TISDELL v FEARON SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CLARKE JA, SHELLER JA, CRIPPS JA 3 September 1992, 20 November 1992 [1992] NSWCA 253 DAMAGES — motor vehicle accident — award manifestly excessive — principles of appellate court interfering and assessing damages itself. The respondent was injured in a motor vehicle accident on 27 April 1982 and awarded $320,000 damages. The appellants appealed on the ground that the sum awarded was excessive. It was alleged the trial judge erred in awarding $50,000 for pain and suffering by misunderstanding the evidence and, in any event, the amount was excessive. It was also alleged that the awards with respect to past and future economic loss were both manifestly excessive and showed that the trial judge failed to assess properly the respondent s residual earning capacity. By notice of contention it was claimed the judgment as a whole was not erroneous and more should have been awarded for the impairment of future earning capacity. It was claimed that an incorrect discount rate was used to accommodate the accident and vicissitudes of life and that the trial judge should not have rounded off his total to take account of double compensation as there was no such doubling. Held: The trial judge had erred in favour of the appellants with respect to the award for past loss of earning capacity and in the sum awarded as interest on past economic loss. The award for general damages was manifestly excessive. There was no double compensation and the trial judge erred in rounding off his award. In light of these findings the Court was required to reassess the award. Robinson v Riley [1971] 1 NSWLR 403 Orders: 1. Appeal upheld. 2. Judgment of the learned trial judge set aside except as to costs and in lieu thereof judgment entered for the respondent/plaintiff in the amount of $288,973. 3. The respondent to pay the appellants costs of the appeal. The respondent to have a certificate under the Suitor s Fund Act 1951. Clarke JA I agree with Cripps JA. Sheller JA I have had the benefit of reading the judgment of Cripps JA And Agree with it and the orders therein proposed. Cripps JA The respondent was injured on 27 April 1982 when his motor cycle collided with a vehicle owned by the first appellant and driven by the second appellant on 8 September 1991, he was awarded $320,000 damages by Mahoney DCJ. On 4 September 1992, the appellants appealed on the ground that the amount of damages was excessive. As a result of the accident the respondent suffered the following injuries: 1. Fractured neck at the seventh cervical vertebra. 2. Chest injury. 3. Injury to the left knee resulting in a rupture of ligaments. 4. Injury to the left little finger. 5. Injury to the right ankle. 6. Injury to the left wrist. The first and third injuries were very serious. For the first two weeks after the accident, the respondent believed that by reason of his neck injury he would never walk again. He was in hospital for about three months during which time his neck was stabilised and he underwent an operation on his left knee. After his discharge, an arthroscopy was performed on his left knee by Dr Cross. The respondent s earning capacity, past and future, was significantly diminished by reason of the accident and he will require an operation for the replacement of his knee in the future. 2 UNREPORTED JUDGMENTS Mahoney DCJ on 8 August 1991 awarded him $320.000 damages made up as follows: 1. Out of pocket expenses: Past 2,100.70 Present 11,380.00 13,480.70 2. Past economic loss 32,389.66 3. Impairment of future income earning capacity 92,496.00 4. General damages Past 75,000.00 Future 75,000.00 150,000.00 5. Interest on (2) at 8.32% for 9.3 years 25 061.31 6. Interest on past general damages at 2 per cent for 13.950.00 9.3 years 327 377.67 The learned trial judge said he may have compensated the respondent twice for the same event under separate headings and that, therefore, he ought round this total off to $320,000. In particular, he was concerned that he had doubly compensated the respondent with respect to future periods he would be required to spend in hospital for knee replacement surgery. The stated grounds of appeal were that the award of $320,000 was manifestly excessive and out of all proportion to the evidence. It was alleged that the learned trial judge erred in awarding general damages in the sum of $150,000 for pain and suffering. It was claimed he made findings which demonstrated he misunderstood the evidence with respect to the respondent's pain and suffering and also that, in any event, the award was manifestly excessive. The notice of appeal alleged that the awards with respect to past and future economic loss were both manifestly excessive and that the learned trial judge failed to assess properly the respondent's residual earning capacity. There was no cross appeal. However, a notice of contention was filed. It was contended that