GIO WORKER'S COMPENSATION (NSW) LIMITED v EATON SUPREME COURT OF NEW SOUTH WALES — COURT OF APPEAL SHELLER and COLE JJA 26 August 1996 [1996] NSWCA 215 PERSONAL INJURY — Workers Compensation Act 1987 s151H — subsequent injury — assessment of damages Sheller JA. GIO Worker's Compensation (NSW) Limited appeals against a decision of his Honour Judge Mahoney QC given on 26 July 1995. The plaintiff and first respondent, Stephen Allan Eaton, was an employee of the second respondent, the Commissioner of Main Roads, to which I will refer as the RTA, on two occasions when he was injured in the course of his employment. The first occasion was on 20 August 1982, and has been described as the Somersby incident, and the second on 26 November or 3 December 1991, and has been described as the Mount Kuring-gai incident. The trial Judge found that the second incident occurred on 3 December 1991 and that finding is not challenged. Mr Eaton sued the RTA for negligence and breach of duty. The proceedings were commenced in 1987. On 13 June 1995 RTA filed a third party notice against GIO General Limited (GIO) pleading that it was entitled to be indemnified in respect of its liability to the plaintiff. GIO's defence to the third party claim was that it went off risk as worker's compensation insurer on 30 June 1988. There were various issues between the parties relating to the matters of limitation and otherwise but it is unnecessary to go into those. His Honour found a verdict for the plaintiff against RTA in the sum of $684,648.23. On the third party proceedings his Honour was satisfied that RTA was entitled to be indemnified by GIO except for the amount of worker's compensation entitlements referable to the Mount Kuring-gai incident which was ultimately quantified by consent at $533.20. This result was explained by his Honour's conclusion that any worker's compensation to which the plaintiff might have been entitled or might in the future become entitled in respect of the Mount Kuring-gai incident must be deducted from the verdict. Section 151H of the Worker's Compensation Act 1987 precluded recovery for economic loss unless the worker had received a serious injury, with like consequences unders151G(3) of the Act in terms of recovery for non-economic loss. This conclusion was not challenged in this appeal but explains the ground of appeal in which GIO contends that the injury suffered on 3 December 1991 comprised a serious injury within the meaning of s 151H of the Act. By leave of the Court GIO relied upon an amended notice of appeal in which there are seven grounds six of which it argued. The first two are against the trial Judge's finding that the injury suffered on 3 December 1991 did not cause a significant impairment to the plaintiff's ability to lead a normal life and that the injury suffered on that date was not a serious injury within the meaning of the section. GIO did not challenge his Honour's findings on negligence or contributory negligence. 2 UNREPORTED JUDGMENTS The Somersby incident occurred when the plaintiff was working waist deep in a trench several metres below the level of the tar surface adjacent to the western border of the Newcastle Freeway. While he was standing there he was struck on the safety helmet and right shoulder by a large chunk of asphalt which detached itself from the sealing of the expressway and which weighed between eight to ten kilograms. The chunk fell about four to six metres and cracked the plaintiff's safety helmet. The trial Judge found that the incident occasioned very serious injuries to the plaintiffs skeletal system and his soft tissue system. The Mount Kuring-gai incident occurred when another employee of the RTA, Mr Giles, in the course of what was referred to as a slanging match with the plaintiff, tugged the cloth baseball-like cap that the plaintiff was wearing. This caused the plaintiff a spasm from which he fell to the ground. The trial Judge found that until December 1991, there had been no basis for the diagnosing of any condition other than soft tissue injuries and osseous damage to the cervical spine of the plaintiff at two levels, C3/C4, and C6/C7. His Honour was satisfied that, as a result of the Somersby incident, the plaintiff sustained soft tissue damage to the neck and right shoulder and osseous damage to the cervical spine at C3/C4 and C6/C7 at least, and said that the osseous damage might be more widespread than had yet been diagnosed. On 16 May 1995 an MRI scan produced a diagnosis of post traumatic myelomalacia suffered by the plaintiff. His Honour said that the chunk of tar initiated a post traumatic myelomalacia and other nerve impingement and damage consequent upon bony damage to the cervical spine and that the Mount Kuring-gai incident exacerbated the injuries to the plaintiff's body and principally his cervical spine for a short time after which he continued on in the way he would have been if it had not occurred. His Honour