New South Wales Supreme Court CITATION : Covington-Thomas v Cth of Australia [No 2] [2007] NSWSC 1059 30/10/06-31/10/06 01/11/06-03/11/06 06/11/06-07/11/06 10/11/06 13/11/06-14/11/06 16/11/06-17/11/06 20/11/06-23/11/06 28/11/06-29/11/06 01/12/06 12/12/06-13/12/06 HEARING DATE(S) : 02/03/07 22/03/07 03/04/07 11/04/07 17/05/07 28/05/07-30/05/07 21/06/07 25/07/07 02/08/07 24/08/07 17/09/07-18/09/07 JUDGMENT DATE : 25 September 2007 JURISDICTION : Common Law Division JUDGMENT OF : Kirby J DECISION : (1) Verdict and judgment for the plaintiff in the sum to be calculated reflecting the reasons in this judgment; (2) The defendant to pay the plaintiff's costs. CATCHWORDS : NEGLIGENCE - Melbourne/Voyager collision - claim for damages - verdict found for plaintiff 2.8.07 - calculation of damages to be awarded - error - correction of error under the slip rule - discount under Malec v J C Hutton P/L - different methods of computation - loss of pension/superannuation rights - no discount for reduced life expectancy. LEGISLATION CITED : Civil Liability Act 2002 Covington-Thomas v Commonwealth of Australia [2007] NSWSC 779 Malec v J C Hutton Pty Limited (1990) 169 CLR 638 Norris v Blake [No 2] (1997) 41 NSWLR 49 Commonwealth of Australia v Ryan [2002] NSWCA 372 Macarthur Districts Motor Cycle Sportsmen Inc & Ors v Ardizzone [2004] NSWCA 145 CASES CITED : Cullen v Trappell [1979-1980] 146 CLR 1 Covington-Thomas v Commonwealth of Australia [2004] NSWSC 743 Griffiths v Kerkemeyer (1976-1977) 139 CLR 161 Skelton v Collins (1966) 115 CLR 94 Sharman v Evans (1977) 138 CLR 563 James Hardie & Co Pty Ltd v Roberts (1999) 47 NSWLR 425 PARTIES : Peter Norman Covington-Thomas (Plaintiff) Commonwealth of Australia (Defendant) FILE NUMBER(S) : SC 21243/95 COUNSEL : G Melick SC/W Walsh/Ms K Sant (Plaintiff) C Barry QC/M Dicker (Defendant) SOLICITORS : James Taylor (Plaintiff) Australian Government Solicitor - Cth (Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION JUSTICE DAVID KIRBY Tuesday 25 September 2007 21243/95 PETER NORMAN COVINGTON-THOMAS v COMMONWEALTH OF AUSTRALIA [No 2] JUDGMENT (Further Judgment on Damages) 1 KIRBY J: On 2 August 2007 I delivered judgment, awarding damages to the plaintiff (Covington-Thomas v Commonwealth of Australia [2007] NSWSC 779). My findings, in some respects, departed from calculations made by expert actuaries. Fresh calculations were therefore required (para [782]). 2 Shortly after, as I reflected upon the judgment, I recognised that I had made an error in my calculation of the discount appropriate under Malec v J C Hutton Pty Limited (1990) 169 CLR 638. The next day, 3 August 2007, I sent the parties a facsimile. The facsimile acknowledged the error which I sought to correct under the slip rule. It included these words: (MFI 43) " It will be apparent from my reasons, that I took the view that the plaintiff had suffered a very substantial loss of earning capacity. In paragraph [754] I identified two likely futures, one of which seemed more probable than the other. The plaintiff, in my view, would plainly have pursued one or other of those futures, subject to vicissitudes. It is those futures that should be calculated in accordance with these reasons." 3 I also acknowledged that the same error may affect the issue of the naval pension. 4 The matter was then mentioned on 24 August 2007. It was apparent that correcting the error would require further findings of fact. The parties were invited to provide further submissions and calculations based upon possible findings of fact. The matter was fixed for a further hearing on 17 and 18 September 2007. 5 Let me now deal with the issues that must be resolved in order to fix the amount to be awarded to Mr Covington-Thomas as damages. Loss of earning capacity. 6 The judgment deals with the issue of loss of earning capacity (paras [708ff]). The plaintiff had, as a result of the collision, suffered a very substantial loss of earning capacity. I found that, but for the accident and the disabilities which followed, he would have remained in the Navy (paras [725]-[726]). He was an exceptional sailor with significant capacity and potential, which had been recognised. He would, inevitably, have progressed through the ranks (paras [728ff]). Whilst there must be some uncertainty as to the timing of each promotion, the date selected in each case was, I believe, conservative. I deliberately did not choose the earliest date, although I strongly suspected that Mr Covington-Thomas would have achieved such promotions very rapidly indeed. 7 Having found that Mr Covington-Thomas was "amongst the cream" of Petty Officers, and that he would have been promoted to Chief Petty Officer by, say, 1 July 1972 (para [741]), I then addressed the issue of whether he would have re-enlisted after 12 years of service. The judgment was in these terms: (para [742]) "[742] The next milestone was 12 years service, when a decision had to be made whether to re-enlist. Again, I believe there can be little doubt that Mr Covington-Thomas would have re-enlisted. In achieving the rank of chief petty officer in less than 12 years, he was already part of an elite. In respect of the 1961 intake, Captain Toohey provided the following statistics, based upon a Naval database, although it should be noted that the date of appointment for many who became chief petty officers may have been much later than the 11 years that I have postulated for Mr Covington-Thomas: (Ex 17, tab 5, report 30.11.06, p2) Rank Achieved at Discharge by all 1961 enlistees (the plaintiff's year of entry) (a) (b) i Captain 2 0.14% ii Commander 2 0.14% iii