SCHIEBEL v MASON SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL POWELL and BEAZLEY JJA 13 May 1997, 27 May 1997 [1997] NSWCA 277 Damages — Measure of damages — Loss of earning capacity — Assessment — Self-imposed limitations on employment — Consideration of possibilities — No question of principle. Powell JA This is an appeal from a Judgment delivered, and verdict entered, by Sidis DCJ in the District Court at Newcastle on 24 July 1996 in proceedings which had been brought by the Respondent against the Appellant to recover damages in respect of injuries which she claimed to have sustained in a motor accident on 28 July 1990 when the car which she was driving was struck by a car driven by the Appellant. Although, originally, the Appellant denied negligence on his part and sought, in addition, to allege contributory negligence on the part of the Respondent, when the proceedings came on for hearing liability was admitted and the only issue for determination was the quantum of damages to which the Respondent was entitled. In the event, her Honour found a verdict for the Respondent in the sum of $91,012.10, the major elements in which were: non-economic loss in the sum of $22,800.00, past economic loss in the sum of $29,517.10 and future economic loss in the sum of $30,000.00. On the Appeal, the Appellant has sought to challenge only the sums allowed for past and future economic loss. The Respondent was born on 16 August 1970 so that, at the time of the accident on 28 July 1990, she was a few weeks short of attaining her twentieth birthday. At the time of the hearing before Sidis DCJ the Appellant was about a month short of attaining her twenty-sixth birthday. It would appear that the Respondent was born with a congenital condition involving dislocation of the hips which condition was finally diagnosed when she was about 17 months old. She was then treated and placed in plaster and a brace until she was aged about 3 years. In July 1994 the Respondent underwent surgery which involved a total right hip replacement. The learned trial Judge recorded that the need for that surgery was unconnected with the accident which gave rise to the proceedings. At the age of 4 years the Respondent apparently fell and fractured her skull. I record these matters since the learned trial Judge was later to find that the Respondent's continuing complaints of pain and discomfort, despite the absence of any objective clinical findings, were substantially psychologically based, the Respondent's psychological condition having had its basis in the Respondent's childhood problems and existing prior to the accident, the Respondent's psychological condition having been exacerbated by the accident. The Respondent, who described herself as an average to above average student, completed her secondary schooling at the end of Year 10, which appears to have been, in her case, at the end of 1986. Following the completion of her secondary schooling, the Respondent attended the Newcastle Business College where she obtained a typing diploma. Quite what followed after the Respondent had completed her course at the Newcastle Business College and prior to about 2 UNREPORTED JUDGMENTS June 1990, the relevance of which date will shortly appear, is less than clear for the evidence is at best very sketchy. However, it would appear that, in that period, the Respondent had a number of positions either as a receptionist or as a clerk and seemingly on an intermittent or a casual basis. In June 1990 - or perhaps it was some months earlier - the Respondent obtained a position with the Roads & Traffic Authority at one of its branches in Newcastle, the work involved in that position being of a receptionist and clerical nature. At the time of the Respondent's obtaining that position it was but a temporary one but, at some time prior to October 1990 - the relevance of which date will shortly appear - a decision had been taken to upgrade the position to a permanent one and there had been published an advertisement inviting applications for appointment to the position. Although, according to the Respondent, the impact of the collision was severe, the Police were not called to the scene of the accident. The Appellant reported the accident to the Police on the same day, at the time filling in what is called a P5 or Self-Reporting Collision form, while the Respondent reported the accident to the Police on the following day, at the time also filling in a PS form. Each of the reports states that no person was injured in the accident, the Respondent explaining this fact, in the case of the report made by her, by saying that it was made in response to a question put to her by the relevant Police Officer as to whether anyone needed hospital treatment. Following the accident, the Respondent took 2 days off work, on the second of which days she attended her general medical practitioner who recorded that although her muscles were tender, movements of the neck, shoulders and back were normal and who suggested