STIPIC v ROGRIGUEZ SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MAHONEY and MEAGHER JJA 8 March 1995, 23 March 1995 [1995] NSWCA 458 Motor vehicle accident — General damages Future economic loss included therein Reassessment of all elements of damages Appeal from District Court — Assessment of Damages from motor vehicle accident. General damages — 17.5 per cent of a most extreme case not excessive, though at top of range — Judge included amount in respect of future economic loss in assessment of general damages — Procedure not permitted under Motor Accidents Act — Error of law. Reassessment of Damages — Reassessment made of all elements of damages. Mahoney JA The plaintiff was injured in a motor vehicle accident on 14 July 1990 and sued the defendant for damages. The defendant has admitted liability. On 5 November 1993 Downs DCJ ordered the plaintiff damages assessed at $47,055. The damages were made up as follows: Past economic loss $12,546 General damages 19.600 Out-of-pocket expenses (agreed) 17.385 $49,531 2.476 Less seat-belt deduction $47,055 The plaintiff has appealed to this Court against his Honour's award. Mr Semmler QC, who appeared for the plaintiff, accepted that his Honour's findings of fact were accurate and did not contest them. The appeal was directed only to two things: the award for general damages; and the award for past and future economic loss. The judge's findings in relation to the accident and its effects were as follows: "The collision caused her to strike the left side of her head and neck, and her left shoulder against the passenger side door of the vehicle. She was then thrown forwards and her chin struck the back of the front seat. Following this she was thrown backwards and her right arm struck the back of the rear seat. She was conveyed to Prince of Wales Hospital where she remained as an in-patient until 20 July 1990. She was diagnosed as having suffered a fracture of the left clavicle and a fracture of the right humerus. On 15 July 1990 under general anaesthetic, open reduction and internal fixation of a Rush nail was performed upon her right humerus. Post-operatively she was slow to mobilise her upper limb and she required much encouragement. Upon her discharge she was continuing to suffer considerable pain in her right arm, upper back, left shoulder, neck and chin. Her chin was cut and this has left her with a minor scar which is not apparent. 2 UNREPORTED JUDGMENTS As a result of her operation she has a scar approximately one and a half inches long above her right elbow. When discharged from hospital on 20 July 1990 both her arms were in slings and she continued to use these slings for approximately two months. She had a lot of physiotherapy treatment, mainly to her right arm until September 1991. In November 1990 she was re-admitted to the Prince of Wales Hospital, for a few days when the nail was removed. Since August 1990 she has been treated by Dr Calfas, a general practitioner, and over the years he has treated her with physiotherapy, acupuncture, manipulations and injections. Any of this treatment has only given her short temporary relief. She last saw him a couple of weeks prior to the hearing of the case. She continues to suffer from pain in more or less the whole of her right upper arm upon use. It is not painful when she is relaxed. She is unable to completely straighten her right arm. She lacks full strength in the arm, and bad or cold weather causes an increase in pain. She is unable to lift a lot with her right arm, for example shopping bags. Her neck is stiff some mornings, cold weather makes this worse. She continues to get pain between her shoulder blades, for example when she runs. Her left shoulder and chin resolved and she has a slight bone protrusion at the site of her fracture of the clavicle. She complains of headaches. Dr Calfas referred her to Dr Dick Tooth, an orthopaedic surgeon, who considered that she suffered a soft tissue injury to her neck which may cause her intermittent discomfort but it would probably improve. He was satisfied that her loss of full extension of the right arm was permanent, and that it would restrict her capacity to lift and carry things. At Dr Calfas's instigation she undertook a rehabilitation programme which improved her physical capacity and skills, whereby in June 1992 she was capable of undertaking full-time clerical work." In relation to her post-accident activities, his Honour found: "She is aged 23 years, and in 1988 she left school having only passed one subject in the Higher School Certificate. From then until her accident she was more or less continuously engaged in employment. For seven months she worked as a check-out operator at Franklin's food store. For a few weeks she worked as a sales assistant in a boutique, and when injured she had been employed by BBC Hardware for approximately nine months as a sales assistant and cashier. On 10 December 1990 she returned to her old job but her services were terminated on 21 December 1990. This work caused pain in her right arm, back pain following prolonged standing and pain in her right arm and shoulder when lifting. At the end of a day she was tired and sore and sometimes she had a headache. She considered she was not working satisfactorily, but there was not any evidence before me that she was dismissed because of her disabilities. As she could not find alternative work she undertook courses to further her education and she engaged in the rehabilitation programme to which I have already referred. During this time as part of her training she worked for Hazelton Airlines and for the Police Department. On 9 June 1992 she commenced gainful employment with the Police Department as a receptionist typist and earnt $300 per week net. In November 1992 she commenced to work for a merchant bank where she earnt $386 per week net. Due to shortage of work she was retrenched on 30 July 1993. She has been looking for work but like so many people, particularly young people, she is still unemployed. The plaintiff impressed me as being a person who has used her best endeavours to mitigate her damage." 