IAG Limited t/a NRMA Insurance v Khaled & ors

THE FACTS

1. The factual background to the matter is set out in the affidavit of Mr Morgan and may be summarized as follows.
2. The first defendant asserts that he was injured in a motor vehicle accident on 1 July 2013. The plaintiff is the Compulsory Third Party Insurer of the vehicle allegedly at fault.
3. The general scheme of the Act is well known and does not require repeating. It is sufficient to note for present purposes that one of the features of the scheme under the Act is that diverts the task of assessing damages from courts, to persons who are appointed as Claims Assessors. The process of assessment of damages before a Claims Assessor involves an informal hearing, known as an assessment conference, within the Claims Assessment Resolution Service, known by the acronym "CARS".
4. On 15 July 2016 the solicitors for the first defendant lodged, with the second defendant, an application for general assessment of damages by CARS. The plaintiff then made an application that the assessment be exempt from CARS, on the primary basis that the first defendant had made a false and misleading statement in a material particular. That application was referred to the Assessor for determination under s 92(1)(b) of the Act which is in the following terms: Claims exempt from assessment (1) A claim is exempt from assessment under this Part if: … (b) a claims assessor has made a preliminary assessment of the claim and has determined (with the approval of the Principal Claims Assessor) that it is not suitable for assessment under this Part.
5. In addition to s 92(1)(b), Chapter 14 of the Claims Assessment Guidelines (the Guidelines) deals, amongst other things, with the determination of whether matters may be unsuitable for assessment within CARS. Clause 14.11 of the Guidelines provides that for the purposes of section 92(1)(b) of the Act, an Assessor may make a determination that a claim is not suitable for assessment. Clause 14.16 is in the following terms: "In determining whether a claim is not suitable for assessment an assessor and the principal claims assessor shall have regard to the circumstances of the claim as at the time of consideration of the claim."
6. Clause 14.16 goes on to make reference to various considerations which may or may not be relevant to that determination. One such consideration, provided for in clause 14.16.11, is where an insurer makes an allegation that a claimant has made a false or misleading statement in a material particular in relation to the injuries, loss or damage sustained in the accident giving rise to the claim. As I have noted, the plaintiff's application for exemption was made primarily on that basis.
7. The matter having been assigned to her for determination, the Assessor refused the plaintiff's application in a Statement of Reasons dated 31 August 2018.

THE ASSERTED ERRORS

1. In these proceedings the plaintiff asserts jurisdictional error and/or error of law on the face of the record on the part of the Assessor in the two respects discussed in detail below. Alternatively, the plaintiff asserts that the Assessor constructively failed to exercise her statutory power in reaching her decision.

THE ASSESSOR'S REASONS

1. The Assessor's reasons commenced by noting [1] the plaintiff's submission that the claim was not an appropriate matter to be assessed at CARS, and that it should be the subject of a discretionary exemption pursuant to section 92(1)(b). The Assessor then set out the four bases of the application, namely, that: 1. the first defendant had made false and misleading statements; 2. there were issues of medical complexity; 3. there were issues of procedural complexity; and 4. critical documentation was unavailable and would likely only be available with the benefit of the power to issue subpoenas.
2. The assessor then said: [2] [10] I note that the insurer does not raise any issue of fraud by the (first defendant) in relation to the number of passengers in the car. [11] I note from the (first defendant's) reply, that the (first defendant) provided a statutory declaration stating that at the time of the accident his daughter-in-law was in the vehicle with him. [12] I find that issues of this nature in relation to how many people were in a motor vehicle at the time of the motor accident is an issue that can be easily dealt with in the CARS process (emphasis added).
3. The Assessor then turned to that part of the plaintiff's application which concerned an asserted failure on the part of the first defendant to disclose his pre-accident medical history. In respect of that issue the Assessor said: [3] I refer to (the first defendant's) submissions above and note that this also is an issue that can be dealt with in the CARS process by cross-examining (the first defendant) as to prior injuries and disclosure thereof (my emphasis).
4. The Assessor then turned to a consideration of the issue of medical complexity and said: [4] The insurer has not pointed to the fact that they have requested the occupational therapist or Dr Hana to attend a CARS hearing and that either or both of these have refused to attend. In my experience it is a common occurrence at CARS that doctors do attend when requested to give evidence (my emphasis).
5. Finally, the Assessor turned to questions concerning the asserted failure by the first defendant to disclose his travel movements. She found [5] that it was "unfortunate" that the first defendant had not dealt with this in the statements he had provided in support of his application for assessment, before going on to say: [6] I find that this issue can be dealt with at CARS by either the claimant updating his statement to explain his overseas travels or giving evidence before me as a CARS assessor (my emphasis).
6. Under the heading "My Decision" the Assessor noted [7] that in the exercise of her discretion she was required to have regard to the objects of the Act set out in s 5. She noted that those objects included encouraging the early resolution of compensation claims. The Assessor then made reference to the decision of Hoeben J (as his Honour then was) in Zurich Australian Insurance Limited v Motor Accidents Authority and Anor. [8] where his Honour had observed that most claims for damages under the Act would be assessed within CARS, and that whilst there would be some which were exempt from assessment in that way they would be in the minority.
7. The Assessor then made reference to parts of the judgment of Campbell J in Insurance Australia Limited t/as NRMA Insurance v Banos. [9] In that case his Honour [10] set out factors which he considered may be relevant in cases where an application for exemption is based upon an assertion that a claimant has made a false or misleading statement, and where the issue is whether in those circumstances, the matter was not suitable for assessment in CARS. The Assessor made reference to some (but it should be said, not all) of the factors to which his Honour referred.
8. The Assessor then said the following: [11] Exercising my discretion under section 92(1)(b) of the Act and having regard to those factors set out in clause 14.16 of the Claims Assessment Guidelines and taking into account the objects of the Act, I have come to the conclusion that this claim is suitable for assessment under Part 4.4 of the Motor Accidents Compensation Act 1999. I reject the insurer's application to have this matter exempted pursuant to section 92(1)(b). I will not recommend to the principal claims assessor that this matter is not suitable for assessment under Part 4.4 of the Act.
9. The Assessor then proceeded to make directions for the further conduct of the matter before her.

