NRMA Insurance Limited v Ashfield

By amended summons filed in Court on 18 October 2018, NRMA Insurance Limited, the plaintiff (the insurer), seeks to have an assessment of damages made in respect of Malcolm Ashfield, the first defendant (the claimant), set aside pursuant to s 69 of the Supreme Court Act 1970 (NSW).

The State Insurance Regulatory Authority (SIRA) is the second defendant. Elyse White, in her capacity as a Claims Assessor of SIRA, is the third defendant (the assessor). Both the second and third defendants have filed submitting appearances.

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

The issues are to be determined in the context of the following facts.

The claimant was involved in a motor vehicle accident on 15 January 2015. He made a claim for damages suffered as a result of injuries sustained in the accident. The insurer has admitted liability for the accident. On 2 November 2017 the claimant applied to SIRA for his damages to be assessed. The insurer lodged a reply to the application on 28 November 2017. Following an oral hearing at a general assessment conference on 18 April 2018 (at which both parties were represented by a solicitor and a barrister), the assessor assessed the claim and issued a certificate pursuant to s 94(4) of the Act on 8 May 2018, to which was attached reasons for the decision.

The total amount of the assessment was $454,117.05. The assessment included an amount for past economic loss of $134,750 with superannuation of $14,822.50 and an amount for future economic loss of $154,670 with superannuation of $17,013.70. The insurer challenges the components of past and future economic loss.

The assessor’s reasons form part of the record: Pham v NRMA Insurance Ltd [2014] NSWCA 22; 66 MVR 152 at [27] (Leeming JA, Tobias AJA agreeing). Any error of law in the reasons will be an error on the face of the record for the purposes of s 69 of the Supreme Court Act. In these circumstances it is not necessary to consider whether any such error is also a jurisdictional error.

A claims assessor is required to assess claims under Pt 4.4 of the Act and also in accordance with Ch 5 of the Act. Section 122(3) provides that Ch 5 applies to the assessment of damages by a claims assessor under Pt 4.4 in the same way as it applies to an award of damages by a court. Claims assessments are subject to guidelines issued pursuant to s 69(1) of the Act: 106(1). It was common ground that the applicable guidelines were the “Claims Assessment Guidelines” effective from 1 May 2014 (the Guidelines).

Where liability has been admitted by an insurer, claims assessors have the power and statutory obligation to make binding determinations of damages: s 94. Claims assessors operate within the Claims Assessment and Resolution Service (CARS) unit of SIRA. Section 94 requires a claims assessor to issue a certificate of the assessment to the insurer and the claimant. The claims assessor must attach a brief statement to the certificate setting out the reasons for the assessment.

Clause 18.4 of the Guidelines makes further provision for the requirements for reasons as follows:

Once a claimant formally accepts an amount of damages awarded by a claims assessor, the insurer becomes liable to pay the assessed amount: s 95(2)(b).

Chapter 5 of the Act contains s 126, which imposes additional requirements on both courts and claims assessors to articulate their reasons for awards of future economic loss. It provides:

The insurer contended that the assessor made the following five errors of law in the assessment:

Because each of the grounds relates to economic loss I propose to set out the relevant part of the reasons in which this head of damages is addressed

Before turning to the grounds of appeal (which involve significant overlap), I propose to address, in general terms, the obligations imposed on assessors to give reasons and the additional obligations imposed by s 126 with respect to awards for future economic loss.

In Wingfoot Australia Partners Pty Ltd v Kocak (2013) 252 CLR 480; [2013] HCA 43 the High Court said, at [55], of a similar statutory regime that the obligation of an assessor was, in substance, 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”. Although the obligation to state the assumptions relied upon for the purposes of s 126 is imposed on courts as well as assessors, it has been accepted that the obligation on assessors to give reasons is a lesser one than that imposed on courts. Basten JA said in Allianz Australia Insurance Ltd v Kerr (2012) 83 NSWLR 302; [2012] NSWCA 13 at [53] (Basten JA, McColl and Macfarlan JJA agreeing):

The real question when assessing the adequacy of the assessor’s reasons is whether, on a fair reading of the reasons, the process of reasoning can be discerned, either expressly or as a matter of necessary inference: Zahed v IAG Ltd [2016] NSWCA 55; (2016) 75 MVR 1 at [6] (Leeming JA, Meagher JA agreeing).

Since Penrith City Council v Parks [2004] NSWCA 201 it has been accepted that s 126 is not inconsistent with the award of a buffer for future economic loss. The requirements imposed by s 126 in the context of an award in the form of a buffer were considered in Allianz Australia Insurance Ltd v Kerr. In that case, Basten JA summarised the assessor’s reasons on the topic of future economic loss as follows:

Basten JA concluded at [35]:

Basten JA, when considering the adequacy of reasons (which to some extent overlapped with the s 126 ground in Allianz Australia Insurance Ltd v Kerr), drew an analogy between the reasons required for awarding a buffer (whether by a judge or, as here, by an assessor) and the reasons required for imposing a particular sentence, the latter being a task which can only be undertaken by a judge. His Honour referred to the “inherent imprecision” involved in both tasks. Basten JA decided that the assessor, having concluded that an amount should be awarded by way of buffer, was not required to provide some further explanation as to how he reached the precise sum adopted in the award.

