MANASSEH v DAVID SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL PRIESTLEY and COLE JJA 30 March 1995, 6 April 1995 [1995] NSWCA 267 PERSONAL INJURIES — ECONOMIC LOSS — REASSESSMENT OF DAMAGES — plaintiff injured in car accident — trial judge found that plaintiff's working capacity was substantially reduced by the injury sustained as a result of the accident — there was evidence that the plaintiff had worked in various clerical jobs before the accident. However since then the plaintiff had not been working as a clerk but in various entrepreneurial situations in regard to which there was very little evidence before the court upon which the court could form any view of what he had been earning in the years immediately before the injury — trial judge therefore allowed nothing for past and future- economic loss. Held: On the authority of Malec v JC Hutton (1990) 169 CLR 638, the trial judge was bound to consider the chance that the plaintiff, uninjured, would have given up self-employment and returned to a job on wages. In doing so he had to conjecture what the plaintiff would have done had he not been injured, and also, in regard to the time after the trial, both what the plaintiff, uninjured, would have been likely to earn, and injured, would be likely to earn. Priestley and Cole JJA This is a plaintiff's appeal against the amount of damages awarded him in 1994 by a judgment of Garling DCJ. The plaintiffs claim arose from a car accident in which he was injured in 1979. The plaintiff was then approaching thirty. The proceedings were begun in 1982. Garling DCJ heard these proceedings together with other proceedings by the plaintiff against another defendant arising from a car accident in which the plaintiff had been injured in 1978. In the proceedings concerning the 1978 accident the judge assessed the damages at $7,920 for general damages and interest. In the proceedings concerning the 1979 accident, the judge assessed the damages at $120,583, which was the sum of $90,583 for general damages and interest and $30,000 for out of pocket expenses. He allowed nothing for loss of income either past or future in either proceeding. The judge thought at least 90 per cent of the plaintiffs problems arose from the second accident. The plaintiff appealed against the judgment in the proceedings concerning the second accident, but not the first. The question raised in the appeal is whether the damages should have included amounts awarded for economic loss. The judge relied principally upon the plaintiff's treating doctor, Dr Weisz, for his findings about the state of the plaintiff's health from time to time and at the time of the trial. For the purposes of the case it was sufficient for his Honour to make the following general summary: "T find in the second accident the plaintiff sustained head, neck and lumbar spine injuries resulting in operative treatment and continuing disability. I accept that at least 90 percent of the plaintiffs problems arise from the second accident. Inote Dr Weisz's opinion that the plaintiff is fit for clerical type of sedentary duty and fit for work for a limited number of hours during his working week. I note 2 UNREPORTED JUDGMENTS that he has a 40 to 50 percent loss of use of his lumbar spine. There doesn't seem to be a lot of dispute about the plaintiff's fitness for work. In fact, if anything, the defendant's doctors were more pessimistic about his working ability than the plaintiff's." The judge's reasons for refusing to award damages for economic loss combined the following elements: (1) He thought the plaintiffs credibility was damaged by admissions he made in cross-examination about past occasions when he had told deliberate lies for his own advantage. Because of this he was not prepared to accept the plaintiff's evidence on important matters, where challenged, unless it was corroborated. (2) The plaintiff had not attempted to prove what were his post accident earnings. All that was tendered in his case were award wages rates. The defendant tendered an accountant's report and taxation returns, but the judge referred again to the real difficulty he had in accepting any evidence given by the plaintiff (and we assume here he was speaking about whatever appeared in the tax returns as well) about loss of income or wages, especially because the plaintiff had admitted that his income tax returns were not always representative of the wages he earned. As to the accountant's report and the information in the tax returns, the judge said there were "some figures in there, there are some amounts of income but I do not know what they come from, I have no idea". A little later he commented that the plaintiff during his working life had not earned any great amount of wages. (3) The judge was also of the view that there was absolutely no evidence before him that the plaintiff had or would have earned any money whether or not he had his accidents or injuries. The judge then stated his conclusions. As to loss of income between accident and trial, the judge said he was satisfied that while the plaintiff had had from time to time a loss of earning capacity he had not demonstrated any loss of income during the period. In regard to the claim for future loss of income he said that as to the future there could be no doubt the plaintiff had a loss of earning capacity but there was no evidence before him which would allow him to assess what sort of ability he had to earn any moneys or if he did how much he could have earned. He was not prepared to guess. He ended with a summary of his conclusions about both past and future economic loss. He said again that he did not accept the plaintiff's evidence as to loss of wage unless corroborated; it was not corroborated; the plaintiff had chosen not to tender any documents in support of his claimed loss of income; if the plaintiff had an income before the accident he no doubt would have paid tax on it and thus have been able to show what it was; there was thus no satisfactory evidence of any actual loss by the plaintiff; the judge therefore did not allow any amount for past or future loss of income or loss of earning capacity. In the appeal, counsel for the plaintiff first submitted that the judge had been wrong as to consideration (3) above. The evidence tendered by the defendant relating to the plaintiffs tax returns showed, even if unsatisfactorily, that the plaintiff had