PALUMBO v IZMIRLIAN SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL GLEESON CJ and ROLFE AJA 8 June 1995, 14 June 1995 [1995] NSWCA 353 Application for New Trial on the grounds that the trial Judge failed to make sufficient allowance for non-economic loss, past economic loss and future loss of earning capacity. Court of Appeal in a position to re-assess damages. Gleeson CJ I have had the advantage of reading in draft form the judgment of Rolfe AJA. I agree with the orders proposed by his Honour and with his reasons for those orders. Rolfe AJA INTRODUCTION The Appellant, who was born on 19 April 1951 in Italy, received personal injuries in a motor vehicle accident, which occurred on 27 October 1987. Liability was not in issue and the matter came before McDevitt DCJ for the assessment of damages on | February 1995. His Honour gave judgment on 17 February 1995. At the time of the accident, and for some time before, the appellant and his wife conducted a pizza parlour, in partnership with each other, pursuant to which each was entitled to one half of the nett profits, which were distributed accordingly. Prior to the accident the appellant worked from 5.30 pm to the early hours of the following day each day, but since the accident he has only worked from 5.30 pm to 11.30 pm on all days, save for Tuesdays, on which day the business is not opened. The business was successful prior to the accident and has continued to be so since, notwithstanding the inability of the appellant to be involved in it for the time he previously was. This inability not only requires the business to be closed each Tuesday, but, from time to time, on other days the appellant is unable to work full time. The appellant is 44 years of age. His concern in the business is the making and sale of the products, in which his wife is involved. She also looks after the finances. His Honour accepted the plaintiff and his wife as truthful witnesses. NON-ECONOMIC LOSS His Honour made the following findings in relation to the injuries the appellant suffered. He referred to the report of Dr Higginbotham of 31 May 1993 in which he stated the appellant had suffered a musculo-ligamentous injury to his cervical spine, which had partially disabled him from his normal work and reduced movements of his neck to about two thirds of normal. Dr Higginbotham also reported there was about twenty per cent loss of function of the cervical spine. His Honour offered no criticism of this evidence and, as I understand it, accepted it. He continued: "T accept the evidence that he has persisting neck pain, which has the effect of limiting his working hours to the extent of from two to four hours a week. On Ist October 1993, Dr Milder recorded that having seen x-rays and the CT scan of the 2 UNREPORTED JUDGMENTS cervical spine, there is an encroachment upon the left C5-6 intervertebral foramen, but no evidence of intervertebral disc protrusion. Dr Seaton also saw CT scans and agrees with this diagnosis. The degenerative changes seen was caused by or aggravated by the accident. His condition will deteriorate with age. Dr Rivett agrees generally and states that the plaintiff is unfit for heavy lifting. For the defendant, the plaintiff was examined by Dr Basil Ireland, who reported in December 1993 that x-rays of 10 September 1993 were seen and disclosed the loss of the normal cervical lordosis, and some encroachment into the left C5-6 intervertebral foramen by the osteophyte. He did appear to have a little restriction of movement in his neck which he estimated to be 5%. I have read all the medical reports. I find on the probabilities that the plaintiff suffered soft tissue ligamentous injury to the cervical spine which has a causal connection to the present degenerative changes seen in his neck. Because of the date of the accident, it is a case to which the provisions of the Motor Accidents Act apply and if appropriate his non-economic loss must be assessed by reference to s79 of the Act and expressed as a percentage of a most extreme case. On the evidence, he worked six days per week, with no time for other activities. The ability to lead a normal life in this case is affected by the injury only in so far as it relates to his personal neck pain and his ability to work, and causes him to rest several times during the week for periods of about two hours. The evidence does not allow me to be more precise than this. On the evidence I find that the plaintiff's ability to lead a normal life is significantly impaired by the injury suffered in the accident. I assess the amount of damages to be awarded for non-economic