Allianz Australia Insurance Ltd v Ward

Friday 24 July 2009 ALLIANZ AUSTRALIA INSURANCE LTD v WARD Judgment 1 YOUNG JA: These reasons are in response to a notice of motion filed by the appellant for a stay of an order of McCallum J that it pay the respondent some $1,100,000 subject to the respondent's solicitor retaining $100,000 in his trust account. 2 The respondent was severely injured on 21 April 2005 when his vehicle was hit by another vehicle, a stolen and uninsured vehicle, whose driver was endeavouring to evade police pursuit. 3 The appellant, representing the nominal defendant, admitted liability. 4 In accordance with the Motor Accidents Compensation Act 1999 (the "MAC Act") the assessment of damages was committed to an assessor being an officer of the Claims Assessment and Resolution Service ("CARS"). In the instant case, the CARS Assessor who was given the task of assessing the damages was Mr Cowley, a Byron Bay solicitor. 5 On 26 May 2009, the Assessor certified pursuant to s 94(5) of the "MAC Act" that the damages were $1,090.956.58 and that the costs payable were $70,906.04. 6 The Assessor gave reasons for his decision. 7 Within the time permitted by the MAC Act, the respondent accepted the assessment. 8 The appellant wrote to the respondent's solicitor alleging that the Assessor had made three mistakes of law in his assessment resulting in an over generous award by some $95,000. It offered to settle for the award less $82,500. 9 The respondent acknowledged that there was an error of $500, denied other errors and offered to settle for about $27,500 less than the award. This offer was rejected. 10 There is no right of appeal given to an insurer against an assessment of damages so made. However, the insurer may ask the Principal Claims Assessor to adjust a certificate in the case of obvious error (see s 94(6) of the "MAC Act"). 11 The appellant asked the Principal Claims Assessor to exercise this power. However, she considered that there was no obvious error in the assessment and did not make any adjustment. 12 The appellant then informed the respondent's solicitors that it took the view that, because the CARS Assessor had made errors of law, the whole award was a nullity. 13 The response was that the appellant was told it had a statutory obligation to pay the amount certified and that steps would be taken to compel compliance. 14 The statutory obligation is imposed by s 95(2) of the "MAC Act" which provides that the insurer must pay the claimant the amount of damages certified by the CARS Assessor. 15 The appellant then, on 3 July 2009, issued a summons in the Common Law Division of this Court, No 30045 of 2009. The summons sought a declaration that the Assessment was a nullity and/or certiorari to quash it. The summons was made returnable on 13 July 2009. 16 The respondent then, on 9 July 2009, approached McCallum J as the Common Law Duty Judge and obtained short service of a summons No 30050 of 2009 for an order that the appellant pay the amount of the Assessor's Certificate forthwith and for associated orders. 17 Summons 30050/09 came on for hearing before McCallum J on 10 July 2009. Her Honour gave judgment for the respondent on the same day. I will consider her Honour's reasons for judgment in due course. 18 The appellant filed a notice of appeal on 17 July 2009 seeking reversal of McCallum J's decision so that summons 30050/09 would be dismissed. 19 On the same day a notice of motion was filed for stay of the judgment pending final determination of the appeal. It is this motion that I am currently trying. 20 The applicant on the motion puts that the respondent has not shown any urgent need for the whole amount of the Assessment to be paid over to him. This is not in accordance with the primary judge's view. She noted that the respondent had a child with a brain tumour who required extensive medical treatment and that the respondent had an immediate need for funds. There has been no challenge to this finding. 21 Further, it is put that, if the whole amount is paid over and the appeal succeeds, the money may well be irrecoverable by the insurer. It offers to pay the respondent $566,638.50 now by way of advance in respect of any judgment that he may obtain in respect of his injury. This offer was not accepted. 22 I should note that, whilst the respondent's lawyers claim that the Assessor's award was within the range, the appellant contends that no reasonable Assessor should have certified the damages as more than $566,638.50. 23 The motion was argued before me on 22 July 2009. Mr M A Robinson appeared for the applicant and Mr P Mahony SC and Mr R Quickenden appeared for the respondent. 24 I was not satisfied that I was completely informed of all the legal questions I need to take into account. I thus, extended the existing stay until today, gave leave for further written submissions and indicated that I would give judgment this afternoon if possible. 25 Mr Mahony told me that, whilst ordinarily it would be quite appropriate to stay a verdict if a fair amount were paid over to a successful plaintiff pending the appeal, the present was not the ordinary case. 26 It is clear that this is not the ordinary case. Further, one wonders why, when the appellant filed summons 30045/09, it did not also file a motion for stay or seek a stay from the duty judge. Presumably it thought that precaution unnecessary and so allowed itself to be outmanoeuvred by the opposing lawyers. 27 The only reason that has been put forward as to why the full amount of the Assessment should not be paid forthwith is that, because the CARS Assessor made an error of law in a small part of his assessment, the whole is a nullity. 28 Thus, one should really analyse the present case by looking to see the strength of the claim in 30045/09 and seeing whether, had a stay application been made in those proceedings, it should have been successful. 