Insurance Australia Limited trading as NRMA Insurance v Duran

Grounds 3(b) and (c): failure to comply with s 126 and/or failure to give adequate reasons

The parties addressed grounds 3(b) and (c) together. It is convenient to adopt the same approach. As already noted, the submissions concerning the assessment of future economic loss also included a complaint of failure to address a substantial argument (under the rubric of ground 3(a)). It is important in that context to pay attention to the kind of error alleged in each case: see Kerr at [13]-[20] per Basten JA.
In addressing ground 3(b), the insurer submitted that "a failure to comply with s 126 constitutes legal error". The authority cited was Kerr but no point reference was provided. As explained in Kerr at [23]-[24], s 126 requires compliance with a variety of kinds of obligations, failure to comply with which might amount to a variety of kinds of error. Section 126(1) requires that the assessor to be satisfied in the terms specified. In Insurance Australia Limited v O'Shannessy [2015] NSWSC 1047; 72 MVR 1 at [71], Beech-Jones J expressed the view that satisfaction in those terms is a "jurisdictional fact" (while noting the remarks of Basten JA in Kerr at [62] where that construction of the section is questioned). However, that is not the kind of error alleged here.
It is clear enough from the particulars provided in the summons that, whereas ground 3(a) asserts jurisdictional error (permitting consideration of material outside the "record", being the argument put by the insurer to the assessor), grounds 3(b) and (c) were characterised as "legal errors" based on the content of the reasons for decision. The particulars were as follows: "(b) The claims assessor failed to perform his statutory duty pursuant to Section 126 of the Act in that: (i) the claims assessor failed to set out, as he was required to do, his assumptions about the first defendant's future earning capacity, or other events on which the damages awarded was based; (ii) the claims assessor failed to set out his assumptions as to the first defendant's most likely future circumstances, were it not for the accident; (iii) the claims assessor failed to set out any assumptions as to the likelihood that the events might have occurred anyway, were it not for the injury. (c) Contrary to Section 94(5) of the Act and Clause 18.4 of the SIRA claims Assessment Guidelines effective 1 May 2014 the claims assessor failed to provide adequate or lawful reasons for his decision in that his Statement of Reasons does not reveal his actual path of reasoning and does not reveal how the claims assessor in fact formed or arrived at his conclusions. In particular: (i) the claims assessor failed to give lawful reasons for the award of future economic loss, having regard to the requirements of Section 126 of the Act; (ii) the decision contains internally inconsistent reasoning in that at [8] the claims assessor stated: 'I do not review the reports of the Insurer's first qualified Orthopaedic Surgeon, Dr David Maxwell, who examined Ms Duran a number of occasions [sic] between 2013 and February 2015. His reports mainly are of historical value. For the same reason, I do not review the reports of Ms Duran's qualified Orthopaedic Specialist, Dr James Bodel, who examines Ms Duran in October 2014 but not subsequently.' However, the claims assessor subsequently gave reasons at [25] and [42] of the decision that show apparent reliance on Dr Bodel's report."
Accordingly, it is appropriate here to confine attention to what is revealed on the face of the record (the certificate and the attached reasons).
The duty of an assessor to provide reasons is stated in s 94(5) of the Motor Accidents Compensation Act, which provides: "The claims assessor is to attach a brief statement to the certificate setting out the assessor's reasons for the assessment."
The content of that requirement is addressed in the guidelines, cl 18.4 of which provides: "The requirement to give reasons is further expanded upon in clause 18.4 of the guidelines, which 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 process 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 the amount."
As explained by Leeming JA in Zahed v IAG Limited t/as NRMA Insurance [2016] NSWCA 55; 75 MVR 1 at [4], those requirements impose competing obligations to explain and to be concise, the resolution of which ought not result in an unduly demanding burden of providing reasons.
It is uncontroversial that, pursuant to s 122(3), the assessment was governed by the provisions of Chapter 5 of the Act, which includes s 126. Section 126 provides: (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.
The content of the requirement to give reasons in respect of such an assessment is well trodden territory. The insurer relied on Kerr at [31] where Basten JA stated that combination of sub-ss 126(1) and 126(3) "required the assessor to identify and state the assumptions about future earning capacity and other events on which the award was based". In that context, his Honour repeated the guiding propositions stated in Livaja 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."
The insurer also relied on the decision of the High Court in Wingfoot Australia Partners Pty Ltd v Kocak (2013) 252 CLR 480; [2013] HCA 43 at [55] which holds that the statement of reasons must explain the actual path of reasoning in sufficient detail to enable a court to see whether the opinion of a medical panel involves any error of law.
