Allianz Australia Insurance Limited v Zein

By amended summons filed on 15 December 2015 the plaintiff, Allianz Australia Insurance Limited (Allianz) seeks relief under s 69 of the Supreme Court Act 1970 (NSW) in respect of a certificate issued on 6 October 2015 by the third defendant, a claims assessor under the Motor Accidents Compensation Act 1999 (NSW) (the Act). The assessor assessed the damages in respect of a claim made by Saadallah Zein, the first defendant (the claimant), for injuries he sustained in a motor vehicle accident on 2 February 2012 at $1,420,801.23.

Submitting appearances were filed on behalf of the second defendant, the State Insurance Regulatory Authority (the Authority) and the third defendant.

On 2 February 2012 the claimant (then aged 37) was driving to work. When the insured’s vehicle failed to give way to the claimant’s vehicle, the two collided, as a result of which the claimant’s vehicle hit a telegraph pole. The insurer accepted liability for the claim pursuant to s 94(1)(a) of the Act. The assessor was obliged to assess damages pursuant to s 94(1)(b) of the Act.

The four challenges to the assessor’s decision relate to the assessment of future economic loss, which comprised $685,025 of the amount in the certificate. In order to address these challenges it is necessary to summarise the assessor’s finding as well as to set out the assessor’s reasons for the part of the award that related to economic loss in full.

The relevant findings of the assessor were, in summary, as follows. The paragraph references are to paragraphs in the reasons.

Immediately prior to the accident, the claimant was physically and mentally healthy and was working full-time ([52]). He was a skilled and conscientious worker who had, in the period 2007-2010, owned and operated his own dental laboratory ([75]).

The claimant sustained the following injuries in the accident: scarring and disfigurement to his right forearm and to the back of his head; musculoligamentous strain to his cervical and lumbar spine; soft tissue injury to his left knee; right macular scar; chronic post-traumatic stress disorder; and major depressive episode ([37]). These injuries and disabilities have had a severe mental and physical impact on the claimant ([48], [50], and [53]). Any other health problems are relatively immaterial ([52]).

As a result of these injuries and disabilities the claimant has been unable to work since the accident and, at the time of the assessment, the claimant remained unable to work, including in his pre-accident work as a dental technician ([64]-[66]). It was common ground that, but for the accident, the claimant would have been earning $1,150 net per week at the time of the assessment ([67], [78]). The claimant will probably be unable to work again as a dental technician ([72]).

The assessor made the following finding as to the claimant’s work history prior to the accident:

The assessor’s reasons for the component of the assessment that related to future economic loss were as follows:

Chapter 5, headed “Award of damages”, applies to assessments of damages by claims assessors under Pt 4.4 in the same way as it applies to such assessments by a court: s 122(3). A Court is bound by Chapter 5: s 123(1). Accordingly a claims assessor is bound by Chapter 5.

Section 126, which is contained in Chapter 5, provides:

Section 90 of the Act provides that a claim may be referred to the Authority by the claimant or the insurer, or both, for assessment under Pt 4.4 of Ch 4 (Motor accident claims). Section 99 empowers the Authority to appoint a claims assessor. Section 94(1)(b) of the Act requires a claims assessor, relevantly, to make an assessment of the amount of damages for the insurer’s liability (being the amount of damages a court would be likely to award). The assessor is to specify an amount of damages (s 94(3)) and attach a brief statement to the certificate, setting out the assessor’s reasons for the assessment (s 95(5)).

The assessment of claims under Pt 4.4 is subject to the Motor Accidents Claims Assessment Guidelines (the Guidelines): s 106. For present purposes the only relevant provision of the Guidelines is cl 18.4 which provides:

This Court has jurisdiction under s 69(3) of the Supreme Court Act to grant relief in respect of an error of law on the face of the record. The record includes the claim form, the certificate and, by reason of s 69(4), the assessor’s reasons. It does not include the evidence considered by the assessor: Craig v South Australia (1995) 184 CLR 163 at 182-183.

This Court’s jurisdiction under s 69 of the Supreme Court Act and its inherent jurisdiction to correct jurisdictional error are to be contrasted with its appellate jurisdiction under s 75A of the Supreme Court Act. An appeal under s 75A is a rehearing in which the Court of Appeal is to form its own assessment, subject to the advantage enjoyed by the tribunal of fact in seeing and hearing the witnesses. When damages arising from a motor vehicle accident are assessed by a judge, the merits of the assessment can be reviewed by the Court of Appeal on an appeal (either from the District Court or the Supreme Court) pursuant to s 75A. However, when, as in the present case, the assessment of damages is conducted by an assessor appointed under the Act, this Court has no jurisdiction to review the merits of the award.

