Insurance Australia Limited t/as NRMA v Howard

By summons filed on 21 September 2018, the plaintiff, Insurance Australia Limited, trading as NRMA Insurance (the Insurer), seeks to have the decision of the third defendant, Robert Quickenden (the Claims Assessor), made on 25 June 2018 to refuse the insurer’s application for exemption from the Claims Assessment and Resolution Service (CARS) (the Exemption Decision), set aside.

The effect of the Exemption Decision was that the amount of damages payable by the Insurer to the Claimant was determined by the Claims Assessor. Had the exemption been granted, the damages would have been assessed by a court.

The assessor was appointed by the second defendant, State Insurance Regulatory Authority (SIRA). The first defendant, Brendan Howard (the Claimant), claims damages suffered as a result of injuries sustained in a motor vehicle accident for which the insurer has accepted liability. The Claimant is the only active defendant, SIRA and the Claims Assessor having filed submitting appearances.

All references to legislation in these reasons are to the Motor Accidents Compensation Act 1999 (NSW), unless otherwise indicated.

Section 69(1) provides that SIRA “may issue guidelines for or with respect to procedures for the assessment of claims under Part 4.4 and associated matters”. These guidelines are known as “Motor Accidents Claims Assessment Guidelines” (the Guidelines). Section 106(1) provides that claims assessments under Part 4.4 “are subject to relevant provisions of [the Guidelines] relating to those assessments”.

Part 4.4 is entitled “Claims Assessment and Resolution”. Division 1A of Part 4.4 contains provisions relating to document exchange and settlement conferences before claims assessment. Division 2 of Part 4.4 contains provisions relating to assessment of claims and includes s 92, which exempts certain claims from CARS assessment in the following terms:

An application for an exemption under s 92(1)(a) is known as a mandatory exemption application (because the exemption is required to be granted). An application for exemption under s 92(1)(b) is known as a discretionary exemption application.

Division 3 of Part 4.4 contains provisions relating to claims assessors and includes s 100, which empowers claims assessors to require the production of documents from third parties. There are also provisions which empower claims assessors to summons parties (but not witnesses) to an assessment (s 102). Section 104 makes provision for proceedings before claims assessors and provides, by s 104(6), that in certain circumstances the assessor may assess the claim without holding any assessment conference or final hearing.

Part 4.5 provides for claims which are exempted from CARS assessment to be determined in court proceedings.

Section 116 provides that a licensed insurer must take all such steps as may be reasonable to deter and prevent the making of fraudulent claims.

It was common ground that the Guidelines comprise those which came into effect on 1 May 2014.

Clauses 1.13 and 1.14 of the Guidelines relevantly provide:

Clauses 8.11 and 8.12 of the Guidelines provide in part:

Chapter 14 of the Guidelines provides, of present relevance:

Chapter 17 of the Guidelines provides, relevantly:

It is common ground that a party to court proceedings is entitled to a hearing, may obtain documents on subpoena issued at the party’s request and is entitled to cross-examine the other side’s witnesses. As court proceedings are run in accordance with the adversary system, the judge generally allows the parties to conduct the proceedings themselves in accordance with forensic decisions made by their legal representatives. Typically, the parties are allocated time in court in accordance with their estimates of the length of the hearing. If the estimate proves to be insufficient, the judge will generally allocate more time for the parties to conclude the hearing.

This process is to be compared with that which applies for CARS Assessments. Mr Robinson SC, who appeared with Ms Lucy for the Insurer, informed me that such assessments are conducted in barristers’ chambers or solicitors’ offices and generally take in the order of half a day. The parties may only obtain documents from third parties by requesting that the claims assessor direct production under s 100. An insurer’s opportunity to cross-examine a claimant may be curtailed by the claims assessor. There is no right to have medical experts or third party witnesses attend to give evidence.

On 26 February 2014 the Claimant suffered injuries in a motor vehicle accident for which the Insurer accepted liability under s 94(1)(a).

On 20 December 2017 the Claimant lodged a CARS 2A General Assessment Application. On 21 February 2018 the Insurer lodged an application for assessment of a treatment dispute in respect of future treatment and care. The Insurer applied for an adjournment of the assessment conference (listed for 8 May 2018) pending resolution of the treatment dispute. On 11 April 2018 the Claims Assessor refused the Insurer’s application for an adjournment. On 2 May 2018 the Insurer applied for a discretionary exemption pursuant to s 92(1)(b) on the basis of cl 14.16.11 of the Guidelines (see above). It also made a further application for an adjournment based on its discretionary exemption application. On 7 May 2018 the Claims Assessor vacated the assessment conference and allocated 8 May 2018 for the hearing of the Insurer’s discretionary exemption application.

