Catherine Mary King v The Owners Corporation Strata Plan 2311 - [2006] NSWDC 44

Reported Decision:

District Court

CITATION: Catherine Mary King v The Owners Corporation Strata Plan 2311 [2006] NSWDC 44

HEARING DATE(S): 08/11/05, 09/11/05, 10/11/05, 11/11/05, 20/04/06

JUDGMENT DATE:
13 October 2006

JURISDICTION: Civil

JUDGMENT OF: Phegan DCJ

DECISION: Verdict and Judgment for the defendant; Submissions invited on costs

CATCHWORDS: Strata title - liability of owners corporation - statutory duty - damages for economic loss

LEGISLATION CITED: Strata Schemes Management Act 1996 (NSW)
Civil Liability Act 2002 (NSW)
Civil Liability Amendment (Personal Responsibility) Act 2002 (NSW)

CASES CITED: Ridis v Strata Plan 10308 (2005) 63 NSWLR 449
Jones v Bartlett (2000) 205 CLR 166
Australian Safeway Stores Pty Ltd v Zaluzna (1987) 162 CLR 479
Jones v Dunkel (1959) 101 CLR 298
Schellenberg v Tunnel Holdings (2000) 200 CLR 121
Manly Municipal Council v Byrne [2004] NSWCA 123
O'Connor v S P Bray Ltd (1937) 56 CLR 464
Rose v Abbey Orchard Property Investment Pty Ltd (1987) Aust Torts Reports 80-121
Shoey's Pty Ltd v Allan (1991) Aust Torts Reports 81-104
MacPherson v Proprietors of Strata Plan 10857 [2003] NSWCA 96
Waverley Municipal Council v Bloom [1999] NSWCA 229
Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389
Telstra Corporation Limited v Bisley [2005] NSWCA 128
Edwards v Consolidated Broken Hill Limited [2005] NSWSC 301
Penrith City Council v Parks [2004] NSWCA 2001

FILE NUMBER(S): 525/2004

COUNSEL: R S Sheldon - Plaintiff
R A Gray - Defendant

SOLICITORS: Carroll & O'Dea - Plaintiff
Curwood & Partners - Defendant

JUDGMENT

1 HIS HONOUR: On the evening of Friday 23 February 2001, a birthday party was held for Mr John Booth a friend of the plaintiff, Catherine King. The party was organised by Ms Ulrike Eichmeyer at the home unit owned by Mr Booth on the seventh floor 49A Upper Pitt Street Kirribilli where both of them lived. To the left of the entrance to the unit was the door to the elevator; on the other side of the elevator and on the northern wall of the tower in which Unit 7 was located was a window. The window was approximately 155cm deep x 90cm wide. The sill at the bottom of the window frame was approximately 90cm from the floor. The window consisted of two sliding glass panels which could be moved up and down by hand. The frames of the moving panels and the fixed window frame were made of aluminium.

2 Between 10 and 10.30pm the plaintiff left the party in the company of another guest, Steve Sim, to meet a surprise VIP guest who was due to arrive at about that time. While Mr Sim summoned the lift to take them to the ground floor, the plaintiff leant out of the window in order to signal to the VIP vehicle when it arrived. The bottom panel of the window had been left in the open position so that it was possible for the plaintiff to lean out of the window without interfering with it while her hands remained on the windowsill. When the plaintiff saw the VIP vehicle turn into the driveway of the unit building, she signalled to the vehicle and turned to enter the lift which had arrived in response to Mr Sim’s call. As the plaintiff turned towards the lift, which was on her left, she “knocked something” with her left arm. The window came down on her right hand which was still resting on the windowsill. Because she was in a hurry to meet the VIP guest, she wrapped her right hand in a scarf and took the lift to the ground floor.

3 Ms King only felt that her left hand had dislodged something to cause the window to drop. She did not see it happen. However, she was sure that the object was an umbrella which she saw projected into the air and fall at the time to the floor. According to the tradesman who was subsequently employed to repair the window by the managing agent, of the defendant owners corporation, the window had ceased to support itself as a consequence of damage to “spiral balancers”. The spiral balancers were part of the window mechanism inside the frame. They were designed to hold the window in position once it had been opened. As long as the balancers were functioning properly the window would not close unless the required force was applied to it.

4 Having met the VIP guest in the parking area Ms King and Mr Sim escorted the guest to the party. From this time Ms King kept in the background but was advised by another guest who examined her hand that she should go to hospital. She took the advice. She was aware of a dull pain in her hand which was throbbing by the time of her arrival at Royal North Shore Hospital.

5 She spent overnight in hospital and the following day underwent surgery in which a laceration of the volar aspect of the proximal phalanx of the right middle finger was repaired. According to x-rays taken prior to surgery no bone was broken. On Monday 26 February 2001 she was discharged from hospital with her right hand in a plaster cast. The cast was replaced about two to three weeks later with a less restrictive “exercise” cast and physiotherapy was continued for about three months.

the issues

liability

6 The window which caused the plaintiff’s injury was situated on the common property of the unit building and was therefore in the occupation of the defendant. The plaintiff’s case against the defendant was based on a duty of care imposed on the owners corporation in such circumstances. The defendant knew or ought to have known that the window was in a state of disrepair and was in breach of its duty in failing to attend to the danger posed by the defective window. In particular it was foreseeable that a window propped open by an umbrella as alleged by the plaintiff was in a defective condition.

7 The particulars of negligence were expanded by the addition of the following particular:

(k) failing to comply with the duties imposed by s 62 of the Strata Schemes Management Act 1996.

Section 62 of the Act provides as follows:

(1) An owners corporation must properly maintain and keep in a state of good and serviceable repair the common property and any personal property vested in the owners corporation.

(2) An owners corporation must renew or replace any fixtures or fittings comprised in the common property and any personal property vested in the owners corporation.

(3) This clause does not apply to a particular item of property if the owners corporation determines by special resolution that:

(a) it is inappropriate to maintain, renew, replace or repair the property, and

(b) its decision will not affect the safety of any building, structure or common property in the strata scheme or detract from the appearance of any property in the strata scheme.

It was the plaintiff’s case that the section imposed an obligation on the defendant to put a system in place to monitor the state of repair of the premises. Had such a system been in place the defect would have been discovered prior to the incident in which the plaintiff was injured.

8 On its part the defendant, while acknowledging a duty of care, denied any breach of duty. With regard to s 62 it was the defendants case that the section amounted to no more than a restatement of the common law. However, even if it imposed a more onerous obligation than that imposed by the common law, no breach of the duty imposed by that section had been proved. The defendant also pleaded contributory negligence and the defence of “obvious risk” under the Civil Liability Amendment (Personal Responsibility) Act 2002. Because the risk was an obvious risk within the meaning of s 5F of that Act, the defendant was relieved of any duty to warn the plaintiff of the risk (s 5H).

damages

9 It was not disputed that the damages in this case must be assessed in accordance with the provisions of the Civil Liability Act 2002. The defendant disputed the plaintiff’s claim that she was entitled to damages for non-economic loss. It was the defendant’s case that the severity of the plaintiff’s injury was less than 15% of the most extreme case and did not therefore meet the threshold under s 16 of the Act.

