Insurance Australia Limited Ltd trading as NRMA Insurance v Hutton-Potts
[2010] NSWSC 1446
•17 December 2010
CITATION: Insurance Australia Limited Ltd trading as NRMA Insurance v Hutton-Potts and Ors [2010] NSWSC 1446 HEARING DATE(S): 2 December 2010
JUDGMENT DATE :
17 December 2010JUDGMENT OF: Schmidt J at 1 DECISION: 1. The assessment certificate and determination of the first defendant, the claims assessor, be set aside.
2. Mr Hutton-Potts' application be remitted to the Principal Claims Assessor for allocation to a different Claims Assessor for determination according to law.
The usual order as to costs is that they follow the event, with the result that Mr Hutton-Potts should pay the plaintiff's costs, as agreed or assessed. The parties have liberty to approach if there is any disagreement as to costs.CATCHWORDS: ADMINISTRATIVE LAW - judicial review - grounds of review - whether claims assessor adhered to s 126 of the Motor Accidents Compensation Act 1999 - jurisdictional error - failure to give adequate reasons for decision - denial of procedural fairness - refusal of adjournment and denial of opportunity to put a case on causation - claims assessor's certificate and determination be set aside - application to be remitted to Principal Claims Assessor for allocation to different claims assessor for determination - costs LEGISLATION CITED: Motor Accidents Compensation Act 1999 CATEGORY: Principal judgment CASES CITED: Akora Holdings Pty Ltd v Ljubicic [2008] NSWCA 339
Allianz Insurance Australia Ltd v Ward [2010] NSWSC 720
Allianz Australia Ltd v Ward [2009] NSWCA 264
Campbelltown City Council and Vegan (2006) NSWLR 372
Kirk v Industrial Relations Commission of New South Wales [2010] HCA 1; (2010) 239 CLR 531
Insurance Australia Limited v Helou [2008] NSWCA 240
Italiano v Carbone & Ors [2005] NSWCA 177
NAIS v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 228 CLR 470
Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30; (2001) 206 CLR 323
SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs [2006] HCA 63; (2006) 228 CLR 152
State of NSW v Moss [2000] NSWCA 133
State of NSW (NSW Police) v Nominal Defendant [2009] NSWCA 225
Qantas Airways Ltd v Gubbins and Others (1992) 28 NSWLR 26PARTIES: Plaintiff - Insurance Australia Limited Ltd trading as NRMA Insurance
First Defendant - Nigel Hutton-Potts
Second Defendant - John Watts
Third Defendant - Motor Accidents Authority of New South WalesFILE NUMBER(S): SC 2006/290443 COUNSEL: Plaintiff - Mr KP Rewell SC with Mr CDR Jackson
First Defendant - Mr CT Barry QC with Mr P FrameSOLICITORS: Plaintiff - Moray & Agnew
First Defendant - Keddies Lawyers
LOWER COURT FILE NUMBER(S): 2009/11/0145 LOWER COURT JUDICIAL OFFICER : Blackmore DCJ
- IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION
SCHMIDT J
FRIDAY, 17 DECEMBER 2010
JUDGMENT2010/290443 INSURANCE AUSTRALIA LIMITED trading as NRMA INSURANCE v NIGEL HUTTON-POTTS
1 HER HONOUR: By amended summons filed in December 2010, the plaintiff sought orders in the nature of certiorari, or in the alternative a declaration setting aside or declaring invalid the assessment and certificate Claims Assessor Watts made on 26 July 2010, pursuant to s 94 of the Motor Accidents Compensation Act 1999 ('the Act'). In the further alternative, injunctions preventing the defendants from acting on the assessment decision were sought and an order in the nature of mandamus, remitting the claim for reallocation to a different claims assessor, for determination according to law.
2 The second and third defendants, Claims Assessor Watts and the Motor Accidents Authority of New South Wales, filed submitting appearances. The first defendant, the claimant Mr Nigel Hutton-Potts, opposed the making of the orders sought, while not putting in issue the Court’s power to grant such relief.
3 The plaintiff pressed its case on three principal bases. Firstly, a failure to adhere to the requirements of s 126 of the Act. Secondly, error going to jurisdiction, by denying the plaintiff an adequate opportunity to present its case, thereby denying it procedural fairness. The third complaint was a failure to give adequate reasons for the decision given.
The circumstances of the claim
4 These can be shortly stated. In December 2001, Mr Hutton-Potts' scooter collided with a motor vehicle driven by a driver insured by the plaintiff. There was no issue as to liability. What was in issue was causation. The claim was for compensation of over $3 million.
5 An ambulance attended the scene. Mr Hutton-Potts had sustained various injuries in the collision. He had been wearing a helmet and the ambulance report noted that he had hit the windscreen and that the windscreen had cracked. He was conscious and denied having lost consciousness. A Glasgow coma test was administered on arrival and again ten minutes later. A perfect score of 15 was twice recorded.
6 At Prince of Wales Hospital, Mr Hutton-Potts’ complaints were noted to be pain to the right hand, left foot, right knee and abrasion to the back. A fracture was found in the right hand, for which he received treatment. Degenerative changes in the neck were found. There was no reference to any brain injury. That was a possibility not investigated at the time. Nor was there complaint about symptoms which could have resulted from such an injury for some years.
7 The possibility of a brain injury having been sustained in the accident was first recorded in a document of Dr Heks, dated 28 September 2005. Dr Heks observed:
"Multiple injuries due to a motorcycle accident on 7/12/01 and has sustained a head injury which needs urgent further investigations and specialist referral."
