what Ms Chung told Dr Baker, Allianz considered Mr Yu had misrepresented his condition before the settlement to enrich himself.

Ms Chung disputed that the history recorded by Dr Baker was accurate, despite an accredited Korean interpreter being present during the assessment.

Dr Baker’s October 2017 report said Mr Yu maintained a relationship with Ms Chung, provided all her basic necessities and oversaw managing six share residents in the house she lived in with her son. Ms Chung told Dr Baker her husband managed the family’s finances and allocated her a fixed sum through an electronic bank account he maintained and monitored.

She deposited pay from her part-time job into his accounts. Mr Yu came to the house on most days to check how it was being run, organised all the family properties’ rental arrangements and Ms Chung told Dr Baker she complied with all her husband’s requests to sign forms for loan applications and property renovations.

Witnesses’ evidence

Anthony Nehme, a contractor engaged by Mr Yu to build a home at Thornleigh, NSW, gave evidence Mr Yu negotiated the contract price “very firmly” and he had no direct dealings with Ms Chung.

Mr Nehme said Mr Yu appeared professional and calm in their negotiations and appeared to understand what he was saying in English during their conversations.

He said Mr Yu was normally well dressed in casual clothing and came onsite about
once a fortnight to discuss the construction’s progress. Mr Yu was “actively involved” in discussions about cost variations and made decisions about specifics of the build.

Mr Nehme saw Mr Yu drive a motor vehicle “on many occasions” and both once went to a bank where Mr Yu withdrew $20,000 to $30,000 to pay Mr Nehme, which Mr Yu counted before giving it to him.

Anthony Weerakkody, a project coordinator at Boss Design Pty Ltd, designed the Thornleigh house. He was commissioned in January 2015, after the accident but before the settlement.

Mr Weerakkody gave evidence he helped Mr Yu to comply with development requirements to get the building approved, but Mr Yu rejected his offer to provide project management services, saying he would project manage the construction himself.

At Boss Design’s office, Mr Weerakkody would sometimes communicate with Mr Yu with the help of a junior architect who spoke fluent Korean. His evidence was that Mr Yu understood or agreed with what was being said and interpreted to him. Mr Weerakkody did not remember ever dealing with Ms Chung.

Behaviours ‘inconsistent’

Justice Weinstein said Mr Nehme and Mr Weerakkody were “disinterested witnesses”. Mr Yu’s behaviours, including instructing Mr Weerakkody either in English or Korean and negotiating invoices, were “inconsistent” with the representations made to Allianz.

Psychiatrist Dr Andrew McClure in 2014 said Mr Nehme and Mr Weerakkody’s descriptions of Mr Yu’s demeanour showed he was “functioning at a normal level”.

He said Mr Yu had negotiated loans with Westpac that indicated “a degree of complexity of cognitive processing for thought and planning” inconsistent with an initial doctor’s assessment of impaired cognitive functioning.

The evidence Mr Yu had gone to a bank to withdraw a large amount of cash, which likely included speaking with a teller and signing documents, also indicated “his cognitive functioning was minimally impaired by the accident”.

Justice Weinstein’s impression was that Mr Yu had “significant fluency in the English language but benefited from the assistance of an interpreter in the court environment”.

He accepted Mr Nehme and Mr Weerakkody’s evidence that Mr Yu interacted with them largely in English while they were designing and constructing the Thornleigh house.

Asked why he was the only point of contact for a Westpac loan if he had no knowledge of the loan’s structure or amount, Mr Yu said he assumed his wife was unavailable all the time so had given the bank his phone number, but Ms Chung had organised the loans.

Responses ‘unsatisfactory’

Justice Weinstein said Mr Yu’s evidence about the bank loans was “entirely untrue” and pointed to other evidence of false claims made in a range of documents, including to several banks and government departments.

The judge said Mr Yu’s answers to questions about the documents were “most unsatisfactory”. “I do not accept his denials or explanations. His evidence was entirely lacking in credibility.”

Ms Chung gave evidence Mr Yu’s personality and behaviour changed radically after the July 2013 accident and they separated in February 2014.

She said Dr Baker’s assessment was full of errors and she believed the Korean interpreter was ineffective.

She said while Mr Yu had a role in paying bills electronically, she denied he controlled her finances or she deposited her earnings into his account or lived off an allowance from him.

She could not explain why a decision was made to give Mr Yu authority to operate her accounts when she believed him to be mentally unstable.

Claimant ‘deliberately deceptive’

Ms Chung saw Dr Tarra Shaw in November 2015 for her own damages claim. When asked whether she told Dr Shaw: “I am not really well physically. I cannot work. I cannot control or manage my situation,” Ms Chung said she could not remember.

She agreed she had told Dr Shaw she only showered when leaving the house, infrequently brushed her teeth, ate only uncooked noodles, could not remember the names or doses of her medications and her Korean psychiatrist had organised a share maid to live in the home rent free to help care for her and her 10-year-old son.

Ms Chung agreed she had been deliberately deceptive about a statement on a May 2015 loan application that her husband was working when he was not. She said a broker making representations on their behalf to Westpac told her to do it and said everyone did it to get loans approved.

Justice Weinstein said Ms Chung’s evidence about the broker was “inherently not credible”.

“To say Ms Chung was an unsatisfactory witness is an understatement. I reject her evidence in its entirety. It is amply contradicted by documentary evidence and the evidence of Mr Nehme and Mr Weerakkody which I accept.”

Key issue ‘temporal’

Defence counsel Mr Williams said the case’s key issue was “temporal” and the court should not take a “black and white” approach, instead considering questions of degree that arise with mental illness, including the capacity for variable presentation, and ambiguity arising from the use of interpreters.

But Allianz’s counsel, Mr Catsanos said the difficulty was that Mr Yu maintained the only significant change to his psychiatric condition was he no longer had suicidal ideation. There was no evidence the condition ever waxed and waned.

Justice Weinstein said Mr Yu and Ms Chung were “not candid” in their evidence and collaborated during their respective cross-examinations in an effort to present as cohesive a story as possible when faced with documents that implicated them both in fraudulent conduct, including purposefully lying in documents to obtain finance with Westpac, to secure public housing and to receive government benefits to which they were likely not entitled.

Mr Yu had engaged the architect and builder in anticipation of getting a settlement and exhibited normal behaviour after he believed he would no longer need to see doctors for the purpose of his claim.

Allianz Australia Insurance Ltd v Yu [2024] NSWSC 31 (2 February 2024)