Kalb v Smith
[2001] QSC 216
•22 June 2001
SUPREME COURT OF QUEENSLAND
CITATION: Kalb v Smith & Others [2001] QSC 216 PARTIES: ALLAN FREDERICK KALB
(plaintiff)
v
PAUL SMITH
(first defendant)
GRAHAM SMITH
(second defendant)
JANET SMITH
(third defendant)
AUSTRALIAN ASSOCIATED MOTOR INSURERS LIMITED ACN 004 971 144
(fourth defendant)FILE NO: S 1850/01 DIVISION: Trial Division PROCEEDING: Trial DELIVERED ON: 22 June 2001 DELIVERED AT: Brisbane HEARING DATES: 12, 13, 14, 15, 19 June 2001
JUDGE: Wilson J ORDER: That there be judgment for the plaintiff against the defendants for $341,735.00. CATCHWORDS: DAMAGES-MEASURE AND REMOTENESS OF DAMAGES FOR ACTIONS IN TORT-where liability admitted but quantum in issue-earning capacity of plaintiff if accident had not occurred
TORTS-NEGLIGENCE-ROAD ACCIDENT CASES-whether all of plaintiff’s physical and mental difficulties were result of accident or other causes
TORTS-NEGLIGENCE-WHERE ECONOMIC OR FINANCIAL LOSS-where liability admitted but quantum in issue-earning capacity of plaintiff if accident had not occurred
Griffiths v Kerkemeyer (1977) 139 CLR 161, applied.
Grincelis v House (2000) 201 CLR 321, applied.
Husher v Husher (1999) 197 CLR 138, applied.
Malec v JC Hutton Pty Ltd (1990) 169 CLR 638, applied.
March v E & MH Stramare Pty Ltd (1991) 171 CLR 506, applied.
Medlin v State Government Insurance Commission (1994) 182 CLR 1, applied.
Wilson v Peisley (1975) 50 ALJR 207, applied.Bankruptcy Act 1966 (Cth), Part X
COUNSEL: RA Mulholland QC and SW Sheaffe for the plaintiff on 12 June 2001
SW Sheaffe for the plaintiff on 13, 14, 15, 19 June 2001
RM Stenson for the defendant
SOLICITORS: Puryer & Co for the plaintiff
Mullins & Mullins for the defendant
WILSON J: The plaintiff claims damages for personal injuries sustained in a motor vehicle accident on 17 November 1994. Only quantum is in issue.
The accident occurred on Eatons Crossing Road, Warner at about 8.30 pm. The plaintiff had stopped his Mercedes Benz vehicle because there was someone on the road with a torch trying to catch some dogs which had strayed. His vehicle was hit from behind by another vehicle travelling at high speed. It had to be towed from the scene; the damage to its rear was in the vicinity of $18,000.
After the collision, the plaintiff got out of his vehicle and collapsed, being momentarily unconscious. The next day he had widespread pain; his neck was sore and stiff; he had extensive bruising from the seat belt from his right shoulder across the front of his sternum; he felt pain in his ankles, feet and knees; he could not put weight on his right leg; he had a severe headache; and he had significant lower back pain. He consulted his general practitioner, Dr Roy Goodman. In the nine months after the accident, he consulted Dr Goodman seven times: the doctor’s attitude was apparently that he had sustained soft tissue damage which would take time to heal. However, his symptoms persisted. He was involved in another rear end collision in February 1995, which aggravated his symptoms for a short time. Dr Diana Loy became his general practitioner in August 1995; since then he has consulted her, on a fairly regular basis, on 60 occasions, almost all related to the accident. He had two sessions of physiotherapy in December 1994. In September 1997 he was diagnosed as a non-insulin dependent diabetic. He had a further physiotherapy treatment in January 1998. In June 1998 he underwent a programme at the Pain Clinic at Royal Brisbane Hospital. Since August 2000 Dr Loy has been prescribing antidepressant medication. In addition she continues to prescribe a large number of pain relieving, anti-inflammatory, tranquillising, and sedative medications. He has other medical problems not alleged to be attributable to the accident, including sleep apnoea and a retracted penis.
There are three principal issues relating to the injuries he sustained in the accident in November 1994 - chronic pain, psychiatric sequelae and the onset of diabetes.
