NRMA Insurance Limited v Mulcahy - [2017] NSWSC 1499 - NSWSC 2017 case summary — Zoe

NSWNSWSC

NRMA Insurance Limited v Mulcahy

[2017] NSWSC 1499

Supreme Court of NSW|2017-11-02|Before: Adamson J

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2017-11-02

Before

Adamson J

Catchwords

[2012] NSWCA 13 Allianz Australia Insurance Ltd v Sprod (2012) 81 NSWLR 626
[2012] NSWCA 281 Craig v State of South Australia (1995) 184 CLR 163
[1995] HCA 58 Insurance Australia Ltd (t/as NRMA Insurance) v Milton [2016] NSWCA 156 Kirk v Industrial Court of New South Wales (2010) 239 CLR 531
[2010] HCA 1 Minister for Immigration and Citizenship v Li (2013) 249 CLR 332

Source

Original judgment source is linked above.

Catchwords

[2012] NSWCA 13 Allianz Australia Insurance Ltd v Sprod (2012) 81 NSWLR 626[2012] NSWCA 281 Craig v State of South Australia (1995) 184 CLR 163[1995] HCA 58 Insurance Australia Ltd (t/as NRMA Insurance) v Milton [2016] NSWCA 156 Kirk v Industrial Court of New South Wales (2010) 239 CLR 531[2010] HCA 1 Minister for Immigration and Citizenship v Li (2013) 249 CLR 332[2013] HCA 18 Minister for Immigration and Ethnic Affairs v Liang (1996) 185 CLR 259[1996] HCA 6 Pham v NRMA Insurance Ltd [2014] NSWCA 22 Repatriation Commission v O'Brien (1985) 155 CLR 422[1985] HCA 10 Sherlock v Lloyd (2010) 27 VR 434[2010] VSCA 122 The Nominal Defendant v Aychahawchar [2015] NSWCA 58 Wingfoot Australia Partners Pty Ltd v Kocak (2013) 252 CLR 480

Judgment (23 paragraphs)

[1]

Solicitors: Curwoods Lawyers (Plaintiff) Law Partners Personal Injury Lawyers (First Defendant) Crown Solicitor's Office (Second and Third Defendant) File Number(s): 2017/219421

[4]

Facts

The facts as set out in the Assessor's reasons and, where relevant, the evidence, can be briefly stated. On 1 July 2012 the claimant, who was then 59 years old, was driving along the Princes Highway near Rose Valley Road, Gerringong at about 70 kms/hour. The insured vehicle was driving at high speed towards him and crossed the middle line of the road and struck the claimant's vehicle head-on. The claimant's vehicle was later found in a ditch beside the road. The claimant was conscious when he was discovered. His feet were stuck under the brake pedal. He was aware that a fire had started in the rear of his vehicle. He feared for his life. It took some time for him to be extricated from the vehicle. The insurer is the compulsory third party insurer of the vehicle at fault and has admitted liability.
The claimant had qualifications as a civil engineer, and also in valuations. He completed a Diploma in Building Science at Sydney University. At the time of the accident he was working as a self-employed property consultant. As a result of injuries suffered in the accident, the claimant was unable to work for a period. He resumed work but his income was reduced. The Assessor found that the claimant's capacity for work was "restricted by his physical and psychological impairments" as a result of the accident. The Assessor concluded that the heart attack which the claimant suffered in 2016 had not affected his earning capacity. The Assessor found that the claimant continued to suffer from "significant physical and psychological disabilities which may remain with him for the remainder of his life".
The claimant relied on two expert reports from Chris Katehos and Cecilia Tang of Furzer Crestani in support of his claim for damages for loss of earning capacity. These reports were dated 29 August 2016 (the first report) and 14 February 2017 (the second report) respectively. In substance, the first report compared the claimant's pre-accident income with his post-accident income and attributed the difference to the accident. The claim for past economic loss was predicated on a projection of the pre-accident earnings from 1 July 2012 to the date of the assessment from which the claimant's actual earnings were deducted. The claimant, who was 63 years old at the date of assessment, said that, but for the accident, he would have continued to work as a self-employed property consultant until he was 70 years old. The claim for future economic loss assumed minimal residual earning capacity.
In the first report the authors calculated the difference between what the claimant would have earned but for the accident and what he in fact earned on the basis of two scenarios, referred to as Scenario 1 and 2. Scenario 1, which produced a lower figure, was based on their calculation of the claimant's Annual Net Business Income (ANBI) for the four financial years from 2009 to 2012. From this figure they derived an "Average Annual Indexed ANBI" of $237,515, which was used for the two years following the accident.
From the total figure calculated for the hypothetical past earnings but for the accident, the claimant's actual earnings since the accident were deducted, which produced a total figure for past loss of $410,938 for the period from 1 July 2012 to 31 August 2016. The claim for loss of future earning capacity, was based on a weekly loss of $2,496.08 as set out in Schedule M to the first report.
The insurer contended before the Assessor that the amounts for past and future earning capacity ought be assessed by way of a buffer rather than a mathematical calculation such as those relied on by the claimant in the first report. It relied on its expert Mr Gaudion, who provided a critique of the first report.

