Best and Anor v West Morton Regional Health Auth
[1997] QSC 54
•20 March 1997
IN THE SUPREME COURT
OF QUEENSLAND
No. 2157 of 1995
Brisbane
Before Mr Justice J.A. Dowsett
[Best and Anor v West Morton Regional Health Auth.]
BETWEEN:
FRANCES CAROLINE MARY BEST
First Plaintiff
AND:
FRANCIS RUSSELL BEST
Second Plaintiff
AND:
WEST MORTON REGIONAL HEALTH AUTHORITY
Defendant
AND:
WORKERS' COMPENSATION BOARD OF QUEENSLAND
Defendant by Election
CATCHWORDS: TORTS - NEGLIGENCE - POST-TRAUMATIC STRESS DISORDER ‑ CALCULATION OF DAMAGES - whether payments made under Workers' Compensation Act 1990 are referrable to economic loss or general damages.
COUNSEL:Mr K Boulton for the first plaintiff
Miss S M Macgroarty for the defendant
Mr M Stewart for the defendant by election
SOLICITORS: Reidy & Tonkin for the first plaintiff
Dale & Fallu for the defendant
Quinlan Miller & Treston for the defendant by election
HEARING DATE: 10 and 11 March 1997
REASONS FOR JUDGMENT - DOWSETT J.
Judgment delivered 20 March 1997
At the commencement of these proceedings the claim by the second plaintiff against the defendant was adjourned by consent to the settlement list. Proceedings have continued as between the first plaintiff and the defendant by election. The first plaintiff was born on 27 May 1940 and is married with two adult children. She has worked for most of her working life as a receptionist and was employed in that capacity at a hospital conducted by the defendant in Ipswich from 1971 until the middle of 1993.
On 12 June 1993, whilst performing that function on the night shift, she was located in a room separated by a partition from a public area. There was a grille in the partition through which she could speak to persons visiting the hospital. Early in the morning of 12 June 1993, two men came to the grille, demanding the keys to the hospital pharmacy. It is reasonable to infer that they were drug‑dependent. One was armed with a firearm and the other carried a bottle containing a substance smelling like petrol, with a wick inserted into the neck. The man with the firearm managed to grab the first plaintiff by reaching through a gap under the grille. He put the weapon into her mouth and rubbed it against her face, bruising her. The other man made lewd suggestions as to what he might do with his bottle. The first plaintiff managed to break away from her assailant and sound an alarm, with the result that other hospital employees came to the scene and she was rescued. This somewhat sanitised version of the incident may tend to underplay the danger to which the first plaintiff was obviously exposed. There can be no doubt that she was in fear for her life during the incident, and with good cause. This has had significant continuing consequences for her.
The incident in 1993 was not the first occasion on which the first plaintiff had been exposed to a situation of personal danger. In early 1988 whilst, going to the lavatory at the hospital, she was confronted by a man with a knife. As a result of this she was off work for about a month. At the time she was diagnosed as suffering from a stress‑related illness. She eventually returned to work, and as far as the evidence goes, had no further difficulties as a result of that incident prior to 12 June 1993.
She says that in the three weeks immediately after the 1993 incident, she did not function at all. During that period, her mother-in-law, her daughter and her husband assisted her in various ways. She was afraid to go out of the house unless accompanied. Thereafter she gradually improved. Unfortunately, she lived near the hospital, and this proximity also caused her problems, particularly at a later stage when she felt that her former co‑workers were trying to avoid her. Her relationship with her husband suffered to some extent. She has not worked since the incident. Her capacity to enjoy sporting and recreational activities has been impaired if not destroyed. Details of her various complaints appear below.
In about August 1994, she decided that she could not continue to live in the Ipswich home, and so she and her husband sold up and have subsequently travelled around Australia in a caravan. In the middle of last year, they settled for an extended period of time at Yamba in northern New South Wales. Notwithstanding their itinerant lifestyle, they have looked for work. Her husband has found work from time to time, but she has not been able to do so. In any event she is unsure whether or not she would be able to hold down a job.