Before addressing the grounds of appeal I propose to set out the assessor’s chain of reasoning which I consider to be evident from the reasons, either expressly or by necessary implication, as follows:

The insurer contended that there was an unexplained inconsistency between the amount for the past ($550 net per week) and the amount for the closed period of two years for the future ($550 net per week). Mr Robinson SC, who appeared with Ms Gumbert on behalf of the insurer, argued that there was no reason for these figures to be the same since the circumstances in the past were to be distinguished from those in the future. He also submitted that it was not clear whether, and to what extent, the claimant’s unrelated back injury had been taken into account in the assessment of damages based on these figures. Mr Robinson submitted that the identity of the figures must be erroneous because there was another integer to be taken into account for the figure for the future, namely the effect of the pre-existing back condition, which ought to have had the effect that the weekly figure for future loss was lower than the weekly figure for past loss.

The insurer also contended that, in respect of the future closed period and the future buffer, although the assessor had said that she was required to take into account the unrelated back injury and discount damages accordingly, there is no indication that she actually did so and no quantification of the amount of any such discount.

As there is considerable overlap in the grounds of appeal, I propose to address them broadly before turning to each specifically.

The first point to be made about the unrelated back injury is that it pre-dated the claimant’s employment at Caltex Service Station. Thus the claimant’s pre-accident weekly earning capacity of $1,100 took into account his pre-existing back injury. In substance the assessor found that the claimant had, by reason of the injury sustained in the accident, totally lost his earning capacity (measured at $1,100 per week) until June 2016 and that, during the period from June 2016 until 8 May 2018 (the date of the certificate), the claimant had lost half his earning capacity due to the injury sustained in the accident (measured at $550 per week being 50% of $1,100 per week).

The assessor noted in her reasons that, at the assessment conference on 18 April 2018, the claimant had visible symptoms arising from the pre-existing back condition and said that they would need to be taken into account by discounting the claimant’s damages for future economic loss. The assessor then turned to the assessment of future economic loss, which attracted the operation of s 126. Although the assessor did not expressly say that the back injury had not materially affected the claimant’s past economic loss, I consider this conclusion to have been necessarily implied by the assessor’s express finding that it would have to be taken into account in assessing damages for future economic loss.

Under s 126, the assessor was obliged to satisfy herself of the claimant’s most likely circumstances but for the injury; set out these circumstances in the form of assumptions; and use these assumptions as a basis for the award of damages for future economic loss. While every case must turn on its facts, the types of matters relevant to the exercise required by s 126 were listed by Basten JA in Nominal Defendant v Livaja [2011] NSWCA 121 at [41]-[42]:

Mr Robinson accepted that, in the present case, (a), (b), (c) and (e) were evident from the assessor’s reasons and that (d) and (f) were not relevant in the circumstances of the present case.

The assessor found that, but for the accident, the claimant would have remained working with Caltex as a service centre attendant (at [30]). The assessor found that, partly as a result of the accident and partly as a result of the claimant’s unrelated back condition, the claimant could no longer perform those duties. The assessor found that the claimant would be likely to work for another forty years (this being the same period as had he not been injured). By necessary implication, the assessor found that the pre-existing back condition would not, of itself, have prevented the claimant from continuing to work at Caltex for this period.

The assessor expressly acknowledged that the damages for future economic loss would have to be discounted to take account of the pre-existing back condition, the symptoms of which she observed at the conference. In this acknowledgement there was no distinction drawn between the two years following the certificate and the period beyond that period. A fair reading of the reasons leads to the conclusion that the assessor took the pre-existing back condition into account for both future periods.

In light of the assessor’s reasons, it is apparent that the assessor took into account the following matters when determining the figure of $550 net per week for the future closed period of two years from the date of the certificate: first, the need for the claimant to retrain as a forklift driver as a result of the injury sustained in the accident; secondly, the time it would take to obtain part-time and then full-time work in that new occupation; and thirdly, the pre-existing back condition. It is, in these circumstances, not to the point that the figure of $550 per week for the initial two-year period happens to be the same as the figure for the past economic loss since the process of reasoning which produced the same figures was different, as is evident from the reasons.