8 Dr Heks also noted amongst other things a history of pre-accident drug use, hepatitis C and treatment for psychosis and recommended that further information, including notes of treating GP, Dr Donoghue and the psychiatrist who had treated Mr Hutton-Potts, be obtained.
9 In 2006 the plaintiff sought an authority from Mr Hutton-Potts to obtain his Centrelink records, so that his treating doctors could be identified. This was refused and repeatedly pursued. Two medical practitioners who examined Mr Hutton-Potts, Dr Maguire and Professor Mattick, advised that there was doubt that the symptoms on which Mr Hutton-Potts relied to establish his claim resulted from head injuries suffered during the accident. Both postulated that he was suffering from a schizophrenic disorder unrelated to the accident. There was a family history of that illness. They were of the view that the medical records being pursued could shed light on Mr Hutton-Potts' condition.
10 In 2009 authorities for release of Medicare history, PBS history and Centrelink records were provided for signature by Mr Hutton-Potts. At the first preliminary conference before the claims assessor in December 2009, Mr Hutton-Potts refused to provide such authorities. The plaintiff was required to make submissions as to why a direction to produce such authorities should be issued. It was not until January 2010 that the authorities were provided.
11 The Centrelink records disclosed a history of acute polar disorder in 1992, hepatitis C and impaired memory and concentration in 2001, with significant lethargy and fatigue from hepatitis C making Mr Hutton-Potts unfit for work in 2003. Eleven treating doctors were identified, before and after the accident. Authorities were provided by the plaintiff for Mr Hutton-Potts to sign in March 2010, to release the records of these treating doctors. At a further preliminary conference, Mr Hutton-Potts' solicitor accepted that these records would be sought and provided to the plaintiff.
12 The assessment conference was fixed for 15 July 2010. On 12 July, when the outstanding medical records had still not been produced, an adjournment was sought by the plaintiff. That application was opposed by Mr Hutton-Potts. At the assessment conference the adjournment application was refused with the result an assessment in Mr Hutton-Potts' favour pursuant to s 130 of the Act of $2,333,282.42.
The scheme of the Act
13 The case advanced for Mr Hutton-Potts was that the Court was here concerned with the question of whether or not the assessor had acted according to law. That required an analysis of the statutory scheme as a whole, given the power there granted to make the challenged assessment. (see NAIS v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 228 CLR 470; Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30; (2001) 206 CLR 323 at [73] - [74] and SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs [2006] HCA 63; (2006) 228 CLR 152 at [26]).
14 The scheme of the Act was discussed by Young JA in Allianz Australia Ltd v Ward [2009] NSWCA 264 at [48] - [51]:
"48 The “MAC Act” clearly sets up a regime whereby there is to be a relatively informal assessment of damages by an administrative official. This displaces the former system of trial by judge or judge and jury with witnesses called and cross-examined. The new system is doubtless much cheaper. However, one would not expect that its accuracy would be as great as the result obtained through what is now regarded as a “Rolls Royce” procedure.
50 The aim of the legislature was to see that claimants were assessed quickly and cheaply and paid their entitlements promptly."49 The legislature doubtless considered that errors could emerge out of the new procedure. However, it provided that there would be a review for obvious error by the Principal Claims Assessor, but only for obvious error and provided no appeal to the insurer.
15 The objects of the Act are specified in s 5:
- " 5 Objects of Act
- (cf s 2A MAA; Sch 1 [1] of Act No 132 of 1998)
- (a) to encourage early and appropriate treatment and rehabilitation to achieve optimum recovery from injuries sustained in motor accidents, and to provide appropriately for the future needs of those with ongoing disabilities,
(b) to provide compensation for compensable injuries sustained in motor accidents, and to encourage the early resolution of compensation claims,
(c) to promote competition in the setting of premiums for third-party policies, and to provide the Authority with a prudential role to ensure against market failure,
(d) to keep premiums affordable, recognising that third-party bodily insurance is compulsory for all owners of motor vehicles registered in New South Wales,
(e) to keep premiums affordable, in particular, by limiting the amount of compensation payable for non-economic loss in cases of relatively minor injuries, while preserving principles of full compensation for those with severe injuries involving ongoing impairment and disabilities,
(f) to ensure that insurers charge premiums that fully fund their anticipated liability,
(g) to deter fraud in connection with compulsory third-party insurance.
- (a) that participants in the scheme under this Act have shared and integrated roles with the overall aim of benefiting all members of the motoring public by keeping the overall costs of the scheme within reasonable bounds so as to keep premiums affordable, and
(b) that the law (both the enacted law and the common law) relating to the assessment of damages in claims made under this Act should be interpreted and applied in a way that acknowledges the clear legislative intention to restrict the level of non-economic loss compensation in cases of minor injuries, and
(c) that:
- (i) the premium pool from which each insurer pays claims consists at any given time of a finite amount of money, and
(ii) insurers are obliged under this Act to charge premiums that will fully fund their anticipated liability, and
(iii) the preparation of fully funded premiums requires a large measure of stability and predictability regarding the likely future number and cost of claims arising under policies sold once the premium is in place, and
(iv) the stability and predictability referred to in subparagraph (iii) require consistent and stable application of the law, and
16 Motor accident claims are dealt with in Chapter 4 of the Act. Section 80 imposes a duty on insurers to ‘to endeavour to resolve a claim, by settlement or otherwise, as justly and expeditiously as possible’. Various other duties are imposed, not necessary to mention here. Duties are also imposed on claimants, including in s 85:
- " 85 Duty of claimant to co-operate with other party
- (cf s 48 MAA)
- (a) to be satisfied as to the validity of the claim and, in particular, to assess whether the claim or any part of the claim may be fraudulent, and
(b) to be able to make an early assessment of liability, and
(c) to be able to make an informed offer of settlement.