While such statements are helpful in providing an understanding of the content of the obligation to specify assumptions and provide reasons for any calculation of future economic loss, that question will always necessarily also be informed by the circumstances of the individual assessment under scrutiny. To borrow the language of Giles JA in a different context, guiding principles or propositions are "subservient" to the fact-specific objective analysis of the reasons stated: Sagacious Procurement Pty Ltd v Symbion Health Ltd [2008] NSWCA 149 at [66].
On behalf of Ms Duran, it was noted that the requirement for reasons of an assessor is not to the same standard as, for example, a judge. It was further noted (and is trite) that the reasons must be read as a whole and fairly.
It may be accepted that the assessor's reasons set out under the heading "future economic loss" were brief. Further, he did not (as many assessors do) dedicate a separate discussion to the requirements of s 126 and it would perhaps have been preferable to adopt that course. It is convenient to set that section of the reasons out in full: "33. Ms Duran claims that her most likely future course, but for the motor accident, is that she would have worked 40 hours per week at $30.00 per hour until age 67 years. That is said to be $949.00 net per week. Ms Duran concedes a residual earning capacity of $450.00 net per week which I accept. That is based upon 15 hours per week. She is able to type, write and use a keyboard. The net loss of $500.00 is claimed until age 67 years. The calculation is as follows: $500.00 x 380.1 x 85% = $161,542.00. Future loss of superannuation is claimed at 12.63% which equates to $20,402.00. The insurer allows $15,000.00, as a buffer, inclusive of superannuation. 34. I am mindful of what has been said in the Court of Appeal about the desirability of Claims Assessors adopting an arithmetic approach instead of a buffer, in the calculation of future economic loss. See Allianz v Cervantes (2012) NSWCA 224, Allianz v Sprod (2012) NSWCA 281 and Allianz v Shamoun (2013) NSWCA 579. Ms Duran supports a mathematical calculation or a buffer. As there is sufficient evidentiary material for me to calculate future economic loss mathematically, I will adopt that course, as the preferred method. 35. The insurer notes that future economic loss is claimed at 40 hours per week whereas Ms Duran was working 30 hours per week prior to the motor accident. That observation is correct. Allowing 30 hours per week at $30.00 per hour equates to $900.00 gross per week or $46,800.00 gross per year. At current tax rates, that is $39,242.14 per year, after tax and Medicare Levy. That equates to $754.66 per week. Deducting the conceded residual earning capacity of $450.00 net per week leaves a continuing net loss of $304.60 net per week. The calculation of future economic loss is then made as follows: $304.60 x 380.1 x 85% = $98,411.69 Additionally, I allow $12,429.40 for superannuation at the rate of 12.63% for which Ms Duran contends."
However, that passage of the reasons must be read in the context of the whole, particularly including the opening recitation of the facts and the consideration of past economic loss.
As the assessment was undertaken by reference to a calculation rather than a buffer the duty to identify the assumptions underlying that calculation was enlivened: Allianz Australia Insurance Ltd v Sprod (2012) 81 NSWLR 626; [2012] NSWCA 281 at [37] (per Barrett JA; Campbell JA and Sackville AJA agreeing).
The insurer submitted that the assessor failed to set out the assumptions underlying the calculation (specifically, whether he accepted the assumptions contended for by Ms Duran or made his own assumptions) and any assumptions as to the likelihood that the event of Ms Duran being made redundant by her employer might have occurred in any event, or the impact of unrelated and pre-existing injuries.
The insurer relied on other decisions in which it has been held that there was a failure to identify and state the necessary assumptions in circumstances where the assessor accepted what was put forward by the claimant. The helpfulness of such comparisons is necessarily limited. As already explained, the evaluation of the adequacy of the reasons in any particular case will be informed by the matters in issue (and not in issue) in that case. And, as also already explained, the question is to be determined here on the face of the record (leaving aside ground 3(a)). Certainly, the authorities do not support a general proposition that an assessor can never accept the assumptions put forward by a claimant without providing an explicit reason for doing so.
The insurer relied on the decision of Beech-Jones J in Allianz Australia Insurance Ltd v Habib [2015] NSWSC 1719; 73 MVR 412 at [37]-[38]. In that case, his Honour noted that the assessor's award made an assumption as to the age at which Mr Habib would have ceased work and also adopted a deduction for vicissitudes "being the percentage possibility that Mr Habib might have suffered an affectation of his earning but for the injuries in any event (s 126(2); cf Penrith City Council [v Parks [2004] NSWCA 201] at [5])".
