Dunmall v Walsh [No 9] - [2017] WADC 19

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: DUNMALL -v- WALSH [No 9] [2017] WADC 19

CORAM: SWEENEY DCJ

HEARD: 21 SEPTEMBER 2015

DELIVERED : 13 FEBRUARY 2017

FILE NO/S: CIV 232 of 2006

BETWEEN: GEOFFREY DUNMALL
Plaintiff
AND
TERRENCE ALLDEN WALSH
Second defendant
SHIRE OF MURRAY
Third defendant

Catchwords:

Negligence - Loss of earning capacity - Assessment of damages - Dividends as earnings - Turns on its own facts

Legislation:

Civil Liability Act 2002 s 11

Result:

Award of damages to plaintiff

Representation:

Counsel:

Plaintiff:     Mr B P Wheatley
Second defendant          :     In person
Third defendant             :     Mr J Eller

Solicitors:

Plaintiff:     Mossensons
Second defendant          :     Not applicable
Third defendant             :     John Eller

Case(s) referred to in judgment(s):

Adams v Ascot Iron Foundry Pty Ltd (1968) 72 SR (NSW) 120
HM Revenue and Customs v PA Holdings Ltd [2011] EWCA Civ 1414
Hochstrasser v Mayes [1959] Ch 22
Hodge v Barham [2011] WADC 71; (2011) 74 SR (WA) 340
Jongen v CSR Limited (1992) Aust Tort Reps 81-192; (1992) Library no 920325
Kelly v Humanis Group Limited [2014] WADC 43
Medlin v State Government Insurance Commission [1995] HCA 5; (1995) 182 CLR 1
Pollock v Wellington (1996) WAR 1

SWEENEY DCJ:

Introduction

On New Year's Eve 2004, the plaintiff and his wife were at the home of their friend Mrs O'Sullivan in South Yunderup. Shortly before midnight, the plaintiff and two others were on the upstairs balcony when it collapsed, carrying the plaintiff to the ground 3 m below. That balcony should have had the capacity to support 50 or more people, but collapsed under the weight of three. The plaintiff suffered a serious and life‑changing injury to his left ankle. He was 63 years old.
Prior to the accident, he had been the general manager of a large and successful ceiling fixing business, with a good income and no immediate plans to retire. Due to his injuries, he had to accept a change in his role at work and, when that proved untenable, early retirement.
Ultimately he instituted legal proceedings, claiming damages for personal injuries, against Mrs O'Sullivan, the builder (the second defendant) and the Shire of Murray (the third defendant) which approved the building plans. The matter proceeded to trial on the issue of liability as a preliminary issue.
On 9 May 2014, O'Neal DCJ gave judgment against the second and third defendants, but dismissed the claim against Mrs O'Sullivan. At a subsequent hearing to determine apportionment of any damages awarded, his Honour found the second defendant liable to pay 65% per cent, and the third defendant liable to pay 35% per cent of any award.
The matter was then listed before me to determine quantum of damages. Prior to trial, the third defendant agreed the sums to be awarded by way of general damages and for gratuitous services. During the course of the trial, agreement was also reached with the second defendant and, accordingly, judgment was entered for the plaintiff in an amount of $14,196.00 for gratuitous services together with $3832.92 in interest on that sum, and $40,500 by way of general damages. The sole issue to be determined at trial therefore was the sum to be awarded by way of the claim for economic loss as a result of loss of earning capacity.
The second defendant accepts by his defence that the plaintiff suffered some diminishment of his capacity to work, but otherwise denies the claim. The third defendant pleads that the plaintiff failed to mitigate his own loss by retiring of his own volition in mid-2006, despite there being medical evidence that he was in a position to work in a full-time capacity as a general manager, or at least in a similar role in a part-time capacity. It also argues that the plaintiff made no efforts to find alternative employment by utilising his contacts within the ceiling fixing field.

General legal principles in relation to loss of earning capacity

A plaintiff is not entitled to recover damages for loss of earning capacity unless he establishes, firstly, that his earning capacity was diminished by the negligence-caused injuries and, second, that the diminution of earning capacity was productive of economic loss: Medlin v State Government Insurance Commission [1995] HCA 5 (the plurality at [2]); (1995) 182 CLR 1.
What is being compensated is the loss or diminishment of earning capacity, not loss of earnings: Medlin (the plurality at [4]), [17] (McHugh). In practice there is usually little difference, but earnings, while evidence of the value of earning capacity, are not synonymous with its value. Treating them as such may lead to a tendency to simply compare pre-accident earnings with post‑accident earnings and to assume that, if there is no difference, no loss has occurred. But earning capacity is an intangible asset: Medlin [17] (McHugh J). Damages can only be awarded, however, to the extent that the loss of earning capacity causes financial loss.
The question whether the requisite causal link is made out between the negligence-caused injuries and the diminishment of earning capacity is a question of fact, to be determined as a matter of common sense and experience. That remains so where the question of causation is complicated by the intervention of some decision on the part of the plaintiff (such as to retire) which constitutes a more immediate cause of the loss or damage: Medlin (the plurality at [6]).
The ultimate question must always be whether, notwithstanding the intervention of the subsequent decision, the defendant's negligence is properly to be seen as having caused the loss or damage: Medlin (the plurality at [6]).
If, for example, it appears that a plaintiff's decision to retire prematurely would not have been made were it not for the fact that the effect of the negligently caused injuries would be to subject him to constant pain and risk of further injury if he remained employed, common sense dictates the conclusion that the decision to retire was a natural step in the chain of causation commenced by the defendant's negligence: Medlin (the plurality at [13]). In such circumstances, the relevant question is not whether the decision to retire was reasonable, but rather whether, in the context of what was reasonable between the plaintiff and the defendant in determining the defendant's liability to pay damages, the decision to retire early was a product of the plaintiff's loss of earning capacity: Medlin (the plurality at [14]).
If the effects of a plaintiff's injuries were, on a common sense approach, a material cause of his decision to retire early, then the financial loss has resulted from the loss of earning capacity and is connected to the defendant's negligence: Medlin [18] (McHugh J).
If the plaintiff has resigned because, by reason of the loss of earning capacity, he is unfit to do the work, then the onus lies on him to prove that, as part of his case to prove his incapacity. Similarly, where an issue arises as to whether a plaintiff could have obtained employment within his retained capacity, it is for the plaintiff to prove that such employment is beyond his capacity: Medlin [21] (McHugh J).
As to failure to mitigate his loss, such as by failing to exercise any retained earning capacity, then the onus lies upon the defendant to prove that the plaintiff acted unreasonably: Medlin [22].
When a plaintiff has voluntarily left employment, or refused employment, that he has a capacity to do, then an evidentiary burden passes to the defendant to establish that the voluntary resignation, or refusal, was unreasonable. If he was unfit to do the work, no question of reasonableness arises: Adams v Ascot Iron Foundry Pty Ltd (1968) 72 SR (NSW) 120, 139.

