NRMA defeats AARA

Although the Australian Automotive Repairers' Association (AARA) lost its Federal Court case against the NRMA, an appeal is being planned.

The AARA alleged that NRMA Insurance had been engaging in the practice of exclusive dealing in contravention of section 47(7) of the Trade Practices Act in respect of its preferred smash repairer (PSR) scheme. The AARA further alleged that NRMA refused to supply certain services to its policy holders in cases where policy holders had not agreed to go to PSRs.

The AARA amended its statement of claim on 5 February 2004 with a motion specifying that NRMA Insurance allegedly refused to supply to its policy holders not going to PSRs as being: timely assessment of the insured?s claim, timely authorisation to proceed with repairs, the opportunity to secure the benefit of an early release of the insured?s motor vehicle as a result of the above, authorisation to proceed with repairs, payment of towing expenses, and payment of the expense of towing to the premises of a non-PSR repairer.

In handing down his judgement on 2 June, 2004 Justice Lindgren dismissed both the motion and application, and directed that AARA pay the cost of the respondent, NRMA. He published his reasons in a document which is available from the Federal Court and can also be viewed on the internet www.fedcourt.gov.au.

One of the central issues of the case was whether teleclaims operators steered claimants towards PRS. While the evidence suggested this was so, Justice Lindgren found that the behaviour of the operators did not amount to refusal to supply services. George Elmassian, speaking of behalf of the AARA said that there would be an appeal- but at the time of going to press the grounds had not been decided. It may be against Justice Lindgren's ruling on Section 47(7) of the Trade Practices Act, or may cite other parts of the Act that are worthy of testing against NRMA's preferred smash repairer (PSR) scheme. Whichever way it goes the costs will be a major issue. Already the AARA has spent over half a million dollars on its own case, and must find more than that money pay the NRMA's awarded costs. While it was likely that there would be an appeal even if it had won, the AARA's task of raising more fighting funds after its defeat may well have ended the campaign. However, there appear to be several new sources of funds for the fight to go on. Providers of the money are keeping a very low profile.

The 60 or more repairers who filled the courtroom to overflowing on 2 June were optimistic before Justice Lindgren took his chair to announce the finding. They spoke of a celebration afterwards. When the judgement was delivered in less than a minute, many repairers were not sure whether they had won or lost. But the shaking heads of AARA leaders George Elmassian and Greg Coli told the story.

The repairers left the court building and stood around in dejected groups wondering what the future held for their battle against the NRMA PSR scheme. There was talk of refusing to do NRMA's work but, after discussion, few believed it would be effective since the PSRs were under contract and many would not buy into a boycott anyway.

Greg Coli then called the repairers together for what looked like a coach talking to his team at half time. He told them not to be depressed about the judgement.

"Don't walk away with your knuckles dragging on the ground," he said, looking squarely at them, some of whom were crying with disappointment. 'It's all about the big end of town. I can't elaborate on that here and now but rest assured it's not over. We might have lost a battle but the war is still on."

Needless to say, representatives of the NRMA did not wait around to chat to the repairers. They adjourned to their offices to prepare this statement:

"Insurance Australia Group (IAG) today welcomed a Federal Court ruling that its Automotive Repairers Association (AARA) initiated the action, contending that IAG?s PSR program breached the Trade Practices Act?s third line forcing provisions. An IAG spokesperson said IAG looked forward to continuing to work with the smash repair industry to offer quality and choice to customers.

'We instituted the PSR program because it gives our customers access to repairers of a high quality,? the spokesperson said. 'We are happy to recommend our preferred repairer network to our customers - this gives customers voluntary access to a high quality pool of rigorously checked repairers, who deliver quality and service.
'The Judge's ruling comes after last year's ACCC issues paper on the smash repair and insurance sectors, which states that programs like the PSR arrangement are in consumers' interests.