GIO OF NSW v MICH SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL SAMUELS, CLARKE and HANDLEY JJA 13 August 1991, 13 August 1991 [1991] NSWCA 117 APPEAL — DAMAGES — IMPAIRMENT OF EARNING CAPACITY — EMPLOYMENT RECORD — CONTINGENCIES Clarke JA The plaintiff, Ahmed Mich, was born on 25 January 1951 and received a neck injury in a motor vehicle accident on 28 October 1984. He sued in respect of that injury and, in due course, liability was admitted and the matter proceeded as one for assessment only before J B Phelan, DCJ. His Honour assessed the damages at a total figure of $278,427 and judgment was entered accordingly. The defendant has appealed from that assessment challenging, in particular, the assessment of the impairment of earning capacity to the date of trial and in the future, and the assessment of general damages. During the course of the appeal counsel for the plaintiff has conceded that his Honour made two errors. In the first place he adopted an incorrect interest rate in calculating the damages for the impairment of earning capacity in the future. If that were the only mistake then, as I see it, the task for this Court would be simply to work out the correct figure by using the proper interest rate and to make appropriate adjustments to the judgment. However, there is a second error which is conceded and that is that in the allowance of $67,410 for the impairment of past earning capacity, his Honour failed to make any allowance for the vicissitudes or contingencies and it has been conceded in the circumstances of this case that such an allowance was called for. It seems to me that where there are two errors of this nature the court is obliged to set aside the judgment under appeal and to assess the damages. That assessment should, however, be carried out upon the basis that his Honour accepted the plaintiff in his statement of the problems which were troubling him. This acceptance is clearly spelled out in the judgment and it is appropriate in my view that this Court proceeds upon the basis that the plaintiff has suffered from all the problems of which he gave evidence. In addition, his Honour accepted the evidence of Dr Phillip Segelov who deposed to the plaintiff's condition over a fairly extended period of time, the existence of disc lesions in his neck and the probability that the plaintiff's work capacity had been markedly impaired or affected by his injuries. One matter with which his Honour did not deal and which, to my mind, explains at least the error in respect of past earning loss, is the work history of the plaintiff. I mention it specifically because in this case it is striking and must necessarily have had an important impact upon the award of damages. The plaintiff came to Australia in March 1971. He worked initially as a blacksmith's assistant for the Department of Railways, for about 12 months; then he returned home to Syria for a short period and upon coming back to Australia 2 UNREPORTED JUDGMENTS he entered employment as a general worker with Tooheys Brewery. This employment would appear to have started in about mid-1972. He worked there for nearly five years. Upon leaving that employment he was not, however, employed again until 9 July 1979 when he commenced work with Pirelli Ericsson Cables as a machine operator. He stayed there for about seven months and was then, once again, unemployed for about 20 months. On 7 October 1981 he commenced working for Warman International as a process worker and remained there for six months. Somewhat against his more recent trend, upon leaving that job he commenced work fairly quickly with D and C Industries as a formwork labourer and remained there until 2 February 1983. He was then off work, except for a period of three weeks, until the accident on 28 October 1984. This short recital of the history demonstrates that in the period between 1971 and October 1984 he had been in employment only about 50 per cent of the time. In the seven and one half years prior to the accident he had worked something less than two years. This history does not engender confidence in the view that he was likely to work regularly from the date of the accident onwards if he had not been injured. The reluctance to accept that view, without qualification, is increased by reference to the circumstances in which he left Strathfield Municipal council where he worked as a casual labourer for three weeks in May 1984. He said there was nothing wrong with the job and that he just left, and despite the fact that he had five mouths to feed, went back on social security. He declined at all stages to give any reason for leaving this employment. Given this background, it is hardly surprising that counsel for the plaintiff concedes that his Honour was bound to make some allowance for contingencies in the award for the impairment of past working capacity. That concession was clearly correct, and on this aspect of the case the debate has focused on the extent of the deduction which should be made. Before I go to that, however, I should indicate that the plaintiff's past work history also impacts upon the allowance for the impairment of future work capacity. where, as here, the history suggests that there was a real possibility that the plaintiff may never have worked again after 1984 or, at least, that his work may well have been spasmodic after this time, a fairly radical adjustment needs to be made to figures based upon the premise that the person was, if uninjured, likely to enter full-time and permanent employment after the date of trial. His Honour allowed a figure for the contingencies for vicissitudes in this case which is