GESSEY v MORRISON SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL GLEESON CJ, POWELL and COLE JJA 8 December 1995, 8 December 1995 [1995] NSWCA 167 DAMAGES — brain damaged quadriplegic — challenges to quantum — no question of principle involved DAMAGES The respondent became a brain-damaged quadriplegic as a result of a motor accident. Liability was admitted. The trial judge assessed damages at $2,601,045. Various items of the assessment were disputed on appeal - HELD - A challenge to an item of $25,000 succeeded. Otherwise no error was shown - no question of principle involved. Gleeson CJ This is an appeal from a judgment of Spender AJ given in August 1995. His Honour gave judgment for the plaintiff/respondent in the sum of $2,601,045.00. The appellant, who was the defendant in the proceedings at first instance, appeals claiming that the damages awarded to the respondent were excessive. In my view the appeal has been made good to the extent of $25,000 and I propose, for reasons that I am about to give, that the appeal should be allowed to the extent that the amount of the judgment should be reduced from $2,601,045 to $2,576,045. Except to that extent, the appeal should be dismissed. My reasons for that are as follows. The claim before his Honour was a claim for damages for personal injuries resulting from actionable negligence of the defendant. The respondent's injuries arose out of a motor vehicle collision that occurred on 19 September 1992. Liability for damages was admitted and ultimately there was no issue as to contributory negligence. Consequently the not inconsiderable task that confronted his Honour was the calculation of the damages to which the respondent was entitled. That matter was governed in certain respects by the provisions of the Motor Accidents Act 1988. The respondent as a consequence of the accident became a paraplegic, suffered brain damage, and also suffered other injuries. At the time of the accident the respondent was aged forty-seven. He is a married man with two adult sons. The respondent's educational background and his employment history are set out in the reasons for judgment between at 1 and S. It suffices for present purposes to say that his background is in electrical engineering; that he is a highly skilled man, and that he had risen to a management level in the scientific instrumentation industry. At the time of his accident his gross salary was $64,000 per annum and he was provided with a motor vehicle. He was contemplating, for career purposes, a movement to the United States of America. That matter assumed some importance in the case. The various items which went to make up the total amount of damages awarded by his Honour is set out in the following list: "Non Economic Loss $222,000 2 UNREPORTED JUDGMENTS Past Economic Loss 162,413 Past Rental 3,203 Future Economic 579,234 5 Loss Future Rent 12,387 Past Care s72 55,865 Future Care s72 173,466 Future Care - 220,740 10 | Commercial Travel 65,000 Future Nursing 39,000 Handyman 44,640 15 | Future Medical 62,000 RGO to date 75,122 RGO future 173,533 Paraquad 81,840 20 | Medication 458 Housing and Sloane 29,645 Future Housing 14,307 Maintenance Air-conditioning 59,372 25 Hydrotherapy 123,360 Security System 6,228 Motor Vehicle 166,609 Computer 60,000 30 | Out Of Pockets 199,268.77 Parmaker 16,013 Moto/Pico 27,337 Dawson Chair 6,738 35 | Physiotherapy 112,535 2,852,31B.77 Payments Made 251,268.77 40 ae 2,601,046.00 In this appeal there is challenge to some only of those items. I will deal with them in turn. 45 First there is a challenge to the amounts awarded in respect of past economic loss and loss of earning capacity or, as it is called in the above list, future economic loss. In relation to past economic loss his Honour awarded $162,413. The appellant says that amount should be reduced to $118,417. In relation to loss of earning capacity or future economic loss as it was called, his Honour awarded 50 $579,234 and the appellant says that should be reduced to $380,000. It is convenient to deal with those two items together. URJ GESSEY v MORRISON (Gleeson CJ) 3 There were three issues that were raised for the consideration of this court by the appellant. The first concerns the manner in which his Honour applied the decision of the High Court in Malic v JC Hutton Pty Ltd (1990) 169 CLR 638. The second concerns what is said to be an error in the estimation of likely earnings in the United States, and that relates in particular to a bonus factor. The third concerns what is said to be an inadequate allowance for vicissitudes or contingencies. In relation to the first of those three matters it is necessary to make brief mention of the method adopted by his Honour and, in particular, the way in which he dealt with the complicating fact that the respondent at the time of the injury was contemplating a move to the United States for the purposes of advancement of his career. In short, in calculating loss of earnings, what his Honour did was as follows. First, he began with the assumption, which he said was reasonable, that if he had not had the accident the respondent - leaving to one side the possibility of moving to the United States - would have remained in employment in Australia no less remunerative than at the time of the accident until he reached the age of sixty-five. Then, his Honour on the basis of the evidence before him estimated that there was a 75 per cent chance that if it had not been for the accident the respondent would have moved to the United States and achieved a certain level and duration of employment there. Then his Honour computed the difference between the earnings in the United States, which would have been higher than