Cic Allianz Australia Limited v Daniel Luke McDonald

[2012] NSWSC 887

Supreme Court

New South Wales

Medium Neutral Citation:	CIC Allianz Australia Limited v Daniel Luke McDonald & Ors [2012] NSWSC 887
Hearing dates:	8 April 2011
Decision date:	13 June 2012
Jurisdiction:	Common Law
Before:	Hidden J
Decision:	Assessment certificate set aside. Matter remitted for determination by different claims assessor.
Catchwords:	ADMINISTRATIVE LAW - Motor Accidents Compensation Act - CARS assessment of damages - failure by assessor to provide adequate reasons in relation to economic loss
Legislation Cited:	Motor Accidents Compensation Act 1999
Cases Cited:	Allianz Australia Insurance Limited v Crazzi & Ors [2006] NSWSC 1090, 68 NSWLR 266 Allianz Australia Insurance Limited v Ward [2010] NSWSC 720 Miller v Galderisi [2009] NSWCA 353 Dyldam Developments Pty Ltd v Jones [2008] NSWCA 56 Insurance Australia Limited Ltd trading as NRMA Insurance v Hutton-Potts and Ors [2010] NSWSC 1446 Allianz Australia Insurance Limited v Sprod and Ors [2011] NSWSC 1157 Allianz Australia Insurance Limited v Cervantes [2011] NSWSC 1296 Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 348 Australian Associated Motor Insurers Limited v Motor Accidents Authority [2010] NSWSC 833 Northern NSW FM Pty Ltd v Australian Broadcasting Tribunal (1990) 26 FCR 39
Category:	Principal judgment
Parties:	CIC Allianz Australia Limited (plaintiff) Daniel Luke McDonald (first defendant) Tom Goudkamp in his capacity as Claims Assessor of the Motor Accidents Authority of New South Wales (second defendant) Motor Accidents Authority of New South Wales (third defendant)
Representation:	Counsel: M Robinson SC (plaintiff) P Woods (first defendant) Solicitors: John Edward Solomon, Moray & Agnew (plaintiff) Robert Montagnino - United Legal Solicitors (first defendant) IV Knight, Crown Solicitor (second & third defendants)
File Number(s):	2011/5843

Judgment

1. On 1 May 2007 the first defendant, Daniel McDonald, was injured in a motor vehicle accident. He made a claim under the Claims Assessment and Resolution Service (CARS) established by the Motor Accidents Compensation Act 1999. The insurer was the plaintiff, CIC Allianz Insurance Limited ("Allianz"). Liability was not in issue. On 1 December 2010, an assessor issued a certificate under s 94(1)(b) of the Act awarding damages of (in round figures) $535,000.

1. Allianz contends that the assessor fell into error in a number of respects in arriving at that assessment and, there being no provision in the Act for an appeal, seeks judicial review in this court. The initiating summons seeks an order in the nature of certiorari and related administrative law remedies. The second defendant is the assessor, and the third defendant is the Motor Accidents Authority of New South Wales, the administrative body constituted under the Act. Both of those defendants have entered submitting appearances. Accordingly, the active parties are Allianz, represented by Mr Robinson SC, and Mr McDonald, whose counsel was Mr Woods.

1. There is no need for a comprehensive examination of the CARS scheme for present purposes. That task has been undertaken in other authorities: see, for example, the helpful review by Johnson J in Allianz Australia Insurance Limited v Crazzi & Ors [2006] NSWSC 1090, 68 NSWLR 266, at [8] - [20] (270 - 6). It is sufficient to say that s 94 provides for the assessment of claims. Subs (4) requires the claims assessor to issue a certificate as to the assessment. Importantly for present purposes, subs (5) requires the assessor "to attach a brief statement to the certificate, setting out the assessor's reasons for the assessment."

1. The scope of the reasons which an assessor should give is fleshed out in cl 18.4 of the Claims Assessment Guidelines, issued pursuant to s 69 of the Act. That clause provides:

"18.4 A certificate under section 94 ... 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."

