Allianz Australia Insurance Ltd v Sprod

Allianz Australia Insurance Ltd appealed to the Court of Appeal of New South Wales against a decision of the primary judge concerning a motor accidents compensation scheme. The dispute centred on an assessment made by a claims assessor regarding the amount a court would likely award as damages to Michael Sprod. Allianz alleged that the assessor had failed to comply with statutory obligations to be satisfied as to the assumptions underpinning an award for future earning capacity and to state those assumptions.

The Court of Appeal was required to determine whether the claims assessor had complied with the statutory requirements concerning the assumptions made about future earning capacity and the articulation of those assumptions. Specifically, the court had to consider whether the assessor's process of calculation, as opposed to awarding a "buffer," satisfied the legislative intent and whether the stated assumptions, particularly regarding the weekly amount and duration of lost earnings, were adequately explained and justified.

The Court of Appeal found that the assessor had erred in law. The assessment was based on lost future earnings of $250 per week for 18.3 years, but the assessor failed to state the basis for either the weekly amount or the duration. The court noted that the $250 figure appeared to be derived from a single year of abnormally high earnings, which was not a proper foundation for an assumption about future earning capacity. Consequently, the appeal was allowed, the primary judge's decision was set aside, and the assessor's certificate of assessment was quashed. The matter was remitted for redetermination according to law, with Michael Sprod ordered to pay Allianz's costs of the proceedings and appeal, though granted an indemnity certificate in respect of the appeal.