Battaglia v Mason
[1996] QSC 81
•17 April 1996
IN THE SUPREME COURT
OF QUEENSLAND
No. 61 of 1987
[Battaglia v. Mason & Ors]
BETWEEN:
STEFAN BRUNO BATTAGLIA
Plaintiff
AND:
MYRNA ANN MASON
First Defendant
AND:
ANDREW JOHN SPILLER
Second Defendant
AND:
NORCO CO-OPERATIVE LIMITED
Third Defendant
JUDGMENT - DERRINGTON J.
Delivered:17 April 1996
CATCHWORDS: Damages - Quantum - property developer - Fifty years of age - closed head injury with cerebral oedema - fractured mandible - fractured left zygoma and orbital floor - laceration of small bowel mesentary - laceration of sigmoid - colostomy for two years - marked depression - impairment of concentration - capacity for decision-making reduced - loss of earning capacity - Award $676,427.71 - Pain and Suffering $75,000.
Contributory Negligence - not wearing seatbelt - whether causal influence on injuries.
Counsel:Mr C. Jensen for the Plaintiff
Mr R. Hanson QC for the Defendant
Solicitors:Rogers Matheson Clark for the Plaintiff
Clayton Utz for the Defendant
Hearing date : 12-18 March 1996
IN THE SUPREME COURT
OF QUEENSLAND
No. 61 of 1987
[Battaglia v. Mason & Ors]
BETWEEN:
STEFAN BRUNO BATTAGLIA
Plaintiff
AND:
MYRNA ANN MASON
First Defendant
AND:
ANDREW JOHN SPILLER
Second Defendant
AND:
NORCO CO-OPERATIVE LIMITED
Third Defendant
JUDGMENT - DERRINGTON J.
Delivered 17 April 1996
The plaintiff was born on 2 January 1936 so that at the date of his accident on 21 August 1986 he was fifty years of age and is now sixty years. He came to Australia from Italy in about 1955 and engaged in manual work until he set up his own business as a builder and subsequently a developer. In 1971 he married a Peruvian lady thirteen years his junior and they have a daughter who is now twenty-three years and twin sons aged twenty-two years.
In the relevant accident he was a passenger in one of two vehicles involved in a collision for which the first defendant admits liability but claims contributory negligence against him, alleging that he refused to wear his seat-belt despite her request of him to do so.
DAMAGES
The evidence touched on many topics some of which affected more than one issue. On the plaintiff's side it was often very unsatisfactory and sometimes insufficient; but in fairness this should not be attributed to any fault of counsel, who had serious difficulties with his instructions. In some areas the court was left without any reliable evidence sufficient to reach a reliable conclusion and it became necessary to seek alternative and less adequate solutions.
Although the plaintiff has no recollection of the event, the accident was very violent and his injuries were serious and extensive, putting his life in danger. A broad catalogue of his injuries is as follows:
| Closed head injury with cerebral oedema; Fractured mandible; Injury to left thumb. |
His head-injury rendered him unconscious for a short period but there is a suggestion that he was able to walk when he entered hospital. The contusion to his brain caused some swelling and his wife says that he was unconscious for twenty days, but there is no indication in the reports of any such prolonged unconsciousness or of any crisis in this respect. It may be that after his admission to hospital he relapsed into unconsciousness for some days for there is some evidence of it in the reports. For several reasons Mrs Battaglia was not a reliable witness but in this matter she may also have been very distressed by her husband's serious condition and sorry appearance and may have mistaken a heavily sedated condition for unconsciousness. He told some doctors that he regained consciousness slowly, but he would not have been able to distinguish whether that was the result of heavy sedation. It makes no difference to the result but it has been necessary to advert to this claim as to his state at the time if only to show that it was not overlooked.
On his admission to hospital he had bowel surgery, including a colostomy which continued for about two years; and a tracheostomy was inserted. He subsequently had a number of facial and dental operations and even yet needs further surgery to his nose and ear. While in intensive care he had pneumonic changes and pneumococcus and staphylococcus infections. After a later operation he also contracted meningitis.
He was discharged from intensive care after eleven days and his convalescence was reasonably uneventful until his discharge from hospital about five weeks after the accident. He was subsequently readmitted for eleven days with a chest infection.
Although his colostomy continued for longer than expected, his bowel surgery has been very successful so that he now suffers only from some minor intolerance to certain foods. He also complains of bowel incontinence, but this is not a result of his injury and is probably due to occasional over-sedation due to excessive consumption of inappropriate medication. He is left with extensive and noticeable scarring of his abdominal region that is clearly permanent and of some embarrassment to him.
His facial injuries also responded very well to surgery so that, except for some flattening of the left cheek-bone, which is not particularly noticeable otherwise than on specific examination, his face bears no noticeable disfigurement. There are fine pale surgical scars, generally indistinguishable from skin creasing due to age, and a more noticeable scar under his chin is largely hidden by its location.
For some time he complained of pain in the back and right leg, but this has not been repeated during recent medical examinations and the appearance of his activity in walking and lifting while under secret video surveillance confirms that this is no longer a problem.
There is a bundle of relatively minor sequelae. He complains of diplopia, but this has largely disappeared and represents a loss of five percent of efficiency of his visual system. Two neurologists were unable to detect it at all and he is able to drive a car. There is some minor pain and stiffness of his neck, tinnitus in both ears, some deafness in one ear that is amenable to surgical improvement, head-aches with a feeling of pressure in his head, occasional difficulty with swallowing for which no organic cause is discernible, and some loss of smell and taste. It is difficult to assess the true degree and endurance of these symptoms because they are probably amplified by his depressive state which, however, could be treated, and because of the strong appearance and likelihood of exaggeration in his description of them.
