Ivan Makragic v Government Insurance Office of New South Wales Stanica Makragic v Government Insurance Office of New South Wales

The Supreme Court of New South Wales Court of Appeal heard appeals by Ivan Makragic and Stanica Makragic against the Government Insurance Office of New South Wales. The dispute concerned the assessment of damages for injuries sustained by the appellants in a motor vehicle accident. The primary issue was whether the trial judge had erred in his assessment of the appellants' future economic loss, specifically in relation to the calculation of their earning capacity and the appropriate discount rate to be applied.

The court was required to determine whether the trial judge had correctly applied the principles governing the assessment of damages for future economic loss under the relevant legislation, particularly concerning the calculation of lost earning capacity and the appropriate method for discounting future losses to their present value. This involved considering the evidence presented regarding the appellants' pre-accident earning capacity, their post-accident capacity, and the likelihood of future employment and wage progression.

In its reasoning, the Court of Appeal reviewed the principles established in previous cases concerning the assessment of future economic loss. It emphasised that the assessment of earning capacity should reflect the realities of the labour market and the individual circumstances of the injured party. Regarding the discount rate, the court considered the prevailing economic conditions and the need for a rate that fairly reflected the time value of money while accounting for inflation. The court found that the trial judge had made errors in his assessment of future economic loss, particularly in relation to the discount rate applied and the consideration of the appellants' potential for future employment.

The Court of Appeal allowed the appeals, setting aside the original judgments and remitting the matters back to the Supreme Court for re-assessment of damages in accordance with the principles articulated by the Court of Appeal.