somewhat greater than is often allowed. The figure was 20 per cent which, according to his Honour, was allowed "having regard to some of the uncertainties that the plaintiff must face in the case and the exigencies". That figure, which is only marginally greater than one that is often adopted by the court, is quite insufficient in my opinion to accommodate the likelihood or possibility that if uninjured the plaintiff would not have worked after the date of trial or if he had done so would only have worked spasmodically. In my opinion the evidence to which I have referred requires a greater adjustment to the figure for impairment of future earning capacity than his Honour made. I will also put the assessment of that figure to one side for the moment to deal with the third area of challenge, and that is the award of $50,000 for pain and suffering. URJ GIO OF NSW v MICH (Clarke JA) 3 Counsel for the defendant conceded that unless his Honour was in error in accepting the plaintiff's statement of his symptoms and the evidence of Dr Phillip Segelov, this figure was not really vulnerable to attack. He did, however, submit that error had been shown insofar as his Honour failed to take account of, and pay regard to, the evidence of Dr Cropley and Dr John Segelov which painted a less pessimistic view of the plaintiff's future than had been painted by Dr Phillip Segelov. The high point of the argument was that, although reference had been made in the judgment to the evidence of another doctor called by the defendant, there simply was no mention of this very important evidence from the two doctors I have mentioned. In my opinion the submission fails to take account of the clear implication in the judgment that the evidence of those two doctors was rejected. This conclusion in my opinion necessarily flows from his Honour's acceptance of the evidence of Dr Phillip Segelov which was, as I have indicated, much more pessimistic than that of the two doctors to whom reference has been made. Where as here there has been a conflict of evidence which has been resolved by the trial judge in a particular way, and has been resolved upon the basis that the witnesses whose evidence was accepted had been called to give evidence before his Honour, I do not think it is open to this court to interfere and substitute a more pessimistic view of the plaintiff's future upon the basis of evidence that was rejected by his Honour. In these circumstances I have reached the conclusion that the challenge to the award of general damages must fail. I return then to the award for past economic loss. His Honour awarded the sum of $67,410 which was calculated by reference to a table which was presented to the court by counsel for the plaintiff. A copy of that table has been handed up to the court on the appeal and although I will not set it out in detail I propose to refer to it in indicating the award which I propose for this component of the damages, and the reasons which lead me to make that award. The case apparently proceeded upon the basis of figures which are included in this table and which were, for relevant purposes, accepted by the defendant: The table was designed to show what the plaintiff, if he had remained in employment with D and C Industries up to the date of trial and continued in that employment after the date of trial, would have earned. The calculation of the figures relating to the past earning loss, when taken up to the date of trial, demonstrated that if he had worked for D and C Industries every day between the date of the accident and the date of trial he would have earned $106,015. However, it was conceded by counsel for the plaintiff that there needed to be deducted from that figure at least $17,013 which represented the wages he would have earned during a period when he was, admittedly, unable to work because of a hand injury which he had suffered. Accordingly, the basic claim advanced was that his loss was $89,002. The reason why his Honour did not allow that amount will become clear in a few moments, but I will put that to one side at this stage. The figure of $89,002, does however, provide a reasonable starting point for the assessment of this component of damages. The question then is what should be deducted from that figure to take account of the normal vicissitudes and, in addition, the very considerable risk that this man simply would not have worked at all during that time. 4 UNREPORTED JUDGMENTS In saying this I do not overlook the fact that he did work for one day in a trainee job, but that was work which was secured for him by the Commonwealth Employment Service while he was on social security and in any event, because of his injury, he only worked there for one day. Despite those facts there remained, in my view, a very considerable risk that he would not have worked at all in the period between accident and trial, although there was, of course, some possibility that he would have worked for considerable periods of time. Having regard to those factors I am of opinion that he should be allowed approximately one-third of the wages which would otherwise have been earned if he had worked every day. The figure that then is arrived at is one of approximately $30,000. I return then to the reason why his Honour arrived at a figure of $67,410. That was because of the necessity to make allowance for social security payments received by the plaintiff, which were not refundable to the Department. Those totalled $21,592. That figure was therefore deducted from $89,000.00. Upon reassessment only one-third of the amount claimed has been allowed and it is therefore proper to deduct from the