There is general agreement that the first plaintiff continues to suffer from a post‑traumatic stress disorder as a result of the incident in June 1993. The primary questions for determination are the extent of her present symptoms and her prognosis.
Dr Cotton, a psychologist, who saw her over a period of some weeks following the incident, said that initially, her traumatic reaction stabilised and her active symptoms diminished. Thereafter, her condition was complicated through interaction with adverse perceptions of her employer, its perceived failure to take steps to change security arrangements and pre‑existing discontent. Dr Cotton tried to get her to return to the hospital to diminish what he called her phobic avoidance behaviour, but she was reluctant to do so. He expected that she would require on‑going management and a continuing regime of medication. He considered the prospects of her returning to the Ipswich Hospital were "uncertain".
The first plaintiff saw Dr Piaggio, a psychiatrist, in late 1993. He considered that she would require on‑going therapy, although he expected that she would probably return to work at some time in the future. He understood that she was performing normally around the house. She was beginning to travel without company, but only in known areas and to comfortable destinations. She was able to walk her dog by herself. It seems from Dr Piaggio's report that she had also seen Dr Klug, another psychiatrist.
Mr Dorey, a psychologist, saw her first in August 1993 and thereafter for some months into early 1994. He considered that she needed continuing counselling if she were to recover. He thought it unlikely that she would be able to return to work in a situation which involved physical public contact or other work environments in which she might reasonably believe she was unsafe, but he did not consider her to be unemployable. He noted considerable improvement in her condition after four counselling sessions and that she had "commenced the process of rebuilding her capacity to engage in activities beyond the home environs in spite of continuing sense of insecurity and apprehension about her safety". He recommended "a few additional counselling sessions in order to provide further coaching, support and encouragement ...".
The first plaintiff saw Ms O'Kelly-Collard, a psychologist, in early 1995. She was still complaining of nightmares, flashbacks, anxiety and loss of interest in activities which had previously occupied her life. She found it difficult to trust people and experienced sleeping problems. She had difficulty in concentrating. She was nervous and on the lookout for danger. She complained of excessive perspiration and a racing heart when distressed, tight chest, muscle tension, nausea, vomiting and diarrhoea with dizziness and a hyper‑alert mind. Ms O'Kelly‑Collard treated her by counselling. She appeared to benefit from this therapy. Further therapy was indicated but as the first plaintiff was leaving Melbourne, this was not provided. Ms O'Kelly‑Collard saw her again in early 1996. She still displayed symptoms of post‑traumatic stress disorder and was also suffering from depression. Ms O'Kelly‑Collard believed that she would benefit from psychiatric treatment, as well as appropriate therapy with a clinical psychologist. The treatment would be long‑term, possibly taking up to two years. She though that the first plaintiff's chances of obtaining employment after the therapy were not good because of her age and because she would not be able to promote herself in the way necessary to obtain a job.
Dr Nothing, a psychiatrist, first saw her in April 1996. He diagnosed a post‑traumatic stress disorder of moderate severity and a major depressive disorder of mild to moderate severity. He was of the opinion that her condition would be alleviated to some extent by the resolution of this litigation. He considered that in April 1996 she was unfit for work but that with appropriate psychiatric counselling and the resolution of litigation, she should be able to return to some part‑time work "in a year or so". Some anti‑depressant medication might also be necessary. Her condition would be slow to resolve if she did not receive appropriate psychiatric treatment. He did not consider counselling by a psychologist to be the most effective treatment for her.
Dr Nothling saw the first plaintiff again in March of this year. She told him that she had intended to obtain employment with her husband when they were in western New South Wales last year, but that her husband would not permit this because of the attitudes and behaviour of the other workers. He considered them to be too rough and rude to work with her. She did not enjoy their time there, although she remained to support her husband and coped. She cooked and took the dog for a walk. She still experiences thoughts and dreams concerning the incident in June 1993 and often wakes at about 2:45 am, approximately the time of the incident. She becomes distressed. She occasionally has fits of shaking and sweats. She avoids hospitals. She enjoyed caravan life and fishing at Yamba during the winter of 1996. She is no longer able to practise yoga because she is living in a caravan. She has enjoyed swimming again. She is not driving. She shops with her husband, never alone. She still feels some detachment from others, except for those with whom she had a former relationship such as her husband and children.. She sleeps with the aid of medication.
