Insurance Australia Ltd t/as NRMA Insurance v Wannous

Supreme Court of NSW|2020-06-09|Before: Beech-Jones J

Solicitors: Hall & Wilcox Lawyers (Plaintiff) File Number(s): 2019/347159

Judgment

By summons filed on 5 November 2019, the plaintiff, Insurance Australia Ltd, trading as NRMA Insurance (the "Insurer"), seeks relief in the form of an order in the nature of certiorari, or alternatively a declaration, setting aside or declaring invalid a decision of the third defendant, Mr Hugh Macken (the "Claims Assessor"), made on 11 September 2019 refusing the Insurer's application that a claim lodged under the Motor Accident Compensation Act 1999 ("MACA") be exempt from assessment under Part 4.4.

Background

On or around 6 March 2019, the Claimant lodged a "CARS 2A General Assessment Application" seeking an assessment of damages for the injuries he sustained in the accident.
On or around 11 April 2019, the Insurer lodged a reply to the Claimant's application. The Insurer sought that the claim be exempt from assessment under Part 4.4. The Insurer sought to rely on s 92(1)(b) of the MACA and raised two grounds. First, the Insurer contended that the Claimant made false and misleading statements in relation to the injuries, loss or damage allegedly caused by the accident. Second, the Insurer contended that the Claimant failed to disclose his relevant pre‑accident medical history.
The Claimant opposed the application for exemption. Between April 2019 and September 2019, there were a number of preliminary conferences and multiple written submissions from both the Insurer and the Claimant on that topic.
On 11 September 2019, representatives of the Insurer and the Claimant attended a preliminary conference with the Claims Assessor. During the conference the Claims Assessor stated, inter alia: "I ha[ve] read the material and I will be issuing a preliminary conference report indicating that I decline to recommend that the matter be exempt from assessment. I will not be providing reasons…."
After the conference, the Claims Assessor issued a document entitled "Report of Fourth Preliminary Conference General Assessment" bearing the date 11 September 2019. Under the heading "Matter summary" the document stated: "1. The claim is not ready to proceed to assessment. 2. There are two treatment disputes which are being considered by the Medical Assessment Service. 3. I have read all the material, the Insurer's Submissions and the Claimant's Submissions in respect to the Insurer's Application for a Discretionary Exemption pursuant to section [92(1)(b) of the MACA] and advise I am not satisfied on the material provided that this matter ought be exempted from [assessment] on the basis submitted by the Insurer. 4. In my view the claim is suitable for assessment."