Part of that exaggeration may itself be the result of his general anxiety and his desire for sympathy from his family, but there also appeared to be deliberate elaboration for the benefit of the Court and, it would seem, the medical witnesses who examined him for the purpose of the litigation. Proper allowance should be made for the effects of the stress of litigation and the effects of inappropriate medication on him; but even then there were signs of deliberate manipulation and inconsistency of behaviour, and there was undoubtedly a deliberate withholding of evidence the extent of which was indeterminable. It is not possible to apportion these factors adequately.
His injuries and their consequences have left him vulnerable in certain respects. He has a mildly increased rate of chest infections and occasional body rash caused by staphylococcus infection. There may be a slight risk of the recurrence of his meningitis, but this is very doubtful. There is also a similarly slight risk of epilepsy from his brain injury. It is said that some of these and other risks consequent upon his mental state, which will be discussed shortly, will have decreased his life-expectancy by about five years; but this assessment was based, among other things, on a flawed understanding of his intellectual status. For the purpose of damages, these factors should be treated as slightly increasing his vulnerability to earlier death, but not more.
The principal issue is the nature and degree of his intellectual and psychological impairment resulting from his injuries. It is in this area that his and his wife's manifest unreliability as witnesses causes the greatest difficulty, for contrary to the acceptable evidence it is alleged that he has been reduced to the level of a mental defective with marked mood swings and substantial irrational behaviour from time to time. These are said to deprive him of all earning capacity, which would follow if the premises were true. Her evidence on this subject was delivered with passionate intensity, even in self-contradiction. Consistently with this misrepresentation, his evidence was marked by slowness of response, ostensible incomprehension and emotional histrionics.
This all involves a complex combination of factors which have already been discussed. However he certainly suffers from depression of a marked order. On the evidence this may be substantially of psychological origin, which would not be surprising in the circumstances. He was a fifty-year-old man with a youngish wife and young children to support in the manner that he wished. Although only modestly educated, he had worked hard and successfully to amass a business with a sizeable fortune which he may well have perceived as establishing his high status within his family and social group. He then found himself critically injured and seriously disabled for some time, putting in doubt his ability to continue his career and to maintain his status. His physical traumas included serious head injury and, he believed, a significant period of unconsciousness. He was required to undergo a number of operations causing further pain and discomfort and he had to put up with a colostomy bag for two years. Because to that time his success as a provider depended on his physical and intellectual fitness, he was clearly vulnerable to concern as to the threat to his capacity to continue in that role. He probably reacted badly, unhelped by his wife's emotional response to the situation, including her excessive bestowal of care and solicitude on him. There must also be a suspicion that in part he uses his condition to demand attention and fortify his authority within his family.
While it is far removed from the state that he and his wife describe, it is fairly clear that his reaction has been so severe as to disable him from enduring any prolonged stress associated with property development without a partner, and he has lost some endurance and, in difficult situations, decisiveness. It is also reasonable to expect that this general condition of disability in turn adds to his depression. However, this state is not constant nor impervious to amelioration by suitable treatment
Unfortunately he refuses to accept it and on the contrary his consumption of inappropriate drugs is probably harmful to his condition. These aberrations are probably contributed to by the condition itself, but even with allowance for that he is capable of making a rational decision on them and his response is not reasonable. While his condition is not nearly as bad as he claims, he would still benefit from treatment. A serious state such as he claims might predicate an irrational refusal, but it is known from other evidence that his condition is not nearly as bad as that.
His vulnerability to stress may also be manifest in his response to the present litigation, because of both the magnitude of his claim and the reminder of his past suffering. This is to acknowledge that some of his lability, distress and inappropriate response in the witness box was genuine and some was due to excessive and harmful medication that he probably took to try to counter the stress of the trial; but this is not characteristic of his ordinary state, nor was it all genuine. Absent a full and true account of relevant information and a careful scrutiny of his claims, the genuine component of his behaviour would tend to mask his deliberate exaggeration. This deception increases the inherent difficulty in the assessment of his damages. For example, while he does suffer from depression, other evidence shows that it does not prevent him from leading a reasonably comfortable and active life. He divides his time between Sydney, the Gold Coast and Argentina, in all of which he has property, friends and, in some cases, relatives.
His business activities are also revealing. In Argentina between 1990 and 1993 he took advantage of his supply of hard currency to make advantageous purchases of houses, commercial premises and a hardware business, and he is obviously in control of their general management. There is good reason to believe that he was also responsible for the decisions behind their acquisition. They appear to have the potential to be proved to be sound investments, and his original concealment of them from the court and later withholding of full details of their earning power and value mean that the evidence deprecating their suitability as investments should be scrutinised carefully. It is most unconvincing.
Though when he is in Argentina he participates in the daily conduct of the hardware business and is present for most of the working day, he probably leaves its ordinary management to a relation, subject to his overall supervision and policy control. Because of obvious difficulties attached to the covert surveillance that it conducted, the defence could not prove that he was placing orders for stock for the business with a supplier's representative when he was caught on camera, but he appeared to be engaged in business-like discussion with that person. His own evidence and that of his wife manifestly cannot be relied on about these things, for it is difficult to discern where the truth begins. The result is that he has not established that he is incapable of transacting such business.
At one time he contemplated developing the premises where this business is conducted and though he did not proceed, this shows the extent to which he actively exercises control and makes important decisions, including the contemplation of development works. It is said that this is but a manifestation of his irrationally optimistic periods, but at best it may have been a sound commercial enquiry with his knowledge that he could perform or at least arrange the project; and at worst it was probably no more than fantasising, the result of frustration with his incompetence to do it. On such occasions of alleged irrationality, he seems always to have taken the correct decision in the end. If they were flights of fancy, they seem to have been no more than temporary emotional aberrations, and do not detract from the strength of the decisions that he finally took. Alternatively, the inference is reasonably open that he has a capacity that, if not up to, is temptingly close to carrying out the development alone, or that he is able to do so with a partner. His known deception in his evidence causes immense problems in reaching any reasonable conclusion on these issues, even with a sympathetic appreciation of his serious injuries.
Much the same picture emerges from his dealings in Australia since the accident. In about 1989 in what would seem to have been a well-judged transaction he sold off the balance of the substantial Mardi Gras development at Surfers Paradise which his company had retained for some years to that time. He investigated the prospect of putting together another amalgam of properties for development in the same street but decided to proceed no further. And for one of his companies he acquired other land at Vista Avenue, Surfers Paradise for a price of $3,637,790.00. There was no demonstrably valid criticism of any of these activities and the financial progress of his group of companies would strongly suggest that none is available. This will be analysed later. While criticism was offered, it was not supported by any evidence that would be expected to be available if it were justified.
There has been even more complex activity. In 1988 he arranged for development and building approval for alterations to existing units owned by his company at Abbortsford and in 1995 he arranged for them to be carried out. In about 1990 he purchased land at Blacktown to be developed in the course of time with two other joint venturers. This has not yet proceeded but there is no satisfactory explanation for the delay and it is consistent with their waiting for a favourable economic climate. Again in 1995 he arranged for development and building approval for landscaping and fencing of his property at Gymea Bay and had that work performed. In that year he also instituted development potential enquiry into property in Bronte.
In some transactions he went even further. In November 1990 he arranged for development approval plans and costing of a development of eight town-houses at Karimbla Road, Miranda which had been acquired by his companies prior to the accident. In April 1992, he arranged for concept plans to be developed for a possible purchaser of the site, and later in that year had various feasibility studies prepared relating to the development. However, he did not proceed with the development but sold off the site, which had been purchased in 1984 for $97,000, for $530,000.
In her evidence his wife said that at the time when he was contemplating developing the site himself she thought that he might be capable of doing so, but that it was a vain and unrealistic hope. Up to a point this is probably correct though not in the way she meant, for she tried to convey the message that his condition doomed the attempt to hopelessness. As it turned out he was probably not up to developing a site alone, but he was, and is, not far below that level so that it was reasonable for him to contemplate it. This picture is consistent with the history of his involvement in this project. It is also consistent with the quantity and quality of the other investment activity and developmental enquiry and arrangements he has engaged in. It is not consistent with the defective and disabled state that he and his wife have presented to the court and to the medical witnesses.
It was suggested by Mr Naylor, his architect, that he was uncharacteristically hesitant and indecisive about proceeding with that development and that in his pre-accident condition he would have done so without hesitation because the feasibility study showed a profit of about $540,000 over and above a land value of $520,000. This, it is said, demonstrates a lost opportunity for profit as well as a marked deterioration in his personality and capacity..
There are a number of flaws in this reasoning. Although it was genuine, the figures in the study were not assured, particularly the estimates of real estate agents as to the prospective sale prices of the units in the development; and the components and results of the study itself varied from one edition to another. Moreover, the plaintiff was already engaged with his brother Paulo in a development at Hurstville which was a burden on the group's resources. It may also well be that its lack of assured prospective profits caused him to hesitate to undertake any other venture at that time in any circumstances. Finally, it may also have been a reasonable commercial decision to have seized the certainty in uncertain times of the profit to be derived from the sale of the site and to have the benefit of the use of the liquid capital rather than to tie up both that asset and the further capital necessary to finance the development.
One other flaw in the reasoning is to draw a general proposition as to his condition from a particular occasion, for there may have been temporary factors exacerbating his depression at that time. This having been said it might also be added that although there must be serious doubt, it should be held on the balance of probabilities that without further treatment he is vulnerable as the result of his depression to stress in some circumstances; but in particular cases the possibility of other explanations should not be disregarded.
These hypotheses, necessary because of the insufficiency of the evidence, are reasonably open on the evidence that was produced and no less compelling than the inferences advanced by the plaintiff. There are also other factors. Had there been such clear potential profitability for the plaintiff as is suggested for this venture, it was open to him to enter into a partnership for it as he had already done in respect of two others by that time. The absence of a full and reliable explanation of these matters throws into considerable doubt any inference favourable to the plaintiff's case.
Notwithstanding these matters, it is also likely that his condition did contribute to his hesitation to proceed with this development and reduced his opportunity to earn greater profit for the group than was in fact obtained. However it cannot be said that his hesitation was misplaced, that he would ever have undertaken it even if he had not been injured, that it would have proved to be profitable, or that his decision to sell was not the best one. His proof of its profitability could have been discharged simply by leading evidence from the developer who actually executed it. That was not done despite its obvious benefits to his case.
Unfortunately this is typical in this case of his reliance upon equivocal inferences from selective and incomplete evidence. Acknowledging this in part, his learned counsel abandoned reliance on such specific transactions and turned to arguments drawn from the overall capital growth of the group over many years. That will be dealt with later.
To return to the plaintiff's post-accident activities which reveal his residual capacity, it is necessary next to look next at the development he undertook at Hurstville in partnership with his brother and their respective wives. His brother undertook the construction work and the plaintiff provided the land and capital and participated in the planning of the development. The suggestion that his contribution was inept and costly has no persuasive support at all and should not be accepted. Further, the proposition that the venture will produce no profit is premature on the available evidence, which goes no further than confirming what is generally known, that is, that the present real estate market is very weak. That, of course, may have been in the plaintiff's mind when deciding to sell the Miranda site rather than proceedings with its development. There is no evidence of any weight to suggest that this development would have been more successful if the plaintiff had not been injured in the accident and had carried out the development alone. His brother is an experienced builder and they had worked together in earlier years.
These are but a few of the considerations which show that the only relevant inference from this transaction is that the plaintiff is capable of engaging in reasonable commercial transactions of this kind though he may himself be disabled from undertaking the strain of carrying them out alone. The arguments that have been advanced tending to detract from the value of the enterprise seem designed only to distract attention from the important fact of his real capacity.
There is more. On 7 September 1994 on behalf of his group he sold four adjoining blocks of land at Urunga Parade, Narranganah, producing a capital profit of $868,000. These had been purchased prior to the accident as stock for the group's development business. He did not proceed with this development himself and his disposal of the land might be seen in part as related to his incapacity; but it seems to have been a special sale and it is not seriously contended by evidence that it was not a proper commercial decision. However, the plaintiff's capacity to engage in transactions of the complexity and size of this sale is demonstrated once more.
This is quite contrary to the convincing impression which he gave the medical witnesses and to the results of their testing. In particular, he has been doing what Dr Cull said (Dep. 133/35) he was not capable of doing, and his capacity exceeds that revealed by Dr Walsh's testing. In fairness to those gentlemen it should be remarked that when they saw him he was probably seriously stressed by the occasion of a medico-legal examination with its reminders of his trauma and loss; and perhaps he was also genuinely confused to some extent by his excessive consumption of inappropriate medication taken to relieve his anxiety. They were also misinformed as to the extent of his activities. They accepted uncritically his and his wife's accounts that his life-style consisted of substantial inactivity about his home and garden, and that was probably consistent with the state in which he presented himself to them.
The substantially true position was stated by Mr Naylor, his architect, who had dealings with him both before and after his accident. His account seemed frank and fair, allowing for some natural sympathy towards his old client's cause. He described the plaintiff's dealings with him as "reasonable" though in respect of one matter he said that a lot of the plaintiff's ideas for solutions to problems had to be modified by Mr Naylor himself; and he suspected that that sort of thing would not have happened before the accident. He also said that in discussing instructions on another matter the plaintiff appeared "quite normal". He also added that by comparison with his bright and animated disposition before the accident, the plaintiff now seemed lethargic, which is consistent with his depression and perhaps the effects of his medication.
The last dealing between them in 1995 concerned the Abbotsford development which apparently caused the plaintiff considerable concern and indecision. Unfortunately on the evidence it cannot be said whether that was justified or not but it created stress which would have taxed him in his present state. Speaking of their meeting on that occasion, Mr Naylor said: " . . . Stefan came to my office and we talked about it again and he really couldn't concentrate on the conversation, he kept wandering away and going back over past history. I told him, look, not to worry about it, I would put a little sketch together for him and . . ." When saying "wandered away" he meant mentally wandering away.
Although the plaintiff's state of medication and other factors are not known this anecdote is of some value. It is an example of his response to the stress on that occasion and is probably indicative of what might be expected from time to time when he is under heavy stress, consistently with his depression; but it does not mean that it would always be so troubled for he seemed to be capable of making other decisions of importance without evidence of a similar reaction. It has however contributed to the view expressed above that the anxiety and stress of undertaking a development alone is probably beyond his capacity. In any event, he later made an apparently valid decision on this matter and carried it through.
The conclusion from the discussion to this point is that although the plaintiff has probably suffered some loss of his earning capacity he can and does engage in a variety of serious but less stressful business affairs. These include investing the capital of his group in land and businesses and participating in development ventures jointly with other parties. As for the former, his decisiveness may well be somewhat reduced though it is difficult to determine whether this is productive of loss. As for the latter, his capacity to contribute is limited to the investment of capital by his group, the selection of suitable land and the provision of ideas and opinions in the planning and execution of the project. Naturally this limitation would reduce his earning capacity in this direction.
The assessment of damages for the latter component is further complicated by the difficulty in knowing the profitability, if any, from the developments that he might have undertaken if he had not been injured, and in resolving the cognate question as to the amount of his remuneration and dividends from the group flowing from his services. Further as an offset to any benefits that were lost in this way, there must be an allowance for the benefits actually received that would not have been received in those circumstances. For example, if the group had been engaged in development projects requiring the use of its stocks of land and its other capital, those assets would not have been available to allow the plaintiff to engage in the investments which he has profitably made. Even the value of these off-setting factors is impossible to determine with any suitable precision.
Unfortunately the answers to all of these issues are speculative in ordinary circumstances, but here they are the more so because the evidence is inadequate or unreliable for one reason or another. In addition to the usual difficulty of anticipating the future for the relevant post-trial period, there is for example a dearth of reliable evidence as to the profitability of the industry in the last ten years since the accident.
Perhaps there is good reason for that. At the time of his accident, the plaintiff was not actively engaged in building and had not done so for over four years, that is, since the end of the Mardi Gras building project in 1981. The group had been obliged to retain and manage it as a business, apart from the forced selling off a few units to reduce its commitments. It did not sell the balance until 1989 when, after a period of notoriously high interest rates and inflation and a turnaround in the market, it became profitable to do so. Because of its financial commitments that had forced a partial sell-off in 1982, it is highly improbable that the group could have undertaken any serious development projects until after the sale of the balance. Moreover, as the difficulty in selling Mardi Gras would indicate, the market did not support new development projects for at least some years.
The profitability of the industry since then is not satisfactorily established. Mr Jackson commented that although the real estate market has been poor for some time, some developers have continued to develop properties. He put the best view for the plaintiff, namely that this would not have happened unless they were making money. That of course is not necessarily true in every case, and even where it is true the extent of profitability is unknown. The need for a cash-flow to pay for plant and equipment and the desire to keep a workforce intact could induce developers to enter into contracts with small profit margins at the best, and, at the worst, losses in the event of adverse contingencies. Further, recent low inflation would have defeated any hope of repetition of the factors which assisted the plaintiff's group to a substantial, if belated profit, from the Mardi Gras development.