physiotherapy and prescribed Feldene, 20mg per day. Thereafter the Respondent returned to her employment with the Roads & Traffic Authority and the evidence contains no suggestion that she required any further time off work. Although, as I have earlier recorded, the position with the Roads & Traffic Authority which the Respondent held was to be upgraded to a full-time one, and although the Respondent understood that unless she were to apply for the position and to be appointed to it she would be retrenched, the Respondent did not apply for that position but, rather, left her employment with the Roads & Traffic Authority on 12 October 1990. The Respondent's explanation for so doing was, not that she was incapable of carrying out the duties which she had hitherto performed but, rather, that she did not get on with her fellow employees and, in particular, did not get on with her supervisor. The Respondent does not appear to have been in any form of employment until 3 December 1990 when she commenced work with an organisation known as the Labour Co-Op. Although this organisation appears primarily to be a placement organisation, the Respondent appears in the first instance to have been employed by it full-time as a clerk for the period from 3 December 1990 to 31 July 1991, during which period she earned wages totalling $9,420.66 gross and $7,883.51 nett. The work which the Respondent performed while employed by the Labour Co-Op appears to have been much the same as that which she had undertaken when with the Roads & Traffic Authority, although it would appear that there was more typing involved than there had been the case when she was employed with the Roads & Traffic Authority. The Respondent appears to have been retrenched as a full-time employee by the Labour Co-Op at the end of July 1991 but retained on its books. While on the books of the Labour Co-Op the Respondent appears to have worked as a URJ SCHIEBEL v MASON (Powell JA) 3 receptionist for a week with an organisation described only as Anderson Rea during which time she was paid $394.69 gross and $328.94 nett. There then followed a period from 2 September 1991 to 14 February 1992 when the Respondent was placed with BHP typing contracts, during which period she was paid some $8,994.68 gross and $8,269.86 nett. Following the conclusion of that placement, the Respondent was then placed with the Roads & Traffic Authority at another of its branches in the Newcastle area typing contracts, that placement continuing from 19 February 1992 to 3 July 1992. During this time the Respondent was paid $9,897.69 gross and $7,908.64 nett. Although the Respondent gave evidence that she found the work which she was required to do when working for BHP and for the Roads & Traffic Authority during this period difficult to cope with, three things should be noted, they being: 1. so far as the evidence permits one to judge, during the period of almost 2 years from the date of the accident until 3 July 1992, the Respondent appears to have consulted her general medical practitioner on only 5 or 6 occasions; 2. during the same period, the Plaintiff appears to have worked full-time for all but about 10 weeks, that period of 10 weeks not being brought about by any complaint of incapacity on the part of the Respondent; 3. although the evidence is not complete, the probability is that, during that period of almost 2 years, the Respondent received wages totalling about $27,000.00 nett. In calculating this figure, I have proceeded upon the basis that, during the period from the date of the accident until the Respondent's leaving the Roads & Traffic Authority in October 1990 - a period of about 10 weeks - that the Respondent would have received about $3,000.00 nett. The records provided by the Labour Co-Op reveal that during the period that the Respondent was employed by it or was placed by it in the various positions to which I have earlier referred, the Respondent received by way of wages some $24,390.95 nett. The significance of these figures will later appear. Quite what followed in the period of 6 months after the completion of the Respondent's work with the Roads & Traffic Authority is difficult to discern as the only evidence dealing with that period is (AB 52): "Q. In that 6 month period do you recall whether you did any work or note or took the time off? A. I think I did a couple of weeks with my sister, helping out in an office. But apart from that I don 't think I was. Q. More importantly can you recall how you were feeling after Christmas and the New Year in 1993, that is just before you started working for Centacom? Were you feeling better through having had a break? A. No, not really, no." The Respondent appears to have commenced with Centacom Staff Pty Ltd, another placement agency, on 8 January 1993. Although she appears to have remained on that organisation's books until 31 August 1994, it would appear that it was only during the period from 8 January 1993 to 15 March 1993 when she was in fact placed by that organisation in various temporary positions. During that time, so it would seem, her gross earnings were $5,374.15 - in the absence of any evidence as to her nett earnings, one can but assume that her nett earnings during this period were probably of the order of $4,000.00. The Respondent appears to have commenced working for the Hunter Region SLSA Helicopter Rescue Service Ltd as a casual office assistant on 15 March 1993, her employment by that organisation continuing until 16 July 1993 when she left of her own accord due to the impending birth of her first child. During that period, the Respondent's duties including word processing, telephonist/receptionist duties, filing, photocopying and general clerical duties. 