GOVERNMENT INSURANCE OFFICE OF NEW SOUTH WALES v KADADI THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL KIRBY P, CLARKE and HANDLEY JJA 23 March 1992, 23 March 1992 [1992] NSWCA 85 DAMAGES — loss of economic capacity — trial judge (Urquhart DCJ) allows on basis of total incapacity to trial, and thereafter — concedes that the approach is "arbitrary" — held (Kirby P, Clarke and Handley JJA concurring): (1) The approach showed error. (2) A safer approach was to calculate the plaintiff's loss of capacity in terms of his evidence (as he was found to be an honest witness) and the medical evidence of experts (which was uncontested). (3) Upon that basis, upon a reassessment for loss of economic capacity, including partial incapacity for a time, the allowance should be reduced from $63,432.75 to $45,000 and the judgment adjusted accordingly. INTEREST — allowance of interest on Fox v Wood component — error as that component is for an obligation which only arises at the moment the judgment takes effect. Haines v Bendall (1991) 172 CLR 60 referred to. Kirby P This is an appeal from a judgment of Urquhart DCJ in the District Court. The judgment arose out of a motor vehicle accident in respect of which the appellant accepted liability to the respondent. The judgment entered by Urquhart DCJ included the following components: General damages for pain and suffering $25,000.00 Loss of earning capacity 63,432.75 Tax paid on worker's compensation of $1,345 together with interest thereon 2,286.50 Interest on economic loss 4,653.66 Agreed out-of-pocket expenses 3,371.37 $98,744.28 The appellant at the hearing today sought and obtained the leave of the Court to substitute four grounds of appeal for those originally pleaded. They were: (1) That the trial judge had erred in assessing economic loss in the sum of $63,472.75; (2) That the trial judge had erred in finding that the respondent was unfit to work up to the date of trial; (3) That the trial judge had erred in failing to take the receipt of unemployment relief into account; and (4) That the trial judge had erred in allowing interest on an amount of tax paid on periodic worker's compensation. During the course of the hearing Ground 3 was abandoned by the appellant and Ground 4 was conceded by the respondent. 2 UNREPORTED JUDGMENTS The respondent sought and obtained the leave of the Court to file a Notice of Contention. By that Notice of Contention, the respondent sought to sustain the judgment awarded to him, if necessary, upon the ground that the trial judge had erred in his failure to make proper allowance for the future loss of earning capacity of the respondent. The respondent was injured in a motor vehicle accident which occurred on 8 August 1985. At the time of the accident he was a front seat passenger and was apparently on a journey covered by the Workers' Compensation Act. He was then aged thirty-two years. In the accident he suffered a soft tissue injury to the left shoulder and arm. This recovered within a year. He also suffered a strain to his cervical spine which was the cause of symptoms for two years. However, his principal injury was a concussive head injury which resulted in traumatic labyrinthitis. The trial judge found that there was some degree of permanency to the disturbance of the respondent's balance and in respect of the tinnitus and recruitment. Recruitment is the hearing of sounds louder than they are and louder than is comfortable. The respondent had come to this country as an immigrant from the Lebanon where he was a qualified plumber. He had arrived here in April 1984, that is to say shortly before the subject accident. He spoke little English on his arrival. His qualification as a plumber in the Lebanon was not recognised in this country. He had commenced work with Bellal Developments Pty Ltd (Bellal) in July 1985. He worked as a casual. However, it appears from the evidence that, in practical reality, before the subject accident he had been performing most of the work of a plumber. That work involved work above ground level and some climbing of ladders. The incident out of which the proceedings arose occurred some five weeks after the respondent's commencement of work with Bellal. Following his injuries, the respondent was off work from the date of the accident up to the date of the trial. He agreed that he had earned small amounts by way of pocket money prior to his engagement by Bellal. However, he also agreed that Bellal was, in effect, his first job in Australia. No evidence was called at the trial from Bellal concerning either the security of the respondent's employment with that company prior to the accident or the security of that company in an industry which has been notoriously unstable in recent times. Apart from a few days of work after the accident, the respondent was basically unemployed to the trial. He received worker's compensation benefits until March 1986 when these benefits were terminated. Thereafter he received unemployment relief. He was in receipt of unemployment benefits when the hearing came before Urquhart DCJ. His Honour made a number of findings concerning the respondent's capacity to work. It is this capacity which has been the principal focus of the appeal to this Court. He said: "The plaintiff is and has been able to do the light work which he has done since the motor vehicle collision without difficulty, but his evidence is that he is not confident that the heavier work involved in plumbing, that is the climbing, bending, crouching and similar activities, could be carried out by him. In this latter regard the evidence is not entirely clear as to the reason for the