AAI Limited t/as AAMI Limited v Jacobs

Supreme Court of NSW|2024-04-05|Before: Elkaim AJ, Dr J

JUDGMENT

The plaintiff is an insurance company. The first defendant has brought a claim for compensation arising out of a motor vehicle accident on 18 June 2017. The claim was made under the Motor Accident Compensation Act 1999 (NSW) (the MACA).
There is a dispute between the plaintiff and the first defendant about the extent of the first defendant's whole person impairment (WPI). A WPI is important because it plays a significant part in the assessment of the quantum of damages to which an injured person might be entitled. Without an WPI in excess of 10% a clamant is not entitled to non-economic loss: s 131 of the MACA.
The WPI dispute was referred to the third defendant for an assessment of the first defendant's WPI. The third defendant concluded that the first defendant's WPI was 17%. A certificate to this effect was issued on 8 September 2023.
The plaintiff disagreed with this assessment and, pursuant to s 63 of the MACA, requested a review of the assessment. On 1 November 2023 the second defendant refused the request.
The plaintiff then asked the second defendant to effectively review the decision that he had made on 1 November 2023. The second defendant, on 6 December 2023, again said 'No'.

Objection to the plaintiff's affidavit of Ms Frances Allen dated 2 April 2024

The plaintiff initially relied only on the affidavit of Ms Johanna Ellem dated 29 February 24
The first defendant relied on the affidavit of Ms Sareeya Misiano dated 14 March 2024
On 15 February 2024, a direction was made that the plaintiff was to file and serve any affidavits on which it intended to rely by 29 February 2024. The plaintiff's affidavit did not deal with the extension of time.
The plaintiff's opening written submissions also did not consider the extension.
The first defendant's opening written submissions make it very clear that the extension of time is opposed, and it is a very real issue.
No doubt prompted by the first defendant's submissions the plaintiff now wishes to rely on an affidavit of Ms Frances Allen which addresses the time issue.
The first defendant opposed reliance on this affidavit, but if admitted, challenged various paragraphs in the affidavit. I indicated during the hearing that I would give leave to the plaintiff to rely on the affidavit. The first defendant's submissions were to the effect that the affidavit did not make any real difference. As to the paragraphs that were objected to, the basis was that they contained hearsay material and, in particular, did not reveal the source of the instructions.
There is an overwhelming inference that the source of the instructions is the plaintiff, namely the insurer giving the solicitor instructions on how to proceed. Once again, senior counsel for the first defendant said that the contents of the paragraphs were of little significance. I formally allowed them to remain in the affidavit.

Should time be extended in respect of the 4 September 2023 assessment?