10 The most significant area of dispute between the parties on the quantum of damages to which the plaintiff was entitled, if the plaintiff succeeded in establishing liability, was past economic loss. The plaintiff was a recruitment consultant by profession. It was the plaintiff’s case that shortly before the incident in which she was injured she had successfully piloted a recruitment program with features that distinguished it from recruitment programs offered by other consultants. The injury came at a crucial time in the establishment and expansion of the program and so seriously impeded her capacity to continue work on the program that it had to be abandoned at very substantial loss to the plaintiff. It was the defendant’s case that the evidence fell short of establishing any recoverable loss of the kind and magnitude alleged by the plaintiff. Furthermore the plaintiff had failed to take appropriate steps to mitigate any such loss even if it was recoverable.

the evidence

liability

11 The plaintiff’s evidence in her case on liability was summarised in the opening part of the judgment [1] to [3]. She did not call any other witnesses such as Mr Sim, who was with her when she was injured, or Mr Booth, the resident of the unit closest to the window, who may have been able to give some evidence on its condition prior to her injury.

12 The defendant’s witnesses on liability included Ms Eichmeyer. She came to live with Mr Booth in his unit in 1992 and at that time all of the windows in the building were steel framed and in poor condition. In about 1993/94 almost all of the windows, with the exception of a few inside individual units, were replaced with aluminium framed windows. It was one such aluminium framed window which was outside the entrance to Mr Booth’s unit when the plaintiff was injured.

13 According to Ms Eichmeyer the window was normally closed and was only opened for specific purposes. Once the window was open it was possible to lean out and see the driveway area below in order to wave to someone approaching or leaving the building. The window had always been in good working order since its installation and Ms Eichmeyer had not seen the window held open in the way in which it appears to have been just before the plaintiff’s injury.

14 Although Ms Eichmeyer was not a member of the executive of the Owners corporation, she was aware of the appointment of Bright and Duggan Pty Ltd as managing agents (Strata Management Agreement Exhibit 2) and, because Mr Booth was a member of the executive, she had attended up to two or three meetings of the executive each year with him. During the late 1990s, that is the period leading up to the plaintiff’s injury, she could remember no discussion at such meetings of any problem with the aluminium windows.

15 Pamela Palmer also gave evidence in the defendant’s case. She had been the owner of a unit in the building since the 1980s. Unlike Ms Eichmeyer she did not live in the building. Her unit was leased. However, she had been a member of the executive of the Owners corporation for a number of years during part of which time she had been the Treasurer. By the time she gave her evidence she had been appointed Chairperson. She recalled the replacement of the old steel windows with the aluminium windows in the early 1990s. The steel windows had been rusty and leaking in places.

16 According to Ms Palmer the executive of the Owners corporation undertook a thorough inspection of the building at the time of its quarterly meetings. A representative of the managing agents, Bright and Duggan, attended the meetings and recorded any matters which required repair. It was then left to Bright and Duggan to attend to the repairs. Apart from the quarterly inspections in the company of the executive, Bright and Duggan also attended to maintenance and repairs in response to any reports either by members of the executive or other unit owners. Ms Palmer was not aware of any problems with the aluminium windows including the window outside Mr Booth’s unit.

17 With regard to the use of the window, Ms Palmer gave evidence similar to Ms Eichmeyer’s. She explained how it was possible to lean out of the open window when it was raised in order to look down into the driveway area. She explained how it was necessary to lean out in order to see over the balconies which projected from the building immediately below the window. The exterior of the window and its position in relation to the balconies were depicted in photographs taken by Ms Palmer shortly before the hearing (Exhibits 5 & 6). If the window had been propped open with an umbrella in the manner suggested by the plaintiff, that Ms Palmer would have noticed it during any of her inspections of the building.

18 Gregory Clark also gave evidence in the defendant’s case. He was the tradesman who had been engaged by Bright and Duggan to repair the window after the plaintiff’s injury. He had been repairing windows for 25 years and in the course of any one year would work on between 30 and 50 windows of the kind installed in 49A Upper Pitt Street, Kirribilli. With regard to the balancers which had failed in the window outside Mr Booth’s unit, Mr Clark explained that whether there was any prior warning of a faulty balancer depended upon whether the two balancers on either side broke separately or at about the same time. If the balancers failed simultaneously the window would fall without warning. There was no way of detecting defective balancers from visual inspection because they were hidden within the window frame. The only way the operation of the balancers could be checked was to open the window and observe whether it remained in place as it would if the balancers were working properly.

damages – medical history

19 The plaintiff was unable to use her right hand while it remained in a cast. She was in constant pain and only her nephew was living with her at the time although her daughter came to help on occasions. She was unable to do very much with her left hand because she was right hand dominant. Her hand responded to three months of physiotherapy although the treatment itself added to the pain. She was also placed on an exercise program and, with the removal of the cast, her ability to use her right hand improved to the point where the condition plateaued towards the end of 2001.

20 In a report dated 9 November 2001 (part of Exhibit A), Dr Anthony Beard, a hand surgeon, noted “current problems with continued swelling and stiffness of the fingers”. The plaintiff had a mild fixed flexion deformity of the middle finger. On examination she was able to make a full fist, but not a tight one. She was still using dynamic splintage. Although the plaintiff had ceased physiotherapy some months before Dr Beard saw her, he expressed the view that she would benefit from some further physiotherapy in order to maximise the hand function. There is no evidence that the plaintiff followed that advice. In summary Dr Beard described “an excellent result following what can often be quite a devastating injury”. He expressed the hope that in time and with further exercise the plaintiff would have “minimal functional deficit”.

21 According to the plaintiff her current symptoms include a sensitivity in the right middle finger from what she describes as an “exposed nerve”. She has to avoid putting pressure on the middle finger in order to minimise any pain. She continues to have difficulty with a number of tasks requiring the use of her right hand such as holding a pen. Although she has resumed typing, it is less accurate and slower than it was before her injury. In a report dated 23 September 2003 (Part of Exhibit A), Dr John Davis, an occupational specialist, gave a prognosis of “continuing symptoms which will occur with activity and adversely affect her day to day activities”. On the basis that the plaintiff had achieved maximum medical improvement by the time of his report, Dr Davis estimated an 18% per cent permanent loss of efficient use of the dominant right hand when compared with the most extreme case.

22 In 2002 the plaintiff was diagnosed with pancreatic cancer. She underwent surgery in January 2003 and this was followed by intensive chemotherapy and radiotherapy. Three reports dated 28 May, 30 May 2003 and 29 April 2004 of her treating oncologist, Dr Gavin Marx, were in evidence (Exhibit 8). In the last of those reports Dr Marx recorded “tumour markers” suggestive of a recurrence of the cancer. However, Dr Marx noted that the plaintiff was “very well in herself with no current symptoms” at the time of his observations. The plaintiff’s evidence is that she continues to be symptom free. If the tumour recurred further surgery would not be possible, although chemotherapy and radiotherapy might be employed as a means of “ongoing maintenance”. As long as she remains free of symptoms no treatment is necessary. The plaintiff has declined any optional precautionary treatment and has not seen Dr Marx since April 2004.

pre-injury financial and work history

23 Because of the particular significance in the plaintiff’s claim for damages for the past economic loss associated with the alleged collapse of the plaintiff’s recruitment enterprise immediately following the injury, it is necessary to record the relevant evidence in some detail. I will begin with the history of the plaintiff’s professional activities as a recruitment consultant up to the time of her injury. Evidence on this subject was given by Mr Paul Misan and Ms Virginia Craven, as well as the plaintiff.