had little difficulty in coming to the view that it was the tar rather than the cloth cap incident which produced post traumatic myelomalacia. His Honour said 'I see nothing in the evidence which convinces me to regard the onset of that condition as being attributable to any other causes or factors.' He said: For my part, the evidence in this case points to this: he sustained a very serious injury at the Somersby incident which rendered him extremely susceptible in the long term to a high risk of recurrent florid episodes and eventually to ending up in his present state even though the industrial disability produced in the period immediately following the Somersby incident was in present terms relatively slight. Dr Foo could appreciate clinically the severity of the condition at early examinations even though the level of sophistication of diagnostic tools then available were not good enough to enable him to make that level of diagnosis which is now possible with the latest technique. The very fragile balance between industrial fitness and unfitness, between tolerable pain and discomfort and intolerable pain and discomfort was liable to be upset at the drop of a hat, to use an every day expression. The Mount Kuring-gai incident was little more than a drop of a hat albeit one assisted by Mr Giles. It is noticeable that no localised trauma around the forehead or the tops of the ears was suffered when the hat was pulled. There is no suggestion that its fabric was damaged. It has not apparently been kept in the crib room by the RTA as a reminder to its road workers always to wear protection as was the case with the hard hat that was struck by a lump of asphalt. Furthermore, the amount of purchase Mr Giles would have been able to gain by gripping a peaked hat such as Mr Eaton was wearing would not have been all that great. What immediately followed the hat pull was very dramatic for Mr Eaton. Those immediately following events, however, revealed not the extent of the trauma visited upon him on that occasion but the level to which his susceptibility from the Somersby incident to an exacerbation of symptoms had sunk by that stage. He would probably URJ GIO WORKER'S COMPENSATION (NSW) LIMITED v EATON (Sheller JA) 3 have experienced the same things if he had sneezed instead of having had his hat pulled. The hat pulling caused no fresh injury to him. In support of its submission that the December 1991 incident did cause serious impairment, GIO referred to a number of matters, notably the fact that early on after the Somersby incident the plaintiff was but rarely absent from work andwas routinely engaged in heavy work and that immediately after that incident he did not lose consciousness. It was pointed out that a laminectomy that was performed on 22 February 1990 was necessitated by the condition of the cervical spine at C3/C4, and a fusion, which was conducted on 15 October 1992 after the Mount Kuring-gai incident, was performed at the C6/C7 level. But in particular GIO relied upon the reports of Dr Segelov, who had examined the plaintiff and prepared reports on a number of occasions going back to January 1989. GIO relied upon what appeared in all those reports and also upon Dr Segelov's oral evidence. However, of particular significance to make the point, GIO advanced Dr Segelov's reports of the 16 March 1993 and 23 August 1994. In the second of those reports Dr Segelov concluded by saying It would appear therefore that the incident in November 1991 was the causative factor for ongoing symptoms and incapacity at the level at which the complaints are now made. Had the patient not experienced the 1991 incident it would appear likely he would have not required further surgery as carried out on 15 October 1993, and both Dr Bentivoglio and | feel that the incident in 1991 resulted in damage to the interior structure of the C6/C7 disc. In a report of 1 June 1995 Dr Segelov referred to the report of the MRI scan of 16 May 1995 and said: These findings indicate a significant degree of damage to the spinal cord consequent on this patient's original injury and aggravated by his subsequent surgery. This finding limits the amount of recovery likely to occur in the future, and in my opinion regarding his diagnosis and prognosis remains as expressed in my report to you dated 23 August 1994.'"In the course of his oral evidence, Dr Segelov was asked to put percentage figures on the extent of contribution of each incident to the plaintiff's current condition. I do not think it necessary to go through this evidence in detail but it would be correct to say that the doctor attributed a significant percentage, perhaps up to as much as 50 per cent, to events subsequent to the Somersby incident. Mr Cassidy QC, who appeared for GIO, referred also to a report from Dr Wolfenden of 14 April 1994 which attributed the plaintiff's condition in part to the second injury. Mr Cassidy correctly pointed out that there were