Judgment
1HIS HONOUR:
Nature of proceedings
The plaintiff is the compulsory third party (CTP) insurer in respect of a motor vehicle accident which occurred on 20 June 2008 in which the first defendant (the claimant) was involved. The second defendant is the Claims Assessor, who made the decision under review. The third defendant is the Motor Accident Authority, a statutory authority which administers the compulsory third party insurance and compensation scheme under the Motor Accidents Compensation Act 1999 ("the Act").
2By Summons filed 27 March 2011 the plaintiff seeks the following orders, pursuant to s69 of the Supreme Court Act 1970:
An order in the nature of certiorari or, alternatively a declaration setting aside or declaring invalid the assessment and/or the certificate of the claims assessor John Tancred, the second defendant, made on 18 February 2011 purportedly pursuant to s94 of the Motor Accidents Compensation Act 1999 (NSW) ("the Act") ("the assessment decision").
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 step in reliance on the assessment decision.
An order in the nature of mandamus remitting the claimant's assessment application to the third defendant or the Principal Claims Assessor of the third defendant for reallocation of the matter to a different claims assessor for determination of the matter according to law.
3The plaintiff alleges jurisdictional error and/or error of law on the face of the record in respect of the assessment decision. The plaintiff submits that the errors arose from the claims assessor's award of future economic loss.
4The plaintiff identifies the following errors in that part of the assessment decision:
(a) The claims assessor failed to comply with the requirements of s126 of the Act.
(b) The claims assessor purported to award a damages component, contrary to the provisions of chapter 5 of the Act, namely s126.
(c) The claims assessor failed to take into account a relevant consideration, i.e. that the claimant was still working and that the award would operate in such a way as to impermissibly add to his current high earnings.
(d) Alternatively, the claims assessor fell into error of law in making an award for future economic loss that did not conform with the compensation principle that guides the award of common law damages in this area.
(e) Alternatively, the claims assessor's decision on this issue was wrong because it was afflicted with manifest irrationality or unreasonableness in the Wednesbury sense.
5Submitting appearances have been entered by the second and third defendants. The contest before the Court has been conducted between the plaintiff and the claimant.
Background
6On 20 June 2008 the claimant was injured in a motor accident while driving home from work. He injured his neck, back and left shoulder. At the time of that accident, he was recovering from a work injury to the same shoulder. The injury at work occurred in November 2007.
7Liability was admitted. The following issues arose for decision by the claims assessor:
(i) The part played by each of the accidents in the claimant's disabilities.
(ii) The extent of the claimant's left shoulder disability.
(iii) The claimant's entitlement to damages.
8The claims assessor found that the injuries to the claimant's neck and back had cleared up and that the continuing problems with the claimant's left shoulder were due entirely to the motor accident. No challenge is made to those findings.
9The claims assessor approached the assessment of economic loss as follows:
" The extent of the Claimant's shoulder disability
The Claimant says in his statement: "My current treatment involves avoiding activities that I know cause me increasing problems in my left shoulder. I take painkillers such as Nurofen when the pain is more severe. Being on light duties I'm largely able to avoid aggravating my injuries too much"
As indicated in paragraph 24, the Claimant has permanent lifting restrictions.
The Claimant says he cannot do the heavier handyman tasks in and around the home. He says he can mow but it hurts. "I pay for it. It wears me down". He has difficulty painting and is paying his sister to do some painting at present.
Assessment of Damages:
...
Past economic loss. The claim is based on lost over time of $165 per week. To date that amounts to approximately $23,000. The claimant, because of a benevolent employer and his own work ethic, had no time off work as a result of the motor accident. In his statement he says that until February 2010 he was unable to resume any Saturday over time. He also says that from February 2010 up until he made his statement in May 2010, he worked only two Saturdays.
The Insurer concedes that there may have been a loss of overtime, but says that any such loss was as a result of the November 2007 accident.
In his submissions, Mr Delfendahl summarises the earnings of the Claimant. His earnings went up by approximately $4,500 net in the year prior to his motor accident and then down by $1,500 in the year of the accident. They went up slightly the next year. In the most recent financial year the Claimant's net income has jumped by about $16,000 to approximately $1,000 net per week.
The Claimant explains this by saying that he has been given overtime lately, because they are very short staffed at work. If the Claimant worked only two Saturdays overtime until May 2010, it is hard to see how he could have earned $16,000 of overtime by June 2010. I believe there is some other innocent explanation for the large increase.
I take account of s124 and of the fact that the Claimant is a very impressive person. Bearing in mind the reduced income in the year after the accident, when, absent the accident, one might have expected an increase and the Claimant's insistence that he did suffer a loss of overtime, I allow a buffer for past loss of earning of $10,000 including superannuation.
...
Future economic loss . The Claimant is concerned about the possibility of losing his job. He explained that he is the only light duties worker in the area of the factory where he works. He is concerned that a pallet system will be introduced at work. This will leave very little for him to do and, I infer, increase his chances of losing his job. The Claimant explained to me in answer to Ms Allan's questions that forklift driving is not a fulltime job. Workers driving forklifts have to do physical tasks as well.
I am satisfied that there is a chance of the Claimant losing his present job, despite his benevolent employer and that he will then be at a disadvantage on the open labour market. His lifting restriction will make it difficult to obtain a manual job, which is all he has ever done.