those in Australia. Then his Honour assumed Australian earnings and added 75 per cent to the difference. For the purposes of that exercise his Honour made the following finding of fact (at 17 of reasons for judgment): "Had he stayed in Australia, in my opinion his character and his professional, personal and intellectual qualities and qualifications were such that, post-November 1993 (had his employment with Fisons ceased) he would have speedily gotten employment at a level of salary and benefits no less than his pre-injury employment." Achallenge has been made on this appeal to that finding of fact. That challenge was made particularly by reference to evidence which appears at 160V and 213J of the appeal papers. The challenge was developed by reference to evidence before the trial judge as to the subsequent commercial history of the Australian business in which the respondent had been engaged following his accident. That history, the detail of which was before the trial judge, only went to demonstrate, so it was argued, the inherent uncertainties involved in the respondent's employment. Making due allowance for the evidence upon which senior counsel for the appellant relies, and the arguments that were advanced in this Court and at first instance, I am nevertheless of the view that the finding of fact made by his Honour and quoted above was well open to him and is not one with which this Court should interfere. That finding was supported by a substantial body of evidence and, it might be added, involved a personal assessment of the respondent by the trial judge. The opportunity to make such an assessment came not only from information as to the background and career of the respondent but also, in an incidental but not unimportant manner, in the medical evidence and in the history of the conduct of the respondent since the accident in relation to its own rehabilitation. That estimation would have thrown a good deal of light on the judgment which was ultimately made by his Honour, and which I have set out above. 4 UNREPORTED JUDGMENTS In addition to the challenge to the finding of fact quoted above, there was a submission that his Honour erred in principle. The finding, it was argued, considered in the light of the judgment in the High Court in Malic v Hutton Pty Ltd, seems to involve an assumption that there was a 100 per cent certainty or, for all practical purposes, a certainty that, but for this accident, this forty-seven year old man would have continued in steady and full gainful employment until the age of sixty-five. So be it. His Honour was familiar with the principles in Malic v Hutton Pty Ltd and referred to them in a portion of his judgment immediately preceding the passage which has been quoted. It involved no departure from principle for his Honour to take the view, on the basis of the evidence in the case, that, subject to the vicissitudes of life and the appropriate allowance for contingencies which his Honour separately made, it was reasonable to calculate damages upon the basis of the prediction or assumption that but for the accident the respondent would have remained in employment no less remunerative than the employment in which he was engaged at the time of the accident. Next, it was argued that his Honour made an error of fact, in calculating the assumed United States earnings, in respect of the element of bonus that would have been involved in those earnings. In that connection, senior counsel for the appellant argued that his Honour's finding was inconsistent with the evidence in the form of a letter from Mr Wagner which appears between pages 946 and 948 of the appeal papers. The reasoning of his Honour on this point is set out in detail between pages 18 and 20 of his reasons for judgment. Having considered that reasoning, in the light of the error of Mr Wagner, and the arguments advanced on this appeal, I can see no error of fact involved in his Honour's conclusion. The finding of fact which his Honour made as the basis for his reasoning was well open to him on the evidence and did not involve any contradiction of what appears in Mr Wagner's letter. Thirdly, it was argued that his Honour made an unreasonably inadequate allowance for contingencies or vicissitudes. His Honour acknowledged that the allowance that he was making in this regard was, as he described it, benign. He allowed a figure of 5 per cent. Subject to the matter of $25,000, in respect of which the appellant is entitled to succeed in this appeal, this is the point in the case that has troubled me most. An allowance of 5 per cent for vicissitudes or contingencies is unusually low. However, senior counsel for the respondent has pointed out a number of features of the case, including the fact that the claim for past loss of income and diminution in future earning capacity was based upon the modest assumption that subject to the United States possibility the respondent would have had no career advancement between the ages of forty-seven and sixty-five. That, it seems to me, is a fair point. In addition, there are the findings of fact made by his Honour as to the respondent's background and capacity. Of course, the evidence before his Honour, and in particular the evidence as to what happened to the Fison business after the date of this accident, would have served to focus his Honour's attention on the risks that are involved in any business or employment activity. Ultimately Ihave come to the conclusion that it has not been shown that the selection of the figure of 5 per cent was beyond the range of proper discretionary judgment. URJ GESSEY v MORRISON (Gleeson CJ) 5 The next major area of challenge to the calculation of damages involves the