GENNUSA v CLEAVELY SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MAHONEY, PRIESTLY and MEAGHER JJA 26 June 1991, 26 June 1991 [1991] NSWCA 98 DAMAGES — FUTURE ECONOMIC LOSS Appeal from District Court — very serious injuries in motor vehicle accident — appeal in respect of general damages, interest on past general damages, and future economic loss. Held: $180,000 general damages not excessive. Held: Leave given to argue for reassessment of interest in accordance with MBP (SA) Pty Ltd v Gogic (98 ALR 193) 4% interest figure adopted. Held: No error in calculation of future economic loss. Appeal upheld, cross-appeal dismissed. Meagher JA This is a matter in which the defendant, the Government Insurance Office of New South Wales, seeks to appeal from a judgment given in favour of the plaintiff by Smyth DCJ in the figure of $866,640.03. The plaintiff, who was successful before his Honour, sued in respect of personal injuries sustained by him as a result of a motor car collision which occurred on 1 April 1984. He was then riding a motor bike. The question of liability was determined by Graham DCJ separately and he found that the plaintiff was entitled to a verdict and that there was no contributory negligence on his part. The matter then came before Smyth DCJ purely for the assessment of damages and they were assessed by his Honour in a judgment of 14 February 1990. The plaintiff's injuries were very serious indeed. his Honour the trial judge found they were nothing less than catastrophic and whilst senior counsel for the appellant, Mr Donohoe QC, has cavilled at that expression, it seems to me to be amply justified. The plaintiff lost between 30 and 60% of the use of his right hand, which is the dominant hand, he sustained very serious injury to his left knee, he had a fracture apparently of his right foot, he broke his pelvis and had serious internal injuries, which eventually resulted in impotency. He also suffered loss of memory and a certain degree of incontinence. The details of his injuries are fully set out in his Honour's judgment and I shall not repeat them. But suffice it to say that they were very considerable and involved enormous medical, surgical and other expenses. The verdict which his honour found in favour of the plaintiff was made up in the following way: Out of pockets $17,740-odd, interest thereon $2,900, past wage loss $87,000, interest on that $43,000, future medical expenses $20,000, the cost of a future operation $6,000, general damages $180,000, interest thereon at 16% $40,000, future wage loss $470,000, giving the total which I have mentioned. The defendant has really challenged three items in that list. First, the question of general damages. It was submitted by Mr Donohoe in the course of very careful argument that the figure of $180,000 was excessive but that his Honour would have been entitled to give an award of $120,000. Bearing in mind that general damages is the most discretionary part of the process of awarding damages, bearing in mind that mathematical precision is unattainable and bearing 2 UNREPORTED JUDGMENTS in mind it is largely a question of impression, in my mind on the seriousness of the injuries which the plaintiff suffered the figure of $180,000 is well within the permissible range and in my mind it should not be disturbed. The second point of attack which was made by Mr Donohoe was on the item of future wage loss, which, as I have said, came out at a figure of $470,000. Unfortunately the manner in which his Honour reached that figure and the steps in his reasoning by which he arrived at that result somewhat on the laconic side and may be summarised as this: The plaintiff is a panel beater. At the time of the accident he was in the best possible physical health. The earnings in the panel beating business could be very large indeed and varied considerably. His Honour heard evidence that a panel beater who set up his own business could earn up to $600,000 a year. His Honour found that if the plaintiff had set up business as a panel beater he should have no difficulty in earning a taxable income of $100,000 a year. His Honour added: "Unfortunately for the plaintiff I do not think that I can properly approach it on this basis". I am left in some difficulty in understanding that sentence because his Honour does not state why he cannot properly approach it on that basis. However, that is one aspect of it. The second aspect of it is an employee can earn net in the panel beating business a figure of up to $500 per week. His Honour also found that the subcontractor panel beater could earn between $1,000 a week and $1,200 a week which figures seem to be gross figures and if reduced to net would give you a figure of something like $750. So the range of possible loss is somewhere between $1,000 a week and $500 a week. His Honour chose a figure of $600 but, again, did not explain why. His Honour did not allow much for residual incapacity and with respect was perfectly right to do so. One of his Honour's findings was this: "The injuries that this man has sustained are such that he can never hope for more than a part-time job with