ARKLOW PTY LTD (TRADING AS CHAMPION PRESS) v TAAVAO SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MAHONEY, CLARKE and Cripps JJA 11 June 1992, 11 June 1992 [1992] NSWCA 10 COMPENSATION — PAIN AND SUFFERING — WORKERS COMPENSATION ACT 1987 — LEGAL ERROR — JUDGE'S DISCRETION IN MAKING AWARD — CORRECT APPROACH TO S67 WORKERS COMPENSATION ACT. Mahoney JA I will ask Clarke JA to deliver the first judgment. Clarke JA The respondent sustained a crush injury to his left hand at work on 11 March 1988. In due course he brought a claim for compensation against his employer who is the appellant here seeking awards under s66 and s67 of the Workers' Compensation Act 1987. So far as the amount payable under s66 was concerned the parties reached agreement at the commencement of the proceedings and an award was made. In accordance with the agreement interest was also allowed on the amount awarded under s66 and there is no complaint made to this Court in respect of the amount awarded or the interest allowed on the amount awarded under s66. The claim under s67, which in broad terms was a claim for a sum of money "by way of compensation for pain and suffering resulting from the loss", was contested. His Honour having considered all the facts allowed an amount of $30,000 and there is no suggestion that that award was vitiated by legal error. His Honour then turned to consider whether he should award interest in respect of the sum of $30,000 or any part thereof and, if so, what amount should be awarded. His determination was that interest should be allowed on the whole of the sum of $30,000 from the date of the injury to the date of trial and that that interest should be calculated at the varying rates set out in the judgment. The appeal, which is limited to errors of law, challenges the award of interest on the whole of the sum of $30,000. It is submitted by the appellant that that sum represented compensation for pain and suffering, both in relation to the period between injury and hearing and the period after the making of the award and that is inconsistent with well established authority and the settled practice of the courts in New South Wales to allow interest in respect of the latter period. It was contended therefore that the exercise by his Honour of his discretion was relatively affected by legal error insofar as he allowed interest upon that part of the award which related to pain and suffering after the date of the hearing. The respondent sought to uphold the award of interest on, I think, two bases. First, it was not correct to say that his Honour had awarded interest on compensation awarded for post hearing pain and suffering. In this respect it was submitted that his Honour's reasons, properly understood, allowed an amount of $30,000 either wholly in respect of past loss or almost wholly in that respect. 2 UNREPORTED JUDGMENTS Secondly, it was established that the exercise of a discretion to award interest was not to be subjected to a fine analysis and that it was appropriate for a trial judge to look at the matter broadly and to award such interest as in his opinion did substantial justice between the parties. In this respect reliance was placed on a passage in the judgment of the High Court in Fire and All Risks Insurance Co Ltd v Cullinan 140 CLR 427, at 432-3. The submissions required the court initially to determine what was decided by the learned trial judge. In analysing the nature of the claim for compensation made by the respondent, Egan J said: "The matters raised by the applicant and relied upon by him in support of his claim for payment under s67 can be summarised as follows. Firstly, he had severe pain on the happening of the injury and this continued throughout five painful operations and considerable physiotherapy. Secondly, he has had less intense pain but it still persists requiring the use of the analgesics. He is worried and anxious that if the present job which he has is lost, he will not be able to obtain further employment and support himself and his family." Those were essentially the matters in respect of which his Honour awarded $30,000 and it should be emphasised that his Honour included within the matters complained of the fact that there was persisting pain, albeit less intense than it had then previously been, which required the use of analgesics. When his Honour turned his attention to the claim for interest he noted that there were three High Court authorities to which reference had been made and he observed that it had been suggested before him that it was necessary to "allocate the damages under the various headings before verdict given and after verdict given". After referring to the cases and making some observations upon them, his Honour said: "Tt is my view that interest should run on s67 assessment from the date of injury. If I am in error in that in this particular case, having regard to the nature of the injury and the operative treatment undertaken immediately succeeding it, I would fix the