IAG Limited t/as NRMA Insurance v Rahif Adhami

1. [1]

   The plaintiff seeks judicial review of an assessment of damages by a claims assessor of the State Insurance Regulatory Authority motor accidents claims assessment and resolution service pursuant to s 94 of the Motor Accidents Compensation Act 1999 (NSW).

2. [2]

   By summons filed 17 December 2015, the plaintiff relevantly seeks, firstly, an order in the nature of certiorari or, alternatively, a declaration setting aside or declaring invalid the decision of the second defendant, Paul Curtis, made on 7 October 2015, purportedly pursuant to s 94(6) of the Motor Accidents Compensation Act 1999 (NSW) (“the Act”) to award the first defendant damages (“the decision”); secondly, an order in the nature of prohibition, or alternatively, an injunction preventing the defendants or any of their officers, servants or agents from acting on or taking any further steps in reliance on the decision; and finally, an order in the nature of mandamus, remitting the matter to the third defendant for reallocation of the matter to a different claims assessor for determination of the application according to law.

3. [3]

   The plaintiff is the insurer, IAG Limited t/as NRMA Insurance (“the insurer”). The first defendant is Rahif Adhami. For convenience and as the other defendants have filed submitting appearances, I shall refer to Mr Adhami as the defendant. The second defendant is Mr Paul Curtis, claims assessor of the Motor Accidents Authority of New South Wales (“the assessor”). The third defendant is the State Insurance Regulatory Authority of New South Wales (“SIRA”). The parties relied on the documents contained in the Court book.

Background

1. [4]

   On 31 May 2012, the defendant sustained injuries in a motor vehicle accident in NSW and lodged a claim for compensation with the compulsory third party (“CTP”) insurer of the vehicle at fault in the collision, the insurer.

2. [5]

   The insurer admitted liability for the defendant’s claim, leaving only the question of damages to be determined.

3. [6]

   The insurer and the defendant filed an application for assessment of the defendant’s personal injuries in the State Insurance Regulatory Authority of New South Wales (“SIRA”).

4. [7]

   The assessor was appointed by SIRA to assess the quantum of damages. On 25 August 2015, an assessment conference was held. It was attended by the defendant, who was assisted by an interpreter, his legal representatives, representatives of the insurer and the assessor. The defendant was interviewed by the assessor. On 7 October 2015, the assessor provided a certificate in accordance with s 94(4) of the Act together with reasons for his decision.

5. [8]

   The following matters were agreed as between the parties for the purposes of the assessment:

   1. (1)

      Past treatment expenses were agreed at $18,049.98;

   2. (2)

      Section 83 payments (included in the agreed past treatment expenses) totalled $12,360.78;

   3. (3)

      The defendant has a working life expectancy of 32 years;

   4. (4)

      The defendant has a life expectancy of 50 years; and

   5. (5)

      The 5% multiplier relevant to the period of 50 years is 976.2.

6. [9]

   The defendant made no claim for past loss of earnings and conceded that he had no entitlement to non economic loss damages.

7. [10]

   What was in dispute before the assessor was, firstly, the extent of the defendant’s injuries and disabilities; and secondly, the defendant’s claims in respect of care, assistance and his diminution of earning capacity. The insurer argued that the defendant’s entitlement ought to be limited to the past treatment expenses he had incurred with a modest buffer of no more than $2,000 for future treatment on the basis of a need for intermittent analgesia and GP attendances. The insurer’s position was that the defendant should not receive an award for future economic loss.

8. [11]

   The assessor awarded the defendant $183,049.98 in damages. This sum comprised of $18,049.98 for past treatment; $15,000 for future treatment expenses; and $150,000 for future loss of earnings including superannuation.

9. [12]

   The issue in this judicial review is confined to the assessor’s assessment of the defendant’s future economic loss. The plaintiff does not dispute the appropriateness of the assessor’s decision to award an amount for future economic loss but says that the assessor failed to comply with the requirements of the Act in making an award for future economic loss.

The assessor’s decision

1. [13]

   The relevant parts of the assessor’s reasons for decision are as follows.

2. [14]

   The assessor set out the defendant’s history. (D [9] to [17]). As at 7 October 2015, the defendant was 35 years old. In 2006, he migrated to Australia and married. He attended school in Lebanon until the age of 12, which is when he started work as an “exhaust engineer”, so described in his statement. His English language skills are limited and he required an interpreter for the purpose of the assessment conference. He has three children. At the time of the assessment, his son was six years old and his twin children were aged four (one boy and one girl). He resides in Bankstown with his wife, children, parents-in-law, brother-in-law and sister-in-law. He had had various employments in Australia, including as a traffic controller, general labourer, cement renderer and formworker.

