Janeiro v Bouvet Pty Ltd Trading as Ansett Gateway Hotel File No. SCGRC 92/1169 Judgment No. 3658 Number of Pages 8 Damages General Principles

[1992] SASC 3658

COURT IN THE SUPREME COURT OF SOUTH AUSTRALIA FULL COURT King C.J.(2), Mullighan (1) and Olsson(3) JJ.

CWDS
Damages - general principles - personal injuries sustained when fell on a stairway - 39 year old gymnasium proprietor and security guard - body building enthusiast - injuries to lower back, neck and right arm - depression - somatoform disorder to resolve after completion of litigation - would have worked as a security guard but for the injuries - appeal against awards for economic loss past and future, future non-economic loss and future medical expenses - appeal allowed - award for past economic loss increased on appeal from $30,000 to $45,000, award for future economic loss increased from $15,000 to $40,000 - award of $13,000 for future non-economic loss not disturbed - award for future medical expenses increased from $12,000 to $18,000 - increase in award for interest - damages and interest increased by $55,000 to $162,879. Malec v Hutton Proprietary Limited (1990) 169 CLR 638, referred to.

HRNG ADELAIDE, 31 August 1992 #DATE 16:10:1992
Counsel for appellant:     Mr S.R. Walsh QC
Solicitors:                 Georgiadis and Co.
Counsel for respondent:     Mr T.M. McCrae with Mr D.W. Tillett
Solicitors:                 Reilly Downs Humphries

ORDER
Appeal allowed.

JUDGE1 MULLIGHAN J. The appellant was injured on 6th August 1987 when he slipped and fell on stairs at the respondent's hotel at North Terrace, Adelaide. He brought an action in the District Court for damages for those injuries and consequential loss. 2. The learned Trial Judge found that the accident was caused by the negligence of the respondent and he rejected the contention that the appellant failed to take reasonable care for his own safety. He assessed the appellant's damages and interest at $107,019 made up as follows:-
    Past economic loss $30,000
    Future economic loss $15,000
    Past non economic loss $25,000
    Future non economic loss $13,000
    Special damages $7,629
    Future special damages $12,000
    Interest $4,750 There was an error in the addition of these components. Judgment should have been entered for the appellant in the amount of $107,379. This error was not raised, but should be corrected, on appeal. 3. The appellant appeals against the awards for past and future economic loss and future special damages on the ground that each of the awards is manifestly inadequate and against the evidence and the weight of the evidence. He also sought leave to amend the grounds of appeal to permit an appeal against the award for future non economic loss on the same grounds. There is no appeal with respect to liability. 4. The appeal was instituted outside the time limitation imposed by the Local and District Criminal Courts Act 1926 and, at the commencement of the hearing of the appeal, Mr. Walsh QC applied for an extension of time which application was opposed. The respondent did not assert any relevant prejudice. After hearing argument, we indicated to Mr. Walsh that he was at liberty to submit argument in writing as to the power to make an order extending time and that we would proceed to hear the appeal. He has since made written submissions and Mr. McRae has intimated that he has received a copy of them and does not wish to make any further submissions. 5. Pursuant to s.59 of the Act, the appellant was obliged to give notice in writing of his intention to appeal within 12 clear days from 4th May 1992, the day when judgment was entered, and forthwith file a copy of the notice in the Registry in this Court: R.96.21 of the Supreme Court Rules 1987. That notice was not given until 20th May 1992, about 4 days beyond the specified period. As the notice did not specify the grounds of the appeal, the appellant was required to file in the Registry a document setting out the grounds within 21 days of filing the notice of the notice of intention to appeal: R.96.21. That document was not filed until 15th June 1992, again about 4 days out of time. As that requirement is to be found in the Supreme Court Rules, the Court clearly has the power to extend the time by virtue of R.6.02. R.96.24 empowers this Court to enlarge the time for the giving of the notice of intention to appeal and is in similar terms to the former Order 71A Rule 25. It has not been doubted that by virtue of these rules, this Court has had the power to extend the time (see Hannan's Local Court Practice, 3rd Ed. paras.392 and 393) even though the power is not provided by that Act or expressly by other legislation. It has been the practice of this court to grant extensions of time in appropriate circumstances and it was not contended on this appeal that there was no such power. In my view, the Court has power to grant the extension and, in accordance with the intimation given at the hearing, the necessary extensions of time should be granted. The appellant also seeks leave to amend the grounds of appeal so as to include an appeal against the award for future non-economic loss on the ground that it is manifestly inadequate and against the evidence. It was not until counsel appearing for the appellant on the appeal had been briefed that it was appreciated that this ground had not been included. I would grant leave to amend. 