ECS Group (Australia) Pty Ltd v Hobby

[2014] NSWCA 193

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

ECS Group (Australia) Pty Ltd v Hobby [2014] NSWCA 193

Hearing dates:

20 May 2014

Decision date:

16 June 2014

Before:

Gleeson JA at [1];
Sackville AJA at [2];
McDougall J at [75]

Decision:

1. Appeal allowed in part.

2. Cross-appeal dismissed.

3. Set aside Order 1 made by Mahony SC DCJ on 1 May 2013.

4. The parties file within seven days an agreed schedule of damages reflecting the reasons in this judgment.

5. In the absence of agreement, the appellant file and serve its proposed schedule of damages with brief written submissions in support within seven days.

6. The respondent file her proposed schedule of damages with brief written submissions in support, within a further seven days.

7. The respondent pay 50 per cent of the appellant's costs of the appeal.

8. The respondent/cross-appellant pay the appellant/cross-respondent's costs of the cross-appeal.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords:

TORTS - mitigation of damages - whether plaintiff's refusal to undergo surgery was unreasonable - whether defendant discharged its burden of proof - whether the plaintiff's state of knowledge at the relevant time was taken into account

TORTS - award of damages for past and future attendant care services - whether award of damages made by the primary Judge was supported by evidence

TORTS - award of damages for past and future domestic services provided to children - whether award of damages made by the primary Judge was supported by evidence

Legislation Cited:

Civil Liability Act 2002 (NSW) ss 15, 15B
Uniform Civil Procedure Rules 2005 (NSW) r 14.14(2)(a), (c)

Cases Cited:

Berkeley Challenge Pty Ltd v Howarth [2013] NSWCA 370
Fazlic v Milingimbi Community Inc [1982] HCA 3; 150 CLR 345
Munce v Vinidex Tubemakers Pty Ltd [1974] 2 NSWLR 235
Plato Films Ltd v Speidel [1961] AC 1090
Rachel Hobby v Rydges Hotels Ltd (District Court (NSW), 1 May 2013, unrep)
Watts v Rake [1960] HCA 58; 108 CLR 158
Wenkart v Pitman (1998) 46 NSWLR 502

Category:

Principal judgment

Parties:

ECS Group (Australia) Pty Ltd (Appellant / Cross-Respondent)
Rachel Hobby (Respondent / Cross-Appellant)

Representation:

Counsel:
R Cavanagh SC (Appellant / Cross-Respondent)
T Molomby SC / M Daly (Respondent / Cross-Appellant)
Solicitors:
McCulloch & Buggy Lawyers (Appellant / Cross-Respondent)
Brydens Compensation Lawyers (Respondent / Cross-Appellant)

File Number(s):

2013/164957

Publication restriction:

None

 Decision under appeal 

Jurisdiction:

9101

Date of Decision:

2013-05-01 00:00:00

Before:

Mahony SC DCJ

File Number(s):

11/122035

HEADNOTE

[This headnote is not to be read as part of the judgment]

The respondent sustained an injury when she slipped and fell while on premises occupied by the appellant. The primary judge found in favour of the respondent and awarded damages in the sum of $431,995.

The primary judge, in considering whether the respondent had failed to mitigate her damages, made a finding that the respondent's refusal to undergo surgery that could ameliorate the effects of the injury was unreasonable.

The appellant did not challenge the primary Judge's finding of liability, but did challenge the awards of damages made for past and future attendant care services, and for past and future loss of the respondent's capacity to provide gratuitous domestic services to her children.

The respondent filed a notice of cross-appeal, which challenged the primary judge's finding of unreasonableness on the basis that failure to mitigate was not pleaded as a defence.

The Court held:

1. The appellant bore the burden of establishing that the respondent had failed to mitigate her loss and should have pleaded in its defence that she had unreasonably refused to undergo the recommended surgery. However, the primary judge did not err making findings on the matter because it was plainly in issue from the early stages of the hearing, and understood as such by the parties: [31]-[35].

Watts v Rake [1960] HCA 58; 108 CLR 158; Wenkart v Pitman (1998) 46 NSWLR 502; Munce v Vinidex Tubemakers Pty Ltd [1974] 2 NSWLR 235; Plato Films Ltd v Speidel [1961] AC 1090; referred to.

2. Whether the respondent's refusal to undergo surgery was reasonable depended on her knowledge of the benefits and risks of the surgery at the time of her refusal. The primary judge erred in failing to take her state of knowledge into account. There was no evidence that the respondent's doctors explained the benefits and risks of the surgery to the respondent. Accordingly, the appellant failed to discharge its burden of proof and the primary judge's finding of unreasonableness had to be set aside: [37]-[41].

Fazlic v Milingimbi Community Inc [1982] HCA 3; 150 CLR 345; applied.

3. The evidence did not support the primary judge's award of damages for future attendant care services for a period of ten years at commercial rates. Damages should be awarded for a period of five years on the basis that the services would be provided gratuitously. The award for past gratuitous attendant care services was also excessive: [51]-[68], [72].

