STATE TRANSIT AUTHORITY OF NEW SOUTH WALES v MALEK SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CLARKE and SHELLER JJA, and WADDELL AJA 2 April 1996, 2 April 1996 [1996] NSWCA 500 DAMAGES — motor vehicle accident — personal injuries — failure to apportion damages for previous injuries — re-assessment of damages Sheller JA In proceedings started in the District Court in 1984 the first respondent, Charles Malek, sued the Urban Transit Authority, as the appellant was then known, and David Gatt to recover damages for injuries alleged to have been caused to Mr Malek's left knee. The injuries were said to arise out of an accident that occurred at about 3.45pm on Wednesday 4 May 1983 when Mr Malek was standing near the north eastern kerb of Hollingshead Street, Mascot near the intersection with Botany Road. A bus, owned by the appellant and driven by Mr Gatt, turned left round the corner from Botany Road into Hollingshead Street and collided with the rear of a Holden Camira which was parked in Hollingshead Street on the left hand side of the street as the bus was proceeding. The collision pushed the Camira onto Mr Malek, pinning him between the front of the Camira and another parked vehicle. The appellant admitted liability on its own behalf and on behalf of Mr Gatt. The defendants filed a third party notice against the second respondent, Tony Sarkis, the owner and driver of the Camira, claiming contribution and indemnity arising out of what was alleged to be Mr Sarkis' negligence. The proceedings were heard by his Honour Judge Lloyd-Jones. On 3 June 1992 he gave a verdict on the third party notice for Mr Sarkis. On 5 June 1992 his Honour delivered judgment assessing the damages in the claim by Mr Malek against the appellant and Mr Gatt. Mr Malek was born on 18 April 1945 and accordingly was aged 47 at the time of the trial. His Honour found that since an accident in 1977 he had had a meniscus problem which persisted up to the time of the trial. Although his Honour did not mention this, the problem was with Mr Malek's left knee. His Honour said it was important to note that this appeared to be somewhat less dominant in Mr Malek's problems than the consequence of the patella injury the result of the crushing episode between the two cars on 4 May 1983. When Dr Kohan, an orthopaedic surgeon, examined Mr Malek he found no sign of a meniscus problem. The area of pain about which Mr Malek complained related to the crushing type injury in the patella area and not the area where the pain would be expected to appear in the meniscus situation. His Honour referred to a report of Dr Ireland of May 1980, who said that the meniscus problem was not significantly troubling Mr Malek. He thought that the matter was best ignored. Should Mr Malek develop more marked symptoms he ought to be assessed again. His Honour said that Dr Ireland, a very experienced orthopaedic specialist, clearly did not feel there was a great deal of problem for the plaintiff caused by the meniscus injury. Dr Kohan took the view that Mr Malek's present problems were a combination of the meniscus difficulty as well as the patella problem, but saw no sign of a meniscus difficulty. 2 UNREPORTED JUDGMENTS Having made those remarks about the medical evidence, his Honour went on to assess damages. He was satisfied that the plaintiff had been caused some past economic loss by the May 1983 accident. The plaintiff was in the business of fitting welded security doors and windows which required him to get assistance and employ casuals. At the time of the trial he also had two permanent employees. The plaintiff did some of the welding himself. His Honour said there had been a loss and how to approach it was "an extremely difficult situation". He noted an increase in his business earnings and said that no doubt this was brought about by industry and hard work. His Honour was satisfied that the plaintiff needed to employ others and had done so in the past since the 1983 accident. He spoke of the plaintiff's tax returns and said it was notorious that accountants do not always reflect in tax returns the true situation. This applied in the present case because of somewhat ill-kept records. Doing the best he could for the eight years past, that is taking 1984 to 1992, and taking a round figure because Mr Malek had been building his house for some months after the accident which took him away from his business, his Honour assessed $12,500 as the amount to be awarded for past economic loss and added interest in an amount of $7,500. His Honour then came to deal with future economic loss and said that the position was static. He mentioned the possibility of an operation to Mr Malek's left knee. but said it was all very speculative. In referring to the arthritis aspect his Honour said this was apparently, primarily at least, attributable to ageing and the 1977 accident which affected the meniscus. Taking account of Mr Malek's age and the possibility that his business, although it appeared to be prosperous, might not continue to be so, he awarded him an amount of $18,000 after allowing a 15 per cent discount for