Horner, Robin David v Nielsen, Axel William Harald

[1980] FCA 131

CATCHWORDS.

Damages - appeal on quantum - loss of earning

capaci ty t o t r i a l - l o s s o f future earning

capaci ty - non-economic l o s s .

ROBIN DAVID HORNER v. AXEL WILLIAM HARALD NIELSEN.

F.C. No. 33 of 1979.

Franki, St .	John	and	Sheppard	JJ.
Sydney.

29 September 1980.

I N THE FEDERAL COURT OF AUSTRALIA

CANBERRA DISTRICT EGISTRY No. F.C. 33 of 1979.

GENERAL DIVISION.

BETWEEN: ROBIN DAVID HORNER

Appellant

- AND: AXEL WILLIAM HARALD NIELSEN

Respondent.

ORDER

JUDGES MAKING ORDER: Franki , St . John and Sheppard JJ.

DATE OF ORDER : 29 September 1980.

WHERE MADE : Sydney.

THE COURT ORDERS THAT:

1. Appeal allowed.

2. Order of the Supreme Court of the Austral ian Capi ta l

Ter r i to ry var ied by the subs t i t u t ion of t h e sum o f

$112,477.66	f o r t h e	sum of $174,977.66 mentioned
there in .

3 . The respondent pay the appellant’s costs of

th i s appea l .

IN THE FEDERAL COURT OF AUSTRALIA)

)

CANBERRA DISTRICT REGISTRY	1	No.FC 33 of 1979
1
GENERAL DIVISION	)

BETWEEN: ROBIN DAVID HORNER

Appellant

AND: AXEL WILLIAM HARALD NIELSEN

Respondent

CORAM: FRANKI, ST. JOHN AND SHEPPARD JJ.

29 SEPTEMBER 1980

REASONS FOR JUDGMENT

THE COURT:

The appellant, R o b m Davld Horner, was the defendant In

an action brought by the respondent, Axe1 William Harald Nlelsen,

In the Supreme Court of the Australlan Capltal Terrltory. The

appeal is limited to the damages awarded.

The learned trial Judge awarded a sum of $174,977.66,

made up as follows:

"Agreed special damages $ 3,153.66

.. -.I- .

Loss of earning capaclty to trial 23,124.00

Loss of future earning capaclty 112,500.00

Future expenses 1,200.00

Non-economic loss 35,000.00"

2

The injuries to the respondent resulted from a motor car accident on 8 April 1975, when the respondent was almost 4 2 years of age and was employed by a company, Dalgetys Ltd., ("Dalgetys") as a sales representatlve In the llquor sales actlvlties of the company In the Canberra and southern dlstrict area of New South

Wales. Dalgetys did not terminate his employment untll March

1977. The respondent is marrled wlth 4 children, the eldest of

whom was 2 0 at the time of the accident.	The learned trial Judge
made the followmg findings:

"Immediately after the accident the plaintlff spent s1x days in hospital. His less serious Injuries were considerable brulsing, and

cracked ribs. His more serious injury, which

has been the foundation of all the pain and loss which he has suffered as a result of the

accident, was damage to the cervical

vertebrae. He found that his neck was at flKSt immovable and very palnful, and the paln extended down into hls arms. In hospital he was immobilized and put under sedation. After leaving hospital he was in bed at home for ten days, during which there was some lessening of paln and increase In hls mobility. A surgical collar was placed round his neck whlle he was In hospltal and

he wore it more or less continuously

afterwards; indeed he was wearing it for most

of the hearing.

The principal effect of the ~ n ~ u r y was severe and prolonged pain. During the months after

the accident the paln Included severe

headache	and	backache with referred pain in
the groln.	He was more a r e s s constantly

under medlcation to relieve thls paln. In

addltion, he has had a great deal of

physiotherapy; indeed from the tlme of the accident to the tlme of trial the longest perlod that was henot uildergolng physiotherapy was three months; for most of the time, he was having physlotherapy three times a week. Thls was helpful In reduclng the pain."

