Zurich Australia Insurance Limited v Drca and Ors - [2018] NSWSC 1945 - NSWSC 2017 case summary — Zoe

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Zurich Australia Insurance Limited v Drca and Ors

[2018] NSWSC 1945

Supreme Court of NSW|2017-12-08|Before: Johnson J, Ms J

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2017-12-08

Before

Johnson J, Ms J

Catchwords

[2015] NSWSC 122 Allianz Australia Insurance Ltd v Habib (2015) 73 MVR 412
[2015] NSWSC 1719 Allianz Australia Insurance Ltd v Kerr (2012) 83 NSWLR 302
[2012] NSWCA 13 Allianz Australia Insurance Ltd v Sprod (2012) 81 NSWLR 626
[2012] NSWCA 281 Allianz Insurance Limited v Larriera [2016] NSWSC 441 Craig v South Australia (1995) 184 CLR 163

Source

Original judgment source is linked above.

Catchwords

[2015] NSWSC 122 Allianz Australia Insurance Ltd v Habib (2015) 73 MVR 412[2015] NSWSC 1719 Allianz Australia Insurance Ltd v Kerr (2012) 83 NSWLR 302[2012] NSWCA 13 Allianz Australia Insurance Ltd v Sprod (2012) 81 NSWLR 626[2012] NSWCA 281 Allianz Insurance Limited v Larriera [2016] NSWSC 441 Craig v South Australia (1995) 184 CLR 163[1995] HCA 58 Graham v Baker (1961) 106 CLR 340[1961] HCA 48 IAG Limited v Sleiman [2017] NSWSC 1346 Malec v JC Hutton Pty Ltd (1990) 169 CLR 638[1990] HCA 20 Mulcahy v NRMA Insurance Limited (2018) 85 MVR 337[2013] HCA 43 Zahed v IAG Ltd (t/a NRMA Insurance) (2016) 75 MVR 1Ms J Gumbert (Plaintiff) Mr BJ Gross QCMr FD Curran (First Defendant) Submitting Appearances (Second and Third Defendants)

Judgment (17 paragraphs)

[1]

[4]

The Claims Assessment

On 23 May 2017, Mr Drca's claim was heard at a general assessment conference. He was 33 years of age at the time of assessment.
The Claims Assessor assessed the claim in his capacity as a SIRA appointed assessor under s.99 MAC Act.
It was undisputed that Mr Drca had suffered soft tissue injuries to his cervical spine, lumbar spine, right shoulder and both knees as a result of the accident. It was also agreed that he had suffered some psychological injury.
It was agreed between the parties that Mr Drca had no entitlement to non-economic loss.
It was accepted that Mr Drca had suffered impairment to his past earning capacity as a result of the accident and would necessarily be entitled to an award for past economic loss.
The issues for determination by the Claims Assessor were: 1. The medical consequences of the motor accident. 2. Amount of past treatment expenses. 3. Amount of future treatment expenses. 4. Amount of past economic loss. 5. Entitlement to and amount of future economic loss. 6. Entitlement to and amount of past gratuitous attendant care. 7. Entitlement to and amount of future attendant care.
On 8 June 2017, the Claims Assessor issued a certificate in accordance with s.94(4) MAC Act which assessed damages in the sum of $767,395.44. Written reasons and details of the assessment were attached to the certificate, indicating a total sum of $767,359.44.
It is apparent that the figure in the reasons was mistaken (a typographical error) with the accurate figure being that contained on the certificate. No point was taken in this respect at the hearing of the Summons.
The Claims Assessor awarded Mr Drca damages in the total sum of $767,395.44. The claim was assessed as follows (page 9 of reasons): Economic losses • Past loss of earnings (incl. superannuation and Fox v Wood) $334,185.28 • Future loss of earnings (incl. superannuation) $331,168.16 • Past treatment $64,042.00 • Future treatment $30,000.00 • Past gratuitous care $ Nil • Future gratuitous care $Nil • Past commercial care $ Nil • Future commercial care $8,000.00 • Interest $Nil • Other $Nil Total of economic loss and non-economic loss $767,359.44 Reduction for contributory negligence • $Nil

[8]