Dr Nothling considers that she remains unfit for work "for which she is suited by training and experience". He expects some improvement once the litigation is resolved and further improvement with appropriate psychiatric treatment, probably in conjunction with anti‑depressant medication. He now considers that the length of time during which she has suffered the post‑traumatic stress disorder may militate against significant improvement. He thinks it unlikely that she will return to full‑time work, however with appropriate treatment, the passage of time and settlement of the litigation, she may return to part‑time work, involving minimal contact with the public. He also expects that she will be able to manage at home. He said in cross‑examination that the incident in 1988 may have sensitized her to the extent that she had become prone to respond disproportionately to fairly minor trauma. He agreed that the earlier incident may have contributed to her extreme reaction to the incident which occurred in 1993. On the other hand, the latter incident was of an extremely traumatic kind. I see nothing obviously disproportionate about her response to it. It may be, however, that she was at risk of suffering a disabling response to a relatively minor incident and that the award should be reduced to reflect this fact.
Dr Nothling considers that the plaintiff has "done fairly well". By this he means that she is apparently able to enjoy travelling around the country with her husband and adjust to new environments. She was able to cope with living in the west whilst her husband was working there. She enjoys fishing. He considers it a positive sign that she has made this degree of recovery without psychiatric treatment and that appropriate treatment can only assist further. He is also encouraged by the fact that she has benefited to some extent from psychological counselling. If he were treating her, he would encourage her to start work on a part‑time basis within six to 12 months.
The defendant by election has admitted liability, and so I turn to the quantification of the loss, commencing with pain, suffering and loss of amenity. Mr Boulton for the plaintiff has referred me to four helpful cases. The first is a decision of White J in Grant v Lun (No. 1607 of 1992 - judgment delivered 1 July 1994). That case involved a male, 39 years of age at trial, who suffered from retrograde ejaculation as a result of an operation. He had not been warned of this possible outcome. He developed a major depressive illness with homicidal and suicidal tendencies and was treated as a regulated patient in a hospital. It was likely that a further four years of psychiatric treatment would be necessary and that he would be required to travel overseas to undergo an operation to reverse the physical problem. There would be risks involved in that procedure. Her Honour held that the plaintiff's life had been destroyed. He had lost his work, his marriage, his children, his recreational pursuits and his fitness. He was likely to be unemployable for four years but would then re‑enter the workforce. He would probably derive only about half the level of his previous wages. For pain, suffering and loss of amenity, her Honour awarded him the sum of $50,000.
In Brown v Hale (Townsville No. 171 of 1972 - judgment delivered 8 July 19994) Cullinane J awarded the plaintiff $55,000 for pain, suffering and loss of amenity. She was 27 years of age when injured and 39 years of age at trial. This woman's injuries included a leg disability of between 25 percent and 40 percent with the probability of increasing difficulties over the following ten years, together with an hysterical conversion disorder and somatoform pain disorder. It seems that she was at risk of such a complaint because of a pre‑existing psychiatric condition.
In Veivers v Connolly (Townsville No. 141 of 1991 - judgment delivered 13 October 1994) de Jersey J awarded a female aged 43 years at trial, the sum of $50,000 for pain, suffering and loss of amenity. When aged 25 years, she bore a daughter who suffered from congenital rubella embryopathy. This had not been discovered prior to birth, although appropriate medical testing would have revealed it. The plaintiff claimed damages for mental distress and destruction of a normal family life brought about by these disabilities. This plaintiff had effectively lost her whole life as a result of her reaction to her daughter's incapacity.
In Harrison v Suncorp Insurance and Finance (No. 1579 of 1993 - judgment delivered 12 December 1995) Lee J awarded the plaintiff $55,000 for pain, suffering and loss of amenity. As a result of witnessing a fatal accident, that plaintiff had suffered a post‑traumatic stress disorder with a schizo‑affective disorder assessed at an overall disability of around 70 percent. He may have had a pre‑disposition towards such illness. He was 23 years of age at the time of the accident and 30 years at trial.
