IAG Limited t/as NRMA Insurance v McBlane

Evidence and background matters

1. An affidavit of Matthew Robert Barter, sworn 30 August 2019, was tendered. That document annexed the Assessor's Certificate and Reasons for Decision, a report and assessment of Dr Maniam, orthopaedic surgeon, dated 1 September 2016, a statement of the claimant signed 27 September 2018, and the claimant's written submissions to the assessor contending for a total of $493,950 under the following specific heads of damage:

• Past economic loss, $15,000;
• Future economic loss, $250,000;
• Future superannuation, $23,750;
• Past out-of-pocket expenses, $5,000;
• Future out-of-pocket expenses, $23,221;
• Past gratuitous domestic care and assistance, $28,300; and
• Future domestic care and assistance, $148,680.

1. Annexed also to Mr Barter's affidavit was a report of Dr Tim Anderson, Occupational and Environmental Medicine Physician dated 29 October 2018, and the insurer's submissions which contended for damages limited to a total sum of $871.90 comprising $200 for past economic loss and $671.90 for past medical expenses and that there should be no award at all for future economic loss, lost superannuation, future out of pockets or past or future domestic care and assistance.
2. I accept the submissions of senior counsel for the plaintiff Mr Robinson SC, that there is no conclusion that can be reached from this material other than that there was significant issue joined between the claimant and the plaintiff insurer as to her entitlement to any awards of damages other than the specified very small amounts for past out-of-pocket expenses and past economic loss.
3. This provides critical context to my evaluation of the summons for judicial review.
4. It was the position of the plaintiff that against a background of obvious controversy between the parties as to whether there was any entitlement at all to damages for loss of future earning capacity and the other contested heads, the Assessor's Reasons were bereft of necessary findings and the s 126 duties were not fulfilled. Section 94(5), whilst requiring a "brief statement" setting out the assessor's reasons for the assessment, still requires reasoning and key findings to be articulated, but they were not.
5. The defendant's position was that the reasons were imperfect, but the necessary findings could be "sticky-taped" together to qualify as sufficient.

Statutory context

1. Consideration of the operation and interrelationship of the provisions of the Act and the Guidelines as outlined by senior counsel for the plaintiff, is illustrative of what was required of the Assessor.
2. The most relevant provisions to the controversy here are s 94 "Assessment of claims" and s 126, "Future economic loss - claimant's prospects and adjustments".
3. Section 94 provides: 94 Assessment of claims (1) The claims assessor is, in respect of a claim referred to the assessor for assessment, to make an assessment of: (a) the issue of liability for the claim (unless the insurer has accepted liability), and (b) the amount of damages for that liability (being the amount of damages that a court would be likely to award). (2) Such an assessment is to be made having regard to such information as is conveniently available to the claims assessor, even if one or more of the parties to the assessment does not co-operate or ceases to co-operate. (3) The assessment is to specify an amount of damages. (4) The claims assessor must, as soon as practicable, after an assessment issue the insurer and claimant with a certificate as to the assessment. (5) The claims assessor is to attach a brief statement to the certificate, setting out the assessor's reasons for the assessment. (6) If the Principal Claims Assessor is satisfied that a certificate as to an assessment or a statement attached to the certificate contains an obvious error, the Principal Claims Assessor may issue, or approve of the claims assessor issuing, a replacement certificate or statement to correct the error.
4. Section 126 provides: 126 Future economic loss - claimant's prospects and adjustments (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.
5. Much focus was placed in oral submissions on what was required by s 94(5), and how the cases that have addressed it assist in setting the relevant standard for comparison.
6. Section 95(2) provides that the assessment is binding on the insurer. Section 99 provides that the authority may appoint a claims assessor who is, in the opinion of the authority, suitably qualified to be a claim assessor. Section 106(1) headed "Motor Accidents Monitoring and Oversight" provides that claims assessments under this Part are subject to relevant provisions of the Motor Accidents Claims Assessment Guidelines which apply pursuant to s 69(1) of the Act.
7. Section 122(1) provides that Chapter 5 applies to and in respect of an award of damages which relates to the death of or injury to a person, caused by the fault of the owner or driver of a motor vehicle in the use or operation of the vehicle and ss (3) provides that the Chapter applies to and in respect of the assessment of damages by a claims assessor under Part 4.4 in the same way as it applies to and in respect of an award of damages by a court.
8. Section 123(1) provides that a court cannot award damages to a person in respect of a motor accident contrary to this Chapter. Part 5.2 headed "Damages for Economic Loss" makes specific provision for the way in which that head of damage must be approached in assessments.
9. Clause 1.14 of the Guidelines sets out the Objects of CARS. Clause 1.13 provides that the objects should be used as an aid to the interpretation of the 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 the 'Objects of the Act' set out in section 5(1) and the 'Acknowledgements of the Act' set out in section 5(2). 1.16 In exercising their functions and interpreting the provisions of these Guidelines, the Registrar, PCA, CAOs, CARS Assessors and officers of CARS must have regard to the objects of CARS, in addition to the objects of the Act.
10. The objects of the Act are set out as follows: 5 Objects of Act (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, … (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, …
11. Clause 18 headed "Certificate and Statement of Reasons" provides: 18.4 A certificate under section 94 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 section 94, the Assessor must specify an amount of damages and the manner of determining that amount.
12. There was some debate as to whether Guideline 18.4 modifies the requirements set out in s 94(5) of the Act.
13. It seems to me to be self-evident that findings on material questions of fact, mention of the applicable law and an articulation of the reasoning processes that led to the conclusions reached would clearly be essential matters to comprise a brief statement of reasons as required by 94(5). The description does not entail any element that would cause the reasons to be anything other than brief. As observed by Leeming JA in Zahed v IAG Limited trading as NRMA Insurance and Ors (2016) 75 MVR 1: "[9] … the reasons need not be long. Indeed there will be many cases, of which I suspect this is one, where a single sentence would suffice."

