Howard v Aikman
[2015] ACTCA 64
•18 December 2015
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
COURT OF APPEAL
Case Title: | Howard v Aikman |
Citation: | [2015] ACTCA 64 |
Hearing Date: | 9 February 2015 |
DecisionDate: | 18 December 2015 |
Before: | Refshauge, Penfold and Katzmann JJ |
Decision: | 1. The appeal be allowed. 2. The cross-appeal be dismissed. 3. The judgment of Master Harper dated 6 March 2014 be set aside. 4. Within 28 days, the parties bring in short minutes of order giving effect to these reasons. 5. The respondent pay the appellant’s costs unless, within 28 days, either party notifies the court and the other party that it wishes to make submissions about the costs order. 6. The parties have liberty to apply on 5 days notice. |
Catchwords: | DAMAGES — personal injury — appeal and cross-appeal from Master –– assessment of lost earning capacity — whether error in award for six-month delay in respondent entering the workforce — whether error in figure for past loss of earning capacity — whether future loss of earning capacity inadequate or excessive |
Legislation Cited: | Evidence Act 2011 (ACT), ss 56(1), 76, 143,144, 145 Court Procedures Rules 2006 (ACT), r 1619 |
Cases Cited: | Commonwealth Shipping Representative v Penninsular & Oriental Branch Service [1923] AC 191 Davies v Powell Duffryn Associated Collieries [1942] AC 601 Harper v Bangalow Motors Pty Ltd (unreported, NSWCA, 24 July 1990) Wynn v NSW Insurance Ministerial Corporation (1995)184 CLR 485 |
Texts Cited: | Heydon JD, Cross on Evidence (10th ed, LexisNexis Butterworths Australia), 2015 |
Parties: | Stephen Michael Howard (Appellant) Amos Aikman (Respondent) |
Representation: | Counsel Mr R L Crowe SC (Appellant) Mr G Stretton SC with Mr Bradfield (Respondent) |
| Solicitors Sparke Helmore (Appellant) Colquhoun Murphy (Respondent) | |
File Number: | ACTCA 14 of 2014 |
Decision under appeal: | Court/Tribunal: Supreme Court of the ACT Before: Master Harper Date of Decision: 6 March 2014 Case Title: Amos Aikman v Stephen Michael Howard Citation: [2014] ACTSC 35 |
THE COURT
Background
At about 8.20 pm on 13 September 2006 there was a motor vehicle accident in the grounds of the Australian National University. The accident occurred when Stephen Howard made a right hand turn in his Holden Rodeo four-wheel drive across the path of a Honda 110 cc motorcycle ridden by Amos Aikman. The two vehicles collided, despite Dr Aikman’s attempts to avoid the collision. Dr Aikman was thrown over the bonnet of the four-wheel drive, falling to the road. His motorcycle followed. In the result, his right leg was crushed between the bull-bar of the four-wheel drive and the motorcycle. He suffered an injury to the base of the third metatarsal of his right foot, a fracture of the right patella involving the patella tendon, an intra-articular injury to the right ankle, contusions to the right leg and knee, abrasions to the face and a laceration to his upper lip caused by his teeth. He had lingering pain in his right ankle and above the heel in the region of the Achilles tendon and his right knee was weaker than the left with a tendency to collapse inwards. He later also developed back pain.
Mr Howard’s insurer (“the insurer”) admitted liability for the accident, and in the proceeding below the Master entered judgment in Dr Aikman’s favour in the sum of $1,232,000.
The appeal is solely concerned with the Master’s assessment of Dr Aikman’s lost earning capacity. While the notice of appeal was cast more widely, a number of grounds were abandoned in the written submissions. Dr Aikman has filed a notice of cross-appeal, contending that the award for future loss of earning capacity was inadequate.
For the following reasons, the appeal should be allowed and the cross-appeal dismissed.
The salient facts
Dr Aikman was 26 at the time of the accident. By the time of judgment he was 34. He graduated from the University of Edinburgh with a first class honours degree in science (geology) in 2002, when he was 22. In 2003, supported by two scholarships, he enrolled in a PhD program at the ANU in earth science, which he had hoped to complete by September 2006. Before the accident, Dr Aikman had sought and obtained a six-month extension and his scholarship payments were extended to the end of March 2007. He obtained a further three-month extension (to the end of June 2007) to complete his thesis. It was not until August 2007, however, that he submitted his thesis and April 2008 when his doctorate was conferred.
Dr Aikman was evidently very fit before the accident, engaging in a range of sporting activities and field trips in connection with his doctoral studies which entailed scaling the Himalayas and returning with 20 to 30 kg of rocks in his backpack. He was also a keen amateur photographer.
While he worked on his thesis, Dr Aikman found freelance work as a photographer. In October 2007, two months after his thesis was submitted, he accepted an offer of permanent full-time employment with The Australian newspaper. In November 2010 he became a journalist as well as a photographer. In July 2012 he moved to Darwin to take up a position as the Northern Territory correspondent for The Australian. The appointment was for two years with the possibility of renewal.
There was a dispute between the medical experts about the extent of any permanent disability resulting from the accident but, with the exception of the more optimistic view of Dr Harvey-Sutton, it appears to have been common ground that Dr Aikman had a persistent problem with his right ankle which might cause him difficulties on uneven and rough terrain. Expert evidence was given to the effect that a high degree of physical mobility is required to engage in the kind of research in which Dr Aikman specialised, that, but for the accident, Dr Aikman could have had a promising career in field-based geochemistry, and that a change in his research direction would have placed him at a significant competitive disadvantage. Another expert expressed the opinion that, were it not for the accident, Dr Aikman would have been able to secure a top position at an academic institute.
Dr Aikman’s evidence was that, when he first moved to Sydney and took up photography for a living, he expected this would be temporary and that he would eventually be able to return to geological fieldwork. He said that he was passionate about geology, had devoted a decade of his life to it, had done well in his studies and was looking forward to an academic career which would give him the opportunity to teach, travel and engage in further practical work. He said that work as a photographer was less satisfying and became mundane after a while. But for the accident, he said, he would have applied for a post-doctoral position in the United States and would have begun to make enquiries and submit applications after he had submitted his thesis.
The Master’s decision
The Master accepted Dr Aikman as a credible witness. He concluded that he did not exaggerate his injuries or disabilities and, if anything, underplayed them. He described him as honest and truthful.
The factual findings critical to the appeal were set out at [87]‑[95]. In view of the issues, it is convenient to reproduce those findings in full:
87.A major focus in the defendant’s case was on whether the plaintiff made a decision during 2007 to move from a career as a geologist to a career as a photographer and journalist. I accept that the plaintiff has made that decision, and that he will not return to work as a geologist, either in industry or in academia. I am satisfied that he has made the decision because of the impact of the injuries, and that if he had not been injured he would have pursued a career as a geologist. How that career would have worked out would have depended on what offers were available to the plaintiff. There is a degree of speculation about this. If he had been offered work in industry he may well have accepted it, and worked in the commercial sphere, either for the rest of his working life or for a period of years. If he had obtained a post-doctoral fellowship in the United States, which seems to me quite likely, he may have progressed to a professorial career. I can take judicial notice of the availability to academic geologists of consulting work in industry and for government concurrently with their academic commitments, as a source of additional income.
88.It seems to me so unlikely as not to require consideration, that the plaintiff might have decided to work as a photographer and journalist if he had not been injured.
89.There is no real challenge to the opinions expressed by the treating surgeon, Dr Sullivan. I accept the evidence which emerges from his reports. In particular I accept his evidence that the plaintiff is likely to continue to have problems with uneven ground and carrying heavy loads.
90.His opinion is corroborated by that of Dr Bodel, whose view is that the plaintiff would have difficulty undertaking fieldwork in remote or rugged terrain, and that he could not cope with geological fieldwork of the nature described by the plaintiff to him.