other incidents after 1982 and before the Mount Kuring-gai incident in which the plaintiff had days off work following particular activity that he had undertaken. In written submissions the RTA referred to a number of matters which are borne out by the evidence and by his Honour's judgment. However, I think it unnecessary to go to any of those. His Honour referred to Dr Segelov's evidence and said that he appreciated that on one view of it the teasing out of the words he used in Court could be made to formulate an argument to the effect that the falling lump of asphalt and the cap pulling episode each contributed equally to Mr Eaton's present condition. His Honour said: I would certainly not come to that decision myself. I do not understand Dr Segelov to have done so either. If he did, it is not an expression of medical opinion which finds favour with me. 4 UNREPORTED JUDGMENTS Any grouping of words which he used and which could be converted into an argument to support such a proposition would fail to pay regard to the overall effect of his evidence as gleaned from what he wrote and the way he expressed his views in the witness box. I am quite certain that an application of commonsense by a jury of four lay persons to the evidence as a whole would not so regard the two incidents either, whether or not they were both properly instructed and able to understand the legal consequences of whatever finding they might reach. I find myself in complete agreement with what his Honour said. It seems to me that the cap pulling incident was no more than a minor one which had the consequence of spasm and the plaintiff's falling to the ground because of the condition resulting from the Somersby incident. In my opinion, as his Honour said, a commonsense view of the evidence would lead inevitably to the conclusion that the plaintiff's condition after the Mount Kuring-gai incident was caused by the earlier Somersby incident. No ground has been shown for disturbing his Honour's conclusion in this regard and this part of the appeal fails. The third ground of appeal relates to his Honour's conclusion that the plaintiff was left with no residual earning capacity. The trial Judge said that he was satisfied that with his background and his present injuries, the plaintiff was unable to be trained for any work which was likely to earn him any assessable income whatsoever. He said: It might be thought that if he is fit enough to go for a walk with his dog twice a day then he should be able to do a gatekeeper's job or look after the console at a service station or be a doorman at a club or fulfil any one of the sorts of occupations which counsel for defendants customarily use by way of example to cross examine a plaintiff who claims that he is unfit for work. His Honour said a little later: This particular plaintiff, Mr Eaton, lacks any sort of training and any suggestions that there is a wide variety of jobs which, if he was properly motivated or properly assisted he would be able to turn his hand to I reject out of hand. He ultimately concluded that: [i]t would be unrealistic to regard him as anything other than totally unemployable for the rest of his economic life. GIO referred to parts of the evidence which indicated that since the plaintiff had ceased work after the Mount Kuring-gai incident he had engaged in a number of activities such as using a lathe, levelling ground, laying foundations and so on. However, with all respect I am not satisfied that any of this material goes to undermine the firm conclusion to which his Honour came after reviewing all the evidence before him. The second point taken about the amount of damages awarded for future economic loss related to the multiplier that his Honour used for the purpose of calculation. It has been agreed by the parties that in this respect his Honour was in error and that the correct multiplier produces an amount of $319,178.47in place of the amount of $325,314.99 which his Honour awarded. The amount of damages will need to be adjusted to take account of this. The fourth ground of appeal related to the discount that his Honour allowed for vicissitudes in calculating loss of future earning capacity. His Honour took account of the facts that the plaintiff had been an outdoor worker, where there was likely to be physical confrontation, and that he was a man of slight physical stature. On that basis he allowed 17.5 per cent as a discounting factor for URJ GIO WORKER'S COMPENSATION (NSW) LIMITED v EATON (Sheller JA) 5 vicissitudes instead of the traditional 15 per cent. The appellant argued that even so, the discount was too low and in particular referred to some evidence which suggested that the plaintiff suffered from a lower back disability which was not in any way attributable to either of the incidents with which the Court is concerned. However, even taking account of this, I am not persuaded that there was any error in the amount of discount which