New South Wales Supreme Court CITATION : Phillips v State Rail Authority of NSW [2000] NSWSC 927 CURRENT JURISDICTION: Civil FILE NUMBER(S) : SC N921/87 HEARING DATE(S) : 17 - 18 August 2000 22 - 23 August 2000 JUDGMENT DATE : 3 October 2000 PARTIES : Raymond Francis Phillips (Pltf) State Rail Authority of NSW (Def) JUDGMENT OF : Newman J A J Katzmann SC/A Moen (Pltf) COUNSEL : P H Greenwood SC (Def) K J Kelleher (from 21.8.00 (Def)) SOLICITORS : Geoffrey Edwards & Co (Pltf) Sparke Helmore (Def) CATCHWORDS : Negligence - master and servant - damages - economic loss - compensation for gratuitous services Donnelly v Joyce (1974) QB 454 at 462 CASES CITED : Griffith v Kerkemeyer (1977) 139 CLR 161 Van Gervan v Fenton [1991-92] 175 CLR 327 Morgan & Ors v Gibson, unreported, Court of Appeal, 6 June 1997 DECISION : See para 75 THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION NEWMAN J NEWCASTLE: TUESDAY, 3 OCTOBER 2000 N921/87 - PHILLIPS v STATE RAIL AUTHORITY OF NEW SOUTH WALES JUDGMENT 1 HIS HONOUR: This is a claim for damages for personal injuries brought by the plaintiff against his former employer. While liability was denied by the defendant and a plea of contributory negligence raised, at the trial, the matter of the defendant's liability to pay damages was not the subject of a vigorous contest. 2 The question of damages was complicated by the fact that in addition to the injury which was the subject of the claim, the plaintiff had suffered an earlier injury in the course of his employment with the defendant and following the subject injury he suffered from a non traumatic malady known as Meniere's disease. I shall return to these matters later in these reasons. 3 The plaintiff, who was sixty-four at the date of hearing, had commenced employment with the defendant as a labourer on 19 May 1958. He thereafter rose through the ranks being promoted to the position of ganger and to the position of an acting first class inspector. The plaintiff's employment involved him in carrying out supervisory maintenance work on the defendant's railway system. 4 While as I have mentioned above, the plaintiff had suffered an injury prior to the subject accident, his uncontested evidence was that he had no trouble with his knees prior to the subject accident. 5 On 26 October 1980 the plaintiff was carrying out supervisory duties as a ganger at a railway bridge which crossed Dora Creek. He had been sent there by an inspector named Jack Plater. The work to be undertaken was to remove and renew rails on the bridge. On the Dora Creek bridge were two sets of tracks between which was situated a timber walk way which provided access to the tracks. While traversing the walk way the plaintiff fell through it when part of the timber comprising the walk way collapsed. The plaintiff's uncontested evidence was that the timber was rotten. 6 The plaintiff, on falling through the walk way, fell a short distance landing on his knees on a horizontal bearer which was situated beneath the walk way. 7 While the immediate effect of the injuries suffered to the plaintiff's knees was not severe, there is no doubt that he did, in fact, suffer injury at the time. 8 As I have said, the plaintiff was in attendance at Dora Creek bridge on the instructions of his superior, Inspector Plater. The plaintiff was unaware that the timber in the walk way was rotten. He stated (and there was no suggestion made to the contrary) that had he been aware of the condition of the walk way he would have refused to allow his gang to work there until the situation was remedied. 9 The failure of the defendant to provide a safe place of work in this case was a clear breach of its duty of care to the plaintiff whether or not that duty arose under the contract of employment between the parties or in tort. 10 As I have said while contributory negligence was pleaded by the defendant nothing was raised to suggest that the plaintiff was in breach of his duty to take care. 11 Accordingly it is not necessary to delineate whether the defendant's breach of duty arose in terms of contract or tort because there was nothing raised in evidence by the defendant in support of its plea of contributory negligence. The plea of contributory negligence must necessarily fail and the plaintiff is entitled to a judgment in his favour. 12 I turn then to the question of damages. The plaintiff in fact worked on following the accident, finishing his shift in the dark. The next morning he noticed that both knees were swollen and painful. However, he continued to work in his capacity as either a ganger or acting inspector until 1985 without taking time off from work. However, he said that during that time he noticed that his knees would sometimes swell up causing pain and resulting in him limping. 13 As I indicated above, prior to the subject accident, the plaintiff had suffered an injury to his back in about 1970. While he had suffered pain in his back from 1970 onwards he was still able to work despite that problem but following the back injury had used his knees in carrying out bending movements. Despite these problems he kept on working. 