Allianz Australia Insurance Limited v Sleiman

The statutory scheme

1. The statutory task which the assessor had to undertake was that specified in s 94 of the Act, which provides: "94 Assessment of claims (1) The claims assessor is, in respect of a claim referred to the assessor for assessment, to make an assessment of: (a) the issue of liability for the claim (unless the insurer has accepted liability), and (b) the amount of damages for that liability (being the amount of damages that a court would be likely to award). (2) Such an assessment is to be made having regard to such information as is conveniently available to the claims assessor, even if one or more of the parties to the assessment does not co-operate or ceases to co-operate. (3) The assessment is to specify an amount of damages. (4) The claims assessor must, as soon as practicable, after an assessment issue the insurer and claimant with a certificate as to the assessment. (5) The claims assessor is to attach a brief statement to the certificate, setting out the assessor's reasons for the assessment. (6) If the Principal Claims Assessor is satisfied that a certificate as to an assessment or a statement attached to the certificate contains an obvious error, the Principal Claims Assessor may issue, or approve of the claims assessor issuing, a replacement certificate or statement to correct the error."
2. Guidelines for the conduct of such assessments have been issued under s 69(1) of the Act. Section 106(1) provides that: "(1) Claims assessments under this Part are subject to relevant provisions of Motor Accidents Claims Assessment Guidelines relating to those assessments."
3. 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. 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. 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. In assessing damages for economic loss, assessors are thus bound by the requirements of ss 125, 126 and 127. They provide: "125 Damages for past or future economic loss - maximum for loss of earnings etc (cf s 151I WCA) (1) This section applies to an award of damages: (a) for past or future economic loss due to loss of earnings or the deprivation or impairment of earning capacity, or (b) for the loss of expectation of financial support. (2) In the case of any such award, the court is to disregard the amount (if any) by which the injured or deceased person's net weekly earnings would (but for the injury or death) have exceeded $2,500. Note. See section 146 for indexation of that amount. 126 Future economic loss - claimant's prospects and adjustments (cf s 70A MAA) (1) A court cannot make an award of damages for future economic loss unless the claimant first satisfies the court 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. (2) When a court determines the amount of any such award of damages it is required to adjust the amount of damages for future economic loss that would have been sustained on those assumptions by reference to the percentage possibility that the events concerned might have occurred but for the injury. (3) If the court makes an award for future economic loss, it is required to state the assumptions on which the award was based and the relevant percentage by which damages were adjusted. 127 Damages for future economic loss - discount rate (cf s 71 MAA) (1) Where an award of damages is to include compensation, assessed as a lump sum, in respect of damages for future economic loss which is referable to: (a) deprivation or impairment of earning capacity, or (b) loss of expectation of financial support, or (c) the value of future services of a domestic nature or services relating to nursing and attendance, or (d) a liability to incur expenditure in the future, the present value of the future economic loss is to be qualified by adopting the prescribed discount rate. (2) The prescribed discount rate is: (a) a discount rate of the percentage prescribed by the regulations, or (b) if no percentage is so prescribed - a discount rate of 5%. (3) Except as provided by this section, nothing in this section affects any other law relating to the discounting of sums awarded as damages."
7. 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. 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] : "26 The underlying principle is that the plaintiff should have a sum by way of damages for the difference between earning capacity as it would have been in the absence of the injury and the earning capacity as it is following the injury. Both elements involve uncertainty and conjecture and, therefore, require that assumptions be made, albeit assumptions shaped by the available evidence. The assumptions cover, among other things, remaining expectancy of working life, the impact of the injury on that expectation, the extent to which the ability to function will be curtailed and the earnings that work according to the reduced ability will produce, together with assumptions regarding discounted present value and investment returns and as to vicissitudes or adverse contingencies. Because of s 126(1), an assessor has a duty to form an opinion that the assumptions to be applied in relation to such matters going to future earning capacity "accord with the claimant's most likely future circumstances but for the injury". 27 The duty under s 126(1) to be satisfied that the adopted assumptions accord with the most likely future circumstances but for the injury is supplemented by the s 126(3) duty to articulate the assumption on which the award is based. This, as has been said in this Court more than once, is to ensure transparency and, at the same time, to inject an element of rigor or method that may be overlooked or simply abandoned if the statutory system did not insist on the identification and articulation of the assumptions employed."

