FAIRFIELD CITY COUNCIL v KALO SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL PRIESTLEY, MEAGHER and POWELL JJA 5 September 1994, 5 September 1994 [1994] NSWCA 93 Appeal and New Trial — Quantum of damages — Inadvertent transposition of figures by trial judge when calculating. Priestley JA. Powell JA will give his reasons first. Powell JA This is an appeal from a Judgment delivered, and a verdict entered, by McInerney J in an action which had been brought by the Respondent ("Mr Kalo") against the Appellant, Fairfield City Council ("the Council"), his former employer, seeking damages for the Council's alleged negligence and breach of statutory duty. Although a variety of grounds of appeal has been taken in the Council's Notice of Appeal, and although none has been formally abandoned, in substance, the only issue which has been debated on the hearing of the appeal is whether or not the Court should intervene to rectify what McInerney J was later to describe as an error on his part in calculating the damages payable by the Council to Mr Kalo. The error in question related to the amounts properly to be allowed by McInerney J for Mr Kalo's past economic loss, for interest thereon and for Mr Kalo's future economic loss, the source of the error being found to lie in the fact that, while, at the hearing, Mr Kalo claimed that he had prior thereto, been, and that he continued to be, totally incapacitated, the Council asserted, and McInerney J held the true position was, that, except for a short period when he had been totally incapacitated, Mr Kalo retained a significant residual earning capacity which he chose not to use. The evidence which was placed before McInerney J to enable him to calculate the amounts which could properly be allowed for economic loss, both past and future, can best be described as sparse in the extreme; nor were his Honour's difficulties eased by the fact that such little evidence as there was put before him in a way which was apt to lead to confusion. However, having considered all the material that was placed before him, McInerney J concluded that, by drawing upon certain of the material contained in Exhibit "H" - the principal exhibit upon which, in this respect, Mr Kalo had relied - he could calculate that, as opposed to a nett earning capacity if he had been uninjured, of the order of $390.00 per week, Mr Kalo, following his period of total incapacity, had a continuing earning capacity of $220.00 per week nett. Upon the basis of the figures which he thus determined, his Honour assessed Mr Kalo's continuing loss of earning capacity at 40 per cent of his pre-injury capacity. It is, however, from that point in his Honour's Judgment where the error, to which I have earlier referred, creeps in, for, having stated his assessment of Mr Kalo's continuing loss of earning capacity, his Honour then continued: "Allowing him 60 per cent therefore of the figures in Exhibit H, I allow the following: 2 UNREPORTED JUDGMENTS From 16.10.82 to 31.12.82 - $1,854 From 1. 1.83 to 31.12.83 - 11,856 From 1. 1.84 to 31.12.84 - 10,920 From 1. 1.85 to 31.12.85 - 11,918 From 1. 1.86 to 30. 6.86 - 6,208 The plaintiff's angina pain commenced in June/July 1986 and he ceased work in February 1987. I find, however, if he had been performing his normal duties as a plant operator with its associated heavy labouring duties, that once the angina manifested itself he would have had to cease work because of his total incapacity resulting from that angina condition. I believe, therefore, that because of that condition he would have been fully incapacitated from work from that date until approximately July 1988. Thereafter I believe he would have reverted to his light work capacity which would result in a diminished earning capacity of some 60 per cent. Using, once again, the figures in Exhibit H, I allow the following: From 1. 7.88 to 31.12.88 - $7,176 From 1. 1.89 to 31.12.89 - $15,100 From 1. 1.90 to 31.12.90 - $16,208 From 1. 