New South Wales Court of Appeal Leichhardt Municipal Council v. Montgomery [2005] NSWCA 432 CITATION: This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S): 18 November 2005 JUDGMENT DATE: 8 December 2005 JUDGMENT OF: Mason P at 1; Hodgson JA at 5; McColl JA at 37 DECISION: Appeal dismissed with costs. CATCHWORDS: NEGLIGENCE - Road authority's duty of care to pedestrians - Whether such duty is non-delegable when road authority undertakes work involving risk to road users - DAMAGES - Award of buffer - Whether available under s.13 of the Civil Liability Act - Whether primary judge's reasons adequate. LEGISLATION CITED: Civil Liability Act 2002, s.13 Ainger v. Coffs Harbour City Council [2005] NSWCA 424 Brodie v. Singleton Shire Council (2001) 206 CLR 512 Burnie Port Authority v. General Jones Pty. Limited (1994) 179 CLR 520 Franklin Self-Serve Pty. Limited v. Wyber [1999] NSWCA 390, 48 NSWLR 249 Hardaker v. Idle District Council [1896] 1 QB 335 Holliday v. National Telephone Co. [1899] 2 QB 392 Kempsey District Hospital v. Thackham (1995) 36 NSWLR 492 Kondis v. State Transport Authority (1984) 154 CLR 672 CASES CITED: Penny v. Wimbledon Urban District Council [1899] 2 QB 72 Penrith City Council v. Parks [2004] NSWCA 201 Roads & Traffic Authority of NSW v. Palmer [2003] NSWCA 58 Roads & Traffic Authority v. Scroop (1998) 28 MVR 233 Rowe v. Herman [1997] 1 WLR 1390 Salisbury v. Woodland [1970] 1 QB 324 State of New South Wales v. Moss (2000) 54 NSWLR 536 Waverley Municipal Council v. Wagner [2002] NSWCA 10 Leichhardt Municipal Council - appellant PARTIES: Leslie Montgomery - respondent FILE NUMBER(S): CA 41190/04 Mr. P. Garling SC with Mr. R. Sheldon for appellant COUNSEL: Mr. G. Miller QC with Mr. A. Reoch for respondent Phillips Fox, Sydney for appellant SOLICITORS: Teakle Ormsby Conn, Sydney for respondent LOWER COURT JURISDICTION: District Court LOWER COURT FILE NUMBER(S): DC6766/02 LOWER COURT JUDICIAL OFFICER: Quirk DCJ IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 41190/04 DC 6766/02 MASON P HODGSON JA McCOLL JA Thursday 8 December 2005 LEICHHARDT MUNICIPAL COUNCIL V. MONTGOMERY Judgment 1 MASON P: I have the benefit of reading in draft the reasons of Hodgson JA. I agree with them, adding the following comments. 2 This is the highest "cushion" or "buffer" award that I have encountered. I would not wish to encourage litigants and trial judges to go down this path in preference to the more difficult, yet exposed, path of reasoning towards an award in the more conventional manner. From my experience, a buffer or cushion award is usually reserved to the situation where there is a smallish risk that otherwise secure employment prospects may come to an end, in consequence of the tort-related injury, at some distant time in the future. The present case is not of that nature, although the facts are quite unusual. They render computation according to the standard method particularly problematical and, from the appellant's point of view, particularly difficult to challenge on appeal. 3 An appellant who is unable to point to particular error affecting an assessment of damages for lost earning capacity faces a difficult, though not unsurmountable task (see State of New South Wales v Moss (2000) 54 NSWLR 536). 4 I observe that the parties were agreed at first instance that it was appropriate for the trial judge to adopt this method of computing damages for future economic loss. Furthermore, as Hodgson JA points out, a cursory look down the conventional path does not suggest that the award is excessive in its bottom line. 5 HODGSON JA: On 1 December 2004, Quirk DCJ gave judgment in proceedings in which the respondent (the plaintiff) had sued the appellant (the Council) and Roan Constructions Pty. Limited (Roan) in respect of injuries suffered from a fall into a pit in a footpath. The plaintiff had compromised his action against Roan for $50,000.00 inclusive of costs, and the contested hearing had concerned only the plaintiff's claim against the Council. The primary judge found the Council liable, and subsequently entered a verdict for the plaintiff in the sum of $264,450.75. On 16 December 2004, the primary judge ordered that the Council pay the plaintiff's costs on a solicitor and client basis. 