91.The orthopaedic surgeon qualified for the defendant, Dr Cummine, was a little more optimistic but conceded that the plaintiff would need to be more cautious than the normal person in walking on even (sic) ground or in rough terrain. He acknowledged that there might be some wisdom in the plaintiff avoiding the potential problems of working at altitude and carrying loads as a geologist.
92.I prefer the evidence of the orthopaedic specialists to that of the occupational and rehabilitation specialists about this issue, which I see as primarily an orthopaedic one.
93.Of those specialists, Dr Papatheodorakis agreed that the plaintiff might have difficulty undertaking fieldwork in rugged terrain. He thought that the plaintiff should eventually be able to get back to that kind of work, but as I said earlier, I am not satisfied that the doctor had a full appreciation of the nature of the plaintiff’s pre-accident fieldwork in the Himalayas.
94.I thought that both Dr Zeman and Dr Harvey-Sutton were unjustifiably optimistic about the plaintiff’s physical capacity, and I prefer the other medical evidence to the opinions they expressed as to the plaintiff’s capacity to carry heavy loads and engage in mountaineering.
95.It follows that I am satisfied on the medical evidence that the plaintiff has made a justified and sensible decision not to pursue geological fieldwork in mountainous terrain, and that the accident has prevented him from pursuing the career he wanted to pursue, and in which I have no doubt he would have been highly successful.
The Master went on to find (at [104]) that Dr Aikman’s injuries had caused an impairment to his earning capacity for which he was entitled to compensation, “to the extent that it has been and is likely in the future to be reflected in actual loss of earnings”.
He said (at [105]) there was no question that the injuries had put Dr Aikman out of the workforce for about six months, for which loss he allocated $50,000 together with interest of $20,000.
The Master considered (at [106]), however, that for the period since then it was not possible to make precise findings about what Dr Aikman would have done and how much he would have earned, had he not been injured. In any event, he observed that the correct approach was to arrive at a figure based on the possibilities. At [107]‑[109] the Master said:
107.Approaching the matter in that way, it seems to me that after the first six months, it is reasonable to adopt an annual figure of $50,000.00 nett as the measure of the difference between what the plaintiff would probably have earned if he had not been injured, and what he has earned. For loss of earning capacity for the period from the first six months after the accident until judgment I allow $350,000.00, plus interest at commercial rates which I assess at $75,000.00.
108.I propose to adopt that same differential figure of $50,000.00 nett per annum for the future. The plaintiff is now 34. The 3% multipliers for a man of 34 are 924 to age 60, 1024 to age 65 and 1249 to death. I propose to adopt a multiplier of 1000. It is conventional to reduce such a figure by 15% to take account of the vicissitudes of life. In the present case it seems to me that a much greater reduction is justified by reason of the imponderables of what the future might have held, and might now hold, for this plaintiff. One of the factors to be taken into account is that field work in the Himalayas is extremely rigorous and probably not the sort of work that an older man would engage in. I propose to apply a reducing factor of 40%. For loss of earning capacity for the future I allow $570,000.00.
109.Counsel for the plaintiff seeks additional damages for loss of superannuation benefits. For a member of the workforce who would otherwise have worked as an employee in Australia, that allowance is generally regarded as justified. I am far from satisfied that the present plaintiff, if it had not been for his injuries, would have worked as an employee in Australia and been eligible for employer superannuation contributions. To the extent that this might have been the case, any such loss should be regarded as (scil.) encompassed within the allowance for loss of earning capacity.
Issues
Grounds (a)‑(c) and (h) in the notice of appeal were not pressed. What remains is a challenge to the awards for past and future loss of earning capacity. By the cross‑appeal Dr Aikman contends that the award for future loss of earning capacity is inadequate.
Broadly speaking, the questions which remain for determination are as follows:
(a)Should $50,000 have been awarded for the six-month delay in entering the workforce?
(b)Did the Master err in adopting a figure of $50,000 net per annum for past loss of earning capacity after the first six months?
(c)Did the Master err in awarding interest of $95,000 on past economic loss in the absence of any statement as to how that sum had been reached?
(d)Should the award of $570,000 for future loss of earning capacity be set aside as excessive because:
(i)the reasons were inadequate;
(ii)the Master failed to have regard to Dr Aikman’s likely future earnings;
(iii)the award was inconsistent with the Master’s finding that, but for the accident, Dr Aikman would most likely have pursued an academic career; and
(iv)the Master failed to have regard to the evidence of the likely earnings of an academic?
(e)Alternatively, should the award for future loss of earning capacity be set aside as inadequate because:
(i)an annual net loss of $50,000 (including superannuation) did not reasonably reflect the evidence concerning Dr Aikman’s likely career path or actual earnings of “a colleague”; and
(ii)a deduction of 40% for vicissitudes was excessive?
Before turning to consider these issues we would make this observation. We have considerable sympathy for the Master. The presentation of the documentary evidence concerning economic loss was poor. Tax records for Dr Aikman were tendered to demonstrate his actual earnings but they do not appear to correlate with the allegations made in the Statement of Particulars. The evidence of Dr Herman’s earnings was given in Swiss francs but no evidence of exchange rates was led. No forensic accountant gave evidence to assist the court in making sense of the evidence and only limited assistance was provided by counsel.
Should $50,000 have been awarded for the six-month delay in entering the workforce?
The insurer submitted that the award of $50,000 for the six-month delay in Dr Aikman entering the workforce should be set aside because:
(a)the reasons for making the award were inadequate;
(b)the Master wrongly took into account the earnings of another PhD colleague of Dr Aikman, an exploration geologist (Dr W), when he had found that, but for the accident, Dr Aikman would probably have become an academic;
(c)the Master wrongly took into account the evidence of Dr Frederic Herman, when Dr Herman’s earnings were inconsistent with such an award;
(d)the Master failed to have regard to the evidence of the likely earnings of a first year academic; and
(e)the Master failed to have regard to Dr Aikman’s actual earnings for the relevant period (being the six months following the accident).
The third submission was abandoned during oral argument.
The fourth submission appears to be factually correct but the failure to have regard to the likely earnings of a first year academic is not an error. The premise for the submission is that the allowance for the delay in starting work must be based on probable earnings at the time Dr Aikman would have entered the workforce. That premise is false because, regardless of any delay, assuming Dr Aikman would have become an academic, he would inevitably have started at the bottom of the academic tree. The likely earnings of a first year academic are relevant to the assessment of past economic loss but not to the assessment of the loss occasioned by the delay in entering the workforce. Any delay in entering the workforce precluded Dr Aikman from achieving his maximum earning potential for the period of the delay. That is to say, any delay would have deferred his entry into the profession, depriving him of the chance of earning income for the period of the delay at the rate at which he would have been paid when his career was at its peak. Dr Aikman is entitled to be compensated for the loss of that chance. We deal with that matter later in these reasons.
For the same reason, it was not an error to fail to have regard to Dr Aikman’s actual earnings in this period. It follows that the fifth submissions must also be rejected.
That leaves the first and second submissions.
Turning first, then, to the adequacy of the reasons for the $50,000 award, in O’Brien v Noble (2012) 6 ACTLR 132 at [20] this Court summarised the law on the giving of reasons by trial judges. In summary:
(a)Trial judges are required to state their findings and their reasons adequately to enable a proper understanding of the basis upon which the verdict has been reached. Failure to do so may constitute error of law: Pettit v Dunkley [1971] 1 NSWLR 376 at 382 (Asprey JA).
(b)An appeal court should not be left to speculate from collateral observations as to the basis of any particular finding: Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 280 (McHugh J).
(c)While not every aspect of the reasoning process needs to be spelled out, the reasons must resolve critical points in dispute and facilitate appellate review: Kendirjian v Ayoub [2008] NSWCA 194 at [169] (McColl JA).
(d)Awards for damages should not be arrived at intuitively but by a process of methodical consideration: Gamser v Nominal Defendant (1977) 136 CLR 145 at 149 (Stephen J).
