Court of Appeal Supreme Court New South Wales

• Medium Neutral Citation: Allianz Australia Insurance Ltd v Cervantes [2012] NSWCA 244
• Hearing dates: 26 July 2012
• Decision date: 08 August 2012
• Before: McColl JA at [1]; Basten JA at [2]; Macfarlan JA at [50]

Decision

(1) Dismiss the appeal from the judgment delivered on 2 November 2011 in the Common Law Division.

(2) Order that the appellant pay the costs of the first respondent of the appeal.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

• Catchwords: ADMINISTRATIVE LAW - judicial review - failure to take into account relevant considerations - whether failure to refer to particular evidence can constitute failure to take into account relevant consideration - whether applicant entitled to rely on the reasons of the decision maker - whether necessary for applicant to rely on submissions before decision maker - need to identify source of legal obligation to consider mandatory factors - whether decision maker considered evidence - whether evidence is a relevant consideration for the purposes of judicial review; DAMAGES - motor vehicle accident - future economic loss - use of buffer - whether decision to award damages by way of buffer is an evaluative judgment - whether buffer manifestly unreasonable given likely future loss
• Legislation Cited: Evidence Act 1995 (NSW), s 55; Motor Accidents Compensation Act 1999 (NSW), ss 94, 125, 126, 146; Supreme Court Act 1970 (NSW), s 69
• Cases Cited: Allianz Australia Insurance Ltd v Kerr [2012] NSWCA 13; 60 MVR 194; Pollard v Baulderstone Hornibrook Engineering Pty Ltd [2008] NSWCA 99; 172 IR 453; Craig v South Australia [1995] HCA 58; 184 CLR 163; Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26; 77 ALJR 1088; The King v Connell; Ex parte The Hetton Bellbird Collieries Ltd [1944] HCA 42; 69 CLR 407; Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; 162 CLR 24; Minister for Immigration and Citizenship v SZJSS [2010] HCA 48; 243 CLR 164; Minister for Immigration and Multicultural Affairs v Eshetu [1999] HCA 21; 197 CLR 611; Nominal Defendant v Livaja [2011] NSWCA 121; Re Minister for Immigration and Multicultural Affairs; Ex part Miah [2001] HCA 22; 206 CLR 57; Swift v SAS Trustee Corporation [2010] NSWCA 182
• Texts Cited: Aronson, Dyer and Groves Judicial Review of Administrative Action (2009, 4th ed) at [4.220]
• Category: Principal judgment
• Parties: Allianz Australia Insurance Ltd (Appellant); Rita Cervantes (First Respondent); Tom Goudkamp (Second Respondent); Motor Accidents Authority of NSW (Third Respondent)
• Representation: Counsel: Mr M A Robinson SC/Dr J Lucy (Appellant); Mr K P Rewell SC/Mr M A Cleary (First Respondent); Submitting appearances (Second and Third Respondents; Solicitors: Moray & Agnew (Appellant); Gerard Malouf and Partners (First Respondent); Crown Solicitor's Office (Second and Third Respondents)
• File Number(s): CA 2011/71087

Decision under appeal

• Jurisdiction: 9111
• Citation: Allianz Australia Insurance Ltd v Cervantes [2011] NSWSC 1296
• Date of Decision: 2011-11-02 00:00:00
• Before: Rothman J
• File Number(s): SC 2011/71087

HEADNOTE

[This headnote is not to be read as part of the judgment]

On 24 June 2006 the claimant was injured in a motor vehicle accident. The appellant, the insurer, admitted liability. On 11 January 2011 a claims assessor appointed under the Motor Accidents Compensation Act 1999 (NSW) ("the Compensation Act") issued a certificate assessing the claimant's damages, including $75,000 for past economic loss and $400,000 for future economic loss. Each amount was awarded as a lump sum or "buffer". Reports of an orthopaedic surgeon, Dr Bodel, and a psychiatrist, Dr Akkerman, were before the assessor.