29 I turn now to her Honour's reasons for decision. 30 Her Honour first noted that an insurer under the "MAC Act" had a statutory obligation to pay the amount certified by the CARS Assessor. She then noted that the insurer contended that the CARS Assessor had made three errors of law in his Assessment. 31 Her Honour is recorded as having accepted the submission of Mr M Robinson "that an administrative decision involving jurisdictional error is not to be regarded as binding or having legal effect unless and until set aside" and citing Minister for Immigration and Multicultural Affairs v Bhardwaj [2002] HCA 11; 209 CLR 597 at 614 [51]. Clearly there is a typographical error. Gaudron and Gummow JJ actually said: "There is…no reason in principle why the general law should treat administrative decisions involving jurisdictional error as binding or having legal effect unless and until set aside." 32 Her Honour then quoted the passage in Bhardwaj that follows what I have just quoted (at 614-615 [51]): "A decision that involves jurisdictional error is a decision that lacks legal foundation and is properly regarded, in law, as no decision at all." 33 Her Honour accepted that an error of law made by an administrative body is in a different plight to such an error made by a court. At least in some circumstances, such an error is a jurisdictional error which will invalidate any order or decision of the tribunal that makes it: Craig v The State of South Australia [1995] HCA 58; 184 CLR 163 at 179. 34 Her Honour noted Mr M Robinson's submission, a submission which was repeated before me, that it was premature and inappropriate for the court to determine the respondent's application before the summons in the supervisory jurisdiction was heard and determined. 35 Her Honour took the view that she could not finally resolve the issues of law which were posed to her. She considered that the problem confronting her was much the same as if the applicant were seeking an injunction to prevent the payment to which the respondent was entitled. 36 I consider that this observation was close to the mark. However, as her Honour herself recognized, there was a difference in that it could be that the Assessor's award was a complete nullity. 37 It is because of that difference that I believe I need to analyse the issues in 30045/09 in a little more detail which I shall do after considering the balance of her Honour's decision. 38 Her Honour then said that she needed to consider what course to take to achieve justice between the parties. She recognized that it might be held that even the errors going to a small portion of the award might be held to vitiate the whole award. However, in view of the respondent's need for money, the intention of the "MAC Act", when liability was not in issue, that a claimant have the money sum contained in the Assessor's certificate paid to him or her at an early point, she should make a final order for payment out of the sum certified. 39 However, her Honour directed that $100,000 of the amount paid over should be retained in a controlled money account as some insurance against a reduction in the award by the amount of the alleged errors of law. 40 It is implicit in this, an implication reinforced by what her Honour said in the parapenultimate paragraph of her reasons, that, while her Honour realised that the whole award might be considered a nullity, the respondent was clearly entitled to at least $566,638.50 and more likely than not, if the whole matter was recommitted, the result would be nearer $1,100,000 than $566,638.50. 41 There are some logical problems in her Honour then proceeding to make a final order for the payment of $1,100,000. However, she probably considered that some order had to be made of this nature in view of section 95(2) of the "MAC Act" if the "injunction" application failed. That matter might trouble this court on the final hearing of the appeal, but is not of concern on this motion. 42 If the present dispute had been dealt with in proceedings 30045/09, the judge would have had to consider whether there was an arguable case for interference by the Supreme Court as well as where the balance of convenience lay. 43 The determination of the supervisory proceedings must await a full hearing. However, I need to make some observations about them which are germane to the present motion. 44 Mr M Robinson would have the court accept the following propositions as completely black and white:

(c) a court asked to grant certiorari to quash such a decision or to declare it a nullity has no discretion to decline to do so. (It is accepted that there are some situations where there is a discretion, but they are irrelevant to the present case). 45 The authority claimed to support proposition (a) is Craig v The State of South Australia; proposition (b) is said to flow from Minister for Immigration and Multicultural Affairs v Bhardwaj; and proposition (c) from The King v Commonwealth Court of Conciliation and Arbitration; Ex parte Ozone Theatres (Aust) Ltd [1949] HCA 33; 78 CLR 389 at 400 and Re Minister for immigration and Multicultural Affairs; Ex parte Miah [2001] HCA 22; 206 CLR 57 at 103 [150]. 46 I was referred during argument to the decision of Johnson J in Allianz Australia Insurance Limited v Crazzi [2006] NSWSC 1090; 68 NSWLR 266. In that case, the central question was the authority of a CARS Assessor to correct jurisdictional error. I found the discussion in that case only of peripheral assistance in dealing with the present problems. 47 It is not appropriate to go fully into the propositions on this motion. However, I should state that, in my view, all three are overstated and, moreover, those statements overlook a major factor in this litigation and that is that courts do not decide disputes by pulling principles out of the air, but by paying regard to the terms of the governing statutes. 