Overview of the witnesses

The plaintiff and his wife testified, as did Dr Michael Beinart, a general practitioner who specialises in workers compensation matters, and Mr Dale Alcock who (through a corporate entity) formerly employed the plaintiff. The second defendant was unrepresented at trial, and called no witnesses, but cross‑examined the plaintiff's witnesses. The third defendant was represented and called an expert witness Mr Hardcastle, a retired orthopaedic surgeon.
By way of preliminary comment, neither the plaintiff nor his wife gave very articulate evidence, and they were not questioned with precision. I have had to interpret a deal of the evidence to glean its meaning. Notwithstanding that, both witnesses presented as plain, straightforward people, doing their best to give honest and accurate evidence. I found the plaintiff to be candid in his evidence, forthcoming about his emotional reactions to the events and not attempting to paint his situation as worse than it was. Cross-examination did not expose any material inconsistencies in his evidence, and his evidence went largely unchallenged. I found him to be a credible witness.
Mrs Dunmall had little to add. She broadly supported her husband's account of the impact the injuries had on his life. Her evidence was unchallenged, and I found her to be credible.
Mr Alcock was an entirely straightforward witness. There was some very faint challenge to his credibility by way of a letter written by him, alluding to his desire to ensure the plaintiff's insurance claim was not put at risk. As discussed later, the letter does not reflect adversely on his credibility at all. I found him to be credible.
Dr Beinart's evidence was not challenged. As a general practitioner who saw the plaintiff and prepared a report concerning his injuries, he had of course based much of his report on what the plaintiff told him, coupled with his own medical knowledge and clinical judgment. But as what the plaintiff told him was credible, his evidence was therefore grounded in fact and credible.
Mr Hardcastle was also a straightforward witness, whose expertise to express his opinions was uncontroversial. His opinion, however, can only be as good as the factual basis underpinning it, and on that score his evidence carries less weight, being based as it was on assumptions which were reasonable enough assumptions, but not in fact borne out by the evidence.

The plaintiff's background and employment pre-accident

The plaintiff was born in England on 17 September 1941. He was 74 at the time of testifying. He left school at the age of 15 in 1956, and for the next 12 years worked as a waterman/lighterman on the River Thames.
In 1968 he commenced work with his father in the building industry as a carpenter. He has no formal qualifications in that field. He agreed that, since leaving school, he has worked exclusively in manual work and had little or no experience with clerical or office work.
He migrated, with his wife, to Australia in 1970 and commenced work firstly as a carpenter, installing ceilings and, shortly thereafter, as a ceiling fixer and estimator, working mainly on-site. He used to provide the complete service of fixing the plaster ceiling sheets and also the flashing and cornicing. He also installed ceilings in shopping centres which tended to consist of suspended ceilings with panels and insulation.
In 1992 Mr Dale Alcock, who ran a number of construction companies, decided to establish his own ceiling company, namely Ceiling Solutions Pty Ltd. The plaintiff was employed as, firstly, the manager and, subsequently, the general manager of Ceiling Solutions. The company commenced by working on houses for the Dale Alcock construction company, and then progressed to servicing other building companies within the Alcock Brown-Neaves Group (ABN Group) of construction companies.
The plaintiff explained that a subcontracted ceiling fixer could be expected to fix ceilings on residential projects and some commercial projects, as well as carrying out partitioning and dry-walling, which also involved carrying the sheets around and fixing them. He agreed residential ceilings were generally around 2.4 m high, but added that the ABN Group worked on large houses, two‑storey, A-frames and lofts and that they did 'big work'.
Mr Alcock is the managing director of the ABN Group, consisting of around 22 separate operating entities, including Ceiling Solutions. Although the evidence was not led with precision as to the timeframe under discussion, he described Ceiling Solutions as 'one of the largest, if not the largest, residential ceiling fixing contracting business in Perth and in Western Australia', employing around 150 to 200 contractors and direct staff including a significant number of apprentices. My impression was that this description was supposed to broadly reflect the general size of the company back in 2004.
The plaintiff also testified that Ceiling Solutions is one of the largest ceiling installation companies in Western Australia. He said it also had a policy of training up apprentices, and had 50 apprentices and approximately 150 subcontractors and supervisors. He said they had a certain amount of regular labour, but also had to advertise as well. Clearly it was a sizeable business and my impression was that the plaintiff's description of the business pertained to the period of his involvement with it.
Significantly, while, as general manager, the plaintiff no longer fixed ceilings, his role remained very hands-on. While he agreed that he had quite a lot of staff, including supervisors, he also said he had quite a lot of houses, 350 a month, on the go.
He said the supervisors looked after the labour on-site, made sure that they had enough materials to complete the job, and also checked to make sure the job was on time. He said the supervisors reported to him, although not on a daily basis. He said they would have a supervisors meeting probably about once a week where they would discuss their problems and/or successes.
He testified that his role included the initial measuring of the site, which involved going out to site, measuring the rooms and doing a 'cut list', and then the measurements would be brought back to the office to be processed so that the appropriate materials could be collected and delivered to site.
Once the job was processed in the office, he was then responsible for programming the job, and selecting and notifying the ceiling fixers to be on-site so as to coordinate with the builder's schedule and requirements. He explained that, in the housing industry, there is a timeline for the construction which has to be adhered to, and it is a very fast turnover situation. He said builders would sometimes notify Ceiling Solutions that they were running behind, and he would have to try and work in with that scenario, which he described as 'always a fine line'.
The plaintiff said he would check through administrative tasks with his office manager and other staff who, between them, did most of the administrative work and then asked him if he wanted to check it. He said he did not check everything, and tended to delegate quite a bit, but would cast his eye across some of the administrative work. He said that he was not suited to a clerical or office based role, and was not a great scholar, but was capable of looking over quotes and making sure that things were done, but said that was not an everyday thing for him.
The plaintiff said his role as general manager was mainly hands‑on, but also involved a clerical aspect, but he testified that he had people in the office to assist with the administrative work. At head office, where he worked, the company had estimators, an office manager, an accountant and an assistant who all reported to him. He also explained that Ceiling Solutions had, over time, installed computer systems which required someone more computer literate than him to deal with. He described himself as barely computer literate, but said he could use a computer and could send emails.
The plaintiff was also responsible for quality control. He testified that, if there was a complaint from any client, or builder, he would meet them on-site. These building sites were as far north as Two Rocks and as far south as Mandurah. The plaintiff lived in Yunderup, just south of Mandurah.
He said the builder also expected him to go and check sites randomly for quality control, and also often requested to meet on-site prior to the ceiling work commencing. He said the builder would have gone on-site and discovered some issue, which may well have already been discussed with the supervisor for that job, but with no decision, and so then the plaintiff would become involved.
He said even though, of course, Ceiling Solutions employed three or four supervisors for the area from Bunbury to Two Rocks (as well as a manager down in Bunbury) the clients always wanted to see the general manager of the company, and he would have to satisfy the client that the work had been done to the expected standard, or arrange for it to be corrected. He said the site visits were mainly due to problems raised by the client, and said the most common problems were glancing light (where painters had used a spray gun instead of sealing the joins and the lines were obvious) and also cornice cracking.
The plaintiff explained that the reason why he had to go on-site as a general manager to examine these issues, notwithstanding that the company employed multiple supervisors, was 'because the request of the client and the builder'. I understood the point he was making was that both the clients and the builders expected that, if a quality control issue arose, they would be able to meet with the general manager of the company on-site, rather than with an underling. Clearly, from the evidence of both the plaintiff and Mr Alcock, that was how the company wished to run its business and, given the size and general success of that building group, one would have to think they know a thing or two about quality control and customer service.
In addition, the plaintiff said, his attendance on-site was needed so that he could discuss any issue directly with the subcontractors and suggest solutions, whereas he felt that, if he did not go out on-site, then they would, in effect, tend to come up with their own quick-fix, inadequate solutions.
In cross-examination the plaintiff described a typical pre-accident day as follows:
I would drive to the office, maybe on the way to the office I would call in and have a look at some jobs or I had to meet a supervisor, because I lived in South Yunderup and I'm going to Osborne Park. So I used to use my day coming up to – to Perth and then sometimes going home on a – on a – on an evening. So it would be that way and they would ask to see me. I – I had a lot of callouts from requests to sort out problems that a builder had and he wanted me to help him, or they had some issues, which they wanted to bring up and as I discussed before. So I'd go to the office, once I got into the office we'd go through what was going on, how much work's come through, how's our labour, what issues had they had and then we'd work from there. So – and I would sit in the office and then go out again maybe in the afternoon, or head home and do some work on the way home. So I tried to manage it on that basis.
The plaintiff also testified that there was a lot of supervision involved with his job. That supervision appears to have been across the board, from the apprentices to the supervisors, extending to his second‑in‑command.
The plaintiff was involved in on-site training. He said safety was important to Ceiling Solutions and it had a health and safety system, including ensuring that the scaffolding was adequate, and his role included ensuring that everyone followed that system on-site. He agreed that the company employed a person to deal with safety on-site, but clearly felt that all aspects of the site still fell within his ultimate responsibility. He testified that he was also involved with relief site‑manning when supervisors were on leave, if another site supervisor in the area could not take on that responsibility. He also regarded himself as having an important role in standing up for his workers against unjust complaints.