As I have said, the amended summons attacks three decisions. The review of the second decision is just in time (the last day). The review of the third decision is in time.
Theoretically therefore, if I did not extend time in respect of the 4 September 2023 decision, the summons could proceed in respect of the other two decisions.
In opposing the extension of time, the first defendant relied heavily upon the decision of the NSW Court of Appeal in Insurance Australia Group Limited t/as NRMA Insurance v Keen (2021) 399 ALR 765; [2021] NSWCA 287. Leeming JA said, at [64]: "That is not an end to the matter. There is to my mind a difficulty in the insurer waiting for a full three months from the decision of the proper officer, only then to bring judicial review proceedings which were principally directed to the operative decision, that of the medical assessor. The three-month period stated in UCPR r 59.10 reflects the fact that proceedings for judicial review should be determined quickly. It will often be the case, as here, that there are no issues of disputed fact in the judicial review proceedings, which can and should be determined promptly, especially where the decision is merely an intermediate step in the determination of a claimant's ultimate entitlement. Many provisions reflect the need for timeliness. One is that an application under s 63 must be made promptly (in 2019, the period was 30 working days; it is now 28 days: s 63(7)). Another is the duty of an insurer "to endeavour to resolve a claim, by settlement of otherwise, as justly and expeditiously as possible": s 80(1). The Legislature regarded that duty as of sufficient importance to deem it to be a condition of the insurer's licence: s 80(2). All of this sits uneasily with an entitlement to delay the commencement of proceedings for judicial review."
The position here is perhaps more 'difficult' for the plaintiff than in Keen. The primary attack, from a judicial review aspect, made in the present matter is against the decision of the medical assessor which was made on 4 September 2023. The intervening period is almost 5 months. It is also notable that the plaintiff waited to the very limit of the r 59.10 time period following the dismissal of the review application on 1 November 2023. This action brings into play the observations made in Keen at [65] and [66]: "65. The insurer needed an extension of time before the primary judge. That may arise in blameless circumstances. A timely application for review may be refused by the proper officer with the disappointed litigant only learning the outcome more than three months after the medical assessor's decision. Ordinarily, if litigation is commenced promptly thereafter, there will be a proper basis for the requisite extension of time. But in the present case, the insurer delayed for three whole months after the adverse decision of the proper officer, only then to approach the court for an extension of time to review the decision of the medical assessor. 66. If a claimant or an insurer takes that course, it would be appropriate to provide an evidentiary account for the delay. If the delay is of the insurer, then it would be appropriate for the insurer in the course of providing that evidence to explain how the course it has taken complies with the duties to which it is subject."
It is clear from Ms Allen's affidavit that the first defendant did not 'suddenly' find out about the rulings, but instead was giving instructions and gathering advice through the process. The type of explanation called for on the part of an insurer in Keen, at [66], is absent. There is no explanation of "how the course it has taken complies with the duties to which it is subject." The explanation given is essentially no more than a timetable of events that occurred.
The first defendant pointed out that the accident occurred in 2017 and that a significant time has passed which should have prompted more speedy action on the part of the insurer. Although the date of the accident is not irrelevant, I accept the plaintiff's submission that the more relevant starting date is 14 March 2023 when the first defendant submitted a dispute concerning her WPI.
Notwithstanding the chronological point just made, it nevertheless remains the case that an insurer has a statutory obligation to act expeditiously. The considerations listed in r 59.10(3), to the extent they are relevant, also do not assist the plaintiff: 1. the plaintiff has a distinct interest in challenging the decision. This consideration would normally operate in favour of the plaintiff. However, in this matter the consideration operates against the plaintiff because, being aware of its interest, it should have acted promptly. As pointed out by the first defendant, the plaintiff "is a sophisticated party that regularly brings judicial review applications in relation to motor accident decisions"; 2. although, as I have said above, the application in respect of the WPI dispute commenced in 2023, the history of the matter does go back to 2017; 3. the plaintiff would have become aware of the decisions very soon after they were made, if not on the day they were made; and 4. although there is a general public interest in claims being resolved expeditiously, I do not regard public interest as relevant to this matter.
Primarily therefore, because of the plaintiff's inadequately explained delay, and the delay itself, I am of the view that there should not be an extension of time.
This conclusion theoretically obviates the need to deal with the complaints in respect of the first decision. However, in case I am wrong on the extension, and to the extent that a judicial review of the second decision is still viable, I make the following comments about the first decision.