6 The Council appeals from that decision. CIRCUMSTANCES 7 The plaintiff was injured on the evening of Saturday 7 April 2001, when he fell into a pit, owned by Telstra, in a footpath in Parramatta Road, Leichhardt. The lid of the pit was broken, at least after the fall, and, on findings of the judge which were not challenged on appeal, the pit was covered by a carpet. The Council had engaged Roan to perform work on the footpath, and work was being carried out by Roan between 7.30pm and 5.30am on Sunday, Monday, Tuesday and Wednesday nights; and part of the specifications for the job provided for artificial grass or carpet to be placed over the top of road base to provide clean access to commercial properties. 8 The plaintiff was born in 1959, and since July 1999 had been working for his present employer as a waterproofer. He had been put off work in July 2000 because of a down-turn in the employer's business, but shortly before the accident he had accepted an offer to return to work on the Monday after the accident. 9 In the accident, the plaintiff suffered injury particularly to his left knee. He was unable to walk without crutches for about three months, and he re-commenced work on 1 July 2001. He had further time off work between 2 October 2002 and 3 November 2002. He had a fall at work on 18 December 2002, and was off work from that time until 2 May 2003, undergoing a knee operation on 3 February 2003. He was on light duties until 6 October 2003. His work since his return after the knee operation has been restricted to clerical work. He was still working at the time of the trial. DECISION OF PRIMARY JUDGE 10 The primary judge referred to the plaintiff's evidence "that there was a piece of the pit cover missing"; and she found that it was most likely that the pit cover was broken at the time when Roan placed the carpet over it, and that "the carpet was covering the hole at the time that the plaintiff fell". The primary judge found that the Council owed the plaintiff a non-delegable duty of care, following Roads & Traffic Authority v. Scroop (1998) 28 MVR 233; and she found that this duty was breached. She found no contributory negligence by the plaintiff. 11 On damages, the primary judge noted there was no dispute that the plaintiff suffered a severe injury to his knee. She found he ruptured his anterior cruciate ligament and tore his medial meniscus; and she found that the surgery was required as a result of this injury, not the second work-related incident on 18 December 2002. She found the plaintiff had pain and discomfort and restrictions in his activities, which could only get worse in the future; and she assessed his non-economic loss as 30% of a most extreme case. 12 As regards past-economic loss, she found the plaintiff was unable to return to work after the accident until 1 July 2001, and found he was again unable to work between 2 October 2002 and 3 November 2002 and between 18 December 2002 and 2 May 2003, and that he was on light duties from 2 May 2003 to 6 October 2003. She awarded damages at the rate of $750.00 per week for the first of these periods, $850.00 per week for the second, $1000.00 per week for the third and $500.00 per week for the fourth. Although apparently the plaintiff was paid workers' compensation in respect of the period after 18 December 2002, the primary judge found that the need for surgery and thus the time off work after 18 December 2002 was due to the subject accident, and not the minor aggravation at work. 13 As regards future economic loss, the primary judge referred to s.13 of the Civil Liability Act 2002, which is as follows: 13 Future economic loss - claimant's prospects and adjustments (1) A court cannot make an award of damages for future economic loss unless the claimant first satisfies the court that the assumptions about future earning capacity or other events on which the award is to be based accord with the claimant's most likely future circumstances but for the injury. (2) When a court determines the amount of any such award of damages for future economic loss it is required to adjust the amount of damages for future economic loss that would have been sustained on those assumptions by reference to the percentage possibility that the events might have occurred but for the injury. (3) If the court makes an award for future economic loss, it is required to state the assumptions on which the award was based and the relevant percentage by which damages were adjusted. 