The plaintiff testified that he had a good relationship with the labour that he picked, and he tried to pick subcontractors who worked well as a team and were team players. He said he would place the apprentices with specific people who would train them and look after them. He considered he was very effective in looking after his people, and said the company managed to be profitable, even though it did a lot of training which is very expensive.
On an annual basis, he took his workers to a hotel where they went to a ball and would stay overnight. He said that he treated his workers as family, because they were important to him and, without them, he was nothing.
It was very obvious that the plaintiff's hands-on relationship with his workers, and his intimate involvement with the projects, gained by visiting the sites, was what made his job rewarding to him.
At this time, the plaintiff was also was a member of the Wall and Ceiling Association of Western Australia, which is part of a national association. He testified that he was vice president for two years, followed by two years as president, followed by two years as vice president again. He believed he was held in high regard by that organisation.
The plaintiff testified that, prior to the accident, he had not intended to retire at all and it had 'never even crossed my mind'. He said there was no retirement age at Ceiling Solutions. Obviously he would have retired eventually, but said that he had not turned his mind to what age that would be.
The plaintiff's evidence as to his role and the manner in which he undertook it was supported by the evidence of Mr Alcock.
He testified that the plaintiff's duties as general manager involved managing the staff required to run a materials and labour contracting business, managing the subcontractor base, establishing site supervision, dealing with the procurement of labour, negotiating the acquisition and provision of materials, undertaking quality inspections and dealing with quality control issues on-site.
He said the direct customers for Ceiling Solutions were the various building companies within the ABN Group and, where any quality matter came up for discussion, the plaintiff would personally attend the site and work through the issue. He explained that the ceiling fixing element of building a home has a very narrow band (of opportunity) where it needs to be completed, and to a very high standard.
Mr Alcock testified that the ABN Group operates in a volume part of the market and Ceiling Solutions is responsible for ceilings in each of those homes. Consequently he considered that, as general manager, the plaintiff had performed a key role within the group. Mr Alcock said that he had directly seen the plaintiff in his role at least three to four times a month at meetings and also if he was simply passing through and decided to catch up. He testified that a large part of the plaintiff's role was to attend site, and said he saw him many times on‑site.
Mr Alcock testified that, although there were site supervisors on-site, when quality issues were under consideration the plaintiff would attend site to give his authoritative view versus the builder's view. He said that would involve investigating the issue thoroughly and, given that ceilings are invariably a minimum of 2.4 m off the ground, it would not be unreasonable to suggest that the plaintiff would have to climb up a ladder.
Mr Alcock explained that, in the volume that Ceiling Solutions operates at, there are repetitive quality issues such as cornice cracking and glancing light issues and, precisely because they are repetitive, individual site supervisors did not make the final call. He said they would be there in attendance, but the plaintiff was the general manager and ruled the business pretty authoritatively, and that was how the business was structured and had operated since 1992. He said it was not a business where the general manager was removed from that practical operation. He said the plaintiff was on call to attend any matters of quality, or non‑completion or poor completion of jobs, and that site based component was very important. Indeed, Mr Alcock said he had attended on-site with the plaintiff many times over the years at times, presumably for similar reasons.
Significantly, Mr Alcock described the plaintiff's role as having required
a fair amount of on-site engagement. So it was quite a practical hands-on type of role. It certainly wasn't what I'd call a, you know, office base sort of formal role of managing.
He said the plaintiff's role was a combination of both field and office‑based work.
He also described that role as a leadership role. He also said that, when a company is dealing with essentially a subcontract workforce, it is important to exhibit good control over that workforce, and also to exercise good supervision over the direct staff of the company, being (on-site) the site supervisors and (in the office) the administration and accounting staff. Mr Alcock described the plaintiff's personal style as being a
very much a hands-on operator. Geoff came from a trade background in the ceiling industry and he – he was a doer. He was a problem-solver and a very practical hands-on operator.
He testified:
Because his – his experience within the industry was always hands-on and practical problem-solving and getting the job done. So if it was coordination of labour and materials, programming of jobs and then ensuring that the work was done practically to a good standard, and the training of apprentices and direction of labour, that's where Geoff's skill set lay. It certainly wasn't in a – an office bound job. It's not that sort of business.
He said that:
By nature, Geoff's a tradesperson. He understands the ceiling industry as his speciality and – and the procurement of labour and materials in a timely manner and executing practical jobs to a high quality and leading the team to – to achieve that.
He said that the plaintiff performed his role very well and very energetically, and had a very strong work ethic. He said that prior to his accident he did not recall the plaintiff taking any sick days. He said the plaintiff was highly respected and regarded within the ABN Group, and the ceiling industry generally.
However, he did describe the plaintiff's communication style as 'abrupt'. He said the plaintiff has a very strong and intimate knowledge of the industry, and could be 'certainly quite forceful in his communication, quite direct and could be quite abrupt'. He said the plaintiff could be very defensive in his dealings with the builders' site managers and construction managers when questions arose over where the fault might lie in any matter of quality. I understood from Mr Alcock's evidence that he was saying that the plaintiff would stand up for the subcontractors, sometimes in a defensive and abrupt manner. No doubt that made him popular with his sub-contractors.
As to office work, consistent with the plaintiff's evidence, Mr Alcock said that administration such as office work and record keeping was certainly not the plaintiff's strength, but he had a very competent crew, including a very competent office manager who dealt with all of those matters which meant 'that Geoff would touch those items very lightly'. Mr Alcock accepted that the plaintiff was ultimately responsible for administration within the company, but said that that did not mean that his role was administrative and clerical. He said the plaintiff had oversight of that, but was not actually that involved in it. He said the focus of the plaintiff's role was 'very much the coordination of labour, around training and around the practical execution of the job'.
In a report dated 14 November 2005, Dr Michael Beinart, a general practitioner registered with WorkCover, wrote of the plaintiff:
Presently he is the general manager of a ceiling fixing company where his work is administrative in nature, but he is also required to visit building sites.
Plainly that description was based upon something the plaintiff had told the doctor, but equally plainly it amounts to a very brief job description, only semi-accurate, written at a time when the plaintiff was in fact no longer working in his pre-accident role as general manager, and the primary basis for the doctor's description is not before the court. I do not regard that snippet of evidence as detracting from the far more detailed and compelling evidence given by both the plaintiff and Mr Alcock as to the nature of his role at work.
Mr Alcock testified that Ceiling Solutions does not have a retirement age. He said they had senior managers who were 65 and he said that, prior to the accident, there had been no discussions about the plaintiff retiring. He said 'Geoff was contributing well as the general manager and that would have continued'. He disagreed with the proposition that the plaintiff was 'on the verge of retirement anyway' at the age of 64. He responded:
Says who? We don't have an – we don't have a retirement age… It's quite clear that nationally, the Federal Government wants us to – you know, to – to work longer. So I – as I say, I'm not – I wasn't clear whether he was 62 or 64, it was irrelevant. He was fulfilling his job well prior to the accident.