THE FIRST ERROR

1. The first error asserted by the plaintiff is that the Assessor misunderstood or misconstrued the scope and nature of her power pursuant to section 92(1)(b) of the Act, and incorrectly exercised that power in determining the plaintiff's application.

Submissions of the plaintiff

1. Senior counsel for the plaintiff submitted that the Assessor had incorrectly approached the question to be determined, and had in fact posed the wrong question, by asking herself whether the claim could be dealt with in CARS, as opposed to asking whether the claim was not suitable for assessment in CARS. It was submitted that the Assessor's repeated statements to the effect that the matter "can" be dealt with in CARS, contained in those passages of her reasons which I have identified, demonstrated that she had asked herself the wrong question in reaching her determination. Senior counsel submitted that the question that the Assessor was required to ask herself was not whether or not the claim could be dealt with in CARS, but whether it was not suitable for assessment in that forum.
2. Senior counsel further submitted that the Assessor's error in asking herself the wrong question was reflected in the fact that her reasons made no reference to a consideration of any of the matters which would normally arise when determining an application of this nature, and which would have arisen had the correct question been asked. Senior counsel submitted that the Assessor's failure to engage in an evaluative exercise, in which she considered relevant discretionary factors, was a further indication that she had asked herself the wrong question. In particular, it was submitted that the Assessor had completely failed to consider factors such as: 1. whether the determination of the matter within CARS would, in a practical sense, be fair having regard to the nature of the allegations which the plaintiff had raised; 2. which particular mode of hearing would resolve the dispute between the parties more efficiently and effectively; 3. where the greater public interest might lie if the first defendant's evidence were tested in open court, and with cross-examination; and 4. whether the absence of sworn and compellable evidence, with a right to cross-examine, might have meant that neither the truth, nor fairness to the parties, was likely to be achieved other than in a formal court hearing.
3. I should emphasise that in advancing these submissions, senior counsel did not suggest that it was incumbent upon the Assessor to consider each and every one of the potentially relevant considerations which have been identified in the authorities. However, he submitted that the Assessor's failure to make any (or at least any substantive) reference to any of them was indicative of the fact that she had asked herself the wrong question.