Principles

1. It is instructive to extract the salient parts of the judgment of Leeming JA in Zahed as it articulates with clarity the area for debate between counsel in the circumstances that have arisen in this case: "[4] …Plainly enough, there may be a tension between the obligation to explain and the obligation to be concise. That is a familiar tension (for example, pleadings must "contain only a summary of the material facts on which the party relies", and be "as brief as the nature of the case allows": see now UCPR Pt 14 rr 14.7 and 14.8). The resolution of the competing obligations imposed by s 94(5) and cl 18.4.3 ought not to result in an unduly demanding burden of providing reasons. It is to be borne in mind that the objects of the Guidelines are "to provide a timely, fair and cost effective system for the assessment of claims" and "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" (cl 1.14), and the obligation to set out the reasoning process is to be construed accordingly. The obligation thereby imposed is less than that imposed on courts: see eg Allianz Australia Insurance Ltd v Kerr [2012] NSWCA 13; 83 NSWLR 302 at [53]-[59]; Pham v NRMA Insurance Ltd [2014] NSWCA 22; 66 MVR 152 at [29]-[31]. Further, as Basten JA's judgment in Kerr indicates, by reference to authority, the nature of the Assessor's task may mean that aspects are insusceptible of any detailed articulation of reasons." [6] …If the only complaint were the failure to state expressly that the 6.76 hours was derived from the certificate of Assessor Davidson, then there would in my opinion be no breach of the obligations imposed on the Assessor. Although it is undesirable for the statement of reasons to leave important matters to inference, doing so does not necessarily breach the obligation to set out the Assessor's reasons. The question is whether the reasoning process can be discerned, reading the reasons as a whole and applying a "beneficial construction" to which the High Court referred in Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 271-272. At least where a gap may be filled as a matter of necessary inference on a fair reading of the reasons, I would consider that the obligation to set out the reasons has been discharged". [7] …However, the Assessor found that 6.76 hours per week of assistance was required until the date of assessment and until some stage in the future. That was inconsistent with the certificate of Assessor Davidson, who had found that most of the heads of domestic assistance ceased to be necessary or reasonable after 8 November 2011. It was also inconsistent with the views of Dr Maniam (who was of the view that the need would extend for the whole of Ms Zahed's lifetime). What then was the reasoning process which led the Assessor to reject the opinions of all of the practitioners who gave evidence on this point and reach a different conclusion?" [8] …The short point in this appeal is that the certificate discloses no reasoning process on that critical integer in the calculation of this head of damages at all." [9] …I would not regard it as necessary for the Assessor to explain why he disagreed with aspects of each of the practitioners' opinions. However, it is necessary for the statement of reasons to explain why the 6.76 hours per week for past gratuitous care was regarded by him to be necessary to the date of the assessment. The reasons need not be long. Indeed, there will be many cases, of which I suspect this is one, where a single sentence would suffice. But to say merely that all of the conflicting evidence was taken into account is, in the facts of this case, insufficient. The matter may be tested against the parties' rights of review: how are the parties to know whether the reasoning is affected by judicially reviewable error of law?"
2. Turning to the issue of s 126 and the inadequacy of reasons I note that in Allianz Australia Limited v Kerr (2012) 83 NSWLR 302 at [31] per Basten JA, in a case where the requirements of s 126 were addressed specifically, his Honour made reference to Nominal Defendant v Livaja [2011] NSWCA 121, where the court said at [41]: "…The assumptions or events upon which a baseline may commonly be calculated include: (a) identification of the skills, training and experience of the plaintiff, as at the date of the accident; (b) the work he or she was undertaking immediately prior to the accident; (c) the likelihood that he or she would have continued in such employment, but for the accident; (d) the possibility that he or she might have obtained promotion or other benefits, but for the accident; (e) the age to which he or she was likely to have worked in that employment, and (f) the possibility that the employment would not have been continuous."
