PAYET v GLEESON THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL KIRBY P, MEAGHER and HANDLEY JJA 5 November 1993, 5 November 1993 [1993] NSWCA 207 DAMAGES — personal injury — two motor vehicle accidents consolidated — long delay in prosecuting proceedings — whiplash injuries to neck- judgment $156,000 — plaintiff's evidence held unreliable- very small amounts as cushion for economic loss and future general damages — alleged inconsistencies in awards for general damages — alleged inconsistencies in awards for general damages and for economic loss — held: (by maj): No inconsistency — small economic loss sustained by factual findings — appeal dismissed. Handley JA This is an appeal by the plaintiff from an assessment of damages byMaster Malpass. The plaintiff's claims arise out of two motor vehicle accidents which occurred on 26 February 1973 and 6 June 1982. The plaintiff commenced proceedings in the District Court based upon the 1973 accident within three months of the date of the accident, but failed to prosecute those proceedings to a hearing for many years. Following the 1982 accident proceedings were commenced in the Supreme Court and, in due course, steps were taken to remove the District Court proceedings to the Supreme Court so that both actions could be heard together. However, the learned Master was, as a result, confronted with the task of assessing evidence and damages on a hearing which commenced in October 1989 arising out of one accident which occurred sixteen and a half years earlier and another accident seven and a half years earlier. In each case the plaintiff claimed to have suffered whiplash type injuries particularly to his neck. The Master awarded $30,000 general damages for the first accident and $45,000 for the second. The judgment having been given prior to the decision in M.B.P.(SA) Pty Ltd v Gogic (1991) 171 CLR 657 the Master allowed interest on the pre-trial components of these awards. For the first accident he apportioned $22,500 for past loss and $7,500 for the future. For the second accident he apportioned $22,500 for the past and $22,500 for the future. The plaintiff's case on economic loss suffered from the double handicap of his oral evidence being regarded as unreliable and not being fully accepted on the one hand, and poor records, apart from tax returns, on the other. The Master rejected the plaintiff's claim for economic loss as formulated at the trial and awarded what could only be regarded as modest amounts for the past and a cushion for the future. He awarded the sum of $7,000 for the period between 1973 and 1982, $8,000 for the period from 1982 to the date of trial and $7,500 for the future. Mr Gross' first attack on the judgment depends upon his submission that the learned Master's reasons contained internal inconsistencies which demonstrate that the case has not been properly tried according to law and that the proper result in these circumstances is that there should be an order for a new trial limited to damages. 2 UNREPORTED JUDGMENTS Mr Gross drew attention to the fact that the learned Master awarded some $30,000 of general damages for the future arising out of the two accidents, $7,500 in respect of the first and $22,500 for the second. He then contrasted the findings which underpin these awards and these awards themselves with the equivalent findings and awards for economic loss. The learned Master allowed $7,500 for future economic loss but $30,000 for future general damages. In many cases such a contrast would establish error leading to intervention by this Court. However it seems to me in the present case, properly understood, there is no such inconsistency. The evidence of economic loss presented by the plaintiff was based, in part, upon income tax returns for a partnership between himself and his wife for the tax years ended 30 June 1972 through to 1988. There was evidence that the 1989 tax return had not been lodged or prepared at the date of trial. As the Master said: "The tax returns reveal that the plaintiffs earnings in pre-accident, as well as in post-accident years, have hardly been at a level of sufficient magnitude as would be necessary to provide one with food and sustenance. His income averaged no more than $3,407 per annum, after tax, which is a weekly rate of only $65.34. The belief was formed that the family partnership could not be classified as a viable business undertaking". He later added that the evidence about the plaintiff's work activities in the partnership from the 1972 year through to the date of trial did not indicate a thriving or profitable business. There were further difficulties in the plaintiff's evidence of economic loss. The learned Master noted that his income pattern over the long period between the first accident and trial did not correspond with his evidence concerning his injuries. At some stage the plaintiff and his wife diversified into a wholesaling business involving the importation of Spanish cigars, films and cassettes. The Master was not satisfied that the plaintiff and his wife embarked upon this business because of any physical incapacity caused to the plaintiff by the first accident. He was also not satisfied that the accident had any effect on the conduct of this new business. In the end he said: "On the evidence it is not possible to identify or assess the plaintiffs loss with any precision". The finding relied upon by Mr Gross to demonstrate inconsistency was in these terms: "On balance the evidence establishes that the plaintiff has recovered from the effects of the first accident. Probably the injury from the second accident was more severe. He may not have fully recovered from this injury. It may continue for some limited time to interfere in the conduct of his future activities". This passage appears in the Master's reasons dealing with the question of economic loss. It seems to me that if the first section is read as referring to the economic "effects" of the first accident and the last sentence is read as referring to the plaintiff's future "business" activities the apparent inconsistency in the findings disappears. The context in which the passage appears supports such a reading. It is, in my view, appropriate for this Court to approach the reasons for judgment of a judicial officer with a view to reconciling if possible any apparent inconsistencies in those reasons. Immediately after the passage in question the learned Master continued: "In the circumstances, it