New South Wales Court of Appeal CITATION : Woolage v The State of New South Wales [2001] NSWCA 256 FILE NUMBER(S) : CA 40736/00 HEARING DATE(S) : 30 July 2001 JUDGMENT DATE : 15 August 2001 PARTIES : Robert Henry Woolage The State of New South Wales JUDGMENT OF : Handley JA at 1; Beazley JA at 2; Stein JA at 54 LOWER COURT JURISDICTION : District Court LOWER COURT 91/99 FILE NUMBER(S) : LOWER COURT Goldring DCJ JUDICIAL OFFICER : COUNSEL : Appellant: L King SC/G Waugh Respondent: D Nock SC/W Auston SOLICITORS : Appellant: Lough & Wells Respondent: Hunt & Hunt CATCHWORDS : Negligence - Employer duty of care - Assessment of damages for workers compensation - Vicissitudes LEGISLATION CITED : Workers Compensation Act 1987 (NSW), ss151(G) and (H) Watts v Rake (1960) 108 CLR 158 Purkess v Crittenden (1965) 114 CLR 164 CASES CITED: Wynn v NSW Insurance Ministerial Corporation (1995) 184 CLR 485 Nestle v McDougall (unreported, New South Wales Court of Appeal, 24 June 1998) Sullivan v Gordon (1999) 47 NSWLR 319 DECISION : Appeal allowed; Respondent to pay the appellant's costs IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40736/00 HANDLEY JA BEAZLEY JA STEIN JA Wednesday, 15 August 2001 WOOLAGE v THE STATE OF NEW SOUTH WALES FACTS The appellant sustained injury in two separate but identical incidents when a desk chair mounted on castors moved away from him as he was about to sit down and he fell on the floor. The appellant brought an action in negligence against the respondent employer in respect of each incident for failing to provide a safe system of work. The trial judge found that the respondent employer was negligent, but in respect of the second accident, found that the appellant was 5% contributorily negligent. The trial judge failed to assess damages n respect of the two separate incidents. Rather, he determined the amount he would have awarded if the whole of the appellant's injuries had been attributable to the accidents. He then reduced that sum by 50% to take into account the appellant's pre-existing low back degenerative condition. He determined that 60% of the appellant's injuries were attributed to the first injury and 40% to the second. The trial judge reduced the award for loss of future earning capacity by 30% for vicissitudes. HELD per Beazley JA (Handley and Stein JJA agreeing) (i) His Honour erred by failing to treat the two separate incidents as giving rise to separate causes of action. Furthermore, his Honour failed to apply the provisions of Pt 5 of the Workers Compensation Act 1987 (NSW) (the Act), and in particular, ss 151G and H to determine the award of damages. (ii) His Honour erred in awarding interest on damages for non-economic loss in contravention of s 151M of the Act. (iii) It was unnecessary to order a new trial to determine the proper assessment of damages. The Court was able to assess damages on the evidence before it. (iv) Applying Watts v Rake (1960) 108 CLR 158 and Purkess v Crittenden (1965) 114 CLR 164, the respondent had failed to show that the appellant's pre-existing degenerative changes would have resulted in the same post-accident state, were it not for the accidents. (v) The appellant was not entitled to damages for non-economic loss in respect of the first accident because any award for injuries sustained would not satisfy the threshold specified by s 151G. It followed that he was also not entitled to economic loss in respect of the first accident: s 151H. (vi) In respect of the second accident, the appellant's non-economic loss was assessed in accordance with s 151G at 45% of a most severe case. He was also entitled to economic loss flowing from that accident: s 151H. (vii) His Honour's reduction of the award for loss of future earning capacity by 30% for vicissitudes was, on the facts, within an appropriate discretionary range. (viii) The amount awarded as a 'cushion' for loss of future earning capacity was inadequate and should be increased. ORDERS (i) Appeal allowed. (ii) The trial judge's assessment of (a) damages for non-economic loss (b) interest on damages for non-economic loss (c) damages for past and future economic loss be set aside. (iii) In lieu thereof the parties are to bring in Short Minutes of Order to accord with this judgment before Beazley JA on 22 August 2001 at 9.30am unless short minutes signed by counsel or solicitors for both parties have previously been filed. (iv) Respondent to pay the appellant's costs of the appeal. IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40736/00 HANDLEY JA BEAZLEY JA STEIN JA Wednesday, 15 August 2001 WOOLAGE v THE STATE OF NEW SOUTH WALES JUDGMENT 1 HANDLEY JA : I agree with Beazley JA. 2 BEAZLEY JA: The appellant appeals against the award of damages made in his favour by Goldring DCJ in respect of injuries he suffered in two separate accidents whilst employed by the respondent. The respondent agrees that his Honour erred in the manner in which he approached the assessment of damages and that a reassessment is required. Accordingly, the appeal in due course will be allowed. However, the parties disagree as to whether the error was such that a new trial was necessary or whether this Court could reassess damages. Accordingly, it is necessary to examine the nature of the error in more detail than might otherwise have been the case. Facts 3 The appellant was employed by the Department of Corrective Services as a prison officer. He sustained injury in two separate but identical incidents when a desk chair mounted on castors moved away from him as he was about to sit down and he fell on the floor, landing on his coccyx. 