The decision of the medical assessor made on 4 September 2023

The principles for judicial review were set out by the High Court in Plaintiff M64-2015 v Minister for Immigration and Border Protection (2015) 258 CLR 173; [2015] HCA 50 at [23]-[25]: "23. It is necessary to make some preliminary observations in relation to the constraints within which the plaintiff's challenge to the validity of the Delegate's decision falls to be determined. These constraints are aspects of the scope of judicial review of administrative action, which is confined to the legality of the Delegate's decision. In particular, judicial review is concerned with whether the Delegate's decision was one which he was authorised to make; it is not: 'an appellate procedure enabling either a general review of the … decision … or a substitution of the … decision which the … court thinks should have been made.' 24. First, the burden is upon the plaintiff to demonstrate that the Delegate's decision was affected by jurisdictional error. The plaintiff must show that the approach adopted by the Delegate 'manifest[ed] a legally erroneous view as to what it was about which [he] needed to be satisfied', so that the Delegate lacked legal authority to make the decision that was made. 25. It is well settled that in the context of administrative decision-making, the court is not astute to discern error in a statement by an administrative officer which was not, and was not intended to be, a statement of reasons for a decision that is a broad administrative evaluation rather than a judicial decision. It is possible that error of law on the part of the Delegate might be demonstrated by inference from what the Delegate said by way of explanation of his decision; but it must be borne in mind that the Delegate was not duty-bound to give reasons for his decision, and so it is difficult to draw an inference that the decision has been attended by an error of law from what has not been said by the Delegate. Further, 'jurisdictional error may include ignoring relevant material in a way that affects the exercise of a power'; but here the plaintiff does not show that relevant material was ignored simply by pointing out that it was not mentioned by the Delegate, who was not obliged to give comprehensive reasons for his decision. Further, the Delegate's letter is 'not to be scrutinised upon over-zealous judicial review by seeking to discern whether some inadequacy may be gleaned from the way in which the reasons are expressed'."
The plaintiff's complaints substantially emanated from two distinct areas of the assessment; the assessors treatment of causation and the assessors asserted failure to properly assess the first defendant's pre-existing mental health status, including the application of that status in reduction of the assessed WPI.