Bearing in mind the Claimant's present high earnings I am satisfied that it is appropriate to allow $250 net per week for future economic loss. The calculation is $250 x 632 (18.3 years) x .85 = $134,300."
10The following provisions of the Act are relevant:
"5(1) The objects of this Act are as follows:
(a) to encourage early and appropriate treatment and rehabilitation to achieve optimum recovery from injuries sustained in motor accidents, and to provide appropriately for the future needs of those with ongoing disabilities,
(b) to provide compensation for compensable injuries sustained in motor accidents, and to encourage the early resolution of compensation claims,
(c) to promote competition in the setting of premiums for third-party policies, and to provide the Authority with a prudential role to ensure against market failure,
(d) to keep premiums affordable, recognising that third-party bodily insurance is compulsory for all owners of motor vehicles registered in New South Wales,
(e) to keep premiums affordable, in particular, by limiting the amount of compensation payable for non-economic loss in cases of relatively minor injuries, while preserving principles of full compensation for those with severe injuries involving ongoing impairment and disabilities,
(f) to ensure that insurers charge premiums that fully fund their anticipated liability,
(g) to deter fraud in connection with compulsory third-party insurance.
(2) It must be acknowledged in the application and administration of this Act:
(a) that participants in the scheme under this Act have shared and integrated roles with the overall aim of benefiting all members of the motoring public by keeping the overall costs of the scheme within reasonable bounds so as to keep premiums affordable, and
(b) that the law (both the enacted law and the common law) relating to the assessment of damages in claims made under this Act should be interpreted and applied in a way that acknowledges the clear legislative intention to restrict the level of non-economic loss compensation in cases of minor injuries, and
(c) that:
(i) the premium pool from which each insurer pays claims consists at any given time of a finite amount of money, and
(ii) insurers are obliged under this Act to charge premiums that will fully fund their anticipated liability, and
(iii) the preparation of fully funded premiums requires a large measure of stability and predictability regarding the likely future number and cost of claims arising under policies sold once the premium is in place, and
(iv) the stability and predictability referred to in subparagraph (iii) require consistent and stable application of the law, and
(d) that insurers, as receivers of public money that is compulsorily levied, should account for their profit margins, and their records should be available to the Authority to ensure that accountability."
"94(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."
"126(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."
11Claims Assessment Guidelines (Guidelines) for the conduct of assessments have been issued pursuant to s69(1) of the Act. Section 106(1) of the Act provides that:
"(1) Claims assessments under this Part are subject to relevant provisions of MAA Claims Assessment Guidelines relating to those assessments."
12The Guidelines operate as delegated legislation. The following sections of the Guidelines are relevant:
" Objects of CARS
1.13 The objects of CARS set out in clause 1.14 should be used as an aid to the interpretation of these Guidelines.
1.14 The objects of CARS in dealing with claims and disputes in connection with claims referred are:
1.14.1 to provide a timely, fair and cost effective system for the assessment of claims under the Motor Accidents Compensation Act 1999 that is accessible, transparent, independent and professional;
1.14.2 to assess claims and disputes fairly and according to the substantial merits of the application with as little formality and technicality as is practicable and minimising the cost to the parties;
1.14.3 to ensure the quality and consistency of CARS decision making;
1.14.4 to make appropriate use of the knowledge and experience of CARS Assessors; and
1.14.5 to establish and maintain effective communication and liaison with stakeholders concerning the role of CARS.
1.15 The objects of CARS set out in clause 1.14 are consistent with, and are in support of the objects of the Act as can be gleaned from the Act as a whole, including from 'Objects of the Act' set out in s5(1) and the 'Acknowledgements of the Act' set out in s5(2))."
"Assessor's role
...
16.3 The Assessor is to act with as little formality as the circumstances of the matter permit and according to equity, good conscience and the substantial merits of the matter without regard to technicalities and legal forms.
16.4 The Assessor is to take into account the objects of the Act and the objects of CARS at all times.
16.5 The Assessor is to ensure that relevant material is available so as to enable all of the relevant facts in issue to be determined.
...
16.12 When undertaking an assessment and making an assessment of the amount of damages for the claim under s94(1), the Assessor is to assess damages in accordance with Chapter 5 of the Act in the same way in which a Court is required to assess damages."
"Certificate and Statement of reasons
...
18.4 A certificate under s94 or 96 is to have attached to it a statement of the reasons for the assessment. The statement of reasons is to set out as briefly as the circumstances of the assessment permit:
18.4.1 the findings on material questions of fact;
18.4.2 the Assessor's understanding of the applicable law if relevant;
18.4.3 the reasoning processes that lead the Assessor to the conclusions made; and
18.4.4 in the case of an assessment certificate pursuant to s94, the Assessor must specify an amount of damages and the manner of determining that amount."
13The statutory compensation scheme under the Act is described in Checchia v Insurance Australia Ltd trading as NRMA Insurance [2009] NSWSC 1005 (Rothman J) in the following terms:
" 7 The scheme established by the Act has been the subject of significant authority, mostly relating to the process of assessment. ...