- (a) to furnish specified information (in addition to the information furnished in the claim form) or to produce specified documents or records, or
(b) to provide a photograph of and evidence as to the identity of the claimant.
- (a) the amount of time the claimant needs to comply with the request,
(b) whether the information sought is cogent and relevant to a determination of liability or quantum of loss, having regard to the nature of the claim,
(c) the amount of information which has already been supplied to or is available to an insurer to enable liability and quantum of loss to be assessed and an offer of settlement made,
(d) how onerous it will be for the claimant to comply with the request,
(e) whether the information is privileged,
(f) whether the information sought is sufficiently specified,
(g) the time of the request and whether the claimant will be delayed in commencing proceedings by complying with the request.
17 Claimants are also obliged to undergo medical examinations requested by the insurer (s 86). Section 89A obliges parties to participate in a settlement conference, which is made a precondition to an assessment of the claim. Documents to be relied on must be exchanged beforehand (s 89B). Assessment of claims is dealt with in Chapter 4 Division 2. The Principal Claims Assessor is responsible for making arrangements as to who is to assess the claim (s 93). The assessment is undertaken in accordance with s 94, which provides:
- " 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).
(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."
18 Guidelines for the conduct of assessments have also been issued pursuant to s 69(1) of the Act. Section 106(1) provides that:
"(1) Claims assessments under this Part are subject to relevant provisions of MAA Claims Assessment Guidelines relating to those assessments."
19 Chapter 16 - Assessment Procedure of the Guideline provides:
" Assessor’s role
16.2 The Assessor is to take such measures as are reasonably practicable to:16.1 In conducting an assessment the Assessor may determine the Assessor’s own procedure and is not bound by the rules of evidence and may inquire into any matter in such manner as the Assessor thinks fit.
- 16.2.1 ensure that the parties to the application understand the nature of the application, the issues to be considered and the role of the Assessor as an independent decision-maker;
16.2.2 explain to the parties any aspect of the procedure of the assessment, and any interim decision or ruling made by the Assessor during the course of the assessment, in respect of that procedure, that relates to the application;
16.2.3 ensure that the parties have an opportunity to have their submissions considered; and
16.2.4 ensure that the parties have had an opportunity to explore the settlement of the dispute.
16.3 The Assessor is to act with as little formality as the circumstances of the matter permit and according to equity, good conscience and the substantial merits of the matter without regard to technicalities and legal forms.
16.4 The Assessor is to take into account the objects of the Act and the objects of CARS at all times.
16.5 The Assessor is to ensure that relevant material is available so as to enable all of the relevant facts in issue to be determined.
16.6 The Assessor may admit into evidence the contents of any document that has previously been provided by one party to the other party, despite non-compliance with any time limit or other requirement specified in the Act or the Guidelines in relation to that document or service or exchange of it after taking into account any submissions of the parties.
16.8 The Assessor shall determine the way in which an assessment is to proceed and may:16.7 The Assessor is to progress the resolution of the matter as quickly, fairly and as cost effectively as is practicable.
- 16.8.1 decide the elements of a claim on which oral evidence or oral argument may be submitted;
16.8.2 direct that evidence or argument be presented in writing;
16.8.3 direct that submissions be presented in writing;
16.8.4 determine whether an Assessment Conference is necessary and the time and place for any Assessment Conference that is to be held;
16.8.5 determine whether any other conference is necessary; and
16.8.6 direct the number and/or type of witnesses who can give evidence at the conference.
16.9 Subject to the location of the Assessment Conference, the Assessor must hold such a conference within 25 days of the final preliminary assessment, or 25 days after compliance with all directions made by the Assessor, whichever is the later.
16.11 For the purpose of section 104(6), an Assessor may make an assessment without conducting an Assessment Conference if satisfied that the information before the Assessor is sufficient to enable the Assessor to make a determination of the issues that are the subject of the assessment. In exercising the discretion not to hold an Assessment Conference, the Assessor must have regard to:16.10 In accordance with section 104(5), if the Assessor intends to conduct separate Assessment Conferences in private with either of the parties or with relevant witnesses or experts, the Assessor must inform the parties before any such conference takes place.
- 16.11.1 the complexity of the claim;
16.11.2 the likely quantum of the claim;
16.11.3 whether the credit of the claimant or any witness is in issue;
16.11.4 whether the matter is a general or special assessment; and
16.11.5 any submission by the parties as to why a conference is required.
16.12 When undertaking an assessment and making an assessment of the amount of damages for the claim under section 94(1), the Assessor is to assess damages in accordance with Chapter 5 of the Act in the same the way in which a Court is required to assess damages."
20 The plaintiff complains that the assessor failed to adhere to these requirements, in refusing the adjournment it sought, in order that the missing medical records could be pursued, so that it would be given a fair opportunity to put its case on causation.
21 An assessment as to liability is not binding on either party, but assessment of damages binds an insurer, if liability is accepted and the claimant accepts the assessment within 21 days of the issue of a certificate of assessment. The assessment of damages is not binding on a claimant (s 95).
22 Claims assessors are granted various powers. Sections 100 and 101 provide:
- " 100 Power of claims assessor to require information
(1) A claims assessor may give a direction in writing to a party to an assessment under this Part requiring the party:
- (a) to produce to the assessor, at a time and place specified in the direction, specified documents in the possession of the party, being documents that the assessor considers relevant to the assessment of the claim concerned, or
(b) to furnish specified information to the assessor within a time specified in the direction, being information that the assessor considers relevant to the assessment of the claim concerned, or
(c) to give within a time specified in the direction any specified consent, authority or direction that the assessor considers necessary or desirable for the purpose of facilitating the provision by another person of documents or information pursuant to a direction under subsection (1A).
