SIMON ENGINEERING (AUSTRALIA) PTY LTD v BRIEGER SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL PRIESTLEY, CLARKE and HANDLEY JJA 31 August, 6 September 1990 [1990] NSWCA 165 The respondent, who was born in 1928, sued the appellant claiming that it had negligently exposed him to asbestos fibres as a consequence of which he was diagnosed in July 1989 as suffering from mesothelioma. The trial judge found that the appellant had been negligent and awarded the respondent the sum of $363,687.00. The appellant appealed claiming that the awards for impairment of earning capacity and general damages were excessive. Held: (1) That his Honour had erred in failing to pay regard to the fact that the respondent had intended to take a holiday overseas for six months and in misconceiving the nature of the additional salary to be paid to the respondent; (2) That the award of damages should be set aside and in lieu thereof an award of $295,201.20 substituted. Priestley JA I agree with Clarke JA. Clarke JA On 30 May 1990 Judge O'Meally sitting as the Dust Diseases Tribunal of New South Wales constituted under the Dust Diseases Tribunal Act 1989 found a verdict and judgment for the respondent, who was the plaintiff in the action, in the sum of $363,687.00. The appellant has appealed to this Court claiming that the award of damages was excessive. Although the notice of appeal asserted error in a large number of respects the written and oral submissions of counsel for the appellant challenged only the awards for impairment of earning capacity and general damages. Before proceeding to deal with the specific attacks upon the judgment it is convenient to outline the facts insofar as they relate to questions in issue. The respondent was born in 1928 and, after spending some time in Shanghai, migrated to Australia in 1949. Initially he qualified as a chemical engineer obtaining a diploma from the Sydney Technical College. Shortly thereafter he entered employment with the defendant remaining with it until May 1960. At this time he began studying to become an accountant. He concluded those studies and obtained his qualification in 1964. Thereafter he worked either in his own business or as a management consultant for a management consultant company as well as for CSR Limited as a senior project officer and for Cockatoo Dockyard Pty Ltd as a controller. For some years prior to 1988 he had been employed by CSR Limited. He retired from that employment on 1 December 1988 having been offered an attractive retirement package. His intentions at that time were to move house, to take a holiday overseas and then to continue part-time consultancy work or teaching until he reached the age of about seventy. He was, as far as he knew, in good health. Shortly after retiring he moved his home and this apparently took him about three months. He then did some part time consultancy work, mainly for CSR, until the end of June 1989. It was in June, however, that he began to experience symptoms of breathlessness for which he sought medical attention. This led to a diagnosis of malignant mesothelioma in July 1989. 2 UNREPORTED JUDGMENTS Notwithstanding he took his holiday overseas although, because of his illness, he was unable to stay away for his planned six months. His condition continued to deteriorate on his return from his holiday and at the date of trial his life expectancy was found to be about four and a half months. The respondent did not assert that his earning capacity had been impaired prior to June 1989. Accordingly, O'Meally J was required to assess the damages for the impairment of his earning capacity from that time until the date of trial and for the rest of his expected life. This assessment was, in a sense, made simpler by an event which occurred in May or June 1989. At that time the respondent was approached by an acquaintance who was leading a team preparing to depart on an overseas aid project in Wuhan, China, which was funded by the Commonwealth Government, with an invitation that he join the team. Although the respondent gave evidence, which was accepted by his Honour, that he proposed to take up the offered appointment he was unable to do so following the onset of his ill health. In the event the project has gone ahead. The selected team met in Melbourne in February 1990 for six months training and are, according to the evidence, now about to travel to China to take up their posts. In the light of these facts his Honour was able to approach the assessment of compensation for the impairment of the respondent's earning capacity upon the basis that if he had not fallen ill he would have worked for the project in Melbourne between February and September 1990 and thereafter continued his employment in China for two years with prospects of remaining there for an additional two years. Of course, he may not have wished to remain in China beyond the initial two year period so that it was proper for his Honour to take the course which he did which was to treat the respondent as probably remaining in China for two years and possibly staying there longer. On those facts the task of determining the compensation for impairment of earning capacity until the date of trial was relatively straightforward. It was accepted that there was no impairment of that capacity until June 1989 when he first sustained symptoms. In the light of his evidence that he was proceeding overseas in August 1989 for a period of six months the Court was required to assess the losses flowing from his inability to work during July 1989 and the period between February and May 1990. Unfortunately, his Honour appears to have overlooked the overseas holiday with the consequence that his Honour allowed the respondent compensation for four months prior to February 1990 rather than one month. His Honour also allowed the respondent the sum