4 UNREPORTED JUDGMENTS Wages paid to the Respondent during that period were $5,035.60 gross and $4,263.75 nett. Although the Respondent appeared to suggest that, during the time she worked for that organisation the work dropped off so that towards the end she was only working 2 days a week, the records (AB 117) would demonstrate that this was not so and that, in contrast to the early weeks of her employment, when she worked 16 to 18 hours a week, towards the later part of that period, she was at times working 25 to 32 hours a week. What I have recorded above will I think demonstrate that in the period of almost 3 years between the date of the accident and the time at which the Respondent terminated her employment because of her impending confinement, the Respondent probably received wages totalling between $35,000.00 and $36,000.00 nett. The significance of these figures will shortly appear. The Respondent's child was born on 31 August 1993. However, the Respondent did not resume work until about February 1995. Her failure to do so however was not due to any of the sequelae of the accident with which these proceedings are concerned, but was due, in part, to the Respondent's wish to care for her child and, as well, to the fact that, in July 1994, the Respondent underwent the hip operation for a right hip replacement to which I have earlier referred. Quite what happened after the Respondent returned to work in February 1995 is difficult to ascertain, for the evidence, if I may say so, has been left in a state which is less than clear, even if not thoroughly confusing. The Respondent appears to have commenced work for an organisation known as Aqualine Australia in some form of clerical position in about February 1995, her employment with that organisation, which seems to have been a full-time position, seemingly lasting until about May or June 1995. At least for part of that time the Respondent appears also to have worked on the week-end in the bar at the Kahibah Bowling Club. Since the Respondent's position with Aqualine Australia is said to have been obtained "through the Hunter Labour Co-Op" and the work was "contract work" the probability is that the Respondent's position with Aqualine Australia was but a temporary one and that her employment was terminated because the "contract work" ran out, rather than because of the Respondent's incapacity to cope with the work. Be that as it may, the Respondent said that, by the time her employment had been terminated, she "was physically and mentally exhausted". The Respondent appears to have obtained employment with the Charlestown Bowling Club as a part-time casual bar worker in late July, that employment continuing until November or thereabouts of that year. During this period, so the Respondent said, she would take whatever work was offered. The Respondent seemed to suggest that her employment at the Charlestown Bowling Club was terminated because she "couldn't handle the pressure of the workload." It seems to have been in late 1995 when the Respondent was reconciled with her "de facto husband" from whom she had been separated since about August 1994. Thereafter, so the Respondent said, she decided to "go and find some work", but "only because (she) felt (she) needed to" so that "(she) wasn't living off trim'. Despite her decision to seek work, so the Respondent said, she had been unable to do so by the time these proceedings came on for hearing in Newcastle. The Respondent's evidence at the trial which I set out below would, however, suggest that the Respondent's inability to obtain employment was not due to there being a generally depressed labour market in the Newcastle area. That evidence was as follows (AB 60-61): URJ SCHIEBEL v MASON (Powell JA) 5 "Q. Have you formed a view about looking for the sort of work that you were doing with the Labour Co-Op early in 1995? You remember a little while ago you gave evidence about that? A. Yes. Q. Have you formed a view about whether you can do that sort of work again now? A. No, I couldn't bring myself to sit in the chair all day and type. Q. It is your desire is it not eventually to be able to return to do the sort of work that you were doing through the Labour Co-Op is that correct? A. No. Q. You don 't want to ever do that sort of work