6. At the time of the trial the appellant was aged 39 years. He was born in Poland where he completed some tertiary education and migrated to Australia in July 1981. At that time he spoke no English but has since acquired a reasonable command of that language. Since his mid teens, he has been actively engaged in body building, weight lifting and gymastics, including in competition. He has played many sports and was a very active and fit person. 7. Shortly after he arrived in this country, he obtained employment as a machinery draughtsman but was retrenched later in that year. No doubt due to his size and physique, he obtained casual work as a security guard at various nightclubs and hotels, but in an unpaid capacity. He was willing to work on that basis as he wanted to acquire a good reputation in the industry and to meet people. In early 1982 he was employed by Australian National Railways as a fettler but resigned at about the end of that year rather than work in the country. He also had employment as a fitness instructor and pool guard at the Parks Community Centre in the evenings and after he ceased to work with Australian National Railways he continued to work at the Centre for about 25 hours a week. In February 1984 he terminated that employment and thereafter until the accident he was in receipt of unemployment benefits. 8. In 1984 he established a gymnasium at his home. In June 1985 he transferred that business to premises in Hindley Street, Adelaide. Despite the enthusiasm of the appellant, his earnings from the business were small and never sufficient to disentitle him to the unemployment benefits which he continued to receive. From December 1986 to April 1987 the appellant travelled around Australia and to the United States of America looking at gymnasiums and pursuing his body building activities. Friends conducted the gymnasium business in his absence. Upon his return he proposed to make various improvements and extensions to the business which he believed would make the business profitable. However, he found it was necessary to obtain other premises but had not done so before the accident. 9. The appellant had no financial resources and needed capital to develop his plans for the business. In about July 1987 he sought work from Mr. Tucker who conducted a security guard business. Mr. Tucker had plans to expand his business and proposed to employ the appellant more extensively, and on a long term basis, as those intentions materialized. He engaged the appellant because he had a good reputation in the industry and he needed someone whom he could rely upon. He intended to earn sufficient money to develop a new gymnasium and then return to conducting that business. He worked for only two days before the accident. 10. In the fall, the appellant hit his head on a stair rail and momentarily lost consciousness. He had severe pain in his neck, right shoulder, lower back and left leg, headache and pain in his right elbow, with restriction in the use of his right hand. Over a lengthy period of time he had substantial medical, physiotherapy and medical treatment. The learned Trial Judge found that the consequences of the fall have had a devastating effect upon the appellant. He has not worked since the accident and has not been capable of any type of work. He summarized the present position as follows:-
    "Of great significance was that since the fall the plaintiff
    has not been able to engage in body building and gymnastics. This
    has robbed him of his self esteem and his purpose in life. He has
    become depressed, moody and irritable. He has drunk heavily on
    occasions. In March 1989 his de facto wife left him because she
    could not tolerate his behaviour any longer and because he seemed to
    be a different person since the accident. Since then he has lived on
    his own. He has walked with a stick and has been a semi invalid. He
    has continually complained of pain particularly in his lower back and
    left leg and of numbness in his left leg. He has been restricted in
    bending, carrying, walking and many other physical activities. He
    has had difficulties in sleeping. His neck, shoulder and elbow
    complaints have gradually resolved, although they cause him some
    irritation from time to time. However, his left hip and leg have
    significantly deteriorated and have become the source of his primary
    complaints. As at the time of trial his left hip was causing him
    continual substantial pain and a significant loss of mobility." 11. The learned Trial Judge accepted medical evidence that prior to the accident the appellant had significant arthritic change in both of his hips and in his lower back due in part to strain placed upon his hips and lower back over many years of body building exercizes and the possibility that he was susceptible to arthritis from some childhood problem with his hips. He found that had the injuries sustained in the fall accelerated the disabilities stemming from the osteo-arthritis in the left hip and back and that if he had not been injured at some time in the future he would have suffered substantial pain and disability from the osteo-arthritis in his hips and quite possibly in his back. Four surgeons expressed different opinions about the effect of the injuries upon this pre-existing condition. The learned Trial Judge felt he was unable to prefer the opinion of one surgeon against any other and concluded:-
    "On the balance of probabilities a middle course seems more