of $22,880, in addition to the other compensation for past loss, being an amount the respondent would have received in lieu of superannuation payments or a lump sum upon retirement if he had worked for the team two and a half years. The underlying assumption appears to have been that the respondent would have received a lump sum in the amount of $22,880 tax free. The evidence does not, however, support that assumption. Mr Crowe, who was the project manager of the project, which became known as the Wuhan Iron and Steel Training Centre Project, gave evidence which was not contradicted that if the respondent had taken up his employment he would have received a salary of $56,650 per annum plus a further percentage on gross salary in lieu of superannuation and long service leave which would be reviewed in February of each year. In addition, the respondent would have received $6,330 per annum, being a difficult post allowance, and $12,849 per annum, being an URJ SIMON ENGINEERING (AUSTRALIA) PTY LTD v BRIEGER (Clarke JA) 3 overseas living allowance for himself and his wife. While in China he would have enjoyed an overseas leave entitlement at the rate of ten weeks per annum, during which time the respondent would have been expected to be out of the city on three occasions in respect of which he would have received moneys equivalent to return air fares to Hong Kong and to Singapore and an airfare back to Australia. The precise percentage above gross salary which was to be paid depended on negotiation between the appointed person and the project. There was, of course, no negotiation between the respondent and the project leaders but the court was asked to infer that the respondent would have received an increase of at least 22 per cent. The basis for the inference was the evidence that the man chosen for the post which the respondent was unable to take up received an additional payment of that amount and in other cases the percentage paid was 30 per cent. It is however important to observe that the 22 per cent was not to be paid as a lump sum at the end of the appointment but was in fact to be added to the weekly or monthly salary paid to the relevant employee and, as far as the evidence goes, was taxable as was the normal salary. In these circumstances O'Meally J's decision to include the sum of $22,880 in the award for impairment of earning capacity as though it was a presently payable tax free lump sum was erroneous. There are, therefore, two errors in the assessment as a consequence of which it cannot stand and the Court is required to carry out its own reassessment. The task of reassessment has been made much easier by the sensible approach of both counsel which led in many instances to agreement as to the appropriate figures to be awarded. For instance it was proved that the respondent earned $10,000 gross in the three month period prior to 1 July 1989 and had rendered invoices for another $3,000. After the deduction of expenses the net income for that period which was returned in the Income Tax Return was $2,756. Without descending into the detail of the discussion which transpired during the hearing it was agreed by both parties that appropriate compensation for the month of July 1989 prior to the respondent undertaking his holiday was $1,000. It was also accepted that for the four month period between the beginning of February and the end of May it is appropriate to compensate the respondent upon the basis that he would, if not ill, have earned a third of a net annual salary of approximately $44,000, that is, just under $15,000. The sum of $44000 is arrived at by taking an annual gross salary of $69,052 (that is, $56,600 plus 22 per cent) less tax of $25,000. The amount awarded should be rounded off to $15,000 and the award which should, therefore, be made for past economic loss is $16,000 to which should be added interest, calculated upon the basis his Honour adopted, of $1,600. The award for the future impairment can also be conveniently divided into time spans. The first period represents the rest of the time he would have stayed in Melbourne, that is, until September 1990. Applying the same approach as adopted in respect of the four months prior to trial the award, undiscounted, should be $11,000. In view of the very small period involved it is not appropriate to discount that figure. For the two year period when the respondent would otherwise have been in China it is convenient to adopt a similar approach although it is necessary to take into account the additional remuneration provided by the two allowances and, having regard to his Honour's finding that the respondent enjoyed a life expectancy only four and a half months from the date of trial, to deduct the living 4 UNREPORTED JUDGMENTS costs during the 'lost years' (Skelton v Collins, 115 CLR 94). It was agreed that, adopting that approach and discounting on the 3 per cent tables to arrive at the present day value of the moneys which otherwise have been received, a figure of approximately $93,000 results and that amount should be allowed for the period terminating in September 1992. I should add that I have not made any discount for vicissitudes in respect of this sum as the respondent may have received more than 22 per cent above the base salary and benefited from the provision of accommodation in Wuhan. T earlier mentioned that the respondent gave evidence that he intended to work until he was about 70 years of age and that his Honour accepted this evidence. No reason appears why this Court should interfere with the conclusion that but for his illness the respondent would have worked broadly as he intended. He hoped, he said, to work part time earning about $60,000. If he had remained in the Wuhan Project he would have earned more than that for the ensuing two years. If he had not, and in any event for the latter period, he intended to do some consultancy or some teaching work. His Honour considered it was probable that he would, as he hoped, earn $60,000 per annum which would leave him with $35,500 after tax. Once again it was necessary to deduct living costs, which his Honour found to be $15,000 per annum (and this finding was not challenged), for the lost years so that the net loss was $20,000 or $400 per week. His Honour discounted the resulting figure by only 5 per cent for vicissitudes because of the short period of time involved, the good health of the respondent and his firm intentions. Although there is much to be said for his Honour's approach I am of opinion that it fails to pay sufficient regard to the reality that, notwithstanding the outstanding qualities of the respondent, he was reaching a stage in life where he would be likely to wish to take more and longer holidays and may have, if he had taken up teaching, received significantly less than $60,000 per annum. Furthermore a discount of 5 per cent for vicissitudes was, in my view, far too small given the fact that the respondent was reaching an age when illness may well have struck and he may not have been able to continue. He was, after all, intending to proceed to China for two years and the demands upon him in that environment may have had a detrimental impact on his health generally. In my opinion, looking at the matter broadly in an endeavour to do justice to both parties, it is more appropriate to adopt a figure of $325 per week and to allow a discount of ten per cent which takes account of positive and negative vicissitudes. The present day value of that sum, discounted, at an interest rate of 3 per cent is approximately $80,000 which is, in my opinion, a proper allowance for the future economic loss. I turn then to general damages. His Honour allowed the sum of $85,000 for this component of the damages and in my opinion this is excessive. There is no doubt that the respondent suffered a staggering blow in June 1989 and that he has since suffered enormously. He has been subjected to severe pain and has been required to submit to treatment which has imposed severe stress upon him. He has also lived under the shadow of impending death and this, in itself, is a most significant matter. His life, it must be accepted, was a misery for the twelve months prior to trial and his situation will deteriorate for the rest of his life. However, this element of a damages award provides compensation only for the pain, suffering and loss of amenities suffered by him for the period until the date of trial and for the rest of his expected life. In this case his life expectancy was found to be about four and a half months. On that basis the award is to cover those aspects for a URJ SIMON ENGINEERING (AUSTRALIA) PTY LTD v BRIEGER (Handley JA) 5 period of slightly less than eighteen months. This, it is accepted by both counsel, is in accordance with established principle and involves compensation for an area of damages quite distinct from any award in respect of loss of expectation of life. I am afraid that despite my sympathies for the plight of the respondent I am unable to agree that the relevant losses, notwithstanding that his suffering is great, for a period of only eighteen months should command an award in the order of that made by the trial judge. This aspect of the appeal has caused me great concern for while I am conscious of the extreme suffering undergone, and likely to be undergone, by the respondent the shortness of the duration of that suffering must have a severe impact upon the amount of the award. In this case my concern has been lessened to a degree by the approach of the appellant's counsel. In his written submissions he submitted that the award should be reduced by a factor of at least 25 per cent and in his oral argument urged the court to award only $60,000. In these circumstances it seems to me that I should adopt the submissions of counsel for the appellant and award $60,000. For the purposes of interest in this case I would adopt his Honour's apportionment of two-thirds to the past and, applying his Honour's approach, award $4,000. In another case in which other facts are under consideration it may be necessary for the court to consider much more closely the size of an award which should be made for pain and suffering and loss of amenities of life in respect of severe suffering for a short duration. None of the other awards were subjected to any criticism nor shown to be in error and no reason appears why this Court should interfere with them. Accordingly, upon the reassessment I would allow the following damages: Past medical expenses 4601.21 Future medical expenses 17500.00 Past economic loss 16000.00 Interest on past economic loss 1600.00 Future economic loss 184000.00 General damages 60000.00 Interest on past general damages 4000.00 Loss of expectation of life 7500.00 TOTAL 295201.20 The orders I would propose are as follows: (1) Appeal allowed. (2) Verdict and judgment of O'Meally J, except as to costs, set aside. (3) In lieu thereof order that judgment be entered in favour of the respondent in the sum of $295,201.20. (4) The respondent to pay the appellant's costs of the appeal and to have a certificate under the Suitor's Fund Acct. Handley JA I agree with the judgment of Mr Justice Clarke. (1) Appeal allowed. (2) Verdict and judgment of O'Meally J, except as to costs, set aside. (3) In lieu thereof order that judgment be entered in favour of the respondent in the sum of $295,201.20. 6 UNREPORTED JUDGMENTS (4) The respondent to pay the appellant's costs of the appeal and to have a certificate under the Suitor's Fund Act. Counsel for the Appellant: J L Sharpe Counsel for the Respondent: J Poulos Solicitors for the Appellant: Moray and Agnew Solicitors for the Respondent: Connery and Partners