(e)Where there is a dispute about the evidence, it is not enough just to state a preference for some evidence over another: Goodrich Aerospace Pty Ltd v Arsic (2006) 66 NSWLR 186 at [28] (Ipp JA).
The reasons given to support the award of $50,000 for the first six months after the accident were brief. That circumstance alone does not bespeak error, but in all the circumstances we are persuaded that they were appealably inadequate.
The reasons given by the Master were that:
(a)the injuries put Dr Aikman out of the workforce for about six months;
(b)if he had not been injured he would have started to earn income six months earlier; and
(c)the figures his Honour arrived at were based on the evidence of Drs Herman and W.
The insurer submitted, without contradiction, that it was implicit that the first six months the subject of this award was the period from September 2006 to March 2007. The submission must be accepted. While that implication is not clear from the Master’s reasons on this question, which appear at [105] of his judgment, the point from which his Honour proceeded to calculate loss of earning capacity is clear from what he said at [107].
Yet, the Master made no findings of fact to support the award. Indeed, Dr Aikman never sought compensation during the period from September 2006 to December 2006. The claim made in the Statement of Particulars began on 1 January 2007. The claim was based on the premise that, irrespective of the accident, Dr Aikman would not have been gainfully employed before then. Until March 2007, he had the benefit of two scholarships. It was only in February 2007, in anticipation of the scholarships running out, that he decided to move to Sydney to look for work “to tide [him] over so that [he] could keep doing the PhD”. Thus, there does not appear to have been any factual foundation for the conclusion that, but for the accident, Dr Aikman would have been working in this period. Certainly, the Court was not taken to any evidence to support such a conclusion.
This is not the only problem with this award.
Shortly before the accident Dr Aikman had applied for a six-month extension of time to complete his doctoral thesis. The optimum time for completion of a PhD thesis is three years and his three years were due to elapse in October 2006. The evidence Dr Aikman gave in cross-examination was that he thought that if he had not been injured he would have completed the thesis within that six-month period. The Master asked him whether that would be by about the end of March 2007 and Dr Aikman replied: “Yes, by the end of 2006 or early 2007. That was my expectation”. After further cross-examination, the effect of his evidence was that he was hopeful of finishing by the end of 2006 but it is equally possible that it would have taken him at least to the end of March 2007 when his scholarships were due to expire. The Master found that by reason of his injuries Dr Aikman obtained a further extension of three months (to the end of June 2007) and submitted his thesis in August 2007. It is impossible to say whether the delay was at all attributable to the accident. Dr Aikman said in his evidence in chief that it was standard practice to apply for an extension, that most people take four years to finish their thesis, some five, and “almost nobody finishes within three years”. Before the injury he was hopeful of lodging his thesis by the end of 2006. Whether his hope would have been realised, however, is another matter.
Thus, the assessment of loss in this period was hypothetical. That is to say it had to be based on a hypothesis that, but for the accident, Dr Aikman would have been earning income during the six-month period in question. That requires a degree of speculation. In these circumstances, the assessment must be based on an evaluation of the possibilities. As Brennan and Dawson JJ explained in Malec v JC Hutton Proprietary Limited (1990) 169 CLR 638 (“Malec”) at 639‑640:
The fact that the plaintiff did not work is a matter of history, and facts of that kind are ascertained for the purposes of civil litigation on the balance of probabilities: if the court attains the required degree of satisfaction as to the occurrence of an historical fact, that fact is accepted as having occurred. By contrast, earning capacity can be assessed only upon the hypothesis that the plaintiff had not been tortiously injured: what would he have been able to earn if he had not been tortiously injured? To answer that question, the court must speculate to some extent. As the hypothesis is false – for the plaintiff has been injured – the ascertainment of earning capacity involves an evaluation of possibilities, not establishing a fact as a matter of history. Hypothetical situations of the past are analogous to future possibilities: in one case the court must form an estimate of the likelihood that the hypothetical situation would have occurred, in the other the court must form an estimate of the likelihood that the possibility will occur. Both are to be distinguished from events which are alleged to have actually occurred in the past.
Given the paucity of the reasons, it is impossible to discern whether the Master approached the assessment of loss in this period in this way. For the following reasons it is unlikely that he did.
The claim made in the Statement of Particulars for the period 1 January 2007 to 30 June 2007 was based on the net annual earnings of Dr W. The figure used was $92,150. Thus, the amount claimed for the first six months was $46,075. That was roughly $4,000 below the figure the Master awarded. The Master said that he also had regard to Dr Herman’s earnings. But at which time? Dr Herman’s earnings in that same period were given in Swiss francs and there was no evidence upon which the Master could have calculated an appropriate conversion rate. The first figure given in Dr Herman’s evidence in Australian dollars related to February 2012 at which time he stated he was earning approximately $118,000 gross.
While the Master said that he had taken into account the evidence of Dr Herman’s earnings, it is not clear what earnings he had in mind. There was no evidence about his net earnings and no figures were provided to the court to enable the Master to calculate what they might be. One might speculate as to how he reached the $50,000 figure but, in the absence of any obvious route and the lack of adequate reasons, we are unable to say.
The Master did not make any finding as to when, but for the accident, Dr Aikman would have completed his thesis. This makes our task all the more difficult. In view of the fact that he submitted his thesis in August 2007, however, it seems likely that, if the accident had not occurred, he would have completed it by the end of March 2007. It may be accepted that there was a chance he could have finished it sooner but it is impossible to assess it. The Master should have awarded damages for past loss of earning capacity from 31 March 2007, making a slight allowance for the chance of loss in the three months before then.
The next problem is the choice of Dr W as a comparable earner.
Dr W completed his PhD in earth science from the ANU in December 2007 and immediately began employment with a private company working as a specialised geological consultant to the minerals industry in various remote places including in Australia, Africa and eastern Europe. Dr Herman is a Belgian-born former PhD researcher at the ANU who had worked alongside Dr Aikman while he was working on his PhD. He was awarded his PhD in geology in 2005 whereupon he moved to the United States as a post-doctoral scholar with the California Institute of Technology. In 2007 he commenced employment as a geologist with the Swiss Federal Institute of Technology in Zurich on a six-year contract.
Mr Stretton SC, who appeared for Dr Aikman, defended the use of Dr W as a comparable employee largely on the ground that the academic achievements of Drs W and Aikman were comparable. In our opinion, that is an unsound basis upon which to proceed.
On no view of the evidence was Dr W a true comparison. The evidence did not allow for a finding of loss based on what Dr W would have earned.
First, the likelihood is that, but for the injuries he sustained in the accident, Dr Aikman, unlike Dr W, would have become an academic. He did not give evidence that he had any intention of entering private practice.
Dr Aikman volunteered the following insight into his pre-injury plans:
I was lucky enough to be very successful in my honours and to go on to a great Ph.D. placement and to have a sort of, you know, terrain ahead of me that — you know, a landscape ahead of me that looked like broader potential for a successful academic career that would have, you know, given me the opportunity to travel a lot and teach and, you know, potentially even maybe discover things that were quite meaningful to the field. And I sort of felt I was, you know, making steady progress towards that…
A little later he lamented that “[t]he door to academia is closing”. When asked what he meant by that, he replied:
Well, it is very competitive, you know, you can’t just jump into academia. You know, it is very competitive. It is, you know, research budgets are shrinking, you know, there is only a certain number of tenure track positions. Everybody wants one, you know, there’s a constant supply of good graduates. You know, you’ve got to get your ducks in a row and you’ve got to knock them off in the right order, you know, one after the other, and I had my ducks in a row I think up to the point where this accident happened and then somehow I sort of — it all got a bit jumbled up and, you know — you know, it’s like anything, you know, you can’t — I’m sure if you had a huge break from law or something like that, you know, you would be a bit difficult to get back into it at the same level. I just — you know, I couldn’t — I can’t jump back into that.
