IAG Limited v Sleiman

1. [1]

   The plaintiff is a compulsory third party liability insurer under the Motor Accidents Compensation Act 1999 (NSW) (“the Act”). It seeks judicial review of an administrative decision made under that Act on 5 January 2017 by the second defendant, an assessor of the State Insurance Regulatory Authority (“the Authority”). The decision is comprised in a certificate issued under s 94 of the Act, assessing damages for injuries sustained by the first defendant in a motor vehicle accident on 31 January 2014. The sum assessed is $929,516.01.

2. [2]

   The second and third defendants filed submitting appearances. The first defendant filed a response to the summons but did not participate in the hearing. The plaintiff’s arguments in support of orders quashing the assessment have therefore been received by the Court without opposing arguments from any contradictor.

The assessment

1. [3]

   The plaintiff admitted liability for the accident by letter of 9 July 2014. Accordingly the referral to the Authority under s 90 of the Act was for assessment of the amount of damages only. Under s 93 of the Act the Principal Claims Assessor appointed the second defendant to assess the claim. The material provided to the second defendant (hereafter “the assessor”) included medical assessment certificates issued pursuant to s 61 of the Act. One of these certificates dealt with physical injuries and attributed 4% Whole Person Impairment to soft tissue injuries to the first defendant’s right shoulder and to his right knee. Another certificate attributed 22% Whole Person Impairment to psychiatric consequences, namely chronic Post Traumatic Stress Disorder and chronic Major Depressive Disorder with panic phenomena.

2. [4]

   The assessor held an assessment conference in accordance with s 104 of the Act on 1 November 2016. Subsection (5) of s 94 required that she attach to her certificate of assessment of the first defendant’s damages “a brief statement … setting out the assessor’s reasons for the assessment”. The certificate issued on 5 January 2017 was accompanied by twelve pages of reasons in which the damages claim was considered in its various components, concluding with the following summation of assessed amounts:

Grounds

1. [5]

   The plaintiff’s grounds for seeking an order that the assessor’s certificate be quashed are concerned with the component allowed for future economic loss. The plaintiff relies upon s 126 of the Act (which governs assessment by a court of damages for future economic loss) and s 122(3) (which provides that Ch 5, including s 126, applies to assessments by assessors in the same way as it applies to assessments by a court). Section 126 is as follows:

2. [6]

   The plaintiff’s grounds occupy two pages of the summons but may be summarised, without detraction from their substance, as follows:

   1. (1)

      (Numbered 5(a)(i) in the summons). The assessor failed to make and record findings on matters which were necessary for correct application of s 126(1).

   2. (2)

      (Numbered 5(a)(ii) in the summons). The assessor applied a wrong legal test by considering the first defendant’s “potential earning capacity” rather than “the claimant’s most likely future circumstances but for the injury”, as required by s 126(1).

   3. (3)

      (Numbered 5(b) in the summons). The assessor failed to provide adequate reasons, in particular with respect to how she arrived at her finding that the first defendant’s “potential” earning capacity was $1,000 per week or how she derived the figure to which effect was given in the certificate, namely, $600 per week.

   4. (4)

      (Numbered 5(c) in the summons). The decision so far as it includes $497,503.98 for future economic loss is unreasonable in the sense that no reasonable assessor acting with a correct appreciation of the task could have arrived at this figure and the decision, in this respect, lacks evident and intelligible justification.

3. [7]

   An order quashing the assessor’s decision, as sought by the plaintiff, may be made under s 69 of the Supreme Court Act 1970 (NSW) if there is shown error of law on the face of the record (see subs (3) of s 69) or jurisdictional error. The record includes the decision-maker’s reasons: s 69(4). There would be an error of law on the face of the record if the assessor’s reasons disclose that she applied a legal test contrary to s 126, as alleged in ground (2). Failure to provide adequate reasons, as alleged in grounds (1) and (3), would also be an error of law on the face of the record: Campbelltown City Council v Vegen (2006) 67 NSWLR 372; [2006] NSWCA 284 at [130]. Unreasonableness is alleged in ground (4), in the sense explained in Minister for Immigration and Citizenship v Li (2013) 249 CLR 332; [2013] HCA 18 at [76]:

The assessor’s reasons

1. [8]

   Against this factual and legal background the assessor’s reasons are to be evaluated. Relevantly for present purposes the reasons include the following findings and analysis (with references to paragraphs of the assessor’s reasons shown thus: “[21]”).