a sympathetic and understanding employer." Despite some discussion of his Honour's finding in that regard, it seems to me there was ample evidence for his Honour to make that finding and it is a finding which, it seems to me, to be perfectly correct. Whatever weekly sum is therefore chosen should not, in my view, be the subject of any discount of a substantial kind. It is perfectly true that there are a variety of lighter and menial jobs which the plaintiff could have performed granted the opportunity, and it is perfectly true that there was a chance, maybe an outside chance, that he could get a job as an assessor with an insurance office, but these are mere chances and clearly his Honour did not think greatly of them. The figure chosen by his Honour was attacked both because his Honour considered it would have applied until the plaintiff reached the age of 65 and because in any event it had not been sufficiently discounted. For reasons I have endeavoured to explain, I do not agree that it was not sufficiently discounted. As far as projecting that figure to the plaintiff's age of 65 is concerned, at first this point did impress me but the more I think about it the less weight I think it carries because whilst it is true that the evidence is that most panel beaters retire from active work as panel beaters at the age of 50, it is not that they retire from business altogether. It is that they move from the active work of panel beating into some other occupation presumably one which one can reasonably presume to be co-equal as far as money is concerned. Therefore, in my view the defendant's attack on his Honour's finding of future wage loss cannot be sustained. URJ GENNUSA v CLEAVELY (Meagher JA) 3 That leaves the third point of attack and this concerns the award of 16% interest on general damages insofar as they relate to the past. On this aspect, and on this aspect alone, in my view the appeal should succeed. The situation is that the High Court in MBP (SA) Pty Ltd v Gogic 98 ALR 193 held that interest on pre-trial pain and suffering cannot be equated with the amount which those damages, invested at the commercial rate of interest, should have earned during the relevant pre-trial period. Whilst many things about exactly what the High Court did decide are not clear, this much is clear: First, that interest should not be awarded on general damages in a commercial rate. The obvious rationale of that is that it would involve double counting to do so because in making the finding of general damages the judge or jury, as the case may be, is awarding damages in today's money, not in money of the date of the occurrence of the injury. The second point which the High Court certainly decided was that one must take a significantly lesser rate of interest; and the third point which must be taken as decided is that that lesser rate is a purely arbitrary rate. The particular arbitrary rate they chose in Gogic's case was 4%, the rate which had traditionally dominated in South Australia. Quite why 4% is chosen rather than some other rate defies, in my view, any logical explanation. It may be the High Court chose that rate and the Supreme Court of South Australia before it chose that rate because it reflected what an interest rate would be if it were shorn of inflationary factors. It may be the rate is a reflection of the difference between the bond rate and the actual inflation rate. Maybe it is nothing more than a reflection of the historical figure granted by courts in the case of interest in more ancient and sedate times. But whatever the explanation of the 4% in my view the practice which has recently developed of adopting it by analogy as appropriate for New South Wales should be continued, even though neither side challenged the applicability of a commercial rate below, and for those reasons I would reduce the amount his Honour had awarded of $866,640.03 by the figure of $29,800 and otherwise dismiss the appeal. I should add that the cross appeal related solely to the question of loss of earning capacity. The figure arrived at by his Honour on this item was $470,000. That figure was a figure which represented $600 per week for the balance of the plaintiff's working life until he was aged 65 at a 25% discount. Mr Crompton QC for the respondent submitted, and in my view correctly submitted, that that figure is far too low. Primacy must be given to his Honour's finding as to the nature of the plaintiff. His Honour found that the plaintiff was courageous, determined, intelligent and hard working. He found that he was able to earn money and was dedicated to doing so. These findings have not been and could not have been challenged by the appellant. There was, as I have said, a range of figures open to his Honour to choose. He could have chosen anything between, in effect, $500 per week and $1,000 per week. I might add $1,000 a week is itself at the bottom of the range of what a self-employed panel beater could earn. In my view bearing in mind the characteristics which his Honour found the plaintiff possessed he should be rewarded by some figure in the top of the available range rather