Past Economic Loss

The Claims Assessor noted that Mr Drca sought an award of $1,144.00 per week for past economic loss from the date of the accident to the date of the assessment, less three days actually worked. Including superannuation at 9%, this amounted to a total claim of $334,185.28.
It was also noted that Zurich had conceded an award of $1,300.00 net per week for nine months, which reflected an amount close to the workers compensation payback figure.
Given the issues raised in these proceedings, it is appropriate to set out the reasons of the Claims Assessor concerning the claim for past economic loss: "19. Mr Drca seeks an award of past-economic loss at $1,144.00 per week, from the date of the motor accident, to the present date, less three days actually worked. That amounts to $306,592.00 plus superannuation at 9% ($27,593.28). 20. The Insurer relies upon the opinion of Dr Menogue that there was no injury or impairment that would prevent Mr Drca's returning to his previous injury hours and duties. Dr Menogue concluded that Mr Drca did not suffer a present or future earning capacity impairment. The Insurer notes that Mr Drca's qualified orthopaedic surgeon, Dr Guirgis, conceded that Mr Drca was at least fit for suitable duties. The Insurer concedes nine months at $1,300.00 net per week which is almost exactly the worker's compensation payback figure. 21. I do not accept Dr Menogue's opinion. As noted previously, Mr Drca has a combined 14% whole person impairment, due to injuries caused by the motor accident. He has undergone a considerable amount of psychological treatment funded by the worker's compensation insurer. MAS Assessor Dr Parmegiani found that his current psychological symptoms would most probably have a mild adverse effect on his ability to return to work in that he would be unable to work full-time in his pre-injury occupation. I accept that Mr Drca's situation has been such that he has not been motivated to return to work. I do not think that he has failed to mitigate his loss. He has undertaken an English Second Language (ESL) course without success. He has complied with the rehabilitation programme organised by the worker's compensation insurer. I note from Mr Drca's 2012 income tax return that he was earning $1,081.13 net per week in that year. That accords with the wages earned by his nominated comparable worker Mr Komazec. I propose to allow the full amount of past economic loss in the sum of $334,185.28 as claimed."
Accordingly, the Claims Assessor awarded the full amount of $334,185.28 as claimed.

[9]

Future Economic Loss

The Claims Assessor noted that Mr Drca sought an award of $800.00 net per week, after allowance for his ability to carry out light duties to the age of 70 years on the 5% tables, less 15% for vicissitudes. In addition, Mr Drca sought a buffer of $50,000.00 for loss of earning capacity. Mr Drca relied on the current earnings of a former colleague as evidence of the earnings of a comparable employee. The Claims Assessor stated that no authority had been cited by Mr Drca in support of the proposition that an award for future economic loss may be awarded on the bases of a mathematical calculation in addition to a buffer.
Zurich maintained its reliance on the opinion of Dr Menogue and repeated its submission concerning past economic loss to the award for future economic loss. In effect, Zurich submitted that no allowance should be made for future economic loss.
Before turning to assess the award for economic loss, the Claims Assessor stated he was satisfied that there had been a reduction in Mr Drca's earning capacity likely to be causative of loss, in accordance with the decisions of the High Court in Graham v Baker (1961) 106 CLR 340; [1961] HCA 48 and Malec v JC Hutton Pty Ltd (1990) 169 CLR 638; [1990] HCA 20.
In making his assessment, the Claims Assessor relied on a Vocational Assessment report dated 13 October 2016 prepared for Mr Drca by Ross Girdler, Rehabilitation Consultant, and an Earning Capacity Assessment report dated 20 November 2015 prepared for Zurich by Dr Robin Mitchell and Muriel Bergel, psychologist. The report of Dr Mitchell and Ms Bergel identified employment options of work as a packer, plastic bag machine operator or product assembler.
In his report, Mr Girdler stated that Mr Drca had no useful vocational qualifications, however he found Mr Drca could be able to perform duties of a sales worker in a business which serviced the Serbian community, which was accepted by the Claims Assessor.
The Claims Assessor accepted the proposition of Mr Girdler that, as the length of time Mr Drca remained unemployed increased, the likelihood of him securing employment would be reduced. It was noted that Mr Drca conceded that he had a residual earning capacity, and the Claims Assessor stated it was likely he could find "some form of suitable work, at least on a part time basis, probably with the assistance of his Serbian connections".
The Claims Assessor concluded his reasons as follows: "27. I am mindful of what was 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, I do not think that it is proper to make an arithmetic calculation, as I am not satisfied that the Claimant's loss of earning capacity will be productive of economic loss continually until his normal retirement age. The Claimant is young, appears to be in good health and has a young family to support. He is a trained motor mechanic as well as a formwork carpenter. I think it is probable that there is a range of occupations and activities which would be open to the Claimant if he were to have a reasonable command of English as a second language. 28 Mr Drca claims $800.00 per week for the future, after allowance for his ability to carry-out light duties, to age 70 years. I think that overstates his loss which is more likely to be about $400.00 per week. Based upon that finding, I calculate future economic loss as follows: $400 x 893.6 x 85% = 303,824.00 Additionally, I allow $27,344.16 for putative superannuation benefits at 9% of the net loss, which is the rate claimed."

