RASMUS and ANOR v GOVERNMENT INSURANCE OFFICE OF NEW SOUTH WALES SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MAHONEY AP, PRIESTLEY JA and SAMUELS AJA 6 May 1992, 22 December 1992 [1992] NSWCA 201 APPEALS ON QUANTUM — injury in road accident — defendant admits liability to two plaintiffs — one plaintiff (a company) dependent upon other plaintiff for its income — by agreement at trial, attention principally directed to company's loss as if its loss and loss of other plaintiff were in large part the same — plaintiffs' and defendant's cases on economic loss based on opposing experts' projections from primary materials not all tendered at trial — trial judge accepts neither expert in full — does not reveal his own method of arriving at figure by reference to which he arrived at judgment amounts — two significant errors of approach identified on appeal — trial judge's assessment took into account reservations concerning possible overstatement of plaintiffs' cases based on demeanour of witnesses — combination of this, with lack of primary materials on economic loss make reassessment by appellate court impossible on any proper basis — new trials ordered of the cases of each plaintiff. Mahoney JA I agree with the judgment of Priestley JA which I have had the privilege of reading. This is a case in which it is desirable that the litigation be brought to an end as soon as may be. The parties have not concurred in asking the Court to reassess the damages without a further hearing. They are entitled to take that course and, having regard to the difficulties of reassessment, they are not to be criticised because they have not been able to agree upon the reassessment. I have considered whether, notwithstanding that there is no common agreement to that end, the Court can yet undertake such a reassessment. Unfortunately, I do not think that it would be proper for it to do so. The circumstances have been outlined in the judgment of Priestley JA. It may have been possible for the Court to reassess the damages if the parties had agreed upon the principles and the facts upon which the reassessment should be made. But, for reasons which are understandable, there has been no such agreement. Therefore, I agree that the reassessment must be undertaken in the context of a new trial. It may be that, in the light of the views expressed by Priestley JA, the parties can come to an agreement as to the amount of damages which should be awarded. His Honour has referred to the basis upon which the assessment by this Court would be undertaken and has indicated the parameters of the matters as to which there is uncertainty affecting the quantification of the damages. It may be that the parties will feel able, by agreement, to resolve these uncertainties and accordingly to arrive at an agreed sum. But, in the absence of such agreement, there should, in my opinion, be a new trial. I agree with the orders proposed by Priestley JA. Priestley JA The accident, and claims for damages. Mrs Rasmus was injured on 22August 1985 when she was knocked down by a motor car while walking across a road in a pedestrian crossing. The accident was the fault of the driver of the car and the Government Insurance Office became liable to pay the damages it caused. 2 UNREPORTED JUDGMENTS Mrs Rasmus was an active business woman when the accident happened. She and her husband worked for a company whose name I will shorten to Nutri-Metics. Although Mr and Mrs Rasmus were paid directly by Nutri-Metics, they regarded their earnings as belonging to Rasmus Enterprises Pty Ltd, their family company; all receipts from Nutri-Metics were banked to their company's account, and all business expenses paid out of its account. In due course, both she and the company claimed for damages in the Supreme Court. Liability was admitted in both cases, which were heard together. The calculation of the damage suffered by Mrs Rasmus personally, particularly the economic component of that damage, and of the damage suffered by the company was complicated principally by three matters: Mrs Rasmus was born on 16 November 1918, so at the time of the accident, she was approaching sixty-seven; two years before the accident she had suffered from viral pneumonia and its complications which stopped her working for about six months; and after the accident she had suffered further ill health, including a mild stroke in December 1988, which, when the damages claims came to court, was held not to have been shown to be related to the accident. The damages awarded at first instance: appeal. The cases were heard by Smart J on 27 and 28 February and 18 and 19 June 1990. They appear to have been carefully conducted on behalf of both plaintiffs and defendant. In extensive reasons published 31 May 1991 Smart J set out in detail the facts he found and the conclusions he reached. He assessed Mrs Rasmus's claim as follows: Out-of-pocket expenses (agreed) 7,331.22 Interest on out-of-pocket expenses (agreed) 1,282.50 Medication 280.00 Loss of earning capacity 5,000.00 Domestic, nursing and other assistance 12,600.00 General damages 45,000.00 71,493.72 He assessed the company's claim as follows: Past economic loss 39,160.00 Interest on past loss 24.409.00 Future losses 8,000.00 71,569.00 Both Mrs Rasmus and the company appealed, saying the judge had made mistakes causing a significant inadequacy in the damages he awarded. The factual framework found by the trial judge. Nutri-Metics uses people, usually women, or husband and wife pairs, to sell health and beauty products, based on health and nutrition, directly to purchasers, usually women. Mrs Rasmus became a consultant to Nutri-Metics in November 1968. A