8 The purpose of the legislation was the establishment of a new scheme for motor accident compensation that, generally, did not involve curial proceedings. Medical assessors resolve differences between injured persons and the relevant insurer as to the extent of the injury and whether the alleged accident was the cause of the injury. There exists a right of appeal to a Review Panel (which also consists of medical assessors).
9 The insurer is obliged by the Act to endeavour to resolve the claim, by settlement or otherwise, justly and expeditiously. It is, in that context, required to give written notice of its attitude to liability no later than three months from the making of the claim. It is also an insurer's duty to make a reasonable offer of settlement (either a money amount for damages or a method of calculating same) within the later of one month from the stabilisation of the injury or two months from the provision of particulars by the claimant. It is required to cover hospital, medical and other expenses from the time of admitting liability (or having it determined) and also to take reasonable steps for the medical rehabilitation of the claimant.
10 On the other hand, the claimant is required under the Act to cooperate fully with the insurer (and insured) as to the claim, by providing enough information to satisfy the insurer as to the validity of the claim and in order to facilitate an early offer of settlement. Further, a claimant is required to answer any reasonable request for particulars and to provide copies of documents.
11 Generally, although some claims are the subject of court proceedings, Claims Assessors will assess claims in accordance with guidelines that have been promulgated. It is unnecessary, for present purposes, to discuss the details of the foregoing. It is sufficient to note the general scheme and the imposition of obligations on claimants and insurers. Further, it is a criminal offence (and often a breach of the licence conditions) for an insurer to contravene an obligation imposed upon it under the Act."
12 It is in that context that one must construe Part 4.6 of the Act. The scheme of the Act depends on (and obliges) cooperation. Fraudulent, false or misleading conduct (by either party) would render unworkable the scheme for assessment, particularly because of the level of informality and the general practice by Claims Assessors not to allow cross-examination before them.
Submissions
14The primary submission by the plaintiff was that the assessor made no attempt to comply with the requirements for awarding damages for future economic loss in that he failed to comply with s126 of the Act. The plaintiff submitted that under s126, an assessor was bound to disclose certain assumptions about the claimant's most likely future circumstances, but for the injury, and was required to make adjustments to any amount of damages for future economic loss by reference to a "percentage possibility" that future events might not occur. It submitted that these assumptions must be stated, quantified and set out plainly in the assessor's reasons for decision. It submitted that none of these things occurred here and as a result, there was a failure to comply with important legislative requirements and the claims assessor was therefore acting without power, i.e. ultra vires.
15The plaintiff identified the failures to comply with s126 of the Act as follows:
(a) There was no reference to s126 or to its terms or to its tests.
(b) When he made an award for future economic loss, the assessor failed in accordance with s126(3) to state the assumptions on which the award was in fact based.
(c) There was no statement by the assessor that he had been "satisfied" as to any assumptions.
(d) There was no logical probative evidence before the assessor to justify the result which he reached.
(e) There was no statement by the assessor in respect of the following matters:
(i) What chance was there of the claimant losing his current job.
(ii) When would the claimant likely lose his current job.
(iii) When the claimant did lose his current job, what kind of job would he be able to obtain in the manual labour market and also in the forklift driving market for which he was suitably qualified and experienced.
(f) No reason was provided by the assessor for his choice of a figure of $250 net per week for the future economic loss calculations over 18.3 years.
16The plaintiff relied upon the observations of Schmidt J in Insurance Australia Ltd trading as NRMA Insurance v Hutton-Potts [2010] NSWSC 1446, [2010] 57 MVR 194 at [27] - [41] but specifically where her Honour said at [33]:
"33 While it must be accepted that elaborate reasons were not required to be given for the conclusions reached by the assessor in relation to the assessment of Mr Hutton-Potts' future economic loss that did not relieve the assessor of the obligation of identifying the assumptions on which the damages award for future economic loss rested, which s 126 requires. Reasons could be given concisely, but they had to be given.
...
39 ... When dealing with claims brought under the Act, however, the obligations imposed by s 126 must be observed. That required the assessor to explain the assumptions he made, on which the damages assessed for future economic loss of $231,477.50 rested. All that was identified was that it rested on a weekly figure of $500. That seems a conclusion inconsistent with the claimant's pre-accident work history, which had been patchy. While it was said expressly that this would have continued, an award of $500 per week did not reflect that assumption. There was no explanation of the assumptions on which that departure rested. What assumption the $500 figure selected as the weekly rate rested on, was also not explained."
17The plaintiff accepted that implicit in its submissions was the proposition that the reasons of an assessor should be tested in the same way as those of a judge deciding the same issue. In the course of submissions, the following exchange took place:
" HIS HONOUR: If your argument is correct then you say the reasons an assessor has to give should be tested in the same way as those of a judge, on 126.
ROBINSON: Your Honour must have the real reasons that show why he did what he did.
HIS HONOUR: I'm not sure that is a correct proposition, that is all.
ROBINSON: If there was to be a difference between the two your Honour is not permitted by law or precedent to be brief whereas the claims assessor is permitted to be succinct and brief. That is the only difference.
