PARTRIDGE v GIO SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL PRIESTLEY, MEAGHER and COLE JJA 21 September 1995, 9 October 1995 [1995] NSWCA 359 CHALLENGE to Cullen v Trappell (1980) 146 CLR 1 and GIO v Rosniak (1992) 27 NSWLR 665 — Court of Appeal bound to follow them — only review of principles can be by High Court of Australia — appellant to tender and rely on material not tendered at trial — disallowed. Priestley J I agree with Cole JA. Meagher JA I agree with Cole JA. Cole JA On 5 May 1993 Dunford J delivered reasons assessing the injured appellant's damages sustained in a motor vehicle accident on 2 November 1986 in the sum of $1,868,237. Certain matters were reserved. On 17 September 1993 further reasons were delivered resulting in entry of judgment in the sum of $2,032, 033. The appellant has argued or sought to argue the following grounds of appeal: 1. That His Honour erred in determining the plaintiff's loss of earning capacity by reference to a postulated net after tax rate of earnings, rather than a postulated gross rate of earnings. 1A. That His Honour erred in discounting the Appellant's future earnings (calculated by the use of a 5% discount rate multiplier) by 15% or 20% in respect of future vicissitudes. 1B. That His Honour should have assessed the Appellant's future damages for loss of future earning capacity without making any discount in respect of future vicissitudes. 1C. That there should have been included in the appellant's damages an allowance for the probable loss by the Appellant of the financial support of a husband that she will on the probabilities now never find. 1D. That there should have been included in the Appellant's damages an allowance for the loss of future superannuation benefits that she would otherwise have received but for her injuries in respect of what otherwise would have been the course of her working life. 1E. That His Honour's allowance for loss of future earning capacity was inadequate. 1F. That His Honour's allowance in respect of general damages was inadequate. 2. That His Honour erred in reducing the allowance for fund management fees in the Appellant's award on the basis that such fees would be tax deductible. 3. That His Honour erred in reducing the allowance for fund management fees in the Appellants award on the basis that the fund would over its life run steadily downwards. 4. That His Honour erred in having regard to the incidence of taxation on the notional earnings of the fund, when the components of the fund had been calculated by reference to the 5% discount tables. 2 UNREPORTED JUDGMENTS 5. That His Honour should have calculated the management fees component of the Appellant's award by taking the recent rate of return on the Protective Commissioners Fund, taking 5.25% of such amount, and capitalising that figure over the intended life of the fund: (a) at zero discount, or alternatively (b) by reference to the 3% discount tables, or alternatively (c) by reference to the 5% discount tables. The appellant sought from this Court leave to tender further documents or for the Court to take judicial notice of such documents. The documents sought to be tendered or in respect of which it was contended this Court, as distinct from the trial court, should take judicial notice were those marked A to E3 and in Schedule I attached to the appellant's submissions. The application to tender the material as evidence in the appeal was rejected on 16 May 1995. Application that the Court should take judicial notice of the material was made at the hearing on 21 September 1995 but was rejected principally for 3 reasons. First, it is established law that save in exceptional circumstances an appellant should not be permitted to raise matter or argue an appeal upon a basis different to that upon which the trial was conducted.! Second, a Court of Appeal should not be asked to take judicial notice of statistics which were either not before the trial judge, or, if they were, were not the subject of submissions to him. Third, had the material now sought to be relied upon, been tendered or sought to be relied upon at the trial, the trial may have been conducted differently by the respondent. It is convenient to deal with each of the grounds of appeal in turn. GROUND 1 The High Court in Cullen v Trappell? held that at common law loss of income earning capacity is to be assessed on an after tax basis. This Court is bound by that decision. The effect of s35B Motor Accident Act is to make that decision applicable to this case. It was sought to be argued before this Court that, in the case of this particular plaintiff, the general proposition that in determining damages for loss of income earning capacity regard is to be had to after tax rather than pre-tax figures, was inapplicable. Reliance was placed upon the passage in the judgment of Gibbs J3 that it is "proper to have regard to the actual situation of the plaintiff, insofar as it will affect the rate of notional tax, provided that the necessary evidence has been adduced". Here it was said such evidence had been adduced which showed that, applying a 5% discount factor as s35B required, if after tax rates were used in calculating damages for loss of income earning capacity as had been done, the resulting fund could be demonstrated to be inadequate to provide for the appellant for the period of her assumed future life. Mr Moini's evidence was said to demonstrate this. Thus, it was said it should not be used in calculating the loss, and Cullen v Trappell was inapplicable. For similar reasons, it was submitted the tax deductibility of the future management fee should be disregarded. Further it was contended that if an "unjust result" was produced by applying the discount rate required by s35B, it should be disregarded. 