The plaintiff was born on 30 January 1944. He did not give evidence of his height: according to one of the doctors (Dr Wainwright) it is 176 cms; according to another (Dr Perry-Keene) it is 171.5 cms. He was overweight for many years before the accident, his weight ranging between 95 and 105 kg. At the time of the accident he was between 100 and 103 kg - on the borderline of morbid obesity. About six to eight months after the accident, he weighed 130 kg. His present weight is 119 kg.
Otherwise the plaintiff’s pre-accident health seems to have been basically unremarkable for a man of his age. He had fairly regular attendances on his general practitioner, whom he regarded as a friend, for minor ailments. In April 1994 he complained of back and neck pain and occipitofrontal headaches after falling down some stairs. Later that year he had recurrent flu, which affected him for about three months.
The plaintiff and his wife have four sons, presently aged 25, 21, 15 and 13 years. The plaintiff has two other adult children from a previous marriage. Before the accident he was “a bit of a workaholic” as well as a good family man, according to his wife. Sunday was “family day” when he used to help with household chores and spend time with his wife and sons. He looked after the lawn and the swimming pool and attended to various handyman tasks. In addition, he would collect the boys from school or sport when he could. He used to walk the family dog (a German Shepherd) three or four nights a week, and bath it when necessary. He used to judge horses and was a dog breed surveyor. He and his wife used to go out together to the local tavern fairly regularly, and they also entertained for business or family reasons.
At the time of the accident the plaintiff was a financial planner. He was the managing director of a company called Bondmark Investment Services Ltd, which had its office at Silverton Place on Wickham Terrace, Brisbane. It had about five or six employees and about 15 authorised agents. The plaintiff was the decision maker around whom the business revolved. Competing contentions as to the viability of that business were a major issue in the case insofar as it relates to economic loss. I shall return to this issue below.
The plaintiff’s life has changed dramatically since the accident.
After the accident he did not attend the office regularly for two or three months (apart from attending company meetings on 30 November 1994 - his wife driving him to the office for that purpose). The administration manager, Madonna Cooper, who seems to have fulfilled the role (inter alia) of his executive secretary, would take papers to his house at Chapel Hill for his attention. After that time either Ms Cooper or his wife would drive him into the office, where he would stay for a couple of hours, three or four at the most: this happened about three days a week until the collapse of the business in about April 1995. He has not worked since.
The family home was sold by the mortgagee, and they have since lived in various rented houses. They cannot afford many of their former pleasures such as going out and entertaining. He still walks the dog, but less frequently and over shorter distances - they “toddle along” together across flat, straight areas, the plaintiff taking care not to jolt his back; he cannot wash the dog. He has given up horse judging and dog surveying because of physical discomfort and embarrassment. He can no longer do handyman tasks. His wife’s physical and emotional state has deteriorated to the point where she required admission to a mental health ward at Royal Brisbane Hospital. Their marriage is under extreme strain; they have had no intimate relations since shortly after the accident, and have sought counselling. The eldest son no longer lives at home; the second son is a heroin addict and the third son smokes marijuana. The plaintiff is distressed at his inability to help his second and third sons in any meaningful way. The family has become seriously dysfunctional.
The plaintiff described feelings of frustration and anger, inadequacy, depression and loneliness since the accident and the collapse of his business. He said -
“I’m extremely frustrated, yes. My life has been taken away. My work has been taken away. My opportunity to get out there and do it has been taken away.” (Transcript p 48)
His wife’s evidence was to similar effect. Both of them tended to idealise the plaintiff’s life and their lives together before the accident. Despite the tendency of them both to blame all their woes on the accident, I am not satisfied that they are all attributable to it. As I shall explain below, they were under mounting financial pressures before the accident. I infer from the fact that his wife obtained a domestic violence order against him in January 1994 that there were some marital difficulties. Further, his wife has a bad back as a result of a nursing injury many years before. The accident aggravated difficulties in the marriage, but the boys’ drug problems, for example, cannot be traced to it on the evidence. There have clearly been other stressors in the plaintiff’s life since the accident.