Causation

The plaintiff submitted that the words: "There is a plausible mechanism of injury from the circumstances of the physical injuries (pain) from the subject accident and the development of her psychiatric injuries …" were not, at least as required by the Motor Accident Permanent Impairment Guidelines (2018), a compliant expression of causation.
For example, cll 1.5 and 1.6 of the guidelines state: "1.5 The assessment must determine the degree of permanent impairment of the injured person as a result of the injury caused by the motor accident. A determination as to whether the injured person's impairment is related to the accident in question is therefore implied in all such assessments." 1.6 Causation is defined in the Glossary at page 316 of the AMA4 Guides as follows: 'Causation means that a physical, chemical or biologic factor contributed to the occurrence of a medical condition. To decide that a factor alleged to have caused or contributed to the occurrence or worsening of a medical conditioning has, in fact, done so, it is necessary to verify both of the following: 1. The alleged factor could have caused or contributed to worsening of the impairment, which is a medical determination. 2. The alleged factor did cause or contribute to worsening of the impairment, which is a non-medical determination'."
The plaintiff complained that a "plausible mechanism" was not a verification that the accident "did cause or contribute to worsening of the impairment" (emphasis added). The argument ignores the words "or contribute" which, in my view, do fit within the scope of a plausible mechanism.
I was next taken to cl 1.18.1 of the guidelines which calls upon the assessor to assess WPI in three stages: firstly, a review and evaluation of the available evidence, secondly an interview and a clinical examination and thirdly the preparation of a certificate applying the guidelines.
Then I was referred to cl 1.203 of the guidelines, which states: "The assessment of mental and behavioural disorders must be undertaken in accordance with the psychiatric impairment rating scales (PIRS) as set out in these Guidelines. … "
Emphasis was placed by the plaintiff on the word "must".
Bringing all these clauses together, the plaintiff asked: 1. why had the plaintiff's submissions made to the assessor concerning causation effectively been ignored? This included reliance upon the report of a biomedical engineer, Mr Griffiths, who gave an opinion that because of "the minor nature of the accident … it was not possible for the claimant to have sustained the injuries alleged in the subject accident." I will have more to say about Mr Griffith's report when dealing with the 1 November 2023 decision; 2. why had the opinion of Dr Vickery, a psychiatrist, been misinterpreted? The WPI assessment did refer to a diagnosis of a Somataform Chronic Pain Disorder found by Dr Vickery, but ignored the fact that Dr Vickery did not attribute the disorder to the accident; and 3. why had the opinion of Dr Keller been ignored? Dr Keller, an occupational physician, pointed out that the first defendant had "an extensive prior history of neck, shoulder and back complaints … ." Further, in a later report he said: "Any possible minor soft tissue strains attributable to the accident would have been expected to recover within days or weeks following the accident."
The plaintiff submitted that the answers to all of the above questions pointed to the assessor having disregarded all of the contrary views so that the causation issues had not been properly dealt with.
The first defendant responded with this concession: "Can I say this, your Honour, it is not a perfect decision. It is not fantastic reasoning but, as we said in the submissions, we know why the medical assessor here found for causation."
In short, submitted the first defendant, the third defendant found there had been physical injuries which in turn caused psychiatric injuries.
Both parties referred me to a number of authorities, and both drew my attention to the decision of the High Court in Wingfoot Australia Partners Pty Ltd v Kocak (2013) 252 CLR 480; [2013] HCA 43. The following paragraphs [47] and [56] are most relevant: "47 The function of a Medical Panel is to form and to give its own opinion on the medical question referred for its opinion. In performing that function, the Medical Panel is doubtless obliged to observe procedural fairness, so as to give an opportunity for parties to the underlying question or matter who will be affected by the opinion to supply the Medical Panel with material which may be relevant to the formation of the opinion and to make submissions to the Medical Panel on the basis of that material. The material supplied may include the opinions of other medical practitioners, and submissions to the Medical Panel may seek to persuade the Medical Panel to adopt reasoning or conclusions expressed in those opinions. The Medical Panel may choose in a particular case to place weight on a medical opinion supplied to it in forming and giving its own opinion. It goes too far, however, to conceive of the function of the Panel as being either to decide a dispute or to make up its mind by reference to competing contentions or competing medical opinions. The function of a Medical Panel is neither arbitral nor adjudicative: it is neither to choose between competing arguments, nor to opine on the correctness of other opinions on that medical question. The function is in every case to form and to give its own opinion on the medical question referred to it by applying its own medical experience and its own medical expertise. 56 … .A Medical Panel explaining in a statement of reasons the path of reasoning by which it arrived at the opinion it formed is under no obligation to explain why it did not reach an opinion it did not form, even if that different opinion is shown by material before it to have been formed by someone else."
The first defendant, relying on Wingfoot, and submitting that the assessor did not have to resolve every controversy, pointed out that not only did the assessor have material before him from the plaintiff, but also a good deal of material to the opposite effect. For example: 1. Dr Verma, an occupational physician like Dr Keller, concluded that the first defendant's injuries "were caused/exacerbated by the incident on 18/6/2017"; 2. Dr Sun, a rehabilitation, and pain physician found the accident had resulted in a number of soft tissue injuries including to the first defendant's neck, mid back, lower back, and right shoulder; 3. Dr Bodel, an orthopaedic surgeon, diagnosed "a musculoligamentous aggravation of underlying degenerative changes in the cervical spine and lumbar spines caused by the motor vehicle accident and a rotator cuff injury to the region of the shoulders on both sides." He said, in terms: "The injuries were caused by the motor vehicle accident on 18 June 2017"; and 4. perhaps most significantly, Dr Fukui, in an unchallenged psychological medical assessment for the Personal Injury Commission, found in an "Assessment of Treatment - Causation" that the use of antipsychotic medication (Seroquel) and psychiatric and psychological treatment all "RELATES TO THE INJURY caused by the motor accident".
The plaintiff submitted that this case was akin to Rodger v De Gelder [2015] NSWCA 211. Gleeson JA said of the assessment in that case, at [109]: "Here the Panel failed to respond to a substantial argument based on evidence relied upon by Mr De Gelder as to the causation of his thoracic spine injury by the motor accident. It may also be inferred that the Panel failed to apply itself to the real question to be decided in carrying out its statutory function under s 58(1)(d), because it misunderstood a significant body of evidence relevant to its non-medical determination. What the Panel did amounted to a jurisdictional error. The Panel's decision recorded in its certificate is to be regarded as a purported and not real exercise of its statutory function in s 58(1)(d), leaving that statutory function unexercised, and the Authority and the Panel liable to the relief granted by the primary judge by way of judicial review: Ex parte Hebburn Ltd; Re Kearsley Shire Council (1947) 47 SR (NSW) 416 at 420 (Jordan CJ)."
However, the first defendant said that the third defendant had considered "the documents provided in the application and reply" and any "additional/late documents" and reached a conclusion that was open on the whole of the material. The first defendant said this was consistent with this passage from Lederer v Insurance Australia Limited Trading as NRMA Insurance [2022] NSWSC 322, at 34: "It may be accepted that a failure to respond to a substantial clearly articulated argument may constitute a denial of natural justice. However, this does not imply an obligation to consider every piece of evidence presented or every passage in a report."
The plaintiff placed emphasis on [35] in Lederer: "It is also uncontroversial that an assessor is required to provide reasons, and that the statement of reasons must explain the actual path of reasoning by which the assessor arrived at the opinion formed on the medical question under consideration, in sufficient detail to enable a court to see whether the opinion does or does not involve any error of law. What is required to discharge that obligation is informed by the battleground between the parties. This was explained (albeit in the context of a review panel) in Campbelltown City Council v Vegan : "Where it is necessary for the Panel to make findings of primary fact, in order to reach a particular conclusion as to the existence, nature and extent of any physical impairment, it may be expected that the findings of material facts will be set out in its reasons. Where facts are in dispute, it may be necessary to refer to evidence or other material on which findings are based, but the extent to which this is necessary will vary from case to case. More importantly, where more than one conclusion is open, it will be necessary for the Panel to give some explanation of its preference for one conclusion over another. That aspect may have particular significance in circumstances where the medical members of a Panel have made their own assessment of the applicant's condition and have come to a different conclusion from that reached by other medical practitioners, as set out in reports provided to the Panel.""
The first defendant in turn pointed out that Wingfoot had been decided after Campbelltown City Council v Vegan (2006) 67 NSWLR 372; [2006] NSWCA 284 and that the important element was that the third defendant had considered the whole of the material before him (the battleground) and had subsequently reached a conclusion that was available to him.
In other words, it is obviously not enough to simply consider one side's material, but that does not mean that every dispute in the material needs to be described and particularly resolved. This, albeit imperfect, assessment did look at both sides and did reach a conclusion, including specifically on causation.

