NSW INSURANCE MINISTERIAL CORPORATION v BARTRON SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MAHONEY, MEAGHER and COLE JJA 13 March 1995, 13 March 1995 [1995] NSWCA 331 Damages — no question of principle. Meagher JA In this matter the respondent, Ms Bartron, received at the hands of Judge Dent a verdict of $407,241.45 for injuries suffered by her in a particularly violent whiplash traffic accident injury. The appellant appealed against this verdict and particularly the component of that verdict in terms of $80,000 for future economic loss on the ground it is excessive. It is an unusual case. The respondent was clearly by profession a fashion designer and of some international repute. It therefore is difficult to find a truly comparable basis on which to calculate her economic loss. His Honour found that she was highly artistically skilled, highly motivated and very determined. Before she left the United States of America she was earning $US30,000 or $US40,000. She had international connections, she was highly ambitions and she gave sworn evidence she would go into business again. The figure of $280,000 at which his Honour arrived, although his Honour did not say precisely on what basis that was achieved, must have been reached by his Honour allowing $300 per week for the rest of her working life as originally claimed although it is fairly clear from reviewing his Honour's reasons that his Honour may have reached that figure by starting with the yearly equivalent of $US30,000 or $US40,000 and then discounting it heavily. In either event, granting his Honour's finding of fact, in my view the appeal should be dismissed. That leaves a cross appeal. His Honour found that Miss Bartron was entitled to future medical expenses for the next 20 years at the rate of about $3,000 per annum. In his calculation of this figure his Honour arrived at the sum of $30,000. That sum was reached after discounting. The difficulty with this calculation is it contradicts what was said in the High Court in Sharman v Evans 138 CLR 563 at 587. Once one takes a probable life expectancy which is this discounted figure, one cannot enter into the business of further discounting. In my view, the result of this is that the following orders should be made: 1. Appeal dismissed. 2. Cross appeal upheld. 3. Judgment for the cross appellant plaintiff in the sum of $428,423 in lieu of the judgment below, the amended adjustment to take effect from the date of the original judgment. 4. The appellant pay the cost both of the appeal and the cross appeal. Mahoney JA I agree with the order proposed by Meagher JA. As this case raises an issue of some little interest, I shall add some brief observations of my own. 2 UNREPORTED JUDGMENTS The accident happened on 1 August 1987. The judge's decision was given on 22 November 1993. It appears generally to have been accepted, that the accident caused the plaintiff incapacity and in relation to the only item in question, that is economic loss, the question to be determined is what the quantum of it was. The Court has traditionally approached this question upon the basis that that which is to be discounted for is loss of capacity. This matter has been considered, perhaps to a degree reconsidered, by the High Court in the recent decision of Medlin v State Government Insurance Commission! (1995) 127 ALR 180 and what I say should be taken subject to what the Court there has said. When approaching the matter on a broad and practical basis and looking not merely at what is the loss of capacity and the sum to be awarded for that but also at what that capacity would probably have brought to the plaintiff in money terms, I think that the assessment of her economic loss at the figure selected by the judge was not inappropriate. It is my opinion easy to say how the judge arrived at the figure of $280,000, (his judgment is unforthcoming and if I may express a personal view, it would save a good deal of speculation by parties and by appellate courts if the reasons why a particular sum is arrived at are shown and set out in the judgment). It is in the context of the evidence of the present case apparent that the matter was dealt with in the context of the wage evidence which was placed before the Court. It was necessary to assess the compensation for the plaintiffs loss of economic capacity. She had said that she proposed to use the lost capacity in setting up a business of her own. In order to do that, she would have needed capital. A figure of $80,000 was mentioned; which she said she hoped to raise or, if I may adopt what counsel have said, as a last resort to borrow it from her father who she said had that amount of money available for her to borrow. If she had borrowed the money, her loss, quantified in money terms, would have been the loss of accretion capital and of income which she would have suffered from not being able to carry on the projected business. The loss of income would have been, to a significant extent, speculative and it would not have been easy to quantify it. However the judge had before him, details of award rates of