As Brennan J said in Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 36:

In the present case, the repository of the relevant power to make the assessment is the assessor, not this Court. Accordingly, subject to the confines of administrative unreasonableness, no judgment can be made about the merits, correctness or appropriateness of the quantum of the assessment. The sole question for determination is its legality.

The grounds for judicial review were, in substance, as follows:

In order to address Allianz’s submission that the assessor erred in law by failing to award a buffer I propose to summarise the relevant principles (which are collected in Basten JA’s judgment in Allianz Australia Insurance Ltd v Kerr [2012] NSWCA 13; 83 NSWLR 302 at [21]-[31]).

The purpose of an award for future economic loss is to compensate the claimant, in so far as money can do it, for the loss of the capacity to earn, in so far as it may be productive of financial loss: Graham v Baker (1961) 106 CLR 340 at 347. It involves predicting the chance and effect of future (and therefore necessarily uncertain) events, including on a hypothetical basis (if the accident had not occurred). The approach to be adopted was authoritatively determined by the High Court in Malec v JC Hutton Pty Ltd (1990) 169 CLR 638 at 643 (Deane, Gaudron and McHugh JJ):

The task of the trier of fact is to form a “discretionary judgment”. As Heydon JA said in State of New South Wales v Moss [2000] NSWCA 133; 54 NSWLR 536 at [87]:

An assessment for future economic loss is commonly expressed in one of two ways. A calculation can be made of likely future loss on the basis of a weekly figure (whether deferred or otherwise) which is then capitalised and discounted to reflect the present value of a future periodic income loss. Alternatively, when the uncertainties are such as to make the first approach too artificial, a rounded figure, referred to as a “buffer” is selected. The choice of method is, largely, a matter for the trier of fact, it being a question of evaluative judgment which of the two methods is more apposite to the case: Allianz Australia Insurance Ltd v Cervantes [2012] NSWCA 244 per Basten JA at [24], McColl and Macfarlan JJA agreeing. The benefit of the first method is that it appears to give greater transparency; however, its disadvantage is that it may produce such an artificial and contrived set of figures as to make the exercise unrealistic and unhelpful.

After s 126 was enacted, the question arose whether its operation precluded the second of these orthodox methods for assessing damages for future economic loss. The Court of Appeal in Penrith Council v Parks [2004] NSWCA 201 (Giles JA at [3]-[5], Cripps AJA and McClellan AJA agreeing) confirmed that assessment by way of a buffer was not precluded by s 126. It is of the nature of an award by way of buffer that compliance with s 126 can be satisfied by more “generalised statements” than were a lump sum on the basis of a capitalised weekly amount to be ordered: Allianz Australia Insurance Ltd v Sprod [2012] NSWCA 281; 81 NSWLR 626 at [30] per Barrett JA.

A further question arose whether the need for the assumptions in s 126(1) to accord “with the claimant’s most likely future circumstances but for the injury” also affected the obligation to state “the assumptions on which the award was based” in s 126(3). In other words, the question arose whether only the assumptions that were “most likely” were to be considered. The answer to this question appears from the language of the section. The assumptions in s 126(1) relate to the “but for (the accident)” scenario. However, the assumptions in s 126(3) are, in substance, the basis for the award. The award is based on the difference between the “but for the accident” scenario and the actual (and future) situation of the claimant as a result of the accident. Section 126(1) applies to the former but not to the latter.

In enacting s 126 (and its equivalent in the Civil Liability Act 2002 (NSW), s 13) Parliament intended to disturb neither the principles established by Graham v Baker, nor those established by Malec v JC Hutton Pty Ltd.

In order to establish that the assessment of future economic loss by way of a capitalised sum constituted an error of law, Allianz must establish that it was not open to the assessor, as a matter of evaluative judgment, to assess damages in that way.

