Farr v IAG Limited t/as NRMA Insurance
[2022] NSWPIC 363
•23 June 2022
| CERTIFICATE OF DETERMINATION OF MEMBER | |
CITATION: | Farr v IAG Limited t/as NRMA Insurance [2022] NSWPIC 363 |
| CLAIMANT: | Allison Farr |
| INSURER: | IAG Limited t/as NRMA Insurance |
| MEMBER: | Elyse White |
| DATE OF DECISION: | 23 June 2022 |
| CATCHWORDS: | MOTOR ACCIDENTS - Claimant’s son riding in rear tray of a utility knowing driver had consumed alcohol after celebrating at a birthday party; suffered catastrophic injuries; claimant mother suffered pure mental harm; parties agreed to a 30% contributory negligence; dispute distinguishing between claimant mother’s damages and losses sustained due to the care of her injured son; Held – economic loss cannot be calculated with any accuracy and as such, past and future loss of earnings assessed as a buffer; certificate issued by Medical Assessor entitled the claimant to damages for non-economic loss. |
| DETERMINATIONS MADE: | 1. On the issue of liability for the claim, the NRMA’s insured owed a duty of care to the claimant, breached that duty of care and the claimant sustained injury loss and damage as a result of that breach of duty. In respect of the allegation of contributory negligence on the part of the claimant, I assess contributory negligence at 30%. 2. Under sub-sections 7.36 (3) and 7.36 (4) of the Motor Accident Injuries Act 2017, 3. The amount of the claimant’s costs, taking into account the amount of damages assessed in respect of this claim, assessed in accordance with the Motor Accident Injuries Act 2017 is $33,618.16 inclusive of GST. 4. Attached to this certificate are reasons for my assessment. |
Reasons for Decision
Issued under section 7.36(1) of the Motor Accident Injuries Act 2017
Background
The claimant, Mrs Allison Farr says she suffered pure mental harm after her son was involved in a very serious motor vehicle accident on 17 December 2017 (the accident). Her son Joshua, suffered catastrophic injuries after celebrating an 18th birthday party with friends.
On behalf of all legal representatives participating at the Assessment Conference,
I expressed to Mrs Farr our sincere sympathy in regard to the extremely sad and horrific circumstances she and her family face as a result of a senseless and stupid act involving young men with catastrophic consequences. During the course of the Assessment Conference, Mrs Farr became angry and argumentative. I reminded her Ms Allan was sympathetic but she had a job to do and I asked her to take her time before responding.The insurer, IAG Limited t/as NRMA Insurance wholly admitted liability.
The parties reached agreement the assessment of damages be discounted by 30% for contributory negligence.
The assessments of damages are limited to non economic loss and past and future economic loss.
I advised the parties before the commencement of the Assessment Conference that the proceedings were being recorded.
Issues
The following issues arose:
a. with the insurer, having accepted Mrs Farr has suffered an impairment to her work capacity due to the mental harm suffered after the accident, what is her compensable sum for past and future economic loss and superannuation?
b. Mrs Farr is entitled to damages for non economic loss. What is the assessment of this head of damage?
With the insurer, having accepted Mrs Farr has suffered an impairment to work capacity due to the mental harm suffered after the accident, what is her compensable sum for past and future economic loss and superannuation?
Mrs Farr is currently 51 years old. At the time of the accident, she was 46 years old. She is married and has three children. Her eldest son Joshua, was celebrating an 18th birthday party with friends. Alcohol was involved. Joshua was riding in the rear tray of the vehicle which was involved in a collision leaving the 25 year old, a paraplegic, with ongoing internal injuries.
At the time of the accident, Mrs Farr was working for Central Tablelands Water (CTW) as an administrative clerk. She secured this position on 29 October 2012. Although Mr Catsanos’ chronology lists the date as 31 October 2012, around 31 October 2013, Mrs Farr entered into a further agreement with CTW to job share which reduced her employment to three days per week commencing on 6 January 2014. However, according to email communication between Mrs Farr and CTW, she was off work for a period of time in November 2013. She told me during this period she had a lump in her bowel which required surgery. She also recalled Joshua may have had appendicitis. It appears she returned to work at the end of 2013.
CTW undertook a performance review on 30 May 2014 which was reported in a letter to Mrs Farr dated 25 June 2014. The review covered the previous 12 months. Overall, the performance review was very positive. In July 2014, Mrs Farr was moved from a part time position to a full time position. On 14 November 2014 her salary increased to $934.90 per week. By 1 July 2016, her salary was increased to $1,016.60 per week.
