Appealing to reason – $1.9m reduction in damages by SA Court of Appeal

South Australia's Court of Appeal has overturned a multimillion-dollar damages award made by the District Court in a compulsory third party (CTP) claim. The decision provides greater certainty for insurers, ensuring that damages assessments are grounded in substantiated evidence when quantifying loss.

In issue

In Motor Accident Commission v Raccanello & Ors [2025] SASCA 146, the Court of Appeal considered the assessment of damages pursuant to the 2013 amendments to the Civil Liability Act 1936 (SA) (CLA) and the common law, covering:

• non-Economic Loss (General Damages)
• economic loss including partnership and business losses
• worker's compensation repayments
• future paid services
• future treatment expenses and loss of consortium
• the findings on causation of alcohol and drug addiction, and
• the application of the Evidence Act 1929 (SA).

There was also an appeal as to the trial Court's decision on costs, but this was not addressed in the decision given the other appeal grounds upheld.

The background

Mr Raccanello was injured in a motor vehicle accident on 27 April 2014, when the truck he was driving collided with another vehicle. As the driver of the other vehicle passed away as a result of the accident, proceedings were brought in the District Court of South Australia against the CTP insurer, the Motor Accident Commission. Mr Raccanello sought damages for his personal injuries, while his wife sought damages for loss of consortium and partnership losses. Two of their companies, Rayen and Wormtech, sought damages for losses sustained due to the impact on Mr Raccanello's alleged capacity as an employee and working director of the companies (per quod servitium amisit or 'per quod').

Liability was not in issue at trial, as the parties agreed on a 25% reduction due to Mr Raccanello's failure to wear a seatbelt.

The matter went to trial in the District Court of South Australia and the decision of the original trial judge awarded damages to the four applicants in the total amount of $2,202,342.90 (after liability reduction and deduction for amounts previously repaid to the worker's compensation insurer with whom Mr Raccanello also had a claim arising from the accident). This was in addition to interest and costs.

The award included an allowance of over $1m (prior to the liability reduction) for losses allegedly sustained as a result of selling water entitlements at a time when they would not otherwise have been sold (but at market value), and therefore missing out on the opportunity to sell for a higher amount at a different time.

The Motor Accident Commission appealed the decision, which was heard over three days by the South Australia Court of Appeal in February 2024, and comprised 13 main grounds of appeal. The Raccanellos, Rayen and Wormtech cross-appealed.

The interplay between personal, partnership and business‑related losses made this an unusually complex claim, underscoring how overlapping personal and commercial interests can complicate damages assessments.

The decision on appeal

The Appeal Court unanimously allowed the appeal, dismissed the cross-appeal, and reassessed damages in the amount of $279,844.78 total (after reductions for liability and amounts previously repaid to the workers compensation insurer), with the parties to be heard on interest and costs.

In reaching this decision, the Court found that the trial judge had erred in her findings on a number of matters of fact and principles of law, including, among other things:

• that in significant respects, the trial judge had accepted the oral evidence of the Raccanellos even when it was 'glaringly improbable' or contradicted by more contemporaneous, objective evidence
• various findings of fact were unsupported by evidence, contained internal inconsistencies, and failed to articulate the reasons for such findings in relation to future economic loss, as required by the CLA
• the per quod assessments should have been confined to the costs (less any savings) of any replacement labour engaged for the period Mr Raccanello was unable to work, and with reference to the contractual entitlements of the companies as at the time of the accident, and not allowed for loss of profits
• causation findings relating to the Raccanellos' sale of water entitlements, both on a factual basis and a scope of liability basis, were in error
• misunderstanding the effect of the relevant rules and section 28 of the Evidence Act 1929 (SA) (the business records provision) in relation to medical reports and the bank records relating to the sale of the water entitlements
• the concept that Mr Raccanellos' drug and alcohol use had 'masked' his pain, and causation of the illicit drug use given Mr Raccanello's prior use
• the award for future services was not based on an assessment of Mr Raccanello's accident-caused need and what he was likely to pay, and
• the award for loss of consortium was too high taking into account the unrelated factors impacting Mr Raccanello and his provision of society and services to Mrs Raccanello.

In reassessing the damages, the Court of Appeal reduced the awards for general damages, future paid services, future medical expenses, and future economic loss and loss of consortium, and made no allowance for damages for per quod or the losses from the sale of the water entitlements.

Implications for insurers

Significant amendments to the CLA specific to the assessment of personal injury claims for motor vehicle accidents in South Australia, took effect from 1 July 2013. The judgment:

• provides the first consideration by the Court of Appeal of the approach to assessing an appropriate ISV when there are multiple injuries
• considers the application of section 56A(4) which requires a court not to take into account a circumstance that is evaluated as less than a 20% chance of occurring, and
• confirmed that the 20% reduction to damages for economic loss and loss of earning capacity pursuant to section 56A(5) of the CLA does apply to where there is a repayment of income maintenance payments to a worker's compensation insurer.

More broadly, the decision confirms that the scope for per quod claims is narrow and should generally be confined to the loss sustained by a company in paying for replacement labour, less the amount of any savings by not paying for the injured employee, and within the scope of the contractual duties of that employee at the time of the tort, rather than on a loss of profit basis.

The decision also highlights the value of obtaining contemporaneous, objective evidence such as bank, medical and other records, and the importance of having a sound evidentiary basis for the assumptions given to an expert witness when seeking a report.

Motor Accident Commission V Raccanello & Ors [2025] SASCA 146 (22 December 2025)