[5]

The Assessor's reasons

In his reasons the Assessor largely adopted Scenario 1 in the first report for both past and future loss of earning capacity. The Assessor accepted two of Mr Gaudion's criticisms of the first report and rounded down the figure for past economic loss on that basis. He applied the same percentage deduction to the claim for future economic loss.
Because the insurer's challenge to the assessment was, in essence, a challenge to the Assessor's reasons for the assessment of damages for past and future economic loss, it is necessary to set out the passages from the reasons in which the assessment was made. The Assessor said in his reasons, of present relevance: "DETERMINATION OF ISSUE 4 / PAST ECONOMIC LOSS 20. Mr Mulcahy relies on the report of Furzer Crestani Forensic Chartered Accountants (dated 29 August 2016) for the purpose of his claim for past economic loss. For the period from the date of the motor accident until 31 August 2016 (217 weeks) the authors of the report provide two calculations of Mr Mulcahy's past economic loss. Those estimates are predicated on two different calculations of his Annual Net Business Income and, having already taken tax liability into account, have been expressed in net terms. It is submitted for Mr Mulcahy that both of those calculations are equally valid. Mr Mulcahy therefore claims the average of the two namely $463,318.00. Additionally, he claims ongoing loss from 1 September 2016 to the date of assessment at the rate of $2,135.10 per week x 34 weeks = $72,593.40. On that basis, Mr Mulcahy claims $535,911.40 for past economic loss plus superannuation at 11% of the net loss ($58,950.25). 21. The Insurer relies upon a report dated 9 December 2016 by Cutcher and Neale Forensic Accounting. Mr Wholohan summarises the relevant matters in that report as follows: (a) There were fluctuations in the Claimant's income both post and pre-accident which are related to fluctuations reasonably expected to occur in a business of the type conducted by the Claimant. (b) It is difficult to reach a concluded opinion as to whether or not revenue was less than it would otherwise have been but for the accident. If it is accepted that there was a loss of revenue caused by the accident, that loss should be restricted to the period from the date of the accident until February 2013, given the significant new work accepted by the Claimant in March 2013. (c) in view of the matters raised in the report and criticisms of the Furzer Crestani methodology, the Cutcher and Neale report does not calculate the amount of any loss. The Insurer submits that, in the circumstances, it is not appropriate to assess past economic loss on the basis of weekly or annual losses, but rather on the basis of a lump sum. It suggests that $100,000.00 is appropriate. Additionally, it allows $11,000.00 for superannuation, calculated at 11% of the net loss, notwithstanding that it would not agree that rate. 22. The Insurer's qualified forensic account, Nick Gaudion, is unable to reach a concluded opinion as to whether Mr Mulcahy's business revenue, in the period July 2012 to February 2013, was less than it would otherwise have been, but for the motor accident. In the event that it is accepted that there is a loss of revenue attributable to the alleged injuries sustained by Mr Mulcahy in the motor accident, Mr Gaudion thinks that any such loss should be restricted to the period July 2012 to February 2013. His reasons for those opinions are set out in section 3 of his report under the following headings: • Assertion that the Claimant was unable to work for 5 to 6 weeks after the motor accident. • Analysis of the invoices based on when the work was performed. • Analysis of the reasons for the increase in revenue in March 2013. I accept Mr Mulcahy's assertion that he was unable to work for 5 to 6 weeks after the motor accident. I am not persuaded by Mr Gaudion that an analysis of the invoices based on when the work performed is of any real relevance to the question of whether or not there has been past economic loss, The conclusion reached in paragraph 3.19 of Mr Gaudion's report is a non-sequitur because it ignores entirely the possibility, as asserted by Mr Mulcahy, that he would have generated more new work from March 2013, than he actually did, as a direct result of the motor accident. I accept Mr Mulcahy's assertion. 23. In section 4 of his report, Mr Gaudion critiques the loss set out in the Furzer Crestani report, under the following headings: (a) Assumption regarding the weekly hours worked prior to the motor accident. (b) Incorrect adjustments to invoiced revenue to determine when worked performed. (c) Reasons for the improved results in the Year Ended 30 June 2014. (d) Increasing the hourly rate Mr Mulcahy is asserted to have charged but for the accident without property establishing the basis for the increase. (e) Incorporation of expenses recorded in the Financial Statements after the date of the motor accident. I have considered the material in section 4 of Mr Gaudion's report in detail. It seems to me that the matters set out under the headings (a), (b) and (c) above are not such as to impact in any significant way upon the Furzer Crestani findings. However, I think that there is some substance in the matters set out in (d) and (e) above, as they impact directly upon the calculation of Annual Net Business Income ("ANBI"), which is the foundation of the Furzer Crestani modelling. For those reasons, I do not accept that scenario 2 proposed by Furzer Crestani is valid. I propose to disregard it. I will make some adjustment to the Furzer Crestani calculations, based upon scenario 1, taking into account Mr Gaudion's criticisms. I should also say that it is not clear to me, from the Furzer Crestani calculations, how the estimated ("ANBI") from 1.7.2015 (in Schedules K and L) is derived. In the absence of Mr Mulcahy's Income Tax Returns, I cannot be satisfied that the deduction of market rent for the Strathfield premises ($11,400 in each of the years 2013-2015) was an actual expense rather than a book entry. The only references I can find are Attachments C-1 and C-2 to the Furzer Crestani report in which it is nilled-off. I allow past economic loss as follows: Date $ • 1 July 2010 [sic, 2012] to 31 August 2016 410,938.00 • 1 September 2016 to date $1,893.72 x 36 weeks 68,173.92 Total 479,111.92