4. No error was demonstrated in the primary judge's award of damages for past and future domestic services: [69]-[72].

Judgment

1. GLEESON JA: I agree with Sackville AJA.

1. SACKVILLE AJA: The respondent sustained a tear of her anterior cruciate ligament (ACL) on 26 April 2008 when she slipped on the dance floor while attending an engagement function at hotel premises of which the appellant was the occupier. The primary Judge (Mahony SC DCJ) found that the appellant had been negligent and awarded the respondent damages of $431,995.00: Rachel Hobby v Rydges Hotels Ltd (District Court (NSW), 1 May 2013, unrep). The appellant does not now dispute liability but contends that the primary Judge's award of damages was excessive.

Procedural Matters

1. The appellant filed a notice of appeal which challenged the award of damages for past and future attendant care services and past and future loss of her capacity to provide gratuitous domestic services to her children (domestic services). These heads of damage together accounted for $310,000.00 of the total damages award of $431,995.00.

1. The respondent filed a notice of cross-appeal. Grounds 1 and 2 of the cross-appeal were as follows:

"1. Finding that the [respondent] failed to mitigate her loss by not having surgery when the same was not pleaded as a defence.

2. The awards of damages be reassessed in light of ground 1."

Grounds 3-5 of the cross-appeal challenged the primary Judge's award of damages for economic loss as inadequate.

1. In response to the cross-appeal, the appellant filed a notice of contention of cross-appeal. The notice of contention sought to uphold the award of damages for non-economic loss, future treatment expenses and future diminished earning capacity on the ground that, having found that the respondent's failure to undertake the surgery recommended by the treating doctor was unreasonable, the primary Judge should have found that any ongoing disability resulted from the respondent's failure to mitigate her loss, and not from the appellant's breach of duty.

1. On 8 May 2014, twelve days before the appeal was listed for hearing, the appellant filed a motion seeking leave to amend the notice of appeal.

1. At the commencement of the hearing in this Court on 20 May 2014, Mr Cavanagh SC, who appeared for the appellant, informed the Court that the cross-appeal and the proposed amended notice of appeal had been "resolved". He indicated that, although final instructions were awaited, the only issues remaining concerned the appellant's challenges to the award of damages for attendant care services and domestic services. The hearing proceeded on that basis.

1. Later in the hearing, there was a discussion about the orders that should be made to reflect the agreement of the parties. Mr Cavanagh said that the appellant would be content for the cross-appeal to be dismissed, with no order as to costs. Mr Molomby SC, who appeared with Mr Daly for the respondent, stated that the cross-appeal was to remain on foot, insofar as it "relat[ed] to the mitigation question". He pointed out that written submissions had been filed on the basis that the mitigation question remained live. Mr Cavanagh agreed that the appropriate order was to dismiss Grounds 3 to 5 of the cross-appeal, with no order as to costs. The Court made the orders.

1. After the orders were made, Mr Molomby explained that Grounds 1 and 2 of the cross-appeal remained alive because the respondent wished to contend that the award of damages for future attendant care services should extend indefinitely into the future. To this end, the respondent challenged the finding made by the primary Judge that damages for future attendant care services should be awarded only in respect of a period of ten years from the date of the trial.

1. It was pointed out to Mr Molomby that if the respondent failed on Ground 1 of the cross-appeal (which contended that the appellant, not having pleaded mitigation, could not rely on the respondent's alleged failure to mitigate her loss), the cross-appeal would have to be dismissed. Mr Molomby then foreshadowed that he wished to amend the notice of cross-appeal to challenge the primary Judge's finding that the respondent's refusal to undergo the recommended surgery was unreasonable. Mr Cavanagh stated that he was not in a position to consent to the foreshadowed amendment.

1. At the conclusion of the hearing, directions were made requiring the respondent to formulate the proposed amendment to the notice of cross-appeal and giving the parties the opportunity to make submissions. The respondent's proposed additional ground of cross-appeal is as follows:

"1A The primary Judge erred:

(a) in finding at paragraph 56 that the plaintiff unreasonably failed to mitigate her loss by not undertaking surgery; and

(b) in restricting the award of damages by reason of the finding in (a)."

1. The respondent submitted that the proposed amendment to the cross-appeal was always intended to be raised and the ground was the subject of written and oral submissions. In particular, the respondent made it clear that she was relying on Fazlic v Milingimbi Community Inc [1982] HCA 3; 150 CLR 345, to demonstrate that the primary Judge had not applied the correct test for determining whether the respondent's refusal to undergo surgery was reasonable. Thus there was no prejudice to the appellant.

1. The appellant acknowledged that it had addressed the substantive issue in its written submissions on the appeal. It said only that the application to amend the cross-appeal was made after the parties had reached agreement on other aspects of the cross-appeal. The appellant did not suggest that it would suffer prejudice if the amendment was allowed.

Background

1. The following brief account is based on the findings of the primary Judge. The account is not controversial.

1. The respondent was born on 28 May 1981 and left school after grade 5. She married in 2001 and separated from her husband in 2003. She has three children, who were aged ten, nine and five at the date of the trial.