On 25 June 2018 the Claims Assessor refused the Insurer’s discretionary exemption application and made the Exemption Decision. The reasons for the Exemption Decision will be addressed in detail below.

The assessment hearing took place on 3 July 2018. Both parties have adduced affidavit evidence as to what occurred. As neither deponent has been required for cross-examination, I accept the evidence of both Ms Daunt (the Insurer’s solicitor) and Mr Dous (the Claimant’s solicitor). According to Ms Daunt, who instructed Mr O’Dowd, who appeared on behalf of the Insurer at the assessment hearing:

According to Mr Dous, the Claims Assessor responded by saying:

Mr O’Dowd, after speaking with Ms Daunt, said:

Thereafter the Claims Assessor proceeded with the claims assessment. On 7 August 2018 the Claims Assessor issued a certificate certifying the Claimant’s damages in the amount of $324,874.49 and costs and disbursements of $47,771.06 (the Assessment Decision).

The Insurer sought to set aside the Exemption Decision. It was common ground that setting aside the Exemption Decision would require the Assessment Decision also to be set aside, subject to the court’s discretion to refuse relief on discretionary grounds.

The grounds, as set out in the summons, are:

As each of these grounds turns on the reasons given by the Claims Assessor for the Exemption Decision, I propose to summarise the reasons and, where necessary, include extracts from them.

After setting out the nature of the application for exemption, the Claims Assessor summarised the Insurer’s submissions as follows:

The Claims Assessor noted the Insurer’s submissions as to why the claim was not suitable for CARS Assessment as follows at paragraph [11] of the reasons:

The Claims Assessor summarised the claimant’s submissions in response as follows at [12] of the reasons:

The following section of the reasons, entitled “Legal Principles” appears in paragraphs [13]-[26]. It was common ground that the Claims Assessor correctly summarised the relevant principles and referred to the relevant authorities and portions of the Guidelines. The Claims Assessor’s identification of the relevant task at [18]-[19] of the reasons has not been the subject of challenge. He said:

At [20] of the reasons, the Claims Assessor set out [43] from Insurance Australia Limited t/as NRMA Insurance v Banos [2013] NSWSC 1519 where Campbell J referred to applications for exemption based, as in the present case, on the insurer’s allegation that a claimant has made a false or misleading statement in a material particular in relation to the injuries, loss or damage sustained in the accident giving rise to the claim. Campbell J’s non-exhaustive list of relevant considerations included the following at (d):

The Claims Assessor referred to Insurance Australia Limited trading as NRMA Insurance v Milton [2016] NSWSC 1521 where Beech-Jones J said that s 92(1) does not preclude any evaluation of an insurer’s allegations in the determination whether the claim is unsuitable for CARS Assessment. The Claims Assessor also referred, at [23] of his reasons, to Insurance Australia Limited trading as NRMA Insurance v Taylor [2017] NSWSC 507 and summarised the following observations by Davies J:

At [26] of his reasons, the Claims Assessor said:

The next section of the reasons is entitled “Consideration”. Because of the emphasis placed by the parties on the paragraphs within this section, it is reproduced in full as follows:

In paragraph [30] of his reasons, headed “Conclusion”, the Claims Assessor declined to grant the exemption.

As is apparent from the summary of relevant provisions above, claims assessors are required to give reasons if an exemption pursuant to s 92(1)(b) is granted (cl 14.13 of the Guidelines). They are also required to give reasons for assessment (Chapter 18 of the Guidelines). However there does not appear to be any express requirement that reasons be given where an application for a discretionary exemption is declined. Nonetheless, in the present case, the Claims Assessor gave reasons for the Exemption Decision which form part of the record because of s 69(4) of the Supreme Court Act 1970 (NSW).

I will address the grounds in the summons which are set out above.

As appears from the wording of ground (1) in the summons, the Insurer submitted that the Claims Assessor considered that, because the injuries sustained by the Claimant were not “catastrophic”, the exemption could not be granted.

