C A T C H W O R D S APPEAL - award of damages for personal injuries - appeal against liability and components of damages for past loss of earnings, interest thereon and future loss of earning capacity - common law negligence and breach of statutory duty - appeal against liability not made out - no question of principle DAMAGES - loss of past earnings and future earning capacity - assessments too generous on the evidence - uncertainty, speculation and conjecture surrounding the respondent's hypothetical capacity and actual capacity - arithmetical approach to calculation of damages not possible - assessments based upon what is fair and reasonable in the circumstances Regulations under the Scaffolding and Lifts Act 1912-48, regs.73, 73(2), 80(6), 142(2)(g), 142(6)(c) Piening v Wanless (1968) 117 CLR 498 Scott v London and St. Katherine Docks Co. [1896] ER 665 ON APPEAL FROM THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY DONALD JAMES MILLER and ALEXANDRA MARY MILLER v. ASHLEY SAWYER HILLSLEY No. ACT G69 of 1995 CORAM: Gallop, Davies and Finn JJ. PLACE: Canberra DATE: 16 May 1996. IN THE FEDERAL COURT OF AUSTRALIA) ) AUSTRALIAN CAPITAL TERRITORY ) ) No. ACT G69 of 1995 DISTRICT REGISTRY ) ) GENERAL DIVISION ) ON APPEAL FROM THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY BETWEEN: DONALD JAMES MILLER and ALEXANDRA MARY MILLER Appellants AND: ASHLEY SAWYER HILLSLEY Respondent CORAM:: Gallop, Davies and Finn JJ. DATE: 16 May 1996 CANBERRA MINUTES OF ORDER THE COURT ORDERS THAT: (1) The appeal is allowed; (2) The judgment of the Supreme Court is varied to the extent that there be judgment for the respondent in the sum of $277,183.62; and (3) The appellant pay 50% of the respondent's costs. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA) ) AUSTRALIAN CAPITAL TERRITORY ) ) No. ACT G69 of 1995 DISTRICT REGISTRY ) ) GENERAL DIVISION ) ON APPEAL FROM THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY BETWEEN: DONALD JAMES MILLER and ALEXANDRA MARY MILLER Appellants AND: ASHLEY SAWYER HILLSLEY Respondent CORAM:: Gallop, Davies and Finn JJ. DATE: 16 May 1996 CANBERRA REASONS FOR JUDGMENT THE COURT: This is an appeal against the judgment of a single Judge of the Supreme Court of the Australian Capital Territory by which it was ordered that judgment be entered for the respondent in the sum of $343,028.62 plus costs. The respondent's cause of action arose out of an accident when the respondent was performing contract work as a plasterer at the home of the appellants on 6 May 1992. In the course of the work the respondent stood on a ladder provided by the male appellant. When he did so, the ladder collapsed and he fell from the ladder to the ground, thereby suffering injury. He sued the appellants in negligence at common law and breach of statutory duty. By their defence the appellants denied liability and alleged contributory negligence against the respondent. The learned trial judge found in favour of the respondent on the issue of liability and assessed damages as follows: General damages $ 60,000.00 Interest thereon 2,330.00 Past loss of earnings 82,175.00 Interest thereon 13,670.00 Future loss of earning capacity 140,000.00 Out-of-pocket expenses 43,193.62 Future treatment and aids 1,660.00 Total $343,028.62 The appellants have appealed on the issue of liability and the components of damages for past loss of earnings and interest thereon, and future loss of earning capacity. The respondent was born on 10 September 1936. He was 56 years of age at the date of the accident. Judgment was entered on 26 October 1995 when the respondent was 59 years of age. Trial judge's finding on the issue of liability On 4 May 1992 the male appellant telephoned the respondent. He wanted to engage a plasterer as he was carrying out renovation works on his own house. The male appellant was himself a builder. It seems that the respondent had been recommended to him by Mr Britten, a plasterer who knew him. That day or the next day, the respondent attended at the appellants' house. He inspected the work to be done. It was restoration of some existing cornices and new cornices in an ensuite which was being constructed. On 6 May 1992 the respondent again attended at the appellants' house. He had with him a portable scaffold and his tools of trade. The male appellant agreed to pay him $25 per hour and to provide or reimburse him for consumable items. When the respondent put his trestle scaffold in place, he noticed it was too low. He had had it made for a standard ceiling. The appellants' ceiling was higher than usual. On noticing this, the respondent indicated to the male appellant that he would need to work from a ladder rather than the trestle. That would slow the progress of the work. The respondent then proceeded to nail up the cornices. He had to move the ladder about half a dozen times. That was about twice the number of times he would have needed to move the trestle. Shortly after the respondent had commenced the "stopping" of the cornices, the male appellant entered the room with a wooden step ladder. It was restrained by two ropes, one for each set of side rails. The male appellant placed it next to the respondent's metal ladder, saying "that might make it a bit easier for you, instead of using one ladder all the time". When he had finished the work in his reach from his own ladder, the respondent stepped across on to the equivalent rung of the wooden ladder. As he put his second foot on to the rung, he reached up to scrape the cornice area. At that moment something happened. He found himself on the floor between the wall and a china cabinet. He did not see what had happened to the ladder on which he had been standing. He saw bones sticking out of his right sock. His foot was at such an angle that he feared he might lose it. He called for help. The male appellant came in and rendered some assistance, removing a hammer and nail bag from beneath the respondent. He then called the ambulance. By the time the ambulance arrived the ankle area was very painful. A pain killing injection was given and the respondent was taken to the Woden Valley Hospital. About two days later the respondent was visited by the male appellant. The latter was obviously and genuinely concerned about the respondent. He gave the respondent $100, representing approximately four hours work. He invited the respondent to apply for compensation. In the course of discussing the event, he explained to the respondent that the rope on the ladder had broken. Whilst in hospital the respondent completed a compensation claim form in which he gave over-balancing as the cause of his fall. In cross-examination he rejected the explanation which he attributed to the effects of his medication and hospitalisation. Still whilst the respondent was in hospital, a solicitor was consulted on his behalf. The solicitor suggested to the respondent's son that a photograph should be taken of the ladder. The male appellant was approached and readily agreed to produce the ladder for that purpose. The photographs so taken were produced in evidence. The restraining ropes appear in those photographs. In one of them one rope was untied at one end and hung loose. It was untied to simulate the condition of the ladder after the respondent's fall. When the male appellant produced the ladder to the respondent's son, he said "This is the wretched thing". He did not suggest to the respondent's son that the appearance of the ladder after the lefthand side rope was disconnected was different from the appearance of the ladder after the respondent's fall. The respondent's son said in evidence that when he attended shortly after the fall to collect his father's tools, the male appellant made some comment to the effect, "The old ladder collapsed underneath him". The respondent's son also noticed when the ladder was produced to be photographed that the ropes on it appeared to be new. His Honour found it likely that they had been replaced following the respondent's fall. Noting that neither appellant gave evidence on the hearing, his Honour concluded that, at least on the balance of probabilities, the respondent's fall was caused by one of the restraining ropes breaking. He further held it probable that, like the ladder, the restraining ropes were old and at least one was defective. He could not conclude whether the knot broke or there was a break at some other point in the rope. He concluded that the ladder was defective and that the male appellant was well aware that it was an old ladder but, of course, he did not expect it to collapse. His Honour said that it seemed more likely than not that if the male appellant had inspected the ladder carefully, perhaps given it a brief load test, it would have appeared that the ladder was defective. He went on to say that because the male appellant was a bricklayer, he was a person on whose judgment the respondent might have been expected to rely as to the condition of the ladder. His Honour held that the appellants owed a duty of care to the respondent and had breached that duty of care in failing to use reasonable care to ensure that the ladder was suitable and safe for the purpose for which it was offered. He drew an inference that no reasonable steps were taken by way of inspections or tests on the ladder by the appellants and that it would have been simple to test the ladder before supplying it to the respondent. Accordingly, its provision to the respondent in a defective condition, so his Honour held, was a breach of the general duty to take reasonable care for the safety of the respondent. In respect of the allegations of breach of statutory duty, his Honour set out the terms of regs 73 and 73(2) of the Regulations under the Scaffolding and Lifts Act 1912-48: "Any person who directly or by his servants or agents (including every independent contractor from time to time engaged in that work) carries out any building work shall take all measures that appear necessary or advisable to minimise accident risk and to prevent injury to the health of persons engaged in such building work and for this purpose, without limiting the generality of the foregoing, he shall - (2) provide and maintain safe means of access to every place at which any person has to work at any time." He held that the provision by the male appellant, as agent also for the female appellant, of the defective wooden ladder to be used for access to the cornices for the purpose of carrying out building work, was a breach of reg 73(2). His Honour then referred to reg 80(6), which reads: "Every ladder shall so far as practicable be securely fixed so that it cannot move either from its top or from its bottom points of rest. If it cannot be so securely fixed it shall where practicable be securely fixed at the base or if such fixing at the base is impracticable a person shall be stationed at the base of the ladder to prevent slipping." His Honour held that the ladder failed this test because at least one of the rope stays was defective and broke. He then referred to reg 142(2)(g) and reg 142(6(c): "(2)(g) Every ladder and every part thereof shall be of sound material, good construction, adequate strength, free from patent defects, and be suitable and safe for the purpose for which it is intended." "(6)(c) The spread between side rails and back legs shall be restrained by means of first quality fibre rope not less than three-quarters (3/4) of an inch in circumference fitted between each back leg and its respective side rail. These ropes shall be effectively anchored at one end through the centre of the wide face of each side rail immediately below the tread second from the bottom, and at the other end through the centre of the wide face of each back leg at the same level ..." He held that there had been a breach of reg 142(2)(g) but not reg 142(6)(c). The breaches of regs 73(2), 80(6) and 142(2)(g) were sufficient to support a finding that the appellants were in breach of their duty under the Regulations by providing a defective ladder for the respondent to use and that those breaches caused the respondent's fall. The trial judge declined to find contributory negligence against the respondent. That finding was not the subject of review on the hearing of the appeal. Submissions on the issue of liability (1) Counsel for the appellants reviewed the evidence and submitted that the admission to the respondent that the rope had broken involved no admission that the rope had broken leading to the accident, as distinct from having broken in the accident when the ladder moved and fell for some other reason such as because it over-balanced. It was clear that the appellants were in no position to say why the rope had broken. (2) There was no evidence that the ropes, as distinct from the ladder, were old and the respondent's son's impression that the ropes seemed new on the second occasion he saw the ladder did not justify any conclusion that the rope had failed so as to lead to the accident. His Honour's comment that it seemed likely that the ropes had been replaced following the respondent's fall, even if it be correct, was not a basis for saying that the rope broke causing the fall rather than that the rope was found to be broken or untied after the fall. (3) There was absolutely no evidence and no basis for his Honour's conclusion that had the appellant inspected the ladder carefully and perhaps given it a brief load test, it would have appeared that the ladder was defective. It was not suggested what might have been found, nor was there any evidence to say that inspection, or even a load test, would have revealed whatever the problem (if any) was. (4) The fact that the male appellant was a bricklayer did not justify the conclusion which his Honour arrived at to the effect that he was a person on whose judgment the respondent could rely as to the condition of the ladder. The respondent put himself forward as an experienced plasterer, a man well versed in trade, involving working, amongst other things, from ladders. The suggestion that the male appellant was any better placed than the respondent was quite unjustified; and (5) As to his Honour's conclusion that the absence of the male appellant from the witness box meant that no precautions, inspections or tests had been performed, no inference was reasonably available to that effect. But even if they were, his Honour's comments that testing would have been simple and that in the event of uncertainty on the part of the male appellant the ladder could have been withheld, logically involved the proposition that testing would have revealed a defect or at least created uncertainty. There was no evidence of that and no logical basis for its being inferred. The respondent's submissions in reply were that: (1) The respondent had been supplied with a ladder by the male appellant which had a defect in that the rope between one stile and one back leg could either break or become detached on use, and when the respondent used the ladder which had been placed in a position by the male appellant, the ladder collapsed and the respondent suffered very severe injuries. (2) Originally the respondent did not know what had happened but he was told effectively, though not in precise words, by the male appellant that he fell because of the rope breaking. His son was told, "The old ladder collapsed underneath him". (3) The respondent had no opportunity to inspect the ladder which was placed next to his own ladder for immediate use. In so far as the appellants case seemed to be that the respondent had not proved that a defective ladder caused his injuries, the respondent gave evidence that he was standing on the ladder when it collapsed suddenly. The clear inference from this was that it was the defective ladder which caused the respondent's injuries; and (4) Lastly, the respondent was entitled to rely on the doctrine of res ipsa loquitur. It is "within the common knowledge and experience of mankind that such an occurrence is unlikely to occur without negligence on the part of the party sued" (Piening v Wanless (1968) 117 CLR 498 per Barwick CJ at 508.5). "There must be reasonable evidence of negligence. But where the thing is shewn to be under the management of the defendant or his servants, and the accident is such as in the ordinary course of things does not happen if those who have the management use proper care, it affords reasonable evidence, in the absence of explanation by the defendants, that the accident arose from want of care" (Scott v London and St. Katherine Docks Co. [1865] ER 665 per Erle CJ at 667). Having carefully considered the evidence and the submissions, we are clearly of the view that the trial judge's conclusions relating to the defective condition of the ladder and the way in which the respondent sustained his injuries were reasonably arrived at and that no sufficient basis has been demonstrated to warrant interference by this Court with those conclusions of fact. Even if the ladder was not a means of access to the place at which the respondent had to work because the respondent was already at the place at which he had to work, and therefore no breach of reg 73(2) of the Regulations under the Scaffolding and Lifts Act 1912-1948 occurred, there was clear evidence of breach of the common law duty owed by the appellants to the respondent and breach of reg.142(2)(g). The appeal on the finding of liability must fail. Trial judge's assessment of damages for past and future economic loss The relevant findings of the trial judge on these heads of damage were that before the accident the respondent had been an enthusiastic member of the Canberra Cycling Club. He cycled both socially and competitively. Previously he had been engaged in rowing. He had intended when his competitive cycling days had ended to take up softball umpiring. His other recreation was fishing. He had hoped to continue working beyond the usual retirement age. Since leaving Axiom (a former employer) he had built up prospects for continuing work as an independent plasterer. His Honour found that it was unrealistic to expect that the respondent would return to plastering or have any meaningful role in the building industry. The respondent had earlier worked in the insurance industry, however he felt that a return to the insurance industry would not in any event have been possible. Technological advances and requirements for minimum premium incomes from a number of insurers were cited by him as reasons for that pessimistic outlook. His Honour noted that in the past the respondent had sold and serviced bicycles. His Honour thought that whilst his knowledge of cycles was now somewhat dated, he could update his expertise without too much difficulty, but would be quite handicapped in servicing cycles. The market is, according to the respondent, presently oversupplied. His Honour found that no doubt there would be some clerical jobs which the respondent could perform. Whether he could obtain such work is doubtful. If he had sufficient capital he might set himself up in a small business. He would need to avoid prolonged standing and heavy stock movement. Although there are some prospects of gainful employment in the future, they were severely diminished compared with what would have been the case had the respondent retained his pre-accident skills and fitness. His Honour then referred to the evidence of two plastering contractors called on behalf of the respondent. He said that Mr Joseph Pfitzner, a plastering contractor, had known the respondent since 1951 and regarded him as a skilled tradesman. He pays plasterers at a gross rate of $608 per week, which represents $474 per week nett. Mr Pfitzner conceded that very few plasterers continued with the full range of work beyond age 57 or 58 and his employees would be expected to do the full range of work. Mr Mervyn Britten was a contemporary of the respondent and had carried on his business in the Canberra region for many years. His evidence was that, but for the accident, he would have hoped to employ the respondent as a sub-contractor on a permanent basis. He was paying $550 per week to his employees, which is $450 per week nett. He had recommended the respondent to the appellants. It was his evidence that a sub-contractor might receive $800 per week gross, but allowing for downturn, tax and expenses, would probably clear an average of $500 per week. His Honour held that the respondent's general level of pre-accident activity was such that he would have performed the heavier work if it became necessary to enable him to continue in work and that he would have been able to do so at least until the normal retirement age. Noting that there had been little movement in the rate of earnings of plasterers between the date of accident and the date of hearing, his Honour found that the respondent's earning capacity would have been between $450 and $500 per week whether he had taken employment as a plasterer or had remained an independent contractor. He adopted an average nett rate of $475. For past loss of earnings he awarded the respondent $82,175, which is $475 x 173 weeks (the total period between accident and hearing). He adopted an interest rate of 10% and halved that rate to 5%, rounding off the arithmetic to the nearest $5. As to the future, he adopted the same weekly rate of $475 and projected that figure to the normal retiring age, allowing six years, and arrived at a figure of $136,325. He applied the usual discount of 15% for vicissitudes. He then did the balancing exercise of taking into account the value of the respondent's residual earning capacity, offset by the possibility that the respondent would have continued, but for the accident, to attract significant earnings beyond 65 years of age. He held that the latter consideration far outweighed the former. He calculated that the value of continued earnings for 10 years rather than six would be $214,700. He stated that even to reduce the sum in respect of the longer period by one-third would exceed the undiscounted sum for six years ($143,119 compared with $136,325). Taking account of vicissitudes both favourable and otherwise, he arrived at an award of $140,000. Submissions on the issue of damages for past and future economic loss It was submitted on behalf of the appellants that the evidence of the respondent and the two plastering contractors, Mr Pfitzner and Mr Britten, did not support the trial judge's findings and his approach in calculating past and future economic loss. It is necessary to have recourse to the evidence to determine whether his Honour's findings and approach were reasonable. The respondent was a qualified plasterer. Having completed his apprenticeship, he was a leading hand. When the proprietor of his employer died, he became the manager. In 1966 he changed his employment to become an insurance inspector. He continued to do some plastering work after that on weekends. He remained in the insurance industry until 1988 and then went to work at Spokesman Cycles, but continuing as an insurance agent at the same time. He went back to plastering work as an employee of Axiom, which he described as being "listed as Habitat Pty Ltd". He worked for them through part of 1990 and the whole of 1991 until 10 February 1992 when his employment was terminated. He decided to conduct his own business. He advertised in a local newspaper for plastering work. He got "bits and pieces". He had some heavy gauge stools made for his scaffolding and he still had the necessary tools of trade. Between February and May 1992 he had a few plastering jobs for which he received money. In relation to activities before the accident, his evidence was that he was a competitive cyclist with the Canberra Cycling Club, having been with them for more than 12 years. He also used to go rowing in the early 1980s. He was cycling right up to the accident. His daughters represented Australia in softball and he was a badged umpire. He last umpired in softball in 1991. He had planned to do that beyond 1991. That was going to be his new takeover sport when he could not cycle any more. He also did a lot of off-shore fishing. With regard to his plastering future, his evidence was that he was going to work for himself and had two different plaster firms that were going to put work his way. His father had worked until the age of 70 and he said that he would have been able to work until 70. There was no employment available to him as a full-time employee as distinct from working for himself. He conceded in cross-examination that between the termination of his employment with Axiom on 10 February 1992 and the subject accident, he had done some plastering jobs but was not really looking for work strongly. He said he was enjoying having a bit of a rest. It was submitted on behalf of the appellants that the respondent's income tax return for 1991-92 showed no sub-contract or sole trader income from plastering and his tax return for 1993-94 showed no income received in that year which might have been earned in the period February to May 1992. Thus, it was submitted, the respondent's own evidence and financial records furnished no support for the finding by the trial judge that the respondent "had built up prospects for continuing work as an independent plasterer". There is some force in that submission. Although the respondent was 59 years of age at the date of trial, he was apparently a very fit man but that is not to say that he would have been successful in earning in the vicinity of $475 per week nett as an independent plasterer during the period from the date of accident to the date of trial and for a further 10 years. Based upon the respondent's evidence, that was a generous assessment of the respondent's earning capacity. However, there was support for the finding that the respondent had an earning capacity in the plastering industry but for his injuries sustained in the accident. It