contingencies. For past general damages his Honour awarded $12,500 and interest on that amount of $2,250. For future general damages he awarded $22,500. Adding to this an agreed amount for out of pocket expenses of $260, his Honour brought in a verdict for $75,510. The appellant appealed against the verdict on the third party notice against it and also against the amount of the verdict awarded to Mr Malek. The other defendant, Mr Gatt, took no part in the appeal, but we were informed by counsel for the appellant that any verdict against him would be met by the appellant. The appellant submitted that his Honour erred in finding no negligence on the part of Mr Sarkis. There was evidence that the rear of Mr Sarkis' car was four to five metres from the Botany Road kerb alignment. The appellant submitted that this presented a hazard to vehicles turning into Hollingshead Street from Botany Road and was therefore in part causative of the collision, which resulted in Mr Malek's injury. In particular, it was said that there was a demonstrable error in his Honour's approach. His language seemed to treat a conclusion that Mr Sarkis was not "the" cause of Mr Malek's injuries as decisive. In other words, it was suggested that his Honour did not consider whether Mr Sarkis' negligence was a contributing cause to the injury. Read as a whole, his Honour's reasons for judgment made plain that he was not satisfied that any act or omission of Mr Sarkis contributed to the accident or Mr Malek's injury. In the absence of any evidence from the defendant driver, Mr Gatt, that Mr Sarkis' car created any sort of hazard to the manoeuvre that he was undertaking, this conclusion is not surprising. The Court indicated during the URJ STATE TRANSIT AUTHORITY OF NEW SOUTH WALES v MALEK (Sheller JA) 3 course of Mr Stone's submissions that the appeal against the verdict on the third party issue would be dismissed with costs. In substance the appellant approached its appeal on quantum on two bases. Firstly, it submitted that his Honour failed to take account or allow for the effect of previous injuries which Mr Malek had suffered to his left knee. Notably, it was said, his Honour failed to take account or allow for the medial meniscus injury which was caused by an accident or accidents which occurred before May 1983. This injury was referred to by one of the treating doctors, Dr Ip, in reports prepared by him in 1986 and 1987. Dr Ip referred to the problems with the left patella, but also reported that Mr Malek was tender over the medial joint line behind the patella and said that a medial meniscus injury could not be ruled out. In 1987 he reported that Mr Malek had pain in the medial aspect of the left knee and said that he thought he might have a medial meniscus injury. Another treating doctor, Dr Rasanyakam, reported in 1989 that clinically Mr Malek had a chondromalacia patellae of the knee. In addition there was strong suspicion of a torn medial meniscus. He continued, "Chondromalacia patellae runs a chronic course. It takes a long time to settle down. In some cases it also leads to degenerative changes. In his case there is a strong suspicion of the medial meniscus. I believe he requires arthroscopic examination. This would not only confirm the chondromalacia patellae of the knee, it would also indicate if a torn meniscus is present. If a torn meniscus is present then it requires meniscectomy. It would be a partial meniscectomy. However, the meniscus has a protective function. If the function is lost it would lead to degenerative arthritis. However, if he were to have a meniscectomy there would be two factors promoting the degenerative arthritis, ie chondromalacia patellae and the loss of the meniscus. Hence, the prognosis is very uncertain at present. I believe it would be difficult for this man to do any work that requires prolonged periods of standing or walking especially on rough ground. He would also find it difficult to do any work where he has to kneel or squat for any length of time. Any work involving frequently going up and down steps and ladders would be difficult. He would have difficulty with driving. He is self employed. His work involves prolonged periods of standing. I believe he would have difficulty doing that type of work." Dr Kohan prepared two reports which were in evidence, one of November 1987 and the other of January 1990. In the second of those reports he said that his opinion remained unchanged. Mr Malek had a lateral patella pressure syndrome. This is a patella tracking abnormality and its development is consistent with the mechanism of injury described, namely, the history of his knee having been crushed between two cars in 1983. Dr Kohan was the only doctor who gave oral evidence. He was cross-examined by Mr Stone and had put to him a complete history, so far as that was revealed from the evidence. It is apparent that this full history had not previously been available to Dr Kohan. He was asked whether it suggested that a meniscus was torn probably in 1979 and had never healed, but had been symptomatic from time to time, although not at the times