An amended letter from the plaintiff's general practitioner, Dr Angelo Mavromatis, was tendered by consent. Dr Mavromatis treated the plaintiff for more than two decades, including the period of time at which the plaintiff received his injuries. He noted 'There is nothing in my notes, nor in my excellent recall of this man, indicating that pre injury, he inted [sic, intended] to retire early'.
Mrs Dunmall testified that, prior to the accident, she and her husband had not really discussed his retirement because 'when you're working you don't think of things that's going to happen'. She said that he was really happy working and, unless something had happened to him, he would not have given it up. She conceded he might have mentioned that he would retire in a few years, but maintained they had not discussed it, and said he never wanted to retire. She said 'when you're well you're not thinking about retirement'. She agreed he had suffered from high blood pressure prior to the accident, but said that he had that under control with medication.
The plaintiff testified that he had double bypass surgery when he was 71 years old and feels 'I would have just been in time for retirement then'. I gathered from that answer that he felt that the double bypass surgery may have caused his retirement at that age independently of the accident. There is no evidence that he had an issue with his heart at the age of 67 or younger.
Although this is jumping ahead a little, I will deal here with an issue potentially going to the credibility of both the plaintiff and Mr Alcock. In truth, it is a non-issue.
Mr Alcock was cross‑examined about a letter dated 11 April 2005 presented to the plaintiff outlining his new role in the company upon his return to work. The letter will be more fully quoted later, but for now it is sufficient to quote as follows:
I write to you to confirm our discussions over the last two weeks.
Following your unfortunate accident and resulting injury, you expressed a desire to work three days a week ongoing.
Further discussions followed whereby I indicated we would require a full‑time general manager for Ceiling Solutions ...
From 1 July 2005, we are happy to have you directly employed or engaged as a consultant to Ceiling Solutions.
The basis of this ongoing engagement is for a minimum of three days per week …
The exact hiring arrangement and potential retirement to effect this change needs to be handled correctly to ensure your insurance claim in [sic, is] not at risk. Jeff Miller will liaise with you to facilitate the correct outcome.
Mr Alcock was asked what he meant by that last quoted paragraph. He pointed out that the letter was written 10 years ago, and said he was unable to recall what was meant, except to say that the reference to 'exact hiring arrangement' was presumably a reference to the plaintiff's change of status.
In cross-examination by the second defendant, the plaintiff confirmed that Mr Alcock was aware that he was making an insurance claim. When asked whether he had discussed his eventual retirement with Mr Alcock, the plaintiff's response was particularly inarticulate, but he in effect said that Mr Alcock had made him redundant and then he made his own decision after that to retire. He said he was unable to recall the precise discussion he had with Mr Alcock prior to the letter to him being written. The second defendant in cross‑examination began to suggest collusion of some sort, but the question was never adequately framed and in any event drew an objection on the grounds of relevance, not having been pleaded.
But because the suggestion was floated, albeit not pleaded, it is appropriate to comment here that the letter in question does not reasonably lead to a conclusion of anything nefarious, or sinister, or even suspicious. The letter is entirely consistent with its author: (a) being aware that the plaintiff had a legitimate insurance claim in respect of his injuries; and (b) not wishing to unwittingly damage that claim by some ill‑chosen language, or a carelessly expressed employment arrangement which might imply, quite misleadingly, that the plaintiff simply wished to retire or semi-retire and become a consultant, as opposed to the plaintiff being no longer able to work in his former role.
I conclude that that is what was meant by that paragraph. Mr Alcock is not a lawyer, and wished to be careful with legal matters. The fact that he reduced that wish to writing confirms that nothing untoward was meant by it. It is not reasonable to even suspect that the plaintiff and his employer decided that the plaintiff should reduce his role, and substantially compromise his financial position, in order to better his potential insurance payout.
Considering the combination of the evidence of the plaintiff and Mr Alcock, I find that the plaintiff's role as general manager was a very practical, hands-on role, involving his attending building sites multiple times a day on a very regular basis. He attended randomly to check on his workers, and also at the request of the client, the builder, his supervisors and his workers. When quality issues were under discussion, as they very often were, it was necessary for the plaintiff to walk on the site, in the building, and thoroughly investigate the issue, which was at ceiling height of at least 2.4 m, but might often be higher in the case of two‑storey buildings or buildings with lofts.
Notwithstanding that the plaintiff was the general manager of a large business, employing and/or contracting a large number of workers, his role was considerably more hands-on than one might expect, and involved a great deal more driving and visiting site, and inspecting works and negotiating on-site than one might expect.
I find that, while Ceiling Solutions employed a number of supervisors, the general manager did not work predominantly through them, accepting their reports and making decisions from afar, as one might expect. Because of the very large volume of houses being built by the ABN Group, and because of the repetitive nature of quality control issues, those issues were not merely dealt with on an individual site‑by‑site basis, because decisions could obviously impact generally across the group. Accordingly, decisions as to quality control issues were often made at the highest level, sometimes involving Mr Alcock himself. I accept that the ABN Group structured itself towards a very hands-on approach even at the highest levels of corporate governance, emphasising the need for direct contact between the client and management, and that model has obviously proved a successful one. There is no evidence before me to suggest that the plaintiff's hands-on approach, nor that of Mr Alcock and the ABN Group generally, was atypical within the domestic building industry.
I find that the plaintiff is a man whose reputation and ability in his field was built on years of practical hands-on experience, rather than formal qualifications and that, as the world of information technology grew and permeated working life, he acquired what basic familiarity with computers he required to send emails and check over documents, but did not ever acquire real skill with computers. Instead, he surrounded himself with good people who had those skills and to whom he could delegate, so that he could concentrate on what he did best, which was manage his workers and deal with quality issues on-site.
I am satisfied that the plaintiff had no plans to retire early and, but for the accident, was likely to have worked past 65 years of age provided he enjoyed sufficient basic health to do so, and provided his employer was content for him to do so. He wanted to continue working after the accident. I accept that, but for the accident and the injuries he suffered, his employer was unlikely to have placed pressure on him to retire at the age of 65, providing he continued to perform. The plaintiff found his work very rewarding, financially, socially and in terms of his self-esteem, and had a strong work ethic.
The only evidence that at all suggested he might have been contemplating retirement at 65 was the large salary sacrifice to superannuation in 2004, prior to the accident. But he was not tackled about that and nothing was made of it and it may well have reflected financial advice that is not before me, and so I have drawn nothing from it.
In determining the plaintiff's likely retirement age for the purposes of his claim, this court is in the unusual position of judging that with the benefit of knowledge of the plaintiff's general state of health at the age of 74, which is how old he was when he testified, and which is well past the retirement age he relies upon. At 74, the plaintiff is still mentally sharp, and there is no reason to suppose that, had the accident not occurred, his mental acuity might have failed him and caused an early retirement. Allowing for his medical history of high blood pressure, and high cholesterol, and a tendency to be overweight, but also to be modestly active, both physically and socially, I am satisfied that the plaintiff would have worked until at least 65, and I am satisfied on the balance of probabilities that he would have worked until 67 years of age, which is the extent of his claim.