Since the accident the plaintiff has suffered from chronic neck and lower back pain radiating to his legs as well as chronic headaches and dizziness and chronic right shoulder pain. The soft tissue injuries resolved after a time, but there was an aggravation of degenerative problems in the spine. His ongoing pain has both an organic component and a psychological component. It has been aggravated by weight gain. I accept the evidence of Dr O’Callaghan, who was in charge of his admission to the Pain Clinic at Royal Brisbane Hospital and who has seen him on more than six occasions between September 1997 and September 2000, in this regard. Various modalities of treatment were tried at the Pain Clinic with no appreciable benefit, apart from a strong opioid (Oxycontin) which gave partial relief. He also underwent an education programme aimed at improving his coping ability. The degree of impairment due to orthopaedic causes is probably quite low (3 - 5% of bodily function according to Dr Boys, between 5 and 7.5% of the spine as a whole according to Dr Pentis, and 15% total permanent partial disability according to Dr Tomlinson). However, pain is a subjective phenomenon, and I accept the sincerity of the plaintiff’s complaints of pain. I accept the opinion of Dr O’Callaghan that he will continue to suffer from chronic neck and lower back pain for the remainder of his life.
According to Dr Maureen Field, a neuropsychologist whose evidence I accept, the plaintiff has deficits in the area of attention/concentration as well as poor delayed visual recall and moderate difficulty with word selection. There is no suggestion of acquired brain damage; rather it is probable that he had post-concussion type symptomatology in the period immediately after the accident which, combined with his physical distress, led him to decompensate psychologically to the point where he was unable to function adequately in his field of employment, and that in turn caused further severe psychological stress. The symptoms are now maintained on a psychological/psychiatric basis.
Dr Peter Mulholland, a psychiatrist, who examined the plaintiff twice in September 1997 and again in February 2001, as well as seeing him twice when he accompanied his wife, expressed the opinion that he has developed a major depressive illness. In his first report (dated 30 September 1997) Dr Mulholland recorded -
“21 PSYCHOLOGICAL ISSUES
21.1He indicated that the main problem for him has been difficulty coping with his new circumstances. He said that he was virtually a millionaire one day and bankrupt the next and it has been, and is, extraordinarily difficult for him to emotionally deal with same.
21.2 He described the following emotions:-
· chronically unhappy
· chronically feels frustrated
· chronically feels angry and resentful
· chronically irritable and aggressive generally and specifically towards his wife
· he is preoccupied with his problems
· he is troubled by insomnia secondary to his preoccupations
· he has had suicidal thoughts
· he feels ashamed of himself and has socially withdrawn
· he has had homicidal thoughts
· if he accidentally runs into any of his old business acquaintances he feels distressed and avoids them as much as possible
· he is thinking of moving somewhere to get away from Brisbane in order to hide himself away and to avoid people but he does not know where to go
· he is troubled by a profound sense of inadequacy, guilt, failure, helplessness and hopelessness
· he has a sense of being a burden on his wife and children
· he said that life is like a dream and he finds himself wandering around in a daze most of the time
· he indicated that he has gained a lot of weight since he was injured and this is something that further distresses him emotionally.
21.3As previously indicated he and his wife have had major difficulties (marriage relationship problems) mainly because of his being depressed, irritable and aggressive and also his wife being depressed herself because of their situation such that substantial conflicts occurred.
21.4He has not had any treatment for any psychiatric condition except insofar as he has been involved with counselling from general practitioner/counsellor, Dr. Vivienne Peters. That involvement has included one on one counselling and couples counselling.
22 OBSERVATIONS AT INTERVIEW
22.1At interview he was very obese and was short of breath with minimal activity.
22.2 He was somewhat untidy in his appearance.
22.3 He used a walking stick in this left hand.
22.4 He moved with a slow, tottering gait.
22.5He was a difficult historian and was dithery and disorganised.
22.6He had difficulty with dates and details. He gave me some conflicting information and there may be mistakes in this report.
22.7He was weepy and agitated at times. He appeared to be trying hard to compose himself but his efforts failed on occasions.
22.8 Overall he gave an impression of a pervasive depression.
22.9 His thought processes were rather disorganised.
22.10 His thought content was dominated by depressive themes.
22.11His perceptual processes were not normal in that he had impaired vision at the first interview. This had improved a little at the time of the second interview.
22.12His general intellectual functioning appeared to be mildly impaired at both interviews. This is most likely to be a result of his depressive illness and may also be contributed to by his diabetes.
22.13His insight and judgment appeared to be reasonably satisfactory, all things considered.”
He considered that, from a psychiatric point of view, he had an impairment of 20% of his whole body. In his second report he recommended psychiatric treatment.