Consideration

1. Bearing in mind the terms of section 92(1)(b) of the Act, the question that the Assessor was required to ask herself was whether the claim was not suitable for assessment in CARS. In accordance with general principles of statutory interpretation, the word "suitable" is to be given its natural and ordinary meaning. [12] The Macquarie Dictionary defines the word "suitable" as meaning: "Such as to suit; appropriate, fitting, becoming."
2. In my view, it is evident from the Assessor's reasons that she did not turn her mind to the question whether the matter was not suitable for assessment in CARS. There is an obvious, and indeed material, difference between whether or not a matter can be dealt with in the CARS process (in the sense of being capable of being dealt with in that way), and whether it is not suitable to be dealt with in that way. In that sense, capability is not the same as suitability. The terms of section 92(1)(b) required the Assessor to consider and focus upon the latter question. It is evident from the passages of her reasons to which I have referred that the Assessor failed in that regard and, in fact, concentrated on the former. In doing so, I am satisfied that the Assessor failed to ask herself the correct question and thus erred.
3. I am fortified in that view by the terms in which the Assessor referred to the judgment of Campbell J in Banos. In that case, his Honour made reference to a number of considerations which he considered may be material in a matter of this nature: [13] [43] When deciding the statutory question in a case that turns upon whether a person has made a false and misleading statement, the following considerations are likely to be relevant. I do not mean to be exhaustive: (a) the Act contemplates that the great majority of disputes will be resolved by the assessment process, and not in court; (b) however, the consideration that s.92 provides for both mandatory exemptions and discretionary exemptions provides a clear legislative guidepost that appropriate cases should be "redirected" to the court system at an early time by way of preliminary determination; (c) a primary question will be, having regard to the nature of the issue raised, whether both parties can be afforded a hearing (assessment conference) which is in a practical sense fair having regard to the nature of the allegation raised; (d) a related question will be which mode of hearing will resolve the dispute more efficiently and effectively, bearing in mind the comparative limitations and advantages of an assessment conference on the one hand, and a court hearing on the other. Advantages of the latter may include a better opportunity for proper and fair cross-examination of witnesses whose credit is to be impugned and the greater availability of cross-examination of medical experts on the material which may call a claimant's reliability into question; (e) as it is clear the claimant's credit will be called into question, a consideration of whether it is in the public interest that such an examination occur in open court; (f) Finally, but by no means least, the consideration that it is not mandatory, whenever a credit issue is raised, to decide that the claim is not suitable for assessment under Part 4.4.
4. The Assessor made passing reference to (in the sense of noting) some, but not all, of the matters to which his Honour referred. The Assessor did not, in my view, engage with any of those considerations. In particular, she did not consider how and, if so, to what extent, any of them impacted on the circumstances of the case which was before her. I accept the submission of senior counsel for the plaintiff that this failure on the part of the Assessor reflects the fact that she asked herself the wrong question.
5. For these reasons the first of the errors relied upon by the plaintiff has been made out.

THE SECOND ERROR

1. There was a second error relied upon by senior counsel for the plaintiff, namely, that the reasons given by the Assessor were inadequate. Although senior counsel suggested that it was not strictly necessary for me to consider that issue, it is appropriate that I do so in circumstances where submissions have been made in relation to it. The passages of the Assessor's reasons which are relevant to this issue are those which I have already identified.

Submissions of the plaintiff

1. Senior counsel for the plaintiff submitted that in circumstances where an Assessor is under a duty to give reasons for an assessment of damages if a case proceeds to that point, it would be anomalous if an Assessor's duty was somehow less when determining a preliminary matter such as an application for exemption. He submitted that an application for an exemption was necessarily a significant step in the process, and that a failure to give adequate reasons for determining it would amount to an error of law.
2. Senior counsel accepted that the reasons of an Assessor need only be brief. However, he submitted that they must, in the relevant sense, be "real", and must adequately and demonstrably comply with the law. Compliance with the law, he submitted, required that the issues raised, and any relevant statutory requirements, be considered, and that there be an exposition of the path of reasoning adopted by the Assessor in reaching her conclusion. Senior counsel submitted that by any standard, the Assessor's reasons in the present case did not satisfy, at the very least, that second requirement, to the point where they amounted to no reasons at all. He submitted that on a fair reading of the whole of the Assessor's reasons, the only basis advanced for the conclusion which was reached was that issues which were relevant to credit could be dealt with in the CARS process. It was submitted that the Assessor's reasons really amounted to nothing more than a statement of a conclusion, absent any exposition of the path of reasoning which had been adopted, such that the plaintiff was placed in a position where it was not able to understand why its application had been refused.