3. A distinction should be made in cases that deal with detailed calculation of future economic loss as opposed to "buffer" cases: Allianz Australia Insurance Limited v Sprod [2012] NSWCA 281 at [30] to [33] per Barrett JA: "[30] …In a true "buffer" case, the obligations imposed by s 126 upon the assessor may be discharged by much more generalised statements: see Allianz Australia Insurance Ltd v Kerr (above) at [69] per Macfarlan JA. But there will still be, of necessity, some assumptions. Assumptions as to life expectancy and likely remainder of working life are examples, even if circumstances mean that the assumptions are necessarily somewhat impressionistic. But if that is the quality of the relevant assumption, it is still possible for it to be stated, if only in very general terms, for example, that remaining working life has been assumed to be a minimum of five years and a maximum of twenty years. That, while it would do little to elucidate any basis of calculation, would serve to accentuate one aspect of the uncertainty that formed the very basis for resort to the evaluative approach of "buffer"." [31] …In the present case, the assessor made and articulated a calculation. He referred to the following matters under the "Future economic loss" heading: 1. Mr Sprod was concerned about losing his job because he is the only light duties worker in his section and is worried that a pallet system may be introduced, leaving very little for him to do and increasing his chances of losing his job. 2. As a forklift driver, Mr Sprod will be expected to do physical work during times when he is not operating a forklift. His impaired capacity for lifting may therefore be taken to emphasise the precariousness of the employment. 3. Mr Sprod will, for these reasons, be at a disadvantage in the labour market, particularly in light of the fact that he has only ever done manual work. 4. Bearing in mind the "present high earnings", it was "appropriate" to allow $250 net per week for future economic loss. [32] …The calculation was then set out at [42] of the assessor's reasons. It showed clearly enough that the assessor had adopted an expected residue of working life of 18.3 years and a discount for vicissitudes of 15% (hence the 0.85 multiplier). [33] …There is no explicit explanation of why a residual working life of 18.3 years was chosen or, more precisely, what assumption was made in that respect (this is an aspect of Allianz's complaint that there was no articulated assumption as to when Mr Sprod was likely to lose his job or as to the degree of likelihood). Nor is there any reference to the assumption that gave rise to the allowance of 15% for vicissitudes. These are matters that may not call for particular elaboration or explanation. A brief statement of what might seem to be reasonably obvious may well suffice."
4. Of guidance also is the decision of Fagan J in IAG Limited v Priestly [2019] NSWSC 1185 where his Honour was critical of the failure of the assessor to make necessary determinations to understand the "buffer" awarded for future loss of earnings: "[24] …The assessor's decision to award a buffer future economic loss appears at [86], devoid of explanation. The assessor stated that he had taken into account a number of variables, which he did not quantify, in his "assessment of a buffer for her future loss of income which I assess to be $400,000". He said, "Such sum is inclusive of vicissitudes and superannuation." [25] …Although the assessor's findings extracted above amounted to a conclusion that, but for the accident, the claimant would have worked full-time for a further 40 years, he did not determine which was the most likely of her career alternatives (supervisor of a childcare centre or further study leading to a primary school teaching role) or what her weekly income would likely have been from whichever of those alternatives was the most probable." [26] …Further, the assessor did not make any finding as to what the claimant's weekly hours would be reduced to as a result of her impairment. Nor did he determine whether the overall length of her working life would be reduced. At [84] he noted a submission - it is not clear from whom - that the plaintiff would be likely to work for only 20 hours per week. The assessor does not say whether he accepted that this was likely or whether he thought it more probable that she would work four days per week as she had done for 7 months up to February 2017."