24 The plaintiff was born on 1 November 1950. She was 22 years of age when she joined the Department of Employment Education and Training in 1973. She remained with the department for 19 years and when she left in 1990 had risen to the rank of manager. She was involved in overseeing recruitment for employment both on an individual basis and in major projects. In 1990 she joined Deloitte’s as a Senior Recruitment Consultant and remained with them for two years. When she left Deloitte’s she operated her own consultancy under the name Catherine King and Associates Pty Limited. The company was described as a “human resources and business consultancy”. She took some Deloitte clients with her, including All Nippon Airlines (ANA). The ANA consultancy included the devising and implementation of a recruitment program for a new hotel being built by the company. After the completion of that project she continued to have an ongoing role as a consultant with ANA advising on staff turnover. During the continuing expansion of Catherine King and Associates up to 1995, she worked on other hotel projects including the Menzies Hotel.

25 From 1995 to 1999 the plaintiff continued to conduct her consultancy through Catherine King and Associates. However, in September 1999 she incorporated G Force Consulting Services Pty Limited which was intended to gradually replace Catherine King and Associates as the vehicle for her recruitment consultancy business. The catalyst for G Force was a recruitment support program which the plaintiff devised for Cable and Wireless Optus (Optus). Ms Craven, who had known the plaintiff since both acted as consultants on the ANA Hotel project, was recruitment manager at Optus and required assistance on a large scale recruitment program. The program devised by the plaintiff was distinguished from other recruitment programs. It undertook the whole of the initial culling process which was costed on a per capita basis breaking the traditional nexus between consultant’s fees and salary level. Once the bulk of the applicants for a particular position had been culled by the plaintiff, the final selection process was handed over to Optus. The attractions to Optus were both considerable reduction in the cost of the initial cull and retention of the control over the ultimate selection. The pilot program began in September 1999 at about the time G Force was formed. Well before it ended, twelve months later, it had become G Force’s project. According to the plaintiff the pilot program produced “outstanding” results.

26 Following the building of the ANA Hotel in the early 1990s, Virginia Craven was appointed the hotel’s Director of Human Resources. It was she who engaged the plaintiff as a consultant over the one or two years before she left ANA in 1995. She then joined Optus Vision which was later taken over by Optus Communications and in turn became Cable and Wireless Optus in 1998. While at Optus Vision Ms Craven engaged the plaintiff (Catherine King and Associates) as a recruitment consultant and turned to the plaintiff again when Cable and Wireless Optus embarked on what she described as a “huge” recruitment campaign. She referred to the need to contain the costs of the campaign, a need which was met by the pilot project devised by the plaintiff for G Force. Ms Craven described it as extremely successful. It had saved Optus “huge sums of money”. Ms Craven left Optus during the first half of 2000 while the project was still underway.

27 When the plaintiff commenced work on the pilot program for Optus she was working from home. The early success of the program prompted the plaintiff to look for commercial premises to house G Force. A lease of office space at Ryde was signed in October 2000. The establishment of commercial premises was seen as contributing to the long term role of G Force as the successor of Catherine King and Associates. Between October 2000 and January 2001 other work taken on by the plaintiff included a consultancy with the Ryde Business Forum, which offered the potential of further consultancies with the various enterprises belonging to the Forum, and another hotel project, this time at the Wentworth Hotel. G Force moved into the Ryde premises in January 2001 and two other consultancies were taken on in early February.

28 The Wentworth Hotel project involved the purchase of the hotel by City Freehold. The principal consultant on that project was Mr Misan’s PM Group, a general consultant to the hotel industry. PM Group subcontracted to the plaintiff the task of drawing up a plan to deal with the redundancies which would result from the transfer of ownership of the hotel. It was the income from the PM Group consultancy ($20,000), the proceeds of sale of a motor vehicle ($15,000) and the expected income from a project with Options Job Futures ($30,000) which were expected to provide the necessary $65,000 interim funding to launch G Force into full operation. Options Job Futures was a “job network provider” involved in large contracts including some government contracts. The plaintiff was engaged to prepare a policies and procedures manual. As between Catherine King and Associates and G Force it is not always clear from the evidence which corporate entity was used on a particular project over the period between late 1999 and early 2001. In some cases such as the Wentworth Hotel project, the project appears to have been undertaken by the plaintiff herself. According to the plaintiff little use was made of G Force between October 2000 and January 2001. Whatever the corporate vehicle used on the Options Job Futures manual, it was the plaintiff’s evidence that by six to seven weeks of work had been put into it February 2001.

29 Paul Misan, like Ms Craven, first became associated with the plaintiff in a business context during the ANA Hotel project. Over the years 1994 to 1995 PM Group employed the plaintiff to provide support services on a number of employment related projects both in recruitment and retrenchment. One of Mr Misan’s companies, PM Learning and Development, used the plaintiff’s expertise to devise a hospitality training package under a contract with the Federal government to develop vocational education and training materials across a range of different industries. According to Mr Misan the Wentworth Hotel project involved “highly complex and sensitive industrial matters” which ultimately found their way into the Industrial Relations Commission. The PM Group engaged the plaintiff as a member of an industrial relations “team” on this project in late January/early February 2001.

30 Mr Misan was aware of the establishment of G Force and was interested in a joint venture which would maximise the respective areas of expertise in the PM Group and G Force. According to Mr Misan his interest in the joint venture was indicative of his confidence in the plaintiff as a recruitment and human resources consultant. Between September 2000 and January 2001 the plaintiff prepared a set of budget projections for G Force for the 2001, 2002 and 2003 financial years (Exhibit D). On a worst to best scenario, the projected net profit per annum for 2001 was $91.340 to $115,038; for 2002 it was $195,616 to $300,947 and for 2003 it was $282,153 to $434,081.

the collapse of G Force

31 When the plaintiff’s hand was injured on 23 February 2001 two major projects were underway which the plaintiff intended to use as the source of funding the consolidation and expansion of G Force. The first was the policies and procedures manual for Options Job Futures; the second was the consultancy for the PM Group on the Wentworth Hotel purchase.

32 According to the plaintiff she was unable to undertake the work associated with the policies and procedures manual because of her injured hand. Most of the work involved data entry on computer. Although Options Job Futures made available a person from their own staff to undertake this task under the plaintiff’s supervision, the person supplied to the plaintiff had neither the knowledge nor skills that the plaintiff needed. Because of other continuing commitments to which the plaintiff had to devote part of her time, the manual was not finished by the deadline. The consequence was that she was paid only $5,000 for a job which was originally expected to yield $30,000.

33 At the time of the plaintiff’s injury the Wentworth Hotel consultancy was at a critical point. Almost immediately after the plaintiff was released from hospital she was involved in a meeting with “key people” involved in the purchase of the hotel business. Just as her work on the Options Job Futures manual was curtailed because of her inability to use her computer, the work for PM Group was slowed down because the nature of her input was not of a kind which could easily be dictated to someone else and quickly translated into a written text. She was also embarrassed at having to participate in “very high level negotiations” while her arm was in plaster and causing her considerable discomfort. The plaintiff decided that because she could not make the contribution which she had been expected to make she could no longer continue the consultancy with the PM Group and the work was taken over by Mr Misan. Of the $20,000 anticipated from the Wentworth Hotel project she received an estimated $9,800.

34 Mr Misan gave evidence that the plaintiff made only a limited contribution to the Wentworth Hotel project following her injury. Although he would have continued to rely on her as a consultant if she had been available, he acknowledged that the PM Group’s work on the Wentworth Hotel purchase took a significantly different direction at the time of her injury. Because the redundancy measures assumed a significant industrial relations dimension which was pursued in the Industrial Relations Commission, PM Group had to rely increasingly on advice from the legal firm, Freehills. Mr Misan was not able to say how much the plaintiff would have been paid had she continued to fulfil the role which was originally delegated to her because payment depended on the number of hours required of her and actually performed.