[11]

Relevant Provisions in MAC Act

Chapter 4 of the MAC Act is entitled "Motor Accident Claims". Contained in Chapter 4, Part 4.4 provides for a scheme of claims assessments and resolution. Section 94 provides for the assessment of claims as follows: "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."
Section 94 imposes a statutory obligation on an assessor to provide a statement of reasons for the assessment, which is to be attached to a certificate: ss.94(4) and (5).
Chapter 5 MAC Act provides for awards of damages following a claims assessment. Section 126 relates to awards for future economic loss, and requires an assessor to state the assumptions on which the award was based and the relevant percentage by which damages were adjusted. Section 126 states: "126 Future economic loss - claimant's prospects and adjustments(cf s 70A MAA) (1) A court cannot make an award of damages for future economic loss unless the claimant first satisfies the court that the assumptions about future earning capacity or other events on which the award is to be based accord with the claimant's most likely future circumstances but for the injury. (2) When a court determines the amount of any such award of damages it is required to adjust the amount of damages for future economic loss that would have been sustained on those assumptions by reference to the percentage possibility that the events concerned might have occurred but for the injury. (3) If the court makes an award for future economic loss, it is required to state the assumptions on which the award was based and the relevant percentage by which damages were adjusted."

[13]

Reasons for Claim Assessments Under MAC Act

In Wingfoot Australia Partners Pty Limited v Kocak (2013) 252 CLR 480; [2013] HCA 43, the High Court (at 501 [55]) emphasised the need for a written statement of reasons given by a Medical Panel under the Accident Compensation Act 1985 (Vic) to explain "the actual path of reasoning": "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 applied to reasons of a claims assessor under s.94(5) MAC Act: Zahed v IAG Ltd (t/a NRMA Insurance) (2016) 75 MVR 1; [2016] NSWCA 55 at 10 [34]; Mulcahy v NRMA Insurance Limited at 345 [23].
In Allianz Australia Insurance Ltd v Sprod (2012) 81 NSWLR 626; [2012] NSWCA 281 at 636 [42], Barrett JA (Campbell JA and Sackville AJA agreeing) described the need for transparency as to assumptions in reasons, in the context of s.126 MAC Act: "… The purpose of s 126, a provision directed at judges and applied in a derivative way to assessors, is to produce a reasonable degree of transparency as to assumptions and the reasons for them so that those interested in the assessment may have an insight into the way in which the task of assessment was performed. The section recognises that assumptions are necessary and appropriate. It does not seek to define aspects that may or may not properly be made the subject of assumptions about future earning capacity. Its aim is merely to ensure that an insight can be obtained into the content of the assumptions and the reasons for their adoption."
In Zahed v IAG Limited, Leeming JA addressed the competing obligations to provide reasons imposed by the MAC Act and the Guidelines at 3 [4]: "The resolution of the competing obligations imposed by s 94(5) and cl 18.4.3 ought not to result in an unduly demanding burden of providing reasons. It is to be borne in mind that the objects of the Guidelines are "to provide a timely, fair and cost effective system for the assessment of claims" and "to assess claims and disputes fairly and according to the substantial merits of the application with as little formality and technicality as is practicable and minimising the cost to the parties" (cl 1.14), and the obligation to set out the reasoning process is to be construed accordingly."
Leeming JA continued at 3-4 [6]: "… Although it is undesirable for the statement of reasons to leave important matters to inference, doing so does not necessarily breach the obligation to set out the Assessor's reasons. The question is whether the reasoning process can be discerned, reading the reasons as a whole and applying a 'beneficial construction' to which the High Court referred in Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 271-272."
In Mulcahy v NRMA Insurance Limited, the Court of Appeal accepted that the reasons of a claims assessor would be capable of complying with the law if they identified, and incorporated by reference, calculations contained in an accountant's report relied upon by a party. In this way, it was held by White JA (Beazley P and Meagher JA agreeing) at 348-349 [36]-[42] that the path of reasoning of the claims assessor was explained sufficiently.