The plaintiff's income pre-accident

The uncontested evidence, both oral and documentary, establishes that, pre-accident, the plaintiff was paid an annual salary of $85,000 per annum, plus statutory contributions of 9% towards his superannuation, together with the use of a company vehicle and a mobile phone and home phone.
He was entitled to a bonus of 10% of the pre-tax profits of Ceiling Solutions, a large portion of which he tended to salary sacrifice to superannuation. He had been salary sacrificing $50,000 per annum but as he got closer to retirement he intended to sacrifice $90,000 and did so in 2004.
He was also entitled to a 3% dividend on pre-tax profits of Ceiling Solutions via Class B shares. The Class B shares were only there for the distribution of income through that bonus while the plaintiff was general manager of the business. The shares gave him no voting rights and had no intrinsic value.
The dividends included franking credits, reflecting the fact that Ceiling Solutions had already paid tax on its profits, such that the plaintiff was entitled to offset the credits against any tax owing, and therefore the dividends were income tax-free. At his request the dividend was paid to the plaintiff's own family trust, which then distributed money to his wife as income, but clearly the right to the dividend and control over its distribution lay with the plaintiff.

Medical evidence relied upon by the plaintiff as to his injuries and his recovery

A report dated 22 April 2005 from a Dr N Nickel of Fremantle Hospital (based on the hospital records) was tendered by consent. The report documents the plaintiff's attendance at emergency department at 08:03 hours on 1 January 2005. He had been transferred from the Peel Health Campus to Fremantle Hospital for orthopaedic review. Mr Stoffel was the plaintiff's treating orthopaedic surgeon, but was not called as a witness and no longer resides in Australia.
The plaintiff had suffered extensive fractures to his ankle. He suffered a very severe comminuted fracture of the left tibia, extending into the joint, and a transverse fracture of the lateral malleolus (the bony prominence on the outer side of the ankle). The lower tibia was also split and varus deformity was evident (a deformity which, in a severe case, has the patient walking on the outside edge of their foot). The comminuted fracture also involved the posterior aspect of the talus and the anterior end of the calcaneus (heel bone) extending from the calcaneus‑cuboid articulation to the anterior subtalar joint. There was also a tiny fracture at the base of the first metatarsal, and widening of the articular surface near the talus. The various ankle fractures were described as extensive. It was also likely that he suffered significant soft tissue injury. His left ankle was significantly swollen.
At that point he had a past medical history of high blood pressure and high cholesterol. I accept the evidence of Dr Beinart, general practitioner, that raised cholesterol and blood pressure are not debilitating medical problems.
Once his swelling decreased sufficiently for surgery to be undertaken, he underwent internal fixation of the distal tibia and fibula, employing plates and screws. He was in a plaster cast for six weeks and was to remain non-weight bearing.
The plaintiff's post-operative recovery was uneventful, but he did not make a full recovery. He was seen by a physiotherapist, given a Zimmer frame, and was discharged on 13 January 2005, with outpatient clinic treatment arranged. As at 28 February 2005, his foot remained very stiff and swollen with fracture lines still clearly evident on X-ray. He was encouraged to commence partial weight bearing and move towards full weight bearing with physiotherapy arranged.
In a follow up report of 11 September 2006, Dr David Oldham of Fremantle Hospital (working from hospital records) noted that subsequent X‑rays of 5 May 2005 indicated some mild degenerative change within the ankle joint. The doctor noted:
Despite continued efforts by the physiotherapists and by Mr Dunmall, the ankle remained very stiff. At this review the treating medical specialist noted that Mr Dunmall would have a stiff ankle due to the severity of his fracture, and would require ongoing physiotherapy.
The plaintiff testified that he was advised that he ought to continue with physiotherapy, while also being told that 'after three months of physiotherapy, that might be the stiffness with which he would end up'. That is consistent with the tenor of the report.
By an X‑ray of 16 November 2005 it was seen that the fracture had healed with good alignment of the implants but
it was obvious that Mr Dunmall had lost a lot of joint space in the ankle joint and was getting post traumatic osteoarthritis. The treating medical specialist noted that Mr Dunmall would have a good outcome if he ended up with a stiff ankle, however a reasonably painless one. The natural history of that injury would be for the ankle to self‑fuse.
Ultimately the plaintiff was discharged from the outpatient clinic after a final review on 17 May 2006. By that point, his surgical wounds had healed completely, but he was still suffering intermittent pain in the ankle.
An X‑ray report of 2 October 2012 of the plaintiff's left ankle (tendered without objection) indicated that 'the ankle joint has secondary osteoarthritis … The talonavicular joint also has mild to moderate secondary osteoarthritis'.
A later X-ray of 8 July 2015 (tendered over objection but admissible as a business record) indicated advanced degenerative changes seen in the talocrural joint which was unaltered compared to 2 October 2012. Although Dr Beinart was tackled in cross‑examination on the basis that this X‑ray report was solely concerned with the plaintiff's right knee, rather than his left ankle, that proposition is simply incorrect. The report concerned the right knee, and the left tibia and fibula including the talocrural joint, in other words the ankle. That was clarified in re‑examination.
In connection with his claim, on 8 November 2005 the plaintiff consulted the afore-mentioned Dr Michael Beinart, a general practitioner who is registered with WorkCover as an approved medical specialist in the area of workers' compensation assessment. His report dated 14 November 2005 is before the court.
At the time of his consultation the plaintiff was still attending the outpatient clinic, but informed the doctor that he had completed his physical rehabilitation program. He told the doctor he was forced to limit his physical activities as his left ankle continues to swell if he remains on it for long. He said he prefers to avoid analgesics but, when in pain, puts his foot up and rests. Dr Beinart had observed that the plaintiff walked with a distinct limp down the corridor to the examination room, and was unable to support himself on his left lower limb alone. He was unable to walk on his toes or his heels and had difficulty squatting. Examination of his left ankle revealed that there was significant swelling, and minimal left ankle and subtalar movement.
The plaintiff reported to Dr Beinart that he suffered extreme frustration at his physical limitations. He said that he used to enjoy social activities, including boating and fundraising, all of which were now beyond him. He said he had been unable to resume boating, as he felt unsure and unsteady on his feet. He could still drive his automatic car. The plaintiff also admitted that he had become irritable and short‑tempered, stating that he had never been a depressive, but that he now tended to go to bed early and to wake early, and had 'lost his zest for life'. The plaintiff also reported a loss of libido, and stated that the accident had changed all aspects of his life.
At the time of the consultation, the plaintiff was very overweight, with a body mass index of 36.5. Dr Beinart expressed his conclusion in his report:
It is now 10 months post‑injury and Mr Dunmall remains with a significantly compromised left lower limb. He walks with a distinct limp and is unable to remain on his feet for any extended period of time. He is unable to engage in any significant physical activities and is not able to partake in his recreational activity – boating. He is not able to traverse uneven ground therefore he is not capable of resuming his full duties required of him in his pre‑accident role as the general manager of his ceiling fixing company.
In my opinion his physical limitations will be permanent. This injury will predispose him to the development of arthritis in his ankle joint, and further surgery in the form of an ankle fusion may be required in the future.
In evidence Dr Beinart testified that the symptoms of irritability mentioned a moment ago are symptoms of depression. He agreed that he had not diagnosed the plaintiff for depression at any time, but rather commented that the plaintiff had symptoms of depression.
There was no suggestion that Dr Beinart was not a credible witness. He agreed with the entirely generalised proposition that, if an orthopaedic surgeon expressed an opinion on the plaintiff within the area of his expertise, then Dr Beinart would defer to that opinion, given the orthopaedic surgeon's higher qualifications. That adds very little however when neither the opinion, nor the factual basis underpinning it, was put to Dr Beinart for comment. It amounts to nothing more than an obvious concession that he is less qualified than an orthopaedic surgeon.
The orthopaedic surgeon under contemplation is Mr Philip Hardcastle, the third defendant's expert witness, whose evidence I shall detail later.
When asked in cross-examination whether he had ever obtained any medical report since the report from Dr Beinart back in 2005, the plaintiff said he had only been for X-rays. He said he had raised with his doctor at some stage that there were lumps on his leg, and he had thought perhaps the screws were starting to come out so he had it X-rayed, and he was told that they were not. He said no medical specialist had ever told him that it was going to get better. He said that Dr Beinart had forecast that he would get arthritis, and he had.