1. At the heart of this matter is the adequacy of the assessor's reasons. In my own decision in Allianz Australia Insurance Limited v Ward [2010] NSWSC 720, I had occasion to consider the duty to give reasons created by s 94(5) and I adhere to the view I expressed at [40]:

"Clearly, an assessor's reasons need not be lengthy or discursive, and should avoid undue formality and technicality. Nevertheless, they must demonstrate that the issues raised by the case have been determined and that any relevant statutory requirements have been considered. Those ends can be achieved in concise reasons."

This approach I believe to be consistent with the requirements in the Guidelines that an assessor should "act with as little formality as the circumstances of the matter permit ... without regard to technicalities and legal forms" (cl 16.3), and should "progress the resolution of the matter as quickly, fairly and as cost effectively as is practicable" (cl 16.7).

1. For Allianz, Mr Robinson submitted that the assessor's reasons disclosed four errors of law, each of them calling for a remedy by way of prerogative relief. On behalf of Mr McDonald, Mr Woods contended that no such error had been shown. However, he did not argue that, if any error were established, prerogative relief was not an appropriate remedy or that there was any discretionary reason not to grant it. That being so, it is not necessary to examine the applicable administrative law principles. There is no doubt that CARS assessments are subject to the supervisory jurisdiction of this court, and if error is established in the present case Allianz is entitled to orders of the kind which it seeks.

1. Of the four grounds for relief, the first and third relate to the assessment of Mr McDonald's economic loss, the second to the medical evidence, and the fourth to the allowance for future commercial care. It is convenient to start with the first and third grounds, which are linked. Mr McDonald was employed as a carpenter at the time of the accident and his evidence was that his injuries reduced his capacity to pursue that occupation. After the accident he worked for a time as an employed carpenter, and thereafter was self-employed.

Ground 1 - accountants' report

1. Allianz engaged Vincents, forensic accountants, to prepare a report on economic loss. This is the subject of the first ground. The report was completed shortly before the hearing of the matter, and was based upon a large volume of material, particularly, of course, financial records, which had been supplied to its authors. Among that material was a schedule setting out the details of Mr McDonald's claim, including his claim for past and future loss of income. The claim for future loss of income was formulated in two alternative ways: one said to be based upon a comparison between his net annual income in the period of about a year leading up to the accident in 2007 and his average weekly earnings in 2009, the other based upon a comparison of the number of hours he was able to work before and after the accident at a given rate per hour. There was also a claim for future superannuation loss.

1. After an analysis of this material, the accountants questioned the bases upon which his wage loss, past and future, had been claimed. They also concluded that there had been no loss of superannuation. In his reasons the assessor summarised the effect of their report in this way:

"The authors prepared two alternative assessments for future economic loss, in answer to the alternative cases presented by the claimant. Vincents relied primarily on the claimant's taxation and business records. They also relied on a number of assumptions in relation to the period of time the claimant took off work after the accident and the number of hours he is no longer able to work.

In particular Vincents assumed that the claimant was initially off work for 7 weeks and that he is currently working 5 hours less per week than he would have worked had it not been for the accident.

Vincents have calculated a minor past economic loss and future economic loss of around $120,000.00 with no allowance for loss of superannuation because the claimant is self employed."

1. In arriving at his findings on economic loss, all the assessor had to say about the report was this:

"I give the conclusions of Vincents little weight because the authors of the report have in my view relied too heavily on the claimant's tax returns and business records, have made some erroneous assumptions, have not fully appreciated the fact that the claimant is clearly inconvenienced by his pain and stiffness to the extent that he is working approximately 15 hours less per week than he would have been working had he not been injured."

1. The assessor arrived at substantial figures for past and future economic loss, as well as future loss of superannuation. Those figures, particularly the figure for future economic loss, make up the lion's share of the award. While the assessor said that he gave the accountants' report "little weight", it is apparent, as Mr Robinson pointed out, that he gave it no weight at all. He simply put it aside and, in my view, gave no adequate reasons for doing so. The report's analysis based upon the financial records was not even mentioned, let alone addressed. Mr Robinson referred to the following passage in the judgment of Hodgson JA, with whom Giles and Basten JJA agreed, in Dyldam Developments Pty Ltd v Jones [2008] NSWCA 56 at [66]:

"In my opinion, it was erroneous for the primary judge to have paid no regard to the plaintiff's record of earnings, as disclosed by his tax returns and as disclosed by the records concerning the 33 weeks prior to the accident. Those were important matters, and if they were to be totally disregarded, they needed to be explicitly addressed and reasons given for disregarding them. The failure of the plaintiff to lead satisfactory evidence concerning his pre-accident employment earnings, and to give any explanation for the earnings shown in the income tax returns, means in my opinion that uncertainties created by this absence of evidence should not be resolved in the plaintiff's favour."