amounts that were allowed for past care and for future care with reference to the provisions of s72 of the Motor Accidents Act. The amount that was allowed for past care was $55,865 and the appellant says this should be reduced to $7,755. The amount allowed for future care was $173,466, and the appellant says this should be reduced to nil. The matter is dealt with in the reasons for judgment between pages 29 and 33. The principles relevant to the point of the appellant's challenge are considered in the case of Marsland v Andjelic (1933) 31 NSWLR 162, and in Nicholson u Nicholson (1994) 35 NSWLR 308. In relation to the award for past care the principal complaint made on behalf of the appellant concerns the starting point chosen by his Honour for the commencement of the period of six months referred to in s72 of the Motor Accidents Act. His Honour said that the period began to run when the respondent was transferred from intensive care to a specialised spinal unit. The appellant submits, on the other hand, that the period should have been taken to have commenced not when the appellant went into the specialised spinal unit but when he went into the rehabilitation centre. The point is that whilst the appellant was in the spinal unit his wife devoted a substantial amount of care and attention to him and the question is whether she was providing at that stage services reasonably needed, or whether the case on the facts was closer to that of Nicholson v Nicholson. The relevant evidence of Mrs Morrison touching this point appears from pages 332 to 334 of the appeal papers. She explained in great detail what she did whilst her husband was in the spinal care unit. As senior counsel for the respondent has pointed out, it is important in this connection to bear in mind that the respondent was not merely affected with paraplegia but was also suffering from brain damage and severe depression. This I take to be the point of observation made by Spender AJ at 35 of his reasons for judgment, lines M to P. On the evidence before his Honour it was well open to him to make the judgment that the nature and extent of what Mrs Morrison was doing whilst her husband was in the spinal unit produced the consequence that time began to run for the purposes of s72. In relation to future care his Honour dealt with the matter from pages 33 to 35 of his reasons for judgment. He made the following finding (at 35): "I find that there is a continuing need for nursing and domestic assistance which runs to 40 hours a week which must allow, of course, for commercially provided services - and that the probabilities are that the difference between the commercially provided services referred to above, and what is otherwise needed, would be provided by Mrs Morrison. This would be continuous, and looked at on the basis of the present prescription that means that she will continue to provide such assistance (or that such assistance will be needed) within s72 of the Motor Accidents Act for around 24 hours a week. It will reduce in the future as commercially provided services increase: see (b) above. That is, I think a reasonable balance. " It was argued that this finding of fact was unsupported by the evidence and in particular was inconsistent with the opinions of Drs Yeo and Buckley as to the nature and extent of the respondent's need for future care. The relevant evidence touching this finding appears particularly in exhibit Q, and in the oral evidence at 469-492 of the appeal book. In evaluating that evidence it is necessary, I think, to allow for something of an ambiguity in the 6 UNREPORTED JUDGMENTS subject of nursing or nursing care. Much of what might be fairly described as care activity to be undertaken by Mrs Morrison is rather different from what was described as professional nursing care or what might be adverted to by Dr Yeo and Dr Buckley in their judgments. In any event, having regard to the extensive evidence before him as to what Mrs Morrison actually does for her husband, his Honour was not bound by the assessments of future need made by the two doctors and was well entitled to take what Mrs Morrison actually does into account and to treat it as evidence of what was needed. In that respect once again his Honour's decision would no doubt have been influenced by his assessment of Mrs Morrison. The next challenge concerns the future need for an appliance elliptically described as an RGO. The allowance made in this area was $173,533 and it is claimed by the appellant that it should be reduced to $37,551. Once again his Honour worked on the basis that, on an assumption regarded by him as reasonable and appropriate, it was certain that the expenses he took into account would be incurred. The appellant says he should have set about evaluating a chance and was over-estimating the likelihood by treating it at, in effect, 100 per cent. On the evidence it was open to his Honour to make the finding of fact upon which his assessment was based and there is no error of fact or principle demonstrated in the approach that he took. The next item concerns future housing maintenance. His Honour allowed $14,307 and that should be reduced, it is said, to $7,500. The nature of this claim is as follows. Perhaps not surprisingly, having regard to his personal skills and background, the respondent was a man who did an unusually extensive amount of household maintenance himself rather than employing outside people. This item was included to allow for the fact that one of the aspects of loss that he will suffer by reason of his injury involved the need now to engage outside people to do work that he previously would have been capable of and, apparently, would have enjoyed doing