PRIOR v SMITH SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL HANDLEY, STEIN JJA and ROLFE AJA 13 August 1998, 27 August 1998 [1998] NSWCA 174 CONTRIBUTORY NEGLIGENCE — MVA — whether finding of fact 'glaringly improbable' — whether trial judge failed to use or palpably misused advantage DAMAGES — non-economic loss — whether within discretionary range — past and future economic loss — whether basis for assessing lost earning capacity was incorrect — whether proper assessment of residual earning capacity — whether appropriate deduction for vicissitudes The respondent was awarded damages of $573,987 for injuries received in a motor accident. The appellant admitted liability but argued that there had been contributory negligence on the part of the respondent. The trial judge found that the accident was caused solely by the negligence of the appellant and no contributory negligence could be attributed to the respondent. On appeal it was argued that the trial judge erred: (1) in failing to find contributory negligence; (2) in assessing damages for non-economic loss at 55% of a most extreme case; (3) in the assessment of past and future economic loss by failing to take into account the respondent's residual earning capacity; (4) in failing to apply a proper discount for vicissitudes. Held: (1) The trial judge's finding with regard to contributory negligence was well open on the evidence. (2) The assessment of non-economic loss was within the discretionary range. (3) The trial judge erred in assessing the respondent's lost earning capacity on the basis of the wages and on-costs of the driver employed by the respondent's company as a substitute for the respondent when he was unable to work. The trial judge's approach equated the costs to the company of the substitute driver with the plaintiff's loss. The better starting point in calculating past and future economic loss is the evidence of the respondent's earnings. The respondent had some residual earning capacity which should be assessed at 25%. (4) The deduction of 10% for vicissitudes, rather than the 'normal' deduction of 15%, was not justified on the evidence. Devries v Australian National Railways Commission (1992-1993) 177 CLR 472, applied. Handley JA I agree with Stein JA. Stein JA The appellant (defendant) appeals against a verdict of $573,987 entered in favour of the respondent (plaintiff) by Nash DCJ in Bega. His Honour delivered an ex tempore judgment on 9 May 1996. He did so because other matters were waiting in the list. The respondent's damage arose out of a motor vehicle accident which occurred at about 6.30 am on 15 July 1992 at Eden wherein the appellant's motor vehicle reversed into the respondent and pinned him against the front of a stationary prime mover causing him severe personal injuries. The appellant admitted liability. At issue in the trial was whether the respondent was guilty of contributory negligence, as well as damages. 2 UNREPORTED JUDGMENTS On appeal the challenge to the judgment can be reduced to four issues: (a) whether his Honour was in error in finding that the respondent was not guilty of contributory negligence. (b) whether his Honour was in error in his assessment of non-economic loss. (c) whether when assessing past and future economic loss, his Honour erred in failing to properly take into account the respondent's residual earning capacity. (d) whether his Honour failed to apply the proper discount for vicissitudes. CONTRIBUTORY NEGLIGENCE His Honour concluded: ... the collision was caused solely by the negligence of the defendant and there was no contributory negligence on the part of the plaintiff. [AB 374] A valiant attempt was made by Mr Shand QC, appearing on behalf of the appellant, to submit that, on a close analysis of-the evidence, the trial judge's finding of fact that the respondent was not running but walking back to his truck because he was cold, was glaringly improbable. Further, it was submitted that his Honour failed to use, or palpably misused, his advantage (Devries v Australian National Railways Commission (1992-1993) 177 CLR 472). It seems to me that Nash DCJ gave proper consideration to the issue of contributory negligence and made careful findings of fact based upon an analysis of the relevant evidence. All of the findings were perfectly open to him. It cannot be said that the finding that the plaintiff was not running at the time of the impact was glaringly improbable. Indeed, for my part, it seems to be a perfectly sound conclusion to draw from the evidence. Nor can it be demonstrated that his Honour failed to use or palpably misused his advantage