Concrete Holland Joint Venture and Master Builders Construction and Housing Association (ACT) Group Apprenticehip Scheme for the Australian Capital Territory Incorporated v Dowse, J.W
[1994] FCA 322
•24 MAY 1994
CONCRETE HOLLAND JOINT VENTURE AND MASTER BUILDERS CONSTRUCTION AND HOUSING
ASSOCIATION (ACT) GROUP APPRENTICESHIP SCHEME FOR THE AUSTRALIAN CAPITAL
TERRITORY INCORPORATED v JOHN WILLIAM DOWSE
No. ACTG87 of 1993
FED No. 322/94
Number of pages - 8
Damages
COURT
IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY
DISTRICT REGISTRY
GENERAL DIVISION
NEAVES, MILES and VON DOUSSA JJ
CATCHWORDS
Damages - appeal against assessment - whether assessments of past and future economic loss excessive
HEARING
CANBERRA, 13 April 1994
#DATE 24:5:1994
Counsel for the appellants: Mr D Nock
Solicitor for the appellants: Macphillamy Cummins and Gibson
Counsel for the respondent: Mr R E Williams QC and Mr G J Lunney
Solicitor for the respondent: Pamela Coward and Associates
ORDER
THE COURT ORDERS THAT:
1. The appeal be allowed.
2. The verdict of $234,448.55 be set aside and in lieu thereof judgment in the sum of $181,438.55 be entered in favour of the respondent against the appellants together with the costs of the trial to be taxed.
3. The respondent to pay the appellants' costs of the appeal.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
NEAVES, MILES and VON DOUSSA JJ This is an appeal against the assessment of damages in a personal injury claim made by a Judge of the Supreme Court of the Australian Capital Territory. The appellants were the defendants at trial.
The respondent had suffered a back injury whilst manoeuvring a heavy steel mesh mat with a fellow employee at his workplace on 11 March 1985. The learned trial judge held that the injury was caused by the negligence of the appellants, and assessed the respondent's damages as follows:-
General Damages $30,000.00 Interest thereon 5,500.00 Loss of earning capacity
- past loss 110,000.00 Interest thereon 64,450.00 - future loss 20,000.00 Out-of-pocket expenses 4,498.55 TOTAL $234,448.55
During argument, the appeal was confined to a challenge to the amounts allowed for the past and future loss of earning capacity, and the interest thereon.
The respondent was born on 12 June 1964. He successfully completed his year 12 secondary education in 1981. In February 1983 he commenced an apprenticeship with the second appellant after completing a one year full time pre-apprenticeship course at the Bruce TAFE. He became an apprentice carpenter. Before he suffered his injury the respondent played both cricket and Australian Rules Football at first grade level. He had participated in other sports and gym work in addition. He had received an offer to play football as a professional from a club in Brisbane, and was seriously considering it when he was injured.
At trial many medical experts in several specialities gave evidence. There was a measure of uncertainty, and perhaps disagreement, amongst them as to the precise mechanics of the injury, and whether the respondent was, before the injury, suffering congenital defects or traumatic injury in the lower lumbar spine. It was clear however that apart from a minor back strain whilst weightlifting which caused pain of very short duration on 8 March 1985, the respondent had been symptom free. X-rays and CAT scans taken in the months following the injury led the medical experts to consider that clear evidence existed of an injury to the intervertebral disc at the L5-S1 level which they considered was probably attributable to the work injury.
The trial judge expressed his conclusion and findings on the medical evidence as follows:
"It may be concluded from all this material that there was no relevant symptomatology before 11 March 1985. It is possible, even likely, that the plaintiff had some stress fractures at the L3 and L4 levels. They were asymptomatic and, but for the incident of 11 March 1985, would either have continued to be asymptomatic or have caused mild symptoms enforcing rest. It is likely they would have then healed without long-term effects. I accept Dr Korber's view that there is a good correlation between a defect which heals and a cessation of symptoms. Given that healing of the relevant defects has taken place, it is unlikely they are the source of the ongoing back symptoms of which the plaintiff complains, although it is possible that L4 has not healed completely and may be contributing to the plaintiff's symptoms.