1. The assessor said that the authors of the report had "made some erroneous assumptions," but did not disclose what they were. Whether that assertion was directed to the time Mr McDonald took off work after the accident and the number of hours he is no longer able to work, to which the assessor referred in the first passage of his reasons quoted above, is far from clear.

1. In response to this ground, Mr Woods set out in written submissions a number of extracts from the evidence of Mr McDonald, his fiancée, two of his previous employers and two doctors whose reports were received by the assessor. All of this material bore upon his capacity for work before the accident and his reduced capacity after it. This material had been relied upon in submissions to the assessor on the question of economic loss, particularly future loss, and Mr Woods argued that it provided a foundation for the assessor to arrive at the figures he did in preference to those propounded in the report. In oral argument, Mr Woods also criticised some aspects of the report and questioned the adequacy of the material upon which it was based.

1. In effect, Mr Woods sought to enunciate the reasons the assessor might have given in arriving at the conclusion he did. However, the assessor himself did not express any such reasons. Whether there was material upon which he could have arrived at his conclusion, of course, is not a matter I am called upon to decide in these proceedings. The fact remains that in his reasons the assessor failed to deal with the report, which was an important part of Allianz's case in response to an equally important part of Mr McDonald's claim.

1. Mr Robinson argued this ground on other bases, but my finding of a failure to give proper reasons is sufficient to make it good. That, in turn, is sufficient to establish jurisdictional error invalidating the assessor's certificate and requiring it to be set aside. However, it is appropriate that I should consider briefly the other grounds, although it is not necessary to decide them.

Ground 3 - future economic loss

1. The error I have identified is of particular significance on the question of future economic loss, for which the assessor allowed a figure of a little under $352,000. He appears to have done so on the second of the alternative bases to which I have referred, that is, by reference to the diminution in the hours Mr McDonald had been able to work per week since the accident. He based his assessment upon a postulated weekly wage loss, rather than an hourly rate, extending that wage loss over the period of Mr McDonald's remaining working life. This figure, of course, was discounted for vicissitudes. Underpinning this assessment was his finding that, but for the accident, Mr McDonald would have continued to work as an employed carpenter rather than starting his own business.

1. This third ground embraced two complaints. The first was that there was an internal inconsistency in the figures upon which the assessor relied. This appears to be so but, given that there must be a fresh assessment, nothing more need be said about it. The second was that there had been a failure to comply with s 126 of the Act, which provides:

"126 Future economic loss - claimant's prospects and adjustments

(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."

1. Mr Robinson submitted that the section had not been complied with because the reasons did not expose the assumptions upon which the assessor arrived at the figures upon which his award were based. He cited the passage in the judgment of Schmidt J in Insurance Australia Limited Ltd trading as NRMA Insurance v Hutton-Potts and Ors [2010] NSWSC 1446. In dealing with the adequacy of an assessment of future economic loss in that case, her Honour said at [33]:

"While it must be accepted that elaborate reasons were not required to be given for the conclusions reached by the assessor in relation to the assessment of Mr Hutton-Potts' future economic loss that did not relieve the assessor of the obligation of identifying the assumptions on which the damages award for future economic loss rested, which s 126 requires. Reasons could be given concisely, but they had to be given."

1. To an extent this submission overlaps with the first ground and, in large part, Mr Woods responded to it in the same way. In effect, Mr Woods argued that the assessor's assumptions could be gleaned from his findings of fact in the reasons as a whole. In the event, I do not need to decide this question, although I can see the force of Mr Robinson's argument.

