Allianz Australia Insurance Limited v Sleiman

1. [1]

   A claims assessor, Ms White, made a damages assessment and issued a certificate in November 2015 under s 94 of the Motor Accident Compensation Act 1999 (NSW), in respect of a claim made by Mr Sleiman about a motor vehicle accident in which he was involved in September 2012. Allianz admitted liability. It was common ground that Mr Sleiman had no entitlement to non-economic loss. His other claimed damages were all in issue, as was his credit.

2. [2]

   In these proceedings Allianz seeks orders under s 69 of the Supreme Court Act 1970 (NSW). By its summons it claimed that the assessor’s reasons revealed that she made a number of jurisdictional errors and errors of law in reaching her conclusions as to the assessment of damages. Alternatively, it claimed that the assessor constructively failed to exercise her statutory powers in making her decision.

3. [3]

   The alleged errors on the face of the record (the assessor’s published reasons) included errors in the assessment of past economic loss; future economic loss; and future domestic care. Allianz also claimed that the assessor had failed to give adequate reasons, including in relation to findings for which there was no evidence. In the result it claimed that the assessor’s decision was invalid and should be set aside.

4. [4]

   These claims were all put in issue by a reply filed by Mr Sleiman in March 2016. The State Insurance Regulatory Authority of New South Wales and the assessor have filed submitting appearances.

5. [5]

   In its written submissions Allianz identified three errors which it submitted infected various aspects of the assessor’s decision. Firstly, applying the wrong legal test to the assessment of past economic loss and future domestic care. Secondly, failing to give reasons for the assessment of future economic loss, including as to the assumptions on which the assessment was based. Thirdly, in making findings for which there was no evidence as to the impact of Mr Sleiman’s diagnosed psychiatric injuries impacting on his work capacity and as to his need for future domestic care.

6. [6]

   At the hearing it was the complaints about the failure to give required reasons which were pressed.

The statutory scheme

1. [7]

   The statutory task which the assessor had to undertake was that specified in s 94 of the Act, which provides:

2. [8]

   Guidelines for the conduct of such assessments have been issued under s 69(1) of the Act. Section 106(1) provides that:

3. [9]

   Chapter 16 - Assessment Procedure of the Guidelines deals with the assessor’s role, providing amongst other things that the assessor may determine his or her own procedure, is not bound by the rules of evidence and may inquire into any matter in such manner as the assessor thinks fit (cl 16.1); that the assessor is to ensure that relevant material is available, to enable all of the relevant facts in issue to be determined (cl 16.5); that the assessor may receive documents, written and oral evidence and submissions and may direct the number and/or type of witnesses who can give evidence (cl 16.8); and is to assess damages in accordance with Chapter 5 of the Act, in the same the way in which a Court is required to assess damages (cl 16.12).

4. [10]

   Section 104(4) of the Act requires assessors to take into account any written submission prepared by an Australian legal practitioner acting for a party to the assessment and submitted by or on behalf of the party. Assessors may hold an assessment conference with all relevant parties and relevant experts in attendance, or a separate assessment conference in private with any of them (s 104(5)).

5. [11]

   Chapter 5 Award of damages of the Act governs the assessment of damages. Section 122(3) provides that it “applies to and in respect of the assessment of damages by a claims assessor under Part 4.4 in the same way as it applies to and in respect of an award of damages by a court”.

6. [12]

   In assessing damages for economic loss, assessors are thus bound by the requirements of ss 125, 126 and 127. They provide:

7. [13]

   Guideline 18 – Certificate and statement of reasons deals with the provision of the reasons required by s 94(5). They require the assessor to set out as briefly as the circumstances permit, the findings on material facts; the assessor’s understanding of the applicable law, if relevant; and the reasoning processes that led to the conclusions made. The amount of damages assessed and “the manner of determining that amount” must be specified in the assessor’s certificate.