The only acceptable factual evidence unfortunately tends to support this negative view. While it is too early to discern the profitability of the Hurstville development, present indications suggest that any profit will be small. The development of the Blacktown land purchased by the plaintiff and two partners in 1990 has not yet proceeded, and in the absence of any better explanation this leaves open a strong suspicion that the reason is the unfavourable economic climate. The plaintiff decided against proceeding with the Karimbla Road development, though this may have been due to his own incapacity, but there is no evidence the purchaser of the site was able to develop it at a profit. The land at Vista Avenue which was purchased since the accident has been neither developed nor sold for development. These pointers attain greater relevance in the absence of reliable contrary evidence directly showing the profitability of the business during this period when, at least in part, the recession is notorious.
Although his learned counsel wisely did not rely on it in his submissions, the plaintiff and some of his witnesses stressed and tried to draw inferences from the profit of $3.3 million derived from the sale of Mardi Gras, but this is misleading. It does not take proper account of interest paid nor of the cost of capital tied-up over a long period of time; and in the calculation of the profit the land was valued at its original purchase price rather than its value as at the date of the development. If it had been bought as stock years before the development and had had the benefit of years of serious inflation, this could distort the picture of profitability. Moreover, as it has been observed, the profit became available only after a further period of high inflation during the retention of the developed asset for several years until the market became favourable.
Recognising the frailty of argument dependent on the evidence relating to these individual matters, again learned counsel for the plaintiff astutely avoided it and sought comfort in the large picture by reference to an interpretation of the financial papers of the group that show a $6 million surplus of assets over liabilities as at the end of the 1993 financial year. He correctly says that this is the end result of the plaintiff's conduct of the business over twenty years. Therefore, he says further, the average annual net increase in surplus is $300,000, since the business was brought up to that position from nothing.
So far as it goes, this is certainly true on its face and full credit must be given for it, subject only to an understanding of the complete history of the matter. As revealed in ex.42, the position in 1980 was a deficit of $31,533, and until the plaintiff's accident in 1986 the best position was a surplus of $297,346 in 1984. In 1985 this had reduced to $26,771 and by the time of the plaintiff's accident in 1986 there was a deficit of $1,839,099 due to interest payments and other losses. (Some care must be exercised with this figure as it did not reflect the true value of the Mardi Gras land. Conversely it may also not have reflected the reduced market value of the asset.) The financial position returned to surplus only in 1989 with the final sale of Mardi Gras. While this was well after his accident, in fairness it must be seen as the result of his pre-accident activities. However, as the above analysis reveals such a creditable result should not be regarded as generally characteristic of the history of the group.
These figures have another puzzling feature which must also be noted in this context. The 1986 deficit was $1,839,099 and had changed to a surplus of $6,006,700 by 1993, an improvement of $7.84 million. The profit from Mardi Gras was about $3.3 million, the sale of Urunga Parade produced a profit of $868,564, and the profit from the sale of the Karimbla Road site was about $400,000, making a total profit from the sale of all pre-accident assets of only about $4,500,000. If the whole of those profits were applied without reduction to the deficit position at the date of the accident, the result would be a surplus of only about $2.7 million. This reveals a growth in the surplus of $3.34 million unattributable to any pre-accident activity or transactions without taking into account any potential capital profit from the purchase of land after the accident; and it does not include any improvement in the asset position of the plaintiff and his wife from his post-accident activities in Argentina and Australia. This exercise could be interpreted as showing a much higher level of profit since the accident than that produced in the whole period of pre-accident activity; and even the latter was achieved by post-accident sales of pre-accident assets.
Even this conclusion is fraught with danger and it should not be adopted, but it is useful to demonstrate that the claim that the plaintiff had amassed a $6 million surplus for the group from his pre-accident activities is not valid. It would have been equally invalid for the defence to refer to the same financial statements to claim that at the time of his injuries the plaintiff had done nothing but lead the company into a deficit of almost $2 million. On this issue, the best that the plaintiff can hope to draw from the evidence, is that the group was only very modestly successful until 1985; that at the time of the accident it was in very serious trouble but able to hold on; that by reason of his activities before the accident but continued and brought to fruition after it, the financial position was moderately healthy; and that for unexplained reasons not shown to be attributable to pre-accident factors, that position has been firmly advanced to the present state.
It is desirable to make one other observation. While he achieved a creditable result financially in the ultimate disposal of Mardi Gras, that final success of the enterprise does not mark the pre-accident plaintiff as the highly successful and astute businessman that Mr Jackson described in his enthusiastic support. The venture met with a serious and unplanned setback so that the development had to be substantially retained and then only after forced sales of part of it. Moreover, under his control the group had suffered very serious losses on other transactions and had been tied to commitments for substantial interest, all of which had placed it in a precarious position. Its recovery was probably the result of inflation and a revived market. If the adverse features of this affair had occurred after his accident, they would probably have been portrayed as the result of his injuries.
It is therefore very difficult to anticipate what the group's future would have been on the hypothesis that the plaintiff had not been injured, not only for the future but also in the past since the accident. At best it can only be said that it may have made modest to moderate profits in some years from development, with the fairly remote chance of a larger profit if the circumstances proved favourable and the chance of substantial loss if they did not, the former being the more likely
. It is not necessary to consider its investment activity for it has not been shown to have suffered any adverse effect on this side of its business through the plaintiff's injuries. He has continued to be very active in that direction and it is not demonstrated at all that he has been any less successful in it than before his accident. Although there was a period during convalescence when he could not engage in it, it was not a task that was undertaken every day or every month. There is nothing to show that his postponed investments were any less productive of profit than any he may have made in that period. For all that is known, the delay could have been beneficial by according favourably with a changing market.
As it has been explained, in assessing the group's loss, if any, from the curtailment of its development activities, it is necessary to take into account any benefits that it may have derived from that state of affairs. In particular, land that would have been retained and used as stock for development has been sold and the proceeds were available for further investment. A proper exercise to determine loss would involve a comparison of the profit from the hypothetical development on the one hand and the profits actually derived by the investment of the proceeds of the sale on the other. In times when development profits are low and alternative investments more profitable, it may even be beneficial in the result to sell off the stock and invest the proceeds.
For example, the course adopted by the plaintiff avoided the pitfalls for developers in the present economic conditions. It may have been wise in any circumstances to use the group's capital to buy up property cheaply in a country of high inflation like Argentina in order to accrue substantial capital gain later, and in the meantime to produce a satisfactory assured income. If this had been precluded because the assets were tied up as development stock and as security for borrowings to finance development, then the result may not have proved to be as favourable as the plaintiff has in fact achieved. These two courses of conduct were largely mutually exclusive, and so without a proper basis for comparison it is not possible to assess the degree of loss, if any. All that can be said is that there has been a loss in part of an alternative choice of income-producing activity in times when it may have been the more profitable, and it for this that the plaintiff is to be compensated to the extent that it has caused loss to him.
He has argued that the benefits actually derived by the group from investments are irrelevant because they would have been available to it in any case and have nothing to do with his incapacity to conduct development ventures. As it has been shown, that is just not so. No doubt if the group had wished to continue with development it would have used its assets in the early purchase of land stocks, and while this would have amounted to an investment of a kind because of the expectation of capital growth, this use of the assets may well have deprived it of some important freedom of investment or resources to lend to the plaintiff for his investments.
The absence of evidence permitting any reasonable exercise produces grave difficulty because of the wide margin of possible results. It may even have been beneficial to the group to have avoided development in the period since the plaintiff's injuries; and for the next seven years, which is the most that can be considered, having regard to the plaintiff's age, it is even more impalpable. For one thing, the threat of tighter economic stringencies for the next several years through governmental action may produce a strongly adverse effect on speculative development; and conversely the $1.65 million lent by the group to the plaintiff and his family may provide them with substantial benefit.
The discussion thus far has addressed the loss suffered by the group of companies, but the issue is the plaintiff's own loss, which is not necessarily the same thing. It has been observed that prior to his injuries, for tax purposes he chose to work through a group of companies so that his own income was limited and the balance of profits was usually diverted to his family. The Court of Appeal has held in Seymour v. Suncorp Insurance & Finance (unreported - Qld. Court of Appeal, 14 December 1994) that in such circumstances the existence of the company structure to which the plaintiff contributed his labour may not be ignored for the purpose of assessing his own actual loss of earning capacity. Conversely it should be taken into account in an appropriate case that circumstances may have changed so as to cause him to provide greater income for himself. He has in fact made investments in his own name with borrowings from the company, but it cannot be said that he would have benefited himself in this way to any greater extent if he had not been injured. Further, although since the accident he has conducted business for the group and has had the opportunity to divert further income to himself, he has not done so and would probably not have done so had he not been injured. Some allowance should be made for the possibility that he would have done so, though it is difficult to see any good reason for it as, with control of the situation, he would have had no good reason for doing so. Similarly, there is no reason to assume that he would have allocated to himself any greater sum by way of dividends than those which he has in fact received.
Before the accident, he did not receive a substantial salary and indeed in some years he had little or no income from that source. It never exceeded $30,000 per annum. There had been no salary since the 1984 financial year, though in that period he has received interest on a loan made to him by one member of the group. This dearth of earnings probably reflected his failure to undertake any development or investment work for the group during that period. It would still have been open to allocate some wages to himself for he worked in the management and maintenance of the Mardi Gras business, but apparently he chose not to do so, presumably as part of his tax-avoidance planning.
Depending on the way he arranged the group's financial affairs, he has also been entitled as a shareholder to receive dividends from the group, but prior to the accident its profits were diverted elsewhere, again for tax minimisation purposes. Among other devices a family trust was available for this purpose. Of course he was eligible to benefit under that too for he controlled it. For example, in 1987 he received $10,400 from that source, but this does not seem to have been repeated; and it was effected only after the accident. The conclusion from these matters is that he was entitled to receive dividends from the companies, either directly or through his family trust, but that he did not do so before the accident and has hardly done so since; and that there is nothing to suggest that he would have received any income from this source if he had not been injured. It was available to him if he had chosen to have it and it is possible that there will be less available as a result of his injuries; but it is very unlikely that he would ever have chosen to take more than what could still be available if he works for the group within the range of his present capacity.
It should however be noticed that prior to the accident he received one other benefit from the group in the form of loans at little or no interest. Again, this was probably part of his tax-avoidance scheme, but he is entitled to have it taken into account so far as he has suffered any loss in this respect. Although he and his wife have received similar substantial loans since the accident, if through his injury the group experienced a loss that reduced this benefit, there would be sufficient nexus to justify his compensation under this head. Unfortunately, because of his exaggeration of his claim and his concealment of the full state of his affairs, the evidence available leaves no cause to believe that the group was deprived in this way of sufficient resources to make him any loan that he may have wanted beyond the substantial ones that he received.
His expert witness, Mr Jackson, tried to avoid the implications of his pre-accident history of low wages and low dividends from his shareholding in the group by suggesting that at about the time of his injuries the introduction of the fringe benefits tax would have justified his allocation to himself of an annual salary of $100,000 and superannuation of $50,000, both subject to tax. It was explained that this had not been done before because a substantial part of his drawings had been allocated to his loan account, which did not then attract tax, but would now do so as a fringe benefit. Later financial papers relating to the post-accident period do not support this proposition. Because of his activities it would have been possible to allocate a wage and superannuation to him, but the device adopted has been to make loans to D.and N.Battaglia in excess of $1.6 million. The loans to the plaintiff and his wife did not attract tax, but he has received no wages and little by way of dividends.
