AAI Limited t/as AAMI v Pearce

[2024] NSWSC 357

Supreme Court

New South Wales

Medium Neutral Citation:

AAI Limited t/as AAMI v Pearce [2024] NSWSC 357

Hearing dates:

On the papers

Date of orders:

08 April 2024

Decision date:

08 April 2024

Jurisdiction:

Common Law

Before:

Lonergan J

Decision:

(1) The plaintiff has leave to file its amended summons dated 22 March 2024.

(2) The decision of the second defendant (per Member David Ford) and third defendant, the Personal Injury Commission of NSW, (“PIC”), dated 9 November 2023 in PIC matter no. M10464655/21 is invalid and is set aside.

(3) The subject matter of the decision is remitted to the third defendant for determination by a different Member according to law.

(4) The parties are to file and serve written submissions as to costs, (not more than 3 pages in length) on or before 15 April 2024.

Catchwords:

ADMINISTRATIVE LAW – judicial review – motor accident compensation – submitting appearances by the defendants – error of law on the face of the record – inadequate reasons

Legislation Cited:

Motor Accident Injuries Act 2017 (NSW)

Personal Injury Commission Rules 2021 (NSW)

Supreme Court Act 1970 (NSW)

Cases Cited:

Allianz Australia Insurance Ltd v Kerr (2012) 83 NSWLR 302; [2012] NSWCA 13

Category:

Principal judgment

Parties:

AAI Limited t/as AAMI (Plaintiff)
Luke Pearce (First Defendant)
David Ford, in his capacity as a Member appointed by the Minister under section 9 of the Personal Injury Commission Act 2020 (NSW) (Second Defendant)
The President of the Personal Injury Commission of New South Wales (Third Defendant)

Representation:

Counsel:
M Robinson SC and Dr Juliet Lucy (Plaintiff)

Solicitors:
Sparke Helmore Lawyers (Plaintiff)
Burgan Lawyers (First Defendant)
Crown Solicitor’s Office (Second & Third Defendants)

File Number(s):

2023/00463596

Publication restriction:

Nil

JUDGMENT

1. The plaintiff, AAMI, seeks relief in the nature of certiorari or a declaration pursuant to s 69 of the Supreme Court Act 1970 (NSW), setting aside or declaring invalid a decision made by Member David Ford on 9 November 2023.

2. The amended summons dated 22 March 2024 is supported by evidence filed in the form of the 9 November 2023 statement of reasons and certificate of Member Ford.

3. The issues can be dealt with in short form as each defendant has filed a submitting appearance, save as to costs. I have refrained from making any order as to costs and have made provision for written submissions on the question of costs.

4. Given that I am exercising the Court’s jurisdiction under s 69 of the Act, it is appropriate that I provide a judgment setting out my reasons for making the orders sought by AAMI.

Background facts

5. Mr Pearce was injured in a motor vehicle accident on 3 November 2018. At the time he was on a motorcycle and was hit by a car insured by AAMI. He suffered injuries including to his right knee and hand, scarring, and a psychological injury.

6. He was at the time a chartered accountant in partnership with a Mr Ghenim (“the Business”). Mr Pearce had a period off work and claimed, amongst other things, past and future economic loss as a result of injury to his working capacity caused by the accident.

7. AAMI admitted liability. Mr Pearce’s claim came before Member Ford for assessment of damages. There was a dispute over the claims for past and future economic loss. Mr Pearce’s claim was supported by accountant reports of Mr Lee of Vincents. Following a particular methodology, Mr Lee assessed Mr Pearce’s past economic loss at slightly over $50,000.00 on the assumption that he lost 5 billable hours a week, and in the alternative, slightly over $127,000.00 on the assumption that Mr Pearce lost 10 billable hours a week.

8. Mr Lee assessed the net future economic loss to be $613,785.00, $1,139,156.00 or $1,581,982.00 on the basis of loss arising from a reduction by Mr Pearce of 5, 10 or 15 billable hours of work per week, respectively.

9. AAMI relied upon a report of Mr Gwynne of PKF who assessed past loss at $33,907.00 on the basis that on his analysis of the records, the Business’s profits and fee income continued to increase after the accident, and this figure was based on a comparison of the remuneration to Mr Pearce when compared with his partner for that period.