The claimant submitted that, although those assumptions were not expressly stated in the award, they could be deduced from examining the "claimant's calculations" which had been provided to the opposing party and that that was sufficient to constitute compliance with s 126(3). Justice Beech-Jones rejected that submission, holding that it would not provide the transparency referred to by Barrett JA in Sprod at [27].
In the present case, the claimant did not need to resort to the contention that the assumptions could be identified from extraneous material. A number of relevant assumptions (including vicissitudes and the age at which Ms Duran would retire) were agreed and were set out in the reasons for decision.
The insurer also relied on the decision of Adamson J in NRMA Insurance Limited v Mulcahy [2017] NSWSC 1499; 82 MVR 285 at [58] where, referring to Habib, her Honour held that it was not enough in order to identify the reasoning process underlying a calculation of future earning capacity of some $2,500 a week to say that it was the figure put forward by the claimant's expert. However, it is clear from a reading of the full decision that that was because acceptance of that figure required explanation in the circumstances of that case; it was higher than the weekly figure assumed for the purpose of calculating past economic loss and no explanation was provided for assuming a higher earning capacity in the future.
In short, the acceptance of an assumption put forward by a claimant will require greater explanation in some circumstances than others. Sometimes, the reasons for accepting an assumption underlying a calculation may be inferred from the reasons as a whole or will be obvious.
In my view, the assumptions made are adequately identified and the reasoning path adequately transparent in the present case. At the outset of the reasons for decision, the assessor set out the facts. Contrary to the submission put by the insurer, I am satisfied that he intended there to record facts as to which he was satisfied rather than merely recording Ms Duran's claim. That included adequate identification of Ms Duran's skills, training and experience as at the date of the accident and the work she was undertaking immediately before the accident. The assessor noted that she was employed on a part-time basis for 30 hours a week as an accounts manager for a company that operated beauty salons (reasons at [3]).
At [4] of the reasons, the assessor set out matters that had been agreed in the assessment conference which included age of retirement (67 years), length of time from assessment to retirement (9 years), the multiplier for years to date of retirement (380.1) and 15% for vicissitudes. The insurer noted at the outset of the hearing before me that the agreement as to vicissitudes did not mean that it resiled from its submissions as to likely future circumstances. So much may be accepted.
In identifying the assumptions made by the assessor as to the future, it is necessary to go beyond the section of the reasons appearing under the heading "future economic loss". Some of the relevant assumptions are identified in the discussion of past economic loss. In that section of the reasons the assessor noted that Ms Duran commenced employment with Catwalk Pty Ltd in 2009 as an accounts manager and that she worked fulltime 40 hours per week at $30 per hour for the first six months and thereafter permanent part-time at 30 hours per week at $20 per hour. He then said "she hoped to return to fulltime work and intended working until age 67 years" (at [27]).
It is clear from the sequence of the reasons that the assessor was accepting that, uninjured, the most likely future course but for the motor vehicle accident was that she would have worked 30 hours per week at $30 per hour until the age of 67 years. He accepted that she had a residual earning capacity of $450 net per week (reasons at [33]). He also made an assessment of the likely future hours which was less than the number of hours contended for by Ms Duran.
The insurer submitted that the reasons disclose no findings or assumptions as to the future. In my assessment it is clear that the assessor accepted that the most likely future course was that she would have continued in the same employment or the same kind of employment. There was no real contest about that. The only specific issue to suggest otherwise was the question of redundancy. Ms Duran had been made redundant in October 2013. The assessor recorded that that occurred after the workers' compensation insurer wanted her to increase her hours against medical advice and she found that she could not cope with working 22 hours a week. The assessor said "she thinks [the redundancy] was due to her accident-related injuries but can't prove it".
The insurer submitted, noting that the redundancy was a known fact, that it needed to be addressed in the context of the finding as to the most likely future circumstances. It was submitted that that was a matter put in issue by the insurer.
I do not accept that the reasons for decision are insufficient on that account. It is clear from the sequence of the reasons for decision that the assessor knew Ms Duran had been made redundant but that he was satisfied that, but for the accident, she would have continued in future work for 30 hours a week until the (agreed) age of retirement.
The assessor's discussion of the most likely future course at [33] of the reasons, while brief, adequately identifies the assumptions made based on the findings as to injuries that precede that discussion. The reason for assuming 30 hours per week instead of the amount claimed is spelled out. Clearly, the assessor was otherwise satisfied that this was a case where, but for the accident, the status quo would have continued. Grounds 3(b) and (c) are not made out.

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Cases Cited (21)