The plaintiff's evidence as to his recovery

It is uncontroversial that the plaintiff was off work for six months after the accident. It is accepted (in the evidence of Mr Hardcastle) that that six‑month period was appropriate. During that period of time, he was paid his full salary and entitlements. Mr Alcock testified that the company paid the plaintiff his full salary and all bonuses up until the end of the financial year to 30 June 2005.
His reduction in work capacity, of course, dates from the accident itself, but was not productive of immediate financial loss.
The plaintiff testified that, after he was discharged from hospital on 13 January 2005 in a wheelchair, he was non‑weight bearing for a period of three months and, during that time, used a Zimmer frame and a gopher to manoeuvre around his home.
After three months he began attending physiotherapy for approximately a two-month period. He felt he got no benefit from the physiotherapy. In particular he felt that he did not regain any range of movement in his foot. He then commenced water physiotherapy for a period of about six weeks. Again he felt that the ankle did not improve at all. The reports quoted earlier from Fremantle Hospital make it plain that ongoing stiffness in the ankle was the expected outcome. Indeed, if the plaintiff was left with stiffness but not much pain, that was to be regarded as a good outcome, given the severity of his injury. Unfortunately, his ankle was not pain-free and he has been left with chronic swelling.
He finished both types of physiotherapy before he returned to work.
Once he was more mobile, he said, just getting around the house would cause his leg to swell up. He kept his leg as elevated as often as he could. From his description, his leg steadily became more swollen throughout the day unless he was able to elevate it. If he simply sat all day with his leg elevated, it was easier for him but, even if he sat all day, if his leg was not elevated, it would swell up. The swelling would tend to dissipate overnight, in bed.
He said it was approximately four months before he was able to start driving again. He had some difficulty getting in and out of a car and noticed that, after driving for a while, his leg would swell and become numb, and then eventually it would cramp. He said when he first started driving, by lunchtime his leg would be up like a balloon. He drove an automatic car and was therefore not using his left foot, particularly in any mechanical act of driving, but his foot and leg swelled from the fact of being in the car and not having his foot elevated.
The plaintiff testified that the chronic swelling and cramping in his foot caused him difficulty sleeping for a couple of years after the accident. He said it was not constant, and he had good days and bad days. He took mild painkillers to alleviate the problem, as he did not wish to take heavier painkillers.
The plaintiff also described what certainly appear to have been panic attacks, which he said he experienced on occasion at night, when he would wake unable to breathe, thinking that he was going to die, and needing to get out of bed and go outside. He said his general practitioner told him that 'It was stress trauma type thing, he believed' and prescribed him medication, which the plaintiff said did help. There is no supporting evidence to that effect from Dr Mavromatis, whose single paragraph, edited report was tendered. No timeframe was put on the anxiety attacks. I infer they coincide with the couple of years during which he had difficulty sleeping.
He testified that, a few years ago, he was prescribed antidepressants from his general practitioner and felt that they were helping him quite a bit. A list of the plaintiff's list of prescribed medications as at 23 June 2015 includes antidepressants.
A lot of this evidence was led with a lack of precision. An amount for general damages was agreed between the parties, which may well have contributed to the lack of precision. The evidence is still broadly relevant, however, to the issue of the plaintiff's capacity to work.
The plaintiff testified that his injuries did have an effect on his mental state because he was very frustrated, having gone from someone who was active and playing regular squash, golf and partaking in various activities, including boating, to someone who was unable to continue with those activities. He was also embarrassed that his wife had to take on a number of the chores at home. He testified 'So really my life's been, to put it bluntly, rubbish since then'.
The plaintiff testified that he has put on weight following the accident, which he estimated to be 6 kg or 7 kg. Dr Beinart's report of 14 November 2005 indicates that at that time the plaintiff's height was 172 cm, his weight 108 kg and his body mass index 36.5.
If he had only put on 6 kg or 7 kg post-accident, or 9 kg as his wife estimated, then plainly he was heavy before his injuries. While both he and his wife described him as active prior to the accident, neither was suggesting he was in peak condition or had a regular exercise programme, as opposed to playing golf and squash and darts socially. The plaintiff said he is the type of person, in any event, who only has to go on holidays for four weeks to put on 3 kg or 4 kg. He said he tries to keep it under control, but there are limitations upon his ability to exercise. Being only able to walk for about a kilometre, and obviously therefore being unable to run, exercise for weight-loss is not really tenable. He said he tried going to the gym but 'to no avail'. He was not asked about his diet. When asked whether his increasing weight had led to any condition, the plaintiff testified that, for the past three or four years, he has had diabetes and was prescribed medication which has it under control. Medication for diabetes is also on his current list of medications.
He said he did have some discussions with his doctors about taking the plates out of his ankle and 'make it so it didn't move' (i.e. arthrodesis or fusion) but he said that there was a risk of infection, and no treatment was going to alter the fact that he had arthritis. He said that he had no cartilage in his joint, and no amount of special shoes or orthotics was going to improve that. He said he does have orthotics, and they do help, and allow him to walk his dog in the morning, but he is limited to 15 minutes.

Evidence of Evelyn Dunmall

Mrs Dunmall's evidence generally supported her husband's account of the impact of the injuries upon him both physically and mentally.
The plaintiff and his wife have been married for 56 years. She was present when he was injured, went with him to the hospital, and assisted with his care after his release on 13 January 2005. She said when he first came home 'he just burst into tears. He was a mess'.
She confirmed that the plaintiff was in a wheelchair initially, then used a Zimmer frame and a gopher to get around the house, and then managed more on the Zimmer frame as time went on. She said he could walk with the Zimmer frame, and with a stick, but could not walk unaided. She said even when he went back to work 'he was still struggling'. She said he couldn't walk for any length of time 'because his leg would swell right up and he just got – it was just too painful … in his ankle'.
She also supported the plaintiff's evidence that he had problems sleeping and would wake up having a panic attack where he could not breathe and was in pain. She said that went for 'a good couple of years'.
She confirmed that the physiotherapy did not do any good and that, following the physiotherapy, the plaintiff had water physiotherapy for a couple of months and also got no improvement whatsoever.
Mrs Dunmall said her husband was unable to drive for the first four or five months leading up to when he went back to work. She said, once he did start driving, he was able to get in and out of the car, albeit with great difficulty, but had a problem driving any distance. She said every time he came home his leg would be swollen up like a balloon, and he was also tired from the drive and it was just too much. Although the questions were not precise, I understood her evidence to be related to his driving to work. She said if he drove any distance, he would suffer swelling and fatigue. She drove him to all of his medical appointments.
Mrs Dunmall said that, prior to the accident, the plaintiff was outgoing and they would always go out on a Friday night. She said that he was a very active person who did not like sitting around, and was always doing something. She said he also just loved his job, and regarded the people at work as being like a second family, which is how he used to describe it. She said that his work also provided them with a social life, and they used to go away every year and had a lot of friends.
Mrs Dunmall testified that, by contrast, after the accident the plaintiff's personality changed. She said he would go to bed about 2.00 pm in the afternoon. She said that, after the accident, he could not stand up long enough to play darts, and they no longer went out a lot. She said he would generally just sit and get frustrated, because he could not do anything. She said that he could not do jobs around the house such as painting, and could not go up a ladder, and also could not bend or get down. She said he used to get frustrated watching her do jobs, because he thought that he ought to be doing them, but was physically unable to. It was clear from her evidence that this remains the position, and that he continues to go to bed very early. She said he had also put on quite a few kilos after the accident, about 9 kg or 10 kg, something like that, because he sits around doing nothing all day. She said three or four years ago he was diagnosed with diabetes.
Mrs Dunmall said the plaintiff used to get angry and flare up over nothing. She said eventually (no timeframe was given) he was prescribed antidepressants, but said his emotions are still up and down. She feels that he does not have real quality of life anymore.
As to suggestions that the plaintiff should have persevered with his physiotherapy treatment for longer, Mrs Dunmall supported her husband's evidence to the effect that he had been given advice that his ankle was 'like fused' and that he had 'no cartilage between his bones so it wouldn't have mattered if he had carried on for a year. It wouldn't have improved it'. That is consistent with the plaintiff's evidence and also with the medical evidence and I accept he was told something to that effect.