that Dr Kohan had examined Mr Malek. Dr Kohan answered in the affirmative. He was then asked, "That meniscus injury is capable of producing much of the pain and restriction which Mr Malek complains of, quite apart from the condition that you've described?" Dr Kohan replied, "Oh, a meniscus injury can be quite symptomatic 4 UNREPORTED JUDGMENTS and uncomfortable, absolutely." Asked a little later in the cross-examination. "So at the moment on the history which I have given you the probability is that he has got a problem with the medial meniscus of the left knee - probably a tear - and this produces some of his problems?" Dr Kohan answered, "On the basis of that history it is certainly highly suggestive, yes." Dr Kohan was re-examined and during the course of that re-examination the following interchange took place. HIS HONOUR: Q. Correct me if I am wrong, but out of all the detailed explanations you have given, and I do not have a transcript of it, correct me now if Iam wrong, I am not suggesting that this is the case. I just want to know. Do you feel that the crushing injury between the vehicles has been detrimental over and above any pre-existing problem with the knee? A. Yes. Q. So whatever is wrong with him now is partly due to the prior condition of the torn meniscus area plus it is in addition to that, it is a combination of that earlier problem and the effect of the crushing injury causing injury in the patella region? A. Yes. Q. Is that a summary of what you have said? A. Yes. LIDDERN: Q. Are you able to say, Doctor, what is the main cause of his problems today, is it the tracking? A. I last saw Mr Malek in 1989 I think. No, I last saw Mr Malek in 1988, that's true. HIS HONOUR: Q. Perhaps at that time, what was the main cause of his problems? A. At that time I found the only pain - I found it was in relation to his patella. I found no evidence of thigh muscle wasting. I found no evidence of abnormality in the medial joint line which may have been attributable to meniscus tear and I found no other ligament injury so when I last saw him his only pain was patella femural and his only problem was one dealing with the patella femural joint." No doubt on the basis of this material the trial Judge acknowledged the contribution of the meniscus injury, which he described as somewhat less than dominant. However, his Honour did not reveal in his reasons how and to what extent he allowed for this in his assessment of damages. In other words, it is not apparent from what he said that he separated the damage caused by the earlier injuries from the damage caused by the injuries suffered in May 1983. It must be acknowledged that the evidence was not such as to assist him in this task, largely, as the appellant contends, because Mr Malek did not give any of the doctors who treated him adequate histories. Ordinarily, since his Honour clearly took the view that some at least of the damage was attributable to the 1983 accident, the failure to make this separation would require a new trial. However, the parties have agreed that this Court should, if it is possible to do so, re-assess the damages. Inevitably this is to some extent, in the light of the evidence, an arbitrary process. However I think there is sufficient in his Honour's findings, and, in particular, his Honour's conclusion that the meniscus problem persisted but was somewhat less than dominant, to allow it to be done. In the light of this, and taking account of the medical evidence, I would attribute 33 1/3 per cent of the damage of which Mr Malek complains to the meniscus injury and other injuries that occurred prior to May 1983. As I have said, it is not apparent from his Honour's reasoning whether he chose such a figure or any figure. However, that I think is the appropriate way to approach reassessment. URJ STATE TRANSIT AUTHORITY OF NEW SOUTH WALES v MALEK (Sheller JA) 5 This brings me to the appellant's second substantial point. The appellant submits that no award should have been made for past economic loss. It is submitted that there was simply no evidence available to support the award that his Honour made. Mr Malek had the opportunity to prove what loss, if any, he had suffered up to the time of the trial, but failed to do so. It appears from the evidence that from 1984 - I take it to be 1 July 1984 - Mr Malek owned a business which thereafter grew from takings of about $22,000 to takings by 30 June 1991 of over $186,000. During that period the net profit grew, if not proportionately, substantially. Mr Malek had been retrenched by his previous employer, Crown Corning, on 24 September 1982. After that there was no evidence up to | July 1984 which went to quantify any claimed loss of earning capacity. In his reasons for judgment his Honour said that the quantification of past economic loss was to a large extent speculative. It is far from clear on the evidence whether Mr Malek indeed employed other persons in his business. Until 1991 one would expect to find any wages in his income tax returns, but until the year ended 30 June 1991 his returns show nothing on account of wages expended by