4 The trial judge held that the respondent was negligent in failing to ensure that the castor mounted chairs used in its premises were prevented from easy or inadvertent movement in circumstances where they were used on hard, smooth floors. However, in respect of the second accident, his Honour found that the appellant was 5% contributorily negligent. There is no challenge to the trial judge's finding on either issue. 5 His Honour then assessed damages. He did so by assessing the amount he would have awarded if the whole of the appellant's injury and disability had been attributable to the accident, in the sum of $70,000. He determined that 50% of his injuries were attributable to his pre-existing low back degenerative condition, giving an amount of general damages of $35,000. 6 His Honour also determined, accepting the opinion of Dr Matheson, the appellant's treating surgeon, that 60% of the appellant's injuries were attributable to the first accident and 40% to the second. It followed from his Honour's finding of 5% contributory negligence in relation to the second accident that 40% of the sum of $35,000 had to be reduced by 5% (or $700), leaving an award of $34,300. He awarded interest on that amount in the sum of $1,200.50. Error in Trial Judge's Approach 7 Both parties agreed that his Honour erred in two respects in the assessment of general damages and in awarding interest. The first error arises because his Honour awarded one lump sum in respect of general damages for the appellant's injuries. However, the appellant sustained his injuries in two separate accidents, giving rise to two separate causes of action. He sued in respect of those separate causes of action and was entitled to separate awards in respect of each cause of action, assuming that each injury was compensable. His Honour erred in failing to consider the appellant's entitlement to damages in respect of each of his causes of action. 8 His Honour's second error was in failing to apply the provisions of Pt 5 of the Workers Compensation Act 1987 (NSW) (the Act) and in particular, ss 151G and H to the assessment of damages for non-economic and economic loss. 9 Part 5 of the Act governs the entitlement to common law damages in respect of "an injury caused by the negligence or other tort of the worker's employer" : s 151E(1) (which for convenience I will describe as a 'workplace injury'). Division 3 of Pt 5 provides a modified scheme for the award of common law damages in respect of a workplace injury. Section 151F in Div 3 provides that "[a] court may not award damages … contrary to this Division" . Section 151G governs assessment of non-economic loss. Non-economic loss is defined in s 149 to mean: " non-economic loss means: (a) pain and suffering, and (b) loss of amenities of life, and (c) loss of expectation of life, and (e) disfigurement." 10 Section 151G(2) specifies how damages are to be assessed. It provides: "The amount of damages to be awarded for non-economic loss is to be a proportion, determined according to the severity of the non-economic loss, of the maximum amount which may be awarded." 11 Subsection (3) provides the maximum amount which may be awarded but specifies that the "maximum amount may be awarded only in a most extreme case" . The maximum amount prescribed as at March 1996, the date of the first accident was $220,100 and as at November 1996, the date of the second accident, was $221,650. 12 Subsection (4) provides that no damages are to be awarded if the amount of non-economic loss (assessed in accordance with subs (2)) is less than a specified amount. That amount was $38,600 in March 1996 and $39,150 in November 1996. 13 Subsection (5) provides that if the amount of non-economic loss was assessed between the prescribed range (being between $38,600 and $51,450 in March 1996 and $39,150 and $52,150 in November 1996) damages were to be assessed in accordance with the statutory formula, namely the amount assessed minus the lesser of the two sums specified in the range multiplied by 4. 14 His Honour did not assess non-economic loss in accordance with s 151G(2), that is, as a proportion determined according to the severity of the non-economic loss, of the maximum amount which may be awarded. His award was thus flawed and must be set aside. 