Dr Jill Reddan, also a psychiatrist, examined the plaintiff once, in April 1998. She considered his psychiatric condition to be less serious, and diagnosed an adjustment disorder with mixed anxiety and depressed mood, in the setting of a man with significant narcissistic personality traits. He had reacted to his difficulties with rage and projection of blame (the usual response of narcissistic individuals to difficulties). This had compounded the whole situation, as had his wife’s difficulties and the problems with the heroin addicted son. Dr Reddan said that the plaintiff did not present to her with the psychomotor retardation usually seen in major depression, his major emotion was anger rather than anxiety and depression, and he did not present with the self blame, self criticism, major loss of self esteem and of self confidence usually seen in major depression. Hence her diagnosis.
The plaintiff presented differently to Dr Mulholland, who had the opportunity of observing him on several occasions over a period of about three and a half years. I accept Dr Mulholland’s diagnosis of a chronic major depressive disorder, and I accept his opinion that, even with appropriate psychiatric treatment, only limited improvement could realistically be expected.
Dr Mulholland assumed that the plaintiff’s business was prosperous until the accident. He said that the depression set in within a few months of the injury when he did not get better quickly. He was already clinically depressed when his business collapsed in mid 1995; the collapse of the business made his depression much worse. Dr Mulholland agreed that a mounting financial crisis with or without the accident would have been a significant psychological stressor, but maintained that even if the business would have collapsed anyway, the plaintiff’s depression was partly attributable to the accident. As I shall explain below, the accident hastened the collapse of the plaintiff’s business, which was likely to have collapsed in any event. I find that it is likely that the plaintiff would have developed depression anyway, but that the accident aggravated the degree and chronicity of the depression.
The plaintiff’s type-2 (non-insulin dependent) diabetes was diagnosed in September 1997 - almost three years after the accident. In the meantime his weight had increased by about 25 - 30 kg. Initially his condition was managed with an attempt at weight reduction, diet and oral anti-diabetic medication, but he converted to insulin therapy in September 1999. It is his case that the onset of diabetes was caused by the accident in that the accident caused him to be in pain and to become depressed; that in consequence he could not exercise and his weight increased.
Age and weight gain are recognised as common triggers for diabetes in persons who are genetically predisposed to developing the condition. Dr Jon Douglas, a consultant physician, summarised the prevailing medical theory of the onset of diabetes in these terms -
“Well, it’s this theory of causation of diabetes that people who get diabetes in this community usually carry the gene for diabetes. That gene does not always express itself either because the patient doesn’t live long enough to express it or they never run into the set of circumstances which act to trigger off the occurrence of their diabetes. It is thought that stressors, either physical illnesses or profound emotional illnesses, can sometimes act as a trigger for diabetes. Having said that, it is possible that diabetes can occur completely de novo without any possible triggers. It is generally accepted that in some patients diabetes is apparently triggered by a series of life events of a stressful nature, be they physical or psychological or both, but behind all that you probably need to have the gene for diabetes on board as well.” (Transcript pp 127 - 8)
The plaintiff had had problems with his weight for many years since giving up major sporting activities. As early as 1982, his weight was recorded by a medical practitioner as 108 kg, and from time to time he was prescribed duromine, an amphetamine type medication intended to suppress appetite and so assist with weight reduction. Weight gain itself is usually attributable not just to lack of exercise, but also to dietary habits and sometimes psychological stressors. There is evidence that the plaintiff was counselled about his diet and there were various stressors in his life after the accident, not all attributable to the accident.
In order for the onset of diabetes to be compensable, there must be a causal link between it and the defendants’ negligence. Whether there is a sufficient causal link is a question of fact, to be resolved on the balance of probabilities, as a matter of common sense and experience: March v E & MH Stramare Pty Ltd (1991) 171 CLR 506. In Medlin v State Government Insurance Commission (1994) 182 CLR 1 at 7 Deane, Dawson, Toohey and Gaudron JJ said that the question of causation cannot be answered by classification of operative causes as “pre-eminent” or “subsidiary”. They went on -
“Regardless of such classification, two or more distinct causes, without any one of which the particular damage would not have been sustained, can each satisfy the law of negligence’s commonsense test of causation. This can be most obviously so in a case where a ‘subsidiary’ cause operates both directly as a cause of the particular damage and indirectly as a contributing component of a ‘pre-eminent’ cause.”
Where the defendants’ negligence is proved to have brought out a latent condition which might have come to light in any event, the damages should be discounted to reflect that possibility: Malec v JC Hutton Pty Ltd (1990) 169 CLR 638; Wilson v Peisley (1975) 50 ALJR 207 per Barwick CJ at 210.