Consideration

1. An Assessor who determines a claim for damages under the Act is required to give reasons. It would, as senior counsel for the plaintiff submitted, be anomalous of the obligation based on an Assessor were less by virtue of the fact that the Assessor was determining a preliminary question.
2. In Zahed v IAG Limited [14] the Court of Appeal addressed the content of the obligation which is placed upon an Assessor when assessing damages. Leeming JA observed [15] that in determining whether reasons are adequate, the question is whether the reasoning process can be discerned by reading the reasons as a whole, and by applying a beneficial construction to them. In making those observations his Honour referred to the decision of the High Court in Minister for Immigration and Ethnic Affairs v Wu Shan Liang. [16]
3. In the same case, Emmett AJA observed [17] that it was important to bear in mind that the reasons of an Assessor were not to be scrutinised over-zealously. Importantly however, whilst acknowledging that the reasons of an Assessor are not necessarily those which would be expected of a judge, his Honour observed that reasons must necessarily demonstrate the path of reasoning that leads the Assessor to the conclusion which has been reached. [18]
4. I am mindful of the fact that it is necessary to read the Assessor's reasons as a whole, and not to over scrutinise them. However, giving full weight to such approach, I have come to the view that the reasons of the Assessor fall short of the requirements of which the authorities speak. Those reasons contain no indication of precisely what (if any) discretionary factors were taken into account by the Assessor in reaching the conclusion that she reached. Similarly, there is no indication of how such factors (if they were taken into account) informed (or did not inform) the exercise of the Assessor's discretion. There was, in my view, no real engagement with any of the relevant discretionary factors at all. It is not enough for a decision-maker to simply cite such factors and reach a conclusion without saying how those factors impacted upon the decision which was reached. As a consequence of these factors, there was no exposition of the reasoning process which led to the Assessor's decision.
5. For those reasons, I am satisfied that the second of the errors asserted by the plaintiff has also been made out.

COSTS

1. The remaining question for determination is that of costs. As I have noted, the second and third defendants have filed appearances submitting to any orders of the court, save as to costs. The submitting appearance filed on behalf of the first defendant contains no similar qualification.
2. In relation to the issue of costs, senior counsel for the plaintiff read a further affidavit of Simon Morgan, solicitor, of 21 March 2019. That affidavit annexed correspondence in which Mr Morgan, as the solicitor for the plaintiff, engaged with those who represent the first defendant. It is not necessary for me to canvass the entirety of that correspondence. It is sufficient to note that much of it focussed upon repeated requests made by the plaintiff that the first defendant actually file an appearance. The plaintiff reached the point where it foreshadowed the filing of an urgent notice of motion seeking orders pursuant to Part 59 of the Uniform Civil Procedure Rules 2005 (NSW) (the Rules) that an appearance be filed. It was only after that correspondence that the first defendant's appearance was filed in the terms I have outlined.
3. It is also relevant to note that some time ago the Registrar made orders requiring those acting for the first defendant to file written submissions by 20 March 2019. Prior to the hearing of this matter, and at my direction, my Associate enquired of the solicitor for the first defendant as to whether any submissions were to be filed. She was told that no submissions were to be filed, and was referred to the terms of the notice of appearance.
4. Senior counsel for the plaintiff referred me to a decision of the Court of Appeal in Kisimul Holdings Pty Ltd v Clear Position Pty Ltd (No 2). [19] In that case, the Court observed [20] that the prima facie position under Rule 42.1 of the Rules is that costs follow the event, but that there is a discretion conferred on the court by s 98 of the Civil Procedure Act 2005 (NSW) to (inter alia) make orders depriving a successful party of that prima facie entitlement. The plaintiff in the present case has been wholly successful in obtaining the relief which has been sought. The first defendant, for some considerable period of time, failed to file a notice of appearance. It was only when he was, in effect, threatened with the filing of a notice of motion that he did so. I have already referred to the unequivocal terms in which that appearance is drafted.
5. In my view, there is no basis on which to deprive the plaintiff of its costs. Further, given the approach taken by the solicitor for the first defendant in filing the notice of appearance in the terms I have outlined, there is no utility in further adjourning the proceedings so as to give the first defendant an opportunity to be heard on the question of costs. Quite apart from any other consideration, taking that course would involve incurring even further expense.
6. Accordingly I make the following orders: 1. The decision of the third defendant of 31 August 2018, refusing the plaintiff's application for exemption made pursuant to s 92(1)(b) of the Motor Accidents Compensation Act 1999 (NSW), is quashed. 2. The matter is remitted to the second defendant to be dealt with according to law by a different Claims Assessor. 3. The first defendant is to pay the plaintiff's costs of the proceedings as agreed or assessed.

Endnotes

1. At [1].
2. At [10].
3. At [13].
4. Commencing at [21].
5. At [32].
6. At [33].
7. At [34].
8. [2006] NSWSC 845 at [53].
9. [2013] NSWSC 1519; (2013) 65 MVR 312.
10. At [43].
11. Commencing at [37].
12. Alcan (NT) Alumina Pty Limited v Commissioner of Territory Revenue (2009) 239 CLR 27; [2009] HCA 41.
13. At [43].
14. [2016] NSWCA 55; (2016) 75 MVR 1.
15. At [6].
16. (1996) 185 CLR 259; [1996] HCA 6 at 271-272.
17. At [43].
18. Wingfoot Australia Partners Pty Limited v Kocak (2013) 252 CLR 480; [2013] HCA 43 at [55].
19. (2014) 86 NSWLR 645; [2014] NSWCA 317.
20. At [12]. 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: 01 April 2019