(Emphasis added.)
Later still, Dr Aikman spoke of his academic career having been “derailed”.
His intention before the accident was to undertake post-doctoral research at an American university.
Dr Aikman was well positioned for an academic career. He had a very good undergraduate honours degree from Edinburgh University, which, he indicated, like the ANU, is renowned for geology. At the ANU, which he described as a “top tier research institution”, he had been offered a position working for the director of the School of Geology and Earth Sciences. Thus, as he put it, “[he] was with a top school working with the top scientist and working for the head of that school who had… all the power and all the money and could do whatever he wanted and… as a result it was a very privileged position…”. If he had been able to do as he planned and “get a post-doc in America” he would then have acquired “a really broad experience of different academic environments”, which he described as “a really good sort of career move”. Furthermore, even before his PhD was conferred, he had a number of publications to his name.
While Dr Aikman did countenance the option of “go[ing] into industry or… pursu[ing] some sort of commercial role”, the most compelling inference on the evidence is that Dr Aikman was planning a career as an academic geologist.
Secondly, there was no evidence about the availability of employment in industry in Dr Aikman’s field and no suggestion from Dr Aikman that he would have abandoned his area of specialisation to undertake different work in industry. Dr Aikman did not express any interest in going into minerals exploration geology like Dr W.
Thirdly, the fields of expertise of the two men were quite different. Dr W’s field was minerals exploration and, in particular, gold; Dr Aikman’s was orogenesis, more particularly, the “tectonic evolution” in Tibet. Assuming that there was work in industry in Dr Aikman’s field, there was no evidence to the effect that outside academia the earnings in both fields were comparable or that Dr Aikman would earn any more in industry than he would in academia.
Fourthly, there was no evidence to enable the Court to conclude that Dr W’s earnings were fairly representative of the earnings of commercial geologists, regardless of their areas of specialisation. This is a case which was crying out for expert evidence but where none was called. In the absence of evidence, it was not open to the Court to find that the market for all PhD graduates in geology is the same or that the income available in one line of work is payable to all.
Fifthly, Dr Aikman’s evidence was that, but for the accident, he would probably have undertaken post-doctoral research work, that is work in the nature of a research assistant.
In the evidence in chief the following exchange took place:
And as far as the career path that you might have pursued but for the accident, do you think there’s a similarity between the path Mr [W] pursued and the path you might have pursued?---It’s certainly one option that would have been available to me. His work for a long time was, or was field-based. He, you know, he’s an exploration geologist, a good one now, a very good one now and a successful one. And yes, absolutely, you know, we did our PhDs together, and---
Without being modest about it, do you believe that the opportunities available to you immediately following your obtaining your PhD as compared to Dr [W] were better, worse or about the same as him?‑‑‑Well, honestly I’d have to say a little better, but again, I feel a little bad in saying that.
Both questions were leading questions and called for the expression of an opinion. Although no objection was taken, it is difficult to understand how this evidence was admissible. While a leading question can be put in certain circumstances, including in cases where the other parties are legally represented and no objection is made, evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed (Evidence Act 2011 (ACT), s 76). There are, of course, exceptions to this rule, but none of them applied here.
In any event, this evidence takes the matter no further. Work as an exploration geologist might well have been an option for Dr Aikman but he did not give evidence that it was an option he ever intended to pursue. Even if it be accepted that Dr Aikman’s opportunities were “better”, whatever that means, “an injured plaintiff recovers not merely because his earning capacity has been diminished but because the diminution of his earning capacity is or may be productive of financial loss” (Graham v Baker (1961) 106 CLR 340 at 347). In the absence of evidence of opportunities that Dr Aikman had intended to take up which were more advantageous than those available to Dr W, the evidence went nowhere. Even if it was admissible, it was not entitled to any weight. It amounted to no more than self-serving speculation.
Did the Master err in adopting a figure of $50,000 net per annum for past loss of earning capacity after the first six months?
There is limited scope for interfering with the Master’s decisions on both past and future loss of earning capacity. These decisions involved discretionary judgments which were not said to be based on “the finding of historical facts on a balance of probabilities, but the assessment of the value of a chance” (State of New South Wales v Moss (2000) 54 NSWLR 536 at [87]). The cases call for judicial restraint: McCartney v Orica Investments Pty Ltd [2011] NSWCA 337 at [112]-[114]. In order to succeed on this question, the insurer must do more than persuade the Court that a different figure is preferable. In Miller v Jennings (1954) 92 CLR 190 (“Miller”) at 196 Dixon CJ and Kitto J adopted the following statement of principle by Lord Wright in Davies v Powell Duffryn Associated Collieries [1942] AC 601 at 616‑617:
Where … the award is that of the judge alone, the appeal is by way of rehearing on damages as on all other issues, but as there is generally so much room for individual choice so that the assessment of damages is more like an exercise of discretion than an ordinary act of decision, the appellate court is particularly slow to reverse the trial judge on a question of the amount of damages. It is difficult to lay down any precise rule which will cover all cases, but a good general guide is given by Greer L.J. in Flint v. Lovell [1935] 1 K.B. 354 at 360. In effect the court, before it interferes with an award of damages, should be satisfied that the judge has acted on a wrong principle of law, or has misapprehended the facts, or has for these or other reasons made a wholly erroneous estimate of the damage suffered. It is not enough that there is a balance of opinion or preference. The scale must go down heavily against the figure attacked if the appellate court is to interfere, whether on the ground of excess or insufficiency.
In Harper v Bangalow Motors Pty Ltd (unreported, NSWCA, 24 July 1990) Clarke JA referred to this statement and its adoption in Miller and said that, where the decision in question “involves a degree of judicial prophesy or speculation”, the test adopted in Miller applies, so that to set aside the decision the appellate court must be satisfied that the trial judge acted on a wrong principle, misapprehended the facts or for these or other reasons made a wholly erroneous estimate of the damage. This approach was endorsed by the NSW Court of Appeal in Diamond v Simpson (No 1) [2003] NSWCA 67; (2003) Aust Torts Reports ¶81-695.
The insurer submitted that the Master was required to assess the competing possibilities in relation to Dr Aikman’s employment on the assumption that the accident had not taken place. So much must be accepted. The Master recognised this at [106]. Contrary to the insurer’s assertion in ground (e) of the notice of appeal, he also had regard to Dr Aikman’s actual earnings. While his reasons are fairly inscrutable, as the following table indicates, the $50,000 figure appears to have been derived from rounding off the figures Dr Aikman claimed as his loss in his Statement of Particulars.
Period
Plaintiff’s net earnings [p.a.]
Dr W’s net earnings [p.a.]
Loss claimed
1/1/07-30/6/07
Nil
$92,150
$46,075
1/7/07-3[0]/6/08
$46,503
$113,900
$67,397
1/7/08-30/6/09
$51,371
$107,000
$55,629
1/7/09-30/6/10
$56,484
$104,310
$47,826
1/7/10-30/6/11
$59,885
$114,110
$54,225
1/7/11-30/6/12
$53,499
$114,110
$60,611
1/7/12-29/10/12
$17,788
$37,942
$20,154
Past loss of earning capacity
$351,917
The Master’s decision, based as it appears to be on Dr Aikman’s claim, reveals two errors.
First, there is the error to which we have already referred in the selection of Dr W as a comparable earner (at [38] to [52] above).
Secondly, contrary to what he acknowledged in [106] to be the correct approach, the Master appears to have simply deducted Dr Aikman’s earnings from those of Dr W without making any finding that Dr Aikman would have pursued the same career path and without assessing the chances that he would have pursued a different one. This means that the Master misapprehended the facts and acted on a wrong principle.
Did the Master err in his award of interest for past economic loss?
Having regard to our conclusion concerning the award for past economic loss it is strictly unnecessary to deal with this issue. It rated only a passing, parenthetical reference in para 2 of the insurer’s written submissions and was not mentioned in oral argument. But we would make the following brief observations.
