GEORGIEVSKA v STATE RAIL AUTHORITY OF NEW SOUTH WALES SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL HANDLEY and STEIN JJA and FITZGERALD AJA 19 November 1998, 19 November 1998 [1998] NSWCA 90 WORKERS' COMPENSATION — assessment of damages — Workers' Compensation Act 1926 (NSW) — payments under s15 — effect on assessment of damages The appellant was injured when she fell on the premises of the defendant in the course of a journey to or from her place of work. The trial Judge assessed the damages payable to the appellant. Before the judgment had been perfected the respondent filed a notice of motion to vary the pre-judgment interest allowed on the award for past economic loss to take account of payments by the appellant's employer under the Workers' Compensation Act 1926 (NSW). The trial Judge granted this motion and reduced the allowance for interest. The appellant appealed challenging the awards for general damages and past and future economic loss in the initial judgment, as well as the reduction in the allowance for pre-judgment interest. HELD: Dismissing the appeal: (1) The trial Judge made no error in her assessments for general damages and past and future economic loss. (2) The trial Judge was correct in taking into account a payment by the appellant's employer under s15 to redeem its liability for weekly payments. While such payments were not "compensation" within the meaning of the 1926 Act, it did not follow that they could be disregarded in the assessment of damages, particularly for prejudgment interest. Gosper v Christopherson (1986) 160 CLR 423 considered; Harris v Commercial Minerals Ltd (1996) 186 CLR 1 applied. Handley JA This is an appeal by the plaintiff from the assessment of her damages by Justice Simpson. She was injured when she tripped and fell on premises of the defendant in the course of a journey to or from her place of work. Liability ceased to be an issue and in her first judgment, delivered on 19 November 1996, her Honour assessed the plaintiff's damages at $160,973. On 13 December, before the judgment had been perfected, the defendant filed a notice of motion to vary the award of $38,000 for pre-judgment interest on the award for past economic loss to take account of payments made by her employer under the Workers Compensation Act 1926 which had been overlooked by the defendant's legal advisers. On 24 April 1997, her Honour delivered a further judgment and granted the defendant's motion. She directed that her award of interest be reduced to reflect compensation payments to the plaintiff. The plaintiff has appealed, challenging her Honour's awards for general damages and past and future economic loss in her first judgment and her revised award for pre-judgment interest. The relevance of weekly payments of compensation to the plaintiff is no longer in issue, but the appellant contends that a lump sum paid under s15 of the Act to redeem the employer's liability to make further compensation payments should not be taken into account in assessing interest. Her Honour awarded $27,500 for general damages. A component of $7,500 for the closed period after the accident when the plaintiff was totally incapacitated was not in dispute. Her Honour provisionally assessed the rest of the plaintiff's 2 UNREPORTED JUDGMENTS general damages at $50,000 but considered that this figure should be discounted by 60 percent so that her actual award was $20,000. The award for past economic loss for periods of total incapacity is not in dispute. The award for periods of partial incapacity is in dispute. Her Honour based her award for periods of partial incapacity on a loss of 50 percent of the plaintiffs pre-injury capacity which she assessed at $134 a week and discounted by 40 percent. She made a lump sum award of $12,000 by way of a cushion for the future. The Judge was faced with a substantial medical issue relating to the existence and causation of the plaintiffs physical and mental symptoms. She resolved this conflict by finding that the plaintiff suffered from a psychiatric condition prior to her fall, although the extent to which it then affected her life and work in the immediate pre-accident period was not apparent. She thought that the plaintiff's post-injury physical complaints and psychiatric condition were inextricably intertwined, each being both causative of and a consequence of the other. Her psychiatric condition she found caused the apparently exaggerated response of the plaintiff to relatively minor physical injuries. As her Honour said, this made the assessment of damages extremely difficult since the defendant could not be held liable for that part of the plaintiff's condition from which she would have suffered in any event. The Judge said: "Tt is reasonable to infer that, with her plainly vulnerable personality, she was at greatly increased risk of coming to her present circumstances at some time". The discount for the general damages over the plaintiff's probable future life span at the date of injury was 60 percent. On the same primary findings the Judge discounted the award for past economic loss for periods of partial incapacity by 40 percent. The difference in these figures demonstrates that they are both averages, assessed over the different periods, reflecting a lower chance or risk at the beginning of the period and a higher chance or risk at the end. In assessing damages, her Honour had to assess the chance or risk at the date of the accident of a future