plaintiff's inability to do all of his pre-accident work nor as to the endeavours which he has made to obtain employment." URGOVERNMENT INSURANCE OFFICE OF NEW SOUTH WALES v KADADI (Kirby P) 3 Urquhart DCJ also found that, at the time of the trial, there was no continuing incapacity for employment on the part of the respondent resulting from the subject accident. It is important to note what his Honour said in this regard: "Tn my view, in addition to his physical injuries, the plaintiff has suffered from an anxiety condition which has resulted in him having a lack of confidence in the attempts of all of his pre-accident work duties. Further, in my view, such condition was for a period following the motor vehicle collision causally related to his episodic dizziness. However, in more recent times, it has been directly related to the plaintiff's inability to speak English. Indeed, I am of the view that at present any inability to perform all of these duties is not related to the motor vehicle collision. In this regard, I accept that occasional dizziness will continue for a period, but I am of the view that it will be so occasional and will, when it occurs, be able to be overcome by a few moments of rest, that it is no bar to a return to the work force and to the performance of the pre-accident duties. I repeat that, in my view, it is the plaintiff's inability to speak English which causes him to search for that work which may be offered to him by friends, generally, and friends such as Mr Shaloub, in particular, rather than to seek work elsewhere. In this regard the plaintiff is in very much the same situation he was in prior to obtaining employment with Bellal." Urquhart DCJ did not, in his reasons, explain how the sum of $63,432.75 was calculated by him for the purpose of assessing the respondent's loss of earning capacity. However, it is tolerably clear, from an analysis of that sum, that it was made up by the multiplication of the pre-injury net wage being earned by the respondent ($258.25 per week) by the 245.6 weeks or 4.72 years (between the date of the accident and the date of the trial). The approach which his honour took in so calculating the nett wage which the respondent was earning at the time of injury itself involves a curiosity. Commonsense and, as I would take it, the notice which this Court may take of the inflationary trends of recent times, would have suggested that the pre-injury wage of the respondent would, had he remained in employment, have risen in conformity with the rise in wages generally. Accordingly, to compensate the respondent as his Honour apparently intended for the loss of economic capacity at no more than the wage level which he actually enjoyed at the time of injury itself involved, particularly over a period of more than four years, a significant discount in the amount of the wage loss which his Honour found the respondent was entitled to recover. Urquhart DCJ said that, in approaching the matter as he did, he had adopted an admittedly arbitrary approach. With that comment of his Honour, I agree. It is not entirely clear to me how, in his Honour's opinion, a worker could have been treated as totally incapacitated up to the date of the thereafter fully fit for work, indeed to such a point that no continuing allowance at all needed to be made for any loss of earning capacity after the trial. The magic of the trial works certain benefits in the reduction in stress and anxiety suffered by litigants. However, it is not clear in this case how the trial would have removed entirely, thereafter, the incapacity of the worker. Or how the occurrence of the trial would justify the computation of damages on a basis of total loss of earning capacity to the date of trial and nil thereafter. For the appellant, it was submitted that Urquhart DCJ had erred in his approach to compensating the respondent for his loss of economic capacity to the date of the trial. It was said that his Honour had failed to have regard to the very short pre-accident industrial history of the worker which belied the suggestion 4 UNREPORTED JUDGMENTS that he would have remained able to earn the amount which he had earned in the five weeks prior to injury. It was also said that his Honour's approach had failed to take into account the restricted pre-accident earning capacity demonstrated by the evidence and had failed to take into account what are called the "usual vicissitudes". With all of these criticisms, and with respect to his Honour, I agree. The respondent's evidence is the relevant basis for approaching the computation of his damages in a case where his evidence was accepted as truthful. That evidence was the respondent was fit for light work from about 18 months after the accident. It was at about that time that he first attempted to obtain work from his pre-injury employer. He approached the employer, but found that the work offered was beyond his capacity. The respondent also conceded in evidence that, as from about three years after the accident, he was fit for light plumbing work. The medical evidence, as I view it, does not support the assessment which was reflected in Urquhart DCJ's finding that the respondent was totally incapacitated up to the date of trial and entitled to compensation for his loss of economic capacity calculated upon that basis. This being the case, the approach which his Honour adopted was erroneous. It therefore demonstrates sufficient error to require and authorise this Court to intervene. The appellant asked the Court, having come to that conclusion, to proceed to a reassessment. The respondent did not dispute that course. In my opinion, it is