SCHULTZE v ANDREN SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL SHELLER, BEAZLEY and STEIN JJA 3 April 1998, 16 April 1998 [1998] NSWCA 206 NEGLIGENCE — damages — trial Judge's award of damages was sound On 30 May 1989 the appellant injured his knee in a motor vehicle accident with the respondent. A trial liability was not in issue. The trial Judge found that the appellant had suffered an injury in the accident but his disability was largely pre-existing and that there was insufficient evidence upon which to calculate past and future economic loss. On these bases his Honour awarded damages consisting of Non-economic loss $4,200 Past out of pocket expenses $2,022 Past economic loss $1,575 Future economic loss $5,000 Future medical expenses for a total knee reconstruction $3,223 The bases for the appeal were that these damages were inadequate. Held: 1. There was ample evidence to support the conclusion that the major portion of the appellant's knee disability pre-existed the accident. 2. It was open to the trial Judge to decline to make a speculative calculation of past and future earnings. 3. Nothing was advanced which suggested there was any error in the calculation of damages for future surgery. Abalos v Australian Postal Commission (1990) 171 CLR 167 Devries v Australian National Railways Commission (1993) 177 CLR 472 Sheller JA The appellant, Mr Jurgen Schultze, injured his right knee on 30 May 1989 when the motor vehicle he was driving collided with one driven by the respondent, Ms Susan Andren. Mr Schultze brought proceedings in negligence to recover damages from Ms Andren. In a trial in which liability was not in issue and which was spread over ten hearing days beginning on | May 1995 and finishing in December 1996, Judge Robison awarded the appellant damages in the sum of $16,020, consisting of - Non-economic loss 4,200 Past out of pocket expenses 2,022 Past economic loss 1,575 Future economic loss 5,000 Future medical expenses for a total knee 3,223 reconstruction The appellant appealed on the basis that the awards for non-economic loss, past economic loss, future economic loss and future medical expenses were inadequate. 2 UNREPORTED JUDGMENTS The appeal, both as formulated in the grounds set out in the notice of appeal and as presented, was misconceived. While in some of his submissions counsel for the appellant paid lip service to what has been said by the High Court in such cases as Abalos v Australian Postal Commission (1990) 171 CLR 167 and Devries v Australian National Railways Commission (1993) 177 CLR 472, particularly at 479, the main thrust of the appeal was that the trial Judge should have preferred the evidence of one medical expert to that of other medical experts, whose opinions supported the trial Judge's conclusions. The case as the appellant presented it was a particularly difficult one for a trial Judge to resolve fairly to him. As will appear, I consider his Honour succeeded in doing this. The problem derived from the appellant's own evidence. His credibility emerged as a most significant issue. His Honour said that he had to have regard to a variety of factors including but not limited to the appellant's demeanour, his evidence given over a lengthy period of time, his responses to answers given in cross-examination, the documentary material before the Court and, of course, the evidence of those witnesses called on his behalf. In his evidence in chief the appellant swore that before the onset of an attack of Ross River fever in July or August 1987 he had had no previous injury or trouble with his right knee and that, leading up to the date of the accident, he was not having any difficulty with his right knee. The appellant was by occupation a builder, who from 1 July 1986 to the date of the accident was self employed doing building maintenance work. This required him to climb ladders and build structures such as walls and roofs. Apart from fatigue, the consequence of the Ross River fever, he said there were no difficulties with these tasks except for taking breaks. After the effects of the Ross River fever had worn off, he said that he resumed tennis twice a week, but not as frequently as before the fever, continued undertaking hunting trips, albeit with some symptoms of fatigue, and went jogging. The effects of the Ross River fever consisted of aches and pains in various parts of his body, including his knees. Immediately after the accident he noticed a large swelling to his right leg which remained for quite a while. He said he was unable to walk on it. His general practitioner referred him to Dr Weisz, who performed an arthroscopy and medial meniscectomy to the right knee. For this purpose he went into hospital on 28 June 1989. He was discharged from hospital using a crutch and, although he felt very uncomfortable, resumed work three weeks after the operation as the right knee started to improve. After resumption of work the appellant had some difficulties with climbing and carrying tool boxes. He said he was unable to straighten his leg and that as a lot of work had to be done by himself he could not delegate it to others. He said his knee "swelled up like a balloon". He could not squat or run. His knee puffed up and swelled after six hours' use. He had sleeping difficulties. The appellant continued in his self-employed building maintenance business until August 1993 when he was employed by Modern Roof Restorations Pty Ltd as a commission salesman. He said he gave up being self-employed because of episodes of instability with his knee when working and because of difficulties in crouching down in small places. Later in 1993 he purchased a franchise from Modern Roof Restorations Pty Ltd which involved undertaking the restoration of tiled roofs. This meant that he had to ascend and descend from roofs. He said he had to take a break every hour or hour and a half in order to accommodate the pain which became unbearable by lunch time and progressively became worse. He employed one or two persons to assist him. URJ SCHULTZE v ANDREN (Sheller JA) 3 The trial Judge said that at first blush and to his mind the appellant appeared genuine. Having heard his evidence in chief one would reasonably form an impression that he was endeavouring to convey the scenario that he was in effect a one man business, that he would normally be undertaking all the duties required on his own, with consequent earnings, and that he had to employ others to relieve him of that work-load. However, when his Honour turned to the medical evidence and a video taken over several days in 1995 and 1996, his initial confidence in the appellant's evidence started to evaporate. This was particularly so during the appellant's cross-examination. Apart from the oral evidence of Dr Seaton the medical evidence consisted, relevantly, of doctors' reports and clinical notes and the clinical notes of a chiropractor, Mr Dalrymple. It emerged that on 8 February 1983 the appellant suffered an injury when he fell at work as a result of missing a step and slipping while he was carrying boxes of material down stairs. He jarred his back. Dr Mark Spigelman saw the appellant on 25 July 1988. In a report of 26 July 1988 he recorded the history given in part as follows: "He also tells me that since the accident he has always had left leg pain which comes and goes. He has also recently started getting severe pain in his right knee though there is no history of him injuring that." On examination Dr Spigelman reported: "Certainly for a person who five years at least after the injury alleges to be crippled by it, it is amazing how minor his original injury was, taking one day, if that, off work. I was rather surprised to see that he came in with a marked limp favouring his right leg but in fact when undressed it was noticed that he had quite significant arthritic changes in his right knee and this explains his limp. In fact he has such a marked limp from his arthritis that one would suspect that his back pain is more than likely due to his arthritic limp." Dr Spigelman concluded: "T believe what we are dealing with a man with a chronically deformed knee who is getting back problems because of his altered gait who about two years ago because of his problems plus perhaps some other incident that occurred at the time that he bent over, did actually strain his back and has had symptoms ever since but who is now attempting to claim some injury which occurred several years before then, but this cannot be substantiated. I feel his disability on this occasion relates more to his chronic knee than his back." On 16 September 1988 the appellant was seen by Dr Roger Rowe, an orthopaedic surgeon, who reported in October 1988 (mis-dated 1989). After referring to the accident of February 1983, Dr Rowe reported the history as follows: "His job at the time was that of a partner in a building company specialising in bathrooms. He continued to work in this self employed capacity until he sold his share of the business in June, 1985. He said that in his last year in this job he employed a foreman to do heavy work but this caused financial problems. Since he sold the business in mid 1985 he has done casual building maintenance jobs which he said have totalled approximately one year of work over the past three years. In March 1988 he began catering with his sister in law running a snack bar at Liverpool. He did this job for three months until he noted some swelling in the right knee. He did not know the reason for this swelling, but he said that he had x-rays and has been told that it is arthritis. He has not done any work at all since June 1988. He has no income but his wife works." 4 UNREPORTED JUDGMENTS Dr Rowe referred to a number of x-rays including x-rays of the right knee taken on 26 February 1988 which he said revealed very early osteoarthritis. Dr Rowe concluded that the appellant was fit for most if not all activity consistent with his age and that the only treatment required was for his depression. The trial Judge quoted from the report of 18 January 1989 of Dr Lyons, an orthopaedic surgeon, who examined the appellant on 17 January 1989. After setting out the appellant's history until 1988, Dr Lyons said: "More recently he has also had problems with recurring pain and swelling in his right knee which he thinks must have been due to the original injury although he knows no definite cause." After referring to the Ross River fever infection, Dr Lyons said that at present the appellant was doing some lawn mowing and property maintenance, about twenty-five hours per week. Amongst the symptoms that the appellant described was the following: "3. He said that his right knee worries him intermittently with recurring pain and swelling usually when he is on it for long. At the present time it is worrying him a good deal. He relates the knee injury to the injury in 1983 but apparently did not have any symptoms for some years thereafter." Amongst the x-rays recorded was one of 4 November 1985 showing "some osteophytic ripping of both knee joints". That x-ray, if correctly described, was not part of the evidence. Dr Lyons was of opinion that the discomfort in the appellant's right knee was associated with osteoarthritis and not related in any way to his 1983 injury. Dr Lyons thought the history suggested chronic symptoms in the appellant's back ever since the 1983 incident and said that spinal fusion might cure the appellant's pain but it would be doubtful whether he would be fit for heavy work following such operation. He thought the appellant capable of doing selective work in the building industry, but not continuous heavy lifting which would probably be assessed of about thirty percent loss. The appellant told Dr Kessell, a general practitioner who was treating him, on 29 June 1988 that he had problems with his right knee. In the records of the chiropractor, Mr Dalrymple, there is reference to a right knee problem before the date of the 1989 accident. In April 1989 the appellant brought proceedings in the Supreme Court to recover damages for his 1983 injury, presumably from his employer. He claimed that this had resulted in serious diminution in his earning capacity and employability. The proceedings were settled in 1993. For the purpose of those proceedings, his solicitors had him examined by Dr Roebuck, an orthopaedic surgeon, who reported on 19 July 1993. Dr Roebuck recorded: "[The appellant] is now a part time property maintenance man but still has back pain without aggravation and it is made much worse if he exercises to any extent and tries any heavy work. He still has pain in the back, all day, every day. He is worried about falling into a drug habit so does not take medication." Dr Roebuck's conclusion and prognosis was: "Mr Schultze has a significant permanent residual disability as a result of the injury of 1983 in which he produced symptoms from a pre-existing but symptomless lumbar spondylitis. This has given him a permanent alteration to his employability making him fit only for light sedentary work permanency and unfit to return to his previous occupation of a self employed builder with consequent loss of income. He is in continuous pain and obviously this has affected his life considerably. URJ SCHULTZE v ANDREN (Sheller JA) 5 He is fit for light part time sedentary duties only permanently as a result of his injury. He has an 18% permanent impairment of his back as a result of the injury of 8 February 1983 and this would not be helped by any treatment nor is any treatment indicated." Not surprisingly in light of the medical evidence the trial Judge concluded that the appellant had significant problems with his right knee for some time before the May 1989 accident. His Honour said: "The initial impression having been given to me by the [appellant] that he was fit and strong, and, apart from Ross River Fever and other medical problems of a nature unrelated to any injury, he was able to undertake a variety of work. I have had considerable reservations in accepting anything the plaintiff says which is not corroborated by other evidence." There were other matters which fuelled these reservations. The trial Judge saw video films of the appellant taken on 9, 10 and 11 November 1994 and 8 June 1995. The videos, which I have not seen although they were available, depicted the appellant, amongst other things, working on roofs. His Honour carefully set out what he observed the appellant doing and concluded that what he saw on the video was inconsistent with the appellant's evidence in many respects to which his Honour referred. In particular, the trial Judge saw the appellant stand on his right leg with his left leg propped up and on other occasions putting his full weight on his right leg, on occasions leaning on his right leg. His Honour did not detect any indication of pain or concern in so far as the appellant was concerned. The appellant appeared to have no difficulty walking on the roof, there was no sign of pain, discomfort or disability. He did not see any evidence that the appellant could not fully straighten his right leg. Thus, the appellant's evidence both that he had had no trouble with his right knee before the 1989 accident and that the accident had seriously affected his earning capacity was in doubt. The appellant tendered as his case on economic loss what were said to be income tax returns for the period from 30 June 1986 to 30 June 1992. In fact, as only emerged in cross-examination, the documents, although in the form of income tax returns, had never been lodged with the Commissioner of Taxation. They were returns prepared years later on 12 April 1994. The trial Judge said: "There is insufficient evidence of any supporting material justifying any of the figures in those returns. They seem to have been plucked from the air from In effect there are really no supporting documents for anything stated in those tax returns. True it is there are some docket books and other things but at the end of the day, I am left with the evidence of the plaintiff, the uncorroborative [sic] evidence of the plaintiff, as to those years involved." His Honour concluded that it would be reckless and irresponsible to accept anything in the tax returns and that any determination of economic loss based on the tax returns was impossible. These conclusions are entirely justified. Yet this was apparently the material upon which the appellant formulated his schedule of damages (exhibit N) showing past economic loss at over $120,000 and future economic loss as nearly $93,000. l observe that in relation to a statement of income and expenditure for the year ended 30 June 1991 prepared by an accountant for submission to a bank in May 1992, the appellant said that the figures had been "dickied up" for the purpose of obtaining a bank loan. 6 UNREPORTED JUDGMENTS In his personal injury claim form of 4 July 1990 the appellant, after referring to the nature of his business as home repairs and maintenance, said that he had obtained no replacement services because that was "not financially viable". Indeed no claim for economic loss was made in these proceedings until the Supreme Court proceedings had been settled. The appellant then claimed to have been obliged to employ replacement labour from August 1989 by employing one and sometimes two assistants. Judge Robison was satisfied that the appellant sustained an injury to his right knee in the 1989 accident. However, he found that although having an injury which was treated under an operative procedure, the appellant did not have the disabilities that he claimed he had arising from this accident, having regard to the overwhelming evidence as to the pre-existing state of his right knee. He regarded him as entitled to some measure of compensation for the nine week period of operative procedure. The trial Judge said that he had taken the very firm view that the appellant's credibility had been significantly impaired, if not shredded, to a considerable extent. The appellant called several lay witnesses whose evidence individually the trial Judge referred but, for reasons he gave, regarded as unhelpful and in the case of Mr Johnson in one respect, at least, unbelievable. The problem was, as the trial Judge acknowledged, that so much of the appellant's case, both as to the nature of his injury and its consequences and the amount of his loss, depended on his own evidence and therefore on his credit. His Honour said: "T am not satisfied that the plaintiff has discharged the burden of proof cast upon him in relation to the extent of the disabilities that he claims to have sustained from that accident, although I am prepared to allow the plaintiff some small measure of damages, having regard to the evidence before me as a whole. I think it is fair that I should do so but I totally reject, apart from a small period following the accident, the plaintiffs claim for economic loss as set forth in the schedule of damages marked exhibit N. The nine weeks to which I referred earlier, I consider, it is appropriate to allow in the sum of $1575. I totally reject any suggestion that this plaintiff's case approaches anything like thirty per cent of a most extreme case." His Honour was satisfied that there was need for a total knee reconstruction but said that had to be measured very carefully against the state of that knee prior to the accident. His Honour allowed a discounted figure of $3,223 for future surgery. As far as s79 of the Motor Accidents Act 1988 was concerned his Honour said that: ... "based upon the evidence of Dr Weisz in particular, and having regard to the fact that he did sustain an injury and he has some disability, although the major portion of this in my view pre-existed the date of the accident, I consider that the plaintiff does warrant a finding of impairment pursuant to the Act. I am prepared to assess that as ten per cent of a most extreme case." As to future economic loss he said that by virtue of the unsatisfactory nature of his evidence, the appellant had not substantiated the claim for future economic loss as asserted in the schedule. He considered that the appellant, having regard to the extent of his injury and that he had had a working life of some kind, justified an entitlement to a very nominal provision for future economic loss by way of a cushion in the sum of $5,000. URJ SCHULTZE v ANDREN (Sheller JA) 7 APPEAL Central to the appeal was the appellant's submission that the trial Judge appeared to have rejected the evidence of Dr Seaton, who was called on the appellant's behalf. Dr Seaton first saw the appellant in 1992 and thereafter on several occasions up to the trial. He saw two x-rays, one pre-accident dated 22 June 1988 and another, post-accident dated 16 June 1989. These disclosed only "slight degenerative changes". This was said to contradict the finding that the appellant's right knee was the source of significant disability before the accident. The second x-ray post-dated the reports of Drs Spigelman, Rowe and Lyons. Dr Spigelman does not refer to the earlier x-ray but both Dr Rowe and Dr Lyons had seen it. Dr Roebuck had apparently not seen these x-rays. Dr Seaton said, and I do not think that this is in dispute, that Ross River fever affects joints causing them to swell and causing discomfort and pain. However, it does not cause osteoarthritis. Dr Seaton gave evidence that the appellant's left knee had not changed since 1988 whilst the degeneration of the appellant's right knee following the accident had increased ten fold with at least fifty percent of that condition being caused by the accident. He said that the right knee was, at the time he gave evidence, twice as bad as it would have been if the appellant had not sustained the injuries he did in the May 1989 accident. In one of his reports he said that the arthritis had spread to all three compartments of the knee and: "it is very probable he would have no problems in his right knee in regard to his present situation of advanced osteoarthritic changes if he had not had the injury against the key in the car accident." When he first saw the appellant's knee, in his opinion there was not much wrong with it. Since that time it had deteriorated rapidly over the years up to 1996 and would continue to deteriorate at that rate. Dr Seaton also gave evidence that he had examined the video and that what he saw of the appellant was consistent with his examination of the appellant as at 1996. He said that the appellant had suffered a wasting of the whole right leg of four centimetres, was unable to extend and flex or lock his right knee, unable to kneel or squat or to put any weight on the right leg when bent or stand on his right leg by itself. The appellant called in aid the evidence of Dr Ireland, the consulting orthopaedic surgeon qualified by the respondent, to make the point that as at June 1988 the x-rays showed that the osteoarthritic condition was slight or in its early stages. The evidence of the lay witnesses who had known the appellant, in the case of Mr Johnson since 1981, and had worked with him from time to time before and after