3. [15]

   In 2011, the defendant’s wife began to suffer from severe migraines requiring him to cease work in order to look after her. Since 2011, he has received a carer’s pension as he is caring for both his wife and their children.

4. [16]

   The assessor also stated that:

5. [17]

   The assessor considered that the defendant was a truthful witness who did his best to assist the assessment process, he did not seek to exaggerate or otherwise embellish his claim and his responses to the questions of the insurer’s solicitor at the assessment conference were spontaneous and credible. (D [21]-[23]).

6. [18]

   So far as the defendant’s injuries are concerned, the assessor was satisfied that the defendant suffered ligamentous injuries to his cervical and lumbar spine as well as injuries to both his shoulders and as a consequence he developed symptoms of anxiety, panic and depression. (D [24]-25]). However, at the time of the assessment, the assessor noted that the defendant acknowledged the shoulder conditions had completely recovered. (D [26]).

7. [19]

   In relation to the defendant’s ability to work and the extent of his capabilities the assessor stated:

8. [20]

   So far as the defendant’s future economic loss is concerned, the assessor stated:

Grounds of review

1. [21]

   The insurer relies on four grounds of review. The essence of the insurer’s grounds of appeal is that the assessor failed to properly apply s 126 of the Act in awarding an amount for future economic loss by failing to state his assumptions for awarding this amount and by failing to give reasons as to the assumptions he relied upon. The insurer says that in so doing, the assessor’s decision contains an error of law on the face of the record and jurisdictional error in so far as he failed to provide reasons for his decision and failed to exercise his jurisdiction. Alternatively, the insurer submits that the assessor constructively failed to exercise his statutory power in making the decision. As a result of these errors, the insurer says that the decision is invalid and should be set aside. (Grounds (a) and (b)). It may not be necessary to address Grounds (c) and (d) if Grounds (a) and (b) are correct.

2. [22]

   The grounds of review are:

3. [23]

   It is common ground that an assessor is required to comply with s 126 of the Act when performing his statutory function of awarding damages for future economic loss.

Section 126 of the Motor Accidents Compensation Act 1999 (NSW)

1. [24]

   Section 126 of the Act falls within “Part 5.3 Damages for non-economic loss”. It reads:

2. [25]

   The parties referred to Allianz Australia Insurance Ltd v Kerr [2012] NSWCA 13; 83 NSWLR 302 (“Kerr”); Allianz Australia Insurance Ltd v Sprod [2012] NSWCA 281 (“Sprod”); and Allianz Aust Insurance Ltd v Habib & Ors [2015] NSWSC 1719 (“Habib”).

3. [26]

   In NRMA Insurance Limited v Buckley [2016] NSWSC 475 (“Buckley”).a recent case on the topic of s 126 of the Act, Rothman J stated (at [39]-[40]):

4. [27]

   In Kerr, McColl JA made the following observations in respect of the power given by s 126 to award an amount of damages for future economic loss by way of a buffer:

5. [28]

   In Kerr, Basten JA (McColl and Macfarlan JJA agreeing) observed in relation to the operation of s 126 (at [23]-[24]):

6. [29]

   In Kerr, Basten JA continued (at [31]):

7. [30]

   In Kerr at [53] Basten JA stated:

8. [31]

   Finally, in Kerr, Macfarlan JA (at [69]) considered that the amount of buffer the assessor in that case arrived at, namely $200,000, more likely represented the assessor’s “intuitive assessment of the claimant’s possible future loss” and that it could not be inferred that the assessor undertook a process of calculation in order to arrive at the amount. His Honour considered that in such circumstances “there was nothing more that the assessor was required to say in his reasons for decision.”

9. [32]

   In Sprod, Barrett JA stated (at [26], [27], [30] and [42]):

10. [33]

    Finally, in Habib, Beech-Jones J concluded that the assessor had failed to set out necessary assumptions that underpinned his award. So far as the requirement to state assumptions under s 126 is concerned, his Honour stated (at [37] and [38]):

Submissions

1. [34]

   In essence, the insurer’s complaint concerns what the assessor did not say, as opposed to what he did. Senior counsel for the insurer submitted that the assessor did not make any findings as to the defendant’s most likely future circumstances but for the accident.

2. [35]

   Senior counsel for the insurer argued that it was incumbent on the assessor to state his assumptions regarding the defendant’s most likely future circumstances were it not for the accident, including:

   1. (1)

      When the defendant was likely to have returned to the workforce, had the accident not occurred;

   2. (2)

      Why the defendant would be likely to be able to return to the workforce, in circumstances where he was currently required to be a carer for his wife; and

   3. (3)

      In what capacity the defendant would have been able to return to the workforce.