[6]

I round that down to $440,000.00 and I also allow $48,400.00 for past superannuation foregone. I note the disclaimer contained in paragraph 3.3 of the Furzer Crestani report as to financial documents that were not available for their consideration. That material apparently was not available to Furzer Crestani when preparing their supplementary report as it is not referred to in that report. It is unfortunate that up-to-date financial data was not provided. It may have enabled a more accurate assessment of past economic loss. Nothing contained in the Supplementary Report causes me to alter the findings that I have made. DETERMINATION OF ISSUE 5 / FUTURE ECONOMIC LOSS 24. Mr Mulcahy relies on the Furzer Crestani forensic accountants report dated 29 August 2016 for the formulation of his future of his economic loss claim. As with past economic loss, the authors of that report provide two estimates of the Claimant's future economic loss, namely $749,208.00 and $898,536.00, as set out in Schedules M & N to that report. Those two scenarios are calculated from 1 September 2016. Those two scenarios are based upon the same, or similar, assumptions as informed the calculation of past economic loss. Mr Maxwell submitted that I should disregard the Insurer's forensic accountant's report and allow the average of the two scenarios proposed by Furzer Crestani. On that basis, Mr Mulcahy claims the average of these two scenarios less 15% for vicissitudes plus superannuation. 25. The Insurer submits that future economic loss should be allowed as a buffer. It doesn't challenge Mr Mulcahy's intention to work until age 70 years but says that there would have been a tapering off in his work activities as he grew older. It says that likelihood should be factored into the calculation of future economic loss. It seems to me that Is only one factor to which I must have regard in performing the exercise prescribed by section 136 [sic, 126] of the Act. Having considered all of the evidence, I am satisfied that, absent the motor accident, his most likely future course is that he would have continued working in his business until aged 70 years, with a gradual winding back of his business and professional activities, as he grows older, and his financial need to work reduced, as his grandchildren increased. 26. It is trite law that an award for future economic loss can be made only if I am persuaded that Mr Mulcahy has a reduction in his earning capacity, as a result of the motor accident, which is likely to be productive of financial loss. I am so satisfied because of the degree, extent and nature of his permanent impairments, which flow from the motor accident. In quantifying that loss, 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. In the present case, Mr Maxwell submits that I should adopt an arithmetic approach, whereas Ms Allan contends for a buffer. 27. Having considered the contending forensic accountant's reports, I think that I should adopt the Furzer Crestani scenario 1 as my base line for calculation. I note that Furzer Crestani have used an incorrect multiplier (258.1) which should be 271.4 (5% for 6 years). I adjust the figure for future economic loss in the same manner as I adjusted the claim for past-economic loss. The calculation is as follows: $2,496.08 x 271.4 x 91.84% (adjustment to Furzer Crestani) x 85% (for vicissitudes) = $528,833.73. As that award is based upon a mathematical calculation, rather than a buffer, I allow an additional $69,806.05 for future superannuation, calculated at 13.2% of the net loss. [Emphasis added to identify the matters particularly germane to the insurer's challenge.]

[7]

