New South Wales Court of Appeal CITATION: Guderjahn v Matilda Cruises Pty Limited & 1 Or; Matilda Cruises Pty Limited v Ledden [2006] NSWCA 107 HEARING DATE(S): 24/04/06 JUDGMENT DATE: 30 May 2006 JUDGMENT OF: Ipp JA at 1; Tobias JA at 63; Basten JA at 78 DECISION: (1) The appeal by Mr Guderjahn on the apportionment of liability is allowed (2) The order made by her Honour apportioning liability between Mr Guderjahn and Matilda Cruises is set aside (3) Liability between Mr Guderjahn and Matilda Cruises should be apportioned equally (4) Matilda Cruises to pay the costs of Mr Guderjahn's appeal in relation to the apportionment of liability but to have a certificate under the Suitors Fund Act 1951 (NSW) if otherwise qualified (5) The appeal of Mr Guderjahn and Matilda Cruises against the assessment of damages is dismissed (6) Mr Guderjahn and Matilda Cruises to pay Mr Ledden the costs of the appeal in relation to the assessment of damages. CATCHWORDS: NEGLIGENCE - collision between a ferry and a dinghy in Sydney Harbour - passenger on dinghy seriously injured - apportionment of liability between the operator of the dinghy and the ferry master - both ferry and dinghy on incorrect side of navigation channel when the collision occurred - failure to keep a proper lookout. - DAMAGES - whether the assessment by the trial judge was reasonable. ND LEGISLATION CITED: Navigation (Collision) Regulations 1983 (NSW), r 15 CASES CITED: Dwight v Bouchier (2003) 37 MVR 550 CA 40365/05 Ralph Guderjahn (Appellant) Matilda Cruises Pty Limited (First Respondent) PARTIES: Clint Ledden (Second Respondent) CA 40356/05 Matilda Cruises Pty Limited (Appellant) Clint Ledden (Respondent) FILE NUMBER(S): CA 40365/05; 40356/05 CA 40365/05 M Cranitch SC/R Montgomery (Appellant) L King SC/E Cox (First Respondent) COUNSEL: G Little SC/D Priestley (Second Respondent) CA 40356/05 L King SC/E Cox (Appellant) G Little SC/D Priestley (Respondent) CA 40365/05 Dibbs Abbott Stillman (Appellant) Ebsworth & Ebsworth (First Respondent) SOLICITORS: Back Schwatz Vaughan (Second Respondent) CA 40356/05 Ebsworth & Ebsworth (Appellant) Back Schwatz Vaughan (Respondent) LOWER COURT JURISDICTION: District Court LOWER COURT FILE NUMBER(S): DC 3417/02 LOWER COURT JUDICIAL OFFICER: Ainslie-Wallace DCJ LOWER COURT DATE OF DECISION: 04/03/2005 IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40365/05 CA 40356/05 DC 3417/02 IPP JA TOBIAS JA BASTEN JA Tuesday 30 May 2006 GUDERJAHN v MATILDA CRUISES PTY LTD & ANOR MATILDA CRUISES PTY LTD v LEDDEN Judgment 1 IPP JA: The claim before the District Court and the appeal 2 At about 9.00 pm on 27 September 2000, a collision occurred in Sydney Harbour between a commercial ferry (the "Rocket Jillian") and an inflatable dinghy. The appellant, Mr Ralph Guderjahn, was operating the dinghy. Accompanying him on the dinghy was the second respondent, Mr Clint Ledden. The first respondent, Matilda Cruises Pty Ltd, owned and operated the Rocket Jillian. Mr Peter Walsh was the master of the Rocket Jillian at the time. 3 As a result of the collision, Mr Ledden was seriously injured. He sued Matilda Cruises and Mr Guderjahn for damages, alleging that he had been injured by their negligence. Ainslie-Wallace DCJ upheld Mr Ledden's claim. Her Honour entered a verdict and judgment for him in the sum of $745,380.50. 4 Her Honour apportioned liability as between Matilda Cruises and Mr Guderjahn on the basis that Matilda Cruises was held to be 25 per cent responsible for Mr Ledden's damages and Mr Guderjahn 75 per cent. 5 Mr Guderjahn appeals against the apportionment of liability her Honour found and also challenges the awards made by her Honour in respect of non-economic loss, past economic loss and future economic loss. Matilda Cruises challenges the same heads of damage as Mr Guderjahn. The circumstances of the collision 6 On the evening of the collision, the Rocket Jillian was going on her regular commuter run from Circular Quay to Darling Harbour. She left Circular Quay travelling north, as she was required to do. Having cleared Sydney Cove, the Rocket Jillian commenced turning to port. She did not make a sharp turn; her movement was more like a gradual arc to the left. The ferry thereby entered the channel, to the north of Sydney Cove, for vessels travelling west and east. 7 A red triangle attached to the traffic deck of the Harbour Bridge marked the centre of the channel. The channel comprised two "fairways". The northern fairway was for traffic headed west and the southern fairway for traffic headed east. This was in accordance with the conventional "rule of the road" that vessels should pass each other when going in different directions port to port. The Rocket Jillian, however, commenced bearing west before crossing onto the northern fairway. She entered the southern fairway travelling in a north-westerly direction. 8 Mr Guderjahn and Mr Ledden had been sailing in a race to the east of Circular Quay. They decided to travel to Darling Harbour in the dinghy to have dinner there. Mr Guderjahn sat on one pontoon at the side of the dinghy and Mr Ledden sat on the other pontoon at a position about level with Mr Guderjahn. They travelled along the channel on a westerly course across the front of the Opera House. Although heading west, they were in the southern (wrong) fairway. 9 As the dinghy was about half way across the mouth of Sydney Cove, the Rocket Jillian cleared the Cove. Mr Walsh did not see the dinghy at all. If Mr Guderjahn and Mr Ledden saw the Rocket Jillian, they did so only at the last moment. 10 The vessels collided. The Rocket Jillian had turned only a few degrees to port when her starboard side struck the port pontoon of the dinghy. Mr Cranitch SC, who together with Mr Montgomery appeared for Mr Guderjahn, submitted that, shortly before the collision, the two vessels were approaching each other at right angles (the ferry heading north and the dinghy heading west) and at the time of the collision the ferry "was turning slightly" to the west. Mr King SC, who together with Mr Cox, appeared for Matilda Cruises, did not dissent from this proposition. 11 As Mr Cranitch submitted, the evidence did not reveal "quite how and where the collision occurred". In particular, it is not possible to determine how far the ferry had moved in performing her arc to the west, at what angle it was turning, and how far the ferry and the dinghy were from each other when each became visible to the other. 12 There was a speed restriction of eight knots on vessels within the Cove. According to Mr Walsh, the ferry proceeded northwards out of the Cove at about that speed. When the ferry arrived at the exit point, Mr Walsh increased speed to between 16 and 18 knots. The speed of the dinghy was estimated by different witnesses as being between eight knots to 15 knots, but it was probably about 10 knots. It is clear that the ferry was going faster than the dinghy. 13 According to Mr Ledden, he saw the ferry when she was about 20 to 30 metres away from the dinghy. He did not see the starboard side of the ferry, only the two hulls pointing towards him. Other witnesses, however, suggested that the ferry had performed so much of the arc she intended to make as to end up travelling in the same westerly direction as the dinghy, and the ferry, in effect, came up from behind the dinghy and "overtook" it before colliding with it. 14 A police officer, Senior Constable McAuliffe, was in a police vessel at the time, situated about 40 metres to the east of the eastern edge, and 20 to 40 metres to the south of the centre, of the Harbour Bridge. He was looking west and observed the collision. He did not see the dinghy take any evasive action. The ferry did not change course. 15 The dinghy carried red and green navigation lights that were lit at the time. She also carried a white stern light that was lit. The stern light was situated about a half a metre above the stern, whereas the Navigation (Collision) Regulations 1983 (NSW) (the "Regulations") required it to be mounted one metre above the stern. 16 After the collision, the ferry continued on its course but then turned about to return to the point of impact. As she did so, when she was about 150 metres away from the dinghy, Mr Walsh saw the dinghy's navigation lights and the white light. The trial judge found that the navigation lights were on and visible from about 150 metres away. Her Honour found that the stern light, although lower than regulation level, "was certainly visible from a distance of 25 metres". 17 There was at the time considerable background light in the harbour near Circular Quay. Apart from the lights on the shore, there was a very large passenger liner moored at the western side of Circular Quay which was brightly lit. In addition, illuminated Olympic rings were suspended below the deck of the Harbour Bridge and these were lit. The judge's findings as to liability 18 The trial judge found that, overall, the light in the harbour "was sufficient to enable [Mr Guderjahn] to see the ferry as she left Circular Quay", had he been keeping a proper lookout. 19 In dealing with the visibility of the dinghy to the ferry, her Honour observed: "The ability of the master of the ferry to see the inflatable boat was impaired given the size of the inflatable, its dark colour, its closeness to the water line and the fact that the ferry was moving from an area which was well lit to one which was not as well lit." Her Honour said: "This finding is made despite the evidence that the elevated position of the wheelhouse afforded the master of the ferry a wider view of the water than that available to [Mr Guderjahn]." 20 The judge observed that as Mr Walsh brought the Rocket Jillian out of Sydney Cove he increased his speed. Her Honour said: "It was well within his contemplation that recreational craft would be on the 'wrong side' of the channel. Although he said he looked for craft as he made his way out of Campbell's Cove, I am satisfied that by not seeing the inflatable boat before the collision, he failed to maintain a proper lookout in all of the circumstances and was negligent." 21 Her Honour pointed out that Mr Guderjahn "was on the 'incorrect' side of the harbour and was therefore in breach of the [Regulations]". Her Honour noted that the ferry, too, was "on the incorrect side of the channel" (and also in breach of the Regulations). 22 Her Honour said: "However, [Mr Guderjahn] had been looking into Circular Quay from before the point that he moved across the mouth of Campbell's Cove and in that time the ferry was moving up the Cove towards the entrance of the Harbour and there ought to have been ample opportunity to see it. The area in both Circular Quay and where the collision occurred appeared on all of the evidence to be well lit. Given the size of the ferry and the lighting within Circular Quay at the time, I find that [Mr Guderjahn] was not keeping a proper lookout prior to the collision and was negligent." 23 Her Honour said that Mr Guderjahn's evidence that he was aware that large vessels such as ferries would be moving in and around the Cove "provides an additional reason for him to have kept a proper lookout". 24 The judge went on to apportion liability as between the two defendants as being 75 per cent to Mr Guderjahn and 25 per cent to Matilda Cruises. Her Honour gave no reasons for this decision. The appeal as to apportionment 25 Mr Cranitch submitted that the trial judge should have found that Mr Walsh was negligent in causing the ferry to travel at a speed that was dangerous in the circumstances. The trial judge made no finding that the speed of the ferry was too high. The expert evidence did not support this argument and there was no contention at trial that the ferry was travelling at an excessive speed. In the circumstances, this submission by Mr Cranitch cannot be upheld. 26 The following factors are relevant to the degree of negligence on the part of Mr Walsh and the degree to which his negligence contributed to the collision: (a) Mr Walsh recognised the possibility that there might be small craft in the vicinity. He accepted that small craft often did not comply with the requirement to travel west in the northern channel. He also knew that the ferry was likely to be going faster than any small vessels, such as dinghies, and could cause such vessels and their occupants serious harm. These matters made it all the more important for Mr Walsh to keep a careful lookout. He failed to do so. (b) Rule 15 of the Regulations provides: "When two power-driven vessels are crossing so as to involve risk of collision, the vessel which has the other on her own starboard side shall keep out of the way and shall, if the circumstances of the case admit, avoid crossing ahead of the other vessel." In my view r 15 applied to the situation and it was for the ferry to avoid crossing ahead of the dinghy. (c) Mr Walsh commenced turning to port into the southern fairway. He was therefore turning into the wrong "lane" and, in effect, was cutting the corner. 27 The above are important factors but the following matters tend to mitigate Mr Walsh's negligence: (a) The dinghy was not easy to see in the dark. She was a small vessel (4.1 metres long) and low in the water. Her white stern light was lower than required by the Regulations and that made her slightly less visible in the dark. The trial judge found that, in the evening, the dinghy had a "dark colour". Mr Cranitch challenged this, but there was ample evidence on which the judge could rely for this finding. (b) Mr Walsh testified that the reason why he began his turn to the west early was that a vessel known as the "Sydney 2000" and a large charter vessel lay to his north. He said that he judged it advisable to turn when he did in order to give those vessels and the ferry "more sea room". There is no finding that this answer was untruthful. 28 The following factors are relevant to the degree of negligence on the part of Mr Guderjahn and the degree to which his negligence contributed to the collision: (a) Mr Guderjahn knew that ferries came out of Sydney Cove at regular intervals and could pose a threat to small vessels such as the dinghy. He should have been on his guard and should have kept a proper lookout. Like Mr Walsh, he failed to do so. (b) The following lights on the ferry were on at the time of the accident: the red and green navigation lights, the mast headlight, two side lights and the stern light. Additionally, the interior cabin lights and the lights on the aft deck were lit. As the ferry was proceeding north in Sydney Cove, the dinghy was proceeding west along the southern freeway. For some time the length of the ferry with all her lights would have been clearly visible to Mr Guderjahn. (c) In his statement to the police, Mr Guderjahn said that, as he passed the Opera House, he saw a large passenger vessel moored at the terminal and the idle water police launch. He appeared then to have had no difficulty with visibility. (d) The dinghy was a far more manoeuvrable vessel than the ferry. Mr Guderjahn would have had ample opportunity to have avoided the collision if, shortly before the collision, he had looked carefully in the direction from which the ferry was heading. (e) Mr Guderjahn knew or should have known that the dinghy was not easy to see at night because it was small, dark and low down in the water. (f) Had the stern light of the dinghy complied with the Regulations it would have made the dinghy more visible. (g) Not only was Mr Guderjahn responsible for his own safety, he was responsible, also, for the safety of Mr Ledden. He knew that his craft was particularly vulnerable if struck by a larger craft. 29 While it was more difficult for Mr Walsh to see the dinghy than it was for Mr Guderjahn to see the ferry, it was the prime duty of the ferry under r 15 to avoid crossing ahead of the dinghy and to take care to keep out of the way of vessels to her starboard side. The breaches of duty on the part of Mr Walsh are, however, counterbalanced by the culpability of Mr Guderjahn in not seeing the ferry when she was plainly visible to him. In all the circumstances, I do not think that a distinction should be drawn between the degrees of negligence of the two parties and the causal effect of their respective acts of negligence. In my view the responsibility for Mr Ledden's damages should be shared equally between Mr Guderjahn and Matilda Cruises. I consider that her Honour erred in the apportionment she arrived at. Non-economic loss 30 Dr Searle, an orthopaedic surgeon, described Mr Ledden's injuries as follows: "[A] fracture of the medial wall of the left acetabulum with slight displacement of the fragments, and a fracture involving the right ala of the sacrum and the right pubic rami (both superior and inferior), and the left superior ramus. On the right side the fracture of the sacrum runs up into the superior articular process of S1." These are serious injuries. 31 Mr Ledden was hospitalised for four weeks and used crutches for months thereafter. He still takes analgesics. 32 According to Dr Searle, all fractures have healed in a satisfactory position. Dr Searle suspected that the accident also caused protrusion of a low lumbar disc, probably at the lumbo-sacral junction. 33 Dr Searle described Mr Ledden's symptoms as follows: "His main pain is about the middle of his sacrum and spreading down to each ischial tuberosity, and these pains are constant. They are aggravated by sitting for a time, standing, sitting on a bicycle, bending or lifting, or sneezing. When he wakes in the morning he feels very stiff in this region and has to do some self-manipulation of his pelvis to try to ease the pain. The pain spreads down the lateral aspect of the left thigh and may spread onto the medial aspect of either leg, worse in the left than the right. He also has pain in the perineum because of a spur which has developed on one of his fractures. He feels some numbness and paraesthesiae on the lateral aspect of the left arm and hand at times but this is not very troublesome. He has no symptoms in his cervical region. He has no neurological bladder or bowel symptoms though micturition is slow, but he has normal bladder sensation. He frequently realises he is limping. Last year on several occasions his right leg suddenly gave way when he was walking. He is now doing less walking and this is less of a problem, but he plans to have some more physiotherapy to try to strengthen his right leg." 34 According to Dr Seale, Mr Ledden is unfit for any activity, including work, which requires him to be on his feet much of the time, sit for lengthy periods, bend or lift or perform twisting movements of the trunk, or regularly travel moderate distances. 35 Dr Searle said: "With regard to prognosis I believe there will be a gradual increase in the symptoms and disability in the lumbar region with the passage of time but I am also concerned that the fracture within the acetabulum on the left side may lead to some degenerative changes in the left hip joint later in life." 36 Dr Solomon, a surgeon specialising in surgery of the hip and knee, said in a report: "Pelvic crush injuries are major injuries. One can be left with pain for many years which can in fact become chronic and long-standing." Dr Solomon said that the prognosis for Mr Ledden was "guarded". He was of the opinion that it was unlikely that Mr Ledden would develop osteoarthritis in his hip joints but he might well develop sacroiliac arthritis. 37 Dr Fuller, an orthopaedic surgeon, expressed opinions similar to those of Dr Searle. He said that Mr Ledden's prognosis was poor and he regarded his complaints and disabilities to be permanent. 38 A consultant physiotherapist was of the opinion that Mr Ledden had been left with instability of the pubic symphysis and left sacroiliac joint, but the other medical practitioners did not express this view. 39 By a report dated 19 June 2003, Dr Snowdon, a psychiatrist, said that Mr Ledden was significantly depressed and showed evidence of having developed post-traumatic stress disorder. He said that the picture that Mr Ledden presented was consistent with "a major depression with endogenous features, being very difficult if not impossible to feign". Dr Snowdon said that the prognosis for Mr Ledden's depression "particularly if better control of his pain levels can be obtained" was "excellent". 40 After Dr Snowdon had given his report he was shown video film taken of Mr Ledden two weeks before commencement of the hearing. According to a further report Dr Snowdon then provided, the video showed that Mr Lidden had consciously "exaggerated both physical and psychological symptomatology". In cross-examination, Dr Snowdon said that the video showed "some compromising of honesty". He accepted that an "underlying disability" existed. 41 Dr Youssef, a rheumatologist, examined Mr Ledden on two occasions prior to the video. He then saw the video. He said that the behaviour of Mr Lidden pictured in the video was not consistent with the history Mr Ledden gave during examination. He said that the video showed a "totally different … person" to the one he had examined. 42 The judge noted the opinions Dr Snowdon and Dr Youssef expressed after seeing the video. Her Honour said that the video satisfied her that Mr Ledden's capacity for daily tasks was greater "than he would have the Court accept". Her Honour said that Mr Ledden's evidence and the video film led her to the view that he was not being entirely frank in his evidence and she proposed therefore to approach his evidence with some caution. The judge concluded: "Taking into account the reservations which have been expressed about the accuracy of [Mr Ledden's] account of his present condition and having carefully considered his evidence, I am nonetheless satisfied that he does continue to have pain and discomfort in his pelvis and lower back. In the film, he is seen clearly limping and I accept that this is as a result of the injury." 43 Apart from Dr Snowdon's views concerning Mr Ledden's state of mind, there was other evidence that indicated that he was suffering from depression. The judge said in this regard: "Chad Davis, a long term friend of [Mr Ledden], spoke eloquently about the change which he has observed in [Mr Ledden] since the accident. He confirms [Mr Ledden's] evidence that before the accident [Mr Ledden] was an outgoing, energetic person who put a lot of effort into making his business a success and who enjoyed socialising and sporting activities. His observation since the accident were that [Mr Ledden] appeared to be in pain, has retired from social life and referred to him as being 'bleak and depressed'. He said that [Mr Ledden] was no longer the good company that he used to be. Similarly, [Mr Ledden's] sister described him as being happy and outgoing before the accident and being changed since and spoke of a deterioration in the relationship between [Mr Ledden] and his young daughter." 44 Notwithstanding the video and the evidence of Dr Snowdon and Dr Youssef, the judge found that since the accident Mr Ledden was "a changed man and that his social and family life has been affected". She accepted the evidence that Mr Ledden suffered from post-traumatic stress disorder. 45 Mr Cranitch submitted that the judge, although stating that she took into account the video and her reservations about the accuracy of Mr Ledden's evidence, in reality did not have regard to these matters. He submitted that the amount her Honour awarded for non-economic loss indicated that she had not properly taken Mr Ledden's exaggerations into account. 46 Apart from Dr Snowdon and Dr Youssef, there was consensus amongst the doctors that Mr Ledden had suffered very serious injuries that were likely to give rise to permanent pain and disability. This view was not based on subjective statements by Mr Ledden, but on the nature of his injuries, objectively assessed. I do not think that those opinions would be altered significantly by the video. Neither Mr Guderjahn nor Matilda Cruises sought to call Drs Searle, Solomon and Fuller so as to put the video to them. Dr Snowdon's evidence was that the depression depended largely on the degree of pain. On the clinical evidence it is likely that the pain is severe and will endure. There was evidence, other than that of Mr Ledden, which supported her Honour's findings of significant personality change. 47 In these circumstances, I am not persuaded that her Honour's assessment was so manifestly unreasonable as to demonstrate error. Economic loss 48 Prior to the accident Mr Ledden worked as a silkscreen printer. He had set up his own company, Final Touch Products Pty Ltd ("FTP"), which he owned and controlled himself. No other person had an interest in the company. FTP's business was allowed to run down after the accident, as is apparent from its tax returns for the financial years 2002 and 2003. By 2003 trading had ceased. 49 There were various discrepancies in the accounts of FTP and her Honour accepted that the accounts were unreliable. The judge nevertheless observed: "In the three years preceding the accident, the sales income for FTP was between $185,000 and $196,000. After expenses and payment of directors fees to the plaintiff it made no profit. In the years 2001, 2002 and 2003 the sales income was respectively $99,000, $77,400 and $40,400, the company accounts show small net losses in those years. No directors fees were paid to the plaintiff in the years after the accident." 50 Despite the unreliability of the accounts, her Honour found that the evidence established that Mr Ledden drew, as director's fees, at least $50,000 in each of the three years before the accident. On the basis of an income of $50,000 per annum, Mr Ledden would have earned $961.54 per week. 51 Mr Ledden claimed, in addition, that he had received "other benefits through the company such as the provision of a car, payment of domestic telephone and electricity accounts totalling about $1,200 per week". The judge said that she was unable to find that the financial accounts supported this additional claim. It was later submitted to her Honour on Mr Ledden's behalf, that – in addition to the $50,000 per year – he should be compensated on the basis that he had received, at least, an additional $300 per week being the value of the provision of the car and the amounts paid for on his behalf by FTP. These benefits were paid to him after the accident until the end of the 2003 financial year when the FTP stopped trading completely. 52 Her Honour held that FTP had indeed provided benefits to Mr Ledden over and above the payment of $50,000 per year. Those benefits were the provision of a car and telephone (for personal as well as business use) and the payment of all expenses for these two items as well as the payment of Mr Ledden's domestic electricity charges. Her Honour held that these benefits amounted in total to $300 per week and she calculated both past and future economic loss on the basis that Mr Ledden received an additional $300 per week from FTP. 53 Mr Guderjahn and Matilda Cruises both challenge the finding that Mr Ledden is entitled to past and future economic loss on the basis that he received that amount of $300 per week. That, in substance, is the sole question that arises in regard to this aspect of the appeal. 54 The amounts of $300 per week were not reflected in FTP's income tax returns as benefits paid to Mr Ledden. FTP's tax returns reflected these items as expenses incurred by the company itself. Matilda Cruises submitted to her Honour that it would not be appropriate to allow Mr Ledden to claim economic loss "outside that which he claimed for taxation". The judge referred to Dwight v Bouchier (2003) 37 MVR 550 where Stein JA (with whom Mason P and Heydon JA agreed) said at 556 to 557 [47]: "His Honour was not bound by the tax returns, nor was he the prisoner of any supposed principle which says that if a person understates his or her income to the Commonwealth, that person cannot recover in a civil claim any more that the stated figure in his or her tax return. The task of his Honour was to assess what the true position was …." Relying on this authority her Honour held that the $300 per week should be taken into account when determining Mr Ledden's damages for economic loss. 55 Matilda Cruises submitted that the judge had erred in finding that Mr Ledden had received an additional $300 per week from FTP. In written submissions it argued that the "best evidence" of Mr Ledden's "total remuneration" came from the following exchange: "Q On average, take home to yourself per week, from both printing and importing and distributing, how much per week were you taking immediately prior to the accident? A: Probably with benefits through my car, the company paying for some bills, and so forth, it would probably be $800-$900 a week; I would imagine." 56 The significant part of this reply was the statement that the benefits Mr Ledden claimed that he had received, making up the $800 - $900 per week, included those in respect of the provision of a car and the payment by the company of certain "bills". This was the main foundation of Matilda Cruises' submission that the $300 per week formed part of the $50,000 received by Mr Ledden annually. 57 After giving the testimony quoted, Mr Ledden's counsel asked him: "What was the fair value of the amount of the car to you per week?" He answered, "a couple of hundred dollars a week". He was then asked to give the value of the telephone and electricity charges. He replied that the value of the bills for the telephone and for electricity amounted to another $100 a week. He was then asked whether the $200 for the car and the $100 for the other expenses were "on top of the eight or nine hundred or included in it". He replied; "That would be on top". This was, as Mr Cranitch submitted, a reply to what in effect was a leading question. 58 Later, in cross-examination, Mr Ledden explained that FTP had leased the car and had paid the rentals, but, eventually, he acquired the vehicle for himself. Prior to that, Mr Ledden had used the car for the business of the company but had also used it for personal travel. 59 The question whether the $300 per week should be regarded as an additional benefit to Mr Ledden or whether it formed part of the $50,000 per year that it is conceded he received, was essentially a credibility issue for the trial judge. There was evidence, although sparse and, on one view, flimsy, that was capable of supporting Mr Ledden's claim based on the receipt of benefits of $300 per week. The decision whether or not to accept that evidence was primarily for the trial judge. The decision depended on her Honour's view of the weight to be attached to Mr Ledden's replies to his counsel. This was essentially a credibility issue. In my view, her Honour's finding was open to her. Therefore, I would not interfere with it. 60 I agree in principle with what Basten JA has written about Malec v J C Hutton Pty Ltd (1990) 169 CLR 369. As this point was not taken by Mr Guderjahn and Matilda Cruises, however, I would not make any deduction from the judge's award under this head. 61 In the circumstances I would not uphold the arguments challenging her Honour's assessment of economic loss. Conclusion 62 I propose the following orders: (a) The appeal by Mr Guderjahn on the apportionment of liability is allowed. (b) The order made by her Honour apportioning liability between Mr Guderjahn and Matilda Cruises is set aside. (c) Liability between Mr Guderjahn and Matilda Cruises should be apportioned equally. (d) Matilda Cruises to pay the costs of Mr Guderjahn's appeal in relation to the apportionment of liability but to have a certificate under the Suitors Fund Act 1951 (NSW) if otherwise qualified. (e) The appeal of Mr Guderjahn and Matilda Cruises against the assessment of damages is dismissed. (f) Mr Guderjahn and Matilda Cruises to pay Mr Ledden the costs of the appeal in relation to the assessment of damages. 63 TOBIAS JA: In this matter I have had the benefit of reading in draft the judgment of Ipp JA. His Honour has comprehensively set out the relevant facts, the reasoning of the primary judge and the factors that he regards as relevant to the degree of negligence on the part of the Master of the ferry on the one hand and the appellant on the other, as well as the mitigating factors in relation to each. 64 Because of the balancing exercise that must be undertaken for the purpose of apportioning liability between the Master of the ferry on the one hand and the helmsman of the dinghy on the other, his Honour has determined that there should be no distinction between the degree of negligence of the parties and the causal effect of their respective acts of negligence which gave rise to the collision. Accordingly, his Honour has concluded that the responsibility for the plaintiff's damages should be shared equally between them. 65 Subject to the following differences between myself and Ipp JA, I am content to adopt the matters referred to by his Honour as relevant to the issue of apportionment which he has set forth in [26] to [28] of his judgment. However, I respectfully differ from his Honour in the following seven respects. 66 First, in [26(a)] of his judgment Ipp JA has set out the matters that made it all the more important for Mr Walsh to keep a careful lookout, which he had failed to do. In [27(a)] a factor that his Honour regarded as mitigating Mr Walsh's negligence was that the dinghy was not easy to see in the dark because it was a small vessel that rode low in the water. In [28(d)] he regarded this factor as relevant to the degree to which the appellant's negligence contributed to the collision. With respect, I do not regard that factor as one which mitigated Mr Walsh's negligence or enhanced the contribution of the appellant's negligence. If anything, it enhanced the contribution of Mr Walsh's negligence. Mr Walsh knew that small vessels, such as a dinghy, might well be dark in colour, would ride low in the water and would therefore be more difficult to see, especially at night. This is a significant factor which should be added to those referred to by his Honour in [26(a)] as making it all the more important for Mr Walsh to have kept a careful lookout. 67 Second, a factor which, in my opinion, ought to have been included by Ipp JA in [26] of his judgment as contributing to the collision was the fact that the ferry was moving from a well-lit area to one which was not. Mr Walsh ought to have realised that this was so with the consequence that it would be more difficult for his eyes to adjust to the changing light. This again made it all the more important for him to have kept a careful lookout. 68 Third, although the dinghy's white stern light was positioned approximately half a metre lower than required by the Regulations, in the circumstances I would not regard that fact (referred to by Ipp JA in [27(a)]) as mitigating Mr Walsh's negligence or (as referred to by his Honour in [29(f)]) as relevant to the degree to which the appellant's negligence contributed to the collision. As the primary judge found (at [14]), the wheelhouse of the ferry was about four metres above the waterline thus providing Mr Walsh with a better view of the surrounding waters than that of a small boat close to the water level. Although Ipp JA noted in [16] of his judgment that the primary judge had found that the stern light of the dinghy "was certainly visible from a distance of 25 metres", it seems to me that her Honour's finding was that that light would have been visible from a minimum of 25 metres rather than suggesting that if it had been half a metre higher, it would have made a difference to the ability of Mr Walsh to have observed the dinghy prior to the collision. In this respect it must be remembered that the evidence of Mr Walsh was that he did not see the dinghy at all prior to the collision. Accordingly, I do not regard the fact that the stern light of the dinghy was half a metre lower than required by the Regulations as a factor contributing in any relevant way to the collision and the appellant's responsibility for it. 69 Fourth, and in the foregoing context, it is to be remembered that the primary judge found (at [18]) that the red and green navigational lights on the dinghy were visible from about 150 metres and that a passenger on the ferry, Ms Susan Perkins, saw those lights as well as the white stern light some 25 metres before the collision. She was on the upper deck of the ferry but at one level below the wheelhouse. The fact that Ms Perkins saw the dinghy in these circumstances and Mr Walsh did not only serves to emphasise that he was not keeping a proper and careful lookout. 70 Fifth, the fact that the dinghy was more manoeuvrable than the ferry, a matter relied upon by Ipp JA in [28(d)] as being relevant to the degree of negligence on the part of the appellant, works both ways. Mr Walsh must also have realised that fact which, in my opinion, again enhanced the necessity of him keeping a proper and careful lookout. 71 Sixth, Mr Walsh was cross-examined (Black 2/468 O-U) to the following effect: "Q. So can I summarise this, leaving Circular Quay you would be aware that it was possible and indeed not unlikely that small vessels could be crossing your path. A. Yes. Q. Those vessels could be on either side of the fairway. A. It is possible, yes. Q. That could include vessels out towards the middle of the fairway going from the east to the west. A. Yes. Q. And it could include vessels that were not quite on their right side of the channel. A. Yes." 72 Mr Walsh also accepted (Black 2/464 X-Y) that, firstly, because of the size and weight of the ferry, it had the potential to injure or kill somebody in a small boat if there was a collision and that his awareness of that factor required him to exercise a very high degree of vigilance when it came to keeping a lookout for other vessels. Furthermore, once the ferry was underway, having left the confines of the Cove, if there was a risk of collision it would be extremely hazardous to put the engines into neutral, let alone into reverse. This was because the engines were very easy to stall which, if this occurred, would result in a total loss of manoeuvrability of the ferry (Black 2/474 M-V). Therefore, Mr Walsh's first choice would be to alter course. The difficulty in the present case was that he had no opportunity to do so as he never saw the dinghy prior to the collision. Again, the requirement to maintain manoeuvrability if on a collision course by not slowing down further highlighted the necessity that Mr Walsh be vigilant in keeping a proper lookout. 73 Seventh, Mr Walsh accepted (Black 2/475 W-476 D) that even when travelling at a speed of eight knots the ferry might not be able to avoid a collision with another vessel that was only 30 to 40 metres away on a collision course. When it was suggested to him (Black 2/476 N-P) that he ought to be crossing the fairway under the Sydney Harbour Bridge at such a speed that he could react to and avoid small vessels within a radius of 30 or 40 metres, he responded by, in effect, saying that it was more appropriate "to keep a better lookout". Having denied that such a situation necessarily required him to slow down, the following exchange took place: "Q. Surely the slower you're going, the safer it is? A. But you'd never get anywhere. Q. So you just run the risk, do you? A. It's a trade-off. I mean, we were going at a speed that allowed us to complete our timetable . Q. Who set the timetable? A. Matilda Cruises." (emphasis added) 74 It is true, as Ipp JA points out (at [25] of his judgment), that the expert evidence did not support the submission that the ferry was, at the time of the collision, travelling at an excessive speed. On the other hand, it is clear from Mr Walsh's own evidence that he was travelling at that speed in order to maintain the first respondent's timetable. In these circumstances, as he himself accepted, it behoved Mr Walsh not only to keep a proper and careful lookout for other vessels, but also to be particularly vigilant in so doing. He failed on both scores. 75 In the foregoing circumstances I am, with respect, unable to agree with Ipp JA that no distinction should be drawn between the degrees of culpability of the appellant and Mr Walsh and the causal effect of their respective negligent acts resulting in the collision. On the contrary, after taking into account the factors referred to by Ipp JA in [26]-[28] of his judgment, and in the light of the further matters to which I have referred above, I am driven to the conclusion that the first respondent should bear a significantly greater proportion of the responsibility for the collision than the appellant. In my opinion, the apportionment of responsibility between the first respondent on the one hand and the appellant on the other should be precisely the reverse of that found by the primary judge. I would therefore apportion liability as between the appellant and the first respondent on the basis that the latter should be held to be 75% responsible for the plaintiff's damages and the appellant 25%. 76 So far as the appeal related to the issue of damages, I have nothing to add to the reasons of Ipp JA with which I agree. 77 Accordingly, I would agree with the orders proposed by Ipp JA in [62] of his judgment except for Order (c) in respect of which I would substitute the following: "(c) Liability between Mr Guderjahn and Matilda Cruises should be apportioned as to 75% to Matilda Cruises and as to 25% to Mr Guderjahn." 78 BASTEN JA: Perhaps due to an oversight, the trial judge appears to have made no orders with respect to the cross-claims filed by each defendant, except as to costs. The cross-claims dealt with the apportionment issue, which her Honour resolved at [33] in her judgment of 4 March 2005. Mr Guderjahn challenged her Honour's finding in appeal No. CA 40365 of 2005. I agree with Ipp JA in relation to the issue of apportionment of liability between the defendants. 79 Both defendants appealed against the assessment of the plaintiff's damages: I deal below with the assessment of Mr Ledden's earning capacity prior to the accident and the finding that his residual earning capacity would not change in the future. Loss of earning capacity 80 Mr Ledden had, in the years immediately preceding the accident declared income tax in an amount of $50,000 per year. On behalf of his company he had approved accounts which showed certain other payments as the company's business expenses. I accept the statement in Dwight v Boucher set out at [54] above. But to say that a plaintiff is not a "prisoner of any supposed principle" that he or she is bound by a figure given in a tax return is merely a colourful way of saying that he or she is not precluded from seeking to prove earnings greater than those declared to the Commissioner of Taxation, nor from proving that business expenses claimed by a company he or she controlled were of a different nature to that asserted on behalf of the company. 81 Those representations were admissible evidence which should have been weighed against the oral testimony of the plaintiff. Such representations to the Commissioner are not usually made carelessly or without appreciating their significance. Penalties can be imposed for inaccurate declarations. Nor should it be assumed that the plaintiff was deliberately untruthful in those declarations. 82 Tax returns may be inaccurate for a range of reasons, but usually one would expect a person giving evidence inconsistent with such declarations to explain the discrepancies. Mr Ledden failed to do that adequately. He said the accounts were prepared by an accountant, but that is unrevealing: Tcpt, 28.10.04, p 268. An accountant may include inaccurate figures, because those were supplied by the taxpayer. In that case, some further explanation is required. Alternatively, the figures may have understated the true income because Mr Ledden accepted professional advice to a particular effect. No such advice was identified by Mr Ledden. Other explanations are conceivable. 83 After the passage set out at [55] above, the trial judge intervened (Tcpt, 25.10.04, p 40): "Q. Did you [say], including the car and bills, or excluding the car and bills? A. It would depend. Probably the car would be on top of that again, so … ." His counsel then continued: "Q. What was a fair value of the amount of the car to you per week? A. Probably a couple of hundred dollars a week, I would imagine. Q. And these extra bills – what type of bills were they? A. Phone, electricity. Q. What was the value of them, per week? A. Probably about another hundred. Q. Would the 200 for car and the 100 for bills be on top of the eight or nine hundred or included in it? A. That would be on top." 84 In cross-examination, he was pressed about the residential phone bills and said (Tcpt 26.10.04, p 121): "Sometimes the company paid for my phone bill, sometimes it wouldn't." 85 Mr Ledden was further pressed in cross-examination as to what he had told Dr Snowdon concerning his financial position (Tcpt, 28.10.04, p 268): "Q. … Did you tell Dr Snowden when asked about your income prior to the accident, that you were earning about $50,000 net per year, although a car component needed to be deducted? A. I told him that I wasn't sure – that I don't do the accounts. Q. Is that the case still today? You're not sure of your income? A. Well, my income was stated as $50,000 in the director's fees. I don't know how my accountant put it all together, no. Q. So you don't know whether that $50,000 payment to you included the benefit to you of having the car or the benefit to you of having bills paid? A. I think the car was in addition to the $50,000." The cross-examination continued (p 272): "Q. Was your income for the year 2001 $50,000? Do you know? A. I don't have [the income tax return] in front of me, sorry. I don't know what it was. Q. Perhaps if I hand you this document, sir. Sir, do you recognise that as your 2001 tax return? A. Yes, I do. Q. $50,000? A. Yes. Q. Derived from Bondza Products. Is that correct? Is it correct, sir, that your income was derived from Bondza Products Pty Ltd? A. If that's what the accountant did, yes. Q. It was $50,000, and that was made up of dividends. Is that right? A. If that's what it says, yes." Q. In relation to the year 2002, would you agree that your income was also from Bondza Products? A. If that's what the tax return says, yes. 86 Bondza Products (Australia) Pty Ltd was an investment company controlled by Mr Ledden. Final Touch Products Pty Ltd was the company through which he ran his business. Her Honour noted various discrepancies in the accounts for the companies and stated at [74]: "Given the state of the evidence I am unable to make further findings about the company accounts." 87 Three circumstances are pertinent to an appropriate assessment of the evidence in the present case. First, Mr Ledden was and had for some years been running a business; he must have understood in broad terms the difference between a business expense and a personal expense. His testimony suggests he did, and her Honour records (at [71]) his counsel's submission that he was "an experienced businessman". Secondly, his own testimony was qualified, imprecise and to an extent internally inconsistent. Thirdly, her Honour had already stated that he had not been entirely frank in his evidence, by which she meant that he exaggerated his disabilities, for his own financial advantage. 88 Her Honour also held that he had exaggerated his income: his evidence suggested (it was equivocal) a range of income between $50,000 per year and $112,400 a year: Judgment at [73]. His counsel adopted $50,000 plus $300 per week ($65,600), but that additional figure was no more clearly established than a higher or lower figure. 89 Where one person seeks to require another to pay him the equivalent of his or her total earning capacity for the rest of his life, the law requires that past earnings be proved on the balance of probabilities. Her Honour's reasons do not demonstrate that she took all the undoubtedly relevant material into account. Accepting her Honour's assessment of Mr Ledden's untrustworthiness, the evidence of the plaintiff fell well short of establishing that he received personal income in excess of $50,000 per year. Accordingly, his loss of earning capacity should have been calculated by reference to that figure. Possible future improvement 90 In relation to the period over which loss of earning capacity was to be calculated, there was evidence that Mr Ledden suffered from a constellation of symptoms somewhat imprecisely labelled "post-traumatic stress disorder" ("PTSD"). As noted above at [40], the only psychiatrist called, Dr Snowdon, thought Mr Ledden's honesty was compromised and thought that the prognosis for his depression was excellent, if better pain control than he assumed existed, before seeing the video, were to be achieved. For a period of one year from the date of the accident she held that he had no earning capacity. Thereafter, depression and on-going PTSD appear to have been significant elements in her Honour's finding of a permanent, 65% incapacity for work. 91 Her Honour reduced the damages by the customary 15% to allow for vicissitudes, being the possibility that his earning capacity might diminish for reasons unrelated to the accident. However, at [99] of her Honour's judgment of 4 March 2005, she held: "Whether the plaintiff's earning capacity improves will depend on the success of the proposed interventions, while there are some prospects that his mood will improve with therapy, I cannot find there is a reasonable likelihood that there will be an improvement in his earning capacity." 92 In my view, that approach reveals error. In accordance with the assessment of future events required by Malec v J C Hutton Pty Ltd (1990) 169 CLR 639, an allowance should also have been made for the possibility that Mr Ledden's mental health would improve. A modest allowance for that possibility requires a further 20% reduction in the damages for loss of future earning capacity. Costs 93 With respect to costs at trial, there is no reason to vary the costs order made by the trial judge in favour of the plaintiff. Those costs should be paid by the defendants. As to their costs, as between each other, each should pay its or his own costs. 94 On the appeal, Mr Guderjahn has had a significant measure of success with respect to the issue of apportionment. Matilda Cruises resisted any variation of the favourable apportionment it received at trial. Whether it repeated an earlier offer of compromise is not known. If it did not, Matilda Cruises should pay Mr Guderjahn's costs on that issue. I would be inclined to divide the costs of the appeal equally between the apportionment and damages issues and hence order Matilda Cruises to pay half Mr Guderjahn's costs of the appeal. I would require Mr Ledden to pay 25% of each Appellant's costs with respect to damages, which on the same basis of division, would require him to pay 12.5% of each Appellant's costs of the appeal. I would allow the parties an opportunity to put submissions in writing if they seek to adopt a different approach. Proposed orders 95 I would propose the following orders: (1) Allow each appeal in part and set aside orders 1 and 3 made in the District Court on 7 April 2005. (2) Vary the damages awarded to the plaintiff by: (a) calculating loss of future earnings capacity on a gross income of $50,000 per year; (b) reducing future economic loss by 20%. (3) Apportion liability between the defendants equally. (4) Otherwise dismiss each appeal. (5) With respect to the costs of the appeals: (a) In appeal No CA 40365 of 2005, order Matilda Cruises to pay the costs of Mr Guderjahn with respect to the issue of apportionment; (b) order Mr Ledden to pay 25% of the costs of the Appellant in each appeal with respect to the issue of damages. (6) Grant a certificate under the Suitors' Fund Act 1951 (NSW) - (a) to Mr Ledden, as a respondent to each appeal; and (b) to Matilda Cruises as a respondent to the appeal in matter No. CA 40365 of 2005, if not disqualified by s 6(7) of that Act. (7) Direct the parties to file and serve within 28 days short minutes of orders with respect to the quantum of the judgment as varied in accordance with order 2, including consequential variations, together with supporting submissions if the orders are not agreed. (8) Within the same time the parties may file and serve submissions, or agreed orders, with respect to the apportionment of costs proposed by order 5 and as to the basis of assessment. ********** 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.