McKENZIE v CHADWICK INDUSTRIES PTY LTD SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CLARKE, HANDLEY JJA and SAMUELS AJA 12 AUGUST 1992, 12 August 1992 [1992] NSWCA 149 DAMAGES — QUANTUM — NO QUESTION OF PRINCIPLE Clarke JA I will ask Justice Handley to give the first judgment. HANDLEY JA: This is an appeal by the plaintiff from the assessment of his damages by Sully J. The plaintiff was injured in a work-related accident on 12 April 1985. At the time he was employed by the defendant as a roofing contractor. The accident occurred when he was working in a confined space and in the vicinity of inflammable material. Some of the material ignited, causing the plaintiff to be engulfed, suddenly and from behind, in an explosion of flame. He suffered severe burn injuries. The evidence established that these covered forty per cent of his body, partly second degree and partly third degree burns. They were on the exposed surfaces of his body, namely his hands, his arms and his legs. One of the plaintiffs early treating doctors described the burns as life-threatening. The Judge accepted this conclusion. The defendant admitted liability at the start of the trial and as I have said, the case proceeded as an assessment of the plaintiff's damages. The plaintiff was twenty eight at the time of the accident, thirty three at the time of his trial in April 1990. The Judge awarded the plaintiff $272,990.42 made up as follows:- Out of pocket expenses $16,354.42 Past loss of earning capacity $44,327.00 Interest thereon $11,501.00 Future loss of earning capacity $115,808.00 General damages $70,000.00 Interest on past general damages $15,000.00 TOTAL $272,990.42 In his appeal the plaintiff has challenged the amounts allowed by the judge for past loss of earning capacity, future loss of earning capacity and general damages. Necessarily the plaintiff's success in his challenge to any of those figures would have consequential results so far as the calculation of interest is concerned. The defendant did not cross appeal or file a notice of contention but in its submissions has drawn attention to the failure of the trial judge to allow credit for payments of workers compensation prior to judgment diminished by the appropriate allowance on the principles established in Fox v Wood. The net figure amounts to $29,171. It is not clear whether this error also affected, at least in part, the calculation of interest on past loss of earning capacity. The trial judge noted in his judgment that the plaintiff had already received the sum of $13,658 as partial compensation for his loss of earnings prior to trial, but it is possible that this figure related to receipts of sickness or unemployment benefits and not workers compensation which as I have already noted, came to a much greater figure. 2 UNREPORTED JUDGMENTS The Court's attention has also been drawn to other matters which it was submitted should be taken into account on any reassessment of the plaintiff's damages. These include an award of interest on past general damages at the rate of 7.5 per cent contrary to what was later established by the decision of the High Court in MDP (SA) Pty Ltd v Gojic (1991) 171 CLR 657; failure to allow anything for future medical expenses and certain alleged errors in the calculation of past and future economic loss. It is convenient to begin with the trial Judge's assessment of the past economic loss. He acted on undisputed evidence as to the earnings of two comparable employees of the defendant for the period down to 30 June 1989. His findings in this regard are challenged by the appellant but I have not been satisfied that his Honour fell into any error in acting on the undisputed evidence in Exhibit 4 and ignoring the disputed and unexplained material relating to the same and other employees in Exhibit O. It was also submitted that the trial Judge had erred in failing to make any proper allowance for higher earnings which the plaintiff might possibly have received, but for his injury, as a_ self-employed subcontractor. Again, however, I have not been persuaded that his Honour fell into error in this regard. It seems to me with respect that the plaintiff failed to establish any quantifiable loss on this basis and that the trial Judge was not bound to increase the award for past economic loss on the basis of some merely theoretical possibility that the plaintiff might have worked as a self-employed subcontractor, if uninjured, at some stage prior to the hearing. The appellant also challenged the refusal of the trial Judge to make any adjustment by way of increase to the comparable earnings in Exhibit 4 for the period after 30 June 1989. The plaintiff called no evidence in relation to that period and the trial Judge took the view that he should not speculate and held that the plaintiff had failed to discharge the onus of proving this ingredient in his claim for damages. I can discern no error in his Honour's approach and would not disturb that finding. His Honour's findings as to the extent of the plaintiffs partial capacity for work from the time he commenced employment with Debiens in November 1985 until the date of trial were also challenged. In my opinion this Court cannot properly disturb those findings for the period to 30 June 1989. There was