- (a) to produce to the assessor, at a time and place specified in the direction, specified documents in the possession of the person, being documents that the assessor considers relevant to the assessment of the claim concerned, or
(b) to furnish specified information to the assessor within a time specified in the direction, being information that the assessor considers relevant to the assessment of the claim concerned.
(2) A person who fails without reasonable excuse to comply with a direction given to the person under this section is guilty of an offence.
- Maximum penalty: 50 penalty units.
(4) The regulations may make provision for or with respect to any of the following matters:
- (a) exempting specified kinds of documents or information from the operation of this section,
(b) specifying cases and circumstances in which a claims assessor is required to exercise the assessor’s powers under this section.
101 Power of claims assessor to provide documents and information to a party
(1) When documents or information are produced or furnished to a claims assessor by a party to an assessment (whether or not pursuant to a requirement under this Act), the assessor may produce or furnish the documents or information to any other party to the assessment.
(1A) When documents or information are produced or furnished to a claims assessor by a person who is not a party to an assessment (pursuant to a direction under section 100 (1A)), the assessor may produce or furnish the documents or information to any party to the assessment.
(2) The regulations may make provision for or with respect to any of the following matters:
- (a) exempting specified kinds of documents or information from the operation of this section,
(b) specifying cases and circumstances in which a claims assessor is required to exercise the assessor’s powers under subsection (1),
(c) specifying circumstances in which documents or information produced or furnished to a claims assessor may not be produced or furnished by the assessor to a party to the assessment."
23 It was common ground that subsections 100(1A) and (1B) did not apply in this case, having been enacted subsequently to the claim in question.
24 The conduct of assessment conferences is dealt with in s 104, which provides:
- " 104 Proceedings before claims assessors
(1) In this section:
- assessment conference means any conference or other proceeding held with or before a claims assessor in connection with an assessment of a claim, and includes any such proceedings at which the parties (or some of them) participate by telephone, closed-circuit television or other means.
(3) A party to an assessment at an assessment conference is entitled to such representation or assistance (for example, the assistance of an interpreter) as may be necessary to enable the party to communicate adequately at the assessment conference.
(4) A claims assessor must take into account any written submission prepared by an Australian legal practitioner acting for a party to the assessment and submitted by or on behalf of the party (whether or not the party is represented by an Australian legal practitioner at an assessment conference on the assessment of the claim).
(5) A claims assessor may, subject to any general directions of the Principal Claims Assessor, hold an assessment conference with all relevant parties in attendance and with relevant experts in attendance, or a separate assessment conference in private with any of them.
(6) If the claims assessor is satisfied that sufficient information has been supplied to him or her in connection with an assessment, the assessor may exercise functions under this Act without holding any assessment conference or other formal hearing.
(7) In proceedings before a court with respect to a claim (other than proceedings under Part 4.6), evidence of a statement made during an assessment conference is not admissible unless the person who made the statement agrees to the evidence being admitted.
- Note. See also section 115 with respect to disclosure of result of assessment. "
25 The control of assessors by the Principal Claims Assessor is dealt with in s 105:
- " 105 Control and direction of claims assessors
(1) A claims assessor is, in the exercise of his or her functions, subject to the general control and direction of the Principal Claims Assessor.
(2) However, a claims assessor is not, in his or her capacity as a claims assessor, subject to control and direction by the Principal Claims Assessor, the Authority, any member of staff of any Division of the Government Service or any other person with regard to any of the decisions of the assessor that affect the interests of the parties to an assessment.
(3) The Principal Claims Assessor, the Authority, any member of staff of any Division of the Government Service or any other person cannot overrule or interfere with any decision of a claims assessor who is a member of staff that affects the interests of the parties to an assessment in respect of any such assessment.
(4) This section does not prevent the making of arrangements for the training of claims assessors, and does not prevent claims assessors from obtaining advice, to ensure consistently correct application of the provisions of this Act and the regulations and of other relevant matters.
(5) This section does not affect the exercise of the functions of the Chief Executive Officer of the Authority under the Public Sector Employment and Management Act 2002 with respect to claims assessors who are members of staff."
26 Court proceedings on claims are dealt with in Part 4.5 of Chapter 4. There is no right of appeal provided from a claims assessor’s assessment, but a Principal Claims Assessor may issue a replacement certificate if ‘satisfied that a certificate as to an assessment or a statement attached to the certificate contains an obvious error’ (s 94(6)). There can be no question that this power does not enable a Principal Claims Assessor to deal with problems of the kind here claimed to have arisen with the proceedings before the assessor.
27 Awards of damages are regulated in Chapter 5. Section 122(3) provides:
- "(3) This Chapter applies to and in respect of the assessment of damages by a claims assessor under Part 4.4 in the same way as it applies to and in respect of an award of damages by a court."
28 Damages for economic loss are dealt with in Part 5.2 of the Act. Damages for future economic loss are dealt with in s 126, which provides:
- " 126 Future economic loss—claimant’s prospects and adjustments
- (cf s 70A MAA)
(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."
29 The plaintiff complains that the assessor failed to adhere to the requirements of this section, in the assessment made of future economic loss.
Adherence to the requirements of s 126 of the Act
30 In order to understand the parties’ contest over this issue, it is convenient to set out the assessor’s short reasons for the assessment of economic loss. He found:
" LOSS OF EARNING CAPACITY
Past loss
There is one issue on which there seems general agreement, and that is that the Claimant has no present earning capacity and will never have any.