is a fair conclusion from the evidence of Mr Pfitzner and Mr Britten that plasterers tend not to do the full range of plastering work beyond the age of 57 or 58. Indeed, Mr Pfitzner ordinarily sought to employ only people who could do "all the jobs". Mr Britten's evidence was that he would not employ anybody who was not prepared to do the heavy work. It would be a fair inference that Mr Britten would have given the respondent some work based upon friendship and respect for the respondent's skill as a plasterer, but that is a far cry from providing the respondent with work which would earn him in the order of $475 per week nett for the three years between accident and trial and for 10 years beyond that. Both Mr Pfitzner and Mr Britten gave evidence that the plastering trade was a variable one. Mr Pfitzner, who carried on business in Bateman's Bay, said of the industry at the time of the trial, "We are a little bit flat for work." Mr Pfitzner said that his practice was that, if he did not have work for contractors, he put them off. Mr Britten, who worked in Canberra, said, "It's been very tight, it comes and goes. Right at this moment, I am very, very busy. Four weeks ago, I was very, very quiet." In our opinion the awards for past loss of earnings and interest thereon were too generous. They total $95,845. A more realistic figure for both components would, on the evidence generally and the income tax returns for 1991-92 and 1992-93 in particular, be in the order of $60,000. Accordingly, the award for those two components should be reduced by $25,845. Likewise, the award for future loss of earning capacity of $140,000 is not supportable on the evidence. In a case such as this and where appropriate, it is legitimate to adopt the earnings of comparable employees or contractors as a guide to the earning capacity of the injured party. In other cases, the assessment for loss of earning capacity, being intuitive, may have to be approached by providing some sort of buffer for the injured party which is not arrived at by arithmetical calculation. In this case it is the latter approach which is more reasonable in all the circumstances. That is so because of the difficulty in assessing the amount which the respondent was capable of earning between the date of accident and date of trial and in the years thereafter. The difficulty in assessing the respondent's nett loss is accentuated by reason of the uncertainty, speculation and conjecture which surrounds the respondent's hypothetical capacity (what would have been earned if there had been no injury) and the actual capacity (what can now be earned if the respondent acts reasonably), together with the imponderability of the number of years for which the respondent would probably have gone on working, let alone whether he was likely to work as an independent contractor beyond the normal retirement age of 65. The difficulty of predicting the number of years for which the respondent would have gone on working is not to be determined solely by the respondent's own evidence that he had an intention to work until he was about 70. The nature of the work as a plasterer and the advancement of age are complicating factors. Accordingly, to make an assessment of the respondent's past and future loss, by reference to what the respondent would have been earning at the date of assessment if there had been no injury, which is purely speculative, and doing the calculation for past and future on that figure, is not appropriate in this case and involves not merely double prophecy but guesswork. As stated earlier, it is a fair approach to make an intuitive assessment rather than an arithmetical one. Adopting that approach, we reassess the respondent's damages for future economic loss at $100,000, which is a reasonable lump sum for the undoubted, but not precisely calculable, loss of the respondent's earning capacity. That represents five years at $20,000 per annum nett with no discount for vicissitudes. Accordingly, the award for this component should be reduced by $40,000. The result is that the appeal should be allowed on the issue of damages and the judgment sum reduced by a total of $65,845. We allow the appeal and substitute judgment for the respondent in the sum of $277,183.62. As the appellants failed on the issue of liability but succeeded on the issue of damages, an appropriate order for costs is that the appellant pay 50% of the respondent's costs. We order accordingly. The orders of the Court therefore are: (1) The appeal is allowed; (2) The judgment of the Supreme Court is varied to the extent that there be judgment for the respondent in the sum of $277,183.62; and (3) The appellant pay 50% of the respondent's costs. I certify that this and the preceding twenty one (21) pages are a true copy of the Reasons for Judgment herein of The Court. Dated: 16 May 1996 Associate Counsel for the Appellant : Mr L. King SC Solicitors for the Appellant: Deacons Graham & James Counsel for the Respondent : Mr B. Salmon QC and Mr G. Lunney Solicitors for the Respondent : Wood Fussell Date of Hearing : 10 April 1996 Place of Hearing : Canberra Date of Judgment : 16 May 1996 Place of Judgment : Canberra