1. Coulton v Holcombe (1986) 162 CLR 1 at 7-8; Sharman v Evans (1967) 138 CLR 563 at 565-566; University of Wollongong v Metwally (No. 2) (1985) 59 ALJR 481-483; Electricity Commission of New South Wales v Yates (1993) 30 NSWLR 351 at 357. 2. (1980) 146 CLR 1. 3. (1980) 146 CLR 1 at 16. See also Atlas Tiles Ltd v Briers (1978) 144 CLR 202 at 233 per Stephen J. URJ PARTRIDGE v GIO (Cole JA) 3 This argument was raised by the appellant before Dunford J after his Honour had delivered the initial judgment on 5 May 1993 awarding $1,868,237, and reserving two issues only, namely, interest on loss of income and the costs of administration. Although the initial judgment had been calculated on the "conventional" after tax basis, Dunford J permitted evidence to be called to support the contention. The respondent also called actuarial evidence seeking to deny the contention that the fund would be prematurely exhausted. In his judgment delivered 17 September 1993, Dunford J noted these arguments, but held that he was bound by Cullen v Trappell and also by Government Insurance Office v Rosniak4 regarding management fees. This Court is also bound by Cullen v Trappell. It requires that after tax rates of income be used in determining loss. The passage in the judgment of Gibbs J addresses only the issue whether one could assume a notional tax position, or the plaintiffs actual tax position in determining the after tax earnings to be used as the basis for calculation. In that way loss suffered during an assumed time period is calculated. The fact that such loss may be exhausted by an assumed scenario of weekly expenditure in less than that period of time does not mean that the principle of calculating the damage suffered from loss of income earning capacity by reference to after tax, rather than pre-tax earnings, is necessarily correct. Even if it be so, this Court is not permitted to reverse the use of pre-tax earnings in damages calculations mandated by the High Court of Australia in Cullen. It is not at all clear that the appellant put to the trial judge the deeper contention that Cullen was wrongly decided because it was based upon two propositions which, at least in the case of young paraplegics, could be demonstrated to be false. The first proposition said to be erroneous is in the judgment of Gibbs J in Atlas5: "In most cases of personal injuries a plaintiff would be compensated too generously if his damages were assessed on the basis of his gross earnings." The second is found in the judgment of Gibbs J in Cullen® "It must be remembered that notional tax will not be payable on the whole sum which h is assumed will be drawn each week from the invested fund... for part of that sum will come from capital. As time goes on, the proportion of capital in the sum notionally drawn each week by the plaintiff will increase, and the income component will decrease. Therefore the notional tax on the income from the damages awarded for loss of earning capacity can never equal the actual tax which would have been paid out of the plaintiffs pre-accident earnings. In other words, damages fixed by determining the present sum necessary to provide the plaintiff with his pre-injury return, when the notional tax is taken into account, will be much less than the damages fixed by calculating the present value of the gross loss." It is said the evidence of Mr Moini demonstrated the fallacy of each proposition. Whether it does so or not was not decided by Dunford J. Even if it does, that does not authorise this Court to hold that what are said to be "foundational concepts" to the decision in Cullen are wrong statements of principle, or that the derived concept that damages are to be assessed upon after tax earnings is either wrong or inapplicable. 4. (1992) 27 NSWLR 665. 5. (1978) 144 CLR at 221. 6. (1980) 146 CLR at 15-16. 4 UNREPORTED JUDGMENTS This ground fails. GROUNDS 1A AND 1B The appellant accepted that the substance of these matters was not raised at trial. It the circumstances, that is a sufficient reason for the court not to permit them to be raised on appeal. Further, the unavailability of the new matter sought to be put before this Court removes the factual basis for the contention that injustice flows from applying a 15% discount factor in respect of vicissitudes to future loss of income earning capacity. Nonetheless the appellant contended that Dunford J took pessimistic view of the appellant's pre-injury prospects in life". The trial judge adopted the conventional deduction of 15% for vicissitudes. The trial judge was bound to consider vicissitudes or contingencies that might affect the appellant's uninjured capacity to earn income in the future.7 The unchallenged finding of the trial judge was that he was "by no means satisfied that (the appellant) would