In assessing past and future economic loss it is necessary to determine what the Claimant's pre-accident capacity was. He was not working at the time of the accident and had a history of hepatitis C infection. He had undertaken a course before the accident but he had, what might be described, as a patchy work history for a period in the years immediately following the accident the Claimant received medication for his hepatitis C as part of a clinical trial. That appears to have caused him some significant lethargy although part of that lethargy may well have been caused by his then undiagnosed brain injury. It is now difficult to know.
I am satisfied that, but for the accident, the hepatitis C is likely to have had some impact from time to time on the Claimant's earning capacity. Both sides have provided accounting reports. The Claimant's report was one by Doleman Bateman dated 8 April 2009. The insurer report was by RGL Forensics dated 21 May 2010. Like all accounting reports, they both depend strongly upon the assumptions but they were both of some assistance.
It is clear that the Claimant is unlikely, but for the accident, to have earned much, if anything, in the two or three years following the accident. This fact was conceded by the Claimant's accountant. The Clamant was in the process of establishing a new business and, but for the accident it might or might not have succeeded. The Claimant told me that if the business had not worked out he would have gone back to doing driving and maintenance jobs as he had in the past. I accept that evidence.
The Doleman Bateman report says that its author was unable to determine the likely profits of the business. The author has therefore based his calculations upon likely earnings of sales representatives. The figures quoted are of a gross income of just over the $60,000.00 marked between 2003 and 2008. The total past loss to 31 March 2009 is said to be this sum of $241,975.00. I do not accept that past earnings can be calculated with that degree of precision and the figure appears to be above the Claimant's historical earnings. The assumption that the Claimant would have become a full time salesman, if the business had failed, is not supported by the Claimant's own evidence.
Doing the best that I can I assess the Claimant's past income loss on the basis of a loss of $500.00 per week from 1 July 2004 to the present. That comes to an amount of $156,500.00 which amount I allow for past income loss including lost superannuation.
Future loss
I assess this on the basis that the Claimant will not work again and on the basis that but for the accident the Claimant is likely to have continued to have a rather patchy work history. It seems to me that it would be reasonable to assess his future loss at $500.00 per week including loss of superannuation.
Future earnings loss is calculated at $500 X 502.3 X .85 which comes to $231,477.50 which amount I allow for future loss of earning capacity including loss of superannuation."The Claimant is presently aged 52 and the multiplier to age 65 is 502.3.
31 What is required under s 126 of the Act was considered in State of NSW (NSW Police) v Nominal Defendant [2009] NSWCA 225, where Beazley JA said at [82] - [88]:
- "82 It is reasonable to comment that the drafting of s 126 is not particularly clear and its proper construction and thus application has caused the courts considerable anxiety. There have been calls for legislative clarification: see MacArthur Districts Motor Cycle Sportsman Inc v Ardizzone [2004] NSWCA 145; (2004) Aust Torts Reports 81-744. In this case, the Court requested the parties to provide a joint note as to the history of s 126. In providing those submissions, the parties indicated a common approach to the proper construction of the section.
83 Pursuant to that request, the parties submitted that the correct approach to s 126 was: first, to arrive at an assumption as to the plaintiff’s most likely earnings had the plaintiff remained uninjured: s 126(1); and secondly, to take into account other possibilities in adjusting the resulting calculation of damages for future economic loss for contingencies, including that the plaintiff’s earnings may have been higher or lower had the plaintiff remained uninjured: s 126(2). Section 126(3) then required the Court to make explicit the assumptions upon which the award was based. In this regard, the assumptions in s 126(1) and s 126(2) had to be specified.
84 The parties further submitted that in the usual case, the Court could award damages for future economic loss by determining the difference between the plaintiff’s “most likely” future earnings uninjured and “most likely” earnings injured. In determining the first of these integers, they accepted that the Court may take into account a range a possible future circumstances had the plaintiff remained uninjured. In that regard, they accepted that the correct approach to the assessment of future economic loss under s 126 was the approach approved by the Court in Norris v Blake (by his Tutor Porter) (No 2) (1997) 41 NSWLR 49; (1997) 25 MVR 101. The parties also submitted that that assessment would then be made subject to a discount for vicissitudes and suggested that, in the normal course, the usual discount for vicissitudes would be 15 per cent.
85 Some comment is required in respect of Norris v Blake (No 2) and the adjustment made for contingencies. Before dealing with those two matters, reference should also be made to Graham v Baker and Malec.
86 Graham v Baker is authority for the basal proposition that an injured plaintiff recovers not merely because his or her earning capacity has been diminished, but because the diminution of his or her earning capacity is, or may be, productive of financial loss.
87 In Malec, Deane, Gaudron and McHugh JJ explained how the assessment of that loss is to be undertaken. Although the relevant passage is long, it is appropriate to set it out in full, given that the appellant relied upon it as being the framework for the proper construction of s 126. Their Honours stated, at [7], 643:
- “If the law is to take account of future or hypothetical events in assessing damages, it can only do so in terms of the degree of probability of those events occurring. The probability may be very high - 99.9 per cent - or very low - 0.1 per cent. But unless the chance is so low as to be regarded as speculative - say less than 1 per cent - or so high as to be practically certain - say over 99 per cent - the court will take that chance into account in assessing the damages. Where proof is necessarily unattainable, it would be unfair to treat as certain a prediction which has a 51 per cent probability of occurring, but to ignore altogether a prediction which has a 49 per cent probability of occurring. Thus, the court assesses the degree of probability that an event would have occurred, or might occur, and adjusts its award of damages to reflect the degree of probability. The adjustment may increase or decrease the amount of damages otherwise to be awarded. See Mallett v. McMonagle (1970) AC 166, at p 174; Davies v. Taylor (1974) AC 207, at pp 212, 219; McIntosh v. Williams (1979) 2 NSWLR 543, at pp 550-551. The approach is the same whether it is alleged that the event would have occurred before or might occur after the assessment of damages takes place.”