Apart from making a general submission that the Master’s reasons were adequate, Mr Stretton did not attempt to defend this aspect of the Master’s decision.
In awarding interest on this head of damage the Master said he would allow interest “at commercial rates which I assess at $75,000”. He did not say what that rate was or over what period of time the sum had been calculated or over what portion of the damages it was calculated. While his Honour said he was using commercial rates, it is notorious that rates change from day to day and that different commercial institutions charge different rates of interest. Whose rate(s) as at what time(s) was applied?
The Court has power under r 1619(1)(b) of the Court Procedures Rules 2006 (ACT) to order that a lump sum be included in the amount for which judgment is given rather than ordering that interest be included at a particular rate, on all or any part of the money and for all or any part of the period since the cause of action arose. But that does not mean that the Court need not give reasons to explain the basis upon which the award is made. In our view, in the absence of agreement, it was insufficient to say that commercial rates were applied without giving any indication as to what those rates were. Consequently, the award of interest for past economic loss was also erroneous.
Conclusion
It follows that the award for past economic loss must be set aside. Compensation for the loss occasioned by the chance that Dr Aikman’s career was stalled because of the accident is a matter that should be reflected in the award for loss of future earning capacity.
Should the award of $570,000 for future loss of earning capacity be set aside as excessive or inadequate?
The appeal
The insurer argued that the Master erred in considering the evidence of Dr W, albeit accepting that it was a possibility that Dr Aikman would have followed a career in commercial geology. The insurer contended that the chance of that occurrence should be assessed as “well under 50%”. For the reasons given above at [45]-[51] these submissions should be accepted.
The insurer also submitted that the Master erred when he apparently took judicial notice that Dr Aikman could have supplemented his income as an academic by private or government income (at [87] of his reasons) when he was not entitled to do so, at least in the absence of notice having been given under s 144(4) of the Evidence Act.
This submission went unanswered, no doubt for good reason, for there was only one answer available. It was not open to the Master to take judicial notice of this matter.
Section 144 states:
Matters of common knowledge
(1)Proof is not required about knowledge that is not reasonably open to question and is—
(a)common knowledge in the place in which the proceeding is being held or generally; or
(b)capable of verification by reference to a document the authority of which cannot reasonably be questioned.
(2)The judge may acquire knowledge mentioned in subsection (1) in any way the judge thinks fit.
(3)The court (including, if there is a jury, the jury) must take knowledge mentioned in subsection (1) into account.
(4)The judge must give a party the opportunity to make submissions, and to refer to relevant information, relating to the acquiring or taking into account of knowledge mentioned in subsection (1) that is necessary to ensure that the party is not unfairly prejudiced.
Thus, not only may a tribunal of fact take into account matters of common knowledge in the jurisdiction that are not reasonably open to question but it must do so. On the other hand, the judge is required to give a party who might be unfairly prejudiced the opportunity to be heard before the tribunal of fact is entitled to act upon such matters.
Three questions therefore arise. First, was the chance that an academic geologist could supplement his income from private or government sources a matter of common knowledge in the locality or generally, or capable of verification by reference to an authoritative document? Second, was it a matter which was not reasonably open to question? Third, might the insurer have been unfairly prejudiced if the Master acted on this basis without giving it an opportunity to be heard?
Neither party addressed these questions.
It seems to us that the question of whether an academic geologist could supplement his income from private or government sources might be a common assumption or belief but the section requires common knowledge. It might be common knowledge amongst geologists or even in academic circles but it is unlikely to be a matter of common knowledge generally, in the Territory. Nor is it a matter which is not reasonably open to question. While one might assume that academic geologists could top up their salaries with part-time or casual consulting work, including, for example, by giving expert evidence in court cases, it would presumably be open to academic institutions to proscribe or limit such work. In the former instance, no extra income would be available, in the latter, the amount is unknowable. The ANU might allow it, in which case it is a matter capable of verification in the manner contemplated in subsection (1), but Dr Aikman was not contemplating a career only at the ANU. His horizons were much wider. Consequently, if the matter had been raised with the parties during the hearing, the insurer might have been able to call evidence of the practices at different academic institutions, which the Master would have had to factor into his assessment. Thus, there was a prospect of unfair prejudice to the insurer. JD Heydon AC QC considers that a failure to comply with s 144(4) renders the matter inadmissible, relying on Prentice v Cummins (No 5) (2002) 124 FCR 67 at [85] (Sackville J), although the judge in that case did not actually say so: Heydon JD, Cross on Evidence, (10th ed, LexisNexis Butterworths Australia), 2015, [3160], p 223.
The question then arises as to whether the Master was entitled to resort to the common law doctrine of judicial notice, assuming this is what he had in mind. In our respectful opinion he was not.
Mr Heydon points out that there are a number of cases in which it has been assumed that the common law doctrine continues to operate alongside s 144 and there is an argument to support this position. Section 56(1) of the Act renders admissible all evidence that is relevant unless it is excluded by the Act. Section 144 does not prohibit the reception of evidence judicially noticed at common law, at least not expressly; “it is facultative, not prohibitory”.
Nevertheless, notwithstanding Mr Heydon’s musings on this subject in Cross, there is High Court authority against it. In Gattellaro v Westpac Banking Corporation [2014] HCA 6; (2004) 78 ALJR 394 at [17] Gleeson CJ, McHugh, Hayne and Heydon JJ said that, while the matter was dealt with in the Court of Appeal as though the common law applied, “there would appear to be no room for the operation of the common law doctrine of judicial notice, strictly so called, since the enactment of [s 144]”. In other words, as a matter of statutory construction, the relevant provisions of the Act dealing with judicial notice (Pt 4.2: ss 143‑145) were intended to cover the field. Matters of (Australian) law are covered by s 143, matters of fact by s 144. Section 145 states that “[t]his part does not exclude the application of the principles and rules of common law and equity relating to the effect of a certificate given by or on behalf of the Crown in relation to a matter of international affairs”. Reading s 144 in context, it is reasonable to conclude that the Parliament intended to exclude the common law doctrine save in relation to Crown certificates in matters of international affairs, for which it wanted to make special provision.
In any case, even if the common law doctrine survives the enactment of the Uniform Evidence Act, the proposition that academic geologists might top up their salaries from other sources is not a matter about which judicial notice could have been taken at common law. At common law, judicial notice could be taken of matters of general knowledge of which the judge was aware or of which the judge became aware following inquiries from sources to which it was proper for him or her to refer: Commonwealth Shipping Representative v Penninsular & Oriental Branch Service [1923] AC 191 at 212 (Summner LJ). Isaacs J explained in Holland v Jones (1917) 23 CLR 149 at 153:
The only guiding principle—apart from Statute—as to judicial notice which emerges from the various recorded cases, appears to be that wherever a fact is so generally known that every ordinary person may be reasonably presumed to be aware of it, the Court "notices" it, either simpliciter if it is at once satisfied of the fact without more, or after such information or investigation as it considers reliable and necessary in order to eliminate any reasonable doubt.
The basic essential is that the fact is to be of a class that is so generally known as to give rise to the presumption that all persons are aware of it. This excludes from the operation of judicial notice what are not "general" but "particular" facts. As to "particular" facts, even the Judge's own personal knowledge is not to be imported into the case …To import knowledge of a particular fact in issue would be to import evidence in the strict sense regarding a matter as to which the Court is supposed to have no knowledge whatever of its own.
Here, it could not be said that the capacity of geologists employed at tertiary institutions to earn income from private work, even in the locality in which the trial took place, is so generally known as to give rise to the presumption that everyone is aware of it. In other words, it is not a notorious fact. Nor is it a matter of local custom. If that was part of Dr Aikman’s case, it should have been proved in the usual way. In any case, if the Master was minded to act upon what he believed to be susceptible to the doctrine of judicial notice, he should have raised it with the parties as a matter of procedural fairness so that the insurer had an opportunity to disprove it.