35 There was no one employed by G Force at the time of the plaintiff’s injury. During her convalescence she undertook occasional small consulting jobs “to keep the bills paid”. Without the seed money which she had expected to obtain from the two projects which she was unable to complete, the G Force concept could not be advanced and from the time of her injury G Force undertook no new work. Although the plaintiff conceded that the demand for the program which had been devised with Optus still existed, it was not possible to replicate the effort which had been put into the establishment and promotion of G Force up to February 2001. It seems that G Force withered on the vine. It formally ceased trading on 30 June 2003.

36 As the plaintiff’s condition improved, her work as a consultant increased. Although the financial details are sparse, it seems that by the end of 2002, when the condition of her hand had plateaued at its current level, she had rebuilt her consultancy business to where it was before her injury. If there was any drop in income after that time it was a consequence of the diagnosis of and treatment of pancreatic cancer. Catherine King and Associates ceased trading on 31 December 2002 and, it appears that the plaintiff conducted the business in her own name from that time. The diagnosis and subsequent treatment of pancreatic cancer was a setback although, even during the period of post-operative treatment, she continued to undertake a small number of consultancy jobs. Since the middle of 2004 she has been back to full-time work. As at the time of the trial she had been working fourteen hours a day, six days a week for the previous three months.

Ridis v Strata Plan 10308

37 Counsel for both plaintiff and defendant sought to get assistance from the recent decision of the New South Wales Court of Appeal on the construction of s 62 of the Strata Schemes Management Act 1996 in Ridis v Strata Plan 10308 (2005) 63 NSWLR 449. In that case the plaintiff was injured while on the common property of a block of home units in Victoria Road, Bellevue Hill, under the management and control of the defendant owners corporation. Having left the building shortly before the incident in which he was injured, the plaintiff was returning through the front entrance when he put out his right hand in order to prevent the front door closing and locking him out. The annealed glass in the door against which he had placed his hand shattered and his right forearm was severely lacerated. The glass had been in the door since the building was erected in 1939. Since 1973 safety glass had been a requirement in doors in all new buildings or in older buildings when annealed glass was replaced. There was no evidence of any prior incident of the kind in which the plaintiff was injured or that any inspection of the glass in the front door had ever been undertaken. It was the practice of the managing agent to list the matters most urgently requiring maintenance work. Such a list had been drawn up in 1999 but contained no reference to the need to replace the glass in the front door. In the light of this and other evidence the trial Judge described the approach of the defendant to maintenance as “reactive rather the proactive”.

38 In his dissenting judgment Tobias JA held that the duties imposed by s 62(1) and (2) of the Strata Schemes Management Act were absolute and unconditional:

55. …the obligations imposed upon the respondent by s 62(1) and (2) of the Act must be taken to have informed the standard of care reasonably required of it as an owners corporation with respect to its management and control of the use of the common property: s 61(1)(a). To discharge that standard of care the respondent was required to inspect from time to time the common property including its fixtures and fittings for the purpose of, inter alia, replacing any item thereof which it was appropriate to replace in the sense referred to above. The statutory regime, given the terms of s 62(3) in particular, required an owners corporation to be proactive and not, as the primary judge found the respondent to be in this case, merely reactive. It could not escape its statutory obligations by simply hiding its head in the sand.

56. Accordingly, and relevantly to the facts of the present case, s 62(2) of the Act obligated the respondent to replace the ordinary annealed glass panes in the front doors unless, by special resolution, it determined that it was inappropriate to do so and that its determination not to do so would not affect the safety of that item of property. As no such resolution had been passed by the respondent, it was in continuous breach of its statutory duty to those who were injured as a consequence of failure to replace that glass.

57. It also follows from the nature of the obligation under s 62(2) and the conditions set out in subsection (3), which inform an owners corporation's determination not to carry out that obligation, that the owners corporation must from time to time (depending upon the circumstances and the nature of the fixture or fitting in question) inspect the same for the purpose of determining whether it is inappropriate to renew or replace it without affecting any relevant question of safety…
59. Similarly, under s 62(1) the proper maintenance of the front doors required them to be inspected to ensure that they operated in a safe manner. In the present case, they did not. The door in question had a closing device that would, from time to time, cause the door after opening to close quickly with the consequence that a manoeuvre such as that executed by the appellant would cause an impact upon the glass which, given its propensity to shatter, gave rise to the foreseeable risk of it shattering and causing severe injury (as in fact happened).

39 Jones v Bartlett (2000) 205 CLR 166 involved an injury sustained in circumstances very similar to those in Ridis. The plaintiff was lacerated by annealed glass in a door with which he collided. The door had been installed in the premises in question at a time when safety glass was not a requirement although, as in Ridis,by the time the plaintiff was injured the requirement of safety glass was operative. A distinction between Jones v Bartlett and Ridis was the fact that the former involved an action by a son of the lessee of tenanted premises against the landlord. Tobias JA expressed the view that the cases could be distinguished on the grounds that in Jones v Bartlett the glass was in an internal door in a domestic dwelling as distinct from the front door to a block of home units on common property. More important, however, was the effect of s 62 of the Act which required the owners corporation to have regard to its statutory obligations in exercising reasonable care. The view of the majority of the High Court in Jones v Bartlett that the defendant landlord was not in breach of any common law duty of care in that case had to be qualified by the effect of s 62 in Ridis.

40 The majority judgments in Ridis were delivered by Hodgson and McColl JJA. Both were of the view that the defendant owners corporation was not in breach of any duty of care to the plaintiff. However, the approach of Hodgson JA to the effect of s 62 had something in common with that of Tobias JA. According to Hodgson JA, s 62(1) and (2) required more than the exercise of reasonable skill and care. The section imposed an absolute obligation requiring the owners corporation, acting reasonably, to have a system in place for monitoring the maintenance and state of repair of the common property. However, that did not mean that the owners corporation was expected to hire specialist experts to inspect every aspect of the common property which could possibly give rise to safety issues. Only in circumstances where the owners corporation had reason to believe that something on the common property could be dangerous did a duty of care arise. The standard of care to be exercised in periodic inspections required by s 62 was that of an experienced managing agent or person with general building maintenance skills.

41 The standard of care envisaged by Hodgson JA had not been breached because a person of the required level of skill and experience would not be expected to detect the existence of annealed glass in the door or understand its potential danger. Hodgson JA also disagreed with Tobias JA concerning the “erratic behaviour” of the door closer. Even if that was obvious, the likelihood and extent of injury from it alone were very small. It was not sufficient to make replacement of the door closer a matter which should have been attended to prior to the accident.

42 In the course of her judgment McColl JA undertook an extensive review of the legislative history of the Strata Schemes Management Act and relevant case law, including, but not restricted to, the decision of the High Court in Jones v Bartlett. Contrary to Tobias JA, McColl JA regarded the duty at common law, not that imposed by s 62, as paramount. The principal purpose of the Act was to allocate responsibility between the owners corporation and the proprietors of individual lots in the strata plan. It should not be read to have intended to impose a proactive duty on the owners corporation beyond that required by the common law principals generally applicable to the liability of occupiers. As an occupier of the common property the owners corporation was in no different position from any other occupier.