    likely which is that at some time in his forties or fifties the
    plaintiff would have become substantially disabled from
    osteo-arthritis in his left, and also probably his right, hip and
    in his lower back. Thus the plaintiff is only to be compensated
    in damages for his disability and suffering in the period from
    the fall until he would have reached his present condition in any
    event." 12. He found that the condition of the appellant's left hip had deteriorated to such an extent that he will undergo a hip replacement operation in the near future which will relieve him of most of the pain in the hip and increase his mobility substantially although he will not be able to engage in unduly strenuous activities. Nevertheless, if the appellant takes care with the replacement hip, it is likely that a further replacement will be necessary in between ten and twenty years and he may require a third replacement later in life. Although it is likely that he will require a replacement of his right hip, the learned Trial Judge found that such replacement was not related to the fall. 13. It is likely that the replacement of the left hip will result in improvement to the appellant's back condition but the learned Trial Judge found that he has significant disability in his back as a result of the fall but he would probably have suffered significant back problems in the future due to the pre-existing condition even if he had not been injured. 14. A consequence of the injuries and the resultant disability is that the appellant suffered an adjustment disorder and in more recent times a somatoform disorder which accounts for some of his symptoms and invalidity. The learned Trial Judge found that many of these psychiatric problems, including the appellant's depression, are likely to be resolved by the resolution of the litigation and successful replacement of the left hip. In so far as the psychiatric problems stem from his inability to continue with his body building activities, it is likely that they would have developed to some extent at some time in the future when his pre-existing condition in the hips and back would have developed to the stage so as to prevent those activities. 15. The award for past economic loss embraced a period of about four years and eight months. According to Mr. Tucker, he had offered the appellant as much work as he would be able to give him at rates of $10 per hour during the day and $15 per hour at night, which would amount to 40 to 50 hours each week. However, there was no fair arrangement as to the number of hours to be worked each week, because the extent of the hours depended upon the expansion of Mr. Tucker's business. Mr. Tucker proposed that the appellant would become a full-time employee. The learned Trial Judge found:-
    "... but for the accident it is likely that the plaintiff
    would have worked substantial hours for Mr. Tucker for many weeks
    and would have been paid over award payments for at least some of
    his working time. No commencement date had been agreed between
    them for the plaintiff to commence this work, but it is likely to
    have commenced when Mr. Tucker was able to organize other work
    for himself. Such employment may have continued on a reduced
    scale once the plaintiff had established his new gymnasium." 16. No doubt His Honour was referring to no commencement date having been agreed for more extensive work as the appellant had begun to work on a casual basis. Mr. Walsh challenged the award for past economic loss of $30,000 on the basis that it did not reflect the likely extent of the appellant's earnings before trial if he had not been injured. If the appellant had quickly progressed to full-time employment with Mr. Tucker and continued to do so until trial his likely total earnings after income taxation would have been about $100,000. The learned Trial Judge found:-
    "I find that but for the fall the plaintiff would have derived
     a substantial income for some time from his work as a security guard
    for Mr. Tucker. However, once the plaintiff had earned enough to
    capitalise his new gymnasium it is likely that he would have given up
    that work and have concentrated on managing his gymnasium and
    instructing in body building. The plaintiff's enthusiasm for his
    gymnasium project was such that it is likely that he would have done
    this at the earliest possible opportunity. He would not have
    utilized his potential earning capacity to the full, but he is only
    to be compensated for the extent to which he was likely to have used
it: Mann v Ellbourne (1974) 8 SASR 298. No evidence was given about
    how much money he needed for the new gymnasium, and it is likely that
    he had never costed the exercise. There is no great likelihood that
    his renewed gymnasium business in new premises would have made any
    significant amount of money for him. His past history of running a
    gymnasium does not suggest that a good living was to be made out of
    such an enterprise. It is unknown whether what he learnt interstate
    and in the USA in early 1987 would have enabled him to build a
    profitable business. No independent expert evidence was adduced on
    the topic. I take judicial notice that many such businesses have
    failed in recent times, although some have apparently prospered. The
    likelihood is that the project was only a pipe dream, but some