seems appropriate to assess a global sum to compensate for the loss arising from each of the two accidents". There followed the awards for economic loss to which I have already referred. URJ PAYET v GLEESON (Handley JA) 3 In these circumstances I have not been persuaded that there are any inconsistencies in the learned Master's reasons which would warrant intervention by this Court. The second ground of attack made by Mr Gross was based upon the well known decisions in Watts v Rake (1960) 108 CLR 158 and Purkess v Crittenden (1965) 114 CLR 164. Mr Gross submitted that the learned Master, although paying lip service to these principles and referring to them at one part of his reasons, actually misapplied them. X-rays of the plaintiff's spine taken in 1973 shortly after the first accident and such x-rays taken later were in evidence. The 1973 x-rays showed some evidence of degenerative changes in the spine, but not such as were likely, at that stage, to cause the plaintiff any symptoms. The later x-rays showed progressive deterioration in the spine but the balance of the medical evidence indicated that the changes at C5-6 and C6-7 were substantially affected by the two accidents, whereas those at C4-5 were work related or constitutional in origin. The balance of the medical evidence and the Master's finding was that the plaintiff's problems were largely centred on the changes apparent in the x-rays at C5-6 and C6-7. The Master said that the wear and tear caused by the plaintiff's past tiling activities could be expected to reduce his working life as a tiler. This statement, as a statement of fact, was supported by the evidence of Dr Seaton. However, Mr Gross submitted that the finding could not support any reduction in the damages to which the plaintiff was otherwise properly entitled. The learned Master continued: "The accidents may bear some responsibility for interference with his activities for some time into the future". This is said to indicate that the learned Master was failing to follow the instruction of the High Court in Purkess v Crittenden. These passages are to be found in the middle of the Master's reasons dealing with economic loss and, if they are read as referring to the plaintiff's economic rather than his physical activities, it seems to me they are consistent with principle. Immediately before these statements the learned Master said: "In respect to the future, the plaintiff will clearly have a continuing working capacity. This includes a capacity to carry on tiling activities as well as the other business activities pursued by him in the past. The evidence indicates an increase in tiling activities in recent years, including the performance of a substantial job". That finding, that there had been an increase in the plaintiff's tiling activities in recent years, repeated an earlier finding where the Master noted that the plaintiff had agreed that he was doing more tiling work in 1988 and 1989 than he had in 1984 and 1985. The other passage to which Mr Gross referred in the Master's reasons was as follows:- "His future capacity will be affected by the pre-existing degenerative condition, and by the extent that it has been aggravated and or accelerated by the injuries sustained in each accident". This is a correct statement of fact and was not challenged as such. However, as I have said, Mr Gross relied upon this statement to demonstrate that the Master had overlooked the instruction of the High Court in Purkess v Crittenden. I do not so read this part of the reasons of the learned Master. As a statement of fact it cannot be questioned and it does not seem, on my reading of his reasons, that he reduced his awards for economic loss because of the existence of these degenerative changes and their progress over the years prior to trial. The amounts in question were awarded, as the Master said, to compensate the plaintiff for his reduced working capacity. He said: 4 UNREPORTED JUDGMENTS "Tn the light of the material put before the court, and doing the best that can be done in the circumstances, I have assessed the sum of $7,500 as the proper amount to be awarded as a cushion for the future". Bearing in mind the then recent increase in the plaintiffs tiling activities, including the performance of a substantial job, it seems to me that the award cannot be challenged successfully and the alleged disconformity with Purkess v Crittenden is not made out. The remaining ground of challenge was based upon the existence of the partnership between the plaintiff and his wife and the fact that the sole practical source of the partnership income was the personal exertion of the plaintiff himself. In these circumstances, it was submitted the whole of the partnership loss should have been treated as the personal loss of the plaintiff for purposes of the assessment of damages. However, against this alleged error of principle by the Master there has to be set off the awards of interest at commercial rates in accordance with the prevailing practice prior to Gogic. In the circumstances, Mr Gross properly and fairly conceded that any success the appellant might have in pursuing this ground of appeal would be swallowed up in any re-assessment by the reduction in the awards of interest on past general damages. Accordingly the third ground of appeal was not pressed and I need say no more about it. I would propose that the appeal and cross-appeal should be dismissed. The appeal should be dismissed with costs and there should be no order as to costs of the cross-appeal. Kirby P I have the misfortune to disagree with what has been said and the order which has been proposed. The Master allowed general damages for the first accident in the sum of $30,000. He allowed general damages for the second accident in the sum of $45,000. Self evidently these allowances reflect an acceptance by Master Malpass of a relatively serious and continuing injury in the appellant's cervical spine. They also, as it seems to me, reflect an acceptance of (a) the general thrust of the medical evidence that both of the injuries, which occasioned these proceedings, had aggravated a pre-existing degenerative condition in the appellant's cervical spine, and (b) the fact that the effects of that aggravation were likely to persist. Otherwise, why award such sums for general damages? The appellant was a migrant to this country. He was born in 1937. He was thus fifty-two years of age at trial. After completing his schooling