Judgment date: 29 August 2011

Allianz Australia Insurance Limited v Sprod & Ors [2011] NSWSC 1157

Supreme Court of New South Wales1

In Brief

A claims assessor may award a buffer for future economic loss as a percentage of the claimant's present earnings in circumstances where the claimant has not presently suffered an economic loss.

Background

The claimant sustained injuries to his neck, back and left shoulder in a motor accident on 20 June 2008. He had suffered an earlier injury to his left shoulder at work in November 2007. Liability was admitted and the matter proceeded to General Assessment at CARS.

The claimant asserted that he was unable to work his usual overtime since the accident and that he was fearful of losing his job in the future. Nevertheless, his earnings continued to increase after the second accident. The insurer submitted that the claimant's inability to work overtime was as a result of his left shoulder injury sustained in the earlier accident and that there was no ongoing economic loss as a result of the subject accident.

The claims assessor determined that the left shoulder injury had resolved by the time of the subject accident. He allowed past economic loss at $10,000 in respect of lost overtime and future economic loss at $250 net per week for 18 years for the possibility that the claimant may lose his job in the future.

The insurer applied to the Supreme Court for administrative review of the award principally on the basis that claims assessor failed to comply with the requirements of s 126 of the Motor Accidents Compensation Act 1999 in assessing economic loss.

At the hearing the insurer submitted that the claims assessor's determination should be tested in the same way as would a judge's reasons, although the claims assessor was not obliged to provide the same level of detail as would a judge. After considering previous cases on this issue2 the Court stated as follows:

"24 Against that background, I am of the opinion that the appropriate test when examining the reasons of an assessor is that of clarity. It has to be clear how the assessor reached his or her decision and what process of reasoning was involved. It is not necessary, however, that each step in that reasoning process be enunciated if it is otherwise clear how the assessor arrived at his or her conclusion."

The Court held that the award was in the form of a buffer, even though it calculated damages as a percentage of the claimant's weekly earnings rather than a lump sum, and was therefore not constrained by the requirements of s 126 in any event. The insurer's summons was dismissed.

Implications

This case confirms the difficulty in demonstrating administrative law error in the manner a claims assessor considers the evidence presented by the parties and forms conclusions. Unlike merits review of a decision of a District Court Judge, a decision of a CARS Assessor will only be set aside if jurisdictional error is demonstrated. The grounds for such review are very narrow.

The case also demonstrates the various alternate methods an assessor may employ to allow for the possibility of future economic loss.

It is noteworthy that in this matter the Court issued a warning to insurers against using administrative challenges as a form of merits review, stating:

"59 It is to be hoped that in future CTP insurers, in accordance with the philosophy of the Act, restrict such s 69 applications to circumstances where there is a genuine jurisdictional issue or error of law on the face of the record, rather than as appears to be the situation here, disagreement with a particular head of damage found by a claims assessor."

However, insurers should not be discouraged from seeking such administrative review of awards which are so unreasonable as to offend the Wednesbury principle.3

Footnotes

1 Hoeben J
2 Insurance Australia Ltd trading as NRMA Insurance Ltd v Helou [2008] NSWCA 240; Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247
3 Associated Provincial Picture Houses Ltd v Wednesbury Corporation (1948) 1 KB 223

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