consultant is a person who sells the company's products. UAABMUS and ANOR v GOVERNMENT INSURANCE OFFICE OF NEW SOUTH WALES (Priestley JA) A consultant successful both in selling and in introducing others to the company who also sell can become a District Director. Mrs Rasmus reached this position within months after commencing as a consultant. Being a District Director meant that she still sold directly herself but also had to motivate and inspire consultants in her district and keep introducing new consultants to the company. As District Director she received a bonus calculated by reference to the earnings of the persons in her group. In 1969 she became a Regional Director and in the early 1970s Senior Regional Director. As a Senior Regional Director, her remuneration was made up of 1. commission on her personal sales, 2. the bonuses she received based on the sales in her region of her group of "Consultants", "District Directors" and "Regional Directors", 3. "Overrides" which were based on the monthly sales levels in the sales regions of other Senior Regional Directors, these only being payable to any Senior Regional Director when that Senior Regional Director's region achieved its monthly sales target, and 4. income from Nutri-Metics operations in New Zealand. (At the hearing, 1. and 2. were usually dealt with together as "bonuses"'.) In addition to direct cash remuneration she received other benefits. Because sales reached a certain level she was given the use of a new car each two years. When in any year those beneath her reached certain quotas she was entitled to an overseas trip to a business seminar run by the company referable to that year. She reached the necessary targets for, and went to an overseas seminar nearly every year from 1969 to the year she had viral pneumonia. She had qualified for and was looking forward to the 1985 seminar when she suffered her accident a few weeks before it. Not long after Mrs Rasmus began working for Nutri-Metics her husband retired from his job with Caltex and became one of a pair with her in her work. Their home was their business headquarters. The trial judge made the following findings concerning Mr Rasmus. He worked as part of a husband and wife team with Mrs Rasmus. Nutri-Metics liked its consultants, directors etc to work in this way. It was part of the company's policy to encourage husbands to attend the company's seminars. A good deal of their business was done on the telephone. Mr Rasmus took telephone calls and noted orders. He knew enough about the marketing plan to speak in a preliminary way to callers asking about that. He sometimes delivered goods. He attended to the banking and the accounts. The salary he drew and the benefits he received from Rasmus Enterprises Pty Ltd were the same as those of his wife. Smart J found that the pair were an effective business unit and that Mrs Rasmus would have been much less effective without him. He died in March 1989. The injuries suffered by Mrs Rasmus when she was knocked down by the car were a fracture of the right temporal bone, intra cranial-damage and a fractured right clavicle. The temporal fracture was very extensive, extending into the skull base. She suffered post traumatic amnesia and confusion, severe headache and a left extensor plantar response. Subsequent symptoms included moderate deafness, dizziness and complaints of poor short-term memory and concentration. The trial judge, who saw Mrs Rasmus give evidence for more than three hours, and who considered the very full medical evidence in detail, made a number of findings of fact about her. Mrs Rasmus impressed him as a lady of above average intelligence. He was unable to reach a concluded view on the claim made in her 4 UNREPORTED JUDGMENTS case that she had suffered organic brain damage. He thought she may have suffered such damage but in view of the difference between the experts on the matter he did not think a definite conclusion could be reached. Any intellectual impairment was minor. The judge found that she had been a driving, successful business woman, living at a considerable pace and very busy. A direct consequence of the accident was that she would not be able to continue as formerly in both her business and personal life. Even uninjured, the judge did not think she could have continued indefinitely at her pre-accident level of activity. At the time of the trial she was still a shrewd lady. In court she was immaculately groomed and showed a keen fashion sense. She was both very well dressed and well spoken. She was able to follow her case closely and be acutely aware of what was important in it. Notwithstanding his findings of her ability at the time of the trial, the judge summarised the effect of the accident on her as follows: "There is no doubt that Mrs Rasmus suffered a nasty head injury and has had a bad period with her shoulder and some residual problems from the shoulder injury. She has suffered by way of headaches and pain. The accident has seriously disrupted her personal life and her business life. Her confidence is gone. She has lost much of her independence and is now apprehensive of cars and traffic." At a later point in his reasons Smart J added that Mrs Rasmus had lost some of her former capacity, had ceased to be a top class saleswoman and group organiser, was no longer gregarious, was not able to go to overseas seminars and was no longer driving a motor car, although she was still hoping that later she would be able to. The challenge to Smart J's findings on economic loss. The two cases were conducted by the parties on the footing, which was adopted by Smart J, that while Mr Rasmus was alive he and his wife fully controlled