The assessor's reasons

1. 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. 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. The assessor identified the issues lying between the parties to be: "5.1 The Claimant's credit is in issue having regard to Mr Sleiman's extent of injuries, his description of the level of pain and restriction, as well as evidence of economic toss. 5.2 Quantum of past economic loss and entitlement to future economic loss. 5.3 Is Mr Sleiman entitled to past gratuitous domestic care and has he established a need for future paid commercial care?"
4. 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. The assessor had said at [1] that the accident had occurred when Mr Sleiman: "… was on his way home from work. He was driving in the left lane in the M5 tunnel. The traffic in his lane slowed. A truck failed to stop and pulled into the right lane colliding with a bus and van. Mr Sleiman's vehicle was caught up in this multi vehicle collision."
6. The assessor immediately identified that Mr Sleiman's statement was incorrect, observing at [2]: "In his statement he says at paragraph 14 "I immediately felt pain in my neck and back". This statement is incorrect. Apparently Mr Sleiman felt no pain immediately after the accident. Video footage of the accident shows him immediately alighting from his car, assisting others involved in the accident, as well as hurdling a concrete barrier on a number of occasions. He can be seen walking on the top of the barrier and falling off. It was almost 6 weeks after the accident before Mr Sleiman sought treatment with his general practitioner."
7. 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. 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. 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": "(a) to produce to the assessor, at a time and place specified in the direction, specified documents in the possession of the person, being documents that the assessor considers relevant to the assessment of the claim concerned, or (b) to furnish specified information to the assessor within a time specified in the direction, being information that the assessor considers relevant to the assessment of the claim concerned."
10. 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: "Notwithstanding s100 Directions to the Claimant's alleged former or current employers there has been a negative response from Future Form Structures that the Claimant is not an employee and no response from the other parties. As such I will draw an inference that the Claimant has not been employed by any of these businesses unless evidence to the contrary is forthcoming."
11. In her reasons the assessor said: "8. Ms Allen asked Mr Sleiman about 2 statements in evidence from 2 "employers. Mr Sleiman admitted he had typed these statements because the employers cannot speak or read English. He said he wrote what they told him to write. However, both statements have similar wording with the same grammatical errors suggesting the words in the statement were written by Mr Sleiman himself and not the employers. Ms Allen argues that these are self serving. I agree with Ms Allen. 9. The Claimant's solicitor and the Insurer's solicitor have sought particulars of the Claimant's employment from both these employers. As these requests were ignored, I issued s100 directions to the employers, which were ignored. As such, I have no evidence from the employers, M&l Formwork or Diamond Colours, to support the contents of the statements prepared by Mr Sleiman. As such, I agree that the statements are self-serving and I do not intend to accept them as supporting Mr Sleiman's claim for past or future economic loss."
12. 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: "7. Mr Sleiman denied receiving any injury from the fall. I accept his evidence as I have no other evidence to suggest he suffered injury from the fall. … 13. Mr Sleiman did tell me he has good and bad days. I accept he has a psychiatric injury caused by the accident which could impact on his perception of his pain level. I accept Mr Sleiman does the best he can when consulting doctors and on some occasions he may have experienced a "bad day". 14. Overall, I accept Mr Sleiman has at times demonstrated abnormal pain behaviours but does the best he can when giving histories to doctors for the purpose of medico-legal opinion and in particular when examined by the MAS Assessors."
13. 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. 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. 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. 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. The obligation to give reasons is as discussed in Zahed v IAG Limited t/as NRMA Insurance [2016] NSWCA 55 at [43]: "43 … the reasons of a claims assessor should not be scrutinised over zealously. While the reasons required are not necessarily those which may be expected of a judge, the reasons must demonstrate the path of reasoning that leads the claims assessor to a conclusion as to the amount of damages that a court would be likely to award. In order to make an assessment of the amount of damages that a court would be likely to award, a claims assessor must have regard to the reasoning process that the court would be required to adopt in awarding damages. Again, a fine line is to be drawn between the reasons that might be given by a court for making an award and the reasons of a claims assessor for making an assessment for the amount of damages that a court might be likely to award. The former is a more burdensome task than the latter. …"