The plaintiff should be taken as having a genetic predisposition to the development of diabetes. He was overweight before the accident, and I accept the evidence of Dr Dana Wainwright, a specialist physician who supervised his admission to Royal Brisbane Hospital in relation to the diabetes, that he would have had a one in four chance of developing diabetes immediately before the accident. After the accident his weight increased substantially, and he was subjected to various stressors, not all of which were related to the accident. Dr D’Emden, an endocrinologist, considered that the development of diabetes was “100% attributable to the consequences of the accident”; in oral evidence he described the link as being indirect (transcript p 89). Dr Douglas and Dr Perry-Keene (another endocrinologist) also identified the weight gain as providing a link between the accident and the diabetes. Dr Wainwright considered that an indirect link could not be excluded. She said -
“The diabetes ... may well have occurred because he had a 1 in 4 chance of developing it when he was 105 kgs, most certainly, and according to the notes, he was inactive and this would increase his caloric intake. To ascribe the development of diabetes directly to the accident is drawing a long bow, in my opinion. Certainly this unfortunate man has had a series of problems after the accident with his depression, his sleep apnoea and his weight gain. Weight gain, however, is not just due to immobility; it is due to diet and inappropriate diet as well. And there must have been some contribution to the number of calories he was taking in as well. So I can’t say there is not an indirect link. However, I can’t say that there was a direct link as well. There are a whole lot of factors in the case that could have contributed to this, including his depression.” (Transcript p 231)
“As far as I can tell, when you become more obese - there is no link with increasing obesity. However, if you are increasingly obese it may well bring further forward your development of the diabetes if you are already going to develop diabetes. So it may have brought it forward by some months or years.” (Transcript p 233)
I am satisfied that there was a sufficient link between the accident, the plaintiff’s weight gain and the onset of diabetes to meet the legal test of causation. However, I am also satisfied that, had it not been for the accident, other factors may have brought about its onset, and I intend discounting the award of damages to reflect that possibility.
The plaintiff’s obesity puts him at risk of coronary and other health problems. His diabetes is a risk factor for coronary artery disease, peripheral vascular disease and cerebral vascular disease. Obstructive sleep apnoea can lead to sudden death. I conclude that his life expectancy is somewhat less than the average of over 21 years for a man of his age.
The plaintiff had over 30 years’ experience in the finance industry. In the 1980s he completed a four year external course offered by Monash University which qualified him to be a financial planner. He moved to Brisbane from Sydney in about 1983 as the state manager for the Telford Property Fund on a salary package worth approximately $160,000 per annum. From the mid 1980s he worked for Bondmark Investment Services Pty Ltd (“Bondmark”), as a representative and later as manager. He was highly regarded by Mr David Dyer of the Advance Bank Group and Mr Barry Maranta of Northern Securities Ltd, both of whom dealt with him until 1991, without knowing anything about the financial viability of his business. Subsequently his family company Edenbay Pty Ltd became a shareholder in Bondmark and he became a director. He borrowed $300,000 from Oceanic Life Limited, which he lent to Edenbay Pty Ltd to enable it to increase its shareholding in Bondmark to 50.3%. Bondmark held a Dealer’s Licence issued by the Australian Securities Commission. The plaintiff became its managing director, responsible for issuing authorities to representatives to act on behalf of the company and to take prescribed investments, reporting to the Australian Securities Commission regularly, training representatives in Melbourne, Sydney and Brisbane, and writing newsletters for representatives and clients. The company’s income came from monthly brokerage and ongoing brokerage. In the early 1990’s the plaintiff restructured the business. Bondmark became an unlisted public company - Bondmark Investment Services Ltd. It was his intention to bring in a major partner or to sell the business. He would then have taken a position as a financial planner in the employ of a large institution or worked as an investment adviser. He did not plan to retire before the age of 65.
It is for the plaintiff to prove the extent of his loss of earning capacity. I must consider what he could have earned and what would have happened but for the accident. I have to assess the loss of income which he would (cf could) have expected to have had under his control and at his disposal by exercising his earning capacity: Husher v Husher (1999) 197 CLR 138. The fact that he chose to conduct his business through a corporate structure does not preclude recovery by him personally.