You both must state the real reasons why you came to the decisions that you have come to. You both must state the statutorily required assumptions and vicissitudes and we don't cavil with sub2 in this case, 126(2). You both must do the same work. ..." (T.11.35)
18There was a subsidiary submission to the effect that the effect of the assessor's award of damages for future economic loss offended the compensation principle in that the claimant was in a better position following the accident than he would have been, had the accident not occurred and that such a result was so absurd as to offend the Wednesbury principle ( Associated Provincial Picture Houses Ltd v Wednesbury Corporation (1948) 1 KB 223.)
19In submissions, the proposition was put as follows:
"ROBINSON: ... And two, he has offended the compensation principle by awarding a lot of money, $130,000 odd, in circumstances where the claimant below, the first defendant here, was earning money. His income went up significantly after he was injured in both his work injury and his motor vehicle accident and the damages are awarded on that." (T.2.34)
Consideration
20I do not accept that the reasons of a claims assessor should be tested in the same way as the reasons of a judge. This is so even if the reasons of an assessor can be more succinct than those of a judge. In Vitaz v Westform (NSW) Pty Ltd [2011] NSWCA 254 Basten JA restated the principle:
"50 It is necessary to assess any alleged inadequacy of the reasons provided by the specialist in the context of their statutory purpose. "
While the Court was there considering the reasons of a medical appeal panel set up under the Workplace Injury Management and Workers Compensation Act 1998, the statement of principle remains valid.
21The statutory purpose is made clear by s94(5) of the Act:
"94(5 ) The claims assessor is to attach a brief statement to the certificate, setting out the assessor's reasons for the assessment."
That provision in the Act is supplemented by the following clauses of the Guidelines:
" 1.14.2 to assess claims and disputes fairly and according to the substantial merits of the application with as little formality and technicality as is practicable and minimising the cost to the parties;
16.3 The Assessor is to act with as little formality as the circumstances of the matter permit and according to equity, good conscience and the substantial merits of the matter without regard to technicalities and legal forms.
16.4 The Assessor is to take into account the objects of the Act and the objects of CARS at all times.
18.4 A certificate under s94 or 96 is to have attached to it a statement of the reasons for the assessment. The statement of reasons is to set out as briefly as the circumstances of the assessment permit:
....
18.4.3 The reasoning processes that led the assessor to the conclusions made;
..."
22It follows that clause 16.12 of the Guidelines is to be interpreted by reference to s94(5) of the Act and those clauses of the Guidelines just referred to.
"16.12 When undertaking an assessment and making an assessment of the amount of damages for the claim under s94(1) the assessor is to assess damages in accordance with Chapter 5 of the Act in the same way in which a court is required to assess damages."
23Guidance was provided as to the interpretation of s94(5) by Campbell JA (with whom Allsop P and Bell JA agreed) in Insurance Australia Ltd trading as NRMA Insurance Ltd v Helou [2008] NSWCA 240:
"60 Another way in which NRMA submits there was a jurisdictional error or error of law on the face of the record on the part of the assessor was that he failed to quantify the allowance made for the pre-existing back condition.
61 The obligations of an assessor to give reasons is qualified by the requirement, in section 94(5) MAC Act , that it be a "brief statement" , and by the requirements of clause 16.3 of the Claims Assessment Guidelines. When the MAC Act and the Guidelines make this express provision concerning the nature of obligations of an assessor to give reasons, they differ from the Workplace Injury Management and Workers Compensation Act 1998 provisions concerning medical assessments that were considered by this Court in Campbe l ltown City Council v Vegan , where the extent of the obligation to give reasons needed to be derived as a matter of implication from the statute.
62 When, for the reasons I have already given, the assessor has performed the task required of him to "assess the damages" , and when his reasons identify the various heads of damage that he has awarded, and how he has arrived at the numbers attributed to each of those heads of damage, his statutory obligation to give reasons has been performed."
24Against that background, I am of the opinion that the appropriate test when examining the reasons of an assessor is that of clarity. It has to be clear how the assessor reached his or her decision and what process of reasoning was involved. It is not necessary, however, that each step in that reasoning process be enunciated if it is otherwise clear how the assessor arrived at his or her conclusion.
25When discussing the giving of reasons in Vitaz , Basten JA referred to Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247, which raised the same issue in a different but analogous context:
"33 Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 involved the adequacy of the reasons for a decision by a judge of the Compensation Court. The judge relied upon a CAT scan and a particular date to conclude that the applicant before him was thereafter "fit for all work" - see T276E. Whilst asserting the importance of giving reasons for findings of that kind, the majority in this Court (Mahoney and McHugh JJA) concluded that there was no legal error in the implied finding "that the applicant was fit for work because the CAT scan did not reveal any abnormality" at 282C-D (McHugh JA)".
26To insist upon a series of specific and detailed findings on the part of a claims assessor so that if one of those findings is not articulated, there has been default in applying the Act and consequently error of law, is quite antithetical to the philosophy behind the Act and to the objects of the Act and Guidelines. It represents the triumph of form over substance, which the Act and Guidelines expressly seek to avoid. It follows that I reject this part of the plaintiff's submissions.
27It should also be noted that this is not an appeal by way of rehearing, nor is it an appeal on the merits. It is an application based on administrative law principles which seeks to establish either lack of jurisdiction or error of law on the face of the record.