It is possible, but, in my view, less likely, that there was a disc protrusion before 11 March 1985. A disc bulge might well have been present without protrusion and, in any event, without symptoms. I think that it is more likely than not that the disc protrusion later found was caused by the incident on 11 March
1985. There was certainly a protrusion after that incident. There is no real evidence of its presence beforehand. That disc herniation is, in my view, the major cause of the plaintiff's ongoing back problems."
The respondent was absent from work for 2 weeks immediately following the injury. He then attempted to return to work but pain was still present, and was exacerbated by lifting, bending, and climbing scaffolding. After a further 2 weeks he was advised not to work, and was prescribed a back brace. This device relieved pain when worn.
The respondent did not return to work again until 11 March 1986. In the meantime he kept up a regime of exercises and physiotherapy. He consulted several surgeons but surgery was not undertaken. He was not symptom free when he returned to work, but he was keen to get back and complete his apprenticeship which he did in September 1986. On his return to work he was directed by his medical advisers to avoid work involving repetitive bending or lifting of heavy objects. Work was found for him that met these requirements, but pain continued to be exacerbated by lifting, bending and climbing activities. There was one minor incident on 18 June 1986 when he strained his back lifting a door frame.
The condition of his back persuaded the respondent that he could not carry out "hands on" carpentry work, and he was advised against it by his treating doctors.
He was unemployed for a time after his apprenticeship ended in September 1986. His Honour made no finding one way or the other whether this unemployment was causally related to the respondent's back injury. The respondent considered his future options. It had always been his intention to obtain qualifications and experience that would lead to a supervising position in the building industry, either in an employed position or working on his own account as a contractor or builder. As the prospect of obtaining those qualifications by working on sites as a carpenter was limited by his back condition the respondent decided to seek qualifications by study. He had a choice. He could study for a building certificate and undertake a clerk of works course by part time night school study at the Bruce TAFE or he could pursue a full time degree course at the Canberra CAE (now the University of Canberra). He gained entry into the latter course in 1987 and completed his degree in 1991. The respondent's evidence concerning his choice of the degree course was:
"I was always going to take carpentry a little bit further. I never intended to be a carpenter for the rest of my life. I always intended to go back and do some further studies, either the clerk of works course or the building certificate course at night school which would have then led me on to becoming a foreman or starting up my own business. Now, because I didn't have anything to do with my days I thought what was the use of sitting at home all day and going to night school three nights a week. So I then took the option of attending a full time course instead."
In 1987 and 1988 the respondent studied full time. During the university vacation in February and March 1988 he worked for 4-6 weeks as a carpenter with a construction company but found that he had difficulty with the level and kind of activity, and considered that he could not handle that work on a continuing full time basis. In 1989, as part of the course, the respondent obtained a cadetship with a building company. His work was of an administrative nature. It did not involve manual labour. The work did not aggravate the respondent's back symptoms.
In 1990 the respondent resumed full time study. In early October 1990, he obtained full time employment with Playoust Builders as a Contracts Administrator. His duties were to draw up quotations for building work, to assess quotations, and to program work. When he took up this employment he dropped two of the units he had been studying. He completed his degree in 1991, studying part time during that year.
In 1990 the respondent returned to playing football (contrary to his medical advice). He played up to mid-1992. This sport caused considerable back pain but he put up with it.
Shortly before the trial in July 1993 the respondent relinquished his employment with Playoust Builders and took up a position with the Department of Administrative Services managing a real estate team. With that Department he received a base salary of $43,500 plus performance pay and allowances together totalling $2-4,000 per annum. The trial judge held that when the respondent obtained the position with the Department "in terms of actual earnings (he) has approximately now caught up to his peers".
As to the ongoing disability suffered by the respondent the trial judge said:
"Of course, there is a need to assess the level of the plaintiff's disability objectively. He does not claim either to be crippled or to be in constant pain. He is prevented by onset of pain from engaging in strenuous physical activity. He can tolerate quite a bit of pain and, hence, strenuous activity, before he has to stop.