3

The respondent's treatment Included tractlon, whlch he said was "desperately painful", manlpulation under anaesthetlc, a

myelogram, cortlsone in~ections and rhysolysis.

The hearing of the case commenced on 24 October 1978 and

~udgment was delivered on 24 August 1979. Between the accident

and March 1977, the respondent did some very limited work for Dalgetys. For this perlod he was paid an amount of $7,836.80 in respect of workmen's compensation and his salary was made up by Dalgetys. The learned trial Judge reached a figure for loss of earnings between the termination of employment and the time of the trial, based upon a period of 84 weeks, of $15,288.

His Honour's ludgment was given before the judgment of

the High Court in Cullen v. Trappell (1980) 29 A . L . R . 1. In

assessing damages the learned trial Judge used a flgure of gross earnings for the calculation of loss of earnlng capaclty up to the date of the trial and of loss of earnlng capacity thereafter, and so it is clear that hls Honour proceeded upon a basls now known to be incorrect. The ma~ority judgments of the Hlgh Court In Cullen v. Trappell (supra) on this aspect only clarlfied the existing law so that no question whether it is approprlate to

apply any change in the law to this appeal arlses. The trial

Judge also, In relatlon to	futureaamages, made the followlng
f lnding:

"For the future, I accept the figure of $400 per week as the amount the plaintlff would have been earnlna at the time of the trial If he had continued- hls employment wlth Dalgetys

Ltd. "

4

After a careful examination of the evidence we do not

regard this conclusion as belng open to the learned trial Judge.

For the purpose of assessing loss of earning capaclty to the date

of the trial, his Honour treated the relevant date as being March 1977 and found that a gross salary of $182.00 per week was the appropriate figure. The respondent was, in fact, employed by Dalgetys until March 1977 and said that his Intention was to

remain with Dalgetys and that he hoped to be promoted from hls position of sales representative to that of manager of all of Dalgetys' operations in Canberra. There was little evidence about

the size of Dalgetys but it does appear that, at the tune of the hearing, it employed 7 sales representatives in New South Wales. There was evidence that he gross salary of the respondent at the

award rate, had he remained with Dalgetys until the date of the

hearing, would have been $9,157.00 per annum, together with a

further payment of $1,500.00, making a total amount of $10,657

per annum. He would also have had the use of a car which the company provided and maintained and for which it supplled petrol. The trial Judge took the view that, because there was no evldence

of the value of the car to the respondent, the provision of the

car should be disregarded.

The appeal was pursued in relation to the assessment

. --.

of damages under three heads, namely:

A.	Loss of earning capacity to trlal.
B.	Loss of future earning capacity.

C. Non-economlc loss.

5

In our opinion, bearing in mlnd that the approach of the

Judge to loss of future earnlng capacity was not in accordance

with that set out in Cullen v. Trappell (supra) and the absence

of evidence which would -justify the concluslon that the

I

respondent would have been earning $400 per week at the tlme of the trlal if he had contlnued hls employment with Dalgetys, lt 1 s necessary to re-examine the assessment of damages made by the trlal Judge, and to vary the figure at which he arrlved, if upon a re-assessment by thls court it seems approprlate so to do.

A. Loss of earning capacity to trial.

The period for which the trial Judge assessed this

aspect of damages terminated at the date of hearing and so no

allowance was made for the period from the date -judgment was

reserved until it was delivered. It was common ground that the

net figure of $153.90 per week resulted when the approprlate

income tax, taking into account dependants, of $28.10, was deducted from the gross earnings of $182.00 which the respondent would have earned at the date of the termination of hls

employment by Dalgetys. It was also common ground that the

figure of $10,657.00 per year was equivalent to an income of

$205.00 per week gross and that if the approprlate lncome tax,

taklng into account dependants, of $35.60 was deducted, the net

flgure of $169.40 resulted.The figue-of $205.00 gross was the

figure which the respondent would have been earning at the date

of the trial had he remained in the posltlon whlch he held wlth

Dalgetys at the date of the accident.