28With that in mind, and also having regard to s94(5) of the Act and the Guidelines to which I have referred, the observations of the High Court in Minister for Immigration & Ethnic Affairs v Wu Shan Liang, Huang Cheng Jiang and Liu Jun Liang [1996] HCA 6; (1996) 185 CLR 259 at 272 are instructive. There the Court said:
"It was said that a court should not be "concerned with looseness in the language ... nor with unhappy phrasing" of the reasons of an administrative decision-maker. The Court continued:
"The reasons for the decision under review are not to be construed minutely and finely with an eye keenly attuned to the perception of error".
These propositions are well settled. They recognise the reality that the reasons of an administrative decision-maker are meant to inform and 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 Court] must beware of turning a review of the reasons of the decision-maker upon proper principles into a reconsideration of the merits of the decision."
29The plaintiff submitted, without explaining why, that the approach of the claims assessor to future economic loss was not to be treated as an award in the nature of a buffer, but as a calculation based on precise figures. On that approach, the plaintiff submitted, there was no basis for those figures in the evidence and no compliance with the requirements of s126 of the Act.
30I do not see why the approach of the claims assessor to the award of future economic loss should not be treated as the award of a buffer. It is true that he did not specifically refer to a buffer (although he did so in relation to past economic loss). Nevertheless, his methodology and approach is the same as that used in the buffer cases. The only difference is that instead of specifying a lump sum, he specified a percentage of the claimant's earnings, by reference to which he calculated a lump sum.
31The failure of the claims assessor to specifically mention the word "buffer" when dealing with future economic loss is not decisive. This is particularly so if the effect of what he did was to award a buffer. This is clearly what the claims assessor did. I can see no difference between a claims assessor saying "I award a lump sum of $134,300 by way of a buffer" and the way in which the claims assessor expressed himself in this case by using as his starting point a weekly loss of $250 which he then converted to a lump sum.
32If this is a correct characterisation of what the claims assessor did, then there has been compliance with s126 of the Act which allows for a buffer to be awarded for future economic loss.
33In the context of appeals from a judge by way of rehearing, the Court of Appeal has had occasion to consider the relationship between the award of a buffer by way of damages for future economic loss and s13 of the Civil Liability Act 2002 (CLA) which is in identical terms to s126 of the Act.
34Penrith City Council v Parks [2004] NSWCA 201 involved considerations similar to those which arose before the claims assessor. The injured plaintiff continued in her previous employment but if she lost her job she would have "grave difficulty obtaining alternative work. She therefore has a restricted earning capacity". It was necessary for the trial judge to assess that loss. The trial judge did so but did not in terms refer to a buffer. He simply chose a figure to represent his assessment of the chance of the plaintiff losing her job.
35In relation to the challenge to the award of damages for future economic loss, on the basis that it did not meet the requirements of s13 CLA, Giles JA said:
" 3 A claimant's entitlement to damages for future economic loss, in concept for loss of earning capacity ( Medlin v State Government Insurance Commission (1995) 182 CLR 1 at 4; Husher v Husher (1999) 197 CLR 138 at 143), involves a comparison between the economic benefit to the claimant from exercising earning capacity before injury and the economic benefit from exercising earning capacity after injury. I agree that s 13(1) appears to address the former.
...
5 I consider that it is still open to assess damages by way of a so-called "buffer". The occasion for a buffer is when the impact of the injury upon the economic benefit from exercising earning capacity after injury is difficult to determine. There is still a comparison between the economic benefits, although the difference cannot be determined otherwise than by the broad approach of a buffer. Section 13(1) can be fulfilled, and the assumptions as to exercising earning capacity before injury can be stated. Having determined damages for future economic loss by way of a buffer, because of the broad approach there is no question of percentage adjustment, and so in the application of s 13(2) the percentage adjustment is nil.
6 The trial judge's error was that he did not state that he made a nil adjustment. It is of no significance. The damages at which he arrived were well within the range available to him."
36In the same case, McClellan CJ at CL said in relation to a "buffer":
"58 With respect to an award for future economic loss in the nature of a buffer, I doubt whether the section has any relevant impact. Although the section must be complied with, it will not lead to a conclusion which has any relevance to such an award. The court must determine the claimant's "likely future circumstances" and identify the pre-injury percentage possibility of those events occurring, but the compensation awarded is not otherwise confined. A modest award as compensation for the chance that a claimant may be disadvantaged in the future because of the injury is not precluded by the section. All that the section is attempting to do is identify the pre-injury circumstances upon which any award of damages may be based, but it does not dictate the outcome in the event that only part of a claimant's earning capacity has been affected by the injury."
37A similar factual circumstance confronted the Court of Appeal in Leichhardt Municipal Council v Montgomery [2005] NSWCA 432. The trial judge summarized the plaintiff's position as follows:
" He is a not insubstantial earner in his present position. However, if his employer's prediction that the future for his company is grim, then the plaintiff's future with that company is most uncertain and, as Mr Egan said his position is "under review". He is unable to perform manual work of the sort which he performed for his present employer in the past. The job that he has been doing for the past year or so, since he returned to work, was in a position made available to him because of the work injury that he sustained. Undoubtedly, if the plaintiff were able to perform physical duties as well as duties as an estimator, his services would be more valuable to another employer. I think he has suffered significant incapacity on the open labour market because of his knee injury. It is probable that if he is unable to maintain his position with his current employer that he would have considerable difficulty obtaining alternative work, given his lack of training, although, as his employer says, he is a hard worker, he is currently still gaining experience."