I reject this submission. It is plain from the reasons that the Claims Assessor was considering various factors in deciding whether to grant an exemption. He included the circumstance that the injuries were not catastrophic as a relevant, but not determinative, factor. The Claims Assessor was not bound to disregard all matters under cl 14.16 of the Guidelines except those raised by the applicant for an exemption. Whether the claim was a catastrophic claim was, at least potentially, a relevant factor by reason of the wording of cl 14.16 and, in particular, cl 14.16.5. Subject to the requirements of procedural fairness, it was open to the Claims Assessor to take it into account. Indeed, Mr Robinson accepted that whether the claim was catastrophic was not a matter which the Claims Assessor was bound not to take into account in the sense referred to in Minister for Aboriginal Affairs v Peko-Wallsend (1986) 162 CLR 24 at 40 (Mason J); [1986] HCA 40. As such, it was for the Claims Assessor to determine how (if at all) he would take that into account and what weight he would give to it: Carr v Western Australia (2007) 232 CLR 138; [2007] HCA 47 at [5]–[7] (Gleeson CJ). This ground has not been made out.

It was argued on behalf of the Insurer that aspects of the Claims Assessor’s reasons were neither rational nor logical which made the Exemption Decision legally unreasonable. Mr Robinson relied on what the High Court said in Minister for Immigration and Citizenship v Li (2013) 249 CLR 332; [2013] HCA 18 (Li) at [76] when applying principles applicable to appellate review of a judicial discretion with judicial review of a statutory discretion:

In Li the Migration Review Tribunal’s refusal to adjourn the proceedings in circumstances where a further skills assessment was forthcoming was held to be so lacking in evident or intelligible justification that it was held to constitute jurisdictional error. It is to be distinguished from the present case because Mr Robinson accepted that it was open to the Claims Assessor to refuse the exemption. Nonetheless, Mr Robinson contended that the Exemption Decision ought be set aside for legal unreasonableness because the reasons were, in effect, unintelligible and provided neither an explanation nor a justification for the decision.

Mr Robinson contended that the reasons for the Exemption Decision were confined to what was set out in [27] and [28] under the heading “Consideration” (reproduced above). He submitted that the first two dot points in [27] indicated that the Claims Assessor accepted what the Insurer said about the basis for an exemption (non-disclosure of pre-existing lumbar spine capacity giving rise to issues of credit and alleged false or misleading statements). As to the third dot point in [27] (whether (unspecified) witnesses other than the claimant will be called and the fact that they will not be required to give evidence on oath or affirmation in a CARS assessment), Mr Robinson submitted that this matter was irrelevant at that stage since the Insurer had not yet been granted an exemption. As to the fourth dot point (that the claim did not enliven any matter under cl 14.16 of the Guidelines other than the one in 14.16.11 which had been raised by the Insurer), Mr Robinson contended that it was irrelevant that only one matter in cl 14.16 was raised and that the absence of other relevant matters ought not to have been weighed in the balance against the exemption.

There was an issue as to the correct interpretation of the fifth dot point in [27] of the reasons. Mr Robinson contended that the reference to there being a “claim of substance” could be an acknowledgement that the Insurer’s application for exemption was a substantial one. He accepted that the use of the word “claim” in the second sentence was a reference to the Claimant’s claim and the fact that it did not involve a catastrophic injury.

As to paragraph [28] of the reasons, Mr Robinson submitted that the opening words (“I am not satisfied that any of the following would be advanced by a curial hearing”) were “nonsensical”. He contended that the first dot point and the passage underneath it (which referred to the “symbolism or dignity of the Court room”) were “utterly and entirely irrelevant” and “incomprehensible”. He described the second dot point (which referred to “curial cross-examination” and “CARS questioning”) as “bereft of meaning”. As to the third dot point (the possibility of subpoenas issued to third parties), Mr Robinson said that it was not necessary for the Insurer to specify which, if any, witnesses it would call if the exemption were granted because cl 14.16 required the Claims Assessor to “have regard to the circumstances of the claim as at the time of consideration of the claim”, that is, at the time of the hearing of the exemption application. As to the fourth dot point (the possibility of medical oral expert evidence), Mr Robinson made a similar submission: that the Insurer was not obliged to foreshadow all, or any, of the experts it proposed to call or require for cross-examination if the exemption were granted.

Mr Robinson also challenged the reasons in [29] as disclosing error. He submitted that the express words of cl 14.16 required the Claims Assessor to confine his attention to “the circumstances of the claim as at the time of consideration of the claim” and that it was an error for the Claims Assessor to undertake a speculative prospective inquiry as to how the court proceedings would be conducted if the exemption were granted. Mr Robinson also submitted that no reasoning was exposed in [29], which comprised no more than a list of conclusions. He submitted that claims assessors were frequently barristers or solicitors and that their reasons ought to be held to a standard which reflected their presumed expertise as legal practitioners.