whether or not the learned trial judge erred in any particular aspect the judgment as a whole was not an erroneous estimate of the respondent s loss. It was submitted that Mahoney DCJ should have awarded more for impairment of future earning capacity than the sum of $92,496.00. It was said that the respondent s residual earning capacity was much lower than that found by the learned trial judge and that but for the accident the respondent would have worked until the age of 65. It was submitted that, by reason of the accident, he will not work beyond 60 and therefore should have been compensated upon the basis of total loss of earning capacity between 60 and 65. It was said that the learned trial judge erred in favour of the respondent in applying a discount rate of 20 per cent to accommodate the accident and vicissitudes of life. Finally, it was alleged that the learned trial judge should not have reduced the award by $7,376.97 because on a proper understanding of the evidence and his Honour's other reasons, there was, in fact, no overlapping or double compensating. The appellants written submissions, lodged with the Court, were confined solely to the appeal ground that the amount of $150,000 for general damages was excessive. It was submitted that the learned trial judge erred in attributing to the URJ TISDELL v FEARON (Cripps JA) 3 respondent an anxiety concerning his future which he did not have with the result that the award was too high. It was submitted, in the alternative, that in any event $150.000 was manifestly excessive. On the matter coming on for hearing, the appellants added to their written submissions. They submitted that the learned trial judge erred in concluding that the present value of the respondent s loss of future earning capacity was $100 per week, the amount being overgenerous and unwarranted. It was submitted that the learned judge erred in failing to apply a discount factor of 30 per cent to accommodate the contingencies of life. The appellants did not challenge the finding that with respect to the past, the respondent's loss of earning capacity had a value of about $100 per week. However, it was alleged that compensation for future loss of earning capacity should have been based upon a finding that the value of his loss at the date of trial and continuing into the future was no more than $80 per week. It was conceded by the appellants that upon the basis adopted by the learned trial judge with respect to the award for past loss of earning capacity, the learned trial judge erred in favour of the appellants. It was conceded the appellant should have been awarded $41,548 and not the $32,389.66 referred to earlier. Further, it was conceded that the learned trial judge erred in favour of the appellants in awarding the respondent the sum of $25,061.31 as interest on past economic loss. It is conceded by the respondent that he ought to have awarded the respondent the sum of $32,148 under this head. I have already referred to the circumstance that there is no cross appeal by the respondent. However, the appellants concede that, whatever be the outcome of the appeal the respondent should not be prejudiced by the failure of the learned trial judge to have compensated him properly. What it means is that with respect to two undisputed items, the respondent has been undercompensated (in respect of past economic loss by $8,158.34 and in respect of interest on the sum for past economic loss, by $7,076.69) by $15,235.03 in all. I am of the opinion that the learned trial judge erred in awarding the sum of $150,000 for general damages - past, present and future. In my respectful opinion, the award was manifestly excessive. I am of the opinion that $100,000 was the upper limit of the range. I reject the submission that the learned trial judge erred in taking into account that the respondent would, in the future, be troubled by the prospect of serious future operations. In my opinion that finding, although somewhat colourfully expressed, was justified on the evidence. The respondent is aware that each year his knee will get worse and that eventually it have to be replaced. Having identified the error made by the learned trial judge, it is then necessary for this Court to assess the respondent's damages in accordance with well settled principles. There was little dispute about the medical evidence. The only opinion that was discarded by the learned trial judge was that of Dr Searle called on behalf of the respondent. He rejected Dr Searle's evidence upon the ground that he expressed a gloomier view of the respondent's future prospects than was warranted. I have no reason to think that the learned trial judge was wrong in his assessment. The learned trial judge, in a lengthy judgment, set out in detail the history of the respondent's convalescence and his attempts to find suitable employment. It is unnecessary for me to deal with the respondent's work history between the date of the accident and the date of trial. There is no appeal with respect to this aspect of the matter and the learned trial judge's assessment of the respondent s loss of earning capacity in the past has not been challenged. 