have achieved average weekly earnings for a female". Nothing was advanced which suggested that his Honour's conventional approach to vicissitudes was in error. GROUND 1C The trial judge included "loss of marriage prospects" in his assessment of general damages of $200,000. At trial, no separate claim for financial loss which it was contended might have flowed from loss of the chance of marriage, was made. It was contended that such a claim was not recognised at law prior to the decision of Giles J in Hines v Commonwealth of Australia8, but that is not so®. The trial was conducted upon the basis that unspecified general damages for loss of this prospect should be considered as part of the head of general damages, and it was so considered by the trial judge. The appellant should not now be permitted to depart from the basis upon which the trial was conducted. The statistical approach to prospects of marriage was unavailable to the appellant on appeal, that not being the manner in which the trial was conducted. For these reasons the ground was not permitted to be argued on appeal. Further, the only evidence touching this matter was that, at the date of the accident, the appellant was aged 19 and had a steady boyfriend. She gave evidence that, pre-accident, she had not thought what she wished to do with her life although she had wanted to have children. The appellant's mother said that: "She probably hinted at hopes for maybe one day marrying and having children." «", an unduly Calculation of any sum for loss of the prospect of marriage was speculative and, in those circumstances and having regard to the conduct of the trial, it has not been demonstrated that including it in the assessment of general damages constituted error.10 GROUND 1D 7. General Motors Holden's Pty Ltd v Moularas (1964) 111 CLR 234. 7 December 1994, 1995 Aust. Tort Reports 81-338. 9. See for instance, Government Insurance office of New South Wales v Mackie (1990) Aust. Tort Reports 81-053. 10. Sharman v Evans (1967) 138 CLR 563 at 583-584. ad URJ PARTRIDGE v GIO (Cole JA) 5 This matter was not raised at the trial either in evidence or by submissions. No claim was made in the statement of particulars for any loss under this head. No material was placed before the trial judge, or admitted by this Court which would permit calculation of any loss. For these reasons this matter was not permitted to be argued on appeal. Further, the trial judge determined a net figure of future loss of income earning capacity of $270 being a figure greater than the basic net earnings loss of $265.36 but less than that sum with the superannuation levy added of $274.55. The matter not having been argued before the trial judge, it cannot be said that, having regard to the necessarily generalised nature of an assessment of loss of future income earning capacity, and the failure of the appellant to seek as a head of damage superannuation loss, error has been shown by the adoption of the figure for future loss of income earning capacity of $270 per week. GROUND 1E This ground was dependent upon this Court either admitting the statistical material sought to be tendered, or this Court taking judicial notice of it in circumstances where it was not the subject of submissions to the trial judge. For reasons already given the Court was not prepared to do either of these things. The ground therefore has to fail. Additionally, as the appellant intended to rely on the ground to raise the financial consequences of grounds 1A and 1B and as those grounds were not permitted to be argued, it would not have been right to entertain this ground either. GROUND 1F This ground was sought to be relied upon in conjunction with Ground 1C to the effect that as the $200,000 awarded for general damages, included "loss of marriage prospects", but not the assumed advantageous financial consequences lost as the result of loss of the chance of marriage, the general damages were inadequate. As no specific head of claim for such financial loss was raised, nor evidence related to it tendered at trial, this matter was not permitted to be raised on appeal. GROUNDS 2, 3, 4 AND 5 The trial judge assessed the sum to be allowed for fund management fees in accordance with the decision of this Court in Government Insurance Officer v Rosniak!!. There were no adequate reasons advanced why this Court should re- examine this recent decision although it was formally submitted the decision was wrong.!2. These grounds fail. CONCLUSION Ihave addressed each ground raised individually. Generally however it is to be noted that the appellant's case before this Court suffered from two significant problems. First, the case sought to be now argued was not the case it sought to run at trial level. Second, the legal points sought to be established can be established only in the High Court for they are contrary to existing authority binding on this Court. For these, and the earlier more detailed reasons, the appeal should be dismissed with costs. Appeal dismissed with costs. COUNSEL: 11. (1992) 27 NSWLR 665. 12. See Bennett and Wood Ltd v Council of the City of Orange (1967) 67 SR 426 at 430. 6 UNREPORTED JUDGMENTS Appellant: TD Kelly (sol)/JP Gould Respondent: MJ Neil QC/G Petty SOLICITORS: Appellant: TD Kelly and Co Respondent: GIO