    allowance is to be made for a relatively small chance that it would
    have succeeded. On a broad axe basis I assess damages for past
    economic loss at $30,000." 17. Mr. Walsh challenged some of those findings and conclusions. It is unnecessary to set out all of his contentions. It is sufficient to say that the effect of his submission is that the learned Trial Judge should have found that, but for the accident, it is likely that the appellant would have quickly progressed to full-time work with Mr. Tucker and continued to work on that basis until he had saved sufficient money to develop the gymnasium business. He would then have worked in that business, probably with little financial reward, but he would have retained his good reputation as a security guard and his earning capacity in that occupation which he could have utilized on a part-time basis in conjunction with his gymnasium business or on a full-time basis if the business failed, subject to availability of employment. In my view, there is merit in this submission. The appellant is to be compensated for his loss of earning capacity and, had he not been injured, he would have been able to utilize that capacity in the way most suitable to him. He has lost the capacity to do so by reason of the accident. In my view, it is likely, that if the appellant had not been injured, he would have earned enough money to develop the gymnasium business but probably he would have found that it was not sufficiently profitable for his purposes. Consequently, it is likely that he would have supplemented his income by working as a security guard. It is possible that he may have come to realize the benefit of secure employment with Mr. Tucker and abandoned his plans for the gymnasium. There are other possible ways in which he may have utilized his earning capacity. The learned trial Judge was obliged to adopt a global approach to the assessment in view of the various possibilities and uncertainties, but as it had been established that the appellant had an earning capacity which had been greatly compromised by his disability due to the fall, his assessment of $30,000 for such an extensive period is an erroneous estimate of his damages for past economic loss and justifies intervention on appeal. In my view, such damages should have been assessed at $45,000. 18. The basis of the award for future economic loss was expressed by the learned Trial Judge as follows:-
    "Damages for future economic loss are even more difficult to
    assess. It is likely that the plaintiff in his condition as it is
    likely to be after this case could probably manage a gymnasium,
    although he could not instruct or take any active part in its
    physical activities. It is likely that even if there had been no
    accident his ongoing arthritic condition would ultimately have
    prevented him from working as a security guard. Thus, even if his
    gymnasium business had failed, he ultimately would not have had an
    occupation of a security guard to fall back on during the latter part
    of his life. The plaintiff is an intelligent person and is improving
    his proficiency in the English language. No evidence was adduced of
    what occupations might be open to him even with his disability, but
    there must be a reasonable prospect that he could succeed in some
    non-physical type of activity. Damages for future economic loss are
assessed at $15,000." 19. Mr. Walsh submitted that the finding that the appellant's pre-existing condition would have deteriorated to the extent that he would have been substantially disabled at some time in his forties or fifties was contrary to the evidence. Whilst it is not a matter of great significance, it does appear that the learned Trial Judge erred in his approach to the resolution of the differing opinions of the four surgeons. He appears to have taken the middle course of their prognoses as to when the incapacity would have occurred and then found that middle course as having been established on the balance of probabilities. The correct approach is to assess the probabilities as to when the incapacity would occur and to make due allowance for those probabilities in assessing the damages: see Malec v J.C. Hutton Proprietary Limited (1990) 169 CLR 638. However, leaving that matter aside, the evidence disclosed that the appellant had not suffered any injury to his right hip in the fall. None of the surgeons suggested that there would be a need for a replacement of that hip until the appellant was in his late fifties. Mr. Walsh contended that, but for the accident, it is likely that the same time frame would have applied to the need to replace the left hip, and therefore his pre-existing condition would not have resulted in substantial incapacity if he had not been injured until his late fifties. However, it must be acknowledged that the physical inactivity of the appellant due to his injuries in the fall have probably slowed down the deterioration of the right hip. In my view, the evidence did not admit of a precise finding as to when the appellant would have been incapacitated for work due only to his pre-existing condition, but it does establish that it was unlikely to have occurred when the appellant was in his forties and particularly his early forties. It is likely that he would not have reached that stage until much later. 20. But for the injuries sustained in the fall, the appellant would have had a significant earning capacity as a security guard which he could have utilized as required. He also was capable of working as a gym instructor and of conducting his own gymnasium business. He had a significant working life ahead of him and in view of his capacity to work as a security guard or in other occupations for which he was suited if he had chosen to do so, an award of $15,000 for future loss of earning capacity was manifestly inadequate. The evidence does not justify an actuarial calculation based upon what the appellant could have earned as a security guard, but it does justify the conclusion that if the appellant had not been injured and had proceeded to try and develop a gymnasium business after a period of time working as a security guard and that business had not been successful, he would probably have returned to work as a security guard periodically if not permanently. In my view a reasonable award for future economic loss is $40,000. 21. There is no challenge to the award of $25,000 for past non economic loss. The complaint about the award of $13,000 for the future is that the appellant will endure considerable pain in the future due to the condition of his left hip and back and consequently the award is inadequate. I do not agree. The learned Trial Judge was correct, in my view, in concluding that the pain and suffering of the appellant in the past was much greater than what will occur in the future. Furthermore, the pain of the left hip will be likely to resolve with the hip replacement. At all events the pre-existing condition in the hips and back would have become symptomatic at some time in the future. I can see no reason to disturb the award. 22. Mr. Walsh also challenged the award of $12,000 for future medical treatment. The learned Trial Judge found that the appellant would require replacement of the left hip in the near future. He assessed that cost at an amount significantly in excess of $10,000 which suggests that he preferred the evidence of Dr. Cornish and Dr. Munyard as to the present day cost of such an operation. Another surgeon estimated the cost at somewhat less. The learned Trial Judge made some allowance for the probability that the plaintiff would require a second replacement of the left hip and possibly a third but went on to say:- "... but this must be heavily discounted for the likelihood that the plaintiff would have incurred considerable expense in any event for such procedures even if the accident had not occurred." 23. It appears that he also made some additional allowance for continuing medical expenses as part of the award. 24. Mr. Walsh contended that the learned Trial Judge erred in discounting the cost of the likely subsequent operations for the reason which he expressed or, in the alternative, that the extent of the discount was excessive. 25. The evidence established that the useful life of a hip replacement is about ten years. Consequently, the appellant will require a second, and possibly a third, replacement of the left hip. The pre-existing condition rendered it likely that he would have required a replacement of that hip even if he had not been injured in the fall, but it must be acknowledged that, at the least, a consequence of the fall is that the initial, and any subsequent, replacements will occur much earlier than otherwise would have been the case. Furthermore, it is possible that but for the accident, the appellant may only have required one replacement. The award made by the learned Trial Judge is approximately the cost of the imminent operation and does not, in my view, make sufficient allowance for the cost of the subsequent replacements and the possibility that they would not have been necessary if the appellant had not been injured. The consideration of the various possibilities and the usual contingencies which are relevant in the assessment of damages for future losses does not admit of precise calculations. However, a useful starting point is the cost of the imminent operation marginally discounted to reflect the present day value of that cost which will be incurred in the near future. The present day value of an expense of $12,000 to be incurred in ten years time is about $9,000 and such value of that expense in twenty years time is about $5,600: see Table 1 Luntz, Assessment of Damages for Personal Injury and Death 3rd Ed. at p.543. Using those amounts as a guide and weighing the various possibilities and contingencies an appropriate award for those future expenses and the others to which the learned Trial Judge had regard is $18,000. For these reasons the award of $12,000 is manifestly inadequate and should be increased to that amount. 26. The learned Trial Judge awarded interest on his award for past economic loss at the rate of 10% per annum for the whole of the period from the date of the commencement of the action, 2nd April 1989, until the date of the trial. The adoption of that rate and that approach was within the proper exercise of his discretion. However, the award must be re-assessed in view of the increase of the damages for past economic loss. Adopting the approach of the learned Trial Judge, I would allow interest at $14,250. 27. The appeal should be allowed and the assessment of the appellant's damages and interest increased by $55,500 to $162,879.

JUDGE2 KING C.J. I concur.

JUDGE3 OLSSON J. I have had the advantage of reading the reasons for decision of Mullighan J. in draft. 2. I agree with his reasoning and the orders which he proposes.