The insurer's challenge to the assessment

The insurer argued that it was not possible to tell how the Assessor had calculated past or future economic loss and, accordingly, the certificate was invalid. Further, it submitted that the certificate was unreasonable in the sense in which the term was used by the High Court in Minister for Immigration and Citizenship v Li (2013) 249 CLR 332; [2013] HCA 18. The specific bases for the challenge are extracted from the summons below.
In [5], [6] and [7] of the summons, the insurer relevantly identified the following matters with respect to the assessment for past and future economic loss: "5. As to his award for past economic loss, the claims assessor erred in the following respects: (a) He accepted that the expert accountant's evidence of the first defendant was fundamentally flawed (reasons at [23]), and yet he applied the figure of $410,938 for past economic loss (to 31 August 2016) without explanation (ibid). (b) He did so after making "adjustments" to these figures which he did not identify or explain at all. (c) He did so after expressing doubt about the correctness of the tables used by the first defendant's accountants to arrive at the figure he adopted, namely $410,938 (Table K); (d) He applied a figure, $410,938, for past economic loss without setting out why such a figure was selected and/or without determining whether or not that figure reflected the actual loss of the first defendant in that relevant period; (e) Further, the claims assessor adopted a figure of $1,893.72 for an additional net weekly calculation for 36 weeks for past economic loss without setting out from where he derived that figure or how it related to the first defendant's actual past earnings. (f) In the premises, the claims assessor has fallen into error of law in that plaintiff was denied procedural fairness by reason of the claim's assessor's failure and the decision is afflicted by legal unreasonableness as a result. He also failed to set out proper or lawful reasons for his assessment. (g) 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 did not reveal his actual path of reasoning and did not reveal how the claims assessor in fact formed or arrived at his conclusions. 6. As to his award for future economic loss, the claims assessor erred in the following respects: (a) In calculating the award, he undertook an "arithmetic approach" (reasons at [26]); (b) He adopted the expert accountants report of the first defendant as "a baseline approach" (reasons at [27]) without stating why and without having regard for or taking into account the fundamental flaws affecting that report that he had earlier identified and accepted (at reasons [23]); (c) He adopted a net weekly figure of $2,498.08 for the first defendant's future earnings without setting out or explaining from where that figure had been derived and why; (d) He adopted the figure of $2,498.08 without explaining why he had adopted a figure higher than that of $1,893.72 net weekly earnings that he determined related to past economic loss; (e) He made a determination that he would calculate future economic loss on the basis of an assumption that the first defendant would gradually wind back his business and his professional activities as he grew older (towards 70 years of age) but he made no adjustment in the vicissitudes figure or elsewhere and set out no reasons as to how he took this finding into account. (f) The above establishes that the claims assessor fell into error of law in making his assessment. (g) Further, 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 as to future economic loss, 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. (h) The claims assessor failed to perform his statutory duty pursuant to section 126 of the Act in that he failed to set out, as he was required to do, his assumptions as to the first defendant's likely future earnings, but for the motor vehicle accident. [Not pressed.] 7. The decision is affected by legal unreasonableness and it is therefore invalid in that: a. no sensible claims assessor acting with due appreciation of his responsibilities would have so decided; b. the claims assessor failed to give adequate weight to relevant factors of great importance; c. the claims assessor gave excessive weight to irrelevant factors of no importance; d. the claims assessor reasoned illogically or irrationally; e. the decision is a disproportionate response by reference to the scope of his power; f. the decision lacks evident and intelligible justification; and/or g. the decision bespeaks of legal error."
The Assessor's reasons reveal that he made his assessment based on the conference with the parties on 18 April 2017 as well as his consideration of the documents before him. He did so in the context of the task he was required to perform, which was relevantly to assess damages for past and future economic loss.

[9]

Supreme Court Act 1970 (NSW)

This Court's jurisdiction derives from s 69 of the Supreme Court Act, which relevantly provides: "69 Proceedings in lieu of writs (1) Where formerly: (a) the Court had jurisdiction to grant any relief or remedy or do any other thing by way of writ, whether of prohibition, mandamus, certiorari or of any other description, or (b) in any proceedings in the Court for any relief or remedy any writ might have issued out of the Court for the purpose of the commencement or conduct of the proceedings, or otherwise in relation to the proceedings, whether the writ might have issued pursuant to any rule or order of the Court or of course, then, after the commencement of this Act: (c) the Court shall continue to have jurisdiction to grant that relief or remedy or to do that thing; but (d) shall not issue any such writ, and (e) shall grant that relief or remedy or do that thing by way of judgment or order under this Act and the rules, and (f) proceedings for that relief or remedy or for the doing of that thing shall be in accordance with this Act and the rules. . . . (3) It is declared that the jurisdiction of the Court to grant any relief or remedy in the nature of a writ of certiorari includes jurisdiction to quash the ultimate determination of a court or tribunal in any proceedings if that determination has been made on the basis of an error of law that appears on the face of the record of the proceedings. (4) For the purposes of subsection (3), the face of the record includes the reasons expressed by the court or tribunal for its ultimate determination. (5) Subsections (3) and (4) do not affect the operation of any legislative provision to the extent to which the provision is, according to common law principles and disregarding those subsections, effective to prevent the Court from exercising its powers to quash or otherwise review a decision."
This Court's jurisdiction to set aside a decision under s 69 for error arises where there is an error of law on the face of the record (s 69(1) of the Supreme Court Act) or jurisdictional error: Kirk v Industrial Court of New South Wales (2010) 239 CLR 531; [2010] HCA 1.
The "record" for the purposes of establishing error of law on the face of the record includes the reasons attached by an assessor to a certificate issued under s 94. The authorities reveal two bases for the reasons being included as part of the record. The first basis is that the assessor is relevantly a "tribunal" within the meaning of s 69(3) of the Supreme Court Act and s 69(4) applies (as was assumed by the parties in Allianz Australia Insurance Ltd v Kerr (2012) 83 NSWLR 302; [2012] NSWCA 13, as noted by Basten JA at [17]). The second basis is that the effect of the requirement in s 94 that the reasons be given and attached to the certificate is to make the reasons part of the record: Pham v NRMA Insurance Ltd [2014] NSWCA 22 at [27] (Leeming JA, Tobias AJA agreeing).