15 Both errors in assessing damages for non-economic loss infected his Honour's determination of economic loss. In the first place, his Honour was required to assess the economic loss which flowed from each injury. He did not do so, assessing economic loss also as if there was but one cause of action. Secondly, his Honour failed to apply the provisions of s 151H(1), which governed the award of economic loss in this case. That section provides: " 151H No damages for economic loss unless injury serious (1) No damages are to be awarded for economic loss unless the injured worker has received a serious injury or dies as a result of the injury." 16 Serious injury is defined in subs (2A): "… (a) an injury for which the compensation otherwise payable under section 66 for the loss or losses resulting from that injury is, in the opinion of the court, not less than 25 per cent of the maximum amount from time to time referred to in section 66(1), or (b) an injury for which damages for non-economic loss of not less than $48,000 are to be awarded in accordance with the Division (whether or not compensation is payable under section 66)." 17 His Honour was therefore not able to determine the appellant's entitlement to economic loss unless and until he had determined the appellant's entitlement to non-economic loss, in respect of each cause of action, in accordance with the provisions of s 151G. It follows that his Honour's award for economic loss must also be set aside. Award of Interest 18 His Honour awarded interest on damages for past non-economic loss in the sum of $1,200.50. Section 151M(1) provides that a plaintiff is only entitled to interest on damages as is conferred by the section. Under subs (3) no interest is payable on damages for non-economic loss. It follows that that aspect of his Honour's award must be set aside. There was no dispute from the respondent on this issue. New Trial? 19 Given that the manner of assessment of damages was fundamentally flawed, the question arose whether this Court could assess damages or whether the matter should be remitted to the trial judge for a new trial on the question of damages. The power of the Court to assess damages itself was not in issue. However, the respondent argued that the trial judge had not made findings on the essential feature of the claim for damages, namely what proportion of a most extreme case was the measure of the plaintiff's non-economic loss. 20 Whilst this criticism is valid, the trial judge accepted the plaintiff as a witness of truth (save for errors relating to dates which were established by other evidence). There was no challenge to his Honour's credit finding, nor was there any challenge to the essential features of the appellant's evidence. Furthermore, the case was conducted before his Honour solely on the basis of the plaintiff's evidence and the medical reports of both treating doctors and medico-legal experts. None of the medical witnesses was called for cross-examination. In those circumstances, I consider that this Court is well able to assess damages itself and there is no warrant in remitting the matter for a new hearing on damages. Plaintiff's Non-Economic Loss 21 Three issues arose in relation to the appellant's non-economic loss: first, whether he had suffered compensable injury within the terms of s 151G arising from the March 1996 incident and if so in what amount; secondly, whether he had suffered compensable injury in respect of the November incident and if so in what amount; and thirdly whether it had been established on the evidence that pre-existing degenerative changes in the appellant's lumbo-sacral spine were such as to affect his entitlement (if any) to damages for non-economic loss. 22 It is convenient to deal with the last question first. There was again no dispute between the parties that the appellant had pre-existing degenerative changes to his spine and had suffered previous injury to his coccyx region when, in January 1991, he had a fall at the Shellharbour Square Shopping Centre. He brought proceedings against the Centre which were settled favourably to the appellant. 23 The effects of that accident and the then state of his pre-existing degenerative condition were summarised in a report of Dr Silva, consultant orthopaedic surgeon, dated 11 December 1992: "[The appellant] had long standing low backaches of an episodic nature for many years when the incident at Shellharbour Square occurred on 3.1.91. … … the incident of 3.1.91 aggravated pre-existing osteoarthritic changes in the facet joints of the lumbo-sacral spine and considering the fact that he returned to pipe laying on 20.1.91 it is probably reasonable to conclude that by that time the aggravation had largely resolved and the prognosis for the incident on 3.1.91 is good and he does not require any continuing treatment for the disabilities arising from the incident of 3.1.91." 