On 4 March 2011 the appellant sought judicial review of the assessor's decision in the Common Law Division, pursuant to the Supreme Court Act 1970 (NSW), s 69. On 2 November 2011 Rothman J dismissed the summons with costs.

The appellant appealed to this Court. The issues for determination on appeal were whether the assessor erred in:

(i) failing to consider the opinion of Dr Bodel that the appellant could continue in her chosen career until normal retirement age,

(ii) disregarding Dr Akkerman's opinion that the claimant had no psychiatric disability, and

(iii) awarding lump sums for past and future economic loss.

The Court held (per Basten JA, McColl and Macfarlan JJA agreeing), dismissing the appeal:

In relation to (i)

1. Evidence that is relevant to a party's case is not to be equated with a relevant consideration for judicial review purposes. An applicant for judicial review must identify a legal obligation to take into account a specific consideration. How those considerations are to be taken into account and the weight they are to be accorded are matters for the decision-maker: [15]-[16]

Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; 162 CLR 24 applied.

2. An applicant for judicial review on the basis of a failure to take into account a relevant consideration is entitled to:

(i) rely on the reasons of the decision maker to establish jurisdictional error, whether or not the reasons formed part of the record;

(ii) tender submissions before the decision-maker to establish that the material was relied on for a particular purpose, and

(iii) tender the material allegedly not considered in order to establish the factual basis of the contention: [11]-[12]

3. The assessor referred expressly to Dr Bodel's report and stated that he accepted the opinions in the report. Moreover, it was not clear that the report supported the appellant's case, and may therefore have been immaterial: [17]-[18]

4. There may be a constructive failure to exercise jurisdiction where a statutory conferral of power has not been exercised according to its terms. There is no obligation to address every piece of evidence presented. A failure to refer to a particular passage in a report may indicate an implicit preference for some other material: such a course cannot constitute a failure to take into account a relevant consideration nor a failure to respond to a substantial argument: [22]

Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26; 77 ALJR 1088; Re Minister for Immigration and Multicultural Affairs; Ex parte Miah [2001] HCA 22; 206 CLR 57 discussed; Minister for Immigration and Citizenship v SZJSS [2010] HCA 48; 243 CLR 164 applied.

In relation to (ii)

5. Dr Akkerman's conclusion that the claimant suffered from no psychiatric disability was premised on his disbelief of the claimant's history. As the assessor was satisfied that the claimant was truthful, there was no basis for accepting Dr Akkerman's conclusion. The refusal to accept the conclusion was not an error of law: [32]

In relation to (iii)

6. The decision to award damages by way of a lump sum or buffer is an essentially evaluative judgment. The appellant did not show that the course taken by the assessor in the present case was not reasonably open to him. The relationship of the buffer to the claimant's actual earnings and likely diminution in earning capacity demonstrated both that the size of the buffer did not demonstrate some unrevealed error, and that the outcome was not manifestly unreasonable: [42]-[45], [51]-[52]

Judgment

1 McCOLL JA: I agree with Basten JA's reasons and the orders his Honour proposes.

2 BASTEN JA: On 24 June 2006, Dr Rita Cervantes ("the claimant") was injured in a motor accident involving a car in which she was a passenger. The insurer, Allianz Australia Insurance Ltd ("the appellant"), admitted liability.

3 On 11 January 2011 Mr Goudkamp, a claims assessor appointed under the Motor Accidents Compensation Act 1999 (NSW) ("the Compensation Act") issued a certificate assessing the claimant's damages at a little over $570,000. Of that amount, $75,000 related to past economic loss and $400,000 related to future economic loss. Neither amount was the subject of a precise calculation; each was awarded as a lump sum or "buffer". The other elements of the award are not presently relevant.