[14]

Submissions for Zurich

Mr Robinson SC submitted that the Claims Assessor had erred in a number of respects: 1. firstly, in regard to past economic loss, by failing to provide adequate reasons, so as to reveal "the path of reasoning", in contravention of s.94 (5) MAC Act and Clause 18.4 of the Guidelines; 2. secondly, that the award for future economic loss was not supported by adequate or lawful reasons, and that the Claims Assessor did not identify the assumptions relied upon in determining the award, thus failing to perform his obligation under s.126 MAC Act.
It was submitted for Zurich that the findings for past economic loss were bad in law due to an absence of reasons. It was argued that the net weekly income figure of $1,144.00 put forward by Mr Drca was adopted by the Claims Assessor without an adequate explanation as to why the figure was adopted in full for the whole period.
Mr Robinson SC noted that Zurich had conceded $50,000.00 for past economic loss, as reflected in the CGU Workers Compensation figure, but maintained its position that (after an initial period of unfitness), Mr Drca was capable of full time employment.
It was further argued that due to the stark contrast between the figures put forward by each party, there was an even greater need for a "path of reasoning" to be elucidated in the written reasons.
It was submitted for Zurich that the figure of $1,144.00 appeared to have been taken from Mr Curran's submissions dated 27 April 2017, however it was not clear as no explanation was provided, nor were any calculations set out by the Claims Assessor in his reasons.
Mr Robinson SC submitted that there was an internal inconsistency within the decision as the award for the past was significantly different to the award for the future.
Zurich relied on the decision of IAG Limited v Sleiman [2017] NSWSC 1346, and submitted there was an "unexplained leap" from the award of $1,144.00 for the past up until the day of the assessment to $400.00 per week for the future. It was argued that the significant reduction in the figure awarded from the arbitrary day of the assessment represented an internal inconsistency in the determination of Mr Drca's capacity for employment since the accident.
It was submitted that the written reasons did not explain why the award for the future was assessed at $400.00 per week and that the Claims Assessor failed to adequately set out the most likely future circumstances, but for the accident, upon which the assessment was based.
It was submitted that the Claims Assessor did not comply with his statutory obligations as he did not address or reference the necessary assumptions required in s.126 MAC Act. Zurich submitted that the Claims Assessor's reference to Mr Drca's inability to speak English as a barrier to employment, was not a relevant factor upon which an assumption of the circumstances (but for the injury) could be formed.
It was submitted that there was a further inconsistency in the reasons as the Claims Assessor stated (in paragraph 27 of the reasons), "In the present case, I do not think that it is proper to make an arithmetic calculation", but then calculated the award for the future at paragraph 28 as "$400 x 8.93.6 x 85% = $303,824.00".
Zurich submitted that, in contrast to the concept of a "buffer" or lump sum figure, the Claims Assessor had used a precise weekly figure and calculated the award by reference to that figure: Allianz Australia Insurance Ltd v Kerr (2012) 83 NSWLR 302; [2012] NSWCA 13 at 305-306 [6]-[7], 311-313 [30]-[35], 319 [67]-[70]; Allianz Australia Insurance Ltd v Sprod at 633-636 [25]-[42].
Zurich relied on the decision of Beech-Jones J in Allianz Australia Insurance Ltd v Habib (2015) 73 MVR 412; [2015] NSWSC 1719 at 422 [38], in which his Honour referred to Allianz Australia Insurance Ltd v Sprod and found that it was not sufficient for an assessor to simply adopt a set of calculations provided by one of the parties. It was submitted that the Claims Assessor in this instance had adopted the figures provided by Mr Drca without expressly stating the reasoning or assumptions upon which they relied, resulting in a lack of transparency.
Zurich submitted that the statutory obligations prescribed by s.126 were enlivened once the Claims Assessor embarked on a process of calculation, and his failure to set out the assumptions upon which the award was based resulted in jurisdictional error (Allianz Australia Insurance Ltd v Sprod at 635 [37]).
It was submitted that prerogative relief should be granted as the Claims Assessor's written reasons failed to conform to the statutory requirements, so that error of law on the face of the record had been established: Allianz Australia Insurance Ltd v Sprod at 636 [39].