In Husher the plaintiff was a block layer. He exercised his earning capacity through a partnership at will with his wife. They were equal partners although the wife’s contribution in fact was negligible. The court assessed the plaintiff’s loss on the basis that the income was all derived by him and applied individual tax rates to arrive at his net loss. The critical issue, according to the High Court in Husher, is where the effective control of the plaintiff’s skill and labour lay. The facts of each case require close attention. The following passage appears in the majority judgment of Gleeson CJ, Gummow, Kirby and Hayne JJ at 148-149:
“The task is not one to be undertaken by seeking to classify cases as concerning ‘sole traders’ or ‘partnerships’ or ‘wage earners’ or ‘trading trusts’, and then attempting to deduce some rule of general application to all cases falling within the classification thus devised. Rather, the enquiry is about what could the plaintiff have done in the workforce but for the accident and what sum of money would the plaintiff have had at his or her disposal.”
At 159 Callinan J (who agreed with the majority as to the result) said -
“A case of this kind is a relatively simple one. However it will always be important in assessing the damages in cases in which the plaintiff is a partner or an employee of a company which he or she controls, or in which he or she has a substantial proprietary interest, to have regard to the realities and motivations underlying the arrangements which have been made, the plaintiff’s capacity to disentangle himself or herself from them, and the likelihood that such a plaintiff would be foolish to act at any time other than in his own best financial, matrimonial, and familial interests. On the other hand, an injured person who has entered into inextricable or virtually inextricable arrangements may be in a different position. Such a person may be one who has bound himself or herself under a restraint of trade or other negative obligation not to exploit his or her earning capacity for a period of years, or at all, or to do so in some limited way only. It is true, as many of the statements in the cases repeat, that each case will depend upon its own facts but the possibilities and likelihood of disentanglement from arrangements, and the virtual certainty that an injured plaintiff will look to his or her own total interests will always be important, if not conclusive factors in assessing economic loss.”
It has been difficult to form a clear picture of the plaintiff’s financial position and of that of the companies at the time of the accident, because there are no proper financial statements or tax returns for the year ended 30 June 1994. The plaintiff said in oral evidence that in 1994 about $200,000 pa worth of monthly commission was being generated by Bondmark, as well as $80,000 pa in ongoing brokerage. The intention was that Edenbay Pty Ltd not take income from Bondmark that year, but that it take more shares, increasing its shareholding to 94%. His wife was also a shareholder in Edenbay Pty Ltd, but although she held a “proper authority” from Bondmark, her contribution to the business was negligible. She used to draw $300 a week from that company, which she used for housekeeping. Beyond that, the plaintiff attended to the discharge of family financial commitments, but it is not clear from what source. Indeed, it was the defendants’ case that he was not able to meet those commitments at the time of the accident: for example, he was under considerable pressure from his bankers and he was well behind in the payment of his sons’ school fees.
The income tax returns of the plaintiff and his wife for the years ended 30 June 1991, 30 June 1992 and 30 June 1993 show gross income from Edenbay Pty Ltd as follows –
Year Plaintiff Plaintiff’s wife Total 1991 $17,836 $17,886 $35,722 1992 $33,890 $19,190 $53,080 1993 $3,100 $3,100 $6,200 Total $54,826 $40,176 $95,002
In cross examination the plaintiff conceded that “things were tight” at the time of the accident (Transcript p 76). He admitted owing Oceanic $200,000. Later this was put to him-
“Bearing in mind that this is an action by you, not an action by Bondmark or Edenbay, you were not getting anything much, you personally, by way of remuneration, were you?”
He replied -
“No, I had agreed to take shares in lieu of income.” (Transcript p 105.)
From late September 1993 he was frequently contacted by Bondmark’s bank manager, because that company was not meeting its obligations to the bank. In February 1994 the bank issued a letter of demand. Bondmark had owed about $81,600 to creditors: this had been reduced to about $35,000 thanks to Edenbay Pty Ltd’s advancing $46,400 - money which should have gone to the plaintiff and his wife. The Australian Securities Commission required Bondmark to maintain a security deposit of $20,000: it refused to consent to the release of the security in October 1994. Ongoing commission of $40,000 was due to Bondmark, but not paid. The plaintiff considered that Bondmark was solvent, although he conceded that its auditors were of a contrary view (Transcript p 28). Bondmark’s annual general meeting was held shortly after the accident, on 30 November 1994. The plaintiff reported that it had been a turbulent year for the company. The minutes record -
“It was agreed that there be no Directors fees paid for the year however consultancy fees of $30,000 per year would be paid to Edenbay Pty Ltd on behalf of Cherie Kalb and $50,000 per year to Edenbay Pty Ltd on behalf of Allan Kalb for the services of Allan Kalb and Cherie Kalb. If however trading did not allow for these amounts to be paid it was agreed that Edenbay Pty Ltd would invoice at a lesser amount or the Directors could issue shares in lieu of fees or for debts paid by Edenbay Pty Ltd if it so desired.”