48 The "MAC Act" clearly sets up a regime whereby there is to be a relatively informal assessment of damages by an administrative official. This displaces the former system of trial by judge or judge and jury with witnesses called and cross-examined. The new system is doubtless much cheaper. However, one would not expect that its accuracy would be as great as the result obtained through what is now regarded as a "Rolls Royce" procedure. 49 The legislature doubtless considered that errors could emerge out of the new procedure. However, it provided that there would be a review for obvious error by the Principal Claims Assessor, but only for obvious error and provided no appeal to the insurer. 50 The aim of the legislature was to see that claimants were assessed quickly and cheaply and paid their entitlements promptly. 51 In the light of such a legislative scheme it is unlikely that the legislature intended that an insured could be allowed to point to an alleged error in law and just take the view that there was a nil decision. 52 True it is that the claimant could do what the present respondent has done and sue the insurer who would cross claim for a declaration of invalidity and so force the claimant to seek mandamus. This is hardly compatible with a system providing for quick, cheap and efficient resolution of claims. 53 However, what is the situation, if the applicant's propositions are correct, where the claimant does not take action. How can CARS start anew? 54 Again it must be noted, that s 95 (2) of the "MAC Act" requires the insurer to pay the amount appearing on the certificate. It may be that it is not possible for the insurer to go behind the certificate and attack the Assessor's reasons. 55 However, dealing with the applicant's three propositions, (a) probably should be put no higher than, in appropriate circumstances, an error of law by an administrative body may be properly classed as a jurisdictional error. It does not mean that all errors of law, no matter how relatively insignificant must be so classed. In any event, the proposition must be read subject to the statute conferring the power on the administrative body. 56 As to (b), the consequences of a jurisdictional error depends on the terms of the relevant statute. The proposition is certainly not of universal application. This was recognised by the Full Federal Court in Jadwan Pty Ltd v Secretary, Department of Health and Aged Care [2003] FCAFC 288; 145 FCR 1 at 16 [42], where Gray and Downes JJ said: " Bhardwaj cannot be taken to be authority for a universal proposition that jurisdictional error on the part of a decision-maker will lead to the decision having no consequences whatsoever. All that it shows is that the legal and factual consequences of the decision, if any, will depend upon the particular statute." 57 As to (c), Miah doubtless covers the situation where the High Court is exercising its authority under the Constitution. In that court, a supervisory writ issues almost as of right: The Queen v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Company Proprietary Limited [1953] HCA 22; 88 CLR 100 at 118-9. 58 However, as this Court held in Solution 6 Holdings Ltd v Industrial Relations Commission of New South Wales [2004] NSWCA 200; 60 NSWLR 558 at 589 [129] such decisions must be treated with care as the Commonwealth jurisdiction is not co-extensive with the common law supervisory jurisdiction of a superior court of a State. 59 The supervisory jurisdiction cases, this court has not infrequently employed what Spigelman CJ in Solution 6 referred to as the "principle of restraint" that is the court is slow to interfere with the decisions of specialist tribunals by means of prerogative orders or declarations. 60 Although early cases dealing with prerogative orders seemed to proceed on the basis that it was an affront to and contempt of the Crown that an inferior court or administrative tribunal has usurped power by purporting to make an order in excess of its jurisdiction (see eg Forster v Forster (1863) 4 B & S 187, 199; 122 ER 430, 435; Farquharson v Morgan [1894] 1 QB 552, 556) and the superior court had little discretion to excuse such contempt by exercising its discretion. (Indeed this is probably the origin of the distinction between jurisdictional and non-jurisdictional error). 61 However, for many years in the resent past, superior courts have long recognised that it is often just to allow decisions of authorities charged with the principal administration of statutory schemes, whose decisions may be infected by minor error, to stand. An example in the federal sphere is provided by Lockhart J's decision in Ansett Transport Industries Ltd v Minister for Aviation (1987) 72 ALR 469 at 484. 62 As cases such as Jadwan recognize, where the court takes that view, no-one can thereafter allege invalidity. 63 In the light of what I have just said, the prospects of the applicant succeeding in 30045/09 are nowhere near as great as Mr M Robinson would have them. 64 This additional analysis reinforces my view that I should not on this motion disturb or stay the decision of McCallum J that the respondent be paid the full amount of the Assessor's certificate, forthwith. 65 Accordingly, I dismiss the motion of 17 July 2009 with costs. The exhibit should remain with the papers. 66 After perusing my reasons, Mr Robinson asked for a stay so that he could consult with his clients and see whether there was to be a reference to a full bench. That seems a reasonable request in the circumstances. The offer to pay money in advance is still open and so I consider the order I should make is to extend the existing stay to 5pm on 3 August 2009 on condition that at or before 9am on 3 August 2009 the applicant pays $566,638.50 by way of advance in respect of any judgment that Mr Ward may obtain in respect of his injury in accordance with the offer which is AX01.

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