loss to be 15% of the maximum amount which may be awarded. The maximum amount currently is $222,000. Non-economic loss awarded will thus be $33,000. S79(5) and s79(5)(a) require that $18,500 be deducted from $33,000. There will be an award for $14,500 for non-economic loss. " The appellant challenges this assessment and, in my opinion, the challenge must succeed. The seriousness of the injuries the appellant suffered is made clear by his Honour's findings. The condition is continuing and, in addition to the soft tissue injury, the accident has exaggerated or exacerbated degenerative changes in his neck. These, in my view, are reasonably severe injuries calling for a higher assessment than fifteen per cent of the maximum amount. It was not suggested that this Court is not in as good a position as his Honour was to make such an assessment and, in doing so, I have had regard to his Honour's findings as to the extent to which the appellant was injured and his Honour's acceptance of the evidence of the appellant. In these circumstances it is appropriate for this Court to re-assess this component of damages rather than send the matter back for a new trial. In my view the proper range is between twenty five per cent and thirty per cent and, accordingly, the amount awarded by his Honour was so far below that range as to entitle this Court to intervene. The appellant has contended for twenty five per cent, a figure which is, in my opinion, within the appropriate range on the facts as found Accordingly, the award for non-economic loss should be $55,500 from which the sum of $18,500 is to be deducted leaving a figure of $37,000 for non-economic loss. PAST ECONOMIC LOSS The only award for past economic loss was $359 42, which his Honour calculated by taking the plaintiffs taxable income for the financial year ended 30 June 1987 of $9,345, dividing that by 52 weeks and multiplying the result by 2 URJ PALUMBO v IZMIRLIAN (Rolfe AJA) 3 to represent a period of two weeks the shop was not open after the accident and income was lost. His Honour allowed interest on that amount at 7.8 per cent for 7.5 years of $210 26 As the amount his Honour awarded crystallised some 7.5 years ago there is no justification for the low interest figure of 7.8 per cent. However it will be necessary to look in more detail at the figures to determine past economic loss. The business was closed for two weeks after the accident. Although his Honour allowed damages in the sum of $359.42 for past economic loss the fixed costs of the business, which must have continued while it was closed, are disclosed for the year ended 30 June 1987 as $29,584.31. These would have continued to run for the two weeks and for the period, amount to $1,138, ie $29,584.31 divided by 52 and multiplied by 2. The appellant was only liable for one half ie $569. I do not find it necessary in making this assessment of damages on the evidence presented to seek to find the other costs of running the business for two weeks. It seems to me that the approach I have taken accommodates other cost factors sufficiently, particularly having regard to the amount involved. The loss is therefore the sum of $359.42 and $569, viz $928.42. Interest on this sum, which crystallised 7.5 years ago should be calculated at eleven per cent. That produces $766, which when added to $928.42 produces $1,694.42. This would, save for the payment by Transcover Authority for economic loss, also be included as part of the past economic loss. Because of the payment for economic loss I do not allow the interest component of $766. Once again I consider it appropriate for this Court to re-assess this head of loss. The evidence was that prior to the accident the business was open from 5.30 pm to 1.30 am from Mondays to Thursdays and from 5.30 pm to 2.30 am on Fridays, Saturdays and Sundays, and that the appellant worked in it seven days a week. After the accident trading hours were reduced and the business was no longer opened on Tuesdays. As I have said this was because of the injuries suffered by the appellant. His Honour held that as the nett trading income had continued to increase since the accident there was no past economic loss save for the amount of $359.42, which he allowed. However, in my opinion, that is not a correct approach. Firstly, there is no reason to suppose that if the appellant had not been injured the increase would not have been even greater. Secondly, but for the accident the business would have been open seven days per week and a reasonable inference is that the nett income derived from six days per week trading would