again? A. No. Q. What sort of work would you like to do if the treatment recommended by Dr Churchin, Dr Klug and Dr Ellis assisted, accept for one moment you went and did all the things they requested of you and that it improved you, what sort of work would you then wish to do? What would you enjoy doing? A. I'd enjoy working from home. Q. Doing what sort of work? A. Knitting, machine knitting." The reference to Dr Klug makes it appropriate to record, here, that in a report (Ex. G) tendered at the hearing, Dr Klug, a psychiatrist, wrote (inter alia): "T would strongly advise Ms Mason to seek psychiatric treatment. Chronic pain syndromes are strongly associated with depressive disorders and anxiety disorders. She should be treated along comprehensive bio-psycho-social parameters which would involve the prescription of an anti depressant and use of cognitive behavioural and socially supportive techniques. The length of such treatment is difficult to gauge. The minimum duration of treatment would be weekly appointments for 3 months, fortnightly appointments for 3 months and monthly appointments for 6 months. The cost of each session would be $170.00 approximately. The cost of prescribed drugs is dependent upon the kind of drugs used and the degree of pharmaceutical benefit funding. I would approximate this, however, at $20.00 to $30.00 per week. If orthopaedic intervention is contra-indicated, which is most likely to be the case, then conservative management may best be co-ordinated through a pain management service such as the one provided at Royal North Shore Hospital." In the Judgment which she was to deliver on 24 July 1996, Sidis DCJ recorded the following (inter alia) "findings": - 3. There is a preponderance of medical evidence, both for the plaintiff and the defendant, in relation to the physical injuries which indicate that she suffered soft tissue injuries leaving no restriction in movement and from which the Plaintiff should by now have completely recovered. In seeking to explain her continued complaints of worsening pain and discomfort, the practitioners concerned have pointed to a psychological basis. 6. I find that the psychological condition existed prior to the accident and has it basis in the Plaintiff's childhood problems relating to her hip displacements and skull fracture. Her complaints have been consistent since the time of the accident and there is evidence of treatment through painkilling medication, physiotherapy, chiropractice, acupuncture, hydrotherapy and massage, without success. 7. On this basis, I find that her psychological condition has been exacerbated by the accident, to the point where she is significantly impaired in her ability to lead her normal life. 8. This impairment has clear implications for her income earning capacity. Although she is physically capable, the psychological condition prevents the plaintiff from coping with the pressures of employment. I have no doubt that his will be overcome in due course, with appropriate treatment. 6 UNREPORTED JUDGMENTS Having recorded her "findings" her Honour then turned to the question of damages, this part of her Judgment being, in full, as follows (AB 181): - "Tt is agreed that the plaintiffs income earning capacity at the time of the accident was $292.76 net per week. Two days were lost directly as a result of the accident, amounting to $117.10. In respect of economic loss, between August 1990 and July 1993, when the plaintiff ceased work by reason of her confinement, I note that her income earning capacity estimated at $300.00 per week, was $15,600 net. She has undertaken some work and I have therefore allowed one half of that amount in the sum of $23,400. Between July 1993 and February 1995, by reason of the birth of her child and her hip replacement surgery, I have made no allowance for economic loss. Between February 1996 and July 1996, the plaintiff has had obligations to her child and has suffered other stress factors. The effect on her income earning capacity of the accident during this period is assessed at $6,000. For the future, I have allowed the plaintiff a period of five years, at $300 per week, with the usual fifteen per cent reduction for contingencies and I have reduced that amount by a further one third to take account of the other stress factors which have affected her life. Out of pocket expenses are allowed in the sum agreed for past expenses at $2,885 and for future expenses as estimated by Dr Klug, at $5,810." (The amount of $30,000.00 which her Honour allowed for future economic loss appears to have been calculated by reference to a loss of $300.00 a week for 5 years calculated on the 5% tables ($58,905.00) and reducing that sum by approximately 49%. The figure of $5,810 allowed for future expenses, does not appear, in terms, in Dr Klug's report; however, if one allows for 13 weekly appointments at $170.00, 6 fortnightly appointments at $170.00 and 6 monthly appointments at $170.00, together with 52 weeks at $30.00 a week for prescribed drugs, the