Insurance Australia Limited trading as NRMA Insurance v Helou

[2008] NSWCA 240

NEW SOUTH WALES COURT OF APPEAL

CITATION:
Insurance Australia Limited trading as NRMA Insurance v Helou [2008] NSWCA 240

FILE NUMBER(S):
40890/07

HEARING DATE(S):
24 September 2008

JUDGMENT DATE:
7 October 2008

PARTIES:
Insurance Australia Limited trading as NRMA Insurance (Appellant)
Joseph Helou (First Respondent)
Robert Quickenden (Second Respondent)
Motor Accidents Authority of NSW (Third Respondent)

JUDGMENT OF:
Allsop P Campbell JA Bell JA   

LOWER COURT JURISDICTION:
Supreme Court - Common Law Division

LOWER COURT FILE NUMBER(S):
30115/07; 15241/07

LOWER COURT JUDICIAL OFFICER:
Malpass AsJ

LOWER COURT DATE OF DECISION:
14 December 2007

LOWER COURT MEDIUM NEUTRAL CITATION:
Insurance Australia Limited trading as NRMA Insurance v Helou; Helou v NRMA Insurance Australia Ltd [2007] NSWSC 1451

COUNSEL:
C Adamson SC; IW Fitzsimmons (Appellant)
KP Rewell SC; J Jobson (First Respondent)
Submitting Appearances (Second and Third Respondents)

SOLICITORS:
Moray & Agnew, Sydney (Appellant)
Andresakis & Associates, Parramatta (First Respondent)
Crown Solicitor's Office, Submitting Appearances (Second and Third Respondents)

CATCHWORDS:
ADMINISTRATIVE LAW – Particular Tribunals or Bodies – appellant sought review of decision of assessor in Claims Assessment and Resolution Service of Motor Accidents Authority – where no right of appeal to Court – where jurisdiction invoked under s 69 Supreme Court Act 1970 – whether decision vitiated by jurisdictional error or error of law on the face of the record – whether assessor determined “amount of damages” within meaning of s 94 Motor Accidents Compensation Act 1999 – whether assessor properly applied principles for assessment of damages – where respondent had pre-existing tendency to one of the two conditions contributed to by the accident – whether assessor ought to have assessed damages that arose from each condition separately – whether failure of assessor to inform parties he did not intend to do so amounted to denial of procedural fairness – whether assessor ought to have divided the damages attributable to the condition that was subject to a pre-existing condition into that part that was attributable to the accident and that part that was attributable to the pre-existing condition – alternatively whether assessor should have assessed extent to which pre-existing condition was causative of past loss and is likely to be causative of future loss and deducted the amount so assessed from the total past and future loss resulting from Respondent’s disability – whether assessor otherwise took account of causal contribution of pre-existing condition in assessment of heads of damage – whether assessor failed to comply with obligation to give reasons – where reasons are to be set out in a “brief statement” in accordance with s 95(5) Motor Accidents Compensation Act, cl 16.3 Claims Assessment Guidelines

LEGISLATION CITED:
Motor Accidents Compensation Act 1999
Supreme Court Act 1970
Workplace Injury Management and Workers Compensation Act 1998

CATEGORY:
Principal judgment

CASES CITED:
Campbelltown City Council v Vegan [2006] NSWCA 284; (2006) 67 NSWLR 372
Craig v South Australia [1995] HCA 58; (1995) 184 CLR 163
Harrison v Melhem (2008) Aust Torts Reports 81-951; [2008] NSWCA 67
Insurance Australia Limited trading as NRMA Insurance v Helou; Helou v NRMA Insurance Australia Ltd [2007] NSWSC 1451
Malec v JC Hutton Pty Ltd [1990] HCA 20; (1990) 169 CLR 638
Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30; (2001) 206 CLR 323
Purkess v Crittenden [1965] HCA 34; (1965) 114 CLR 164
Seltsam Pty Ltd v Ghaleb [2005] NSWCA 208; (2005) 3 DDCR 1
Watts v Rake [1960] HCA 58; (1960) 108 CLR 158

TEXTS CITED:

DECISION:
Appeal dismissed with costs.

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40890/07
SC 30115/07

ALLSOP P
CAMPBELL JA
BELL JA

7 OCTOBER 2008

INSURANCE AUSTRALIA LTD Trading as NRMA Insurance v HELOU

Judgment

1. ALLSOP P:  I agree with the orders proposed by Campbell JA and with his Honour’s reasons therefor.

2. CAMPBELL JA:  The Respondent, Mr Joseph Helou was injured on 22 November 2000 when the motor vehicle he was driving was run into from the rear by another vehicle.  NRMA Insurance Ltd (now known as Insurance Australia Limited, and hereinafter called “NRMA”) was the insurer of the other vehicle. 

3. Mr Helou made a claim against the driver of the other vehicle, seeking damages in accordance with the Motor Accidents Compensation Act 1999 (“MAC Act”).  NRMA admitted liability.  The claim was sent to an assessor in the Claims Assessment and Resolution Service (“CARS”) of the Motor Accidents Authority (“MAA”), Mr RE Quickenden.

4. Mr Quickenden issued his assessment and a certificate under section 94 MAC Act on 5 September 2007.

5. NRMA takes the view that the assessor awarded the Respondent far too much money, and did not pay the assessment. The Respondent issued a summons against NRMA in the Supreme Court of New South Wales, number 15241 of 2007 in the Common Law Division, seeking an order under section 95 MAC Act that NRMA pay to the Respondent the amount certified by the assessor.  NRMA responded by itself issuing a summons against the Respondent, Mr Quickenden and the MAA, number 30115 of 2007 in the Administrative Law List of the Common Law Division, seeking to set aside the assessment on the ground of jurisdictional error, or error of law on the face of the record.  It sought an order quashing the assessment and the Certificate, and that the matter be returned to the MAA to be assessed in accordance with law.

6. Both sets of proceedings came before Malpass AsJ on 13 December 2007.  In the course of the hearing, the parties reached a consensus that the Respondent’s summons should be deferred pending determination of the proceedings brought by NRMA.  Thus, the reasons for judgment of Malpass AsJ dealt only with NRMA’s summons, and the proceedings brought by the Respondent were stood over to a date to be fixed.

7. Malpass AsJ was unpersuaded that there was any jurisdictional error, or error of law on the face of the record, and in consequence dismissed NRMA’s proceedings:  Insurance Australia Limited trading as NRMA Insurance v Helou; Helou v NRMA Insurance Australia Ltd [2007] NSWSC 1451.

8. In the present appeal, NRMA seeks to persuade this Court that Malpass AsJ erred in failing to find that the decision of the assessor was vitiated by jurisdictional error, or error of law on the face of the record, in circumstances such that the assessment should be set aside.

   9             Before Malpass AsJ, NRMA had relied upon four different alleged jurisdictional errors or errors of law.  Only one of those grounds is relied upon on the appeal.  To understand it, some explanation of the factual background of the Respondent’s claim must be given.
   
   Factual Background to Respondent’s Claim

9. The Respondent was born on 21 December 1951.  Thus he was aged 48, nearly 49, at the date of the accident.

10. Before the accident the Respondent had carried out predominantly manual labour, operating a concreting business in partnership with his wife.  The assessor found that a proportion of his work in this occupation was “of a heavy nature”.  The Respondent had suffered a low back injury in 1985, which caused him to be off work for about five years until the early 1990s.  However, he was able to work and operate his business from the early 1990s until the time of the accident.  He had some back pain in this time, though it was not bad enough for him to seek treatment.

11. It was common ground that in the accident he had sustained injury to both his cervical spine, and his lumbar spine, and that all disability he suffered after the accident in his cervical spine was related to the accident.

12. After the accident, the Respondent had four months off work, but was able to resume work between April 2001 and about November 2005.  During that time, he suffered pain in his cervical and lumbar spine, but was able to keep working.  His condition became worse, and on 24 November 2005 he had an anterior cervical diskectomy and fusion of the C4-5.  He had a lumbar laminectomy in March 2006, and a related procedure later in October 2006.  He has been unable to work since November 2005.  The assessor accepted that he “has a poor prognosis”. 

13. It was common ground that after he ceased work he suffered significant disability, and could not be gainfully employed, or looked after without care.  There was an issue about the extent of care he had required at various times, and would require in the future.

14. There was a very significant issue, in the proceedings before the assessor, about the extent to which the Respondent’s lumbar spine condition after the accident was attributable to the accident, rather than to the 1985 injury and degenerative changes that had occurred or were in progress, prior to the accident, in his lumbar spine. 

15. NRMA contended, before the assessor, that the lumbar spine condition of the Respondent, in the period after he stopped working, was not causally connected to the accident.  Rather, NRMA contended, it was a continuation of an underlying degenerative condition, which would have developed irrespective of the accident. 

16. The Respondent contended, on the other hand, that the accident was the only significant cause of his post-November 2005 condition.  The extent of the difference between the positions contended for by the Respondent and by NRMA is illustrated by that fact that, on all heads of damage, the Respondent claimed nearly $4.8m, while NRMA conceded damages of a little over $320,000.

17. The assessor rejected both contentions.  He recognised that there were some facts that supported NRMA’s contention – that the Respondent had suffered an injury to his lumbar spine in 1985, that that injury continued to cause him pain up to the time of the accident, and that there was a lapse of five or six years between the Respondent being injured in the accident and the condition of his back becoming disabling. 

18. The assessor concluded, however, that the accident made a material contribution to the Respondent’s lumbar spine condition.  By that, he clearly meant the lumbar spine condition that the Respondent had suffered from up to the time of the assessment, and would continue to suffer from in the future.  He also found, however, that:

    “… even without the intervention of the MVA the Claimant’s lumbar spine condition was very precarious and was likely to have had a significant detrimental effect on his ability to work and live without some form of care in the future.” 

19. In the result, he assessed the amount of damages at $1,494,794.30, and assessed the Claimant’s costs at $90,879.50. Those were the figures contained in his certificate under section 94 MAC Act.

    Relevant Provisions of the MAC Act and Assessment Guidelines

20. The power of a CARS assessor to make assessments of damage concerning motor vehicle accidents arises under the MAC Act.  Any decision about whether the assessor made a jurisdictional error must depend upon the scope and conditions of the decision-making power conferred upon him by the MAC Act. 

21. Section 94 provides:

    “(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.

    (2)Such an assessment is to be made having regard to such information as is conveniently available to the claims assessor, even if one or more of the parties to the assessment does not co-operate or ceases to co-operate.

    (3)The assessment is to specify an amount of damages.

    (4)The claims assessor must, as soon as practicable, after an assessment issue the insurer and claimant with a certificate as to the assessment.

    (5)The claims assessor is to attach a brief statement to the certificate, setting out the assessor’s reasons for the assessment.”

22. Claims Assessment Guidelines have been made, pursuant to section 69 MAC Act.  They have the force of delegated legislation.  Those Guidelines include:

    “16.3A 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:

    16.3.1     the findings on material questions of fact, and

    16.3.2the assessor’s understanding of the applicable law if relevant, and

    16.3.3the reasoning processes that lead the assessor to the conclusions made, and

    16.3.4in 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.”

    The Role of the Court

23. There is no right of appeal of any kind to the Court concerning a decision of a claims assessor under the MAC Act. The jurisdiction that NRMA invokes is that under section 69 Supreme Court Act 1970, whereby the Court can issue orders in the nature of certiorari.  The High Court in Craig v South Australia [1995] HCA 58; (1995) 184 CLR 163 at 179 identified the nature of the Court’s powers in that respect.

    “If such an administrative tribunal falls into an error of law which causes it to identify a wrong issue, to ask itself a wrong question, to ignore relevant material, to rely on irrelevant material or, at least in some circumstances, to make an erroneous finding or to reach a mistaken conclusion, and the tribunal's exercise or purported exercise of power is thereby affected, it exceeds its authority or powers.  Such an error of law is jurisdictional error which will invalidate any order or decision of the tribunal which reflects it.”

24. The power was further explained by McHugh, Gummow and Hayne JJ in Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30; (2001) 206 CLR 323 at 351:

    “"Jurisdictional error" can thus be seen to embrace a number of different kinds of error, the list of which, in the passage cited from Craig, is not exhaustive.  Those different kinds of error may well overlap.  The circumstances of a particular case may permit more than one characterisation of the error identified, for example, as the decision-maker both asking the wrong question and ignoring relevant material.  What is important, however, is that identifying a wrong issue, asking a wrong question, ignoring relevant material or relying on irrelevant material in a way that affects the exercise of power is to make an error of law.  Further, doing so results in the decision-maker exceeding the authority or powers given by the relevant statute.  In other words, if an error of those types is made, the decision-maker did not have authority to make the decision that was made; he or she did not have jurisdiction to make it.”

25. The contention of the Appellant is that the assessor has not determined the “amount of damages”, within the meaning of section 94 MAC Act, because the assessor has failed to comply with a mandatory requirement of law concerning the manner in which damages are to be assessed.

26. Alternatively, NRMA contends that the reasoning of the assessor shows an error of law on the face of the record. Section 69 Supreme Court Act includes the following subsections:

    “(3)It is declared that the jurisdiction of the Court to grant any relief or remedy in the nature of a writ of certiorari includes jurisdiction to quash the ultimate determination of a court or tribunal in any proceedings if that determination has been made on the basis of an error of law that appears on the face of the record of the proceedings.

    (4)For the purposes of subsection (3), the face of the record includes the reasons expressed by the court or tribunal for its ultimate determination.”

27. NRMA submits, without opposition, that the assessor’s reasons in the present case constitute the record, and thus if an error of law is revealed in those reasons, the Court has power to correct it:  cf Campbelltown City Council v Vegan [2006] NSWCA 284; (2006) 67 NSWLR 372 at [49]-[51].

28. There is no privative clause in the MAC Act, that purports to cut down what would otherwise be the Court’s power to review decisions of an assessor for jurisdictional error or error of law on the face of the record.

    The Assessor’s Reasoning

    Past Economic Loss

29. Concerning past economic loss, it was common ground that the Respondent had been totally incapacitated for a period of 17 weeks immediately following the accident. In accordance with section 124 MAC Act no damages were awarded for the first five days of that loss, but damages were assessed for the balance of that period. 

30. The assessor was not satisfied that there had been any reduction in earning capacity in the period April 2001 to November 2005.  He gave three reasons for reaching that conclusion.  First, the Respondent had been working during that period without apparent need for medical treatment.  Second, his business appears to have been on the decline prior to the accident.  Third, his ability to earn in the construction industry “was also adversely affected by his degenerative lumbar spine condition and age”.

31. Given that his certificate was issued on 5 September 2007, the assessor evidently regarded the end of August 2007 as the end of the period during which damages related to the past should be assessed.  For the period from December 2005 to August 2007 he held that “there has been a total loss of earning capacity caused by the injuries and disabilities sustained in the MVA”.  That finding was consistent with his earlier finding that the motor vehicle accident had made a material contribution to the Respondent’s ongoing lumbar spine condition. 

32. However, the making of that material contribution, sufficient in law to amount to a finding of causation, did not result in the assessor awarding the Respondent the full amount that he would have earned in December 2005 to August 2007 if suffering from no disability.  Rather, the assessor said he was not satisfied that during that period there would have been uninterrupted employment but for the accident.  That finding may well have been attributable in part to the decline in the Respondent’s business that was already underway at the time of the accident.  The assessor also said, however,

    “I am further satisfied it is likely the Claimant would not have worked during this period for reasons associated with his age and health (primarily his lumbar spine condition).  I will reduce the period by 25% to make allowance for probable unrelated MVA total incapacity during this period.”

    Future Economic Loss

33. Concerning future economic loss, the assessor found that the accident “has been the major contributor to the Claimant’s inability to work in the construction industry in any capacity for what would have been the rest of his working life”.  This is a finding of the relative causal efficacy of the accident, and the other factors that would have affected his ability to work.

34. The assessor said that given the heavy nature of the Respondent’s work, “and his vulnerable lower back condition apart from the MVA I doubt the Claimant would have worked to the age of 65 years”.  For reasons that expressly included the vulnerable condition of his lumbar spine before the accident, the assessor assessed damages by calculating the present value of his net loss of wages for 10 years (an assessment of his time to retirement) but then reduced the claim for future loss by 33%.  That is much more than the conventional 15% allowance for vicissitudes.

    Past Voluntary Services

35. Concerning past voluntary services, the assessor made no award for the period up to November 2005. That result was arrived at in accordance with the understanding of section 128(3) MAC Act prior to the decision in Harrison v Melhem (2008) Aust Torts Reports ¶81-951; [2008] NSWCA 67, and is not the subject of the present appeal.

36. In para 8.3 of his reasons, the assessor made a statement that is criticised by NRMA in the present appeal.  The assessor said:

    “Since November 2005 I am satisfied the Claimant has needed personal care and domestic assistance because of his cervical spine and lumbar spine condition.  On the basis of my findings on causation of the Claimant’s lumbar spine condition I do not consider it necessary to determine the proportion of the Claimant’s disability referable to the cervical spine and lumbar spine.  The Claimant’s disability to my mind is significantly caused by both conditions.”

1. The assessor recognised that there was a significant change in the type of level and care needed following completion of the Respondent’s lumbar spine surgery in October 2006.  He dealt with that by determining an average need for voluntary personal and domestic care during the period November 2005 to August 2007.

2. The assessor drew on reports of Karolina Petrovska, an occupational therapist, who had assessed the extent to which the Respondent was in need of assistance in his activities of daily living.  The assessor stated that:

   “… my assessment takes account of the fact that Mrs Helou did considerable domestic tasks for the Claimant before the MVA and my allowances are only based on requirements generated by the MVA related injuries and disabilities.”

   40           He assessed the “reasonable and necessary voluntary care the Claimant was given referrable to the MVA” at being an average of 38.5 hours per week during that period.
   
   Future Care

3. The largest element in the damages assessment of the assessor related to future care.  The Respondent’s claim had been for commercial 24 hour per day care for the rest of the Respondent’s expected lifetime, of approximately 30 years.

4. By comparison, NRMA submitted that the only need for future care related to the accident was 7 hours per week.  The assessor said “[i]n making this submission the Insurer assumes the Claimant’s lumbar spine condition is paramount in the Claimant’s need for care and this is unrelated to the MVA”.  On the basis of findings he had already made about the causal connection between the accident and the ongoing lumbar spine condition, the assessor said, “I am compelled to reject that submission”.  That rejection was of the submission that the accident-related care was 7 hours per week.  In my view it is clear that the reason the assessor had for rejecting the submission was that he did not accept NRMA’s assumption that the ongoing lumbar spine condition was unrelated to the accident.  The rejection does not involve a rejection of the proposition that the lumbar spine condition was paramount in the Respondent’s need for care.

5. The assessor divided the period of future care into two components.  The first component was a period of 10 years, during which it was reasonable to expect that the Respondent’s family would care for him.  The second was for the remaining 20 years of his expected life, during which commercial care would be needed.

6. The assessor had oral evidence relating to the Respondent’s needs for care, as well as the reports of Ms Petrovska.  On this appeal, we do not have any transcript of the oral evidence, but do have access to Ms Petrovska’s reports.

7. Notwithstanding that the Respondent’s claim for future care had been put initially on the basis that there was a need for 24-hour care, his counsel submitted that a “realistic allowance” was 14 hours per day care.  The assessor concluded that 6.5 hours per day was the appropriate allowance to make for future domestic care needs during the first 10 years of the future.  He concluded that that was made up as following:

“9.6.1	Assistance in the bathroom (principally toilet and showering).	1.5 hrs per day
9.6.2	Assistance in home transfers and Supervision including night supervision	2.5 hrs per day
9.6.3	Home care including emergency bedding Changes	0.5 hr per day
9.6.4	Transport	0.75 hr per day
9.6.5	Domestic duties including shopping	1 hr per day
9.6.6	Home property and motor vehicle Cleaning	0.25 hr per day
6.5 hrs per day”

1. Ms Petrovska’s report does not itemise the various headings by reference to which the assessor arrived at his figure of 6.5 hours per day in exactly the same way as the assessor does.  However, there is a reasonably close comparison between the categories she used and those of the assessor, though sometimes she used more subdivisions of categories than those that the assessor used.  If one translates the headings by reference to which Ms Petrovska assessed his needs for care during the period 10 October 2006 to 2 February 2007 (the date of her report) into the headings that the assessor used for future care, Ms Petrovska’s assessment of his needs during the period she was assessing was:

9.6.1	2.5 hrs per day
9.6.2	14 hrs per day
9.6.3	2.5 hrs per day
9.6.4	8 hrs per week
9.6.5	2 hrs per week
9.6.6	1.56 hrs per week

1. Ms Petrovska’s report assessed his requirements for care in the future, from 2 February 2007, as being 24 hours per day for personal care and inactive night care, 1.25 hours per week for house and property maintenance, and 0.31 hours per week for occasional tasks such as window cleaning and pruning.

2. I have considered the evidence concerning future care needs in some detail, because if it showed that no discount had been made from the Respondent’s assessed total need for future care, that might provide a ground for demonstrating that the assessor had failed to take account, concerning future care, of the extent to which the pre-existing lumbar spine condition might itself have been productive of a need for future care.  However, consideration of the detail of the evidence does not show any such thing.  Concerning items 9.6.1, 9.6.2, 9.6.3 and 9.6.4, the assessor has awarded for future care less per day than Ms Petrovska assessed as appropriate, for his total needs, in the period from 10 October 2006 to 2 February 2007.  It must be borne in mind that that period that Ms Petrovska was assessing was part of the past care that the assessor assessed, as he assessed past care as being for the entire period up to the end of August 2007.  The amounts the assessor assessed as needed for future care were, in total, vastly less than those that Ms Petrovska assessed as being needed for future care.

3. Concerning the 20 years during which the Respondent was assessed as needing commercial care, the assessor said:

   “In determining the fair and reasonable paid care requirement for the future in terms of hours per week I should and do take into account the probable need for care as a result of non-related MVA factors such as the Claimant’s age and degenerative lumbar spine condition in his advancing years and allow a commercial hourly rate for reasonable care for approximately 20 years.  The time involvement of commercial carers can be reasonably assessed to be at least the current voluntary care needs.  It is not possible on the evidence to conclude the Claimant will need 24 hour care in ten years time nor the accurate form or cost of care.  I am satisfied, however, a fair and reasonable allowance should be for 50 hours per week …”
   
   Other Heads of Damage

4. While the assessor’s reasons also included other heads of damage, no complaint was made about how he dealt with those heads.

   Principles for Assessment of Damages

5. There was no dispute about the principles that should be applied in assessment of damages, though counsel on both sides adverted to those principles in their submissions.  Rather, the dispute was about what proper application of the principles required in the present case. 

6. Watts v Rake [1960] HCA 58; (1960) 108 CLR 158 held that if a person who has a predisposition to a disability of a particular kind suffers an injury that is a cause of a disability of the same kind, in consequence of the negligence of a defendant, the plaintiff is entitled to recover damages for the full extent of the disability that has been shown to be caused by the accident, unless the defendant can disentangle the causes of the plaintiff’s condition, and show that, to some particular extent, the accident was not a contributory cause. On the facts of that case, it was accepted that the plaintiff’s pre-existing disability would have resulted in him becoming unfit for work 13 years after the accident, and hence the plaintiff was entitled to general damages assessed on the basis of the accident having caused him to lose 13 years of working life.

7. Purkess v Crittenden [1965] HCA 34; (1965) 114 CLR 164 makes clear that the onus on the defendant to disentangle the causes is an onus of adducing evidence, not an onus of proof. Barwick CJ, Kitto and Taylor JJ, at 168 said:

   “… it is not enough for the defendant merely to suggest the existence of a progressive pre-existing condition in the plaintiff or a relationship between any such condition and the plaintiff’s present incapacity.  On the contrary … both the pre-existing condition and its future probable effects or its actual relationship to that incapacity must be the subject of evidence (ie either substantive evidence in the defendant’s case or evidence extracted by cross examination in the plaintiff’s case) which, if accepted, would establish with some reasonable measure of precision, what the pre-existing condition was and what its future effects, both as to their nature and their future development and progress, were likely to be.  That being done, it is for the plaintiff upon the whole of the evidence to satisfy the tribunal of fact of the extent of the injury caused by the defendant’s negligence.”

8. Malec v JC Hutton Pty Ltd [1990] HCA 20; (1990) 169 CLR 638 requires prediction of future events to be assessed by reference to the probability of their occurring. It concerned a situation where the plaintiff contracted a disease in consequence of the defendant’s negligence, and that disease was one that could cause both a depressive illness and a degenerative-like condition in the spine. As well, the plaintiff had a pre-existing back condition, the onset of which was itself likely to produce a “neurotic condition”.  Deane, Gaudron and McHugh JJ held, at 645 that:

   “The plaintiff is entitled to damages for pain and suffering on the basis that his neurotic condition is the direct result of the defendant’s negligence.  Those damages must be reduced, however, to take account of the chance that factors, unconnected with the defendant’s negligence, might have brought about the onset of a similar neurotic condition.”

9. In Seltsam Pty Ltd v Ghaleb [2005] NSWCA 208; (2005) 3 DDCR 1 Ipp JA (with whom Mason P agreed) at [103] drew the following propositions from Malec:

   “Therefore, according to Malec:

   1.In the assessment of damages, the law takes account of hypothetical situations of the past, future effects of physical injury or degeneration, and the chance of future or hypothetical events occurring.

   2.The court must form an estimate of the likelihood that the alleged hypothetical past situation would have occurred.

   3.The court must form an estimate of the likelihood of the possibility of alleged future events occurring.

   4.These matters require an evaluation of possibilities and are to be distinguished from events that are alleged to have actually occurred in the past, which must be proved on a balance of probabilities.”

10. Ipp JA continued in Seltsam v Ghaleb at [104]-[107]:

    “What was said in Watts v Rake and Purkess v Crittenden now has to be qualified by these principles (cf Commonwealth of Australia v Elliott[2004] NSWCA 360 at [81]). Malec has an important bearing, for example, on the way in which a court must determine whether a defendant has discharged the “disentangling” evidentiary burden on it of showing that part of the plaintiff’s condition was traceable to causes other than the accident and that, had there been no accident, the plaintiff would have suffered disability from his pre-existing condition.

    Where a defendant alleges that the plaintiff suffered from a pre-existing condition, the evidential onus as explained in Watts v Rake and Purkess v Crittenden remains on the defendant and must be discharged by it.  Nevertheless, to the extent that the issues involve hypothetical situations of the past, future effects of physical injury or degeneration, and the chance of future or hypothetical events occurring, the exercise of “disentanglement” discussed in those cases is more easily achieved.  That is because the court is required to evaluate possibilities in these situations — not proof on a balance of probabilities.

    Without intending to give an exhaustive list of possibilities, it may be that, had the defendant’s negligent act not occurred, a pre-existing condition might have given rise to the possibility that the plaintiff’s enjoyment of life and ability to work would have been reduced and to a susceptibility to further injury; in addition, other causes entirely unrelated to the defendant’s negligent act might have contributed to the plaintiff’s ultimate condition.

    Appropriate allowances must be made for these contingencies.  A proper assessment of damages requires the making of a judgment as to the economic and other consequences which might have been caused by a worsening of a pre-existing condition, had the plaintiff not been injured by the defendant’s negligence.  A pre-existing condition proved to have possible ongoing harmful consequences (capable of reasonable definition) to the plaintiff, even without any negligent conduct on the part of the defendant, cannot be disregarded in arriving at proper compensation.”
    
    The Alleged Jurisdictional Error or Error of Law

11. NRMA submits that, in the circumstance where it was shown that both the cervical spine and lumbar spine condition of the Respondent was contributed to by the accident, but the Respondent already had a pre-existing tendency to disability in the lumbar spine, the assessor was failing to perform his task of assessing damages when he declined to “determine the proportion of the Claimant’s disability referable to the cervical and lumbar spine”. 

12. I do not accept that the assessor has failed to perform the statutory task given to him of assessing the “amount of damages” sustained by the Respondent in consequence of the accident.  As I understand it, Ms Adamson SC, for NRMA, submits that the way in which the assessor ought to have proceeded was to assess the damages that arose from the cervical spine condition, and bring the full quantum of the damages as so assessed to NRMA’s account.  He should then have assessed the damages attributable to the lumbar spine condition, and divided those damages into that part which was attributable to the accident, and that part that was attributable to the pre-existing lumbar spine condition, and brought to NRMA’s account only that proportion of the lumbar spine damages that was found to be attributable to the accident.  Alternatively, he should have assessed the extent to which the pre-existing lumbar spine condition has been causative of past loss and likely to be causative of future loss, and deduct the amount so assessed from the total loss that the Respondent has sustained in the past, and is likely to sustain in the future, through being disabled.  I do not accept that assessment of damages is required by law to proceed in either of those ways.  Indeed, proceeding in those ways seems to me to be a highly artificial way of proceeding.  The assessor has recognised that the predictable future disability of the Respondent will partly result from the motor vehicle accident, and will partly result from his pre-existing lumbar spine condition.  The assessor has recognised that, in particular, his past economic loss, his future economic loss, the award for past voluntary services, and the award for future care all need to be discounted, by a reason of the pre-existing lumbar spine condition, from the figure at which they would have been assessed had there been no pre-existing lumbar spine condition.  Hence, for each of those heads of damage, he has arrived at a figure that takes into account the causal contribution of the pre-existing condition.  Proceeding in that way is exactly what is required to perform the task of assessing damages. 

13. If the assessor has made any errors in carrying out that task, they are errors within jurisdiction, and not errors of law on the face of the record.  In putting it that way, I am not to be taken as expressing a view that the assessor has actually made any such error.  While the figures at which he arrived for items 9.6.5 and 9.6.6 of his assessment of future domestic care needs are puzzling by comparison with the evidence of Ms Petrovska, I am not in a position to say they are wrong (let alone wrong in a way that amounts to jurisdictional error or error of law) when the assessor had before him more evidence on this topic than just the reports of Ms Petrovska. 

    Failure to Comply with the Obligation to Give Reasons

14. Another way in which NRMA submits there was a jurisdictional error or error of law on the face of the record on the part of the assessor was that he failed to quantify the allowance made for the pre-existing back condition.

15. The obligations of an assessor to give reasons is qualified by the requirement, in section 94(5) MAC Act, that it be a “brief statement”, and by the requirements of clause 16.3 of the Claims Assessment Guidelines.  When the MAC Act and the Guidelines makes this express provision concerning the nature of obligations of an assessor to give reasons, they differ from the WorkplaceInjuryManagement and Workers Compensation Act 1998 provisions concerning medical assessments that were considered by this Court in Campbelltown City Council v Vegan, where the extent of the obligation to give reasons needed to be derived as a matter of implication from the statute.

16. When, for the reasons I have already given, the assessor has performed the task required of him to “assess the damages”, and when his reasons identify the various heads of damage that he has awarded, and how he has arrived at the numbers attributed to each of those heads of damage, his statutory obligation to give reasons has been performed.

    Denial of Procedural Fairness

17. Another way in which NRMA puts its case is that, in circumstances where it was common ground that there was a pre-existing lumbar spine condition but no causally relevant pre-existing cervical spine condition,

    “… the appellant was entitled to expect that the [assessor] would apportion the disability between the cervical and lumbar spines, since the discount required by Purkess v Crittenden, Watts v Rake and Malec v Hutton meant that such apportionment had to occur (as a necessary precondition to the apportionment between accident related and the pre-existing disability in the lumbar spine).”

18. NRMA submits that there was an obligation on the assessor to inform the parties that he did not propose to apportion the disability between the cervical and lumbar spines in order that they could have an opportunity to address him on why it was necessary to perform the apportionment. 

    65           The premise of this argument is that it was necessary for the assessor to apportion the disability between the cervical and lumbar spine to be able to perform his statutory task.  I have already rejected that premise.  When the premise is rejected, the argument that there has been a denial of procedural fairness also fails.
    
    Orders

19. I propose that the appeal be dismissed with costs.

20. BELL JA:  I agree with Campbell JA.

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LAST UPDATED:
7 October 2008