Lieutenant Commander 14 0.99% iv Lieutenant 15 1.06% v Warrant Officer 66 4.68% vi Chief Petty Officer 115 8.15% vii Petty Officer 48 3.40% viii Leading Seaman and below 1149 81.43% TOTALS 1411 99.99% (Columns (c) and (d) omitted)" 8 The statistics in that table were later corrected by Captain Toohey (Ex 28). I should digress and deal with the circumstances in which that correction was made, since it was said by the defendant to have implications for the findings that I have made. Leave to re-open. 9 Addresses concluded on 30 May 2007 and judgment was reserved (Day 24) (T1606). An important issue, dealt with in submissions, was whether the plaintiff would have re-enlisted in the Navy after his contracted term of nine years had expired. In the table from Captain Toohey's 30 November 2006 report, reproduced above, the ranks achieved by those who had enlisted at the same time as Mr Covington-Thomas (1961) were provided. According to the table there were 48 Petty Officers. Having been provided with this information, the plaintiff sought from Captain Toohey the records in relation to each such officer. The records were produced and ultimately tendered. It was apparent that each Petty Officer had served 20 years or more. The impression created by the table and this evidence, therefore, was that everyone who had achieved the rank of Petty Officer (as Mr Covington-Thomas had) remained in the Navy for at least 20 years, some reaching a rank above Petty Officer. In that context, the plaintiff's written submissions said this: (30 May 2007) "24. The crucial finding is whether Mr Covington-Thomas would have re-enlisted after nine years. In light of the evidence of Captain Toohey this issue has become a non event. As it appears that all or almost all (taking into account the error rate of 3% to 5%) Petty Officers remained in the Navy for 20 years or more. There is absolutely no reason why Mr Covington-Thomas would have been any different." 10 The reference in those submissions to an "error rate of 3% to 5%" was a reference to a concession made by Captain Toohey in cross examination. It was apparent at the time of cross examination that the statistics were not completely accurate, since Mr Covington-Thomas was amongst those who had enlisted in 1961 and achieved the rank of Petty Officer and yet was not amongst the 48 Petty Officers referred to in the table. It was assumed that his omission was within the 3% to 5% error rate which Captain Toohey acknowledged. 11 Within a week of judgment having been reserved, the Commonwealth sought leave to re-open. It served a further affidavit from Captain Toohey (7 June 2007). Captain Toohey's affidavit acknowledged that an error had been made, which he wished to correct. He said this: (Ex 28) "5. In relation to paragraph (d)(vii) of the report which relates to Petty Officers, I have realised an error was made in the assumptions used to create the statistics contained therein. Statistics for Petty Officer rank were incorrect due to an erroneous query entered into the relevant data base which included an assumption of service for 20 years, thereby excluding any sailor who reached the rank of Petty Officer but did not serve for 20 years or more." 12 The correction which Captain Toohey sought to make to the table for the 1961 intake of recruits was in these terms: (Ex 28) "9. These errors caused incorrect statistics in relation to the ranks achieved by sailors on discharge. I have re-examined the data and confirm the following statistics are correct in relation to ranks achieved on discharge by the 1411 sailors who were recruited in 1961: a. Captain - 2 b. Commander -2 c. Lieutenant Commander - 14 d. Lieutenant - 22 e. Warrant Officer - 64 f. Chief Petty Officer - 165 g. Petty Officer - 290 h. Leading Seaman and below - 852" 13 The plaintiff opposed the Commonwealth's application for leave to re-open. On 9 June 2007, submissions were filed and a lengthy affidavit from Mr Taylor, the solicitor for the plaintiff. Mr Taylor's affidavit explained that, judgment having been reserved, he left for overseas. Having been told of the application he had returned to Australia at some inconvenience and expense. 14 The matter was mentioned on 21 June 2007. I had, by that time, read the material submitted by both parties (T1). I stated my preliminary view as follows: (T5) " HIS HONOUR: They are saying, he says he's made a mistake. I agree it doesn't fill you with confidence about Captain Toohey, and I agree he has no doubt learned a lesson from this case but nonetheless, one has to have the correct material. And it would seem just from looking at it and what we know about the material that there is plainly an error. And if that's right, then it has to be corrected." 15 The foreshadowed application to re-open was made on 25 July 2007. When giving leave, I made the following statement: (T1607) " HIS HONOUR: It seems to me, I have to say - I have read the material - I have not really moved from the instinctive reaction I had on the day, which is if there is an error, and there is plainly an error - and indeed it was apparent that there was an error, I think, at the time this evidence was first given, because it was a puzzle to everyone and, of course, a pleasant surprise to you - but, nonetheless, if there is a error it must be corrected and I must proceed on correct information. So, it seems to me the defendant must be given leave to re-open and I should receive the affidavits, or certainly Captain Toohey's affidavit." 16 The affidavit of Captain Toohey of 7 June 2007 was then admitted as Exhibit 28. 