In my view it was open to the assessor to assess damages for future economic loss by way of a capitalised sum rather than a buffer. In the circumstances of the present case, the first integer of the comparison (what the claimant would have been earning at the time of the assessment but for the accident) was substantially agreed, in that the weekly figure was agreed (see [78]). It appears to have been accepted that the claimant’s most likely circumstances but for the accident would have been that he would have continued in his pre-accident employment. The second integer of the comparison (what his future circumstances would be) was, as is commonly the case, more difficult. The assessor identified each of the matters considered and his findings (including as a matter of future or hypothetical fact, with the relative chance assessed). His approach fulfilled the requirements of s 126.

Ms Poljak confirmed in oral submissions that Allianz would not take issue with the assessor’s reasoning if the end result was to assess damages for future economic loss by way of buffer. This submission demonstrates why the first ground must fail: the legality of an assessment of damages for future economic loss cannot depend on the label applied to the method if the basis of the assessment fulfilled (as Ms Poljak accepted it would have if it had been a buffer) the legal requirements of s 126 of the Act.

Had the assessor taken the approach of awarding a buffer (which it was within the evaluative judgment which was open to him to make), he might have given less detail about how the buffer was calculated. But he could hardly have given more detail than he actually did in his reasons, which were both comprehensive and, relevantly, sufficient. This ground has not been made out.

The relevant requirements to give reasons are set out above. Allianz’s submissions were largely, if not wholly, confined to a challenge to compliance with the requirements of s 126.

In my view, Allianz’s submissions fail to take account of the nature of the task of assessing future economic loss which is necessarily conjectural. The comparison between the “what if” (the accident had not happened) and the “what now” (that it has) cannot be determined in the same way as a historical fact can be determined. What s 126(1) requires is that the “what if” (the accident had not happened) be articulated in terms of the claimant’s most likely circumstances. What s 126(3) requires is that the assumptions on which the award was based, with relevant percentages, are stated.

Allianz’s criticisms of the assessor were trenchant, as the following extract demonstrates:

In the present case, the claimant was unfit for work at the time of the assessment. Questions including the following needed to be considered: whether the claimant would become fit for work again; when he would become fit for work again; what work he would be fit for; whether he would have to retrain in order to become employable having regard to his disabilities; and what his residual earning capacity was likely to be compared with his pre-accident income. Each of these questions required a degree of evaluation and estimation, as well as conjecture and prediction.

The particular criticisms levelled by Allianz for the alleged lack of reasons in the third ground were expressed in its written submissions as follows:

I consider that each of the matters listed above was addressed sufficiently in the reasons. As to (a), the reasons are to be found in [79]-[81]. The matter in (b) involved the making of an evaluative judgment as to the matters referred to above. The reasons for (b) were sufficiently exposed at [81] as well as [79]-[80]. As to (c), it cannot be an error of law to fail to mention something in reasons where there is no legal obligation to do so. The assessor considered the possible need for retraining, which was sufficient. I am not persuaded that any finding beyond that needed to be made or addressed. As to (d), it is plain that the assessor considered that it was preferable to allow for a period of five years for recovery and retraining than to calculate damages on the basis of a staged return to work. This was a choice open to the assessor whose reasons were sufficient. The assessment of residual earning capacity is, as with many aspects of the task of assessing damages for future economic loss, an evaluative judgment. The reasons are adequately set out, in particular at [79].

As to (f), this was the integer which required the least evaluative judgment since the claimant had a continuous work history prior to the accident. The assessor explained (at [67], [75], [76] and [77]) why he considered that, but for the accident, the claimant’s most likely future circumstances would have been that he would have continued to work as a dental technician at his current wage. The assessor’s reasons were sufficient to fulfil the requirements of s 126 as well as the general requirements to give reasons in the Act and the Guidelines referred to above.

The second ground has not been made out.

In so far as the third ground is said to involve an error of law on the face of the record, my consideration is restricted to a consideration of the record, as referred to above, which includes the assessor’s reasons. As is apparent from the extract from the assessor’s reasons set out above there is detailed reference to the evidence relied upon for various findings. For this reason, were I restricted to the record, I would dismiss this ground.

However, Ms Poljak, who appeared for Allianz, relied on jurisdictional error and, on that basis, submitted that it was necessary for the claimant to identify the basis for the findings for which there is alleged to be no evidence. I have reservations about this approach since it would appear to be an attempt to obtain merits review of the findings, which is no part of my jurisdiction. However, Mr Beckett, who appeared with Mr Gemmell on behalf of the claimant, submitted that the evidence to support the findings could readily be identified and tendered for the purposes of determining this ground. In these circumstances, I admitted such evidence as an exhibit in the claimant’s case.

