Sparke Helmore's MAD (Motor Accidents Division) - Judicial Review case note

AAI Limited t/as AAMI v Pearce [2024] NSWSC 357

The Personal Injury Commission (Commission) has agreed to pay an insurer’s costs of Supreme Court judicial review proceedings.

A high bar needs to be overcome to convince a Court that a submitting party should pay costs. The bar is even higher when it involves a tribunal or public body or office. Exceptional circumstances must be established to justify the costs order.

This outcome bears significant scheme importance.  Errors by Commission officers that require a party to file a Summons will typically manifest in delays and costs, to the disadvantage of all parties.  These proceedings illustrate a scenario where the costs implications are mitigated.

Background

The claimant sustained injuries in a motorcycle accident on 3 November 2018. His injuries included soft tissue injuries to the right knee and hand including scarring, and a psychological injury. He was a self-employed chartered accountant at the time of the accident and as a result of his injuries he required a brief period away from work, subsequently returning on reduced duties. 

The key areas of dispute were the extents of past and future loss of earning capacity, and particularly assumptions about most likely circumstances but for the accident.

The Member’s decision

The insurer and the claimant relied on forensic accountants reports which differed widely in their assessments of economic loss.

The claimant’s accounting reports assumed that the business would have grown by 35-45% per annum and loss was calculated on that basis.   

The insurer’s accounting report concluded that the business’s profits increased after the accident. A comparative assessment was made between the claimant’s income and that of his business partner. Future loss was calculated by considering the cost of labour replacement to perform billable work the claimant alleged he could not do.

The Member effectively adopted the claimant’s accounting report in totality.

Judicial review

The insurer command judicial review proceedings.  It submitted that the Member provided inadequate reasons for his assessments of past and future economic loss:

• There was no explanation as to why the methodology used by the claimant’s expert was preferred.
• There was no reasoning to explain why the Member accepted the claimant’s evidence but adopted calculations by the claimant’s forensic accountant, in circumstances where the claimant’s evidence was inconsistent with the accountant’s methodology.
• The Member failed to make necessary factual findings (about how many hours less per week the claimant could work in the future).
• The Member failed to make findings about the claimant’s most likely future circumstances.
• The Member failed to provide reasons as to how he formulated diminution of future earning capacity.

The claimant, the Member and the Commission each filed submitting appearances.

The Court reached its decision after advising the parties that it did not require oral arguments and was content to determine the matter on the papers.

The Court concluded that the Member’s reasons were inadequate and, “failed to make any of the necessary findings that underpin the basis of calculation of economic loss, either in the past or in the future”.

The Court identified a failure by the Member to reach factual findings that could validate the accounting methodology that he accepted.

The insurer lodged submissions seeking costs orders against the Member and the Commission.  The Commission agreed to bear the insurers costs of the Summons, as agreed or assessed, and consent terms were filed accordingly.

Held: The decision of the Member dated 9 November 2023 was set aside and the matter was remitted back to the Commission for a decision to be made by a different Member according to law.  Commission to pay the insurer’s costs as agreed or assessed.