14 He did not, in fact, consult a doctor in relation to his injured knees until 1985 and as I understand the evidence the matter of the problems he was having with his knees only came to the attention of the medical profession after he had been admitted on 1 October 1985 to Maitland hospital with chest pains which happily were diagnosed as not being related to any cardiological condition. 15 Some months after the episode involving chest pains the plaintiff was afflicted with Meniere's disease which is a disease affecting the inner ear which results, as it did with the plaintiff, in a person so afflicted, suffering vertigo. As a consequence of that condition he underwent no less than four surgical procedures between 22 May 1986 and 7 February 1989. While a consequence of these procedures is that the plaintiff is now totally deaf in his right ear, the treatment afforded him cured his Meniere's disease. 16 However, the imbalance caused by the medical condition of Meniere's disease affected the plaintiff's gait to the extent where Dr Plowman, orthopaedic surgeon, opined in March 1988 that he had become permanently unfit for work because of his back, knees and impaired gait resulting from Meniere's disease. At the same time Dr Plowman observed as follows:- "Had it not been for the onset of Meniere's disease and its consequences it is quite probable that he would have been able to continue work despite problems with his back and his knees." 17 I take Dr Plowman's opinion in the context of the plaintiff being partially incapacitated for work. 18 The plaintiff, in evidence, deposed that from the mid eighties onwards pain and disability flowing from both his back problems and those associated with his knees increased. 19 He first came under specialist attention in October 1987 when he was referred to Dr L Laird, orthopaedic surgeon, by his general practitioner. Dr Laird diagnosed the problem in his knees as being that of advanced degenerative arthritis. He also noted that the plaintiff had advanced degenerative changes in his lumbar spine. 20 As a consequence of these various ailments the plaintiff, following a report from Dr Sharrod, the defendant's chief medical officer, that at 1 June 1987 the plaintiff was permanently incapacitated on account of his medical condition and injuries of 1970 and 1980, was retired from the defendant's work force on 4 July 1987. 21 The question of the plaintiff's incapacity for work arose in proceedings before the Compensation Court of New South Wales. On 16 October 1990 following a hearing in which the defendant in these proceedings denied that the plaintiff had suffered injury arising out of or in the course of his employment and further the plaintiff was incapacitated, his Honour resolved the matter in the plaintiff's favour. 22 Relevantly, his Honour found that from 5 July 1987 (the date of his medical retirement from the defendant) to 17 April 1989 the plaintiff was partially incapacitated for work and totally incapacitated thereafter. 23 In those proceedings the plaintiff claimed compensation on the basis of both the back injury suffered in 1970 and the injury to his knees of 26 October 1980. 24 It was not necessary for his Honour Judge O'Meally to determine anything but the plaintiff's incapacity flowing from those injuries. He did not delineate the part played by either injury in determining incapacity. While there is no evidence before me as to why it was that Judge O'Meally selected 17 April 1989 as the date upon which the plaintiff became totally incapacitated for work, I note that Dr Plowman in September 1989 was of the view that because of the plaintiff's knee and back condition he was permanently incapacitated for work in contra distinction to his view of March 1988 which I have set out above. 25 There is no issue that his Honour's finding has the effect of estopping the defendant from denying that the condition of the plaintiff's knees was related to his injury of 26 October 1980. 26 Equally while his Honour's finding acts as an issue estoppel only up to the date of his determination namely 16 October 1990 there is literally no medical issue that the plaintiff has been other than totally incapacitated for work from then to now and permanently so. 27 There is no issue before this Court that the plaintiff's underlying condition of degenerative arthritis in his knees advanced as years went by to the extent that that condition alone would have rendered him totally incapacitated from 17 April 1989. 