resultant figure is $5,810.) The principal grounds of appeal taken on behalf of the Appellant were as follows (AB 184): 1. that having regard to the evidence, her Honour should not have awarded the Plaintiff any sum in respect of past lost income; 2. alternatively to ground 1, the amount awarded in respect of past lost income was excessive; 3. having regard to the evidence, her Honour should not have awarded the Plaintiff any sum in respect of future economic loss; 4. alternatively to ground 3, the sum awarded in respect to future economic loss was excessive. When the appeal was called on for hearing, Mr C E O'Connor QC appeared for the Appellant while Mr L King SC appeared for the Respondent. Reduced to their most simple form, Mr O'Connor's submissions were to the following effect: 1. except for the 2 days immediately following the accident, the evidence in relation to the period August 1990 to July 1993 did not suggest that the Respondent had been obliged to resign from any of the positions which she had had as a consequence of the injuries or disabilities from which she was suffering nor that she was obliged to take up positions involving lighter duties as a consequence of those injuries. On the contrary, the evidence would appear to indicate that the positions which she had during that period would have been the same even if she had not been involved in the accident. This being so, the only URJ SCHIEBEL v MASON (Powell JA) 7 amount that should have been allowed by way of damages was the sum of $117.10 representing the wages lost for the 2 days immediately following the accident; 2. the figure of $6,000.00 which Sidis DCJ allowed for the period February 1996 to the date of trial appears to represent 20 weeks at $300.00 per week. If this be the basis of her Honour's calculation, then the amount allowed is insupportable for there was no evidence before her Honour to support the conclusion that the Respondent was totally incapacitated for work during that period. Such a finding would be contrary to the Respondent's demonstrated work capacity and her endeavours - albeit unsuccessful - to obtain employment; 3. the evidence did not support a finding that the Respondent would be totally incapacitated for all forms of employment for the 5 years following the trial. The evidence did not support a finding that the Respondent was then unable to work. Even if the evidence of Dr Klug be taken as indicating that the Respondent was not then able to work, that evidence tended to suggest that the Respondent would be able to return to the work force at the end of the treatment regime proposed by him in which event there should be an allowance of no more than 12 months loss of wages for future economic loss. What I have recorded above will, I believe, demonstrate that the verdict found by her Honour in favour of the Respondent cannot be sustained, if only because the amount which her Honour awarded for past economic loss is clearly excessive. Given that view, and given the vague and unsatisfactory state in which the evidence as to the relationship between the Respondent's condition and her periods out of the work force was left, I would have preferred to remit the matter to the District Court for a new trial rather than undertake the task of assessing for myself the appropriate amount of damages to be allowed to the Respondent. However, as both counsel appeared to be united in the view that, having regard to the amounts involved, it was undesirable that there be a new trial, I proceed to assess, as best I might, the sums which I think appropriate to be awarded in respect of past and future economic loss. The amount which Sidis DCJ calculated for past economic loss for the period August 1990 to July 1993 appears to have been based upon two assumptions: 1. that, had it not been for the accident and its sequelae, the Respondent would have been in permanent employment throughout that period; and 2. that, as the result of the accident and its sequelae, the Respondent was not able to work for more than half of the period in question. If those be the assumptions upon which her Honour proceeded, what I have recorded above would demonstrate that the assumptions were ill-founded for the following reasons: 1. the Respondent's work history prior to the accident was that of one who worked in temporary, or casual, rather than full-time, positions, albeit that some of those temporary, or casual, positions persisted for a period of some months at a time. It was thus virtually inevitable, even if there had not been an accident, that there would have been periods when the Respondent would not have been employed. That this would in all probability have been so is indicated by the fact that, after she left the Roads & Traffic Authority in October 1990, the Respondent did not obtain a new position for 6 weeks and, further, that there were periods in August 1991 when the Respondent was unemployed because no positions were available for her; 8 UNREPORTED JUDGMENTS 2. what I have