him. If indeed others were employed in the business there is no way of knowing to what extent that was required by the expansion of the business or, alternatively, required, as Mr Malek submitted, because of his incapacity, so that it could be said that to the extent of additional wages he had suffered some economic loss. It seems to me with the greatest respect that the trial Judge, recognising the speculative nature of the undertaking that he was engaged in, went ahead and fixed a figure which has no basis in evidence whatever. Nor is it possible from the evidence that was before his Honour to extract out any other basis for fixing or quantifying an amount for past economic loss. In my opinion this part of the appellant's appeal succeeds and the amount assessed by his Honour for past economic loss should be set aside. This brings me to the appellant's third point which relates to general damages, past and future. The appellant submits that all the awards were excessive. There is no doubt, as his Honour acknowledged, that following the injury in 1983 Mr Malek suffered pain from his left knee. He had to undergo treatment. There is the possibility that he will have to have an operation on his knee and, as his Honour acknowledged, there is an increased, perhaps substantial, probability of his developing arthritis in the knee in the future. These matters his Honour took account of. I have read Mr Malek's evidence particularly about the difficulties that he has had in climbing ladders and stairs and in walking and running and the pain that he has suffered. However, once again the problem is that in his Honour's judgment there is no dissection of the extent to which these matters were attributable to the 1983 incident rather than earlier injuries to Mr Malek's left knee. It seems to me that if ane takes account of the earlier injuries in the manner I have described, the amounts awarded for general damages, both past and future, are outside the appropriate range for this case. In my opinion they are excessive to the point of demonstrating an error in his Honour's discretionary judgment in that regard. Accordingly, it falls upon this Court to consider what is an appropriate award. Taking account of the matters to which I have referred, in my opinion the amount allowed for past general damages should be reduced from $12,500 to $9,000, and the interest thereon from $2,250 to $1,620, and the amount allowed for future general damages from $22,500 to $15,000. 6 UNREPORTED JUDGMENTS This leaves finally the matter of future economic loss which his Honour allowed in an amount of $18,000. Again there is a dearth of evidence to support the mathematical calculation of any amount for future economic loss. However, Mr Malek suffered an injury in May 1983 which is likely to have the consequences in the future to which I have referred. His business appears to be a prosperous one, but there is no guarantee that that will continue for the rest of his working life, which I have assumed to be till the age of 65. This being so, as his Honour concluded, there must be provision by way of insurance against the possibility that he will find himself on the labour market suffering from the consequences to his left knee of the May 1983 injury. Again his Honour did not in his award separate the amount attributable to the 1983 injury as distinct from previous injuries. Standing alone, it seems to me that the amount of $18,000 is again so excessive as to be outside the range of discretion if that is attributable to the May 1983 injury alone. It seems to me that the appropriate award would provide an amount of $10,000 as a cushion to cover the future loss of earning capacity. I arrive at that $10,000 after allowing as his Honour did an amount of 15 per cent for contingencies. This leaves only the matter of out of pocket expenses of $260. If that is added to the adjusted amounts to which I have referred it produces a verdict of $35,880. Accordingly, I propose the following Orders: 1. Appeal allowed. 2. Set aside the verdict and judgment of 5 June 1982, other than any order for costs. 3. In lieu thereof substitute a verdict of $35,880. 4. Judgment accordingly to take effect from 5 June 1992. 5. The first respondent Mr Malek to pay the costs of the appellant of the appeal against him, but to have a certificate under the Suitors Fund Act 1951. Clarke JA I agree. Waddell AJA I agree. CLARKE JA: The orders of the Court will be as Sheller JA has advanced. 1. Appeal allowed. 2. Set aside the verdict and judgment of 5 June 1982, other than any order for costs. 3. In lieu thereof substitute a verdict of $35,880. 4. Judgment accordingly to take effect from 5 June 1992. 5. The first respondent Mr Malek to pay the costs of the appellant of the appeal against him, but to have a certificate under the Suitors Fund Act 1951. Counsel for the Appellant: P Stone Solicitors for the Appellant: Mark Kennedy and Co Counsel for the First Respondent: AJ Lindden/I Ryan Solicitors for the First Respondent: Cooley and Cooley Counsel for the Second Respondent: MA Elkaim Solicitors for the Second Respondent: GM Meadows