Mrs Farr said due to her husband’s unreliable self employment, she applied to CTW to perform a second job at the Royal Hotel at Carcoar which was approved.
A further performance review was conducted on 27 June 2017 and again, Mrs Farr was commended on her commitment and enthusiasm towards her duties.
After the accident on 17 December 2017, Mrs Farr says she devoted her life to caring for her injured son. She needed to be there for him. Whatever Joshua needed, whatever needed to be done all came through her. She spent all her time with Joshua either in hospitals or at rehabilitation programs. Apart from an occasional visit, neither she nor Joshua visited their home in Carcoar until after Easter in 2019.
During this time, Mrs Farr did not work. She says she used up all her long service, holiday and sick leave to be with Joshua. She was also given leave without pay.
Mrs Farr signed a statutory declaration dated 21 August 2019 to provide an explanation in support of a late claim. It appears Mrs Farr made a claim around July 2019. The statutory declaration and statement basically mirror each other. Essentially, Mrs Farr is adamant it was not until mid 2019 she became aware she had also suffered a psychiatric injury caused by the accident.
The real issue is whether Mrs Farr’s loss of earning from July 2019 is due to the accident related psychiatric injury or does the loss flow because she cares for her son.
As the claim for past economic loss was abandoned from 17 December 2017 to July 2019, it is apparent Mrs Farr concedes her loss of earnings is not compensable prior to July 2019. This is a period of more than 18 months. During this period, Mrs Farr had numerous communications between herself and her pre accident employer. When questioned about these at the Assessment Conference, Mrs Farr became upset, swore, and asked why she was being interrogated. I adjourned for 15 minutes to give her time to compose herself.
Of interest is a letter sent to the General Manager of CTW by Mrs Farr dated 15 June 2018. She revealed all her paid leave will expire on 10 August 2018. She applied for extended leave without pay until 1 February 2019. She identified she was the primary carer for Joshua. Further, she says it was her intention to employ a carer for the days she intended to work in February 2019. CTW replied to Mrs Farr on 31 July 2018. Mrs Farr was advised by CTW that all staff had been advised about a full organisational restructure and salary system review during 2018-2019. At the same time, CTW approved Mrs Farr’s request for leave without pay until 31 December 2018. Further, she was advised part time employment of three days per week will be considered during the organisational structure and salary system review.
After the review of CTW organisation was completed, Mrs Farr was told her full time assistant revenue officer position was identified as not being required in the new structure. Two new positions were included in the new structure. CTW offered
Mrs Farr two options, firstly a part time position as a customer service officer three days per week or, alternatively, a voluntary redundancy. CTW approved a further period of leave without pay to 1 February 2019.On 20 December 2018 Mrs Farr had a telephone conversation with CTW’s General Manager at which time the two options were discussed. If Mrs Farr accepted the part time position, CTW were prepared to consider negotiating a return to work date however, advised Mrs Farr that the position could not be held open indefinitely.
The tone of her letter dated 20 January 2019 demonstrated disgust and includes accusations of a lack of empathy and compassion. She was clearly angry and felt the attitude was directed at her because she was a USU member and that she spoke up. She ended the letter by accepting the voluntary redundancy which CTW confirmed in their letter to her dated 6 February 2019. They further offered Mrs Farr access to the Career Assistant Service via the EAP Program and advised her she was entitled to a job search allowance for 12 months post redundancy.
It was pointed out to Mrs Farr that her statement at paragraph 16 is incorrect where she says she was terminated. I agree, she was not terminated but rather offered two alternatives, a part time position at CTW or redundancy. Then at paragraphs 5 and 6 of her updated statement, Mrs Farr suggested she had a conversation with the General Manager. However, it was put to her that conversation never happened because it is clear from the written correspondence Mrs Farr was offered the two options. At no time in those exchanges is there any mention that her ongoing employment was under threat. What is clear, Mrs Farr has focused on the care of Joshua and as such, was unable to return to work. It was not until she received advice from her legal representative that she may have a claim, that Mrs Farr has attempted to alter the facts as set out in communications between herself and CTW. I accept based on the evidence, she accepted the voluntary redundancy because she could not return to any type of work because she was caring for her son.
Due to COVID and other distractions, Joshua was not accepted into the Life Time Care Program until mid 2019. This program has offered care for Joshua which continues. It was around the same time Mrs Farr says she started to think about herself and consulted with her legal representative. Her claim for economic loss was amended to commence in July 2019 rather than December 2017.