as the trial judge. There is no substance in this ground of appeal. NON-ECONOMIC LOSS With respect to non-economic loss the trial judge said: It is not easy to determine what is a reasonable percentage of a most extreme case with such a long life to have to take into account. There is no doubt that the plaintiff qualifies for an award of what is now called non-economic loss. Frankly I disagree with the percentages submitted to me by both counsel. Over the last couple of days I have given a lot of thought as to what is an appropriate percentage. Bearing in mind the injuries and the grave affects upon him both in the past and in the future, I consider an appropriate percentage is fifty five and 1 award a sum for non-economic loss on that basis. [AB 387] It is argued that 55% of a most extreme case is 'unreasonably disproportionate to the circumstances of the injury in question', Arthur Robinson (Grafton) Pty Ltd v Carter (1969-70) 122 CLR 649, Barwick CJ at 655. Nash DCJ considered that the plaintiffs injuries were significant. He considered the course of the plaintiffs treatment and rehabilitation, his chronic pain and permanent disabilities. Having reviewed the evidence, including the medical evidence tendered on both sides, I am unable to conclude that the trial judge's assessment was outside the discretionary range available to him. PAST ECONOMIC LOSS The plaintiff was born on 28 June 1959 and was 33 years at the date of the accident on 15 July 1992. At that time he was employed as a log truck driver by his family company Pyolind Pty Ltd. He had been doing this work since 1989 and had a contract with the Harris-Daishowa mill at Eden. The plaintiffs nett income at the time of the accident was $460 per week. URJ PRIOR v SMITH (Stein JA) 3 Although the evidence is not easy to track down it is apparent that the plaintiff was unable to work from 15 July 1992 to 9 August 1993. He then attempted to return to work for around 7 weeks. However, he was unable to continue and was off work again from the beginning of October 1993 until 2 May 1994. Thereafter he returned to work 2 short days per week, his company employing a driver at a cost of $426 per week nett for a 40 hour week in order to fulfil the contract with the mill. Accordingly, it appears that the plaintiff was unable to work for approximately a period of 1 year 8 months and employed part time for 2 years and 2 months prior to the trial on 9 May 1996. The approach of the trial judge to damages for past economic loss was as follows. On behalf of the plaintiff, an accountant, Mr Crestani, had provided a report. He estimated the past economic loss of the plaintiff at $69,811. This figure was accepted by his Honour. It appears that it was based on the payment of wages and on-costs to the driver who was employed by Pyolind Pty Ltd because the plaintiff was unable to work or only to work part time. According to the evidence, the employed driver was paid $426 per week nett. His Honour adopted this figure. His Honour said that the plaintiffs lost earning capacity should be assessed on the basis of the driver's wages. [AB 387S] Although use of the driver's wages may be of assistance as a guide, adoption of it may involve an error. That is because it appears to assume that the cost to the company of the substitute driver is to be equated to the plaintiffs loss. Since there was reliable evidence of the plaintiffs earnings, which were consistent with what another driver (Martin) was earning, it appears to me that this would be a preferable starting point. His Honour may well have been aware of this when he said, in adopting $426 per week, that it involved an element of undercompensation or 'could be on the light side'. In my opinion, a proper approach to past economic loss is to take $460 per week for the period the defendant was unable to work — | year and 8 months. This totals $39,866. For the period he worked part time — 2 years and 2 months — it is necessary to measure the plaintiffs residual earning capacity. The appellant submits that since the plaintiff went back to work 2 days per week, his residual earning capacity is two-fifths or 40%. In my view, this is an overly simplistic approach and fails to properly measure the plaintiffs residual earning capacity. There is no doubt that the plaintiff has some such capacity. Before the accident he was regularly working 70 hours per week and performing heavy maintenance on his truck at weekends. His position now is that he can only work two short days (5 or 6 hours each) on Mondays and Fridays and perform light maintenance jobs on his truck. On occasions, he is unable