8. [14]

   Thus, a claims assessor must come to a conclusion as to the proper assessment of damages on the evidence and submissions which the parties advance. In the case of future economic loss, the assessor must base the assessment on assumptions that accord with “the claimant’s most likely future circumstances but for the injury” (s 126(1). The obligation to state the assumptions on which the award is based imposed by 126(3) is as discussed in Allianz Australia Insurance Ltd v Sprod [2012] NSWCA 281; (2012) 81 NSWLR 626, where it was explained at [26] - [27] :

The assessor’s reasons

1. [15]

   There was no issue as to how the accident occurred, or that at the time, Mr Sleiman was self-employed, although incorrect reference is made at various points in the reasons to he having been an employee.

2. [16]

   The assessor noted at [3] that Mr Sleiman claimed to be working as a painter and formworker at the time of the accident and that “as a result of his injuries he can no longer manage heavy manual work and is limited to part-time supervisory activities.”

3. [17]

   The assessor identified the issues lying between the parties to be:

4. [18]

   The assessor noted at [6] that on the credit issue Allianz relied on what the video footage of the accident showed Mr Sleiman doing, which he had not told examining doctors about.

5. [19]

   The assessor had said at [1] that the accident had occurred when Mr Sleiman:

6. [20]

   The assessor immediately identified that Mr Sleiman’s statement was incorrect, observing at [2]:

7. [21]

   Mr Sleiman denied that he had been injured in the fall (at [7]). That was in issue. There were other difficulties with his case.

8. [22]

   Mr Sleiman had claimed that he was employed by M&I Formworks, and/or Diamond Colours, businesses operated by his cousin and a friend, at the time of the accident. No reliable supporting material was provided to support those claims. Allianz sought particulars as to Mr Sleiman’s work history from each of these businesses. They were not provided.

9. [23]

   Section 100(1A) of the Act permitted the assessor to “give a direction in writing to a person who is not a party to an assessment under this Part requiring the person”:

10. [24]

    The assessor issued such directions, but the two claimed employers did not respond, with the result that the assessor concluded in her 4 August 2015 preliminary conference report that:

11. [25]

    In her reasons the assessor said:

12. [26]

    Despite all these conclusions, the assessor accepted Mr Sleiman’s evidence about the fall and his pain behaviour, which various doctors who had examined him considered to have been abnormal and manufactured. The assessor relied on the independent medical examiner’s assessment that Mr Sleiman had presented a generally consistent history and did not appear to be exaggerating. The assessor concluded that:

13. [27]

    Mr Sleiman’s economic loss was assessed by reference to his tax returns and Allianz’s concession that he had suffered a restriction to his earning capacity, productive of economic loss for a closed period. The assessor did not, however, accept the cases which either party advanced as to Mr Sleiman’s economic loss. She rested her conclusions on Mr Sleiman's evidence, the medical assessor’s findings, the conclusion of the majority of doctors, who she found supported that Mr Sleiman had ongoing work restrictions; his past income; and a finding that he had a residual earning capacity.

14. [28]

    Future domestic care was assessed by an acceptance of Mr Sleiman’s evidence, the consequences of his physical restrictions and established need for future paid care.

Were adequate reasons given?

1. [29]

   Allianz’s case was that the assessor had failed to give adequate reasons for her credibility finding; for the basis on which Mr Sleiman’s residual earning capacity was arrived at; the basis upon which the assessor resolved issues lying between the parties as to Mr Sleiman’s medical condition; how his future economic loss was calculated, including as to the assumptions on which those damages were calculated, as s 126 required; and the basis on which his requirements for future domestic care for life were calculated.

2. [30]

   Mr Sleiman’s case was that the assessor had not only identified the assumptions on which the damages award rested, as she was obliged to do, but had also adequately explained her reasoning process.

3. [31]

   The obligation to give reasons is as discussed in Zahed v IAG Limited t/as NRMA Insurance [2016] NSWCA 55 at [43]:

4. [32]

   I consider that it must be accepted that the assessor did not met the statutory obligation to give reasons imposed by s 94(5) and the Guidelines earlier discussed, because she did not reveal the path of reasoning that had led her to her conclusion as to the amount of damages that a court would be likely to award Mr Sleiman.

5. [33]

   Allianz had conceded that Mr Sleiman had suffered a restriction to his earning capacity for a closed period. Its case was that he had made a full recovery by 6 weeks post-accident. Mr Sleiman’s case was contradictory. On the one hand he claimed that he could no longer manage heavy manual work and was limited to part-time supervisory activities, on the other he claimed that he had no residual earning capacity.