than towards the bottom. Accepting as I do Mr Crompton's calculations of $1,000 a week, I would deduct from that the sum of $100 to represent residual capacity, giving $900, work out the capital sum on the 3% basis and debit 15%. That, on my calculations, would increase the future wage component of the damages awarded by $324,070 and overall I would, therefore, allow the appeal and the cross 4 UNREPORTED JUDGMENTS appeal, set aside his Honour's verdict, award in lieu thereof the verdict of $1,160,910.03, interest to run as from the date of his Honour's judgment. Mahoney JA The injuries which the plaintiff suffered were very serious. The quantification of an amount of general damages for such injuries is attended with the difficulties and uncertainties to which reference has been made in the reported cases. Doing the best that I can with the award which the learned judge made, I would have come to the conclusion that it was excessive and that I would consequently have adopted the award which, on behalf of the appellant, the defendant, Mr Donohoe QC submitted the court should adopt, namely, $120,000. However, in the circumstances, as I understand the view of the court, it is not necessary for me to detail my reasoning further. As I have said, my view would have been that $120,000 was an appropriate sum and I would have given judgment on that basis. The second matter that affects the appeal is the amount to be awarded as interest upon past general damages. Meagher JA has referred to the details of this amount. Mr Crompton QC for the plaintiff has submitted that the court should not permit this matter to be reopened. It was, as he correctly pointed out, not raised at the trial and, therefore, on the ordinary principles that he submits should be applied the appellant, the defendant, should not be entitled to raise it now. There are instances in which this court has, since the decision in the Gogic case, allowed the matter to be raised notwithstanding it was not raised in the proceedings below but, of course, the circumstances in other cases do not necessarily determine the present case and this case is to be determined on its own merits. The ground advanced by Mr Crompton for objecting to the matter being raised now was essentially that it might have been possible for the plaintiff to have adduced further evidence in relation to the matter and so to have persuaded the judge below to adopt a figure which, in accordance with the Gogic principle, did not take account of the simple commercial rates of interest but yet differed from the 4% there referred to, that rate being the rate which in other cases this court has adopted in recent months since the Gogic decision. The court asked Mr Crompton to specify precisely what evidence might have been called and the reason for calling it. He indicated that the evidence was substantially to be directed to the commercial rate of interest and that it would have been sought to persuade a judge upon the basis of that commercial rate to adopt a different rate in the manner to which I have referred. I do not think that evidence for that purpose would have been appropriate in the proceedings before a trial judge. It is not necessary for the court to attempt to redefine what is stated by the High Court in the Gogic case (see 98 ALR 193 at 197-8) as the basis on which interest was there said to be given. It is sufficient in my opinion to say that evidence of the kind referred to by Mr Crompton would not be of assistance in determining whether a 4% figure or some other figure would be appropriate. The matter is one upon which this court can I think make a decision notwithstanding that it does not have the benefit of a decision given by a trial judge. In these circumstances I think it is proper that this court deal with the matter. In it dealing with the matter I agree with the conclusions that have been expressed by Meagher JA and his reasons on this point. That deals with the appeal itself. I come now to the cross appeal. The cross appeal relates to the amount to be awarded for future economic loss. The appeal deals in the main with three questions. The first is whether the Court should differ from the learned judge's assessment of the plaintiffs loss in terms of a weekly URJ GENNUSA v CLEAVELY (Mahoney JA) 5 wage loss or from the amount that he adopted. The adoption of a weekly wage loss as distinct from an amount representing the profits of a business which the plaintiff uninjured might have undertaken, was the result of a calculated decision by the learned judge. The learned judge referred to the possibility, indeed, as he may have thought the likelihood, that the plaintiff would himself have undertaken a business and would have earned on the probabilities profits in excess of $100,000 per annum. But his Honour determined not to adopt that as the proper approach to the calculation of the plaintiff's loss. I think that his Honour was right in taking such an approach. For myself I feel that the prediction of what a plaintiff would have done from the circumstances which are before a court in a case such as this is a most difficult matter. To