The disability has meant that he can no longer aspire to be a carpenter or a top-level competitor in cricket and football. I have the impression that the latter loss is that which the plaintiff feels most keenly."
and later:
"It seems to me to be reasonable that the plaintiff should refrain from heavy physical work as a consequence of his injury. He had to give up carpentry as a trade. He also lost the chance of reasonable earnings as a professional footballer."
Against these findings the trial judge proceeded to assess damages for the respondent's past and future loss of earning capacity. In assessing the past loss his Honour had regard to the earnings of four other carpenters, at least two of whom had worked with one or other of the employers by whom the respondent was employed after his injury. His Honour said:
"Where, as here, an individual decides to re-train so as to enliven a dormant capacity to earn, the loss of time and seniority and the cost of re-training provide a means of assessing the loss in question.
The plaintiff finished his apprenticeship without further real loss of earnings. I consider Mr Mitton to be reasonably comparable as indicating a career and earnings path the plaintiff would probably have followed but for his injury. The information concerning the other employees referred to also provides some relevant guidance."
The reference to completing the apprenticeship "without further real loss of earnings" is probably a recognition that for most of the period that the respondent was away from work in 1985 and 1986 he received remuneration from one of the appellants equal to earnings he would have received had he been at work. His Honour then considered the earnings, net after tax, received by Mr Costello, for the period 11 March 1985 to 30 June 1988. The difference in net receipts of the respondent and Mr Costello was $29,905, but it is to be noted that in the 1987-1988 year the net earnings of Mr Costello were $25,471 whereas the net earnings of Mr Mitton were $20,740. His Honour then said:
"To date, the difference between what the plaintiff would probably have earned but for the accident and what he might have earned had he followed a career path similar to that followed by Messrs Costello, Shannon and/or Mitton, so far as they are able to be compared, is approximately $110,000.00. That is, in any event, a median rather than an optimum assessment. To choose that figure incorporates some discount for unfavourable contingencies."
The reasons for judgment do not disclose how his Honour arrived at the figure of approximately $110,000.00. A number of possible permutations were suggested in the course of argument, but none of them gives a convincing explanation for the figure stated. Counsel for the respondent sought to explain, and to uphold, the figure in the following manner from evidence about the earnings of the respondent, and the four other carpenters:
Loss to 30/6/1988
From the comparison of net earnings of Mr Costello and the respondent $29905 1/7/1989-30/6/1992
Earnings net of taxation
Year Comparators respondent 1988-89 27587 less 8289 = 19298 1989-90 29826 " 10462 = 19364 1990-91 33491 " 18714 = 14777 1991-92 36300 " 22876 = 13424 1992-1993
No actual figures available -
allow same figure as for 1991-1992 13424 $110192
The comparators for the period from 1 July 1988 to 30 June 1992 were three of the other carpenters, Messrs Shannon, Mitton and Bijorac; the average of their net earnings each year has been used.
There are problems with this suggested explanation. First, the statement in the reasons for judgment that the figure of $110,000 incorporates some discount for unfavourable contingencies is not explained.
Secondly, the figures for the period from 1 July 1988 are based on the assumption that Messrs Shannon, Mitton and Bijorac were reasonably comparable people whose earnings reflected what the respondent would have earned but for his injury. Counsel for the appellants criticised this comparison and contended that any comparison of the respondent with Mr Mitton cannot be made without significant adjustment for important differences in the levels of experience of the two men. Although Mr Mitton is only 20 months older than the respondent, he had completed his apprenticeship in the early 1980's and during the years used in the comparison periods was employed as a foreman. The respondent however was not likely to have been employed as a foreman, at least in the early part of the comparison. Even without the accident he would not have acquired his tradesman's qualification until early 1986, and as he frankly acknowledged in his evidence he would have been required to work his way up to the position of foreman. This contention overlooks that the respondent's explanation for the $110,000 figure is based on the average earnings of three people, and not on the earnings of Mr Mitton alone. The net earnings of Mr Mitton were some $13300 higher than the average figures over the period from 1 July 1988 to 30 June 1992. When this fact is brought to account the force of the appellants' contention is weakened somewhat. Nevertheless we think there remains weight in the criticism that the chosen comparators were holding more responsible and therefore higher paid positions than the respondent would have been likely to hold at the corresponding time. Mr Shannon was also engaged as a foreman. The evidence does not satisfactorily establish the positions held by Messrs Costello and Bijorac, neither of whom gave evidence. For the last year that Mr Costello's earnings were disclosed (for the 1987-1988 year) he received significantly more than Mr Mitton. In the 1990-1991 year Mr Bijorac earned close to the same wage as Mr Shannon, and in the 1991-1992 and the 1992-1993 years he received more than Mr Shannon. These earning rates suggest that Messrs Costello and Bijorac were also engaged as foremen, or in similar positions of responsibility.