Mr Johnson SC, who appeared with Mr McSpedden for the Claimant, submitted that it was necessary to read the reasons of the Claims Assessor fairly and as a whole. He also submitted that, once the result was accepted as being within the range of legally available decisions open to the Claims Assessor, the Exemption Decision could not be impugned on the grounds of legal unreasonableness. He contended that, in so far as the legal unreasonableness ground incorporated a claim of inadequate reasons, the reasons ought be judged in accordance with the principles in Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 271-272; [1996] HCA 6 (Brennan CJ, Toohey, McHugh and Gummow JJ) (Wu Shan Liang).

The concept of legal unreasonableness is largely concerned with whether the decision-maker is acting within the authority conferred by the statute. As Mr Robinson accepted that the result fell within the range of lawful results, it is necessary to examine the process whereby the decision-maker came to the Exemption Decision. This requires an examination of the reasons to ascertain whether they demonstrate a justification for the exercise of power. The reasons of an administrative decision-maker are to be read with what has been termed a “beneficial construction”.

In Wu Shan Liang, the Minister’s delegates rejected the respondents’ applications for refugee status on the ground that the respondents’ fears of persecution were not well-founded. The respondents applied for judicial review of the delegates’ decision under the Administrative Decisions (Judicial Review) Act 1977 (Cth). Wilcox J dismissed the applications. The Full Court of the Federal Court allowed the respondents’ appeal. The Minister appealed to the High Court following a grant of special leave. The High Court allowed the appeal and reinstated the original decision of the delegates. In the joint judgment of the High Court, their Honours considered the proper role of the reviewing court as follows at 271-272:

The High Court addressed the Full Court’s conclusion that the use by the delegates of the phrase, “I consider it speculative … to suggest that [the respondents] would be treated more harshly than in the known relevant cases” indicated that the delegates had applied the incorrect legal test. The High Court said at 277-278:

As in Wu Shan Liang, the decision-maker, in this case the Claims Assessor, has not expressed his reasons in an unambiguous way. There is force in Mr Robinson’s criticism of the language of the Claims Assessor which, when “construed minutely and finely with an eye keenly attuned to the perception of error” (to borrow the language of the Full Federal Court in Collector of Customs v Pozzolanic (1993) 43 FCR 280 at 287, citing Lockhart in Politis v Commissioner of Taxation (Cth) (1988) 16 ALD 707 at 708), does not, at certain points, make sense.

However, when one adopts a “beneficial construction” of the reasons, the substance of the Claims Assessor’s reasons is relatively clear. The Claims Assessor was obliged to consider matters put forward by both parties to determine whether the claim was unsuitable for assessment. The Claims Assessor was also, subject to the requirements of procedural fairness (about which there is no complaint), entitled to take into account any matter which he considered to be relevant to the exercise of the discretion, including those matters which were common ground (such as that the Claimant’s injuries were not catastrophic). Even if the Claims Assessor could be said to have undertaken a weighing process when considering all relevant factors, this does not indicate error since it is often a feature of discretionary decisions (including when sentencing offenders) that relevant factors might tend towards one decision or the other. Further, it does not do justice to the Claims Assessor’s reasons to regard the paragraphs headed “Consideration”, [27]-[29], as comprising the whole of his reasoning. Decision-makers commonly consider all of the material before they write a word: Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 [2003] HCA 30; (2003) 77 ALJR 1165 at [14] (Gleeson CJ). A beneficial construction requires a court to refrain from pedantry or overmuch reliance on headings and discern the reasoning from the whole of the reasons, not the portion which bears a particular label.

As referred to above, it was accepted by the Insurer that the Claims Assessor articulated the correct test and referred to the relevant authorities germane to the exercise of his discretion.

In [27] of his reasons, the Claims Assessor identified matters raised by the parties and concluded that the only relevant matter in the list in cl 14.16 was the one in cl 14.16.11. The Claims Assessor specifically excluded the factor that the claim was one for catastrophic injury as it was common ground that it did not fall into that category.

In [28] the Claims Assessor had regard to the “comparative limitations and advantages of an assessment conference on the one hand and a court hearing on the other”. At [29]-[30], he concluded that he was not satisfied that the claim was unsuitable for assessment and recorded his view that a fair and just hearing could still be had at an assessment conference. He also noted that credit is often an issue in a CARS hearing and that credibility could still be determined in that context.

The Claims Assessor’s reasons are to be read fairly as a whole and given a beneficial construction. They contain an evident justification for the exercise of power: that he was not satisfied that the claim was unsuitable for assessment because a fair and just hearing could still be had at an assessment conference.