14 She then continued: It is submitted by the plaintiff, and it is agreed by defendant's counsel, that the appropriate award, given the uncertainties in respect of the plaintiff's future, should be on the basis of a cushion or a buffer. I am told by Mr Turnbull for the defendant that there is Court of Appeal authority that an award of a buffer, rather than precise mathematical calculation is permissible under the Civil Liability Act. The plaintiff submits that an appropriate buffer for future loss of income is $200,000. From the wage material available, he has been earning in the order of around $1000 net per week. He is not an insubstantial earner in his present position. However, if his employer's prediction that the future for his company is grim, then the plaintiff's future with that company is most uncertain and, as Mr Egan said his position is "under review". He is unable to perform manual work of the sort which he performed for his present employer in the past. The job that he has been doing for the past year or so, since he returned to work, was in a position made available to him because of the work injury that he sustained. Undoubtedly, if the plaintiff were able to perform physical duties as well as duties as an estimator, his services would be more valuable to another employer. I think he has suffered significant incapacity on the open labour market because of his knee injury. It is probable that if he is unable to maintain his position with his current employer that he would have considerable difficulty obtaining alternative work, given his lack of training, although, as his employer says, he is a hard worker, he is currently still gaining experience. It is possible that the plaintiff may be able to retrain himself. Mr Turnbull did not make a submission as to the quantum of future economic loss but I think it probable that, at least from time to time, the plaintiff will have difficulty finding suitable employment and will probably experience time out of work. As I have said, the medical evidence suggests that he will require some future surgery, at least on one occasion, and that his knee will deteriorate further. Doing the best I can I make an award for future economic loss in the sum of $160,000. GROUNDS OF APPEAL 15 The Council relies on the following grounds: 1 Her Honour erred in holding that the Appellant owed a non-delegable duty of care to the Plaintiff upon the facts proved. 2 Her Honour should have found that: (a) The contractor engaged by the Appellant was competent; (b) That the Appellant did not retain, nor did it exercise, any control over the conduct of the contractor, save to engage it to undertake the contracted works; (c) The Appellant did not create, nor did it exacerbate, the danger, ie the broken Telstra pit lid in the footpath, which caused the Respondent's injury; (d) The Appellant did not know, nor ought it to have known, of the condition of the footpath which caused the Respondent's injury, prior to that injury happening; (e) The Appellant was not vicariously liable to the Respondent for the conduct of the contractor, nor was it otherwise liable to the Respondent for the injuries sustained by the Respondent. 3 Her Honour failed to give adequate reasons in support of her: (a) Finding that the Appellant was in breach of the duty of care it owed; (b) Finding an obligation on the Appellant to maintain the infrastructure of another entity, namely Telstra; (c) Implicit finding that any breach by the Appellant was causally related to the accident; (d) Finding that the Appellant had relevant control of the area in which the accident occurred; (e) Finding that the carpet hid a hole in the pit lid. 4 Her Honour was in error in making these findings as there was no evidence upon which to base such findings: (a) The extent to which carpet covered the hole into which the Respondent fell and the extent to which the carpet covered the lid; (b) When the Telstra pit lid was broken, and the time during which the pit lid remained broken prior to the Respondent's injury and therefore whether the pit lid was broken at the time of the Contractor laying the carpet two days prior to the Respondent's injuries. 5 Her Honour erred in drawing an inference that the pit lid was broken at the time the carpet was laid because: (a) Such inference was no more likely than, and in fact was less likely than, a competing inference, namely, that the lid was broken after the carpet was laid; (b) Such inference was mere speculation. 6 Her Honour erred in finding the Appellant was vicariously liable for the conduct of the contractor including any negligence on its part. 7 Her Honour erred in assuming that the hole would have been visible and/or that it would have been seen by the Respondent if it had not been covered by carpet. 