In the first two cases there were significant physical incapacities apart from the psychiatric injuries. In all cases the plaintiffs were significantly younger than the first plaintiff and in my view, their various psychiatric conditions were significantly worse. This plaintiff must be seen as somebody whose condition is likely to improve after resolution of the action and with treatment, although I do not treat her as being likely to recover completely. I fix the award for pain, suffering and loss of amenity at $37,500. I apportion $20,000 to past loss. I will deal with the question of interest at a later stage. I have made some slight allowance for the possibility that she may have been unduly sensitive to trauma as a result of the 1988 incident and so may have been at risk of developing her present condition as a consequence of some other trauma which might not otherwise have affected her.
As to past economic loss I will act upon Dr Nothling's evidence that she is presently unfit for work but should remain so only for another six to 12 months, assuming that she undergoes appropriate treatment. She should do so, acting reasonably in her own best interests. Calculations indicate that her lost income, assuming that she had continued at the hospital to the date of trial, totals $97,514.81. I find that the plaintiff would probably have remained in full‑time employment at the hospital had she not been involved in the incident in question. Although her husband ceased work shortly after the incident, and they subsequently sold the house and travelled, I find that these events were precipitated by the incident. It is necessary to discount that figure to reflect the vicissitudes of life and in particular, the possibility that her exposed condition as a result of the 1988 incident may have caused her to react disproportionately to some other trauma, even in the absence of the 1993 incident. I do not consider that any substantial discounting is justified. I fix the award for past economic loss at $85,000.
As to future economic loss, I find that within six to 12 months, she should be able to return to part‑time work. I doubt that she will ever return to full‑time work. One must also take into account the difficulty which she is likely to experience in finding employment at her age and in the current employment market. On the other hand, she is well‑motivated. The question arises as to the type of part‑time work which she might find. I think it unlikely that she would take a job in which she might be exposed to the public, having regard to her past experience. It is more likely, as she herself has suggested, that she would find work on a part‑time basis as a fruit picker or in some other unskilled or semi‑skilled occupation. I am satisfied that although prior to the incident, the first plaintiff and her husband had a home, an investment in another home unit and some savings, together with superannuation benefits, they were not so well off that they would have stopped work before at least one of them had to. I think it likely that both would have worked until Mr Best turned 65, subject to the contingencies to which I have already referred and the other usual contingencies of life.
Mr Best was born on 4 August 1939 and so would have turned 65 in the year 2004. That is something more then seven years from the present time. The first plaintiff could have worked until May 2005. She might also have taken part‑time work thereafter. It is possible that her health may have declined for any of a variety of reasons, or she and her husband may have decided to stop work earlier. I think it appropriate to allow her a period of six years from the present time to take account of these and other contingencies. I must then deduct from that an amount to represent her continuing capacity to earn income. As I have said, it is likely that she will take part‑time work at some time in the next six to 12 months if work is available. It is common ground that had she not been injured, and had she stayed at the hospital, her current net weekly wage would be $522. On the 5 percent tables, that is a total loss of $140,940. The casual hourly rate for the fruit and vegetable growing industry is $9.69. This is a gross figure. Assuming a 20 hour week, this would be $193.80 per week. I understand from ex.7 that the tax on this would be $19.20, showing a net weekly income of $174.60. On the 5 percent tables this shows $47,142 for six years. Dr Nothling would encourage her to return to part‑time employment within six to 12 months of commencing treatment. I therefore infer that she will have another nine months of unemployment before she starts part‑time work. $174.60 per week for one year on the 5 percent tables shows $8,904.60. I take three‑quarters of that sum on the assumption that she will return to part‑time work in nine months. This shows $6,678.45. That should be deducted from the sum of $47,142 to yield the present value of her capacity to work, assuming that she is able to find work during the next six years as a casual fruit picker or in some other similar capacity for 20 hours per week. The result is $40,463.55. However I consider her capacity to earn income to be less than that in view of her age and the difficulties likely to be met in finding work. I discount that figure to $30,000. That figure must then be deducted from the figure of $140,940 derived above, showing a future loss of income of $110,940. I round that off to $111,000.