their family company and that after he died Mrs Rasmus alone was in full control; as all remuneration she received from Nutri-Metics went into the company and as, in the judge's view, she would cause the company's funds to be dealt with in the most advantageous way to herself, the realistic way of approaching the economic losses of the company and herself would be to look first to see what the company lost because of the accident and to treat that as substantially what was lost by both plaintiffs. This approach may seem somewhat rough and ready, but it was practical. It allowed many legal problems to be left on one side. The parties appear in the end to have asked Smart J to adopt it, which he did. It was not questioned in the appeal. I emphasise this matter because it explains why I make no further reference to a number of questions which would otherwise have had to be dealt with. The plaintiffs submitted that the figures arrived at by the trial judge for economic loss both for the period from accident to trial and the period after trial were demonstrably wrong. The figure for past economic loss, ($39,160) was made up of what Smart J described as loss of bonuses $32,000 and loss of New Zealand income $7,160. There was no complaint concerning the latter item. It seems that the $32,000 figure represented Smart J's conclusion in response to the claim for loss to 30 June 1990 (see at 28 and 38 of his reasons) flowing from lost commissions, bonuses and overrides. Smart J arrived at the $32,000 figure after considering evidence from accountants on both sides, Mr Daniels for the plaintiff and Mr Furzer for the defendant. The two accountants had followed different approaches. Mr Daniels' approach to economic loss. UAABMUS and ANOR v GOVERNMENT INSURANCE OFFICE OF NEW SOUTH WALES (Priestley JA) Mr Daniels in fact said in his written report that having regard to the complex nature of his task he had chosen to use three approaches in trying to quantify the plaintiffs' economic loss. He called these Approaches No 1, No 2A and No 2B. He himself thought Approach 2A was the best one, and at the hearing it was the one of his three upon which attention was focussed. Approach 2A involved, as described by Mr Daniels in his report, "the projection of the Plaintiffs' income from the date of the accident to 30 June 1993 on the basis of known (ie to February 1990) historical sales price increases and historical volume growth. This income is then compared to actual income to assess the past and future economic loss. This approach involves a monthly assessment of loss because of the significance of monthly sales targets. With this approach we have projected both future sales increases and future sales target increases based on historical rates of increase of prices and targets." Mr Daniels assumed that outgoings would have been substantially the same whether Mrs Rasmus had been injured or not. He thus needed only to consider the effect of her injury upon income. Although this assumption is obviously a rather broad one, no major criticism seems to have been directed to it at the trial, and Smart J did not question it. Mr Daniels closed his month by month approach at 30 June 1993 because at that date Mrs Rasmus would be approaching seventy-five. In his view the assumption that she would work till that age gave recognition to information with which he had been provided as to her previous energy and vitality, her mother's life span, and her pre-accident intentions concerning continuing to work. Other matters were taken into account in arriving at the month by month figures of estimated loss. It was assumed that Mrs Rasmus's income history prior to July 1983, that is prior to her being disabled by pneumonia for a significant period, provided the most reliable indication of her usual earning capacity. Her income history in the interval between her suffering from pneumonia and her injury in the accident was not considered reliable as a basis for analysis or projection. In arriving at the future economic loss Mr Daniels used a discount rate of five per cent. Income tax was also allowed for, using the relevant historical corporate tax rates and assuming the tax rate current at the date of his report would apply in respect of future losses. In projecting future sales increases Mr Daniels used a figure for annual increase of five per cent. He had actually worked out a volume growth rate of 7.8 per cent by comparing periods 1 January 1982 to 31 July 1982 with | January 1983 to 31 July 1983. He thought it appropriate to reduce this to five per cent having regard to Mrs Rasmus's age. Mr Daniels' Approach 2A showed a loss of income (before tax) to 30 June 1993 of $337,000, $194,000 being past and $143,000 being future. On an after tax basis these figures reduced to $103,000 for the past and $87,000 for the future. On Mr Daniels' calculations, overrides would probably not be earned from July 1988. Smart J's criticism of Mr Daniels' estimates. Mr Daniels' Approach 2A involved calculating what the income would have been month by month but for Mrs Rasmus's accident and comparing it with the actual month by month income. The income consisted of overrides, bonuses and New Zealand commissions. Smart J does not appear to have been critical of Mr Daniels' basic method, but said he did not agree that the 1983 figures were the correct starting point. In his view the starting point should have been the sales figures at the time of the accident, August 1985. He also thought that the yearly 6 UNREPORTED JUDGMENTS increase in sales volume would not have exceeded four per cent, and that the date to which the loss should be calculated was earlier than 30 June 