1. GENERAL DAMAGES URJ STIPIC v ROGRIGUEZ (Mahoney JA) 3 His Honour was satisfied that the plaintiff's "ability to lead a normal life is significantly impaired to the extent of 17.5 per cent". He arrived at the award of general damages, $19,600, as follows: "17.5 per cent of $212,00 comes to $37,100. Deducting from that the statutory amount of $17,500, that is to say $17,500 from $37,100 leaves a balance of $19,600." For the plaintiff, two objections were taken to his Honour's assessment of this item: that 17.5 per cent was an appealably low assessment of her economic loss within s79 of the Motor Accidents Act 1988; and that his Honour had adopted an erroneous approach to the determination of non-economic loss within s79. In my opinion, the second submission should be upheld. In considering economic loss his Honour made separate calculations in respect of three periods: 14 July 1990-10 September 1990; 9 June 1990 up till trial 5 November 1993; and the period following the trial. In relation to the last period, his Honour said: "Since then her continuing disabilities do not amount to an economic loss, but they do represent a loss of earning capacity for which I will make an allowance in general damages." Mr Semmler's submissions suggested that this is not an approach which is permissible under s79. That section requires that a calculation be made of the damages to be awarded for non-economic loss and that, in effect, in making that calculation the court must include all non-economic loss of the kind falling within s79 and must not include anything which is non-economic loss within that section. This, the submission suggests, is because of the procedure which the statute requires to be followed. The section requires that the court assess the damages to be awarded as "'a proportion, determined according to the severity of the non-economic loss, of the maximum amount which may be awarded" for the relevant non-economic loss: see the definition in s68. The learned judge, as s79(2) required, determined what was the "proportion... of the maximum amount which may be awarded": more accurately, he selected a percentage rather than a proportion, but nothing turns upon that. He determined the proportion upon the basis specified in s79(3), viz, that the maximum amount which might be awarded was $212,000 and that that amount should be awarded "only in a most extreme case". The error that occurred occurred in relation to the allowance for future economic loss. As I have said, the judge indicated that he would make an allowance for future economic loss in his award of "general damages", ie, non-economic loss. He did not do that in terms: at least, his reasoning, as I have set forth, does not indicate that he did it. I do not suggest that his Honour forgot to do what he had indicated he would do. It is likely, I think, that, in assessing the "proportion" as 17.5 per cent, he adopted a higher percentage than otherwise he would have adopted in order to make the allowance in respect of future economic loss which he proposed to make. However, in my opinion, to do that is to adopt a procedure not authorised by s79. I do not mean by this that the correctness of what a judge does is to be judged according to form rather than substance: if it is clear what the judge did and what he did complies with the substance of what the section requires his judgment will not, I think, be set aside. But in the present case what was done is not clear. If indeed the judge did increase the "proportion" to 17.5 per cent as I have inferred, he has imposed upon the award for future economic loss the 4 UNREPORTED JUDGMENTS consequences of the "cap" procedure and other limitations arising from s79. If he did not follow this course, then it is difficult to see how future economic loss was taken into account. For these reasons the assessment of non-economic loss was erroneous and that part of the award must be set aside. The parties are agreed that the practice which this Court, in accordance the rulings of the High Court, has adopted should be followed; the whole of the judgment must be set aside and this Court must undertake a general reassessment of the judgment. Accordingly, it is not necessary to consider whether there was error in the judge's assessment of economic loss. Nor is it necessary to consider whether, within the principles illustrated by Moran v McMahon (1985) 3 NSWLR 700, it would otherwise be appropriate for this Court to set aside the assessment of damages which was made. 2. REASSESSMENT OF DAMAGES: It is necessary to assess, first, the severity of the plaintiff's non-economic loss. Her injuries did not, of course, constitute "a most extreme case". But they were by no means insignificant. As his Honour pointed out, they involve significant restriction of movement in the right arm, continuing lack of strength, and a degree of pain involving, inter alia, "more or less the whole of her right upper arm upon use" and pain between her shoulder-blades at various times. Her position is unlikely to improve substantially. The nature of the restrictions and the degree of pain were referred to in her evidence and, I think, the judge accepted what she said. Having regard to the effects of the injuries and in particular the ongoing pain from which she will suffer I would, were I not constrained by s79, award general damages of the order of $40,000 or thereabouts. Having in mind the terms of s79, I would assess the proportion of the maximum amount to be awarded within s79(2) as one-fifth. Accepting, as the parties have, that the maximum amount is $212,000, one-fifth of this is $42,400. S79(5) requires a deduction to be made from such an amount. Giving judgment as at 5 November 1993, Downs DCJ deducted $17,500. Order No 5 made under s79, commencing on 1 October 1994, prescribes that, for the purpose of s79(5), if the amount of damages is less than $49,000, the amount to be deducted is $18,500. This, I think, is the amount to be adopted: cf Marsland v Andjelic (1993) 31 NSLWR 162. Deducting that amount from $42,400, there is produced an award of $23,900 as damages for non-economic loss. This amount, is as I have indicated, significantly less than the amount which, unconstrained by s79, I would have awarded. But having regard to the section, that sum, $23,900, is the award to which the plaintiff is entitled. 