1. After she was injured, the respondent was referred first to Dr Fox, an orthopaedic surgeon and then to Dr Hoe, another orthopaedic surgeon. Dr Hoe diagnosed a tear of the ACL and recommended surgery in the form of an ACL reconstruction.

1. The respondent was placed on a waiting list for the surgery at Mt Druitt Hospital. However, she declined surgery on three separate occasions. On the first occasion (apparently in 2008), she said that she could not have the operation because it was Christmas time; on the second, she said that her childcare arrangements had fallen through; on the third, she said that she was "too scared" to have the operation. At the date of the hearing, the respondent had not undergone the recommended surgery.

1. In a report dated 21 July 2011, Dr Hoe stated as follows:

"[The respondent's] left knee is likely to remain unstable without surgical intervention. Surgery has been recommended. Following that surgery, she is unlikely to be able to look after children for approximately 3-4 weeks. She may require assistance from family members.

Following the surgery I would expect a return of close to normal function of her left knee."

Legislation

1. The provisions of the Civil Liability Act 2002 (NSW) that are relevant to damages for gratuitous attendant care services are as follows:

"15 Damages for gratuitous attendant care services: general

(1) In this section:

attendant care services means any of the following:

(a) services of a domestic nature,

(b) ...

(c) services that aim to alleviate the consequences of an injury.

gratuitous attendant care services means attendant care services:

(a) that have been or are to be provided by another person to a claimant, and

(b) for which the claimant has not paid or is not liable to pay.

(2) No damages may be awarded to a claimant for gratuitous attendant care services unless the court is satisfied that:

(a) there is (or was) a reasonable need for the services to be provided, and

(b) the need has arisen (or arose) solely because of the injury to which the damages relate, and

(c) the services would not be (or would not have been) provided to the claimant but for the injury.

(3) Further, no damages may be awarded to a claimant for gratuitous attendant care services unless the services are provided (or to be provided):

(a) for at least 6 hours per week, and

(b) for a period of at least 6 consecutive months."

Subsections 15(4) and (5) impose limits on the amount of damages that can be awarded for attendant care services.

1. Section 15B of the Civil Liability Act deals with damages for loss of capacity to provide domestic services. Section 15B(2) provides as follows:

"(2) When damages may be awarded

Damages may be awarded to a claimant for any loss of the claimant's capacity to provide gratuitous domestic services to the claimant's dependants, but only if the court is satisfied that:

(a) in the case of any dependants of the claimant of the kind referred to in paragraph (a) of the definition of dependants in subsection (1) - the claimant provided the services to those dependants before the time that the liability in respect of which the claim is made arose, and

(b) the claimant's dependants were not (or will not be) capable of performing the services themselves by reason of their age or physical or mental incapacity, and

(c) there is a reasonable expectation that, but for the injury to which the damages relate, the claimant would have provided the services to the claimant's dependants:

(i) for at least 6 hours per week, and

(ii) for a period of at least 6 consecutive months, and

(d) there will be a need for the services to be provided for those hours per week and that consecutive period of time and that need is reasonable in all the circumstances."

1. The expression "gratuitous domestic services" is defined by s 15B(1) to mean:

"services of a domestic nature for which the person providing the service has not been paid or is not liable to be paid."

Paragraph (a) of the definition of "dependants" in s 15B(1) includes a child of the claimant who is wholly or partly dependent on the claimant.

1. The damages to which a claimant is entitled for loss of capacity to provide gratuitous domestic services is subject to a cap calculated using the same hourly rate used to cap attendant care services: s 15B(4).

Primary Judgment

1. The primary Judge noted (at [54]) that the only evidence supporting the respondent's case for past attendant care services or domestic services for her children was that given by her mother. His Honour found that the evidence of the respondent's mother contained an "element of over-embellishment".

1. The primary Judge said (at [55]) that an issue in the case was whether the respondent's refusal to undergo the surgery offered to her amounted to a failure to mitigate her damages. His Honour found (at [56]) that the respondent's refusal to undergo the surgery was unreasonable:

"I find that the real reason why the [respondent] has refused the surgery is that she is scared of having a poor outcome. I find that this is an unreasonable position for her to take, given that she will remain significantly disabled without surgical repair of her ACL and will be susceptible to ongoing pain and instability in the joint which will cause her much disability into the future. By comparison, the surgery is relatively safe, with the majority of patients doing well following the procedure, according to Dr Pillemer in his report dated 29 May 2012, a report relied on by the [respondent]. It was Dr Pillemer's opinion that it is 'essential' that the [respondent] undergo surgical treatment for her injury."

1. The primary Judge recorded (at [67]) the respondent's submission that she required 26 hours per week for past domestic care and assistance. For the future, she submitted that seven hours per week of paid assistance was reasonable and that $40.00 per hour was an appropriate rate for that assistance. In addition, the respondent claimed 14 hours per week for past domestic services for her children (at [68]). She also claimed a lump sum of $50,000.00 for loss of capacity to provide domestic services for her children in the future.