8 Her Honour should have found that: (a) The Appellant did not owe a duty of care with respect to the particular condition of the footpath where the accident occurred; (b) That there was no breach by the Appellant of any duty it owed; (c) That any duty was not of a "non-delegable" kind; (d) That the Appellant was entitled to expect qua the Respondent that the contractor would take whatever care was necessary; (e) The evidence did not permit a finding to be made that the existence of the hole in the lid predated the laying of the carpet; (f) The evidence did not permit a finding to be made concerning the position of the carpet relative to the hole. 9 Her Honour should have found a verdict and judgment for the Appellant. 10 Her Honour erred in failing to find the Respondent guilty of contributory negligence in that: (a) The condition of the footpath as found by her Honour heightened the Respondent's obligation to look where he was going; (b) The conditions were such that it was reasonable that the Respondent look where he was placing his feet. 11 Her Honour erred in failing to deduct from her assessment of the Respondent's damages the amount of the Respondent's continuing entitlement to receive workers compensation in respect of an injury suffered by the Respondent on 18 December 2002, in accordance with Kempsey District Hospital v. Thackham (1995) 36 NSWLR 492. 12 Her Honour's assessment of the relationship of the Respondent's injury to a most extreme case was outside a sound discretionary range. 13 Her Honour should have found that the Respondent's relationship to a most extreme case was no more than 25%. 14 Her Honour erred in the calculation of past economic loss by reason of the failure to take account of compensation payments made to for or on behalf of the Respondent in respect of the incident on 18 December 2002. 15 Her Honour erred in the allowance made for future economic loss in that: (a) She failed to allow for the Respondent's entitlement to continue to receive compensation payments in respect of the incident on 18 December 2002; (b) She failed to adequately expose her process of reasoning as required by s 13 of the Civil Liability Act; (c) She failed to comply with the obligation imposed by s 13(3) of the Civil Liability Act in that her Honour: i. Did not state the assumptions on which the award was based; ii. Did not identify the percentage adjustment undertaken; 16 Her Honour's allowance with respect to loss of economic capacity in the future was wholly excessive and not supported by adequate exposition of the reasoning employed in reaching the figure. 16 It is necessary to consider two broad issues on liability: first, whether the primary judge erred in finding that the carpet was placed over a hole, or a pit cover with a piece missing, or a pit cover that was otherwise obviously broken; and second, whether the primary judge erred in finding that the Council's duty was non-delegable. 17 There were three main issues concerning damages: first, the amount of non-economic loss; second, the judge's failure to make a deduction from future economic loss in accordance with Kempsey District Hospital v. Thackham (1995) 36 NSWLR 492; and third, the award of future economic loss, and application of s.13 of the Civil Liability Act. FINDING OF HOLE COVERED BY CARPET 18 Mr. Garling SC for the Council submitted that the primary judge erred in asserting that the plaintiff's evidence was that there was a piece of pit cover missing, and in finding that there was carpet covering the hole at the time the plaintiff fell. He submitted that the plaintiff's evidence merely established that the pit cover gave way when he stood on it, this being consistent with the pit cover not being obviously broken when the carpet was placed on it. Indeed, it should be inferred that the contractor would not have placed the carpet over the pit cover if it was obviously broken or had a hole. Accordingly, there was no appropriate factual basis for the finding of negligence. 19 In my opinion, this submission should be rejected. The plaintiff gave evidence (Black 14) that he just went into the ground, that it was like the ground just swallowed him up, and that his left leg went through the footpath; (Black 15) that he saw bits of concrete broken, the lid broken, pieces missing; and (Black 33-34) that when he pulled his leg out he could feel the concrete behind his leg. Photographs taken a few days later showed about one-third of the pit cover missing, and the remainder broken into two pieces; and did not show pieces of concrete corresponding to the one-third that was missing. In those circumstances, in my opinion the plaintiff's evidence was to the general effect that there was a piece of the pit cover missing; and it was open to the primary judge to infer that it was not a