pay applicable in New South Wales. The awards dealt with shop employees, being shop assistants, clerks grade 2 and clerks grade 3. The rates ranged from 10 March 1987 to 16 October 1992. The judgment was given on 22 November 1993. Those figures show that the nett income to be paid on an award basis to a shop assistant ranged between those dates from $231.60 to $321.15 and to a clerk grade 2, between $253.85 and $320 a week. This, I think, is what the judge had in mind when he adopted the $280 on which he based the damages he awarded. (The Court is indebted to Mr Laughton for the calculation which he handed to the Court). In any event, her then capacity was to earn as a shop assistant something over $300 per week in the future and in the past to have earned something of that order. I think the judge had a measure of that in mind when he assessed the sum that he did. However, it is appropriate to bear in mind the difficulty which the plaintiff had in seeking and retaining employment as a shop assistant. Perhaps she would have had the same difficulty had she sought clerical work. It is to be accepted that though capacity is particularly that for which compensation is given, the Court 1. (1995) 127 ALR 180 URJ | NSW INSURANCE MINISTERIAL CORPORATION v BARTRON (Cole JA) 3 must have regard to what probably would have come from the use of that capacity and if it appears clearly that employing that capacity the plaintiff would not have been able to produce income then the amount of compensation is to be reduced accordingly. The suggestion in the present case is, I think, that having regard to her history she would not have been able to earn as an employee either as a shop assistant or a clerk; she would not have been able to obtain the work or keep it and therefore that was the wrong basis on which to approach the matter. The judge did not, I think, draw that conclusion; at least, he didn't draw it in terms. I would not draw that conclusion from the evidence. I think that if the judge was satisfied that she could not go into business would have had to seek employment of the kind in question, the plaintiff would have sought it and, I suspect, would have been able to obtain it. I am appreciative that the evidence supports that previous occasions she was not able to obtain such employment. But, in my opinion, had she been faced with a future in which employment of that kind was her only source of income, she would have adopted a different attitude. I have perhaps unnecessarily elaborated these matters, both because of the peculiar features of the present case and because the matter has been recently considered, or reconsidered, by the High Court. But in the end, I am not satisfied that the judge was wrong. I myself would come essentially to the same conclusion. I agree then with the orders and what has been said by Meagher JA and the orders he proposes. Cole JA I am in the regrettable position of disagreeing with my brethren. The respondent came to Australia in October 1981. She was then aged 39 years. She had engaged in activity in the fashion design area for the preceding 20 years and apparently had been successful in those endeavours in the United States of America. When she came to Australia, however, her circumstances changed. Arriving here in October 1981 she sought employment from that date until April 1983, a period of eighteen months. She was unable to find any employment satisfactory to her or commensurate with her skills. In April 1983 she separated from her then husband. She resumed her search for employment in May and June 1983, and in June 1983 was able to find employment as a shop assistant at David Jones. In that capacity she was paid $179 per week nett. That was the only employment she could find as a result of 20 months of searching. She continued in that employment only for a period of 4 months, until approximately September 1983. She then formed a new relationship with a person and they moved to the Blue Mountains. For the next two years, from October 1983 to October 1985, she spent her time renovating a house in the Blue Mountains. Thus she was not seeking employment. When that work ceased and that relationship ceased, she returned to Sydney determined to find employment. She spent the next 14 months seeking it but again was unable to find any employment. The consequence was, that she decided to turn her endeavours to starting a business in the fashion design area. There were a number of difficulties in that course, the first being that she had no capital. Her estimate was she would need some $80,000 of capital and she had none, but she thought she would be able to borrow it either from her father, from a bank or from some other person. The consequence was that at the time she had the accident on 1 March 1987 she 4 UNREPORTED JUDGMENTS had been in Australia for approximately 6 years, had worked for only 4 months, and contemplated establishing a business in the fashion design area without capital. The trial Judge was faced with the claim which, on the pleadings sought past economic loss in the order of $300 a week, and for