17 The judgment delivered on 2 August 2007 was, at that point, being written and was well advanced. In writing that judgment I was certainly conscious of this material. 18 Having delivered the judgment on 2 August 2007 the plaintiff, in written submissions, invited me to correct the table in paragraph [742], substituting the following table which incorporated Captain Toohey's amendments: (MFI 45) Rank Achieved at Discharge by all 1961 enlistees (the plaintiff's list of entry) (a) (b) i Captain 2 0.14% ii Commander 2 0.14% iii Lieutenant Commander 14 0.99% iv Lieutenant 22 1.56% v Warrant Officer 64 4.54% vi Chief Petty Officer 165 11.69% vii Petty Officer 290 20.55% viii Leading Seaman and below 852 60.38% TOTALS 1411 99.99% 19 Mr Barry QC, for the defendant, said that the "error" was not amenable to correction under the slip rule. In his submission the wrong table had been used in reaching the conclusions in the judgment. Whilst ever the conclusions remained, the table should remain. 20 My recollection, such as it is, concerning my purpose in including the table in para [742] was to acknowledge an important aspect of the defendant's case that, statistically, few people reached the top. I had, by that point in the judgment, already determined that Mr Covington-Thomas would re-enlist at the end of his nine year term and would certainly have been promoted to Chief Petty Officer. In reaching that conclusion, I did not rely upon the statistical argument which the plaintiff had advanced. Rather, I relied upon my assessment of Mr Covington-Thomas' character and capacity, and the evidence concerning his intentions before the collision. 21 Did I make an error in including the table in paragraph [742]? When I received the plaintiff's submissions of 14 September 2007 (MFI 45), I thought that I had made an error. Having revisited the sequence giving rise to the re-opening and having examined more closely the paragraph which followed (para [743]) (which refers to the re-opening), I am not so sure. I acknowledge nonetheless that, having reproduced the November 2006 table of Captain Toohey, I should have reproduced the correction. My conclusions in the light of the table, as corrected, remain the same. 22 There was error, however, in paragraph [759], where I was dealing with Mr Covington-Thomas' promotion to the rank of Lieutenant. The paragraph included the following sentence: "[759] Lieutenant Hunt became a lieutenant at the end of 1987 (Ex AA). He had been reluctant to seek promotion and only did so at the urging of his superior officer. I do not think Mr Covington-Thomas would have been the least reluctant. It is likely that he would have been promoted to lieutenant not later than 1 January 1985. In forming that view, I am conscious of the report of Captain Toohey of 28 May 2007 (Ex 26, tab 9). Only 86 men from the 1961 intake reached the rank of lieutenant or above." 23 Having looked again at Captain Toohey's report of 28 May 2007 (Ex 26, tab 9), I cannot see a source for the figure 86. The statistics accompanying Captain Toohey's reports do not readily combine to give 86 men. The correct figure was 40. I can only assume that the figure 86 was a typographical error. The point I was seeking to make was that the numbers were small. I had no doubt that Mr Covington-Thomas would be amongst that small number. 24 Let me return to the question of the Malec v J C Hutton Pty Limited (supra) discount. The Malec v J C Hutton discount. 25 Having dealt with Mr Covington-Thomas' likely career in the first 20 years after his enlistment in the Navy (to 1981), I then addressed his likely date of retirement from the Navy. The judgment was expressed in these terms: (paras [754]-[755]) "[754] The next milestone in the plaintiff's Naval career was 20 years service in 1981. What may have happened thereafter is less certain. After 20 years service he would have qualified for the Naval pension. The economic imperative to remain in the Navy therefore ceased. There were, broadly, two futures open to him, for which persuasive arguments could be advanced. They were: · First, Mr Covington-Thomas may have chosen to remain in the Navy, seeking promotion, and retiring at the age of, say, 55 years. Those who chose that course (such as Lieutenant Hunt) usually worked part time in the Naval Reserves upon retirement and were paid an allowance which was not taxed. · Secondly, Mr Covington-Thomas might have left the Navy (at the age of 39 years) and worked in civilian employment. Had he done so, it is probable that he would have continued working to the age of at least 60 and perhaps 65 years. He may or may not have been entitled to additional superannuation. [755] Each future was subject to vicissitudes, which I will deal with separately. What I have termed "the second future" may have been more lucrative than the first, depending upon the age of retirement, and whether Mr Covington-Thomas accrued additional superannuation." 26 It seemed to me, for the reasons set out in [756], that it was more likely that Mr Covington-Thomas would have remained in the Navy than pursuing the second path. Had he done so, I believe that he would have reached the rank of Lieutenant (para [756]). There was even the possibility (although no more than a possibility) that he would have been promoted to Lieutenant Commander (para [760]). 27 The judgment then included the following: (para [762]) "[762] What is the appropriate discount to reflect the degree of probability involved in my assessment of Mr Covington-Thomas' likely future (supra para [702]) ( Malec v J C Hutton Pty Limited )? I believe the degree of probability was about 75%, so that there should be a discount of 25%. That represents the top line of the calculation of loss of earning capacity, being the loss of remuneration ultimately at the rank of lieutenant." 