say the least, it is affected by such uncertainties and contingencies that for myself I would not feel appropriate confidence in selecting the conclusion that his Honour rejected, estimating the return to be derived from a business and then using that as the basis for calculation of future loss. As has, of course, been indicated in the judgment just given, the loss which the plaintiff has suffered in this regard includes the loss of a chance to carry on a business: one should in compensating him, be compensating him essentially for the loss of a chance. But that is something which, in terms of money, is very difficult to quantify. I think the learned judge was, in the end, correct in adopting a more conventional basis for assessment of the loss, namely, that based upon the likelihood that the plaintiff would at least for some significant time have suffered a loss of a particular and more readily quantifiable sum per week. That leads to the second question. It has been submitted that the evidence disclosed that if the plaintiff were to have undertaken employment or to have worked as a subcontractor in the relevant business area, he would have ceased in that occupation at about the age of 45 years. The learned judge took his calculations of the weekly loss that he had adopted not merely to age 45 but to age 65. It was then said that that constituted error on the part of the learned judge. As Meagher JA has pointed out, the learned judge was not fully forthcoming in detailing the reasons which moved him to make the particular assessments of loss in his judgment. This is, I suppose, a criticism from the viewpoint of perfection but it means that it is difficult to know with any precision why the learned judge, in the face of the evidence to which I have referred, adopted a basis of calculation of loss up to 65 years. Tam inclined to think that the learned judge came to the conclusion that, at the age of 45 or thereabouts, if and when the plaintiff ceased to be employed in the particular business area he would undertake some other business or employment. It may be the judge assumed, as I would myself assume, that the employment in that other business area might well have brought less than any employment in the particular business area in which the plaintiff would have initially been engaged. But on the other hand the plaintiff's residual capacity to earn income after 45 may well, his Honour may have thought, have been significantly reduced and to that extent the offset against the plaintiff's loss of income would have to be taken into account on a different basis. All in all I do not think that his Honour was in error in adopting the approach that he did in this regard. Alternate approaches which might be propounded are, I think, equally the subject of qualification and contingency. I would not be satisfied that any alternative approach was apt to produce a more accurate result than that adopted by the learned judge. 6 UNREPORTED JUDGMENTS The third matter in question in the cross appeal is, in my opinion, the rate of discount which his Honour adopted. His Honour discounted the amount of loss calculated by reference to the conventional tables by an amount of approximately 25%. The conventional rate of discount, it has been said, is 15% and Mr Crompton has submitted that this court should assess the future economic loss upon the basis only of a 15% discount. Again, the learned judge did not articulate in detail why he adopted 25% but I think on reflection the learned judge was probably right. The 15% discount which has been adopted is in general terms adopted for a person who has a settled way of life and is earning income from an employment which, in one sense, is settled for a substantial period of his working life. But the plaintiff was not such. His Honour had evidence from his as to his attitude to employment. He had evidence that in fact he would not have been continually in ordinary employment and may well in the future have been following one business or another. He may have been following, for example, the kind of business that he was engaged in at the time of the accident. His Honour may then have seen these uncertainties as to the plaintiffs economic future uninjured as increasing the rate of uncertainty in relation to his future earnings and adopted the 25% accordingly. In the circumstances I am not satisfied the learned judge was wrong. I think some figure above 15% is justified and I would not dissent from the view his Honour has formed. I would adopt it as my own. In the circumstances, therefore, I would dismiss the cross appeal. The result in my opinion should therefore be that the appeal succeeds in relation only to the interest on past general damages. The cross appeal should be dismissed. Priestley JA The principal matter in the appeal which was argued today was theamount awarded in respect of what the trial judge described as the plaintiff's "general damages for the injuries sustained, disruption to his life, pain and suffering he has indicated, his loss of marriage prospects, his loss of prospect of being in business on his own account and all those