Thirdly, the comparison assumes that whenever the respondent was not either undertaking his degree course or at work, his absence from work was caused by his injury. There is no finding to this effect. In our opinion the evidence does not establish the causative link. The evidence is that towards the end of his period of apprenticeship the respondent was told by his employer that there would be no position for him when the apprenticeship was complete. The respondent looked for work, but not as a carpenter, but could not find anything at all that was available. There is no evidence to establish that, but for his injury, work as a tradesman carpenter would have been available. In the assessment of damages for past loss of earning capacity a significant allowance is required by the evidence for the possibility that the respondent may have had periods of unemployment, even if he had suffered no injury, at the end of his apprenticeship and during the period when he was undertaking full time study. The suggested explanation for the figure of $110,000 makes no such allowance.
Fourthly, whilst there was shown to be a difference between the actual earnings of the respondent and those of the comparators in the period 1990 to 1993, the loss of earning capacity was not necessarily to be measured by that simple difference. The trial judge's finding was that by July 1993 the respondent had "caught up to his peers" in terms of actual earnings, with the result that, thereafter, the loss of earning capacity is not to be measured by comparing the respondent's earnings and those of his peers. This finding makes it likely that during the period 1990 to 1993 and particularly in the latter stages of it, the respondent's earning capacity was increasing and that the gap between his earning capacity as it was then, and what it might have been but for his injury, was narrowing progressively. It is unlikely that the gap remained constant and then closed altogether as the figures put by counsel for the respondent might suggest.
Finally, the estimate of $29,905 for the net earning loss to 30 June 1988 assumes that the comparator's net wage was some $4,700 more than Mr Mitton's wage. The estimated difference of $29,905 seems to be unduly favourable to the respondent.
Counsel for the respondent argued that the trial judge had the undoubted benefit, not available to this Court, of seeing and evaluating the respondent, Mr Mitton and Mr Shannon giving evidence. It was argued that the trial judge may have concluded that the respondent presented so well that potential employers would have preferred him over other tradesmen for a position of foreman. The trial judge for the most part accepted the evidence of the respondent, and his Honour was clearly impressed by the evidence about the respondent's sporting prowess. But even making every allowance for a favourable assessment of the respondent, it does not seem to us possible to construe the evidence in a way that could support a conclusion that the respondent's loss of earnings arising from his impaired earning capacity was as high as $110,000.
In our opinion when allowance is made for the five matters identified above the evidence does not justify an award of more than $80,000 for damages for past loss of earning capacity. As the trial judge has not explained how the figure of $110,000 was arrived at, it is not possible to identify particular error in the reasoning lying behind that figure. However as this Court is unable to find any reasonable basis for the figure, it must be concluded that undisclosed error has occurred. In our opinion the amount of $110,000 cannot be sustained, and the award for past loss of earning capacity should be reduced to $80,000.00
It is necessary to refer to two submissions made by counsel for the appellants which we are unable to accept. The appellants do not dispute that on the medical evidence the trial judge was justified in treating the loss of time and seniority, and the cost incurred by the respondent as the result of his "retraining" at the Canberra CAE, as a product of the injury suffered, but argue that the respondent could have gained qualifications, such as a TAFE building certificate and a clerk of works qualification, by evening study, undertaking part time work during the day. It was argued that damages should have been assessed on this basis, and a broad, but significant, reduction should have been made in the difference between the earnings of the respondent and the comparators to reflect this factor. The trial judge rejected this argument saying that he considered the choice made by the respondent was a reasonable one, and the net effect of undertaking full time study rather than part time study over a much longer period would be the same.