Agreed special damages, including amounts paid by the Workers' Compensation Board, total $8,279.63. The cost of future psychiatric care and medication over three years is agreed at $8,410. It is also agreed that the cost of future medication (including sanitary pads) is $6,500, a total of $14,910. An amount of $5,984 should be allowed as the present value of lost superannuation benefits, including interest. Had she continued in employment, the present value to her of her employer's contributions to her superannuation would be $36.00 per week. Again, using the 5 percent tables for six years, this shows $9,720.
There is a claim for past and future loss pursuant to the decision in Griffiths v Kerkemeyer (1977) 139 CLR 161. In the period of three weeks following the incident, the plaintiff claims to have been virtually non‑functional with respect to most normal household activities. She received support from her mother‑in‑law and also from her daughter and husband. Her mother‑in‑law moved in to her home, her daughter visited regularly, and her husband was, of course, also living in the home. There are obviously significant difficulties incidental to apportioning this support as between providing services required by the plaintiff as a result of the incident and ordinary familial support and attention. Her needs were not limited to domestic assistance but also included the need for an escort when she attended doctors or undertook other expeditions outside the home. No doubt it would have been very unwise for her to be left by herself during this time. She was, however, a married woman and had the benefit of her husband's company other than when he was at work. All in all, I consider that an allowance of eight hours per day for the first three weeks is reasonable. The cost of this is agreed at $9.50 per hour. This shows 168 hours at $9.50 per hour, totalling $1,596. Thereafter she continued to need some assistance, particularly when she left the home to attend to duties such as shopping, to see doctor and lawyers, and to transact other business incidental to ordinary life. It is somewhat difficult to ascertain the frequency of such outings. Three hours per week appears to be a reasonable estimate for 191 weeks at $9.50 per hour, showing $5,443.50. Rounding it off, I will allow $7,000 for past loss under this heading.
For the future, it is likely that she will require some assistance, at least for the next 12 months and, I would expect, for longer than that. However her need for such assistance will decline after she has finished the treatment proposed by Dr Nothling. I will allow her three hours per week for the next year and one hour per week thereafter for the following 5 years. $28.50 per week for one year shows $1,453.50. $9.50 per week for 6 years shows $2,565. That must be reduced by $9.50 per week for one year to represent the first of the 6 years during which she will be compensated at the higher rate. $9.50 per week for one year shows $484.50. Deducting this from $2,565 leaves $2,080.50.
Total future loss under this heading is therefore:
For the first year: $1,453.50
For the ensuing 5 years $2,080.50
$3,534.00
=======
This should be discounted somewhat to recognise the contingencies of life. I will round it off to $3,000.
It has been the practice in cases of this kind to allow an item to represent the income tax paid on Workers' Compensation payments. This course was in accordance with the decision in Fox v Wood (1981) 148 CLR 438. This item of loss arises because in Queensland, an injured worker is compensated for lost income in an action such as this upon the basis of after‑tax loss. A worker receiving Workers' Compensation payments whilst incapacitated receives a net sum after tax has been deducted pursuant to PAYE arrangements but is obliged to refund the gross amount of the Workers' Compensation payments from any award of damages. To adjust for this anomaly, an additional amount has previously been awarded to plaintiffs in the amount of the taxation instalments deducted by the Workers' Compensation Board and paid to the Commissioner of Taxation.
In connection with a similar problem concerning the payment of sickness benefits, the Australian Taxation Office has ruled that the employee may, if he or she does not recover the amount of the tax instalments so paid, file an amended tax return for the year in which the instalments were paid with the result that they will be refunded. As much appears from Taxation Ruling IT 2623 dated 13 December 1990. (See ex.10.) Although it may not automatically follow that a similar process will be permitted in connection with income tax paid on Workers' Compensation payments, ex.12 is a letter from a firm of accountants indicating that they anticipate no difficulty in achieving such a result. The cost of doing so would be $450. The Commissioner of Taxation has previously been non‑committal when asked to express a view on this matter. See ex.11. However I see no reason to reject the evidence contained in ex.12. In those circumstances there will be no allowance in connection with the "Fox v Wood" component, save for an allowance of $450 to represent the cost of recovering the instalments of taxation.