himself. I see no error in the assessment made by his Honour in this respect. I pass over the next item which relates to two motor vehicles for the moment and come to the subject of computer costs. His Honour's reasoning in relation to this aspect of the matter appears from pages 46 to 47 of his judgment. I see no error of fact or principle in what he said there. The same applies to the next two items, one of which is a Parmaker invalid chair, and the other of which is a machine described as a Moto/Pico machine. It is argued that the need for those devices was not shown on the evidence but his Honour's findings of need are clear and are justified on the material before him. There was a challenge to a provision made in respect of future physiotherapy expenses. Mr Khalifeh provides expert services to the respondent and the nature and extent of those services is related in some respects to the appliance earlier described as an RGO. It is unnecessary for the purposes of this challenge to go into the evidence about the RGO although it may be remarked that is a very interesting subject. It suffices to say that his Honour's reasoning on the point appears at 38 of his reasons for judgment. Complaint was made about the hourly rate charged by Mr Khalifeh allowed in his Honour's reasons but, as was pointed out by the respondent, the services provided by Mr Khalifeh exceed in expertise the services provided by those URJ GESSEY v MORRISON (Cole JA) 7 whose lower rates were provided by the appellant. No error has been demonstrated in his Honour's reasoning on this point. The only error that has been shown in the calculation involves the amount of $25,000 that was allowed by his Honour as capital costs of a motor vehicle. In fairness to his Honour I should say that I have the strongest suspicion that the point on which the appellant is entitled to succeed in relation to this matter is not one which was raised before his Honour or argued at first instance. It is a point that was raised from the Bench in the course of this appeal and it was not mentioned, so far as I can see, in any of the written submissions. However, it appears to be a point that is unanswerable. Shortly stated it is as follows. In calculating the economic loss suffered by the respondent allowance was made for the motor vehicle that was provided for him in his Australian employment and which, it was assumed, would have been provided for him in his United States employment. In working out the amount he lost as a result of the unavailability of that motor vehicle a figure was taken separately allowed under the heading "Motor Vehicle Expenses". On examination it appears that the calculation of motor vehicle expenses, which was not in dispute at first instance, included an allowance for depreciation. Apparently that was not noticed at first instance and a separate allowance was made for the capital cost of a motor vehicle at $25,000. In principle an allowance for depreciation covers the capital cost of a motor vehicle and there was an element of doubling-up involved in the $25,000 which his Honour allowed in this respect. It is for that reason that I propose that the award of damages should be reduced marginally from $2,601,045 to $2,576,045. There was a cross-appeal concerning his Honour's refusal to make an order for interest. That involved the exercise of a discretionary judgment by the trial judge. No error of fact is suggested on his behalf. His judgment was based upon information before him as to settlement negotiations that had taken place up until a very late stage of the hearing. Senior counsel for the cross-appellant points to the extent of the difference between the highest offer that was made by the appellant and the amount of the award. Spender AJ took that into account, but he also took into account the other aspects of the case referred to in his reasoning on this point. I see no error of fact or principle and the exercise of discretion in this regard is not one with which this Court should interfere. In my view because the appellant has succeeded only marginally, and then on a point that does not appear to have been noticed at first instance, the proper order for costs is that the appellant should pay the respondent's costs of the appeal. Accordingly, the orders that I would propose are as follows. The appeal should be allowed to the extent of $25,000 but otherwise should be dismissed. The orders made by Spender AJ should stand except to the extent that the figure of $2,601,045 should be reduced to $2,576,045. The cross-appeal should be dismissed. The appellant should be ordered to pay the respondent's costs of the appeal. I note there is going to be an application about the basis upon which those costs can be assessed and we can deal with that when we come to it in due course. Powell JA I agree with the orders proposed by the Chief Justice and I would not wish to add anything to his Honour's reasons. Cole JA I also agree. (Mr Webb QC made application for indemnity costs.) GLEESON CJ: The orders of the court will be as I have proposed. A further order will be that the respondent's costs on and from 29 September 1995 should be paid on an indemnity basis. 8 UNREPORTED JUDGMENTS 1 Appeal allowed to the extent of $25,000; otherwise dismissed. 2 Judgment for $2,576,045 substituted for judgment as first instance. 3 Cross-appeal dismissed. 4 Appellant to pay respondent's costs of appeal; the costs on and from 29 5 September 1995 to be on an indemnity basis. Representation: Counsel for the Appellant: JE Machonachie QC/ML Williams 10 — Solicitors for the Appellant: Caruana Kay and Barry Counsel for the Respondent: P Webb QC/D Conti Solicitors for the Respondent: McClellands