1.91 to 9.10.91 at $561 per week - $13,464 I allow in total, therefore, a figure of $112,509. The plaintiff was born on 1.7.42 and is now aged 49 and if he worked to 65 his loss on the basis of his pre-injury earnings of $561 per week on the 55 Tables, allowing him a capacity of 40 per cent of $561 per week, is a figure of $212,731. I note the approach taken by Handley JA (with whom Samuels and Clarke JJA agreed) in McLeod v Pacific Waste Management (NSW) Pty Ltd (unreported 13.8.91) in reducing the sum for future diminished earning capacity by 30 per cent because of the existence of a pre-existing degenerative condition in that plaintiff's back which was apparently aggravated by the accident. Whilst each case must be considered on its own merits, having regard to the factors I have mentioned, I believe that a larger contingency than normal should be allowed for the matters I have referred to and I believe a reduction of 30 per cent is called for. In respect of the calculation of interest on his past loss of earnings, it is noted he has received $81,868 in weekly payments by way of workers' compensation and the calculation of interest for past loss is based on a figure of $30,641 being the difference between the loss as I have found it and the amounts he has received by way of workers' compensation weekly payments. The verdict will comprise of the following: Out-of-pocket expenses (agreed mathematically) $13,415.18 Fox and Wood component $3,047.00 General damages ($35,000 to present) $55,000.00 Interest on general damages at 2 per cent $7,175.00 Past economic loss $112,509.00 URJ FAIRFIELD CITY COUNCIL v KALO (Powell JA) 3 Interest on past economic loss of $30,641 at $26,381.00 8.4 per cent Future economic loss $148,911.00 Verdict $366,438.18 Less workers' compensation payments $95,383.72 Judgment $271,054.46 Thereafter, there was filed on behalf of the Council a Notice of Appeal in which the following (inter alia) grounds of appeal were taken: "1. That His Honour erred in that having found that the Respondent as from the 16th October, 1982 had a loss of capacity of 40 per cent of his pre-injury work capacity allowed the Respondent damages for the loss of past earnings at the rate of 60 per cent of the amount set out in Exhibit H (comparable employee) when he ought to have assessed such loss at 40 per cent of those figures. 2. That His Honour erred in that having found that the Respondent had a loss of capacity of 40 per cent of his pre-injury work capacity assessed his future loss of earning capacity at the rate of 60 per cent of what the Respondent would have earnt if not incapacitated and should have assessed such loss at 40 per cent of that figure consistent with his finding of facts. 3. That if the Respondent's past earnings loss and loss of future earning capacity are assessed on the basis of His Honour's findings of fact then His Honour ought to have entered a judgment in favour of the Respondent in the sum of $163,469.00 However, having regard to what the Council's advisers clearly believed to have been an inadvertent transposition of the relevant figures, long before this appeal came on for hearing, application was made to McInerney J, on behalf of the Council, with a view to having his Honour exercise what were conceived to be his powers under "the slip rule" in order that his Judgment might be corrected. In the Judgment which he delivered when dealing with that application, McInerney J commenced by saying: "In this matter I delivered judgment in favour of the plaintiff on 9 October 1991, in the sum of $271,054.46. In the determination of loss of earning capacity, L assessed that he had a loss of 40 percent capacity of his pre-injury earnings. As far as I can recall - and indeed I have little doubt about this - I base that on evidence given by the plaintiff at 8 of the transcript when he was being led by his own counsel: "Q. When you left that job what pay were you receiving per week in hand? A. Well, beside the insurance, I was getting from the, I think, $220. Q. That was after payment of tax. Is that correct? A. Yeah.' That was evidence led by his own counsel. he gave evidence that he had started work at the Hurstville Business College on 13 January 1985, that he worked a five to five and half hour day and because of a heart condition, he gave up work early in February 1987. that was evidence led by his own counsel. In my judgment I also noted: 'Thereafter I find he reverted to his previous capacity. It is not easy to assess his earning capacity but Mr Andrews has invited me to assess his earning capacity at about $220 per week. ' 4 UNREPORTED JUDGMENTS On that basis I found an earning capacity of 40 percent of his pre-injury capacity. Unfortunately I transposed those figures in my calculation to a loss of 60 percent instead of 40 percent, a mistake on my part. " Later, after referring to a number of submissions which had been advanced by Mr DE Andrews, who then appeared, as he does today, for Mr Kalo - which submissions have been repeated today - his Honour