I turn now to the question of interest. In addition to moneys received from the Workers' Compensation Board, the first plaintiff received an amount from the Department of Justice by way of an ex gratia payment made following an award of criminal compensation pursuant to the Criminal Code. This amount is refundable from any award of damages. See ex. 1, pp.117-8. The net amount received by way of weekly compensation under the Workers' Compensation Act, was $21,112. The first plaintiff also received $32,706 as lump sum compensation under that Act. The sum received from the Department of Justice was $17,294. It was agreed that these sums should be taken into account for the purpose of calculating interest, but there was no agreement as to how this should be done. Because different parts of the award will earn interest at different rates, the way in which these amounts are applied may, it is suggested, affect the totality of the award.
Differential interest rates apply because of the High Court decision in M.B.P. (SA) Pty Ltd v Gogic (1990-1991) 171 CLR 657. The High Court held that whereas an award of damages for economic loss should bear interest at the appropriate commercial rate, interest on non‑economic loss should be awarded at a lower rate. This is because an award for non‑economic loss is calculated in accordance with the value of money at the time of the award, whilst damages for economic loss are calculated in accordance with the value of money at the time of the relevant expenditure or loss of income. Thus, by the time of judgment, the value to the plaintiff of the latter category of damages will have been reduced by the effects of inflation. A commercial rate of interest includes an element to compensate for such effects. Applying that rate to damages for economic loss will therefore compensate the plaintiff for both the effects of inflation and the lost opportunity to use the money. To apply the same rate to damages for non‑economic loss would, however, confer a windfall gain on the plaintiff. He or she would be protected against inflation both by the award of damages assessed having regard to current money values and by the component of the interest award attributable to the inflation rate. Such a windfall gain is not permissible, and so interest on the award for non-economic loss is to be calculated using a rate which excludes the inflation factor.
It is agreed that the amount of the weekly compensation payments should be deducted from the award for past economic loss for the purpose of calculating interest on that award. The first plaintiff submits that the amount of lump sum compensation should be applied in reduction of the award of damages for non‑economic loss which earns interest at the lower rate. That would mean that the balance of the award for economic loss (after deduction of the weekly compensation payments) would bear interest at the commercial rate, resulting in a higher overall total award than if the amount of lump sum compensation were also deducted from that award. The defendant by election submits that the amount should, at least in part, be applied in further reduction of the award for economic loss, thus reducing the amount to bear interest at the higher rate. Similar considerations may affect the application of the ex gratia payment.
The parties refer to the decision of the High Court in Haines v Bendall (1991) 172 CLR 60 and submit that the proper approach is to seek to match the lump sum compensation payment by the Workers' Compensation Board to the most appropriate element or elements of the damages award. I do not understand the decision to justify that submission. My subsequent discussion of the decision proceeds on the assumption that the legislation of New South Wales in question in Haines v Bendall was substantially similar to the analogous Queensland legislation.
The majority in Haines v Bendall (Mason CJ, Dawson, Toohey and Gaudron JJ) was willing to apply the amount of lump sum compensation in reduction of the award for past non‑economic loss although they considered that it may have included an element for future non‑economic loss and an element for economic loss. Brennan J considered such characterization to be unnecessary. Although the majority sought to characterize the lump sum compensation as attributable to one of the various heads of damages commonly used in common law claims, their Honours' willingness to deduct the lump sum payment from the award for past non‑economic loss was not based upon any clear identification of that payment as attributable to such loss. As I have said, their Honours conceded that it might well be attributable in part to economic loss or future non‑economic loss. Their Honours were satisfied that it was not solely attributable to past economic loss because its amount far exceeded the appropriate measure of such loss. See p.70. They considered to be irrelevant the possibility that some element was for future non‑economic loss. See p.72. I consider that the majority was concerned only to ensure that there was sufficient nexus between the loss for which the lump sum payment was intended to compensate and the subject matter of the action in order to justify application of the payment in reduction of the award for the purpose of calculating interest.
