THE NOMINAL DEFENDANT v CHAPMAN SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MAHONEY CLARKE MEAGHER JJA 18 October 1991, 30 October 1991 [1991] NSWCA 216 APPEAL from District Court — Injuries in motor vehicle accident. INTEREST ON OUT OF POCKET EXPENSES — Error in allowing interest on unpaid out of pocket expenses — Judgment to be amended. INTEREST ON PAST GENERAL DAMAGES — Award of interest on past general damages — Application of MBP (SA) Pty Ltd v Gogic (1991) 171 CLR 657 — 4% adopted in particular case — Award by judge of 6% not shown to result from discretionary judgment. GENERAL DAMAGES — Not appealably excessive. PAST ECONOMIC LOSS — No error in amount awarded. FUTURE ECONOMIC LOSS — Award for risk of future loss not wrong. Mahoney JA On 22 August 1979 the plaintiff was injured in a motor vehicle accident for which the defendant now accepts responsibility. On 14 October 1980 the plaintiff commenced proceedings against the defendant in the District Court. On 28 March 1991 his Honour Acting Judge Patten gave judgment for the plaintiff in the sum of $344,150.44. The defendant has appealed to this Court in respect of the quantum of the judgment given against it. The judgment was made of the following components: 1. General Damages $80,000 2. Interest on General Damages 20,700 3. Past Economic Loss to December 1982 58,643 4. Interest on 3. 86,352 5. Past Economic Loss from January 1983 to February 50,000 6. Interest on 5. 30,000 7. Future Economic Loss 5,000 8. Out of Pocket Expenses 10,996.44 9. Interest on Out of Pockets 2,459 $344,150.44. The defendant, in its amended grounds of defence, has appealed in respect of the amounts included in the judgment in respect of interest, general damages, and past and future economic loss. Having regard to the grounds of appeal as argued and the submissions as made to this Court, it is not necessary to refer in detail to the facts. The plaintiff's injuries were very severe. He was in hospital for various purposes and on various 2 UNREPORTED JUDGMENTS occasions until April 1980. His treatment in hospital involved him in, as his Honour described it, "extreme agony" and "violent pain". He underwent at least two serious surgical procedures and was involved in a fusion of cervical vertebrae and an operation on his hip. The plaintiff convalesced at home after discharge from hospital. He was prevented from working for more than three years, his marriage broke up, he became "very depressed and on one occasion attempted suicide". He still suffers from "a constant throb to the right side of his head and the four places where" medical apparatus had been attached to his skull. He also suffers "frequent headaches". The learned judge, in his judgment referred to epileptic fits, lack of ability to concentrate, forgetfulness, referred pain in the arms and a sensation of pins and needles. He referred to emotional problems which the plaintiff now has and to his hypertension and nightmares. As the result of two epileptic fits, the plaintiff was investigated by Dr Wolfenden. As the result of that investigation it appeared that the plaintiff had two bodies described as "calcified mass" in his skull. They were, the doctor said "most likely tumours". The doctor was not able to say with appropriate assurance that either of these was caused by the accident for which the defendant was responsible and the matter has proceeded upon the basis that his Honour's conclusion that "the state of the evidence did not permit a finding of causal connection between the accident and the epileptic fits..." is correct. I come now to consider the submissions that have been made for the defendant. 1. Interest: The defendant's submissions were directed to the interest given in respect of out of pocket expenses and that in respect of general damages. The agreed out of pocket expenses were $10,996.44. It was agreed at the trial that of this $8,145.29 had already been paid. The learned judge said: "I will allow interest on the balance viz $2,851.15 at 7.5% per annum for 11.5 years such interest amounting to $2,459.00". It is submitted for the defendant and accepted for the plaintiff that in this his Honour fell into error. There was no evidence to support the award of interest for the amount of the unpaid out of pocket expenses. Mr Glissan QC, for the plaintiff, ventured the suggestion that his Honour may have intended to award interest on the out of pocket expenses which have been paid but in the end conceded, in my opinion correctly, that the award of $2,459 cannot be supported. His Honour awarded $80,000 for general damages, attributed $60,000 to the past and $20,000 to the future, and allowed "interest at 3% per annum upon the sum of $60,000 for a period of 11.5 years such interest amounting to $20,700". In MBP (SA) Pty Ltd v Gogic (1991) 171 CLR 657, the High Court departed from its decision in Cullen v Trappell (1980) 146 CLR 1. It indicated that interest on damages for non-economic loss sustained before trial should not be calculated on current interest rates or the real rate of interest which would have been available to the plaintiff in the relevant period but on a rate which represents the difference between the prevailing rate for secure investments and the rate of inflation. It