4 UNREPORTED JUDGMENTS At the date of the accident, the respondent, then aged 18, was an apprentice fitter. By reason of his neck injury, he has had and will continue to have, pain and restriction of movement at the seventh cervical vertebra. He will continue to suffer discomfort between the shoulder blades and will be more prone to degenerative changes than he would otherwise. However, his most significant disability is from the injury to his left leg. Dr Cross, whose evidence was accepted by the learned trial judge, treated the respondent and operated on his left knee. He expressed the opinion that, by reason of the injury, the respondent had lost 25 per cent of the efficient use of his left leg. He thought that his knee would undergo osteoarthritic changes and a total knee replacement would be necessary. When that occurs, the loss of efficient use of his left Leg would have reached approximately 50 per cent. Dr Cross was of the opinion that, on current medical knowledge, the prosthesis which will be required in about twenty years time, will need to be replaced every ten years. I do not understand there to have been any real dissent, by other doctors, from the views and opinions expressed by Dr Cross otherwise than by Dr Searle whose views the learned trial judge rejected. Dr Cross' views were, generally speaking shared by doctors called on behalf of the appellants. Dr Voss for example, found the presence of arthritic changes behind the left knee cap at the time of his examination in October 1989. He thought that the effects of the injury would be to curtail severely the respondent's working capacity and that he would have difficulty in walking or standing for long periods of time, climbing ladders, scaffolding etc. The whole medical evidence shows that the respondent s working capacity has not been destroyed but it has been significantly affected. The learned judge accepted that he ought to apply the same figure, ie $100 per week, to compensate the respondent for loss of future earning capacity as he used to compensate him for loss of past earning capacity. I can see no reason why I should depart from that assessment. It was open to the learned trial judge and it is a conclusion with which I find myself in agreement. The assessment of $92,496.00 was based upon an assumption that, had the respondent not been injured, he would probably have continued working until the age of 65. The respondent submits that the trial judge erred because he failed to recognise that as a result of the operation which the respondent will, more probably than not, be required to undergo, he will probably not be able to work at all after the age of 60. He submits that he is entitled to be compensated upon the basis that for five years after the age of 60 he will be totally unfit for any form of employment. I have already said that the learned trial judge's assessment of $100 per week for loss of future earning capacity was correct. I do not think he was required to award him the sum of two totals viz the present value of $100 per week until the respondent reaches 60 and the present value of $400 per week from the age of 60 to 65. Although likely, it is not certain that the operation will take place. Most people at the age of 60 are not doing the sort of hard physical work they were doing in their 20s. Finally, the doctor's views concerning the efficacy and duration of prostheses are necessarily based on what is now known. It is not unrealistic to assume that, as with the last 20 years, the next twenty years will see an improvement in the efficiency of artificial members. It follows, therefore, that if the learned trial judge's discount for contingencies of 20 per cent is applied, he was correct in awarding the sum of $92,496 for loss of earning capacity. Both the appellants and respondent have submitted that the learned trial judge's adoption of 20 per cent was wrong. In the case of the appellants, it is submitted that the award should have been reduced by at least 30 per cent to URJ TISDELL v FEARON (Cripps JA) 5 accommodate the circumstance that unconnected with the accident, the respondent has a significant hearing disability and has sight in one eye only. On the other hand, the respondent submits that the error of the learned trial judge was to adopt the convention that, absent individual circumstances, the award should be reduced by 15 per cent. The appellants submit that there is no warrant for beginning with such a high figure and quotes passages from Luntz - Assessment of Damages, 3rd Edition - in support of his proposition that the practice is questionable. Although this Court is required to make its own assessment, I do not think we are bound