[15]

Submissions for Mr Drca

Mr Gross QC submitted that the figure adopted by the Claims Assessor of $1,144.00 for past economic loss was provided by him in the "Amended Schedule of Damages" which was clearly stated in paragraph 22 of the reasons. It was argued that the source of the figure was disclosed on the face of record.
Mr Gross QC submitted that $1,144.00 was an average figure calculated from the date of the accident to the date of the assessment, by reference to Mr Drca's prior earnings and the earnings of a comparable employee in the 2012 financial year.
Mr Gross QC submitted that the figure was less than the $1,300.00 weekly figure conceded by Zurich (for a nine-month period), but more than the 2012 earnings of the comparable employee, and it could be inferred that the Claims Assessor had accepted the figure of $1,144.00 per week, over the entire five-year period, as a projection of Mr Drca's probable earnings if uninjured.
Mr Drca relied on the decision of Harrison AsJ in Allianz Australia Insurance Limited v Park (2015) 69 MVR 538; [2015] NSWSC 122 at 545 [28]-[29], where her Honour stated that an assessor's reasons should not be overly scrutinised. Mr Gross QC took the Court to Allianz Australia Insurance Ltd v Habib at 422 [37] in support of his argument that the Claims Assessor's assumptions may be deduced from the calculations provided in the reasons.
Mr Drca submitted that the decrease in the award from $1,144.00 per week for the past, to $400.00 per week for the future, did not represent an "unexplained leap" as argued by Zurich. It was submitted that a "leap" could not be attributed to a decrease in an award, only to an increase.
Mr Gross QC submitted that the adjustment by the Claims Assessor was not unexplained, as the future award was reduced in order to reflect Mr Drca's changed situation since the date of the accident and his residual earning capacity.
It was submitted that an evaluation of the Claims Assessor's reasons as a whole revealed the foundation for the future award of $400.00.
It was submitted that the Claims Assessor had rejected the opinion of Dr Menogue, upon which Zurich relied, and accepted the opinion of Dr Parmegiani, which included a finding of a Major Depressive Episode. In paragraph 14 of the reasons, it was found that Mr Drca's psychological condition had become chronic. It was submitted that the Claims Assessor clearly accepted that Mr Drca had an ongoing incapacity and in particular a loss of earning capacity.
It was submitted that the Claims Assessor had adopted a "buffer", rather than a strict mathematical approach as, although the award of $400.00 reflected a weekly figure rather than a lump sum, it was a more appropriate measurement to account for the different variables affecting Mr Drca's future earning capacity over a long period of time.
It was submitted that the reasoning in Penrith City Council v Parks [2004] NSWCA 201 at [5] and Allianz Australia Insurance v Kerr at 305-306 [6]-[9] and 313 [36] supported the use of a buffer approach by the Claims Assessor, in circumstances where the award for future economic loss is difficult to determine and cannot be precisely calculated.
Mr Gross QC submitted that s.126(1) MAC Act operated as a precondition to an award for future economic loss. It was submitted that the Claims Assessor's acceptance of Mr Drca's claim of $1,144.00 per week for the past showed this precondition had been satisfied, as the award provided the basis for the assumptions upon which his future earning capacity, but for the injury, would be calculated.
It was submitted that assessors are required to make use of their knowledge and experience as assessors, which is reflected in the weekly "buffer" award adopted by the Claims Assessor in this case. It was submitted that any gaps in the reasons of the Claims Assessor could be filled in "as a matter of necessary inference": Allianz Insurance Limited v Larriera [2016] NSWSC 441 at [20].
Mr Gross QC relied on the reasoning of Leeming JA in Zahed v IAG outlined at [44]-[45] in support of the argument that the Claims Assessor, while obliged to provide reasons, also has an obligation to be concise. It was submitted that the Guidelines outline the requirement for assessments to be conducted in a timely, fair and cost-effective manner (Clause 1.14.1), with as little formality and technicality as practicable (Clause 1.14.2).

[16]