evidence to support those findings and they were necessarily dependent, in part at least, on his Honour's assessment of the plaintiff and his evidence. His Honour found that by July 1989, the plaintiff was reasonably capable of full time work and that he should have accepted the offer of a full time job at Riteways in February 1990. In my opinion and with due respect, it was not reasonably open to his Honour to make those findings. The undisputed and uncontradicted evidence of Mr McConnell, the supervisor at Riteways, was that the plaintiff was a good worker, that he put in one hundred per cent like any bloke at the job, but that he had difficulties working in pantechnicons because of overheating and the restrictions in air circulation within the confined space. Mr McConnell said that on several occasions the plaintiff had asked him if he could work outside pantechnicons, because if he had to work there, his skin became irritated and he unconsciously scratched the irritated areas. Mr McConnell as far as possible, sought to accommodate the plaintiff's wishes in this regard and has rostered the plaintiff for work in other areas, as he said, to keep the harmony in the place. However, he cannot do this all the time and on occasions the plaintiff still has to work in this confined airless and hot environment. URJ McKENZIE v CHADWICK INDUSTRIES PTY LTD (Clarke JA) 3 Mr McConnell was also asked whether he noticed anything about the plaintiff's attitude if he worked three days in the one week and he said that the plaintiff became irritable at times and that very rarely had he, Mr McConnell, been able to get the plaintiff to work more than three days in a week because he gets short-tempered and loses his temper quite easily on the second and third days. He has discussed this matter with the plaintiff and Mr McConnell said that he was told by the plaintiff that he cannot handle the irritation to his body. Mr McConnell also said that the work on the job is very hot and that employees sweat profusely and that as a result, there was a high turnover of staff in this job and in the year before the trial some seventy eight casual employees had come and gone who could not handle the work on a continuing basis. The work apparently involves transferring goods onto or from a conveyor belt and that this can require employees to work at a high rate, for up to four hours at a time. Sometimes the staff have to miss lunch because there are urgent trans-shipments which have to be attended to. In the light of this evidence I am unable to accept the view taken by the trial Judge that the plaintiff could reasonably be expected to work under those arrangements and in that environment and at that pace over a five day working week. I should add that the plaintiff's own evidence, that of his de facto wife and the report by Dr Gibson, would also support the reasonableness of the plaintiff's attitude as explained to Mr McConnell. In my opinion therefore the plaintiff acted reasonably in declining to subject himself to work of that kind over a five day working week. Acting reasonably he had to attempt to mitigate both the economic and the personal effects of his injuries and in my view he was not obliged to work to the point where he experienced increased discomfort and irritability which could have had an adverse effect on his personal relations at home, with his fellow employees, and his employer. In those circumstances in my opinion this Court should substitute a finding that acting reasonably, the plaintiff could have and should have had part time earnings which would leave him with an economic loss from 1 July 1989 to the date of trial of some $200 per week. As a matter of mathematics, this results in an increased award for past economic loss of $2,280. The trial Judge deducted the plaintiffs actual earnings of $1,221 from his allowance for this period, but in my opinion this involved a double deduction because his Honour had already calculated this part of the plaintiff's damages on the basis that he could and should have earned $336 per week. His actual earnings therefore were subsumed in this figure and should not have been added to it, which was the result of this deduction made by his Honour. The trial Judge also deducted receipts of $200 per week which the plaintiff earned as a result of his part time building work for a friend. In my opinion the deduction of this amount either involved a further double deduction or should have been excluded on the basis that the plaintiff, if uninjured, could have done this work in his spare time. Accordingly, in my opinion, the allowance for this period should not be reduced because of the plaintiff's earnings from other sources. The result is that the plaintiff's damages for past economic loss should be increased by $4,000 to $48,327. 