The “fact” in respect of which it was alleged that there was no evidence was the assessor’s finding in [81] that the claimant will take approximately five years to obtain any remunerative employment.

The first difficulty with Allianz’s submission is that it is necessarily the case that there can be no direct evidence of such a finding, it being a matter of prediction, speculation, conjecture or “opinion”. Accordingly the gravamen of Allianz’s complaint must be that there was no evidence of the matters identified as forming the basis of the inferential finding, or that the inference was not open as a matter of law.

I propose to address each of the matters the assessor identified as a basis for the finding (taken from [81]) to determine whether there was evidence to support it. As there is evidence for each of the findings (in so far as there could be, having regard to the nature of the finding), it is not necessary to consider what occurred at the conference at which the Claims Assessment and Resolution Service (CARS assessment) took place or the evidence of the claimant himself. As appears from the assessor’s reasons, the claimant gave evidence at the conference, which was largely accepted by the assessor. At the conclusion of the reasons with respect to the claimant’s credit, the assessor said at [50]:

The reports of Dr McClure, Dr Hayek, Dr Lee and Dr Mayne support this finding, as well as the medical certificates of Dr Awada. For example, in a report of 7 April 2015 Dr Mayne said:

The reports of Dr Hayek, Dr Lee and Dr Mayne support the finding that the claimant continued to require counselling as well as anti-depressant medication.

The evidence in support of this finding is contained in the medical reports referred to above.

The reports of Dr Deveridge, Dr Buckley, Dr Saunders and Mr Martin support this finding. For example, in his report of 4 December 2013 Mr Martin said:

There is evidence to support this finding in the reports of Dr Deveridge and Mr Martin and in the claimant’s statement.

The selection of a figure of five years was one that was not susceptible of evidence. Because of the nature of the claimant’s disabilities (which were both physical and psychological) it was a matter of judgment for the assessor, assisted by expert opinion, as to the length of the period during which the claimant would be unable to engage in paid work. It is not a necessary precondition of such a finding that there be an expert opinion to support it. Indeed, an expert opinion may well not be admissible because the judgment called for is not obviously one falling within an area of expertise, but rather one which requires the weighing and consideration of lay and expert evidence by the trier of fact.

The third ground has not been made out.

The starting point is the following passage from the judgment of Mason J in Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 356:

Ms Poljak relied on Minister for Immigration and Citizenship v Li [2013] HCA 18; 249 CLR 332 in support of the proposition that unreasonableness can amount to jurisdictional error. That case concerned the Migration Review Tribunal’s decision to refuse an adjournment. I do not regard that case as applying to the present. However, it is unnecessary to consider the extent to which the decision of an assessor could be set aside on the grounds of unreasonableness in circumstances where I am not persuaded, for the reasons given below, that there is any illogicality or unreasonableness in the matters relied upon.

The first of the specific complaints made by Allianz in the fourth ground is that there is an inconsistency, or discrepancy between the finding that the claimant was not likely to have a successful business and the finding that it was possible that he would have a successful business (which required an adjustment to the percentage for vicissitudes). I am unable to discern any inconsistency. The first proposition is, in effect, that the claimant has a chance of having a successful business but the chance is not greater than the chance that he will not. The second proposition is, in effect, that the claimant has a chance of having a successful business, which, though possible, is not probable. These propositions are consistent. As the High Court said in Malec v JC Hutton Pty Ltd in the passage set out above, a prediction which has a 49% chance of occurring is no more to be disregarded than a prediction which has a 51% chance of occurring is to be treated as a certainty.

The second of the specific complaints made by Allianz in the fourth ground is that the claimant’s health and employment prospects would improve but that it would take five years before he would obtain remunerative employment. There does not appear to me to be anything either illogical or irreconcilable about these propositions. The claimant’s health and employment prospects might improve over time but unless and until they improved to the point where he could obtain remunerative employment, there would still be a gap between the improvement and the obtaining of remunerative employment. The assessor adjudged this period to be five years. For the reasons given above there was a basis for this inference. Accordingly, there is no place for judicial review.

Allianz has failed to make out any of its grounds for judicial review, either under s 69 of the Supreme Court Act or on the basis of jurisdictional error. As a stay was ordered by Hidden J on 25 November 2015, it is necessary to dissolve the stay, no successful challenge to the assessment having been made.

I make the following orders: