RACQ Insurance Ltd v Motor Accidents Authority of NSW

Judgment 1The plaintiff insurer seeks judicial review of the assessment of the damages payable to the third defendant (claimant) for personal injury received in a motor accident. Claims Assessor Buckley of the Motor Accidents Claims Assessment and Resolution Service made the assessment under s 94 of the Motor Accidents Compensation Act 1999 (NSW).

The Claimant was injured in a motor accident. 2The claimant suffered severe injuries in a head-on collision on the Sturt Highway in the Riverina area of New South Wales. She was a resident of Murtoa in country Victoria. The collision was caused by the negligence of the driver of an oncoming motor vehicle insured by the insurer. That driver was a Queensland resident and his vehicle was registered and insured in that State. The Queensland driver caused the collision by allowing his vehicle to drift onto the wrong side of the road where it collided with the claimant's vehicle. In his statement of reasons attached to the certificate of assessment under s 94 of the Act, assessor Buckley assessed the claimant's damages as follows (at page 13 [31]): Non-economic loss $240,000.00 Past treatment (including s 83 payments) $277,038.06 Future treatment $79,940.00 Future commercial care $59,055.00 Total damages $656,033.06 3Of these allowances, only the sum of $240,000 for non-economic loss is challenged. The insurer says that errors made in making that allowance vitiate the validity of the certificate and it should be set aside with the matter remitted to the Motor Accident Claims Assessment and Resolution Service for redetermination according to law.

Basis of the challenge 4As I explained in an earlier interlocutory judgment ([2014] NSWSC 803), the errors relied on to engage the jurisdiction of this court, although categorised in various ways, fall into two broad categories. The first concerns the assessment made of the claimant's life expectancy; the second is about the allowance made for non-economic loss damages. As will be obvious, these matters are closely, but not completely, interrelated. 5Before addressing the arguments of the active parties, I will say something more about the assessor's reasons.

The assessor's reasons 6The assessor found the claimant to be a credible, reliable witness who gave her account without embellishment (p3 [7]). She suffered severe orthopaedic injuries involving multiple fractures to both her left and right legs, a left shoulder injury, soft tissue injuries to her elbows, face, chest and legs, a sternal injury and "consequential psychiatric illnesses, diagnosed as a post-traumatic stress disorder and a depressive disorder". 7The assessor described the course of the treatment and rehabilitation of the claimant as "a lengthy, harrowing experience". She underwent multiple operations during initial treatment as an inpatient for 55 days. She had a further 3 months of inpatient treatment at the Victorian Rehabilitation Centre. More surgery was later undertaken for the removal of the plates and screws by which the fractures of her right and left feet had been fixed. She received extensive psychiatric treatment. 8The assessor rejected a claim that the claimant incurred a traumatic brain injury in the car accident resulting in cognitive deficit, but he accepted that the long-term prognosis of the psychiatric disabilities is guarded. The psychiatric illness was "significant" and (along with the physical injuries) compromised her leisure activities. 9The assessor accepted that the claimant's physical injuries were also significant and that the injuries to her left and right feet were severe. They continued to be symptomatic and disabling "which as a matter of likelihood will permanently cause her pain, restriction of movement and mobility that will impact upon most aspects of her life"(p4 [14]). Her previous leisure activities of golf and strenuous bushwalking are now beyond her. The assessor accepted the claimant had difficulty sleeping and the level of pain was such as to require opiate based treatment. The right foot injury is developing post-traumatic arthritic change, which will deteriorate inexorably, and the resulting increasing pain levels will necessitate surgery to fuse the joints in her foot. 10When dealing with the issue of he claimant's life expectancy, the assessor recorded that she had been born on 26th December 1936, was 72 years of age at the date of accident and 77 at the date of his assessment. In accordance with the median life expectancy tables conventionally used in personal injuries assessments, a woman of her age had a "statistical life expectancy of a further 13.3 years" (p5 [17]). However, there was a dispute between the medical experts about whether reduction in this should be made in the plaintiff's case because of her lengthy history of cigarette smoking and her cardiac disease resulting in a "double by-pass operation". These considerations led Dr Slezak, for the insurer, to estimate that the claimant was unlikely to survive beyond 7 to 9 years. 11As against Dr Slezak's opinion, Dr Burdon, a specialist respiratory physician who had arranged for lung function tests to be carried out, expressed a more favourable view. The lung function tests showed normal spirometry diffusing capacity. He was of the view there was no significant lung disease, surprising as this result was given her history of cigarette smoking. In his opinion, the claimant's life expectancy had not been reduced. The assessor preferred the view of Dr Burdon. He rejected Dr Slezak's opinion because he did not refer to Dr Burdon's report and the respiratory function test results. Moreover, Dr Slezak expressed himself as follows: On the (limited) medical evidence as available to me, I would assess [the claimant's] life expectancy to be a further 7 - 9 years. At p6 [20] of his reasons, the assessor said: I am of the view, shared by Dr Slezak, that his opinion is of limited utility. He did not have available to him the lung function evidence and opinion of Dr Burdon, which I note was provided well before Dr Slezak's examination. In such circumstances I prefer the opinion of Dr Burdon. It should be borne in mind that the average life expectancy is just that, an average. There are unders and overs. (original emphasis) (minor typographical error corrected). 12The insurer says that this finding is erroneous constituting error of law on the face of the record because the assessor misstated the effect of Dr Slezak's opinion. Alternatively, this was jurisdictional error. 13In assessing damages for non-economic loss the assessor rejected the reliance by the insurer on Reece v Reece (1994) 19 MVR 103, and by reference to Varga v Galea [2011] NSWCA 76 at 73 said: "age is but one factor in the total equation" (p12 [28]) (there is some duplication of paragraph numbering in the assessors reasons). Age was relevant because it informs the estimate of the "period during which the person shall endure the pain, suffering and loss of amenities of life". The assessor referred to "the intensity of the claimant's extreme level of suffering" during the initial period, her circumstances during the five years since the accident, and the consideration that he had assessed her life expectancy to be a further 13 years. 14He said at pp12-3[29] - [30]: The assessment of damages for non-economic loss entitlement is one which should be governed by reference to the values of today. It should be noted that the Act came into operation in October 2009 [should be 1999], and the maximum amount at that point of time allowed for non-economic loss damages was $260,000.00. It is now some $477,000.00, an increase of 83%. It is clear that the Act provides a mechanism whereby the maximum amount allowable for non-economic loss damages is increased every year to accommodate for the changing values of the dollar, CPI, wage rates, all of the extraneous indicia which testify to the diminishing purchasing power of the dollar. It is in my view a commonly disregarded intrinsic principle that the assessment of common law awards of general damage must be made in the "money of today", that is at the time of the award of damages. In Lee Transport Company v Watson (1940) 64 CLR 1 at 14, Dixon J stated that- ".....the figures to which former times courts grew accustomed, ought not govern out notions of what should be awarded in the terms of money of today with its reduced purchasing power." I have had regard to the submissions by both parties, noting that as against the insurer's submission, the claimant proposed a figure of $260,000.00. I have had regard to the claimant's age, the intensity of her pain and suffering, the likelihood of future surgery and what she has lost by reference to her very active lifestyle that she had before this accident. I am of the view that an appropriate figure for non-economic loss damages is $240,000.00 15In making this assessment, the insurer said that the assessor erred in principle in failing to apply Reece v Reece; took into account an irrelevant consideration, being that the cap provided for in s 134 of the Act had increased by 83 per cent since the commencement of the Act in October 1999; by providing inadequate reasons for his assessment; and making an assessment which was "manifestly unreasonable" in the administrative law sense. 16The claimant argued that the assessor did not fall into error; if he did the errors were purely factual and within jurisdiction; Reece did not apply to the assessment of non-economic loss under the Act, rather common law principles applied; the assessor gave adequate reasons to support his assessment of non-economic loss; the assessment was not disproportionate to the claimant's injuries and disabilities as he found them to be; the passage at p12 [29] of his reasons did no more than correctly direct himself that the assessment of damage was to be made in today's money, and to this extent, the changing value of money over the previous years was relevant especially when supported by the assessor's reference to Watson.

Disposition 17The Motor Accidents Claims Assessment and Resolution Service is not a court of law, it is an administrative tribunal. For present purposes it is sufficient for me to call to mind Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30; 206 CLR 323 at [82]: It is necessary, however, to understand what is meant by "jurisdictional error" under the general law and the consequences that follow from a decision-maker making such an error. As was said in Craig v South Australia, if an administrative tribunal (like the Tribunal) "falls into an error of law which causes it to identify a wrong issue, to ask itself a wrong question, to ignore relevant material, to rely on irrelevant material or, at least in some circumstances, to make an erroneous finding or to reach a mistaken conclusion, and the tribunal's exercise or purported exercise of power is thereby affected, it exceeds its authority or powers. Such an error of law is jurisdictional error which will invalidate any order or decision of the tribunal which reflects it." "Jurisdictional error" can thus be seen to embrace a number of different kinds of error, the list of which, in the passage cited from Craig, is not exhaustive. Those different kinds of error may well overlap. The circumstances of a particular case may permit more than one characterisation of the error identified, for example, as the decision-maker both asking the wrong question and ignoring relevant material. What is important, however, is that identifying a wrong issue, asking a wrong question, ignoring relevant material or relying on irrelevant material in a way that affects the exercise of power is to make an error of law. Further, doing so results in the decision-maker exceeding the authority or powers given by the relevant statute. In other words, if an error of those types is made, the decision-maker did not have authority to make the decision that was made; he or she did not have jurisdiction to make it. Nothing in the Act suggests that the Tribunal is given authority to authoritatively determine questions of law or to make a decision otherwise than in accordance with the law. (Emphasis added)

Life expectancy 18Applying this approach, which I remind myself is not exhaustive, it may be a relevant error for the assessor to palpably misconstrue Dr Slezak's expression of opinion by giving it a meaning not reasonably open. If this is what happened, there is no question in my mind that this error in assessing life expectancy was dispositive because the decision about life expectancy affected the exercise of the assessor's power by affecting in a material way the assessment of non-economic loss. 19The error asserted is that Dr Slezak's reference to "limited" evidence qualifying his estimation of life expectancy could not be construed as a statement by him that his opinion is of "limited utility". 20I interpolate that the insurer attempted to introduce evidence demonstrating that its solicitors had provided Dr Slezak with the report of Dr Burdon which included the results of pulmonary function testing. The rejection of this evidence is dealt with in my interlocutory judgment. The insurer's solicitors could not be criticised for the efficiency with which they prepared the insurer's case before the assessor. 21The fact remains, however, that Dr Slezak did not refer to Dr Burdon's report including the test results and this did limit the "utility" of his opinion. In my view, the assessor's observation about that was a fair reading of Dr Slezak's own express qualification of his opinion and I am not satisfied that the asserted error has been made good. 22For what it is worth, the assessor was entitled to choose between the competing opinions of Dr Burdon and Dr Slezak. Given that Dr Burdon had the benefit of the pulmonary function test results, the assessor's preference for his view over Dr Slezak's was not in any way unreasonable or otherwise unjustifiable.

Damages for non-economic loss 23Entitlement to damages for non-economic loss under the Act is conditioned upon the claimant suffering a degree of permanent impairment as a result of the accident caused injuries "greater than 10 per cent" (s 131 of the Act). In the event of a dispute about the degree of permanent impairment, it must be assessed by a medical assessor under ss 60 and 133 of the Act. The present claimant has been assessed as having a permanent impairment greater than 10 percent. 24S 134 of the Act fixes a "cap" or maximum amount that a court may award for damages for non-economic loss. 25Unlike ss 79 and 79A of Motor Accidents Act 1988, and s 16 Civil Liability Act 2002 (NSW) for that matter, s 134 of the Act does not adopt an approach to assessment predicated upon the concept of proportionality in percentage terms to "a most extreme case" of non-economic loss. In Hodgson v Crane [2002] NSWCA 276; 55 NSWLR 199 at [39] Heydon JA (as he then was) (Sheller JA, and Davies AJA (more or less), agreeing) said at [39]: On the true construction of ss 131-134, once the s 131 threshold of 10 per cent permanent impairment is passed, the court is to assess damages for non-economic loss without any statutory restraint, save that no more than $284,000 may be awarded, provided the court has regard to information published by the Motor Accidents Authority as required by s 135. The absence of "any statutory restraint" requires a court, and therefore an assessor, to adopt the common law's methodology for the assessment of damages for non-economic loss. There is no evidence before me that the Motor Accidents Authority has published information to assist courts to determine the appropriate level of damages in accordance with s 135. (Neither is the availability of such material obvious from the Authority's website). If such information is available it was not put before the assessor. 26Of course, the idea of proportionality has its part to play in the common law assessment of general damages. In Planet Fisheries Pty Ltd v La Rosa (1968) 119 CLR 118 the Court (Barwick CJ, Keeto and Menzies JJ, at 124 - 125 said: It is the relationship of the award to the injury and its consequences as established in the evidence in the case in question which is to be proportionate. It is only if, there being no other error, the award is grossly disproportionate to those injuries and consequences that it can be set aside. Whether it is so or not is a matter of judgment in the sound exercise of a sense of proportion. It is not a matter to be resolved by reference to some norm or standard supposedly to be derived from a consideration of amounts awarded in a number of other specific cases.... The principle to be followed in assessing damages is, in our opinion, not in doubt. It is that the amount of damages must be fair and reasonable compensation for the injuries received and the disabilities caused. It is to be proportionate to the situation of the claimant party and not to the situation of other parties in other actions, even if some similarity between their situations may be supposed to be seen. (emphasis added). I would understand, in particular, that the passage I have emphasised explains the difference between the common law approach, on the one hand, and the statutory modifications of it as exemplified by s 16 of the Civil Liability Act, on the other. Moreover, one could amplify what their Honours said by observing that in assessing damages for non-economic loss under the Act (always subject to s 135), the damages awarded are not required to be proportionate to the situation of other parties in other actions even if some similarity, or difference, between their situations may be supposed to be seen.

Error of principle 27If this is correct then any principle to be derived from Reece has no application. There, the Court of Appeal (Handley JA, Clarke and Sheller JJA agreeing) considered the application of the percentage proportionality principle established by s 79 of the Motor Accidents Act (the progenitor of s 16 Civil Liability Act). At 105 Handley JA said: The difficulty, in my opinion, with his Honour's assessment is to reconcile it with the assessment that might properly be made in the case of a much younger woman, say 30 years old, who before her injury had a similar range of interests and hobbies but had young children to help bring up and who, of course, faced a much longer period during which she would experience the pain, the disabilities and the progression of her condition. It seems to me that when one seeks to compare the position of this plaintiff with a woman, say, 30-35 years younger than herself at the date of injury, it becomes evident that an assessment of this plaintiff as being 1/3 of a most extreme case is a wholly erroneous assessment and disproportionate to a true assessment of the extent of her loss. In Hall v State of New South Wales [2014] NSWCA 154 at [29] Leeming JA said of s 79 - type modifications of the common law approach that their "purpose is to replace the former process of awarding a money sum by way of general damages by an obligation to evaluate the severity of the non-economic loss by reference to a proportion of a most extreme case. That proportion is, by the operation of statute, translated into a monetary amount." 28It will be relevant later to observe that Leeming JA, following Berkley Challenge Pty Ltd v Howarth [2013] NSWCA 370 (by Basten JA at [13]), regarded the statutory modification as calling for the making of a finding of evaluative fact, not the exercise of discretionary power (at [32]). In Watson (at 13) Dixon J said of the common law approach to the assessment of general damages applicable here: The standards by which the amount of general damages is to be fixed are indefinite and uncertain, and to estimate the sum to be awarded involves the exercise of a form of discretionary judgment. 29It is clear then that Reece does not apply. For that matter, strictly, nor does Varga v Galea, referred to by he assessor; it is concerned with s 16 of the Civil Liability Act. The assessor did not err by not applying Reece.

Irrelevant consideration 30I agree with the insurer's argument that it would have been irrelevant in the exercise upon which the assessor was engaged, by reference to the principles discussed in Planet Fisheries, and in Watson, for the assessor to inflate the amount which he would otherwise have awarded by reference to the adjustments, pursuant to s 146 of the Act, of the s 134 cap. As it happens these adjustments, so far, have been ever upwards. But the maximum has no bearing on the amount proportionate to the claimant's injury; it simply "caps" what may be awarded. However, I do not think that is what the assessor did. He gave the trend of those adjustments as an example reflecting the changes in the value of money which, in the prevailing economic conditions, have diminished its purchasing power. His reference to passage from p 14 of Watson at the end of p12 [29] makes this clear. It was permissible for the assessor to have regard to that dictum, as s 94 required him to assess "the amount of damages that a court would be likely to award".

Adequacy of reasons 31The circumstances of the present case do not require a detailed exposition of the content of the duty of an assessor to give reasons for the assessment as required by s 94(5) of the Act. This has been essayed a number of times in the Court of Appeal: see for example Allianz Australia Insurance Limited v Kerr [2012] NSWCA 13; 83 NSWLR 302 at [61]. In a different but analogous legislative context in Wingfoot Australia Partners Pty Ltd v Kocak [2013] HCA 43; 303 ALR 64 at [55], the High Court of Australia discussed the content of the obligation of a medical panel to provide a written statement of its reasons for its opinion. Adapting their Honours' languaue, the statement of reasons of an assessor must explain the actual path of reasoning in sufficient detail to enable a court to see whether the assessment 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 assessor made his assessment, the legal effect of the assessment can be removed by an order in the nature of ceritiorari for that error of law on the face of the record. 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 assessment on the basis of which an order in the nature of ceritiorari can be made removing the legal effect of the assessment. 32However, in assessing the adequacy of the assessor's reasons according to that standard one does not focus on the four paragraphs appearing under the heading "the assessment of the plaintiff's entitlement to non-economic loss damages" commencing on p 12. It is necessary to read the assessor's reasons fairly, and as a whole. It is inappropriate to carry out that task with an eye too finely attuned to the detection of error. 33The whole of the assessor's reasons actually expressed are relevant, but especially the reasons expressed over three pages dealing with the extent of the claimant's physical and psychiatric injuries, the duration of consequential incapacitating symptomatology, and the claimant's life expectancy (see [6]-[14] above). Moreover, the findings relating to ongoing need for treatment, curative apparatus, home modification and attendant care services also cast light on the conclusions reached about, relevantly in this case, pain and suffering (including loss of enjoyment of life) and loss of amenities of life, always accepting there must be no double counting in the allowances. 34I have summarised above (at [6]-[14]) the findings made by the assessor about the nature and extent of the plaintiff's injuries and disabilities and their likely duration including the manner in which they interfere with her ability to lead a normal life in accordance with her pre-injury capabilities. In my judgment, there is no legal inadequacy in the assessor's reasons.

Manifest unreasonableness 35This leaves the final ground which is manifest unreasonableness in the sense discussed in Minister for Immigration and Citizenship v Li [2013] HCA 18; 249 CLR 332. If made good, this ground will constitute jurisdictional error. 36As I have said already, the assessment of damages for non-economic loss under the Act requires the exercise of a discretionary power conferred on the assessor by statute. As the plurality judgment in Li points out, statutory powers are required to be exercised according to the "standard of reasonableness" at (362 [64]). Their Honours point out that courts must always be conscious "of not exceeding their supervisory role by undertaking the review of the merits of an exercise of discretionary power" (363 [66]). Their Honours added: Properly applied, a standard of legal reasonableness does not involve substituting a court's view as to how a discretion should be exercised for that of a decision-maker. 37Jurisdictional error on the ground of unreasonableness extends beyond so-called "Wednesbury unreasonableness" as discussed by Lord Green MR in Associated Provincial Picture Houses Limited v Wednesbury Corporation [1948] 1KB 223 (Li at 364 [68]). 38The plurality justices concluded their analysis at 366 [75] - [76] in the following terms: In Peko-Wallsend ((1986) 162 CLR 24 at 41-2), Mason J, having observed that there was considerable diversity in the application by the courts of the test of manifest unreasonableness, suggested that "guidance may be found in the close analogy between judicial review of administrative action and appellate review of a judicial discretion". House v R (at 504-5) holds that it is not enough that an appellate court would have taken a different course. What must be evident is that some error has been made in exercising the discretion, such as where a judge acts on a wrong principle or takes irrelevant matters into consideration. The analogy with the approach taken in an administrative law context is apparent. As to the inferences that may be drawn by an appellate court, it was said in House v R (at 505) that an appellate court may infer that in some way there has been a failure properly to exercise the discretion "if upon the facts [the result] is unreasonable or plainly unjust". The same reasoning might apply to the review of the exercise of a statutory discretion, where unreasonableness is an inference drawn from the facts and from the matters falling for consideration in the exercise of the statutory power. Even where some reasons have been provided, as is the case here, it may nevertheless not be possible for a court to comprehend how the decision was arrived at. Unreasonableness is a conclusion which may be applied to a decision which lacks an evident and intelligible justification. Their Honours "analogy" is very apparent in the present context. The rules of restraint informing the exercise of a court of appeal's power to review an award of general damages at common law are derived directly from House v R (1936) 55 CLR 499: see Moran v McMahon (1985) 3 NSWLR 700; Wilson v Peisley (1975) 50 ALJR 207; Gamser v Nominal Defendant (1977) 136 CLR 145; Berkley Challenge Pty Ltd v Howarth [2013] NSWCA 70 [9] - [12], by Basten JA; [25] per Meagher JA; and [75] - [76] per Tobias AJA. 39Applying this approach to the present case, for the reasons I have already given I am not satisfied that the assessor acted on a wrong principle or took irrelevant matters into consideration. Nor does it seem to me, having regard to the facts as found by the assessor (see [6]-[14] above), that his assessment of non-economic loss is either wholly unreasonable or plainly unjust. Reading his reasons as a whole, I am not persuaded that the assessment of non-economic loss in this case "lacks an evident and intelligible justification". I am not satisfied that the allowance made is wholly disproprortionate to the injuries suffered by the claimant and their consequences as found and described by the assessor. 40My orders are: (1)Summons dismissed; (2)The plaintiff is to pay the third defendant's costs of and incidental to the proceedings on the ordinary basis after they have been agreed or assessed.

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: 22 August 2014