other matters". In regard to that aspect of the appeal I agree with what has been said by Meagher JA and do not wish to add anything to it. A subsidiary matter in the appeal, a matter which is of some general importance but of a comparatively minor importance in this case so far as the plaintiff is concerned, was what has been called the Gogic point. In regard to that I do not wish to add to what has been said by Mahoney JA and Meagher JA beyond remarking that the circumstances of this case do not seem to me to be suitable for the court to formulate a fixed standard by which the question of interest rate in regard to the non-economic loss suffered by a plaintiff after accident and before trial is to be decided. The result in the present case which has been arrived at by the other two judges seems to me to be a sensible one. In light of the way the point arose in the present case it may well be that the 4% figure will become the standard figure for this aspect of interest in personal injury claims. Equally, however, it may be that a case will come before the court which will enable the court to examine the various matters bearing upon the interest rate in a more satisfactory way than is possible in the present case, and for my part I would not regard the present case as precluding a fuller examination of the point on more satisfactory materials should that position emerge. In regard to the cross appeal, I have felt some difficulty in satisfying myself of precisely what was the trial judge's train of reasoning; however, after hearing the argument from both sides it seems to me that it is possible to see the general way in which the trial judge approached the matter of future economic loss. Once URJ GENNUSA v CLEAVELY (Mahoney JA) 7 having grasped what I think was the trial judge's method it did not seem to me to contain any errors of a kind required or justifying intervention by this court. For the reasons given by Mahoney JA each aspect of the evaluation of what the plaintiff's future would have been had he not been injured contains difficulties. Any particular assessment of that hypothetical future would be subject to counter arguments almost as satisfactory as the initial argument. In circumstances where evaluation is so difficult it seems to me that appellate courts should be slow to alter what has been decided by a trial judge who has, as I think Smyth DCJ did in this case, clearly in mind the principal matters that needed to be considered and who has used the advantages he had as trial judge in assessment of the plaintiff without logical error or other discernible defect in reasoning. I would not interfere with the assessment that he made in this respect. Thus, in my opinion the cross appeal should be dismissed. The appeal should succeed only on what I have described as the comparatively minor matter of the Gogic point. The court's eventual judgment, as I understand it, will reflect those two opinions. Mahoney JA The result would appear to be that the appeal be upheld as to $29,800 interest on past general damages, that the cross appeal be dismissed and that therefore there be judgment for the plaintiff for, as I see the figures, $836,840.03. That is the amount of $866,640.03 less $29,800 which comes, I am informed, to the figure that I have suggested. It would appear to be appropriate to take effect from 14 February 1990 which is the date of the judgment below and if that be so then the court can direct judgment accordingly. That leaves only the question of costs. That being a somewhat complicated matter, it may be the parties might like to say something about it. The result seems to be the appeal has been upheld on what, on one view, is a comparatively minor matter and the cross appeal has been dismissed. The question then is whether a special order should be made for the appeal and the cross appeal or whether a general order should be made and what that should be. (Mr Crompton submitted the order for costs should be the appellant pay the respondent's costs.) (Mr Bell submitted each party should pay its own costs.) The order the court makes in respect of costs is that the appellant pay the general costs of the appeal. The respondent is to pay the costs of the cross appeal insofar as additional costs have been incurred by reason of it. If and insofar as the respondent is entitled to a certificate under the Suitors' Fund, he is to have it. Otherwise the judgment of the court is as I have announced it. 1. Appeal upheld as to $29,800 interest on past general damages. 2. Cross-appeal dismissed. 3. Judgment for the plaintiff for $836,840.03 being the amount of $866,640.03 less $29,800. 4. The appellant to pay the general costs of the appeal. The respondent to pay the costs of the cross-appeal insofar as additional costs have been incurred by reason of it. The respondent, if entitled, is to have a certificate under the Suitors' Fund Act. Counsel for Appellant: P DONOHOE QC with P BELL Counsel for Respondent: JA CROMPTON QC with DU ARNOTT Solicitors for Appellant: GOVERNMENT INSURANCE OFFICE OF NSW 8 UNREPORTED JUDGMENTS Solicitors for Respondent: STAUNTON and THOMPSON