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.
The claimant claimed damages as a result of injury received by him in a motor vehicle accident in August 2007. The claimant sustained injury to his right leg, knee and heel, and an aggravation to pre‑existing back and neck symptoms. There was no issue as to liability.
The insurer filed a summons in the Supreme Court seeking an order that the claims assessor’s determination be quashed on various grounds. The primary basis for the relief sought in the summons was that the claims assessor had erred in making the awards for past and future economic loss on the basis of the decision of the Court of Appeal in Guzman v Zammit . Secondly, the insurer contended the claims assessor failed to adhere to the requirements of s 126 of the Motor Accidents Compensation Act 1999 (MACA). The third complaint was failure to give adequate reasons for the decision given.
Section 126 of MACA requires that a court or claims assessor states 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.
Court of Appeal Decision
The claims assessor relied upon the Court of Appeal decision in Guzman v Zammit as an authority. In that case the Court found that where the taxation returns of a self‑employed plaintiff painter disclosed earnings of between $200 and $350 a week, and an employed painter would earn at least $600 a week, it was fairly clear that if there had been no accident, the plaintiff painter would have been driven by economic necessity back into the employed workforce.
In 1993 the claimant purchased a dry cleaning business in North Ryde Shopping Mall and continued the business until approximately August 2007 when the shopping mall was shut down for renovations. Notice of the shut down had been given to the claimant in July 2007 and he had negotiated a lease in the Meadowbank Shopping Centre, where he said he had planned to commence business on 13 November 2007. The claims assessor accepted that it had been the claimant’s intention to operate the business from a new location. The claims assessor noted, on the basis stated in the taxation returns, the business had generated losses for a number of years, except in the 2007 year when a profit of $35,000 was shown.
The claims assessor awarded past and future economic loss on the basis of the decision in Guzman v Zammit and the claimant’s statement that he was paying for his family expenses from the business and determined that, were it not for the accident, the claimant would have been forced to sell or close his business and seek employment as a dry cleaner or as a stonemason. In proceeding upon that basis, the claims assessor adopted the average weekly net earnings of an employed laundry worker. The damages for past economic loss were calculated from the time of the accident at a rate of $773 per week for past loss and as well for future loss to the age of 65.
The Court found the approach taken by the claims assessor in calculating past and future economic loss was flawed in that the claims assessor failed to have regard to the claimant’s pre‑injury earnings generated by the laundry business, and failed to have regard to the claimant’s own evidence that he had been, and intended to continue as, a self‑employed person and the evidence did not establish that the most likely future circumstance was that he would earn remuneration as an employee in the laundry business. Further, the Court found the evidence did not support the approach taken by the Court of Appeal in the case of Guzman v Zammit.
The Court found that the claims assessor committed a jurisdictional error in not complying with the requirements of s 126 stating:
“131 The claim, whilst premised on the fact that Mr Pham had been for many years self‑employed and intended, but for the accident, to continue to do so, was assessed upon the hypothesis, for which there was no evidence, that he would be forced by economic circumstances to change and to work for wages in an employed capacity.”
The Court quashed the certificate of assessment and ordered that the matter be allocated to a different claims assessor for reassessment.
This claim represents a rare instance of a successful administrative review of a claims assessor’s certificate of determination. 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.
 Hall J
  NSWCA 224