24 The appellant also said that after his return to work sometime after the 1991 accident, and in the time leading up to the March 1996 accident, he did not have any pain or restriction of movement in his lower back and was able to engage in his usual sporting activities. 25 Dr Matheson, the appellant's treating orthopaedic surgeon, in his report of 26 February 1999, in referring to the fact there was evidence of degenerative changes to the appellant's spine which pre-dated both 1996 accidents stated: "… It would perhaps be reasonable to attribute one-third of his back disability to a pre-existing condition but all of this leg disability one would have to attribute to the two incidents that occurred." 26 Dr Maloney, in a medico-legal report dated 12 November 1999, provided to the respondent's solicitor, attributed 50% of the appellant's incapacity to his pre-existing condition and 50% to the two accidents. 27 His Honour held that the appellant's pre-existing condition was responsible for half of his "current condition" and the two falls to the other half. In doing so he noted that this attributed a greater percentage disability to the appellant's condition not caused by the March and November 1996 incidents than Dr Matheson had expressed. However, he stated that Dr Matheson "was unaware of relevant material" . This appears to be a reference to his Honour's finding that the appellant not only had pre-existing degenerative changes, but had also sustained an injury to his coccyx in September 1996. Both parties agree this finding was wrong and should be ignored. His Honour did not make any reference to Dr Maloney. 28 However, the appellant submitted that his Honour's finding that 50% (or for that matter any percentage) of non accident attribution to his injury was not sustainable on the basis of the principles in Watts v Rake (1960) 108 CLR 158 and Purkess v Crittenden (1965) 114 CLR 164. 29 In Watts v Rake , Dixon CJ at 159-160 expressed the principle in these terms: "The plaintiff showed satisfactorily that, although not without disabilities, he was before the accident able to lead an active life both in work and in physical recreation and that his enjoyment of life was not impaired much, if at all. He proved further that the physical injuries he sustained in the accident had been a cause of the crippled condition in which he finds himself … If no more appeared it needs no argument to show that he should receive a full award of damages assessed on the footing of what he has suffered and what he will endure in the future. But for the defendant it is answered, first that he was predisposed to many or at least some of the arthritic and other conditions which have so seriously and rapidly developed as a consequence of the accident considered at all events as a precipitating cause … If the injury proves more serious in its incidents and its consequences because of the injured man's condition, that does nothing but increase the damages the defendant must pay. … If it be the case that at some future date the plaintiff would in any event have reached his present pitiable state, the defendant should be called upon to prove that satisfactorily and moreover to show the period at the close of which it would have occurred ." (emphasis added) 30 Menzies J stated at 163-164: "Prima facie, where a plaintiff was in apparent good health before an accident and is in bad health thereafter, the change would be regarded as a consequence of the accident and it is for the defendant to prove that there is some other explanation for it, e.g., that the plaintiff has aggravated his condition by some unreasonable act or omission. Similarly, although it is of course material to ascertain what was the pre-accident condition of the plaintiff who alleges that his post-accident ill health is due to the accident, it is for the defendant to prove that before the accident the plaintiff was in a condition that, without the accident, would have led to his post-accident state of health ." (emphasis added) 31 In Purkess v Crittenden , Barwick CJ, Kitto and Taylor JJ pointed out, as is now well recognised, that the principle in Watts v Rake related to the evidentiary burden of proving a particular issue. They said at 168: "It was, in effect, pointed out that it is not enough for the defendant merely to suggest the existence of a progressive pre-existing condition in the plaintiff or a relationship between any such condition and the plaintiff's present incapacity. On the contrary it was stressed that both the pre-existing condition and its future probable effects or its actual relationship to that incapacity must be the subject of evidence (i.e. either substantive evidence in the defendant's case or evidence extracted by cross-examination in the plaintiff's case) which, if accepted, would establish with some reasonable measure of precision, what the pre-existing condition was and what its future effects, both as to their nature and their future development and progress, were likely to be. That being done, it is for the plaintiff upon the whole of the evidence to satisfy the tribunal of fact of the extent of the injury caused by the defendant's negligence." 