Pre-existing condition

Turning now to the complaints about errors in assessing, or even ignoring, pre-existing conditions, I was particularly referred to the following: 1. the notes of the general practitioner referred to counselling and CBT, the latter presumably being cognitive behaviour therapy, on 21 February 2005, 2 March 2017 and 28 March 2017; 2. Dr Teoh, a psychiatrist, in his report of 30 March 2018 took a history that "She has not had any counselling"; 3. Dr Vickery, also a psychiatrist, in respect of the psychological/psychiatric history noted "Nil reported"; 4. the third defendant was given the following history: "She denied any pre-existing psychiatric conditions, and denied any previous treatment"; and 5. the third defendant was provided with a history that the first defendant had long-standing anxiety problems.
There are a number of questions and matters arising from the general practitioners' notes: 1. Dr Vickery, in his report dated 4 April 2023 does not seem to regard the CBT treatment as indicative of a previous psychiatric condition. In addition, he attributes the CBT treatment in 2005 to "pain management" which seems inconsistent with the note which says the first defendant attended for "Bacterial Vaginosis"; 2. the two CBT treatments in 2017 are probably related to domestic issues. The first note refers to "stressed few issues with family" and the second says "Had a confrontation with the psychologist as her husband was assessed with the psych"; and 3. there is no clue as to whether the CBT was of a formal nature or even amounted to little more than a 'chat' with the GP.
The plaintiff submitted that the failure to properly assess a pre-existing condition is reflected in the third defendant's completion of the table at [25] of the assessment. Firstly, the table says there is "Nil" pre-existing psychiatric evidence and secondly, the table attributes a category number without giving any reason for the decision.
The plaintiff submitted that the guidelines, at cl 1.218, require an estimate of any pre-existing impairment and then the subtraction of the value of that impairment from the overall WPI. Table 11 however attributes a Class I assessment, as has been attributed here, to: "No deficit, or minor deficit attributable to normal variation in the general population. …" A finding of no pre-existing psychiatric condition is in itself a reason for a Class I rating. It follows that no reason need be given if the rating is Class I.
Accordingly, I see no substance in the plaintiff's complaint about the completion of the table.
The result of the above is that, if I had extended the time for the judicial review of the first decision, that review would not have succeeded.

