NSW INSURANCE MINISTERIAL CORPORATION (formerly GIO of NSW) v GOMES SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL SHELLER, POWELL and STEIN JJA 5 June 1998, 26 October 1998 [1998] NSWCA 165 ASSESSMENT OF DAMAGES — trial Judge's failure to give reasons an error of law — future out of pocket expenses — future economic loss — future non — economic loss Both the appellant and respondent appealed against the trial Judge's assessment of damages in proceedings brought by the respondent to recover damages for the onset of attacks of schizophrenia precipitated by severe grief reaction and nervous shock the he suffered as a result of the death of his father in motor vehicle accident. Liability was admitted before the hearing and the trial Judge awarded damages of $926,232.99. The appellant appealed against the assessment of damages for future out of pocket expenses, in particular, psychiatric consultations during periods of hospitalisation, hospital expenses and anti-psychotic medication. The appellant cross appealed against the assessment of non-economic loss, future economic loss and future out of pocket expenses on the basis that the trial Judge had applied excessive and inappropriate discounts, based on her findings as to the prospect of the onset of the respondent's illness even if his father's sudden death had not precipitated it. Held: 1. The trial Judge's failure to give adequate reasons for her assessment of the cost of future hospitalisation is an error of law and may mask a misunderstanding of the evidence. Therefore, this element was to be re-assessed. The trial Judge's award of hospital expenses for 4 months per year was excessive. The correct assessment of damages, before any discount, was $308,100 on the basis that the respondent will require 4 months hospitalisation every two years. Soulemexis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 280 and Sharman v Evans (1977) 138 CLR 563 at 565 applied. 2. The trial Judge's discounting of damages due to the likelihood of the respondent suffering from the onset of schizophrenia in any event was contrary to the evidence and to the extent that it had any foundation involved a misunderstanding of the evidence. While the evidence gave the impression that the illness was genetic, it did not establish that there was any calculable chance that at some point in time after the respondent was 30 years old he would have suffered from the severest form of schizophrenia without the circumstance of his father's death. Therefore, no discount was allowed and the appropriate award of damages for future hospital expenses was $308,100. Sharman v Evans at 587, Watts v Rake (1960) 108 CLR 158 at 160, 164 and Purkess v Crittenden (1965) 114 CLR 164 at 167-168, 170-171 referred to. 3. The assessment of damages for future psychiatric consultations should not have been discounted and should be reduced to accord with the damages allowed for future hospitalisation. Therefore, the appropriate assessment of damages was $15,172. 4. The trial Judge should not have discounted the damages awarded for future anti-psychotic medication. However, the sum awarded by the trial Judge was within the range contemplated by the evidence and the reduction of 50% to take into account periods when the respondent either refused or could not take the drug although arbitrary was not unreasonable. Therefore, the appropriate measure of damages was $41,907. 5. In relation to the respondent's cross appeal, the trial Judge should not have discounted the damages awarded on the basis that the illness would have been suffered in 2 UNREPORTED JUDGMENTS any event. In addition, the assessment of non-economic loss under s79 of the Motor Accidents Act to be 50 percent of the most extreme case was too low. Damages should be awarded at 65 percent of the most extreme case, namely, $168,350. Marsland v Andjelic (1993) 31 NSWLR 162 at 169; 186 CLR 20 at 29 referred to. 6. The trial Judge should not have discounted the damages for future economic loss to take into account reduced level of overhead the respondent would incur in his business. The appropriate damages for future economic loss was $236,384. Authorities: Marsland v Andjelic (1993) 31 NSWLR 162; 186 CLR 20 Purkess v Crittenden (1965) 114 CLR 164 Sharman v Evans (1977) 138 CLR 563 Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 Watts v Rake (1960) 108 CLR 158 Sheller JA INTRODUCTION In this appeal, both the appellant, NSW Insurance Ministerial Corporation, the defendant in the proceedings, and the respondent, James Gomes, the plaintiff in the proceedings, appeal against the assessment of damages by the trial Judge, Sidis DCJ in proceedings the respondent began in 1992 to recover damages for the onset of attacks of schizophrenia precipitated by severe grief reaction and associated nervous shock he suffered as the result of the sudden death of his father in a motor vehicle accident which occurred on the 31 March 1988. Liability was admitted before the hearing. In her decision of the 5 January 1996, Judge Sidis awarded the respondent $926,232.99 made up as follows: Non-economic loss at 50 per cent of a most $117,500 extreme case Past economic loss $92,879 Interest on past economic loss $11,082.99 Future economic loss $165,469 Past out of pocket expenses $2,479 Future out of pocket expenses $536,823 The amounts allowed for future out of pocket expenses were: (1) monthly psychiatric consultations $16,920 (2) psychiatric consultations during periods of $22,758 hospitalisation (3) hospital expenses $461,834 (4) sleeping medication $3,881 (5) anti-psychotic medication $31,430 The appellant appealed only against three of these amounts, namely, psychiatric consultations during periods of hospitalisation, hospital expenses and anti- psychotic medication. By cross-appeal, the respondent contended that the amounts allowed for non-economic loss, future economic loss and future out of pocket expenses were inadequate on the basis, in each case, that the trial Judge had applied excessive and inappropriate discounts, based on her findings as to the prospect of the onset of the respondent's illness even if his father's sudden death had not precipitated it. WABW INSURANCE MINISTERIAL CORPORATION (formerly GIO of NSW) v GOMES (Sheller JA) Both the appellant and respondent submitted that in a number of respects Judge Sidis' reasons for judgment were inadequate. It is necessary in this appeal to reiterate the duty of trial Judges to give reasons which are sufficient to enable the parties and any appellate Court rehearing the matter on appeal, to understand the essential ground or grounds upon which the decision rested; Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 280. Failure to do this is an error of law which may lead to a new trial with the consequences of unnecessary delay and expense to the parties. On the other hand, although this is an appeal by way of rehearing, it is not a second trial and due weight must be given to the trial Judge's conclusions, bearing in mind that the range of damages which might properly have been awarded is wide and the trial Judge's discretion, properly exercised, in awarding such damages is not to be set aside because this Court would have awarded a greater or lesser amount; Sharman v Evans (1977) 138 CLR 563 at 565. FINDINGS OF FACT The respondent was aged 30 on 31 March 1988 when his father was killed in a motor vehicle accident as the result of the negligence of another driver. The appellant was sued as the authorised insurer pursuant to s54 of the Motor Accidents Act 1988. The respondent began to suffer from the effects of the mental illness, chronic relapsing schizophrenia. His father's death did not cause this illness but he claimed that the shock of the death and the resulting stress placed upon him, precipitated symptoms of the illness which had previously remained latent. In the course of the illness, the respondent damaged his eyes and, in consequence, impaired his eyesight. The respondent, who was the only child of Portuguese migrants, was born in Portugal in 1958 and came to Australia in 1966. His father was a painter and decorator, operating his own business until he injured his back in a work related accident. After that, he worked part-time as a taxi driver. The respondent left school without obtaining his School Certificate and joined his father in the painting and decorating business. In 1980, he established his own business working for various building companies. He led an active social life. He enjoyed football, surfing, sailing, cycling and horseriding. He went to nightclubs, parties and picnics. In about 1982, he formed a relationship with Donna Jackson, now Mrs Hicks. Subsequently, the couple lived together in a de facto relationship, first in rented accommodation and later in the respondent's parents' home. The respondent's relationship with his father was very close. He said his father was his best friend and there was nothing he would not do for him. The exact nature of the relationship, which various witnesses described, does not matter. The respondent depended heavily on his father and suffered immense shock and grief when the police arrived at his home on 31 March 1988 early in the morning to tell him that his father had been killed instantly when his taxi had been involved in a head-on collision with a vehicle travelling on the wrong side of the road. The trial Judge described what happened at the morgue and at his father's funeral. The respondent's problems began about two weeks after the funeral or perhaps a little later. Those problems involved hallucinations and illusions of various kinds. They continued with limited severity but gradually got worse and interrupted his capacity to work. In August 1991, his mother observed him to drive erratically. He said he could see snakes and crosses and was trying to drive around them. He was taken to his general practitioner, Dr Clifford, who referred him to Dr Pettit, a psychiatrist. Dr 4 UNREPORTED JUDGMENTS Pettit diagnosed an extreme psychotic episode and referred him to Prince Henry Hospital for treatment. At some time between his admission to hospital and December 1991, Mr Gomes spent most of one day standing in his yard gazing at the sun. He said he did this because he thought he saw his father's body enter the sun. As a result, he suffered "eclipse" burns to each retina. Dr Delaney, an ophthalmic surgeon, assessed loss of vision at 50 percent in the right eye and 40 percent in the left eye. There was evidence that before the father's death, Mrs Hicks and the respondent had a normal, happy relationship. There were some problems but they had been overcome and at the time of the death they were looking forward to the birth of their child and purchasing their own home. The respondent had bought items for the baby. Mrs Hicks described the respondent, at that time, as physically active, outgoing, hardworking and generous. He showed no signs of psychiatric problems. He did not drink to excess, nor use illicit drugs. Immediately after he had been told of his father's death, Mrs Hicks said the respondent's behaviour changed. He became withdrawn. She was not permitted to accompany him to the morgue or to attend the funeral because at that time she was pregnant with his child and he thought it would be damaging to the pregnancy. The respondent told Mrs Hicks of vivid dreams after the funeral of his father trying to tell him something. His moods were erratic and he told of seeing his father in various places in the house and of his father talking to him all the time at work and when he was in his car. In May 1988, their child Monique was born. According to Mrs Hicks, the respondent was very happy on the night of the birth but his moods then alternated between withdrawal, agitation and happiness. At the hospital he was agitated, objecting to the doctors touching his daughter and concerned that people were looking at her and wanting to kill her. Four weeks. after Monique's birth, Mrs Hicks left with their daughter because she said she could not cope with the respondent's behaviour. Mrs Hicks spoke with the respondent by telephone regularly after she left and suggested he get help for his continuing problems. Three attempts at reconciliation failed, according to Mrs Hicks, because the respondent's behaviour continued to be erratic. She described him as obsessive, paranoid, unable to sleep, angry and screaming and ultimately violent towards her. The last attempt at reconciliation was in October/November 1989. Thereafter, Family Court proceedings took place in relation to Monique. Mrs Hicks subsequently married and moved with Monique to live at Wauchope. Judge Sidis noted that the respondent had been hospitalised four times as a result of his illness: ¢ in August 1991 at Prince Henry Hospital for over three weeks; * in September 1991 for about ten days at Rozelle Hospital; ¢ in May/June 1994 for about 32 weeks; and ¢ from October 1994 to February 1995 for about four months, on the last two occasions at Prince Henry Hospital. Between periods of hospitalisation, he had been treated by two psychiatrists, Dr Whitehead and Dr Cullen and to the time of the trial remained under the care of Dr Cullen. Judge Sidis said that various anti-psychotic drugs had been used to stabilise the respondent's condition but he had not tolerated any of them. As a consequence in periods of remission from illness he took no medication. The eclipse burns to his eyes could not be treated. He had been provided with special telescopic glasses to assist with the problems caused by retinal burns. At the time of the trial, WBW INSURANCE MINISTERIAL CORPORATION (formerly GIO of NSW) v GOMES (Sheller JA) he was in remission and taking no medication. Judge Sidis said that, as he presented to the Court, the respondent was logical and sensible although somewhat subdued. Her Honour went on: "Drs Cullen, Dent and Smith agreed that he is currently in the stage of the illness which is chronic and relapsing. This means that he will never recover from it and that he may get worse. In his current condition he requires management by ongoing psychiatric supervision and possible hospitalisation. On the basis of past experience Dr Cullen suggests that Mr Gomes will go to hospital annually for two to four months. Dr Dent agrees. Dr Smith expressed the view that with adequate supervision, regular hospital admissions may not be required. Tf the illness progresses to the next stage, Mr Gomes will require more direct supervision through hospital accommodation. The worst case scenario is continuous hospitalisation." When dealing with what she described as the defendant's response, the trial Judge said: "All medical experts agreed that Mr Gomes was genetically predisposed to schizophrenia. There is a family history affecting a cousin on his father's side in Portugal and an indication Mrs Gomes also suffers from the illness. They also agree that with his genetic predisposition, Mr Gomes faced the prospect, put at a 20 percent possibility by Dr Smith, that the symptoms of the illness would have manifested regardless of the sudden death of his father or any other event involving extreme stress." Other stressors they pointed to were: * the relationship with Mrs Hicks, which was under some strain prior to his father's death; * the pregnancy and the impending birth of his first child; * the breakdown of the de facto relationship and the three attempts at reconciliation; * the separation from his daughter and constant Family Court proceedings; ¢ Mrs Hicks subsequent marriage to another; and * the ongoing pressure of his obligations to his dependent mother. ASSESSMENT OF DAMAGES At the time of his father's death, the respondent was self-employed, working on a sub-contract basis as a painter and decorator. He continued this work until his admission to Prince Henry Hospital in August 1991. Past economic loss was claimed from 1 July 1991. Her Honour allowed $92,879, the amount the respondent claimed. Neither side has challenged that assessment. The respondent claimed future economic loss assessed on one of two alternative bases. Her Honour accepted the second of these. The appellant does not challenge this method of assessment. The respondent claimed $236,384 for loss of income for 26 weeks in each year, coupled with diminished income for the 26 weeks during which work was possible, applying "the usual" 15 percent discount. The respondent's evidence was that his earning capacity was affected by two factors, first, his impaired eyesight which prevented him from successfully completing fine work or "cutting in" and which slowed his rate of work and loss of productivity. He said that he had taken work with commercial paint companies but had been unable to meet their standards. Secondly, the respondent claimed his income earning capacity was affected by the interruption 6 UNREPORTED JUDGMENTS of his work by periodic hospitalisation and periods immediately before and after the hospitalisation during which his capacity to work was seriously diminished. At the time of the trial, the respondent was enjoying a period of continuous work. He was working for himself undertaking domestic work. He had maintained a record which indicated that he had been working regularly since 18 September 1995, earning about $200 per day with few overheads. He said he had obtained the work from friends and references. Judge Sidis thought it unlikely that the respondent would continue to earn at the current level of $200 per day gross and discounted the figures put forward on his behalf to reflect: "(1) the likelihood that at some stage of his life he would have suffered from the symptoms of the illness for which a discount of 20 percent has been applied; and (2) the reduced levels of overhead which he would incur in pursuing his business at a lower scale for which a discount of 10 percent has been applied." The amount allowed was $165,469 calculated by reducing the amount of $236,384 claimed by 30 percent. Past out of pocket expenses were agreed at $2,479. As to future out of pocket expenses, the trial Judge said: "Future out of pocket expenses are claimed for the supervision and hospitalisation which it is said Mr Gomes will require for the rest of his life, allowing a life expectancy to age 77. Claims are made for: (a) monthly attendance on a treating psychiatrist costing between $70 and $145 per month: $14,819 - $30,702. (b) extra consultations required during periods of hospitalisation, estimated at 16 further consultations per year: $19,755 - $40,934. (c) hospital expenses for four months per year at a daily rate of between $202 and $380: $427,739 - $803,817. (d) medication involving sleeping tablets at a weekly cost of $5.64 per week: $5,175. (e) anti-psychotic medication at a cost of between $48.07 and $134.61 per week: $44,109 - $123,518. The standard 15 percent discount has not been applied in calculating these figures. Her Honour allowed future out of pocket expenses: "by taking the median of the ranges suggested and discounting them by the standard 15 percent and a further 10 percent to take account of the likelihood of the onset of schizophrenia at some stage in Mr Gomes' life. Anti-psychotic medication is allowed for six months of each year on the basis of the evidence that Mr Gomes is not able to tolerate such medication in periods of remission." Judge Sidis found that there was a connection between significant stress events and the precipitation of attacks of schizophrenia in persons who are predisposed towards that illness and that the respondent was subject to a genetic predisposition towards the illness of schizophrenia. However, apart from one incident involving the use of marijuana, there was no evidence to suggest that the respondent was suffering from schizophrenia before the accident. The respondent first experienced hallucinations about two weeks after his father's death. These continued, but with moderate severity until the psychotic episode of August 1991. The trial Judge found that the stress of the respondent's father's death and his unresolved grief over that death had precipitated attacks of schizophrenia in the respondent. Whilst other stressors had subsequently impacted upon the illness WABW INSURANCE MINISTERIAL CORPORATION (formerly GIO of NSW) v GOMES (Sheller JA) so that by the time of the trial he suffered from the illness in its chronic relapsing form, the hallucinations and other disturbances from which he had suffered had substantially focussed upon his father and his father's death. Her Honour said: "T find that the consequences to Mr Gomes of the precipitation of his schizophrenic illness and of his impaired eyesight are severe and constitute significant impairment of his ability to lead a normal life. He is socially isolated by the illness, his behaviour has led to estrangement from his de facto wife and his daughter. His capacity to operate his own painting and decorating business is seriously diminished both by his illness and his impaired eyesight. His future life will be one of alternating periods of serious illness and hospitalisation and relatively normal life. Taking into account evidence of a likely prospect of the onset of the illness in any event, I assess the percentage this impairment bears to a most extreme case at 50 percent." GROUNDS OF APPEAL The amount the trial Judge assessed as damages for future hospital expenses was the median of the range the respondent claimed for four months per year. Her Honour did not describe her process of assessment; compare Sharman v Evans at 572 and failed to make any express finding about the degree of future hospitalisation the respondent would require. She referred, in the passage I have quoted, to the evidence of Dr Cullen who said that one could make a reasonable judgment on the basis of the past which was usually a pretty good indicator in these situations. Dr Cullen gave the following evidence: "He's had three admissions over a three year period approximately. I would have thought he'll end up being hospitalised annually to every second year." Asked whether he would be able to give any indication of the length of time such hospitalisation would be likely to last, Dr Cullen said: "T think the problem in answering that question is whether there are new developments in the treatment of schizophrenia and I am aware there are some in future. Having said that, it would be a minimum of a month and up to three to four months." Dr Cullen agreed in cross-examination that his evidence about the possible need for future hospitalisation was at best an educated guess and that the respondent's last period of hospitalisation could have been his last. However, his belief was that the respondent would have continual hospitalisation periods for the rest of his life. Sidis DCJ said that Dr Dent agreed that the respondent would go to hospital annually for two to four months. Dr Dent said that it would be "the wildest of estimates" to state the frequency with which hospitalisation was likely to be required by the respondent in the future. Dr Dent gave the following evidence: "Tt would be a better way of saying that one attempts to keep this man out of hospital by regular contact and supervision. If one does that, one attempts to maintain him out of hospital. I really couldn't give an estimate of whether or not he's likely to need hospitalisation in the future except to say in the broadest terms, if he has an acute episode, it would be wise if he were." He would be concerned each time there was an anniversary of the respondent's father's death or of an important family event or meeting, such as Christmas, birthdays or religious festivals, and each time there was an escalation of stress beyond the level that the respondent was able to tolerate. In those circumstances, 8 UNREPORTED JUDGMENTS the likelihood of psychosis was there ever emerging and the respondent might then need hospitalisation. Dr Dent said: "So I guess I'm saying the emphasis I think very properly ought to be on prevention and maintenance and without that, then the likelihood would be of him being in hospital I would imagine that least on an annual basis and probably on the anniversary or thereabouts of his father's death." The period required for proper treatment in such circumstances would, in Dr Dent's opinion, be in the order of four to six weeks. Dr Dent was asked whether the fact that the respondent in 1994 and 1995 required fairly lengthy hospitalisation during psychotic episodes indicated what the likelihood in the future of the length of hospitalisation and its frequency would be and answered: "Again, if one back pedals to what I was attempting to say earlier, that since we are looking at a disorder which by its nature tends to be one of a downhill progression, then I would imagine that his hospitalisation would need to be of lengthy - similar length when they occurred and on a similar frequency unless there is very expert and ongoing provision of support and medication as I have suggested before." Dr Dent did not in his evidence agree that the respondent would go to hospital annually for three to four months. At the time he gave evidence, Dr Smith regarded the respondent as in the third category of schizophrenia, that of a chronic unrelenting illness. He conceded it was possible that this category would require hospital admissions virtually on an annual basis throughout the patient's lifetime. His stays in hospitals would be measured in terms of months rather than days or weeks. The appellant submitted that, given the respondent was having monthly visits to a psychiatrist and was back in the workforce, the trial Judge's allowance of four months' hospitalisation per year for the rest of his life was excessive and against the weight of the medical evidence. Her Honour had misread Dr Dent's evidence, had chosen the longest period in one year mentioned by Dr Cullen and had given no reasons for this choice, bearing in mind, amongst other things, that in his oral evidence Dr Cullen had said that the respondent would be hospitalised "annually to every second year'. As against this, after apparently seeking no treatment until August 1991, which was more than three years after his father's death, the respondent had been in hospital on four occasions between August 1991 and February 1995 for periods which total over six months. The proceedings were heard in November 1995. The last period of hospitalisation had ended on 22 February 1995. Dr Cullen said that the past was usually a pretty good indicator of the future need for hospitalisation. Ina report of 11 May 1995, Dr Cullen said that while it was extremely difficult to get an accurate estimate, the respondent would need continuous ongoing psychiatric supervision for the rest of his life. "By and large this would be on a monthly basis with periods of increased intensity of involvement at times when he relapses. These relapses, appear, to be occurring on approximately an annual basis and in recent times, these have required two to four months in hospital." In a report dated 22 June 1995 Dr Cullen said: "I can confirm that my estimate of $10,000 per year would cover the cost of four months in hospital together with psychiatric supervision during the year. However, in the event that he was on Clozapine and needed the same length of time in hospital this figure could increase in the first year to approximately $15,000." WBW INSURANCE MINISTERIAL CORPORATION (formerly GIO of NSW) v GOMES (Sheller JA) The trial Judge's failure to give adequate reasons for her assessment of the cost of future hospitalisation is an error of law and, in the light of what she did say about Dr Dent's evidence may mask a misunderstanding of the evidence. Accordingly, in my opinion, this element of the damages must be reassessed. Neither party presses for a new trial which is undesirable. The Court must reassess the damages for itself This is an extremely difficult task. The extent of need for future hospitalisation is in the view of the experts little better than a guess. The only firm guide is the experience of the respondent during the period of four years from August 1991 to November 1995. In August and September 1991, he spent five weeks in hospital. Two and a half years passed without hospitalisation. In the final period of 18 months from May 1994 to November 1995 he was in hospital for five months. Nobody suggested that this period was atypical, although as the respondent pointed out in his submissions, if the condition progressed there was a worst case scenario of continuous hospitalisation. I have come to the conclusion that the award of hospital expenses for four months per year was excessive. The experience between May 1994 and February 1995, shows that hospitalisation in a twelve month period may extend over five months but between August 1991 and the hearing in November 1995, this did not happen annually. Insofar as estimates of time were given for likely periods of hospitalisation, Dr Cullen, with the benefit of his past experience, spoke of one month up to three to four months "annually to every second year". Dr Dent said that the usual experience if you required hospitalisation on an annual basis would be of the order of four to six weeks. In my opinion, it is appropriate to assess this part of the damages on the basis that, spread over the rest of his life, the respondent will require on average four months hospitalisation every two years. Neither party challenged the daily rate of $291 which her Honour's calculation adopted. In the result, this produced an amount before any discount, of $616,198 for 4 months hospitalisation per year which, accordingly, I would reduce by one-half to $308,100 before any discount. In arriving at the final assessment for future out of pocket expenses, her Honour applied a discount of "the standard 15 percent and a further 10 percent to take account of the likelihood of the onset of schizophrenia at some stage in Mr Gomes' life." The trial Judge's calculation of future hospital expenses was based upon. a statistical life expectancy, unaffected by the illness, of 77 years. There was no suggestion that the respondent's life expectancy was reduced and that being so, as the respondent contended in his cross-appeal, no discount for vicissitudes of life or what her Honour described as the "standard" discount, was appropriate; see Sharman v Evans at 587. The respondent also submitted that the evidence did not justify the discount her Honour made, in calculating non-economic loss, future economic loss and future out of pocket expenses, for the likelihood of the onset of schizophrenia, even if he had not suffered the shock and resulting stress from his father's death in 1988. In each case, the respondent submitted that either no discount should have been made for this or, at most, the discount should have been no more than a nominal amount of 5 percent. The trial Judge did not explain how these discounts were calculated. In the case of future economic loss the discount applied was 20 percent, in the case of future out of pocket expenses it was 10 percent and in the case of non-economic loss it was an unstated percentage which was used to reduce the respondent's impairment bore to a most extreme case. 10 UNREPORTED JUDGMENTS When dealing with the appellant's case, she observed, in the passage I have quoted, that the medical experts agreed that the respondent was genetically predisposed to schizophrenia and that there was a family history of the illness. She said that the medical experts were agreed that, with his genetic predisposition, the respondent faced the prospect that the symptoms of the illness would have manifested themselves regardless of his father's death and that Dr Smith put this at a 20 percent possibility. The respondent submitted that the evidentiary onus was on the appellant to prove the likelihood that he would suffer the condition in any event, when he would suffer it and the degree of disability which would result; Watts v Rake (1960) 108 CLR 158 at 160 and 164; Purkess v Crittenden (1965) 114 CLR 164 at 167-168 and 170-171. Dr Dent, who was called by the respondent, noted in his report of 11 July 1995 that there had been a family history of psychosis in a cousin. He was cross-examined on the hypothesis that the cousin was the son of the father's sister and that there had been some emotional disturbance experienced by the respondent's mother. Dr Dent said in evidence and by reference to a reputable textbook on genetics, that in the population where there was one schizophrenic parent, the prevalence was 12 percent and where there were two schizophrenic parents, the prevalence was 40 percent. Neither of the respondent's parents suffered from schizophrenia. The cousin, so far as the evidence went, suffered from mental illness and had experiences similar to the respondent but the cousin's diagnosis and details of treatment were unknown. There was some evidence in a report of Dr Cullen of 26 October 1993, that the respondent's mother had had depression and psychotic symptoms. The evidence of Dr Smith, to which the trial Judge referred, was given on the assumption put to him that the cousin in question was the son of the respondent's father's sister and that the respondent's mother had suffered depression and psychotic symptoms and psychosis. Dr Smith said: "Well if you' ve got a genetic loading on both sides then you' ve got quite a risk that you will develop a psychotic illness. I think Dr Dent put it at something like 20-odd percent. I wouldn't disagree with that. So he had a | in 5 chance anyway of becoming schizophrenic." Although the trial Judge did not say so, the discount she applied was apparently based on this evidence but the evidence was of little weight because Dr Dent had not put the risk at 20 percent. According to Dr Dent's evidence, if neither of his parents was schizophrenic, the chance of his suffering from the illness, but for the event of his father's sudden death, must have been less than 12 percent. But there were other factors. Another psychiatrist, Dr Haik, in a report of 22 March 1993, said that the pattern of the respondent's psychosis was not typical in that it did not appear insidiously in the teens or early twenties, but was late in onset and probably stress related. No expert evidence was led about the chance of the respondent at the age of 30 suffering from the condition in the future, but for his father's sudden death, or about whether if he did suffer from the condition, it would have been in the most severe category. In my opinion and with the greatest respect, her Honour's discounting of the amounts awarded because of the likelihood of the onset of schizophrenia in any event, was contrary to the evidence and to the extent that it had any foundation in the evidence involved a misunderstanding by both Dr Smith, her Honour and counsel for the appellant of Dr Dent's evidence. It is open, therefore, to this Court to determine whether any discount should be made on this head. WABW INSURANCE MINISTERIAL CORPORATION (formerly GIO of NSW) v GOMES (Sheller JA) While I have the impression from the evidence that the illness was genetic, I do not think that the appellant established that there was any calculable chance that at some point of time, after he had reached the age of 30, the respondent would have suffered from the severest form of schizophrenia without the circumstance of his father's sudden death. If such a case was to be made, it required greater expert precision than the appellant's evidence showed. Accordingly, I would not allow any such discount. The appropriate award for future hospital expenses was $308,100. The appellant's second challenge to the damages awarded was directed to future psychiatric consultations in hospital. As I have said, the assessment should not have been discounted. The sum assessed was based upon the median of the ranges the respondent estimated at 16 further consultations per year. The appellant submitted that these should be reduced consistently with the reduction of her Honour's allowance of hospital expenses for four months per year. One problem with this is the degree to which the separate allowance for future monthly psychiatric consultations took account of the periods of hospitalisation allowed. No clue to this is found in the reasons for judgment. One can only assume that the 16 further consultations per year were based upon a conclusion that during the four months the respondent was in hospital each year, such a consultation would occur each week. However, the item for future psychiatric consultations is said to be monthly and apparently calculated without regard to whether the respondent was in or out of hospital. The appellant did not challenge the amount allowed for monthly psychiatric consultations. The respondent only challenged this award to the extent it was discounted. In his evidence, Dr Cullen was asked about the psychiatric supervision which the respondent would require in the future. He said that, at times, it would be at a very intensive level in a psychiatric unit with intensive treatment and monitoring. At other times, when the respondent's psychotic condition was relative symptom free, he would need less active supervision. In addition, the respondent would need ongoing rehabilitation as part of his illness, independent of whether he was psychotic or not. Dr Dent seemed to agree with this. According to the reasons for judgment, the appellant put its case on the basis that during periods of hospitalisation, further consultations would be needed and estimated those at 16 per year. In my opinion, this must inevitably be reduced to accord with the allowance of future hospital expenses. The appropriate reduction is to halve the undiscounted figure. The damages for this should accordingly be the median between $19,755 and $40,934, namely, $30,344 divided by 2, that is to say, $15,172. The appellant's final challenge was directed to the amount allowed for future anti-psychotic medication. At the date of the trial, the respondent did not take any anti-psychotic medication. He showed a degree of intolerance to it. Her Honour gave no explanation for the basis upon which she assessed this head of damage beyond the mathematical calculation based on the respondent's claim and discounted in the way the respondent complained about. Her Honour said that the anti-psychotic medication was allowed for six months of each year on the basis of evidence that the respondent was not able to tolerate such medication in periods of remission. This method of calculation seems to me to be entirely divorced from the evidence. However, for the reasons already given any assessment of the expense of future anti-psychotic medication should not be discounted in the general way that her Honour adopted. 12 UNREPORTED JUDGMENTS In his report of 22 June 1995, Dr Cullen said that the respondent was currently not on any medication although until very recently he had been on Risperidone Img mane, which he was unable to tolerate due to side effects. The respondent had elected to discontinue it. The Doctor referred to various medications that the respondent had been on over the time that Dr Cullen had seen him. Dr Cullen continued: "The types of medication that he will need prescribed will include anti-psychotic drugs, benzodiazepines, anti-depressants and anti-cholinergic agents. These medications would not necessarily be required altogether [sic] at any one time but it is conceivable that at different points he would need these. The main stay of his treatment would be anti-psychotic medication although as you would be aware from my previous reports and this report there has been considerable difficulty stabilising him on this form of medication due to side effects. In terms of estimating the cost of being on such medication it would vary from virtually nothing if he was not taking any treatment to several thousand dollars a year if he was taking Clozapine. I should add that Clozapine is potentially the agent that will most likely help him if he can be stabilised on it as this is traditionally used for people with schizophrenia who either have problems on conventional agents or are resistant to treatment." In his oral evidence, Dr Cullen said that he anticipated trialing the respondent on that drug again or on a newer anti-psychotic similar to it that would be on the market in the next year but equally expensive. He was asked: Q. "So we're talking there about - you say several thousand dollars a year for such treatment? A. That's probably the upper end, it could be anywhere from two and a half to several thousand." Asked to put a more specific figure on it, Dr Cullen said: "Tt depends really on the exact dosage that he would require. It could go beyond that. And that would depend on the blood levels in his symptom to obtain a correct dosage. $5,000-$7,000 [per annum would] probably be the normal range." The median range her Honour chose of $91.34 per week or $83,813 in total seems to me to fall within the range of which Dr Cullen gave evidence. The deduction of 50 percent to take account of periods when the respondent either refused or could not take the drug, while arbitrary, does not strike me as unreasonable. I assume that failure to take medication would heighten the possibility of longer hospitalisation. The respondent does not challenge the 50 percent reduction. Accordingly, in my opinion, since the amount should not have been discounted, the damages that should be awarded for anti-psychotic medicine are $41,907. RESPONDENT'S CROSS-APPEAL The first ground was that the trial Judge erred in applying a discount on the basis that the symptoms of schizophrenia may have manifested themselves in any event. I have already stated my opinion that the evidence did not support the making of any discount on this basis. Consistent with her Honour's findings, this means that the amount recoverable for future economic loss after applying a 15 percent discount for vicissitudes should have been $236,384. The remaining items included in future out of pocket expenses should be similarly adjusted by WABW INSURANCE MINISTERIAL CORPORATION (formerly GIO of NSW) v GOMES (Sheller JA) deleting the discounts of 15 percent for vicissitudes and a further 10 percent to take account of the likelihood of the onset of schizophrenia at some time in the respondent's life as follows: Monthly psychiatric consultation from $16,920 to $22,720 Sleeping medication from $3,881 to $5,175 In awarding an amount for non-economic loss on the basis that the respondent's impartment was 50 percent of a most extreme case, her Honour said she took into account evidence of the likely prospect of the onset of the illness in any event. The respondent challenged this as an irrelevant consideration when applying s79 of the Motor Accidents Act. In my opinion, on the evidence and for the reasons already given, the prospect of the onset of the illness in any event should not have been taken into account when determining the amount to be allowed for non-economic loss. Accordingly, this Court must reassess the damages for non-economic loss. The respondent was 30 when his father died. He had established his own business as a painter and decorator in 1980 and enjoyed carrying out that work. He had lived an active social life and gave evidence that he enjoyed football, surfing, sailing, cycling and horseriding. He went to nightclubs, parties and picnics. He had formed a relationship with Mrs Hicks and was awaiting the birth of their first child. Mrs Hicks described him as physically active, outgoing, hardworking and generous with no signs of psychiatric problems. After his father's death, the respondent began to behave in a bizarre manner and from 1991 until the trial was admitted