32 It was argued for Mr Hutton-Potts that these conclusions as to the operation of s 126 were not binding and that in any event, the assessor had complied with the requirements of the section. While s 122(3) required the assessor to undertake the assessment of damages in the same way as a Court, assessors were not obliged to provide reasons for the conclusions reached, in the way that a Court was obliged to do, given the provisions of s 94(5) (see Insurance Australia Limited v Helou [2008] NSWCA 240 at [61]).
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.
34 By an analysis of the reasons given, including those given in relation to past economic loss, it was argued for the first defendant that those assumptions were apparent, even if not expressly identified. Having carefully considered that submission, I am afraid that it may not be accepted.
35 In evidence were various expert reports, which went to the question of economic loss. The assessor dealt with them, noting that there was general agreement that the claimant had no present earning capacity. He then turned to his pre-accident capacity, when he had ‘a patchy work history’ and had participated in a clinical trial for treatment of his hepatitis C, which caused significant lethargy. It was concluded that this is likely to have had some impact from time to time on his earning capacity.
36 The assessor then turned to the post accident period, where he found that but for the accident, the claimant was unlikely to have earned anything for two to three years. He was then pursuing a business, the likely profit of which could not be determined.
37 The assessor accepted what the claimant said, that if the business had not worked out, he would have returned to the driving and maintenance jobs he had done in the past. The claim was, however, based on likely earnings of a sales representative, with losses of just over $60,000 per annum claimed. This claim was not accepted, not being supported by the claimant's own evidence. As to the future, it was assumed that a patchy work history would have continued. The claimant was unlikely to work again.
38 As submitted for Mr Hutton-Potts, when assessing damages in a situation where there is but scant evidence, a Court cannot generally abandon the attempt. In State of NSW v Moss [2000] NSWCA 133, Heydon JA observed at [87]:
- "In short, where earning capacity has unquestionably been reduced but its extent is difficult to assess, even though no precise evidence of relevant earning rates is tendered, it is not open to the court to abandon the task and the want of evidence does not necessarily result in non-recovery of damages. Statements to the contrary such as those made in Allen v Loadsman [1975] 2 NSWLR 787 at 792 are not correct: Baird v Roberts [1977] 2 NSWLR 389 at 397-8 per Mahoney JA; J K Keally v Jones [1979] 1 NSWLR 723 at 732-735 per Moffitt P; Yammine v Kalwy [1979] 2 NSWLR 151 at 154-5 and 156-7 per Reynolds JA and Mahoney JA; Thiess Properties Pty Ltd v Page (1980) 31 ALR 430; see also Radakovic v R G Cram & Sons Pty Ltd [1975] 2 NSWLR 751 at 761 where Samuels JA criticised the "meagre facts" provided but did not say it was not open to the jury to find a substantial sum for diminished earning capacity by the "application of their own knowledge and experience". The task of the trier of fact is to form a discretionary judgment by reference to not wholly determinate criteria within fairly wide parameters. Though the trier of fact in arriving at the discretionary judgment must achieve satisfaction that a fair award is being made, since what is involved is not the finding of historical facts on a balance of probabilities, but the assessment of the value of a chance, it is appropriate to take into account a range of possible outcomes even though the likelihood of any particular outcome being achieved may be no more than a real possibility. The trial judge in substance explained these aspects of the jury's task satisfactorily."
39 That is the position at common law. When dealing with claims brought under the Act, however, the obligations imposed by s 126 must be observed. That required the assessor to explain the assumptions he made, on which the damages assessed for future economic loss of $231,477.50 rested. All that was identified was that it rested on a weekly figure of $500. That seems a conclusion inconsistent with the claimant's pre-accident work history, which had been patchy. While it was said expressly that this would have continued, an award of $500 per week did not reflect that assumption. There was no explanation of the assumptions on which that departure rested. What assumption the $500 figure selected as the weekly rate rested on, was also not explained.
40 That approach does not accord with the Court of Appeal’s discussion in State of NSW (NSW Police) of what s 126 requires. For my part, I cannot see any good reason for departing from that construction of the section, even if the view that the decision was not binding, could be accepted. What other approach was being urged for the first defendant was not, in any event, clear. For myself, the fact that Beazley J took the view that it was not necessary in the circumstances where the parties were in accord as to the proper construction of the section to embark on a lengthy explanation for the conclusion reached in relation to Malec v JC Hutton Pty Ltd [1990] HCA 20; (1990) 169 CLR 638, does not result in the decision not being binding on this Court. In any event, the construction of the section discussed, particularly at [83] and [84], seems to me to accord with the intent, structure and purpose of the section.
41 The result of these conclusions, it seems to me, must be the same as that reached by Hidden J in Allianz Insurance Australia Ltd v Ward [2010] NSWSC 720 at [53], applying Kirk v Industrial Relations Commission of New South Wales [2010] HCA 1; (2010) 239 CLR 531. The error is jurisdictional. While there is a discretion to refuse the grant of prerogative relief, the error here in question cannot be described as minor, resulting as it has in an award of damages for future economic loss of over $230,000. Unlike the situation in Ward, this is not the only basis on which the assessment is challenged. For reasons which I will explain in relation to the other matters argued, they, too, support the conclusion that this is not an appropriate case to exercise the discretion to refuse relief.
Inadequacy of reasons
42 For the reasons which I have already explained, it is apparent that the assessor's explanation of the reasons for the award of damages for future economic loss was inadequate. The Guidelines which bound the assessment process in this respect were provided in Chapter 18.4:
- "18.4 A certificate under section 94 or 96 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."