1. His Honour dealt with the respondent's claims in respect of assisted care and domestic services as follows:

"72 I do not accept the evidence of the [respondent's] mother in respect of her need for past gratuitous care. However, given the significant ongoing problems that she has suffered with the instability of her left knee, I am satisfied that the [respondent] has met the threshold for such gratuitous attendant care services in s 15(3) of the [Civil Liability Act]. Whilst her need for such assistance was greater for the year or so immediately following her injury, on average, that need was in order of 14 hours per week. At a rate of $25 per hour I have assessed the appropriate award over a period of 5 years since the accident and rounded it off at $90,000.00. Further, I find that the [respondent] has established a claim pursuant to s 15B for gratuitous assistance provided to assist her in looking after her young children and that the threshold in s 15D(2)(c) [sic: 15B(2)(c)] has been met in respect of such services. I assess the [respondent's] claim at 7 hours per week over the 5 year period and have rounded it out to $45,000.00.

73 For future care, I find that the [respondent] will require 7 hours care per week and that $40 per hour is a reasonable commercial rate for that care. However, provided the [respondent] has the recommended surgery for reconstruction of her anterior cruciate ligament, she will not require that care for the rest of her life and I award it for a period of 10 years only. I have rounded that award off to $145,000.00.

74 As the [respondent's] children reach school age and require less intensive care from her on a daily basis, I find that the need for dependent care will diminish. I find that it is an appropriate case to award a lump sum for such care and I award the sum of $30,000.00 for that head of damages."

1. Accordingly, the primary Judge made the following awards in respect of attendant care services and domestic services:

$
Past gratuitous attendant care services	90,000.00
Past domestic services for the children	45,000.00
Future paid attendant care services	145,000.00
Future domestic services for the children	30,000.00
TOTAL	$310,000.00

(The primary Judge stated that the award of $145,000.00 was for "Future Gratuitous Care" (at [81]). However, the reasons (at [73]) indicate that that award was in respect of the appellant's future need for paid attendant care services.)

Issues

1. The issues raised by the appeal are these:

(i) Should the respondent be granted leave to amend her cross-appeal?

(ii) Should the appellant be permitted to rely on the respondent's alleged failure to mitigate her loss notwithstanding that the defence did not plead a failure to mitigate?

(iii) Was the primary Judge incorrect to conclude, as the respondent contends in her cross-appeal, that she unreasonably refused to have the recommended surgery?

(iv) Did the primary Judge err in finding that the respondent had a need for past attendant care services averaging 14 hours per week?

(v) Did the primary Judge err in awarding damages in respect of future attendant care services for a period of ten years? (The respondent sought an award covering an indefinite period into the future, while the appellant sought to limit the relevant period to two years.)

(vi) Did the primary Judge err in awarding damages to the respondent for future commercial attendant care services at commercial rates rather than on the basis of an allowance for gratuitous services?

(vii) Should the award in respect of past and future domestic services stand?

Reasoning

Amending the Cross-Appeal

1. The appellant was not able to point to any prejudice if the respondent was given leave to amend the cross-appeal. In particular, it was not suggested that the grant of leave would expose the appellant to prejudice by reason of the terms on which the parties reached a compromise on the cross-appeal. Mr Cavanagh fairly conceded that the reasonableness of the respondent's refusal to undergo surgery had been the subject of written submissions and that the proposed amendment did not introduce an issue that would require further submissions. In these circumstances, leave should be granted.

Failure to Plead the Mitigation Issue

1. As has been seen, the primary Judge identified as an issue in the proceedings whether the respondent had failed to mitigate her damages by unreasonably refusing to consent to the recommended surgery.

1. The appellant acknowledged that it bore the burden of proving that the respondent had failed to mitigate her loss by unreasonably refusing to undergo the recommended surgery: Watts v Rake [1960] HCA 58; 108 CLR 158 at 159 (Dixon J); Wenkart v Pitman (1998) 46 NSWLR 502 at 520-523 (Powell JA, Mason P and Sheppard AJA agreeing); Munce v Vinidex Tubemakers Pty Ltd [1974] 2 NSWLR 235. Mr Cavanagh also accepted that the appellant should have specifically pleaded that the respondent failed to mitigate her damages: Uniform Civil Procedure Rules 2005 (NSW) r 14.14(2)(a), (c) (requiring a defendant to plead anything which, if not pleaded specifically, would take the other side by surprise or that raises matters of fact not arising out of the previous pleading); Plato Films Ltd v Speidel [1961] AC 1090 at 1140 (Lord Denning), 1145 (Lord Morris). Mr Cavanagh nonetheless submitted that no unfairness had been occasioned to the respondent by the appellant's failure to plead that the respondent had unreasonably refused to undertake the recommended operation. He contended that the respondent's failure to mitigate her damages was squarely put in issue at the trial and that the primary Judge was therefore correct to address the issue and make a finding of fact as to whether the respondent had acted unreasonably.