Contrary to the insurer’s submission, however, the Master did take into account the prospect that, quite apart from the accident, Dr Aikman would not have been able to engage in arduous field work as he got older. For this reason he applied a 40%, rather than a 15% discount for vicissitudes (at [108]).
The cross-appeal
Turning to the cross-appeal, Dr Aikman submitted that the allowance of $50,000 per year was “totally inadequate” in the light of Dr W’s evidence, which was the basis for his claim. Alternatively, if the proper conclusion was that he had been likely to work as an academic, then an additional sum should have been awarded for loss of superannuation. Moreover, to include superannuation in the $50,000 figure was “grossly inadequate in the circumstances”.
In oral argument, counsel for Dr Aikman, Mr Stretton SC, said that Dr Aikman likely would have worked until age 67, and if anything there should be an uplift on the standard 15% vicissitudes.
These submissions must be rejected. They fail to recognise the limitations of Dr W’s evidence and they fail to account for the numerous negative contingencies. The particulars of economic loss in the Statement of Particulars are based on the premise that Dr Aikman would have retired from the workforce at 65. They also invite a 15% discount for vicissitudes. In the circumstances, the contrary propositions advanced in argument should not have been put.
Conclusion
We are not persuaded that the sum awarded for future loss of earning capacity was appealably inadequate. To the contrary, we are satisfied that it was appealably excessive.
Disposition of the appeal
The appeal is in the nature of a rehearing. Neither party suggested the matter should be remitted to the Master for determination and this Court is in as good a position as he was to calculate the losses. Consequently, that is what we shall do.
Shortly stated, the relevant principles are as follows.
First, the purpose of an award of damages is to put the plaintiff in the position he or she would have been had it not been for the injury.
Secondly, as we have already observed, damages are not awarded for loss of earnings but for the diminution in a plaintiff’s earning capacity caused by the injury the subject of the proceedings to the extent that it is or may be productive of financial loss: Graham v Baker above. That means it is necessary to identify the capacity that has been lost and the economic consequences that will or might flow from that loss: Husher v Husher (1999) 197 CLR 138 at [7] (Gleeson CJ, Gummow, Kirby and Hayne JJ).
Thirdly, the evaluation of a loss of capacity to earn is of its nature more imprecise than the assessment of lost income; resting, as it does, “on the hypothesis – that the plaintiff will have undiminished capacity – which has been rendered false by events”: New South Wales v Moss at [71], [72] (Heydon JA). Indeed, “[d]amages founded on hypothetical evaluations defy precise calculations”: Malec 640 (Brennan and Dawson JJ).
Fourthly, where questions arise as to the hypothetical effects of an injury (whether before or after the assessment is being made), save in the case of virtual certainty on the one hand or mere speculation on the other, a court is required to determine the degree of probability of the occurrence of the associated future or hypothetical events and adjust the award up or down to reflect it: Malec at 643 (Deane, Gaudron and McHugh JJ). The same approach applies to the assessment of past loss. Allowance must be made for all contingencies including the ordinary vicissitudes of life (ill health, accidents, unemployment, and so on) and “positive considerations” such as the prospect of advancement, promotion and increased earnings: Wynn v NSW Insurance Ministerial Corporation (1995)184 CLR 485 at 497 (Dawson, Toohey, Brennan and Gummow JJ). Deane, Gaudron and McHugh JJ explained in Malec at 642‑3:
When liability has been established and a common law court has to assess damages, its approach to events that allegedly would have occurred, but cannot now occur, or that allegedly might occur, is different from its approach to events which allegedly have occurred. A common law court determines on the balance of probabilities whether an event has occurred. If the probability of the event having occurred is greater than it not having occurred, the occurrence of the event is treated as certain; if the probability of it having occurred is less than it not having occurred, it is treated as not having occurred. Hence, in respect of events which have or have not occurred, damages are assessed on an all or nothing approach. But in the case of an event which it is alleged would or would not have occurred, or might or might not yet occur, the approach of the court is different. The future may be predicted and the hypothetical may be conjectured. But questions as to the future or hypothetical effect of physical injury…are not commonly susceptible of scientific demonstration or proof. If the law is to take account of future or hypothetical events in assessing damages, it can only do so in terms of the degree of probability of those events occurring. The probability may be very high — 99.9 per cent — or very low — 0.1 per cent. But unless the chance is so low as to be regarded as speculative —- say less than I per cent — or so high as to be practically certain — say over 99 per cent — the court will take that chance into account in assessing the damages. Where proof is necessarily unattainable, it would be unfair to treat as certain a prediction which has a 51 per cent probability of occurring, but to ignore altogether a prediction which has a 49 per cent probability of occurring. Thus, the court assesses the degree of probability that an event would have occurred, or might occur, and adjusts its award of damages to reflect the degree of probability. The adjustment may increase or decrease the amount of damages otherwise to be awarded…The approach is the same whether it is alleged that the event would have occurred before or might occur after the assessment of damages takes place.
Nevertheless, as Clarke JA (with whom Handley and Sheller JJA agreed) observed in Norris v Blake by his tutor Porter (No 2) (1997) 41 NSWLR 49 at 68–69, save perhaps for the references to percentages, Malec does not support “the adoption of a scientific, or quasi-scientific, approach to the assessment of damages in a case in which there is a requirement that account be taken of future possibilities and past hypothetical situations”. On the other hand, if the evidence is “capable of demonstrating that a particular scientific approach is likely to reach a more accurate assessment than an intuitive judicial approach”, then there is no reason not to adopt it, provided full weight is given to the uncertainties.
Fifthly, in some cases, however, where the uncertainties are too great and the evidence too deficient, the courts may award a “buffer” or “cushion” for lost earning capacity: see, for example, Government Insurance Office (NSW) v Jackson (unreported, NSWCA, 3 May 1994). But the mere fact that damages are difficult to assess does not mean that the plaintiff is only entitled to a nominal sum: New South Wales v Moss at [72] (Heydon JA).
The starting point, then, is to decide, to the extent that it is possible, what, on the probabilities, Dr Aikman would have done had he not been injured.
Contrary to the allegation in the notice of appeal, the Master said (at [87]) that he was satisfied that if Dr Aikman had not been injured he would have pursued a career as a geologist, either in industry or in academia, but in the latter event, he said he could take judicial notice of the availability to academic geologists of consulting work in industry and for government to supplement their incomes. Putting aside the question of whether he could take judicial notice of this matter, which is considered separately, the Master’s conclusion was reasonably open on the evidence. For the reasons given at [38]–[52] above, however, the latter alternative, that is, the career in academia, appears much more likely.
That said, Dr Aikman is a young man and some allowance must be made for the possibility that he might have lost interest in the academic life or been lured away from pursuing it by a lucrative job offer.
The insurer submitted that “the variables and imponderables in this case are such that the preferable means of assessing damages for loss of earning capacity in the future is to award a substantial buffer”. Mr Stretton argued to the contrary, submitting that the award of a buffer is rarely appropriate. He referred to O’Brien v Noble at [44]—[48] and, in particular, the following passage from the decision of the Full Court in Fry v McGufficke [1998] ACTSC 20 at [8] where Miles CJ, Gallop and Crispin JJ said:
Some arithmetical basis must be used and a lump sum cannot be plucked out of the air, but judgment must be used in the application of arithmetic to what figures the evidence may support.