4. 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. 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. 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. 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. 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. 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. 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. 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. The assessor explained why she rejected the cases which both parties had advanced in relation to past economic loss at [20], observing that: "20. I disagree with both submissions. Mr Sleiman has a residual earning capacity. He told me he had worked in June and July this year, supervising on a worksite earning $30.00 per hour working 4 to 8 hours per day depending on work opportunities. Also, I have no evidence that before the accident Mr Sleiman would have increased his earnings to $1,500.00 per week."
13. 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. 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. 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: "23. Based on Mr Sleiman's evidence and doctor's opinion set out above, I accept his physical injuries has resulted in ongoing work incapacities, which is productive of economic loss. In addition, his diagnosed psychiatric injuries reviewed earlier in this decision has impacted on Mr Sleiman's work capacity. 24. Review Mr Sleiman's past income, his wages year to year have fluctuated. The only true measure of his economic loss is to take an average of his pre-accident income. 25. Adopting the figures in the Insurer's submissions, the years ending 2009 to 2013, the average yearly wages amount to $25,186.00 (rounded up) per year. Before tax, the gross average income per week was $485.00 (rounded up) per week. 26. Mr Sleiman has a residual earning capacity. Adopting the amount submitted by Mr Hickey in the submissions for future economic loss and the evidence given by Mr Sleiman as to his capacity to work, I accept he has a 25% residual earning capacity. Accordingly, I assess his past economic loss to amount to $364.00 (rounded up) net per week from the date of the accident to the date of the Assessment Conference, which is calculated as follows: ' 26.1 162 weeks x $364.00 per week = $58,968.00. 26.2 Less 25% residual earning capacity = $4,226.00 26.3 As Mr Sleiman was self employed, I make no allowance for superannuation contributions."
16. 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. 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: "… it is not sufficient for the Assessor to simply refer to a set of calculations provided by one of the parties which in turn contains the assumptions on which the award is based. Such an approach would not "ensure transparency" of the kind referred to by Barrett JA. Without the assumptions being expressly stated the task of determining whether they accord with the claimant's "most likely future circumstances but for the injury" as specified in s 126(1) is either impossible or at least rendered that much more difficult.
18. 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. 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. 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: "29. The evidence does not support either of these submissions. As stated in past economic loss, I accept Mr Sleiman has suffered a restriction to his working capacity which is productive of economic loss. According to sl26 of the Motor Accident Compensation Act, Mr Sleiman's most likely future circumstance but for the accident is he would have continued to work as a painter/construction worker. He may have increased his business but I have no evidence to support this proposition. Again, I prefer to adopt his average earnings at the time of the accident and reduce this amount by 25% for his residual working capacity for reasons set out above. The calculation is as follows: 29.1 $364.00 net per week less 25% residual earning capacity = $273.00. 29.2 I accept the normal age of retirement would be 67 years. He has 32 years to retirement. 29.3 32 years for the 5% multiplier is 845.0. 29.4 845.0 x $273.00 -15% for vicissitudes = $196,082.25. 29.5 There is no future superannuation as Mr Sleiman was self employed."
21. 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. 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. 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: "41 The assumptions or events upon which a baseline may commonly be calculated include: (a) identification of the skills, training and experience of the plaintiff, as at the date of the accident; (b) the work he or she was undertaking immediately prior to the accident; (c) the likelihood that he or she would have continued in such employment, but for the accident; (d) the possibility that he or she might have obtained promotion or other benefits, but for the accident; (e) the age to which he or she was likely to have worked in that employment, and (f) the possibility that the employment would not have been continuous. 42 Each of these factors is liable to variation, depending upon the circumstances of the case. For example, the likelihood of improved earning capacity for a skilled or professional person, who was at the beginning of a career when the accident occurred, may be high. The possibility of unemployment for periods may be low in some occupations and higher in others. It is common under the general law to allow a reduction in the order of 15% (depending on the circumstances) for "vicissitudes", to allow for the possibility that some event other than the injury would have adversely affected earning capacity. Assuming that length and continuity of employment are treated as "events concerned", for the purposes of sub-s (2), that provision may be seen as allowing for variation for such vicissitudes."
24. 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. 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. In the result, the orders sought must be made.

Costs

1. 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.

Orders

1. For the reasons given, I order: 1. The assessor's decision is set aside. 2. The matter is remitted to the State Insurance Regulatory Authority to be dealt with according to law, by a different claims assessor. 3. Unless the parties approach to be heard on costs, the costs order will be an order in favour of Allianz.

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: 23 June 2016