case of weakened pit cover giving way under the weight of the plaintiff, but rather a case of carpet being placed over what was in effect a hole in the footpath. Accordingly, the primary judge was justified in finding negligence in whoever placed the carpet over the hole. NON-DELEGABLE DUTY 20 Mr. Garling submitted that the existence of a non-delegable duty in the Council, suggested by Scroop, could not stand with a subsequent decision of the High Court in Brodie v. Singleton Shire Council (2001) 206 CLR 512, because Brodie stated the road authority's duty as merely a duty to take reasonable care; whereas a non-delegable duty was a duty to ensure that reasonable care is taken. Mr. Garling also relied on Waverley Municipal Council v. Wagner [2002] NSWCA 10, where the Court of Appeal found that the plaintiff could not succeed in respect of a fall caused by a defectively laid paver on a footpath, because he did not prove the Council or someone for whom the Council was vicariously liable laid the paver. 21 Mr. Garling also submitted that, even if Scroop was correct, Scroop (and also Roads & Traffic Authority of NSW v. Fletcher [2001] NSWCA 63) were distinguishable, because those cases concerned work on a road requiring expertise in traffic control and safety, the independent contractor engaged by the road authority lacked that expertise, and the road authority having that expertise was closely controlling and supervising the work. 22 In my opinion, the decision in Scroop was founded on two independent bases, each of which was treated as sufficient. First, there was RTA's direct liability arising from its own direct involvement in operations for which the contractor did not have expertise; and second, there was the principle that a highway authority causing or permitting operations on a highway has a non-delegable duty of care to highway users. 23 As pointed out by Fitzgerald JA in Scroop, that principle is supported by English case law: see for example Hardaker v. Idle District Council [1896] 1 QB 335, Penny v. Wimbledon Urban District Council [1899] 2 QB 72, Holliday v. National Telephone Co. [1899] 2 QB 392, Salisbury v. Woodland [1970] 1 QB 324, Rowe v. Herman [1997] 1 WLR 1390. Those cases suggest that, where a road authority engages a contractor to do work on a road used by the public, such as to involve risk to the public unless reasonable care is exercised, the road authority has a duty to ensure reasonable care is exercised; and the road authority will be liable if the contractor does not take reasonable care. However, the road authority will not be liable for casual or collateral acts of negligence by the contractor: Penny suggests that, whereas leaving an unguarded pile of soil would not be casual or collateral, negligently leaving a pickaxe on the road would be. 24 That this principle applies in Australia has support from Scroop and Fletcher, and also from Roads & Traffic Authority of NSW v. Palmer [2003] NSWCA 58 at [8], [151], [232] and [248]. Since this appeal was argued, it has been applied again in Ainger v. Coffs Harbour City Council [2005] NSWCA 424. The circumstance of a road authority undertaking work on a highway was not specifically mentioned in Mason J's analysis of non-delegable duties in Kondis v. State Transport Authority (1984) 154 CLR 672 at 679-688 (approved in Burnie Port Authority v. General Jones Pty. Limited (1994) 179 CLR 520 at 550-551); but that circumstance could be considered as within the general principle stated in Kondis at 687 as follows: The element in the relationship between the parties which generates a special responsibility or duty to see that care is taken may be found in one or more of several circumstances. The hospital undertakes the care, supervision and control of patien ts who are in special need of care. The school authority undertakes like special responsibilities in relation to the children whom it accepts into its care. If the invitor be subject to a special duty, it is because he assumes a particular responsibility in relation to the safety of his premises and the safety of his invitee by inviting him to enter them. And in Meyers v. Easton the undertaking of the landlord to renew the roof of the house was seen as impliedly carrying with it an undertaking to exercise reasonable care to prevent damage to the tenant's property. In these situations the special duty arises because the person on whom it is imposed has undertaken the care, supervision or control of the person or property of another or is so placed in relation to that person or his property as to assume a: particular responsibility for his or its safety, in circumstances where the person affected might reasonably expect that due care will be exercised. 