The plaintiff nevertheless professed an unrealistic optimism about the prospects of selling the business profitably. This exchange occurred in cross-examination -
“Mr Kalb, you want to be an investment advisor. You want her Honour to consider you to be an investment advisor. What was the other? An investment advisor or financial planner. You weren’t very good at looking after your own affairs, were you?
-- Depending what you want to do with my own affairs. I was trying to achieve too much with too little capital, yes, but it was a - there was a golden pot at the end of it.” (Transcript p 108)
After the accident the business ground almost to a halt. The plaintiff sought advice from Knights, who are chartered accountants and insolvency practitioners. He seemed to think they would supply management services for a month or two until he was able to resume day to day control. Whatever the exact circumstances in which it occurred (and they are not clear), the Australian Securities Commission stepped in almost immediately and revoked Bondmark’s Dealer’s Licence in early 1995. Bondmark Investment Services Ltd was wound up. On the home front, the plaintiff’s bank exercised its mortgagee’s power of sale over the house at Chapel Hill. On 1 August 1995 the plaintiff entered into a deed of arrangement with his creditors under Part X of the Bankruptcy Act.
I am satisfied that the plaintiff’s business was headed for collapse before the accident. The accident and his consequent incapacity served to hasten its demise.
Given his age, the type of work in which he was experienced before the accident, his physical and psychiatric disabilities, I conclude that he is presently commercially unemployable and that he will remain so.
Evidence was received from Mr Bruce Davidson, a recruitment consultant. In his view a good financial planner needs extremely strong sales skills, relationship building skills, influencing skills and technical competence. At present the average income for financial planners in Queensland is $80,000 - $95,000 pa made up of base salary of $50,000 - $65,000 plus commission. The average income of an investment adviser is similar. At present there are plenty of positions available: it is a very candidate-short market. While the retirement age of such people tends to be higher than in some other professions, people have different earning capacities at different points in their lives. In assessing someone’s prospects of success, the best guide is always past performance, and if he were aware someone had suffered a financial collapse, he would inquire into the reasons for the collapse and put the position before any potential employer.
In all the circumstances I assess the damages for pain and suffering and loss of the amenities of life at $40,000.00. I assign $20,000.00 of that to pre-trial loss. Interest on pre-trial loss at 2% per annum over 6 years 7 months comes to $2,635.00.
The parties endeavoured to reach agreement on special damages. In summary it was agreed that, depending on whether or not the onset of diabetes was caused by the defendants’ negligence, the special damages were as follows -
| With diabetes | Without diabetes | |
| Medical expenses | $4,018.35 | $2828.45 |
| Travelling expenses | $453.60 | $453.60 |
| Medication | $8,550.00 | $6,840.00 |
| TOTAL | $13,021.95 | $10,122.05 |
Because of my conclusion that the onset of the diabetes was caused by the accident, but that, had it not been for the accident, other factors may have brought it about, I intend discounting the special damages to $12,000.00. Interest at 5% pa on the travelling expenses and on, say, $6,400.00 of the medication costs, comes to approximately $2,250.00.
I allow $12,000.00 for future medical and psychiatric expenses, made up of future medication at $20 per week over 10 years, using the 5% discount tables ($8,258.00) plus the average cost of psychiatric treatment, as per Dr Mulholland ($3,750.00).
The plaintiff claims pretrial and future losses under the principle in Griffiths v Kerkemeyer (1977) 139 CLR 161. The plaintiff’s wife and children have given him assistance since the accident. His wife still assists him with showering and dressing. He bought a secondhand massage table and his third son massaged his back every night for nearly two years. The boys attend to the mowing. His eldest son has assisted him financially as well as in other ways. He estimated that in the first three months after the accident he received 3.5 hours assistance per day; that in the second three months he received 2.5 hours assistance per day; and that thereafter he received 1.5 hours assistance per day. His evidence on this was not challenged. He is to be compensated for the need for services which were supplied gratuitously, which does not necessarily equate with the actual level of services provided. It was agreed that the damages should be assessed on an average commercial rate of $12.00 per hour from the accident to the trial. The plaintiff claimed the full value of the services actually provided ($45,900.00), while the defendants submitted that only $5,000.00 should be allowed. In all the circumstances I allow $25,000.00 for pre-trial losses under this head. I allow interest at 5% pa in accordance with Grincelis v House (2000) 201 CLR 321, which comes to $8,230.00. For the future, I allow one hour per day over 10 years. Using the 5% discount tables, I reach the sum of $34,683.60, which I round down to $30,000.00.
