Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Matar v Jones [2011] NSWCA 304 Hearing dates: 31 August 2011 Decision date: 22 September 2011 Before: Beazley JA at [1] Giles JA at [2] Macfarlan JA at [3] Decision: (1) Appeal allowed in part. (2) Direct the parties, if they are able to agree as to the amount of damages recalculated in accordance with this judgment, to lodge with the Court within seven days of the date of this judgment a form of consent order to be made by the Court in chambers. (3) Direct that if the parties are unable to agree as to that matter: (a) within seven days of the date of this judgment the appellant lodge with the Court a submission identifying the orders that he contends should be made to give effect to this judgment, together with submissions in support of that contention; (b) within seven days thereafter the respondent lodge a reply; (c) within a further seven days the appellant lodge any submission in reply to that of the respondent. (4) Order the respondent to pay the appellant's costs of the appeal. (5) Direct the Registrar of the Court to refer this judgment to the Commissioner of Taxation for consideration. (6) The respondent to have a certificate under the Suitors' Fund Act 1951, if qualified. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: DAMAGES - motor vehicle accident - claim for past loss of earnings and future lost earning capacity - prior to accident plaintiff earned income as a self-employed taxi driver and by leasing out a second taxi plate that he owned - whether primary judge erred in finding that plaintiff's pre-injury earnings as disclosed in his tax returns included income from both taxi driving and lease payments - whether fact that plaintiff did not disclose lease payments for income tax purposes precluded him from recovering damages in respect of what he truly earned as distinct from what he disclosed - Registrar directed to refer judgment to Commissioner of Taxation for consideration. DAMAGES - motor vehicle accident - plaintiff sold taxi plates after the accident and claimed damages for loss of opportunity to earn capital profits - whether plaintiff established causal connection between sale of taxi plates and injuries suffered. Legislation Cited: Motor Accidents Compensation Act 1999 Cases Cited: AMP General Insurance Ltd v Kull [2005] NSWCA 442; (2006) 14 ANZ Insurances Cases 61-687 Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 Giorginis v Kastrati [1988] 49 SASR 371; [1989] Aust Torts Reports 68,460 Category: Principal judgment Parties: Ezat Ahmed Matar (Appellant) Renee Jones (Respondent) Representation: Counsel: B Gross QC/T J Boyd (Appellant) G J Bellew SC/N Ghabar (Respondent) Solicitors: Lough Wells Duncan (Appellant) Dibbs Barker (Respondent) File Number(s): CA 2009/339874 Decision under appeal Citation: Matar v Jones Date of Decision: 2010-05-04 00:00:00 Before: Delaney DCJ File Number(s): DC 19/09 Judgment 1BEAZLEY JA : I agree with Macfarlan JA. 2GILES JA : I agree with Macfarlan JA. 3MACFARLAN JA : On 1 May 2004 the appellant, Mr Ezat Matar, a self-employed taxi driver, was injured in a collision between the taxi that he was driving and a vehicle that the respondent was driving. The appellant's claim against the respondent for damages to compensate him for his injuries came before Delaney DCJ for determination. By judgment dated 1 April 2010 the primary judge found in favour of the appellant in relation to liability and contributory negligence and awarded him damages totalling $156,833. This amount did not include damages for non-economic loss as the medical assessors appointed by the Motor Accidents Authority did not assess the appellant's degree of permanent impairment as a result of his injuries as greater than 10 per cent (s 131 Motor Accidents Compensation Act 1999). 4The appellant's appeal was confined to the following contentions concerning the primary judge's assessment of damages: (1) The primary judge erred in his assessment of the economic consequences to the appellant of the appellant's loss of earning capacity as his Honour erred in his findings as to the level of the appellant's pre-injury earnings (Appeal Grounds 1 to 3). (2) The primary judge erred in failing to award the appellant damages to compensate him for an alleged loss of opportunity to earn a capital profit in respect of the sale of two taxi plates that he owned (Appeal Grounds 4 to 7). (3) The primary judge "failed to give proper consideration to the evidence and adequate reasons for [his] decision as to economic loss" (Appeal Ground 8). (4) The primary judge "erred in reaching adverse conclusions concerning the credibility of the [a]ppellant and his family members" on the basis of the evidence that the appellant, his family and a housekeeper gave concerning domestic work (Appeal Ground 9). (5) The primary judge erred in the conclusions he drew from viewing a DVD of surveillance film of the appellant (Appeal Grounds 10 - 12). (6) The primary judge erred "in failing to properly consider the evidence as to the [a]ppellant's injuries and disabilities, and to make findings, and to give adequate reasons, as to what those injuries and disabilities, and their consequences, were" (Appeal Ground 13). 5I shall deal with these contentions in turn. ECONOMIC LOSS - PRE-INJURY EARNINGS (GROUNDS 1 TO 3) 6Prior to the accident the appellant earned income by driving a taxi that he owned, utilising a taxi plate that he also owned. His unchallenged evidence was that he usually worked 12 hours a day, six days a week and had the taxi driven by another driver on the day that he did not work. His claim in the proceedings in respect of past loss of earnings and future lost earning capacity was based upon the assumption that his average net weekly earnings in the three years prior to the accident had been about $430 (Ex P) and that, but for the accident, these earnings would have continued for 10 years after the date of his medical assessment, that is, until he was aged 70. The amount of $430 was based upon an approximation of the figures appearing in his tax returns for the years 2002, 2003 and 2004. 7The appellant also owned a second taxi plate (although not a second taxi cab) that he leased to another driver at a rental of $330 per week. When the appellant first gave evidence he said that all of his income was disclosed in his tax returns, including the lease payments. Later, he was recalled to say that the income disclosed in the tax returns did not include the lease payments. He said that he first came to realise that when he spoke to his accountant that morning. 8The appellant's accountant, Mr Zarko Prem, gave evidence that when preparing the appellant's tax returns for the relevant years he was not aware that the appellant owned a second taxi plate and was therefore not aware that the appellant received lease payments in respect of it. Mr Prem however said that the appellant simply gave him figures for the appellant's "takings" (Transcript 11/11/09 p 159) to be included in the tax returns as the appellant's gross income from which expenses were derived to obtain his net income. 9The primary judge expressed his findings on this issue as follows: "I ... find that his net weekly income was $430 ... per week over the three years before the accident, including the $330 per week paid to him as the lease fee on the second plate. The court can only proceed on the financial records that were tendered and the plaintiff's evidence about them as he understood them when they were created. In this case, where the credibility of the plaintiff in relation to his taxation records is in issue the court should not accept late attempts to change the financial records when the plaintiff said in chief they included all his income. This means that his claim for lost income from taxi driving cannot be more than $100 per week (after deduction of the lease payments) from May 2004 to May 2006, a period in respect of which I accept he was disabled and could not drive a taxi for a living. Thereafter, he has had, in my view, a restricted capacity to work as a taxi driver and his loss should be assessed at $50 per week to the date of judgment. I allow the sum of $20,800 for past economic loss" (Judgment [70] and [71]). 10The circumstances in which an appellate court can intervene in relation to credit-based findings such as these are of course limited. In essence it can only intervene where the findings are contrary to "incontrovertible facts" or "uncontested testimony", or are "glaringly improbable" or "contrary to compelling inferences" ( Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 at [28] and [29]). 11The first matter of relevance is that the Taxi Operator Agreement pursuant to which the lease payments were received only commenced on 24 September 2001. However, the gross income appearing in the appellant's tax returns for the three years subsequent to the year ended 30 June 2001 did not exceed that for the year ended 30 June 2001. In fact gross income diminished whilst (absent any other factors intruding) it would have been expected to increase as a result of the inclusion of the lease payments in gross income, if they were in fact included in the figures for the year ended 30 June 2002 and subsequent years. It was not suggested that there was any offsetting change that may have masked the inclusion of the lease payments. 12Secondly, the appellant was entitled to $330 per week as rental for his second taxi plate, although he did say that the lessee forced him to accept the lower sum of $300 per week. The appellant gave the unsurprising evidence that he did not have to do any work in order to derive this sum. In these circumstances it is incongruous that the appellant was able to derive $330 (or $300) per week from the rental of his second taxi plate but, rather than attempting to similarly lease his first taxi plate, elected to work extremely hard using it to earn, on the primary judge's findings, only $100 per week. 13Thirdly, there was evidence that at about the time of the accident the usual annual gross turnover of a taxi operator per vehicle in operation would have been in the order of $90,000 (Blue Appeal Book pp 486 - 7). However, on the primary judge's findings the appellant's gross income for the use of his first taxi plate in the relevant years would have been in the order of $55,000 (being declared income of approximately $70,000 less $15,000 representing $300 per week lease payments in respect of the second taxi cab plate). Bearing in mind the long hours that the appellant worked, this would have meant that he was a remarkably unsuccessful taxi driver. The evidence did not suggest any reason why this was, or might have been, the case. 14Fourthly, on the primary judge's findings the 72 hours per week that the appellant worked (much of which time was late at night) generated net earnings of less than $1.50 per hour ($100 per week divided by 72 hours). It hardly seems likely that the appellant would have persisted in driving the taxi if this was all he earned. 15In these circumstances my view is that the finding that the appellant's disclosed income figures included the lease payments is "glaringly improbable" and "contrary to compelling inferences". The idea that the appellant was earning only $100 per week in the circumstances described above borders on the absurd. The overwhelming probabilities are in my view that, as he indicated when he gave evidence for the second time, the appellant did not disclose the lease payments for income tax purposes. 16This is to the appellant's discredit but does not preclude him from recovering damages upon what he truly earned, as distinct from what he disclosed. The following observations made by von Doussa J in Giorginis v Kastrati [1988] 48 SASR 371; [1989] Aust Torts Reports 68,460 and approved by this Court in AMP General Insurance Ltd v Kull [2005] NSWCA 442; (2006) 14 ANZ Insurances Cases 61-687 at [70] are in point: " ... Where the plaintiff gives evidence that his income tax returns do not disclose the full extent of his earnings, a court will scrutinise the plaintiff's evidence with special care. The want of honest compliance with the taxation laws is a matter that will reflect adversely on the plaintiffs (sic) credit and may lead to the rejection of his evidence as untrustworthy, at least about his earnings. In such a case the plaintiff has only himself to blame if damages are assessed in line with the pre-accident income actually disclosed to the revenue authority. However, where the fact of the receipt of other income is proved, then, in my view, the plaintiff is entitled to have that exercise of his earning capacity brought to account, although subject to reduction for the income tax which should have been paid, and subject to the question whether the plaintiff would have continued to exercise that capacity had he been required to pay tax on the additional income: see McIntosh v Williams [1976] 2 NSWLR 237 at 244, 252. Melino v Ken Eustice Motors (North Road) Pty Ltd (1984) 111 LSJS 296 at 308-310 is an example of a case where undisclosed income was proved and brought to account." 17For these reasons I consider that the appellant is correct in contending that the primary judge erred in deducting the lease payments of $330 per week from the net weekly income figure of $430 per week for which the appellant contended. 18I should add at this point that in my view it is clear that the primary judge took the view that whilst the appellant suffered a total loss of earning capacity from May 2004 to May 2006, he had a residual earning capacity of 50 per cent thereafter. This is apparent from the fact that his Honour awarded $50 per week rather than $100 per week for the period after May 2006 (see [71] quoted in [9] above). Whilst I have concluded that the primary judge used an erroneous figure for pre-accident earnings to calculate the future economic loss to the appellant resulting from his loss of earning capacity, I do not consider that any reason has been shown for departing from his Honour's conclusion that the appellant has a 50 per cent residual earning capacity. 19I also add that the consequence of the Court accepting the appellant's submission as to his pre-tax earnings is that the appellant did not make full disclosure of his income for income tax purposes. As a result the Registrar of the Court should refer this judgment to the Commissioner of Taxation for consideration. The South Australian Full Court said in Giorginis v Kastrati at 376, in a passage approved by this Court in AMP General Insurance Ltd v Kull at [70], that it was the duty of a court to take this course in a case such as the present. LOSS OF OPPORTUNITY TO EARN CAPITAL PROFITS (GROUNDS 4 TO 7) 20The appellant sold his first taxi plate (together with the taxi that he acquired with the proceeds of an insurance claim to replace that which was destroyed in the accident) for $160,000 on 17 January 2005. He sold his second plate for $170,000 on 10 June 2006. His evidence was that both of these sales were at market value. 21The appellant submitted on appeal: "The Appellant's case was that 9 months after the accident, he sold the first plate and taxi as he was unable to return to work driving this taxi, he lacked income, he did not receive Centrelink payments or workers compensation, and he needed money to live, and also to pay his medical expenses. He obtained some money from his adult children, which he needed to pay back. About 2 years after the accident he sold the second plate for the same reasons" (Appellant's Written Submissions [12]). 22The appellant contended that in these circumstances he was entitled to damages reflecting the difference between the sale prices of the two plates and the market value of each plate of $250,000 to $260,000 at the date of trial. This contention was qualified by the following submission that the appellant put at first instance and implicitly adopted on the appeal: "Although the loss to the Plaintiff being claimed for is measured by the difference between the price of taxi plates now and the price of taxi plates when the Plaintiff sold the two taxi plates, it must be recognised that the relevant difference will depend not on the price of a notional sale of the taxi plates as at date of judgment, but the likely price of the taxi plates if those taxi plates had been sold when he turned 70. It is appropriate to take the value at time of judgment as the basis of this assessment, but to take into account the contingencies" (Submissions dated 11 November 2009 [5]). 23Involved in the appellant's submissions is the proposition that the appellant sold the taxi plates because the injuries he suffered in the accident necessitated him taking that course. However the primary judge's findings do not support that proposition. 24The primary judge said the following as to the appellant's reasons for selling the plates: "On the question of the business losses, I find that the plaintiff sold his taxi plates at a time when the evidence does not disclose with sufficient clarity that he had a financial need to do so. He created his losses by the sale of the taxi plates. He could have leased both of the plates out and recovered a weekly amount in excess of his earnings as disclosed in taxation returns. I do not have reliable evidence about the loan obligations he may have had when he purchased the plates, but his evidence about needing to sell the plates to live should be rejected. In my opinion, he has not discharged his onus of proof that the sale of the plates was causally connected to his injuries and I reject the claim" (Judgment [83]). 25The appellant submitted that the respondent bore the onus of proving that by selling the taxi plates the appellant unreasonably failed to mitigate his loss (Appellant's Written Submissions [18] - [23]). However this submission assumed that the appellant's sales were causally related to the loss but, as I have indicated, the primary judge considered that the appellant had not established that proposition. In my view for the appellant to succeed on his capital loss claim it was essential that the causal connection be established. The primary judge's finding was a credit-based one and the appellant did not demonstrate that there is any basis consistent with the principles in Fox v Percy (see [10] above) to justify appellate intervention in relation to the finding. As a result, the appellant's capital loss claim must fail. 26It is unnecessary in these circumstances to identify all the possible difficulties with the appellant's claim for loss of the opportunity to earn capital profits. I simply refer to the following additional insurmountable hurdle. 27The appellant's claim was not that circumstances brought about by the accident forced him to sell the taxi plates at less than market value. He accepted that he obtained market value for the taxi plates. To make good his claim he therefore had to persuade the Court that the market value of the taxi plates at the time that he turned 70 (at the end of 2019) was likely to be greater in real terms (that is, excluding the effects of inflation) than it was when he sold the taxi plates in 2005 and 2006. There was no basis in the evidence upon which the Court could reach this conclusion. The fact that the market price appeared to be higher at the time of trial in late 2009 (although the effects of inflation would have to be taken into account before that conclusion could reliably be reached) provides no sound basis for a conclusion that the market value is likely to be higher at the end of 2019 than it was in 2005/2006. A wide variety of factors would be likely to bear on that question, none of which were addressed in the evidence. THE APPELLANT'S RESIDUAL EARNING CAPACITY (GROUND 8) 28The appellant submitted that the primary judge "did not address the difficulties of the [a]ppellant obtaining part-time employment as a taxi driver, and performing that work to the necessary standard and for the requisite hours" (Written Submissions [24]). The references that the appellant gave in support of this submission were concerned with the ongoing disabilities that the appellant contended that he had. However the primary judge did not accept that the appellant had ongoing disabilities of the seriousness that he claimed and for the reasons that I later give in relation to other of the appellant's grounds of appeal (see [35] - [39] below) there is no basis for interfering with that conclusion of his Honour. Accordingly I do not accept the appellant's submission. CREDIBILITY - DOMESTIC WORK (GROUND 9) 29The appellant's first submission under this head was that the primary judge erred in finding that "there was clear inconsistency [on] the question of who did the lawns and gardens before the accident" (Judgment [28]). However in my view this finding was open to his Honour as the appellant gave evidence that he did the lawns and gardens before the accident and that a gardener was not employed until after the accident (Transcript p 68) whilst his son (Hossam Matar) and wife gave evidence that there were occasions before the accident, albeit few in number, when a gardener had been engaged. 30The appellant further submitted that the evidence and his particulars did not justify the primary judge's comment that: "... The belated evidence of the housekeeper, whose existence had not been divulged in evidence or in particulars until the end of the case was another example of the plaintiff and his family not being frank or forthright about the needs and provision of domestic care" (Judgment [28]). 31In support of this submission the appellant pointed to the particulars in his Statement of Claim but they relevantly refer only to a claim "for moneys paid for lawn mowing, house maintenance and other assistance around the home". In this context, it was open to the primary judge to conclude that this claim did not foreshadow a claim for paid domestic assistance inside the home. 32The primary judge's comment that the evidence of the housekeeper was "belated" was also open to him as she was not called until near the end of the case and previous references in the evidence to the engagement of a cleaner in what seems to have been the 18 months prior to the trial appear to have been in the context of reference to the deteriorating health of the appellant's wife. 33The appellant pointed in this context to references in the appellant's opening at first instance to the appellant deferring calling evidence concerning care and expenditure until the nature and extent of any issues between the parties on this topic became apparent. However, whilst Counsel foreshadowed that he might call evidence from "family members" or further evidence from the appellant, he did not foreshadow that he might call evidence from a housekeeper. 34In these circumstances I do not consider that the primary judge's observations in [28] of his Honour's judgment were unjustified. However even if they did to some extent go beyond what was justified, the observations do not appear to me to have formed such a significant part of his Honour's reasoning that it could be said that that error vitiated his conclusions as a whole. THE DVD SURVEILLANCE EVIDENCE (GROUNDS 10 - 12) 35The appellant contended that the primary judge drew "unjustified conclusions that the DVD evidence showing the appellant driving his car, showed him doing so 'without discomfort' (at [31]), 'without apparent difficulty' (at [33]), having a greater capacity to drive vehicles than he or his family conceded (at [35]) and that he endured driving without anxiety (at [58])" (Appellant's Written Submissions [34]). 36The appellant did not play any part of the DVD to this Court or request that the Court view any part of the DVD for the purpose of reaching its conclusions on the appeal. Nor did he provide by way of submission any compelling reason why the primary judge's conclusions drawn from the judge's watching of the DVD were not open to him. In these circumstances I reject the appellant's submission. 37The appellant further submitted that the primary judge erred in "failing to address the fact that the DVD evidence did not show strenuous physical activity, depicted obvious physical restrictions while the plaintiff was performing gardening work, and at times showed the [a]ppellant exhibiting difficulty in walking" (Ground 11). However consideration of whether the appellant had the various physical restrictions that he described to doctors and in his evidence was the purpose for which the primary judge was asked to examine the DVD. His Honour gave adequate reasons for concluding that the appellant had overstated his disabilities (see for example Judgment [33], [39] and [40]). This sufficiently addressed the appellant's case. The fact that the DVD evidence "did not show strenuous physical activity" is not to the point as whether or not the appellant was able to engage in strenuous physical activity was not in issue in the proceedings. 38The appellant next submitted that the primary judge failed to address the evidence and the appellant's arguments concerning the appellant's ability to elevate his arms. However that was an issue specifically adverted to by Dr Harris who concluded that the DVD captured movements that were inconsistent with the appellant's clinical presentation (see Judgment [63]). The primary judge appears to have accepted this evidence. I do not consider that his Honour was required to descend into any greater detail. LACK OF FINDINGS AND REASONS AS TO THE APPELLANT'S INJURIES AND DISABILITIES (GROUND 13) 39In my view the primary judge made sufficient findings and gave sufficient reasons as to these matters. After describing the appellant's injuries (Judgment [41]) his Honour referred to the appellant's subsequent treatment (Judgment [42] - [49]) and embarked on a detailed description of the medical evidence led by the appellant and respondent, where necessary indicating his preference for the evidence of one doctor over another (Judgment [50] - [65]). ORDERS 40As this Court has not been provided with a copy of the final orders that were apparently made at first instance on 4 May 2010 and as some recalculations are necessary to give effect to this judgment, I propose the following orders: (1) Appeal allowed in part. (2) Direct the parties, if they are able to agree as to the amount of damages recalculated in accordance with this judgment, to lodge with the Court within seven days of the date of this judgment a form of consent order to be made by the Court in chambers. (3) Direct that if the parties are unable to agree as to that matter: (a) within seven days of the date of this judgment the appellant lodge with the Court a submission identifying the orders that he contends should be made to give effect to this judgment, together with submissions in support of that contention; (b) within seven days thereafter the respondent lodge a reply; (c) within a further seven days the appellant lodge any submission in reply to that of the respondent. (4) Order the respondent to pay the appellant's costs of the appeal. (5) Direct the Registrar of the Court to refer this judgment to the Commissioner of Taxation for consideration. (6) The respondent to have a certificate under the Suitors' Fund Act 1951, if qualified. ********** 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. Decision last updated: 22 September 2011