earned some income both before and after the accident. More importantly, there was evidence before the judge that from the age of sixteen until he was twenty-two the plaintiff had worked in various clerical jobs, usually as an accounts clerk. These submissions appear to be correct. Counsel for the defendant in this court agreed that there had been no challenge at the trial to the URJ MANASSEH v DAVID (Priestley and Cole JJA) 3 evidence given by the plaintiff about his various clerical employments and that it was not open to the judge to reject it. Plaintiff's counsel then submitted that the evidence concerning the plaintiff's work as a clerk established that, uninjured, he had a working capacity which would earn him wages at least at the level of a clerk. He relied on the fact that the trial judge acknowledged that the plaintiffs working capacity was substantially reduced by the injury; the judge had said, on the basis of medical evidence he accepted that after the injury the plaintiff reached the stage where he could work in a sedentary occupation for up to twenty hours a week. The argument then proceeded that the trial judge had been bound to consider what prospects there were that the plaintiff, uninjured, would have returned to working as a clerk, and in the light of the assessment of that prospect, then to consider the wage loss likely to flow from the plaintiff's diminished ability to earn wages in a clerical job. The trial judge, said counsel, had simply not carried out this part of the damages-assessing task. Counsel for the defendant replied to the submissions on behalf of the plaintiff in two ways. First, it was said that the approach of the trial judge was correct. He had been entitled not to accept any contention of the plaintiff which was not corroborated and nothing concerning his assertions about what he earned before and after the accident was corroborated. The trial judge was therefore right in saying that he had no way of knowing whether the plaintiff had or would have earned any money whether or not he had been injured in the accident. The state of the evidence left it open to the trial judge to conclude that he had not been satisfied that the plaintiff had suffered or would suffer any loss at all because of his impaired working capacity. We do not think this argument should be accepted. Before the injury the plaintiff had the working capacity to earn wages as an account clerk. After the injury there were some periods when he was deprived of that capacity altogether and for the balance of the time fit for sedentary work, including clerical work, for a limited number of hours during his working week. Had he been working as a clerk at the time of the injury and had the evidence been that he intended but for the injury to continue working as a clerk, the assessment of economic loss would have been relatively straightforward; the court would have estimated as well as it could on the materials before it what was the extent of the partial incapacity caused by the injury and what the plaintiff would have been able to earn as a clerk by using that reduced capacity. The difference between his pre-injury wage and his conjectured wage injured would be the figure on which the court would work, subject to such adjustments as the circumstances of a particular case made appropriate, in calculating an overall figure for economic loss. The present case is more complicated because for some years before the injury the plaintiff had not been working as a clerk but in various self-employed or partnership situations in regard to which there was very little evidence before the court upon which the court could form any view of what he had been earning in the years immediately before the injury. In Medlin v State Government Insurance Commission (1995) 127 ALR 180, the High Court restated the longstanding rules about the recovery of damages for loss of earning capacity. For a plaintiff to recover damages two requirements must be satisfied: the first, that the plaintiff's earning capacity has in fact been diminished by reason of the injury; second, that a diminution of earning capacity is or may be productive of financial loss (per Deane, Dawson, Toohey and Gaudron JJ, at 181). 4 UNREPORTED JUDGMENTS A little later the same judges pointed out that a plaintiff will not be able to recover for diminution in earning capacity "in circumstances where the diminution has had and will have no adverse effect on actual earnings and will be productive of no economic loss" (at 182). In the circumstances of the present case it is in our view clear that the diminution of earning capacity which the trial judge accepted had been caused in the plaintiff by the injury had the potential to be productive of financial loss and it could not be said that the diminution would not be productive of economic loss. The trial judge therefore had to attempt to value that loss. In doing so he had to consider what events would have happened had the plaintiff not been injured, and also, in regard to the time after trial, both what the plaintiff, uninjured, would have been likely to earn, and injured, would be likely to earn. As the High Court pointed out in Malec v JC Hutton Pty Ltd (1990) 169 CLR 638 at 643, repeating earlier authority, in dealing with events which it is alleged would or would not have occurred or might or might not yet occur, the court assesses the degree of probability that an event would have occurred or might occur and adjusts its award of damages to reflect the degree of probability. This is so whether it is alleged that the event would have occurred before or might occur after the assessment of damages takes place. In the present case therefore, the trial judge had to undertake the difficult task of considering what were the chances that, uninjured, the plaintiff would at some stage have returned from his apparently unprofitable self employment to the simpler life of a wage earner. Having assessed the chances of that, the court would take into account the earning capacity as a clerk of the plaintiff in his injured state and arrive at a figure for weekly loss which could be used as a basis for calculating both pre-trial and post trial economic loss. There were wage figures in evidence before the trial judge enabling this process to be carried out. These figures showed the award wage rates for salesmen and clerks. The plaintiff conceded