2. [9]

   The assessor accepted as accurate the first defendant’s income tax returns filed in respect of the five financial years up to and including the year in which the accident occurred. They showed the following (see [21]):

3. [10]

   As the accident occurred in January 2014 and the first defendant did not work thereafter, the last of these tax returns may be taken as indicating $26 per week during the six months to 31 December 2013. Other evidence in respect of the two years preceding the accident, coupled with the tax returns, caused the assessor to find that in that period the first defendant “had hardly worked … and had taken two small casual positions”. He had been unemployed at the date of the accident: [10] and [21].

4. [11]

   The first defendant’s initial claim form was completed on 19 May 2014 with the assistance of a solicitor. Question 37 as to whether the first defendant had lost income because of the accident was ticked “No”. Question 48 as to whether firm arrangements had been made before the accident for the first defendant to start a new job was ticked “Yes” but the request on the claim form for details was left blank: [16] and [17].

5. [12]

   The assessor found that “only over time has the [first defendant’s] history evolved” into an assertion that he had been offered full-time employment prior to the accident: [16]. She recorded the following conflicting accounts of this as given by the first defendant at various times. He told a doctor on 26 June 2015 that he had worked for Leighton Contractors in construction for 6 years up to the date of the accident and that prior to that he had worked as a lexographic printer for 5 years. He said to this doctor that he had “applied for” a job with “the Sydney Frame Team” as a carpenter shortly before the accident and was to have had a medical examination on 6 February 2014.

6. [13]

   Inconsistently with this he told another doctor on 1 September 2015 that his work with Leighton Contractors had ended in 2012 (which is more in conformity with his tax returns) and that he had then taken a redundancy. The first defendant said he had been “offered a full-time carpentry job” shortly prior to the accident and had attended a medical “in about mid-February” but had failed that due to his injuries. In a statement prepared for the purposes of the assessment the first defendant said the job he had been offered in about January 2014 was “a set run in a heavy rigid truck … working full time 8 hours [per] day, 5 days per week at about $33.00 per hour with the promise of regular overtime”: [18g].

7. [14]

   The assessor recorded that a letter from the putative prospective employer was produced, dated 11 February 2014, but the assessor found that letter short on detail and she was left with “concerns as to the arrangement”: [14]. The assessor found as follows:

8. [15]

   The first defendant claimed loss of income at the rate of $1,538 per week. The assessor concluded:

9. [16]

   The assessor’s analysis of these facts, with respect to past and future economic loss, appears at [60] – [86]. Her principal findings with respect to past economic loss were as follows:

10. [17]

    The assessor commenced her consideration of future economic loss by quoting subs (1) of s 126 of the Act at [66]. There followed these reasons, extracted so far as relevant:

Ground (3): failure to give adequate reasons

1. [18]

   The steps by which the assessor arrived at her ultimate figure for future economic loss may be re-ordered as follows:

2. [19]

   With the exception of an absence of explanation of how the assessor arrived at her conclusion in item (b), that the first defendant would have earned $1,000 net per week but for the accident, the above summarised steps of reasoning were sufficient to discharge the assessor’s obligation to give reasons.

3. [20]

   As to item (b), it has been observed at [10] that the figure for weekly earnings in the financial year ended 30 June 2014 implied that in the six months immediately preceding the accident the first defendant must have earned on average $26 per week. Taking that together with the weekly earnings for the preceding four years, to 30 June 2013, the first defendant’s average weekly earnings over four and a half years to the date of the accident had been $545, on evidence which the assessor expressly accepted. This is the weighted average of the figures in [9] and [10]. Factored into this average is a high point of slightly over $1,000 per week for the earliest year (apparently when he was employed by Leighton Contractors), significantly lower and declining weekly earnings for the next two years, then very low weekly income in the next year and a half, during which the assessor found the first defendant was for the most part unemployed.

4. [21]

   The assessor’s reasons say nothing as to how she arrived at a figure for future average weekly earnings, but for the accident, which would be nearly double his average for the four and a half years leading up to the date of injury. On the face of the reasons the conclusion is irreconcilable with the findings stated at [67] that the first defendant “would have continued” to work in construction and printing with “periods off work in between jobs from time to time”. The finding that his employment “would have continued” as in the past could only support an inference of future average weekly earnings of $545, unless some other finding or calculation or justification should be introduced to support the higher figure for the future.

5. [22]

   The assessor’s reasons do not identify any such additional finding, calculation or justification. No path of reasoning from the pre-accident average of $545 per week to a post assessment forecast of $1,000 appears anywhere in the reasons. Ground (3) must be upheld and the certificate of assessment must therefore be set aside.