6

A figure of $153.90 per week for 84 weeks 1 s $12,927.60

and $169.40 per week for 84 weeks 1s $14,229.60. In our oplnion, although the figure his Honour arrived at is somewhat higher than elther of these figures, some value should be attrlbuted to the use of the car. Bearing this consideratlon In mlnd we do not regard the assessment of $15,288 as excesslve. To this figure

must be added the sum of $7836.80 which had been paid for workmen's compensation prior to the terminatlon of the respondent's employment with Dalgetys. We would not dlsturb the assessment of $23,124.00 for loss of earnlng capaclty prior to the trial.

B. Loss of future earning capacity.

It was agreed between the partles that insofar as It was approprlate t o use actuarial tables which show the present value of a sum of money to be recelved over a period of time in the future, those based on 5 per cent should be used. Thls avolded the court having to consider the appropriate tables to use In the

light of the ~udgment in Cullen v. Trappell (supra),

The learned trial Judge used tables based on 7 per cent and found that the present value of $400 for 20 years was

$220,272. He reduced this figure byabout 20 percent to make

allowance for the contingency of the plaintlff's death before the age of 65 and reached a flgure of $180,000. He also said:

"My assessment of all the evldence, Including

that of the plaintlff hlmself, is that the

plalntiff has not totally lost his earnlng

capaclty. In my opinlon, a proper way, in

7

this case, to assess the damages for loss of earnlng capaclty for the future 1 s to reduce by three eighths the damages whlch I would assess If the plaintiff's loss of earnlng capacity were total."

The trial Judge then reduced the flgure of $180,000 by three elghths, and this resulted In the figure of $112,500. His

Honour's reasonlng produced the result that, In relation to earnlng capacity for the perlod after the date of the hearlng, the respondent was treated as having three eighths of the earnlng

capacity which he otherwise would have had.

There is no doubt that the learned trial Judge, who had the advantage of seeing the plaintiff and observlng hlm in the wltness box, formed a very favourable vlew of the plaintiff's pre- ~n]ury capaclty and clearly accepted the truth of his evidence. His Honour said:

"I have no dlfficulty in finding, on the plaintiff was an intelligent and industrlous man, who had learned and was capable of applying a number of skills, and In particular was a highly successful salesman and sales evidence, that before the accident he

organizer, having the characteristlcs of

drlve, energy and an engaglng personality,

which that work demands."

He also said:

"The evidence showed clearly that the

plalntiff was a hlghly successful sales

representative, and a report on hls ablllty and success, made by a responslble offlcer of

the company, was put in evidence; It was In

strlkingly glowlng terms.''

The respondent's evidence, provlded a firm foundatlon

for the flndings concernlng his abillty. The trlal Judge sald:

"The plaintiff was born in England In 1933. He left school at the age of 15, was employed as an apprentice waiter at Claridges Hotel In London for twelve months, and he was then a student at a hotel school In Swltzerland for

two years: at this school he was very

successful. He was then, at the age of 18,

head waiter at the Mayfalr Hotel In London for nine months, after whlch he ~olned the

Royal Alr Force. After falling to be

commissloned as a pilot, because of colour

blindness, he was offered a commlssion as

catering officer, but chose Instead the

engineering served H side. In

non-commlssloned ranks In the englneering

slde of the Royal Air Force until the age of

22 . Thereafter he was a hotel manager in

London f o r elghteen months and then became a flight steward in the employ of Brltlsh

European Alrways, and later of Britlsh

Overseas Airways Corporatlon, for a total of nine years. The plaintiff had married In