in a general government school in Spain he was employed first as an apprentice tiler and secondly as an apprentice cook. Subsequently, he pursued work in France and in Belgium as a tiler. In 1965 he came to this country. He here obtained work as a tiler. He set up his own business as a tiler. The picture of the appellant is, therefore, one of a person engaged in a physical activity of some skill and, as I believe that the Court would be entitled to infer that it is work of a kind which, fully engaged, produces a significant remuneration. Upon such a skill and capacity for remunerative activity, a disability of the kind complained of in this case would have, potentially, a significant economic impact. It seems impossible to me to reconcile the amounts awarded by the Master for general damages (and the assumptions and conclusions which are revealed by those amounts) with the amounts awarded by him for past and future economic loss. Those amounts I can only really describe as bordering on the illusory. URJ PAYET v GLEESON (Kirby P) 5 The Master correctly found that the injury which had been suffered by the appellant (in a case which involved no dispute as to liability and was, therefore, for assessment only) was one which was likely to reduce the appellant's working life as a tiler. This seems self evident. It was likely to carry consequences for the appellant's earning activities in the future. This also seems to be self evident. Whilst there were some inconsistencies in the appellant's case, he is entitled to recover damages for the possibilities of the impact of the injuries upon him as a person who, effectively, only had his specialist labour to sell. I, therefore, accept the submission put for the appellant that there was an internal inconsistency in the Master's reasoning and computation of damages. It is one which calls for this Court to correct it. It is not necessary for the Court to reach a conclusion as to how that inconsistency occurred. However, I consider that the appellant has made out a very strong case in his suggestion to this Court that the disproportionately small amounts allowed, for loss of economic capacity, were attributable to a possible error by the Master in the application of the principles relating to the onus of proof established by the High Court of Australia in Purkess v Crittenden (1965) 114 CLR 164, and in other cases. But whether this be so or not, I have concluded that error, sufficient to warrant disturbance of the judgment, is established. I would therefore allow the appeal. The appellant said that, in such a circumstance, the Court should not proceed to re-assess but should send the matter back for re-trial. In a case of this kind, with such a melancholy chronicle of delay in the litigation, one naturally hesitates before so ordering. However, a very important strength of the case of the respondent was the adverse impression which the appellant made upon the Master. That adverse impression was related to the vagueness and uncertainty of his evidence, the inconsistencies revealed in his oral evidence and in the histories given to medical practitioners, and in the material contained in his tax returns and elsewhere. This Court, not having seen the appellant, is unable to put itself adequately into the position of the primary decision-maker for the purpose of re-assessment. I did not hear the respondent to say that, in the event that error was shown, it would ask the Court to re-assess. In any case, I believe - unfortunate as it is - that the Court is not able to re-assess. The matter should, therefore, be sent back for re-trial. In the light of the conclusion which I have reached on the appeal, it is necessary to consider the cross-appeal. It is clear enough that the Master erred in the application of the law as it is now understood following the decision of the High Court in MBP(SA) Pty Ltd v Gogic (1991) 171 CLR 657. However, because the matter must, in my view, be sent back for re-trial it can safely be assumed that, upon a re-trial, the correct principles relating to the calculation of interest upon the damages to which the appellant is entitled will be applied. It is, therefore, unnecessary to say anything more in this respect. Formally, however, the cross-appellant - the respondent to the appeal - is entitled to succeed in the cross-appeal because error has been shown which is relevant to the final disposition of the matter. I have approached the fundamental error which I see in the Master's award bearing in mind the principle that the appellant was entitled not simply to a calculation, week by week, of the amount which it could be inferred he had lost (or was likely to lose) in income for his labour. The appellant was entitled, at trial, to an amount calculated by reference to the loss of his economic capacity. 6 UNREPORTED JUDGMENTS That loss was a loss to be compensated over and above the general damages for interference in the enjoyment of life etc. The amount which was awarded for general damages simply cannot stand with the amount that was awarded for his economic loss, past and future. The inconsistency in the internal components of the Master's decision and award being exposed, this Court must correct it. The only way that it can fairly be corrected in this case is by ordering a re-trial. The orders which I propose are therefore: 1. Allow the appeal; 2. Set aside the judgment of Master Malpass; 3 In lieu thereof, order that there be a re-trial in the Common Law Division of the two proceedings brought by the appellant; 4. Allow the cross-appeal; 5. Order that the respondent pay the appellant's costs of the appeal but have in respect thereof, if otherwise qualified, a certificate under the Suitors' Fund Act, 1951; and 6. No order as to the costs of the cross-appeal. Meagher JA I agree with my brother Handley. To my mind no error has been shownin the judgment. The appellant may lament the result but those who assert economic loss must prove it and those who cannot, or will not, prove it must fail on that issue. Kirby P: The orders of the Court are, accordingly, that the appeal is dismissed. The cross-appeal is dismissed. The appellant must pay the respondent's costs of the appeal. There is no order as to the costs of the cross-appeal. Counsel for the Appellant: B J Gross QC / R H Grace Counsel for the Respondent: H J Mater Solicitors for the Appellant: G H Healey and Co Solicitors for the Respondent: G M Meadows, Solicitor for GIO of NSW