entirely safe, in the primary factual findings which are carefully recorded by Urquhart DCJ, for the Court to proceed to a reassessment. believe that it should do so. In approaching the reassessment, the following matters, which were urged for the respondent, must be taken into account in calculating the true loss of economic capacity on the respondent's part. First, he spoke little or no English when he arrived to this country and when he was injured. He had an inability to communicate which diminished still further his already limited economic capacity in the general labour market following his injuries. Secondly, although the respondent was qualified as a plumber in the Lebanon, his qualifications were not recognised in this country. I infer from the evidence that he obtained his work with Bellal through his friendship with Mr Shaloub, a fellow countryman. It is difficult to say much more than this about that work because of the absence of evidence concerning the pre-injury employment in the case called for the respondent at trial. Thirdly, although there have recently been very high levels of unemployment, it is proper to say that during the time that the Court is considering here, that is to say from 1985 and thereafter, unemployment levels were much lower than they are at present. Accordingly, it might have been expected that there would have been work for a person such as the respondent even with diminished work capacity had he not been injured. That work would have extended far beyond the work which the respondent has been able to secure. Fourthly, the injuries which the respondent suffered understandably in his condition, caused him a certain degree of anxiety. As well, there was the incapacity for a time in working at heights and climbing ladders. The latter was occasioned by a concern about dizzy spells and loss of consciousness for brief periods resulting from the subject injuries and their effects. URGOVERNMENT INSURANCE OFFICE OF NEW SOUTH WALES v KADADI (Kirby P) 5 I take all of those matters into account when approaching the reassessment of the loss of economic capacity which should be allowed to the respondent in this case. Approaching the matter not on the "arbitrary" basis which Urquhart DCJ chose, but on the basis of the evidence which is before the Court, it seems to me that the proper assessment of the respondent's loss of economic capacity is to allow him his full wage loss at the rate of $258.25 per week for the 18-month period which immediately followed the accident and up to the date, or approximately the date, when he first made his own application to return to work. This is the best signal, in my view, of his own estimation of his capacity to return to work. It is a signal which is borne out by the balance of the medical evidence which is before the Court. It can safely be accepted because the trial judge found that the respondent was a truthful witness. As from that date, it seems to me that it was unrealistic to treat the respondent as entirely unfit to do any work. In my view, he assessed his own capacity correctly. Thereafter, he was to be assessed by a court compensating him for his loss of economic capacity on the basis not of full loss of capacity but on the basis of partial incapacity for work. consequently, there remains a period of three years and one month after that date up to the date of the hearing for which the respondent must be compensated on this basis. During the whole of this period, for the reasons which I have adumbrated, there was a continuing loss of capacity. It manifested itself, particularly, by an inability to perform work at heights, to climb ladders, both of which duties were included in the pre-injury duties of the respondent. The respondent's pre-injury wages were, as I have said, $258.25 net per week. However, as I have also said, those wages would have increased during the period in question. No wages of a comparable worker were satisfactorily proved. Taking a broad view, I think it is appropriate to work on a base figure of $300 per week over the whole of the ensuing three years and one month. The appropriate measure of the loss of economic capacity of the respondent during that time is that he lost fifty per cent of his capacity. I appreciate that, to use the word used by Urquhart DCJ, this estimate itself involves an element of arbitrariness. However, it is an arbitrariness which does less offence to commonsense than to fix the date of trial as a date of significance for the calculation of the loss of economic capacity. It is thus an arbitrariness which does less offence to the evidence, including that of the respondent himself. On this basis, the loss of economic capacity at the date of trial is made up to two components: $20,144 for the first eighteen months, during which the appropriate approach is to give the respondent his full loss of wages and $24,000 for the ensuing three years and one month, during which it is appropriate to treat him as enjoying half the capacity which he formerly did. This makes a total of $44,144 for loss of economic capacity to the date of trial. I would round that sum to $45,000. That is the sum which, upon reassessment, should be allowed for loss of economic capacity to the date of trial. The question then arises as to whether, as the notice of contention asserted, there was a continuing loss of economic capacity after the trial. The difficulty in the way of making allowance for that suggested head of damage is Urquhart DCJ's finding, which I have already incorporated, that there was no bar to the respondent's return to the work force and the performance of his pre-accident