The plaintiff attempts to resume his working life

The plaintiff testified that, towards the end of the six months off, he felt that he was able to walk and drive. He wanted to go back to work, but said he did not have the ability at that stage to work full-time as a general manager. At that stage he was assuming that he would improve over time.
In April 2005 he approached Mr Alcock with a view to returning to work on a part-time basis. The plaintiff reasoned that working part-time would enable him to have a break between work days so that he could rest his leg, because the drive from home to work (an hour and a half each way) was exhausting. Based on his evidence about his leg swelling from driving, a break between work days would also enable him to elevate his leg on his days off. He said he could not work five continuous days in a row:
Because of the tiredness and weariness and the whole concept of it all. I was still in recovery mode from the accident and, as I say, I was trying to get back and get my act together but it never worked.

Based on a salary of $85,000 and the bonus that he would have received directly (based on an expected salary sacrifice of $50,000) (a total of $165,993.20), his income (after tax of $61,566.00) would have been $104,427.20 nett. He did not lose out on dividends that year.
Instead he earned approximately $96,569 which (after tax of $28,937.43) resulted in earnings of $67,631.57 nett, a loss of $36,795.63.
(c)Financial year ending 30 June 2007
In the financial year ending 30 June 2007, but for the change in role and reduction in salary, the plaintiff could have expected to earn his pre‑accident salary of $85,000, together with a bonus of $199,589.20 (representing 10% of pre-tax profits from the previous year). He claims on the basis that he could have been expected to salary sacrifice $50,000 of that bonus to superannuation, being paid directly then the sum of $149,589.20.
He could also have expected to receive (constructively) a dividend on his Class B shares of $59,876.75 (representing 3% of pre-tax profits from the previous year) which figure includes the franking credit. I do not have the figure of the franking credit, but working on the basis that it would have been 30% as it was in the previous two years, it would have been $17,963, making the dividend, less the credit, $41,913. His total expected earnings (of salary, plus bonus directly paid to him, plus the dividend) were therefore $276,502, being $40,006 over the statutory cap. It may be minutely less if the unknown fee is included, but it makes little difference.
For the financial year ending 30 June 2007, therefore, I will take into account potential gross earnings, but for his injuries, of $236,496, being the maximum the court may have regard to pursuant to the statutory cap. The total of his salary of $85,000 and the bonus not salary-sacrificed is $234,589.20, therefore the most he can claim for dividends he could have expected to receive is $1906.80 which will bring him up to the statutory cap.
Based on that expected salary of $85,000 and the bonus not salary‑sacrificed (a total of $234,589.20 exclusive of dividends), his income (after tax of $85,914) would have been $148,674 nett, exclusive of dividends.
Instead the plaintiff worked for only a week, but had accrued leave entitlements. He received salary payments (based on $55,000 per annum) of $2,115.36, together with accrued leave payments totalling $25,033.97 and a bonus of $99,975 (representing instead 5% of pre-tax profits from the previous year), $10,700 of which was paid to him directly (and $89,095 of which he salary-sacrificed to superannuation). Having relinquished his Class B shares, he received no dividends.
His total income of $37,849.33 would have been subject to income tax of approximately $6704, leaving a nett income of approximately $31,145, a loss ($148,674 - $31,145) of $117,529.
(d)Financial year ending 30 June 2008
In the financial year ending 30 June 2008, but for the injuries suffered, the plaintiff could have expected to earn his pre-accident salary of $85,000, together with a bonus of $212,422.30 (representing 10% of pre-tax profits from the previous year). I accept he would likely have salary-sacrificed $90,000 of that bonus to superannuation, given that he would now be in the two years prior to expected retirement. His Class B shares (which he would have continued to hold as general manager) would have resulted in him being paid the equivalent (representing 3% of pre-tax profits from the previous year) of $63,726, representing $42,808 dividend and an assumed $20,918 franking credit (30%).
His resulting expected earnings of salary, bonus not salary-sacrificed and dividend excluding the franking credit would have exceeded the statutory cap (by about $14,000) and so, for the financial year ending 30 June 2008, I will take into account potential earnings, but for his injuries, of $236,496, being the maximum the court can have regard to due to the statutory cap. The total of his expected salary of $85,000 and the bonus not salary sacrificed is $207,422, therefore he can claim for a loss of dividends up to $29,074 before he hits the statutory cap.
Based on an expected salary of $85,000 and the bonus paid directly to him ($207,422), his income (after tax of $72,940) would have been $134,482 nett, exclusive of dividends.
Having retired, the plaintiff earned nil income for that financial year, incurring a loss of $134,482.
(e)Financial year ending 30 June 2009
In the financial year ending 30 June 2009, on the basis that, but for his injuries, the plaintiff would have worked the 2.5 months up to 17 September 2008 when he turned 67, he could have expected to earn his pre-accident salary of $85,000 for 2.5 months, totalling $17,707. He could have expected to receive a bonus of $42,091.77 (representing 10% of pre-tax profits from the previous year) $18,229.94 of which I accept would have been salary-sacrificed to superannuation as retirement was pending, leaving $23,861.83 to be paid directly to him. I have also added in his accrued leave entitlements as at 7 July 2006 totalling $25,033.97.
His Class B shares (which he would have continued to hold as general manager) would have resulted in him being paid the equivalent (representing 3% of pre-tax profits from the previous year) of $12,627.53. Assuming the franking credit represented 30% as it had in previous years, the dividend was $8840 and the franking credit to be set off against taxation was $3,788. Adding his salary to his bonus (not salary‑sacrificed) to his dividend (excluding the franking credit) results in total earnings of $50,409 which, when calculated to a weekly rate comes under the statutory cap of $4,548 per week. I have not added his leave entitlements into that equation as they could so easily have been spread out over years, particularly those which fell easily below the cap, and therefore not been added in at retirement in this hypothetical way.
Based on the expected $17,707 together with the accrued leave entitlements, and the bonus paid directly to him (a total of $66,602.80), his income (after tax of $13,980.84) would have been $52,621.96 nett, exclusive of dividends.
Having retired, the plaintiff earned nil income for that financial year, incurring a loss of $52,622.
(f)Total of past income lost (exclusive of dividends and salary‑sacrificed bonuses)
The plaintiff has lost past income as follows:
Year ending 30 June 2005                 nil
Year ending 30 June 2006 $36,796
Year ending 30 June 2007                 $117,529
Year ending 30 June 2008                 $134,482
Year ending 30 June 2009   $52,622
TOTAL$341,429
That total figure should be discounted for contingencies, to take into account the vicissitudes of life, in that, if the plaintiff had not been injured and had he continued to work full time, and spent considerable time driving, there is always a chance he may have suffered some other injury or poor health which would have cut his working life short. I intend to apply a discount of 5% only, however, because I have seen the plaintiff still in reasonable health at the age of 74, which reduces the likelihood of his work life otherwise having been cut short. That results in a figure of $324,358.