3. [36]

   Senior counsel for the insurer also submitted that in the present case, the assessor made no findings about what the defendant’s likely circumstances would have been, and instead, he proceeded to deal only with the issue of what his disability would be now as a result of the accident.

4. [37]

   On the topic of the sufficiency of the assessor’s reasons, senior counsel for the insurer submitted that the assessor failed to give lawful reasons to explain his award for future economic loss, at least in the following respects:

   1. (1)

      He failed to give any reasons as to why the defendant would have returned to work at all, were it not for the accident;

   2. (2)

      He failed to give adequate reasons as to why the defendant’s future economic loss would be deferred for at least 10 years (as opposed to some other period of time);

   3. (3)

      In using the phrase “at least 10 years” in respect of the deferral for economic loss, the assessor failed to explain whether, in making his calculation, he was allowing a deferral for 10 years or in fact some longer period of time; and

   4. (4)

      Whether the buffer of $150,000 that was ultimately awarded included any deferral and if so whether it was for 10 years or some other period of time.

5. [38]

   Counsel for the defendant submitted that the limitations of the obligation to give reasons must be kept firmly in mind by a judicial officer accustomed to a higher obligation (Kerr [53]) and that a proper reading of the assessor’s reasons reveal that the assessor has properly complied with the statutory requirements set out in s 126. Counsel for the first defendant also referred to the well known statements set out in Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6; 185 CLR 259, at 271-2 (Brennan CJ, Toohey, McHugh and Gummow JJ) (“Wu Shan”):

6. [39]

   And in Wu Shan, where Kirby J observed (at 291):

7. [40]

   The defendant submitted that the insurer is seeking to have this Court scrutinise the assessor’s decision in a way contrary to these passages from Kerr and Wu Shan. I accept that the assessor’s decision must be read fairly and as a whole. Reading the decision as a whole, counsel for the defendant submitted that the assessor made the following findings in relation to the defendant’s “most likely future circumstances but for the injury”:

   1. (1)

      The defendant was a witness of truth (D [21]);

   2. (2)

      The assessor accepted the defendant’s evidence relating to his future intention regarding work and that, although the defendant had stopped working and was caring for his wife and children, his children would be able to assist in caring for his wife when they were old enough (D [81]);

   3. (3)

      Based on these findings, the defendant’s most likely future circumstances but for injury was a return to the work force at some stage in the future when the defendant’s children were old enough to assist in caring for his wife if he was to pursue employment (D [82]); and

   4. (4)

      The defendant’s return to work would likely be delayed for at least another 10 years (D [83]).

8. [41]

   In respect of the “assumptions” about future earning capacity upon which the award was based, counsel for the defendant submitted that these were properly stated by the assessor. These assumptions included:

   1. (1)

      The defendant’s employment history was generally in labour related areas or work involving physical exertion, including as a traffic controller, general labourer, cement renderer and form worker, before he became his wife’s carer in 2011;

   2. (2)

      As a result of the motor accident, the defendant sustained ligamentous injury to the cervical spine, ligamentous injury to the lumbar spine, injuries to both shoulders (which, the assessor noted, had healed), and symptoms of anxiety, panic and depression (D [24]-[25]);

   3. (3)

      The defendant continued to have intermittent neck and back pain which was triggered by activity involving lifting, carrying, bending and prolonged sitting or standing (D [35]);

   4. (4)

      Acceptance of medical evidence to the effect that the claimant’s ability to find work on the open labour market had been compromised (D [92]) and would have an adverse effect on his ability to carry out heavy physical activity (D [93]); and

   5. (5)

      A rejection of the medical opinions that did not support a restriction in employment capacity as the medical examiners did not believe that the defendant had been left with any permanent impairment related to the motor accident.

9. [42]

   Senior counsel for the insurer disputes that, with the exception of one, they are “assumptions”.

10. [43]

    Finally, counsel for the defendant contended that, by reason of the combination of the above matters, the assessor determined that the defendant had a reduction of earning capacity productive of financial loss (D [96]) and therefore a proper reading of the assessor’s reasons reveals that the appropriate matters identified in s 126(1) of the Act have been stated.

Conclusion

1. [44]

   In view of the imponderables and uncertainty as to the defendant’s “likely future circumstances but for the injury” the assessor determined that any allowance for future economic loss should be assessed as a buffer. (D [89]). There is no complaint by either party about that approach. The defendant claimed a buffer of $150,000 whereas the insurer’s position was that the defendant’s future economic loss should be assessed at nil.