It is unclear when Mrs Farr commenced working at Centacare in Bathurst. In her statements, she says this work commenced in early 2020, however, when questioned if this could have been in 2019 at the Assessment Conference, Mrs Farr was unsure and accepted it may have been before 2020. I have not been provided with any records from Centacare. Mrs Farr said due to COVID, she only worked there for about two months. Without supporting evidence demonstrating the period of employment and her earnings during this period, there is uncertainty as to any details of the position, duties, earnings, terms and conditions of the contract of employment and or start and end dates.
In September 2020, Mrs Farr said she secured employment with Western New South Wales Local Health District based at Orange Health Service as an Administrative Officer in the Paediatric Clinic for four days a week. She presented a letter to the Commission on the morning of the hearing. The letter is from Western New South Wales Local Health District dated 19 May 2020 which reveals Mrs Farr works two days per week from 8:30am to 4:30pm. There is no explanation why there has been a reduction in hours. Mrs Farr told me it is because she cannot cope with four days because of her mental harm. There is no medical certificate to support her reason.
Mrs Farr was further asked about large amounts of sick leave in the past prior to the accident. She said her kids took priority and she would do whatever needed to be done.
Other questions about her social life were put to her as she had given a history to
Dr Vickery about walks in the Blue Mountains and belonging to a book club. She confirmed she did those things but said she no longer meets up with other book club members. Dr Vickery assessed Mrs Farr’s whole person impairment at 1%.Notwithstanding a number of inconsistencies with Mrs Farr’s evidence, I do accept she has sustained an impairment to her work capacity partially due to the care of her injured son and partially caused by her mental harm injury.
She is working and up until May 2022, she was coping with four days per week. There is no medical reason why her days have been reduced.
Not surprisingly, her main focus is the ongoing care of her son. She told me she has to work to contribute to the family finances.
Her claim has been amended to include five separate periods from July 2019 to the day of the hearing amounting to $72,742 plus superannuation of $8,000.
The insurer concedes a loss but submits this can only be assessed as a buffer and suggests the amount should be $10,000 inclusive of superannuation. I agree this is a buffer case.
A cushion of buffer assessment is relevant in circumstances where earning capacity has unquestionably been reduced but its extent is difficult to assess, see Allianz Australia Insurance Ltd v Kerr (2012) 83 NSWLR 302, [2012] NSWCA 13.
An accurate mathematical calculation cannot be applied in this case for a number of reasons. Firstly, Mrs Farr has stated on numerous occasions her son is her priority. Secondly, she rejected CTW’s offer of part time employment because of the care of her son. This decision had no bearing on her mental state. It was not until she discussed her emotional state with Mr Tancred that she consulted any doctors or psychiatrists for treatment.
Further, prior to Joshua’s accident, the records demonstrate large periods of leave. In addition, Mrs Farr says herself in a letter to CTW she felt the reason restructure took place was that her position was made redundant because she spoke up and the fact, she was a member of a union. She also indicates in her updated statement that she feels the compensation process has taken too long affecting her recovery.
There is no suggestion Mrs Farr has not suffered an impairment to her work capacity which is partly related to her fragile emotional state.
Considering the number of concerns I have, that the loss she is claiming has not been totally caused by her injury, a buffer for past economic loss including superannuation is assessed to be $40,000.
The statutory test set out section 4.7 of the Motor Accident Injuries Act 2017 (the MAI Act) requires the questions to be asked, what is Mrs Farr’s most likely future circumstance but for her mental harm injuries? That answer is most likely working part time in an administrative role and focusing on the care of her son. However, as with the past loss, I am persuaded Mrs Farr will require to take some days off work to attend to her mental health. She is disadvantaged in the open labour market due to her condition.
She is claiming to age 70 years retirement although I have no supporting evidence that administrative positions offer employment past 67 years in the area of health or other government departments. She says her ongoing loss is $588 net per week based on her pre accident earning less her residual earning capacity. Mr Catsanos is claiming a buffer of $75,000 in addition for early retirement and periods of unemployment.
For the reasons I have expressed in the past economic loss head of damage, this loss cannot be accurately calculated. After the stress of this claim is no longer present,
Mrs Farr may find her condition improves allowing her to embark on further work.I do agree she is disadvantaged in the open labour market, however, this disadvantage is partially due to her devotion to the care of her son.
Mrs Farr is 51 years old. She has another 16 years of administrative work ahead of her. She is emotionally unwell and will experience a future loss of earnings.