32 In the present case the evidence was that the appellant had pre-existing degenerative changes to his back and that those changes constituted a certain percentage of his back impairment. That evidence, however, does not establish what must be established by a defendant who seeks to limit a plaintiff's damages because of pre-existing disability. The principle in Watts v Rake and Purkess v Crittenden is not affected by the provisions of s 151G. That section governs the method of computation and depending upon that computation qualifies a plaintiff's entitlement to damages. Accordingly, there was no evidence upon which his Honour could act so as to reduce the appellant's damages for pre-existing disabilities. 33 The next question is whether the plaintiff suffered any compensable injury from the March 1996 incident. 34 As I have already indicated, the plaintiff gave evidence that in the period leading up to the March 1996 incident he was not suffering from any pain or restriction of movement in his lower back. He was playing sport regularly, especially golf. He also played softball and occasionally played a game of squash and played touch football with friends. 35 He did not seek any medical attention. He said: "… I continued my duties as normal and I think I just forgot all about it." 36 He continued to play sport after the accident, as and when he could. Any interruption to his sport was only caused by his inability to find time and playing partners. He did not take any time off work. He did not claim to be in pain or otherwise suffer any impairment. 37 Even if it could be argued that the appellant had suffered some injury, any damages which would otherwise flow would have been minimal. Once the provisions of s 151G, and subs (4) in particular, are applied to the assessment it is clear that the appellant was not entitled to damages in respect of the March incident. 38 That leaves the question of whether the appellant was entitled to damages in respect of the November 1996 accident. His Honour accepted the appellant's evidence that although he did not feel immediate serious pain, serious pain developed shortly after. He underwent chiropractic treatment for 2 – 3 months and was eventually referred by his general practitioner to Dr Graham, orthopaedic surgeon in late January or early February 1997. He had a CAT scan in late January. At that time, the appellant was complaining of pain going from the low back to the right buttock. The pain was worsened by coughing, sneezing, stooping, lifting, sitting and standing, with bending, stooping and prolonged sitting and standing being the worst features for him. He could not play sport. Dr Graham described him as "severely disabled" and recommended a discography which was carried out on 5 March 1997. That procedure was unsuccessful and Dr Graham referred the appellant to Dr Matheson, who, on 6 August 1997 carried out "bilateral fenestration operations" of L3/4 and L4/5 with decompression and fusion using titanium cages filled with cancellous bone graft. Dr Matheson was of the opinion post-operatively that: "The prognosis is not good here. He has two level disc disease with operations and he is likely to have some continuing disability in the future." 39 He considered the appellant, at that point, to be unfit for all forms of employment. Later, on 25 November 1997, the left cage at the L3/4 level, which had prolapsed with compression of the left L4 nerve root, was removed. 40 In a later report of 26 February 1999, Dr Matheson reported that he was unable to differentiate between the effect of the incidents of the two accidents. He said however: "I am unable to differentiate really between the effects of the incidents of 13th March, 1996 and 8th November, 1996. On the grounds that the March incident occurred first, one would assume that was the principal incident in tipping him into chronic back pain. If one were to differentiate between these two incidents, I guess it would be reasonable to ascribe 60% of his disability to 13th March, 1996 and 40% of his disability to the 8th November, 1996. However, this is simply a guess but the best guess I can manage." 41 He confirmed the opinion expressed in this report in a later report dated 4 July 2000 in which he reviewed the medical evidence provided to him in relation to various of the appellant's earlier injuries. 42 The trial judge found that "it was the fall in November 1996 which precipitated the need for the extensive and, unfortunately, complex surgical treatment" which the appellant required. However, he accepted Dr Matheson's 'opinion' that the appellant's injuries could be attributed as to 60% to the March fall and 40% to the November fall. He awarded damages on that basis. 