1. The respondent's case was conducted on the basis that her damages should include the cost of the recommended operation. The respondent's Further Amended Statement of Particulars filed on 8 April 2013, stated that she "is likely to require surgery to her left knee". As recorded by the primary Judge (at [71]), it was agreed that the respondent should be "awarded future treatment expenses, having regard to her need for surgery". His Honour found that the cost of the surgery would be about $8,000.00 and he included that amount in the damages of $15,000.00 awarded for future treatment expenses. That award also included an unspecified amount for medication required in the future, including medication required following the surgery.

1. The respondent's examination in chief explored her reasons for not undergoing the recommended surgery, despite the surgeon having scheduled three separate appointments for the operation to take place. The respondent gave the various explanations for refusing to agree to surgery. The respondent was subsequently cross-examined at some length on her reasons, without objection from her counsel. The cross-examination challenged the respondent's evidence and was directed towards showing that her reasons were either not genuine or had no reasonable basis.

1. It is clear enough from the course of the trial that both parties regarded the appellant's claim that the respondent had failed to mitigate her damages as being in issue. In final submissions, counsel for the respondent at trial recognised as much. He complained that he was facing an "unpleaded failure to mitigate case", but nonetheless proceeded to advance arguments as to why the primary Judge should not find that the respondent's refusal to undergo surgery was unreasonable. Counsel did not submit that the appellant in the absence of an amendment to the defence, should be precluded from contending that the respondent had failed to mitigate her damages.

1. There is no doubt that the appellant should have pleaded in its defence that the respondent had failed to mitigate her damages by unreasonably refusing to undergo the recommended reconstructive surgery on her knee. But the omission did not result in any procedural unfairness to the respondent. Mitigation was an issue from the early stages of the hearing and, it can readily be inferred, was understood as such by the parties. It follows that the primary Judge did not err in considering whether the respondent's conduct was unreasonable and in making a finding on the matter. For the same reasons, it is open to the appellant to seek to support the primary Judge's finding in this Court.

1. As I shall explain shortly, I consider that the respondent is entitled to succeed on her cross-appeal on the mitigation issue, insofar as it relates to the primary Judge's finding that her refusal to undergo surgery was unreasonable. If I had reached a different conclusion on the merits of that issue, I would have required the appellant, as a condition of being permitted to rely on the respondent's failure to mitigate her damages, to file an amended defence specifically pleading the failure.

The Finding of Unreasonableness

1. The primary Judge found that the respondent's refusal to undergo the surgery was unreasonable because the surgery is "relatively safe" and is likely to ameliorate the extent of her disability. His Honour does not appear to have been referred in final submissions to the decision of the High Court in Fazlic v Milingimbi Community Inc [1982] HCA 3; 150 CLR 345. The High Court there dealt with the case of an injured claimant who had refused to undergo a back operation to ameliorate the consequences of a work related injury because he was fearful of the outcome of the surgery. The Supreme Court of the Northern Territory found that the claimant's refusal was unreasonable and thus he was not entitled to periodic workers compensation payments. An appeal to the Full Federal Court was dismissed.

1. The High Court allowed the claimant's appeal on the ground that the reasonableness of the claimant's refusal to undergo the surgery depended on his state of knowledge at the time of the refusal. The Court said this (at 349-350):

"In its joint judgment the Full Court relied extensively upon the reasonableness of the proposed operation and upon the unreasonableness of the appellant's fear, which was regarded as the only substantial factor standing in the way of the operation. No doubt it will be but rarely that an employer does not succeed in establishing that a worker's refusal is unreasonable when the worker has allowed baseless fear to decide his choice, outweighing his knowledge of cogent factors favouring his undergoing an operation. But this is not such a case. All that the appellant had to place in the scales and weigh against his strong and genuinely held fear of operation was the knowledge, gained from his treating surgeon, that the operation would be relatively major, carrying some risk, the chances being that it would improve his condition. He knew almost nothing about the objective reasonableness of the operation. ...

Any assessment of the reasonableness or otherwise of a worker's refusal of treatment must depend upon the worker's state of knowledge at the relevant time. This accords both with good sense and with authority. A worker's choice cannot be said to be unreasonable because he has failed to give effect to factors unknown to him. And in the case of complex medical or surgical procedures he will know little except what he is told. In the present case he was told very little indeed." (Emphasis added.)

1. Mr Cavanagh did not seriously dispute that the primary Judge in the present case applied a wholly objective test to determine whether the respondent's refusal to undergo the surgery was unreasonable. Nor did he seriously dispute that such an approach was inconsistent with the ratio decidendi of Fazlic. That decision requires a court assessing the reasonableness of a refusal to undergo medical treatment to take into account the claimant's knowledge of the benefits and risks of the treatment.