43 McColl JA disagreed with Tobias JA with regard to the relevance of the decision in Jones v Bartlett. Contrary to Tobias JA, her Honour regarded the relevant language of the Western Australian Occupiers and Liability Act 1985 as not dissimilar in its terms to the corresponding provisions in s 62(1) and (2) of the Strata Schemes Management Act. The view in Jones v Bartlett that the statutory provisions in that case imposed no affirmative duty on the landlord were applicable to the owners corporation in Ridis. Her Honour agreed with Hodgson JA that there was no material distinction between an internal glass door in domestic premises and the front entrance door to a block of home units. However, her Honour did not agree with Hodgson JA’s conclusion that s 62(1) and (2) imposed an absolute duty:

181. Moreover the legislature could be expected to have recognised that the obligations imposed upon the owners corporation were imposed, in substance, upon individual property owners. There was no reason for the legislature, by the enactment of s 62, to impose upon individuals who take advantage of urban consolidation to live in properties governed by the Management Act , a burden of inspection and continually updating of the common property not borne by individuals who reside in freehold properties.

44 In s 75 of the Strata Schemes Management Act the owners corporation is required to consider on an annual basis its actual and expected expenditure on recurrent and capital expenses. That section indicates that at least once a year the owners corporation is required to consider the cost of exercising its responsibilities under s 62. It was the view of McColl JA that s 62 did not mandate a system of more frequent inspections:

…the question whether the owners corporation has discharged its s 62 duties of maintenance and repair is to be judged by whether an "ordinary person" in the owners corporation’s position "would or should have known that there was any risk; whether that person would or should have known of steps that could be taken in response to that risk; and the reasonableness of taking such steps": Jones v Bartlett per Gummow and Hayne JJ (at [186]), per McColl JA in Ridis at [187].

liability
common law

45 The duty of an owners corporation towards an entrant on the common property is that owed by occupiers to entrants in accordance with the general principles restated by the High Court in Australian Safeway Stores Pty Ltd v Zaluzna (1987) 162 CLR 479. The duty of the occupier is to take such care as is reasonable in the circumstances. The duty is not to make the premises as safe as reasonable care and skill on the part of anyone can make them but to protect entrants from foreseeable risks of injury. The standard of care is measured by what a reasonable person in the circumstances would do. These general principals were reaffirmed by the High Court in Jones v Bartlett, discussed at [30] to [44] above.

46 It is reasonable to infer from the limited evidence available that the window in this case had been propped open by an umbrella immediately before the plaintiff was injured and that, because of the defective balancers which were subsequently replaced by Mr Clark, the window dropped shut once the support of the umbrella was withdrawn. When the plaintiff withdrew from the window and knocked the umbrella onto the floor, the window immediately fell because of the absence of such support. While those conclusions can be reasonably inferred from the evidence, they do not go beyond establishing the mechanism of the injury and its physical cause. The defendant’s liability depends upon proof by the plaintiff that the danger posed by the defective mechanism in the window was a danger of which the defendant was aware or, with the exercise of reasonable care, should have been aware. There was no evidence to support actual knowledge either in the records of the defendant or in the recollection of either Ms Eichmeyer or Ms Palmer. In his opening at the beginning of the trial, plaintiff’s counsel referred to a controversy which had been “raging” for some time in the owners corporation concerning the state of repair of the windows in the building about which nothing had been done. The only evidence of the poor state of the windows was that given by both Ms Eichmeyer and Ms Palmer about the steel windows that had fallen into disrepair in the early 1990s and were replaced by aluminium windows in 1993 or 1994. There was no evidence of any complaints about the condition of the aluminium windows from the time they were installed.

47 With regard to the question of whether the owners corporation should have been aware of the existence of the danger created by the window which caused the plaintiff’s injury, there was no evidence of when the balancers in the window failed or when the umbrella was put in place to hold the window open. Given the uncontroverted evidence of Mr Clark that a window could fail without warning and Ms Eichmeyer’s evidence that although she lived in the unit opposite the window she not seen the window held open by the umbrella, it is possible that the window was propped open a very short time before the plaintiff was injured. It is even possible, given the number of guests who had arrived at the party for Mr Booth earlier that evening, that the window was propped open after the party began but before the plaintiff went out to meet the VIP guest.

48 Much was made in the course of submissions of the inferences to be drawn from both the failure of certain prospective witnesses to give evidence, in particular Mr Booth. Mr Booth was the owner of the unit, or units, adjacent to the window. Although the evidence was vague, there was reference to two units owned by Mr Booth on the seventh floor. If he owned both, he owned the only units on that floor. He was also chairman of the executive of the defendant owners corporation at the time of the plaintiff’s injury. He was therefore someone who might have been expected to provide important evidence with regard to the condition of the window at the time and the practices of the defendant with regard to inspection and maintenance of the building. For these reasons it was submitted by counsel for the plaintiff that the failure of the defendant to call Mr Booth entitled the plaintiff to an inference that Mr Booth’s evidence would not have assisted the defendant’s case: Jones v Dunkel (1959) 101 CLR 298. On the evidence in this case, the attempt to use a Jones v Dunkel inference in that way was misconceived.

49 The difficulty facing the plaintiff is that there was not sufficient evidence to provide the foundation for a case against the defendant on the general principles of negligence at common law applicable to occupiers. Given that the onus of proof is on the plaintiff, a Jones v Dunkel inference is not available to the plaintiff if the evidence in the plaintiff’s case is not sufficient to require the defendant to lead evidence. In those circumstances the defendant’s failure to call evidence has:

Schellenberg v Tunnel Holdings

50 Plaintiff’s counsel relied on the decision of Campbell J in the New South Wales Court of Appeal in Manly Municipal Council v Byrne [2004] NSWCA 123. However, in the course of a passage cited by plaintiff’s counsel in submissions Campbell J stated:

Jones v Dunkel

In this case there was insufficient evidence in the plaintiff’s case from which an inference could be drawn against the defendant that the defendant either knew or ought to have known of the existence of the faulty mechanism in the window prior to the plaintiff’s injury. On the authorities relied on by the plaintiff, Jones v Dunkel cannot assist the plaintiff.

51 Another reason why the absence of Mr Booth as a witness could not support the plaintiff’s case, even with the assistance of Jones v Dunkel, is that there is at least an argument that Mr Booth was no more in the defendant’s “camp” than he was in the plaintiff’s. The plaintiff would appear to have known Mr Booth sufficiently well to be invited as a guest to his birthday party and to be engaged in assisting in the organisation of the surprise VIP guest. In those circumstances there would appear to have been no obstacle to the plaintiff’s calling Mr Booth, if his evidence would have assisted the plaintiff’s case. If that view were sustained, Jones v Dunkel could paradoxically be used against the plaintiff. More generally the plaintiff’s case was conspicuously unaided by any witness on liability apart from the plaintiff herself. Not only was Mr Booth not called as a witness in the plaintiff’s case, but nor was Mr Sim who was the only person in the vicinity of the window when the plaintiff was injured. However, because I have found that the evidence was sufficient to establish that the plaintiff’s injury was caused in the manner described by her, that is as a consequence of the dislodging of the umbrella which had been supporting the faulty window, the question of whether the plaintiff’s case would have been assisted by evidence from any other witness in this respect becomes redundant. But the plaintiff’s evidence remains unsupported on the ultimate question of whether there was a failure to exercise reasonable care on the part of the defendant.