4 Where the insurer has accepted liability, and the claimant accepts the amount of damages assessed within 21 days of the issue of the certificate, that amount becomes payable within the period specified by the regulations. The Court was advised that no amount had yet been paid. There is no appeal from an assessment under the Compensation Act. On 4 March 2011 the appellant commenced proceedings by way of judicial review, pursuant to s 69 of the Supreme Court Act 1970 (NSW). Those proceedings were heard by Rothman J who, on 2 November 2011, made orders dismissing the summons, with costs: Allianz Australia Insurance Ltd v Cervantes [2011] NSWSC 1296.

5 Allianz appealed to this Court, identifying three grounds in respect of which the primary judge was said to have erred. The matter raised no novel issue of principle and, for the reasons given below, the appeal should be dismissed.

Nature of jurisdiction

6 The grounds upon which judicial review was sought, as set out in the summons filed in the Common Law Division, were expressed discursively and in a manner which made it difficult to identify with precision the nature of the alleged errors. So stated, they gave at least a superficial impression that what was sought to be done, impermissibly, was to invite the Court to review the factual findings made by the assessor. This impression was not removed when the grounds were reformulated for the purposes of the appeal.

7 The documentary evidence tendered before the assessor ran to some 600 pages. The claimant gave oral evidence, which was not recorded. All of the documentary evidence was apparently tendered as a bundle before the primary judge. Little attempt appears to have been made to identify how that material was relevant with respect to grounds for judicial review. In the result, that approach appears to have discouraged careful identification of relevant error and, consequentially, invited a reassessment of the findings of fact, a course which the primary judge correctly noted was not available.

8 When invited on the hearing of the appeal to identify the basis upon which the whole of the material before the assessor had been tendered, senior counsel for the appellant noted that the grounds were not limited to error of law on the face of the record (which, it was accepted, extended to the reasons of the assessor) but included jurisdictional error. He also noted that the errors had been categorised in each ground in different ways, conformably with the conventional categorisation of grounds for judicial review.

9 The exercise of the Court's supervisory jurisdiction pursuant to s 69 of the Supreme Court Act has been consistently treated as constrained by the principles governing relief available pursuant to the old prerogative writs, although those have been abolished and replaced by orders of a similar kind. As a result, it is commonplace to state that a quashing order (in the nature of certiorari) must be grounded upon jurisdictional error or error of law on the face of the record. However, these two categories speak in different tongues. Jurisdictional error is a category of error: it is not limited to errors of law in the ordinary sense of that term, but includes factual errors where the objective existence of the fact, as determined by the reviewing court, is a pre-condition to the exercise of power by the authority on which the power is conferred. In the conventional language, a quashing order may be made where a jurisdictional fact has not been established or an error of law, properly described as jurisdictional, has occurred. Thus it is not any error of law, but only those errors which are "jurisdictional" which provide a basis for relief. By contrast, the second category includes all errors of law, but only if they may be discerned from the record. As explained by Aronson, Dyer and Groves, Judicial Review of Administrative Action (2009, 4th ed) at [4.220], by reference to general law principles articulated in Craig v South Australia [1995] HCA 58; 184 CLR 163:

"Henceforth, and in the absence of any legislative indication to the contrary, the record means only: (a) the documents... which initiated the impugned proceedings; (b) any pleadings; and (c) the impugned order itself."

10 In New South Wales, the record has been expanded by statute to include "the reasons expressed by the court or tribunal for its ultimate determination": s 69(4).

11 As will be seen in considering ground 1, the appellant contended that the assessor had failed to take into account a "relevant consideration", namely a medical report tendered by the appellant. In order to establish the factual basis of the contention, the appellant needed to rely upon the medical report in question. Accordingly, it submitted that it was entitled to tender that report in evidence on the judicial review application.

12 On the assumption (discussed below) that failure to refer to particular evidence can constitute a failure to take a "relevant consideration" into account, that submission may be accepted. Indeed, it was necessary for the appellant to go further in order to establish such a ground. It needed to rely upon the reasons of the assessor to demonstrate what the assessor had or had not taken into account. That it was entitled to do, in order to establish jurisdictional error, whether or not the reasons formed part of the "record". However, the material relevant to such a ground could, in the absence of a concession, include any record of submissions made to the decision-maker by the applicant for judicial review. That extra material may be necessary because, unless the party seeking judicial review can establish that the material was in fact relied upon for a particular purpose, there can be no legitimate complaint that the decision-maker failed to take it into account. It follows that the submissions, or at least the relevant parts thereof, before the decision-maker could be relevant and admissible as evidence before the reviewing court.

13 Thus, although the appellant was correct to submit that the evidence properly before the primary judge extended beyond the record of the assessment, there was no justification for tendering the whole of the material before the assessor. (There was no 'no evidence' ground relied upon, but even had there been, a blanket tender of material which could not conceivably relate to the impugned factual finding should not be permitted.) That material had in fact been admitted into evidence before the primary judge did not make it relevant, either before him or on an appeal.

Ground 1: report of Dr Bodel

14 Ground 1 identified error on the part of the primary judge in dealing with the assessor's treatment of the opinion of Dr James Bodel, an orthopaedic surgeon: at [35]-[41]. The appellant submitted that, although the assessor referred to the reports of Dr Bodel, he omitted to make reference to a statement by Dr Bodel which was "most relevant to the plaintiff insurer's case": written submissions, par 17. The particular evidence, identified in a report from Dr Bodel dated 21 November 2008, was by way of response to a specific question (AB 351):

"14. As a result of the permanent disabilities and any acceleration to the degenerative process, will the Claimant be able to work to age 65? If not at what age will the Claimant be able to work up to?

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

15 Because the precise nature of the ground was not adequately spelled out, the submissions tended to elide a number of key concepts. First, to describe evidence as "relevant" to the case of one party is not to identify a "relevant consideration" for judicial review purposes. All evidence is (or should be) "relevant" in the broad sense identified in s 55 of the Evidence Act 1995 (NSW), namely that, if accepted, it could rationally affect, directly or indirectly, the assessment of the probability of the existence of a fact in issue. (It is of no consequence for present purposes that the Evidence Act did not apply to the assessment in its own terms and was expressly not adopted: Motor Accident Authority of NSW Claims Assessment Guidelines, as amended on 1 October 2009, ("the Guidelines") par 16.1.) The reference to a "relevant consideration" in judicial review is a reference to a factor which, by law, the decision-maker is bound to take into account: Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; 162 CLR 24 at 39 (Mason J). This ground required that the appellant identify the legal obligation on which it relied to identify what were mandatory factors to be taken into account for the purposes of the assessment.

16 Secondly, the obligation is, as stated in Peko-Wallsend, to take a consideration "into account". How it is to be taken into account and what weight it is to be accorded in all the circumstances are matters within the authority of the decision-maker. Thus, assuming for present purposes that the assessor was bound to take into account the particular statement set out above, he could do so by dismissing it, by giving it little weight, or by giving it decisive weight.

17 Thirdly, the appellant needed to establish on the balance of probabilities that the assessor did not take the identified material into account. Given that, in the course of his reasons, the assessor referred expressly to Dr Bodel's report of 21 November 2008 in summarising the medical evidence and stated expressly that he accepted "the opinions and diagnoses of Dr James Bodel", the appellant faced an apparently insuperable obstacle in this respect. The mere fact that the specific statement relied upon by the appellant was not identified by the assessor in his reasons was, of itself, neutral. The assessor, as noted above, had more than 600 pages of material before him and could not possibly be expected to refer to the whole of it in reasons which were permissibly brief.

18 Fourthly, the question and answer relied upon were not, in an objective sense, "most relevant" to the appellant's case. Assuming that the assessor did not find (as in fact he did not) that the injury suffered in the motor accident would cause the claimant to cut short her working life, the statement set out above was, on one available view, immaterial. It appears that the appellant wished to interpret the question and answer as meaning that the claimant would be able to continue, unrestricted by any relevant disability, for the whole of her career. Even supposing that was a possible construction of the evidence, it was not one which the assessor was required to adopt and there was, therefore, no error in failing to adopt it. In fact, it may be doubted that such a reading of the report was available. Dr Bodel identified "ongoing disabilities" as "pain and headache and difficulty concentrating"; with "persisting symptoms indefinitely" and affecting an ability to lead a normal life which "has been compromised by the effects of this injury". In a supplementary report Dr Bodel assessed her as having a whole person impairment of 5%, as assessed in accordance with the Guidelines. 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.

19 Although this ground must be dismissed for the reasons given above, it is desirable to return to the first step in the reasoning, namely identifying the legal obligation to take particular evidence into account. No case was referred to which supported a proposition expressed in these terms. In Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26; 77 ALJR 1088, at [24], Gummow and Callinan JJ stated:

"To fail to respond to a substantial, clearly articulated argument relying upon established facts was at least to fail to accord Mr Dranichnikov natural justice."

20 A similar point was made by Kirby J at [86] referring to a passage in the judgment of Gaudron J in Re Minister for Immigration and Multicultural Affairs; Ex parte Miah [2001] HCA 22; 206 CLR 57 at [81] where, after noting that it was not always easy to distinguish an error of law which is jurisdictional from one that is not, her Honour continued:

"However, the present case is, in my view, a clear case of constructive failure to exercise jurisdiction. That is because the delegate failed to consider the substance of Mr Miah's application and could only have failed to do so because he misunderstood what is involved in the Convention definition of 'refugee'."

21 Two propositions may be drawn from these statements. First, although not articulated in these terms, a constructive failure to exercise jurisdiction may arise because the statutory conferral of power has not been exercised according to its terms. Thus, in the present case, s 94 of the Compensation Act requires that a claims assessor "is, in respect of a claim referred to the assessor for assessment, to make an assessment of ... the amount of damages": s 94(1)(b). It is, therefore, mandatory that the assessor address the claim and carry out the statutory function.

22 The second point is that neither Dranichnikov nor Miah went so far as to imply an 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: Minister for Immigration and Citizenship v SZJSS [2010] HCA 48; 243 CLR 164 at [35].

23 Apart from a 'relevant consideration' ground, the appellant adopted a raft of alternative ways of putting the same submission. These included the assertion that the assessor was required "to act fairly towards the parties", in accordance with cll 16.3-16.7 of the Guidelines. So much may be conceded: however the underlying factual premise was not made good because the element of unfairness identified above does not approach the kind of unfairness required, as explained in Dranichnikov.

24 The submissions further asserted that the claims assessor failed to have "proper, realistic and genuine consideration" to the expert report. These words do not advance the matter any further. As the High Court noted in SZJSS at [30], referring expressly to the phrase "proper, genuine and realistic consideration":

"That which had to be properly considered was 'the merits of the case'. Taken out of context and without understanding their original provenance, these epithets are apt to encourage a slide into impermissible merit review".

25 The appellant then asserted that it was "simply impermissible for a claims assessor to make a determination about an expert medical matter ... in the absence of medical evidence"; and that the determination was, as a result, "manifestly irrational or illogical or unreasonable". As the judgment of the Court in SZJSS continued, that language is apt to reflect the strength of the response to a weighing of the evidence with which the party adopting the response disagreed, rather than identifying a kind of jurisdictional error: at [32] and [34]. Such different formulations in the submissions for the appellant do nothing to identify a relevant ground for rejecting the decision of the assessor.

26 Finally, the appellant relied upon a supposed lack of adequacy of the reasons provided by the assessor for his final determination. The relevant principles in this regard were addressed in Allianz Australia Insurance Ltd v Kerr [2012] NSWCA 13; 60 MVR 194 at [47]-[64] by the Court as constituted in the present matter and need not be repeated. The analysis of the relevant passage in the evidence reveals no need for any specific reference in the reasons.

Ground 2: report of Dr Akkerman

27 This matter was addressed briefly in submissions and requires no extended discussion. Dr Akkerman was a consultant psychiatrist to whom the claimant was referred by the appellant. He prepared a report dated 16 December 2008. In setting out the claimant's psychological symptoms, as reported by the claimant, Dr Akkerman noted that she complained of nightmares and that "the content is stereotyped". He commented:

"This is a very strong indicator of malingering. In patients with Post Traumatic Stress Disorder the content of the nightmares will vary."

28 Under the heading "Mental status examination" the report stated:

"... She exaggerated her symptoms. She tried to put herself in a good light. She told me several times that she was honest. That she was not exaggerating. ...

She interacted in a somewhat grandiose manner. She spoke obsessively of her own accomplishments. ...

... Her affect was mildly irritable. Her concentration was normal. ... She was somewhat irritable. She was not tearful. She did not become upset when she described the accident. There was no avoidance. She did not startle easily. She was not hypervigilant."

29 In answering specific questions, Dr Akkerman stated, in reference to the nature and extent of any present or continuing disabilities, "there is no diagnosis". Under the heading "Findings on examination and diagnosis" he stated:

"I have outlined my findings on examination. She exaggerated her symptoms. Otherwise there were no abnormalities[.] In my opinion there is no diagnosis[.]"

30 The assessor did not disregard Dr Akkerman's report. In discussing, under the heading "General findings", the medical evidence in respect of the claimant's psychological problems, the assessor accepted the opinions of two psychiatrists and rejected the opinion of Dr Akkerman "who is the only medico to cast any doubt on the claimant's genuineness".

31 The primary judge dealt with this matter concisely at [42]-[45]. He stated at [42]:

"Allianz seeks to elevate a determination of fact to an error of law by submitting that to reject Dr Akkerman for the reason that 'he is the only medico to cast any doubt on the claimant's genuineness' is to make an error of law."

32 The basis of the challenge to this conclusion was by no means clear. It was, of course, open to Dr Akkerman to conclude that the symptoms the respondent recounted did not constitute a psychiatric condition, that they were consistent with a particular condition or that they were inconsistent with that condition. However, to disbelieve the claimant's history was to remove the basis for a diagnosis and thus, almost inevitably, lead to the conclusion that she suffered from no psychiatric disability. Dr Akkerman's finding that she "exaggerated her symptoms" and that "[o]therwise there were no abnormalities" suggested that all relevant symptoms were dismissed as untrue. Except in relation to the claim that she had "stereotyped" nightmares, which he described as "not consistent with clinical experience", it is not clear that his disbelief was based on his psychiatric expertise. If the assessor were satisfied that, in recounting her condition, the claimant had told the truth, the basis for Dr Akkerman's conclusion was removed. 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. To suggest that the conclusion involved an error of law is to deprive that expression of any relevant meaning. Ground 2 must be rejected.

Ground 3: award of a buffer for economic loss

33 The calculation of economic loss, whether in the past or for the future, involves a comparison between the actual circumstances of the claimant, as a result of the accident, and the circumstances which would probably have continued or come to pass but for the accident. On the assumption that the accident has resulted in a loss of earning capacity, the Court must also consider whether such a loss might have occurred independently of the accident.

34 That, in broad terms, is the exercise which must be undertaken in each case: Pollard v Baulderstone Hornibrook Engineering Pty Ltd [2008] NSWCA 99; 172 IR 453 at [84] (McColl JA, Mason P and Beazley JA agreeing). At least parts of that exercise are now identified in s 126 of the Compensation Act, as explained in Nominal Defendant v Livaja [2011] NSWCA 121 at [39]-[40].

35 The conventional approach to such an exercise is to assess the earning capacity of the claimant in monetary terms prior to the accident (usually on the basis of net weekly or annual earnings) and, where there is evidence of unemployment or employment at a reduced income thereafter, to assess the quantum of the difference up to the date of hearing (past economic loss) and to project the calculation into the future (future economic loss). The latter exercise will, again conventionally, be discounted by 15% on account of vicissitudes.

36 Such calculations produce precise figures, often resulting in awards expressed in dollars and cents. However, such precision is fallacious. Varying degrees of uncertainty will attend the hypothetical aspects of the calculation, rendering any degree of precision misleading.

37 Additionally, with respect to future economic loss, the exercise requires a discounting of the calculation in order to achieve a present monetary value for the assessed loss which, it is assumed, will accrue steadily over the remaining working life of the claimant.

38 Under the general law, it has long been accepted that, at least in some cases, the assessment will involve such a degree of speculation as to render a calculation by the conventional techniques inappropriate. In those cases, a lump sum is awarded by way of "buffer", the court being satisfied on the probabilities that a loss will be suffered or, indeed, has been suffered.

39 One of the contingencies which may not be readily assessable, thus supporting the lump sum approach, may be the question of vicissitudes. The greater the difficulty in identifying the claimant's most likely future circumstances but for the accident, the greater the difficulty in assessing the uncertainty as to whether or not those circumstances would have arisen in any event, and if so when and for how long they might subsist. Awarding a lump sum will usually incorporate the element of vicissitudes into the global assessment.

40 Under s 126 of the Compensation Act, the court is required to be satisfied that any assumptions about future earning capacity "or other events" accord with the claimant's most likely future circumstances but for the injury. Any award is to be discounted by the "percentage possibility that the events concerned might have occurred but for the injury". On one view, s 126 could be read as inconsistent with the award of a buffer for future economic loss. Such an approach would force a court, satisfied on the probabilities that there has been such a loss, to make an arithmetical calculation suggesting a degree of precision which was not warranted by the circumstances. As explained in Allianz v Kerr at [30], that approach has been rejected in a consistent line of authority in this Court, which was not challenged in the present case.

41 Part of the appellant's argument, revisiting a point raised in Allianz v Kerr, was that buffers were inherently unsatisfactory because they failed to reveal the true basis on which the figure was reached. In so far as the complaint is addressed to the use of a buffer as such, as opposed to the adequacy of the reasons given by the assessor, it is misconceived in two respects. First, the failure to adopt an arithmetical calculation does not mean that the assessor was excused from identifying the circumstances he was satisfied would most likely have occurred but for the injury. Nor was he excused from identifying, in broad terms, the limits on the earning capacity resulting from the injury. To that extent, there was transparency. Secondly, there was a misconception as to the value of "transparency" in relation to a speculative exercise. As already noted, if a precise calculation were to be mandated it could no doubt be undertaken. In each case the result will be precise, being a monetary figure; in one case there will be a false impression as to accuracy, whereas in the other inaccuracy will, with justification, be conceded.

42 The appellant accepted that the statute permitted what it described as a "compliant buffer". However, it was unable to articulate the principles which distinguished a compliant from a non-compliant buffer. The point appears to have been that where the assessor could reasonably have been expected to make an arithmetical calculation in the conventional sense, there would be an error in point of law in failing to undertake that task. However, that approach merely relocates the error of law to a different stage in the process. It must be an essentially evaluative judgment to determine whether in a particular case one approach is preferable to another, if both are available. It is then a matter for the appellant to establish that the course taken by the assessor in the present case was not reasonably open to him. Why that should be so, given the inherent uncertainties in the exercise being undertaken, was not made clear. The underlying premise appeared to be that a precise calculation was demanded in circumstances where the buffer for future economic loss was as large as $400,000.