Her claim for $588 is excessive and on the evidence, cannot be supported. Likewise, the insurer’s suggestion of a buffer of $30,000 which they say adequately compensates Mrs Farr’s loss of future earning capacity is inadequate considering this lady’s mental health state.
Having regard to all of the circumstances discussed throughout this decision on the assessment of economic loss, the appropriate buffer for future loss of earning capacity for Mrs Farr is $100,000 including superannuation.
Mrs Farr is entitled to damages for non economic loss. What is the assessment of this head of damage?
A dispute arose between the parties on Mrs Farr’s entitlement to damages for non economic loss. As such, she was referred to the Medical Assessor Mason at the Commission on 23 November 2021 to assess whole person impairment. The assessment was carried out via A/V Link Interview. Assessor Mason took a complete history from Mrs Farr and reviewed documentation provided to him by both parties. He issued a certificate which confirmed injuries caused by the accident to give rise to a permanent impairment of 16% which is greater than 10%. The injuries include
post-traumatic stress disorder and major depressive disorder. This certificate entitles Mrs Farr to damages for non economic loss.Division 4.3, section 4.11 relevantly:
“No damages for non economic loss may be awarded in respect of injury unless the degree of permanent impairment of the injured person as a result of the injury caused by the motor accident is greater than 10%.
Section 4.13(1)
The maximum amount of damages that may be awarded for non economic loss is $595,000
Section 4.13(2)
If that amount is adjusted by the operation of section 4.22(Indexation of maximum for non economic loss damages), the applicable maximum amount is the amount as at the date the award is made.”
The maximum award which was the indexation order made on 1 October 2021 is $595,000. To put the amount of damages for non economic loss into lay terms, I must assess what Mrs Farr’s non economic loss is up to $595,000 being the maximum sum. The maximum amount is generally accepted to be reserved for claimant’s with extreme catastrophic injuries such as brain injury, spinal paraplegia as examples.
By virtue of section 4.11 of the MAI Act the claimant is entitled to damages for non-economic loss and section 4.13(1) prescribes a maximum that I may award for non-economic loss. Section 1.4 relevantly defines non economic loss to mean:
a. Pain and suffering, and
b. Loss of amenities of life, and
c. Loss of expectation of life, and
d. Disfigurement.
The question for me becomes what assessment should be made of this claimant’s entitlement to general damages having regard to the particular circumstances of this case.
Damages are assessed with the application of Common Law Principles up to the maximum provided for in section 4.13(1). This was explained by Heydon JA in Hodgson v Crane (2002) 55NSWLR 199 when he said it is not possible to construe the concept of proportionality out of the language of section 131- section 134 of MAC Act. When the threshold of 10% of whole person impairment was passed, the court was required to assess non-economic loss without statutory restraint except for the maximum that may be awarded.
According to the authority in Dell v Dalton (1991) 23NSWLR 528 the court determined that the assessment of non-economic loss involved “…questions of fact and degree, and matters of opinion, impression, speculation and estimations, calling for the exercise of common sense and judgment”.
Mrs Farr told the Medical Assessor she was depressed and had constant suicidal ideation. She described ongoing nightmares and flashbacks. She avoids people and is socially isolated. She has separated from her husband. She finds it hard to concentrate and no longer attends to housework.
Her mental state presents as pain and suffering. Her quality of life has been impaired. She is only 51 years of age and has to deal with her grief every day. She claims her non economic loss should be assessed at $350,000, whereas, the insurer has pitched their assessment of non economic loss to be $180,000.
Having regard to all the circumstances of Mrs Farr’s predicament, the appropriate assessment of non economic loss is $250,000.
Assessment of damages summary
Under sub-section 7.36 (1)(b) of the MAI Act, I am required to make an assessment of the amount of damages for that liability that a court would be likely to award.
I assess the claim as follows on the findings set out above:
· Non-Economic Loss $250,000
· Past loss of earnings (incl. superannuation) $40,000
· Future loss of earnings (incl. superannuation) $100,000
Total$390,000
Total Damages Assessed less 30% contributory negligence $273,000
Costs and disbursements
A schedule of costs and disbursements was lodged on the Portal on 22 June 2022 and the insurer has conceded to the amounts claimed which are included in the costs calculation sheet.
Legislation
In making my decision I have considered the following legislation and guidelines:
· the MAI Act, and
· Personal Injury Commission Rules 2021.
Elyse White
Member (Motor Accidents Division)
Personal Injury Commission
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