28 A complicating feature is the fact that the medical reports tendered before me indicate that his back condition also has deteriorated and on my reading of the medical evidence and in particular the evidence of Dr Isaacs, the plaintiff has been permanently incapacitated by reason of his back condition from the same date. 29 While Dr Laird, who treated the plaintiff for his knee problems, felt that his back problems had been exacerbated by the plaintiff's gait he conceded in cross-examination as follows: "Q. Indeed in the mid 1980s you would have expected very considerable degenerative changes in the back, is that right? A. Yes that is right. Q. To the extent that it would be unwise for him to carry out any work that involved heavy lifting, bending, that sort of thing? A. Unwise, yes. Q. And any activities that involved stresses or strains to his back, is that right? A. Yes. Q. Indeed, the very sort of work that he was carrying out at the railways, is that right? A. Yes." 30 While the fact that the plaintiff's problems stem from two unrelated work injuries (both exacerbated an underlying degenerative condition in his back and legs separately) complicates the resolution of part of the plaintiff's claim for damages, it causes no difficulty as far as finding his ability to work is concerned. 31 I should add that while his Honour Judge O'Meally's finding acts in some regards as an estoppel, my own view of the evidence as far as the plaintiff's incapacity is concerned coincides with that found by his Honour. 32 In other words whatever the position in law may be as to any estoppel flowing from his Honour's finding, my own finding as to disability, independently reached, is the same as Judge O'Meally. 33 In other words I find that from 5 July 1987 to 16 April 1989 the plaintiff was partially incapacitated for work as a result of the injuries suffered to his knees on 26 October 1980 and that since 17 April 1989 to date and permanently he has been and will be totally incapacitated for work. That is he was partially incapacitated for one year and forty three weeks and totally incapacitated thereafter. 34 During the time he was partially incapacitated by reason of his knee injuries during that first period I assess weekly loss of wages flowing from the partial incapacity to be $100 which gives rise to a figure of $9,500 during the first period. To be precise I find that the plaintiff's ability to earn during the period of partial incapacity was reduced by that amount as a result of his knee injuries. 35 On the agreed wage figure which the plaintiff would have earned had he remained in a comparable position with the railways to date of trial I calculate the sum of $368,981.98 as the plaintiff's past loss of wages to date of trial on the basis of total incapacity. This gives rise to a total loss of wages from 5 July 1987 to 21 August 2000 of $378,481.98. 36 From that sum I believe that a discount should be made for the chances that physical problems flowing from the back injury of 1970 and/or any back pain unrelated to the effects of his injury of 26 October 1980 would have interfered with his earning capacity. I asses that discount at forty percent. Accordingly, I allow $221,389.18 as the plaintiff's past wage loss when he was totally incapacitated. To that I add the sum of $9,500 for the period of partial incapacity, which results in a total award under this head of $230,889.18. 37 I award interest on that past loss having deducted the net weekly payments of compensation paid to the plaintiff using half the Supreme Court interest rate and taking it back to the date of the plaintiff's retirement namely 5 July 1987 which was 13.1 years (230,889.18 - 120,527.35 = 112,336.43 x 7.25 percent x 13.1 years = 104,816.14). 38 As I mentioned above, the plaintiff is now sixty-four. He was born on 7 March 1936. It is common ground that had he continued working for the railways he would have retired at age sixty-five that is from the date of trial, six months and two weeks that is twenty-eight weeks. Because of the very small period I do not believe that it is appropriate to use actuarial tables in order to calculate the plaintiff's future economic loss. I would allow the sum of $20,000 under this head. 39 Out of pocket expenses have been agreed in the sum of $41,921.66 and I award the plaintiff that sum. 40 I turn next to the question of general damages. The plaintiff was aged forty-four at the date when he suffered the subject injury. As I have said he is now aged sixty-four. On the mortality table his life expectancy is eighteen years. He does suffer from the unrelated diseases of diabetes and gout. He has undergone two total knee replacements and requires these procedures to be repeated in the future. Taking into account his pain and suffering in the past and that he will suffer in the future from the injury and loss of amenities of life which he has suffered and will suffer because of his physical and attendant psychological problems (and in this regard I have taken into account not only the reports of medical practitioners but also the views of Elizabeth Naylor, consulting psychologist) I would award the plaintiff the sum of $150,000 for general damages. 41 Because the plaintiff received $30,000 by way of lump sum for the injuries to both knees pursuant to Schedule 6 part 6 clause 4 of the Workers' Compensation Act as it stood in 1987 and pursuant to s 16 of the Act which preceded that Act I assess interest on general damages as follows: interest on half of $120,000 for 19.8 years at 2% = 23,760. 