Mr Jackson's suggestion should be treated with the same scepticism as most of the rest of his evidence. While the course suggested would no doubt have been open, it does not conform with the plaintiff's tax-avoidance proclivities and the suggestion had all the appearance of a proposal invented to enlarge his damages with the same enthusiasm that it would have been eschewed in practice because of its attraction of tax. Had the plaintiff not been injured, it is very likely that, if it were necessary, alternative tax-avoidance devices would have been used that would have limited his income both by way of salary and dividends. No direct expert evidence was called in contradiction of Mr Jackson's propositions, but his heavily partial approach to the plaintiff's cause, consistent with his selective and unhelpful use of the financial evidence that the plaintiff had made available, detracted heavily from his value.
Next it is necessary to consider the length of time when but for the accident he would have exercised his earning capacity. It is reasonable to assume, as his learned counsel submitted, that he would have worked to about the age of sixty-seven, if it had been left to him. To allow for the vicissitudes of life, this should be reduced to sixty-five, or about five years from the present. He will probably still do this for, although his capacity is reduced, he should still be able to continue to at least that age within the limits of his present capacity.
During this period from the accident to the projected end of his working life, his opportunity to exercise the earning capacity that has been lost to him will have varied. Because of its financial position, it is highly unlikely that his group would have engaged in any new development before 1989, and after that, as it has been explained, it is very difficult to say what it would have done in that activity, and with what success. This means that the relevant period of loss due to that reduced capacity should be limited to a period of twelve years, seven of them in the past and five in the future and that the loss would be operative for only parts of that period.
As the analysis above reveals, the basis of the award is to compensate him for his loss of the capacity to develop properties alone, that is, otherwise than in partnership, should that activity have been any more profitable to him than the use of the group's capital for investment. He would have received wages of about $30,000 per annum net at such times as well as potential dividends, and would have been able to borrow from the group on very advantageous terms. Against this must be offset the value of the advantages that he has enjoyed by borrowing from the group sums that would not have been available to him in those hypothetical circumstances, and by having the time and freedom to exploit that advantage. The amount of several of these factors is unknown except by way of broad impression.
As it has been remarked, there is a serious evidentiary deficit in his case. Only selective and superficial financial information has been produced, and his financial expert witnesses have failed to provide any full or fair discussion of its implications. Such evidence as he has produced must be viewed with serious suspicion, and even it admits of the strong possibility of adverse factors. While the defence has been able to prove the concealment of some very material facts, it does not bear the onus of establishing the adverse factors, many of which would be within the plaintiff's peculiar knowledge. Consequently, it has been necessary to speculate in order to demonstrate how competing inferences adverse to his case were reasonably open. They were frequently no less persuasive than the inferences that he was forced to advance because of the unreliability of much of his case. The direct evidence is not easily distinguishable as between fact and fiction so that it is necessary to have recourse to inference to try to find his true loss for which he should be compensated. Unfortunately the facts that can be relied on for inferential purposes often turn out to have equivocal results. This makes it necessary to compensate him as adequately as possible to rely on a very wide view of the probabilities so far as the facts can reasonably support them, but this demands a cautious approach. The same broad inferences tend to suggest that the result is probably correct.
Recognition should be fully accorded to the possibility that in some favourable circumstances he may have been able to make a substantial profit for his group which would have provided him with an enlargement of his income in the short term and the availability of even more substantial loans in the long term. Where necessary, he would also have been able to provide some physical contribution towards the management and upkeep of the company's properties, and, although it is doubtful whether he is disabled from doing this in part, he probably suffers some small loss in this respect.
A global assessment of damages under this head should be set at $400,000 in order to allow for all the countervailing contingencies. Half of this should be applied to the past since 1989 but, having regard to the partially unsatisfactory explanation of the delay in the action, interest should be limited to six years, producing a figure of $72,000.
The plaintiff's injuries were very severe and caused him considerable pain, suffering and discomfort at the time and endured with diminishing effect during his convalescence. Fortunately, he was unconscious or heavily sedated during the worst time. He has been obliged to undergo several operations under general anaesthetic that have left him with noticeable abdominal scarring and some minor facial disfigurement. He had the trouble and discomfort of a colostomy bag for two years. His residual pain and suffering from a variety of physical causes is no doubt unpleasant in its own right and amplified by his depressed condition.
It is that depression which is his major residual disability. On the best evidence it is not shown to be of organic origin and can be fully explained in terms of a psychological reaction. The distinction leads to no difference in the result, for it is amenable to amelioration, though not fully curable, by treatment. This would cost about $5000 per year for a few years if he were as bad as he led the psychiatrist to believe, but because of his true condition it should be much less than that. In its present form it causes him some loss of happiness in general and, from time to time, some emotional disturbance so that he is difficult with his family and distressed. He cannot endure serious or lengthy stress and when it appears he takes excessive doses of inappropriate medicines that have a somewhat stupefying effect. This could be avoided with proper medical advice.
Generally his depression interferes with his sleep and his sexual interest in his wife and sometimes this causes him to be unjustifiably jealous and hurtful to her, although he is otherwise affectionate and generous. Fortunately she is faithful, loyal and supportive. A number of these problems would improve with psychiatric treatment and counselling, and his refusal to undertake it is unreasonable. This cannot be totally attributed to the condition itself, for although Dr Mulholland says that the condition would have this effect, his understanding of the degree of the condition was defective. It would be fair to accept that the condition contributes to the plaintiff's unwillingness to undertake the treatment.
It should also be remarked that although his depressive state may not be completely curable, in general the plaintiff will probably still be able to lead a satisfying life and to engage in business and investment activities which please him. However, there has been substantial pain and suffering and a serious interference with his normal enjoyment of life and in some degree these are enduring.
For this component he should receive $75,000 of which $50,000 should be apportioned to the past. Interest should be allowed on that at 2% for ten years (MBP (SA) Pty Ltd v. Gogic (1991) 171 CLR 675), amounting to $10,000.