The present is not the usual case where the figure for the past and the figure for the future would ordinarily be the same, the dividing line between them being determined by the date of the assessment or judgment, which is necessarily arbitrary. This was the situation in Nominal Defendant v Aychahawchar [2015] NSWCA 58; (2015) 70 MVR 89 where I said at [18] (Basten and Gleeson JJA agreeing):

In the present case, there were two significant distinctions between the past and the future: first, the claimant at the conference exhibited signs of discomfort arising from the pre-existing back condition; and, secondly, he told the assessor of his immediate plans to retrain as a forklift driver and obtain full-time work in that occupation in the future. It was these matters which called for an assessment to be made for the forthcoming years on a different basis from that made for the previous two years.

The assessor set out the basis of the future awards, both for the closed period of two years following the assessment and the period beyond that. It cannot be assumed from the circumstance that the assessor did not specify any percentage reduction for the allowance made for the unrelated back injury that she did not take it into account. Indeed, her reasons refer to that matter specifically in the context of the awards for future economic loss. On a fair reading of her reasons, the reference to future economic loss incorporates the closed period of two years and the buffer. In the analogous context of sentencing referred to by Basten JA in Allianz Australia Insurance Ltd v Kerr, it has been accepted that, although a sentencing judge is required to take a guilty plea into account in sentencing, a failure to quantify the discount in the reasons is not an error. As long as the sentencing judge refers to the guilty plea in the reasons, this is generally sufficient to indicate that it has been taken into account: R v Thomson; R v Houlton (2000) 49 NSWLR 383; [2000] NSWCCA 309 at [46] (Spigelman CJ). The present case is to be distinguished from Zahed v IAG Ltd where the assessor’s finding involved a rejection of the opinions of all the practitioners who gave evidence on the question of the amount of weekly assistance required, and no explanation was given for the hourly figure used to base the award.

I am not persuaded that there was any unreasonableness in the sense considered by the High Court in Minister for Immigration and Citizenship v Li (2013) 249 CLR 332; [2013] HCA 18 (Li). For the reasons given above, I consider there to be an “evident and intelligible justification” (Li at [76]) for the assessor’s awards for past and future economic loss.

I propose now to summarise the consequences of the reasons I have given above by reference to the grounds of appeal in turn.

The first ground alleges that the assessor failed to discount the figures for past and future economic loss to take account of the claimant’s back injury, having found that it was necessary that the figure be discounted on that basis. As referred to above, I do not understand the assessor’s reasons as finding that the damages for the past are to be discounted on the basis of the pre-existing back injury. The assessor said that the damages for the future would have to be discounted on that basis. For the reasons given above, I am satisfied that such a discount was taken into account for the closed period for the two years after the date of assessment as well as for the period beyond which was covered by the buffer. This ground has not been made out.

The second ground alleges that the assessor failed to set out the assumptions that led to her adopting the figure of $550 for future economic loss for the two-year closed period. For the reasons given above, I consider that the assessor sufficiently set out the relevant assumptions as to the likely future circumstances but for the accident (the claimant would have continued to work at the Caltex Service Station full-time for the rest of his working life), as well as the likely future circumstances as a result of the accident (the claimant would retrain as a forklift driver and endeavour to return to part-time and then full-time work in that occupation, with allowance to be made for the pre-existing back injury). These assumptions were sufficient to set out the chain of reasoning for the purposes of s 94 and cl 18.4 of the Guidelines and to fulfil the requirements of s 126. This ground has not been made out.

The third ground alleges that the assessor failed to state the relevant assumptions that led to the buffer for future economic loss of $100,000. It is significant that, as referred to above, the Court of Appeal in Penrith City Council v Parks said of a similar provision to s 136 (s 13 of the Civil Liability Act 2002 (NSW)) that the legislation did not preclude an award for future economic loss in the nature of a buffer. Although the Court considered that the statutory provision required the determination of the claimant’s likely future circumstances, there was no question of a percentage adjustment (as referred to in s 126(2) and (3)) when a buffer was awarded because of the broad approach involved in such an award (Giles JA at [5]; Cripps AJA at [10] and McClelland AJA at [58]; see also Allianz Australia Insurance Ltd v Sprod (2012) 81 NSWLR 626; [2012] NSWCA 281 at [37] (Barrett JA, Campbell JA and Sackville AJA agreeing). The pre-existing back condition was in the category of vicissitudes to be taken into account in the amount of the buffer. It was sufficient for the assessor to record that she had taken the previous back injury into account and unnecessary to express a percentage adjustment.

For the reasons given above, I am satisfied that the assessor adequately set out the claimant’s likely future circumstances but for the accident and provided sufficient reasons to explain why a buffer was being awarded, rather than a capitalised weekly sum. These reasons included the claimant’s youth; the length of his remaining working life; and the need to discount the damages to take account of the pre-existing back injury. This ground has not been made out.

The fourth and fifth grounds are covered by the reasons given above. Neither has been made out.

I am not satisfied that any of the grounds of appeal have been made out. The parties accepted that there was no reason why costs ought not follow the event.

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