that as the state of the evidence was left before the trial judge the lower of these two sets of figures (that for salesmen) should be taken. The award rates in evidence were said to justify a figure of about $150 net per week on average as what the plaintiff could have earned as a wage earner during the period 1981 to 1987 and $200 net per week for the period from 1990 to trial (the plaintiff was not claiming for pre-trial periods not included in these two periods). It was said that although the plaintiff in theory could probably have handled fifteen to twenty hours a week in some sedentary tasks it was quite unrealistic to expect he would have been employed at all given his medical history and therefore the full allowance should be made for the periods claimed for. Similarly for future economic loss $200 net per week to age sixty-five should be allowed. It is at this stage that we should return to the submissions made for the defendant. While putting as his first submission, and not in any way resiling from it, the contention already set out that the trial judge was quite justified in taking the course which he did on the basis of the evidence before him, counsel for the defendant recognised that the court might take the view that even as the evidence was left before the trial judge, it had been incumbent upon him to attempt the assessment exercise we have outlined, and put before the court an alternative calculation of economic loss. As to the pre-trial period, this calculation assumed that the assessment should be made in respect of the periods claimed by the plaintiff, that is 335 weeks from 1981 to 1987 and 227 weeks from 1990 to trial. URJ MANASSEH v DAVID (Priestley and Cole JJA) 5 It was then submitted, taking the plaintiff's award-derived weekly net figures as the starting point, that in view of the extreme vagueness of the plaintiff's intentions about future employment as at the date of the injury, and in view of the trial judge's dissatisfaction with his evidence, the court should not take a view favourable to the plaintiff concerning the wages he could earn as a clerk in his injured state and the court would not be safe in taking any figure greater than $50 as representing the difference between his earning capacity uninjured and injured. Counsel for the defendant recognised also that in arriving at a figure of this kind the court should not only take the matters already mentioned into account but also recognise, in the plaintiff's favour, that there would be real difficulties in a person suffering the injuries which the plaintiff suffered from the accident in obtaining part time clerical work. We agree with the approach suggested by counsel for the defendant. Looked at from the plaintiffs point of view it is a very conservative one, but that is the result of the vague and unsatisfactory nature of his evidence. We do not think it would be fair to the defendant to adopt figures more favourable to the plaintiff. Taking into account then the various rather imponderable matters already mentioned, our conclusion is that the fair figure for the court to adopt, in light of the judge's primary findings, which were soundly based on the evidence, is $50 net per week. One of the factors in arriving at this figure is our estimation of the chance that the plaintiff, uninjured, would have given up self employment and returned to a job on wages. The submission for the plaintiff was that simple economic imperatives would have driven him to do this. We think that it is a strong point in the plaintiffs case that there was a real chance that this would have happened. But we also think that a very weak point in the plaintiff's case is the lack of any credible evidence upon which any kind of informed estimate could be made of the likelihood of his returning, had he not been injured, to the ranks of the wage earners. As the evidence was left, and in light of the trial judge's views of the plaintiff's credibility, the chances must have been strong that the plaintiff would have pursued his small-entrepreneurial way, in regard to which the facts of his earning power were left wrapped in mystery. We have therefore not been prepared to treat the chance that, uninjured, he would have returned to being a wage earner, as being other than of a low order. On the assumption that the figures presented to the court by defendant's counsel are correctly calculated, the figure derived for the plaintiff's past economic loss is $28,100. It was agreed between the parties that social security payments received by the plaintiff during the relevant periods were greater than that sum, so that no interest need be calculated in connection with the past economic loss. As to future economic loss, we would start from the plaintiff's $200 per week figure, but reduce it to $50, taking into account the same considerations as before, but in the different context that it is the future that is the subject of the court's estimations. Then, using the 3% discount tables (because of the date of the accident) and the multiplier for the nineteen years for the future of 758.6, we arrive at a figure of $37,930, again assuming the correctness of the calculations of defendant's counsel. Counsel for the defendant submitted that there should be deducted from this figure the conventional 15 per cent discount for vicissitudes. However, in taking into account the various factors leading to adoption of the $50 figure for the future, we have, in a general way already taken into account the matters usually covered by vicissitudes. We therefore assess the future economic loss at $37,930 without further deduction. UNREPORTED JUDGMENTS The result is that the appeal should be upheld; the judgment below for $120,583 set aside; in its place and to take effect from the same date there should be judgment for $186,613; the defendant should pay the plaintiffs costs of the trial and the appeal; if qualified, the defendant/respondent should have a Suitors Fund Certificate. 4. 5. If qualified the defendant/respondent should have a Suitors Fund 1. Appeal upheld. 2. 3. Judgment for $186,613 entered to take effect from the date of the Judgment below for $120,583 set aside. original judgment. Defendant to pay plaintiffs costs of the trial and appeal. Certificate. Counsel for the Appellant: LT GREY Instructed by: CARROLL AND O'DEA Counsel for the Respondent: DJ RUSSELL Instructed by: GM MEADOWS