38The trial judge awarded a buffer for future economic loss. In relation to the defendant's challenge to that buffer under s13 CLA, Hodgson JA (with whom Mason P and McColl JA agreed) said:
"32 Mr. Garling submitted that the primary judge had not complied with the requirements of s.13 of the Civil Liability Act, and had not given reasons justifying her award of $160,000.00 for future economic loss. He submitted that in circumstances where the plaintiff was working and able to earn $1000 per week, this was excessive.
33 In my opinion, it is open to assess future economic loss by way of a buffer: Penrith City Council v. Parks [2004] NSWCA 207 at [3]-[5]. In such cases, the deduction for vicissitudes will be nil; and failure to state this as required by s13(3) is immaterial.
34 The primary judge indicated what she considered as the plaintiff's most likely future circumstances but for the injury, namely an ability to perform physical duties as well as duties as an estimator, making his services more valuable to another employer. The buffer award was based on a finding that his future with his current employer was uncertain, that he would have difficulty finding alternative work, and that he will probably experience time out of work. Having regard to his current earnings of $1000 per week, in my opinion the buffer of $160,000.00 was not manifestly excessive, and the judge's reasons were adequate.
35 I note that the Court was informed that $300.00 per week for 19 years at 5%, less 15% vicissitudes, would give a figure of $165,000.00. In my opinion, that tends to confirm that the $160,000.00 was not manifestly excessive."
39The same approach was followed recently by the Court of Appeal in Burton v Brooks [2011] NSWCA 175. Section 13 CLA was the relevant statutory provision. The trial judge set out his reasons for an award of future economic loss as follows:
" Assessing future loss of earning capacity in a case like this is not easy. It is not easy because this man is a good worker, has a good working history. He goes back to work at an early time and he does his work. His work is not physically very demanding. Whilst the business he is in continues, then he probably will not have a lot of problems; he will be able to continue working there and earning what he earns. However, should that business, like many businesses, close down, should it have to put off staff, should something happen to it in the future then the plaintiff will be forced onto the open labour market. There has to be a significant chance that he will not continue working at this business for the rest of his life. He has a working life which is in excess of twenty years.
In addition to that, if he does go onto the open labour market, whilst he might be lucky enough to get another similar job, he may be unlucky and not get a similar job. That really restricts him. This man is very restricted. There are numerous types of work which he could never do including driving type work because he cannot do that for lengthy periods of time and none of those types of work I have set out. In my view, the chances of him losing income in the future are in excess of ninety per cent. The difficulty is assessing what it will be.
There are no other matters which affect his assessment. Had he not had this accident he could have just kept working. He does not have any other injuries, he does not have any other problems but he does have hanging over his head a distinct possibility that he will lose income in the future. How does one assess it? It is a task Judges face constantly; it is very difficult. It not a matter of multiplying out an amount per week. It is a matter of assessing what is a reasonable way of awarding damages being fair to both parties. On that basis I award the plaintiff for future loss of earning capacity $70,000".
40In Burton the submission made by the defendant was:
"[The Judge]... seems to have taken the figure of $70,000 out of the air ... Working backwards, and assuming an ordinary discount for contingencies of 15%, it equates to lump sum compensation reflecting a loss of $120 per week after tax for every week of the plaintiff's working life. There is simply no basis for an award of that size."
41Macfarlan JA (with whom Hodgson JA and Tobias AJA agreed) said:
"46 I do not accept this submission. The primary judge in effect awarded damages for future economic loss by way of a "buffer" to compensate Mr Brooks for the possibility, which his Honour saw as a real one, of Mr Brooks' future employment being adversely affected by his injuries. The provisions of the Civil Liability Act do not preclude the award of a "buffer" in appropriate circumstances (see Penrith City Council v Parks [2004] NSWCA 201 at [3] - [5], [58]; Stretenovic v Reed [2009] NSWCA 280 at [81]). As Mason P noted in Leichhardt Municipal Council v Montgomery [2005] NSWCA 432: "a buffer or cushion award is usually reserved to the situation where there is a smallish risk that otherwise secure employment prospects may come to an end, in consequence of the tort-related injury, at some distant time in the future" (at [2]).
47 Mr Brooks' income from his present employment has not been adversely affected by his injuries. However it appears that his employer has been accommodating and there is, as the primary judge found, a significant risk that if in the future he had to find another job he would be prejudiced by the undoubtedly serious disabilities that he has. Mr Burton's submissions indicate that the buffer awarded to Mr Brooks equates to something in the order of ten per cent of his present income. The primary judge was engaged in an evaluative task and the figure at which he arrived was not in my view outside the range of those at which he could reasonably have arrived. In my view Mr Burton's challenge to the primary judge's award of damages fails."
42Even though he was not obliged to do so, the claims assessor in this case provided as much detail of the reasoning leading up to his award of future economic loss as did the judges in the decisions to which I have referred.
43The claims assessor found the claimant to be a very impressive person ([38]). He clearly accepted the claimant's evidence concerning his work circumstances and the possibility of him losing his job. Although the claims assessor did not expressly say so, it is implicit and obvious from his reasons that uninjured the claimant would have continued in his pre-injury employment earning $1000 per week. The claims assessor found a real chance that he might lose that job, despite his benevolent employer. The claims assessor then made the same evaluative decision that the judges made and determined that a loss of $250 per week represented the value of that chance.