Strata Schemes Management Act

52 The plaintiff’s case based on s 62 of the Act is not assisted by the judgment of McColl JA in Ridis. However, the plaintiff’s case is assisted in principle, if the intermediate position adopted by Hodgson JA is applied. As noted earlier [40] Hodgson JA held that s 62(1) and (2) imposed an absolute obligation which required the owners corporation, acting reasonably, to have in place a system of monitoring the maintenance and state of repair of the common property. On that interpretation, the defendant in this case was under a statutory obligation to put such a system in place. It makes no difference to the actual effect of s 62 in this case whether it is regarded as the foundation of a separate action for breach of statutory duty or merely evidence of a standard of care in negligence more onerous than that otherwise applied at common law:

O’Connor v S P Bray Ltd

(1937) 56 CLR 464.

53 It was the plaintiff’s submission that the defendant failed to establish the existence of any “system” in a meaningful sense. Ms Palmer’s evidence was that at each quarterly meeting of the defendant’s executive the members of the executive, in the company of a representative of a managing agent, conducted an inspection of the building in order to identify areas which required maintenance or repair. However, Ms Palmer’s evidence did not identify any systematic procedure adopted for the purpose of such inspections. In particular there was no evidence that the inspections included a testing of each of the windows in the common property in order to ensure that they were in working order. In the Schedule of Services attached to the Strata Management Agreement with Bright and Duggan (Exhibit 2) the obligation to

make inspections of the common property and public areas and render inspection report in relation to the quality of the service providers to the Owners corporation

was marked “N” and accordingly excluded from matters covered by the management fee under the agreement. Such services were available on payment of an additional fee. But there was no evidence of any separate agreement with the managing agent to perform those services and the obligations of the managing agent under the agreement were therefore restricted to engaging a consultant to report on repairs/maintenance required to the common property. The granting of a power to engage a consultant fell well short of any system of inspection and maintenance.

54 On the above evidence there is some basis for a case against the defendant based on s 62(1) and (2) of the Act, given that in at least two of the judgments in Ridis a proactive duty more onerous than the duty at common law was envisaged. However, I am equally satisfied that to make a case against the defendant the plaintiff bears the onus of establishing that a system of inspection and maintenance which could reasonably be expected of the defendant in the circumstances would have been sufficient to avert the plaintiff’s injury. It is in this respect that the plaintiff’s case again fails. The evidence does not support a conclusion that a reasonable system of inspection would have discovered the defect in the window in sufficient time to enable steps to be taken to repair it or install an appropriate warning before the plaintiff was injured. A system requiring constant vigilance and inspections sufficiently frequent to detect a defect, which on Mr Clark’s evidence might remain hidden until the balancers ultimately failed, would have been unreasonably onerous and out of proportion to the risk posed by the faulty window.

55 The plaintiff relied on three cases to support its submission that, even if there was any system in place, it was not sufficient to meet the requirements of s 62. However, all three can be readily distinguished from the present case. Rose v Abbey Orchard Property Investment Pty Ltd (1987) Aust Torts Reports 80-121 and Shoey’s Pty Ltd v Allan (1991) Aust Torts Reports 81-104 were cases involving a car park and a supermarket both frequented by large numbers of members of the public where the system of clearing the area of any foreign matter likely to render the surface dangerous was in question. The nature of the premises in both cases was such as to impose an obligation of frequent inspection. In both cases it was held that if the inspections were carried out sufficiently frequently they should have exposed the danger. In the present case the evidence does not support a conclusion that frequent inspections would have discovered the danger. In addition the burden on the defendant would be less than that on the occupier of car parks and supermarkets given the nature of the premises and role of the owners corporation with regard to those premises: MacPherson v Proprietors of Strata Plan 10857 [2003] NSWCA 96.

56 The third decision relied on by the plaintiff was Waverley Municipal Council v Bloom [1999] NSWCA 229, a case in which the defendant council, which was responsible for the patrolling of Tamarama Beach, was sued for its failure to exclude board riders from the beach with the result that a swimmer was injured when a board rider collided with him. Again the facts of that case are far removed from those before me and, since the extent of any obligation arising under s 62 must depend very much on the circumstances of each case, I am not greatly assisted by any of those three decisions.

57 Plaintiff’s counsel sought to make similar use of Jones v Dunkel for the purposes of s 62 to that used with regard to common law liability. In this context it was submitted that it was the defendant’s failure to call Bright and Duggan, the managing agents, which raised an inference favourable to the plaintiff. This attempt to use Jones v Dunkel must fail for essentially the same reasons given with regard to the failure to call Mr Booth [48] to [50]. Jones v Dunkel is of no assistance to the plaintiff if the evidence in the plaintiff’s case contains no foundation for a conclusion that the defendant was in breach of s 62.

58 It was also submitted on behalf of the plaintiff that adverse inferences should be drawn against the defendant because of the failure on the part of counsel for the defendant to put questions to Ms Eichmeyer and Ms Palmer on questions such as how long before the plaintiff’s injury either of them had inspected or operated the window. I was invited to assume that their answers to such questions would have been unfavourable to the defendant’s case. In support of this submission counsel relied on the following passage from the judgment of Handley JA in Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389:

There appears to be no Australian authority which extends the principles of Jones v Dunkel to a case where a party fails to ask questions of a witness in chief. However I can see no reason why those principles should not apply when a party by failing to examine a witness in chief on some topic, indicates "as the most natural inference that the party fears to do so". This fear is then "some evidence" that such examination in chief "would have exposed facts unfavourable to the party", at 418.

59 Counsel for the defendant submitted in reply that the comment was obiter and unsupported by any other authority and, even if it was not, it could not be applied to this case for reasons similar to those which render Jones v Dunkel itself irrelevant. Putting aside the question of whether the proposition is binding on me, I find the second argument entirely persuasive. In the quoted passage, Handley JA was referring to a matter which the insured, on whose evidence he was commenting had to prove. His Honour was suggesting that a party in that position should be denied the benefit of any inference made necessary because of the absence of direct evidence which that party could have given. The plaintiff was the equivalent party in this case, not the defendant. The remarks of Handley JA cannot assist the plaintiff.

60 The plaintiff, on whom the onus of proof lies to establish a breach of duty, has failed to make a case either at common law or with the aid of s 62 of the Strata Schemes Management Act. The defendant is therefore entitled to a judgment in its favour.

contributory negligence

61 Having found in the defendant’s favour there is an element of artificiality in attempting to address the question of contributory negligence. This is because the question depends upon the same facts, as those on which I have found that the defendant was not negligent. There was no evidence on either the appearance or the position of the umbrella before it was knocked aside by the plaintiff. In those circumstances there is no foundation for a conclusion that the plaintiff failed to exercise reasonable care for her own safety in not noticing the umbrella when she went to the window and leant out. The onus of proof with regard to contributory negligence is on the defendant. On the evidence that onus was not discharged.

obvious risk

62 The defendant submitted in the alternative that the plaintiff should be denied recovery on the grounds that the risk posed by the faulty window was an obvious risk for the purpose of ss 5G and 5H of the Civil Liability Act 2002. Were it necessary to decide the issue, I am not satisfied that the evidence in the defendant’s case went far enough to establish that the risk was obvious in the required sense. In those circumstances I do not intend to address the difficult question of the consequences to the plaintiff’s case of a finding of obvious risk. It was also the defendant’s submission that, because there was no response from the plaintiff’s counsel to the defendant’s submissions on this matter, the plaintiff’s silence should be regarded as a concession: Telstra Corporation Limited v Bisley [2005] NSWCA 128 and Edwards v Consolidated Broken Hill Limited [2005] NSWSC 301. I am not satisfied that the judgments in the cases relied on by the defendant support the general proposition that failure to answer a case made in submissions is necessarily fatal. There is little to be gained from taking that issue any further.