28 Having considered an appropriate allowance for vicissitudes, I determined that a discount of 20 percent was appropriate (paras [775]-[778]). The summary at the end of the judgment included the following formulation relating to loss of earning capacity: (para [782]) [v] Loss of Earning Capacity, reflecting the career progression to Lieutenant and retirement at age 55 years, with service in Naval Reserve 50 days p.a. to age 60 years; such sum to be discounted by 25% (Malec v J C Hutton) and a further 20% (vicissitudes). To be calculated 29 It was this formula which struck me as wrong very shortly after I handed down judgment. I recognised that that formula would under compensate Mr Covington-Thomas. The finding I had made was that Mr Covington-Thomas would have pursued one or other of the futures which I had identified (para [754]). It was therefore inappropriate to select one future (the most probable) and then apply a discount based upon the likelihood of that future being pursued rather than another. 30 What, then, is the proper approach consistent with Malec v J C Hutton? In the judgment (para [709]) I set out a passage from Norris v Blake [No 2] (1997) 41 NSWLR 49, per Clarke JA at para 63, which provided a useful guide, that is, looking to the most probable future and then adjusting up or down for contingencies. In Commonwealth of Australia v Ryan [2002] NSWCA 372, Hodgson JA expressed the concept in these terms: (at para [73]) "Where there is a wide spectrum of possibilities … the best approach is often that supported in Norris v Blake No 2 (1997) 41 NSWLR 49 at 73; namely, to take the figure applicable to the most likely alternative (if there are many alternatives, even this may have a probability considerably lower than 0.5 [ie 50%], and then adjust it upwards or downwards according to one's assessment of the chances and figures associated with more favourable and less favourable alternatives." 31 In Macarthur Districts Motor Cycle Sportsmen Inc & Ors v Ardizzone [2004] NSWCA 145, Hodgson JA (with whom Stein AJA agreed) said this, although writing in the context of s13 of the Civil Liability Act 2002: (at paras [8ff]) "[8] In the first place, there is at least theoretically some tension between the requirements of s13 and what the High Court of Australia said in Malec v J C Hutton Pty Ltd (1990) 169 CLR 638 at 643 about assessing damages, namely, that in respect of hypothetical and future events, the court assesses the degree of probability that an event would have occurred, or might occur, and adjusts the award of damages to reflect that degree of probability. This could be understood as suggesting that the court should not base its award on the 'most likely future circumstances' but rather should base it on probability weightings or a range of alternative possibilities. [9] That matter was considered with some care in Norris v Blake [No 2] (1997) 41 NSWLR 49, where it was concluded that the proper approach in that case was to assess what it was most likely the plaintiff would have earned during the rest of his working life, and then adjust this for contingencies. So far, this would appear generally in accord with s13. But in Blake , at 73, it was expressly noted that the contingencies included the possibility that the plaintiff might have done far better; and that is a matter to which s13 appears to make no reference. [10] Subject to what I say later about 'buffer' awards, it seems that the Blake approach has in fact been adopted in most personal injury cases, as a practical way to give effect to the Malec principle; and s13 may be regarded as making it mandatory to do this. However, and this leads to the second major problem with s13, the wording of s13(2) is not entirely apt to the purpose of requiring an appropriate adjustment for vicissitudes or contingencies." 32 The plaintiff urged a mathematical approach, rather more exact, although probably little different in practical effect. The Court's finding was that Mr Covington-Thomas would have worked until retirement, subject to vicissitudes (attracting a discount of 20 percent). His loss of earning capacity should therefore be calculated by combining the two futures thought to be likely, according to the findings made as to their probability, namely (cf MFI 49): · 75% of the earning in a naval career progressing to Lieutenant and retiring at the age of 55 and thereafter serving in the Naval Reserve 50 days p.a. to the age of 60; plus · 25% of the earnings from a naval career for 20 years progressing to Warrant Officer and thereafter civilian employment commencing at a salary equal to that of a Warrant Officer, adjusted thereafter until retirement at the age of 65 years according to adjustments made to average weekly earnings. 33 The second future included a number of assumptions, not the subject of findings in the judgment of 2 August 2007. I will return to those assumptions shortly. The calculated loss using that formula and those assumptions was $274,908.20 (MFI 49), having made a 20 percent discount for vicissitudes. 