6. [34]

   The assessor considered that Mr Sleiman's evidence was credible, but still rejected his claim that he had no residual earning capacity, understandably given his own evidence that he had been working. The assessor concluded that he had retained a 25% earning capacity after the accident.

7. [35]

   This conclusion, Allianz submitted in these proceedings, was not only inconsistent with Mr Sleiman’s own evidence and any reasonable assessment of his residual earning capacity based on the medical evidence, but was not adequately explained.

8. [36]

   Mr Sleiman’s case was that the assessor’s reasons had to be read as a whole, in the way discussed in Zahed. It was argued that the assessor had made relevant findings of fact as to the injuries which he had suffered in the accident; that Allianz had conceded that he had suffered a restriction in his earning capacity for a closed period which had been productive of economic loss; that his earning capacity had also been further impacted by his psychiatric injuries; that his fluctuating earnings before the accident had averaged $485 gross per week; and that his residual earning capacity was evidenced by the $30 per hour he had earned when working 4 to 8 hours per day, depending on opportunities, in June and July 2015. It was also submitted that the 25% assessment rested on the available medical evidence and that given by Mr Sleiman, with the result the conclusion a weekly loss from the date of the accident of $364 per week.

9. [37]

   As discussed in Sretenovic v Reed [2009] NSWCA 280 at [80], “compensation for lost earning capacity is awarded because diminution in an injured plaintiff’s earning capacity is or may be productive of financial loss: Graham v Baker [1961] HCA 48; (1961) 106 CLR 340 (at 347)”. Such an assessment involves “a comparison between the economic benefits the plaintiff derived from exercising his or her earning capacity before injury and the economic benefit derived from exercising earning capacity after injury”, even in cases where the award made in favour of a plaintiff is on the basis of a buffer (Sretenovic at [81).

10. [38]

    In this case it is apparent that relevant to the assessment of Mr Sleiman’s residual earning capacity was what could be seen on the video; the evidence as to his medical conditions; the evidence of what work he had in fact been able to perform, after the accident; and what he had earned from that work. Mr Sleiman’s tax returns up to the 2014/2015 tax year were in evidence. They showed what he had in fact earned, both before and after the accident. Mr Sleiman was cross-examined as to whether he had received any cash payments, but the assessor accepted his evidence that he had not (at [15] – [16]).

11. [39]

    Mr Sleiman claimed he had no residual earning capacity and Allianz’s case was that his earning capacity had been affected for only six weeks.

12. [40]

    The assessor explained why she rejected the cases which both parties had advanced in relation to past economic loss at [20], observing that:

13. [41]

    A four hour work day would thus have generated $120 income and an 8 hour work day $240. There was no suggestion that this was a lower rate of pay than Mr Sleiman was earning prior to the accident.

14. [42]

    At [21] the assessor turned to consider the evidence as to the injuries which Mr Sleiman had suffered, which the assessor found to have been an aggravation of an asymptomatic degenerative change to Mr Sleiman’s neck. The medical assessor’s assessment was that the soft tissue injury to his cervical and lumbar spine had involved 10% whole person impairment. The assessor referred to the findings of various doctors who had examined Mr Sleiman and MRI scans of his neck, which had revealed various damage. The assessor concluded that the injury to Mr Sleiman's back and low back had been caused by the accident.

15. [43]

    At [22] the assessor noted that the majority of doctors supported Mr Sleiman having ongoing work restrictions, but what they were, or their impact on his earning capacity was not discussed. She also noted Mr Sleiman’s indication to Dr Dalton that he was fit for light duties. The assessor concluded at [23] - [26] that:

16. [44]

    While it was finally accepted that the reason for the adoption of the $485 figure had been properly exposed, it was not in issue in this Court that the rest of the assessor’s reasons are difficult to follow. It was common ground that the $364 figure reflected an agreement reached by the parties at the conference, as to the effect of tax on Mr Sleiman’s fluctuating income, prior to the accident. That was not referred to, nor explained, in the assessor’s reasons.