It is simply not possible to assess the plaintiff’s loss of earning capacity with precision. Calculations by a chartered accountant, based on various alternative scenarios, were put into evidence. In his final submissions counsel for the plaintiff sought approximately $140,000 for pre-trial loss and approximately $130,000 for future loss, while counsel for the defendants submitted that the pre-trial loss should be assessed globally at $15,000.00 and the future loss at $15,000.00.
Adopting the approach in Husher, and having regard to my finding that the plaintiff’s wife’s contribution to the business was negligible, I have begun by looking at their combined income from Edenbay Pty Ltd in the years ended 30 June 1991, 30 June 1992 and 30 June 1993. I do not regard the records (such as they are) for the year ended 30 June 1994 as being useful for this purpose. The average combined gross income per annum was approximately $31,000.00. After making an allowance for income taxation at individual rates, I estimated the average net income per week at $400.00. Loss at that rate between the accident and the trial (over 342 weeks) would come to $136,800.00. It is appropriate to discount that not only for the usual vicissitudes of life, but also because the plaintiff’s business was likely to have collapsed in any event, and so he would have had to establish another income stream. I have decided to allow $85,000.00 for past loss of earning capacity.
The plaintiff’s counsel conceded that approximately $50,000.00 in social security benefits should be deducted from the past loss of earning capacity for the purposes of the calculation of interest. I allow interest on $35,000.00 over 6 years 7 months at 5% pa - that is, $11,520.00.
The plaintiff is presently aged 57 years. I think it is likely that he would have continued to earn income for several more years had it not been for the accident. He has a comparatively young family who would have continued to be dependent on him at least to some degree. Before the accident he was an energetic worker, and it is likely that he would have obtained a paid position in a business run by someone else. He would probably not have risen to be one of the top earners among financial planners and or investment advisers. Further, his earning capacity may have been reduced by his ongoing depression associated with the collapse of his business, his obesity, his predisposition to diabetes, and his obstructive sleep apnoea, as well as the usual vicissitudes of life. I have had regard to the following calculations based on the 5% discount tables –
| Net loss per week | To age 60 (3 years) | To age 65 (8 years) |
| $400.00 | $58,240.00 | $138,240.00 |
| $500.00 | $72,800.00 | $172,800.00 |
| $600.00 | $87,360.00 | $207,360.00 |
| $700.00 | $101,920.00 | $241,920.00 |
| $800.00 | $116,480.00 | $276,480.00 |
| $900.00 | $131,040.00 | $311,040.00 |
| $1,000.00 | $145,600.00 | $345,600.00 |
I have decided to allow $100,000.00 for future loss of earning capacity.
Both counsel submitted that I should assess past loss of superannuation benefits at 6% of past loss of earning capacity and future loss under this head at 8% of future loss of earning capacity. On that basis, I allow $5,100.00 for the past and $8,000.00 for the future.
In summary, my assessment of quantum is as follows –
| Past pain and suffering etc. | $20,000.00 |
| Interest on past pain and suffering | $2,635.00 |
| Future pain and suffering etc. | $20,000.00 |
| Special damages | $12,000.00 |
| Interest on special damages | $2,250.00 |
| Future medical expenses | $12,000.00 |
| Past Griffiths v Kerkemeyer | $25,000.00 |
| Interest on past Griffiths v Kerkemeyer | $8,230.00 |
| Future Griffiths v Kerkemeyer | $30,000.00 |
| Past loss of earning capacity | $85,000.00 |
| Interest on past loss of earning capacity | $11,250.00 |
| Future loss of earning capacity | $100,000.00 |
| Past loss of superannuation benefits | $5,100.00 |
| Future loss of superannuation benefits | $8,000.00 |
| TOTAL | $341,735.00 |
Order: That there be judgment for the plaintiff against the defendants for $341,735-00.
0
5
0