34 The plaintiff, in argument, drew attention to the desirability of precision where it can be achieved. In Cullen v Trappell [1979-1980] 146 CLR 1, Gibbs J said this: (at 17) "I cannot accept that if Gourley's Case is followed, it will lead to unacceptable difficulty and complication in the assessment of damages. The accepted method of determining the present value of a future loss by the use of appropriate tables will continue to be employed whether net or gross figures are taken. It is no more than a proper application of this method to take into account the notional tax on the income from the sum awarded. Whether the court proceeds as accurately as possible (as no doubt it should) with the assistance of actuarial material, or along very broad lines, the assessment of damages in this way does not appear to me to cause any great difficulty. But even if Gourley's Case renders the assessment of damages more complicated, that is no reason for departing from the fundamental principle on which that decision rests." (emphasis added) 35 In Norris v Blake [No 2] (supra), Clarke JA said this: (at 68/69) "There is nothing in any of the judgments of the High Court (except perhaps the reference to percentages in the majority judgment in Malec ) which supports the adoption of a scientific, or quasi-scientific, approach to the assessment of damages in a case in which there is a requirement that account be taken of future possibilities and past hypothetical situations. That is not to say that where a scientific method is available it should not be adopted. Indeed, in my opinion, if there is evidence in a case capable of demonstrating that a particular scientific approach is likely to reach a more accurate assessment than an intuitive judicial approach then, provided full weight is given to the uncertain nature of the future, there is no reason for failing to adopt that method." 36 Such an approach, according to the plaintiff, was conservative, in that it did not include any loading for the possibility (which was recognised) that the plaintiff may have been promoted beyond Lieutenant to Lieutenant Commander. 37 The defendant, at the resumed hearing, adopted the stance that the judgment of 2 August 2007 was appellably wrong and the plaintiff's submissions were also wrong (T28), such that it was inappropriate to make a contribution to the debate. The flaw, so far as counsel would elaborate, was the failure to take account of contingencies inherent in the issue of re-enlistment in the Navy and the achievement of each successive rank (T29). 38 However, the vast majority of employees in the workforce continue to work until retirement, subject to ill health and accident. That is the context of Malec v J C Hutton in this case. One is not dealing with uncertainties arising from, for instance, a business venture or a disease. Mr Covington-Thomas, like others in the workforce, would, I believe, have continued working until retirement unless struck down by ill health or accident. The only uncertainty in his career path, given his capacity and the requirements for each rank, was the question of timing. By approaching that issue conservatively, as already described, there appears to me no warrant for a discount beyond vicissitudes. Progression beyond Lieutenant to Lieutenant Commander, Commander and Captain, may well be different. Such positions represent the very peak of the hierarchy, where luck and chance may well play a part. I do not believe such factors would have prevented Mr Covington-Thomas from comfortably attaining the rank of Lieutenant, although they may have affected the time at which he achieved that rank. 39 At the end of the day, I do not believe that the result would be greatly different whether the mathematical approach, urged by the plaintiff, were adopted, rather than adjusting for contingencies, as suggested by Norris v Blake [No 2]. I am, nonetheless, attracted to the approach suggested by the plaintiff and shall therefore examine the reasonableness or otherwise of the assumptions which underpin that approach. Assumptions in respect of Scenario 2. 40 The plaintiff identified three relevant assumptions, requiring findings of fact in respect of the second future: · First, it was assumed that the plaintiff's salary in civilian life, having left the Navy in 1981 as a Warrant Officer, would be no less than that of a Warrant Officer. · Secondly, that in the years between 1981 and retirement, the plaintiff's earnings would have increased at the same rate as average weekly earnings. · Thirdly, that the plaintiff would have continued working until the age of 65 years. 41 Addressing each of these issues, the first assumption appears to be reasonable. There were many benefits in remaining in the Navy, including health and dental care, free or discounted accommodation, free or discounted meals, as well as job security and satisfaction. As a generality, a person would be unlikely to forego such benefits and enter civilian life for less than the pay they were then receiving. In the case of Mr Covington-Thomas one must also take account of his love for the Navy, the success he had enjoyed and the promise of further success. Whilst leaving the Navy would presumably afford more time with his family, nonetheless I believe the assumption is warranted and, indeed, conservative. 42 The second assumption also appears to be reasonable, that is, that Mr Covington-Thomas' salary in civilian life would increase in line with average weekly earnings. The salary he would have been receiving on 30 July 1981, had he been a Warrant Officer about to enter civilian life, would have been gross $20,843. Average weekly earnings at that time were $16,830. 