have increased by some fourteen per cent, ie the relationship which one day bears to seven. The nett trading income for the financial years ended 30 June 1988 to 1992 was $6,354, $19,167, $27,741, $23,326 and $27,556 respectively, which totals $104,153. Fourteen per cent of that amount is $14,581 42 to which the plaintiff would have been entitled to half, namely $7,291. Accordingly, I conclude that the past economic loss suffered by the plaintiff to 30 June 1992 was $7,291 I appreciate that costs would have been incurred in opening the business on Tuesdays. But that happened on every other day the business was open and in my opinion the nett profit figure would, in all probability, have reflected for Tuesdays a similar percentage as against costs. Therefore, I do not see any basis to make any further reduction to this amount. The figures for the financial years ended 30 June 1993, 1994 and to the date of trial are not in evidence. However there is no reason why one should not take the average based on the previous five years of $1,458, (ie $7,291 divided by 5 years), which when multiplied by 2.5 years gives a further $3,645 by way of past economic loss. When that sum is added to $7,291 it produces a past economic loss of $10,936 on which I would allow interest, but for the amount of $11,180, 4 UNREPORTED JUDGMENTS which was paid to the appellant by the Transcover Authority for loss of earnings I would allow, therefore, for past economic loss $10,396 plus $928.42 for the two weeks the shop was closed. This gives a total of $11,324.42 for past economic loss. The equivalence between the amounts of $11,180 and $11,324.42 and the time when the former was paid is such that I am satisfied, in the exercise of my discretion, that it is not appropriate to award interest on the balance of about $140. FUTURE LOSS OF EARNING CAPACITY Regard must then be had to the future. The plaintiff is now aged 44 years. It is not unreasonable to assume he would have continued to work until he was 60 years ie a further period of 16 years. No submission was put to the contrary. The multiplier on the 5% Tables for that period is $579.5 and on a loss of $1,458 per annum there is a loss of $28 per week, ie $1,458 divided by 52. When the multiplier is applied to $28 it produces $16,226, which I would discount by fifteen per cent for vicissitudes to produce future loss of earning capacity of $13,792. His Honour did not allow for future loss of earning capacity because he did not think the evidence established the loss on the balance of probabilities. In my opinion when the evidence is analysed in this way it does produce the figures on which I have based my findings. It was not seriously contended on behalf of the respondent that this was not an appropriate approach to essentially uncontested facts. Accordingly it is not appropriate for the matter to go back for a new trial on these damages. An alternative case was sought to be made on the basis that various members of the family and at least one friend had offered their services without charge to assist the appellant in running the business. It was not suggested the appellant was under any obligation to pay for this. As I understand it this was alternative to the claim for past loss of earnings and the future loss of earning capacity. As the appellant should, in my opinion, succeed on the basis of an entitlement to past loss of earnings and future loss of earning capacity I consider it is unnecessary to consider the further basis suggested. Any further award would, in my opinion, tend to duplicate the damages and, in any event, I am not satisfied there has been shown to be any loss save on the day, each week, when the business is no longer opened. CONCLUSION In the result I am of the view the appellant should recover the following amounts: 1. Non-economic loss: $ 37,000.00 2. Past loss of earnings: $ 11,342.42 2. Past loss of earnings: $ 11,342.42 3. Future loss of earning capacity $ 13,792.00 4. Out-of-pocket expenses $ 10,869.58 $ 73,004.00 The orders I propose are: 1. Appeal allowed. 2. Judgment of McDevitt DCJ set aside. 3. In lieu thereof judgment for the plaintiff in the sum of the sum of $73,004.00. URJ PALUMBO v IZMIRLIAN (Rolfe AJA) 5 4. The respondent pay the appellant's of the proceedings before McDevitt DCJ and of the appeal and as to the costs of the appeal have a certificate under the Suitors' Fund Act if he is otherwise entitled to it. 5 Counsel for the Appellant: A Lakeman Solicitors for the Appellant: Teakle Ormsby and Associates Counsel for the Respondent: J Guihot 10 Solicitors for the Respondent: GM Meadows