42 I next turn to the question of gratuitously provided services. Here the claim involves services gratuitously provided by the plaintiff's wife, Valda. The claim made for these services involves care, house maintenance, gardening and cleaning. The claim, in fact, encompasses all domestic arrangements between the plaintiff and his wife. 43 The law in regard to gratuitously provided services has been the subject of judicial refinement in this country since Megaw LJ in the Court of Appeal adumbrated the relevant principles. See Donnelly v Joyce (1974) QB 454 at 462. 44 The High Court in Griffith v Kerkemeyer (1977) 139 CLR 161 in general adopted the principles as stated by Megaw LJ in Donnelly's case. 45 Following a number of decisions by State courts the High Court reviewed the applicable principles in Van Gervan v Fenton [1991-92] 175 CLR 327. There the majority of the court held that the true basis of a claim for damages with respect to care or services provided gratuitously to a person who has suffered personal injury is the need of the plaintiff for those services, and the plaintiff does not have to show that the need is or may be productive of financial loss. Accordingly, the plaintiff's damages are not to be determined by reference to the actual cost to the plaintiff of having the care or services provided or by reference to the income forgone by the provider of the services, but, generally, by reference to the market cost of providing the services. 46 In Morgan & Ors v Gibson, unreported, Court of Appeal, 6 June, 1997 Meagher JA considered the application of the principle as stated by the High Court in Van Gervan's case. Essentially, he held: 1. The basis for the award for gratuitously provided services is the need of a plaintiff for those services to be provided irrespective of actual or possible financial loss. 2. Those damages are not to be discounted by reason of the fact that others may or do derive a benefit from the services provided to the plaintiff. 3. The cost of providing a particular service must be reasonable. 4. The plaintiff is entitled to be compensated so as to restore him to the position he would have been in had it not been for the accident, thus a subjective test is to be applied. 47 The claim for services provided by the plaintiff's wife extends back to the time of the injury. Initially, and it seems that until the time of the plaintiff's admission to hospital in 1986 with chest pains, she would bind his knees with bandages. It is to be noted that this was during a period when the plaintiff had not consulted any medical practitioner as a consequence of the injuries to his knees. 48 It is claimed that during this time some two hours a week in total was spent by the plaintiff's wife providing this assistance. In this regard there is no medical evidence that during this time the plaintiff could not have performed this simple therapeutic exercise himself. While I have no doubt that the plaintiff's wife did perform, from time to time, this task I am of the view that it was not a task which needed to be performed for the plaintiff. Accordingly, I disallow that part of the plaintiff's claim relating to care performed prior to 18 May 1986 when the plaintiff was admitted to Maitland hospital with chest pains and Meniere's disease. 49 From the end of 1986 until date of trial, the undisputed evidence is that the plaintiff's wife assisted the plaintiff in dressing and undressing and because of his instability, washing him in the shower below the knees and subsequently drying his legs. It is claimed that one hour a day has been spent by the plaintiff's wife doing these things. 50 The market rate for the provision of these services went from $8.93 per hour in 1986 to $27.91 per hour at the present time. On the medical evidence I have no doubt that because of the plaintiff's instability and lack of mobility caused by both of his work related injuries and until February 1989 his condition of Meniere's disease, that these services were needed. 51 Applying the market rates to the time spent by the plaintiff's wife providing these services, a figure of $90,328.05 emerges. However, it seems to me that a discount should be applied to this figure because of the part played throughout the period by the plaintiff's back condition and the time when he was suffering from Meniere's disease. As I found in relation to this claim for past wages a discount of forty percent should be applied which gives rise to a figure of $54,196.83 which I award. 52 A further claim is also made from December 1986 to date of trial for the plaintiff's wife massaging his legs to relieve pain and applying frozen bags of peas to reduce swelling. It is alleged some two and a half hours per week was spent in the performance of this assistance. I found the evidence of Dr Tarrant persuasive in this regard. 