10. As to the future, Mr Gwynne was of the view the records did not indicate that there would be a future loss, but if it was established that Mr Pearce had in fact sustained a loss of earning capacity of 5 to 15 billable hours per week, the loss should be measured by reference to the cost of labour engaged to perform the billable work that Mr Pearce cannot do, and on that basis the future loss was assessed to be $128,111.00 to $164,714.00 on the basis of 5 lost hours per week, $256,221.00 to $329,427.00 on the basis of 10 lost hours per week and $384,332.00 to $494,141.00 on the basis of 15 lost hours per week.

11. Mr Gwynne made a number of criticisms of the methodology used by Mr Lee in analysing past and future loss.

12. Complaint is made by AAMI that rather than providing a path of reasoning or explanation as to why he reached the assessment that he did for past economic loss, Member Ford simply stated a “preference” for Mr Lee over Mr Gwynne, without stating any reason at all for that approach. There were no findings made as to how many hours less Mr Pearce had in fact worked. There was simply an acceptance of Mr Lee’s methodology without explaining at all how or why. The reasons are opaque at best.

13. Complaint is made by AAMI that the approach by Member Ford to future economic loss was also inadequate. No path or reasoning to the conclusion is evident or sufficient to enable a court to see whether the opinion does or does not involve any error of law. There are no findings on material questions of fact or the reasoning process that led him to the conclusions he made. The assumptions on which the award was based have not been stated. These failures are in breach of r 78(2) of the Personal Injury Commission Rules 2021 (NSW) (“the Rules) and s 4.7(3) of the Motor Accident Injuries Act 2017 (NSW) (“the Act”). The obligation to state the assumptions is a necessary element of any statement of reasons: Allianz Australia Insurance Ltd v Kerr (2012) 83 NSWLR 302; [2012] NSWCA 13 at [53] and [31]. Member Ford has failed to do so.

14. AAMI also complained that Member Ford discounted the assessment by 15%, but gave no reasons as to why he chose that figure.

15. Whilst there were findings about Mr Pearce’s likely future circumstances, they were not sufficient to comply with the requirements of s 4.7 of the Act or r 78(2) of the Rules. The failure to provide adequate reasons about these matters was jurisdictional error here because it was a constructive failure to exercise jurisdiction.

16. Counsel argued in the written submissions that given that the inadequacy of reasons appears from the record, if the Court is satisfied of that, it need go no further and should set the certificate aside.

Decision

17. I am persuaded by the submissions of Mr Robinson SC and Dr Lucy. There is no doubt that the reasons are inadequate. Whilst the reasons include findings as to Mr Pearce’s disabilities, the effect on his working life, and the risk he will be on the open labour market if his business partner terminates the partnership, Member Ford’s reasons fail to make any of the necessary findings that underpin the basis of calculation of economic loss, either in the past or in the future.

18. The reasons fail to engage at all with the competing bases of assessment of past loss set out in the respective reports of Mr Lee and Mr Gwynne.

19. Regarding future loss of earnings, having rejected AAMI’s primary argument of a “buffer” of $100,000.00, there was no engagement at all with the analyses of Mr Gwynne regarding that component of the claim. No finding is made as to why the approach of Mr Lee is to be preferred. There is no analysis at all, and no reasoning provided as to why the approach of Mr Lee reflects the compensable loss. None of the necessary factual findings to validate or underpin Mr Lee’s approach to assessment have been made.

20. There is error of law on the face of the record because of clear inadequacy of reasons.

21. Whilst an additional ground was added to the amended summons in March 2024 - legal unreasonableness or irrationality - as stated in the helpful written submissions of counsel, if I have formed the view that the reasons are inadequate, the certificate should be set aside, and I do not need to go further.

22. I accept that submission and grant the relief sought in the amended summons, save as to costs, which should be the subject of written submissions of no more than 3 pages in length provided to Chambers on or before 15 April 2024.

Orders

23. I make the following orders:

1. The plaintiff has leave to file its amended summons dated 22 March 2024.

2. The decision of the second defendant (per Member David Ford) and third defendant, the Personal Injury Commission of NSW, (“PIC”), dated 9 November 2023 in PIC matter no. M10464655/21 is invalid and is set aside.

3. The subject matter of the decision is remitted to the third defendant for determination by a different Member according to law.

4. The parties are to file and serve written submissions as to costs, (no more than 3 pages in length) on or before 15 April 2024.

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Decision last updated: 09 April 2024