duties by the time of the trial. Urquhart DCJ had the advantage of seeing the 6 UNREPORTED JUDGMENTS respondent give evidence. Conventionally, this is regarded as providing his honour with material upon which to base an assessment of the respondent. This is an advantage which the Court lacks. His Honour recorded his impression that the respondent was an honest witness who did not embellish his symptoms or record non-existent symptoms. Accordingly, I must take it that his Honour approached the matter with his findings of the credibility of the respondent in mind. Yet he concluded that, notwithstanding the respondent's continuing complaints of giddiness and dizziness, he was able to return, at the time he saw him at the trial, to full employment duties. Even if I were disposed to disturb that conclusion, as I am not, I believe that it is supported by the medical evidence which was before Urquhart DCJ and is now before this Court. In particular, I refer to the medical evidence of Dr Dallas Finney who expressed himself unsatisfied concerning the economic effects of the dizziness. He pointed to the fact that the respondent was able to drive his car seemingly without impairment. There is also the evidence of Dr JH Seymour, like Dr Finney an ear, nose and throat surgeon. He also expressed the view that the disability of giddiness was minor. Faced with the expressed conclusion of the trial judge, supported by the two specialists with relevant qualifications concerning the effects of giddiness, I do not believe that this Court would be authorised to come to a view different than that expressed by the trial judge. Accordingly, I do not believe that it is appropriate, on a reassessment, to make allowance for future economic loss of capacity. The foregoing conclusion leaves two issues which were before the Court as the appeal was originally mounted. The first concerned the failure, as it was said, of Urquhart DCJ to make allowance by way of discount for the payment of unemployment relief to the respondent. This argument was hopeless, given-that it was not run at the trial. See Coulton and Ors v Holcombe and Ors (1986) 162 CLR 1, 7. That fact was ultimately recognised by counsel for the appellant. The argument was withdrawn. Therefore it does not need to be further dealt with. The final issue was a complaint by the appellant about the interest which Urquhart DCJ allowed on what is known as the Fox v Wood component of the respondent's damages. That allowance of interest was plainly misconceived. The component is provided to compensate a plaintiff at the point of judgment for a burden of repayment which would otherwise fall on a plaintiff as at that moment. The entitlement to hold the interest on that component was, I believe, ultimately abandoned by counsel for the respondent. In my view, it was properly abandoned having regard to the purpose of the provision of interest. That purpose was recently explained by the High Court of Australia in Haines v Bendall (1991) 172 CLR 60. For these reasons the following are the components which make up the reassessed entitlement of the respondent to damages: General damages, undisputed $25,000.00 Loss of earning capacity as above 45,000.00 Agreed out-of-pocket expenses 3.371.37 The Fox v Wood component (but 1,345.00 without interest) Total $74,716.37 \GROVERNMENT INSURANCE OFFICE OF NEW SOUTH WALES v KADADI (Handley JAY There remains to be calculated the amount of interest on the past economic loss less the payments of worker's compensation. This Court does not know the precise amount of the payment of worker's compensation. It will therefore be left to the parties to calculate the interest to the date of trial on the past economic loss, less that amount. The judgment will then be constituted by the sum of $74,716.37 together with the amount of interest so provided. That judgment should take effect from the date of trial. To give effect to the foregoing analysis, the orders which I propose are: (1) Appeal allowed; (2) Set aside the judgment of Urquhart DCJ dated 27 April 1990; (3) In lieu thereof, substitute as from 27 April 1990 a judgment to include the sum of $74,716.37 together with interest to be agreed. In default of agreement as to interest, liberty to both parties to apply and approach this Court for the purpose of the calculation of the interest; and (4) The costs order at trial to remain but the respondent to pay the appellant's costs on the appeal and to be entitled, if so qualified, to a certificate under the Suitors' Fund Act, 1951. O.(3) may be modified by the agreement of the parties as to interest, signified in short minute which can be handed to the Court later. Clarke JA I agree. Handley JA I also agree. KIRBY P: They are the orders of the Court. (1) Appeal allowed; (2) Set aside the judgment of Urquhart DCJ dated 27 April 1990; (3) In lieu thereof, substitute as from 27 April 1990 a judgment to include the sum of $74,716.37 together with interest to be agreed. In default of agreement as to interest, liberty to both parties to apply and approach this Court for the purpose of the calculation of the interest; and (4) The costs order at trial to remain but the respondent to pay the appellant's costs on the appeal and to be entitled, if so qualified, to a certificate under the Suitors' Fund Act, 1951. O.(3) may be modified by the agreement of the parties to interest, signified in short minutes which may be later handed to the Court. 1. Note: Subsequently short minutes were handed up which formalised 0.3. Counsel: Appellant: GR PETTY Respondent: DENNIS and CO Solicitors: Appellant: HD McLACHLAN, CHILTON and CO Respondent: DENNIS and CO