Judgment Date: 22 March 2012
QBE Insurance (Australia) Limited v Durkin and Ors [2012] NSWSC 72
Supreme Court of NSW1
In Brief
- Once a claimant has prima facie established total incapacity the evidentiary onus shifts to the insurer to prove a residual earning capacity.
- An expert report provided by a lawyer in respect of an aspect of a claim is not "provision of a legal service" and is not caught by the Motor Accidents Compensation Regulation 2005 and is, therefore, recoverable as a disbursement.
Background
The matter arises out of an administrative law review of an assessment of damages by CARS Assessor White.
The claimant sustained significant injuries, including organic brain damage, in a motor vehicle accident. At the time of the accident, he had a consistent history of working as a saturation diver. This work is highly specialised, in demand, and very well remunerated.
The original claim was not exempt from CARS and ran through to assessment. On 1 April 2011, Assessor White handed down her assessment of damages in the amount of $2,917,108.50.
The insurer took issue with the assessment of damages and sought judicial review, alleging that the Assessor:
- erred in making an assessment in respect of past domestic care in the absence of evidence other than that of the claimant and, further, that assessment was impermissible in circumstances where the Assessor had made an expert determination about a medical matter in the absence of medical evidence;
- failed to provide any reasons when assessing past economic loss;
- acted ultra vires when assessing future economic loss by not undertaking the determination required under s 126 of the Motor Accidents Compensation Act 1999(the Act); and
- erred in allowing the cost of a taxation advice by a barrister as an ordinary disbursement, which the insurer alleged was unrecoverable by operation of clause 9 of the Motor Accidents Compensation Regulation 2005.
The Judgment
The matter was heard by his Honour Justice Hall on 4 October 2011. His Honour handed down his judgment on 22 March 2012.
The judgment as a whole provides a useful summary of the relevant case law in respect of assessing damages for past and future economic loss under the common law and in conjunction with the Act.
His Honour found for the claimant and dealt with each alleged error in turn.
First alleged error - assessment of domestic assistance
His Honour found that there was no error of law as alleged by the insurer. His Honour noted that the Assessor's findings were based upon medical and lay evidence and that the Assessor had provided adequate reasons to justify the conclusions reached.
Second alleged error - assessment of past economic loss
The insurer alleged that the Assessor had failed to provide reasons for her assessment of past economic loss as required by s 94(5) of the Act and cl 18.4 of the Motor Accident Authority Guidelines.
His Honour found that the reasons for the assessment recorded the relevant findings and opinions established in the medical evidence, and made findings both as to the level of the claimant's impairment, the nature of the impairment, and its impact upon the claimant's earning capacity.
The Assessor stated her reasoning in determining the claim for past economic loss on the basis of total incapacity and why she rejected the insurer's submission that the claimant was only partially incapacitated for work.
His Honour concluded no error of law was established.
Third alleged error - assessment of future economic loss
His Honour considered the medical evidence and the reasoning adopted by the Assessor when determining future economic loss.
His Honour carefully considered whether the Assessor had met her obligations pursuant to s 126 of the Act.
His Honour found that the Assessor had sufficiently identified the basis for her ultimate conclusion that the claimant had no residual earning capacity. The reasons indicated the Assessor had considered the submissions of the insurer's representatives.
His Honour noted that the only substantive issue between the insurer and the claimant in the CARS proceedings was the issue as to whether the claimant's incapacity was total or partial. Agreement had already been reached as to the claimant's pre-injury earnings. His Honour found that the Assessor made relevant findings on the only substantive issue in contest and those findings were recorded in her reasons for the assessment.
His Honour pointed out that once a claimant establishes total incapacity for employment on the basis of medical evidence, the onus is upon the insurer to adduce evidence that establishes the claimant has a residual earning capacity. In this case, the insurer did not adduce such evidence.
His Honour noted that no submission was or could have been made by the insurer that the evidence did not permit or support the ultimate conclusion reached by the Assessor on the issue of incapacity.
Fourth alleged error – assessment of costs and disbursements
The claimant, as a result of his employment as a saturation diver, spent most of his time working overseas. As a result, his income was earned outside Australia.
The claimant obtained an expert report from a barrister who specialised in taxation matters. The barrister provided a report addressing the claimant's pre-accident tax status. The barrister indicated that he had read and was bound by the Witness Code of Conduct. The report cost $10,490.91.
The Assessor allowed the cost of that report to be recovered as an unregulated disbursement.
The insurer contended that the expert report was an advice and, as such, was the provision of "legal services" and thereby regulated by cl 9 of the Motor Accidents Regulation 2005.
His Honour found that there was no retainer between the claimant and the taxation barrister, and the report was an expert report and not the provision of a legal service. As such, the costs of the report were recoverable as an unregulated disbursement.
Implications
This case again illustrates the difficulty in successfully seeking administrative relief, particularly when alleging failure to provide reasons.
This case also illustrates the importance of having evidence to discharge the evidentiary onus upon a defendant/insurer that the claimant has a residual earning capacity once total incapacity has been established. A mere submission that the claimant has residual earning capacity will not be sufficient. It is necessary for a defendant/insurer to establish what the residual earning capacity is and how it can be applied. Without having evidence that addresses all injuries sustained by a claimant and their impact upon the claimant's capacity, a defendant/insurer is at risk of not establishing a residual earning capacity.
This decision also clarifies that where expert legal advice is provided in the form of an expert's report, it is not the provision of a "legal service" and as such is recoverable as a disbursement.
This case usefully sets out the principles established by the authorities when assessing economic loss.
Footnote1 Hall J
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