indicated that the rate which ought to be adopted in the present circumstances, as detailed in the judgment in that case should be 4% per annum. (I have taken the effect of the decision from the summary contained in the headnote of the report). The effect of the Gogic decision and its application to the circumstances in this State have been referred to in earlier decisions of this Court. There is, as far as counsel's researches extend, no definitive statement of what course should be followed in this State. In particular, as far as now appears, it has not been URJ THE NOMINAL DEFENDANT v CHAPMAN (Mahoney JA) 3 determined whether the rate referred to in the Gogic case, namely 4% per annum, is a rate which should be applied generally throughout Australia or whether it represents, to an extent, a rate determined by circumstances peculiar to the State of South Australia from which the appeal in that case was brought. However, in general, the course of decision in this State has adopted the rate of 4% per annum for the purposes of calculating interest on past general damages. In the present case, the learned judge adopted, in this sense, 6% per annum: in accordance with the proper practice, he applied that rate by allowing 3% per annum upon the whole of the past general damages for the whole of the period from injury to trial. The learned judge did not indicate why he selected 6% as the appropriate rate. It was submitted by Mr Glissan QC for the plaintiff that his Honour's selection of that rate should be seen as a discretionary decision based upon the circumstances peculiar to the present case or to the State of New South Wales and as such should not be interfered with. There is nothing in the judgment or the material before this Court to which counsel could refer in support of that submission. And there seems to be nothing in the circumstances of the case which would warrant such a departure from the general rule. Counsel were not able to suggest that there is anything at the trial or in the District Court provisions which led to his Honour accepting that rate as the rate to be applied. It is not clear whether the learned judge had before him a report of the decision in the Gogic case when he gave his judgment. In the absence of some indication as to how the rate of 6% was selected, I do not think the court should accept that his Honour's selection of it was the result of a discretionary decision based upon considerations of the kind referred to in the Gogic case. On that basis, the interest to be allowed on past general damages should be calculated by reference to the conventional rate of 4% per annum, that is, by allowing 2% per annum on $60,000 for the period of 11.5 years. This represents $13,800. The question was then raised whether, in the circumstances of this appeal, this adjustment to interest should be made. The view has been taken in some cases that if the submission was not made at the trial that interest should be calculated in accordance with the principles of or principles analogous to the Gogic case, then no adjustment should be allowed by this Court on appeal. However, it has, in such cases, generally been accepted that, if there be a reason for setting aside the judgment other than arises from the Gogic decision, then the appropriate adjustment is to be made. It was submitted that the adjustment to which I have referred in respect of interest on out of pocket expenses should be seen as a mere recalculation not warranting a revision of interest in accordance with the Gogic decision. I do not think that that view should be adopted. The grant of interest in respect of out of pocket expenses was an error requiring the recalculation of the judgment. The matter is not de minimis nor does it fall within "the slip rule". In the circumstances, the reduction of this portion of the award by $6,900 should be made. 2. General Damages: In the defendant's written submissions, the quantum of this award was attacked. It was submitted that his Honour erred either in the amount which he awarded or because, as it was suggested, he failed to take into account that some at least of the plaintiff's difficulties were due to the brain tumours for which the defendant was not responsible. 4 UNREPORTED JUDGMENTS It is, as I have said, proper to approach the matter on the basis that difficulties with the brain tumours are to be excluded from the present assessment. But that having been done, I do not think that the amount awarded is excessive. The plaintiff's evidence was accepted as from a credible witness. His description of the pain and suffering and generally the disabilities resulting from the accident, and their continuing effects upon him by way of pain and otherwise are such as to warrant an award of $80,000. In so deciding, I do not conclude that the learned judge erred in the manner suggested. His Honour's judgment is clear and concise and I see no reason to doubt that, in his conclusions, he took into account the fact that, as he said, the evidence did not permit of the finding of a causal connection between the accident and the tumours and their sequelae. 