[10]

Motor Accidents Compensation Act 1999 (NSW)

Chapter 4 of the Act makes provision for motor accident claims. Part 4.4 of the Act, which is contained in Ch 4, entitled "Claims Assessment and Resolution", provides for medical assessments, claims assessments and also for the regulation of compulsory third party insurers. Section 94, which is contained in Part 4.4 relevantly 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." [Emphasis added.]
As is evident from the highlighted portions of s 94, various statutory obligations are imposed on a claims assessor, including to make an assessment of damages being the amount of damages that a court would be likely to award, and to provide a statement of reasons for the assessment which is to be attached to the certificate.
Section 95 provides that, if a claimant accepts the assessment, the insurer is obliged to pay in accordance with the assessment. This obligation is subject to the insurer's right to challenge the assessment by invoking this Court's jurisdiction under s 69 of the Supreme Court Act. It is common ground that the claimant accepted the assessment in the present case.
Chapter 5 of the Act provides for awards of damages. Section 122(3), which is contained in Pt 5.1, provides that Ch 5 applies to assessments by claims assessors under Pt 4.4 in the same way as it applies to, and in respect of, an award of damages by a court.
Section 126 of the Act requires a court or assessor, if making an award of damages for future economic loss, to state the assumptions on which the award was based and the relevant percentage by which damages were adjusted.
Section 69(1) of the Act provides that SIRA may issue guidelines for or with respect to procedures for the assessment of claims under Part 4.4 and associated matters. SIRA has issued claims assessment guidelines effective 1 May 2014 (the Guidelines). Chapter 18 of the Guidelines provide as follows: "Chapter 18 - Certificate and statement of reasons 18.1 Upon completion of the assessment the Assessor is to issue a certificate under section 94 or 96. 18.2 A copy of the certificate and any statement of reasons should be provided to the PCA and each party within 15 days of the conclusion of any Assessment Conference, or in the absence of any Assessment Conference, within 15 days of the provision by the parties of all information and documentation sought by the Assessor at the Preliminary Conference or any date fixed by the Assessor. 18.3 The time fixed for the provision of the certificate and statement of reasons may not be extended by an Assessor except with leave of the PCA. 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. 18.5 The Assessor may at any time issue a certificate in accordance with an agreed settlement, provided the terms of the agreed settlement are reduced to writing, signed by or on behalf of the parties and sighted by the Assessor, and the Assessor is satisfied that the terms of the agreed settlement are issues upon which the Assessor has power to make an assessment. 18.6 The Assessor may with the consent of both parties provide reasons orally at the Assessment Conference provided that, in accordance with section 94(4) and (5), a certificate is issued with a brief written statement summarising those reasons."

[12]

The obligation imposed on an assessor to give reasons for the assessment

Decision-makers who are not judges are entitled to some latitude in an evaluation of whether their reasons are sufficient and their reasons are not to be construed with an eye attuned to the detection of error: Minister for Immigration and Ethnic Affairs v Liang (1996) 185 CLR 259; [1996] HCA 6 at 271-272.
The authorities in this area are replete with formulations as to what is required of claims assessors when discharging their statutory obligation to give reasons for their assessments. For example, in Allianz Australia Insurance Ltd v Kerr, when addressing the reasons required when awarding a buffer for future economic loss, Basten JA said at [59]: "While is it sometimes, but not always, true that lengthy reasons will give greater assistance and understanding than brief reasons, the obligation on the assessor was not to give lengthy reasons. The explanation provided was sufficient to warrant the award of a significant sum of money for future economic loss. The obligation imposed by statute did not require him to explain why some particular amount was chosen as opposed to another. Even in circumstances where this Court has intervened on an appeal by way of rehearing, the amount chosen has been identified with little explanation as to how the figure was selected: see, e.g., Werner v Krahe [2002] NSWCA 168 at [29] (Foster AJA, Hodgson JA agreeing); Sretenovic v Reed [2009] NSWCA 280 at [86] (McColl JA, Beazley JA agreeing); see also, in rejecting a challenge, Leichhardt Municipal Council at [34] and, in assessing a buffer, Ilic v O'Connor [2004] 2 DCLR (NSW) 249 at 264-265 (Patten DCJ)."
The High Court in Wingfoot Australia Partners Pty Ltd v Kocak (2013) 252 CLR 480; [2013] HCA 43 considered the obligation of a medical panel to give reasons as required by the Accident Compensation Act 1985 (Vic). The Court (French CJ, Crennan, Bell, Gageler and Keane JJ) said, of present relevance, at [55]: "The standard required of a written statement of reasons given by a Medical Panel under s 68(2) of the Act can therefore be stated as follows. The statement of reasons must explain the actual path of reasoning by which the Medical Panel in fact arrived at the opinion the Medical Panel in fact formed on the medical question referred to it. The statement of reasons must explain that actual path of reasoning in sufficient detail to enable a court to see whether the opinion does or does not involve any error of law. If a statement of reasons meeting that standard discloses an error of law in the way the Medical Panel formed its opinion, the legal effect of the opinion can be removed by an order in the nature of certiorari for that error of law on the face of the record of the opinion. If a statement of reasons fails to meet that standard, that failure is itself an error of law on the face of the record of the opinion, on the basis of which an order in the nature of certiorari can be made removing the legal effect of the opinion."
This statement of principle has been found to be applicable to the reasons required to be given by a claims assessor by s 94(5) of the Act: Zahed v IAG Ltd (t/as NRMA Insurance) [2016] NSWCA 55 at [34] (Emmett AJA, Meagher and Leeming JJA agreeing). Apparent gaps in the reasons required by s 94(5) may be filled by necessary inference: Zahed v IAG Ltd (t/as NRMA Insurance) at [6] (Leeming JA)
The purpose of the requirement for reasons for assessments made under s 94 of the Act (specifically in the context of s 126) is to produce a reasonable level of transparency so that those interested in the assessment can see how it was performed: Allianz Australia Insurance Ltd v Sprod (2012) 81 NSWLR 626; [2012] NSWCA 281 at [42] (Barrett JA, Campbell JA and Sackville AJA agreeing).

[16]

The claimant's submissions

Mr Deakin QC, who appeared with Mr Maxwell for the claimant, relied on the following passage, for the purposes of protecting the claimant's position on appeal. In Repatriation Commission v O'Brien (1985) 155 CLR 422; [1985] HCA 10, Brennan J said at 445-446: "[A] failure by a tribunal adequately to fulfil its statutory obligation to state the reasons for making an administrative decision does not, without more, invalidate the decision or warrant its being set aside by a court of competent jurisdiction."
Mr Deakin submitted that this dictum had been cited with approval in Sherlock v Lloyd (2010) 27 VR 434; [2010] VSCA 122 in the context of a decision which concerned the reasons of a medical panel under the Accident Compensation Act 1985 (Vic) and should be applied in the present case to protect the reasons of the Assessor from judicial review.
The claimant also contended that the reasons were sufficient to comply with s 94(5) of the Act. Mr Deakin argued that the Assessor's statement, "Having considered the contending forensic accountant's reports, I think that I should adopt the Furzer Crestani scenario 1 as my base line for calculation," was sufficient to incorporate the reasoning of the experts into the Assessor's reasons and that no more was required.
Mr Deakin submitted that it was open to the Assessor to accept the base figure of $410,938 on the basis of Scenario 1 in the first report since it was derived from a calculation of past economic loss which projected the claimant's earnings and deducted his actual earnings during the period from the date of the accident on 1 July 2012 to the date specified in the first report of 31 August 2016. Mr Deakin submitted that it was plain from the Assessor's reasons that he had divided the figure of $410,938 by 217, being the number of weeks between the date of the accident and 31 August 2016 to arrive at the figure of $1,893.72. This figure was then multiplied by 36 weeks, being the number of weeks between 31 August 2016 and the date of the assessment on 15 May 2017. Mr Deakin argued that it was sufficient that the Assessor rounded down the figure of $479,111.92 to $440,000. He submitted that it was necessarily implied by the preceding paragraphs that the rounding down was intended to give effect to the Assessor's reservations about the two criticisms made by Mr Gaudion (referred to as (d) and (e)), which he considered to have some substance (see [23] of the Assessor's reasons).

[19]

The claimant's submissions

Mr Deakin submitted that the reasons were sufficient because it was plain where the figures came from and how the calculations were performed. He contended that the figure of $2,496.08 was the figure calculated by Furzer Crestani in schedule M as being the actual loss of income per week projected into the future for the balance of the claimant's expected working life based on Scenario 1. He submitted that the path of reasoning was clearly set out in the first report and that the Assessor made it clear that he was adopting that path of reasoning.
Mr Deakin explained the basis of the figures by reference to the first report. A summary of his explanation is set out below.
Mr Deakin accepted that the apparent disparity between the net weekly figure of $1,893.72 (which applied to past economic loss up to 15 May 2017) and the substantially higher net weekly figure of $2,496.08 (which applied to future loss from that date) was potentially anomalous and, indeed, erroneous, but it was readily explicable. He submitted that the figures for the past were averaged and took into account that the claimant's actual income before tax. The claimant's income for the financial year ended 30 June 2014 (as depicted in Sch K) was $234,803 and his net (after-tax) income for that year (as depicted in Sch K) was $152,073 was more in line with his pre-accident earnings than other post-accident years.
Mr Deakin contended that it was open to the Assessor to use average figures for the past to bring the calculations which ended on 31 August 2016 up to the date of the assessment (hence the figure of $1,893.72 to 15 May 2017). Mr Deakin submitted that it was also open to the Assessor to accept that the claimant had, in effect, minimal residual earning capacity from the date of the assessment and therefore use a higher weekly figure for the future (on the basis that there would be no, or few, actual earnings). Accordingly the weekly loss for the past was necessarily less than the weekly loss for the future (in which the claimant's residual earning capacity was likely to be minimal). Mr Deakin submitted that it was open to the Assessor to conclude that the whole loss (of $2,496.08 per week) should be awarded for the future subject to the same discount which was applied to the figure for the past (see below), as well as the conventional discount of 15% for vicissitudes.
Mr Deakin argued that it was plain that the Assessor calculated the difference between $440,000 (the rounded down figure) and $479,111.92 (the figure in the table set out in [23] of the reasons) to arrive at a ratio of 91.84% and that this was the ratio applied to the amount for future loss in [27] of the Assessor's reasons.
Mr Deakin submitted that the Act did not intend that an assessor's reasons be subjected to the critical analysis contended for by Mr Robinson. He contended that even if I were satisfied that the disparity in the weekly figures revealed error (which he, in substance, conceded), the error was not one of law and therefore could not be corrected by this Court in the exercise of its jurisdiction under s 69 of the Supreme Court Act. He submitted that the insurer's arguments were an attempt to seek merits review of an assessment which it regarded as too high.
Mr Deakin also submitted that the insurer's remedy, if there be one, lay in s 95(6) of the Act. He argued that the insurer ought not to have invoked this Court's jurisdiction under s 69 of the Supreme Court Act in circumstances where it had not approached the Principal Claims Assessor to correct the error.