43 This was an express obligation, which s 106 required the assessor to observe, but which was not complied with. The assessor made no reference to the requirements of s 126; did not explain his departure from the conclusion reached as to a patchy work history; and did not explain how the figure of $500 was arrived at on the evidence.
44 The result is an error of law which itself warrants the grant of the relief sought (see the discussion in Campbelltown City Council and Vegan (2006) 67 NSWLR 372 per Handley J at [20] - [26] and Basten JA at [98]-[130]).
Breach of Procedural fairness - refusal of adjournment and denial of opportunity to put a case on causation
45 There can be no question that there is a power of adjournment. Guideline 14.3 provides that an assessor may conduct one or more preliminary conferences, by telephone or face to face. Guideline 15.5 permits an assessor to adjourn an assessment conference on application of a party, or on the assessor's own initiative.
46 The adjournment power is one which may be exercised, if necessary, in order to ensure that 'relevant material is available so as to enable all of the relevant facts in issue to be determined’ (see Guideline 16.5). Whether or not the plaintiff was suffering from schizophrenia, which caused the symptoms on which the claim rested, was in issue. The medical records in question were relevant to a determination of that issue.
47 Whether or not an adjournment should be granted must be determined by an assessor, having in mind the obligation to ‘to act with as little formality as the circumstances of the matter permit and according to equity, good conscience and the substantial merits of the matter without regard to technicalities and legal forms', (Guideline 16.3). That is a frequently used formulation, which has no fixed legal meaning independent of the statutory context in which it is used. In this statutory scheme, it plainly imports an obligation to adhere to the requirements of natural justice, including that a fair opportunity be afforded a party to present its case and requires that the assessor determine the claim in accordance with law (see the discussion in Qantas Airways Ltd v Gubbins and Others (1992) 28 NSWLR 26 at 29-31, applied in Akora Holdings Pty Ltd v Ljubicic [2008] NSWCA 339).
48 It is well settled that denial of an adjournment may result in a denial of procedural fairness. In Kearns v Fair Trading Tribunal of NSW [2001] NSWSC 951, Grove J, for example, observed:
"25 There is ample authority that procedural fairness is denied if a decision maker fails to adjourn proceedings where such a failure has the effect of depriving a person of adequate opportunity to prepare or present a case: Sullivan v Department of Transport 1978 20 ALR 323; Opitz v Repatriation Commission 1991 29 FCR 50; Humphrey v Wills 1989 VR 439."
49 As discussed in Italiano v Carbone & Ors [2005] NSWCA 177 at [148], the concern of the law in relation to questions of natural justice and procedural fairness is to avoid practical injustice.
50 In this case the claim concerned the consequences of a brain injury said to have resulted from an accident in 2001, in circumstances where at the time of the accident and for some years afterwards, there was no suggestion of any kind that any such injury had been suffered. Causation was consequently in issue. There were competing medical opinions, including a view that the symptoms in question could be the result of undiagnosed and untreated schizophrenia, which required consideration of the claimant's medical history before and after the accident. Thus the plaintiff pursued production of the medical reasons.
51 There can be no question that the medical reasons of the claimant's eleven treating doctors identified were relevant to a determination of causation. That such records had existed was apparent from the Centrelink, Medicare and PBS records from which the treating doctors had been identified. There were clearly strong prospects that the records still existed at the time of the assessment conference, but they had not been produced by Mr Hutton-Potts.
52 Relevant to a consideration of the adjournment application was that it was only in 2010 that Mr Hutton-Potts signed the authorities necessary for the production of the records. That does not appear to accord with the obligations imposed on claimants by s 85 of the Act. There is no transcript kept of an assessment conference, but in the reasons given for the refusal of the adjournment, the assessor said:
"The essence of Mr Torrington's argument was that Dr Maguire, on pages 13 and 14 of his report dated 24 June 2010, had indicated that access to further documentation was needed. The documentation mentioned by Dr Maguire was:
Clinical records of the Claimant's treating G.Ps in the year prior to the accident and subsequently.
Clinical records of the specialists and/or hospital where the Claimant was treated for hepatitis C.
TAFE records covering his attendance and performance for the business degree.
Records of the psychiatrist who treated the Claimant after the accident.
Review of the MRI scan by another experienced neuro radiologist.
What is interesting is that Dr Maguire suggests that the material is only needed "If it is strongly argued by others that Mr Hutton-Potts does indeed continue to show the effects of a closed head injury due to the accident or has some other psychiatric disorder directly related to the effects of the accident ..."
Mr Torrington also submitted that Professor Mattick had indicated that it was necessary to review treating doctor's records.
The Claimant's case in support of an organic brain injury was based upon several medical reports, including the report of Assessor Lethlean. The Claimant relied upon reports from Dr Milder, neurologist, Dr Jungfer, psychiatrist, Dr Buckley, rehabilitation physician and Mr Rawlings, Neuro psychologist. Those practitioners concluded that the Claimant did suffer an organic brain injury when he hit his head on the windscreen of the car in the accident. I will deal with the contents of these reports in more detail below.
It is certainly true that both Dr Maguire and Professor Mattick mentioned the obtaining of further material. The problem with the Insurer's submission is that both Dr Maguire and Professor Mattick were able to come to quite firm and concluded opinions without access to that further information. On page 12 of his report dated 24 June 2010 Dr Maguire said as follows:
"I have no reason to alter the opinion expressed from pages 16 to 19 in that first report. The reports that were perused after the most recent assessment reinforced my view that the accident under consideration did not result in Mr Hutton-Potts sustaining a closed head injury associated with long term cognitive and behavioural deficits."