the future a similar sum until the age of 65 years. It is not clear where the $300 per week loss assessment of the respondent's income earning capacity came from. The work she had been able to obtain as a shop assistant had paid her $179 per week and whilst there were some figures before the trial Judge, being the figures of clerks at various grades, which showed income receipts in the order of $280, slightly less than the $300 per week which the respondent claimed, his Honour said, at paral6 of his judgment: "Quantification of a capital sum to compensate such as the plaintiff for this lost but very clear opportunity cannot be achieved by actuarial exercises based upon the earnings of plodders and minimum Australian wages, but calls for a conservative assessment based upon judicial experience and reflecting upon her past high success in the United States with allied international experience, and a reflection upon the now obvious, that the Australian clothing trade is subject to the heat of international competitive influences" .2 It seems to me clear from this that his Honour did not make his assessment of either past or future economic loss of earning capacity by reference to the award rates which were tendered by consent, or by reference to the income which she had in fact earned in the 4 months she had worked whilst in Australia. That leaves one with the difficulty that there is simply no basis shown, in my view, for the manner in which his Honour arrived at the figure of $280,000, being the global sum that his Honour awarded for both past and future loss of earning capacity, taking into account in some arcane way both discount factors and interest in respect of past economic loss. It is true that the notice of appeal does not specify a ground that his Honour gave no adequate reasons for indicating the manner in which he achieved that sum. However application was made today to add that as a ground of appeal, and as the matter would raise no new issues of fact and as the submissions in support of it are clearly set forth in the written submissions provided to the Court and to the appellant, for my part I would have granted leave to add that ground. If I may return then to speculation as to how it was that his Honour reached the figure of $280,000. If it was not based upon the award rates which were tendered - and the passage I have indicated in my view makes clear it wasn't - how was it achieved? It apparently is his Honour's judicial experience which enables him to determine that if the respondent had been able; to raise a capital sum of $80,000 and had been able to start a business then, having regard to the risks associated with borrowing capital and commencing a business in the fashion design area in this country, some portion of that sum is an appropriate sum to be awarded for future economic loss. As it turns out, the $280,000 is about $300 per week, allowing total past and future economic loss to age 65 years. However, his Honour also said that he anticipated that the respondent would achieve the commencement of this proposed business within a year of the trial. 2. Appeal book, at 228 URJ | NSW INSURANCE MINISTERIAL CORPORATION v BARTRON (Cole JA) 5 If by that is meant that for that year there would be no income earned then deduction of the sum, which I assume was $300 per week allowed whilst this business was being established, would mean that the sum of $280,000 in fact awarded not only exceeded that which was claimed, but exceeds the $300 per week. The Court was told that the case was presented by the appellant not upon the basis of her obtaining employment as a shop assistant, or as a clerk, or on some other basis earning $300 per week, but it was presented on the basis that she would start a business. It seems to me that if one were to seek to assess the prospects of a 51 year old lady with experience in the American fashion design market who has been unemployed for some 6 years in Australia, who did not have any capital, who would have to resort to borrowings, and who had at that time no knowledge, or no adequate knowledge, of the Australian fashion design industry, one would need to make a very significant discount indeed in relation to her prospects of future income earning capacity and conversion of that capacity into monetary terms. In those circumstances it is my view that the appeal should be upheld and that there should be a new trial. As I am in dissent I need say no more other than to say that for the reasons expressed by the majority, I agree that the cross appeal should be upheld. Mahoney JA: The order of the Court is therefore that proposed by Meagher JA. That will be the order of the Court. 1. Appeal dismissed. 2. Cross appeal upheld. 3. Judgment for the cross appellant plaintiff in the sum of $428,423 in lieu of the judgment below, the amended adjustment to take effect from the date of the original judgment. 4. The appellant pay the cost both of the appeal and the cross appeal. COUNSEL: Appellant: G Laughton Respondent: DJ Higgs SOLICITORS: Appellant: G Meadows Respondent: Isenberg Spedding and Player