Assessor's award of damages amiss - Insurance Australia Group Ltd t/as NRMA Insurance v Abboud [2017] NSWSC 1571

The claimant brought a claim for personal injuries arising out of a motor vehicle accident on 28 February 2013, against NRMA Insurance (NRMA). He alleged he sustained an array of physical and psychological injuries, which included soft-tissue injuries to his head, neck and back. At the time of the accident, the claimant was a self-employed carpenter.

The matter was referred to the Claims Assessment and Resolution Service (CARS) to be assessed by Assessor Hugh Macken on 27 February 2017. Assessor Macken issued his certificate and reasons on 17 March 2017, assessing total damages in the sum of $438,559.17.

In his reasons, Assessor Macken noted surveillance footage obtained by NRMA showing the claimant walking freely, standing unsupported on a ladder painting, standing on a ladder and operating a nail gun and undertaking activities consistent with the operation of a carpentry and building business. He found the claimant's assertions of disability unconvincing, and was "prone to exaggeration."

NRMA challenged the award in the Supreme Court of New South Wales (the Supreme Court) by way of summons, seeking relief under s 69 of the Supreme Court Act 1970 (NSW).

The matter was heard on 26 October 2017 before Walton J. His Honour found NRMA had made good its contentions on the following grounds:

Ground one: Reasons for the decision are inadequate

His Honour acknowledged, in accordance with the established authorities, that an assessor's obligation to give reasons is not to be equated with that of a judge, however the reasons must be sufficient to demonstrate the "path of reasoning that leads the claims assessor to a conclusion as to the amount of damages that a Court would be likely to award”.[2]

Assessor Macken assessed damages for past economic loss on the basis of a loss of earning capacity of 20%, and awarded $50,000 as a buffer for past economic loss. His Honour found that even if the award was intended to represent a 20% loss of earning capacity, upon adopting these calculations, the claimant's resultant pre-accident earnings did not accord with the Assessor's finding that the claimant's pre-accident earnings were "closer to $400 net per week." His Honour found the Assessor's reasons did not provide any adequate explanation for the past economic loss award.

Assessor Macken awarded $350,000 as a buffer for future economic loss, despite finding that the claimant's physical injuries were "not particularly disabling." His Honour acknowledged it was permissible to make an "indicative calculation" of the weekly loss to which a particular buffer is equivalent, and accepted NRMA's submission that the buffer was equivalent to a weekly loss of $450 net per week, which was again inconsistent with his earlier finding as to the claimant's pre-accident earnings, and was equivalent to a near-total incapacity for work. His Honour found the Assessor's reasons were inadequate.

Ground two: The reasons do not comply with s 126 of the MACA

His Honour observed that Assessor Macken's reasons for awarding future economic loss made no reference to s 126 of the MACA, which is designed to ensure transparency in the path of reasoning adopted by an assessor.

His Honour added that Assessor Macken did not state, even in general terms, what work the claimant would have done in the future but for his injuries, nor did he state what work the claimant could do despite his injuries. The Assessor simply stated that the claimant's injuries have interfered with his capacity to work in the "physically arduous profession he has chosen in the future."

His Honour concluded that the Assessor's failure to engage with and perform the specified task in s 126 amounted to an error of law on the face of the record.

Section 126 of the MACA is designed, in the context of future economic loss, to compel assessors to be explicit in their reasoning. This case is a succinct reminder of an assessor's obligation to provide adequate reasons and to engage with the factual exercise specified by s 126 of the MACA.

The Assessor clearly failed to engage appropriately with the claimant's credit issues, and as a result, his reasons for the award do not accord with his findings on credit, the supporting evidence, or his earlier findings on the claimant's pre-accident earning capacity. As a result, the Assessor's reasons were infected by error.

This case is distinguishable from cases such as Allianz Australia Insurance Ltd v Kerr[3], where the buffer awarded was well-supported by the assessor's outline of the minimum factual assumptions necessary for the s 126 exercise. There remains a fine balance to be struck between challenging the award of a buffer on the basis of brief, yet adequate reasons, and plain inadequate reasons.