43 The third assumption concerns Mr Covington-Thomas' likely date of retirement. I did not address this issue in the original judgment because I mistakenly thought that it was unnecessary to deal with the second possible future of Mr Covington-Thomas. Nonetheless, in describing that future, I did say this: (para [754]) "Secondly, Mr Covington-Thomas might have left the Navy (at the age of 39 years) and worked in civilian employment. Had he done so, it is probable that he would have continued working to the age of at least 60 and perhaps 65 years. He may or may not have been entitled to additional superannuation." 44 The plaintiff, nonetheless, urged a finding that Mr Covington-Thomas would have retired at the age of 65 years. That is the normal retirement age for males. It was suggested I should take judicial notice of Government policy to keep people in the workforce. Mr Covington-Thomas, it was argued, had demonstrated a strong work ethic before and after the collision. Before his collapse in 1996, he had worked almost without interruption, notwithstanding escalating symptoms arising from his psychiatric disabilities. 45 These are plausible arguments and, upon reflection, I certainly think it likely that Mr Covington-Thomas would have worked to 65 years. I also think it likely that, after retirement, he would have continued to serve part time in the Naval Reserve. However, he had an advantage not enjoyed by other males in the working population, namely a generous naval pension. Greater uncertainty therefore attends this assumption than the others. 46 On balance, I think some adjustment to the mathematical product of the two futures ($274,508.20) is warranted to reflect these uncertainties. The award for loss of earning capacity should be $255,000. The issue of interest. 47 The plaintiff also sought interest on past loss of income in accordance with the Supreme Court rate (Schedule 5, Uniform Civil Procedure Rules). Ordinarily a plaintiff would be entitled to interest. However, the defendant submitted that interest should be denied or moderated because the plaintiff had, in part, been responsible for the delayed hearing. The matter was listed for trial before Dowd J on 23 June 2003. Shortly before the hearing the plaintiff applied on Notice of Motion to amend the Statement of Claim. The amendments sought to deal, amongst other things, with the complication occasioned by the plaintiff's Vietnam service following the Melbourne/Voyager collision, which, on the plaintiff's case, aggravated his psychiatric disabilities. The defendant objected to the amendments. It said that they introduced a new cause of action requiring a further extension of time. The argument was protracted, being part heard on various days over six months. The hearing, in the meantime, was vacated. The plaintiff was ordered to pay the costs thrown away. Dowd J ultimately gave judgment on 17 August 2004, allowing certain amendments (Covington-Thomas v Commonwealth of Australia [2004] NSWSC 743). The defendant successfully appealed. The plaintiff was ordered to pay the costs on appeal. Some amendments, nonetheless, were made to the Statement of Claim, either as a consequence of the appeal or by consent. The amendments dealt with the alleged aggravation to the plaintiff's PTSD occasioned by his Vietnam service. The defendant filed an Amended Defence on 10 February 2006 raising the "battle defence", which I assume had been foreshadowed. It is said by the Commonwealth that the costs payable by the plaintiff as a consequence of the aborted hearing and the unsuccessful appeal are approximately $150,000. I gather a bill has not yet been prepared or assessed. 48 I believe the plaintiff, notwithstanding that history, is entitled to interest. The circumstances were unusual. The issues raised by an aggravation occasioned by later war service were novel. The application was not frivolous. It succeeded at first instance. The defendant, in the meantime, has had the use of the money which has now been awarded to the plaintiff. 49 The damages awarded to Mr Covington-Thomas therefore, in summary, should include the following items (adopting the numbering in MFI 49): [v] Loss of Earning Capacity $255,000 [vi] Interest on Past Loss per the Supreme Court rate (Sch 5, Uniform Civil Procedure Rules) To be calculated The Naval pension. 50 After the judgment on 2 August 2007, the parties, as directed, sought to agree on outstanding issues. The plaintiff wrote on 22 August 2007 identifying 15 questions. The defendant responded on 23 August 2007 (MFI 41). The response set out the questions and provided the answers. It included the following: (MFI 41) "6. That the Plaintiff would have commuted his DFRDB pension in 1981 after 20 years or 1997 at the age of 55 and taken a lump sum payment. - There was no evidence that the Plaintiff would, had he stayed in the Navy, (have) commuted any DFRDB pension. Accordingly it is not agreed." (emphasis in original) 51 When the matter was mentioned on 24 August 2007, the plaintiff drew attention to that response. His counsel foreshadowed that leave would be sought to adduce evidence that the vast majority of sailors commuted their pension (T2). 52 When the hearing resumed on 17 September 2007, the Commonwealth was asked whether it had changed its attitude. Mr Barry QC, counsel for the defendant, said that it had not. It opposed the introduction of further evidence. The plaintiff outlined his argument. First, actuaries retained by both parties had prepared reports, which had been served. Both had approached the pension issue upon the assumption that it would be commuted. Secondly, McClellan CJ at CL had directed the experts to confer before the hearing and to produce a joint report, identifying matters in common and areas of difference. They produced a joint report on 19 October 2006. The report implicitly reaffirmed the methodology of commutation of the pension. It included the following statement: (Ex 17, tab 1, report 19.10.06) "Mr McKewen [with Lexiq, the defendant's expert] and I [Hugh Sarjeant with Cumpston Sarjeant Actuaries] believe there are no material differences in our methods, and that the calculations we have both made are correct under the assumptions used." (parenthesis added) 53 Thirdly, when the trial began on 30 October 2006, neither party asked Mr Covington-Thomas whether he intended to commute his pension. I infer that they did not do so because it was not an issue. 54 Fourthly, the plaintiff asserted (and sought leave to adduce evidence to prove) that, statistically, 95% of sailors entitled to a pension commuted their pension. Eventually Mr Barry made a concession that the plaintiff's assertion in respect of the statistics was accurate. The defendant would not acknowledge, however, that it was reasonable to approach the pension entitlement upon the basis that it would be commuted. 55 The defendant's attitude was completely unreasonable. It was not the behaviour of a model litigant. Time was wasted on an issue where a concession was called for and unreasonably withheld (cf para [663]). I infer that Mr Covington-Thomas, in common with 95% of sailors, would have commuted his pension. 56 Returning to the issue of the plaintiff's entitlement to damages in respect of the naval pension, the judgment of 2 August 2007 said this: (para [779]) "[779] What is the appropriate discount in respect of the naval pension? I have described two possible "futures" for Mr Covington-Thomas, had he not been disabled in the Melbourne/Voyager collision (supra para [755]). Both involved service in the Navy for at least 20 years, so that in either case he would have qualified for the naval pension. In my view, therefore, receipt of the pension one way or another was highly likely. Had Mr Covington-Thomas retired after 20 years, the pension would have been calculated at the rate of pay for a warrant officer. The future that I believe most likely involves promotion to the rank of lieutenant and retirement at the age of 55 years. Since, on either future, he would have received a naval pension, it is inappropriate, in my view, to apply to that issue the same Malec v J C Hutton discount as to loss of earning capacity. Some discount is appropriate, nonetheless, because neither "future" can be considered certain. A number of things had to happen before Mr Covington-Thomas' entitlement would accrue. The appropriate Malec v J C Hutton discount, I believe, is 15% (rather than 25%)." 57 I regret that my approach in that paragraph was also wrong. The approach ought to have been the same as in respect of loss of earning capacity, that is, taking account of both futures. When I spoke in that paragraph of "a number of things had to happen" I believe, on reflection, for the reasons I have given in the context of the discussion of loss of earning capacity, that the only relevant discount was in respect of vicissitudes. 58 The calculation necessary to determine the value of the pension in the past requires, as I have said, an examination of the two futures. In respect of the second future the plaintiff incorporated an assumption which was not the subject of a previous finding of fact. It was assumed by their expert that, from 1992, the plaintiff would have received his employer's contribution to superannuation, since they were compulsory from that year. The defendant challenged that assumption upon the basis that it presupposed that the plaintiff had been employed rather than self employed. The defendant pointed out that the plaintiff, whilst a cleaner at the Maryborough school, had a small business with a backyard nursery. 59 I believe, nonetheless, that it is reasonable to assume that the plaintiff would have been employed. His background in gunnery did not suggest a career in business or a trade (unlike certain sailors who had a trade qualification). Scenario 2 presupposed entry into the workforce at a mature age, 39 years. His business in the 1980s was in the nature of a hobby which yielded some money on the side. The plaintiff argued, and I accept, that the assumption they suggest is conservative, first, because it ignored employer contributions to Mr Covington-Thomas' superannuation before 1992, that is before they were compulsory, and, secondly, the assumption ignored benefits arising from the plaintiff's own contributions after 1992. 60 On reflection, I believe that the appropriate discount for vicissitudes in respect of all past pension entitlements is 15% (cf MFI 49), although the interest component will require updating. 61 Accordingly, I believe it reasonable to incorporate into the plaintiff's award the following (taken from the plaintiff's schedule MFI 49): [vii] Past Loss of $266,530 Superannuation/Pension [viii] Interest on Past Loss of Pension as per the Supreme Court rate (Sch 5, Uniform Civil Procedure Rules) $220,519 Future loss of pension. 62 In the judgment of 2 August 2007, the following was said on the question of future pension entitlement: (para [781]) "[781] Nor is a discount for vicissitudes appropriate in respect of the plaintiff's future pension entitlement. The same logic, as set out above in respect of future medicals, has application. The only relevant issue is future life expectancy. The life tables statistically incorporate vicissitudes. The issue should therefore be approached in the manner set out above at paras [691ff]. Mr Covington-Thomas has a normal life expectancy for a person of his age, provided he can give up alcohol. A discount of 30% is appropriate to reflect the possibility of relapse and a foreshortened life span." 63 The plaintiff, in submissions before the resumed hearing, said this: (MFI 45 - PS: 14.9.07) "20. His Honour has discounted the plaintiff's pension by 30% to reflect the possibility that the plaintiff will recommence alcohol consumption which will cause a reduction in his life expectancy. 21. We submit that a pre injury life expectancy should be applied to this head of damage as the pension is part of the plaintiff's economic loss and should be treated the same way as a claim for loss of earnings: see Skelton v Collins (1966) 115 CLR 94; see also Griffiths v Kerkemeyer (1977) 139 CLR 161 per Mason J at 185.6. Hence a 30% discount to life expectancy should not be applied in relation to the calculation of future pension." 64 In Griffiths v Kerkemeyer (1976-1977) 139 CLR 161, Mason J said this: (at 185) "I begin with the respondent's criticism that the primary judge erred in assessing future economic loss. It is conceded by the appellant that the judge was wrong in finding that the respondent's life expectancy was about thirty years for the purpose of assessing this head of damage. Skelton v Collins ((1966) 115 CLR 94) establishes that in calculating future economic loss the court looks to the injured person's life expectancy before, and not after, the accident. …" 65 The principal was acknowledged by the defendant. However, the defendant submitted that the amount awarded during the "lost years" should be reduced to take account of the cost of maintaining the plaintiff which, by definition, would no longer be required. It is only the surplus, if any, that should be awarded (cf Skelton v Collins (1966) 115 CLR 94, per Taylor J at 121; Sharman v Evans (1977) 138 CLR 563, per Gibbs and Stephen JJ at 579; James Hardie & Co Pty Ltd v Roberts (1999) 47 NSWLR 425, per Sheller JA (with whom Spigelman CJ Stein and Giles JJA agreed) at 439-446 (esp at 445-6)). Here it was submitted that there would be no surplus. The defendant said this: (DS: 19.9.07) "3. … It is likely he would have consumed all or almost all of his pension in maintaining himself and therefore no real benefit would have arisen which should be taken into account. If the Plaintiff had survived for the full period it would have been necessary for him to maintain himself out of his pension and the pension would likely have been exhausted in this regard." 66 The plaintiff responded by submitting that no finding had been made that there were "lost years". Rather, there was the chance of a reduced life expectancy should the plaintiff relapse and again resort to alcohol. No general damages had been awarded for loss of expectation of life. The cases relied upon by the defendant concerned loss of earning capacity, not loss of pension entitlement. According to the plaintiff, the general principle in Skelton v Collins (supra) should be applied. 67 It was said in the alternative that, if there were a reduction to that entitlement, two things should be recognised and reflected in any such reduction. First, there was only a chance of lost years, not a certainty and, secondly, the pension itself was generous, such that a handsome surplus could be expected (cf Lieutenant Hunt: T1247, line 41). 68 I accept that the ordinary principle in Skelton v Collins should be applied. These are not lost years. The plaintiff's pension entitlement should be calculated in accordance with normal life expectancy. If I am wrong in that conclusion, such that the chance of lost years should be regarded as lost years for the purposes of the rule, I think it unlikely that Mr Covington-Thomas would use his entire naval pension to maintain himself. He has been living on much less for more than a decade. Whilst that may change following the verdict, I think it likely that at least half the pension would remain. 69 The plaintiff's schedule (MFI 49) referred to a deduction for vicissitudes. However, for the reasons set out in paragraph [781] of my judgment of 2 August 2007, that seems to me inappropriate. The life expectancy tables are necessarily a statistical average which take account of vicissitudes. Mr Covington-Thomas is now almost 65 years. He is not subject to any special risk, apart from alcohol. His problem with alcohol can ultimately be traced to the collision. I have been furnished with a further report from the plaintiff's actuary, Hugh Sarjeant (Ex AG: 18.9.07) which calculates the plaintiff's entitlement in accordance with normal life expectancy. I am not sure whether it includes a discount for vicissitudes. If it does, in my view it should not. The appropriate amount, using his normal life expectancy without reduction for vicissitudes, should be included in the award. Order. 70 In summary, the damages to be awarded are as follows (with interest updated to the date of judgment). [i] General Damages $180,000.00 [ii] Interest on 75% of General Damages (to 3.8.07) $94,500.00 Past Medicals: $15,475.25 [iii] (a) agreed $39,200.00 (b) clinics [iv] Future Medicals $19,984.65 [v] Loss of Earning Capacity $255,000.00 [vi] Interest on Past Loss of Earning Capacity To be calculated [vii] Past Loss of $266,530.00 Superannuation/Pension [viii] Interest on Past Loss (to 3.8.07) $220,519.00 [ix] Future Loss of To be calculated Superannuation/Pension 71 I therefore make the following orders: 1. There should be a verdict and judgment for the plaintiff in the sum to be calculated reflecting these reasons. 2. The defendant should pay the plaintiff's costs. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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