Consideration - fundamental inadequacy of the Reasons

1. Against that background, the Assessor has noted in paragraph 2 of his introduction that the insurer "disputes the damages sought by the claimant". Clearly he appreciated the ambit of the dispute.
2. Under the heading "additional material provided at the assessment conference", focus is placed on the effect of the questioning of the claimant conducted at that conference.
3. Paragraphs 5 to 17 of the Reasons provide background clarification regarding entries in medical records that refer to pre-existing neck and back symptoms. There was also reference to evidence regarding the claimant's sitting capacity associated with her loss of earning capacity claim, symptoms that were recorded by treaters as present prior to the motor accident and the effect of those on her capacity to do overtime, as well as questioning regarding a knee injury she suffered in 2017, and why she ceased seeing her physiotherapist.
4. Paragraphs 18 to 27 of the Reasons cover the effect of the cross-examination and indicate that a significant challenge was made to the complainant's veracity and her failure to tell various assessing doctors about previous neck and low back pain, as well is issues regarding work and overtime, wage loss and the true nature and extent of asserted domestic assistance needs.
5. In paragraph 31 of the Reasons, the assessor makes positive credibility findings regarding the claimant's "determined nature", finding that she is an "impressive and honest" person. He accepts that her failure to recall certain things was "due to a lapse of memory, rather than any attempt to promote her claim."
6. Nowhere in any of this material is there anything that resembles a finding by the assessor as to what parts of the body of the complainant the assessor has accepted are impaired, let alone the nature and extent of the impairment.
7. The assessor then goes on to carry out the task of assessment of damages, still having not made any finding about impairment or identifying what parts of the claimant's body are impaired. The assessment of damages includes vague references that are insufficient to overcome this problem such as: "there is no doubt that the claimant's attempt at house work and her current employment at Wests continue to aggravate her neck and back and shoulder problems from the accident" [47] and, when dealing with the issue of past domestic assistance, "given the nature of the claimant's injuries…", again without any specification of what the assessor has concluded those injuries are.
8. The Reasons are fatally inadequate. Senior counsel for the defendant's valiant attempts to "sticky-tape" together sufficient findings, only served to highlight the inadequacy of the Reasons.
9. There are additional failures in the way the claim for future loss of earning capacity was dealt with, however on the basis I have already identified, I am satisfied that the orders sought by the plaintiff should be made on the basis of the first ground of the summons. The assessor's decision must be set aside, and the matter returned to the second defendant for determination by a different claims assessor, according to law.

Orders 1. The decision of Assessor Robert Foggo dated 23 April 2019 is set aside. 2. The matter is remitted to the second defendant for determination by a different claims assessor according to law. 3. The first defendant is to pay the plaintiff's costs.

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: 13 December 2019