to ignore the conclusions of the trial judge. In the present case, there was no debate before him concerning whether the figure of 15 per cent could be used as a base. It is clear that he had regard to the individual circumstances of the case before him. I do not think this is the case to determine whether the convention operating in New South Wales should continue. Further, the learned trial judge took account of individual circumstances and I can see no reason for departing from his discretionary assessment. It would seem to me that, with respect, the learned trial judge erred in reducing the award by $7,377.67 to take account of overlapping. I have generally adopted the approach taken by the learned trial judge. Upon that approach, there was no overlapping. What the learned trial judge did was to make an allowance for future out of pocket expenses likely to be incurred when the respondent has the operations in the future and for loss of earning during the periods he will be away from work when that happens. He had already compensated the respondent for part of that total loss by including in his general assessment of future loss of earning capacity $100 per week with respect to those periods. He then made an allowance for $300 per week (being the value at the date of trial of the respondent's earning capacity) and applied appropriate discount tables. He appeared to think that he was overcompensating the respondent with respect to the two periods of eight weeks he would be away from work when recuperating from the operations. In my opinion, he erred for two reasons. First, because, even if his general approach was correct, $7,337.67 greatly exceeded the present value of two lump sums - $2,400 to be lost twenty years hence and another $2,400 ten years after that. Secondly, and more importantly, there was no overlapping at all. At the trial the respondent was assessed as having an earning capacity of $300 per week. He had already lost the capacity or ability to earn a further $100 per week. With respect to economic loss consequent upon future operations, he was compensated not on the basis that he would lose $400 per week but that he would lose $300 per week. It would seem to me therefore, that there was no overlapping and, on any view of the matter, the respondent was entitled to an additional $7,377.67 upon the basis that the learned trial judge s assessment of future economic loss and future operations was correct, as I think it was. Upon my findings, the respondent should have received a verdict as follows: 1. Out of pocket expenses: Past $2,101 Present $11,380 $13,481.00 2. Past economic loss (and it is agreed it should be $41,548.00 adjusted) 3. Impairment for future economic earning capacity $92,496.00 4. General damages: 6 UNREPORTED JUDGMENTS Past $50,000 Future $50,000 $100,000.01 5. Interest on 2. at 8.32 per cent for 9.3 years (as $32,148.00 agreed) 6. Interest on past general damages - 2 per cent for $9.300.00 9.3 years $288,973.01 In Robinson v Riley [1971] 1 NSWLR 403, it was held that where the assessment of damages is affected by errors of principle, an appellate court should interfere and assess damages itself unless the verdict as a whole is not a totally erroneous estimate of the damage or unless the effect of the error of principle can be estimated. I do not think, in the present case there is any room for the application of the principle referred to in Robinson. Once it is accepted that general damages exceeded the range by $50,000 and that, accordingly, interest on past pain and suffering for nine years must be reduced by $4,600, the principle in Robinson could only apply if the award for future loss of earning capacity was inadequate by something in the order of $31,000 - that figure being the difference between $320,000 and the components varied by consent or as a necessary consequence of the findings I have made. For reasons which I have endeavoured to explain I think the learned trial judge's estimate of the value of loss of future income earning capacity was correct. Accordingly, I am of the opinion that the following orders should be made: 1. Appeal upheld. 2. Judgment of the learned trial judge set aside except as to costs and in lieu thereof judgment entered for the respondent/plaintiff in the amount of $288,973. 3. The respondent to pay the appellants costs of the appeal. The respondent to have a Certificate under the Suitor's Fund Act 1951. Orders: 1. Appeal upheld. 2. Judgment of the learned trial judge set aside except as to costs and in lieu thereof judgment entered for the respondent/plaintiff in the amount of $288,973. 3. The respondent to pay the appellants costs of the appeal. The respondent to have a certificate under the Suitor s Fund Act 1951. Counsel for the Plaintiffs: C Barry Solicitors for the Plaintiffs: GIO Counsel for the Defendants: G Hall QC with C Heazlewood Solicitors for the Defendants: Cohen Hyde Page and CO