Australia: Supreme Court upholds $400,000 future economic loss buffer

Curwoods Case Note
Last Updated: 5 November 2011
Article by Jaspreet Singh-Bains

Judgment date: 2 November 2011

Allianz Australia Insurance Limited v Cervantes [2011] NSWSC 1296

Supreme Court of New South Wales1

In Brief

  • An order in the nature of certiorari is issued to remedy an error of law or jurisdictional error. It does not allow for a review of the merits of a determination of a claims assessor.
  • In providing a statement of reasons, a claims assessor must identify the heads of damage and the manner in which the amounts attributed to each head of damage have been determined. The reasons for determination are required to be no more than brief.


The plaintiff, a specialist Nephrologist, was injured as a passenger in a motor vehicle accident. She sustained whiplash type injuries which became chronic in addition to secondary psychological issues.

The claims assessor accepted that the injuries sustained by the plaintiff prevented her from maintaining a successful private Nephrology practice and from continuing as a full time specialist at a larger hospital.

The claims assessor awarded damages of $570,133.36. This included a future economic loss buffer of $400,000.

Grounds for review

The Insurer sought judicial review of the determination of the claims assessor on the basis of an error of law or jurisdictional error. The Insurer's application was based on four grounds:

  1. The failure to take into account the opinion of Dr Bodel that the plaintiff could continue in her chosen career

    The Insurer submitted that the claims assessor erred in his reasons for decision by failing to take into account the evidence of Dr Bodel (qualified on behalf of the plaintiff) who opined that notwithstanding the injuries sustained in the accident, the plaintiff could continue to work as a specialist at a hospital until retirement age.
  2. Rejection of the opinion of Dr Akkerman

    The claims assessor accepted most of the opinions expressed by each of the doctors with the exception of Dr Akkerman (qualified on behalf of the Insurer) given he was the only doctor to cast doubt on the plaintiff's genuineness.

    It was the submission of the Insurer that the claims assessor had erred in failing to consider the content of Dr Akkerman's report on the sole basis that it questioned the genuineness of the plaintiff's complaints.
  3. The use and amount of a buffer

    The claims assessor determined that it was difficult to precisely calculate the claimant's economic loss per week. He therefore awarded past and future economic loss as a buffer in the amounts of $75,000 and $400,000 respectively.

    The Insurer submitted the claims assessor's determination in this respect was erroneous given there was no apparent compliance with section 126 of the Motor Accidents Compensation Act 1999 (MACA) for future economic loss. Further, the buffers awarded to the plaintiff were not true buffers as the claims assessor did not provide any real explanation as to the basis upon which the buffers had been calculated.
  4. Future commercial care

    The plaintiff was awarded future commercial care in the amount of 2 hours per week until the plaintiff reached retirement age.

    Again it was the view of the Insurer that the claims assessor had erred in law by failing to set out the precise reasons as to why 2 hours of commercial care was appropriate.


  1. The failure to take into account the opinion of Dr Bodel that the plaintiff could continue in her chosen career

    Rothman J noted that the report of Dr Bodel opined that the plaintiff could continue her career as a Nephrologist for the remainder of her working life. Dr Bodel did not specify whether the plaintiff could maintain a career in private practice.

    The claims assessor did not conclude that the plaintiff could not continue working as a Nephrologist until retirement. Rather, the claims assessor found that the plaintiff would be unable to maintain a successful Nephrology practice in addition to working as a full time specialist at a large hospital as a result of the injuries sustained in the accident. Rothman J noted that the findings of the claims assessor were not only warranted given the evidence before him, but were also not inconsistent with the opinion expressed by Dr Bodel.
  2. Rejection of the opinion of Dr Akkerman

    It was the opinion of Dr Akkerman that the plaintiff was exaggerating her disabilities. The claims assessor came to a different view on the basis of the other medical evidence before him including the evidence of the plaintiff herself.

    Rothman J determined that the claims assessor's rejection of the opinion of Dr Akkerman in circumstances where there was evidence to support that view was a question of fact and not an error of law or a jurisdictional error.
  3. The use and amount of a buffer

    Rothman J affirmed section 126 of MACA does not prevent a Court from awarding damages by way of a buffer in appropriate circumstances. He referred to the judgement in Allianz Australia Insurance Limited v Kerr [2011] NSWSC 347 at [19] in which Hislop J stated:

    "The occasion for a buffer is when the impact of the injury upon the economic benefit from exercising earning capacity after injury is difficult to determine."

    In commenting on the difficulty in assessing the amount of a buffer and the obligations of an assessor in this regard, Rothman J referred to the discussion of the Court of Appeal in State of New South Wales v Moss [2000] NSWCA 133, (2000) 54 NSWLR 536 at [87] in which Heydon JA stated:

    "Though the trier of fact in arriving at the discretionary judgement must achieve satisfaction that a fair award is being made, since what is involved is not the finding of historical facts on a balance of probabilities, but the assessment of the value of a chance, it is appropriate to take into account a range of possible outcomes even though the likelihood of any particular outcome being achieved may be no more than a real possibility."

    Rothman J accepted that the claims assessor's conclusion that the plaintiff's injuries prevented her from maintaining a successful private practice constituted sufficient findings of fact. Likewise he considered that the claims assessor was justified in awarding damages by way of a buffer given the difficulty in assessing with any degree of precision, the loss of future earnings, together with the possibility (however remote) that the plaintiff could have established her own private practice.

    Rothman J noted that the claims assessor was faced with an extremely difficult task in attempting to determine the amount of the buffers to be awarded. The lack of any figures indicative of the comparable earnings of practitioners of similar experience to the plaintiff in this case warranted the claims assessor's reliance on the general estimate provided by the plaintiff herself.

    Whilst Rothman J noted that a buffer of $400,000 is more than is usually associated with an amount by way of a buffer, he commented that the buffer was conservative given the circumstances of this case.

    The plaintiff was earning $130,000 per annum whereas a successful Nephrologist in private practice could earn in excess of $500,000 per annum. Therefore, given the level of earnings and potential earnings of the plaintiff, Rothman J concluded the buffer was not excessive and was well within the range available.
  4. Future commercial care

    It was the submission of the Insurer that there was no evidence upon which the claims assessor found that past gratuitous care would not continue.

    Rothman J found that the claims assessor had sufficient evidence before him to form the view that 2 hours of commercial care per week would be required and would not have been obtainable through ongoing gratuitous care. In particular, the claim assessor noted that past domestic care had been provided by the plaintiff's de facto spouse from whom she is now separated and her adult son who is unlikely to continue living at the plaintiff's home and provide her with ongoing assistance.


The case does not suggest that an amount of $400,000 would ordinarily be an appropriate amount for a buffer. Rather, it affirms that if a claims assessor has provided a statement of assumptions and disclosed the primary facts to justify the reasons for the buffer and its amount, that will suffice.

The case also affirms that the reasons for a determination of a claims assessor are required to be no more than brief.

In doing so, the case reiterates that the general purpose of MACA is to implement a less formal regime to provide a cost effective and expeditious assessment of damages by an administrative official. The grounds for seeking an appeal of an assessment of a claims assessor by an Insurer remain limited.


1 Rothman J

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