44Nothing turns on the fact that the claims assessor started with a figure of $250 per week and then calculated the buffer of $134,300, rather than simply nominating the buffer. As the decisions to which reference has been made make clear, in assessing the reasonableness of a buffer, the Court of Appeal often deconstructs the lump sum to work out how much per week the lump sum represents.
45It follows that the error in respect of s126 of the Act which the plaintiff asserts has not been made out. Had the same standard been applied to the reasons of the claims assessor as were applied to the reasons of the judges in the cases to which I have referred, the claims assessor would have met that standard. For the reasons already indicated, I am of the opinion that an assessor under the Act is not required to meet such a standard. It is sufficient that it is clear from the reasoning of the claims assessor what he or she has done and by what methodology and reasoning he or she has arrived at the damages component under consideration. That is clearly the case here.
46In relation to the alternative challenge made to the assessor's award of damages for future economic loss, this appears to fundamentally misunderstand how the common law approaches the assessment of damages of this kind and how the assessment of a buffer is carried out.
47As the cases referred to make clear, it is not an unusual circumstance for a person to have a disability of such a kind that he or she is unable to compete on the open labour market but due to the generosity of an employer or other favourable circumstance, for that person to remain in employment. The awarding of damages by way of a buffer for future economic loss to cover the chance or contingency that the injured person might lose that job and be unable to obtain a job at all or a job which is as highly paid, does not involve a breach of the compensation principle. On the contrary, the logic underpinning such an award of damages is based on the compensation principle. It is designed to put the injured person back in the same position as he or she would have been in, had the accident not occurred.
48As Giles JA appreciated in Parks, the High Court decisions in Medlin and Husher clearly endorse this approach.
49The principles underlying awards of damages for future economic loss in such circumstances was carefully analysed by Heydon JA (with whom Mason P and Handley JA agreed) in State of New South Wales v Moss [2000] NSWCA 133, (2000) 54 NSWLR 536.
50The following extracts from the judgment make it clear that such an approach to damages for future economic loss has long been a part of the common law and does not involve any breach of the compensation principle.
51In Moss an injured plaintiff claimed an amount per week based on the average weekly earnings of fulltime adult females in New South Wales. In addition, she also claimed damages for her loss of opportunity to run her own hairdressing business. A jury awarded her $110,000 in respect of that second category.
52While deferring to the more detailed reasons of Heydon JA, Mason P said:
"26 The appellant's submission as refined in argument accepts these matters. At the end of the day the nub of the complaint is the absence of evidence to support the proposition that a hairdressing business could or would have projected the respondent's earnings beyond those of the average weekly net wage for full-time adult female workers in New South Wales ($500 per week). Cf Hampton Court Ltd v Crooks (1957) 97 CLR 367. The real issue is whether it was open to the jury to conclude that the loss of that opportunity was productive of financial loss ( Graham v Baker (1961) 106 CLR 340 at 347).
27 I had originally been troubled by this ground of appeal. However, the judgment of Heydon JA with which I respectfully agree has allayed my concerns. I agree with what his Honour has written and would reject this ground of appeal."
53In the course of his judgment, Heydon JA said:
"66 There are two uncontroversial themes running through the cases relating to the assessment of damages for injury to earning capacity. One is that in general it is desirable for precise evidence to be called as to what the plaintiff would have been likely to earn but for the injury and what the plaintiff is likely to earn after it. The second is that the failure to call such evidence does not necessarily result in selection of only a nil or nominal figure as damages for impaired earning capacity.
...
71 Secondly, strictly the issue does not turn on a comparison between what money the plaintiff would have earned apart from the injury and what money the plaintiff will earn after the injury. The compensable loss is not a loss of income but the loss of capacity to earn income in a manner productive of financial loss: Graham v Baker (1961) 106 CLR 340 at 347. The income earned before the injury is relevant, but only as an evidentiary aid in assessing damages for the loss of capacity to earn income: Paff v Speed at 566 per Windeyer J. Evaluation of the worth of a loss of capacity to earn - of a lost chance to earn - is of its nature a more imprecise inquiry than calculation of a lost income. It rests on the hypothesis - that the plaintiff will have undiminished capacity - which has been rendered false by events. It does not depend on calculating the income from a particular career which is no longer possible, but in calculating the damage to a capacity to carry on various careers. It is an exercise in estimation of possibilities, not proof of probabilities. Luntz , Assessment of Damages for Personal Injury and Death, 3rd ed, para [1.9.18], said:
"It is not necessary for the plaintiff to establish the future loss with the same degree of precision as the present and past loss ... The court is really being asked to estimate as best it can the future effect of the injuries from which the plaintiff has been proved to be suffering as a result of the defendant's wrongful act."
...