3. ECONOMIC LOSS: Mr Semmler QC has submitted that, for economic loss to the date of trial, the plaintiff is entitled as follows: 14.7.90 (date of accident) to 10.12.90 21 weeks at $226 per week $4,746 21.12.90 (termination of employment) to 9.6.92 (unemployment) 80 weeks at $100 per week 8,000 30.7.93 (termination of employment) to 5.11.93 (date of judgment) 15 weeks at $100 per week 1,500 URJ STIPIC v ROGRIGUEZ (Mahoney JA) 5 He submitted that, for future economic loss, the plaintiff should be awarded: $100 per week for 42 years (to age 65) less 20 $74,509. per cent for vicissitudes: (present value) 5% tables (multiplier 931.7) The two periods up to 9 June 1992 are those assessed by the learned judge, in respect of which the respondent has not appealed. With minor adjustments, I am content to adopt Mr Semmler's submissions for these periods. The claim for the third period, 15 weeks at $100 per week, is, I infer, made upon the basis that, as the judge held, the plaintiff's injuries reduced her capacity to earn income by the order of $100 per week and that, though the defendant is not to bear the burden of her ordinary unemployment during this period, he is to bear the burden of the loss of $100 per week upon a basis such as that, if she had been able to obtain employment, it would have been at a wage approximately $100 per week less than uninjured she would have earned. Mr Crittle, for the defendant, submitted that the assessment of wage loss at $100 per week was excessive. He pointed to the fact that, when she did obtain employment, with the Police Department and with a merchant bank, she in fact earned net per week $300 and $386 respectively. He submitted that, correctly viewed, her loss was that the employment which she could undertake was restricted; once employment was obtained, the return as wages was no less than otherwise it would have been. This matter was not, I think, explored in depth at the trial. It is difficult to arrive at an assessment of her loss which compels acceptance. She was, as the judge believed, a person who would have done what she could to mitigate her loss and to obtain employment; her creditable history provides confirmation of this. But, I suspect, with her difficulties she was less likely to obtain employment than had she not been injured. The parties adopted without contention the judge's approach to a somewhat similar question in respect of the second period. During the instant period, she was entitled to compensation if for no more than for loss of economic capacity. Making the best assessment that can be made, I am content to accept that there was a loss of $1500 during this period. The assessment of future economic loss raises the present problem to a greater extent. The claim was to a working life to age 65; I suspect her working life would not have been as long. But, however this be, I am not satisfied that the loss is to be quantified upon the basis of a loss of $100 per week for the number of years in question. The contingencies and uncertainties involved in a calculation of this kind has been referred to in the judgments of the High Court recently in Medlin v State Government Insurance Commission (1995) 127 ALR 180. The contingencies and uncertainties in the present case are each substantial. I am not satisfied that, when the plaintiff obtains employment in the future, the result of her injuries will be that her remuneration is significantly less than uninjured she would have obtained; I am not satisfied that it would be, week in and week out, $100 per week less. I incline to the view that her injuries will probably cause her to cease employment earlier rather than later. And it is a significant likelihood that, 6 UNREPORTED JUDGMENTS because of her injuries, she will have more or longer periods of unemployment than uninjured she would have had. It is necessary to quantify, in money terms, such a loss. I do not think that a procedure based upon, eg, a weekly wage loss provides a credible basis for calculating such loss. To calculate the loss in that way would be to assume a degree of certainty greater than the facts justify. In my opinion, a loss of this kind is best compensated by, as it has been described, the provision of a "cushion". The quantification of the amount to be awarded for this purpose necessarily involves something closer to guess-work than to calculation. But, taking these matters into account, I would award for this purpose a sum of $25,000. Accordingly, I would damages as follows: 1. Non-economic loss $23,900.00 2. Past economic loss 14,246.00 3. Future economic loss 25,000.00 4. Out-of-pocket expenses 17.385.00 $80,531.00 Less 5% (seat-belt reduction) 4.026.55 $76,504.45 In my opinion the judge's judgment should be set aside and there should be substituted for it judgment for $76,504.45, to take effect from the date of his judgment. The respondent should pay the costs of the appeal. I would direct that the judgment be not entered for fourteen days after the date on which it is delivered. If the parties, during that period, desire to make submissions to the Court as to the correctness of the calculations made in arriving at the amount of the judgment, they may do so on motion or by consent order. If, at the end of the period, no such application has been made, the judgment may be entered accordingly. Meagher JA I agree with Mahoney JA. Appeal allowed. Judgment below set aside and in lieu substitute judgment for $76,504.45, such judgment to take effect from the date of the original judgment. The respondent to pay the costs of the appeal COUNSEL: Appellant: PCB SEMMLER QC/TJ BOYD Respondent: CP CRITTLE SOLICITORS: Appellant: CAMERON GILLINGHAM BOYD Respondent: Solicitor for GOVERNMENT INSURANCE OFFICE