to hospital four times. On one such occasion, he had to suffer the indignity of being scheduled and taken under police escort to hospital, where he was locked in rooms, physically manhandled and the like. He also has the stigma of being branded a person with mental illness. He is troubled by dreams, visions and hallucinations which have continued since shortly after his father's death. His de facto wife has left him taking the child and will never return. He has lost his social skills and is socially isolated. He no longer plays sport and is under continuous psychiatric care. He has tried medications, some of which can be life threatening and he has had side effects in relation to the taking of those medications. When he is not in hospital, for much of the time he lacks motivation, with the blunting of volition and energy because of his condition. He has permanent loss of vision assessed at 50 percent in the right eye and 40 percent in the left eye, the result of starring at the sun while in a psychotic state. Reading or doing precise things is slow and unsatisfactory. His future is gloomy. His condition is permanent and may worsen. The trial Judge recognised that but for the likely prospect of the onset of the illness in any event, a greater percentage of a most extreme case was warranted. A discount on that basis was not justified. In my opinion, an assessment of 50 percent of a most extreme case was too low. In reassessing the damages for the respondent's non-economic loss under s79 of the Motor Accidents Act the maximum amount which may be awarded current at the date of this judgment must be applied; Marsland v Andjelic (1993) 31 NSWLR 162 at 169; 186 CLR 20 at 29. The amount is $259,000; New South Wales Government Gazette 25 September 1998 at 7698-7701. In my opinion, the damages should be calculated at 65 percent of a most extreme case which is $168,350. The final matter is the respondent's challenge to the amount awarded for future economic loss on the basis that "the reduced level of overhead which he will incur in pursuing his business at a lower scale for which a discount at 10 percent 14 UNREPORTED JUDGMENTS has been applied." Her Honour has said that the amount of $236,384 was claimed to cover loss of income for 26 weeks in each year coupled with diminished income for the 26 weeks during which work was possible, again applying the 15 percent discount for vicissitudes. Her Honour gave no explanation for the further discount for reduced level of overhead. The respondent accepted that his overheads were reduced when he was either not working or working at a reduced capacity but submitted that that did not mean that his net income would be higher in this circumstance. There is no evidence which denies this fairly obvious proposition. The respondent will not return to his previous level of functioning, either at a personal or work level. The discount for reduced overheads erroneously assumes that in his unwell state, the respondent will be able more efficiently to run his business than he was previously able to do when he was fit, active and well. There is nothing to suggest this was so and in my opinion this discount was wrongly made. Accordingly, as I have said, the amount of $236,384 claimed should be the damages for future economic loss. CONCLUSION The appeal and cross-appeal both succeed, at least in part. The verdict should be set aside. The verdict entered for the respondent should be made up as follows together with interest on past economic loss: non-economic loss at 65 percent of a most extreme 168,355 case past economic loss 92,879 future economic loss 236,384 past out of pocket expenses 2,479 future out of pocket expenses 393,114 made up of: monthly psychiatric consultations 22,760 psychiatric consultations during periods of hospitalisation 15,172 hospital expenses 308,100 sleeping medication 5,175 anti-psychotic medication 41,907 Sub-total 393,114 The trial Judge calculated the interest on past economic loss at $11,083 for the period from 1 July 1991 to the date of hearing. The cover sheet in the appeal papers indicates the amount of interest awarded but does not indicate how it was calculated. On the same date a stay was granted for twenty-eight days upon the condition that the appellant pay the respondent by no later than 4 pm on 2 February 1996 a sum equal to 50 percent of the verdict. Since, in my opinion, the verdict should be set aside and damages reassessed this may require a re-calculation of the interest on past economic loss to allow for interest up to the date of this judgment but taking account of any payments made by the appellant on account of the verdict. Such an adjustment, if required, should be made by agreement between the parties. The appellant has succeeded in reducing the amount of the verdict by an amount of approximately $20,000. In my opinion, it is appropriate that there be no order for the costs of either the appeal or the cross-appeal. WRB INSURANCE MINISTERIAL CORPORATION (formerly GIO of NSW) v GOMES (Sidi6 JA) I propose the following orders: 1. Appeal and cross-appeal allowed; 2. Set aside the verdict and judgment of Judge Sidis of 5 January 1996; 3. In lieu thereof, verdict and judgment for the plaintiff in an amount to be 5 calculated in accordance with these reasons for judgment; 4. The defendant to pay the plaintiff's costs of the trial; 5. No order for costs of the appeal or cross-appeal; 6. Leave to the parties to apply to a single member of the Court sitting on this appeal on twenty-four hours' notice. Powell JA I agree with Sheller JA. Stein JA I agree with Sheller JA. 1. Appeal and cross-appeal allowed, 2. 3. In lieu thereof, verdict and judgment for the plaintiff in an amount to be Set aside the verdict and judgment of Judge Sidis of 5 January 1996; calculated in accordance with these reasons for judgment; 4. The defendant to pay the plaintiff's costs of the trial; 5. 6. Leave to the parties to apply to a single member of the Court sitting on No order for costs of the appeal or cross-appeal; this appeal on twenty-four hours' notice. Counsel for the appellant: J D Hislop QC/L W Roche Solicitors for the appellant: R J Walters Counsel for the respondent: R C Tonner Solicitors for the respondent: Grahame Goldberg Partners