2. [45]

   The assessor recorded that the defendant placed reliance on an analysis of average weekly earnings of full time employed males either in the construction industry ($1,755.70 gross per week), or as, the average for all industries ($1,681.20 gross per week). (D [91]). At the hearing of this judicial review, counsel for the defendant handed up some calculations made based on the 5% multiplier. The 5% multiplier for 22 years (agreed 32 years less the found 10 year delay) is 703.8 and the deferred multiplier for 10 years is 0.614. There were two calculations made. The first at $1,000 net per week x 703.8 x 0.614 – 15% equates to $367,313 or the second at $500 net per week equates to $183,657. Neither of these calculations reflect the sum that the defendant claimed as a buffer at the assessment.

3. [46]

   While the assessor does not use the word “assumption” or “assumptions” when considering the award for future economic loss, a fair reading of his reasons include the making of the following assumptions:

4. [47]

   Earlier in his decision, the assessor stated that the defendant was a witness of truth. From the material available to him the assessor was satisfied that the defendant suffered injuries in the motor vehicle accident, a ligamentous injury to the cervical spine, a ligamentous injury to the lumbar spine and injuries to both shoulders. At the assessment, the defendant acknowledged that his shoulder conditions had completely recovered. As a consequence of these injuries the defendant has also developed symptoms of anxiety, panic and depression. (D [24]-[26]).

5. [48]

   The assessor referred to various doctors’ views and made an assumption that he was not persuaded by the opinion suggesting the defendant had not been left with any permanent impairment related to the accident. (D [40]-[57]; [84]-[86]).

6. [49]

   At (D [96]) the assessor stated:

7. [50]

   Here the assessor has made two assumptions, the first is that there is presently an impairment of the defendant’s earning capacity referrable to the motor accident related injuries and the second is that such impairment will not be productive of loss of income for at least 10 years. That means the defendant had less than 22 years of working life left, although this was not stated as an assumption.

8. [51]

   The assessor at (D [97] concluded:

9. [52]

   Section 126(3) of the Act provides that the assessor is required to state the assumptions on which the award was based. Those assumptions must be assumptions as identified in s 126(1) of the Act, that is, the court must be satisfied that “the assumptions about future earning capacity or other events on which the award is to be based accord with the claimant’s most likely future circumstances but for the injury.” In a true “buffer” case the obligation imposed by s 126(3) upon the assessor may be discharged by more generalised statements.

10. [53]

    The assessor made an assumption about the past earning capacity that the defendant had limited experience in unskilled occupations. The assessor also made assumptions as to the injuries the defendant suffered attributable to the motor accident and his present family circumstances. The only assumptions that the assessor made about the defendant’s future earning capacity is that his permanent impairment of earning capacity would not be productive of loss of income for at least 10 years and that the sum of $150,000 was inclusive of the loss of future employer sponsored superannuation contributions. The assessor did not make any further assumptions about future earning capacity or other events on which the award is based that accord with the defendant’s “most likely future circumstances but for the injury”.

11. [54]

    The assessor also did not make any general assumptions as to the type of future occupations the defendant would be able to engage in, given his injuries referrable to the motor accident after at least 10 years. Nor were there any assumptions of a general nature made as to whether his employment was likely to be full time, part time or a combination of both, or whether he would experience some periods of unemployment given that his wife may continue to suffer migraines.

12. [55]

    Although the assessor referred to wage figures furnished by the defendant he did not say he relied on them to assess the buffer figure. The assessor assessed the sum $150,000 for future economic loss being the whole of the amount claimed by the defendant. It may be that the assessor accepted the defendant’s submissions in relation to the calculation of the buffer, but if he did, the assessor needed to state them as assumptions.

13. [56]

    I have taken into account that when the assessor quantified the buffer for lost earning capacity he could not be exact as the assessment is “necessarily impressionistic”. However, without some general assumptions being expressly stated in relation to the defendant’s circumstances after at least 10 years it is difficult to determine whether the assessor has made assumptions that accord with the defendant’s “most likely future circumstances but for the injury” as required by s 126(1) of the Act. In my view, the reasons do not produce a reasonable degree of transparency so that those interested in the assessment may have an insight into the way in which the task was performed. In my view, the assessor has provided insufficient reasons and has failed to comply with s 126 of the Act. The assessor’s decision should be set aside and the matter should be remitted to SIRA for redetermination in accordance with law.

14. [57]

    Hence, it is not necessary to deal with the remaining grounds of review (c) and (d).

15. [58]

    Costs are discretionary. Costs usually follow the event. The first defendant is to pay the plaintiff’s costs on an ordinary basis as agreed or assessed.