damages

63 Partly because of the finding against the plaintiff on liability, but even more so because of the absence of independent evidence to suspect the substantial claim for economic loss, I propose to restrict what I have to say on the subject of damages to findings which narrow within a relatively limited range the amounts that would have been recoverable by the plaintiff had her claim succeeded I will attempt precise calculation. Such an approach should be sufficient to demonstrate to the plaintiff that, even if she had succeeded on liability, the damages recoverable would have been of modest proportions.

non-economic loss

64 Damages for non-economic loss are circumscribed by the provisions of s 16 of the Civil Liability Act. Under s 16(1) no damages may be awarded for non-economic loss unless the severity of the loss is “at least 15% of a most extreme case”. Above 15% of a most extreme case the section provides for damages to be assessed according to a percentage of the maximum amount recoverable which is at present $416,000 subject to indexation. It was submitted by counsel for the plaintiff that the damages for non-economic loss should be assessed at 28% of a most extreme case which would entitle the plaintiff to the sum of $58,000 under this head.

65 I cannot accept that the evidence supports an award of that order. There is no doubt that the immediate effect of the incident was to cause the plaintiff considerable pain which persisted for at least three months after the injury. For that period the plaintiff’s arm was in plaster and for that reason the plaintiff was subjected to substantial inconvenience and was significantly restricted in her day to day activities. However, in his report of 9 November 2001, less than nine months after the accident, Dr Beard described “an excellent result” and predicted that in time and with further exercise the plaintiff would have “minimal functional deficit” [20]. The plaintiff’s own evidence was that the condition of her finger continued to improve until the end of 2002 and has remained stable since that time. While she does continue to experience sensitivity in the injured finger and pain if it is subjected to pressure, it now has only a marginal effect on work related tasks such as writing and word processing.

66 It is difficult to find any evidence to support an assessment at the level suggested by plaintiff’s counsel. Dr John Davis estimated the permanent loss of efficient use of the right hand at 18% when compared with the most extreme case. Even if that were translated directly into a percentage of a most extreme case for the purpose of s 16, it would translate into damages of only $9,000. It was the defendant’s submission that non-economic loss both past and future in this case does not exceed the threshold of 15%.

67 Counsel for the defendant relied on the Court of Appeal decision in Penrith City Council v Parks [2004] NSWCA 2001. In that case the Court of Appeal reduced an award of 28% of a most extreme case to “no higher than 15%”. The plaintiff had suffered a fracture of the right little finger as well as pain and discomfit in the right hand, back and neck. Although the fracture of the little finger was attributable entirely to the incident for which the defendant council was held responsible, the other injuries were an aggravation of a pre-existing condition caused in an earlier motor vehicle accident. There is a danger in attaching too much significance to assessments made in other cases because of the inevitable variation in the relevant facts from one case to another. The plaintiff in Parks was left hand dominant so that the injury to her right hand, while comparable to the plaintiff’s injury in this case, would not have had as significant an effect on the plaintiff’s amenities and enjoyment of life. On the other hand, a reason why the Court of Appeal did not reduce the assessment below the 15% threshold was that counsel for the defendant had conceded at the trial that the threshold had been exceeded. Notwithstanding the dangers of comparison in this case, it is very difficult to see how the plaintiff could hope to recover damages beyond the sum available for 18% of the most extreme case. The appropriate percentage would more likely be less than that.

economic loss

68 The one item of damage not in dispute is a sum of $1,529.93 for past out of pocket expenses. It is not necessary to comment further on that.

69 It was foreshadowed earlier in the judgment that the head of damage on which the parties were most significantly divided was that for past economic loss suffered by the plaintiff as a consequence of her inability to work to her full capacity during the period immediately following the injury. In particular it was part of the plaintiff’s case that the future of G Force as the new vehicle for an expanded source of income for the plaintiff was effectively destroyed as a consequence of the injury. The damages specifically itemised in the final submissions by plaintiff’s counsel for past economic loss were made up of the sum of $65,000, representing loss of capital injected into the G Force project which was irretrievably lost as a consequence of its ultimate collapse, and a further sum of $200,000 for loss of income expected from G Force had it not collapsed.

70 The claim for damages for past economic loss is pervasively and adversely affected by the lack of supporting evidence. This case illustrates the difficulties facing a plaintiff in a case for economic loss where the plaintiff has operated as a sole trader and whose sources of income are channelled through corporate entities. Although it ignores the value of the plaintiff’s contribution to the corporate entities, one approach in such a case is to accept on face value the taxable income from year to year disclosed in the plaintiff’s tax returns and notices of assessment as the basis of determining economic loss. According to the notices of assessment of income tax for the plaintiff for the financial years ending 30 June 2000, 2001, 2002 and 2003 (Exhibit G), the plaintiff’s income for those years was $42,640, $37,640, $31,530 and $29,530. From that evidence the plaintiff could substantiate a case for loss of income in the two financial years following her injury of $5,000 and $11,000. The further decline in income in the financial year ending 30 June 2003 is more likely than not attributable to the onset of cancer and the interruption to the plaintiff’s earnings which that caused. Therefore the maximum the plaintiff could recover for past economic loss using that evidence would be $16,000.

71 A different approach was adopted by the author of the economic loss report dated 4 March 2005 tendered in the defendant’s case, Mr Richard Ivey (Exhibit 11). He took into account the financial records of Catherine King and Associates and G Force in calculating the plaintiff’s nett earnings. According to Mr Ivey the financial year ending 30 June 2001, although it included four months following the injury, should be used as the benchmark for assessing past economic loss sustained in the following years because, on his calculations, the plaintiff’s earnings for the 2001 financial year exceeded those for the preceding year. According to Mr Ivey:

A decline in the plaintiff’s earnings did not appear to commence until well after the accident.

On that basis Mr Ivey calculated the nett loss of income for the years 2002 and 2003 at $29,913 and $13,744 respectively.

72 Although Mr Ivey acknowledged the relevance of the onset of cancer and its possible recurrence to the assessment of future economic loss, it appears that he did not take this into account in the calculation of past loss in the 2003 financial year. It was during that year that cancer was diagnosed and treated and it was therefore more likely than not that the loss of $13,744 was entirely a consequence of the cancer and not the injured finger. Once that adjustment is made, Mr Ivey’s estimate of past economic loss is reduced to less than $30,000. The recovery of a much larger sum in the order of the $265,000 sought by the plaintiff could only be justified if it could be proved that the collapse of G Force was the result of the plaintiff’s inability to give it her full support when it was most needed because of the injury to her finger.