In Minister for Immigration and Border Protection v SZVFW [2018] HCA 30; (2018) 92 ALJR 713, Nettle and Gordon JJ said at [84]:

In substance, Mr Robinson’s challenge to the Exemption Decision rests on the premise that the reasons are “unintelligible”. I accept that there are several infelicities of expression in the reasons. For example, in the fifth dot point of [27], I consider that the word “claim” is used in the same sense in both sentences and is a reference, in both cases, to the Claimant’s claim. In effect, the Claims Assessor was saying that the Claimant’s claim was substantial but not catastrophic. The opening words of [28] do not particularly fit with what follows in the dot points under that paragraph. The “symbolism and dignity of the Court room” is irrelevant since what was at stake was the fact that evidence in court has to be given on oath or affirmation and the opponent has a right to cross-examine. While claims assessors may be barristers, there is no requirement in the Act that they be legal practitioners. In any event it is not appropriate that their reasons be held to a judicial standard: see, in the context of s 126 of the Act: Allianz Australia Insurance Ltd v Kerr (2012) 83 NSWLR 302; [2012] NSWCA 13 at [53] (Basten JA, McColl and Macfarlan JJA agreeing).

Although there was no statutory obligation to give reasons, the Claims Assessor chose to give them. He cannot be held to a higher standard than that which applies where there is such an obligation. In Wingfoot Australia Partners Pty Ltd v Kocak (2013) 252 CLR 480; [2013] HCA 43 the High Court (French CJ, Crennan, Bell, Gageler and Keane JJ) said, at [55], in circumstances where there was a statutory obligation to give reasons that the assessor was, in substance, required to “explain the actual path of reasoning in sufficient detail to enable a court to see whether the opinion does or does not involve any error of law”. Notwithstanding the evident deficiencies in expression, I consider the import of the Claims Assessor’s reasons to be sufficiently clear.

Applying a beneficial construction to the reasons, I regard the Claims Assessor as having said, in effect, the following:

I reject Mr Robinson’s submission that the wording of cl 14.16, which relevantly requires the assessor to “have regard to the circumstances of the claim at the time of consideration of the claim”, prevents the assessor from considering the relevant counterfactual: namely, if an exemption were granted, the use which the applicant for exemption would be likely to make of the forensic avenues which are available in court proceedings but unavailable on CARS assessment.

In the present case, the Insurer did not, for example, say, “if the exemption were granted, we would want Dr X for cross-examination to ask Dr X to reconsider his or her an opinion in light of the true history instead of the false history given by the Claimant”; or “we would subpoena witness Y who was the Claimant’s neighbour to give evidence about his pre-accident condition or post-accident capacity”. In those circumstances, the Claims Assessor was entitled to note the absence of any such indication.

I do not understand the Claims Assessor’s reasons at [29] to indicate that he did not take account of the allegations made by the Insurer. It is plain from the first two dot points in [28] that the Claims Assessor accepted that there was substance to the Insurer’s allegations that the Claimant had not disclosed his prior back conditions in circumstances which would be relevant to his credit and his capacity. The reference to further material ought, applying a beneficial construction, be understood as a reference to further material which might indicate that the forensic avenues available in a court and unavailable in an assessment conference, would make a material difference to the Insurer’s right to a fair hearing.

I am not persuaded that there was anything inappropriate, much less unlawful, in the Claims Assessor’s indication to the Insurer in [29] of his reasons that “[t]here is the possibility of other material becoming available which would change my determination”. It was common ground that further applications could be made if there were a change in circumstances. The Claims Assessor was open to this possibility, as indicated by the question he asked Mr O’Dowd before the assessment hearing began on 3 July 2018. Although the assessment hearing took place only 8 days after the Exemption Decision had been made it was at least possible that there would have been a change in circumstances.

For example, the Insurer had identified, in its written submissions dated 2 May 2018 in support of the exemption application, that it had not received the records it had requested from Healthsmart Medical Centre and the Family Practice at the Gap. However, I understood it to be common ground that documents from these sources were made available in time for the assessment conference on 3 July 2018.

Ground 3 has not been made out.

As none of the grounds has been made out, it is not necessary to decide whether, had any of the grounds been made out, it would have been appropriate to decline relief because of the Insurer’s conduct in waiting until the Assessment Decision had been made before filing the summons in this Court to challenge the Exemption Decision.

The parties accepted that there was no reason why the usual rule that costs follow the event ought not apply: Uniform Civil Procedure Rules 2005 (NSW), r 42.1.

For the reasons given above, I make the following orders: