Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Hall v State of New South Wales [2014] NSWCA 154 Hearing dates: 13 May 2014 Decision date: 19 May 2014 Before: Meagher JA at [1]; Leeming JA at [2]; McDougall J at [43] Decision: Appeal dismissed with costs. [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 - personal injury - non-economic loss - proportion of a most extreme case - challenge to primary judge's determination of 25% - applicable principles - Civil Liability Act 2002 (NSW) s 16 Legislation Cited: Civil Liability Act 2002 (NSW), s 5D, s 16 Supreme Court Act 1970 (NSW), s 101(2)(r) Workers Compensation Act 1987 (NSW), s 151G, s 151Z(2) Cases Cited: Berkeley Challenge Pty Ltd v Howarth [2013] NSWCA 370 Clifton v Lewis [2012] NSWCA 229 Coles Supermarkets Australia Pty Ltd v Haleluka [2012] NSWCA 343 Crystal Wall Pty Ltd v Pham [2005] NSWCA 449 Dell v Dalton (1991) 23 NSWLR 528 House v The King (1936) 55 CLR 499 Jopling v Isaac [2006] NSWCA 299 Perpetual Trustee Company Ltd v Khoshaba [2006] NSWCA 41 Warren v Coombes (1979) 142 CLR 531 Withyman v State of New South Wales [2013] NSWCA 10 Wynn Tresidder Management Pty Ltd v Barkho [2009] NSWCA 149 Category: Principal judgment Parties: Sally Hall (Appellant) State of New South Wales (Department of Corrective Services) (First Respondent) State of New South Wales (Department of Education and Communities) (Second Respondent) Representation: Counsel: E Welsh (Appellant) K Stern SC (First Respondent) Solicitors: Federation Law Pty Limited (Appellant) Crown Solicitor's Office (First Respondent) Leslie Hargrave Lawyers (Second Respondent) File Number(s): 2013/00180496 Decision under appeal Citation: [2013] NSWDC 66 Date of Decision: 2013-05-21 00:00:00 Before: Elkaim SC DCJ File Number(s): 2010/00347906 2011/00152206 Judgment 1MEAGHER JA: I agree with Leeming JA. 2LEEMING JA: The only issues arising on this appeal concern the finding by the primary judge that non-economic loss was 25% of a most extreme case, for the purposes of s 16 of the Civil Liability Act 2002 (NSW). The appellant contends for a finding of 40%. Her appeal is as of right, because a finding of 40% would increase the damages to which she was entitled by more than $100,000: Supreme Court Act 1970 (NSW), s 101(2)(r). 3The appellant's amended notice of appeal raises three grounds: (1) whether the finding of 25% of a most extreme case was "outside a sound discretionary range", (2) whether the primary judge adequately explained his reasoning process, and (3) whether the primary judge erred in finding that the appellant would be greatly assisted by the conclusion of this litigation. 4When the appeal was heard, the grounds of appeal were, helpfully, narrowed. The third ground became very much the principal ground, and its gravamen was that there was no evidence to support a finding that the appellant would be greatly assisted by the conclusion of litigation. The second ground was confined to a challenge to the reasoning process underlying the finding challenged by the third ground. The first ground was confirmed to be consequential upon the others. The first respondent tailored its submissions accordingly. 5I propose that the appeal be dismissed. My essential reasons are that there was no error in finding that the appellant would be "greatly" assisted by the conclusion of the litigation, and in any event, on a fair reading of the reasons, the challenged finding of fact played no part in the s 16 finding of 25% of a most extreme case. Background 6In light of the narrow scope of the appeal, it is possible to abbreviate the summary of the five day trial before the primary judge, whose judgment was delivered, promptly, a few days later. 7The appellant was a high school teacher, with a Master's degree in special education from the University of Newcastle, who taught students within schools located within correctional centres operated by the Department of Corrective Services. She was an employee of the Department of Education. In 2007, she was teaching at the George Anderson Walpole School, within the Kariong Juvenile Correctional Centre (Kariong), which is a maximum security institution. 8On 5 November 2007, while the appellant was teaching a class, a fight broke out between two students. The classroom was locked. The teacher's aide pressed the duress alarm, but there was no response for some period of time (she estimated 20-30 seconds). She was not relieved by prison wardens, contrary to her expectations and contrary to a memorandum of understanding between the two departments. Instead, the response took time, and when it came, it was from other teachers rather than Corrective Services officers. 9The appellant was not physically injured during the incident. However, the primary judge found that the appellant had been in a state of panic and distress, had started to bang on the window, and then a table, and had screamed to attract attention. 10The appellant returned to work on the following day. The trial judge found that she was distressed. She attended work again on the day after, but did not last through the morning. She has not returned to work subsequently. 11The primary judge found that the incident caused major psychiatric injury to the appellant, for which the State was liable (a) in its capacity as the appellant's employer and (b) as the operator of Kariong. The appellant commenced separate proceedings against the State in each of those capacities, which were heard together by the primary judge. This litigation has at all times proceeded on the basis that (a) it was open to the appellant to sue the State separately in each of those capacities, (b) the State's liability in each capacity was separately regulated, (c) questions of apportionment arose, and (d) the State was entitled to separate representation, in each respect as if the appellant's employer had been a different legal person from the operator of Kariong. It is not necessary to express any view on the correctness of that approach. 12It was common ground that the State's liability as employer was regulated by the Workers Compensation Act 1987 (NSW). By reason of s 151G, no claim for non-economic loss was available against the State in this capacity. Accordingly, this appeal relates only to the appellant's claim against the State as operator of Kariong. It was also common ground that it was necessary for the primary judge to apportion responsibility for the purposes of s 151Z(2) of the Workers Compensation Act. His Honour found that the State in its capacity as employer was 30% responsible, and in its capacity as operator 70% responsible. No challenge is made to that apportionment. 13The claim against the State as operator of Kariong was governed by the Civil Liability Act 2002. No damages may be awarded for non-economic loss unless its severity is at least 15% of a most extreme case: s 16(1). For more severe injuries, the statute prescribes a sliding scale, described in Berkeley Challenge Pty Ltd v Howarth [2013] NSWCA 370 at [5]: "Damages for non-economic loss are required to be assessed as a proportion of a most extreme case: Civil Liability Act 2002 (NSW), s 16. Non-economic loss assessed at less than 15% of such a case cannot be compensated: s 16(1). An assessment between 15% and 33% gives rise to an award on a scale increasing from 1% to 33% of the prescribed maximum amount. The trial judge assessed the severity at 33% of a most extreme case, thus permitting an award of 33% of the maximum amount, being $171,500. The appellant submitted that this assessment of severity was disproportionate and that the proper figure should have been in the order of 25%. Because of the tapered scale, the result of such a variation has a disproportionate effect on the award. An assessment of severity as 25% of a most extreme case will give rise to an award of $33,780, being a reduction of $137,720. Thus, the effect of the taper is that a variation from 33% of a most extreme case to 25% gives rise to an 80% reduction in an award." 14By the end of the trial, it was common ground that the appellant's injury was at least 15% of the most extreme case. The State submitted that it was 15% of the most extreme case. The appellant submitted that it was 40% of a most extreme case. The dispositive paragraph of the reasons of the primary judge on this issue, which the appellant challenges, is [113]: "In relation to non-economic loss I think the plaintiff's assessment of 40% of a most extreme case is too high and is even outside "the range". I think DCS's suggestion of 15% is below the range. I do accept the plaintiff's life has been significantly affected, that she has been unable to work and she spends most of her time in a depressed mood without the motivation to carry out even basic tasks. On the other hand she is not entirely without a sense of humour, she is able to travel, to go out and to interact with her children. She is having intensive treatment but she has not been hospitalised nor is there a suggestion of that occurring in the future. In my view 25% of a most extreme case is appropriate. This equates to a figure of $35,000 under Section 16 of the CLA." 15Earlier in his reasons, the primary judge had referred to the facts that the appellant had consulted a general practitioner in December 2000 for depression (arising from in-fighting amongst her daughters and her disquiet with the cold weather in Orange) and again in 2005 (arising from strained dealings with a fellow teacher). On the second occasion, the appellant was prescribed anti-depressant medication and continued working at the school with the other teacher. The primary judge said that: "the strains between them were managed, it would appear, by mutual avoidance. The plaintiff did however maintain a good deal of anger arising from this situation which has played a part to the present time." 16The primary judge summarised the psychiatric evidence in some detail at [67]-[90], over eight pages. He said that the appellant first commenced seeing Dr Butler on 18 February 2008, but the appellant lost confidence in him and commenced seeing Dr Short in May 2009. Dr Short found (in a report dated 28 April 2010) that the appellant was suffering from a post traumatic stress disorder, but added: "but the picture appears to be complicated by her personality style which demands her to be strong, confident and uncomplaining. She is full of anger at a fellow teacher with whom she had difficulties, the principal who took no notice of her complaints, the correctional officer who failed to protect her and most of all with herself for being weak and out of control." 17The appellant also saw Ms Gjerdrum, a psychologist who was consulted by the appellant in 2005 when having difficulties with a fellow teacher. She recorded excessive side effects to anti-depressant medication and that she preferred to rely on an exercise program and sessions with a psychologist. She observed that the appellant: "remains extremely unwell, with poor presentation and diminished capacity to perform even simple routine self-care activities. She is unable to return to her previous occupation of teaching and is currently too unwell to perform alternative work activities." 18Dr Short and the psychiatrist called by the State, Dr Champion, each gave oral evidence. In particular, the primary judge dealt with the interrelationship between the psychiatric consequences of the incident in November 2007, and the ongoing anger as a result of the appellant's interaction with the other teacher in 2005. The primary judge found that the anger played "a greater part in her ongoing condition than she admitted in evidence". Nevertheless, his Honour found that it was not a factor in the development of her PTSD and the symptoms from which she continued to suffer. The primary judge found, accordingly, a causal connection which satisfied s 5D of the Civil Liability Act, and concluded at [74(d)]: "The anger concerning the other staff member does play a part in the appellant's ongoing symptoms but it is minor. The defendants conceded that the part it played should not produce any reduction in damages." 19Dr Champion, called for the State, expressed a different view. However, the primary judge preferred Dr Short's opinion, principally because it was the product of a very long-term course of treatment, contrasted with the one consultation the appellant had had with Dr Champion. 20The primary judge recorded that: "There was almost no cross-examination of the plaintiff's complaints about her condition since November 2007. She was not challenged about her feelings of anger, despondency or lack of motivation. She was not challenged about her failure to socialise or interact with her family and friends." 21The primary judge summarised the appellant's evidence as to her general mood being very low, which he said: "was reflected by the manner in which she gave evidence in the witness box. Her tone was flat, she was quietly spoken and sometimes tearful. I have no reason to doubt the sincerity of her demeanour." 22The primary judge recorded that the appellant's sleeping problems were now under control (through the use of Temazepam and Xanax), that many anti-depressant medications had failed due to their side-effects, that she was often frightened and startled, cried easily and could not participate in normal social contacts due to an overwhelming sense of "not being bothered". His Honour said: "The compelling impression I had of the plaintiff was that she simply could not summon the energy to go about the tasks, whether at work or at home, that she participated in prior to the incident." 23The primary judge recorded that there were occasions (shopping with her daughter or attending a party) where she could appear happy but that she felt like a "wind up toy". She described feelings of anger and agitation combined with feelings of guilt because she had not recovered. She said she had a "terrible" relationship with her husband. 24On the point that assumed importance in light of the grounds of appeal, both the appellant and Dr Short gave evidence about the effect of the litigation. 25The appellant accepted in cross-examination that the case had been a burden upon her "in the sense that it's been something that's causing you anxiety". She agreed that "that anxiety [had] increased, the closer the case approached". However, she maintained that once the case was concluded, it would not be possible to enhance her quality of life. 26Dr Short gave evidence, in chief, about the effect of the litigation: "[S]he has absolute horror of this whole procedure. She sees herself as being a bludger; she doesn't like being in court; she doesn't see litigation as being right; she sees it being a weakness and she should get better herself. She's hugely motivated by, to get, to not be here and to get better." 27Understandably, Dr Short was not cross-examined on that evidence. Consideration (a) Applicable principles 28The starting point must be the principles applicable to a challenge on appeal to the finding of 25% of a most extreme case. Contrary to what was common ground between the parties, the better view is that s 16 calls for no exercise of "discretion" such that its review is governed by the principles of House v The King (1936) 55 CLR 499. As much appears from the language and structure of the provision. Section 16 does not confer a discretionary power. Instead, it imposes an obligation to determine the severity of the appellant's non-economic loss and to do so by reference to a proportion of a most extreme case. 29The purpose is to replace the former process of awarding a money sum by way of general damages by an obligation to evaluate the severity of the non-economic loss by reference to a proportion of a most extreme case. That proportion is, by the operation of statute, translated into a monetary amount. The appellant advanced, or came close to advancing, the submission that the Court should look through s 16 and approach the exercise by reference to the dollar amounts which correspond to the various percentages. That submission is readily rejected. To adopt it would be to subvert the statutory scheme and would be legally erroneous: Clifton v Lewis [2012] NSWCA 229 at [57]. 30The position was described by Basten JA in Berkeley Challenge at [13]: "The importance of the distinction is that the assessment of general damages, now being reduced by statute to a determination of the severity of the injuries as a proportion of a most extreme case, involves no translation of pain and suffering into a cash payment, but is rather to be compared with the assessment of the restrictions imposed by the injuries on the plaintiff's pre-existing earning capacity. On this approach, the assessment of non-economic loss is not to be seen as analogous to a discretionary judgment, but rather to be subject to the general principles for appellate review articulated in Warren v Coombes. That means that if the appellate court's assessment of the facts satisfies it that the conclusion reached by the trial judge is erroneous, it should not shrink from substituting its own opinion for that of the trial judge. If that conclusion permits of a higher level of intervention in respect of such awards, that is because of the significant change which has been made from the common law principles governing general damages. 31It is true that some authorities in this Court refer to s 16 as involving an exercise of discretion: see for example Berkeley at [79] and Coles Supermarkets Australia Pty Ltd v Haleluka [2012] NSWCA 343 at [32]. However, those authorities do not go so far as the parties to the present appeal ventured, which was to accept that House v The King error needed to be established. What those authorities do clearly establish is that the determination is "neither scientific nor normative" and is "not readily susceptible to appellate review": see Crystal Wall Pty Ltd v Pham [2005] NSWCA 449 at [49]; Wynn Tresidder Management Pty Ltd v Barkho [2009] NSWCA 149 at [110]-[111]; Withyman v State of New South Wales [2013] NSWCA 10 at [146]. That is plainly so. The key to the meaning of the description of the task as "discretionary" may be seen perhaps most clearly in the often cited proposition in Dell v Dalton (1991) 23 NSWLR 528 at 533 that the assessment involves matters of "opinion, impression, speculation, and estimation". I respectfully agree with McDougall J's observation that "to say that a determination of non-economic loss involves more art than science might be to overstate the degree of logic and precision with which such an assessment is performed": Jopling v Isaac [2006] NSWCA 299 at [24]. Nevertheless, while fully acknowledging its inevitable imprecision, the task remains conceptually distinct from the exercise of a discretionary power, and its review on appeal is subject to different principles. 32The primary judge was not called to exercise a discretionary power, but instead had to make a finding of fact, namely, the severity of non-economic loss by reference to the proportion of a most extreme case. Ordinary principles of appellate review apply to that finding. That said, the intrinsically imprecise nature of the statutory task will have the effect that in many if not most cases, nothing will turn upon the different formulation of the applicable principles of appellate review. In this respect, the position is as stated by Spigelman CJ in Perpetual Trustee Company Ltd v Khoshaba [2006] NSWCA 41 at [40]: "Where, as here, the first statutory step is clearly a finding of fact, albeit one involving a broadly based value judgment, it may be that the Court should invoke the principles reflected in Warren v Coombes (1979) 142 CLR 531 rather than in House v The King. Nevertheless, in most cases it is unlikely that the different tests will lead to different results." 33This is such a case; nothing turns on the precise test to be applied in order to reject each of the grounds raised by the appellant. (b) Error in finding that appellant would be "greatly" assisted by the litigation ending? 34The primary judge, at [115], after dealing with non-economic loss and expressly for the purpose of calculating future out-of-pocket expenses, found that compensation should be awarded based on a further 10 years of treatment. No challenge is made to that finding, which was supported by the evidence. One of Dr Short's reports in 2010 included that he would anticipate treatment continuing "for perhaps the next 10 years". In 2012 Dr Short said she would require "very long-term psychotherapy" and imagined that she would continue to see him and a psychologist for a further five years. 35In the course of dealing with this head of damages, his Honour said: "There is no doubt, however, both from the plaintiff's evidence and that of [Dr Short], that the conclusion of legal proceedings will greatly assist the plaintiff in dealing with her predicament. As Dr Short said, it is unusual for there to be such intensive treatment over a long period of time." 36The appellant says that that finding is plainly wrong, and that it may be inferred that it influenced the finding of 25% of a most extreme case, since it is located only two paragraphs beyond it, thereby entitling this Court to redetermine the matter. I respectfully disagree. 37First, the finding is not plainly wrong. To the contrary, it is supported by the evidence. As noted above, the appellant herself acknowledged the increasing anxiety she had felt as the hearing approached. True it is that the appellant denied that it would be possible for her to enhance her quality of life once the case was over, but it was open to the primary judge to discount that (necessarily speculative) evidence, especially in light of the evidence of Dr Short, about her "absolute horror" of the litigation. Further, it is evident from the transcript that when giving evidence in chief, the appellant became tearful. Added to the testimonial evidence is the obvious advantage enjoyed by the primary judge to make a finding such as this, which is implicit or explicit in many of his findings (the way she gave evidence, the "compelling impression I had of the appellant", and, perhaps, the statement that "she is not entirely without a sense of humour"). 38The appellant confirmed that no challenge was made to the finding that the end of the litigation would assist her; the challenge was confined to the finding that she would be greatly assisted. But that was an evaluative conclusion supported, in particular, by Dr Short's evidence extracted above, and to which this Court must give considerable deference to the primary judge who saw her give evidence. 39Secondly, even if the finding were wrong, it did not undermine the finding of 25% of a most extreme case. The structure of the reasons of the primary judge provided no support for any such inference: his Honour having dealt with non-economic loss had passed to a different head of damages. Indeed, the premise of the calculation of future out-of-pocket expenses was the existence of some continuing psychological condition requiring treatment. In short, there is nothing in the paragraph which looks forward to a finding not yet made in order to inform the conclusion of 25% of a most extreme case. For that further reason, this ground is not made out. (c) Failure to give reasons? 40The appellant in oral address confined this ground to the inadequacy of reasons for the first sentence of [115]. For the reasons set out above, the finding of 25% of a most extreme case is independent of the finding for which reasons are said to be inadequate, and the finding is in any event sound. This ground cannot advance the appellant's position, and it is accordingly unnecessary to say anything more of it. (d) Finding of 25% of a most extreme case outside a sound discretionary range? 41As noted at the outset, the appellant conceded that this ground was derivative upon the principal grounds advanced; accordingly, it is unnecessary to say anything further in relation to it. Orders 42For those reasons, I propose that the appeal be dismissed. There is no reason for costs not to follow the event. 43McDOUGALL J: I agree with Leeming JA. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 19 May 2014