We are not persuaded that the trial judge fell into error in the approach that he took to the respondent's decision to undertake full time study. That decision kept the respondent out of work for the best part of three years - 1987, 1988 and 1990 until he commenced full time employment in October of that year. There is no evidence that there was suitable light work available which the respondent could have undertaken without the qualifications for which he was studying. It is reasonable to assume that from time to time he may have obtained light work, though not necessarily in the building trade, but there is no evidence that the net return to the respondent from work of that kind over the extended time that the alternative studies would have taken would have exceeded the earnings actually received by the respondent over the same period. As events happened, in the latter part of the period when the respondent would still have been working and studying part time had he pursued that option, he was in full time employment in the building trade.
The other submission of the appellants which we are unable to accept contended that the evidence of "comparative" earnings by other carpenters should be disregarded, and that a comparison should be made between, on the one hand, the weekly award rates payable for ordinary hours, i.e. without allowance for hours that would attract overtime or penalty rates, and on the other hand the actual earnings of the respondent. The evidence does not justify this approach. There is no evidence that carpenters undertaking the type of work which the respondent could have undertaken but for his injury received only the basic award rates. On the contrary the annual remuneration of Messrs Mitton, Shannon, Costello and Bijorac was almost double the basic weekly rate provided for in the award. It is apparent that the work they were undertaking attracted penalties, overtime loadings, or other accretions to the basic rates. Subject to there being some adjustment to reflect the fact that the people chosen as comparators were receiving an additional loading for supervision which would not have been paid to the respondent, at least for the whole period in question, the approach adopted by the trial judge was, on the evidence, an appropriate one.
Turning to the sum allowed for the future loss of earning capacity, the appellants also contended that $20,000 is manifestly excessive. The grounds of appeal suggest that the trial judge allowed this sum in respect of lost earnings as a professional footballer. This submission misunderstands the basis of the award. His Honour said:
"For future loss of earnings, I consider that in terms of actual earnings the plaintiff has approximately now caught up to his peers. He has, however, a diminished range of employment open to him and some risk of further physical deterioration. There is also the loss of the chance of future earnings from professional sport. I consider that a sum of $20,000.00 is adequate to reflect that loss, including those possible earnings from sport played at a professional level, taking account, of course, of the discount factors to which I have already made reference."
In saying that $20,000 was adequate to reflect "that loss" his Honour was referring not just to the lost chance of future earnings as a footballer, but to all the matters earlier mentioned. His Honour only treated the chance of future earnings for football as "possible", and it does not appear to us that his Honour made more than minimal allowance for that lost chance.
Moreover, there was medical evidence from Dr Andrews which his Honour did not reject that "if he (the respondent) looks after his back the risk that he will require a spinal fusion in the next ten years is probably in the order of 20%". This risk, if it eventuates, would take the respondent out of the workforce altogether for some months, and possibly lead to an increase in his physical incapacity (as well as expose him to considerable hospital and medical expenses for which no allowance is otherwise included in the assessment). This prospect, though again only a chance, is one to be included under the head of future economic loss: Malec v J C Hutton Pty Ltd (1990) 169 CLR 638. When it is brought to account we do not think $20,000 to cover all future losses is excessive.
For these reasons we consider the appeal should be allowed. The damages for past economic loss should be reduced from $110,000 to $80,000 and the interest thereon should be recalculated. As it appears that his Honour has assessed the loss of earning capacity on the footing that there was no "real loss of earnings" before the end of the period of apprenticeship we agree with the submission of counsel for the appellants that interest on the damages for past loss of earning capacity should be assessed over a period of 7.4 years rather than 8.4 years. Subject to this change we adopt the basis of calculation for the interest used by the trial judge which we understand counsel to acknowledge as being in accordance with the usual practice of the Supreme Court. The figure of $41,440 will be substituted for interest on past economic loss. In the result the verdict of $234,448.55 will be set aside, and an amount of damages in the sum of $181,438.55 will be substituted. The respondent must pay the costs of the appeal to this Court.
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