4 UNREPORTED JUDGMENTS In my opinion the Court should assess the plaintiff's future economic loss on the same basis; that subject to vicissitudes, he will have a continuing loss of $200 per week. This is somewhat more than the continuing loss of $143 per week found by the trial Judge. The trial Judge deducted twenty five per cent for vicissitudes because of his finding that the plaintiff had substantially recovered from his depression, that in the future he would be able to put the litigation behind him and had recently become motivated to fully exploit his earning capacity and undoubted skills as a result of establishing a stable domestic relationship with Miss Kim Micaere, who at the time of trial, was expecting a child to the plaintiff. In my opinion this additional deduction of ten per cent for favourable vicissitudes in the future, as assessed by his Honour, was not justified by the evidence or his Honour's findings. If a stable domestic relationship and pending parenthood could motivate the plaintiff in his injured condition to increase his earnings he would have had the same increased capacity when similarly motivated if uninjured. Accordingly in my view, no occasion arose for making this further deduction. I would therefore assess the plaintiff's future economic loss of $200 per week less the usual allowance for unfavourable vicissitudes of fifteen per cent. The calculation would result in an award on this head of damages of $183,566, an increase of $67,758. I now turn to the award of general damages. The trial Judge allowed on this head, the sum of $70,000. As I read his Honour's reasons for judgment and the evidence, it seems to me that the amount awarded fails to properly compensate the plaintiff for the constant reminder hour by hour and day by day of the effects of his injuries. This arises from the constant irritation and discomfort associated with his diminished capacity to tolerate heat and sunlight and the consequent irritation to his skin and the unconscious scratching to which the plaintiff subjects the areas which were damaged by the burns. This constant discomfort and irritation and the continuing disability and vulnerability to minor trauma to which the plaintiff is exposed, is amply demonstrated by the report of Dr Gibson, which the trial judge accepted; by the evidence of Mr McConnell, which was unchallenged and uncontradicted; and by the evidence of the plaintiff and his de facto wife. The plaintiff, who was thirty three at the date of trial, had at that stage some forty odd years of future life expectancy before him with no prospect of any improvement in the condition of the burn-damaged areas of his skin. When I come to assess the plaintiff's disabilities and discomfort arising from this condition over such a long period of time, the increased vulnerability that he has to irritation, his loss of tolerance, his short temper, the effect that this might have on his personal relations, his ability to get on with fellow employees, if he goes into his business, his customers, it seems to me that the sum of $70,000 allowed by his Honour for general damages is seriously inadequate and calls for the intervention of this Court. His Honour accepted the plaintiff's evidence as to the extent of the pain that he suffered as a result of his burns, the extent of those burns both as a percentage of the plaintiffs body and the extent to which they took the form of second and third degree burns. This establishes that a very substantial allowance should be made for past general damages and his Honour allowed $40,000 of his award of $70,000 for the past. This leaves only $30,000 of his award for the future, and in my view that was a serious underestimate. Doing the best I can, I would propose URJ McKENZIE v CHADWICK INDUSTRIES PTY LTD (Samuels AJA) 5 that general damages be increased to $90,000, with the increase being attributable to the future rather than the past. In my opinion the appeal ought to be allowed. The assessment of the plaintiff's damages made by the trial Judge should be set aside and in lieu of the amounts allowed by the trial Judge for past economic loss, future economic loss and general damages, there should be substituted respectively amounts of $48,327, $183,566 and $90,000. The defendant is entitled to credit for the net amount of workers compensation after deduction of the Fox v Wood component, that is for the $29,171 that I have already referred to. The interest on the past general damages will have to be recalculated at the rate of two per cent in accordance with the decision in MDP (SA) Pty Ltd v Gojic (1991) 171 CLR 657. It will also be necessary to recalculate interest on past loss of earning capacity in the light of the amounts received by the plaintiff for workers compensation in addition to amounts which may have been allowed for sickness and unemployment benefits. I would propose that the recalculation of the interest be left to the parties in the first instance and that they be invited to bring in short minutes to give effect to my reasons. Clarke JA I agree with the judgment delivered by Handley JA. Samuels AJA I also agree. HANDLEY JA: It will also be necessary of course to provide for the appellant to receive the costs of the appeal and the defendant if qualified, to have a certificate under the Suitors Fund Act. ORDERS 1. Appeal allowed with costs. 2. Judgment of Sully J dated 10 April 1990 set aside. 3. In lieu thereof judgment for Plaintiff for $326,076 and costs. 4. Respondent to have a certificate under the Suitors Fund Act, if qualified. Counsel for the Appellant: B GROSS QC / R GRACE Counsel for the Respondent: AJ LESLIE QC / P MORRIS Solicitors for the Appellant: GH HEALEY and CO Solicitors for the Respondent: MORAY and AGNEW