1955, at about the time that he ~ o i n e d

British European Airways. After leavlng

British Overseas Alrways Corporatlon, he became a field representative for a company whlch marketed animal foods. After two years In this position, in May 1966 he came to Australla with his wife and family, and for seven months was a motel manager worklng at various places in New South Wales and this Territory. He was then employed as office manager and senior purchasing offlcer of a constructlon company which had a contract In connection with the Canberra water supply. He had this job for two years, and when the

company's contracts in Australia were

completed he declined an offer of employment by the same company in the Unlted States, preferrlng to stay in Australia. He then undertook the ownership and operatlon of the Cotter Tavern Restaurant, a business which he bullt up from a very small slze to a much

larger size and more prosperous condltlon. The business was operated by the plalntlff, hrs wife, hls eldest son, and one woman

employee; they operated t k s buslness for

elghteen months."

9

His Honour also said:

"When the buslness ceased because hls

sub-tenancy came to an end, he took a lob at

the Australian National University as

assistant manager to the catering manager. The plalntlff worked hard and effectlvely and was promoted to function manager and manager In charge of the commerclal aspects of the -

Union's activitles, lncludlng the bar. There was an enormous and successful increase in

the buslness of the Union In this respect,

and there was evidence that thls successful

increase was to a conslderable extent due to the energy and efflciency of the plaintlff. The work involved long hours, considerable

physical energy, and a high degree of

Initiative and inventiveness. After two

years, the plaintiff left the Universlty

Union and became secretary/manager of the

Western District Rugby Union Club in

Canberra. The reason for hls leavlng the

Union was that there seemed no prospect for advancement and the ]ob with the Rugby Unlon Club was less demandlng and better rewarded. However, after six months he left the Rugby Union Club after a disagreement with some members of the board of control, and thereupon entered on the employment in whlch

he was engaged at he time of the

accident.. .".

As a result of the accident, the trial Judge found that

he had:

' l . . . no difflculty In findln that hls abillty

to continue the work that e, e was dolng was

slgnificantly impalred by the ~ n ~ u r y ; he could not tolerate long periods at the wheel of a car; he walked with some dlfflculty and paln; he found concentratlon, even on desk work, difflcult; and he was generally unable to glve the physlcal and mental energy to hls work whlch he had glven to It before the accident."

10

Dr. Roebuck, an orthopaedlc surgeon, was the

respondent's principal medical witness, and the learned trial Judge clted and accepted the followlng passage from hls evldence:

"I don't think he could travel much. That

would make hls neck worse. He could travel a bit. I think he would have dlfficulty putting in a full days work, even sitting or standing,

at the moment. I thlnk he could probably do-

half a days work If there wasn't too much travelling and I think, as I say, in a year or two perhaps he'd get to the stage where he

could do a full days work without much

travelling. I doubt if he'll ever be able to

travel long distances In a car."

The principal medical wltness for the defendant was Dr.

Andrews and the learned trial Judge said of his evldence:

"Dr. Andrews, the neurologist, called by the defendant, was a llttle more optimistic about the plaintiff's employment capabillty, whlle

agreeing essentlally wlth Dr. Roebuck. He

suggested a period of a year or two after

whlch the plaintiff should be able to 'get by

quite well' but not so as to be able to do any

lifting or heavy work, o r drlve a motor

vehlcle for long dlstances; and he was also

mindful of the possibllity of eplsodes of

acute pain which would require physlotherapy

and medlcatlon. He believed that the

functional element In the plaintiff's present

condltion would probably disappear in tlme."

We accept the flndings of the learned trlal Judge in

relation to the medlcal evidence. There is no doubt that the

respondent's capacity for work was saerely curtailed, although

the appellant argued that a signiflcant amount of the

respondent's trouble was caused by functlonal overlay.