25 It can be said that a road authority that undertakes work on a road involving risk to road users is so placed in relation to road users as to assume a particular responsibility for their safety. 26 I do not think Brodie stands against this approach. The general duty of road authorities is to take reasonable care; but in the particular circumstance where the road authority undertakes work involving risk to road users, a circumstance not considered in Brodie, that general duty is overlaid by the more extensive duty that arises because of the risk created by the undertaking of those works. In my opinion, until the High Court says otherwise, this Court should follow Scroop, Fletcher, Palmer and Ainger, and apply that principle. 27 The principle is not referred to in Wagner. In that case, it was not shown that the Council had undertaken work on the footpath, either by itself or by an independent contractor; and the question whether it could be inferred that the paver in question must have been placed either by the Council or by an independent contractor engaged by the Council to work on the footpath was not raised in submissions for the plaintiff. Accordingly, I do not think Wagner stands as authority against the application of the principle. 28 In the present case, the Council did undertake work on the footpath involving risk to users of the footpath, it engaged Roan to perform the work, and it retained overall and supervision and control of the work. In my opinion, the principle I have referred to was engaged, so the Council is liable for the negligence of Roan. NON-ECONOMIC LOSS 29 The Council's contention was that the appropriate finding in relation to non-economic loss was 25% of a most extreme case. In my opinion, having regard to the affectation of the plaintiff by his injury, as found by the primary judge, the primary judge's finding of 30% of a most extreme case is not such as to attract appellate intervention. THACKHAM 30 After the primary judge had given reasons for judgment, the Council submitted she should reduce the award for future economic loss to the extent that the plaintiff could expect to receive workers' compensation in the future in respect of his work injury, as required by Thackham. 31 In my opinion, having regard to the finding of the primary judge that the work injury was a minor aggravation, and that the time off work from 18 December 2002 and the operation were caused by the subject injury, the prospect of recovery of future workers' compensation is too remote to justify any deduction: cf. Franklin Self-Serve Pty. Limited v. Wyber [1999] NSWCA 390, 48 NSWLR 249. FUTURE ECONOMIC LOSS 32 Mr. Garling submitted that the primary judge had not complied with the requirements of s.13 of the Civil Liability Act, and had not given reasons justifying her award of $160,000.00 for future economic loss. He submitted that in circumstances where the plaintiff was working and able to earn $1000 per week, this was excessive. 33 In my opinion, it is open to assess future economic loss by way of a buffer: Penrith City Council v. Parks [2004] NSWCA 207 at [3]-[5]. In such cases, the deduction for vicissitudes will be nil; and failure to state this as required by s.13(3) is immaterial. 34 The primary judge indicated what she considered as the plaintiff's most likely future circumstances but for the injury, namely an ability to perform physical duties as well as duties as an estimator, making his services more valuable to another employer. The buffer award was based on a finding that his future with his current employer was uncertain, that he would have difficulty finding alternative work, and that he will probably experience time out of work. Having regard to his current earnings of $1000 per week, in my opinion the buffer of $160,000.00 was not manifestly excessive, and the judge's reasons were adequate. 35 I note that the Court was informed that $300.00 per week for 19 years at 5%, less 15% vicissitudes, would give a figure of $165,000.00. In my opinion, that tends to confirm that the $160,000.00 was not manifestly excessive. CONCLUSION 36 For those reasons, in my opinion the appeal should be dismissed with costs. 37 McCOLL JA: I agree with Hodgson JA. ********** 28/02/2008 - Corrected the citation for Penrith City Council v. Parks [2004] NSWCA 201 on the coversheet. - Paragraph(s) Citation 09/05/2008 - - Paragraph(s) 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.