72 Thirdly, the mere fact that the quantum of damages is difficult to assess does not mean that the plaintiff is only entitled to a nominal sum. This principle applies as much to the assessment of damages for impaired earning capacity in injured plaintiffs as it does to pecuniary loss caused by negligent advice ... or equitable damages (Talbot v General Television Corporation Pty Ltd [1980] VR 224 at 250-1), or damages for breach of contract ... In the last case, Dixon and McTiernan JJ put the following general proposition: "Where there has been an actual loss of some sort, the common law does not permit difficulties of estimating the loss in money to defeat the only remedy it provided for breach of contract, an award of damages." This was followed in Sellars v Adelaide Petroleum NL (1994) 185 CLR 332 at 349 per Mason CJ, Dawson, Toohey and Gaudron JJ.
...
84 An illustration of the court's readiness to award damages for diminution of earning capacity arises when very young children are injured. Strictly speaking it would be impossible to prove that the child would have had an earning capacity as an adult or would have exploited it. But it is conventional to rely on the occupations, attitude to life and work histories of parents and other relatives: ...
85 Further, the willingness of the courts to compensate plaintiffs for reduced earning capacity in the absence of specific evidence is highlighted by their willingness to compensate even where there was an increase in the post-injury but pre-trial earnings of the plaintiff which was prima facie contra-indicative of loss. In Russell v J Hargreaves & Sons Pty Ltd (1956) 30 ALJ 533 at 534 Dixon CJ and McTiernan J increased the trial judge's award and said of the plaintiff in this position:
"His efficiency as a driver and his capacity to drive for any lengthy period have obviously been greatly impaired and even if an exact sum of special damages has not been proved the existence of this head of damage has been shown as a substantial element and ought to have been taken into account in assessing general damages."
...
87 In short, where earning capacity has unquestionably been reduced but its extent is difficult to assess, even though no precise evidence of relevant earning rates is tendered, it is not open to the court to abandon the task and the want of evidence does not necessarily result in non-recovery of damages. Statements to the contrary such as those made in Allen v Loadsman [1975] 2 NSWLR 787 at 792 are not correct: Baird v Roberts [1977] 2 NSWLR 389 at 397-8 per Mahoney JA; J K Keally v Jones [1979] 1 NSWLR 723 at 732-735 per Moffitt P; Yammine v Kalwy [1979] 2 NSWLR 151 at 154-5 and 156-7 per Reynolds JA and Mahoney JA; Thiess Properties Pty Ltd v Page (1980) 31 ALR 430; see also Radakovic v R G Cram & Sons Pty Ltd [1975] 2 NSWLR 751 at 761 where Samuels JA criticised the "meagre facts" provided but did not say it was not open to the jury to find a substantial sum for diminished earning capacity by the "application of their own knowledge and experience". The task of the trier of fact is to form a discretionary judgment by reference to not wholly determinate criteria within fairly wide parameters. Though the trier of fact in arriving at the discretionary judgment must achieve satisfaction that a fair award is being made, since what is involved is not the finding of historical facts on a balance of probabilities, but the assessment of the value of a chance, it is appropriate to take into account a range of possible outcomes even though the likelihood of any particular outcome being achieved may be no more than a real possibility. The trial judge in substance explained these aspects of the jury's task satisfactorily."
54It follows from the above analysis that the submissions by the plaintiff that the assessor's award offended the compensation principle and was so unreasonable as to attract the Wednesbury principle must be rejected.
55Accordingly, for the above reasons the plaintiff's summons should be dismissed.
56Before making final orders, I wish to make some observations about this application generally.
57Recently a number of applications, similar to this, have been made pursuant to s69 of the Supreme Court Act 1970 seeking to review decisions of claims assessors on the basis of deficiencies in reasons ( Allianz Australia Insurance Ltd v Ward & Ors [2010] NSWSC 720 (Hidden J); Insurance Australia Ltd (trading as NRMA Insurance) v Hutton-Potts & Ors [2010] NSWSC 1446 (Schmidt J); NRMA Ltd v Ainsworth [2011] NSWSC 344 (Rothman J); Allianz Australia Insurance Ltd v Kerr [2011] NSWSC 347 (Hislop J)).
58In this case and in Kerr the applications appear to be thinly veiled attempts at a merits appeal where no such appeal is provided for under the Act. In relation to the decision as to s126 in Hutton-Potts , upon which the plaintiff placed such reliance in this case, while I do not necessarily agree with all of the statements of principle by her Honour in respect of s126, the factual circumstances of that case were far different to those before me. The claimant in that case had no steady employment history and before findings could be made as to both past and future economic loss, the basis for those findings needed to be identified although not in the sort of detail asserted by the plaintiff.
59It is to be hoped that in future CTP insurers, in accordance with the philosophy of the Act, restrict such s69 applications to circumstances where there is a genuine jurisdictional issue or error of law on the face of the record, rather than as appears to be the situation here, disagreement with a particular head of damage found by a claims assessor.
Conclusion
60The orders which I make are as follows:
(1) The plaintiff's summons is dismissed.
61No submissions were made before me as to costs. Subject to any submissions from the parties, my intention would be that costs should follow the event and that the plaintiff should pay the defendant's costs of these proceedings.
62I will, however, list this matter for mention to allow the parties time to consider the judgment and advise the Court whether they wish to make any submissions as to costs.
In relation to paragraph 62 above, on 6 October 2011, Hoeben J made an order in Court that the Plaintiff pay the Defendants' costs of the proceedings, including the Second and Third Defendants.
[2]
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Decision last updated: 06 October 2011