The appeal in Haines v Bendall was only against the failure to apply the lump sum payment in reduction of the award for past non‑economic loss. Most of the sum awarded for past economic loss did not bear interest because the plaintiff had received other sums under the Act in place of such income. He recovered a further sum for past economic loss for which he had not been previously compensated and which bore interest, but the High Court did not consider whether the lump sum payment could have been applied in reduction of that amount. This seems not to have been raised in argument, probably because the judgment in Gogic (supra) was only handed down on 26 February 1991, after argument in Haines v Bendall and before judgment. Thus differential interest rates were probably not applied at trial, and so it did not matter whether the amount of lump sum compensation was wholly applied in reduction of the award for past non‑economic loss or partly in reduction of that and partly in reduction of the award for additional past economic loss.
I have perused the Workers' Compensation Act (Qld) in its present form and as it was in 1993 and 1994. An injured worker is entitled to compensation pursuant to s.88 of the current legislation (previously s.5.1). Division 1 of Part 9 of the Act provides for weekly compensation to be calculated having regard to wage rates, but s.112 allows the Board to discharge this obligation by payment of a lump sum. Division 2 of Part 9 also provides for lump sum compensation for permanent impairment. Although this appears to be in addition to any amount paid by way of weekly compensation, s.131(2) provides that generally, the total of weekly compensation and lump sum compensation is not to exceed a prescribed total, now $100,000. See s.154(1)(c). Similar provisions were found in the earlier forms of this legislation, particularly in Part 8 and s.7.7. From the evidence, it is not clear whether the "disability settlements" referred to at p.114 of ex.1 (i.e. $32,706) were concerned with lump sum compensation or weekly compensation to be paid in a lump sum. In any event, as in Haines v Bendall (supra) I can find no clear indication as to whether lump sum compensation (as opposed to weekly compensation) was intended to compensate for past economic loss, future economic loss or for past and/or future pain, suffering and loss of amenity. It may be, as suggested in Haines v Bendall, that it contains elements of all four.
As to the ex gratia payment, there can be no doubt that it was by way of compensation for the injury which is the subject of this action. Whether it was for economic or non‑economic loss, past or future, is also unclear, although it appears that it was calculated by deducting the amount of the Board's payment of lump sum compensation from the sum of $50,000, possibly the amount awarded by the court as criminal compensation. In my view, particularly as it must be refunded from any judgment, there is a sufficiently close connection between that payment and the subject matter of the action to justify its being taken into account in calculating interest.
The award of interest is discretionary, and so I must take into account all relevant factors. There is another aspect concerning inflation which requires consideration in this exercise. Gogic (supra) dealt with the avoidance of a windfall gain caused by applying an inappropriate interest rate, but that is not the only way in which such a gain may occur. The first plaintiff is to be compensated for non‑economic loss having regard to the current value of money, but she has previously received the payments to which I have referred. She has therefore had the benefit of them and since receipt of them, has not been exposed to the effects of inflation on those amounts. If the award for non‑economic loss is made in 1997 dollars without regard to these payments, she will be twice indemnified against inflation. This is a different problem from that considered in Gogic. There the court was concerned to avoid making an award of interest which would compensate the plaintiff for the effects of inflation for which he had already been compensated in the award for past non‑economic loss. I am presently concerned with the effect of a payment received before judgment, a question which did not arise in Gogic.
Quite apart from any question of interest on the award, to allow the full amount calculated as appropriate for past non‑economic loss without making allowance for amounts previously received under that heading would be to allow the first plaintiff full compensation for the effect of inflation on her award when she had money on account of the award in possession and so had not suffered all of those effects. It follows that the award for non‑economic loss should be reduced by an amount which recognises this factor. This reduced sum should then, of course, also be used to calculate interest at the lower rate required by Gogic (supra). This exercise would require the apportionment of the various payments between economic and non‑economic loss.