[20]

Consideration

The difficulty with the claimant's principal argument is that, while one can follow it when one is directed to the details of the first report, the path of reasoning is not sufficiently apparent from the Assessor's reasons. While I accept that it is possible to discern the provenance of the ratio of 91.84% applied in [27] of the reasons (by dividing the discounted figure for the past with the undiscounted figure for the past), the other matters raised by Mr Robinson have not been explained by the Assessor's reasons.
The dividing line between past and future economic loss is determined by the date on which damages are assessed. This date is necessarily arbitrary. Assessments of past and future economic loss are not independent: see the discussion in The Nominal Defendant v Aychahawchar [2015] NSWCA 58 at [3]-[4] (Basten JA) and [18] (Adamson J, Gleeson JA agreeing). A claimant's position at the date of assessment necessarily conditions the assessment of past and future economic loss. Although there is no provision equivalent to s 126 of the Act which requires assumptions as to the past hypothetical (what the claimant would have earned but for the accident) to be specified, the principle of coherence requires such assumptions to be made and, where there is a requirement for reasons to be given, that they be set out with sufficient clarity to expose the path of reasoning.
Thus, although it need not be the case that, if a mathematical approach is taken (by multiplying a weekly amount of net earnings by a multiplier), as opposed to the award of a buffer, the weekly amount up to the date of assessment will correspond with the weekly amount from the date of assessment, it will commonly transpire that they are. In the present case, the net weekly economic loss to 15 May 2017 was $1,893.72, whereas the net weekly economic loss from that date was $2,496.08, a difference in the order of $600 net. Had the Assessor given the explanation that Mr Deakin gave (which I have endeavoured to summarise above) this might, depending on how it was done, have exposed the actual path of reasoning sufficiently to comply with the statutory requirement for reasons. However, the Assessor did not give that, or any such explanation. Although resort can be had to the evidence beyond the record for the purposes of establishing jurisdictional error, reasons which are insufficient cannot be made sufficient by attempting to divine the Assessor's reasoning process from working out how the result in the reasons could have been arrived at from the evidence.
The apparent disparity of $600 between the figure for the past and the figure for the future is aggravated by the finding in [25] on which Mr Robinson relied, that the claimant would have worked less in the remaining years of his working life until he reached the age of 70. It is difficult to reconcile the finding with the disparity. The reasons do not indicate either the basis for the disparity or how the finding as to the claimant's likely future work patterns is to be reconciled with it. The discount of 15% for vicissitudes is standard, and therefore could not, without reasons to explain it, give rise to any necessary implication that it reflected the claimant's assumed diminishing work between his age at assessment and his retirement at the age of 70. Mr Deakin's suggestion that the assessor accepted the expert's figure, which was higher for the future because it was predicated on minimal residual earning capacity, notwithstanding the likely diminution in the claimant's working hours, is one possibility. However, the assessor was obliged to explain his reasons for making the assessment of future economic loss and was not entitled to leave the parties to guess what his reasoning process was.
I note that the insurer did not press the ground set out in 6 of the summons which is extracted and ruled through above. It was suggested by Mr Deakin that the insurer had, in effect, abandoned reliance on error as a result of non-compliance with s 126 of the Act. I consider that the submissions put by Mr Robinson fall within the ambit of the grounds in the summons that were maintained (which are extracted above). As I understood the insurer's submission on this point, it was that the finding as to likely future earnings (that the claimant would work less and spend more time with his grandchildren) could not be reconciled with the figures used in the calculation, not that the finding was not made. I have noted by square brackets in [25] of the Assessor's reasons that I consider the reference to s 136 to be a typographical error since I am persuaded by the context that the Assessor intended to refer to s 126, which in part requires the assumptions on which the award of future economic loss to be set out.
I reject Mr Deakin's argument that the insurer was obliged to seek to correct the error in the Assessor's reasons by approaching the Principal Claims Assessor as provided for in s 94(6). The "error" cannot reasonably be described as an "obvious error". Indeed the error is, as I have found, in the deficiency in the reasons and cannot be corrected through s 94(6).
I note for completeness that I was referred to several authorities in which the sufficiency of reasons pursuant to s 94(5) was considered. It is neither necessary nor helpful to recite the facts of these cases or the basis for the decisions since each decision turns on its facts. However, the decision of the Court of Appeal in Zahed v IAG Ltd provides an example of a case where an assessor made a finding which, on proper analysis, was neither derived from the evidence nor adequately explained, which required the assessment to be set aside. The assessor in that case applied a figure of 6.76 hours a week of domestic assistance into the future when none of the medical practitioners provided support for that figure, although one had opined that 6.76 hours had been required for a limited past period but that assistance at that level was no longer required. Leeming JA posed the following question and answer at [7]-[8]: "[7] 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."