Dr Maguire also expressed the view that the Claimant did not suffer from any psychological disorder.
Dr Maguire does not explain why the additional material is required when he appears to have been able to come to firm conclusions and opinions without the material. What he also does not explain is why the material might be needed if others strongly put forward an argument which disagrees with his view.
Professor Mattick did considered that the results of neuropsychological assessment were consistent with impairment, but expressed the very firm view that the impairments resulted from the Claimant having a pre-existing bipolar disorder which had been present from late 1980's or early 1990's. That opinion or course was quite at odds with that of Dr McGuire(sic).
Accordingly both Dr Maguire and Professor Mattick were able to come to quite firm conclusions without the further documentation now being requested.
For the reasons mentioned above it seems to me that there was no real basis for acceding to the Insurer's request to adjourn the matter so that further documentation might be sought."None of the medical practitioner's, including Assessor Lethlean, who have concluded that the Claimant does have an organic brain injury caused by the accident expressed the view that they needed more documentation or information of the kind now being sought by the insurer in order for them to reach their conclusions.
53 The assessor does not appear to have appreciated that light could be shed on the controversy between the medical practitioners as to whether Mr Hutton-Potts' condition could have been caused by the accident, by reference to medical records of the eleven identified treating doctors. They could have shown, for instance, whether or not Mr Hutton-Potts was suffering symptoms claimed to be the result of the accident, before it occurred. Had such records been produced they would unquestionably have been relevant to the opinions which the various medical practitioners had expressed.
54 The objects of the Act emphasise not only early resolution of compensable claims, but also keeping premiums affordable, by limiting the amount of compensation payable for non-economic loss in cases of relatively minor injuries, while preserving principles of full compensation for those with severe injuries involving ongoing impairment and disabilities. This the objects refer to obligations imposed on participants in the scheme with the overall aim of benefiting all members of the motoring public by keeping the overall costs of the scheme within reasonable bounds so as to keep premiums affordable.
55 The medical records in question were clearly relevant to a resolution of the disagreement over whether or not the injuries the subject of the claim were the result of the accident, or another condition entirely. The plaintiff sought the opportunity itself to pursue production of the medical records, which Mr Hutton-Potts had not obtained, by being given access to the authorities which had been signed by Mr Hutton-Potts only in 2010, so that it could itself approach the eleven treating medical practitioners for production of their records.
56 Under the statutory scheme at the time, the assessor could not himself order the doctors to produce those records, s 100(1A) not then being in operation. Presumably it was enacted in order to deal with precisely the kind of difficulty which arose in this case.
57 Nevertheless, the statutory scheme did permit what the plaintiff was seeking, namely, the opportunity to pursue the medical records which it had first been suggested in 2005 required consideration, as Dr Maguire and Professor Mattick had later reiterated, given what their examination of the claimant had revealed. It was not in issue that the assessor could have required production of the authorities under s 100 and provided them to the plaintiff under s 101, so that production of the records could be pursued.
58 Had the records not supported the view that Mr Hutton-Potts had been suffering the symptoms on which the claim rested before the accident, then, given the obligations imposed by the Act on the plaintiff, the prospect of a settlement being reached would presumably have been enhanced. If the records did support the view that Mr Hutton-Potts' injuries had not resulted from the accident, but from some other cause, then they would have been relevant to a determination of the question of his entitlement to damages under the Act. Given that he received an award of damages of over $2 million, this was not an insignificant matter.
59 The circumstances were that Mr Hutton-Potts' had long delayed in providing the authorities relating to the records in question and they had then been unsuccessfully pursued by his solicitor. It is unlikely that no records existed. Given their obvious relevance to the question which fell to the assessor to determine, it seems to me to be unquestionable that the plaintiff was refused procedural fairness in being refused the adjournment, so that it could pursue the production of the records. Thereby it was denied an opportunity to put its case on causation by reference to relevant medical records.
60 It was not necessary for the proceedings to be adjourned for an indeterminate period, for such an opportunity to be provided. That the plaintiff was denied any access to the authorities, and any period of time in which to seek to obtain the relevant records, did not accord with the requirements imposed on the assessor by the Guidelines to which I have referred. Thereby the assessor did not ensure that relevant material was available and denied the plaintiff procedural fairness in relation to the presentation of its case.
61 Nor would the adjournment have resulted in a failure to adhere to the requirements of s 94(2) that an assessor is to have ‘regard to such information as is conveniently available to the claims assessor’. That an opportunity given to the plaintiff to seek production of the records could not have resulted in their production is not apparent. As was submitted for the plaintiff, an approach from it to the doctors concerned, in connection with proceedings brought against it under the Act, may have resulted in greater co-operation than the approach from Mr Hutton-Potts' solicitor apparently achieved. As was explained in submissions, the approach from the solicitor had resulted in the production of little material, the requests being largely ignored, or advice being given that the doctors had no records.
62 Had the opportunity which the plaintiff sought been allowed by an adjournment for a suitable time period, any material produced would then unquestionably have been ‘conveniently available’ to the assessor, no matter whether it supported the claimant's case, or that of the plaintiff.
Orders
63 For the reasons given, the plaintiff's claims must be upheld. The usual order as to costs is that they follow the event, with the result that Mr Hutton-Potts should pay the plaintiff's costs, as agreed or assessed. The parties have liberty to approach if there is any disagreement as to costs. Otherwise, I order that:
2. Mr Hutton-Potts' application be remitted to the Principal Claims Assessor for allocation to a different Claims Assessor for determination according to law.
1. The assessment certificate and determination of the first defendant, the claims assessor, be set aside.
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