respective amounts as being $25,000 pre-hearing and $5,000 post-hearing." This passage is not entirely clear or more precisely the first sentence is somewhat ambiguous. However, on my reading of it it expresses his Honour's conclusion that it was appropriate in this case to award interest on the whole sum of $30, 000 from the date of injury to the date of trial. On that basis the second part of the passage provides a dissection of pre-hearing and post-hearing compensation, which is expressly put forward on the basis that the initial expression of opinion might be wrong. That initial expression of opinion was, as I indicated, that it was appropriate to award interest on the whole of the sum awarded. I feel the conclusion inescapable that his Honour did conclude that part of the $30,000 represented compensation for pain and suffering suffered between the date of injury and the hearing and the remainder related to pain and suffering which would be suffered in future. I recognise that his Honour clearly allocated the greater sum to the pre-trial award but, nevertheless, he recognised in his reasons for judgment and clearly expressed the fact that the award included compensation for post and pre hearing pain and suffering. Accordingly, in my view, the first submission made by counsel should be rejected. URJ ARKLOW PTY LTD (TRADING AS CHAMPION PRESS) v TAAVAO (Clarke JA) 3 I am also of the opinion that the second submission should be rejected for although his Honour's judgment was of a discretionary nature and appeals are thereby limited to what might be broadly described as errors in principle (see House v The King, 55 CLR 499), there is, in my opinion, a clear legal error underlying his Honour's judgment. Earlier I said his Honour referred to three authorities. One was a decision of the High Court in Ruby v Marsh 132 CLR 642. In referring to that case his Honour cited a short passage from the judgment of the learned Chief Justice in which this was said: "In each case the loss is wholly suffered at the one time; in the first case at the date of death and in the second at the date of receipt of injury." Although the learned judge did not quote any more from that judgment, it is clear that the learned Chief Justice expressed the opinion that the concept of the award of damages, that is that the loss was suffered at the time of receipt of injury, should control the exercise of a discretion to award interest. The other passages from the judgments of the High Court which were quoted do no more than emphasise the breadth of the judicial discretion and the importance of not seeking to examine an award in too fine a detail. It would seem to me that his Honour's approach involved two steps: (1) that as the loss, and that is the whole loss, is suffered at the time of injury it may well be appropriate to award interest on the whole of the award for pain and suffering notwithstanding that some part of the award relates to pain and suffering which will be suffered in the future. (2) That the discretion is a broad one and that there may be reasons which would lead the Court to adopt another approach. This manner of approaching the exercise of discretion demonstrates in my opinion clear legal error. It is true that the Chief Justice did express what has been described as the conceptual approach to the award of interest which I had earlier described, see Feeney v Doolan (1977) 1 NSWLR 601 at 614. But as Reynolds J made clear in Feeney, the majority of the judges in Ruby rejected-the conceptual approach and considered it acceptable and proper to break down an award into components for the purposes of making an appropriate allowance for interest. To the extent, therefore, that the learned judge placed reliance on the dictum of the Chief Justice he was in error. Of more importance is the fact that it has been the settled practice in New South Wales, certainly since the 1980's, in common law cases to dissect an award of damages for pain and suffering between past and future for the purpose of awarding interest and to allow interest upon that section which related to the past. That practice is, as I understand it, in accordance with a line of authorities both of this Court and of the High Court. It is, perhaps, helpful to cite what was said by the High Court in Fire and All Risks Insurance Co Ltd v Callinan 140 CLR 427 at 432: "Tn the case of pain and suffering and loss of amenities it was said they too 'should have a time differential applied to them for the purpose of giving interest on damages within the terms of s721. These conclusions accurately reflect the application to the Queensland legislation of the principles enunciated by a majority of this Court in Ruby v Marsh." The approach taken by the learned trial judge runs counter to this settled practice and line of authorities. It could be supportable only if there was some basis upon which a different approach was permissible in respect of awards made under s67 of the Workers Compensation Act. In this