43 The appellant disputes this approach. He submitted that, approaching the assessment of damages on the correct basis of two separate injuries, the appellant was not, in fact entitled to damages for the injuries received in March 1996 because he would not satisfy the threshold requirements of s 151G. I have already dealt with that issue and agree with this submission. 44 By way of contrast, after the second accident, the appellant was indisputably severely disabled. Dr Matheson's medical guess at the proportion of disability attributable to the appellant's condition is not relevant to the question which the Court has to determine in assessing common law damages. In my opinion, as a matter of legal causation, the appellant's disabilities and impairment are attributable to the second accident. 45 Senior counsel for the appellant and respondent were asked by the Court to put forward the percentage of a most extreme case which each submitted was an appropriate assessment of the appellant's disability. Senior counsel for the appellant submitted 50% (or a few percentage points either side) was the appropriate assessment. Senior counsel for the respondent submitted the range was 35 – 40%, although he sought to support the judge's attribution of 60/40 to the respective injuries. I have already given my reasons for rejecting that attribution. 46 As I have indicated, the medical evidence clearly discloses that the appellant has a severe back injury and has and will continue to have low back pain. He has dysaesthesia in his left leg with some mild weakness. He had lengthy periods of time off work and will only ever be fit for light duties. His usual domestic activities are restricted, he cannot play sport and sexual activity has become extremely limited because of pain. 47 In my opinion, the appellant's non-economic loss should be assessed as 45% of a most severe case. Accordingly, he is entitled to an award of $99,742.50. Past Economic Loss 48 His Honour awarded damages for past economic loss flowing from both accidents in the sum of $50,491.43. The appellant does not dispute the quantum but submits that the damages are referable to the second accident. Consistently with my views expressed above, this submission is correct. Loss of Future Earning Capacity 49 Again, there was no major dispute between the parties as to quantum save that the appellant contended that his Honour should not have reduced the award by 30% for vicissitudes but should have applied the usual 15%. I do not agree. The convention of applying the 'usual' 15% reduction for vicissitudes is well recognised: see Wynn v NSW Insurance Ministerial Corporation (1995) 184 CLR 485. However, the authorities are clear that the usual reduction is "subject to adjustment up or down to take account of the plaintiff's particular circumstances" : see Wynn at 498; Nestle v McDougall (unreported, New South Wales Court of Appeal, 24 June 1998) at 3 and the cases cited therein; Sullivan v Gordon (1999) 47 NSWLR 319 at 338. 50 Although the deduction of 30% for vicissitudes might be considered to be high, I do not consider it to be outside an appropriate discretionary range, given the extent of the appellant's pre-existing back condition. 51 However, I accept the appellant's submission that a cushion of $15,150 was inadequate to take account of the temporary nature of the appellant's current employment. He is suited only for work in sedentary occupations, he is of an age where work is not necessarily available and lives in an area where jobs are not necessarily plentiful. His Honour referred to these factors but awarded a sum equivalent to a year's salary at the rate he is currently earning. In my view, if the appellant's present work ceases, the likelihood is that the concurrence of these factors make it likely he would lose more than a year from work. He may never regain employment. I consider an allowance of $50,000 to be reasonable in those circumstances. Superannuation 52 The appellant also challenges the assessment for loss of future superannuation benefits on the basis that his Honour should only have applied a deduction of 15% for vicissitudes. For the reasons already given I do not agree. Orders 53 Accordingly, I would propose the following orders: (i) Appeal allowed. (ii) The trial judge's assessment of (a) damages for non-economic loss (b) interest on damages for non-economic loss (c) damages for past and future economic loss be set aside. (iii) In lieu thereof the parties are to bring in Short Minutes of Order to accord with this judgment before Beazley JA on 22 August 2001 at 9.30am unless short minutes signed by counsel or solicitors for both parties have previously been filed. (iv) Respondent to pay the appellant's costs of the appeal. 54 STEIN JA : I agree with Beazley JA. 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.