Grounds (1) and (2): failure to apply s 126(1) correctly

1. [23]

   I do not consider that the assessor failed to make or record findings as necessary for the application of s 126(1). The first of her findings relevant to the award for future economic loss is that summarised at [18](a) above. Namely, that the first defendant would have continued to work in the construction and printing industries. In making this finding the assessor expressly applied the requirement of s 126(1) that the basis of assessing future economic loss should be “the claimant’s most likely future circumstances but for the injury”. At [67] the assessor explicitly stated that she found continuance in the construction and printing industries constituted “the most likely circumstances but for the injuries”. The statutory test has been conformed to, precisely.

2. [24]

   The assessor’s second relevant finding is that, absent the accident, the first defendant’s employment would have been interrupted from time to time between jobs, as had been the case in the past. At [81] this was said to be “likely”. In the context of the whole of the reasons, read fairly, there is no difference between this and a finding, as required by s 126(1), that the circumstances relied upon for the economic loss calculation should be those found to be “most likely”, but for the accident. In any event, the finding that there would have been intermittent interruptions to the first defendant’s employment, even without the accident, is favourable to the plaintiff.

3. [25]

   The assessor’s third finding for the purposes of assessing future economic loss is that the “most likely” pattern of future employment would have generated average weekly earnings of $1,000 net. This figure was expressed (at [84]) as the first defendant’s “potential earning capacity”. The plaintiff submits that in that phrase the assessor applied an erroneous test different from the statutory test of “most likely circumstances”. But earlier in the same paragraph the assessor said she estimated the first defendant’s loss as “likely to be” approximately $600 per week calculated at $200 per day for 3 days. That is, she found it “likely” that he would lose three days of work per week due to his injury and that it was “likely” that the work, if he could have performed it, would have generated $200 per day.

4. [26]

   The reference to “potential earning capacity of $1000 net per week” later in the same paragraph is merely repetitive of the assessor’s conclusion that it was “likely” that but for the accident he would have earned $200 per day for five days per week. There is no difference between the finding that $200 per day is the “likely” rate of pay the first defendant could have commanded and a finding, as required by s 126(1), that this rate is one of the “most likely circumstances” of his employment, if he had not been injured.

5. [27]

   I conclude that all of the “assumptions” for the future economic loss calculation have been stated by the assessor and that all are the subject of findings that they constitute the “most likely” scenario had the accident not occurred. The assessor did not err in the application of s 126(1) in this respect.

Ground (4): future economic loss quantification unreasonable

1. [28]

   Substantially for the reasons given at [20] – [22], the assessor’s attribution to the first defendant of a likely future rate of earnings, but for the accident, of $1,000 per week is strikingly and demonstrably unreasonable. It is inconsistent, internally, with the evidence recorded by the assessor and which she states she has relied upon. Notably, the four and a half years past earnings disclosed in the first defendant’s tax returns. It is inconsistent with the assessor’s stated assumption and reasoning that the first defendant’s pattern of employment would have continued as before.

2. [29]

   On a reading of the whole of the reasons it is evident that the unexplained leap to a future earning capacity of nearly double the first defendant’s demonstrated capacity over the years for which figures were available would deliver to him not compensation for lost capacity but a very considerable windfall. The resulting calculated figure of $497,503.98 for future economic loss in the assessment lacks “evident and intelligible justification” and the certificate must, on this additional ground, be set aside.

Orders

1. [30]

   Because I have upheld Grounds (3) and (4) the second defendant’s certificate of assessment must be set aside. The plaintiff submits that the certificate is an indivisible whole and must be set aside in its entirety, rather than being set aside only as to the future economic loss component. An equivalent submission was made to Hidden J in Allianz Insurance Ltd v Ward (2010) 79 NSWLR 657 and upheld (at [69] – [73]). In the absence of any argument to the contrary before me I will take the same approach as Hidden J. The assessment must be remitted to the third defendant for reassessment but, as a practical matter in view of the plaintiff not having contested any part of the assessor’s reasons except that relating to future economic loss, it would be expected that the re-assessment would be concerned with that component only. I have concluded that the reassessment should be assigned to an assessor other than the second defendant. If the matter were to be considered again by the second defendant on being remitted from this Court there would be a justifiable apprehension on the plaintiff’s part that she may have prejudged the matter and that she would revisit the assessment of future economic loss with a tendency to justify the quantum at which she previously arrived.

2. [31]

   The plaintiff does not seek its costs of the proceedings in this Court.

3. [32]

   Accordingly, the orders of the Court are:

   1. (1)

      The decision of the second defendant made 5 January 2017 pursuant to s 94(4) of the Motor Accidents Compensation Act 1999 (NSW) comprised in a certificate of assessment of damages is set aside.

   2. (2)

      The assessment of the first defendant’s damages is remitted to the third defendant for re-allocation pursuant to s 93 of the Motor Accidents Compensation Act 1999 (NSW) to an assessor other than the second defendant, the reassessment to be conducted having regard to these reasons.