his Honour allowed. In the circumstances which were thoroughly canvassed in the evidence before his Honour, this was an appropriate discount and I do not think that this ground of appeal succeeds. The fifth ground of appeal is in respect of general damages which GIO submitted were excessive. In this regard I would refer without quoting them at length to the passages in his Honour's judgment which find their place at various parts of the judgment relating to the continuing pain and suffering of the plaintiff, his age, the poor prospects in terms of his future and the effect thatthe pain and suffering has had upon his self esteem and his ability to enjoy the society of his wife and son in the family environment. Having closely read his Honour's judgment and considered the matters that have been advanced on behalf of GIO, I am not persuaded that the amount of general damages awarded by his Honour indicated any error of principle or went outside the appropriate range. In my opinion this ground of appeal also fails. The final and seventh ground of appeal relates to past economic loss. With respect to his Honour, the reading of the judgment on its face does produce a little confusion in the reader's mind. However, the parties have sensibly considered the matter and have agreed that the basis of the agreed comparable earnings rate between 11 October 1991, when the last compensation payment was made, and the date of judgment, was $86,094. An amount of $22,064.20 should be added to this amount subject to one matter, to which I will return, to produce what his Honour described as the total past economic loss factor of $108,158.20. On this figure his Honour made a calculation of interest which it is agreed is erroneous. The correct figure should be $21,695.68. To that extent the verdict should be amended. However there is one further argument advanced on behalf of GIO which relates to the amount of interest. It appears that the agreed calculation of $21,695.68 does not take account of the fact demonstrated by the evidence that some part of the worker's compensation payments were made after 11 October1991. An adjustment to take account of that reduced the amount of interest to $20,893.85. To determine which way that amount of $800 should go has been left to the Court. It seems to me that if, as we have been told by senior counsel for the appellant, the calculation of interest did not allow for payments after 11 October 1991, then the lower amount of interest is appropriate. This appeal is, of course, an appeal by the third party against the judgment on the third party notice. In my opinion it succeeds but only to the extent necessary to take account of the amendments to the amount for future economic loss and the amount of interest on past economic loss to which I have referred. Otherwise it fails. However, that leaves untouched the question of the amendments to which I have referred as between the RTA, which substantially succeeds on the appeal, and the plaintiff. This Court was not directly invited on the appeal to deal with that question and I would not propose that we should do so absent some proposal from counsel. 6 UNREPORTED JUDGMENTS What then is left to be determined is the amount of the appropriate order on the third party claim and any question of costs. I would be disposed, subject to anything that counsel wish to say, to order that GIO pay the respondents" costs of the appeal. Cole JA. I agree. Sheller JA. Mr Cassidy rather than take up a lot of time with it now a document can be produced as to what sort of order you would ask the Court to make and the other parties can look at it and agree and hopefully we can deal with that by consent at 10.15 tomorrow morning if not before. Is there anything you want to say about what I said about costs? CASSIDY: No, your Honour I would have no submissions. SHELLER JA: Is there anything any other party wishes to say at this point of time? EINSTEIN: As I understand your Honour the third party is to pay the costs of both the respondents of the appeal. SHELLER JA: Yes. CASSIDY: The only thing that I'm a little confused about is the second last sentence of your Honour's judgment relating to the situation between the plaintiff and the defendant. SHELLER JA: Well I do not think you need worry about it Mr Cassidy but if anybody wants to suggest there ought to be some other order made other than an adjustment to the amount you have to pay then it is up to them as far as I am concerned. If it can be agreed it can be dealt with in the registry by consent and there is no need for you to come back. That would be the preferable course. Orders accordingly. Counsel for the appellant: DI Cassidy QC Solicitors for the appellant: William K Chambers Counsel for the first respondent: PM Hall QC/S Hickey Solicitors for the first respondent: Carroll and O'Dea Counsel for the second respondent: C Einstein QC/B Green Solicitors for the second respondent: Hunt and Hunt