Calculation of loss of bonus salary-sacrificed to superannuation

In his calculations the plaintiff has rolled the loss of that portion of the bonus the plaintiff would have received (but for his injuries) and salary‑sacrificed to superannuation, into one with the loss of his employer's contribution of 9% of his gross salary of $85,000. Consistent with the approach taken in Jongen v CSR Limited & Anor (1992) Aust Tort Reps 81-192; (1992) Library no 920325, I prefer to keep those two separate.
I turn now to that portion of his annual bonus (based on 10% or pre‑tax profits of the company for the previous year) that, but for the accident, the plaintiff would have received and salary-sacrificed into superannuation. This does not involve any judgment about the likelihood of the company making profit, as the quantity of the profit, and hence the resulting bonus, is known.
For the financial year ending 30 June 2005, but for his injuries the plaintiff could have expected to receive and would have salary‑sacrificed $50,000 to superannuation. Because that financial year saw him receive his full salary and bonus despite his injuries, he did salary sacrifice $50,000 from his bonus to superannuation. That year was not productive of any financial loss.
In the financial year ending 30 June 2006, but for his injuries, I accept that the plaintiff could have expected to receive and again would have salary‑sacrificed $50,000 to superannuation. Although on a lower wage, in fact he was able to salary sacrifice $90,000 from his bonus to superannuation.
In the financial year ending 30 June 2007, but for his injuries, I accept that the plaintiff could have expected to receive and would have salary‑sacrificed $50,000 to superannuation. Although on a lower wage, in fact he was able to salary sacrifice $89,095 from his bonus to superannuation.
In the financial year ending 30 June 2008, but for his injuries, I accept that the plaintiff could have expected to receive and would have salary‑sacrificed $90,000 of his bonus. Instead, he received no bonus.
In the financial year ending 30 June 2009, but for the injuries, I accept that the plaintiff could have expected to receive and would have salary‑sacrificed (consistent with his likely salary sacrifice of $90,000 of his bonus the year before) $18,229.94 of his bonus. Instead, he received no bonus.
Overall, comparing what portion of his bonus he might have expected to be able to salary sacrifice to superannuation with what he was in fact able to salary sacrifice, the overall position is a loss to him of $29,134.54. In line with the reasoning in Jongen, again I will treat these really by way of lost salary which the plaintiff thereby could not contribute to superannuation.
It is appropriate to apply a discount of 15% to allow for taxes, administrative fees and contingencies: Jongen; Hodge v Barham [2011] WADC 71 at [323]; (2011) 74 SR (WA) 340; Kelly v Humanis Group Limited [2014] WADC 43 at [501]. That results in a figure of $24,764.

Calculation of loss of superannuation (employer's contributions)

I will deal here with loss of the employer's statutory contributions to the plaintiff's superannuation, which are really a loss of a benefit in the nature of additional salary, taxed at a concessional rate: Jongen.
Prior to the accident, the plaintiff's employer made an annual contribution the equivalent of 9% of the plaintiff's gross salary of $85,000, amounting to $7,650 (the actual sum paid sometimes varied slightly).
For the financial years ending 30 June 2005, 2006, 2007 and 2008, but for his injuries, the plaintiff could have expected his employer's superannuation contribution to be that same $7,650. In the year ending 30 June 2009, he could have expected his employer to contribute 9% of the salary he would have earned during the 2.5 months prior to his turning 67 years old, an amount of $1,594.
In fact in the financial year ending 30 June 2005, his employer contribution actually paid was $6,767.51. That discrepancy had nothing to do with his injuries, however, and I intend to treat that financial year as one in which his injuries were not productive of any financial loss.
In the financial year ending 30 June 2006, his employer superannuation contribution, being 9% of $55,577, should have amounted to $5,001.93 but the actual figure paid was $5,884.77.
In the financial year ending 30 June 2007, his employer superannuation contribution was $190.38. In the financial years ending 30 June 2008 and 2009, he received no employer contributions to his superannuation.
Overall, comparing what he might have expected to receive by way of employer contributions in the financial years ending 30 June 2006, 2007, 2008 and 2009 ($24,544) to what he actually received ($6075), the plaintiff sustained a loss of $18,469.
It is appropriate to again discount that figure by 15% to allow for taxes, administrative fees and contingencies, resulting in a figure of $15,699.

Calculation of damages for loss of dividends

Pre-accident, by virtue of being the general manager, the plaintiff held Class B shares in Ceiling Solutions which resulted in his constructively receiving a dividend representing 3% of pre-tax profits of the business from the previous year. He directed that the dividend be paid to the Dunmall Discretionary Trust, which distributed the funds to his wife. Attached to the dividend was a franking credit.
When he suffered his injuries, he lost his capacity to maintain his role as general manager to which the shares attached, and therefore his capacity to earn the dividends. That loss of capacity was not immediately productive of financial loss, however.
For the financial year ending 30 June 2005, notwithstanding his injuries and absence from work for six months, his Class B shares resulted in him receiving a dividend of $29,740, to which attached a franking credit of $12,746.00 (a total of $42,486.00). There was no loss to him in that year.
In the financial year ending 30 June 2006, notwithstanding his injuries and change of role in the business, because the dividend pertained to the previous year, he still received the dividend representing 3% of pre‑tax profits from the previous year of $27,509, to which attached a franking credit of $11,789.57 (a total of $39,298.57). Again, he suffered no loss that year.
In the financial year 2007, however, having had to relinquish his Class B shares, the plaintiff lost his entitlement to dividends. He therefore received no dividends in the financial years ending 30 June 2007, 2008 and 2009.
Were it not for his injuries and consequent inability to remain as general manager, I accept he could have been expected to receive a dividend representing 3% of pre-tax profits from the previous year in each of the financial years ending 30 June 2007, 2008 and 2009. The plaintiff claims only a portion of the 2009 dividend payment given that he would only have worked 2.5 months, which seems reasonable.
For the financial year ending 30 June 2007, that dividend would have been $59,876.75 inclusive of the franking credit. Working on the basis that the franking credit would have 30% of the total as it was in the previous two years, it would have been $17,963, making the dividend, less the credit, $41,913. The most he can claim, however, because of the statutory cap, is $1,906.80.
For the financial year ending 30 June 2008, that dividend would have been $63,726.69, inclusive of the franking credit. Again working on the basis that the franking credit would have 30% of the total, it would have been $20,918, making the dividend, less the credit, $42,808. The most he can claim, however, because of the statutory cap, is $29,074.
For the financial year ending 30 June 2009, when the plaintiff would have worked 2.5 months, the portion of the dividend which the plaintiff could have expected to receive is $12,627.53, representing an assumed franking credit of $3,788 and a dividend, less franking credit, of $8,840. He was below the statutory cap in that year.
The plaintiff appears to claim the amount of the franking credit as well but, because the plaintiff will be receiving as damages the equivalent of the dividend tax-free, the franking credit should not be included in the sum, it being only the credit by which the plaintiff received that income tax-free. The loss is the dividend, exclusive of the franking credit.
That loss then totals $39,820.80. There is no need to apply a discount for taxes. I apply a 5% discount for general contingencies, making the figure $37,830.

Interest

The plaintiff claims interest on his loss of past earning capacity – his salary, bonus, dividends and superannuation - at the rate of 3%, which I consider to be reasonable. Rather than embark on a complex assessment on when each sum became due, he simply claims it on the totals for the past seven years as at filing his particulars – so from mid-2008. I consider that also to be reasonable, and allow interest on all the above totals for a period of 8.5 years.

Total award

I award damages for loss of earning capacity as follows:
Loss of past earnings (salary and bonus) $324,358
Loss of past superannuation $15,699
Loss of salary-sacrificed bonus $24,764
Loss of past earnings (dividends) $37,830
($402,651)
Interest of 3% on $402,651 x 8.5 $102,676
TOTAL$505,327