Decision

In approaching a claim of error in law concerning sufficiency of reasons under the MAC Act, it is appropriate to take a practical approach having regard to the role and functions of assessors and provisions such as s.94(5) MAC Act which requires "a brief statement … setting out the assessor's reasons for the assessment", and the requirement for "assumptions" to be included in an award of damages for future economic loss under s.126(2) MAC Act. Clause 18.4.3 of the Guidelines provides as well that the "statement of reasons is to set out as briefly as the circumstances of the assessment permit … the reasoning processes that lead the Assessor to the conclusions made". It is necessary to read fairly, and as a whole, the reasons of the Claims Assessor.
Accordingly, there are statutory requirements for both brevity and sufficiency in reasons to be given as part of the assessment process.
It should be kept in mind as well that, in a case such as this, the sums involved are substantial so that there ought be a transparent explanation of the basis upon which conclusions have been reached with respect to past economic loss and future economic loss.
The "actual path of reasoning" should be apparent in the reasons, although this requirement can be achieved by incorporating by reference to a source document such as an expert accountant's report containing calculations, which the assessor states has been accepted: Mulcahy v NRMA Insurance Limited at 348-349 [36]-[42]. That is not what occurred in this case.
There was a significant dispute between the parties concerning past economic loss. Mr Drca derives no real assistance from Zurich's acceptance of $1,300.00 per week for a closed period of nine months. The scope of the controversy concerning past economic loss required reasons to be given as required by law.
Applying these principles to the assessment by the Claims Assessor concerning past economic loss, it appears that the Claims Assessor has simply adopted the figures put forward on behalf of Mr Drca from submissions by counsel. The Claims Assessor has moved, without any real explanation or elaboration, from noting the wages earned by a nominated comparable worker to an acceptance of the complete claim for past economic loss made by Mr Drca (see [27] above).
In my view, this approach fails to comply with the obligation to give reasons with respect to an award for damages for past economic loss, so that error on the face of the record is demonstrated in that respect.
The claim for future economic loss involved Mr Drca seeking $800.00 net per week, with Zurich contending that no allowance at all should be made for future economic loss. Accordingly, there was a clear and substantial dispute between the parties, which required appropriate reasons as required by law to explain why an award of damages for future economic loss was being made.
Apart from the requirements under s.94(4) MAC Act, the Claims Assessor was obliged to explain assumptions upon which reliance was placed concerning future economic loss, so as to comply with the obligation under s.126(2) MAC Act.
The critical reasons of the Claims Assessor concerning the future economic loss claim were set out earlier in this judgment (see [35] above). He explained why he did not consider it to be proper to make an arithmetic calculation. However, from that position, the Claims Assessor stated that Mr Drca's claim of $800.00 per week overstated his loss which was "more likely about to be about $400.00 per week". Based upon that finding, and without any further elaboration, the Claims Assessor calculated future economic loss in the total sum of $303,824.00, together with the sum of $27,344.16 for putative superannuation benefits at 9% of the net loss.
Compliance with s.126 MAC Act is not inconsistent with the use of a buffer: Penrith City Council v Parks at [5]; Allianz Australia Insurance Limited v Kerr at 311-313 [30]-[35]; Allianz Australia Insurance Limited v Sprod at 631 [17]ff.
It was open to the Claims Assessor to consider the use of a buffer in this case. However, that is not what the Claims Assessor did.
The Claims Assessor resorted to a precise figure ($400.00 per week) and made a calculation by reference to that figure for a period until Mr Drca reached 70 years. That is not the way to determine a buffer: Allianz Australia Insurance Limited v Sprod at 633 [25], 634 [30]. The Claims Assessor utilised a capitalised weekly sum as opposed to a buffer: NRMA Insurance Limited v Ashfield [2018] NSWSC 1593 at [40].
Without any explanation, the Claims Assessor determined to halve the claimed weekly sum (from $800.00 to $400.00) and then apply that sum to the full period of the claim. The basis for selection of this weekly figure was unexplained.
I am satisfied that the Claims Assessor failed to comply with ss.94(4) and 126 MAC Act in taking this approach. There was, in truth, an unexplained leap to select the figure of $400.00 per week, which was then applied in an arithmetical exercise which was inconsistent with the use of the buffer.
In addition, it is not at all clear why Mr Drca's future employability would be affected, in any significant way, by his command (or otherwise) of the English language given the types of employment which may be available to him.
If the Claims Assessor intended to use a buffer, the wrong approach to calculation was adopted. If he did not intend to use a buffer, there is an unexplained leap from $800.00 to $400.00 per week for the purpose of the calculation of future economic loss.
On either approach, there has been a failure to comply with the obligation to give reasons as required by law.
Making all due allowance for the advantage of brevity in reasons, I am satisfied that this approach to future economic loss fails to comply with the legal requirement to give reasons under s.94(4) and s.126 MAC Act.
In all the circumstances, I am satisfied that Zurich has made good the claim for relief as sought in the Summons.
I make the following orders: 1. order that the Certificate of Assessment dated 8 June 2017, purportedly issued by the Second Defendant pursuant to s.94(4) Motor Accidents Compensation Act 1999 in respect of the First Defendant's claim, be set aside; 2. remit the assessment of the First Defendant's Claim under Chapter 4 of the Motor Accidents Compensation Act 1999 to the Third Defendant for allocation to a different Claims Assessor for determination according to law; 3. order the First Defendant to pay the Plaintiff's costs of the proceedings in this Court.

Zurich Australia Insurance Limited v Drca and Ors

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (17 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (26)

Cited By (3)