The review decision on 1 November 2023

I think the review decision can be dealt with shortly. The plaintiff submitted: "The second defendant was required to refer the medical dispute concerning the first defendant's WPI to a review panel if they had 'reasonable cause to suspect that the medical assessment was incorrect in a material respect having regard to the particulars set out in the application' see s 63(2B) of MACA."
My finding that the assessment by the third defendant was not susceptible to judicial review means that there would have been no basis for a reference to the review panel.
The plaintiff submitted that the second defendant had "acted irrationally and answered the wrong question" in his decision at [19]: "The insurer does not refer me to any requirement for an Assessor, who specialises in the assessment of psychiatric injuries, to make specific comment on the opinion of a bio-mechanical engineer with respect to whether the claimant could have sustained physical injuries in the subject motor accident. The Assessor accepted that the claimant suffered pain from her motor accident-related injuries which caused the development of her psychiatric injuries. Thus, a causal nexus was established and the Assessor's reasons sufficiently convey this."
It is important to make the following two observations about Mr Griffiths' report: 1. He seems to have reached his conclusions on the slightest of evidence. As he states: "At the time of preparing this preliminary report, I don't have any physical evidence by way of photographs, repair assessments, or detailed descriptions, of the damage sustained by either vehicle." 1. Mr Griffiths concluded: "By the reasoning processes in Section 8, it is deduced that it would not have been possible to receive the injury alleged to the head, neck, right shoulder and arm, chest, upper and lower back or the legs in this incident."
The conclusion reached by Mr Griffiths, as quoted in the previous paragraph, is not a conclusion that the first defendant was not injured at all. It is only a conclusion that she did not receive the injuries that are described in the claim form and in answer to requests for particulars. While there would obviously be overlap, the alleged injuries are not necessarily the physical injuries that form part of the causation train found by the third defendant. Notably the third defendant refers only to the physical injuries as "pain".
I do not think the second defendant was irrational and I do not think he answered the wrong question.
Accordingly, the attack on the second review also fails.

The decision on 6 December 2023

On 28 November 2023, the plaintiff wrote to the second defendant asking him to reconsider his decision. He refused on 6 December 2023.
The refusal was referred to as the Bhardwaj decision (derived from Minister for Immigration and Multicultural Affairs v Bhardwaj 209 CLR 597; [2002] HCA 11.
It may be that a Bhardwaj decision is not amenable to judicial review. Whatever the case, on the findings I have made about the extension of time and the reviews of the two earlier decisions, there would be no basis for any judicial review of the decision on 6 December 2023.

Orders

The following orders flow from the above reasons: 1. The amended summons is dismissed. 2. The plaintiff is to pay the first defendant's costs of the proceedings. 3. No other order is made as to costs. 4. I will hear the parties if any amendments to the costs orders are requested within 14 days.

Amendments 11 April 2024 - Incorrect spelling of Lum in Parties, Coversheet 15 April 2024 - Para 30 first defendant replaced with plaintiff DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 15 April 2024

Motor Accident Compensation Act 1999(NSW)

At a glance

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Judgment (10 paragraphs)

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Legislation Cited (2)

Cases Cited (11)