17. [45]

    Nor did the assessor explain how she came to the conclusion that Mr Sleiman had only a 25% residual earning capacity, which was also used to calculate Mr Sleiman’s future economic loss. The reference to the claim advanced for Mr Sleiman in oral submissions at the conference in relation to residual earning capacity, does not satisfy the statutory obligation to give reasons. As was discussed by Beech-Jones J in Allianz Aust Insurance Ltd v Habib & Ors [2015] NSWSC 1719 at [38] by reference to Sprod:

18. [46]

    The assessor did not explain, by reference to the relevant evidence, or even the submissions, either the assumptions on which the conclusion as to a 25% residual earning capacity rested, or the path of reasoning which led to that conclusion. The assessor was obliged to give an explanation, given what she had identified to be lying in issue between the parties.

19. [47]

    There was no reference, for example, to what the post-accident tax returns had revealed, as to what Mr Sleiman had earned since the accident. Like his evidence as to the work he had performed in June and July 2015 for up to 8 hours a day at a rate of $30 per hour, they also shed light on the economic benefits he had derived from exercising his earning capacity after the accident. The work he had described having been able to perform in 2015 appears to be quite inconsistent with the assessor’s conclusion that he then had only a 25% earning capacity. Accordingly, some explanation had to be given for how, despite Mr Sleiman’s own evidence, the conclusions arrived at were reached, by reference, for example, to his work restrictions, or reduced ability to work over the course of a day, or a week.

20. [48]

    In relation to future economic loss, the assessor again rejected both parties’ cases. Mr Sleiman’s claim was for damages calculated on the basis of earnings of $1,500 per week for 36 years, less 25% residual capacity and Allianz’s case was that there was no future economic loss. The assessor concluded (at [29]) that:

21. [49]

    This calculation reflected a conclusion that Mr Sleiman’s 25% residual capacity would provide him with income per week less than he had earned working one four hour day in the preceding June and July. On his evidence his only then limit was the availability of such work. Allianz’s case that while assessment of future economic loss involved some degree of speculation, the assessor had failed to meet the statutory obligation to give reasons and to disclose the basis of the assumptions on which the conclusions she reached rested, must be accepted.

22. [50]

    Mr Sleiman’s contention that these obligations were met, cannot be accepted, even reading the assessor’s reason as a whole, in the way discussed in Zahed.

23. [51]

    As discussed in Nominal Defendant v Livaja [2011] NSWCA 121 and Allianz Australia Insurance Ltd v Kerr [2012] NSWCA 13, an assessor must identify and state the assumptions about future earning capacity and other events on which the award was based. In Livaja at [41] - [42] it was observed that:

24. [52]

    In Kerr it was observed at [24] that “Income earned prior to the accident may well be the best evidential basis to assess the earning capacity of the claimant, but for the injury, subject to adjustment for the passage of time since that income was last earned. Income earned between the accident and the trial may be (but often is not) a good indicator of current capacity. The latter may be capable of extrapolation into the future, but it will usually be necessary to consider whether, and to what extent, both pre-accident capacity and post-accident capacity might have been and might be expected to vary in the future. At [29] attention was drawn to the need where “the employment situation of the claimant is inherently unstable” to allow a greater percentage than the 15% normally allowed for vicissitudes.

25. [53]

    Here, the assessor simply failed either state the assumptions made about Mr Sleiman’s future earning capacity and other events on which the award was based, or to expose the reasoning which led to the conclusion that his future earning capacity was only 25%, a figure less than the work he had been able to perform and the income it had generated, after the accident.

26. [54]

    In the result, the orders sought must be made.

Costs

1. [55]

   The usual order as to costs is that they follow the event. Unless the parties approach to be heard on costs, that will be the Court’s order. That is, an order in favour of Allianz.

2. [56]

   For the reasons given, I order:

   1. (1)

      The assessor’s decision is set aside.

   2. (2)

      The matter is remitted to the State Insurance Regulatory Authority to be dealt with according to law, by a different claims assessor.

   3. (3)

      Unless the parties approach to be heard on costs, the costs order will be an order in favour of Allianz.