53 Dr Tarrant was of the view that the plaintiff could certainly reach his knees and indeed massage them. I should add that I found Dr Tarrant's evidence more persuasive in this regard than that given by Dr Laird. Accordingly, I am of the view that the plaintiff has not established that these services provided were needed in the relevant sense. Accordingly, I disallow this part of the claim. 54 It is further claimed that the plaintiff's wife spent two hours per week assisting the plaintiff in cleaning his car and boat from January 1987 to the date of trial. Having regard to the totality of the effects of the plaintiff's various injuries I am of the view that there has been, in fact, a need for the provision of this service. Applying the agreed market rates, a figure of $23,344.59 arises under this part of the claim. However, again I believe that a discount of forty percent should be applied and having done so I award $14,006.74 under this head. 55 The plaintiff and his wife between January 1987 and April 1989 had a holiday house in the Port Stephens area. A claim is made for the plaintiff's wife's services in cleaning that holiday house (which was a relocatable home) both inside and out during that period. It is said five and a half hours per week was spent performing this task which would otherwise have been performed by the plaintiff. 56 This was during the time when the plaintiff was suffering from Meniere's disease. It is also during the time covered by the remarks of Dr Plowman as to the plaintiff's work capacity which I have set out above. Accepting as I do Dr Plowman's opinion it follows that if absent Meniere's disease the plaintiff was capable of performing part of his work with the defendant then he was certainly capable of carrying out the cleaning tasks which are the subject of this part of the claim. Accordingly, I find that need in relation to this part of the claim has not been established and I disallow it. 57 A further claim was made for assistance with mowing and horticultural activities around the home and cleaning gutters and washing windows from April 1989 to date of trial. It is claimed that Mrs Phillips spent three quarters of an hour per week doing these activities. During this period which commenced in April 1989 up to the date of trial, the plaintiff had, in fact, recovered from his condition of Meniere's disease. 58 While the plaintiff readily conceded that he carried out certain of the tasks involved but was inhibited from doing such tasks to the extent he would have if uninjured, I am of the view that this assistance was needed. Applying the agreed market rates a figure of $8,701.47 emerges under this head. However a discount should be made for the fact that the plaintiff was also inhibited in performing such tasks by his continuing back condition. Here, I am of the view that a discount of thirty-five percent should be made to take this into account. This gives rise to a figure of $5,656. 59 Additionally, a claim is made for house cleaning performed by Mrs Phillips from April 1989 to the date of trial. The plaintiff deposed that the effects of his injury prevented him from so doing, and that before he was injured he normally would have assisted in the performance of these tasks. 60 It is this area of the claim where Brennan, Deane and Dawson JJ in Van Gervan expressed reservations. However, following what fell from the Court of Appeal in Morgan's case, I am of the view that this part of the claim should be allowed. Applying agreed market rates a figure of $54,250.45 emerges. Again, I would apply a discount of thirty-five percent having regard to the effects of the plaintiff's back injury which means that I would award $35,262.80 under this head. 61 On 16 July 1991 and 16 June 1992 Dr Laird performed the surgical procedure of total knee replacement on both the plaintiff's knees. Following these procedures he was discharged from hospital on 26 July 1991 and 29 June 1992 respectively. Following these procedures the plaintiff's wife performed various acts of assistance ranging from assisting him visit the toilet, driving him to and from appointments with doctors and physiotherapists and helping him put on surgical stockings. These activities plainly fell within the relevant concept of need and I award, in relation to the assistance afforded in relation to both knees, $3,751. 62 Applying market rates I tabulate my award for past gratuitous assistance as follows: Personal care 54,196.83 Cleaning car and boat 14,006.74 Mowing and house maintenance 5,656.00 Cleaning home 35,262.80 Transportation for treatment and medical consultations 3,751.00 112,873.37 63 I turn then to the question of interest awardable on this amount. I have found that the assistance afforded the plaintiff by his wife which resulted in damages being awarded on a needs basis commenced at the end of the year 1986. I believe it reasonable to allow a period of 13.75 years as one of the factors determining the interest payable, that is from the end of 1986 to date of trial. Applying half the Supreme Court interest rate during that period the sum of $116,400.66 emerges. 