the accident was said to support the appellant's evidence that before the May 1989 accident the appellant had no trouble with his knee but that after the accident he could work only for short periods before requiring a break. The submission was that the trial Judge was bound to accept the evidence of Dr Seaton, which was said to be uncontradicted and unchallenged. The appellant also argued that his Honour wrongly disregarded the evidence of the lay witnesses. As I have said his Honour dealt with each of these witnesses' evidence individually and, having heard them in the witness box, gave reasons for treating their evidence as unhelpful or unbelievable. I detect no error in his Honour's approach. He had the advantage of having heard the evidence and seen the witness. Dr Ireland examined the appellant on 2 August 1993 and on 24 November 1994 gave reports on those days. He agreed that the x-rays of 22 June 1988 indicated there to be an early osteoarthritic change. He accepted that the road 8 UNREPORTED JUDGMENTS traffic accident may have made a difference to the right knee but suggested that the knee matter may have arisen out of some injury in the course of his work. In the 24 November 1994 report he said: "\.... consider that he has a fifteen percent impairment of function of the right leg as a whole. I do not know how bad the matter was before the car traffic accident, I can only hazard a guess that perhaps half of the matter pertains to a pre-existing matter and half could be seen as a consequence of the road traffic accident." Dr Ireland was not required for cross-examination. Dr Seaton said that the accident was the cause of at least fifty percent of the appellant's ongoing disability. However, he did not have the benefit of the pre-accident history of knee problems referred to in the other medical reports. He acknowledged in the course of his evidence that it would be necessary to correlate the appellant's clinical pre-accident complaints with the x-ray findings before expressing any view as to the attributability of the condition as diagnosed several years post-accident. Understandably, both Dr Seaton and Dr Ireland expressed reservations about the opinions they formed having first seen the appellant, in the case of Dr Seaton in 1992 and in the case of Dr Ireland in 1993. Dr Seaton examined the appellant on a number of occasions up to early 1996. Dr Ireland last saw him in 1994. The trial Judge, having seen him give oral evidence, said that Dr Seaton was very sympathetic to the appellant and was perhaps relying too much on what the appellant had told him. In assessing non-economic loss his Honour came to the conclusion that the major portion of such disability as the appellant suffered "pre-existed the date of the accident". In my opinion, there was ample evidence to support this conclusion. Having reached this conclusion, his Honour assessed non-economic loss as ten percent of a most extreme case. It is accepted that this percentage was arrived at after allowing for the pre-existing condition. The appellant claimed that the award should have been made on the basis that the disability represented thirty percent of a worst case which should then be discounted back to twenty percent to take account of the pre-accident condition of his right knee. Thirty percent on any view represented the middle of the range if not above it. It was open to his Honour to conclude that the major portion of the appellant's right knee disability pre-existed the accident and on that basis, in my opinion, the ten percent award was open and cannot be disturbed. So far as economic loss was concerned, the appellant failed to produce in Court any acceptable evidence of his earnings either before or after the accident or any acceptable evidence of what he might have earned but for the accident. Apparently, as a fall back position the appellant sought to persuade the trial Judge that both past and future economic loss should be calculated by reference to $100 per week, said to be the amount paid to employees brought in to assist the appellant after the accident, on the basis that but for the accident that assistance would not have been needed. His Honour obviously rejected this approach as speculative and I would not interfere with this view. It is to be borne in mind that, in the proceedings ultimately settled in 1993, the appellant had claimed to have suffered a serious diminution in earning capacity and employability as a result of the 1983 accident. There was evidence that following this accident for periods of time he was not working or working only for short hours. He saw fit to present his case on the basis of false evidence. The trial Judge was not prepared to speculate about what he was earning or might have earned and I see no reason for this Court to interfere with that approach. URJ SCHULTZE v ANDREN (Stein JA) 9 Finally, it was argued that an inadequate amount was allowed for future surgery. His Honour discounted the expected cost of future surgery of $12,000 to $15,000 having regard to the appellant's pre-existing condition and then by an amount of twenty-five percent for vicissitudes, no doubt intended to take account of the possibility that the surgery would not be needed or would not occur. Nothing has been advanced which suggests there was anything wrong with this approach or the ultimate award that his Honour made. In the result the appeal, which as I have said I regard as misconceived and without any merit, should be dismissed with costs. Beazley JA I agree with Sheller JA. Stein JA I agree with Sheller JA. Appeal dismissed with costs. Counsel for the appellant: J S Drummond Solicitors for the appellant: Mark Kennedy & Co Counsel for the respondent: J P Guihot Solicitors for the respondent: Turner Whelan