to work the 2 short days. He is quite unable to perform the long and arduous 15-16 hour days 'up the mountain'. Indeed, his Honour found that the plaintiff was probably working beyond his capacity. Taking into account all of the circumstances relevant in consideration of the plaintiffs residual earning capacity, I would assess it at 25%. This translates into $345.00 per week nett. For the 2 year 2 months period prior to the hearing this totals $38,985. Adding the two amounts together produces a figure of $78,851 for past economic loss. It will be observed that this is approximately $9,000 more than the trial judge awarded. However, it must be noted that there is no cross-appeal or notice of contention. 4 UNREPORTED JUDGMENTS FUTURE ECONOMIC LOSS AND VICISSITUDES My assessment of the correct approach to past economic loss is relevant to the plaintiff's future economic loss. The trial judge again used the driver's wage of $426 per week as 'an appropriate figure for calculation purposes' .[AB 389] He made no express deduction from this for any residual earning capacity of the plaintiff. His Honour then applied a 10% discount for vicissitudes and I will return to this in a moment. By applying the multiplier of 798.4 to age 65 years, his Honour produced a figure of $340,118. Reducing this by 10% lead to an allowance of $306,106 for future economic loss. Applying the reasoning I have spelled out earlier, it would seem to me that a proper starting point would be $460 per week. In addition, a finding of 25% residual earning capacity is appropriate. This leaves a loss of $345 per week. Applying the multiplier 798.4 produces an allowance of $275,448. His Honour applied a 10% deduction for vicissitudes rather than the 'normal' 15%. It appears to me that this was not justified on the evidence. Given the continuing climate in the timber industry in the south-east of the State, the need to renew contracts every 5 years and the reducing mill quotas and number of truck drivers, the usual 15% deduction for vicissitudes should have been applied. When this is applied to the above allowance, a final figure produced for future economic loss is $234,131. This is some $72,000 less than the award. REASSESSMENT OF DAMAGES In my view, his Honour erred in his approach to assessing damages for past and future economic loss. Although it seems that he made some allowance for the residual earning capacity of the plaintiff, it was clearly not enough. The question arises as to whether this court should reassess these components of the award. On behalf of the respondent, Mr Hall QC submits that he would prefer that the matter return to the trial judge. As there is no issue of credit and the court has before it all of the material necessary to make the reassessment, it would be inappropriate to order a new trial. Substituting the figures I have arrived at for past and future economic loss, leads to a verdict for the plaintiff in the sum of $511,052 to be substituted for that entered by his Honour. COSTS Approximately speaking, the appeal may be divided equally between the appellant's arguments on contributory negligence and damages. In my opinion, the appeal on liability was lacking in any substance or merit. The appellant has been partially successful on damages reducing the verdict by around $63,000. This is roughly 11% of his Honour's verdict. In my view, this is an appropriate matter in which to apportion costs. I would order the respondent to pay 50% of the appellant's costs of the appeal and, if otherwise entitled, receive a Suitor's Fund Certificate with respect thereto. I would not disturb the costs order made at the trial. I would propose the following orders: 1. Appeal upheld in part. 2. Verdict and judgment below set aside and in lieu thereof substitute a verdict for the plaintiff in the sum of $511,052. 3. The respondent pay 50% of the appellant's costs of the appeal and receive a certificate under the Suitors Fund Act if otherwise entitled. 4. The costs order of the trial should not be disturbed. Rolfe AJA I agree with Stein JA. URJ PRIOR v SMITH (Rolfe AJA) 5 (1) Appeal upheld in part. (2) Verdict and judgment below set aside and in lieu thereof substitute a verdict for the plaintiff in the sum of $511,052. (3) The respondent pay 50% of the appellant's costs of the appeal and 5 receive a certificate under the Suitors' Fund Act if otherwise entitled. (4) The costs of the trial should not be disturbed. Counsel for the appellant: A Shand QC 10 Solicitors for the appellant: G E Lazar Counsel for the respondent: G B Hall QC/ G Heatheote Solicitors for the respondent: Griffiths Tiemey