3. Past Economic Loss: At the time of the accident the plaintiff was working in his own business. He said that he was deriving, after expenses and tax, some $500 per week. The judge awarded him, for the period between the accident and his return to work in December 1982, $58,643. This was calculated upon the basis of a net loss per week of $347. This sum of $347 per week was, it is accepted, arrived at by deducting taxation at appropriate rates from the sum of $500 per week. The defendant's submission was that his Honour arrived at the total award for past economic loss merely by a process of multiplication and that this was not justified by the uncertainty of the evidence. The uncertainty lay, it was said, in the acceptance of the loss of $500 per week. This was the approximation which the plaintiff gave. He lacked records to provide substantial corroboration for his assessment. But, as Mr Barry for the defendant conceded, apart from questions as to the absence of records, his assessment of his loss at $500 per week was not questioned in cross-examination. In the circumstances I see no error in what the learned judge did in this regard. It was submitted that the judge should, in assessing interest upon this loss, have made allowance in some way for the fact that, as the plaintiff said generally, he was receiving help from friends and in receipt of social service payments. This matter was not raised by the defendant at the trial and there is little or no evidence in relation to the matter. It is, in my opinion, sufficient to say that, whatever might be the merit of such a submission, it is not open to the defendant in the present case. The learned judge awarded the plaintiff, for the period from his return to work (December 1982) to the trial (March 1991) $50,000. His Honour arrived at this sum, the court was informed, by deducting the starting salary of the plaintiff in December 1982, approximately $190 net per week, from the sum of $347 per week to which I have referred and extending that over the period in question. This, the submission was, was wrong because at the date of the trial the plaintiff's salary was $25,500 per annum and it was to be assumed that there had been progressive increases from $12,450 to $25,500 during the period from December 1982 to March 1991. I do not think that this submission should be accepted. The sum awarded $50,000 was an approximation adopted by his Honour after taking into account factors which, I would infer, included the progressive rise in the level of his remuneration at work. It was no doubt difficult to calculate the full extent of the plaintiff's loss but, having regard to his injuries, the amount awarded was not, in my opinion, excessive. 4. Future Economic Loss: URJ THE NOMINAL DEFENDANT v CHAPMAN (Meagher JA) 5 The learned judge awarded the plaintiff "a small cushion which I assess at the sum of $5,000" - His Honour said: "Tn my opinion on the evidence it is unlikely that the plaintiff will suffer loss of income in the future which can be attributed to the subject accident." His Honour's conclusion was, I think, that the plaintiff would remain in his existing employment and that insofar as he suffered difficulties in future, it was "unlikely" that these would flow otherwise than from the tumours or other irrelevant matters. The submission was therefore that there was no basis for the award of $5,000. I do not think that this submission should be accepted. His Honour's use of the term "unlikely" does not exclude the possibility of risk of loss from the accident and the plaintiff is entitled to be compensated for that risk. The assessment of that risk was no doubt difficult but, in the context of the injuries flowing from the accident, I do not think that it was beyond the bounds of a sound discretionary judgment to assess the compensation for the risk as his Honour did. Mr Barry for the defendant made other submissions but, in general, they related to matters which do not appear to have been raised at the trial. He referred, for example, to the possibility that, because of the tumours, the plaintiff's life expectancy should be seen as less than normal and he submitted that that should affect various components of the judgment. It is possible to suspect that the tumours may have such an effect. But the matter was not, as Mr Barry concedes, raised at the trial and I do not think this Court should draw inferences in this regard against the plaintiff. In my opinion, therefore, the judgment for $344,150.44 should be set aside. There should be substituted for it a judgment arrived at by taking into account the amounts of $2459 and $6900 to which I have referred. There should therefore be judgment for $334,791.44. The judgment should operate from 28 March 1991. The plaintiff should pay the costs of the appeal and, if and insofar as it is appropriate so to order, he should have reimbursement in respect of those costs from the Suitors' Fund. Clarke JA I agree with Mahoney JA. Meagher JA I agree with Mahoney JA. Judgment set aside. Judgment of $334,791.44 substituted, to operate from 28 March 1991. Plaintiff to pay costs of the appeal and to have reimbursement from Suitors' Fund if it be appropriate so to order. COUNSEL for the Appellant: CT BARRY Counsel for the Respondent: J GLISSAN QC/A REOCH SOLICITORS for the Appellant: JA GRAY for GIO Solicitors for the Respondent: DANIEL J BREZNIAK