Australia: Court of Appeal Considers Use of Buffers

Curwoods Case Note
Last Updated: 18 August 2012
Article by Nabil Ghattas

Allianz Australia Insurance Ltd v Cervantes [2012] NSWCA 244

Judgment date: 8 August 2012

Jurisdiction: NSW Court of Appeal1

In Brief

  • A Claims Assessor does not necessarily fall into error by failing to mention every passage of the evidence.
  • The award of buffer damages involves an evaluative judgment and the size of the buffer will depend upon the circumstances of the case, including the level of the claimant's pre-accident income.
  • In an exceptional case, where the claimant is a high income earner, a larger than usual buffer may be justified.


On 24 June 2006 the claimant was injured in a motor vehicle accident. Liability was admitted by the insurer. On 11 January 2011 Mr Goudkamp, Claims Assessor, issued a certificate assessing the claimant's damages at just over $570,000. The amount included $75,000 for past economic loss and $400,000 for future economic loss. These awards were expressed as buffers.

On 4 March 2011 the insurer sought judicial review of the determination of Claims Assessor Goudkamp in the Supreme Court of New South Wales. Rothman J in those proceedings 2 dismissed the insurer's summons with costs. 3

The insurer appealed to the NSW Court of Appeal on the grounds that Claims Assessor Goudkamp erred as follows:

  • Failing to consider the opinion of Dr Bodel that the claimant could continue in her chosen career until normal retirement age;
  • Disregarding Dr Akkerman's opinion that the claimant had no psychiatric disability; and
  • Awarding buffers for past and future economic loss.

The lead judgment was handed down by Basten JA with McColl and Macfarlan JJA agreeing.

Report of Dr Bodel

The insurer submitted that even though Claims Assessor Goudkamp referred to the reports of Dr Bodel, there was no specific reference to the following statement with regards to economic loss:

"Dr Cervantes should be able to continue in her chosen career until her normal retirement age."

Justice Basten noted that the Claims Assessor expressly referred to Dr Bodel's reports and accepted the opinions and diagnoses in those reports.

His Honour considered it was not clear that Dr Bodel's report supported the Insurer's case and as such may have been immaterial. The reason for this was that Dr Bodel identified that there were ongoing disabilities with persisting symptoms indefinitely, which would affect the claimant's ability to lead a normal life and assessed her with 5% WPI. At [18] his Honour held that:

"It is doubtful that Dr Bodel's reports could be read otherwise than as supporting a degree of loss of earning capacity based on identified disabilities."

Finally, his Honour at 22 considered there was no obligation to consider every piece of evidence presented:

"Further, to refer to a report, but not to a particular passage in the report, may indicate an implicit preference for some other material which (in the absence of any no evidence ground) must be accepted as existing to support a particular conclusion. Such a course cannot constitute a failure to take into account a relevant consideration nor a failure to respond to a substantial argument 4 ."

Report of Dr Akkerman

This ground was in relation to the insurer's contention that Dr Akkerman opined the claimant exaggerated her symptoms and had no psychiatric abnormalities.

His Honour noted the Claims Assessor did not ignore Dr Akkerman's report. The Claims Assessor specifically mentioned in his reasons that Dr Akkerman was the only doctor to cast doubt on the claimant's veracity. His Honour at [32] held:

"As the assessor accepted the complainant as truthful, the conclusion that Dr Akkerman's report was of no assistance and should be rejected was at least logical, if not inevitable".

Economic Loss Buffer

Justice Basten noted there is a long line of authorities that support the notion that, in some cases, assessment of economic loss involves a degree of speculation which does not permit specific calculations. As such, an award by way of a buffer was appropriate.

Further, s 126 of the Motor Accidents Compensation Act 1999 (NSW) (MACA) does not prevent the court from awarding buffers in appropriate circumstances 5 .

His Honour characterised the insurer's argument to be that it was impermissible to award a large sum, such as $400,000, without providing a precise calculation.

His Honour noted the claimant, without contradiction, suggested such an award could have been reached by calculating a loss of earning capacity at $740 net per week. The claimant at the time of the assessment was earning approximately $2,500 net per week. The amount suggested was approximately 23% of her net weekly earnings. As such, His Honour held at [45] that:

"...the relationship of the buffer to the actual earnings and likely diminution in earning capacity demonstrated that the outcome was not manifestly unreasonable"

His Honour did not decide if an upper limit could be placed on buffers. However, the difference in individual earning capacities was relevant, along with the cap on economic loss damages under s 125 and the indexation under s 146 of the MACA

The Court dismissed the appeal with costs.


This case reinforces the view that Claims Assessors are not required to refer specifically to all the evidence before them and are free to give weight to the evidence in the manner they see fit.

The award of damages by way of a buffer requires consideration of the earning capacity of each individual. Based on this judgment, there appears to be no correlation between the size of a buffer awarded and when a Claims Assessor is required to give precise calculations to justify such an award.

However, this was an unusual case given that the claimant was a high income earner, thus justifying a higher than usual buffer.


1 McColl JA, Basten JA and Macfarlan JA
2 Allianz Australia Insurance Ltd v Cervantes [2011] NSWSC 1296
3 See Curwoods Case Note from November 2011 entitled 'Supreme Court upholds $400,000 future economic loss buffer'
4 Minister for Immigration and Citizenship v SZJSS (2010) HCA 48; 243 CLR 164 at [35]
5 Allianz Australia Insurance Ltd v Kerr [2012] NSWCA 13 at [30]

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