1. The Court was taken to the respondent's evidence in chief, cross-examination and to the medical reports. As Mr Cavanagh ultimately accepted, there was no evidence that the treating doctors explained to the respondent the reasons why they considered that the surgery was necessary and outlined to her both the risks and benefits of the operation. Nor was there evidence that the doctors considered the respondent's refusal to be unreasonable. Indeed, Dr Pillemer, an orthopaedic surgeon, expressed the view in his report of 28 April 2011 that there were "understandably multiple reasons why she is reluctant to go into hospital and have the surgery done". Since the burden of proof was on the appellant on the mitigation issue, it is not open to this Court on appeal to find, on the test approved in Fazlic, that the respondent's refusal to undergo the operation was unreasonable. Thus the primary Judge's finding to that effect was erroneous. It follows that the respondent's damages must be assessed on the basis that her refusal to undergo surgery prior to the trial was not unreasonable.

1. I should add, in fairness to the treating doctors, that this does not amount to a finding that they did not adequately explain to the respondent the likely risks and benefits of the operation. My conclusion merely reflects the evidence - or, more accurately, the paucity of evidence - adduced as to the respondent's understanding of the benefits and risks of the recommended reconstructive surgery at the relevant times.

The Respondent's Need for Past Attendant Care Services

1. The primary Judge found (at [72]) that the respondent required gratuitous attendant care services for the five year period between the date of the injury and the trial. His Honour considered that the respondent's need was in the order of 14 hours per week throughout the period and thus satisfied the threshold requirement stated in s 15(3) of the Civil Liability Act (a minimum of services for six hours per week and for a period of at least six successive months).

1. Mr Cavanagh submitted that the primary Judge was wrong to find that the threshold requirements in s 15(3) had been satisfied and that, in any event, an allowance of 14 hours per week for the five year period was excessive.

1. The respondent's evidence was that she and her parents lived together; that following the accident she had difficulty performing household tasks such as sweeping, mopping, vacuuming and cleaning; and that her mother performed many of these tasks for her. The respondent did not give any clear estimate of the number of hours per week for which she required services beyond the hours that had previously been provided by her mother. Mr Cavanagh accepted that the respondent had not been cross-examined on her evidence as to her inability to perform household tasks after the accident.

1. Dr Conrad, a surgeon, expressed the following views in a report dated 28 July 2011:

"With regards to her work capability, should she be looking for work, she might be able to do about 12 hours per week of light cleaning work or similar work or shop work in a position where she is able to stand or sit at will and not do a lot of standing, walking, going up and down stairs, squatting or kneeling. She should not lift or carry anything more than 5kgs in weight and she should not use heavy industrial vacuum cleaners or polishers.

...

Should her mother not be able to assist with the heavier part of her housework, cooking and cleaning and childcare, she might need about six hours per week of Home Care assistance."

1. There was also evidence, although not directly from the respondent, that she was significantly more limited in her ability to care for herself during the period immediately following the accident. For the first six weeks she was immobilised in a Zimmer splint. In June 2008, about two months after the accident, her general practitioner recorded that the respondent's knee was frequently giving way and this was "making her home duties and caring for her baby very difficult". (At this stage, her youngest child was an infant.)

1. In a report dated 7 September 2012, the general practitioner said that the respondent had encountered problems in obtaining the physiotherapy she required because of financial constraints. However, her condition had improved following visits to Blacktown Hospital physiotherapy department over the period June 2008 to September 2009. A report from a physiotherapist at that Hospital, dated 7 July 2008, stated that, at that time, the respondent was finding it very difficult to do any activity of daily living, including caring for her three children.

1. In this state of the evidence, particularly having regard to Dr Conrad's report, I do not think that the primary Judge's finding that the respondent required attendant care services on average for 14 hours per week over the whole five year period can be sustained. It must also be remembered that the primary Judge awarded damages for a further seven hours per week of domestic care services in respect of the same five year period. There is a basis for finding that the respondent needed (on average) about 14 hours of care per week for a period of about 18 months after the accident. From that time onwards however, the level of attendant care services she required tapered off until it reached approximately six hours per week at the time of the trial. I think that a fair estimate would be that the respondent required, on average, eight hours per week for the last three and a half years of the five year period preceding the trial.

1. It follows that damages for past gratuitous attendant care services should be calculated on the basis that the respondent required:

● an average of 14 hours per week for the first 18 months after she sustained her injuries; and

● an average of eight hours per week for the three and a half years thereafter.

1. The primary Judge's finding that the respondent satisfied the threshold requirements stated in s 15(3) of the Civil Liability Act should not be disturbed.

Future Attendant Care Services

1. The respondent submitted that once the appellant's claim that she had failed to mitigate her damages was rejected, the primary Judge was wrong to limit the award of damages in respect of future attendant care services to a period of ten years. According to Mr Molomby, the primary Judge should have found that the respondent's need for those services would continue indefinitely into the future and the damages award should be increased accordingly.

1. The only reason given by the primary Judge for selecting a period of ten years was that if the respondent had the recommended surgery for reconstruction of her ACL, she would not require care for the rest of her life. The basis for the implicit finding that the respondent would be likely to have the surgery within ten years of the trial was not spelt out. His Honour may have considered that the respondent's fear of the surgery (which his Honour found to be unreasonable) would be dispelled, or at least overcome, if the benefits and risks were properly explained to her by the treating doctors. An alternative possibility is that his Honour considered that the respondent would be more amenable to undergoing surgery once her children had grown up (the youngest will be 15 years of age 10 years after the trial) and were no longer substantially dependent on her for their own care.