1. I should record that, after I reserved judgment, Mr Woods on two occasions sent me further authorities dealing with s 126: Allianz Australia Insurance Limited v Sprod and Ors [2011] NSWSC 1157 (Hoeben J) and Allianz Australia Insurance Limited v Cervantes [2011] NSWSC 1296 (Rothman J). However, he did not seek to make any further submission based upon those authorities. Each of them is distinguishable from the present case on its facts. In Sprod, Hoeben J made some observations about s 126 and, generally, about administrative review in cases such as this. This is not the occasion to examine those matters.

Ground 2 - medical evidence

1. The evidence in Mr McDonald's case was that he suffered a cervical injury in the accident, causing persistent headaches and pain and stiffness in his neck. This was supported by the evidence of his partner, Ms Kylie Bolton. The assessor accepted the evidence of both Mr McDonald and Ms Bolton.

1. The assessor summarised the medical evidence in his reasons as follows:

"The claimant relied on reports and opinions from a number of medico-legal specialists, namely Dr Ron Brooder, Neurologist, Dr G David Champion, Rheumatologist, Dr Alan Searle, Orthopaedic Surgeon and Dr W Patrick, General Surgeon.

...

Dr Ron Brooder ... considered that the claimant would suffer some disability indefinitely, noted that the claimant is able to work around his disabilities and that he had suffered no reduced earning capacity and would not require care.

Dr Alan Searle ... considered that the claimant had symptoms in his neck and head which have become persistent and permanent and which render him unfit for some activities. He considered the claimant's condition will deteriorate with degeneration. He made no comment on care.

Dr David G Champion ... diagnosed a whiplash injury as being responsible for the claimant's cervicogenic headaches and the pain in his right scapular. ... He considered that the claimant's condition is worsened and aggravated by activity i.e. work.

Dr W Patrick ... described the accident as being more severe than the usual rear end collision and that in turn the claimant suffered a more than the usual hyperextension/flexion injury to his cervical spine. He also suspected that the claimant had suffered a direct trauma to the occipital region i.e. the back of his head. He diagnosed a significant cervical zygapophyseal joint injury in the upper-mid cervical regions and considered the possibility of cervical disc pathology but without any significant disc herniation.

He also suspected that the claimant had suffered some degree of upper thoracic facet injury.

...

The insurer relied on reports and opinions from Dr John Cameron ... and Dr David Bornstein ... . Neither doctor supported the claimant's assertions. Dr Cameron went further by stating that the claimant's headaches, which he described as migraine headaches, were unrelated to the accident. He noted in his report that the claimant may have been hit on the back of the head by a tool box, on impact."

1. The assessor expressed his findings on the medical evidence in this way:

"I reject the opinion of Dr Cameron in relation to causation because [it] is contrary to the preponderance of the medical evidence and also the evidence of the claimant and Ms Bolton.

There is no evidence that the claimant suffered headaches before the accident and no other plausible explanation for his post-accident headaches, other than the injuries he suffered in the accident.

I accept the diagnoses of Drs Champion and Patrick. Furthermore I accept their opinions where they are in conflict with the opinions of Drs Cameron and Bornstein."

1. Again, Mr Robinson submitted that the assessor gave no adequate reasons for rejecting the evidence of Dr Cameron and Dr Bornstein. Simply to assert that he accepted the opinions of Dr Champion and Dr Patrick where they were in conflict with the opinions of the other two doctors, he submitted, fell well short of his statutory duty to provide reasons. As he put it, the fact that reasons need only be brief does not remove the requirement that they be "real" reasons.

1. I can see the force of that argument. The assessor's reasons on this aspect are certainly spare. On the other hand, read as a whole, what they convey is that he found the diagnoses of Dr Champion and Dr Patrick consistent with the evidence of Mr McDonald himself and of Ms Bolton, which he accepted. Viewed in that way, it seems to me that the reasons were adequate but it is not necessary to express a concluded view about the matter.

Ground 4 - future commercial care

1. The assessor awarded a little over $32,000 for future commercial care. He did so on the basis of 1 hour per week for the period of Mr McDonald's life expectancy. His reasons were as follows:

"The claimant claims 2 hours of commercial care per week for the rest of his life, at $32.00 per hour i.e. $64.00 per week.

He had initially claimed 1 hour per week.