43 The actual monetary value of the award may in some circumstances be indicative of error. Whether that is so will depend upon the circumstances of the particular case. As the respondent noted, without contradiction, the award in the present case could have been reached by calculating a loss of earning capacity of $740 net per week. If that were in fact the full extent of the claimant's earning capacity (as it might be for some claimants), error might well be demonstrated; an immediate and total loss of the earning capacity of the claimant should be stated and the amount would very likely be calculable in the conventional manner. That, however, was not this case. The claimant was in fact, at the date of the assessment, earning approximately $2,500 net per week. The indicative calculation undertaken by the respondent indicated a loss of earning capacity of approximately 23% or perhaps a little higher once vicissitudes were factored in.

44 Contrary to the submissions for the appellant, the justification for such an exercise is not to demonstrate that the assessor could have reached the same figure by a different course which he did not in fact adopt, but rather to demonstrate that the size of the buffer did not of itself demonstrate some unrevealed error.

45 Quite separately, the calculation had a different and additional purpose: conceding that the circumstances were appropriate for awarding a buffer, the relationship of the buffer to the actual earnings and likely diminution in earning capacity demonstrated that the outcome was not manifestly unreasonable.

46 Finally, that which the appellant sought to characterise as arbitrary and capricious, could also be characterised, in the circumstances, as impressionistic or evaluative. The nature of the exercise may not be such as to warrant the pejorative epithets which derive from the judgment of Latham CJ in The King v Connell; Ex parte The Hetton Bellbird Collieries Ltd [1944] HCA 42; 69 CLR 407 at 430 and 432, cited by Gummow J in Minister for Immigration and Multicultural Affairs v Eshetu [1999] HCA 21; 197 CLR 611 at [133]. Where a binary choice is made between alternative outcomes, a different characterisation of a decision-making process may be available than in respect of the selection of a particular point within a range or spectrum of potentially available outcomes. Nor, as explained in Allianz v Kerr, can any precise explanation be given which will helpfully determine where across the range the line has been drawn: at [7]-[8] and [59].

47 The outcome in Allianz v Kerr does not determine the outcome in the present case: although the appellant suggested otherwise, the adequacy of reasons and compliance with s 126 must be assessed on a case-by-case basis.

48 It is not necessary to decide whether, as a matter of law, an upper limit can be placed on the amount of an award of future economic loss by way of a "buffer". Certainly the analysis of principle in the present case did not suggest whether or how that exercise might be undertaken. Any such exercise would have to take into account the large differences in earning capacity which exist amongst individuals. In Allianz v Kerr, the claimant was a nursing assistant who undoubtedly had a far lower earning capacity than the claimant in the present case, who was a general physician with a speciality in renal disease. The exercise would also need to take into account the cap on damages for economic loss which, at the time of the assessment, was a little under $4,000 per week net: Compensation Act, s 125, the figure having been adjusted pursuant to s 146, allowing for changes in average weekly earnings.

Conclusion

49 The appellant has failed to demonstrate error on the part of the primary judge in any of the respects raised on the appeal. Accordingly, the following orders should be made:

(1) Dismiss the appeal from the judgment delivered on 2 November 2011 in the Common Law Division.

(2) Order that the appellant pay the costs of the first respondent of the appeal.

50 MACFARLAN JA: I agree with the judgment of Basten JA and add the following observations concerning the assessor's award of a buffer in respect of future economic loss.

51 This is a case in which anything approaching precision in calculating future economic loss was difficult, if not impossible. Dr Cervantes' injuries restricted her ability to engage in private and public practice as a nephrologist and in valuable medical research. The income that she would have earned from these activities, if she had not been injured, would have varied significantly depending on the mix of activities. Precisely what that mix would have been from time to time could only be a matter of speculation.

52 In my view the extreme difficulty of calculation of future economic loss in this case justified the assessor making an award by way of buffer. Further, there is no basis here for inferring that the assessor had some undisclosed reasons for choosing to award the amount of $400,000, rather than arriving at the figure intuitively after a consideration of all the circumstances identified by him (compare my comments in Allianz Australia v Kerr at [70]). Accordingly, the appellant's challenge to the buffer award fails.

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Decision last updated: 08 August 2012