respect his Honour seemed to have placed some reliance upon the fact that there was a ceiling for awards 4 UNREPORTED JUDGMENTS under s67 and appears to have considered that that would be a distinguishing feature. For my part, I do not think that it is a relevant distinction and for what it is worth I would note that in a number of areas of tort law there are ceilings in place in respect of awards of general damages. Be that as it may the approach demonstrated by the cases is that it is proper to allow interest only on those parts of the common law award which represent losses suffered to the date of trial and there is nothing either in s67 of the Workers Compensation Act or s19(1) of the Compensation Court Act (which is in relevantly identical terms to s94 of the Supreme Court Act) would justify taking a different approach in claims under s67 from the approach, which has the judicial imprimatur, taken in respect of claims at common law. In my respectful opinion his Honour was in error in concluding, as I am sure that he did, that it was appropriate and permissible to allow interest on post hearing general damages and his award should to that extent be set aside. I would, therefore, propose that the appeal be allowed with costs and that the respondent have a certificate under the Suitors Fund Act. The Court perhaps ought to hear some argument on the question of the form of the consequential order which should be made. Mahoney JA I agree with the orders proposed by Clarke JA and generally with his reasons. However, Mr Wynyard has informed the Court that there is a difference of view between the judges of the Compensation Court as to the construction of s67 of the Workers Compensation Act 1987 and s19 of the Compensation Court Act 1984 and I shall, for that reason and in deference to the persistence of Ms Stewart for the respondent, add some observations of my own. There are in this case and I think generally in cases of this kind two questions to be considered: first, what it was that the learned Judge did in awarding interest and, secondly, whether what he did involved appealable error. I interpolate that this case is one, as the parties are agreed, where it is necessary for the appellant to show error of law. The portion of the award against which the appeal has been directed is para4 of the award of 28 September 1990 whereby the learned judge directed that the respondent company pay interest in the sum of $30,000 at the varying rates there referred to between 11 March 1988 and 14 September 1990. The instant question is whether the learned judge in the awarding of $30,000, the sum on which interest was directed to be paid, awarded the sum by reference to, I use the phrase general, "future" (that is post judgment) pain and suffering. This problem arises because of the form of s67 and particularly s67(1) and (3) of the Workers Compensation Act. At common law when compensation is given for pain and suffering the amount is in principle assessed by reference to the actual pain and suffering concluded to have been suffered or apt to be suffered by the plaintiff, firstly, to the date of judgment and then, secondly, after judgment. The Court assesses in principle these two amounts as best it can and then awards in principle amounts appropriate for the pain and suffering for each of these periods. I do not mean by this that the court actually does or must in terms in every case do a calculation by reference to each of these steps but in principle this is the conceptual basis upon which pain and suffering is approached in common law cases. The position is somewhat different under s67. S67 provides that a worker who has suffered a relevant loss is entitled to receive from his or her employer by way of compensation for pain and suffering resulting from the loss an amount not exceeding the amount specified in money within s67 subs1. S67(3) then provides: URJ ARKLOW PTY LTD (TRADING AS CHAMPION PRESS) v TAAVAO (Cripps JA) 5 "The maximum amount of compensation under this section is payable only in a most extreme case and the amount payable in any other case shall be reasonably proportionate to that maximum amount having regard to the degree and duration of pain and suffering and the loss or losses." Because the total amount which may be awarded is artificially limited under s67(1) there is, in the sense to which I have referred in relation to the assessment of common law damages, no true evaluation of the compensation for the total pain and suffering suffered by the worker. The sum awarded under s67 is in this sense and in the sense to which I have referred a conventional sum. However, in the present case it is, in my opinion, clear that in assessing that albeit conventional sum his Honour Judge Egan took into account not merely pre judgment pain and suffering, but also post judgment pain and suffering. It was, of course, proper for him to do so. S67(7) provides that the pain and suffering for which compensation is to be given under the section