Legislative Provisions and Guidelines

I reviewed the scheme of the MACA, especially concerning applications to exempt claims from assessment, in Insurance Australia Limited t/as NRMA Insurance Limited v Milton [2016] NSWSC 1521 ("Milton"). In summary, Part 4.4 of the MACA is entitled "Claims assessment and resolution". It contains provisions relating to the assessment of claims for damages by claims assessors in respect of death or injury arising out of certain motor accidents. Part 4.5 deals with court proceedings in respect of such claims. Within Part 4.4, s 90 provides that a claim may be referred to the SIRA by a claimant or insurer or both for assessment under Part 4.4.
Section 92 of the MACA exempts certain claims from assessment under Part 4.4. It provides: "92 Claims exempt from assessment (1) A claim is exempt from assessment under this Part if: (a) the claim is of a kind that is exempt under MAA Claims Assessment Guidelines or the regulations, or (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. (2) If a claim is exempt from assessment under this Part, the Principal Claims Assessor must, as soon as practicable, issue the insurer and claimant with a certificate to that effect (enabling court proceedings to be commenced in respect of the claim concerned)."
In the present case, the Insurer's application for an exemption sought to invoke s 92(1)(b) (known as a "discretionary exemption"), as opposed to s 92(1)(a) (known as a "mandatory exemption").
Section 93 vests the Principal Claims Assessor with responsibility for making arrangements as to the claims assessor who is to assess any particular claim or class of claims that are not exempt from assessment.
Section 94 provides: 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.
Thus, s 94(1) vests the claims assessor, to whom a claim is referred, with an obligation to make an assessment of "the issue of liability" and the "amount of damages for that liability". The assessment of liability is not binding on the parties (s 95(1)), although the assessment of the quantum of damages is binding on the insurer (s 95(2)). If a claim is the subject of a certificate of exemption under s 92 or is the subject of a certificate issued under s 94, then a claimant is entitled to issue court proceedings in respect of the claim and the matter proceeds in accordance with Part 4.5 (s 108).
Section 69(1) of the MACA states that the SIRA "may issue guidelines for or with respect of procedures for the assessment of claims under Part 4.4 and associated matters". Chapter 14 of the Claims Assessment Guidelines (the "Guidelines") deals with discretionary exemptions in the following terms: "Unsuitable for assessment under section 92(1)(b) 14.11 For the purpose of section 92(1)(b), an Assessor may, in dealing with an application for general assessment and following a preliminary assessment of the claim, determine that the claim is not suitable for assessment. 14.12 An Assessor may make a preliminary determination that a claim is not suitable for assessment on their own initiative or upon application by the claimant, the insurer, or both, at any time during the course of an assessment, after providing the parties with the opportunity to make submissions on that issue and considering any such submissions. 14.13 If the Assessor determines that the claim is not suitable for assessment, the matter must be returned within 5 days of making such a determination to the PCA for approval with a brief statement of reasons. ……... 14.16 In determining whether a claim is not suitable for assessment, an Assessor and the PCA shall have regard to the circumstances of the claim as at the time of the preliminary determination including, but not limited to: 14.16.1 whether the claim is exempt under section 92(1)(a) because the claim involves one or more of the circumstances set out in clause 8.11; 14.16.2 the heads of damage claimed by the claimant and the extent of any agreement by the insurer as to the entitlement to those heads of damage; 14.16.3 whether the claim involves complex legal issues; 14.16.4 whether the claim involves complex factual issues; 14.16.5 whether the claim involves complex issues of quantum or complex issues in the assessment of the amount of the claim including but not limited to major or catastrophic, spinal or brain injury claims; 14.16.6 whether the claimant has been medically assessed and is entitled to non-economic loss pursuant to section 131 and the claim involves other issues of complexity; 14.16.7 whether the claim involves complex issues of causation in respect of the relationship between the accident, the injuries sustained and disabilities arising from it including but not limited to multiple accidents or pre-existing injuries or medical conditions; 14.16.8 whether the insurer is deemed to have denied liability under section 81(3); 14.16.9 whether the claimant or a witness, considered by the Assessor to be a material witness, resides outside New South Wales; 14.16.10 whether the claimant or insurer seeks to proceed against one or more non-CTP parties; and/or 14.16.11 whether the insurer makes an allegation that a person has made a false or misleading statement in a material particular in relation to the injuries, loss or damage sustained by the claimant in the accident giving rise to the claim. …" (emphasis added)
Thus, the Insurer's request for exemption under s 92(1)(b) sought to rely on the matter identified in clause 14.16.11 of the Guidelines.