64 In February of this year the plaintiff and his wife moved into a new home at Foster. Between 1989 and the time of this move they have lived at Salamander Bay having moved from Maitland in that year and having disposed of the relocatable home to which I have made reference earlier in these reasons. The house at Salamander Bay, had, as the evidence reveals, some extensive gardens whereas the premises at Foster have a much smaller garden and as I understand the evidence, is a slightly smaller home. The plaintiff still drives a car and still maintains a boat, albeit a relatively small one. 65 I turn to the question of future gratuitous services. Doing the best I can with the evidence I find that the plaintiff's wife currently provides the plaintiff with assistance for seven hours per week on a needs basis. Using the agreed present market rate of $27.81 per hour a weekly figure of $194.67 emerges. 66 The plaintiff's expectancy on the mortality tables, as I have said, is 18.03 years. The three percent actuarial multiplier is 728.4. Using these factors, a raw figure of $141,797.62 emerges. Having regard to the fact that the plaintiff's suffers from diabetes and part of the time during which Mrs Phillips provides services should be ascribed to his back injury I believe that a higher than normal discount rate for vicissitudes should be applied. I thus apply a rate of twenty-five percent which gives rise to a figure of $106,348.21 under this head. 67 Dr Laird has deposed that the plaintiff requires two further total knee replacements and the plaintiff has indicated that he intends to have these procedures carried out as soon as possible. Dr Laird estimates that each procedure will cost $30,000. There is no dispute that these procedures are necessary and accordingly I award $60,000 for this purpose. 68 The plaintiff's knee condition will require him to attend doctors in the future and physiotherapists. I believe it is reasonable to allow $10,000 for this purpose. 69 Miss Klymenko, occupational therapist, having reviewed the plaintiff's medical condition has suggested that certain home alterations be made to obviate certain of the difficulties the plaintiff has in moving around and using the facilities of his home. 70 The actuarial calculation reveals that with replacement the total of these aids and alterations comes to $28,355.22. Again, because I have found that a number of the plaintiff's difficulties with mobility result from his back injury I am of the view that I should discount that figure by thirty-five percent which gives rise to a figure of $18,430. 71 Ms Naylor, psychologist has recommended that the plaintiff undergo counselling from time to time. There was no contest as to the depressive effects which the plaintiff's injuries have had upon him. A claim for $4,620 for future psychological counselling is made. I believe that it is reasonable that an allowance should be made under this head but once more a discount should be made as a result of the part which the back injury plays in relation to this need. Using thirty-five percent as the discount factor a figure of $3,003 is thus calculated. 72 As I have already mentioned the plaintiff intends to undergo two further procedures of total knee replacement in the immediate future. The plaintiff will require additional gratuitous services from his wife following those procedures. Quite rightly it has been submitted on behalf of the plaintiff because these procedures are to be carried out in the near future no discount for vicissitudes should be made in relation to the time which will be expended by his wife in providing those services. Using current market rate I award the sum of $12,848.48 under this head. 73 During the course of the evidence, covertly taken video film of the plaintiff was shown to the court. In my view there was nothing depicted in that material which affects the plaintiff's credit nor did they indicate that the plaintiff's level of disability was anything but what he said it was. 74 I tabulate then the plaintiff's damages as follows: Past wage loss 230,889.18 Interest thereon 104,816.14 Future economic loss 20,000.00 General damages 150,000.00 Interest thereon 23,760.00 Out-of-pocket expenses 41,921.66 Gratuitously provided services 112,873.37 Interest thereon 112,520.63 Current assistance 106,348.21 Future knee replacements 60,000.00 Future medicals 10,000.00 Alterations to home 18,430.00 Future psychological counselling 3,003.00 Additional gratuitous services 12,848.48 1,007,410.00 75 It is agreed that in accordance with the decision in Fox v Wood the sum of $22,355.20 should be added to this total which gives rise to $1,031,641.20. From that figure the sum of $214,583.45 is to be deducted for payments made to the plaintiff pursuant to the Workers' Compensation Act. In the result there will be judgment for the plaintiff in the sum of $815,182.42 plus costs. ********** Last Modified: 10/20/2000 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.