Australia: CARS assessment quashed: Court finds insufficient reasons to justify award for economic loss and denial of procedural fairness

Curwoods Case Note
Last Updated: 10 January 2011
Article by Gerry Tzortzatos

Judgment date: 17 December 2010. Insurance Australia Limited trading as NRMA Insurance v Hutton-Potts and Ors [2010] NSWSC 1446. New South Wales Supreme Court1

In Brief

  • A claims assessor's failure to provide details of the assumptions on which an award for economic loss was based, and the relevant percentage by which damages were adjusted to reflect the likelihood of a future economic loss occurring regardless of the accident, may amount to a jurisdictional error.
  • A claims assessor must adjourn an assessment conference where there is a risk that a party may suffer injustice due to the other party's failure to provide documents relevant to the assessment of the claim.


The claimant was injured in a motor accident occurring in December 2001 and claimed damages in excess of $3 million. There was no issue as to liability. Although the claimant, who was riding a scooter and wearing a helmet, hit his head on the windshield of the other vehicle, his Glasgow Coma Scale following the accident was full (15/15) suggesting that there was no traumatic brain injury.

The issue of a traumatic brain injury was first raised in 2005. During the course of its investigation the insurer obtained the claimant's Centrelink records, which revealed a longstanding history of acute polar disorder, hepatitis C and impaired memory and concentration. The insurer sought the release of the claimant's pre-accident medical records but these were not provided prior to the assessment conference. The insurer sought to adjourn the assessment conference in order to obtain these medical records but this was refused by the claims assessor, who ultimately awarded the claimant in excess of $2 million in damages.

The insurer filed a summons in the Supreme Court seeking an order that the claims assessor's determination be quashed on various grounds. Firstly, a failure to adhere to the requirements of s 126 of the Motor Accidents Compensation Act 1999 (MACA). Secondly, error going to jurisdiction, by denying the insurer 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.

Supreme Court

Section 126 of MACA requires that a Court or claims assessor state the assumptions on which an award for economic loss was based and the relevant percentage by which damages were adjusted to reflect the likelihood of a future economic loss occurring regardless of the accident.

Shortly prior to the accident the claimant had established a new business, which was not making a significant return at the time of the accident. The business failed following the accident. It was common ground that the claimant had no real earning capacity at the time of the assessment. The claims assessor determined that the claimant may have suffered some loss as a result of his pre- accident conditions regardless of the accident and awarded economic loss at $500 per week. The Court found that the claims assessor committed a jurisdictional error in not complying with the requirements of s 126, stating:

"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 [the claimant's] 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."

The Court also found that the insurer was denied procedural fairness in the refusal of its adjournment application. The Court relevantly held:

"59 The circumstances were that [the claimant] had long delayed in providing the authorities relating to the [pre-accident medical] 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."

The Court set aside the certificate of assessment and ordered that the matter be allocated to a different claims assessor for re-assessment.


This claim represents a rare instance of a successful administrative review of a claims assessor's certificate of determination2. Insurers should consider whether a claims assessor has provided reasons supporting the award for economic loss sufficient to discharge the duty pursuant to s 126.

Insurers should also be wary of any outstanding requests for particulars or documents. Such requests should be brought to the attention of the claims assessor and called upon prior to the assessment of the claim. If the claimant is unresponsive to the requests and the requests are capable of producing information probative to the assessment of damages, there is a risk that the insurer may suffer an injustice if the claim proceeds to an assessment.

1. Schmidt J

2. Recent examples of failed challenges to assessments include QBE Insurance (Australia) Limited v Peter Cowan [2010] NSWSC 933 and Zurich Australian Insurance Limited v Elizabeth Pellegrino; Elizabeth Pellegrino v NRMA Insurance Australia Ltd [2010] NSWSC 1114. See earlier Curwoods Case Notes for further information.

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