Ground 1: Implied Duty to Give Reasons

As noted, the Insurer argued that the Claims Assessor's decision was invalid because of a failure to comply with an (implied) legal obligation to provide reasons for a refusal to exempt a claim from assessment. Clause 14.13 of the Guidelines requires that a claims assessor provide reasons if an application for discretionary exemption is granted. However, neither s 92 of the MACA, nor Chapter 14 of the Guidelines, expressly requires that the claims assessor provide reasons for declining an application for a discretionary exemption.
There is no authority directly addressing whether there such an implied obligation. In Insurance Australia Ltd t/as NRMA v Howard [2019] NSWSC 224 at [36] and AAI Ltd v Feng [2019] NSWSC 535 at [56], Adamson J observed that there was no express requirement for the claims assessor to give reasons for declining an application for discretionary exemption. In IAG Limited t/as NRMA Insurance v Khaled [2019] NSWSC 320, Bellew J observed that, because a claims assessor who determines a claim for damages under the MACA is required to give reasons, "[i]t would … be anomalous [if] the obligation based on an Assessor were less by virtue of the fact that the Assessor was determining a preliminary question" (at [35]).
In Public Service Board of New South Wales v Osmond (1986) 159 CLR 656; [1986] HCA 7 ("Osmond"), the High Court held that the common law of Australia does not impose "a general obligation to give reasons for an administrative decision" (at 670 per Gibbs CJ). That conclusion was restated in Wingfoot Australia Partners Pty Ltd v Kocak (2013) 252 CLR 480; [2013] HCA 43 at [43]. In Osmond, the relevant body was the Public Service Board of NSW which had dismissed an appeal by a disappointed applicant for a position against the promotion of another officer. Gibbs CJ distinguished the position of a "body exercising discretionary administrative powers" from "the exercise of judicial functions" in respect of which the provision of reasons is "an incident of the judicial process" (citing Housing Commission of New South Wales v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378 at 386), although there is no "inflexible rule of universal application" that reasons should always be given for judicial decisions (Osmond at 667).
In Osmond, Deane J agreed with Gibbs CJ but added (at 676): "… the courts should be less reluctant than they would have been in times past to discern in statutory provisions a legislative intent that the particular decision‑maker should be under a duty to give reasons or to accept that special circumstances might arise in which contemporary standards of natural justice or procedural fair play demand that an administrative decision‑maker provide reasons for a decision to a person whose property, rights or legitimate expectations are adversely affected by it."
Such a legislative intention was discerned in Campbelltown City Council v Vegan & Ors (2006) 67 NSWLR 372; [2006] NSWCA 284 ("Vegan"). In Vegan, it was found that an Appeal Panel conducting a review of a medical assessment in relation to a medical dispute under ss 327 and 328 of the Workplace Injury Management and Workers Compensation Act 1998 was subject to an implied obligation to give reasons (at [117] per Basten JA, Handley and McColl JJA agreeing). After referring to Osmond, Basten JA observed that "[t]he classification of the functions of the tribunal as administrative or judicial therefore remains an important element in the exercise" of discerning a legislative intention to require reasons for a decision (at [106]).
A determination of whether the functions of a decision maker are administrative or judicial in nature is a question of statutory construction (Vegan at [108]). In Vegan, the functions of the Appeal Panel involved the application of a statutory test to determine legal rights as between an employee and employer. Basten JA described this as being "in the nature of a judicial function whatever the precise name or status of the Appeal Panel itself" (at [109]). In addition, Basten JA noted that the determination of the medical dispute by a medical specialist, the subject of the review by the Appeal Panel in Vegan, was subject to a requirement to provide reasons. His Honour observed that it would be "anomalous if the resolution of the medical dispute were to be subject of reasons only when undertaken by an approved medical specialist and not when undertaken by an Appeal Panel" (at [115]). His Honour also noted that, as there was a power to refer a dispute for a medical assessment more than once, including by a Court or the Workers Compensation Commission, then the "fair operation" of those powers "would be hampered if the Registrar, a Court or the Commission were not assisted with available reasons for a certificate given by an Appeal Panel" (at [116]).
Basten JA concluded (at [117]): "In the absence of challenge to the principles established in Soulemezis [v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247], it should be accepted that the Appeal Panel was subject to an implied statutory obligation to give reasons. That conclusion follows from the foregoing analysis of the statutory context and from an understanding of the nature of the functions imposed on the Appeal Panel. Those functions might not constitute an exercise of judicial power for the purposes of the federal Constitution, but they are functions properly characterised as judicial in nature, for the purposes of determining their incidents." (emphasis added)
The reference to the "principles established in Soulemezis" is to the proposition that the foundation of the obligation imposed on a court to provide reasons is not the existence of a right of appeal against its decisions but the norm that "justice must not only be done it must be seen to be done" (at 278E per McHugh JA).
Four matters should be noted about Vegan and the implication of a duty to provide reasons. First, the conclusion that there was an implied duty to give reasons followed in part from an analysis of the "functions" of the Appeal Panel and a characterisation of the body as a whole. Thus, in a case such as this it follows that the inquiry as to whether there is an implied duty to give reasons is not confined to just an analysis of the specific function conferred by s 92(1)(b) of MACA, but extends to a consideration of the nature of the person or body that exercises that function, namely, a "claims assessor".
Second, unlike many statutory obligations to provide reasons, the content of an implied duty to give reasons has a flexible quality; it "will vary, depending on the issues in dispute, the subject matter of the dispute, the urgency in reaching a decision and a variety of other factors" (Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales v Secretary of the Treasury [2014] NSWCA 112 at [46]; "Public Service Association"; Vegan at [121] to [122]). In particular, "[w]here the legal test to be applied involves an evaluative judgment, it may well not be practicable to provide a detailed articulation as to how specified (and conflicting) factors have been weighed in the balance; the scope of the obligation must recognise that constraint" (Public Service Association at [46]).
Third, in Vegan, the fact that some provisions of the Workplace Injury Management and Workers Compensation Act 1998 expressly required certain decision makers to provide reasons, but there was no such provision concerning the Appeal Panel, did not warrant the conclusion that there was no implied duty imposed on the Appeal Panel to provide reasons. To the contrary, Basten JA considered that anomalous circumstance to be a factor in favour of finding that there was such a duty (at [115]). Handley JA emphasised that the maxim that an express provision excludes an implied "... must always be applied with care" (at [14] citing Houssein v Under Secretary of Industrial Relations and Technology (NSW) (1982) 148 CLR 88 at 94; [1982] HCA 2).
Fourth, where by operation of s 69(4) of the Supreme Court Act 1970 the record includes the reasons of the relevant "tribunal", then a failure to provide reasons amounts to an error of law on the face of the record that warrants the setting aside of the decision (Vegan at [130]).