Whilst I accept the claimant's evidence and that of his partner that he is restricted in his ability to carry out some of the heavier household and outdoor chores and Dr Champion's opinion that the claimant's physical condition worsens with heavy activity, I consider the appropriate allowance to be 1 hour per week at $32.00 per hour."

1. Mr Robinson submitted that the assessor had failed to identify or apply any of the principles concerning this head of damages to be found in Miller v Galderisi [2009] NSWCA 353 at [18] - [24]. He referred, in particular, to the following passage at [24]:

"There is no conventional allowance for the provision of domestic assistance on a commercial basis at some future point in time, against the possibility that the gratuitous carer may no longer be able or willing to provide such care. If any such convention were to be adopted, it would, as with vicissitudes, require the plaintiff's particular circumstances to be taken into account. The respondent's circumstances in this case militate against any such allowance. Accordingly, it is not appropriate in this case to simply pluck a figure out of the air because there is a remote, though not entirely fanciful, chance of the need for commercial domestic assistance in the future."

1. In the present case, Mr Robinson argued, the assessor gave no reason for selecting the figure of 1 hour per week and it had the appearance of having been plucked out of the air. In response to this, Mr Woods referred in his submissions to some of the evidence of Mr McDonald and Ms Bolton, together with the opinion in the report of Dr Champion that it would be beneficial to Mr McDonald "and facilitate his work capacity if he could have outdoor assistance, as with gardening and the home generally, 2 hours a fortnight, on a trial basis for say 6 months."

1. Here also, Mr Robinson submitted that Mr Woods' response was an attempt to put forward reasons the assessor might have given rather than dealing with the adequacy of those he did give. It seems to me that the little the assessor did say by way of reasons is derived from the material to which Mr Woods referred, and presumably the allowance of 1 hour per week is based upon the figure suggested by Dr Champion (on a trial basis). Even so, it appears to me that the reasons are barely adequate but, again, that is not a matter which I need to determine.

Conclusion

1. Accordingly, the assessor's certificate must be set aside and the matter must be remitted for reassessment. I trust that the parties will do their best to refine the issues in dispute so as to minimise delay in the case being brought to finality.

1. After I reserved judgment I received supplementary submissions from the parties as to whether the matter should be remitted to another assessor. Mr Woods referred to the consideration by the Court of Appeal of the issue whether a matter should be remitted to another judge in Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 348 at [5] ff. The court there reviewed authority to the effect that such a power should be exercised sparingly. He referred also to the decision of Barr AJ in Australian Associated Motor Insurers Limited v Motor Accidents Authority [2010] NSWSC 833, in which his Honour remitted an assessment for allocation to a different claims assessor, noting that in that case there had been a denial of procedural fairness. He argued that in the present case there was no suggestion of bias or denial of procedural fairness by the assessor such as might call for the assignment of the matter to a different assessor.

1. Mr Robinson submitted that considerations of that kind were not determinative when remitting an administrative decision of the kind with which this case is concerned. He noted that in a number of cases of administrative review of CARS assessments an order that the matter be remitted to a different assessor was made. Generally he referred to the decision of the full Federal Court in Northern NSW FM Pty Ltd v Australian Broadcasting Tribunal (1990) 26 FCR 39, in which Davies and Burchett JJ said at 42:

"... when decisions in judicial and administrative proceedings are set aside in toto and the matter remitted to be heard and decided again, justice is in general better seen to be done if the court or the tribunal is reconstituted for the purposes of the hearing."

1. In all the circumstances, I am satisfied that the present matter should be reheard by a different assessor. Mr McDonald must pay the costs of the proceedings in this court, but I am of the view that he is entitled to a certificate under the Suitors' Fund Act for the reasons I gave in Allianz Australia v Ward (supra) at [82].

1. The assessment certificate of the second defendant, the claims assessor, is set aside. I order that the matter be remitted to the third defendant, the Motor Accidents Authority, for allocation to a different claims assessor for determination according to law. The first defendant is to pay the plaintiff's costs of these proceedings, but I grant him a certificate under s 6 of the Suitors' Fund Act 1951. I shall consult the parties as to whether any other order should be made.

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Decision last updated: 03 August 2012