73 The sum of $65,000 was identified by the plaintiff in her evidence as the amount of “seed money” necessary to put G Force on a financially viable footing [28]. Her evidence was that the sum was to be provided from three sources: the policies and procedures manual for Options Job Futures ($30,000), the income from the PM Group consultancy on the Wentworth Hotel project ($20,000) and the proceeds of the sale of a motor vehicle ($15,000). However, the two consultancies could not be completed because of her injury and the total income received from those projects was reduced from an expected $50,000 to $14,800 [32]-[33]. On that evidence the most that the plaintiff could hope to recover, even if the unavailable seed money were accepted as a proper basis for assessment, would be the difference of $35,200 which the plaintiff had to make up from her own resources. A further difficulty with accepting even the reduced sum as a reliable basis for calculating any loss is the absence of other evidence to support the plaintiff’s claim that she was to have ultimately received the sum of $20,000 from PM Group. Mr Misan’s evidence was that there was no fixed sum agreed to in advance and that the plaintiff was to be paid according to the amount of work which she was required to put into the project. It was also Mr Misan’s evidence that at the time the plaintiff was injured much of the consultancy work associated with the redundancy package had been placed in the hands of the solicitors, Freehills, because of the increasing importance of legal issues created by the Union’s initiating proceedings before the Industrial Commission. It must follow that there was going to be less for the plaintiff to do than might have been expected at first.

74 The most significant hurdle facing the plaintiff in making a case for substantial damages for past economic loss was the failure to substantiate by way of any evidence, other than that of the plaintiff herself, the claim that G Force would have risen to the heights envisaged in the projections prepared by the plaintiff and summarised in [30] above, had its progress not been interfered with by the plaintiff’s injury. The expert evidence relied on by the plaintiff was contained in a report dated 1 November 2004 prepared by Po Mar, a consultant with Personal Injury Support Pty Limited (PIS) (Exhibit B). In calculating the loss to the plaintiff attributable to the collapse of G Force, the PIS report relied on an accumulated loss over the four years to June 2003 of $203,670. That accumulated loss was then treated as set up costs which had to be offset against the anticipated profits over the corresponding period. The fundamental difficulty in this approach was identified by Mr Ivey in his report.

75 Contrary to the worst case scenario projection in the plaintiff’s forecast for G Force in the 2000/2001 year, namely $91,000, it incurred a loss of $58,709, according to the company’s tax return for the year ending 30 June 2000 (Exhibit H). It also had recorded a trading loss for the previous year of $16,293. To accept uncritically the plaintiff’s projections for the years that followed defies common sense. Yet that is what the PIS report does, as well as attributing over $200,000 to set-up costs in contrast to the plaintiff’s own estimate of $65,000. Mr Ivey demonstrates that comparison of projected income with actual income for the corresponding periods produces similarly stark differences.

76 The plaintiff’s projections, unsupported by any independent assessment of the profitability of G Force, are no more than the plaintiff’s own best estimate. The optimistic picture painted by the plaintiff is not corroborated in any concrete way by the evidence of either of her witnesses, Mr Misan or Ms Craven. To Mr Misan, G Force was never more than an interesting idea which he intended to explore with the plaintiff. His evidence cannot be translated into any tangible level of profitability. Ms Craven’s evidence was even more remote. Like Mr Misan, Ms Craven gave evidence of her confidence in the plaintiff as a human resources consultant. Both of them had worked with and employed the plaintiff in that capacity. However, Ms Craven had left Optus before the G Force pilot project was completed and there was nothing in her evidence to indicate that she was in a position to feed future work to G Force to lift it to the levels of profitability contemplated by the plaintiff.

77 No support can be found in the evidence for the submission that the injury caused economic loss to the plaintiff of an amount even approaching $200,000 in the period immediately following the injury. The plaintiff cannot expect to recoup losses based on the collapse of a highly profitable enterprise the success of which was unproven and was evidenced only in the plaintiff’s own projections. It is doubtful whether the evidence proves any connection between the injury and the collapse of G Force. At the very most a case might be made for recovery of the seed money which the plaintiff had expected to receive from projects which she was unable to complete because of her injury. The maximum recoverable on that basis would not exceed $35,000 [73]. But the plaintiff’s own evidence about her unsuccessful efforts to employ substitute staff and the extent to which the injury, rather than other circumstances, affected her role in the PM Group consultancy was unconvincing. The more valid means of assessing loss of the plaintiff’s income would be to rely on the decline in her actual income following her injury which on Mr Ivey’s comparatively favourable assessment, after allowance for the effects of the onset of cancer, would entitle the plaintiff to just short of $30,000 [71].

78 There was no evidence of the plaintiff’s financial circumstances from the end of the 2003 financial year to the date of the hearing. For this reason and because of the uncertainties surrounding the plaintiff’s future health, Mr Ivey made no assessment of future economic loss. Because of the plaintiff’s own evidence that by the time of the hearing she was working at a level which more likely than not was generating income equal to or greater than her pre-injury income, the most that she could recover would be a relatively modest amount for the possibility that the ongoing problems with her finger may have a marginal effect on her achieving her full capacity. The plaintiff was born on 1 November 1950. She has a future working life of approximately ten years, assuming that she would retire at 65.

79 The submission of plaintiff’s counsel on future economic loss appears to have been based on considerations of the kind referred to in the last paragraph. He used a nett weekly loss of $60 over the rest of the plaintiff’s working life which produced a sum, based on a 5% discount rate, of $24,774, less 15% for vicissitudes leaving $21,057.90. While this was not an excessive amount as a starting point, further reduction must be made for vicissitudes in this case in view of the very real possibility that the plaintiff’s cancer will return at some stage with significant effect on her income earning capacity. In those circumstances the adjustment for vicissitudes should be at least 25% which would produce a nett figure for future economic loss of approximately $18,500. The plaintiff would be entitled to an allowance for superannuation calculated on the usual basis of 9% of gross income loss for both past and future.

80 The amounts identified under the various heads of damage which the plaintiff would be likely to recover are as follows:

I am satisfied that, had the plaintiff established liability, her damages would be most unlikely to have exceeded $65,000.

**********

CITATION:	Catherine Mary King v The Owners Corporation Strata Plan 2311 [2006] NSWDC 44
HEARING DATE(S):	08/11/05, 09/11/05, 10/11/05, 11/11/05, 20/04/06
JUDGMENT DATE:	13 October 2006
JURISDICTION:	Civil
JUDGMENT OF:	Phegan DCJ
DECISION:	Verdict and Judgment for the defendant; Submissions invited on costs
CATCHWORDS:	Strata title - liability of owners corporation - statutory duty - damages for economic loss
LEGISLATION CITED:	Strata Schemes Management Act 1996 (NSW) Civil Liability Act 2002 (NSW) Civil Liability Amendment (Personal Responsibility) Act 2002 (NSW)
CASES CITED:	Ridis v Strata Plan 10308 (2005) 63 NSWLR 449 Jones v Bartlett (2000) 205 CLR 166 Australian Safeway Stores Pty Ltd v Zaluzna (1987) 162 CLR 479 Jones v Dunkel (1959) 101 CLR 298 Schellenberg v Tunnel Holdings (2000) 200 CLR 121 Manly Municipal Council v Byrne [2004] NSWCA 123 O'Connor v S P Bray Ltd (1937) 56 CLR 464 Rose v Abbey Orchard Property Investment Pty Ltd (1987) Aust Torts Reports 80-121 Shoey's Pty Ltd v Allan (1991) Aust Torts Reports 81-104 MacPherson v Proprietors of Strata Plan 10857 [2003] NSWCA 96 Waverley Municipal Council v Bloom [1999] NSWCA 229 Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 Telstra Corporation Limited v Bisley [2005] NSWCA 128 Edwards v Consolidated Broken Hill Limited [2005] NSWSC 301 Penrith City Council v Parks [2004] NSWCA 2001
FILE NUMBER(S):	525/2004
COUNSEL:	R S Sheldon - Plaintiff R A Gray - Defendant
SOLICITORS:	Carroll & O'Dea - Plaintiff Curwood & Partners - Defendant