Reasons Required

Subject to obtaining the approval of the Principal Claims Assessor, the function of determining whether a claim is exempt under s 92(1)(b) is reposed in a "claims assessor". The primary function of claims assessors is that conferred by s 94(1), namely, the making of an assessment on the "issue" of liability and damages. Such an assessment involves the application of a statute and common law to proven facts to determine existing rights. The resulting assessment is, at least in some respects, binding. It follows that the function conferred by s 94(1) of MACA is definitely "in the nature of a judicial function" (Vegan at [109]).
What of the function conferred on a claims assessor by s 92(1)(b)? Although the claims assessor who applies s 92(1)(b) is not necessarily the same claims assessor who will determine the claim under s 94(1), the fact that the obligation to address the provision is imposed on a claims assessor who exercises a judicial type function is, for the reasons noted at [27], a factor in favour of finding an implied duty to give reasons when s 92(1)(b) is applied. Further, to address s 92(1)(b), the relevant claims assessor is obliged to make a "preliminary assessment of the claim", that is, undertake a "preliminary" form of the task imposed by s 94(1). Having made that assessment, the claims assessor must consider whether the claim is "not suitable for assessment", but instead appropriate to be determined by a court. This requires an evaluative judgment that considers the nature of the claim and the suitability of the assessment procedures provided for in the MACA to resolve it. That s 92(1)(b) requires the making of a judgment of that character strongly tends towards the conclusion that the task the section requires to be undertaken "is in the nature of a judicial function". The outcome of the performance of this function is a determination of the forum most suitable for an assessment of the claim. Such determinations are routinely made by courts (see John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503; [2000] HCA 36; Civil Procedure Act 2005, ss 38, 140, 146 and 149B) and involve the exercise of a function that is "judicial in nature" (Vegan at [117]) although it is ancillary to the ultimate determination of a matter.
The fact that the determination of a claims assessor under s 92(1)(b) of MACA must meet with the approval of the Principal Claims Assessor tends to undermine the characterisation of the exercise of the function as being "judicial in nature", as that concept carries with it a degree of independence in its exercise. Even so, given that the decision under s 92(1)(b) is made by a claims assessor who undertakes a function that is "judicial in nature" under s 94(1), that the decision requires a preliminary exercise of that function and the making an evaluation of the suitability of the claim for determination under the MACA, it follows that a determination by a claims assessor under s 92(1)(b) to either exempt or decline to exempt a claim from assessment also involves the exercise of a function that is "judicial in nature" and is subject to an implied duty to give reasons.
Two matters should be noted about this conclusion. First, it is not undermined by the fact that the Guidelines only provide for the giving of reasons in the event that it is determined that a claim is exempt from assessment. The Guidelines do not affect the proper construction of the MACA and, even if they did, the approach in Vegan would not warrant much significance being attached to this factor (see [29]).
Second, nothing in this judgment is directed to whether and, if so, in what circumstances a claims assessor is obliged to address the exercise of the power conferred by s 92(1)(b). In this case, although no reasons were provided, there is no doubt that the claims assessor purported to address and determine whether the claim should be exempted under s 92(1)(b).
There remains to consider the content of the implied duty of reasons in this case. Given that s 92(1)(b) only requires a "preliminary assessment" of the claim, it is unlikely that there will be factual disputes that arise when an exemption is sought (see Milton at [25] to [26] and cases cited; cf Vegan at [121]). Further, given that ultimately a determination under s 92(1)(b) is a procedural step (albeit important) leading to the determination of a claim either under s 94(1) or by a court, then in many cases "to fulfil a minimum legal standard, the reasons need not be extensive or provide detailed explanation of the criteria applied" (Vegan at [122]). However, given that the Guidelines have been promulgated and, in this case were relied on by the Insurer, then to conform with the implied obligation in this case the Claims Assessor was obliged to state, at least briefly, whether the preliminary assessment of the claim meant that it fell within the type of cases listed in clauses 14.6.1 to 14.6.11 of the Guidelines and, if so, what regard was had to that circumstance in denying the request for exemption. Overall, a claims assessor is obliged to state what it was about the preliminary assessment of the claim that warranted a non-acceptance of the contention that it was not suitable for assessment. Otherwise, if it were the case that a claims assessor considered that the claim was not suitable for assessment, but the Principal Claims Assessor did not agree, then that should be stated.
It follows that ground 1 will be upheld and the decision of 11 September 2019 will be set aside (see [30]).