1993. These three factors used by Mr Daniels in Approach 2A were specifically criticised by Smart J. The criticisms applied to the calculation of both overrides and bonuses. In regard to overrides, Smart J reached the conclusion that none would have been earned from September 1985, even if there had been no accident in August. Although he did not say so in so many words, from Smart J's discussion of this matter at 34-36 of his reasons I think it a reasonable inference he thought that conclusion followed from use of Mr Daniels' method. if instead of taking a starting point of 1983 and a yearly increase in sales volume of five per cent, a starting point of September 1985 and a yearly increase of four per cent were used. In regard to bonuses, Smart J spelt out the same criticisms with greater specificity. He turned to Appendix II to Mr Daniels' report. This contained the Approach 2A calculations. Mr Daniels had calculated what the September 1985 monthly sales figure would then have been by taking the average monthly sales figure from the year ending 30 June 1983 and adjusting it by five per cent per annum to take in increased prices and volume of sales. The figure thus obtained was $38,144. The actual sales figure for September was $19,510. Mr Daniels therefore deduced that the fall in sales figures due to the accident was the difference, $18,634. (These figures are on p 3 of Appendix II.) He then increased the $38,144 figure month by month by what he calculated as the appropriate proportions to reflect increases in volume of sales and of prices, compared that monthly figure with the actual figure for the month, and took the bonus rate (5.7%) upon the difference as the gross profit loss consequent upon the August 1985 accident. I infer that the three matters Smart J mentioned, and the consequences of substituting what he thought were the correct inputs to be assumed, were the main matters he had in mind in saying that Mr Daniels' calculations produced results which he thought were excessive. In other words, I infer that had Mr Daniels' Approach 2A been applied, using as data projected monthly sales figures based on the twelve months experience up to August or September 1985, using a four per cent figure thereafter for annual sales increase, and taking the closing date as June 1990, Smart J would have accepted the result as a reasonable approximation of loss of bonuses. Smart J's criticism of Mr Furzer's estimates. On the other hand, Smart J appears to have been more dismissive of Mr Furzer's calculations. He said he had considered the figures advanced by him in his reports and his evidence but had not been attracted to follow his approach, although he had accepted some of his points. In his view the results suggested by Mr Furzer did not adequately recompense the company. Smart J's method. If I have followed Smart J's reasoning correctly to this point, he would, if he had the material in readily useable form, have been disposed to apply Mr Daniels' Approach 2A method, using the different input he had indicated, as a suitable one for calculating income loss. However, the monthly sales figures which Mr Daniels had obtained from materials supplied by the plaintiffs were only reproduced in his schedules from September 1985. So far as I can see, no monthly figures for sales earlier than that date were put in evidence. The average of the monthly figures to June 1983 was given, but because of the assumptions adopted by Mr Daniels he did not need to refer to, and did not include, either the details or an average of the monthly figures from June 1983 to September 1985, UAABMUS and ANOR v GOVERNMENT INSURANCE OFFICE OF NEW SOUTH WALES (Priestley JA) the latter month being the first for which Appendix II records actual monthly sales. Smart J himself remarked that he did not have the actual sales for the six months before September 1985, saying that they "may have enabled useful comparisons to be made". However, having drawn to attention the absence of figures necessary to enable him to apply Mr Daniels' method on the basis which he thought appropriate, and having apparently rejected Mr Furzer's approach altogether, Smart J then arrived at his $32,000 figure without giving any checkable indication of how he did it. This is plain from the following passage: "There are many matters which are difficult to measure and I have been unable to find amongst the materials a satisfactory way to assess in a precise fashion the loss which the company has suffered. If the actual sales figures for the 12 month period of September 1985 to August 1986, adjusted for price increases only, are taken, they total $301,535 and average $25,127.916 per month. However, there are problems. The input of Mrs Brady and the others [persons helping Mrs Rasmus] would have been significant in keeping the sales up. It is hard to say when the effects of the accident to Mrs Rasmus were felt. I do not have the actual sales of the company for the six months prior to September 1985. They may have enabled useful comparisons to be made. In respect of the period to date I propose to award the company the net figure of $32,000 on account of bonuses probably lost. This is the best assessment I can made after considering the many factors involved, including the bonus rate of 5.7%." A principal problem in the appeal is that Smart J gave sound reasons for criticising the results reached by the expert witnesses on the question of economic loss, but then did not reveal how he reached his own. Smart J's conclusion on overrides. In the part of his reasons where he indicated the starting point should not be the 1983 figures but the time when Mrs Rasmus was injured, because at that stage the business was being rebuilt from a low point which was not the defendant's responsibility (a view with which I agree), Smart J said: "As mentioned, there would have been no overrides on Mr Daniels' approach from July 1988. In my opinion, there would probably have been no overrides between 1 September 1985 and 30 June 1988 even if the accident had not happened. The business would not have been rebuilt to the stage where overrides were payable. I am also of the view that it is probable that there would have been some increase in business expenses if Mrs Rasmus had been able to embark upon a vigorous recruiting and retraining programme. There was the possibility of the company earning some overrides in the period 1 July 1985-30 June 1988. The rebuilding of the business may have proceeded better than I think it would have. As a result of the August 1985 accident to Mrs Rasmus the company effectively lost the opportunity to rebuild and her skills and efforts in retaining all existing business. However, as I am dealing with past economic loss I am not entitled to make an allowance for the possibilities I have mentioned. I have to deal with the probabilities. I am not satisfied on the balance of probabilities that there was a loss of overrides." First criticism of overrides conclusion. The foregoing passage was criticised in argument in the appeal because it was said to be an error of law to make no allowance for the lost possibilities. In my opinion this criticism was well founded. The High Court dealt with the point in Malec v JC Hutton Pty Ltd (1990) 169 CLR 638. There, Deane, Gaudron and McHugh JJ in joint reasons said 8 UNREPORTED JUDGMENTS "in respect of events which have or have not occurred, damages are assessed on an all or nothing approach. But in the case of an event which it is alleged would or would not have occurred, or might or might not yet occur, the approach of the court is different... If the law is to take account of future or hypothetical events in assessing damages, it can only do so in terms of the degree of probability of those events occurring... The court assesses the degree of probability that an event would have occurred, or might occur, and adjusts its award of damages to reflect the degree of probability... The approach is the same whether it is alleged that the event would have occurred before or might occur after the assessment of damages takes place. " (at 643) Their Honours made it clear that in assessing the degree of probability what was being considered was the chance of the occurrence of a particular event and that the range of probability to be considered was very broad, from say, one per cent, to say, ninety-nine per cent. On this approach Smart J was bound to allow some amount for the loss of the chance of overrides. In the appeal, counsel for the defendant sought to resist this result, but realistically recognising his difficulties submitted that if the court were against him on this point, the amount which should have been allowed by the trial judge was in the order of $10,000. The Problem of estimating economic loss. The plaintiffs relied both on Smart J's not having explained how he reached his $32,000 figure and also on the point made in the last paragraph. They also made a general complaint about the figure Smart J arrived at. That figure is not, they say, significantly different from the figure derived from Mr Furzer's approach. It is submitted that this must demonstrate some error on the part of the judge since he had plainly stated that that approach did not in his opinion adequately recompense the company. The problem created by the fact that the trial judge did not indicate how he arrived at the figure of $32,000, becomes more serious when taken together with some features of the evidence. The competing cases on the issue of economic loss put before the court through Mr Daniels and Mr Furzer were supported by written reports by each man (which were put in evidence) and their oral evidence. Their written reports were based on information and documents of account supplied to them, parts of which were reproduced in or deducible from their written reports. The materials from which they worked however were not themselves put in evidence. Each man was accepted as fully qualified to give estimates of the likely economic loss following the accident and based on the available figures. The method used by Mr Furzer was different from Mr Daniels' preferred method. Mr Furzer took the income tax returns of Rasmus Enterprises Pty Ltd for the years ended 30 June 1982 to 30 June 1986 and Mrs Rasmus's income tax returns for the years ended 30 June 1983 to 30 June 1986 and from them prepared schedules summarising income and operating expenses and analysing them in various ways. In his first report he only estimated the loss in respect of the 1986 tax year saying that losses for later years could not be quantified without personal or corporate income tax returns for the later years. Subsequently he was given materials which enabled him to take his estimates up to and including the 1989 tax year. He made no reference to the distinction between overrides and bonuses. The method used by Mr Daniels for estimating what the plaintiffs' income would have been had Mrs Rasmus not been injured is in my opinion more precise and more realistic than that subsumed in Mr Furzer's method. This is because it takes into account what actually happened, and what was likely to happen in the UAABMUS and ANOR v GOVERNMENT INSURANCE OFFICE OF NEW SOUTH WALES (Priestley JA) future (that is post trial) in regard to the prices of Nutri-Metics products and the actual conditions that had to be fulfilled to earn the various types of commission Nutri-Metics paid to Mr and Mrs Rasmus. It would therefore have been desirable for this court to have applied Mr Daniels' methods, using what it thought to be the appropriate factual input, as a way of checking the result reached by Smart J. However, not all the information necessary to enable the method to be used is available in the appeal papers. In particular, some of the primary materials used by Messrs Daniels and Furzer were not tendered at the hearing. What seems to have happened is that each side was relying on acceptance of its expert's opinion, the material for attempting an independent approach along the lines the court might think best was not all tendered in evidence at the trial, but the judge accepted neither expert's estimate, and this court is therefore hampered in any calculations it might wish to make by lack of some relevant data. Notwithstanding the difficulties, I thought the available materials should be used in an effort to form an opinion of the reasonableness of the sum of $32,000 arrived at by Smart J. This effort drew attention to some data in Mr Daniels' report of 23 February 1990 which, if it would be proper for this court to act on them, I at first thought might enable approximations to be made of the result Mr Daniels would have reached by his Approach 2A had he used the assumptions in applying that approach which Smart J thought were the appropriate ones. These data appear in the report as Appendix I, referable to Approach 1. Approach | is described in the report as follows: "With this approach we have assumed the probable number of months per year Mrs Rasmus would have achieved target and hence received overrides, but for the accident. Assumptions (i) Mrs Rasmus' override earning history was determined to be 8 to 9 months per year. This was arrived at upon review of the results for the three years ended 30 June 1982 to 1984 which includes the period of illness. In the 12 months ended 30 June 1985, overrides were received in only 5 months with the 1985, and to a lesser extent 1984, override earnings seriously impacted by a 60% increase in sales target in April 1984. Allowing for significant increases in targets in recent years but also allowing for selling price increases, we have assumed that Mrs Rasmus would have been able to achieve overrides for at least 4 months of each year subsequent to the accident. (ii) Accordingly, we extracted actual available override amounts to December 1989, calculated a monthly average override, and multiplied that average override amount for 4 months of the year. Override estimates were made for the period January 1990 to June 1993 based on previous average increases. With this relatively simple approach we have elected to, initially at least, not assess the impact on the bonus income loss, as such an assessment would unduly complicate the method. We note that the exclusion of any such allowance thereby will understate the loss calculated by this method. Results On the basis of this approach, the schedule at Appendix I reflects a loss of income of $232,000 (overrides only), being $99,000 past economic loss and $133,000 future economic loss. On an after tax basis this represents a loss of income of $137,000 being $55,000 past economic loss and $82,000 future economic loss." 10 UNREPORTED JUDGMENTS Although stated under the heading "Assumptions", what appears to be actual information is given in the course of explaining this approach, to the effect that in the twelve months ended 30 June 1985 overrides were received in five months. That financial year included the period when Mrs Rasmus was laid low by pneumonia, which apparently put her out of action from July to the end of December 1984. If the statement that overrides were received in five months of that financial year is a factual one, then it would seem a fair year to take as the starting point for calculation, particularly as it was during it that the worst effects on the business would have been felt from the sixty per cent increase in the sales target to be reached as entitlement to overrides, which came into operation in April 1984. Further, if in that bad year five overrides were received, it would seem, at the least, reasonable to assume, as Mr Daniels did, that the business as at August 1985 when the accident happened was operating at a level where overrides in four months of the following year and some later years, would be earned. Override oversight? The information in Appendix I could be of considerable significance in this case. If five overrides were earned in the tax year ending 30 June 1985, the inference would be very strong that the business, had Mrs Rasmus not been injured, was likely to earn overrides in subsequent years. The 1985 overrides information in Appendix I was not mentioned in argument in the initial hearing of the appeal, and does not appear to have been dealt with at first instance. This might have been because it was known to the parties not to have been factual, or because of the way the case was conducted. At the trial, attention was focussed on the contest between Mr Daniels' Approach 2A and Mr Furzer's approach. It seems likely that counsel were directing their attention to supporting or trying to demolish those two approaches and were doing so by reference to the data in the accountants' reports specifically relating to those two approaches. It does not appear that there was any attempt on the plaintiffs' part ever to rely on or even refer to Approach | as a possible method for the judge to consider; hence, counsel would never have had any need to draw the judge's attention to Appendix I. Nevertheless, if the information about overrides in the 1985 tax year was factual it was of importance once the trial judge disagreed with the three earlier mentioned assumptions by Mr Daniels in his Approach 2A. It seems clear Smart J did not have in mind the information in Appendix A when he came to his conclusions about overrides. Second criticism of overrides conclusion. Thus, a second criticism of Smart J's conclusions about overrides would follow from his not having taken account of the statement in Appendix I to Mr Daniels' Approach 1| that five overrides were earned in the year ending 30 June 1985, if that statement was in truth factual. The potential significance of this only appeared when, after judgment was reserved, it became necessary to see if there was any way to test the figure of $32,000 arrived at by Smart J for past economic loss. Once the possible importance of the point was recognised, the parties were invited to make written submissions on the questions, (1) whether the court could take the statement as factual, (2) if so what the consequences would be for the view reached by Smart J that no further overrides would have been earned after August 1985, and (3) some related matters. The defendant submitted that the figures could not be safely treated by the court as factual. Three reasons were given for this, which have some weight. However, they did not convince me that the words used by Mr Daniels in UAABMUS and ANOR v GOVERNMENT INSURANCE OFFICE OF NEW SOUTH WALES (Priestley JA) describing his Approach I, "In the twelve months ended 30 June 1985 overrides were received in only five months", did not mean what they said. Taken in their overall context, I cannot see any other plausible reading of them than that they were stating facts. In light of this conclusion, the question arose whether it was possible to calculate economic loss using Mr Daniels' Approach 2A but, in doing so, to substitute for those of his assumptions rejected by the judge, those which the judge thought were appropriate, namely the 1985 starting point, the yearly increase in sales volume of four per cent and the cut off date of June 1990. Such a calculation would attempt to arrive at figures for both bonuses and also overrides on the basis of its being the fact that in the 1985 tax year five monthly overrides were earned. The only method that seemed possible for this purpose necessarily involved extrapolation from the material in Appendix I concerning overrides for the year ending 30 June 1985. Further hearing. Before embarking on this calculation the appeal was listed for further hearing to get the parties' submissions on what the figures for the various heads of damage should be, if the court accepted that the information in Mr Daniels' report about overrides in five months in the year ending 30 June 1985 as factually reliable. At the further hearing, on 15 December 1992, counsel for the defendant submitted that no satisfactory reassessment could be made by the court, even with the help of the further material. Counsel for the plaintiffs, with commendable frankness, said that there were dangers involved in a reassessment using the 1985 overrides information as a basis for estimates. It is unnecessary to detail these; they confirmed doubts I already had about the availability of such a method. Counsel for the plaintiffs nevertheless still urged the court that if the point came where the court must choose between a reassessment and a new trial then the choice should be reassessment. However, the only basis he could suggest for this was that the court should choose some appropriate figure between those proposed by Mr Daniels and Mr Furzer. Insufficient data for recalculation using Mr Daniels' Approach 2A. Unfortunately, even with the further information from Appendix I, I have not found sufficient data in the materials available to the court to be able to make even a modestly satisfying approximate calculation. In regard to overrides, such of the data which underlay Mr Daniels' elaborate appendices as comprised the figures necessary for a recalculation along the lines which seem to me to be the appropriate ones are neither in evidence, nor deducible (by me at any rate) from the appendices themselves. Similarly in regard to bonuses. For both these aspects of the recalculation more detail than is available of the monthly figures in the twelve or fifteen months preceding Mrs Rasmus's August 1985 accident is required in order to do the recalculation on any satisfactory basis. Can any recalculation be done? The position seems to me to be this. In my opinion Smart J was wrong in some of the criticisms he made of Mr Daniels' evidence; he was also wrong in two respects adverse to the plaintiffs concerning the possibilities of overrides being earned. Since he did not reveal how he arrived at the figure of $32,000 for past economic loss (excluding the New Zealand commissions) it is impossible to form an opinion about the reliability of that figure. It seems clear however that had he not made what in my respectful opinion were the errors I have mentioned his 12 UNREPORTED JUDGMENTS calculation of economic loss must have been significantly higher than it was. At the very least, some amount would have to be added to that figure in regard to the possibility of overrides being earned. I should perhaps mention at this point that the missing data which in my opinion would be relevant to an Approach 2A recalculation appear to have been available at the trial, but were not tendered by the plaintiffs. It would follow that any untoward consequences from the present unavailability of the information would have to be borne by the plaintiffs. A further matter is that on the basis that five overrides were earned in the year ending 30 June 1985 and the trial judge did not take that into account in his evaluation of the likely profitability of the business if Mrs Rasmus had not been injured, his use of a three per cent to four per cent figure for likely annual increase in sales volume also becomes questionable. Mr Daniels, who I infer must have had the 1985 figures in mind when estimating the appropriate figure for that factor, used a rate of five per cent which itself was quite heavily discounted from the actual past figures. Although the question of economic loss to 30 June 1990 was the principal matter debated in the appeal, other matters were raised on behalf of Mrs Rasmus. These concerned the amounts allowed by his Honour for future economic loss, for her loss of earning capacity and her general damages. Smart J allowed $8,000 for future economic loss because, although he was doubtful whether she would have done much work after June 1990, her decline from that date may have been slower, and from a higher figure, if she had not suffered the August 1985 accident (see p 38 of his reasons). This figure is likely to have been higher had he taken the five 1985 overrides into account. Any calculations of the future economic loss and Mrs Rasmus's loss of earning capacity could easily overlap, unless great care were taken, and in view of the way economic loss was approached, obliterating for practical purposes the distinction between Mrs Rasmus and the company, I would not have seen any real basis for disturbing the figure of $5,000 allowed by Smart J for loss of earning capacity were it not for the overrides not having been fully taken into account. However, it seems likely to me that the $5,000 figure too was influenced, at least in some degree, by the judge's gloomy view of the likelihood of recovery of the business after Mrs Rasmus's viral pneumonia. Had the position concerning the earning of overrides in the year ending 30 June 1985 been taken into account, it seems to me that Smart J must have taken a somewhat more favourable view of the prospects of the recovery of the business, and this view could well have been carried into his estimate of Mrs Rasmus's loss of earning capacity. In regard to the general damages, Smart J had indicated that he would take into account in assessing those, the loss of enjoyment of the overseas trips which Mrs Rasmus had taken regularly as a result of her successful supervising and selling activities for Nutri-Metics. A related factor would have been the provision of a new car every two years. The inclusion of these matters in the general damages figure means that it too could have been depressed by the conclusions the trial judge had arrived at in regard to the prospects of the business recovering. It is quite plain from remarks made in different parts of his reasons that Smart J was influenced in his assessment of Mrs Rasmus's general damages by the impression he gained from her in the witness box. Although he expressed his opinion politely, it seems clear enough that he thought she was to some extent UAABMUS and ANOR v GOVERNMENT INSURANCE OFFICE OF NEW SOUTH WALES (Samuels AJA) exaggerating the effect of the accident upon her. He did not indicate the extent to which the figures he assessed under the various heads of damage were influenced by his impressions of exaggeration. I mention at this point the stroke suffered by Mrs Rasmus in December 1988, merely to say that it does not appear to have been regarded as of great significance by Smart J. In view of his description of Mrs Rasmus as she appeared when giving evidence, I think the judge must have been of the view, that if the accident had not happened in August 1985, then although Mrs Rasmus should be assumed still to have later suffered the stroke, it would not have greatly interfered with her business activities. Conclusion on reassessment. The foregoing matters seem to me to make new trials unavoidable. The further information in Appendix 1 is not sufficient to supply data which, together with the other evidence, would justify a sensible estimation, even were the problems of the judge's assessment of Mrs Rasmus not involved. The same objections seem to me to apply even more strongly to the method proposed on behalf of the plaintiffs. The fact that the matter of economic loss is important in almost every aspect of the calculation of damages in the two cases, combined with the lack of information I have mentioned and the fact the court has not seen Mrs Rasmus, all put the court at such a disadvantage that it seems to me impossible to feel any real confidence that this court would reach even an approximately fair result. The result is that the court, in my opinion, should not try to do it. Because of the importance of the court's assessment of Mrs Rasmus as a witness in deciding upon the extent of some important heads of damage, I think this would be the strictly correct conclusion even if all the primary accounting materials were available. Orders. My opinion therefore is that there should be new trials of the two proceedings. In my opinion the orders in each case should be: 1. Appeal upheld. 2. Judgment set aside. 3. New trial ordered. 4. Appellants' costs of appeal and of trial to be borne by respondent. Samuels AJA I agree with Priestley JA. In each case: 1. Appeal upheld. 2. Judgment set aside. 3. New trial ordered. 4. Appellants' costs of appeal and of trial to be borne by respondent. Counsel for the Appellant: DR A MORRISON / S DIAMOND Instructed by: MICHELL SILLAR MCPHEE MEYER Counsel for the Respondent: CT BARRY / B MACRAE Instructed by: G MEADOWS, GIO OF NSW