STATE RAIL AUTHORITY OF NEW SOUTH WALES v BLANCHARD SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL Hope AP, PRIESTLEY and CLARKE JJA 14 July 1989, 20 July 1989 [1989] NSWCA 195 Appeal — Causation — Negligence — Damages — Economic loss — No question of principle. Clarke J In 1980 the respondent was employed as a fettler by the State Rail Authority of New South Wales, the appellant. He lived on a farm at Harden and worked as part of a gang based at Binalong. On 14 March of that year he sustained injury when a stack of sleepers collapses on his back and leg during the course of his employment. He sued the appellant claiming damages in respect of those injuries claiming that they had resulted from negligence on the appellant's part. His case was heard by Campbell J who on 29 June 1988 delivered his reasons which led to the entry of judgment in favour of the respondent in the sum of $461,537.00. The appellant filed a notice of appeal in which it challenged a great number of his Honour's conclusions. At the hearing of the appeal most of the grounds set out in the notice of appeal were withdrawn and the court has been concerned to consider only whether his Honour erred in directing the entry of judgment in favour of the respondent and whether the assessment of damages in respect of the respondent's claim for impaired earning capacity was vitiated by error. It is convenient to examine the liability question first. For some time prior to sustaining his injury the respondent had been working with other members of his gang unloading sleepers from open railway carriages on the main southern line near Binalong. The manner in which the unloading was carried out and which was under the control of Mr Menz, was as follow - sleepers were stacked in an open railway truck transversely across the truck one on top of the other. Each sleeper was approximately eight feet long, eight inches wide and four or five inches deep and weighed eighty to ninety pounds. Each stack comprised seven sleepers. The centre door of the truck was opened and sleepers were discharged from the truck through that opening. On occasions the sleepers were discharged while the train wa, moving slowly and on others when it was stationery. The respondent was working in one truck with another member of the gang, Mr Melross. They would, using sleeper hooks, initially remove the sleepers from the stacks situated in the centre of the wagon. When all the sleepers in those stacks had been discharged the two men angled the remaining stacks so that the sleepers were pointed towards the open doorway. When the time came to throw the sleeper from the truck a fettler would, with the assistance of his sleeper hook, push the sleeper out of the side of the truck. During the course of this operation the respondent was spearing out sleepers when the train jolted and a stack of sleepers collapsed onto him. He described the occurrence in these words: "The train jolted and well they hit the brakes and the stack just fell back on me." 2 UNREPORTED JUDGMENTS The sleepers which were being unloaded at the time had been creosoted. As it had been raining earlier in the day and the trucks were uncovered the sleepers were also wet. The respondent sought to show that the appellant had been negligent in a number of ways. His Honour rejected all but one of these claims. He did, however, find the appellant negligent in proceeding with the work of unloading the sleepers when they were wet. The question is whether that was an erroneous conclusion. It was submitted that it was not open to his Honour to conclude that there was any causal nexus between the condition of the sleepers and the collapse of the stack. Alternatively it was said that even if that conclusion was open it was not the correct one in the light of all the evidence. The appellant also submitted that even if the relevant causal connection had been shown the evidence failed to demonstrate that the appellant had failed to exercise reasonable care for the safety of the respondent. In this respect it was argued that it had not been shown that there was any practicable alternative means of carrying out the operation of unloading the sleepers. There was evidence which his Honour was entitled to accept, and did accept, that sleepers which have been covered in creosote are slippery and that wet creosoted sleepers are even more slippery. This evidence was of significant weight and it could not be said that his Honour was in error in accepting it. It was said, however, that the same evidence demonstrated that dry sleepers which had not been coated in creosote were dangerous and that there was no basis in the evidence for the conclusion that the wetness of the creosoted sleepers contributed to the collapse of the stack. The question of causation can be a difficult one. As McHugh JA (as he then was) said in Nader v Urban Transport Authority of New South Wales (1985) 2 NSWLR 501, at 530: "Causation in fact is to be determined, not according to scientific or philosophical theories of causation, but by 'commonsense principles': Leyland Shipping Co Ltd v Norwich Union Fire Insurance Society Ltd (1988) AC 350, at 362; Fitzgerald v Penn (1954) 91 CLR 268, at 277." The "but for" has been the favoured test in a number of cases but, as Hope and Priestley JJA said in Barnes v Hay (1988) 12 NSWLR 337, at 339, while that test provides an apparently simple formula it has been differently understood by different judges. In the same case their Honours expressed the view that the law requires the court to decide whether "the connection of the negligent act or omission of the defendant to the plaintiff's loss was such that the defendant should be made liable for it". It is unnecessary, in my opinion, to examine the conceptual issues involved in causation in this case for the reason that it was clearly often in my opinion to the trial judge to conclude that the relevant causal nexus had been established whether one adopts the "but for" test or proceeds in accordance with the approach of Hope and Priestley JJA in Barnes or, indeed that favoured by Mahoney JA in the same case. The question raised in this case is essentially a simple one. The evidence showed that when the train jolted and the brakes were applied sleepers, which it can be inferred were on top of the stack, slid from the stack onto the respondent. Prima facie the fact that the wet creosoted sleepers were very slippery would appear to present as the obvious cause of the failure of the stack to remain intact when the train jolted. At the least it would be open to a tribunal of fact to conclude that the slipperiness of the sleepers contributed to their slipping in the circumstances unless there were countervailing factors.It is the submission of the appellant that in this case the evidence demonstrated that URJ STATE RAIL AUTHORITY OF NEW SOUTH WALES v BLANCHARD (Clarke J) 3 sleepers which were neither wet nor creosoted were dangerous with the consequence that it was no longer possible to infer a connection between the slippery surface of the sleepers which fell onto the respondent and the fact that they slid from the stack. In my opinion this submission fails sufficiently to distinguish between sleepers which, whether wet or dry, are dangerous to handle and sleepers which have a slippery surface. The respondent himself recognised that dry sleepers were dangerous to work with but he said that they were not as dangerous as the wet ones. When asked to explain the distinction he said: "Well because the creosote made them very slippery and when they were wet you know they were very dangerous and they would slide off, just slide off easily". The particular dangers oi handling sleepers which were dry was not explored in the evidence but the suggestion which was conveyed is that there is an inherent lack of stability in a stack containing seven sleepers, one upon the other, which has been angled towards the centre of the truck and is no longer supported on either side. The suggestion was, as I understand the evidence, that the unsupported stack was unstable. So much can be accepted but the recognition that sleepers which are not slippery are dangerous does not, in my opinion deny the connection in this case between the slippery surface of the wet creosoted sleepers and the collapse of the stack. In any event there was evidence from a Mr Boris Osman, who was described by the trial judge as a suitably qualified consulting engineer whose report was tendered without objection and who was not cross examined, to the following effect: "In the event of non slippery conditions the problem of a sleeper slipping and causing the accident similar to that in which the plaintiff suffered injury is remote and does not occur very often." His Honour was entitled to accept that evidence which when coupled with the evidence given by the lay witnesses who described the condition of the sleepers and the collapse of the stack provided ample evidentiary material upon which to base the finding to which his Honour came that it was more probable than not that the stack collapsed because the sleepers were wet. The next question is whether it was negligent to proceed with the work when the sleepers were wet. No evidence was led to establish that it was impracticable to abandon the work temporarily or to cover the trucks to prevent the sleepers becoming wet and slippery. Mr Menz had, he said, the authority to stop the work if he formed the opinion that the sleepers were too slippery to unload but he did not even inspect the sleepers before or during the course of the unloading operation. Mr Menz did say that he was on a tight schedule and that he did not think that allowed him sufficient time to carry out an inspection of the sleepers to ensure that they were safe to work. That evidence does not, however, demonstrate the impracticability of a temporary abandonment of the work and, of course, does not touch on the question of the covering of the trucks. In my opinion it has not been shown that his Honour was in error in concluding that the evidence demonstrated a lack of reasonable care for the safety of the respondent on the part of the appellant. The appellant complained that the damages were excessive and in particular challenged the amount awarded for the respondent's impairment of earning capacity insofar as it included a significant amount of damages said to flow from the respondent's inability to work his farm. 4 UNREPORTED JUDGMENTS Senior counsel for the appellant submitted that the farm had always run at a loss, that there was no evidence that there ever was a prospect of it being run at a profit and that it was wrong to hold the appellant liable for increased losses when the respondent should, if he had acted reasonably, have sold the farm. In addition Mr Kenny QC, for the appellant, argued that even if that was not correct it was open to the trial judge only to award the respondent either the additional expense which he had incurred and was likely to incur as a result of his inability to carry out manual work on the farm, or to provide compensation for the lost opportunity to make profits. Mr Kenny submitted that there was no clear evidence of the additional costs which had been, and which were likely to be, incurred by the respondent in running the farm so that he was thrown back to his claim for damages for the lost opportunity. An evaluation of such a claim would require, according to the argument, a significant discounting and his Honour had failed to make such a discount and thus made an extravagant award of compensation. The submissions appear to me to disregard entirely the course of the trial and the manner in which counsel for the appellant presented the case on his client's behalf at the trial. It is necessary in this context only to quote from portions of his Honour's reasons for judgment. He said: "At the end of the first day's hearing Mr Coleman indicated that income tax returns would be tendered and there was reference to certain records of the defendant which had apparently been subpoenaed and inspected but were not immediately available. I suggested to counsel that it would be preferable if agreement could be reached in any areas arising from the farming matters. On the following day the course was taken of tendering a report of Mr Koob, an actuary, it being noted that there was no objection on the basis that Mr Wilkins agrees that the figures in the report are appropriate. The report became Ex J. The following further note then appears in the transcript: 'Mr Coleman referred his Honour to p2 of an exhibit J and advised that those figures are not disputed by the defendant and, similarly, throughout the report he advised that there is no dispute about figures used as basis for the calculations." When his Honour came to deal with the claim for diminished work capacity until 22 February 1988 he noted that counsel for the appellant accepted the base figures, the method used and the calculations (ie, those of Mr Koob). He then observed that counsel made a number of points which were relevant to the head of damage then under consideration. Only one of those, that propounding that the farm should have been sold, is presently relevant. When his Honour came to deal with the impairment of future earning capacity he observed again that Mr Wilkins did not attack the method or the figures and pointed out that he merely reiterated the general submissions which had been raised in relation to the past economic loss claim. In these circumstances I do not think it open to the appellant to assert error upon the basis of the assessment method set out in the actuarial report and adopted by his Honour. The case was fought upon the basis that that method was correct. However, even if that course were open to the appellant I do not think its counsel has made his point good. He accepted that it was open to the trial judge to evaluate the loss in respect of the impairment of the respondent's working capacity by reference to the cost of additional labour in the past and the likely cost in the future of workers engaged to carry out work which the respondent was no longer able to perform. URJ STATE RAIL AUTHORITY OF NEW SOUTH WALES v BLANCHARD (Clarke J) 5 This was the approach which I would understand his Honour to have taken. In dealing with the claim for the future his Honour noted he was required to pay regard to the likely earnings of the respondent in employment and the present value of the cost of replacement labour on the farm. This seems to me to be an adoption of the very approach which is agreed by the appellant to have been open. In addition there is a table in the actuary's report which although headed "Lost Income" clearly enough sets out the cost in each year of substitute labour. Having regard to the course of the trial, the adoption by his Honour of the cost of substitute farm labour as the measuring stick for the economic loss claim and the concession by counsel during the appeal that it was permissible to approach the claim on that basis I do not find any substance in this submission. That leaves for consideration the argument, which was advanced at the trial, that his Honour should have held that the respondent ought, in mitigation of his damages, to have sold the farm which was always a losing proposition. In the actuarial report, which was compiled from taxation returns, the financial recults of the farm enterprise for each year were set out. What is demonstrated by these results is that in the year 1980, which includes a period of three months when the respondent was injured, the farm enterprise returned a profit of $1,841.00. The respondent said in evidence that between purchasing the farm in 1973 and 1979 he had expended a lot of money in upgrading the fencing on the farm and in installing a watering system. He had also been working on pasture improvement and this programme was only completed in 1979 or 1980. He was then asked this question: "What was the condition of the farm say by the end of 1979?" And he answered, "I just had it to the stage where it was going to be a profitable organisation". Although it would appear from the results that even if the costs of substitute labour were deducted from the annual expenses the respondent would not have gained a profit in each year, he certainly would have gained a significant profit in some years, such as 1981 and 1982,. Farming and grazing ventures are notoriously vulnerable to the effects of seasons and markets. The fact that a particular venture has sustained losses in one or two years does not mean that it is not a profitable venture nor that a plaintiff who seeks to persist with it is acting unreasonably in the sense that he is adding improperly to his damages. His Honour accepted that the respondent reasonably expected profits following the works done prior to 1980 and, bearing in mind the fact that the respondent had his home on the property and would, prima facie, have gained profits from the venture in some years if he had not sustained his injury, held that he had not acted unreasonably. In my opinion his conclusion could not be said to be wrong. Leaving aside altogether the fact that the injuries undoubtedly made it more difficult for the respondent to run the operation even with the assistance of substitute labour I am quite unable to accept that it was unreasonable for the respondent to hold on to his home and the farm which had been the focal point of his life with his family. In my opinion the appeal should be dismissed with costs. Counsel for Appellant: J Kenny QC and D Wilkins Solicitor for Appellant: FD Thompson (Solr for SRA) Counsel for Respondent: WJ Holt QC and P Coleman Solicitor for Respondent: GH Healey and Co