Ground 2: (Alleged) Constructive Failure to Exercise Jurisdiction

The submissions in support of this ground relevantly state: "The [Claims Assessor's] decision contains no indication of what (if any) discretionary factors were taking into account in reaching the conclusion he did. There is no indication of how such factors (if any were taken into account) informed (or did not inform) the exercise of the Third Defendant's discretion. There is nothing in the decision to suggest that there was any real engagement with any of the relevant discretionary factors at all."
To the extent that this submission is premised on the existence of an obligation to provide reasons which was not complied with, then it rises no higher than ground 1 which was has been upheld. If there was no such obligation then this ground would not advance the matter because it would fail for lack of proof and thus illustrate the dilemma that arises in seeking judicial review in the absence of reasons (Avon Downs Pty Ltd v Federal Commissioner of Taxation (1949) 78 CLR 353 at 360; [1949] HCA 26). However, even with the finding that there was such an obligation, I would not infer from the absence of reasons that the Claims Assessor did not engage with the test posed by s 92(1)(b). The refusal to provide reasons was the consequence of a wrong but genuinely held belief that reasons were not required. That wrong understanding is addressed by the conclusion in relation to ground 1. Ground 2, however, is rejected.

Relief

The relief sought in the summons "in the nature of certiorari" (Supreme Court Act, s 69(3)). In this case, the appropriate relief is an order setting aside the determination of the Claims Assessor made on 11 September 2019 that he was not satisfied under s 92(1)(b) of the MACA that the claim was not suitable for assessment.
In light of the submitting appearances, there will be no order for the costs of the proceedings.
Accordingly, the Court orders that: (1) The determination of the Third Defendant on 11 September 2019 that he was not satisfied under s 92(1)(b) of the Motor Accidents Compensation Act 1999 that the First Defendant's claim was not suitable for assessment be set aside; (2) There be no order as to the costs of the proceedings.

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: 09 June 2020

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