concluded: "Mr Andrews then relied on this to justify my findings, which he said is not a mistake but an accurate reflection of his loss of earning capacity of 60 percent. Thave no doubt in my mind about the manner in which I made this calculation. it is suggested by Mr Andrews, as I understand his submission, that my findings are in accord with exhibit H although, as I would emphasise, he did not address me on it at the time. I have given this matter a lot of thought. In the light of what has been put to me, bearing in mind that there is a dispute about this matter, that in the exercise of my discretion, I do not believe it is proper to alter the terms of the judgment on the slip rule. I believe that the slip rule should only be used when there is no disputed question of fact. If Mr Andrews disputes the manner in which I have given these figures, then I think it is a matter of the Court of Appeal to determine the issue. I refuse the application. For my part, I read his Honour's concluding remarks as indicating that, notwithstanding what had been put to him by Mr Andrews on that occasion, he remained of the view that his previous assessment of Mr Kalo's continuing earning capacity was sound. This being so, it seems to me that, notwithstanding the argument which Mr Andrews has advanced today, which argument is, in substance, that which was put before his Honour, the argument ought not to be accepted and, by contrast, the appeal should succeed. It seems to me, however, that there are several adjustments to the figures advanced by Mr GB Beauchamp, who appears today for the Council, which are called for, those adjustments being in relation to the figures suggested as appropriate for past economic loss, for interest on past economic loss, for future economic loss and for recoverable Workers' Compensation payments. The figure which Mr Beauchamp has suggested for past economic loss is no more than a two-thirds proportion of the figure allowed by McInerney J. However, in the figure allowed by his Honour, there is an amount of some $ 17,000 odd which represents the period of total incapacity shortly after the accident. Accordingly, I would propose that, instead of the figure of $75,006 suggested by Mr Beauchamp, there be substituted the figure of $80,941. As the total of the weekly compensation payments which, prior to the delivery of McInerney J's first Judgment, had been made on behalf of the Council exceeded, by a small amount, the amount now to be allowed for past economic loss, no interest on past economic loss is now called for. In relation to future economic loss, the calculation which has been made by Mr Beauchamp is, in my view, a little astray and I would propose that, instead of the figure suggested of $99,214, there be allowed a figure of $99,274. Once these adjustments have been made there is produced a gross figure of $258,852.18, from which figure the amount of recoverable Workers' Compensation payments is to be deducted. Mr Beauchamp has suggested that the recoverable Workers' Compensation payments are only 488,521.72. It seems to me, however, that the whole of the payments for medical, and other like, expenses, as well as the amount of previous weekly compensation payments is recoverable, so that, from the figure of URJ FAIRFIELD CITY COUNCIL v KALO (Meagher JA) 5 $258,852.18 to which I have earlier referred there should be deducted the sum of $95,383.00, which would bring a nett verdict and Judgment for Mr Kalo of $ 163,469.18. I would, therefore, propose that the appeal be upheld, that the Judgment entered by McInerney J should be set aside and that, in lieu thereof, there should be entered a Judgment in favour of the Respondent in the sum of $163,469.18, that Judgment to date from 9 October 1991. I would also propose that the Respondent pay the Appellant's costs of the appeal and that, if qualified, as I would anticipate that he would be, the Respondent have a certificate under the provisions of the Suitors Fund Act 1951. Priestley JA: I agree. Meagher JA I agree. Priestley JA: Accordingly, the Court's Orders are that the Appeal is upheld, the Judgment below is set aside. In its place Judgment is to be entered in the sum of 163,469.18 to have effect from 9th October 1991. The Respondent is to pay the Appellant's costs of the appeal, and is to have, if qualified, a Suitors' Fund Certificate. Counsel for the Appellant: GB Beauchamp Instructed by: Dexter Healey and Co Counsel for the Respondent: DE Andrews Instructed by: Beston and Co