recorded above will also demonstrate that, in the period from and including August 1990 to July 1993, the Respondent was out of employment for only about 36 weeks, ten of those weeks representing the periods in 1990 and 1991 to which I have earlier referred and the balance of that time being represented by the period from July 1992 to January 1993, during which time the Respondent appears, in any event, to have engaged in some form of employment assisting her sister in an office (AB 52). Even if - which is at best doubtful - it be open to proceed upon the basis that the Respondent's absence from the work force for that period was due to the sequelae of the accident, the maximum which it would be open to the court to allow for past economic would seem to be the sum of about $6,000.00 in addition to the sum of $117.10 representing the 2 days immediately following the accident. The figure of $6,000.00 which Sidis DCJ allowed for the period from February 1996 to the date of hearing is also difficult to sustain. A person is entitled to compensation for impairment of earning capacity only where it can be shown where that impairment has been, or is, or may be, productive of financial loss. Given the state in which the evidence has been left, it may be doubted that it has been shown that the Respondent's psychological condition was the cause of her inability to obtain employment during that period. I say this since it would appear that the Respondent sought employment - and then only in a desultory way - only in the hospitality industry for which employment she appears not to have been qualified and that she had set her face against again taking employment in the clerical field for which she was qualified (see, for example, Ahmedi v Ahmedi (1991) 23 NSWLR 288). However, as it may be that the true explanation for the Respondent's assertion (AB 60) that she would not bring herself to sit in the chair all day again and type was that she would find it painful if she did so, I would be prepared, albeit reluctantly, to allow a sum of $3,000.00 in respect of this period. The cryptic statement of the basis upon which Sidis DCJ calculated the amount of $30,000.00 which she allowed for future economic loss makes it difficult, indeed, to discern what were the assumptions which her Honour adopted; in particular, it is difficult to determine how it was that her Honour came to fix a period of 5 years as the basis upon which economic loss should be calculated. The evidence, such as it is, does not, in my view, support the figure in question nor, I add, does the fact that her Honour has allowed for future medical expenses only the sum of $5,800.00, which sum, as I have earlier recorded, represents 12 months treatment and suggests that her Honour proceeded on the basis that, at the conclusion of that time, the Respondent would be fit to re-enter the work force. It seems to me that the more appropriate course is to proceed upon the basis that, although it could well be that at the end of 12 months treatment, the Respondent would be fit to re-enter the work force that might not necessarily be so and there should be some further allowance made against the possibility that it will be necessary for some further time to elapse before that might occur. Doing the best I can it seems to me that it might be appropriate to allow 2 years or a little more and, on this basis, I would be disposed to allow some $15,000.00 for future economic loss. In the result, I would reduce the amount allowed by Sidis DCJ for past economic loss by $20,400.00 from $29,517.10 to $9,117.10 and would reduce the amount allowed by her Honour for future economic loss by $15,000.00 from $30,000.00 to $15,000.00, a course which, if adopted, would reduce the amount of the verdict to the Respondent from $91,012.10 to $55,612.10. URJ SCHIEBEL v MASON (Beazley JA) 9 For these reasons I would propose the following Orders: 1. ORDER that the appeal be upheld. 2. ORDER that the verdict found by Sidis DCJ be set aside and that in lieu thereof there be found a verdict for the Respondent in the sum of $55,612.10. 3. ORDER that Judgment be entered in favour of the Respondent accordingly, such Judgment to date from 24 July 1996. 4. ORDER that the Respondent pay the Appellant's costs of the appeal and that, if qualified, the Respondent have a Certificate under the provisions of the Suitors Fund Act 1951. Beazley JA I agree with Powell JA. Appeal upheld. Verdict found by Sidis DCJ set aside and that in lieu thereof be a verdict for the Respondent in the sum of $55,612.10. Judgment be entered in favour of the Respondent accordingly, such Judgment to date from 24 July 1996. The respondent to pay the Appellant's costs of the appeal and that, if qualified, the Respondent have a Certificate under the provisions of the Suitors Fund Act 1951. Counsel for the Appellant: C E O'Connor QC Solicitors for the Appellant: P W Turk & Associates Counsel for the Respondent: L King SC Solicitors for the Respondent: Rankin & Nathan (Newcastle)