11

If one seeks to assess damages under thls head by

that a figure conslderably less than $400 should be chosen.	followlng the approach of the learned trial Judge we conslder allowlng something for the use of the car which he had and the
llkellhood of something slmilar contlnulng, we conslder that a
flgure of $325 gross per week, or approxlmately $16,900 gross per annum, is a reasonable figure to adopt. It is interestlng to note that the appellant suggested that a flgure of the order of $300 gross per week was appropriate. If one assumes income tax of $ 4 , 4 0 0 on $16,900, a net earning per annum of $12,500 results,
equlvalent to about $ 2 4 0 per week. The learned trlal Judge,
having taken the flgure of $400 as the appropriate starting point, decided that the respondent was capable of earnlng three eights of this amount, ie, $150 per week. But both these figures were gross figures. The figure of $150 per week gross 1s equivalent to a net flgure of the order of $125 per week when taxatlon 1 s taken into account. We consider that thls is an
appropriate flgure to use. The dlfference between the net flgure
of $ 2 4 0 per week and $125 per week is $115 per week. On the
figures provided by the respondent, whlch appear to be common
ground, $115 per week for 20 years results In a flgure of
approxlmately $66,500.

.. -.

The learned trial Judge made an allowance for the

contlngency of the plalntiff's death before 65 of 20 percent. In

our oplnlon, a reductlon for contlngencles of somethlng less than

12

thls 1 s appropriate because of the favourable view which the trial Judge took of the respondent's capaclty, because of the probabllity that in the period of two or three years followlng the hearing the respondent's earning capacity would be less than $125 per week net and to allow for the period of 10 months between trial and ~udgment. Doing the best we can- wlth the evidence avallable we conslder a reductlon for contingencies of about 10 percent is appropriate. We would reduce the assessment

for loss of future earning capacity from $112,500 to $60,000.

C. Non-economic loss.

The learned trial Judge made the followlng findlngs:

"The plalntlff takes a large quantlty of

analgesic tablets to relieve pain and to help

him to sleep. There is substantial evldence

to show that hls personality is substantially changed since the accident: he was formerly physlcally strong, happy, healthy and very energetic and equable In temperament. Since the accident he has become a somewhat lrrltable, worrled, and depressed man who has bursts of deep depression and has dlfflculty in concentrating on even purely mental work. He 1s limited in the extent and amount of physical exertion which is possible for hlm, which contrasts markedly wlth his energy and fondness for physical actlvity which was a feature of his life before the accident."

In our oplnion the flgure of $35,000 for non-economlc

loss 1s excessive.	We conslder that flgure should be reduced to	---
$25,000.

13

Conclusion.

It wlll be seen that we would reduce the figure for the

total of the loss of future earning capaclty and non-economlc

loss from $147,500 to $85,000.

It IS, of course, important to bear in mlnd that the

total sum should not have been arrived at in a manner which

compensates the respondent twlce In respect of the same factor.

It is also desirable to appreclate, certainly ~n

relation to the use of mathematlcal tables and actuarlal

evldence, what was	said by Glbbs J. in Cullen v . Trappell,
(supra) at p.11:

"Even if actuarial material is available, the Court

cannot attain complete mathematical pccuracy,and is not bound to

engage In complicated exercises In an attempt to do so."

Aickln J., although dlssentlng from the ma~ority

~udgment, expressed a warning when he said, at p.23, in dealing with what he described as the process now used In assesslng future loss of earnlng capacity from approprlate tables after

maklng allowance for "the vlclssitudes of llfe",: . .--_

"This exercise glves a flgure whlch has, lf I may say

so, a spurlous alr of precision."

.

14

We consider that the flgures we propose for loss of

future earning capaclty and non-economic loss produce a result

fair to both parties.

We would vary the assessment of damages in the followlng

way :

Agreed special	damages	3,153.66
Loss of earning capacity to the date

of trial 23,124.00

Loss of future ea ning capacity 60,000.00

expenses Future 1,200.00

Non-economic loss 25,000.00

Making a total of 112,477.66

\(e were asked not to deal wlth the questlon of costs

before we had dellvered our ludgments.