figure allowed only one-third of the social security payments which will be retained by the plaintiff and for which credit is due to the defendant. Having carried out that deduction, the resulting figure is $23,000 which in my opinion should be allowed for loss of wages to date of trial. I turn then to the impairment of future earning capacity. His Honour, once again accepting the figures which had been put before him, took the view that if he had been working at the date of trial he would have been earning $400 per week. Upon the basis that he had shown a reduction in capacity of about 50 per cent, his Honour calculated the impairment of future earning capacity upon the basis of a loss of $200 nett per week. I see nothing wrong with that approach in the light of the acceptance by the defendant at the trial of the figures which had been put forward. For myself, I have a feeling that the figure is somewhat generous to the plaintiff who only worked in the building industry for a very short time during his stay in Australia. Notwithstanding, for the reasons I have given, I propose adopting his Honour's approach. If one applies the correct interest tables to the calculation of a loss of $200 net per week for 26 years, one arrives at a figure of $153,740. Once again, however, it is necessary to make adjustment not only for the normal vicissitudes, but also for the possibility, which could not be regarded as a low possibility in this case, that the plaintiff would have worked either not at all or only from time to time. Of course, assessing an award of damages for this component is a difficult task at any time, but when one is faced with a work history such as this man had, it becomes much more difficult and the Court is required to adopt a fairly broad and approximate approach. The correct discount which should be made has troubled me. On the one hand Iam convinced that 20 per cent is nowhere near enough; on the other hand I think to allow only one-third, as I have done for the short past period, would not be to do justice in all the circumstances of the case. In my opinion the appropriate approach is to divide the total figure by two, thereby allowing the plaintiff 50 per cent of the capitalised sum representing $200 nett per week for 26 years. The figure which that results in is $77,000 which I would allow for the impairment of future earning capacity. To all those figures should be added the agreed out of pocket expenses of $3,255,90 and the allowance for future physiotherapy which is not challenged, totalling $6,242. URJ GIO OF NSW v MICH (Handley JA) 5 Finally, one comes to the interest on past economic loss. Once again it is necessary to make allowance for social security sums which have been paid and which are refundable by the plaintiff. The total repayable is $21,000 and although Mr Petty mounted a sophisticated argument designed to show that only one-third of that sum should be refundable and that interest should be calculated upon the difference between $23,000 and that sum I have reached a contrary conclusion. In my opinion the plaintiff was not out of pocket to the extent of $21,000 because of social security moneys he received and, insofar as he will not be required to pay interest when he repays the money, I do not think it appropriate to award him interest on that amount, or even the difference between one-third and the total of that amount. Accordingly, interest should be awarded only on the difference between the allowance and the refundable social security which is $2,000, and treating the interest calculation broadly, I allow $800. Those figures total $160,297.90. In my opinion the orders which should be made are as follows: Appeal allowed. Judgment below set aside. In lieu thereof enter judgment in favour of the plaintiff for $160,297.90 to date from 2 June 1989. The plaintiff's counsel sought to be heard on the issue of costs and I defer consideration of that matter until argument has been heard. Samuels JA I agree. Handley JA I agree. (Counsel addressed on costs.) We have heard argument about the order which should be made for the costs of the appeal. The complaint that the learned judge applied the wrong discount rate, which was not taken in the original grounds of appeal, but relied on in the amended grounds of appeal, was advanced in the written submissions, and that certainly could have been disposed of under the "slip rule" without the need for further argument. But it seems to us that the matters upon which the appellant largely succeeded, which depend upon an analysis of the respondent's work record, were not worked out in the appeal or in the written submissions but were very much refined as the matter developed during argument. The point that the learned judge overlooked certain of the medical advice which was distinctly taken here and in the written submissions reveals that the amount which was acceptable to the appellant for future economic loss was some $45,000 in excess of the amount which was finally assessed. In all the circumstances we think that the fair solution would be to make no order for the costs of the appeal or of the cross-appeal. The formal orders of the court therefore are: The appeal is allowed. The judgment below is set aside. In lieu thereof there is substituted judgment, with costs, for the plaintiff/respondent in the sum of $160,297.90 to date from 2 June 1989. The cross appeal is dismissed. We make no order for the costs of the appeal or of the cross-appeal. Counsel for Appellant: P W NEIL Solicitors for Appellant: GIO of NSW, Parramatta Counsel for Respondent: G R PETTY Solicitors for Respondent: STEPHEN HODGES and CO