1. The principal difficulty facing the respondent's submission is that she claimed and was awarded damages on the basis that she was likely to have the recommended surgery. At no stage has it been said on her behalf that she disclaims her entitlement to damages for the cost of the operation, or for the cost of medication or treatment consequential on surgery. On the contrary, in his oral submission at the trial the respondent's counsel stated that the claim for further medical expenses included the cost of the recommended surgery, which he described (confusingly) as "the probability of a possibility of surgery". Moreover, the respondent did not give evidence that she would continue to refuse surgery because of her fear of an adverse outcome, regardless of her future circumstances. She merely gave her reasons for not undergoing the procedure up to and including the date of the trial, despite her orthopaedic surgeon giving her the option to have the operation.

1. The onus is on the respondent to prove that her need for attendant care services would continue for longer than the period of ten years allowed by the primary Judge. The starting point is the primary Judge's finding that the respondent refused to undergo the surgery prior to the trial because she was afraid of the adverse consequences. For the reasons that have been given, it must be accepted that her fear of the surgery was not unreasonable, although this conclusion rests in part on the absence of evidence that the risks and benefits were fully explained to her. However, it is also necessary to take into account that the respondent claimed and was awarded the cost of the operation on the basis that it was likely she would undergo the surgery. It is also necessary to bear in mind that the respondent did not give evidence that, even if the risks and benefits were properly explained and even if her condition continued to cause her pain and limit her mobility, her fear of the procedure would prevent her undergoing the surgery at any time in the future.

1. Once all these matters are taken into account, in my opinion, there is no sound basis for finding that the respondent's need for attendant care services and her inability to provide domestic services to her children would continue for longer than the period of ten years allowed by the primary Judge.

1. The more difficult question is raised by the appellant's submission that the period of ten years allowed by the primary Judge for future attendant care services was too long. Mr Cavanagh submitted that a period of no longer than two years should have been allowed. He selected that period because there was some evidence that the waiting time for ACL reconstructive surgery in the public hospital system was up to two years. But, as was pointed out in argument, if the respondent is awarded the cost of the operation in the private sector, she would not be required to join the public hospital waiting list.

1. In part Mr Cavanagh relied on the primary Judge's finding that the respondent's refusal to undergo the surgery was unreasonable (a finding now set aside). But he also submitted that a finding that the respondent would require gratuitous attendant care services overlooked the fact that she claimed and was awarded damages to enable the operation to take place and that she never stated that she would refuse to have the operation in the future (although Mr Cavanagh accepted she was not asked about this directly).

1. The primary Judge made no finding that the respondent's fear of the recommended surgery would continue for any particular time in the future or indeed at all. The respondent herself was not asked, either by her own counsel or the appellant's counsel, whether her attitude was likely to change in the future. Nor was she asked whether she would continue to be too "scared" to have the surgery if the benefits and risks were fully explained to her.

1. As I have noted, the respondent bore the onus of proving that she would require attendant care services in the future. She claimed and received damages for the cost of the operation which, as the primary Judge found, is relatively safe and is likely to produce a favourable outcome. For the reasons I have given, his Honour's finding that the respondent's refusal to undergo the surgery was unreasonable cannot stand, but the basis for that conclusion is that the evidence does not establish that the respondent was provided with sufficient information to make a fully informed decision at the time she refused to undergo the surgery. That conclusion does not justify an inference that the respondent's fear would prevent her from having the recommended ACL reconstructive surgery for a further period of ten years.

1. In my opinion, the finding that the respondent would require attendant care services for a period of ten years after the trial (a total of fifteen years in all) cannot be supported by the evidence. As in virtually all cases where damages are awarded in respect of period of future incapacity, there is a substantial element of uncertainty. While the finding that the respondent's fear of surgery at the date of the trial was not unreasonable must be given due weight, I do not think that the evidence supports an award of damages for attendant care services in respect of a period any longer than five years.

1. Bearing in mind that any estimate of the extent of the respondent's need for attendant care services is necessarily approximate, I would not disturb the primary Judge's finding that the respondent required attendant care services in the future for seven hours per week. For the reasons I have given, the award of damages should be limited to the cost of future gratuitous attendant care services for seven hours per week for a period of five years.

Commercial Rates for Attendant Care Services

1. The primary Judge found (at [73]) that the respondent required seven hours per week for future attendant care services and that $40.00 per hour was a reasonable commercial rate for that care. His Honour did not explain why he considered that an allowance should be made for commercial care, as distinct from an allowance in respect of gratuitous services.

1. Sections 15 and 15B of the Civil Liability Act deal with gratuitous attendant care services. In order for the respondent to be entitled to damages in respect of commercial care services, she had to show not only a need for paid commercial care but also that gratuitous assistance to satisfy the need was unavailable: Berkeley Challenge Pty Ltd v Howarth [2013] NSWCA 370 at [148] (Tobias AJA, Basten and Meagher JJA agreeing).