Fry v McGufficke, however, is no authority for the proposition that the award of a buffer is rarely appropriate. Nor is O’Brien v Noble. Indeed, in Fry v McGufficke the Master made such an award and the award withstood two appeals, one to the Full Court of the ACT Supreme Court, the second to a Full Court of the Federal Court (Black CJ, Foster, Madgwick, Finkelstein, Dowsett JJ): Fry v McGufficke [1998] FCA 1499. The complete passage, from which the above quote was taken, recognised the utility of such an approach in a case like the present:
It was submitted that the Master had fallen into error in assessing damages for past and future economic loss on the basis of an intuitive rather than an arithmetical approach. Counsel for the plaintiff submitted that it was preferable to adopt the latter approach where that was practicable. As a matter of general principle that is correct. Furthermore, this case in particular was one in which any assessment of damages for economic loss was beset by so many imponderables that an arithmetic approach could only have given a false appearance of accuracy. Nevertheless, in our view, it was open to the Master to make a global assessment of the losses in question, based on the evidence but without express reference to arithmetical calculation, his award does not bear the appearance of gross inaccuracy. However, it is rare that the facts allow one approach to the exclusion of the other. Some arithmetical basis must be used and a lump sum cannot be plucked out of the air, but judgment must be used in the application of arithmetic to what figures the evidence may support
The Full Federal Court said that the Master was “well-entitled, given all the uncertainties about the plaintiff’s future … to opt for an intuitive, global assessment”.
In our view this case, too, is one where the uncertainties were such that “an intuitive, global assessment” is called for. It was, in effect, the approach for which the insurer argued below and it was one which Mr Stretton appearing for Dr Aikman agreed was open. The evidence is insufficient to enable the kind of assessment referred to in Malec and undertaken in Norris v Blake. That said, the assessment of both past and future economic loss should be based on the following conclusions which are supported by the evidence:
(a)But for the injuries he sustained in the accident, Dr Aikman would probably have submitted his thesis by 31 March 2007, if not sooner.
(b)At that point, Dr Aikman would probably have worked in a casual or temporary position or a succession of casual or temporary positions until he was awarded his PhD, say by November 2007 (corresponding to the eight months between the submission of his thesis in August 2007 and the conferral of the award in April 2008).
(c)He would probably then have moved to the United States to undertake postdoctoral research for, say; two years (like Dr Herman).
(d)After two years in the US, he would have sought a tenured academic position, although it is likely that, if he returned to Australia, there would have been a delay in taking up the appointment because of the differing academic years.
(e)It is highly likely that he would have started as a lecturer and progressed up the ladder, to associate professor level, if not professor.
(f)It is possible that he would have taken full-time employment in the private sector as a field geologist, where he most probably would have been able to earn significantly more, either immediately after his two years in the US or at some later period of time.
The only assistance the Court received in calculating the sums was given by the insurer’s counsel, Mr Crowe SC, in his written submissions. Those figures allow for a buffer of $10,000 for the period from when the thesis would have been submitted but for the accident until June 2007 and make no allowance for any loss in the period from then until the end of 2009 by which time he posited that Dr Aikman would have returned to Australia. Mr Crowe’s submissions (the question of interest aside) were as follows:
Having regard to the salary ranges for lecturers at Sydney University as a guide and Dr Herman's income during the first year of his full-time work it is reasonable to conclude that from 2010 to the date of judgement of the Master the probable loss suffered by the respondent would have fallen somewhere within the following ranges:
2010 Lecturer - $81,000 Dr Herman - $97,500
Actual - $70,000 Actual - $70,000
$11,000 $27,500
2011 Lecturer - $88,000 Dr Herman - $100,500
Actual - $71,000 Actual - $71,000
$17,000 $29,500
2012 Lecturer - $95,000 Dr Herman - $110,500
Actual - $85,000 Actual - $85,000
$10,000 $25,500
Adopting a mid point for each of these years gives indicative gross loss figures of $19,250, $23,250 and $17,750. Assuming a marginal rate of tax of 37% this equates to net figures of approximately $12,150, $14,650 and $11,200, which is an average annual loss of $12,666 – say $13,000 per annum net of tax.
On the basis of the above findings a reasonable assessment of the respondent's past loss of earning capacity damages would be:
For the period of April-June 2007, by way of a "buffer" allowance - $10,000
For the period from 2010 to March 2014, say 4.25 years at $13,000 per annum - $55,250
Plus allowance for possibility that the respondent would have done some high paying commercial geology work - $50,000
Total for past loss: $115,000
The methodology adopted by Mr Crowe is not entirely satisfactory. But Mr Stretton did not quarrel with the approach and, given the poor quality of the evidence, it is probably a reasonable approach to take. In the Statement of Particulars, Dr Aikman asserted that his net earnings for the financial year ending 2010 was $56,484, for the financial year ending 2011 $59,885, and for the financial year ending 2012 $53,499 but the sources of this information were not identified. The documentary evidence contained in the appeal books did not easily correlate with the statement of particulars. For this reason, and in the absence of an alternative submission, the Court is inclined to adopt Mr Crowe’s approach, that is to say to calculate Dr Aikman’s lost earnings by applying a 37% marginal tax rate to the difference between Dr Aikman’s gross earnings and the gross loss derived from a comparison with the earnings of Sydney University academics and Dr Herman.
In this light, the figure suggested as a buffer for the early period seems reasonable.
100. We accept the submission that no allowance should be made for the two years in the US when Dr Aikman would probably have been undertaking postdoctoral research. We have come to this conclusion because there is no evidence to suggest that Dr Aikman would have earned any more in that period than he was earning in Australia. Dr Herman was ideally placed to give evidence of what he earned during the two years he undertook that work –– two years before Dr Aikman submitted his PhD thesis. Yet he said nothing and offered no explanation for his silence. In the circumstances, his silence is eloquent. The inference to be drawn is that nothing he could say would have assisted Dr Aikman’s case.
101. Moreover, if Dr Aikman’s actual earnings are compared with the earnings of entry level academics, he does not appear to have suffered any loss at all until 2010. The evidence as to academic earnings only begins in 2009 and the only evidence in this category comes from the ANU and the University of Sydney. At the ANU the starting salary is $53,935 per annum gross in the 2009 calendar year up until 24 December, rising then to $55,013. The Sydney University figures are similar at $53,375 in March 2009, rising to $54,976 in September. According to the Statement of Particulars, Dr Aikman received a net income of $51,371 for the financial year ending 30 June 2009. While the Court was not taken to them at the hearing, the appeal books include Dr Aikman’s group certificate and taxation estimate from the Australian Taxation Office for the year ending 30 June 2009. In those documents, Dr Aikman’s gross income is $64,816 and his taxable income (after deductions) was $50,488. It is not clear to us how the figure of $51,371 was arrived at, but it does not appear to be in dispute and so we adopt the net income figure of $51,371 for the purpose of this analysis. Reliance on Australian university figures presupposes, of course, that that Dr Aikman would have started at the bottom. But he carried the onus of proof. If he wished to establish that he would probably have been offered a position at a higher level he should have called expert evidence from which the Court might have been able to reach such a conclusion. He took a risk in relying on Dr W’s income.
102. Furthermore, the evidence from Dr Herman was unsatisfactory. As we have already observed, figures were given in Swiss francs for the period from 2007 until 2010 inclusive without evidence of exchange rates or conversion to Australian dollars. Furthermore, there was no evidence of Dr Herman’s earnings in 2011. And there was no indication whether the years to which the figures were said to relate were calendar years or financial years.
103. Nevertheless, some assistance can be obtained from the earlier rates through a process of extrapolation from the 2012 figures where, without objection, an Australian equivalent to the Swiss earnings was offered. In February 2012 Dr Herman was earning a gross salary of CHF107,850, which he stated was approximately AUD118,000.
104. Comparing these figures obtains an exchange rate of approximately AUD1.09 to CHF1. While exchange rates fluctuate daily, as the Court was not taken to any evidence of the conversion rates, this is the best evidence available. Thus, rounded to the nearest dollar, the following figures may be extrapolated:
Period
Salary prior to increase
Increase from previous year
Percentage increase from previous year
2007-2008
89,000 CHF
N/A
N/A
97,376 AUD
N/A
2008-2009
91,741 CHF
2,741 CHF
3.080%
100,375 AUD
2,999 AUD
2009-2010
100,815 CHF
9,074 CHF
9.981%
110,303 AUD
9,928 AUD
2010-2011
104,318 CHF
3,503 CHF
3.475%
114,136 AUD
3,833 AUD
2011-2012
107,850 CHF
3,532 CHF
3.386%
118,000 AUD
3,864 AUD
Mr Crowe’s submission was that from the end of the two-year stint in the United States, the loss should be calculated by deducting Dr Aikman’s gross actual earnings from the earnings of a lecturer roughly based on the figures in the Sydney University enterprise agreement on the one hand and from Dr Herman’s earnings on the other and taking a median figure from which the net figure was then calculated (without demur from Mr Stretton) using a marginal tax rate of 37%. This is a reasonable approach and, once Dr W’s earnings are rejected as a suitable basis for comparison, there was no alternative proposal. Mr Crowe relied on the Sydney University figures and this is as good a basis as any. Mr Stretton did not contend that they were not a suitable guide.
We have begun the mathematical analysis at 1 January 2010 on the premise that, had the accident not occurred, Dr Aikman would have submitted his thesis by 31 March 2007 and his PhD would have been conferred by 30 November 2007. If he spent two years from that date undertaking post-doctoral research in the United States, he would have returned at around 1 November 2009. As this would be towards the end of the Australian academic year, we have not made any allowance for the residue of 2009. For convenience, we begin on 1 January 2010.
107. We have adopted the figures for University of Sydney Lecturers (Level B) (“USL”). They are the figures used by Mr Crowe. They are higher than the ANU and UNSW figures for the comparable period, although the comparison is not an exact one. The figures attributed to Dr Aikman are derived from his tax returns and, in the case of the 2011–2012 financial year, his oral evidence.
Period
Aikman
Herman (AUD)
Lecturer
Differences
Midpoint
After 37% tax
01/01/2010-30/06/2010
33,983,
55,152
40,055,
Herman
USL
13,621
8,581
21,169
6,072
01/07/2010-30/06/2011
71,857
114,136
86,253
Herman
USL
28,338
17,853
42,279
14,396
01/07/2011-30/06/2012
85,000
118,000
93,897
Herman
USL
20,994
13,226
33,000
8,987
108. For the rest of the period in the past, to the date of the Master’s judgment in March 2014 (a period of approximately 1.75 years), in the absence of any evidence of academic earnings outside Australia, we are reliant on the figures from Australian universities contained in various enterprise agreements which were tendered at the trial. The figures for the University of Sydney cease at the end of the 2011–2012 financial year. The ANU figures appear to extend to the end of the 2012–2013 financial year, as do those from the University of Queensland. Figures were provided for the University of Melbourne only for annual salaries payable as at April 2012. No attempt was made by either party to provide a comparison of the figures, to calculate an average, to point to a median, or to assist the Court as to the use to which the documents should be put.
109. Mr Stretton pointed to the payment by the University of Queensland of loadings for the recognition of merit or outstanding leadership in research, but no basis upon which the Court could calculate their value.
It is reasonable to infer that Dr Aikman’s actual salary and the salaries of a lecturer and Dr Herman would have continued to increase at least in step with the CPI. In these circumstances, we accept Mr Crowe’s submission that the loss of earning capacity from 1 July 2012 until the time of the Master’s judgment should be assessed by reference to the average net annual loss. Based on the figures above at [107], Dr Aikman’s net average annual loss was $16,080. Therefore for the remaining 1.75 years, we allow $28,140.
111. To compensate for the chance that Dr Aikman would have accepted work in the private sector for some or all of the time from which he was awarded his doctorate until the publication of the Master’s judgment and for the chance that these earnings might have exceeded his actual earnings, we would allow $35,000.
112. Thus, for the past, we would allow the following sums:
(i) for the period to June 2007: $10,000;
(ii) for the period from July 2007 to December 2009: $nil;
(iii) for the period from January 2010 to June 2012: $39,660
(iv) for the period July 2012 to March 2014: $28,140.
(v) an additional sum to compensate Dr Aikman for the chance that he would have earned more from private work as a geologist: $35,000
113. This gives a total of $112,800, to which interest should be added from 1 January 2007 to the date of the Master’s judgment. We are not disposed to order that a lump sum be included in the amount for which judgment is given in accordance with r 1619(1)(b). Rather, we propose to invoke the power given by r 1619(1)(a) to award interest on the whole sum at an appropriate rate for an appropriate period. Subrule (5) enables, but does not require, the Court to set the rate of interest in accordance with the rate stated in the claim for relief or, having regard to the rates of interest applying, from time to time, under sch 2, pt 2.1.
114. The statement of claim did not include a reference to any particular rate. Schedule 2, pt 2.1 provides that, for the period 10 January 2005 to 30 June 2010, interest of 9% per annum should be applied. After that time, the rate is calculated by reference to the cash rate last published by the Reserve Bank of Australia plus 4%. Irrespective of which rate should be taken to apply, as we noted above, r 1619(1) allows the Court to order interest at the rate it considers appropriate. We see no good reason to depart from the rates contained in the schedule. To allow for the fact that the loss has occurred progressively, half the rate should be applied to the full period or the whole rate to half the period: see Hallett v Schoevers (1992) 109 ACTR 1 (FC).
115. For the future, the insurer submitted that the uncertainties are such as to warrant the award of a buffer, which it put at $200,000. We agree that this is the correct approach but we are of the opinion that the sum proposed is too low. It appears to be based on the premise that the diminution in Dr Aikman’s earning capacity will remain the same for the rest of his working life.
116. In this case, the evidence demonstrates that it is highly unlikely that, but for his injuries, Dr Aikman’s earning capacity would have remained the same throughout his working life. For this reason the positive vicissitudes outweigh the negative. They include the likelihood that Dr Aikman would have advanced to the top if he had pursued an academic career and the chance that he might have gone into private enterprise and earned considerably more. If he became a professor at the University of Sydney he would earn nearly $170,000 gross per annum at 2012 rates. But the evidence is insufficient to establish that he would have achieved such a position at an early age, if at all. Apart from Dr W’s earnings, there is no evidence about what geologists in private enterprise are capable of earning. Doing the best we can, taking into account all the variables and the limited evidence available, we would award $350,000 for loss of future earning capacity. This figure takes into account damages to compensate Dr Aikman for the possibility of delay in his career caused by the accident. It also takes into account the prospect that Dr Aikman would be working in Australia and his employer paying into a superannuation fund. He would therefore recover superannuation on his retirement. But that amount is not substantial because account must be taken of the accelerated receipt. The lost superannuation benefit we have built into this figure reflects an allowance based on the gross figures for lost earning capacity (both past and future) and the current compulsory superannuation guarantee contribution of 9.5%, discounted at 3% to reflect its present value.
117. We have ignored the possibility that Dr Aikman’s earnings do not properly reflect the extent of his residual earning capacity. That is because the onus of proving that Dr Aikman did not take reasonable steps to mitigate his loss was upon the insurer and it was not discharged. The faint suggestion that he should have sought work “doing office geology” was not pursued. While it is theoretically possible that Dr Aikman might have been able to earn more than he was earning at the time of the hearing before the Master and, indeed, that despite his physical disabilities he might increase his earnings in the future, the insurer had an evidential onus on this issue which it did not satisfy.
Conclusion
118. The appeal should be allowed and the cross-appeal dismissed. The judgment of the Master should be set aside.
119. Within 28 days, the parties should bring in short minutes of order giving effect to these reasons.
120. The respondent is to pay the appellant’s costs unless, within 28 days, either party notifies the court and the other party that it wishes to make submissions about that costs order.
121. The parties have liberty to apply on 5 days notice.
| I certify that the preceding one hundred and twenty one (121) numbered paragraphs are a true copy of the Reasons for Judgment of the Court. Associate: K Harris Date: 18 December 2015 |
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