As a practical matter, if, for the purpose of calculating interest, the amount in hand on account of past non-economic loss is applied against the award of damages for past economic loss, the reduction in the interest awarded on that head of damages will usually, if not always, equal the total of the adjustment which should be made to the amount of damages for past non‑economic loss to avoid such double indemnity against inflation plus the reduction in interest awarded under that heading by virtue of the reduced amount on which it is to be calculated. This is because the latter total amount will be calculated by taking the sum in hand and applying to it that part of the relevant interest rate which is applicable to inflation. The outcome will then be deducted from the appropriate award. The result will then bear interest at the rate applicable pursuant to Gogic (commercial rate less inflation factor). If, instead of this course, the amount in hand is simply applied in reduction of the award for past economic loss which is to bear interest, the result will be that such interest will be reduced by a sum equal to interest calculated on the sum in hand at the commercial rate. The result will be the same in either case. Obviously, it is simpler to adopt the latter course, meaning that all sums in hand should be applied against past economic loss. That course also avoids the difficult problem of apportionment.
Another factor militates in favour of such a course. A plaintiff is unlikely to differentiate between moneys received on one account or the other. One would expect him or her to use the money to pay out that part of any total indebtedness which is bearing interest at a higher rate. Alternatively, he or she may invest at the current rate, which will include an allowance for inflation. I consider that in the exercise of the discretion to award interest, I should apply all moneys in hand in reduction of the award for economic loss and then in reduction of other interest‑bearing amounts. Similar reasoning applies to the ex gratia payment.
Regard must also be had to the relevant dates of payment. The sum of $25,912.48 was paid by weekly instalments following the incident in June 1993, from 12 June 1993 to 16 September 1994. The lump sum compensation of $32,706 was paid on or before 24 April 1995. I infer that the ex gratia payment was made some time shortly after 9 November 1995. The best approach would be to calculate the appropriate amount of interest on $85,000 (lost income) for 3.75 years using the usual formula, and then deduct interest at 12 percent per annum for the various periods since receipt of the sums in question.
Interest on $85,000 at 6% p.a. for 3.75 years $19,125.00
less interest on $25,912.48 at 12% p.a. for 2.5 years$7,773.74
less interest on $32,706 at 12% p.a. for 1.9 years $7,456.97
less interest on $17,296 at 12% p.a. for 1.3 years $2,698.17
$17,928.88
$1,196.12
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The calculation of interest on the weekly compensation amount is probably unduly favourable to the first plaintiff in that it ignores the fact that she had part of the total sum in hand prior to 16 September 1994. the sum of $25,912.48 at 6 percent per annum for 1.3 years shows $1,943.44. This is the notional interest on the weekly compensation instalments paid over 15 months at half the commercial rate to recognise the fact that the instalments were received during that period. In the circumstances, I will exercise my discretion against awarding interest on this part of the award. Indeed, it might be said that the "excess" of about $750 should be applied in reduction of the interest awarded on other parts of the claim. However the calculations in question are not sufficiently precise to justify that course. I am exercising a discretion, not preparing accounts. It is sufficient if I say that I consider that there was no loss suffered by the first plaintiff which calls for an award of interest on that part of the award which relates to past loss of income.
As to pain and suffering, the amount of $20,000 should bear interest at 2 percent per annum for 3.75 years showing $1,500. As to special damages, the amount not paid by the Workers' Compensation Board is $5,335.10. This should bear interest at 6 percent per annum for 3.75 years, showing $1,200.40.
The award for past domestic assistance ($7,000) should bear interest at 2 percent per annum for 3.75 years, showing $525.00. This interest rate was not in dispute at the trial. I assume it is justified by the fact that the agreed rate of $9.50 is the current rate.
In summary, the award is:
Pain, suffering and loss of amenity $37,500.00
Interest on $20,000 at 2%p.a. for 3.75 years $1,500.00
Past economic loss $85,000.00
Recovery of tax instalments on Workers' Compensation $450.00
Future economic loss $111,000.00
Special damages $8,279.63
Interest $1,200.40
Future needs $14,910.00
Past loss of superannuation benefits $5,984.00
Future loss of superannuation benefits $9,720.00
Past domestic care $7,000.00
Interest $525.00
Future domestic care $3,534.00
TOTAL$286,603.03
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This amount must be reduced by the amount directly paid by the defendant by election, namely $61,563.01. There will be judgment for the plaintiff against the defendant by election in the amount of $225,040.02.
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