1. In my opinion, the sparse evidence did not establish that either of these requirements was satisfied. The respondent said that her mother performed the household tasks that she herself could not perform after the accident. Subject to the matter mentioned in the next paragraph, the respondent did not pay for care services prior to the trial. The only evidence relating to the need for commercial services to perform household tasks in the future was the following passage in the respondent's examination in chief:

"Q. How do you feel about the fact that your mother is doing all this housework for you?

A. I don't like it.

Q. You know that in the case there's a claim that someone come in and be paid to do household chores you can't do?

A. Yes.

Q. How would you feel about spending money on that?

A. Prefer it."

1. The respondent gave evidence that prior to her accident she mowed the grass on the property where she and her parents lived, every two or three weeks. She said that she performed this task because her father was physically unable to do the work. The respondent said that after the accident she paid for someone to mow the grass as she could no longer do so.

1. When the respondent was asked in her evidence in chief how much she paid for lawn mowing services, counsel for the appellant objected on the ground that the particulars of damage did not include a claim for the cost of such services. The respondent's then counsel did not press the question and acknowledged a little later that the particulars filed on behalf of the respondent did not refer to the cost of lawn mowing services. Later in the hearing, the respondent's counsel handed up an amended statement of particulars that incorporated a claim of $80 once every three weeks since the date of the accident for lawn mowing services.

1. Despite the amendment, the issue of the cost of lawn mowing services was not revisited in the respondent's evidence, although the respondent's mother said that someone had to be engaged to mow the lawn after the accident. There was no evidence as to the cost that had been incurred for lawn mowing services or the likely cost of such services in the future. A schedule of damages handed to the primary Judge by the respondent's counsel during his final submissions made no reference to the cost of lawn mowing services. Counsel made a passing reference in his oral submissions to the respondent's "outside work with the lawns" but did not refer to the cost of obtaining someone else to perform the work. Not surprisingly, the primary Judge did not refer to the cost of lawn mowing services as a justification for awarding for future care services on a commercial basis. In these circumstances, in my opinion, the respondent cannot (and indeed did not) rely on the cost of lawn mowing services to support the award of damages for future care services on a commercial basis.

1. The evidence before the primary Judge suggests that for the period of five years after the trial (that being the relevant time based on the findings at [60] above) the respondent will have available to her gratuitous services to meet her need for care services attributable to her injuries. Thus damages in respect of future attendant care services should be assessed having regard to the caps imposed by s 15(4) and (5) of the Civil Liability Act and not by reference to commercial rates.

Domestic Services

1. The primary Judge awarded the respondent damages for her loss of capacity to provide domestic services to her children. He allowed seven hours per week for the five years prior to the trial and a lump sum of $30,000.00 in respect of future domestic services. His Honour did not expressly find that each of the requirements specified in s 15B(2) was satisfied. However, it is implicit in his reasoning that he considered each sub-paragraph to be satisfied.

1. While both the evidence and the reasoning in support of these findings is somewhat meagre, I do not think that the award of damages in respect of domestic care services has been shown to be wrong. There is little doubt that for the five year period before the trial, the respondent required assistance from her mother to care for the children over and above the assistance she previously provided. Particularly in the year and a half following the injury, her ability to care for her very young child was significantly curtailed. The estimate of seven hours per week throughout that period has not been shown to be wrong.

1. As I have explained, the damages in respect of future domestic services should be limited to a maximum of five years. However, the lump sum awarded by the primary Judge took into account that the children would require less care as time went on. The allowance of $30,000.00 should also stand.

Conclusion

1. The award of damages for past and future domestic services should stand. However, the awards in respect of past gratuitous attendant care services and future paid attendant care services should be set aside. Instead, damages should be awarded on the following basis:

● for past gratuitous care services, 14 hours per week for the first 18 months and eight hours per week for the remaining three and a half years, calculated in accordance with s 15(5) of the Civil Liability Act;

● for future attendant care services, seven hours per week for a period of five years, calculated in accordance with s 15(5) of the Civil Liability Act.

1. I propose the following orders:

1. Appeal allowed in part.

2. Cross-appeal dismissed.

3. Set aside Order 1 made by Mahony SC DCJ on 1 May 2013.

4. The parties file within seven days an agreed schedule of damages reflecting the reasons in this judgment.

5. In the absence of agreement, the appellant file and serve its proposed schedule of damages with brief written submissions in support within seven days.

6. The respondent file her proposed schedule of damages with brief written submissions in support, within a further seven days.

1. On the issues debated in this Court, the appellant has enjoyed some success, but has not established all its grounds of appeal. The respondent succeeded on the mitigation issue, but her cross-appeal is to be dismissed. I propose the following costs orders:

7. The respondent pay 50 per cent of the appellant's costs of the appeal.

8. The respondent/cross-appellant pay the appellant/cross-respondent's costs of the cross-appeal.

1. McDOUGALL J: I agree with Sackville AJA.

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Decision last updated: 16 June 2014