The claim for voluntary domestic help and care is grossly excessive. Mrs Battaglia was guilty of serious exaggeration, enlarging anecdotal events into a way of life until forced to modify her evidence, and then only as far as she felt obliged to go. If she provides to her husband even a small part of the care and supervision that she alleges, she would still be excessively indulgent on him, for his needs, as distinct from his demands, for assistance outside what is normally provided are few.
There is no satisfactory evidence that it was necessary for her to be present while he was unconscious, but during his conscious state while in hospital, he would have needed the comfort of her presence for several hours each day. This would have been most important when he was in intensive care and conscious, and during the several post-operative periods. In his convalescence at home, he would have needed the usual care and attention of an invalid, but this should have reduced as his mobility increased. After a further reasonable period his needs should normally have been minimal, and in the light of his capacity for independent activity as revealed by the evidence, it is doubtful whether he now needs even the regular one to two hours per day suggested by Dr Mulholland. Again in this his opinion suffers from an imperfect knowledge of the scope of the plaintiff's condition and activities.
It is clear that he does not need, and has not received, full-time care and supervision as his wife states. While his depression remains untreated, he will need occasional special care and comfort for his wellbeing. Otherwise he is not shown to be mentally and physically incapable of providing for his own domestic and personal needs beyond those usually provided by his wife as part of their ordinary domestic routine, so he has little claim in this respect. His depression may disincline him to do some things for himself and his wife's indulgence on him may cater to his disinclination, but when he is required to fend for himself it seems that he can and will do so.
It is likely that any residual need that remains will largely, though not entirely, disappear with psychiatric treatment and counselling, but even then it would be unjust not to allow for some need for special comfort and services for his worse moments, that is, for those services beyond what might be ordinarily expected between a husband and wife: Spargo v Greatorex (1992) 59 SASR 1.The excessive nature of this claim has, of necessity, excluded much of the proper evidence of his reasonable needs, and it is necessary therefore to arrive at a global sum on the basis of what might reasonably be expected in such a case. This would assume an average need for about six hours companionship and comfort per day whilst he was in hospital, a figure for services commencing at about fifteen hours per day and reducing over the next twenty weeks to about three hours per day, reducing further over the next half year, and becoming spasmodic thereafter to the time of trial. The value of these services should be estimated at an average rate of about $10 per hour. On these figures the allowance to the time of trial for this component should be $40,000 with interest, again limited to about six years, of $5000.
For the future the award should be a further $15,000. The best estimate that can be made of the spasmodic and variable need in terms of average is about three hours per week. The state of the evidence does not permit of more. The hourly rate is higher at $14 per hour but the resulting sum must be discounted to the present value.
There should be no allowance for the claim relating to a nursing home. His true condition and the benefits that might be expected from suitable treatment remove the evidentiary foundation supporting the claim that he would need to enter a nursing home any earlier than would have been the case if he were uninjured.
He should be allowed the sum of $12,500 as the present value of his possible future needs for medical, dental and psychiatric treatment some of which will not appear, if at all, for many years.
Special damages, including interest, have been agreed at $46,927.71
SUMMARY
| Loss of earning capacity | $400,000.00 |
| Interest on pre-trial loss | 72,000.00 |
| Pain, suffering and loss of amenities of life | 75,000.00 |
| Interest on pre-trial loss | 10,000.00 |
| Domestic care and assistance (pre-trial) | 40,000.00 |
| Interest thereon | 5,000.00 |
| Domestic care and assistance (future) | 15,000.00 |
| Future medical, dental and psychiatric treatment | 12,500.00 |
| Agreed special damages, including interest | 46,927.71 |
TOTAL: | $676,427.71 |
CONTRIBUTORY NEGLIGENCE
The plaintiff's claim that he remembered that he was wearing his seatbelt is manifestly untrue for he told a medical practitioner about three years ago that he had no memory whatever of the occasion. Unfortunately the general state of their credibility also puts into serious doubt his evidence and that of his wife as to his predilection for and habit of wearing a seatbelt.
By contrast, the evidence of the first defendant was reasonably clear, subject to the depredation of time upon her memory. It was reasonably detailed, it spoke of positive events, that is, her unsuccessful attempts to have the plaintiff wear the seatbelt provided, it was unremarkable, and it was not significantly diminished by cross-examination or other evidence. Because her evidence was taken from New Zealand by telephone, her demeanour apart from what could be discerned in her voice could not be observed. This was a serious obstacle in the determination of the issue. Despite this, her evidence was preferable to that of the plaintiff and his wife on this point.
Although it is far from being absolutely probative, the absence of bruising from the seatbelt on the relevant parts of the plaintiff's body tends to support this view. In turn its force is diminished by the existence of bowel injury to which it is difficult to attribute a cause other than the physical stress of the seatbelt as it restrained him in his forward motion.
The preponderance of acceptable evidence leads to the conclusion that he was not wearing one at the time despite the first defendant's request. However, it must also be shown that his failure to wear his seatbelt was productive of his injuries, and this fails if the injuries would have occurred in any case. That is the more difficult problem here, for according to the rescuer who saw him very soon after the accident, although his head was resting near the front pillar of the car between the windscreen and the front window, his whole seat had moved forward towards the dashboard. The driver's seat was in the same position so that the first defendant was pinned up against the steering wheel.
In these circumstances it is impossible to say that the absence of restraint had any causal influence on the plaintiff's injuries, for it is not shown that they were not caused as the result of his being thrust into contact with the pillar and the dashboard by the seat's forward movement. It is not demonstrated by the evidence that the seatbelt was anchored to a part of the vehicle other than the seat itself, and even if it were, it would be difficult to see how that could have made any difference. Indeed, reflection upon the possible effect on the plaintiff of restraint by a seatbelt with independent anchor points while the whole seat carried him forward with considerable force suggests that greater injury could have been caused in those circumstances. Consequently there can be no finding of contribution by the plaintiff's own negligence to his injuries.
There is, therefore judgment for the plaintiff against the first defendant in the sum of $676,427.71.
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