hypothetical event, namely the chance or risk that the plaintiff's mental condition would have deteriorated to the same extent by different dates without the precipitating effect of tortious injury. In doing so her Honour correctly applied the principles established in Malec v J C Hutton Pty Ltd (1990) 169 CLR 638. Mr Evatt contended that her Honour erred in the application of these principles. However in view of her primary findings as to the plaintiff's vulnerable personality and the necessarily imprecise nature of any inquiry into hypothetical possibilities which the law requires in these circumstances, I can discern no error. Mr Evatt also challenged the finding that during these periods the plaintiff had only lost 50 percent of her pre-injury working capacity. The plaintiff did not work at all after her accident, but in my judgment there was no error in making the allowance her Honour did for the residual working capacity that she found. This was based on the evidence of Dr Mahoney, the plaintiff's treating doctor, which, in the main, her Honour accepted. The challenge to her Honour's allowance of a cushion for the future, was not strongly pressed and in my judgment this allowance was reasonably open to her Honour on her primary findings. The other question concerned the allowance for pre-judgment interest. Her Honour referred to Batchelor v Burke (1981) 148 CLR 448 which decided that weekly payments of compensation should be taken into account in assessing an award for pre-judgment interest. She also referred to Haines v Bendall (1989) URJGEORGIEVSKA v STATE RAIL AUTHORITY OF NEW SOUTH WALES (Stein JA) 3 172 CLR 60 which decided that lump sum payments of compensation under s16 of the 1926 Act should also be taken into account for this purpose. Mr Evatt sought to distinguish these decisions as not applicable to the payment of $34,154 made by the plaintiff's employer under s15. In Gosper v Christopherson (1986) 160 CLR 423 the High Court held that payments under s15 were not compensation within the meaning of the 1926 Act because the employer was not under a legal obligation to make them but had what the Court described at 427 as "a statutory option to pay or to refrain from paying" such a lump sum to redeem the liability to pay compensation in the future. Mr Evatt is undoubtedly correct in submitting that this lump sum did not fall within s64 of the 1926 Act so that the plaintiff was not under a legal obligation to refund it to her employer out of her damages. However, in my judgment, it does not follow that this amount is to be disregarded when assessing the plaintiff's damages, particularly her damages by way of pre-judgment interest. Mr Evatt relied upon the decisions which establish that payments under insurance policies taken out by plaintiffs against the risk of accidental injury and payments under statutory or contractual arrangements between employer and employee for payments of pension or superannuation in the event of injury are not to be deducted from damages which an injured person is entitled to recover from the tortfeasor. The line of authorities to which Mr Evatt referred is well established but there is no decision which applies these authorities to a payment under s15. Mr Evatt invited the Court to decide that those authorities are applicable to such a payment. The principles which this Court should apply in deciding this question are those applied to Harris vy Commercial Minerals Ltd (1996) 186 CLR 1 at 16-18. The Court was there considering weekly payments to an injured worker under the Workers Compensation (Dust Diseases) Act which are not affected by an award of damages for the same injury. Their Honours enumerated three relevant considerations. For present purposes the important consideration was the source of the benefit. In that case, the benefit was paid for by employers and employees did not make any contribution to the relevant fund, the Workers Compensation (Dust Diseases) Fund. The Court said in its joint judgment at 17: "The financial source of the benefits therefore indicates the benefits should be deductible from awards of damages in respect of injuries giving rise to the benefits". Workers do not contribute to their own workers' compensation insurance. In my opinion therefore, this payment under s15 can properly be taken into account in assessing the plaintiff's damages including her damages by way of pre-judgment interest. No question arises in this appeal as to the effect of this payment on the lump sum award made by her Honour because the plaintiff refunded this amount to her employer. This has not been to her disadvantage because her Honour did not, as she otherwise would have been bound to, reduce the award to reflect the fact that under s64 this amount did not have to be refunded to the employer. The principles referred to require this Court to decide that the receipt of this lump sum was properly taken into account by her Honour in her adjusted allowance for pre-judgment interest. It follows that all the grounds of appeal fail and I would propose that the appeal should be dismissed with costs. Stein JA I agree. UNREPORTED JUDGMENTS Fitzgerald AJA I agree. Handley JA The order of the Court is appeal dismissed with costs. Appeal dismissed with costs. Counsel for the appellant: C A Evatt/M K Rollinson Solicitors for the appellant: Carters Law Firm Counsel for the respondent: P M Hall QC/P Biggins Solicitors for the respondent: Dibbs Crowther & Osborne