includes not merely pain and suffering "suffered but also pain and suffering that is likely to be suffered" by the worker. I think it is clear from the passages to which Clarke JA has referred and generally from the judgment that his Honour in assessing the amount of $30,000 took into account both pre and post judgment pain and suffering in this sense. I come then to the second question. This question involves a consideration of whether if that was what the learned judge did, he was involved in an error of principle. The error of principle is suggested to be that he awarded interest for the post judgment pain and suffering. In my opinion, it is no error of principle so to do. It is true, as Ms Stewart has pointed out, that the terms of s19 of the Compensation Act under which interest may be awarded grant a general discretion, but in considering the exercise of the general discretion an appellate court is required to consider what were the factors taken into account in the exercise of that discretion and whether some or all of those factors lie outside the scope of the proper exercise of this discretion. This has been considered in many cases and it is not necessary to pursue the detail of them. In the present case, in my opinion, if a judge awards interest under s19 by reference to pain and suffering and to the compensation to be awarded under s67(6) and if he awards interest by reference to post judgment pain and suffering, he is involved in an error of principle. There is, in my opinion, no basis upon which interest can or should be calculated under s19 by reference to pain and suffering which being post judgment has not then been suffered. I do not mean to say by this that there may not be special cases to be dealt with in the application of s67. It may be that the sum of compensation to be awarded under s67, being of the conventional nature, may be seen to be related completely to pre judgment pain and suffering. In that case an award of interest on the total amount would be justified. I do not wish to exclude, as a matter of principle, the possibility that there may be other cases in which interest can be awarded but where as in this case the judge awarded interest by reference to pain and suffering likely to be suffered and not actually suffered, then in my opinion he was involved in an error of principle. Upon this basis, in my opinion, the award was affected by an error of law and it should be set aside in respect of the matter the subject of the appeal. Cripps JA I agree with the reasons of Clarke JA and the orders he proposes. I also agree with the observations of Mahoney JA. 6 UNREPORTED JUDGMENTS Mahoney JA The question now arises what is the form of the order? This is a matter of a limited appeal as to law. It may be that the learned judge would require to make some special kind of order in relation to interest on the amount of pain and suffering, compensation that he has awarded, it would appear sensible and I speak, subject to the observations of counsel for the parties to agree upon an order. It may well be that the judge had in mind that the $5,000 would not attract interest as the law has now indicated. If that is so, a great deal of time and money would be saved if the parties agree to an order limiting the order to $25,000. However, in the absence of agreement, this Court would have to consider, and I emphasise consider, whether it is necessary to send the matter back to the judge formally to make an appropriate order. Wynyard: The parties are agreed, if the Court sees fit to alter the amount on page 4 to $25,000 from $30,000. Mahoney JA That would be a sensible way of achieving the result. In this matter the court has, following argument, indicated its views as to the terms of para4 of the award of 28 September 1990. The question has arise as to what order the court should make as a result of the views which it has expressed. The Court has referred the parties to the possibility that it may be necessary formally to return the matter to the judge to correct the error having regard to the fact that it is agreed that this is a matter on which there is an appeal only in respect of law. However, the parties with good sense have avoided the necessity for the court considering this matter. They are agreed that the award should be amended so that in para4 the amount of $30,000 should be deleted and there should be substituted for that $25, 000. The court win make that order by consent. The order to be made would, therefore, appear to be: That the appeal is upheld and the award is varied by substituting in para4 of it for $30, 000, the $25, 000. Otherwise, the award is confirmed. The appellant should have the costs of the appeal and the respondent should, if it be appropriate, and he is otherwise entitled, have a certificate under the Suitors Fund Act. Counsel for the appellant: CJ Wynyard Solicitors for the appellant: Gadens Ridgeway Counsel for the respondent: D Stewart Solicitors for the respondent: Kencalo and Rimes