The present case is not on all fours with Zahed v IAG Ltd because, as Mr Deakin's explanation set out above shows, there was a basis in the evidence for the Assessor's approach. However, as in Zahed v IAG Ltd, there was no explanation of matters that required explanation. In the present case, the Assessor's reasons did not reveal the answer to the following question: What was the reasoning process which led the Assessor to calculate past economic loss on the basis of $1,893.72 per week and future earning capacity on the basis of $2,496.08 per week in circumstances where the Assessor found that the claimant would probably be gradually winding back his business and professional activities, as he grew older, and his financial need to work reduced, as the number of his grandchildren increased? The Assessor failed to disclose his reasoning process on the critical integer of $2,496.08 at all. It was not enough for the claimant merely to say in this Court that it was the figure put forward by the claimant's expert in the first report: see also Allianz Australia Insurance Ltd v Habib [2015] NSWSC 1719 at [38]-[39] (Beech-Jones J). I do not accept that, by saying that he was adopting the baseline approach in the first report as the basis for the award of future economic loss, the Assessor ought be taken to have adopted the expert's "path of reasoning" or that this was sufficient to discharge the Assessor's obligation to give reasons for his assessment. The first report revealed how the amount was calculated on the assumptions on which it was based. However, its authors did not engage in a reasoning process such as was required of the Assessor. I reject Mr Deakin's submission that the Assessor incorporated the first report by referring to it in his reasons or that, if he did so, it revealed any path of reasoning, as opposed to calculations based on assumptions.
It may be, as Mr Deakin submitted, that Parliament did not envisage, when it made provision in the Act for claims assessments to be undertaken by claims assessors rather than judges, that s 69 of the Supreme Court Act would be used with such apparent frequency to challenge such assessments. However, the requirement in s 94(5) that an assessor give reasons which are to be attached to the certificate makes the reasons (and therefore the reasoning process) amenable to judicial review. When its jurisdiction under s 69 of the Supreme Court Act is invoked in a case such as the present, this Court is obliged to determine whether a particular statutory authority (in this case, the Assessor) has failed to carry out his statutory function (in this case to give reasons which reveal his reasoning process): Insurance Australia Ltd (t/as NRMA Insurance) v Milton [2016] NSWCA 156 at [7] (Basten JA).
The distinction between a successful challenge to an assessment on the basis of the Assessor's reasons on the one hand and merits review of an assessment of damages (such as may be undertaken by the Court of Appeal under s 75A of the Supreme Court Act on appeal from the assessment of damages under the Act by a judge) on the other, is fundamental. In the former case, the Court's obligation is merely to determine whether an error of law on the face of the record, or jurisdictional error, has been established and, if so, to grant relief, if appropriate. Such relief will be confined to setting aside the certificate and remitting the assessment to be determined in accordance with law. In the latter case, the role of the Court of Appeal is, where error (whether of law, fact or discretion) is shown, to conduct the assessment itself.
I can deal briefly with Mr Deakin's argument that this Court ought not intervene because what Brennan J said in Repatriation Commission v O'Brien had been cited with approval in Sherlock v Lloyd. As the argument was raised without notice to the insurer, it is not appropriate that I deal with it comprehensively, particularly as Mr Deakin accepted that the authorities by which I am bound in New South Wales required me not to accept it. However, I note that the Victorian Court of Appeal in Sherlock v Lloyd held, at [74], that, as there was no statutory obligation on the medical panel to provide reasons for its opinion, the medical panel's failure to provide adequate reasons was not an error of law. The present case is plainly distinguishable from Sherlock v Lloyd as the Assessor was obliged, by s 94(5) of the Act and cl 18.4 of the Guidelines, to give reasons. In addition, the High Court in Wingfoot Australia Partners Pty Ltd v Kocak decided, by reference to wording that is similar to s 94 of the Act, that a medical panel appointed under the Accident Compensation Act 1985 (Vic) was obliged to give reasons and that, if they were inadequate, this would constitute an error of law. I note that Sherlock v Lloyd was considered in Wingfoot Australia Partners Pty Ltd v Kocak. The relevant provision in the Accident Compensation Act 1985 (Vic) had been amended after Sherlock v Lloyd and before Wingfoot Australia Partners Pty Ltd v Kocak to require the medical panel to give reasons (which makes it relevantly indistinguishable from s 94 of the Act): see the discussion of the amendment and the reasons for it in Wingfoot Australia Partners Pty Ltd v Kocak at [52]. The High Court held in [53] that: "[T]he amendment to s 68(2) of the Act [the Accident Compensation Act 1985 (Vic)] had the result, already explained, that failure of reasons given by a Medical Panel to comply with the statutory standard is now an error of law on the face of the record of the opinion of the Medical Panel, so that an order in the nature of certiorari is now available to remove the legal consequences of an opinion for which non-compliant reasons were given. . ." [Emphasis added.]
I reject Mr Deakin's argument that the Assessor's failure to provide sufficient reasons was not an error of law as it is inconsistent with what the High Court said in Wingfoot Australia Partners Pty Ltd v Kocak at [53] and [55] in the passages highlighted in the extracts above.

NRMA Insurance Limited v Mulcahy

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